<PAGE>
As filed with the Securities and Exchange Commission on April 28, 1998
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
JEFFBANKS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Pennsylvania 6060 23-2189480
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
1845 Walnut Street, Philadelphia, PA 19103 (215) 861-7000
(Address, including ZIP code, and telephone number, including area code, of
registrant's principal executive offices)
Betsy Z. Cohen, Esquire
Chairman and Chief Executive Officer
JeffBanks, Inc.
1845 Walnut Street, 10th Floor
Philadelphia, PA 19103
(215) 861-7000
(Name, address, including ZIP code, and telephone number, including area
code, of agent for service)
With copies to:
J. Baur Whittlesey, Esquire Frederick W. Dreher, Esquire
Lisa A. Ernst, Esquire Duane, Morris & Heckscher LLP
Ledgewood Law Firm, P.C. 4200 One Liberty Place
1521 Locust Street, Suite 800 Philadelphia, PA 19103-7396
Philadelphia, PA 19102 (215) 979-1234
(215) 731-9450
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are being registered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.[]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.[]______________
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. []______________
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
Title of each class Proposed maximum Proposed maximum Amount of
of securities to be Amount to be offering price per aggregate offering registration
registered registered unit(1) price fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (par
value $1.00 per
share)..................... 1,144,074 shares $53.631 $61,357,832 $17,805.56
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(f)(1) under the Securities Act of 1933 based
upon the market value (calculated in accordance with Rule 457(c)) of
the securities to be cancelled in connection with the merger which is
the subject of this Registration Statement, as of April 22, 1998 (a
date within five business days prior to the date of filing of this
registration statement), expressed per share of Registrant's common
stock.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
JEFFBANKS, INC.
1845 Walnut Street, 10th Floor
Philadelphia, Pennsylvania 19103
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
(the " JBI Meeting") of JeffBanks, Inc. ("JBI"), which will be held at 1845
Walnut Street, 10th Floor, Philadelphia, Pennsylvania, at 9:30 a.m., local time,
on June ___, 1998.
At the JBI Meeting, shareholders will be asked to approve and adopt an
Amended and Restated Agreement and Plan of Merger (the "Merger Agreement")
pursuant to which a subsidiary of JBI, formed for that purpose, will merge with
and into Regent Bancshares Corp. ("RBC") with the result that RBC will become a
wholly-owned subsidiary of JBI. Immediately following the merger, RBC will be
merged into JBI, with JBI being the surviving entity. Thereafter, Regent
National Bank (the wholly-owned banking subsidiary of RBC) will be merged with
and into Jefferson Bank, JBI's Pennsylvania banking subsidiary, with Jefferson
Bank being the surviving bank. This combination will create a financial services
institution with over $1.5 billion in total assets and 32 branch banking offices
in the Philadelphia metropolitan area. JBI's shareholders will also be asked to
approve an amendment to JBI's Articles of Incorporation for the purpose of
increasing the authorized number of shares of JBI Common Stock.
The proposed merger is described in the accompanying Joint Proxy
Statement/Prospectus. I urge you to carefully review this information.
THE BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE BEST
INTERESTS OF JBI AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD HAS, BY UNANIMOUS
VOTE, APPROVED THE MERGER AGREEMENT. THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
TO APPROVE AND ADOPT THE MERGER AGREEMENT.
Whether or not you plan to attend the JBI Meeting in person, I urge you
to complete the enclosed proxy and mail it promptly in the enclosed
postage-paid, return-addressed envelope to ensure that your shares will be
represented at the JBI Meeting. If you do attend the JBI Meeting, you will, of
course, be entitled to vote in person.
Sincerely,
Betsy Z. Cohen
May _____, 1998 Chairman and Chief Executive Officer
<PAGE>
REGENT BANCSHARES CORP.
1430 Walnut Street
Philadelphia, Pennsylvania 19102
May ___, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
(the "RBC Meeting") of Regent Bancshares Corp. ("RBC") to be held at 10:00 a.m.,
local time, on June _____, 1998 at The Union League of Philadelphia, 140 South
Broad Street, Philadelphia, Pennsylvania 19102.
At the RBC Meeting, among other matters, you will be asked to consider
and vote upon the approval and adoption of an Amended and Restated Agreement and
Plan of Merger (the "Merger Agreement") among RBC, Regent National Bank
("Regent"), JeffBanks, Inc. ("JBI"), Jefferson Bank ("Jefferson") and JeffBanks
Acquisitioncorp. V, Inc. ("JBI Merger Sub") , a copy of which is attached as
Annex A to the Joint Proxy Statement/Prospectus accompanying this Notice. The
Merger Agreement contemplates that, among other things, JBI Merger Sub will
merge with and into RBC (the "Merger") as a result of which RBC will become a
direct wholly owned subsidiary of JBI and Regent will become a second-tier
subsidiary of JBI. Immediately following the Merger, RBC will merge into JBI,
with JBI being the surviving entity (collectively with the Merger, the "Merger
Transaction"). Thereafter, Regent will merge into Jefferson, with Jefferson
being the surviving bank (the "Bank Merger").
Briefly, the Merger Agreement provides that upon the Merger:
(a) each share of RBC Common Stock will be converted into 0.303 of a
share of JBI Common Stock; and
(b) each outstanding and unexercised option to purchase RBC Common
Stock will be converted into an option to purchase that number of shares of JBI
Common Stock as equals the number of shares of RBC Common Stock purchasable
pursuant to such option multiplied by 0.303 at an exercise price equal to the
exercise price of the RBC option divided by 0.303.
Additional information concerning the Merger, the Merger Transaction
and the Bank Merger, a description of the respective businesses of JBI,
Jefferson, RBC and Regent, certain financial information and the complete text
of the Merger Agreement are set forth in the accompanying Joint Proxy
Statement/Prospectus. Also accompanying the Joint Proxy Statement/Prospectus is
a copy of RBC's Form 10-K Annual Report for the year ended December 31, 1997,
which constitutes RBC's 1997 Annual Report to Shareholders.
RBC's Board of Directors and management are excited about the prospect
of the Merger, the Merger Transaction and the Bank Merger and believe they offer
significant advantages for
<PAGE>
RBC, its shareholders, its customers and its employees. RBC's Board of Directors
also believes the Merger Transaction and the Bank Merger will strengthen the
surviving corporation's ability to compete and enhance its business potential.
Upon completion of the Merger, Robert B. Goldstein will join the JBI
Board of Directors as Vice Chairman, and will become President, Chief Operating
Officer and a director of Jefferson. Regent President Barbara Teaford will also
join Jefferson as an officer and director of Jefferson.
RBC'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PROPOSED MERGER
TRANSACTION WITHOUT DISSENT AFTER CONSIDERING VARIOUS FACTORS, INCLUDING THE
FAIRNESS OPINION OF KEEFE, BRUYETTE & WOODS, INC., RBC'S FINANCIAL ADVISOR, AND
BELIEVES THAT THE MERGER TRANSACTION IS IN THE BEST INTERESTS OF RBC AND ITS
SHAREHOLDERS. RBC'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
To approve and adopt the Merger Agreement, the affirmative vote of a
majority of the votes cast by the holders of RBC Common Stock is required. It is
important that your shares be represented at the RBC Meeting, regardless of the
number of shares you hold. Therefore, please complete, sign and date your proxy
card and return it in the enclosed envelope as soon as possible, whether or not
you plan to attend the RBC Meeting. Returning the proxy card will not affect
your right to revoke your proxy as described in the accompanying Joint Proxy
Statement/Prospectus or to attend the RBC Meeting.
Sincerely,
Robert B. Goldstein,
President and
Chief Executive Officer
<PAGE>
JEFFBANKS, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE ____, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "JBI
Meeting") of JEFFBANKS, INC. ("JBI") will be held at its principal executive
office located at 1845 Walnut Street, 10th Floor, Philadelphia, Pennsylvania, on
__________, June _____, 1998, at 9:30 a.m. local time to consider the following
matters:
1. To consider and vote on a proposal to approve and adopt an Amended
and Restated Agreement and Plan of Merger (the "Merger Agreement") dated March
27, 1998 and effective as of March 18, 1998, among JBI, Jefferson Bank,
JeffBanks Acquisitioncorp. V, Inc. ("JBI Merger Sub"), Regent Bancshares Corp.
("RBC") and Regent National Bank ("Regent"), pursuant to which JBI Merger Sub
will merge with and into RBC (resulting in RBC becoming a wholly-owned
subsidiary of JBI and Regent becoming a second-tier subsidiary of JBI), upon the
terms and subject to the conditions set forth in the Merger Agreement, as more
fully described in the enclosed Joint Proxy Statement/Prospectus;
2. To consider and vote upon a proposal to amend JBI's Articles of
Incorporation to increase the aggregate number of authorized shares of JBI
Common Stock from 10,000,000 shares to 20,000,000 shares; and
3. The transaction of such other business as may properly come before
the JBI Meeting or any adjournment thereof.
Only those shareholders who hold Common Stock of record at the close of
business on May ____, 1998 are entitled to notice of and to vote at the JBI
Meeting or any adjournment thereof.
By Order of the Board of Directors,
WILLIAM H. LAMB, Secretary
May ____, 1998
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE. IF YOU ATTEND THE JBI MEETING, YOU MAY VOTE IN PERSON
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
REGENT BANCSHARES CORP.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE ____, 1998
To the Shareholders of
REGENT BANCSHARES CORP.:
The Annual Meeting of Shareholders (the "RBC Meeting") of Regent
Bancshares Corp. ("RBC") will be held at 10:00 a.m., local time, on
____________, _______________, 1998 at The Union League of Philadelphia, 140
South Broad Street, Philadelphia, Pennsylvania 19102 for the following purposes:
1. To consider and vote upon a proposal to approve and adopt an Amended
and Restated Agreement and Plan of Merger dated March 27, 1998 and effective as
of March 18, 1998, among RBC, Regent National Bank ("Regent"), a wholly owned
subsidiary of RBC, JeffBanks, Inc. ("JBI"), Jefferson Bank ("Jefferson") and
JeffBanks Acquisitioncorp. V, Inc. ("JBI Merger Sub") each a wholly owned
subsidiary of JBI (the "Merger Agreement"), a copy of which is attached as Annex
A to the Joint Proxy Statement/Prospectus accompanying this Notice, which
contemplates that, among other things, (i) JBI Merger Sub will merge with and
into RBC (the "Merger") as a result of which RBC will become a direct wholly
owned subsidiary of JBI and Regent will become a second-tier subsidiary of JBI,
and immediately following the Merger, JBI will merge RBC into JBI, with JBI
being the surviving entity (collectively with the Merger, the "Merger
Transaction") and thereafter Regent will merge into Jefferson, with Jefferson
being the surviving bank (the "Bank Merger"), and (ii) the holders of RBC Common
Stock and stock options will have the right to receive JBI Common Stock and
stock options as follows:
(a) each share of RBC Common Stock will be converted into 0.303 of a
share of JBI Common Stock; and
(b) each outstanding and unexercised option to purchase RBC Common
Stock will be converted into an option to purchase that number of shares of JBI
Common Stock as equals the number of shares of RBC Common Stock purchasable
pursuant to such option multiplied by 0.303 at an exercise price equal to the
exercise price of the RBC option divided by 0.303;
all as more fully described in the accompanying Joint Proxy
Statement/Prospectus;
2. To elect five directors to serve until the 1999 Annual Meeting of
Shareholders and until their successors are elected;
3. To act upon the election of Arthur Andersen LLP as independent
public accountants for RBC for its 1998 fiscal year; and
4. To transact such other business as may properly come before the RBC
Meeting and any adjournment, postponement or continuation thereof.
<PAGE>
The RBC Board of Directors has fixed the close of business on May ____,
1998 as the record date for the determination of the RBC shareholders entitled
to notice of and to vote at the RBC Meeting. Approval of the Merger Agreement
will require the affirmative vote of a majority of the votes cast by the holders
of RBC Common Stock.
The RBC Board of Directors has carefully considered the terms of the
Merger Agreement and has unanimously concluded that such terms are fair and that
the proposed Merger is in the best interests of RBC and its shareholders.
Accordingly, the RBC Board of Directors unanimously recommends that the holders
of RBC Common Stock vote FOR the proposal to approve and adopt the Merger
Agreement.
By Order of the Board of Directors,
Robert B. Goldstein,
President and Chief Executive Officer
May ____, 1998
Philadelphia, Pennsylvania
<PAGE>
JOINT PROXY STATEMENT
REGENT BANCSHARES CORP.
AND
JEFFBANKS, INC.
PROSPECTUS
----------
1,144,074 Shares
JEFFBANKS, INC.
Common Stock
This Joint Proxy Statement/Prospectus ("Joint Proxy
Statement/Prospectus") is being furnished to shareholders of JeffBanks, Inc., a
Pennsylvania corporation ("JBI"), and shareholders of Regent Bancshares Corp., a
New Jersey corporation ("RBC"), as a proxy statement in connection with the
solicitation of proxies by the respective Boards of Directors of JBI and RBC for
use at the Special Meeting of Shareholders of JBI (including any adjournments,
postponements or continuations thereof, the "JBI Meeting") and the Annual
Meeting of Shareholders of RBC (including any adjournments, postponements or
continuations thereof, the "RBC Meeting" and, together with the JBI Meeting, the
"Meetings") to be held on June _____, 1998.
This Joint Proxy Statement/Prospectus relates to the proposed merger
(the "Merger") of a subsidiary of JBI with and into RBC, with RBC thereby
becoming a wholly-owned subsidiary of JBI pursuant to an Amended and Restated
Agreement and Plan of Merger, dated as of March 27, 1998 and effective as of
March 18, 1998 (the "Merger Agreement"). Immediately following the Merger, RBC
will be merged with and into JBI, with JBI being the surviving entity
(collectively with the Merger, the "Merger Transaction") and thereafter, Regent
National Bank ("Regent"), the wholly owned banking subsidiary of RBC, will be
merged with and into Jefferson Bank ("Jefferson"), the wholly owned Pennsylvania
banking subsidiary of JBI, with Jefferson being the surviving bank (the "Bank
Merger").
At the Meetings, shareholders will consider and vote on a proposal to
approve and adopt the Merger Agreement. Under the terms of the Merger Agreement,
at the effective date of the Merger (the "Merger Effective Date"), each
outstanding share of common stock of RBC ("RBC Common Stock") will be converted
into the right to receive 0.303 of a share (the "Exchange Ratio") of common
stock of JBI ("JBI Common Stock"), except that cash will be paid in lieu of
fractional shares of JBI Common Stock in an amount per fractional share equal to
the relevant fraction multiplied by the average of the closing prices for JBI
Common Stock on the Nasdaq National Market ("Nasdaq") for the 20 trading days
immediately preceding the Merger Effective Date (the "Index Price"). Each option
to purchase RBC Common Stock (an "RBC Option") will be converted into an option
(a "JBI Option") to purchase 0.303 of a share of JBI Common Stock for each share
of RBC Common Stock purchasable under the RBC Option, at an exercise price equal
to the exercise price of the RBC Option divided by 0.303. See "The Merger -
Merger Consideration" and "- Conversion of Shares; Procedures for Exchange of
Certificates; Fractional Shares." Based on (i) the 3,409,822 shares of RBC
Common Stock outstanding on the RBC
<PAGE>
Record Date (as hereinafter defined), (ii) the 366,000 shares of RBC Common
Stock issuable upon the exercise of RBC Options and (iii) the Exchange Ratio, a
maximum of 1,144,074 shares of JBI Common Stock are issuable as a result of the
Merger.
This Joint Proxy Statement/Prospectus also constitutes a prospectus of
JBI with respect to a maximum of 1,144,074 shares of JBI Common Stock issuable
to holders of RBC Common Stock, including persons who hold RBC Common Stock as a
result of exercising RBC Options before the Merger Effective Date, pursuant to
the Merger.
JBI Common Stock is traded on the Nasdaq National Market under the
symbol "JEFF." RBC Common Stock is on traded the Nasdaq SmallCap Market under
the symbol "RBNK." On March 18, 1998, the last business day prior to the public
announcement of the Merger, the last reported sales prices for JBI Common Stock
and RBC Common Stock were $49.00 and $14.00 per share, respectively. On June
_____, 1998, such prices were $______ and $_____ per share, respectively.
This Joint Proxy Statement/Prospectus also relates (i) with respect to
JBI, to a proposal to amend JBI's Articles of Incorporation to increase the
authorized number of shares of JBI Common Stock from 10,000,000 shares to
20,000,000 shares; and (ii) with respect to RBC, to the election of directors
and election of Arthur Andersen LLP as independent public accountants for RBC.
This Joint Proxy Statement/Prospectus, the accompanying Notice of
Special or Annual Meeting and the proxy card enclosed herewith are first being
mailed to shareholders of JBI and RBC on or about June ____, 1998. Holders of
JBI Common Stock and RBC Common Stock are not entitled to dissenters' appraisal
rights in connection with the proposals to be voted on at the Meetings. See "The
Merger - No Dissenters' Rights."
THE SHARES OF JBI COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK SUBSIDIARY OF JBI
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER FEDERAL OR
STATE GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is May____, 1998.
-2-
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Joint Proxy
Statement/Prospectus or incorporated by reference herein and, if given or made,
such information or representations must not be relied upon as having been
authorized by JBI or RBC. Neither the delivery of this Joint Proxy
Statement/Prospectus nor any distribution of the securities to which this Joint
Proxy Statement/Prospectus relates shall, under any circumstances, create any
implication that there has been no change in the affairs of JBI or RBC since the
date hereof or that the information contained or incorporated by reference
herein is correct as of any time subsequent to its date. This Joint Proxy
Statement/Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy any securities other than the securities to which it relates or
an offer to sell or a solicitation of an offer to buy such securities in any
circumstances in which such an offer or a solicitation is not lawful nor does it
constitute the solicitation of a proxy in any jurisdiction to or from any person
to or from whom it is unlawful to make such solicitation within such
jurisdiction.
AVAILABLE INFORMATION
JBI and RBC are each subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (including the rules and regulations
thereunder, the "Exchange Act"), and, accordingly, file reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information are
available for inspection and copying at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and at Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of
such documents may also be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, copies of such documents may be obtained
through the Commission's Internet address at http://www.sec.gov.
This Joint Proxy Statement/Prospectus incorporates certain documents by
reference which are not presented herein or delivered herewith. Copies of such
documents are available without charge (other than exhibits to such documents
that are not specifically incorporated by reference therein) to any person,
including any beneficial owner, to whom this Joint Proxy Statement/Prospectus is
delivered, upon written or oral request to JeffBanks, Inc., Investor
Relationships, 1845 Walnut Street, 10th Floor, Philadelphia, Pennsylvania 19103
(telephone number (215) 861-7000) as to JBI documents and from Regent Bancshares
Corp., 1430 Walnut Street, Philadelphia, Pennsylvania 19102 (telephone number
(215) 546-6500) as to RBC documents. In order to ensure timely delivery of such
documents, any such request should be made by ______________, 1998.
All information contained or incorporated by reference in this Joint
Proxy Statement/Prospectus with respect to JBI has been supplied by JBI, and all
information contained
-3-
<PAGE>
or incorporated by reference in this Joint Proxy Statement/Prospectus with
respect to RBC has been supplied by RBC.
JBI has filed with the Commission under the Securities Act of 1933, as
amended (including the rules and regulations thereunder, the "Securities Act"),
a Registration Statement on Form S-4 (No. 333-__________) (including all
amendments and exhibits thereto, the "Registration Statement") with respect to
the JBI Common Stock offered hereby. This Joint Proxy Statement/Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. The Registration Statement, including any amendments and
exhibits thereto, is available for inspection and copying as set forth above.
Statements contained in this Joint Proxy Statement/Prospectus as to the contents
of any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference.
INCORPORATION OF DOCUMENTS BY REFERENCE
Certain documents previously filed by JBI and RBC with the Commission
pursuant to the Exchange Act are hereby incorporated by reference in this Joint
Proxy Statement/Prospectus as follows:
JBI Documents
1. JBI's Annual Report on Form 10-K for the year ended December 31,
1997;
2. JBI's Current Report on Form 8-K dated March 18, 1998; and
3. The description of JBI's capital stock contained in JBI's
Registration Statement on Form 8-A and any amendment or report filed
for the purpose of updating such description.
RBC Documents
1. RBC's Annual Report on Form 10-K for the year ended December 31,
1997 ("RBC's 1997 Form 10-K Report"); and
2. RBC's Current Report on Form 8-K dated March 18, 1998.
A copy of RBC's 1997 Form 10-K Report accompanies this Joint Proxy
Statement/Prospectus.
All documents filed by JBI pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the JBI
Meeting are hereby incorporated by
-4-
<PAGE>
reference into this Joint Proxy Statement/Prospectus and shall be deemed to be a
part hereof from the date of filing of such documents.
Any statement contained herein, in any supplement hereto or in a
document incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Joint Proxy Statement/Prospectus to the extent that a statement
contained herein, in any supplement hereto or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement, this Joint Proxy Statement/Prospectus or any supplement
hereto.
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING INFORMATION
This Joint Proxy Statement/Prospectus (including information included
or incorporated by reference herein) contains certain forward-looking statements
with respect to the financial condition, results of operations, plans,
objectives, future performance and business of each of JBI and RBC, including
(i) statements relating to the cost savings estimated to result from the Merger,
(ii) statements relating to revenues estimated to result from the Merger, (iii)
statements preceded by, followed by or that include the words "believes,"
"expects," "anticipates," "estimates" or similar expressions. See "Summary,"
"Selected Pro Forma Combined Financial Information of JBI and RBC," "The Merger
- - Background of the Merger" "- Reasons for the Merger; Recommendations of the
Boards of Directors" and "- Opinion of Financial Advisor." These forward-looking
statements involve certain risks and uncertainties. Factors that may cause
actual results to differ materially from those contemplated by such
forward-looking statements include, among others, the following possibilities:
(a) expected cost savings from the Merger may not be fully realized or realized
within the expected time frame; (b) revenues following the Merger may be lower
than expected, or deposit attrition, operating costs or customer loss and
business disruption following the Merger may be greater than expected; (c)
competitive pressures among depository and other financial institutions may
increase significantly; (d) costs or difficulties related to the integration of
the businesses of JBI and RBC may be greater than expected; (e) changes in the
interest rate environment may reduce margins; (f) general economic or business
conditions, either nationally or in Pennsylvania and New Jersey, may be less
favorable than expected resulting in, among other things, a deterioration in
credit quality or a reduced demand for credit; (g) legislative or regulatory
changes may adversely affect the business in which JBI is engaged and (h)
changes may occur in the securities markets.
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<PAGE>
TABLE OF CONTENTS
Page
----
Available Information..........................
Incorporation of Documents by Reference........
Cautionary Statement Concerning
Forward-Looking Information..................
Summary........................................
The Merger...................................
The RBC Meeting..............................
The JBI Meeting..............................
Selected Financial Information.................
Selected Historical Financial
Information of JBI.........................
Selected Historical Financial Information
of RBC....................................
Selected Pro Forma Combined Financial
Information of JBI and RBC ...............
Certain Unaudited Pro Forma Per Share
Data.......................................
The Meetings...................................
Date, Time and Place.........................
Record Date for, and Voting at, the
Meetings ..................................
Proxies for the RBC Meeting..................
Proxies for the JBI Meeting..................
The Merger ....................................
General .....................................
Background of the Merger.....................
Reasons for the Merger; Recommendations
of the Boards of Directors.................
Market Price Information.....................
Terms of the Merger..........................
Conduct of Business Pending the Merger.......
Opinion of RBC Financial Advisor.............
Regulatory Approvals.........................
No Dissenters' Rights........................
Expenses.....................................
Interests of Certain Persons.................
Federal Income Tax Aspects...................
Accounting Treatment.........................
Exchange of Certificates and Options.........
Option Agreement.............................
JBI............................................
RBC............................................
General......................................
Recent Developments..........................
Regent.......................................
Competition..................................
Properties...................................
<PAGE>
Page
----
Legal Proceedings............................
Description of JBI Capital Stock...............
General......................................
Description of JBI Common Stock..............
Description of JBI Preferred Stock...........
Certain Anti-Takeover Provisions.............
Transfer Agent and Registrar.................
Comparison of Rights of Shareholders
of JBI and of RBC ..........................
Authorized Capital...........................
Issuance of Shares...........................
Nomination of Directors and Other Matters
to Be Placed on Annual Meeting Agenda......
Removal of Directors.........................
Size and Classification of Board of
Directors..................................
Shareholder Action...........................
Certain Anti-Takeover Provisions in
Articles and Bylaws........................
Inspection Rights............................
Dissenters' Appraisal Rights.................
Resale of JBI Common Stock.....................
Proposal to Increase Authorized
Capital Stock of JBI.........................
Election of Directors of RBC...................
Executive Officers...........................
The Board of Directors of RBC and
Its Committees.............................
RBC Executive Compensation.....................
Summary Compensation Table...................
Employment Agreements........................
Director Compensation........................
Report of the Compensation Committee
of RBC.....................................
Comparison of Total Return on
RBC Common Stock with Certain
Averages...................................
RBC's Relationship with Regent...............
Compensation Committee Interlocks and
Insider Participation......................
Certain Transactions of RBC....................
Beneficial Ownership of RBC Common
Stock........................................
Section 16(a) Beneficial Ownership
Reporting Compliance for RBC.................
-6-
<PAGE>
Page
----
Proposal to Elect Arthur Andersen LLP
as Independent Public Accountants of RBC
for 1998 Fiscal Year.........................
Experts........................................
Legal Opinions.................................
Other Business.................................
Shareholder Proposals..........................
Annex A - Merger Agreement..................... A-1
Annex B - Opinion of RBC Financial
Advisor......................... B-1
Annex C - Option Agreement..................... C-1
-7-
<PAGE>
SUMMARY
The following summary is not intended to be a summary of all material
information relating to the Merger and is qualified in its entirety by reference
to the more detailed information contained elsewhere in this Joint Proxy
Statement/Prospectus, including the Annexes hereto and the documents
incorporated herein by reference. A copy of the Merger Agreement is set forth in
Annex A to this Joint Proxy Statement/Prospectus and reference is made thereto
for a complete description of the terms of the Merger. Shareholders are urged to
read carefully this Joint Proxy Statement/Prospectus, including the Annexes
hereto, in its entirety.
The Merger
Parties to the Merger
RBC. RBC is a one bank holding company incorporated under New Jersey
law on November 2, 1987 and registered under the Bank Holding Company Act of
1956, as amended (the "Holding Company Act"). RBC became a bank holding company
on June 2, 1989 when it completed the acquisition of all of the authorized
capital stock of Regent, RBC's only subsidiary and through which it provides
banking services in Philadelphia, Pennsylvania. As of December 31, 1997, RBC
had, on a consolidated basis, total assets of $225.6 million, total deposits of
$152.0 million and total shareholders' equity of $18.1 million. The principal
executive offices of RBC are located at 1430 Walnut Street, Philadelphia,
Pennsylvania 19102, and its telephone number is (215) 546-6500.
JBI. JBI is a bank holding company incorporated under Pennsylvania law
on May 26, 1981 and registered under the Holding Company Act. JBI owns as its
principal assets Jefferson and Jefferson Bank of New Jersey ("Jefferson NJ")
through which it provides a wide range of commercial and retail banking services
at 31 branches in Philadelphia and its immediate Pennsylvania and New Jersey
suburbs. As of December 31, 1997, JBI had, on a consolidated basis, total assets
of $1.3 billion, total deposits of $933.6 million and shareholders' equity of
$102.9 million. The principal executive offices of JBI are located at 1845
Walnut Street, 10th Floor, Philadelphia, Pennsylvania 19103, and its telephone
number is (215) 861-7000. JBI Merger Sub is a wholly-owned subsidiary of JBI,
newly-formed for the purposes of effectuating the Merger.
The Merger; Exchange Ratio
Under the terms of the Merger Agreement, JBI Merger Sub will merge with
and into RBC, resulting in RBC becoming a wholly owned subsidiary of JBI.
Immediately following the Merger, JBI will cause RBC to be merged into JBI (with
JBI being the surviving corporation). After the Merger Transaction, JBI will
cause the merger of Regent with and into Jefferson (with Jefferson being the
surviving bank). At the Merger Effective Date, each outstanding share of RBC
Common Stock will be converted into the right to receive 0.303 of a share of JBI
Common
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<PAGE>
Stock. Outstanding RBC Options to purchase RBC Common Stock will be converted
into JBI Options to purchase 0.303 of a share of JBI Common Stock for each share
of RBC Common Stock purchasable under the RBC Options at an exercise price equal
to the exercise price of the RBC Option divided by 0.303. See "Comparison of
Rights of Shareholders of JBI and of RBC."
Recommendation of the Boards of Directors of JBI and RBC
The Board of Directors of each of JBI and RBC approved the Merger
Agreement by unanimous vote. The Board of Directors of each of JBI and RBC
believes that the Merger Agreement is in the best interests of its respective
shareholders, and recommends that its shareholders vote FOR the approval and
adoption of the Merger Agreement.
Opinion of RBC Financial Advisor
The Board of Directors of RBC (the "RBC Board of Directors") has
retained Keefe, Bruyette & Woods, Inc. ("KBW") as its financial advisor to
review the fairness of the Exchange Ratio to the holders of RBC Common Stock
from a financial point of view. In its letter dated as of ________________,
1998, KBW has advised the RBC Board of Directors that, in its opinion, the
Exchange Ratio is fair to holders of RBC Common Stock from a financial point of
view. The full text of the form of KBW's opinion describing the procedures
followed, assumptions made and limitations on the review undertaken is set forth
in Annex B to this Joint Proxy Statement/Prospectus and should be read in its
entirety. For further information regarding KBW's opinion and a discussion of
its qualifications and the method of its selection, see "The Merger - Opinion of
RBC Financial Advisor."
Interests of Certain Persons
Certain directors and executive officers of RBC have interests in the
Merger in addition to interests they may have as RBC shareholders. As a result
of the Merger, Robert B. Goldstein and John W. Rose will become directors of
JBI, and Mr. Goldstein, O. Francis Biondi and Barbara H. Teaford will become
directors of Jefferson. Mr. Goldstein will become a Vice chairman of JBI, and
President and Chief Operating Officer of Jefferson and Ms. Teaford will become
an officer of Jefferson. Mr. Goldstein will enter into an employment agreement
with JBI and Jefferson. RBC Options held by directors and officers of RBC will
be converted into JBI Options. See "The Merger - Interests of Certain Persons."
Federal Income Tax Aspects of the Merger
Consummation of the Merger Transaction is conditioned upon the receipt
by JBI and RBC of opinions of counsel to the effect that the Merger Transaction
will constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). If the Merger
Transaction constitutes such a reorganization, no gain or loss will be
recognized by RBC or JBI in the Merger Transaction and no gain or loss will be
recognized by the shareholders of RBC upon the receipt of JBI Common Stock in
exchange for RBC Common
-9-
<PAGE>
Stock, except with respect to any cash received in lieu of fractional shares.
For a more complete discussion, see "The Merger - Federal Income Tax Aspects."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER TRANSACTION MAY VARY
DEPENDING UPON THE PARTICULAR CIRCUMSTANCES OF EACH RBC SHAREHOLDER, IT IS
RECOMMENDED THAT RBC SHAREHOLDERS CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
FEDERAL (AND ANY STATE, LOCAL AND FOREIGN) TAX CONSEQUENCES OF THE MERGER
TRANSACTION IN THEIR PARTICULAR CIRCUMSTANCES.
Effective Date of the Merger
Subject to the terms and conditions set forth in the Merger Agreement,
the Merger Effective Date will occur upon the filing of articles of merger with
the Pennsylvania Department of State and the New Jersey Secretary of State. The
presentation of the articles of merger for acceptance and filing is subject to
the rights of the Boards of Directors of RBC and JBI to terminate the Merger.
See "The Merger - Terms of the Merger - Effective Date; Conditions to
Consummation; Termination."
Conditions to Consummation; Termination
The consummation of the Merger is subject, among other things, to
receipt of required regulatory approvals and the expiration of any statutory
waiting periods. Applications either have been made or are expected to be filed
in the near future to obtain required regulatory approvals. No assurance can be
given that all required approvals will be received or as to the timing or
conditions thereof.
Consummation of the Merger is also subject to there not having occurred
any event which, either by itself or in the aggregate with other events, is
reasonably likely to have a "material adverse effect" on RBC. As used in the
Merger Agreement, a "material adverse effect" means one or more events,
occurrences or circumstances which, determined as provided in the Merger
Agreement, result in a decrease in the shareholders' equity account of RBC
(determined in accordance with generally accepted accounting principles) equal
to or greater than $600,000, as measured from the shareholders' equity account
set forth in RBC's 1997 Form 10-K Report.
The Merger Agreement may be terminated by mutual agreement of the
Boards of Directors of RBC and JBI. The Merger Agreement may also be terminated
by the Board of Directors of either JBI or RBC if, among other things, the
Merger does not occur on or before September 30, 1998. In addition, the Merger
Agreement may be terminated (i) by JBI if the RBC Board of Directors withdraws
or modifies its recommendation or approval of the Merger in a manner adverse to
JBI or approves or recommends a proposal other than by JBI in respect of any
merger, consolidation or other business combination involving RBC or its
subsidiaries or the acquisition of all or substantially all of their assets (an
"Acquisition Transaction"), (ii) by RBC, if the JBI Board of Directors withdraws
or modifies its recommendation or approval of the
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<PAGE>
Merger in a manner adverse to RBC or (iii) by either JBI or RBC if there is an
uncured material breach by the other of its covenants and agreements in the
Merger Agreement. In the event of a termination pursuant to (i), (ii) or (iii),
the terminating party will receive a payment of $1.5 million from the other
party.
See "The Merger - Terms of the Merger - Effective Date; Conditions to
Consummation; Termination" and "- Regulatory Approvals".
Accounting Treatment
The Merger is expected to be accounted for as a pooling of interests
for financial reporting purposes. See "The Merger - Accounting Treatment." It is
a condition to the consummation of the Merger that JBI and RBC shall each have
received a letter from its respective independent accountants confirming that
such firm is not aware of any facts and circumstances which might cause the
Merger not to qualify for pooling of interests accounting treatment for
financial reporting purposes.
Comparison of Shareholders' Rights
Holders of RBC Common Stock will become holders of JBI Common Stock as
a result of the Merger. There are certain significant differences in the rights
of the holders of RBC Common Stock and JBI Common Stock, primarily with respect
to actions which may be taken by shareholders and with respect to certain
anti-takeover provisions. For a more detailed discussion of relative rights and
preferences, see "Comparison of Rights of Shareholders of JBI and of RBC."
Exchange of Share Certificates and Options
After the Merger Effective Date, JBI will send to RBC shareholders
transmittal materials for use in exchanging their RBC Common Stock certificates
for JBI Common Stock certificates and for effecting the exchange of their RBC
Options for JBI Options. See "The Merger - Exchange of Certificates and
Options."
Resale of JBI Common Stock; Nasdaq Market
The shares of JBI Common Stock issuable in connection with the Merger
will be freely transferable, except for shares held by persons who may be deemed
to be "affiliates" (generally including directors, certain executive officers
and certain major shareholders) of RBC under applicable federal securities laws.
See "Resale of JBI Common Stock."
The JBI Common Stock issuable in connection with the Merger has been
approved for quotation on Nasdaq. JBI Common Stock is currently traded on Nasdaq
under the symbol "JEFF."
-11-
<PAGE>
No Dissenters' Rights
Holders of JBI Common Stock and RBC Common Stock are not entitled to
dissenters' appraisal rights in connection with the proposals to be voted on at
the respective Meetings. See "The Merger - No Dissenters' Rights" and
"Comparison of Rights of Shareholders of JBI and of RBC - Dissenters' Appraisal
Rights."
Option Agreement
As an inducement and condition to JBI's willingness to enter into the
Merger Agreement, RBC (as issuer) entered into an Amended and Restated Stock
Option Agreement with JBI (as grantee), dated March 27, 1998 and effective as of
March 18, 1998 (the "Option Agreement"). Under the Option Agreement, RBC granted
to JBI an irrevocable option, exercisable only under certain limited
circumstances (none of which, to the best of RBC's and JBI's knowledge, has
occurred as of the date hereof) to purchase up to 19.9% of the authorized but
unissued shares of RBC Common Stock for a purchase price of $14.39 per share,
subject to adjustment in certain circumstances. The purchase of any shares of
RBC Common Stock pursuant to the Option Agreement is subject to compliance with
applicable law, including receipt of any necessary approvals under the Holding
Company Act. The Option Agreement is intended to increase the likelihood that
the Merger will be consummated on the terms set forth in the Merger Agreement,
and may be expected to discourage offers by third parties to acquire RBC prior
to the Merger.
In the event that either the RBC shareholders or the JBI shareholders
fail to approve the Merger Agreement, either JBI or RBC may terminate the Merger
Agreement. See "The Merger Terms of the Merger - Effective Date; Conditions to
Consummation; Termination." If such termination occurs prior to the occurrence
of an Initial Triggering Event or a Subsequent Triggering Event (as such terms
are defined in the Option Agreement), the Option Agreement will automatically
terminate. If a Subsequent Triggering Event occurs under the Option Agreement
prior to its termination, however, JBI will be entitled to exercise its option
in accordance with its terms.
For a more complete description of the Option Agreement, see "The
Merger - Option Agreement."
The RBC Meeting
General
The Annual Meeting of the holders of RBC Common Stock will be held at
10:00 a.m., local time, on June _____, 1998, at The Union League of
Philadelphia, Philadelphia, Pennsylvania for the following purposes: (i) to
adopt and approve the Merger Agreement; (ii) to elect five directors to serve
until the 1999 Annual Meeting of Shareholders of RBC and until their successors
are elected and (iii) to act upon the election of Arthur Andersen LLP as
independent public accountants of RBC for its 1998 fiscal year. The RBC Board of
Directors
-12-
<PAGE>
has fixed May ___, 1998 as the record date (the "RBC Record Date") for
shareholders entitled to receive notice of, and to vote at, the RBC Meeting.
Required Vote
Approval of the Merger Agreement requires the affirmative vote of a
majority of the votes cast either in person or by proxy provided a quorum (a
majority of RBC's outstanding shares) is present. As of the RBC Record Date,
there were 3,409,822 shares of RBC Common Stock outstanding and entitled to vote
on the matters to be considered at the RBC Meeting. Each share of RBC Common
Stock is entitled to one vote at the RBC Meeting. Abstentions and broker
non-votes will be counted as being present for purposes of determining a quorum
at the RBC Meeting. Abstentions (and broker non-votes) will have no effect on
the approval and adoption of the Merger Agreement, the election of directors or
the election of Arthur Andersen LLP.
Directors and executive officers of RBC, and their affiliates, held
734,751 shares of RBC Common Stock (excluding 109,165 shares issuable upon
exercise of outstanding and currently exercisable RBC Options), constituting
21.5% of the outstanding shares of RBC Common Stock as of the RBC Record Date.
Pursuant to the provisions of the Merger Agreement, RBC has undertaken to use
its best efforts to obtain from such persons irrevocable proxies in favor of
approval and adoption of the Merger Agreement. No director or executive officer
of JBI or Jefferson holds shares of RBC Common Stock.
The JBI Meeting
General
The JBI Meeting will be on held June ____, 1998, at 9:30 a.m. local
time, at 1845 Walnut Street, 10th Floor, Philadelphia, Pennsylvania for the
following purposes: (i) to consider and vote on the proposal to approve and
adopt the Merger Agreement and (ii) to consider and vote upon the proposal to
amend JBI's Articles of Incorporation to increase the aggregate number of
authorized shares of JBI Common Stock from 10,000,000 shares to 20,000,000
shares. The Board of Directors of JBI (the "JBI Board of Directors") has fixed
May ___, 1998 as the record date (the "JBI Record Date") for JBI shareholders
entitled to receive notice of, and to vote at, the JBI Meeting.
Required Vote
Approval and adoption of both the Merger Agreement and the amendment to
JBI's Articles of Incorporation to increase in the authorized number of shares
of JBI Common Stock requires the affirmative vote of a majority of the total
votes cast either in person or by proxy, provided a quorum (a majority of JBI's
outstanding shares) is present. As of the JBI Record Date, there were 5,052,489
shares of JBI Common Stock outstanding and entitled to vote on the matters to be
considered at the JBI Meeting. Each share of JBI Common Stock is entitled to one
vote at the JBI Meeting. Abstentions and broker non-votes will be counted as
being present for
-13-
<PAGE>
purposes of determining a quorum at the JBI Meeting. Abstentions (and broker
non-votes) will have no effect on the approval and adoption of the Merger
Agreement or the amendment of JBI's Articles of Incorporation.
Directors and executive officers of JBI, and their affiliates, held
1,137,773 shares of JBI Common Stock (excluding 382,683 shares issuable upon
exercise of outstanding stock options), constituting 22.5% of outstanding shares
of JBI Common Stock as of the JBI Record Date. Each JBI director and executive
officer has indicated his or her present intent to vote his or her shares of JBI
Common Stock in favor of approval and adoption of the Merger Agreement and the
amendment of JBI's Articles of Incorporation. No director or executive officer
of RBC or Regent holds any shares of JBI Common Stock, except that Mr. Goldstein
owns 3,110 shares of JBI Common Stock.
SELECTED FINANCIAL INFORMATION
The following tables set forth selected unaudited historical financial
information for JBI and RBC for each of the five years in the period ended
December 31, 1997. Such information has been derived from and should be read in
conjunction with the audited consolidated financial statements of JBI and RBC,
and the respective notes thereto, and the management's discussion and analysis
of financial condition and results of operations of each of JBI and RBC, which
are incorporated by reference in this Joint Proxy Statement/Prospectus (see
"Incorporation of Documents by Reference").
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<PAGE>
Selected Historical Financial Information of JBI
<TABLE>
<CAPTION>
As of and for the Years Ended December 31,
--------------------------------------------------
1997 1996(1) 1995(1) 1994(1) 1993(1)
---- ---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Interest income........................ $94,136 $85,204 $74,276 $54,462 $46,832
Interest expense....................... 45,140 39,079 33,049 20,583 19,252
------- ------- ------- ------- -------
Net interest income.................... 48,996 46,125 41,227 33,879 27,580
Provision for credit losses............ 3,600 5,023 3,986 1,857 2,519
------- ------- ------- ------- -------
Net interest income after provision
for credit losses..................... 45,396 41,102 37,241 32,022 25,061
Non-interest income(2)(3).............. 9,649 7,305 6,969 5,814 5,879
Non-interest expense................... 36,607 35,817 31,160 26,978 23,365
------- ------- ------- ------- -------
Income before income taxes,
dividends on preferred stock, minority
interest and cumulative effect of
accounting change..................... 18,438 12,590 13,050 10,858 7,575
Income taxes(4)........................ 6,001 4,640 4,571 3,593 2,307
------- ------- ------- ------- -------
Income before dividends on preferred
stock, minority interest and
cumulative effect of accounting
change................................ 12,437 7,950 8,479 7,265 5,268
Dividends on preferred stock of
subsidiary............................ -- -- 1,125 1,313 789
Minority interest in net income of
subsidiaries.......................... -- -- -- -- 1,191
------- ------- ------- ------ -------
Income before cumulative effect
of accounting change.................. 12,437 7,950 7,354 5,952 3,288
Cumulative effect of change in
accounting for income taxes(4)........ - - - - 485
------- ------- ------- ------- ------
Net income applicable to common
stock................................. $12,437 $ 7,950 $ 7,354 $ 5,952 $ 3,773
======= ======= ======= ======= =======
Per Common Share Data:
Net income - basic(5).................. $2.50 $1.63 $1.87 $1.72 $1.50
Net income - diluted(5)................ 2.33 1.54 1.63 1.57 1.33
Book value............................. 20.57 18.43 17.42 16.49 15.81
Book value - diluted(6)................ 18.77 17.41 16.54 15.28 14.57
Balance Sheet Data:
Total assets........................... $1,328,624$1,127,174 $1,069,692 $863,230 $740,706
Total loans(7)......................... 909,725 829,587 774,491 634,472 533,987
Allowance for credit losses............ (12,769) (13,734) (14,991) (8,986) (6,867)
Investment securities(8)............... 244,169 175,238 163,572 97,108 110,415
Goodwill, net.......................... 4,435 8,776 8,978 809 135
Deposits............................... 933,630 787,139 840,516 710,669 631,091
Securities sold under repurchase
agreements............................ 70,911 73,764 46,549 16,229 16,211
FHLB advances.......................... 150,000 127,750 77,000 43,745 10,774
Subordinated notes and debentures...... 32,000 32,000 9,000 9,000 9,000
Trust preferred securities............. 25,300 -- -- -- --
Minority interest...................... -- -- -- -- 437
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
As of and for the Years Ended December 31,
--------------------------------------------------
1997 1996(1) 1995(1) 1994(1) 1993(1)
---- ---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Convertible preferred stock and
related surplus....................... $ - $ - $ - $12,835 $12,845
Common shareholders' equity............ 102,855 91,281 85,038 62,330 53,054
Selected Operating Ratios:
Return on average assets............... 1.04% .74% .92% .96% .87%
Return on average common equity........ 12.89 8.95 10.74 10.73 10.76
Net interest margin.................... 4.51 4.59 4.82 4.83 4.45
Dividend payout ratio.................. 26.71 30.15 22.05 16.63 --
Selected Capital and Asset Quality
Ratios:
Equity/Assets.......................... 7.74% 8.10% 7.95% 8.71% 8.90%
Non-performing loans/total loans(9).... 1.03 1.36 1.69 1.83 1.56
Non-performing assets/total loans
and other real estate owned(10)....... 1.27 1.78 2.23 2.76 2.64
Allowance for credit losses/total
loans................................. 1.40 1.66 1.93 1.42 1.29
Allowance for credit losses/
non-performing assets(10)............. 110.12 92.76 86.22 50.77 48.15
Net charge-offs/average loans.......... .53 .79 .58 .50 .42
</TABLE>
- -------------------
(1) All acquisitions through December 31, 1996 have been accounted for under
the purchase method of accounting and, accordingly, the results of these
entities' operations are included from their respective dates of
acquisition. The 1997 acquisition of United Valley Bank was accounted for
under the pooling of interests method of accounting and, accordingly, the
financial statements have been restated to reflect the impact of such
acquisition.
(2) Includes gain on sale of securities of $515,000 in 1997, $245,000 in 1996,
$333,000 in 1995, $128,000 in 1994 and $376,000 in 1993.
(3) Effective October 1, 1995, JBI adopted SFAS No. 122, "Accounting for
Mortgage Servicing Rights." Income resulting from the capitalization of
mortgage servicing rights required by that pronouncement was $554,000 in
1997, $279,000 in 1996 and $72,000 in 1995.
(4) Effective January 1, 1993, JBI adopted SFAS No. 109, "Accounting for Income
Taxes." As a result of adopting SFAS 109 in 1993, JBI recognized a
cumulative benefit of $485,000, or $.22 and $.15 in basic and diluted
earnings per share, respectively.
(5) Effective January 1, 1997, JBI adopted the provisions of SFAS No. 128,
"Earnings Per Share" which eliminates primary and fully diluted earnings
per share and requires presentation of basic and diluted earnings per share
in conjunction with the disclosure of the methodology used in computing
such earnings per share. Net income per share calculations for prior
periods have been restated to reflect the adoption of SFAS No. 128. Basic
net income per share is based upon the respective weighted average number
of shares of JBI Common Stock outstanding, as follows: 4,967,000 (1997);
4,882,000 (1996); 3,936,000 (1995); 3,460,000 (1994) and 2,166,000 (1993).
Diluted net income per share in all years presented gives effect to the
dilution resulting from stock options granted by JBI or acquired companies.
Diluted
-16-
<PAGE>
net income per share in 1995, 1994 and 1993 gives effect to the increase in
average number of shares that would have been outstanding, and the increase
in net income applicable to JBI Common Stock that would have resulted from
the assumed conversion of JBI's dilutive preferred stock. Per share amounts
in all years have been adjusted to reflect retroactively prior stock
dividends.
(6) Diluted book values give effect to the dilution resulting from stock
options granted by JBI or acquired companies. Diluted book values in 1994
and 1993 give effect to the increase in average shares that would have been
outstanding, and the increase in common equity that would have resulted
from the assumed conversion of JBI's dilutive convertible preferred stock.
(7) Includes mortgage loans held for sale of $3.0 million (1997), $725,000
(1996), $484,000 (1995), $380,000 (1994) and $19.0 million (1993).
(8) Effective January 1, 1994, JBI adopted SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities." The adoption had no effect on
JBI's financial position or results of operations.
(9) Non-performing loans consist of non-accrual loans and renegotiated loans
and exclude loans past due 90 days or more still accruing interest.
Effective January 1, 1995, JBI adopted SFAS No. 114 "Accounting for
Impairment of a Loan," as amended by SFAS No. 118 "Accounting by Creditors
for Impairment of a Loan - Income Recognition and Disclosures." The effect
of adoption was not material to JBI's financial position or results of
operations.
(10) Non-performing assets consist of non-accrual loans, renegotiated loans and
other real estate owned and exclude loans past due 90 days or more still
accruing interest.
-17-
<PAGE>
Selected Historical Financial Information of RBC
<TABLE>
<CAPTION>
As of and for the Years Ended December 31,
------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Interest income........................ $16,260 $21,519 $21,160 $17,165 $15,112
Interest expense....................... 10,231 12,461 12,553 11,373 9,921
------- ------- ------- ------- -------
Net interest income.................... 6,029 9,058 8,607 5,792 5,191
Provision for credit losses............ 100 5,092 4,905 860 450
------- ------- ------- ------- -------
Net interest income after provision
for credit losses..................... 5,929 3,966 3,702 4,932 4,741
Non-interest income(1)(2).............. 811 212 104 202 156
Non-interest expense................... 7,123 7,224 7,396 4,372 3,113
------- ------- ------- ------- -------
Income (loss) before income taxes...... (383) (3,046) (3,590) 762 1,784
Income tax expense (benefit)(3)........ (1,375) (350) (463) 259 607
------- ------- ------- ------- -------
Net income (loss)...................... 992 (2,696) (3,127) 503 1,177
Dividends on preferred stock........... 467 142 487 287 516
Net income (loss) applicable to
common stock......................... $ 525 $(2,838) $(3,614) $ 216 $ 661
======= ======= ======= ======= =======
Per Common Share Data:
Net income (loss) - basic(4)........... $0.26 $(2.66) $(3.80) $0.24 $0.76
Book value............................. 5.32 6.58 10.31 13.14 14.72
Book value - diluted(5)................ 5.21 4.58 6.55 7.98 8.88
Balance Sheet Data:
Total assets........................... $225,618 $201,904 $262,512 $243,450 $243,945
Total loans(6)......................... 95,051 85,069 118,784 81,248 72,944
Allowance for credit losses............ (1,367) (3,060) (6,501) (1,713) (1,321)
Investment securities(7)............... 121,014 105,553 138,722 156,664 156,166
Deposits............................... 151,997 185,126 196,132 161,061 192,393
FHLB advances.......................... 48,193 203 43,655 63,037 34,105
Subordinated debentures................ 2,750 2,750 2,750 2,750 2,550
Convertible preferred stock and
related surplus....................... - 55 58 60 59
Common shareholders' equity............ $ 18,143 $ 8,078 $ 10,295 $12,145 $13,067
Selected Operating Ratios:
Return on average assets............... .48% (1.26)% (1.10)% .20% .55%
Return on average common equity........ 6.84 (22.94) (27.22) 3.89 10.33
Net interest margin.................... 3.00 3.76 3.56 2.37 2.49
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
As of and for the Years Ended December 31,
------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Selected Capital and Asset Quality
Ratios:
Equity/Assets.......................... 7.01% 4.03% 5.50% 5.14% 5.88%
Non-performing loans/total loans(8).... .52 4.51 6.79 4.54 2.91
Non-performing assets/total loans
and other real estate owned(9)........ .55 5.29 6.79 4.54 2.91
Allowance for credit losses/total
loans(10)............................. 1.44 3.60 5.47 2.10 1.84
Allowance for credit losses/
non-performing assets(9).............. 259.89 67.45 80.58 46.49 62.22
Net charge-offs/average loans(11)(12).. 2.22 .90 .13 .60 .37
</TABLE>
- -----------------
(1) Includes gain on sale of securities of $72,000 in 1997, $5,000 in 1996, $0
in 1995, $0 in 1994 and $0 in 1993.
(2) Includes a gain of $711,000 in 1997 for the sale of loans and
participations in conjunction with the Carnegie Bank settlement.
(3) Effective January 1, 1993, RBC adopted SFAS No. 109, "Accounting for Income
Taxes." The cumulative effect of adopting this change was not material.
(4) Effective January 1, 1997, RBC adopted the provisions of SFAS No. 128,
"Earnings Per Share" which eliminates primary and fully diluted earnings
per share and requires presentation of basic and diluted earnings per share
in conjunction with the disclosure of the methodology used in computing
such earnings per share. Net income per share calculations for prior
periods have been restated to reflect the adoption of SFAS No. 128. Basic
net income per share is based upon the respective weighted average number
of shares of RBC Common Stock outstanding, as follows: 2,005,331 (1997);
1,068,523 (1996); 952,193 (1995); 900,272 (1994) and 867,244 (1993). The
conversion of the preferred stock and the impact of stock options for RBC
are anti-dilutive, therefore, net income (loss) per share - diluted is not
presented.
(5) Diluted book values in 1997 give effect to the dilution resulting from
stock options granted by RBC. Diluted book values in 1996, 1995, 1994, and
1993 give effect to the increase in average shares that would have been
outstanding, and the increase in common equity that would have resulted
from the assumed conversion of RBC's dilutive convertible preferred stock.
(6) Includes mortgage loans held for sale of $0 (1997), $0 (1996), $12.9
million (1995), $5.4 million (1994) and $22.7 million (1993).
(7) Effective January 1, 1994, RBC adopted SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities." The adoption had no effect on
RBC's financial position or results of operations.
(8) Non-performing loans consist of non-accrual loans and renegotiated loans
and exclude loans past due 90 days or more still accruing interest.
Effective January 1, 1995, RBC adopted SFAS No. 114 "Accounting for
Impairment of a Loan," as amended by SFAS No. 118 "Accounting by Creditors
for Impairment of a Loan - Income Recognition and Disclosures." The effect
of adoption was not material to RBC's financial position or results of
operations.
-19-
<PAGE>
(9) Non-performing assets consist of non-accrual loans, renegotiated loans and
other real estate owned and exclude loans past due 90 days or more still
accruing interest.
(10) The 1995 ratio includes $4.5 million of the allowance for possible loan
losses allocated to RBC's automobile insurance premium finance ("IPF") loan
portfolio in the numerator and $16.8 million of IPF receivables in the
denominator; excluding IPF related losses and receivables, the ratio of the
allowance for possible loan losses as a percentage of period-end loans and
loans held for sale was 1.96% at year end 1995.
(11) The 1997 ratio includes charge-offs of $1.9 million associated with a loan
sale in the second quarter of 1997; excluding such charge, there would have
been a net recovery of .13%.
(12) The 1996 ratio excludes IPF net charge-offs.
-20-
<PAGE>
Selected Pro Forma Combined Financial Information of JBI and RBC
The following table sets forth selected unaudited pro forma combined
financial information giving effect to the Merger under the pooling of interests
method of accounting as if it had occurred on December 31, 1997 (with respect to
balance sheet data) and as of the beginning of such period (with respect to
operating data). For a description of the pooling of interests method of
accounting with respect to the Merger, see "The Merger - Accounting Treatment."
The unaudited pro forma combined condensed financial statements do not give
effect to anticipated cost savings in connection with the Merger (see "The
Merger - Reasons for the Merger; Recommendation of the Boards of Directors"),
and do not purport to be indicative of the combined financial position or
results of operations of future periods or indicative of the results that
actually would have been realized had the entities been a single entity during
these periods.
-21-
<PAGE>
Pro Forma Combined Condensed Balance Sheet
December 31, 1997
(unaudited)
<TABLE>
<CAPTION>
JBI Regent
(Historical) (Historical) Adjustments Pro Forma
------------ ------------ ----------- ---------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Assets:
Cash and due from banks........................ $ 49,623 $ 2,343 $ 51,966
Federal funds sold............................. 92,200 3,036 95,236
Investment securities available for sale....... 243,487 121,014 364,501
Investment securities held to maturity......... 682 - 682
Mortgages held for sale........................ 2,959 - 2,959
Loans, net..................................... 893,997 93,684 987,681
Premises and equipment, net.................... 18,420 529 18,949
Accrued interest receivable.................... 7,518 1,402 8,920
Other real estate owned........................ 2,235 - 2,235
Goodwill....................................... 4,435 - 4,435
Other assets................................... 13,068 3,610 16,678
----------- --------- -----------
Total assets................................ $1,328,624 $225,618 $1,554,242
========== ======== ==========
Liabilities:
Deposits....................................... $ 933,630 $151,997 $1,085,627
Securities sold under repurchase
agreements................................... 70,911 - 70,911
FHLB advances.................................. 150,000 48,193 198,193
Subordinated notes and debentures.............. 32,000 2,750 34,750
Guaranteed preferred beneficial interest
in the Company's subordinated debt........... 25,300 - 25,300
Accrued interest payable....................... 11,352 4,383 15,735
Other liabilities.............................. 2,576 152 2,728
------------ ---------- -----------
Total liabilities........................... 1,225,769 207,475 1,433,244
---------- -------- ----------
Shareholders' Equity:
Common stock................................... 5,001 341 (341)(1) 6,034
1,033 (1)
Additional paid in capital..................... 71,101 23,698 (692)(1) 94,107
Retained earnings (accumulated deficit)........ 25,127 (5,524) 19,603
Net unrealized gain (loss) on securities
available for sale............................ 1,626 (372) 1,254
------------ ----------- ------------
Total shareholders' equity.................. 102,855 18,143 120,998
----------- --------- -----------
Total liabilities and shareholders' equity.. $1,328,624 $225,618 $1,554,242
========== ======== ==========
</TABLE>
(1) Historical and pro forma common stock outstanding as of December 31, 1997
were as follows:
<TABLE>
<CAPTION>
JBI RBC Adjustments Pro Forma
--------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
JBI Common stock (historical)...... 5,001,430 5,001,430
RBC Common stock (historical)...... 3,409,222 (3,409,222)
RBC Common Stock outstanding.....
times Exchange Ratio............. 0.303 1,032,994 1,032,994
----- --------- --------- ---------- ---------
Total.............................. 6,034,424
=========
</TABLE>
-22-
<PAGE>
Pro Forma Combined Condensed Income Statement
Year Ended December 31, 1997
(unaudited)
<TABLE>
<CAPTION>
JBI RBC
(Historical) (Historical) Adjustments(1) Pro Forma
------------ ------------ -------------- ---------
(In thousands, except per share data)
<S> <C> <C> <C>
Interest income................................ $94,136 $16,260 $110,396
Interest expense............................... 45,140 10,231 55,371
------ ------ ------
Net interest income............................ 48,996 6,029 55,025
Provision for credit losses.................... 3,600 100 3,700
------ ----- ------
Net interest income after provision
for credit losses............................ 45,396 5,929 51,325
Non-interest income............................ 9,649 811 10,460
Non-interest expense........................... 36,607 7,123 43,730
------ ------ ------
Income (loss) before income taxes benefit...... 18,438 (383) 18,055
Income taxes (benefit)......................... 6,001 (1,375) (1,317)(2) 5,943
------ ------ ------ ------
Net income .................................... 12,437 992 (1,317) 12,112
Dividends on preferred stock................... -- 467 467
------ ----- ------- -------
Net income applicable to common stock.......... $12,437 $ 525 (1,317) $11,645
======= ======= ====== =======
Per share data:
Net income per common share - basic.......... $2.50 $0.26 $2.09
Average number of common shares - basic...... 4,967,373 2,005,331 5,574,988
Net income per common share - diluted........ $2.33 -- (3) $1.98
Average number of common shares - diluted.... 5,333,415 -- (3) 6,128,063
</TABLE>
- -------------------
(1) No pro forma adjustment was made for estimated merger expenses because they
are not considered material. Such expenses are estimated to be
approximately $375,000.
(2) The valuation allowances that existed as of December 31, 1996 and 1995 are
not needed on a combined pro forma basis. JBI files a consolidated federal
tax return with its subsidiaries, and therefore any losses sustained by RBC
would be offset by profits of JBI and its other subsidiaries and no
valuation allowance would be required as of December 31, 1996 and 1995 had
the companies always been combined. Accordingly, the pro forma financial
combined condensed statements include a pro forma adjustment to reflect
what the changes to the valuation allowance would have been had the
companies always been combined. The pro forma adjustment to income taxes
(benefit) is a reversal of the federal and state portions of the tax
provision and benefits described above.
(3) The conversion of the convertible preferred stock and stock options for RBC
are anti-dilutive, therefore, net income per common share - diluted is not
presented.
-23-
<PAGE>
Pro Forma Combined Condensed Income Statement
For Year Ended December 31, 1996
(unaudited)
<TABLE>
<CAPTION>
JBI RBC
(Historical) (Historical) Adjustments(1) Pro Forma
------------ ------------ -------------- ---------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Interest income................................ $85,204 $21,519 $106,723
Interest expense............................... 39,079 12,461 51,540
------ ------ --------
Net interest income............................ 46,125 9,058 55,183
Provision for credit losses.................... 5,023 5,092 10,115
------ ------ --------
Net interest income after provision
for credit losses............................ 41,102 3,966 45,068
Non-interest income............................ 7,305 212 7,517
Non-interest expense........................... 35,817 7,224 43,041
------ ------ --------
Income (loss) before income taxes (benefit).... 12,590 (3,046) 9,544
Income taxes (benefit)......................... 4,640 (350) 668(2) 3,622
------ ------ --- -------
Net income (loss).............................. 7,950 (2,696) 668 5,922
Dividends on preferred stock................... -- 142 142
----- -------- ------ -------
Net income (loss) applicable to common
stock........................................ $ 7,950 $ (2,838) 668 $ 5,780
======= ======== === ========
Per share data:
Net income (loss) per common share - basic... $1.63 $(2.66) $1.11
Average number of common shares - basic...... 4,881,909 1,068,523 5,205,671
Net income per common share - diluted........ $1.54 -- (3) $1.05
Average number of common shares - diluted.... 5,162,013 -- (3) 5,658,268
</TABLE>
- ----------------------
(1) No pro forma adjustment was made for estimated merger expenses because they
are not considered material. Such expenses are estimated to be
approximately $375,000.
(2) The valuation allowance that existed as of December 31, 1996 and 1995 are
not needed on a combined pro forma basis. JBI files a consolidated federal
tax return with its subsidiaries, and therefore any losses sustained by RBC
would be offset by profits of JBI and its other subsidiaries and no
valuation allowance would be required as of December 31, 1996 and 1995 had
the companies always been combined. Accordingly, the pro forma combined
condensed financial statements include a pro forma adjustment to reflect
what the changes to the valuation allowance would have been had the
companies always been combined. The pro forma adjustment to income taxes
(benefit) is a reversal of the federal and state portions of the tax
provision and benefits described above.
(3) The conversion of the convertible preferred stock for RBC is anti-dilutive,
therefore, net income per common share - diluted is not presented.
-24-
<PAGE>
Pro Forma Combined Condensed Income Statement
For Year Ended December 31, 1995
(unaudited)
<TABLE>
<CAPTION>
JBI RBC
(Historical) (Historical) Adjustments(1) Pro Forma
------------ ------------ ------------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest income................................ $74,276 $21,160 $95,436
Interest expense............................... 33,049 12,553 45,602
------- ------- -------
Net interest income............................ 41,227 8,607 49,834
------- -------
Provision for credit losses.................... 3,986 4,905 8,891
-------
Net interest income after provision
for credit losses............................ 37,241 3,702 40,943
Non-interest income............................ 6,969 104 7,073
Non-interest expense........................... 31,160 7,396 38,556
------ ------ ------
Income (loss) before income taxes (benefit).... 13,050 (3,590) 9,460
Income taxes (benefit)......................... 4,571 (463) 650(2) 3,458
------ ------ ---- ------
Net income (loss).............................. 8,479 (3,127) 650 6,002
Dividends on preferred stock................... 1,125 487 1,612
------ ------ ----- ------
Net income (loss) applicable to common
stock........................................ $7,354 $(3,614) $650 $4,390
====== ======= ==== ======
Per share data:
Net income per common share - basic.......... $1.87 $(3.80) $1.04
Average number of common shares - basic...... 3,936,340 952,193 4,224,854
Net income (loss) per common share - diluted $1.63 - (3) $1.01 (4)
Average number of common shares - diluted.... 5,197,545 - (3) 5,486,059
</TABLE>
- --------------
(1) No pro forma adjustment was made for estimated merger expenses because they
are not considered material. Such expenses are estimated to be
approximately $375,000.
(2) The valuation allowances that existed as of December 31, 1996 and 1995 are
not needed on a combined pro forma basis. JBI files a consolidated federal
tax return with its subsidiaries, and therefore any losses sustained by RBC
would be offset by profits of JBI and its other subsidiaries and no
valuation allowance would be required as of December 31, 1996 and 1995 had
the companies always been combined. Accordingly, the pro forma combined
condensed financial statements include a pro forma adjustment to reflect
what the changes to the valuation allowance would have been had the
companies always been combined. The pro forma adjustment to income taxes
(benefit) is a reversal of the federal and state portions of the tax
provision and benefits described above.
-25-
<PAGE>
(3) The conversion of the convertible preferred stock for RBC is anti-dilutive,
therefore, net income per common share - diluted is not presented.
(4) The conversion of RBC's convertible preferred stock is anti-dilutive,
therefore, the convertible preferred stock and the dividends associated
with the preferred stock are not included in the computation of pro forma
net income per common share - diluted.
-26-
<PAGE>
Certain Unaudited Pro Forma Per Share Data
The following unaudited information sets forth historical and pro forma
per share data for JBI Common Stock and historical and equivalent pro forma per
share data for RBC Common Stock. The information set forth below should be read
in conjunction with the historical financial statements of JBI and RBC, and the
notes thereto, and the pro forma combined financial data appearing elsewhere in
this Joint Proxy Statement/Prospectus or incorporated herein by reference.
<TABLE>
<CAPTION>
For the Year Ended
December 31,
-----------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash dividends declared per common share:
JBI actual............................................... $0.67 $0.48 $0.39
RBC actual............................................... - - -
RBC pro forma equivalent(1).............................. 0.20 0.15 0.12
Net income (loss) per common share - basic
JBI actual............................................... 2.50 1.63 1.87
RBC actual............................................... 0.26 (2.66) (3.80)
JBI and RBC, pro forma(2)................................ 2.09 1.11 1.04
RBC pro forma equivalent(3).............................. 0.63 0.34 0.32
Net income per common share - diluted
JBI actual............................................... 2.33 1.54 1.63
RBC actual(4)............................................ - - -
JBI and RBC, pro forma(2)................................ 1.98 1.05 1.01
RBC pro forma equivalent(3).............................. 0.60 0.32 0.31
</TABLE>
As of December 31,
1997
------------------
Book Value per common share:
JBI actual............................................... $20.57
RBC actual............................................... 5.32
RBC and JBI pro forma(5)................................. 20.05
RBC pro forma equivalent(6).............................. 6.08
Book Value per common share - diluted:(7)
JBI actual............................................... $18.77
RBC actual............................................... 5.21
RBC and JBI pro forma(5)................................. 18.52
RBC pro forma equivalent(6).............................. 5.61
-27-
<PAGE>
- ----------------
(1) Represents the dividends declared on the JBI Common Stock during the
respective periods multiplied by the Exchange Ratio.
(2) Represents net income per common share on a pro forma combined basis. Such
amounts, for purposes of determining basic income (loss) per common share,
have been determined by dividing pro forma net income by the sum of (i) the
weighted average number of shares of JBI Common Stock outstanding during
each period retroactively adjusted for stock dividends and (ii) shares of
JBI Common Stock assumed to be issued pursuant to the Merger. Such amounts
for purposes of determining diluted income per common share have been
determined by dividing pro forma net income by the sum of (i) the weighted
average number of shares of JBI Common Stock and stock options outstanding
during each period retroactively adjusted for stock dividends and (ii)
shares of JBI Common Stock and the JBI Options assumed to be issued
pursuant to the Merger.
(3) Represents the amount computed pursuant to Note 2, above, multiplied by the
Exchange Ratio.
(4) Diluted net income per common share is not shown since the conversion of
preferred stock and stock options for RBC are anti-dilutive.
(5) Represents the pro forma combined net book value of JBI and RBC
attributable to common shares, divided by the sum of (i) the number of
shares of JBI Common Stock outstanding, retroactively adjusted for stock
dividends, and (ii) shares of JBI Common Stock assumed to be issued
pursuant to the Merger.
(6) Represents the amount computed pursuant to Note 5 above multiplied by the
Exchange Ratio.
(7) Diluted book value is presented to give effect to the dilution resulting
from stock options granted by JBI and RBC.
-28-
<PAGE>
THE MEETINGS
Date, Time and Place
RBC. The RBC Meeting will be held at The Union League of Philadelphia,
Philadelphia, Pennsylvania, at 10:00 a.m., local time, on June ___, 1998.
JBI. The JBI Meeting will be held at 1845 Walnut Street, 10th Floor,
Philadelphia, Pennsylvania at 9:30 a.m., local time, on June _____, 1998.
Record Date for, and Voting at, the Meetings
RBC. The RBC Record Date for shareholders entitled to notice of, and to
vote at, the RBC Meeting is May ____, 1998. At the close of business on the RBC
Record Date, 3,409,822 shares of RBC Common Stock were outstanding and entitled
to vote. At the RBC Meeting, holders of record of RBC Common Stock on the RBC
Record Date will be entitled to one vote per share on each matter of business
properly brought before the RBC Meeting. Approval and adoption of the Merger
Agreement and the election of Arthur Andersen LLP as independent public
accountants of RBC for its 1998 fiscal year requires the affirmative vote of a
majority of the total votes cast on each proposal, either in person or by proxy,
at the RBC Meeting by the holders of RBC Common Stock, provided a quorum is
present. The vote of at least a majority of the shares represented at the RBC
Meeting in person or by proxy is required to elect the directors, and the five
nominees for election as RBC director who receive the highest number of votes
cast in person or by proxy at the RBC Meeting will be elected as directors. The
presence, in person or by proxy, of holders of RBC Common Stock entitled to cast
at least a majority of the votes which all holders of RBC Common Stock are
entitled to cast on a particular matter will constitute a quorum for the purpose
of considering such matter. Cumulative voting rights do not exist with respect
to the election of directors of RBC.
As of the RBC Record Date, directors and executive officers of RBC and
their affiliates beneficially owned and were entitled to vote 734,751 shares of
RBC Common Stock (excluding 109,165 shares currently issuable upon exercise of
options), constituting 21.5% of the RBC Common Stock outstanding on the RBC
Record Date. Pursuant to the provisions of the Merger Agreement, RBC has
undertaken to use its best efforts to obtain from such persons irrevocable
proxies in favor of approval and adoption of the Merger Agreement. Each such
person also has indicated his or her present intent to vote his or her shares of
RBC Common Stock for the nominees for director of RBC listed in this Joint Proxy
Statement/Prospectus and for the election of Arthur Andersen LLP as independent
public accountants of RBC for its 1998 fiscal year. No directors or executive
officers of JBI or Jefferson own shares of RBC Common Stock.
JBI. The JBI Record Date for shareholders entitled to notice of, and to
vote at, the JBI Meeting is May ____, 1998. At the close of business on the JBI
Record Date, 5,052,489 shares of JBI Common Stock were outstanding and entitled
to vote. At the JBI Meeting, holders of record of JBI Common Stock on the JBI
Record Date will be entitled to one vote per share on
-29-
<PAGE>
each matter of business properly brought before the JBI Meeting. Approval and
adoption of the Merger Agreement and the amendment to JBI's Articles of
Incorporation to increase the number of authorized shares of JBI Common Stock
from 10,000,000 shares to 20,000,000 shares requires the affirmative vote of a
majority of the total votes cast on each proposal, either in person or by proxy,
provided a quorum is present. The presence, either in person or by proxy, of
holders of JBI Common Stock entitled to cast at least a majority of the votes
which all holders of JBI Common Stock are entitled to cast on a particular
matter will constitute a quorum.
As of the JBI Record Date, directors and executive officers of JBI and
their affiliates beneficially owned and were entitled to vote 1,137,773 shares
of JBI Common Stock (excluding 382,683 shares issuable upon exercise of
options), constituting 22.5% of the JBI Common Stock outstanding on the JBI
Record Date. Each JBI director and executive officer has indicated his or her
present intent to vote his or her shares of JBI Common Stock in favor of
approval and adoption of the Merger Agreement. No directors or executive
officers of RBC or Regent own shares of JBI Common Stock, except for Mr.
Goldstein who owns 3,110 shares of JBI Common Stock.
Proxies for the RBC Meeting
Shares of RBC Common Stock represented by proxies in the accompanying
form, if properly signed and returned, will be voted in accordance with the
specifications made thereon by the shareholders. Any proxy not specifying to the
contrary will be voted in favor of the adoption of the proposals referred to in
the Notice of Annual Meeting of RBC and for the election of the nominees for
director of RBC named below. A shareholder who signs and returns a proxy in the
accompanying form may revoke it at any time before it is voted by giving written
notice of revocation or a duly executed proxy bearing a later date to the
Secretary of RBC or by attending the RBC Meeting and voting in person.
The cost of solicitation of proxies for the RBC Meeting in the
accompanying form will be borne by RBC, including expenses in connection with
preparing and mailing this Joint Proxy Statement/Prospectus, except that the
printing expenses of this Joint Proxy Statement/Prospectus, which is also being
delivered to JBI shareholders, will be shared equally between RBC and JBI under
the Merger Agreement. Such solicitation will be made by mail and may also be
made on behalf of RBC in person or by telephone or telegram by RBC's regular
officers and employees, none of whom will receive special compensation for such
services. RBC, upon request therefor, will also reimburse brokers, nominees,
fiduciaries and custodians and persons holding shares of RBC Common Stock in
their names or in the names of nominees for their reasonable expenses in sending
proxies and proxy materials to beneficial owners.
Abstentions and broker non-votes will be counted as being present, for
purposes of determining a quorum. Because approval and adoption of the Merger
Agreement, election of directors and the election of Arthur Andersen LLP each
requires the affirmative vote of a majority of the votes cast, abstentions (and
broker non-votes) will have no effect upon approval
-30-
<PAGE>
and adoption of the Merger Agreement, the election of directors and the approval
of the election of Arthur Andersen LLP.
The RBC Board of Directors does not know of any matters to be presented
for consideration at the RBC Meeting other than the matters described in the
Notice of Annual Meeting of RBC, but if any matters are properly presented, it
is the intention of the persons named in the accompanying proxy to vote on such
matters in accordance with their judgment.
Proxies for the JBI Meeting
Shares of JBI Common Stock represented by proxies in the accompanying
form, if properly signed and returned, will be voted in accordance with the
specification made thereon by the shareholders. If no specification is made,
such shares will be voted for approval and adoption of the Merger Agreement and
for approval of the amendment to JBI's Articles of Incorporation to increase the
authorized shares of JBI Common Stock. A proxy may be revoked by the person
giving it at any time after its submission and before it is exercised by: (i)
submitting written notice of revocation of such proxy to the Secretary of JBI,
(ii) submitting a later dated proxy or (iii) such person appearing at the JBI
Meeting and requesting a return of the proxy (appearance alone will not of
itself constitute a revocation of the proxy).
JBI will bear the cost of the solicitation of proxies from the holders
of JBI Common Stock, except that JBI and RBC will share equally the cost of
printing this Joint Proxy Statement/Prospectus. Such solicitation will be made
by mail and may also be made on behalf of JBI by directors, officers and
employees of JBI by telephone, facsimile transmission, personal solicitation or
otherwise. Such persons will receive no special compensation for any
solicitation services. JBI will request that the Notice of Special Meeting, this
Joint Proxy Statement/ Prospectus, the proxy and related materials be forwarded
by record owners to beneficial owners and expects to reimburse banks, brokers
and other persons for their reasonable out-of-pocket expenses in handling such
materials.
Abstentions may be specified on the proxy card. Abstentions will be
considered present for purposes of determining the presence of a quorum for the
JBI Meeting, but as unvoted on the matters as to which abstention has been
specified. Because approval and adoption of the Merger Agreement and of the
amendment to JBI's Articles of Incorporation to increase authorized shares of
JBI Common Stock requires the affirmative vote of a majority of the votes cast,
abstentions will have no effect upon approval and adoption of the Merger
Agreement and the amendment to the Articles of Incorporation of JBI to increase
authorized shares of JBI Common Stock.
The JBI Board of Directors does not know of any matters to be presented
for consideration at the JBI Meeting other than the matters described in the
Notice of Special Meeting of JBI, but if any matters are properly presented, it
is the intention of the persons named in the accompanying proxy to vote on such
matters in accordance with their judgment.
-31-
<PAGE>
Under applicable rules of the New York Stock Exchange and the National
Association of Securities Dealers, Inc., brokers or other members who hold
shares in street name for customers have the discretion to vote those shares
with respect to certain matters if they have not received instructions from the
beneficial owners. Brokers will not have such discretionary authority with
respect to the approval of the Merger Agreement.
THE MERGER
The following information relating to the Merger is qualified in its
entirety by reference to the other information contained elsewhere in this Joint
Proxy Statement/Prospectus, including the Annexes hereto, and the documents
incorporated herein by reference. A copy of the Merger Agreement (excluding the
exhibits and schedules thereto) is set forth in Annex A to this Joint Proxy
Statement/Prospectus and is incorporated herein by reference, and reference is
made thereto (together with Annexes B and C hereto) for a complete description
of the terms of the Merger. Shareholders are urged to read the Merger Agreement
and Annexes B and C hereto carefully.
General
Subject to the terms and conditions of the Merger Agreement, on the
Merger Effective Date, JBI Merger Sub will merge with and into RBC, resulting in
RBC becoming a wholly owned subsidiary of JBI. Upon consummation of the Merger,
each outstanding share of RBC Common Stock will be converted into 0.303 of a
share of JBI Common Stock, with cash being paid in lieu of any fractional share
interest. Outstanding RBC Options will be converted into JBI Options to purchase
0.303 of a share of JBI Common Stock for each share of RBC Common Stock
purchasable under the RBC Option at an exercise price equal to the exercise
price of the RBC Option divided by 0.303.
If, prior to the Merger Effective Date, JBI's Common Stock undergoes a
stock split, stock dividend, recapitalization or similar transaction, or if JBI
issues JBI Common Stock or securities convertible into or exchangeable for
shares of JBI Common Stock at a price per share of JBI Common Stock less than
the market value of JBI Common Stock at the time of issuance or at the time a
binding agreement to issue is executed, then the Exchange Ratio will be
proportionately adjusted.
Background of the Merger
On February 18, 1998, Betsy Z. Cohen, Chairman of the Board and Chief
Executive Officer of JBI, and Robert B. Goldstein, President and Chief Executive
Officer of RBC, met to discuss the local banking and business climate. At the
conclusion of the meeting, Mrs. Cohen suggested that the parties consider
whether a combination of the institutions would be appropriate. Mrs. Cohen and
Mr. Goldstein agreed to meet again on February 24, 1998.
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On February 24, 1998, Mr. Goldstein met with Mrs. Cohen in her office
to discuss their respective visions for Regent and Jefferson and the opportunity
that the consolidation in the banking industry offered to commercial banks in
the Philadelphia marketplace. They agreed to meet again to discuss, on more
tangible terms, the basis for combining JBI and RBC. On the morning of February
25, 1998, Mr. Goldstein met with Mrs. Cohen to discuss the products, services
and technologies of the respective institutions, how the combined institution
would be operated and a preliminary exchange ratio of JBI Common Stock for RBC
Common Stock. Later that day, Mr. Goldstein met with the RBC Board of Directors,
reviewed the matters discussed at his meetings with Mrs. Cohen and the
conclusions being drawn relative to value to the respective shareholders of JBI
and RBC and sought the advice of the RBC Board of Directors. The RBC Board of
Directors indicated that RBC should move forward to negotiate an agreement and
begin the due diligence process. After the RBC Board of Directors meeting, Mr.
Goldstein telephoned Mrs. Cohen to discuss the RBC Board of Directors' decision
to continue the negotiations.
Between February 24, 1998 and March 17, 1998, Kenneth Frappier, a
Senior Vice President of JBI, Joel E. Hyman, Executive Vice President, Chief
Financial Officer and Treasurer of RBC and Regent and Amanda V. Perkins,
Executive Vice President and Chief Credit Officer of Regent, held a series of
meetings to exchange information relating to the respective institutions.
On March 10, 1998, Mr. Goldstein met with Mrs. Cohen and Edward E.
Cohen, Chairman of the Executive Committee of JBI. They discussed the potential
combination and the due diligence to be performed. Mrs. Cohen and Mr. Goldstein
agreed that due diligence reviews would be performed over the ensuing weekend.
Mr. Goldstein also informed them that RBC would engage KBW to conduct due
diligence and prepare a fairness opinion for the RBC Board of Directors. On
March 12, 1998, RBC engaged KBW as its financial consultant. Also, on March 12,
1998, Ms. Perkins met with Mrs. Cohen and other officers of JBI, and Mr.
Goldstein met with officers of JBI.
During the weekend of March 14 and March 15, 1998, JBI conducted a due
diligence review of RBC, Regent and Regent's loan portfolio, and Regent
performed a due diligence review of JBI. KBW conducted a due diligence review of
JBI during the period March 13, 1998 through March 18, 1998. During the period
March 11, 1998 through March 18, 1998, drafts of a merger agreement were
negotiated and prepared by JBI and RBC and their respective counsel.
On the afternoon of March 18, 1998, the RBC Board of Directors met to
consider the Merger Agreement as negotiated. The RBC Board of Directors reviewed
the terms of the proposed Merger Agreement following presentations by Mr.
Goldstein and representatives of KBW and Duane, Morris & Heckscher LLP, RBC's
counsel. KBW delivered its verbal opinion that the consideration to be paid to
the holders of RBC Common Stock was fair to such shareholders from a financial
point of view.
After discussion, the RBC Board of Directors, by a unanimous vote,
decided to proceed with the Merger and the Merger Transaction for the reasons
discussed in "The Merger - Reasons
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for the Merger; Recommendations of the Boards of Directors," and approved the
Merger Agreement, the Option Agreement and the transactions contemplated thereby
and unanimously recommended that the holders of RBC Common Stock vote to approve
and adopt the Merger Agreement.
On the same day, the JBI Board of Directors met to consider the Merger
Agreement. After a presentation by Mrs. Cohen, the JBI Board of Directors
reviewed the terms of the proposed Merger Agreement. After discussion, by
unanimous vote, the JBI Board of Directors decided to proceed with the Merger,
for the reasons discussed in "The Merger - Reasons for the Merger;
Recommendations of the Boards of Directors," and approved the Merger Agreement,
the Option Agreement and the transactions contemplated thereby. The JBI Board of
Directors unanimously recommended that the JBI shareholders vote to approve and
adopt the Merger Agreement.
RBC and JBI entered into the Merger Agreement and the Option Agreement
on the night of March 18, 1998 and, on March 19, 1998, JBI and RBC issued a
joint press release announcing that they had entered into the Merger Agreement
and the Option Agreement. On March 27, 1998, RBC and JBI amended and restated
the Merger Agreement and the Option Agreement to make certain non-material
changes.
Reasons for the Merger; Recommendations of the Boards of Directors
The Boards of Directors of each of JBI and RBC believe that the Merger
provides shareholders of each of JBI and RBC with the opportunity to combine two
financially strong banking operations with a similar focus on small to
middle-market business banking and, because of the geographic overlap of the
institutions, to achieve a number of operating efficiencies and business
synergies. Although no assurances can be given that any specific level of
expense savings will be achieved, or as to the timing thereof, JBI and RBC have
identified potential annualized pre-tax expense savings of $4.2 million (or
approximately 58% of the pro forma 1997 operating expense base) which they
anticipate can be effected within approximately three months following
consummation of the Merger by consolidating certain lending, deposit, loan and
administrative operations, consolidating office space, combining data processing
operations under JBI's data processing contract (including year 2000
remediation) and eliminating duplicative audit, insurance and other expenses.
Moreover, the Merger is consistent with each company's expansion goals. Since
1995, JBI has been pursuing a strategy of bank and branch acquisition in order
to support its institutional growth. Similarly, in 1997 RBC had set a goal for
itself of significant expansion over the next four years; the Merger will enable
RBC to achieve that goal more rapidly.
In addition, although neither RBC nor JBI has quantified any particular
level of revenue enhancements which may result from the Merger, several
potential business synergies have been noted in both the lending and general
financial services areas. The Boards of each of JBI and RBC noted that, by
becoming a part of JBI, Regent customers would have the support of JBI's greater
resources and products, and broader access to markets and lendable funds. In
particular,
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they observed that the Merger would increase the limit on loans that could be
made to an RBC customer from approximately $3.3 million to approximately $23.5
million and would present Regent customers with a significantly larger number of
deposit account choices, a larger number of certificate of deposit options and
previously unavailable services, including in-house credit card, debit card and
merchant plan services, cash management services, zero balance accounting,
foreign drafts, home banking and bill-paying services and consumer loan
programs. The Boards of Directors of JBI and RBC also noted that the Merger
would provide JBI with a pool of strong existing loans, the services of Regent's
experienced lending personnel and a referral network for JBI's mortgage
originations.
In determining to approve the Merger Agreement, the Boards of Directors
of each of JBI and RBC also considered, among others, the following factors:
(i) The Financial and Other Terms of the Merger Agreement. The Boards
of Directors considered the terms of the Merger Agreement and the transactions
contemplated thereby. Each Board took into account the historical trading ranges
for JBI Common Stock and RBC Common Stock, and the Exchange Ratio. The RBC Board
of Directors considered recent and historical selling prices for RBC Common
Stock, the net book value of RBC Common Stock and the more liquid market for JBI
Common Stock provided by its listing on the Nasdaq National Market. The RBC
Board of Directors noted in particular that, based on the closing price of JBI
Common Stock on the last trading day prior to its March 18, 1998 meeting, the
Exchange Ratio reflected a price equal to 272% of RBC's book value and a
multiple of 55.7 times RBC's earnings for the four trailing calendar quarters.
The JBI Board of Directors took into account the potential impact of the Merger
on the price of JBI Common Stock over the short- and medium-term and the
resulting relative interests of JBI and RBC shareholders in the equity of the
combined company. The RBC Board of Directors considered the dividend history of
JBI and the potential for increased earnings and book value per share for
shareholders of RBC as a result of the Merger. The JBI Board of Directors
considered that the Merger was expected to be accretive to JBI's earnings per
share in 1998, that JBI Common Stock will be diluted by only 1% on a tangible
basis, and that a discounted cash flow analysis resulted in a value per share of
RBC Common Stock in excess of the consideration being paid by JBI, based upon
the closing price of JBI Common Stock on March 18, 1998. Both Boards of
Directors were advised, and considered, that under the Merger Agreement, JBI
would have the right to terminate the Merger Agreement if, prior to the
completion of the Merger, a specified significant decline in the shareholders'
equity of RBC occurs, determined as provided in the Merger Agreement.
(ii) Advice of RBC Financial Advisor and Fairness Opinion. The RBC
Board of Directors considered, and placed special importance on, advice received
from KBW and reviewed the detailed financial analyses, pro forma results and
other information presented by KBW, including KBW's favorable opinion as to the
fairness, from a financial point of view, of the consideration to be paid to RBC
shareholders in the Merger. For a discussion of KBW's opinion, including a
summary of the procedures followed, the matters considered, the scope of the
review undertaken and the assumptions made with respect thereto, see "The Merger
- - Opinion of RBC Financial Advisor."
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(iii) Certain Financial and Other Information. Each Board of Directors
analyzed information with respect to, among other things, the historical
financial results of the other bank holding company and pro forma financial
results, and reviewed information with respect to the other bank holding
company's business, operations, financial condition and future prospects. Each
Board considered, in particular, the other bank holding company's capital
position, asset quality, management strength and strategic direction, as well as
relative strengths and weaknesses of the other's businesses. The RBC Board of
Directors also considered its knowledge of the business, operations, properties,
assets and earnings of RBC, as well as its assessment of the earnings potential
and future value of RBC. Each of the Boards of Directors considered the prices
and premiums paid in recent acquisitions of other bank holding companies, the
prospects of RBC and JBI and the values of JBI and RBC separately and as a
combined enterprise.
(iv) Due Diligence Review. Each Board of Directors considered the
results of the due diligence review conducted by its management and advisors,
including, among other things, a review of the other institution's credit
policies, asset quality, the adequacy of its loan loss reserves and its interest
rate risk profile.
(v) The Tax and Accounting Treatment of the Transaction. The RBC Board
of Directors considered that the Merger Transaction is expected to be tax-free
(other than with respect to cash paid in lieu of fractional shares) to
shareholders for federal income tax purposes. Each Board of Directors considered
that the Merger Transaction was expected to be accounted for under the pooling
of interests method of accounting for business combinations. See "The Merger -
Federal Income Tax Consequences" and "- Accounting Treatment."
(vi) Regulatory Approvals. Each Board of Directors considered the
nature of, and likelihood of obtaining, the regulatory approvals that would be
required with respect to the Merger. See "The Merger - Regulatory Approvals."
(vii) Operating Environment. Each Board of Directors took into account
the current and prospective economic and competitive environment facing the
financial services industry generally and each of RBC and JBI in particular, and
considered the ability of larger institutions to provide increased products and
services and to invest in technology, and the impact of the proposed Merger on
their depositors, employees, customers and the communities they serve.
The foregoing discussion of the information and factors considered by
each Board of Directors is not intended to be exhaustive but includes all
material factors considered. In reaching its determination to approve the Merger
Agreement, neither Board of Directors assigned any relative or specific weights
to the various factors considered by it (except as described above), nor did
either Board of Directors specifically characterize any factor as positive or
negative, and individual directors may have given differing weights to different
factors and may have viewed certain factors more positively or negatively than
others.
Based upon the considerations described above, the Boards of Directors
of each of JBI and RBC, by unanimous vote, approved the Merger Agreement and the
transactions
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contemplated thereby and recommended that its shareholders vote "FOR" approval
and adoption of the Merger Agreement.
Market Price Information
On March 18, 1998, the day preceding the public announcement of the
proposed Merger, the high and low sales prices per share of JBI Common Stock
reported on the Nasdaq National Market were $49.00 and $48.25, and the high and
low sales prices per share of RBC Common Stock reported on the Nasdaq SmallCap
Market were $14.00 and $13.625.
Terms of the Merger
Structure. Pursuant to the Merger Agreement, JBI will acquire RBC and
Regent through merger of JBI Merger Sub with and into RBC, with RBC being the
surviving entity. As a result of the Merger, RBC will become a direct
wholly-owned subsidiary of JBI and Regent will become a second-tier subsidiary
of JBI. Immediately following the Merger, JBI intends to merge RBC into JBI,
with JBI being the surviving corporation. Following the Merger Transaction, JBI
intends to merge Regent with and into Jefferson, with Jefferson being the
surviving bank. As a result of these mergers, the separate existences of RBC and
Regent will cease.
In accordance with Pennsylvania and New Jersey law, following the
Merger, RBC will possess all of the property, rights, powers, duties,
obligations and liabilities of RBC and JBI Merger Sub. RBC will be governed by
the articles of incorporation and bylaws of JBI Merger Sub in effect immediately
prior to the consummation of the Merger. The directors and officers of JBI
Merger Sub in office immediately before the Merger Effective Date will become
the directors and officers of RBC. Following the mergers of RBC into JBI and of
Regent into Jefferson, the officers and directors of JBI, on the one hand, and
Jefferson, on the other, will be the officers and directors of the surviving
institutions, subject to certain appointments of RBC and Regent officers
contemplated by the Merger Agreement. See "The Merger - Interests of Certain
Persons."
Merger Consideration. Upon consummation of the Merger, each outstanding
share of RBC Common Stock will be converted into and become, automatically and
without any action on the part of the holder thereof, the right to receive JBI
Common Stock at the Exchange Ratio of 0.303 of a share of JBI Common Stock for
each share of RBC Common Stock. Each holder of RBC Common Stock who would
otherwise be entitled to a fractional share of JBI Common Stock will receive
cash in lieu thereof in an amount determined by multiplying such fractional
share by the Index Price.
Upon consummation of the Merger, each outstanding and unexercised RBC
Option will be converted into and become, automatically and without any action
on the part of the holder thereof, a JBI Option to purchase that number of
shares of JBI Common Stock as shall equal 0.303 multiplied by that number of
shares of RBC Common Stock which such RBC Option
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entitled the holder thereof to purchase, at an exercise price equal to the
exercise price per share of the RBC Option divided by 0.303.
If JBI, at any time before the consummation of the Merger, (i) changes
the number of issued and outstanding shares of JBI Common Stock as a result of a
stock split, stock dividend, recapitalization or other distribution with respect
to outstanding JBI Common Stock or (ii) issues JBI Common Stock, or securities
convertible into JBI Common Stock, at a price per share (or conversion price per
share) less than the market value of the JBI Common Stock at the time of
issuance or at the time a binding agreement to issue such JBI Common Stock or
convertible securities is entered into, the Exchange Ratio will be
proportionately adjusted so that each RBC shareholder (and each holder of an RBC
Option) will be entitled to receive such number of shares of JBI Common Stock
(or JBI Options) as such shareholder would have been entitled to receive in such
transaction if the Merger had been consummated prior to the happening of such
event.
Effective Date; Conditions to Consummation; Termination. Subject to the
terms and conditions set forth in the Merger Agreement, the Merger Effective
Date will occur upon the filing and acceptance of articles of merger by the
Pennsylvania Department of State and the Secretary of State of the State of New
Jersey. The presentation of the articles for acceptance is subject to the rights
of the Boards of Directors of JBI and RBC to terminate the Merger Agreement as
provided for in the Merger Agreement.
The consummation of the Merger is subject to, among other things, the
approval of the shareholders of JBI and RBC; receipt of required regulatory
approvals; receipt by each of JBI and RBC of letters from their respective
independent accountants to the effect that such accountants are not aware of any
facts or circumstances which might cause the Merger not to qualify for pooling
of interests accounting treatment; and there not having occurred any event
which, by itself or in the aggregate with other events, occurrences or
circumstances, is reasonably likely to have a "material adverse effect" on RBC.
As used in the Merger Agreement, a material adverse effect means, subject to
certain exceptions provided in the Merger Agreement, a decrease in the
shareholders' equity account of RBC (determined in accordance with generally
accepted accounting principles and the provisions of the Merger Agreement) equal
to or greater than $600,000, as measured from the shareholders' equity account
set forth in RBC's 1997 Form 10-K Report. As of December 31, 1997, Regent's
shareholders' equity account was $18.1 million.
The Merger Agreement provides that it may be terminated and the Merger
abandoned at any time prior to the Merger Effective Date: (i) by mutual consent
of JBI and RBC if the Board of Directors of each so determines by majority vote;
(ii) by either the JBI Board of Directors or the RBC Board of Directors: (a) in
the event of any breach of a representation or warranty by the other party
materially adversely affecting the Merger, or any material breach of a covenant
contained in the Merger Agreement, which, in each case, is not cured within 30
days after notice, (b) if approval of the Merger Agreement by the shareholders
of either JBI or RBC is not obtained or (c) if the Merger is not consummated by
September 30, 1998 (except that if any required regulatory approval has not been
received by such date, such date is extended to that date which is five business
days after receipt of such approval, but in no event later than November 30,
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1998); (iii) by the JBI, if the RBC Board of Directors withdraws or modifies its
recommendation or approval of the Merger in a manner adverse to the JBI or
approves or recommends a proposal other than by the JBI in respect of an
Acquisition Transaction; or (iv) by RBC, if the JBI Board of Directors withdraws
or modifies its recommendation or approval of the Merger in a manner adverse to
RBC.
In the event of a termination of the Merger Agreement by JBI by reason
of an uncured material breach by RBC of any of its covenants or agreements in
the Merger Agreement, the withdrawal or modification by the RBC Board of
Directors of its recommendation or approval of the Merger Agreement in a manner
adverse to JBI or the approval or recommendation by the RBC Board of Directors
of any Acquisition Transaction or in the event RBC terminates the Merger
Agreement (but not in violation of certain non-solicitation covenants) to allow
RBC to enter into an Acquisition Transaction, RBC must pay JBI $1.5 million in
cash. Similarly, in the event of a termination of the Merger Agreement by RBC by
reason of an uncured material breach by JBI of any of its covenants or
agreements in the Merger Agreement or the withdrawal or modification by the JBI
Board of Directors of its recommendation or approval of the Merger Agreement in
a manner adverse to RBC, JBI must pay RBC $1.5 million in cash.
Waiver; Amendment. Prior to the Merger Effective Date, any provision of
the Merger Agreement may be: (i) waived by the party benefitted by the
provision; or (ii) amended or modified (including the structure of the
transaction) at any time by an agreement in writing among the parties thereto
approved by their respective Boards of Directors and executed in the same manner
as the Merger Agreement; provided that, after approval and adoption of the
Merger Agreement by the shareholders of RBC, the consideration to be received by
the shareholders of RBC may not thereby be decreased.
Conduct of Business Pending the Merger
Pursuant to the Merger Agreement, each of RBC and Regent has agreed
that, without the prior written consent or approval of the Chairman or President
of JBI, neither will, nor will agree to, (i) make, declare or pay any dividend
or declare or make any distribution on, any shares of its capital stock or
directly or indirectly combine, redeem, reclassify, purchase or otherwise
acquire any shares of its capital stock; (ii) enter into or amend any
employment, severance or similar agreements or arrangements with, increase the
rate of compensation or increase any employee benefit of (except normal
individual increases in the ordinary course of business in accordance with
existing policy consistent with current practice), or pay or agree to pay any
bonus to, any of its directors, officers or employees, except in accordance with
plans or arrangements existing on March 18, 1998; (iii) enter into or modify
(except as may be required by applicable law or except in accordance with plans
or agreements existing on March 18, 1998) any pension, retirement, stock option,
stock purchase, savings, profit sharing, deferred compensation, consulting,
bonus, group insurance, or other employee benefit, incentive or welfare
contract, or any trust agreement related thereto in respect of any of its
directors, officers or other employees; (iv) amend its certificate or articles
of incorporation or bylaws; (v) dispose of or discontinue any material portion
of its assets, business or properties (except for the sale of
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foreclosed properties, or properties received in lieu of foreclosure, in the
ordinary course of business, consistent with past practice and purchases and
sales of investment securities consistent with current practice) or merge or
consolidate with, or acquire all or any substantial portion of, the business or
property of any other entity (except for properties received through, or in lieu
of, foreclosure in the ordinary course of business, consistent with past
practice); and (vi) take any other action or engage in any loan, deposit,
investment or other transaction not in the usual, regular and ordinary course of
business consistent with past practice.
RBC and Regent have also agreed (i) to use their best efforts to cause
each director and executive officer to deliver to JBI irrevocable proxies to
vote the shares of RBC Common Stock held by each of such persons for approval
and adoption of the Merger Agreement and the Merger and (ii) not to solicit or
encourage inquiries or proposals with respect to, or (except as required by the
fiduciary duties of the RBC Board of Directors) furnish any nonpublic
information relating to, or participate in any negotiations or discussions
concerning any Acquisition Transaction.
Opinion of RBC Financial Advisor
RBC retained KBW on March 12, 1998 to provide certain investment
banking advice and services, including advice with respect to mergers and
related matters. KBW was selected to act as RBC's advisor based upon its
qualifications, expertise and reputation of its personnel in the banking and
investment communities as well as its experience in the valuation of bank and
thrift institutions and their securities in connection with mergers and
acquisitions and other corporate transactions.
As part of the advisory services described above, the RBC Board of
Directors requested KBW's opinion as to the fairness to the holders of RBC
Common Stock, from a financial point of view, of the terms of the Merger
Agreement (the "Opinion"). Pursuant to the terms of the Merger Agreement, each
share of RBC Common Stock will be converted into the right to receive 0.303 of a
share of JBI Common Stock as described in the Merger Agreement. On March 18,
1998, KBW made a presentation to the RBC Board of Directors with respect to the
Merger and subsequently delivered a written opinion to the RBC Board of
Directors that the consideration to be paid to the holders of RBC Common Stock
was fair to such shareholders from a financial point of view.
The full text of the Opinion, which sets forth, among other things,
assumptions made, matters considered and limitations on the review undertaken,
is attached hereto as Annex B and is incorporated herein by reference. RBC
shareholders are urged to read the Opinion in its entirety for a description of
the procedures followed, assumptions made, factors considered and qualifications
to the review undertaken by KBW in rendering the Opinion. The Opinion is
directed to the RBC Board of Directors, addresses only the fairness of the
consideration to be paid by JBI pursuant to the Merger Agreement from a
financial point of view and does not constitute a recommendation to the RBC
Board of Directors or to the holders of RBC Common Stock as to how such
shareholders should vote on the proposal to approve and adopt the Merger
Agreement.
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In rendering the Opinion, KBW examined and relied upon, among other
things, the Merger Agreement, annual reports to shareholders, proxy statements
and related audited financial statements for RBC and JBI, certain other publicly
available financial information concerning RBC and JBI, and certain internal
financial analyses and other information furnished to it by RBC and JBI. KBW
also held discussions with members of the senior management of RBC and JBI
concerning historical financial performance and condition, market area economic
conditions, future business prospects and financial forecasts. In addition, KBW
(i) compared certain financial and stock market information for RBC and JBI,
respectively, with similar information for certain comparable companies whose
securities are publicly traded, (ii) reviewed the financial terms of certain
recent business combinations which it deemed comparable in whole or in part,
(iii) reviewed the potential pro forma impact of the Merger on JBI's financial
condition, operating results and per share data and (iv) performed such other
studies and analyses and considered such other factors as KBW deemed
appropriate.
In conducting its review and arriving at the Opinion, KBW assumed and
relied upon, without independent verification, the accuracy and completeness of
all the financial and other information reviewed by and discussed with it for
purposes of the Opinion. With respect to the financial forecasts reviewed by
KBW, in rendering the Opinion, KBW assumed that such financial forecasts were
reasonable and prepared on bases reflecting the best currently available
estimates and judgments of the managements of RBC and JBI as to their likely
future performance. KBW did not make an independent evaluation or appraisal of
the assets or liabilities of RBC or JBI nor was it furnished with any such
appraisal.
While the summary set forth below describes all analyses and factors
that KBW deemed material in its presentation to the RBC Board of Directors, it
does not purport to be a complete description of the analyses and factors
considered by KBW in this regard. The preparation of a fairness opinion is a
complex process involving various determinations as to the most appropriate and
relevant methods of financial analysis and the application of these methods to
the particular circumstances, and, therefore, such an opinion is not readily
susceptible to summary description. Accordingly, notwithstanding the separate
factors discussed below, KBW believes that its analyses must be considered as a
whole and that selecting portions of its analyses, without considering all
analyses and factors, could create an incomplete view of the evaluation process
underlying the Opinion. No one of the analyses performed by KBW was assigned a
greater significance than any other. The analyses performed by KBW are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than those suggested by such analyses.
Additionally, analyses relating to the values of businesses do not purport to be
appraisals or to reflect the prices at which the business actually may be sold.
The Opinion is based on market, economic and other conditions as they existed
and could be evaluated as of the date of the Opinion. Furthermore, no opinion is
being expressed as to the prices as which shares of JBI Common Stock may trade
at any future time.
Stock Trading History. KBW examined the history of trading prices for
RBC Common Stock and JBI Common Stock for the period from December 31, 1997
through March 16, 1998.
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During that time period, RBC Common Stock traded in the $13.63 to $14.75 per
share range. On March 16, 1998, RBC Common Stock closed at $14.00 per share.
Contribution Analysis. KBW prepared a contribution analysis showing the
percentage contribution by RBC to the combined company on a pro forma basis of
assets, deposits and tangible equity. Net income contributions were considered
based upon management's estimates for the 12 months ending December 31, 1998.
RBC reported significant nonrecurring items to earnings in 1997. The 1998
estimates were deemed to reflect more appropriately the recurring earnings level
for RBC. KBW compared these percentages to the RBC shareholders' pro forma
ownership of JBI. This analysis showed that RBC would contribute 15% of pro
forma consolidated assets, 14% of pro forma consolidated deposits, 16% of pro
forma consolidated tangible equity and 13% of pro forma estimated net income for
the 12 months ending December 31, 1998. RBC shareholders would receive 17% of
the pro forma ownership of the combined company based on the Exchange Ratio.
Valuation Summary. In preparing the Opinion, KBW compared the financial
condition, financial operating performance and trading market performance of JBI
with a selected group of commercial banking organizations. The selected group of
peer institutions comprised nine commercial banks with total assets between $1.0
billion and $4.0 billion.
JBI reported a return on average assets of 1.04% and a return on
average equity of 12.89% based on December 31, 1997 operating results, and a
tangible equity to assets ratio of 7.4%; the peer group reported a median return
on average assets of 1.16%; a median return on average equity of 14.75% and a
median tangible equity to assets ratio of 7.2%.
At March 16, 1998, the JBI Common Stock price was $48.00 per share or
18.2 times estimated 1998 earnings and 254% of reported December 31, 1997 book
value, compared to the peer group median of 19.1 times estimated 1998 earnings
as estimated by KBW, or if unavailable, a nationally recognized consensus
earnings estimate service, and 298% of book value. KBW noted that no company
used in the peer group analysis was identical to JBI.
Analysis of Selected Merger Transactions. In preparing the RBC Opinion,
KBW reviewed the financial terms of certain selected merger and acquisition
transactions for banks based upon the acquisition price relative to stated book
value, stated tangible book value, premium to deposits (price in excess of
tangible equity) and latest 12 months ("LTM") earnings, as of the date of
announcement. The analysis included a review and comparison of the average
multiples represented by a sample of recently effected or pending bank
acquisitions both in the northeast region and nationwide which have been
announced since June 30, 1997.
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The relative multiples implied by the merger consideration and each of
the selected bank merger and acquisition transactions are provided in the
following table:
<TABLE>
<CAPTION>
Tangible Deposit
Book Value Book Value Premium LTM Earnings
---------- ---------- ------- ------------
<S> <C> <C> <C> <C>
Northeast Bank Transactions
Average 214% 215% 10.7% 28.8X
Nationwide Bank Transactions
Average 274% 286% 20.7% 24.1X
RBC Merger 272% 272% 22.1% 55.7X
</TABLE>
KBW concluded from its review of selected acquisition transactions that
the relevant multiples implied by the per share merger consideration were within
the range of multiples implied in each of the aforementioned transaction
categories. Because RBC recorded several nonrecurring items in 1997, KBW
indicated that the price to latest 12 months earnings was not a meaningful
ratio.
Pro Forma Merger Analysis. KBW analyzed certain pro forma effects on
JBI from the Merger in 1999 assuming the payment of the merger consideration.
Based on certain assumptions by both RBC and JBI management with respect to cost
savings and other synergies from the Merger, and the stand-alone earnings
projections of RBC and JBI, the analysis showed that the Merger, as a pooling,
would be accretive to JBI's earnings per share by 5%. Additionally, the pro
forma pooling merger analysis showed the Merger would be 2% dilutive to JBI's
stated book value per share and 1% dilutive to JBI's tangible book value per
share.
KBW also analyzed certain per share values for fully converted RBC
Common Stock on an independent basis as well as the equivalent values based on
the Exchange Ratio of 0.303 of a share of JBI Common Stock for each share of RBC
Common Stock as proposed in the Merger Agreement. The estimated equivalent 1998
annual earnings per equivalent share of RBC Common Stock was 32% greater than
RBC's estimated earnings per share; the book value equivalent of RBC Common
Stock as of December 31, 1997 was 7% greater than RBC's book value per share as
of the same date; and the annual indicated cash dividend for each equivalent
share of RBC Common Stock was $0.23 per share (a percentage increase could not
be calculated since RBC does not pay a cash dividend).
Discounted Cash Flow Analysis. KBW performed an analysis that estimated
the future cash flows to RBC shareholders over five years under various
circumstances, assuming RBC performed in accordance with the earnings forecasts
of its management. To approximate the terminal value of RBC Common Stock at the
end of the five-year period, KBW applied price to earnings multiples ranging
from 18.0 to 24.0 times which resulted in values that equated to
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percentages of book value ranging from 282% to 338%. The terminal values were
discounted to present projected values using discount rates, ranging from 10.0%
to 17.0%, chosen to reflect assumptions regarding rates of return and risk
premiums required by holders of RBC Common Stock. This analysis indicated a
range of present values per share of $11.32 to $16.20. KBW also calculated the
pro forma present value of RBC assuming the Merger with JBI at the Exchange
Ratio and derived present values in a range per share of $12.38 to $17.69
(assuming no cost savings), and $13.11 to $18.73 (assuming JBI was able to
achieve cost savings equal to 40% of RBC's non-interest expense). KBW noted that
the discounted cash flow analysis was included because it is a widely used
valuation methodology, but noted that it relies on numerous assumptions,
including earnings growth rates, terminal multiples and discount rates.
Compensation of Financial Advisor. Pursuant to the terms of an
engagement letter dated March 12, 1998 RBC will pay KBW an aggregate fee of
0.50% of the total transaction value as determined at the closing for acting as
financial advisor in connection with the Merger, including rendering the RBC
Opinion. Of the 0.50% fee, $50,000 was payable following signing of the Merger
Agreement, with the remainder of the fee payable upon consummation of the
Merger. Whether or not the Merger is consummated, RBC also has agreed to
reimburse KBW for its reasonable out-of-pocket expenses incurred in connection
with the transaction. RBC has also agreed to indemnify KBW and certain related
persons against certain liabilities relating to or arising out of its
engagement. KBW acted as placement agent in connection with the capital
placement of Regent in 1997. See "RBC Executive Compensation - RBC's
Relationship with Regent." KBW's fees in connection with such placement were
approximately $340,000.
Regulatory Approvals
The Merger is subject to the prior approval of the Federal Reserve
Board ("FRB"), the Federal Deposit Insurance Corporation ("FDIC"), the Office of
the Comptroller of the Currency ("OCC") and the Pennsylvania Department of
Banking ("PA Department"). There can be no assurance that all required approvals
will be obtained, or as to the timing or conditions of any such approvals.
Applications to obtain such approvals have been filed or are expected to be
filed in the near future.
No Dissenters' Rights
Pursuant to the Pennsylvania Business Corporation Law ("PBCL"), holders
of JBI Common Stock who are entitled to vote at the JBI Meeting do not have
dissenters' appraisal rights with respect to the Merger because JBI has more
than 2,000 shareholders of record.
The New Jersey Business Corporation Act ("NJBCA") generally provides
dissenters' rights for mergers and share exchanges that require shareholder
approval. However, JBI Common Stock (the consideration to be received by RBC
shareholders in the Merger) is held by more than 1,000 shareholders of record
and, therefore, pursuant to the NJBCA, holders of RBC Common Stock who are
entitled to vote at the RBC Meeting do not have dissenters' appraisal rights
with respect to the Merger.
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See "Comparison of Rights of Shareholders of JBI and of RBC -
Dissenters' Appraisal Rights."
Expenses
All expenses incurred by or on behalf of the parties in connection with
the Merger (including KBW's fees), which are estimated not to exceed $375,000,
will be borne by the party incurring such costs, except that printing expenses
for this Joint Proxy Statement/Prospectus will be shared equally between RBC and
JBI.
Interests of Certain Persons
In considering the recommendations of the respective Board of
Directors, shareholders of JBI and RBC should be aware that members of RBC's
management and Board of Directors have interests in the Merger that are in
addition to their interests as shareholders of RBC.
Positions as Directors and Officers. Pursuant to the Merger Agreement,
JBI has agreed to cause the election or appointment on or prior to the Merger
Effective Date of (i) Robert B. Goldstein, O. Francis Biondi and Barbara H.
Teaford as additional directors of Jefferson, (ii) Robert B. Goldstein and John
W. Rose as additional Class A directors of JBI and (iii) Robert B. Goldstein as
Vice Chairman of JBI and President and Chief Operating Officer of Jefferson.
Indemnification. Pursuant to the Merger Agreement, JBI has agreed to
provide indemnification for a period of two years from the Merger Effective Date
to each present and former director and officer of each of RBC and Regent and
each officer or employee of each of RBC and Regent who is serving as a director
or trustee of another entity expressly at the request or direction of RBC or
Regent, against any costs or expenses, including reasonable attorneys' fees,
judgments, fines, losses, claims, damages or liabilities incurred in connection
with claims arising out of matters existing or occurring at or prior to the
Merger Effective Date, including transactions contemplated by the Merger
Agreement. JBI is required to maintain in effect, for not less than two years
from the Merger Effective Date, the policies of directors' and officers'
liability insurance most recently maintained by RBC or substitute policies with
reputable and financially sound carriers of at least the same coverage with
terms and conditions no less advantageous without gaps or lapses in coverage;
provided that JBI is not required to spend more than an amount per year equal to
250% of the current annual premiums paid by RBC to maintain or procure such
insurance coverage.
Employment Agreements. Pursuant to the Merger Agreement, the employment
agreements of each of Robert B. Goldstein, Joel E. Hyman and Amanda Perkins are
required either to be amended or replaced on terms acceptable to JBI or
terminated in accordance with their terms or on such other terms as shall be
acceptable to JBI. To the extent that employment agreements of such persons are
amended or replaced, it is anticipated that the economic terms of the amended or
replacement agreements will be substantially similar to their existing
agreements with RBC and Regent. If JBI elects to terminate the employment
agreements, Mr. Goldstein, Mr. Hyman
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and Ms. Perkins are entitled to certain termination benefits, and Ms. Teaford is
entitled to be paid her stipulated salary through the stated term of her
existing employment agreement. See "RBC Executive Compensation - Employment
Agreements."
Regent Employees. Prior to completion of the Merger, JBI will advise
each of the current employees of RBC and Regent in writing that (i) it will
interview all current employees of Regent; (ii) it will consider in good faith
continuing to employ each such employee upon the completion of the Merger and
(iii) any employee of Regent who is retained by JBI will be given credit for his
or her prior service with Regent for the purposes of determining the entitlement
to and amount of (a) retirement benefits provided under JBI's current retirement
plans (and any successors thereto) and (b) the required employer contribution
for the group health insurance currently provided by JBI.
Stock Options. Each outstanding and unexercised option to purchase RBC
Common Stock will be converted into an option to purchase that number of shares
of JBI Common Stock as equals the number of shares of RBC Common Stock
purchasable pursuant to such option multiplied by 0.303 at an exercise price
equal to the exercise price of the RBC Option divided by 0.303. See "RBC
Executive Compensation - Summary Compensation Table."
Federal Income Tax Aspects
Consummation of the Merger is conditioned upon there being delivered
opinions of Duane, Morris & Heckscher LLP, as to matters pertaining to RBC, and
Ledgewood Law Firm, P.C., as to matters pertaining to JBI, that for federal
income tax purposes, under current law, assuming the Merger Agreement is
approved and adopted by the shareholders of JBI and RBC and that the
transactions under the Merger Agreement take place as described in the Merger
Agreement, among other things, the Merger Transaction will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and, in that
case, the following would be the material federal income tax consequences of the
Merger Transaction:
(i) no gain or loss will be recognized by RBC or JBI in the Merger
Transaction;
(ii) no gain or loss will be recognized by the shareholders of RBC
upon their receipt of JBI Common Stock in exchange for RBC Common
Stock, except that shareholders who receive cash in lieu of
fractional share interests in JBI Common Stock will recognize
gain or loss equal to the difference between the amount of such
cash and the basis allocated to such fractional share interests.
Any such gain or loss will generally constitute capital gain or
loss, provided the RBC Common Stock is held as a capital asset on
the Merger Effective Date;
(iii) the basis of JBI Common Stock (including fractional share
interests) to be received by the shareholders of RBC will be the
same as the basis of the RBC Common Stock surrendered in exchange
therefor; and
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(iv) the holding period of JBI Common Stock to be received by a
shareholder of RBC will include the holding period of the RBC
Common Stock exchanged therefor, provided the RBC Common Stock is
held as a capital asset by the shareholder on the Merger
Effective Date.
In general, the exchange of RBC Options for JBI Options will be a
tax-free exchange to RBC Option holders for federal income tax purposes. Holders
of RBC Options should consult their own tax advisors as to the proper tax
treatment to them of the exchange of RBC Options for JBI Options.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. IT DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE MERGER
TRANSACTION. FURTHER, THE DISCUSSION MAY NOT BE ENTIRELY APPLICABLE TO
SHAREHOLDERS WHO RECEIVED THEIR RBC COMMON STOCK PURSUANT TO THE EXERCISE OF
EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION OR WHO ARE NOT CITIZENS OR
RESIDENTS OF THE UNITED STATES. THE DISCUSSION IS BASED ON CURRENTLY EXISTING
PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS THEREUNDER,
AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE FOREGOING ARE
SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF
THIS DISCUSSION. EACH RBC SHAREHOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX
ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TRANSACTION
TO HIM OR HER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN
TAX LAWS.
Accounting Treatment
If completed as proposed, the Merger will be accounted for under the
pooling of interests method of accounting. Under this method of accounting, and
after addressing any conformity issues, (i) the recorded assets and liabilities
of JBI and RBC will be carried forward to JBI (on a consolidated basis) at their
recorded amounts; (ii) income of JBI (on a consolidated basis) will include
income or loss of RBC for the entire fiscal year in which the combination
occurs; and (iii) the reported income or loss of the separate companies for
prior periods will be combined and restated as income or loss of JBI (on a
consolidated basis).
It is a condition to consummation of the Merger that JBI shall have
received a letter, dated the Merger Effective Date, from Grant Thornton LLP and
that RBC shall have received a letter, dated as of the Merger Effective Date,
from Arthur Andersen LLP confirming that such firm is not aware of any facts and
circumstances which might cause the Merger not to qualify for pooling of
interests accounting treatment under Accounting Principles Board Opinion No. 16
if the Merger is consummated in accordance with the Merger Agreement.
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Exchange of Certificates and Options
As promptly as practicable after the Merger Effective Date, JBI will
send or cause to be sent to each holder of record of RBC Common Stock or an RBC
Option transmittal materials for use in exchanging all of such holder's
certificates representing RBC Common Stock or RBC Options for a certificate or
certificates representing the number of shares of JBI Common Stock to which such
holder is entitled and payment (if any) with respect to such holder's fractional
share interest, or a JBI Option exercisable for the number of shares of JBI
Common Stock to which the holder is entitled. The transmittal materials will
contain information and instructions with respect to the surrender and exchange
of such certificates and options. RBC SHAREHOLDERS AND OPTIONHOLDERS SHOULD NOT
SEND IN THEIR CERTIFICATES OR OPTIONS UNTIL THEY RECEIVE THE LETTER OF
TRANSMITTAL FORM AND INSTRUCTIONS. Upon surrender of all of a holder's
certificates for RBC Common Stock or RBC Options (or upon providing indemnity
satisfactory to JBI if any certificate or RBC Option has been lost, stolen or
destroyed), together with a properly completed letter of transmittal, JBI will
mail to the holder a certificate or certificates representing the number of
shares of JBI Common Stock to which the holder is entitled, together with all
undelivered dividends or distributions in respect of such shares and, where
applicable, a check for the amount representing any fractional share interest
(in each case, without interest) or, with respect to a holder of an RBC Option,
a JBI Option.
All JBI Common Stock and JBI Options issued pursuant to the Merger will
be deemed issued as of the Merger Effective Date. After the Merger Effective
Date, former holders of record of RBC Common Stock will be entitled to vote at
any meeting of holders of JBI Common Stock the number of shares of JBI Common
Stock into which their shares of RBC Common Stock have been converted,
regardless of whether they have surrendered their certificates therefor.
Dividends declared by JBI after the Merger Effective Date will include dividends
on all JBI Common Stock issued in the Merger, as applicable, but no dividend or
other distribution payable to the holders of record of JBI Common Stock at or as
of any time after the Merger Effective Date will be paid to the holder of any
RBC Common Stock share certificates until the holder physically surrenders all
such certificates as described above. Promptly after surrender, all undelivered
dividends and other distributions and, where applicable, a check for the amount
representing any fractional share interest, will be delivered to the holder
(without interest). After the Merger Effective Date, the transfer books for RBC
Common Stock and RBC Options will be closed and there will be no transfers on
the transfer books of RBC of any shares of RBC Common Stock or any RBC Options
that were outstanding immediately prior to the Merger Effective Date.
Option Agreement
As an inducement and condition to JBI's willingness to enter into the
Merger Agreement, RBC entered into the Option Agreement with JBI. Pursuant to
the Option Agreement, RBC granted an option to JBI, exercisable only under
certain limited circumstances (none of which, to the best of RBC's and JBI's
knowledge, has occurred as of the date hereof), to purchase up
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to 19.9% of the authorized but unissued shares of RBC Common Stock for a
purchase price of $14.39 per share, subject to adjustment in certain
circumstances.
Subject to applicable law and regulatory restrictions, JBI may exercise
its option, in whole or in part, if, but only if, both an Initial Triggering
Event (as defined below) and a Subsequent Triggering Event (as defined below)
have occurred prior to the occurrence of an Exercise Termination Event (as
defined below), provided that written notice of such exercise is provided within
six months following such Subsequent Triggering Event (or such later period as
provided in the Option Agreement).
As defined in the Option Agreement, an "Initial Triggering Event" is
any of the following events or transactions which occurs after March 18, 1998:
(i) RBC or Regent, without having received JBI's prior written
consent, shall have entered into an agreement to engage in an Acquisition
Transaction (as defined in the Merger Agreement) with any person, or the RBC
Board of Directors shall have recommended that the shareholders of RBC approve
or accept any Acquisition Transaction other than as contemplated by the Merger
Agreement;
(ii) any person, other than JBI or any of its subsidiaries, shall have
acquired beneficial ownership or the right to acquire beneficial ownership of
10% or more of the outstanding shares of RBC Common Stock;
(iii) the RBC shareholders shall have voted and failed to approve the
Merger Agreement at the RBC Meeting, or the RBC Meeting shall not have been held
in violation of the Merger Agreement or shall have been cancelled prior to
termination of the Merger Agreement or if, prior to the RBC Meeting (or if the
RBC Meeting shall not have been held or shall have been cancelled, prior to such
termination), it shall have been publicly announced that any person shall have
made, or disclosed an intention to make, a proposal to engage in an Acquisition
Transaction;
(iv) the RBC Board of Directors shall have withdrawn or modified in
any manner adverse in any respect to JBI its recommendation that RBC's
shareholders approve and adopt the transactions contemplated by the Merger
Agreement, or RBC or Regent shall have authorized, recommended or proposed an
agreement to engage in an Acquisition Transaction with any person;
(v) any person other than JBI or any of its subsidiaries shall have
made a proposal to RBC or its shareholders to engage in an Acquisition
Transaction and such proposal shall have been publicly announced;
(vi) any person other than JBI or any of its subsidiaries shall have
filed with the Commission a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute an
Acquisition Transaction;
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(vii) RBC shall have willfully breached any covenant or obligation
contained in the Merger Agreement in anticipation of engaging in an Acquisition
Transaction, and following such breach JBI would be entitled to terminate the
Merger Agreement; or
(viii) any person shall have filed an application or notice with the
FRB or other federal or state bank regulatory or antitrust authority for
approval to engage in an Acquisition Transaction.
As defined in the Option Agreement, an "Exercise Termination Event" is
any of the following:
(i) the Merger Effective Date;
(ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event, except a termination by the JBI due to a willful
breach of the Merger Agreement by or due to the failure of the RBC Board of
Directors to recommend approval and adoption of the Merger Agreement by RBC's
shareholders (each, a "Listed Termination"); or
(iii) the passage of 18 months (or such longer period as provided in
the Option Agreement) after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a Listed
Termination.
Under applicable law, JBI may be required to obtain the prior approval
of the FRB before acquiring 5% or more of the issued and outstanding shares of
RBC Common Stock. Certain other regulatory approvals may also be required before
such an acquisition could be completed.
At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the holder of the option, delivered prior to an
Exercise Termination Event (or such later period as provided in the Option
Agreement), RBC must repurchase the option from such holder at a price (the
"Option Repurchase Price") equal to the amount by which (a) the market/offer
price exceeds (b) the option exercise price, multiplied by the number of shares
for which the option may then be exercised and (ii) at the request of the owner
of shares purchased under the Option Agreement from time to time, delivered
prior to an Exercise Termination Event (or such later period as provided in the
Option Agreement), RBC must repurchase such number of shares as the owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of option shares so designated.
A "Repurchase Event" will be deemed to have occurred upon the
occurrence of any of the following:
(i) the acquisition by any person other than JBI or any of its
subsidiaries of beneficial ownership of 50% or more of the then outstanding RBC
Common Stock; or
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(ii) the consummation of any Acquisition Transaction.
The Option Agreement is intended to increase the likelihood that the
Merger will be consummated according to the terms set forth in the Merger
Agreement, and may be expected to discourage offers by third parties to acquire
RBC prior to the Merger. A copy of the Option Agreement is set forth in Annex C
to this Joint Proxy Statement/Prospectus, and reference is made thereto for its
complete terms. The foregoing discussion is qualified in its entirety by
reference to the Option Agreement.
JBI
JBI was incorporated under Pennsylvania law on March 26, 1981 and
registered under the Holding Company Act. JBI owns as its principal assets
Jefferson and Jefferson NJ through which it provides a wide range of commercial
and retail banking services in Philadelphia, Pennsylvania and its immediately
adjacent Pennsylvania and New Jersey suburbs. JBI currently operates an
executive office, 31 retail branch offices and a mortgage loan production
office. The principal executive officers of JBI are located at 1845 Walnut
Street, 10th Floor, Philadelphia, Pennsylvania 19103, and its telephone number
is (215) 861-7000.
During the past three years, JBI has experienced substantial growth,
reflecting both internal growth and JBI's acquisitions of United Valley Bank
(1997) and Constitution Bank (1995). For the period from January 1995 through
December 31, 1997, JBI's total assets have grown from $863.2 million to $1.3
billion, its deposits and interest-bearing liabilities have grown from $779.6
million to $1.2 billion and its shareholders' equity has grown from $75.2
million to $102.9 million. JBI has also enjoyed increased profitability during
the period. JBI's income increased from $7.3 million for 1994 to $12.4 million
for 1997. Return on average assets increased from 0.96% for 1994 to 1.04% for
1997.
JBI's primary strategy for further growth is to establish a reputation
and market presence as the "small and middle-market business bank." JBI has
sought to implement its strategy by targeting the banking needs of high net
worth or high income individuals within its market area and the businesses which
they own or control. To attract this market, JBI provides specialized commercial
lending, cash management, lease financing and personal credit services. In
particular, in its commercial lending, JBI seeks to respond to its targeted
market by customizing the terms of its loans to the specific or special needs of
individual customers or their businesses. Such services are also intended to aid
in generating loans and deposits from JBI's targeted market. JBI believes that
satisfactory attention to this selected market requires a combination of the
services of the type described above (which JBI believes are frequently
unavailable at small banks), and the personal attention of senior management
(which JBI believes is often unavailable to such customers at major financial
institutions). The customers in this market generally require relatively small
amounts of credit (almost never in excess of $5 million, and often less than $1
million), but often seek customized solutions to their financial requirements.
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JBI provides a wide range of banking services for both individuals and
businesses in addition to the more specialized services referred to above. For
individuals, JBI provides services which include demand, interest checking,
money market, certificates of deposit and other savings accounts. JBI also
offers home banking by computer, telephone banking services, automatic teller
services through the MAC inter-bank automated teller system, night depository
services, safe-deposit facilities, consumer loan programs (including installment
loans for home repairs and for the purchase of consumer goods such as
automobiles and boats), home equity loans, credit card plans with Visa and
Mastercard, revolving lines of credit, automobile leases, residential
construction loans and permanent mortgages for single family and multi-family
homes. For businesses, JBI additionally offers short-term loans for seasonal and
working capital purposes, term loans secured by real estate and other assets,
loans for construction and expansion needs (including residential construction),
equipment and automobile leasing and loan programs, revolving credit plans, cash
management services and merchant credit card depository programs. JBI also makes
indirect automobile loans by providing consumer financing through automobile
dealerships. Although JBI does not itself provide trust services, it has entered
into strategic alliances with several trust institutions to offer their services
to JBI customers.
Deposits obtained through JBI's branch banking system have been the
principal source of funds for use in JBI's lending activities. At December 31,
1997, JBI had total deposits of $933.6 million. Of this total, 44% represented
time deposits, 41% represented savings, money market and interest checking
deposits and 15% represented demand (non-interest bearing) deposits.
At December 31, 1997, JBI had a net loan portfolio (excluding mortgage
loans held for sale) of $894.0 million, representing 67% of total assets at that
date. The loan portfolio of JBI is categorized into commercial, commercial
mortgage, construction, direct lease financing, consumer (including indirect and
direct automobile loans and home equity loans and lines of credit), credit card
and residential mortgage. At December 31, 1997, commercial mortgages and other
commercial loans, including construction loans and direct financing leases, were
$566.5 million, or approximately 63% of JBI's net loan portfolio. Although in
making its loans JBI relies upon its evaluation of the creditworthiness and
debt-servicing capability of a borrower, its loans often are secured by
residential or commercial real property, automobiles, equipment, fixtures, and
other collateral. However, significant exceptions may be made to this general
operating philosophy. JBI does not generally engage in non-recourse lending
(i.e., lending as to which the lender only looks to the asset securing the loan
for repayment) and typically will require the principals of any commercial
borrower to personally guarantee the loan. JBI does not generally engage in
out-of-area lending, although it may accept significant amounts of out-of-area
collateral security (such as a second home or other collateral) from borrowers
in the Philadelphia area.
JBI has been active in originating residential mortgage loans for the
purposes of resale to the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation and other entities. For the year ended December
31, 1997, JBI had originated $46.2 million of mortgage loans. JBI originates
these loans primarily through its branches and existing network
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of customers and generally retains the servicing on loans sold. JBI generally
obtains commitments to sell its mortgage originations as they are made, to
minimize the interest rate risk of holding such originations. At December 31,
1997, JBI had approximately $3.0 million of mortgage loans held for sale.
Additionally, JBI periodically purchases the right to service other
portfolios located in its geographic markets. Amounts so purchased are subject
to, and limited by, management's assessment of the prepayment risk of the
underlying portfolio. Under its mortgage servicing arrangements, JBI collects
and remits loan payments, maintains related account records, makes or monitors
insurance and tax payments, makes any required physical inspections of property,
contacts delinquent mortgagors and supervises foreclosures and property
dispositions. At December 31, 1997, JBI was servicing real estate loans for
lenders other than itself in an aggregate principal amount of approximately
$243.3 million.
RBC
General
RBC is a one bank holding company incorporated on November 2, 1987
under New Jersey law and registered under the Holding Company Act. RBC became a
bank holding company on June 2, 1989 when it completed the acquisition of all of
the authorized capital stock of Regent, RBC's only subsidiary. Regent commenced
operations on June 5, 1989. RBC provides banking services through Regent and
does not engage in any activities other than banking activities. RBC is
regulated by the FRB. The executive offices of RBC are located at 1430 Walnut
Street, Philadelphia, Pennsylvania 19102. RBC's telephone number is (215)
546-6500.
Recent Developments
On November 21, 1997, RBC completed the redemption of all then
outstanding shares of its Series A through Series E Convertible Preferred Stock.
Following RBC's August 25, 1997 announcement of its intention to redeem all
outstanding RBC Preferred Stock, the holders of 496,333 shares, representing
approximately 97% of the total outstanding shares of RBC Preferred Stock,
elected to convert their RBC Preferred Stock into RBC Common Stock in lieu of
receiving the redemption price of $10 per share.
On December 31, 1997, Regent reclassified its $63.5 million portfolio
of securities "held to maturity" as "available for sale." The principal benefit
of this action is that Regent's entire balance sheet can now be actively managed
as part of the asset/liability management process, which is dedicated to
generating a consistent stream of net interest income. During the first quarter
of 1998, Regent sold $48.0 million of the investment portfolio in an effort to
minimize the impact on future earnings of significant prepayments on
mortgage-backed securities and reinvested the proceeds into other debt
securities. The net gain from the restructuring of the
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portfolio was not material. Additional restructuring may occur from time to
time as circumstances warrant.
Regent
Regent, as a national bank, is regulated by the OCC and is a member of
the Federal Reserve System. The deposits held by Regent are insured by the Bank
Insurance Fund of the FDIC.
Regent engages in the commercial banking business, serving the banking
needs of its customers with a particular focus on small and medium-sized
businesses, professionals and other individuals, with an emphasis on the
origination of loans in the $100,000 to $3.0 million range. Regent's strategy in
providing its services is to attempt to respond to each customer's needs and
assure that a customer will deal regularly with the same officer of Regent. The
small and mid-sized business and entrepreneurial market in Regent's service area
is large and Regent believes it can offer the flexibility, speed and personal
attention necessary to serve this market. The banking and broad business
experience of Regent's officers and directors makes Regent particularly
well-suited to serve the individualized needs of this market. Regent maintains
one office at 1430 Walnut Street, Philadelphia, Pennsylvania 19102, where it
conducts all of its banking activities.
At December 31, 1997, Regent had $225.6 million in assets, $152.0
million in deposits and $93.7 million in net loans. Regent's primary service
area for Community Reinvestment Act ("CRA") purposes is the Delaware Valley
which includes the greater Philadelphia metropolitan area and various counties
in New Jersey, Delaware and Maryland.
The federal and state laws and regulations that are applicable to bank
holding companies and banks give regulatory authorities extensive discretion in
connection with their supervisory and enforcement activities and generally have
been promulgated to protect depositors and deposit insurance funds and not for
the purpose of protecting shareholders. Any change in such regulations, whether
by an applicable federal or state regulatory authority or federal or state
legislative bodies, could have a significant impact on RBC and Regent.
Regent offers a wide range of deposit products, including checking
accounts, interest-bearing NOW accounts, insured money market accounts,
certificates of deposit, savings accounts and Individual Retirement Accounts. A
broad range of credit facilities are offered to the businesses and residents of
Regent's service area, including commercial loans, home improvement loans,
mortgage loans and home equity lines of credit. At December 31, 1997, Regent's
maximum legal lending limit was approximately $3.3 million for any borrower or
any affiliated group of borrowers.
In addition, Regent offers safe deposit boxes, travelers' checks,
money orders, direct deposit of payroll and Social Security checks, and access
to one or more regional or national automated teller networks as well as
international services through correspondent institutions.
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Regent is also empowered to offer, but does not provide, trust services. Regent
has the power to act as executor of wills and as a trustee for Individual
Retirement Accounts, minors and other fiduciaries. Other trust services are
provided through correspondent institutions. Regent has established
relationships with correspondent banks and other financial institutions in order
to provide other services requested by its customers, including requesting
correspondent banks to participate in loans where the loan amount exceeds
Regent's policies or legal lending limit.
As of December 31, 1997, RBC and Regent had a total of 33 employees.
Competition
There is substantial competition among financial institutions in
Regent's service area, although Regent believes its relatively small size and
emphasis on personal service provide it with a competitive advantage. Regent
competes with new and established local commercial banks, as well as numerous
regionally based commercial banks. There is also competition from out of state
financial institutions, thrifts and mutually owned savings banks and savings and
loan associations. Regent attracts its customers from the deposit base of such
existing banks and financial institutions and from growth in the Delaware
Valley. Many of such banks and financial institutions are well-established and
well-capitalized, allowing them to do more advertising and promotion and to
provide a greater range of services, including trust services, than Regent.
Regent's strategy has been emphasizing personalized services, offering
competitive rates to depositors and making use of commercial and personal ties
of RBC's shareholders, directors, advisory board members, officers and staff to
Delaware Valley businesses and residents.
In recent years, intense market demands, economic pressures and
significant legislative and regulatory action have eroded traditional banking
industry classifications which were once clearly defined and have increased
competition among banks, as well as between banks and other financial
institutions. As a result, banks and other financial institutions have had to
diversify their services, generally increase interest paid on deposits and
become more cost effective. These events have resulted in increasing homogeneity
in the financial services offered by banks and other financial institutions.
Some of the effects on banks and other financial institutions of these market
dynamics and legislative and regulatory changes include increased customer
awareness of product and service differences among competitors and increased
merger activity.
Properties
Regent leases approximately 20,600 square feet of the first and second
floors and basement of 1430 Walnut Street and the third floor of 1426 and 1428
Walnut Street, Philadelphia, Pennsylvania. The space is occupied by both RBC and
Regent and serves as Regent's sole banking location. The properties are leased
at a rental expense of approximately $210,000 per annum, excluding taxes,
insurance, utilities and janitorial services through 1998 and $87,000 through
May 1999. The leases provide for two five-year renewal options at then current
market rental rates. The leases for the 1430 and 1428 Walnut Street premises
include a right of first refusal to purchase the premises.
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Legal Proceedings
Information pertaining to litigation to which RBC and Regent is
subject is incorporated by reference to the discussion under "Legal Proceedings"
in Note 14 to the Consolidated Financial Statements included in Item 8 of the
RBC's 1997 Form 10-K Report, a copy of which accompanies this Joint Proxy
Statement/Prospectus.
DESCRIPTION OF JBI CAPITAL STOCK
General
JBI's authorized capital stock consists of 10,000,000 shares of JBI
Common Stock, par value $1.00 per share, and 1,000,000 shares of preferred stock
("JBI Preferred Stock"), par value $1.00 per share. As of the JBI Record Date,
there were 5,052,489 shares of JBI Common Stock outstanding and no shares of JBI
Preferred Stock outstanding. JBI proposes to amend its Articles of Incorporation
to increase the number of authorized shares of JBI Common Stock from 10,000,000
shares to 20,000,000 million shares. See "Proposal to Increase Authorized
Capital Stock of JBI."
Description of JBI Common Stock
Holders of JBI Common Stock are entitled to dividends when, as and if
declared by the JBI Board of Directors and in such amounts as the JBI Board of
Directors may deem advisable. In the event of any liquidation, dissolution or
winding up of JBI, whether voluntary or involuntary, holders of JBI Common Stock
are entitled, after payment or provision for payment of the debts or other
liabilities of JBI, and subject to the prior rights of holders of any JBI
Preferred Stock which may then be outstanding, to share ratably in the remaining
assets of JBI. Shares of JBI Common Stock do not possess preemptive rights.
Holders of JBI Common Stock are entitled to one vote for each share held of
record on each matter submitted to a vote at a meeting of shareholders. There is
no cumulative voting in the election of directors. See "Comparison of Rights of
Shareholders of JBI and of RBC" for a description of certain matters affecting
the voting rights of shareholders of JBI.
Description of JBI Preferred Stock
Although there are currently no shares of JBI Preferred Stock
outstanding, the JBI Board of Directors is authorized to issue JBI Preferred
Stock from time to time in one or more series, with each series to have such
designation or title as fixed by the JBI Board of Directors. Each series of JBI
Preferred Stock may differ from every other series already outstanding as may be
determined by the JBI Board of Directors in any or all of the following, but in
no other respects: rates of dividend, rights and price of redemption, rights in
the event of liquidation, sinking fund provisions, rights of conversion and
voting rights, if any.
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Certain Anti-Takeover Provisions
State and Federal Law Anti-Takeover Provisions. JBI is subject to
various provisions of the PBCL which may have the effect of discouraging
unilateral tender offers or other attempts to acquire JBI whether or not the
terms thereof might be favored by some shareholders. See "Comparison of Rights
of Shareholders of JBI and of RBC." JBI is also subject to the provisions of the
Change in Bank Control Act of 1978 and the Holding Company Act which may also
have the effect of discouraging attempts to acquire JBI.
Provisions in JBI's Articles of Incorporation and Bylaws. Certain
provisions of JBI's Articles of Incorporation and Bylaws may have the effect of
discouraging unilateral tender offers or other attempts to take over and acquire
JBI whether or not the terms thereof might be favored by some shareholders. For
a discussion of these provisions, see "Comparison of Rights of Shareholders of
JBI and of RBC - Authorized Capital," "- Size and Classification of Board of
Directors," "- Removal of Directors," "- Shareholder Action: Amendments of
Articles, Certificate and Bylaws," "- Shareholder Action: Special Meetings" and
"- Shareholder Action: Provisions in Articles or Certificate Regarding Certain
Fundamental Transactions."
Transfer Agent and Registrar
ChaseMellon Shareholder Services, L.L.C. acts as the transfer agent and
registrar for the JBI Common Stock.
COMPARISON OF RIGHTS OF SHAREHOLDERS OF
JBI AND OF RBC
JBI is a Pennsylvania corporation subject to the provisions of the PBCL
and is a "registered corporation" within the meaning of the PBCL. RBC is a New
Jersey corporation, subject to the provisions of the NJBCA. Shareholders of RBC,
whose rights as shareholders are currently governed by the NJBCA and RBC's
Certificate of Incorporation ("RBC Certificate of Incorporation") and Bylaws
("RBC Bylaws"), as amended to date, will become holders of JBI Common Stock as a
result of the Merger. Accordingly, their rights will be governed by the JBI
Articles of Incorporation, JBI Bylaws and the PBCL.
The following is a summary of the material differences between the
rights of holders of JBI Common Stock and the holders of RBC Common Stock. This
summary does not purport to be a complete discussion of, and is qualified in its
entirety by reference to, the PBCL, the NJBCA and the constituent documents of
each corporation.
Authorized Capital
For a description of the authorized capital of JBI, see "Description of
JBI Capital Stock."
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The RBC Certificate of Incorporation authorizes the issuance of
10,000,000 shares RBC Common Stock, par value $.10 per share, of which 3,409,822
shares were issued and outstanding as of the RBC Record Date, and 5,000,000
shares of preferred stock, par value $.10 per share ("RBC Preferred Stock"),
none of which were issued and outstanding as of the RBC Record Date. RBC
Preferred Stock is issuable in series, each having such rights and preferences
as the RBC Board of Directors may, by adoption of an amendment of the RBC
Certificate of Incorporation, fix and determine.
Issuance of Shares
Following the Merger, JBI will have approximately 3.9 million
authorized but unissued shares of JBI Common Stock. As a general matter, the
existence of unissued and unreserved shares of capital stock provides a board of
directors with the ability to cause the issuance of shares of capital stock
under circumstances that might prevent or render more difficult or costly the
completion of a takeover by diluting the voting or other rights of any proposed
acquirer, by creating a substantial voting block in institutional or other hands
that might undertake to support the position of a board of directors, or by
effecting an acquisition that might complicate or preclude a takeover or
otherwise.
The JBI Board of Directors also has the authority to issue shares of
JBI Preferred Stock with such terms as it deems advisable. In the event of a
proposed merger, tender offer or other attempt to gain control of JBI which the
JBI Board of Directors does not approve, the JBI Board of Directors could
authorize the issuance of one or more series of JBI Preferred Stock with rights
and preferences which could impede the completion of such transaction. An effect
of the possible issuance of JBI Preferred Stock, therefore, may be to deter a
future takeover attempt. In addition, the rights, preferences, privileges and
limitations of any JBI Preferred Stock which may have been established by the
JBI Board of Directors prior to any proposal for merger, tender offer or other
attempt to gain control of JBI could have the effect of impeding or discouraging
attempts to acquire control of JBI.
Size and Classification of Board of Directors
The JBI Articles of Incorporation provide that the number of directors
constituting the entire JBI Board of Directors is fixed by a vote of
three-quarters of the entire JBI Board of Directors. The number of directors is
currently fixed at 11, and two vacancies will be created for the appointment of
Messrs. Goldstein and Rose as provided in the Merger Agreement. The JBI Articles
of Incorporation provide for a classified board of directors consisting of three
classes as nearly equal in size as practicable. One class is proposed for
election at each annual meeting of shareholders. Each class holds office until
the third annual meeting for election of directors following the election of
such class.
The RBC Bylaws provide that the RBC Board of Directors will be composed
of not fewer than five, but not more than 25 members, the number of which may be
fixed by resolution of the RBC Board of Directors from time to time. All
directors are elected at each annual meeting of
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shareholders to serve until their successors have been elected and qualified.
The RBC Board is not classified.
The classification of the JBI Board of Directors may have the effect of
decreasing the number of directors that could otherwise be elected at a given
annual meeting by any holder of JBI Common Stock who obtains a controlling
interest in JBI Common Stock and thus have an anti-takeover effect. With respect
to RBC, however, any holder of RBC Common Stock who obtains a controlling
interest in RBC Common Stock could elect the entire RBC Board of Directors at
any meeting held for the purpose of electing directors.
Nomination of Directors and Other Matters to Be Placed on Annual Meeting Agenda
Shareholders of JBI are required to submit any nomination of a
candidate for election as a director not less than 90 days prior to a scheduled
meeting for the election of directors (except that, if less than 21 days' notice
of the meeting is given to shareholders, nominations may be submitted within
seven days following the mailing of notice to shareholders). The RBC Bylaws have
no comparable provisions.
Shareholders of JBI are also required to submit to JBI, in writing and
in advance, any matter desired to be placed on the agenda of the annual meeting
of shareholders. The RBC Bylaws have no comparable provisions.
Removal of Directors
The JBI Articles of Incorporation provide that the entire JBI Board of
Directors, or any individual director, may be removed from office only for
cause, by a two-thirds vote of all shareholders entitled to vote in the election
of directors. The RBC Certificate of Incorporation and RBC Bylaws do not provide
for the removal of directors. The NJBCA provides that a director may be removed
by the affirmative vote of a majority of the votes cast by the holders of shares
entitled to vote for the election of directors.
Shareholder Action
Amendments of Articles, Certificate and Bylaws. The JBI Articles of
Incorporation may be amended by the affirmative vote of a majority of the votes
cast by shareholders entitled to vote thereon, except as set forth in
"Shareholder Action: Provisions in Articles or Certificate Regarding Certain
Fundamental Transactions" below. The JBI Bylaws may be amended by a majority
vote of the JBI Board of Directors or by an affirmative vote of at least
two-thirds of the shares entitled to vote. The RBC Bylaws may be amended by a
majority vote of the RBC Board of Directors, subject to the right of the
shareholders to change any such action by majority vote.
The RBC Certificate of Incorporation may be amended by RBC's
shareholders upon the affirmative vote of the holders of a majority of the votes
cast by the holders of outstanding RBC Common Stock if such amendment is first
approved by the RBC Board of Directors. An
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amendment to the RBC Bylaws requires the affirmative vote of a majority of the
RBC Board of Directors or the affirmative vote of a majority of votes cast by
the holders of the outstanding RBC Common Stock. Any amendment to the RBC Bylaws
adopted by RBC shareholders may be amended or repealed by the RBC Board of
Directors unless the adopting resolution for such bylaw amendment expressly
reserves to the shareholders the right to amend.
Special Meetings. The JBI Bylaws provide that special meetings of
shareholders may be called by the JBI Board of Directors. Shareholders are not
entitled under either the JBI Bylaws or the PBCL to call special meetings of
shareholders, except that under the PBCL an "interested shareholder" is entitled
to call a meeting for the purposes of approving certain business combinations
with such interested shareholder. See "Comparison of Rights of Shareholders of
JBI and of RBC - Shareholder Action: Fundamental Transactions - Control Share
Acquisitions." As used in the PBCL, an "interested shareholder" is a shareholder
who beneficially owns at least 20% of the voting shares of the corporation or
who is an affiliate or associate of such corporation and, at any time during the
five years prior to the date in question, beneficially owned at least 20% of its
voting shares.
The RBC Bylaws provide that special meetings of RBC shareholders may be
called at any time by any of the following: (i) the President of RBC; (ii) the
Chairman of the RBC Board of Directors; (iii) a majority of the RBC Board of
Directors; or (iv) the holders of at least 10% of all shares entitled to vote at
the meeting by submission of a written request, stating the subject of the
meeting, to the Secretary of RBC.
Under the JBI Articles of Incorporation, unless the JBI Board of
Directors otherwise directs, action may be taken by written consent of JBI
shareholders constituting the larger of (i) two-thirds of the total number of
votes which all shareholders are entitled to cast or (ii) the minimum percentage
of vote required by law.
Action by RBC shareholders may be taken by written consent of
shareholders who would have been entitled to cast the minimum number of votes
which would be necessary to authorize such action at a meeting at which all
shareholders entitled to vote thereon were present and voting.
Fundamental Transactions. The PBCL and the NJBCA contain several
significant provisions regulating fundamental corporate transactions as follows:
Control Transactions. The PBCL provides that if any person or group
acting in concert acquires voting power over voting shares of a registered
corporation that would entitle the holders to cast at least 20% of the votes
that all shareholders would be entitled to cast in an election of directors, the
remaining shareholders are entitled to notice of such acquisition from the
acquiring person or group and, following notice, are entitled to make written
demand upon the acquiring person or group to acquire the shares of the remaining
shareholders for their "fair value," including a proportion of any value payable
for acquisition of control of the corporation.
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The NJBCA has no comparable provisions with respect to "control
transactions."
Business Combinations. The PBCL generally restricts a registered
corporation from engaging in a "business combination" with an interested
shareholder of the corporation for a period of five years after the date on
which the interested shareholder became such. See "Comparison of Rights of
Shareholders of JBI and of RBC - Shareholder Action: Special Meetings" for
definition of "interested shareholder." The restrictions do not apply to: (i)
any business combination approved by the board of directors of the corporation
prior to the interested shareholder's "share acquisition date" (the date on
which the shareholder became an interested shareholder), or where the purchase
of shares by the interested shareholder on the share acquisition date has been
approved by the board of directors prior to the share acquisition; (ii) a
business combination approved by a majority of the shares entitled to vote for
directors, excluding shares owned by the interested shareholder or any affiliate
or associate of the interested shareholder, where (x) the interested shareholder
owns shares having 80% of the votes that all shareholders would be entitled to
cast, (y) the consideration to be received by the shareholders meets certain
criteria (generally that the cash and market value of non-cash consideration to
be received equals the higher of (A) the highest price paid by the interested
shareholder (at a time when the interested shareholder held shares having 5% of
the voting power) within a period of five years before announcement of the
business combination or the date the interested shareholder became such, or (B)
the market value of the corporation's shares on the date of the announcement of
the business combination or the date the interested shareholder became such),
and (z) the interested shareholder does not acquire further shares, with certain
limited exceptions, between the share acquisition date and the consummation of
the business combination; and (iii) a business combination approved by the
affirmative vote of all of the holders of all outstanding shares entitled to
vote. After five years following the share acquisition date, a business
combination between the corporation and an interested shareholder must be either
approved by a majority vote of the shares entitled to vote for directors
(excluding shares owned by the interested shareholder) or be approved at a
shareholder's meeting (which allows the voting of the shares of the interested
shareholder) and meet the criteria set forth in clauses (y) and (z), above.
As used in the PBCL, the term "business combination" means (i) a
merger, consolidation, share exchange or division of the corporation or any
subsidiary of the corporation with the interested shareholder or with any other
company which is or will be an affiliate or associate of the interested
shareholder; (ii) a sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets of the corporation or a subsidiary having an aggregate
market value of 10% or more of all consolidated assets, or 10% or more of the
market value of outstanding shares (equity securities or securities convertible
thereto) of the corporation, or representing 10% or more of the earning power or
net income (on a consolidated basis) of the corporation; (iii) the issuance or
transfer of shares of the corporation or a subsidiary having a market value
equal to 5% of the market value of all outstanding shares of the corporation;
(iv) the adoption of a proposal or plan of liquidation or dissolution of the
corporation proposed by or pursuant to an agreement or understanding with the
interested shareholder; (v) a recapitalization or reclassification proposed by
or done pursuant to agreement or understanding with the interested shareholder
which would, directly or indirectly, increase its proportionate share of the
outstanding
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shares of any voting securities or securities convertible thereto; or (vi) the
receipt by the interested shareholder of the benefit, directly or indirectly, of
any loans, advances, guarantees, pledges or financial assistance or any tax
credits or other tax advantages provided by or through the corporation.
The NJBCA contains provisions that are generally similar to the
business combination provisions of the PBCL. However, the NJBCA limits the
application of these provisions to "resident domestic corporations" which are
defined as issuers who, as of the date the interested shareholder became such,
had their principal executive offices in New Jersey. RBC's principal executive
offices are in Philadelphia, Pennsylvania, and, accordingly, such NJBCA
provisions are inapplicable to it.
Control Share Acquisitions. Under the PBCL, before an acquirer of 20%,
33-1/3% or 50% of the voting power of a registered corporation may exercise
voting power with respect to "control shares" (a term defined for these purposes
to include shares above the applicable threshold, shares acquired within 180
days of the control-share acquisition and any shares acquired with the intention
to make a control-share acquisition), the shareholders of the corporation must
have approved such exercise by a vote of (i) a majority of all outstanding
voting power, and (ii) a majority of outstanding "disinterested shares" (a term
defined to exclude shares beneficially owned by executive officers, inside
directors, the acquirer and its affiliates and associates, employee stock plans
where the employee lacks the right to direct confidentially the manner in which
the employee's shares are to be voted on the issue of according voting rights to
the control shares, and shares purchased while the corporation is "in play" and
that were beneficially owned continuously, for the period from the last to occur
of (x) 12 months preceding the record date of the shareholders' meeting called
for the purpose of considering the voting rights of the control shares, and (y)
five business days prior to the first public disclosure of a control share
acquisition through the record date of the subject shareholders' meeting). The
vote may take place at the next available shareholders' meeting, or the acquirer
may request the acceleration of the consideration of the issue by agreeing to
pay the cost of a special meeting and satisfying certain other requirements. If
the acquirer does not seek voting rights in the prescribed manner or if such
voting rights are denied or lapse, unless otherwise provided in the
corporation's articles of incorporation, the PBCL authorizes the corporation to
redeem all of the control shares from an acquirer at any time within two years
after the control-share acquisition. The redemption price of control shares
would be the average of the high and low sales prices of shares of the same
class and series on the date the corporation gives notice to the acquirer of the
call for redemption. JBI's Articles of Incorporation do not contain any contrary
provisions.
The NJBCA has no comparable provisions.
Disgorgement by Controlling Persons. Under the PBCL, a "controlling
person" (which for these purposes is defined generally to mean a person or group
which has acquired, offered to acquire or publicly disclosed the intention of
acquiring, or is seeking, at least a 20% voting interest or who has, directly or
indirectly, publicly disclosed that he, she or it may seek to acquire control)
would be required to disgorge any profit made by such controlling person on the
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disposition of shares of the corporation during the 18 months following
attainment of "controlling person" status. Any such profit would belong to and
be recoverable by the corporation, unless the shares involved were purchased
more than 24 months before the attainment of such status. The profit recovery
may be enforced by the corporation or by a shareholder if the corporation fails
to prosecute the action seeking such recovery in the prescribed manner.
The NJBCA has no comparable provisions.
Other Provisions. Both the PBCL and the NJBCA expressly authorize the
issuance of rights or options which contain such terms as may be fixed by a
board of directors, which may include provisions that limit any person owning or
offering to acquire a specified amount of the outstanding common shares of a
corporation from exercising or receiving the securities or rights. This
statutory authorization is intended to validate the adoption of shareholder
rights plans ("poison pills") which are often implemented by corporations to
deter undesirable takeovers or accumulations of large equity positions in the
corporation. Neither JBI nor RBC has such a shareholder rights plan.
Unlike the NJBCA, the PBCL also allows a corporation to classify the
holders of shares of a class or series into one or more special groups by
reference to any facts or circumstances that are not manifestly unreasonable and
to treat the shares held by particular shareholders, or group of shareholders,
in a manner that differs materially from the treatment accorded other
shareholders who hold shares of the same class or series. Such special treatment
of shareholders may be used to effect a recapitalization or incidental to a
fundamental transaction, such as a merger or acquisition. The PBCL provides that
such a plan may be permitted based on a court finding that it was undertaken in
good faith, after reasonable deliberation, and is in the best interests of the
corporation. Generally, however, the adoption of such a plan must be approved by
the normal vote of shareholders required to approve the underlying transaction
(e.g., the recapitalization or merger), and, at the option of the board of
directors, each group of shareholders that receives the same special treatment
must be given either the right to approve the plan or dissenters' rights.
Provisions in Articles or Certificate Regarding Certain Fundamental
Transactions. The JBI Articles of Incorporation provide that, with respect to
"fundamental transactions" and except where the PBCL specifically requires a
different vote, a proposed corporate action may be approved by (i) the minimum
vote of shareholders required for authorization of such action by the PBCL if
such approval is by recommendation of a vote of two-thirds of the entire JBI
Board of Directors, or (ii) if the JBI Board of Directors does not so recommend,
a vote of two-thirds of all shares entitled to vote, voting as a single class
and, in addition, the affirmative vote of any class of shares as may be required
by applicable law. The JBI Articles of Incorporation define a fundamental
transaction to be (A) the amendment of the JBI Articles of Incorporation
regarding the number, classification, qualifications, removal and election of
directors and regarding fundamental transactions; or (B) any of the following,
if any such transaction requires the approval of the shareholders under the JBI
Articles of Incorporation or the PBCL: the sale, lease, exchange or other
disposition of all or substantially all of the assets of JBI or the merger,
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consolidation, division, reorganization, recapitalization, dissolution,
liquidation or winding up of JBI.
The RBC Certificate of Incorporation contains no comparable provisions.
The RBC Bylaws provide that, unless otherwise provided by applicable law,
proposed shareholder actions shall be approved by a vote of a majority of the
shares entitled to vote.
Inspection Rights
Under the PBCL, and pursuant to the JBI Bylaws, every shareholder has a
right, upon written verified demand stating the purpose thereof, to examine, in
person or by agent or attorney, the share register, books and records of
account, and records of the proceedings of the incorporators, shareholders and
directors of JBI, and to make copies or extracts therefrom. The shareholder's
purpose for requesting access must be reasonably related to the interest of the
person as a shareholder. In addition, the officer or agent having charge of the
transfer books for JBI Common Stock is required to prepare a complete list of
shareholders entitled to vote at any meeting of shareholders, arranged in
alphabetical order, with the address and number of shares held by each. The list
is required to be produced and kept open at the time and place of the meeting
and is subject to the inspection of any shareholder during the meeting.
Under the NJBCA, shareholders are entitled, upon written request, to
obtain a balance sheet as of the end of RBC's most recent fiscal year, and its
profit and loss and surplus statement for such fiscal year. The NJBCA further
permits (i) any person who has been a shareholder of record of RBC for six
months, or (ii) any person holding, or so authorized in writing by persons
holding, at least 5% of the outstanding shares of any class or series, upon five
days' written demand, for any proper purpose (generally, a purpose related to
the business of the corporation) to examine the minutes and proceedings of
shareholders and record of shareholders, and to make extracts therefrom. In
addition, the officer or agent having charge of the stock transfer books for
shares of RBC is required to prepare a complete list of shareholders entitled to
vote at a shareholders' meeting, arranged alphabetically within each class, with
the address and number of shares held by each. The list must be produced at the
meeting and is subject to the inspection of any shareholder for reasonable
periods during the meeting.
Dissenters' Appraisal Rights
The PBCL provides dissenters' rights, under certain circumstances, with
respect to mergers, consolidations, divisions, conversions and certain share
exchanges that would require shareholder approval, sales of all or substantially
all of the assets (other than sales that are in the usual and regular course of
business and certain liquidations and court-ordered sales), amendments or plans
containing a provision for special treatment of certain shareholders, and any
corporate action taken pursuant to a shareholder vote to the extent the articles
of incorporation, bylaws or a resolution of the board of directors entitles
shareholders to dissent.
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A shareholder opposing a plan will not have dissenters' rights to fair
value of any shares where the shareholder receives notice of and is entitled to
vote at a meeting at which a plan of merger/consolidation, share exchange, or
asset transfer is voted upon if the shares of the corporation are listed on a
national securities exchange or are held of record by more than 2,000
shareholders. This exception does not apply in situations where (i) shares are
not converted solely into shares of the acquiring, surviving, new or other
corporation or solely into such shares and money in lieu of fractional shares;
and (ii) there are shares of preferred or special class, unless the articles,
plan or terms of the transaction entitle all shareholders of the class to vote
and require an affirmative vote of the majority of votes cast by the
shareholders for a transaction.
The PBCL provides certain quasi-appraisal rights if a "control"
transaction occurs. See "Comparison of Rights of Shareholders of JBI and of RBC
- - Shareholder Action: Fundamental Transactions."
The NJBCA generally provides dissenters' rights for mergers,
consolidations and share exchanges. If the New Jersey corporation is the
surviving corporation in a merger, the NJBCA generally provides for dissenters'
rights where the corporation would issue shares (defined for these purposes to
include shares that entitle their holders to participate without limitation in
distributions and shares issuable on conversion of other securities or an
exercise of rights and warrants issued pursuant to the transaction) in excess of
40% of the shares outstanding immediately prior to the transaction and sales of
all or substantially all of the corporation's assets not in the usual or regular
course of business (other than court-ordered sales and certain sales pursuant to
a plan of dissolution). However, unless the certificate of incorporation
otherwise provides, no such rights exist with respect to (i) any class or series
of shares that is listed on a national securities exchange or is held of record
by not less than 1,000 holders on the record date fixed to determine the
shareholders entitled to vote on the transaction or (ii) any transaction in
connection with which the shareholders of the corporation will receive only (a)
cash, (b) securities that, upon consummation of the transaction, will be listed
on a national securities exchange or held of record by not less than 1,000
holders or (c) cash and such securities. A shareholder of a New Jersey
corporation may also dissent from any acquisition of shares owned by such
shareholder in connection with the acquisition by another New Jersey
corporation, in exchange for its shares, of all the shares of a class or series
of securities of such corporation. Any shareholder that perfects dissenters'
rights under the NJBCA is entitled to receive the "fair value" of such shares as
determined either by agreement between such shareholder and the corporation or
by a court of competent jurisdiction.
RESALE OF JBI COMMON STOCK
All shares of JBI Common Stock issuable in the Merger have been
registered under the Securities Act and can be traded freely, except for shares
of JBI Common Stock received by persons who become "affiliates" of JBI as a
result of the Merger. Transfer of JBI Common Stock by any such person will be
subject to restrictions imposed by Rule 145 under the Securities Act. In
addition to the foregoing, the affiliates of JBI and RBC may not (subject to
limited exceptions) sell or otherwise dispose of any JBI Common Stock or RBC
Common Stock beneficially owned
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<PAGE>
by them for a period commencing 30 days before the Merger Effective Date and
terminating 30 days after the publication by JBI of financial statements
covering at least 30 days of combined operations of JBI and RBC.
Shares of JBI Common Stock issuable pursuant to the exercise of the JBI
Options to be issued in the Merger will be restricted, and may only be
transferred upon registration under the Securities Act or if an exemption from
the registration requirements of the Securities Act is available. However, JBI
has undertaken to file a registration statement with respect to such shares
promptly following the Merger Effective Date (see "The Merger - Interests of
Certain Persons"). Upon effectiveness of such registration statement, the
remaining shares will also be freely tradeable, subject to the limitations upon
affiliates referred to above.
It is expected that each affiliate will enter into an agreement with
JBI providing that such affiliate will not transfer any JBI Common Stock
received in the Merger, except in compliance with the Securities Act.
PROPOSAL TO INCREASE AUTHORIZED CAPITAL STOCK OF JBI
The JBI Board of Directors, on March 18, 1998 unanimously adopted a
resolution that approves, and submits to the JBI shareholders for their
approval, a proposal that would amend the JBI Articles of Incorporation to
increase the number of authorized shares of JBI Common Stock from 10,000,000
shares to 20,000,000 shares. For a description of JBI Common Stock, see
"Description of JBI Capital Stock."
The principal purpose of the proposed amendment to the JBI Articles of
Incorporation is to give JBI flexibility in its financial affairs in the future
by making approximately 12.9 million unissued and unreserved shares of JBI
Common Stock available for issuance by JBI without further vote of the
shareholders (unless such approval is thereafter required by law or the rules of
any applicable exchange). As of the JBI Record date, JBI had 5,057,796 shares of
JBI Common Stock outstanding and had reserved 1,144,074 shares for issuance in
connection with the Merger and 940,457 shares for issuance pursuant to option
exercises (including options issued pursuant to the Merger), leaving
approximately 2.9 million shares unissued and unreserved.
Authorized but unissued and unreserved JBI Common Stock would be
available for issuance in such transactions and at such times as the JBI Board
of Directors determines. The JBI Board of Directors considers it advisable to
have the additional shares available for possible future issuance in connection
with future acquisitions, offerings, stock dividends, stock splits or for other
corporate purposes. Because shareholders do not have preemptive rights under the
JBI Articles of Incorporation, to the extent such additional shares are issued
for cash or property having a net tangible book value less than the net tangible
book value of the JBI Common Stock on the date of issuance, shareholders will
realize an immediate dilution in the net tangible book value of their JBI Common
Stock.
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<PAGE>
Except as set forth above, JBI has no plans, options, warrants,
contractual commitments or other arrangements, and is considering no proposals,
for the issuance of shares of JBI Common Stock. There can be no assurance that
JBI will not develop such plans or proposals in the future.
The JBI Board of Directors recommends a vote FOR approval of the
proposed amendment.
ELECTION OF DIRECTORS OF RBC
At the RBC Meeting, five persons will be elected as members of the RBC
Board of Directors and will constitute the entire RBC Board of Directors. Each
director will be elected to hold office until the next annual meeting of
shareholders and until such director's successor has been elected. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the election of the nominees named below, all of whom are currently
directors of RBC. If a nominee becomes unavailable for any reason, it is
intended that the proxies will be voted for a substitute nominee designated by
the RBC Board of Directors. The RBC Board of Directors has no reason to believe
the nominees named will be unable to serve if elected. Any vacancy occurring on
the RBC Board of Directors for any reason may be filled by appointment by a
majority of the directors then in office. A director so appointed shall hold
office until the next annual meeting of shareholders and until such director's
successor shall have been elected. Shares held by brokers or nominees as to
which voting instructions have not been received from the beneficial owner or
person otherwise entitled to vote and as to which the broker or nominee does not
have discretionary voting power, i.e., broker non-votes, will be treated as not
present and not entitled to vote for nominees for election as directors.
Abstentions from voting and broker non-votes will have no effect on the election
of directors since they will not represent votes cast at the RBC Meeting for the
purpose of electing directors. The vote of at least a majority of the shares
represented at the RBC Meeting in person or by proxy is required to elect the
directors, and the five nominees for election who receive the highest number of
votes cast in person or by proxy at the RBC Meeting will be elected as
directors.
The names of the nominees for election as directors of RBC, together
with certain information regarding them, are as follows:
Name Age
-------------------- ---
David W. Ring 82
Robert B. Goldstein 57
O. Francis Biondi 65
John J. Lyons 58
John W. Rose 48
Mr. Ring is presently, and has been since December 1986, the Chairman
of the RBC Board of Directors and a Director of RBC and Regent. From December
1986 until April 1997, Mr. Ring also served as Chairman of the Board of Regent.
In addition, from September 1996
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<PAGE>
until April 1997, Mr. Ring served as Chief Executive Officer of RBC. Mr. Ring
was the founder and formerly the President and Chief Executive Officer of Larami
Corporation, a toy manufacturer, a director and a controlling stockholder of The
First National Bank of Wilmington and a director of Integrity Holding Co., its
one-bank holding company. Mr. Ring was a director of the Port Corporation of
Philadelphia and was formerly a director and Corporate Vice President of Tasty
Baking Co.
Mr. Goldstein became Chairman, Chief Executive Officer and a Director
of Regent and President, Chief Executive Officer and a Director of RBC in April
1997. Mr. Goldstein is serving in these positions pursuant to an Employment
Agreement, dated April 7, 1997, among RBC, Regent and Mr. Goldstein which
provides for an initial term of three years, such term to extend automatically
for additional periods of one year unless terminated by one of the parties. See
"RBC Executive Compensation - Employment Agreements" for information regarding
the compensation of Mr. Goldstein. Mr. Goldstein succeeded John J. Lyons, who
served as Regent's President and Chief Executive Officer on a interim basis
until April 1997 following the resignation of Harvey Porter as Regent's
President and Chief Executive Officer in September 1996. Mr. Goldstein has been
engaged in commercial banking for over 30 years. From November 30, 1993 until
immediately prior to his employment by RBC and Regent, Mr. Goldstein served as
President and Chief Executive Officer and a director of Lafayette American Bank
in Bridgeport, Connecticut. Mr. Goldstein served as Vice Chairman of the Board
of National Community Banks, Inc. in West Paterson, New Jersey from January 1992
to November 1993 and as President and a director of Crossland Savings Bank in
Brooklyn, New York from March 1991 to January 1992. From 1974 to 1991, Mr.
Goldstein served as Senior Vice President and then Executive Vice President of
First Interstate Bank of Texas in Houston, Texas.
Mr. Biondi has been a Director of RBC since its inception. He has been
a senior partner with the law firm of Morris, Nichols, Arsht & Tunnell of
Wilmington, Delaware for more than five years. From 1974 to 1983, he was a
director and a controlling shareholder of The First National Bank of Wilmington
and Integrity Holding Co., its one-bank holding company. Mr. Biondi is a former
member of the State of Delaware Council on Banking, former President of the
Delaware Bar Association and former City Solicitor of Wilmington, Delaware.
Mr. Lyons has been a Director of RBC since May 1997. Mr. Lyons is a
professional banking consultant and currently serves as President and Chief
Executive Officer of Gateway American Bank of Florida, Fort Lauderdale, Florida.
Mr. Lyons served as President and Chief Executive Officer of Regent on an
interim basis from September 1996 until April 1997 when Mr. Goldstein took
office. Mr. Lyons was a Director of Regent from September 1996 until May 1997.
Mr. Lyons is the former President, Chief Executive Officer and a director of
Monarch Savings Bank and of Jupiter Tequesta National Bank. Mr. Lyons is also a
director of Bisys Group, Inc.
Mr. Rose has been a Director of RBC and Regent since May 1997. Since
May 1996, Mr. Rose has been a general partner and head of the investment
committee of Castle Creek Capital Partners Funds, LP, a fund that invests in
turnaround banking situations. Since January
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<PAGE>
1992, Mr. Rose has also been President and owner of McAllen Capital Partners, an
investment banking firm that specializes in bank turnaround investments. From
March 1995 to July 1997, Mr. Rose was also an executive Vice President of F.N.B.
Corporation, a multi-bank holding company located in Hermitage, Pennsylvania.
Executive Officers
Barbara H. Teaford has served as President of Regent since April 1997
and, prior thereto, had served as the Executive Vice President and a Director of
RBC since 1986. She had also been the Executive Vice President and a Director of
Regent since its inception, and the Secretary of RBC since 1990. See "RBC
Executive Compensation -- Employment Agreements." From 1985 through 1987, Mrs.
Teaford was Vice President and manager of the Southern Asset Based Lending
District of The Philadelphia National Bank. From 1984 to 1985, she was a Vice
President in the Regional Corporate Banking Division and, from 1981 to 1984, she
was a Commercial Officer and Assistant Vice President in the Large Corporate
Banking Division, both with The Philadelphia National Bank. From 1982 to 1986,
she was a director and Secretary of the Board of Directors of the Central
National Bank of Greencastle, Indiana. Mrs. Teaford is a member of the Board of
Directors of a number of charitable and civic organizations, including the
Pennsylvania Horticultural Society and the Settlement Music School.
On January 21, 1997, Joel E. Hyman became the Executive Vice President,
Treasurer and Chief Financial Officer of Regent and RBC. See "RBC Executive
Compensation Employment Agreements." From 1993 to 1996, Mr. Hyman served as
Executive Vice President, Chief Financial Officer and Treasurer of Farmers &
Mechanics Bank located in Middletown, Connecticut until that bank was acquired
by Citizens Financial Group. From 1990 to 1993, Mr. Hyman served as Senior Vice
President, Chief Financial Officer and Treasurer of Tolland Bank in Vernon,
Connecticut. Prior thereto, he served in various officer-level capacities in the
Financial Division of Connecticut Bank & Trust Co., Hartford, Connecticut from
1977 to 1990.
On April 14, 1997, Amanda V. Perkins began serving as Executive Vice
President and Chief Credit Officer of Regent. See "RBC Executive Compensation --
Employment Agreements." From November 30, 1993 until immediately prior to her
employment by Regent, Ms. Perkins served as Executive Vice President and Chief
Credit Officer of Lafayette American Bank in Bridgeport, Connecticut. Prior
thereto, Ms. Perkins was Senior Vice President and Deputy Chief Credit Officer
of National Community Bank in West Paterson, New Jersey from January 1992 to
November 1993.
THE BOARD OF DIRECTORS OF RBC AND ITS COMMITTEES
The Board of Directors of RBC met 11 times in 1997. During 1997, each
director attended more than 75% of the meetings of the RBC Board of Directors
and any committee on which such director served. During 1997, the standing
committees of the RBC Board of Directors were the Audit Committee and the
Compensation Committee.
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<PAGE>
The Audit Committee consisted of the entire RBC Board of Directors,
which during 1997, met 2 times. The Audit Committee has responsibility for
recommending to the RBC Board of Directors the selection of independent public
accountants and meeting with such accountants to receive and consider their
recommendations, reviewing and examining the reports of internal auditors,
evaluating internal financial controls and reviewing the reports of regulatory
agencies having jurisdiction over RBC and Regent. The Audit Committee has the
authority to retain independent legal counsel.
The members of the Compensation Committee, formed in mid-1997, were
John J. Lyons and John W. Rose. The Compensation Committee did not meet in 1997.
The Compensation Committee determines employment, promotion and remuneration
arrangements for executive officers and directors, including the approval of all
executive incentive plans and grants thereunder.
On January 28, 1998, the RBC Board of Directors established a
Nominating Committee and an Executive Committee. The members of the Nominating
Committee are David W. Ring, Robert B. Goldstein, O. Francis Biondi and John J.
Lyons. The Nominating Committee is responsible for nominating persons to stand
for election to the RBC Board of Directors at RBC's annual meetings of
shareholders, nominating persons to fill vacancies on the RBC Board of Directors
between annual meetings of shareholders and reviewing and reporting on the
qualifications of persons otherwise nominated for election to the RBC Board of
Directors. The Nominating Committee will consider nominees recommended by
shareholders. Nominations, including biographical information and a statement by
the nominee that he or she is willing to serve if nominated, should be submitted
to Robert B. Goldstein by October 1 for consideration for proposal at RBC's next
succeeding annual meeting of shareholders if the Merger is not theretofore
completed. The members of the Executive Committee are David W. Ring, Robert B.
Goldstein, O. Francis Biondi, John J. Lyons and John W. Rose. The Executive
Committee has the power to exercise the authority of the full Board of Directors
in the management and direction of the business of RBC between meetings of the
Board of Directors to the extent consistent with New Jersey law.
RBC EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation for the years ended
December 31, 1997, 1996 and 1995 of (i) each person who served at any time
during 1997 as the chief executive officer of RBC or Regent and (ii) the four
other highest paid executive officers of RBC and Regent in the year ended
December 31, 1997.
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<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------------- -------------
Other Securities
Name and Annual Underlying
Principal Position Year Salary($) Bonus($)(1) Compensation($) Options(#)
- ----------------------------------- ---- --------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
David W. Ring, Chief Executive 1997 32,500 --- --- ---
Officer of RBC (2) 1996 55,500 --- --- ---
1995 65,000 --- --- ---
Robert B. Goldstein, President 1997 138,46250,000 54,555(4) 150,000
and Chief Executive Officer 1996 --- --- --- ---
of RBC and Chairman of 1995 --- --- --- ---
the Board and Chief Executive
Officer of Regent (3)
John J. Lyons, President and 1997 55,385 --- 10,396(6) 50,000
Chief Executive Officer 1996 51,923 --- --- ---
of Regent (5) 1995 --- --- --- ---
Barbara H. Teaford, President 1997 103,661 --- --- 25,000
of Regent (7) 1996 110,692 --- --- ---
1995 118,939 --- --- ---
Joel E. Hyman, Executive Vice 1997 99,931 25,000 17,848(9) 25,000
President, Chief Financial 1996 --- --- --- ---
Officer and Treasurer of 1995 --- --- --- ---
RBC and Regent (8)
Amanda V. Perkins, Executive 1997 76,154 25,000 40,999(11) 25,000
Vice President and Chief 1996 --- --- --- ---
Credit Officer of Regent (10) 1995 --- --- --- ---
</TABLE>
- ---------------
(1) Represents a signing bonus paid to the individual upon the commencement of
employment with Regent in 1997.
(2) Mr. Ring served as Chief Executive Officer of RBC from September 1996 until
April 14, 1997 when Mr. Goldstein became President and Chief Executive
Officer of RBC.
(3) Mr. Goldstein became President and Chief Executive Officer of RBC and
Chairman of the Board and Chief Executive Officer of Regent on April 14,
1997.
(4) Includes $37,027 in housing expenses for which Mr. Goldstein was reimbursed
by RBC and $17,528 of expenses associated with an automobile leased by RBC
for Mr. Goldstein's use.
(5) Mr. Lyons served as President and Chief Executive Officer of Regent from
September 1996 until April 14, 1997 when Mr. Goldstein became Chairman and
Chief Executive Officer of Regent. Mr. Lyons was compensated at the rate of
$180,000 per year.
(6) Includes $6,646 in housing expenses for which Mr. Lyons was reimbursed by
RBC and $3,750 in directors fees.
(7) Ms. Teaford served as Executive Vice President and Secretary of RBC until
April 14, 1997 when she became President of Regent.
(8) Mr. Hyman became Executive Vice President, Chief Financial Officer and
Treasurer of RBC and Regent on January 21, 1997.
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<PAGE>
(9) Includes $14,248 in housing and automobile expenses and $3,600 in
relocation expenses for which Mr. Hyman was reimbursed by RBC.
(10) Ms. Perkins became Executive Vice President and Chief Credit Officer of
Regent on April 14, 1997.
(11) Includes $31,000 in relocation expenses and $9,999 in housing and
automobile expenses for which Ms. Perkins was reimbursed by RBC.
The following table sets forth information with respect to options
granted under RBC's 1997 Equity Incentive Plan (the "1997 Plan") to the persons
named in the Summary Compensation Table during the fiscal year ended December
31, 1997.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Percent of
Total Options
Number of Securities Granted to
Underlying Employees in Exercise Expiration
Name Options Granted (#) Fiscal Year Price ($/sh) Date
- ----------------------- -------------------- -------------- ------------ ----------
<S> <C> <C> <C> <C>
Robert B. Goldstein 150,000(1) 45.9% 6.75 4/15/02
John J. Lyons 50,000(1) 15.3 6.75 4/15/02
Barbara H. Teaford 25,000(2) 7.6 6.75 10/22/02
Joel E. Hyman 25,000(1) 7.6 6.75 4/15/02
Amanda V. Perkins 25,000(1) 7.6 6.75 4/15/02
</TABLE>
- --------------
(1) This option is exercisable in three equal cumulative annual installments
commencing April 16, 1998.
(2) This option is exercisable in three equal cumulative annual installments
commencing April 14, 1998.
No executive officer named in the Summary Compensation Table
exercised any options during 1997.
The following table sets forth information at December 31, 1997
with respect to the value of unexercised options held on December 31, 1997 by
the persons named in the Summary Compensation Table.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Securities Number of Securities
Shares Underlying In-the-Money
Acquired Options at Fiscal Year End Options at Fiscal Year End
on Value ---------------------------- ----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------ --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert B. Goldstein --- --- --- 150,000 $ --- $1,087,500
John J. Lyons --- --- --- 50,000 --- 362,500
Barbara H. Teaford --- --- --- 25,000 --- 181,250
Joel E. Hyman --- --- --- 25,000 --- 181,250
Amanda V. Perkins --- --- --- 25,000 --- 181,250
</TABLE>
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<PAGE>
The following table sets forth information with respect to options
granted under the 1997 Plan to the persons named in the Summary Compensation
Table between January 1, 1998 and March 25, 1998.
<TABLE>
<CAPTION>
Percent of
Total Options
Number of Securities Granted to
Underlying Employees in Exercise Expiration
Name Options Granted (#) Fiscal Year Price ($/sh) Date
- -------------------- -------------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Barbara H. Teaford 10,000(1) 18% 14.38 1/28/03
Joel E. Hyman 10,000(1) 18% 14.38 1/28/03
Joel E. Hyman 5,000(1) 9% 13.63 2/25/03
Amanda V. Perkins 10,000(1) 18% 14.38 1/28/03
</TABLE>
- -------------
(1) This option is currently exercisable as to 50% of the shares covered
thereby, is exercisable on and after the first anniversary of the date of
grant as to an additional 25% of the shares covered thereby and is
exercisable on and after the second anniversary of the date of grant as to
all of the shares covered thereby.
Employment Agreements
Compensation for Mr. Goldstein is paid pursuant to an employment
agreement, the initial three-year term of which commenced in April 1997, and
thereafter automatically extends on each anniversary of the date of his
employment for successive one-year periods, subject to prior written notice of
termination by Mr. Goldstein or RBC, in each case no later than 90 days prior to
the expiration of the then current term. Mr. Goldstein is entitled to receive an
annual base salary of $200,000, which increases 15% each year, and an annual
bonus ranging from 25% to 50% of his annual base salary depending upon
achievement of specified performance objectives. Mr. Goldstein received a
signing bonus of $50,000, options to purchase 150,000 shares of RBC Common Stock
and various other benefits, including the use of an automobile and a housing
allowance of $4,000 per month to assist Mr. Goldstein in establishing a
residence in the Greater Philadelphia area. Mr. Goldstein also is entitled to
"change in control" benefits of 2.99 times his annual salary and bonus in the
event that, during the 270 days prior to or the 180 days subsequent to a Change
in Control of RBC, Mr. Goldstein resigns for Good Reason, is terminated without
Cause or dies or becomes subject to a Permanent Disability, in each case as such
capitalized term is defined in the agreement. The agreement with Mr. Goldstein
provides for the continued payment of Mr. Goldstein's salary and provision of
life, health and disability coverage for Mr. Goldstein and his eligible
dependents for the lesser of the initial term of his employment, as provided in
the agreement, or three years, in the event that RBC terminates Mr. Goldstein's
employment other than for Cause.
Compensation for Mrs. Teaford is paid pursuant to an employment
agreement, the current term of which expires in May 1998, and thereafter
automatically extends for successive one-year periods, subject to prior written
notice of termination by Mrs. Teaford or RBC, in each case no later than 90 days
prior to expiration of the then current term. The agreement with Mrs. Teaford
requires continuation of compensation for one year to the executive's spouse,
issue or estate in the event of death, but does not provide for severance
payments.
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<PAGE>
Compensation for Joel E. Hyman, who became Executive Vice President,
Chief Financial Officer and Treasurer of RBC and Regent in January 1997, and for
Amanda V. Perkins, who became Executive Vice President and Chief Credit Officer
of Regent in April 1997, is paid pursuant to an employment agreement dated as of
January 21, 1997 among RBC, Regent and Mr. Hyman and an employment agreement
dated as of April 14, 1997 among RBC, Regent and Ms. Perkins, the initial term
of each of which is three years, and thereafter automatically extends on each
anniversary of employment for successive one-year periods, subject to prior
written notice of termination by the officer or RBC, in each case no later than
90 days prior to the expiration of the then current term. Each agreement
provides for an initial annual salary at the rate of $110,000, options to
purchase 25,000 shares of RBC Common Stock and various other benefits. Mr. Hyman
and Ms. Perkins are each also entitled to "change in control" benefits of 2.99
times their annual salary plus any discretionary bonus paid during the preceding
12 months in the event that, during the 270 days prior to or the 180 days
subsequent to a Change in Control of RBC, the officer resigns for Good Reason,
is terminated without Cause or dies or becomes subject to Permanent Disability,
in each case as such capitalized term is defined in the agreements. The
agreements with Mr. Hyman and Ms. Perkins provide for the continuation of salary
and employee benefits for the term of employment in the event that RBC
terminates their respective employment other than for Cause.
Director Compensation
RBC pays its non-employee directors an annual retainer of $7,500, and
Regent pays its non-employee directors an annual retainer of $3,600 and a fee of
$350 for each RBC Board of Directors meeting attended.
Report of the Compensation Committee of RBC
Prior to the formation of the Compensation Committee in mid-1997, the
RBC Board of Directors established the compensation of the executive officers of
RBC and Regent. The RBC Board of Directors established compensation policies for
RBC's executive officers intended to further the earnings of RBC and Regent and
facilitate securing, retaining and motivating management employees of high
caliber and potential. RBC's executive compensation consists of three
components: base salary, annual incentive awards based on the performance of RBC
and Regent and long-term incentive awards. The persons eligible to receive
awards under these policies are the officers and other employees of RBC and
Regent who are in positions in which their decisions, actions and counsel
significantly impact upon the short and long-term goals and strategies of RBC.
David W. Ring served as Chief Executive Officer of RBC until April 14,
1997, but was not separately compensated for such service. Since April 14, 1997,
Robert B. Goldstein has served as President and Chief Executive Officer of RBC
and Chairman of the Board of Directors and Chief Executive Officer of Regent.
During 1997, Mr. Goldstein was compensated at the annual rate of $200,000 in
accordance with the terms of an employment agreement dated April 7, 1997 with
RBC and Regent. John J. Lyons served as President and Chief Executive Officer of
Regent until April 14, 1997. Mr. Lyons, a professional bank consultant, was
compensated on the basis of a consulting fee of $15,000 per month. Joel E. Hyman
has served as Executive Vice President, Chief Financial Officer and Treasurer of
Regent and RBC since January 21, 1997.
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<PAGE>
During 1997, Mr. Hyman was compensated at the annual rate of $110,000 in
accordance with the terms of an employment agreement dated January 21, 1997 with
RBC and Regent. Amanda V. Perkins has served as Executive Vice President and
Chief Credit Officer of Regent since April 14, 1997. During 1997, Ms. Perkins
was compensated at the annual rate of $110,000 in accordance with the terms of
an employment agreement dated as of April 14, 1997 with RBC and Regent. Barbara
H. Teaford has served as President of Regent since April 14, 1997. During 1997,
Mrs. Teaford was compensated at the annual rate of $103,661 in accordance with
the terms of an employment agreement first entered into in 1989.
Deductibility of Executive Compensation
Section 162(m) of the Code generally disallows a tax deduction to
public companies for compensation in excess of $1 million paid to the chief
executive officer and the other four most highly compensated individuals who are
executive officers at the end of the year. Qualifying performance-based
compensation is not subject to the deduction limit if certain requirements are
met. While it is RBC's policy to preserve corporate tax deductions by qualifying
compensation paid over $1 million to named executive officers, RBC also intends
to maintain the flexibility to approve compensation arrangements that it deems
to be in the best interests of RBC and its shareholders but which may not always
qualify for full tax deductibility.
The RBC Compensation Committee
John J. Lyons
John W. Rose
Comparison of Total Return on RBC Common Stock with Certain Averages
The following graph provides an indicator of cumulative total
shareholder returns on RBC Common Stock over the five-year period ended December
31, 1997 compared to (i) the KBW 50 Index of Banking Companies ("KBW 50") and
(ii) the Standard & Poor's 500 index ("S&P 500"). All of the cumulative returns
were computed assuming the reinvestment of dividends at the frequency with which
dividends were paid during the applicable years.
<TABLE>
<CAPTION>
December 31, December 31, December 31, December 31, December 31, December 31,
1992 1993 1994 1995 1996 1997
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
RBC 100.00 163.64 109.09 195.45 100.00 254.55
KBW 50 100.00 105.54 100.16 160.41 226.92 331.73
S&P 500 100.00 110.08 111.53 153.44 188.67 251.62
</TABLE>
RBC's Relationship with Regent
RBC was formed on December 22, 1986 and became a bank holding company
on June 2, 1989 when it completed the acquisition of all of the authorized
capital stock of Regent. RBC provides banking services through Regent and does
not engage in any activities other than banking activities.
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<PAGE>
On April 16, 1997, Regent completed a private placement of 1,120,000
shares of its Common Stock (the "Regent Common Stock") for $8.50 per share
which, based upon an opinion as to fairness issued by KBW, Regent believed to be
the fair market value per share. The net proceeds to Regent from this private
placement were approximately $8.8 million. Following the private placement, RBC
held 1,275,000 shares of the 2,395,000 outstanding shares of Regent Common
Stock, or approximately 53% of the outstanding shares. Regent Common Stock
issued in the private placement was exchangeable for RBC Common Stock at the
rate of 1.41666 shares of RBC Common Stock for each share of Regent Common Stock
at the discretion of RBC at any time after (i) the average of the closing bid
price for RBC Common Stock equaled or exceeded $12.00 per share for 15
consecutive trading days and (ii) the resale of the RBC Common Stock issuable in
exchange for the privately placed Regent Common Stock had been registered under
the Securities Act.
On August 14, 1997, RBC's registration statement under the Securities
Act relating to the resale of the 1,586,660 shares of RBC Common Stock issuable
in exchange for the privately placed Regent Common Stock was declared effective
by the Commission. Effective as of August 15, 1997, RBC, Regent and each of the
holders of the privately placed Regent Common Stock executed an agreement
whereby each of such holders waived the condition precedent to the exchange
relating to the bid price of the RBC Common Stock. On August 20, 1997, RBC
commenced the exchange of its Common Stock for the privately placed Regent
Common Stock, which exchange was completed as of August 31, 1997. As a result,
as of August, 31, 1997, Regent again became the wholly owned subsidiary of RBC.
Compensation Committee Interlocks and Insider Participation
John J. Lyons served as President and Chief Executive Office of Regent
on an interim basis from September 1996 until April 1997 and as a director of
Regent from September 1996 until May 1997. As described in "Certain Transactions
of RBC" below, in April 1997, Mr. Lyons and his wife purchased an aggregate of
29,412 shares of Regent Common Stock at $8.50 per share for an aggregate
purchase price of $250,000, and Castle Creek Capital Partners Fund - I, of which
John W. Rose is a general partner, purchased 110,000 shares of Regent Common
Stock at $8.50 per share for an aggregate purchase price of $935,000. In August
1997, those shares of Regent Common Stock were exchanged for RBC Common Stock at
the rate of 1.41666 shares of RBC Common Stock for each share of Regent Common
Stock.
CERTAIN TRANSACTIONS OF RBC
During 1997, RBC paid insurance premiums of approximately $106,000 to
Harry David Zutz Insurance, Inc., of which firm Harry D. Zutz, a director of
Regent, is Chairman of the Board and a principal shareholder.
As of December 31, 1997, Regent had no outstanding loans to officers,
directors and advisory directors of RBC or Regent or their families or entities
of which such persons are directors and officers.
On April 16, 1997, Regent sold 1,120,000 shares of Regent Common Stock
at a price of $8.50 per share in a private placement for which KBW served as
Regent's placement agent. The
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<PAGE>
purchasers included Robert B. Goldstein, Chairman of the Board, Chief Executive
Officer and a Director of Regent and President, Chief Executive Officer and a
Director of RBC since April 14, 1997, and his wife, who purchased 59,000 shares
of Regent Common Stock for an aggregate purchase price of $501,500; John J.
Lyons, President, Chief Executive Officer and a Director of Regent from
September 1996 until April 14, 1997 and a Director of RBC since May 28, 1997,
and his wife, who purchased an aggregate of 29,412 shares of Regent Common Stock
for an aggregate purchase price of $250,002; Joel E. Hyman, and his wife, who
purchased an aggregate of 17,647 shares of Regent Common Stock for an aggregate
purchase price of $150,000 and Castle Creek Capital Partners Fund-I, of which
John W. Rose, a Director of RBC, is a general partner, which purchased 110,000
shares of Regent Common Stock for an aggregate purchase price of $935,000.
Regent Common Stock issued in the private placement was exchangeable
for RBC Common Stock at the rate of 1.41666 shares of RBC Common Stock for each
share of Regent Common Stock at the discretion of RBC at any time after (i) the
average of the closing bid price for RBC Common Stock equaled or exceeded $12.00
per share for 15 consecutive trading days and (ii) the resale of the RBC Common
Stock issuable in exchange for the privately placed Regent Common Stock had been
registered under the Securities Act.
On August 14, 1997, RBC's registration statement relating to the resale
of the 1,586,660 shares of RBC Common Stock issuable in exchange for the
privately placed Regent Common Stock was declared effective by the Commission.
Effective as of August 15, 1997, RBC, Regent and each of the holders of the
privately placed Regent Common Stock executed an agreement whereby each of such
holders waived the condition precedent to the exchange relating to the bid price
of RBC Common Stock. On August 20, 1997, RBC commenced the exchange of its
Common Stock for the privately placed Regent Common Stock, which exchange was
completed as of August 31, 1997.
On November 21, 1997, RBC completed the redemption of all outstanding
shares of its Series A through Series E Convertible Preferred Stock
(collectively, the "Preferred Stock"). Persons who converted their Preferred
Stock into RBC Common Stock in accordance with the terms thereof included
certain directors and executive officers of RBC and Regent.
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<PAGE>
BENEFICIAL OWNERSHIP OF RBC COMMON STOCK
The following table sets forth as of March 25, 1998 the amount and
percentage of outstanding RBC Common Stock owned beneficially by (i) each person
who is known by RBC to own beneficially more than 5% of its outstanding Common
Stock, (ii) each director and nominee for director, (iii) each executive officer
named in the Summary Compensation Table and (iv) all executive officers and
directors of RBC as a group.
<TABLE>
<CAPTION>
Shares Percent of
Beneficially Outstanding
Name and Address Owned(1)(2) Common Stock
- ---------------- ------------- ------------
Directors:
- ----------
<S> <C> <C>
David W. Ring 165,551 4.9%
c/o Regent National Bank
1430 Walnut Street
Philadelphia, PA 19102
Robert B. Goldstein 133,582(3) 3.9
c/o Regent National Bank
1430 Walnut Street
Philadelphia, PA 19102
Abraham L. Bettinger(4) 38,300(4) 1.1
845 Third Avenue
New York, NY 10022
O. Francis Biondi 132,968(5) 3.9
1201 North Market Street
P.O. Box 1347
Wilmington, DE 19801-1347
John J. Lyons 58,530(6) 1.7
c/o Gateway American Bank of Florida
1451 N.W. 62nd Street
Fort Lauderdale, FL 33309-1953
John W. Rose 155,832(7) 4.6
c/o F.N.B. Corporation
One F.N.B. Boulevard
Hermitage, PA 16148
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Shares Percent of
Beneficially Outstanding
Name and Address Owned(1)(2) Common Stock
- ---------------- ------------- ------------
Directors:
- ----------
<S> <C> <C>
Executive Officers:(9)
Barbara H. Teaford 95,988(9) 2.8
c/o Regent National Bank
1430 Walnut Street
Philadelphia, PA 19102
Joel E. Hyman 49,832(10) 1.5
c/o Regent National Bank
1430 Walnut Street
Philadelphia, PA 19102
Amanda V. Perkins 13,333(11) *
c/o Regent National Bank
1430 Walnut Street
Philadelphia, PA 19102
5% or More Holders:(12)
Rainbow Managers, LLC 297,498(13) 8.7
Suite 3108
375 Park Avenue
New York, NY 10152
All Directors and 843,916(14) 24.7
Executive Officers
as a Group (9 persons)
</TABLE>
- ------------------
* Less than 1%.
(1) Information furnished by each individual named. This table includes shares
that are owned jointly, in whole or in part, with the person's spouse, or
individually by his or her spouse.
(2) Under the rules of the Commission, a person is deemed to be the beneficial
owner of securities if the person has, or shares, "voting power" which
includes the power to vote, or to direct the voting of, such securities or
"investment power" which includes the power to dispose, or to direct the
disposition, of such securities. Under these rules, more than one person
may be deemed the beneficial owner of the same securities. In addition,
under the rules of the Commission, a person is deemed to be the beneficial
owner of securities if the person has the right to acquire such securities
within 60 days from the date of this Joint Proxy Statement/Prospectus
pursuant to the exercise of options or warrants.
(3) Of these shares, 83,582 shares are owned jointly by Mr. Goldstein and his
wife. Includes 50,000 shares which Mr. Goldstein may purchase pursuant to
an option to purchase
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<PAGE>
150,000 shares of RBC Common Stock that is exercisable in three equal
cumulative annual installments commencing April 16, 1998.
(4) Not standing for reelection as a director of RBC. Includes 16,721 shares
owned by the Trustees of Bettinger & Leech, Inc. Profit Sharing Plan of
which Mr. Bettinger is a Trustee; 6,197 shares owned by the Trustees of
Bettinger & Leech, Inc. Money Purchase Plan of which Mr. Bettinger is a
Trustee; 7,589 shares owned by Bettinger & Leech Financial Corp. of which
Mr. Bettinger is a principal and 7,793 shares owned by Bettinger & Leech,
Inc. of which Mr. Bettinger is a principal. Mr. Bettinger disclaims
beneficial ownership of 50% of these shares.
(5) Includes 11,166 shares owned by Mr. Biondi's wife as to which Mr. Biondi
disclaims beneficial ownership; 9,772 shares owned by O. Francis Biondi,
Trustee for Mary Biondi, daughter and 9,771 shares owned by O. Francis
Biondi, Trustee for O. Francis Biondi, Jr., son.
(6) Of these shares, 6,529 shares are owned by Mr. Lyons' wife. Includes 16,666
shares which Mr. Lyons may purchase pursuant to an option to purchase
50,000 shares of RBC Common Stock that is exercisable in three equal
cumulative annual installments commencing April 16, 1998.
(7) The shares shown in the table are owned by Castle Creek Capital Partners
Fund, LP of which Mr. Rose is a general partner.
(8) Excludes executive officers listed under Directors.
(9) Of these shares, Mrs. Teaford and her husband, Stephen D. Teaford, own
82,655 shares set forth in the table as tenants by the entireties and share
voting and investment power with respect to such shares. Includes 5,000
shares which Mrs. Teaford may purchase pursuant to an option to purchase
10,000 shares of RBC Common Stock that is currently exercisable as to 5,000
shares and becomes exercisable in two 2,500 share installments in 1999 and
2000, and 8,333 shares which Mrs. Teaford may purchase pursuant to an
option to purchase 25,000 shares of RBC Common Stock that is exercisable in
three equal cumulative annual installments commencing April 14, 1998.
(10) Of these shares, 17,332 shares are owned jointly by Mr. Hyman and his wife
and 16,667 shares are owned by Mr. Hyman. Mr. Hyman and his wife share
voting and investment power with respect to all shares owned jointly.
Includes 7,500 shares which Mr. Hyman may purchase pursuant to an option to
purchase 15,000 shares of RBC Common Stock that is currently exercisable as
to 7,500 shares and becomes exercisable in two 3,750 share installments in
1999 and 2000 and 8,333 shares which Mr. Hyman may purchase pursuant to an
option to purchase 25,000 shares of RBC Common Stock that is exercisable in
three equal cumulative annual installments commencing April 16, 1998.
(11) Includes 5,000 shares which Ms. Perkins may purchase pursuant to an option
to purchase 10,000 shares of RBC Common Stock that is currently exercisable
as to 5,000 shares and becomes exercisable in two 2,500 share installments
in 1999 and 2000 and 8,333 shares which Ms. Perkins may purchase pursuant
to an option to purchase 25,000 shares of RBC Common Stock that is
exercisable in three equal cumulative annual installments commencing April
16, 1998.
(12) Excludes 5% or greater holders listed under Directors.
(13) Information based on a Schedule 13G of Rainbow Managers, LLC dated February
9, 1998.
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<PAGE>
(14) Includes an aggregate of 109,165 shares that persons included in the group
may purchase pursuant to currently exercisable options or options that are
exercisable within 60 days from the date of this Proxy Statement.
The foregoing table does not include up to 678,340 shares of RBC Common
Stock that JBI has the right to purchase under certain circumstances set forth
in the Option Agreement.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE FOR RBC
Section 16(a) of the Exchange Act requires that the officers and
directors of a corporation, such as RBC, which has a class of equity securities
registered under Section 12 of the Exchange Act, as well as persons who own more
than 10% of a class of equity securities of such a corporation, file reports of
their ownership of such securities, as well as monthly statements of changes in
such ownership, with the corporation and the Commission. Based upon written
representations received by RBC from its officers and directors, and RBC's
review of the monthly statements of ownership changes filed with RBC by its
officers, directors and 10% or greater shareholders during 1997, RBC believes
that all such filings required during 1997 were made on a timely basis, with the
exception of Abraham L. Bettinger, who failed to file on a timely basis one Form
4 report relating to the sale of 11,000 shares of RBC Common Stock.
PROPOSAL TO ELECT ARTHUR ANDERSEN LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS OF RBC FOR 1998 FISCAL YEAR
Arthur Andersen LLP served as independent public accountants for RBC
and Regent for the years ended December 31, 1993, December 31, 1994 and December
31, 1995. During the year ended December 31, 1995 and the nine months ended
September 30, 1996, RBC and Regent incurred significant losses and expenses in
connection with Regent's automobile insurance premium finance ("IPF") loan
portfolio. Regent, as a result of such losses and the adverse impact thereof on
Regent's capital, entered into a written agreement in October 1996 with the OCC
and thereafter undertook an investigation to determine whether various third
parties, including Arthur Andersen LLP, had any liability to RBC or Regent in
connection with the losses and expenses they incurred in connection with
Regent's IPF loan portfolio.
As a result of the pendency of Regent's investigation, in November
1996, Arthur Andersen LLP notified RBC and Regent that, absent the unconditional
release of Arthur Andersen LLP by RBC and Regent, Arthur Andersen LLP could not
serve as independent public accountants for RBC and Regent in respect of RBC's
and Regent's consolidated financial statements for the year ended December 31,
1996. Because RBC and Regent had not completed their investigation by December
31, 1996 and were therefore not sufficiently knowledgeable to execute an
unconditional release in favor of Arthur Andersen LLP, on December 31, 1996,
Arthur Andersen LLP submitted its resignation as the independent public
accountants for RBC and Regent.
Effective December 31, 1996, RBC, with the approval of RBC's Audit
Committee, retained the firm of Grant Thornton LLP to serve as the independent
public accountants for RBC
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<PAGE>
and Regent with respect to RBC's and Regent's consolidated financial statements
for the year ended December 31, 1996.
Because of the extensive changes which occurred in the membership of
the RBC Board of Directors following RBC's 1997 annual meeting of shareholders,
the RBC Board of Directors did not select or recommend shareholder approval at
the 1997 annual meeting of an independent public accounting firm to audit RBC's
and Regent's consolidated financial statements for the year ended December 31,
1997.
On September 24, 1997, RBC and Regent completed their investigations
and executed an Agreement of Settlement and Release with Arthur Andersen LLP
whereby (i) RBC and Regent unconditionally released Arthur Andersen LLP with
respect to the IPF matters discussed therein and (ii) RBC and Regent, with the
approval of the Audit Committees of the Boards of Directors of RBC and Regent,
engaged Arthur Andersen LLP as independent public accountants in respect of
RBC's and Regent's consolidated financial statements for the years ending
December 31, 1997, December 31, 1998 and December 31, 1999. In addition, Arthur
Andersen LLP was retained to re-audit RBC's and Regent's consolidated financial
statements as of and for the year ended December 31, 1996.
During RBC's two most recent fiscal years and any subsequent interim
period preceding the decision of the Boards of Directors of RBC and Regent not
to continue the engagement of Grant Thornton LLP, there were no disagreements
between Grant Thornton LLP and RBC on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure which,
if not resolved to the satisfaction of Grant Thornton LLP, would have caused
Grant Thornton LLP to make a reference to the subject matter of such
disagreement in connection with its report.
Unless instructed to the contrary, it is intended that votes will be
cast pursuant to the proxies for the election of Arthur Andersen LLP as RBC's
independent public accountants for its 1998 fiscal year. Election of Arthur
Andersen LLP will require the affirmative vote of the holders of a majority of
the outstanding shares of RBC Common Stock present in person or represented by
proxy at the RBC Meeting.
A representative of Arthur Andersen LLP will attend the RBC Meeting,
will have the opportunity to make a statement, if he desires to do so, and will
be available to respond to any appropriate questions presented by RBC
shareholders at the RBC Meeting.
EXPERTS
The consolidated financial statements of JBI as of December 31, 1997
and 1996 and for each of the three years in the period ended December 31, 1997,
incorporated by reference in this Joint Proxy Statement/Prospectus have been
audited by Grant Thornton LLP, independent certified public accountants, whose
report thereon appears herein, and in reliance upon such report of Grant
Thornton LLP, given upon the authority of such firm as experts in accounting and
auditing. A representative of Grant Thornton LLP will attend the JBI Meeting,
will have an opportunity to make a statement, if he or she desires to do so, and
will be available to respond to any appropriate questions presented by JBI
shareholders at the JBI Meeting.
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<PAGE>
The consolidated financial statements of RBC as of December 31, 1997
and for each of the three-years in the period ended December 31, 1997
incorporated by reference in this Joint Proxy Statement/Prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
KBW has consented to the use of its name and its opinion included as
Annex B to this Joint Proxy Statement/Prospectus.
LEGAL OPINIONS
The validity of the JBI Common Stock being offered hereby is being
passed upon by Ledgewood Law Firm, P.C., counsel to JBI.
Certain federal income tax consequences of the Merger Transaction are
being passed upon for JBI by Ledgewood Law Firm, P.C., counsel to JBI, and for
RBC by Duane, Morris & Heckscher LLP, counsel to RBC. As of April 22, 1998,
partners of Duane, Morris & Heckscher LLP own an aggregate of 91,655 shares of
RBC Common Stock.
OTHER BUSINESS
The Board of Directors of each of JBI and RBC are not aware of any
matters, other than the proposals described herein, to be presented at the
respective Meetings. If any other matters should properly come before the
meeting, the persons named in the enclosed proxy form will vote the proxies in
accordance with their best judgement.
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal to the shareholders of
JBI for inclusion in the proxy materials for the Annual Meeting to be held in
1999, may do so by forwarding such proposal in writing no later than December
16, 1998 to William H. Lamb, Secretary, JeffBanks, Inc., 1845 Walnut Street,
10th Floor, Philadelphia, Pennsylvania 19103. JBI reserves the right to omit any
proposal from its proxy materials which it is not required to include therein
pursuant to the applicable rules and regulations of the Commission.
Any shareholder desiring to submit a proposal to the shareholders of
RBC for inclusion in the proxy materials for the Annual Meeting to be held in
1999, may do so by forwarding such proposal in writing no later than January
____________, 1999 to Robert B. Goldstein, Chief Executive Officer, Regent
Bancshares Corp., 1430 Walnut Street, Philadelphia, Pennsylvania 19103. RBC
reserves the right to omit any proposal from its proxy materials which it is not
required to include therein pursuant to the applicable rules and regulations of
the Commission.
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<PAGE>
ANNEX A
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT and PLAN OF MERGER, dated March 27, 1998
and effective as of March 18, 1998 (this "Plan"), by and among Regent Bancshares
Corp. ("RBC"), Regent National Bank ("Regent"), JeffBanks, Inc. ("JBI"),
JeffBanks Acquisitioncorp. V, Inc. ("JBI Merger Sub") and Jefferson Bank
"Jefferson").
RECITALS:
A. RBC. RBC is a corporation duly organized and validly existing in
good standing under the laws of the State of New Jersey with its principal
executive offices located in Philadelphia, Pennsylvania. As of the date hereof,
RBC's authorized capital stock consisted of 5,000,000 shares of Preferred Stock,
par value $.10 per share ("Preferred Stock") and 10,000,000 shares of common
stock, par value $.10 per share ("RBC Common Stock"), of which no shares of
Preferred Stock and 3,409,203 shares of RBC Common Stock were outstanding.
B. Regent. Regent is a national banking association duly organized and
validly existing in good standing under the laws of the United States, with its
principal executive offices located in Philadelphia, Pennsylvania. As of the
date hereof, Regent's authorized capital stock consisted of 3,000,000 shares of
common stock, par value $1.00 per share ("Regent Common Stock") of which
1,275,000 shares of Regent Common Stock were outstanding, all of which are owned
by RBC.
C. JBI. JBI is a corporation duly organized and validly existing in
good standing under the laws of the Commonwealth of Pennsylvania with its
principal executive offices located in Philadelphia, Pennsylvania. As of the
date hereof, JBI's authorized capital stock consisted of 10,000,000 shares of
common stock, par value $1.00 per share ("JBI Common Stock"), of which 5,038,251
shares of JBI Common Stock were outstanding.
D. JBI Merger Sub. JBI Merger Sub is a corporation formed for the
purpose of accomplishing the transactions contemplated by this Plan duly
organized and validly existing in good standing under the laws of the
Commonwealth of Pennsylvania with its principal executive offices located in
Philadelphia, Pennsylvania. As of the date hereof, JBI Merger Sub's authorized
capital stock consisted of 100 shares of Common Stock, par value $.01 per share
("JBI Merger Sub Common Stock"), of which 100 shares of JBI Merger Sub Common
Stock were outstanding, all of which are owned by JBI.
E. Merger Transaction. Pursuant to this Plan, the parties have agreed
that JBI will acquire RBC and Regent by means of a merger of JBI Merger Sub with
and into RBC (the "Merger") as a result of which RBC will become a direct wholly
owned subsidiary
<PAGE>
of JBI and Regent will become a second-tier subsidiary of JBI (the
"Acquisition"). Immediately following the Merger Effective Date (as hereinafter
defined), JBI intends to merge RBC into JBI, with JBI being the surviving entity
(collectively with the Merger, the "Merger Transaction"). Thereafter, JBI and
RBC intend to merge Regent into Jefferson, with Jefferson being the surviving
entity (the "Bank Merger").
F. Stock Option Agreement. As a condition and inducement to JBI's
willingness to enter into this Plan, concurrently with the execution and
delivery of this Plan, RBC has executed and delivered a Stock Option Agreement
with JBI (the "Stock Option Agreement") in substantially the form attached
hereto as Exhibit A, pursuant to which RBC is granting to JBI an option to
purchase, under certain circumstances, shares of RBC Common Stock.
G. Intention of the Parties. It is the intention of the parties to this
Plan that (i) the Merger shall be accounted for as a pooling of interests under
generally accepted accounting principles, and (ii) the Merger Transaction and
the Bank Merger shall qualify as a reorganization under Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
H. Approvals. The Board of Directors of each of RBC, Regent, JBI,
Jefferson and JBI Merger Sub has determined that this Plan and the transactions
contemplated hereby and by the Stock Option Agreement are in their respective
best interests and the best interests of their respective shareholders, and has
approved, at meetings of each of such Boards of Directors, this Plan and, at the
RBC and JBI Board meetings, the Stock Option Agreement.
NOW, THEREFORE, In consideration of the mutual promises and obligations
contained herein, the parties hereto, intending to be legally bound hereby,
adopt and make this Plan and prescribe the terms and conditions hereof and the
manner and basis of carrying it into effect, which shall be as follows:
I. THE MERGER.
1.01 The Merger. In the event that all of the conditions
set forth in Article VI hereof have been satisfied or waived:
(A) The Continuing Corporation. On the Merger Effective Date, JBI
Merger Sub shall merge with and into RBC, the separate existence of JBI Merger
Sub shall cease and RBC (sometimes hereinafter referred to as the "Continuing
Corporation") shall survive. The name of the Continuing Corporation shall be
"JeffBanks Acquisitioncorp. V, Inc."
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<PAGE>
(B) Effect of the Merger. At the Merger Effective Date, the Continuing
Corporation shall be considered the same business and corporate entity as each
of RBC and JBI Merger Sub, and thereupon and thereafter, all the property,
rights, powers and franchises of each of RBC and JBI Merger Sub shall vest in
the Continuing Corporation and the Continuing Corporation shall be subject to
and be deemed to have assumed all of the debts, liabilities, obligations and
duties of each of RBC and JBI Merger Sub and shall have succeeded to all of each
of their relationships, fiduciary or otherwise, as fully and to the same extent
as if such property rights, privileges, powers, franchises, debts, obligations,
duties and relationships had been originally acquired, incurred or entered into
the by Continuing Corporation.
(C) Liabilities. Upon consummation of the Merger, the Continuing
Corporation shall thenceforth be responsible and liable for all the liabilities,
obligations and penalties of each of the corporations so merged. All rights of
creditors and obligors and all liens on the property of each of JBI and RBC
shall be preserved unimpaired.
(D) Certificate of Incorporation; Bylaws; Directors; Officers. The
Certificate of Incorporation and Bylaws of the Continuing Corporation shall be
those of JBI Merger Sub, as in effect immediately prior to the Merger Effective
Date in each case as amended as of the Merger Effective Date as provided in
Exhibits B and C attached hereto. The directors and officers of JBI Merger Sub
in office immediately prior to the Merger Effective Date shall be the directors
and officers of the Continuing Corporation, together with such additional
directors and officers as may thereafter be elected, who shall hold office until
such time as their successors are elected and qualified or their earlier
resignation, removal or death. On or before the Merger Effective Date, JBI shall
cause the election or appointment of (i) Robert B. Goldstein, O. Francis Biondi
and Barbara H. Teaford as additional directors of Jefferson, (ii) Robert B.
Goldstein and John W. Rose as additional Class A directors of JBI and (iii)
Robert B. Goldstein as Vice Chairman of JBI and President and Chief Operating
Officer of Jefferson.
1.02 Merger Effective Date; Closing. The Merger shall become effective
upon the filing and acceptance of articles of merger by the Pennsylvania
Department of State and the Secretary of State of the State of New Jersey (the
"Merger Effective Date") which such articles of merger shall be filed within ten
days after satisfaction of all conditions set forth in Article VI hereof,
including, without limitation, the receipt of the regulatory approvals referred
to in Paragraphs (B) and (C) of Section 6.02 hereof unless otherwise agreed to
in writing by the parties hereto. All documents required by the terms of this
Plan to be delivered at or prior to consummation of the Merger shall
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<PAGE>
be exchanged by the parties at the times prescribed herein (the "Closing"),
which shall be held on the Merger Effective Date at the offices of Jefferson,
1845 Walnut Street, Philadelphia, Pennsylvania 19103 (or at such other location
as may be mutually agreed upon) at 10:00 a.m.
1.03 Other Matters. Notwithstanding any term of this Plan to the
contrary, JBI may, in its discretion at any time prior to the Merger Effective
Date, designate a direct or indirect wholly-owned subsidiary to substitute for
JBI Merger Sub as a constituent corporation in the Merger by written notice to
RBC so long as the exercise of this right does not adversely affect the
interests of the RBC shareholders, or cause a delay in consummation of the
transactions contemplated herein. JBI shall also have the right to cause JBI
Merger Sub or such substitute, to be the surviving corporation of the Merger, so
long as the exercise of such right does not have an adverse effect on the
interests of the holders of the capital stock of RBC, or cause a delay in, or
otherwise adversely affect, consummation of the transactions described herein.
Nothing in this Plan shall be deemed to restrict the ability of JBI or any of
its subsidiaries to merge with or with and into another entity so long as no
such other transaction shall adversely affect the parties' ability to consummate
the Merger Transaction and the Bank Merger or cause a delay in, or otherwise
adversely affect, consummation of the transactions contemplated herein, or
adversely affect the qualification of the Merger Transaction and the Bank Merger
as a "reorganization" under Section 368(a) of the Code.
II. MERGER CONSIDERATION.
2.01 Merger Consideration. Subject to the provisions of this Plan, at
the Merger Effective Date, automatically as a result of the Merger, and without
any action on the part of any party or shareholder:
(A) Outstanding JBI Common Stock. The shares of JBI Common Stock issued
and outstanding immediately prior to the Merger Effective Date shall, on and
after the Merger Effective Date, remain issued and outstanding shares of JBI
Common Stock.
(B) Outstanding RBC Common Stock. On the Merger Effective Date, each
share of RBC Common Stock (excluding shares owned by RBC) issued and outstanding
immediately prior to the Merger Effective Date shall, by virtue of the Merger,
automatically and without any action on the part of the holder thereof, become
and be converted into the right to receive .303 shares (the "Exchange Ratio")
(subject to possible adjustment as set forth in Section 2.06 hereof) of JBI
Common Stock (the "Merger Consideration"). Any shares of RBC Common Stock owned
by RBC shall be canceled and retired upon the Merger Effective Date and no
consideration shall be issued in exchange therefor.
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(C) Outstanding Shares of JBI Merger Sub. Each of the shares of JBI
Merger Sub Common Stock issued and outstanding immediately prior to the Merger
shall, by virtue of and after the Merger, be converted into one share of RBC
Common Stock and thereafter shall collectively constitute all of the issued and
outstanding shares of the capital stock of the Continuing Corporation.
(D) Outstanding Shares of Regent. The shares of Regent Common Stock
issued and outstanding immediately prior to the Merger shall, on and after the
Merger, remain issued and outstanding shares of Regent Common Stock.
2.02 Shareholder Rights; Stock Transfers. On the Merger Effective Date,
holders of RBC Common Stock shall cease to be, and shall have no rights as,
shareholders of RBC, other than to receive the Merger Consideration provided
under Section 2.01 hereof and Section 2.03 hereof. After the Merger Effective
Date, there shall be no transfers on the stock transfer books of JBI Merger Sub
or the Continuing Corporation of the shares of RBC Common Stock which were
issued and outstanding immediately prior to the Merger Effective Date.
2.03 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of JBI Common Stock, and no certificates or scrip therefor, or
other evidence of ownership thereof, will be issued in the Merger. Instead, JBI
shall pay to each holder of RBC Common Stock who would otherwise be entitled to
a fractional share of JBI Common Stock an amount in cash determined by
multiplying such fractional share of JBI Common Stock by the Index Price (as
hereinafter defined). As used herein, the term "Index Price" shall mean the
average of the daily closing prices for JBI Common Stock on the Nasdaq National
Market System ("Nasdaq NMS") for the 20 consecutive full trading days ending at
the close of trading on the business day immediately prior to the Merger
Effective Date.
2.04 Exchange Procedures. As promptly as practicable after the Merger
Effective Date, JBI shall send or cause to be sent to each shareholder of record
of RBC immediately prior to the Merger Effective Date transmittal materials for
use in exchanging such shareholder's certificates formerly representing RBC
Common Stock ("Old Certificates") for the consideration set forth in Section
2.01(B) hereof and Section 2.03 hereof. The certificates representing the shares
of JBI Common Stock ("New Certificates") issuable in exchange for the Old
Certificates and any fractional share checks which an RBC shareholder shall be
entitled to receive, and any dividends or other distributions paid on any shares
of JBI Common Stock that such shareholder shall be entitled to receive prior to
the delivery to Chase Mellon Securities Transfer Company (the "Exchange Agent")
of Old Certificates representing all of such shareholder's shares of RBC
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Common Stock will be delivered to such shareholder only upon delivery to the
Exchange Agent of Old Certificates representing all of such shares (or indemnity
satisfactory to JBI and the Exchange Agent, in their judgement, if any of the
certificates are lost, stolen or destroyed) owned by such shareholder. No
interest will be paid on any such fractional share checks or dividends to which
the holder of such shares shall be entitled to receive upon such delivery. After
the Merger Effective Date, to the extent required by law, former shareholders of
record of RBC shall be entitled to vote at any meeting of holders of JBI Common
Stock the number of whole shares of JBI Common Stock into which their respective
shares of RBC Common Stock are converted, regardless of whether such holders
have exchanged their Old Certificates for New Certificates in accordance with
the provisions of this Plan. Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to any former holder of RBC Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
2.05 Options. Any valid option to purchase shares of RBC Common Stock
(an "RBC Option"), outstanding and unexercised immediately prior to the Merger
shall, by virtue of the Merger, automatically and without any action on the part
of the holder thereof, become and be converted into an option (a "JBI Option")
to purchase that number of shares of JBI Common Stock as shall equal the
Exchange Ratio multiplied by that number of shares of RBC Common Stock which
such option entitled the holder thereof to purchase (rounded to the nearest
whole share), at an exercise price equal to the exercise price per share of the
RBC Option divided by the Exchange Ratio (rounded to the nearest cent). JBI
shall perform each such JBI Option in accordance with the terms of the plan or
agreement by which it is evidenced, subject to the foregoing. The maximum number
of shares of RBC Common Stock which are issuable upon exercise of the options
referred to above, as of the date hereof, has been Previously Disclosed (as such
term is defined in Section 8.08(C) hereof.
2.06 Anti-Dilution Provisions. In the event that (i) JBI changes the
number of shares of JBI Common Stock issued and outstanding prior to the Merger
Effective Date as a result of a stock split, stock dividend, recapitalization,
reclassification or other distribution with respect to the outstanding JBI
Common Stock and the record date therefor shall be prior to the Merger Effective
Date, or (ii) between the date hereof and the Merger Effective Date, JBI issues
JBI Common Stock or securities convertible into or exchangeable for shares of
JBI Common Stock, at a price per share of JBI Common Stock (or, with respect to
securities convertible into or exchangeable for shares of JBI Common Stock at a
conversion or exchange price per share) less than the market value per share of
JBI Common Stock at the time of issuance or a binding agreement to issue such
JBI Common Stock
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or such convertible or exchangeable securities is entered into, then the
Exchange Ratio shall be proportionately adjusted effective upon the record date
for any such event.
III. ACTIONS PENDING MERGER.
3.01 Actions Pending Merger. From the date hereof until the Merger
Effective Date, except as expressly contemplated by this Plan, without the prior
written consent or approval of the Chairman or President of JBI, RBC will not,
and will cause Regent not to:
(A) Dividends. Make, declare or pay any dividend or declare or make any
distribution on, any shares of its capital stock or directly or indirectly
combine, redeem, reclassify, purchase or otherwise acquire any shares of its
capital stock.
(B) Compensation; Employment Agreements. Enter into or amend any
employment, severance or similar agreements or arrangements with, increase the
rate of compensation or increase any employee benefit of (except normal
individual increases in the ordinary course of business in accordance with
existing policy consistent with current practice), or pay or agree to pay any
bonus to, any of its directors, officers or employees, except in accordance with
plans or agreements existing, as Previously Disclosed and as in effect on the
date hereof.
(C) Benefit Plans. Enter into or modify (except as may be required by
applicable law or except in accordance with plans or agreements as Previously
Disclosed and as in effect on the date hereof) any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance, or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement related thereto,
in respect of any of its directors, officers or other employees, including
without limitation taking any action that accelerates (i) the vesting or
exercise of any benefits payable thereunder; or (ii) the right to exercise any
employee stock options outstanding thereunder.
(D) Acquisitions and Dispositions. Dispose of or discontinue any
material portion of its assets, business or properties (except for the sale of
foreclosed properties, or properties received in lieu of foreclosure, in the
ordinary course of business, consistent with past practice and purchases and
sales of investment securities consistent with current practice), or merge or
consolidate with, or acquire all or any substantial portion of, the business or
property of any other entity (except for properties received through, or in lieu
of, foreclosure in the ordinary course of business, consistent with past
practice).
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(E) Amendments. Amend its Certificate or Articles of Incorporation or
Bylaws.
(F) Actions in Ordinary Course. Take any other action or engage in any
loan, deposit, investment or other transaction not in the usual, regular and
ordinary course of business consistent with current practice, including, but not
limited to, (i) significantly changing asset liability sensitivity, (ii) making
loans, (iii) purchasing securities, (iv) entering into any material contract,
except for this Plan and the Stock Option Agreement, to be performed after the
date hereof, and (v) incurring any indebtedness for borrowed money, in each case
in a manner not consistent with current practice.
(G) Agreements. Agree or commit to do or take any of the foregoing
actions.
IV. REPRESENTATIONS AND WARRANTIES.
Each of RBC and Regent hereby represents and warrants to JBI, Jefferson and JBI
Merger Sub, and each of JBI, JBI Merger Sub and Jefferson hereby represents and
warrants to RBC and Regent as follows:
(A) Recitals. The facts set forth in the Recitals of this Plan with
respect to it are true and correct.
(B) Capital Shares. The outstanding shares of it are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive rights.
(C) Qualification. It is duly qualified to do business and is in good
standing in the states of the United States and foreign jurisdictions where its
ownership or leasing of property or the conduct of its business requires it to
be so qualified. It has the corporate power and authority to carry on its
business as it is now being conducted and to own all its material properties and
assets. It has in effect all federal, state and local authorizations, licenses
and approvals necessary for it to own or lease its properties and assets and to
carry on its business as it is now conducted.
(D) Subsidiaries. Except as Previously Disclosed, in the case of RBC
and Regent, it does not have any subsidiaries.
(E) Authority. Subject to receipt of any necessary approval by its
shareholders and the regulatory approvals referred to in Section 6.02 hereof, it
has the corporate power and authority to execute, deliver and perform its
obligations under this Plan and, in the case of RBC, the Stock Option Agreement,
this Plan and, in the case of RBC, the Stock Option Agreement has been
authorized by all necessary corporate action
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by it and this Plan and, in the case of RBC, the Stock Option Agreement is a
valid and binding agreement of it enforceable against it in accordance with its
respective terms, subject to bankruptcy, insolvency, receivership,
conservatorship and other laws of general applicability relating to or affecting
creditors rights and to general equity principles.
(F) No Conflict. The execution, delivery and performance of this Plan
and, in the case of RBC, the Stock Option Agreement and the consummation of the
transactions contemplated by this Plan and, in the case of RBC, the Stock Option
Agreement will not constitute (i) a breach or violation of, or a default under,
any law, rule or regulation or any judgment, decree, order, governmental permit
or license, or agreement, indenture or instrument of it or of any of its
subsidiaries or to which it or any of its subsidiaries or properties is subject
or by which any of them are bound, which breach, violation or default is
reasonably likely to have, either by itself or in the aggregate with one or more
other events, occurrences or circumstances, a Material Adverse Effect (as such
term is defined in Section 8.08(B) hereof), on it, or (ii) a breach or violation
of, or a default under, its Certificate or Articles of Incorporation or Bylaws;
and the consummation of the transactions contemplated by this Plan and, in the
case of RBC, the Stock Option Agreement will not require any consent or approval
under any such law, rule, regulation, judgment, decree, order, governmental
permit or license or, except as Previously Disclosed, the consent or approval of
any other party to any such agreement, indenture or instrument, other than the
required approvals of applicable regulatory authorities referred to in Section
6.02 hereof.
(G) Financial Reports and SEC Documents. Its Annual Reports on Form
10-K for the fiscal years ended December 31, 1996 and 1997, and all other
reports, registration statements, definitive proxy statements or information
statements filed or to be filed by it or any of its subsidiaries subsequent to
December 31, 1996 under the Securities Act of 1933, as amended (together with
the rules and regulations thereunder, the "Securities Act") or under Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
(together with the rules and regulations thereunder, the "Exchange Act"), in the
form filed, or to be filed, with the SEC (collectively, its "SEC Documents") (i)
complied or will comply as to form in all material respects with the applicable
requirements under the Securities Act or the Exchange Act, as the case may be,
and (ii) did not and will not, at the time of such filing, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and each of the
balance sheets in or incorporated by reference into any such SEC Document
(including the related notes and schedule thereto) fairly
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presents and will fairly present the financial position of the entity or
entities to which it relates as of its date, and each of the statements of
income and changes in shareholders' equity and cash flows or equivalent
statements in such report and documents (including any related notes and
schedules thereto) fairly presents and will fairly present the results of
operations, changes in shareholders' equity and changes in cash flows, as the
case may be, of the entity or entities to which it relates for the periods set
forth therein, in each case in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved, except in
each case as may be noted therein, subject to normal year-end audit adjustments
in the case of unaudited statements.
(H) Conduct of Business in Ordinary Course. Except as Previously
Disclosed, since September 30, 1997, (i) it and each of its subsidiaries have
conducted their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses related to this Plan and the transactions
contemplated hereby) and (ii) no event has occurred which, either by itself or
in the aggregate with one or more other events, occurrences or circumstances, is
reasonably likely to have a Material Adverse Effect on it.
(I) Litigation; Regulatory Action. Except as Previously Disclosed, no
litigation, proceeding, or controversy before any court or governmental agency
is pending which, either by itself or in the aggregate with one or more other
events, occurrences or circumstances, is reasonably likely to have a Material
Adverse Effect on it and, to the best of its knowledge, no such litigation,
proceedings or controversy has been threatened; and except as Previously
Disclosed, neither it nor any of its subsidiaries is a party to, or subject to
any order, decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or has adopted any board
resolution at the request of, any federal, state or other government,
governmental agency or authority charged with the supervision or regulation of
financial institutions or their holding companies or the issuance of securities
or engaged in the insurance of deposits (including, without limitation, the
Office of the Comptroller of the Currency (the "OCC"), the Pennsylvania
Department of Banking, the Board of Governors of the Federal Reserve System (the
"FRB") and the Federal Deposit Insurance Corporation (the "FDIC")) or the
supervision or regulation of it or any of its subsidiaries or properties
(collectively, the "Regulatory Authorities"); and except as Previously
Disclosed, neither it nor any of its subsidiaries has been advised by any
Regulatory Authority that such authority is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, commitment letter or similar
submission or any such resolutions.
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Since Regent received notification of its most recent CAMEL rating from the OCC,
a copy of which has been furnished to JBI, there has been no change in such
rating.
(J) Compliance with Laws. Except as Previously Disclosed, it and each
of its subsidiaries is in material compliance, in the conduct of its business,
with all applicable federal, state and local statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto or to the
employees conducting such businesses, including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending laws
relating to discriminatory business practices; and, except as Previously
Disclosed, it and each of its subsidiaries has all permits, licenses,
authorizations, orders and approvals of, and has made all filings, applications
and registrations with, all Regulatory Authorities that are required in order to
permit them to conduct their businesses substantially as presently conducted;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect and, to the best of its knowledge, no suspension or
cancellation of any of them is threatened; and, except as Previously Disclosed,
neither it nor any of its subsidiaries has received notification or
communication from any Regulatory Authority (i) asserting that it or any of its
subsidiaries is not in material compliance with any of the statutes,
regulations, or ordinances which such Regulatory Authority enforces or (ii)
threatening to revoke any license, franchise, permit, or governmental
authorization or (iii) threatening or contemplating revocation or limitation of,
or which would have the effect of revoking or limiting, federal deposit
insurance (nor, to its knowledge, do any grounds for any of the foregoing
exist).
(K) Material Contracts. Except as Previously Disclosed and except for
this Plan and the Stock Option Agreement, in the case of RBC and Regent only, it
is not bound by any material contract to be performed after the date hereof.
(L) Defaults. Except as Previously Disclosed, in the case of RBC and
Regent only, neither it nor any of its subsidiaries is in default under any
material contract, agreement, commitment, arrangement, lease, insurance policy,
or other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a default. Neither it nor any of its subsidiaries is
subject to, or bound by, any contract containing covenants which (i) limit the
ability of it or any subsidiary to compete in any material line of business or
with any person, or (ii) involve any material restriction of geographical area
in which, or method by which, it
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or any subsidiary may carry on its business (other than as may be required by
law or any applicable Regulatory Authority).
(M) Title to Properties. Except as Previously Disclosed, in the case of
RBC and Regent only, it and each of its subsidiaries has good and marketable
title, free and clear of any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance ("Liens") (other than Liens for current
taxes not yet delinquent, pledges to secure deposits or in the ordinary course
of business consistent with past practice) to all of the properties and assets,
tangible and intangible, owned by it or its subsidiaries. To the best of its
knowledge, all buildings and all fixtures, equipment and other property and
assets are held under valid leases or subleases by it or its subsidiaries
enforceable in accordance with their respective terms (except as may be limited
by bankruptcy, insolvency, receivership, conservatorship and other laws of
general applicability relating to or affecting creditors rights or by general
equity principles).
(N) No Brokers. Except as Previously Disclosed in the case of RBC with
respect to arrangements between Keefe, Bruyette & Woods, Inc. and RBC, all
negotiations relative to this Plan and the transactions contemplated hereby have
been carried on by it and its agents directly with the other parties hereto and
their agents and no action has been taken by it that would give rise to any
valid claim against any party hereto for a brokerage commission, finder's fee or
other like payment.
(O) Employee Benefit Plans. Except as Previously Disclosed:
(i) RBC has delivered to JBI a true and complete copy of its
401(k) Plan, which is the only "employee benefit plan" within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), covering employees or former employees of it and Regent (the
"Employees").
(ii) All employee benefit plans of Regent covering Employees,
to the extent subject to ERISA (the "ERISA Plans"), have been operated and
administered, and are in material compliance with, applicable law, including
ERISA and the Code, or any rules or regulations thereunder, and all filings,
disclosures and notices required by any such laws have been timely made, except
for failures to so comply which are not reasonably likely, either by themselves
or in the aggregate with one or more other events, occurrences or circumstances,
to have a Material Adverse Effect on it. There is no pending or, to the best of
its knowledge, threatened litigation relating to the ERISA Plans which is
reasonably likely, either by itself or in the aggregate with one or more other
events, occurrences or circumstances, to have a Material Adverse Effect on it;
and neither it nor any of
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its subsidiaries has engaged in a transaction with respect to any ERISA Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject it or any of its subsidiaries to a tax or penalty imposed
by either Section 4975 of the Code or Section 502 of ERISA in an amount which is
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on it.
(iii) All contributions required to be made under the terms of
any ERISA Plan of RBC or its subsidiaries have been timely made.
(iv) There are no material current or projected liabilities
for retiree health or life insurance benefits.
(P) No Regulatory Impediment. It knows of no reason why the regulatory
approvals referred to in Section 6.02 hereof should not be obtained.
(Q) Labor Matters. Neither it nor any of its subsidiaries is a party
to, or bound by any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization, nor is it the subject
of a proceeding asserting that it or any subsidiary has committed an unfair
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel it or any subsidiary to bargain with any labor organization as
to wages and conditions of employment, nor is there any strike or other labor
dispute involving it, pending or, to the best of its knowledge, threatened, nor
is it aware of any activity involving its employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
(R) Insurance. It and each of its subsidiaries has taken all requisite
action (including without limitation the making of claims and the giving of
notices) pursuant to its directors' and officers' liability insurance policy or
policies in order to preserve all rights thereunder with respect to all matters
(other than matters arising in connection with this Plan and the transactions
contemplated hereby) that are known to it.
(S) Asset Classification. In the case of RBC and Regent only, it has
Previously Disclosed a list, accurate and complete in all material respects, of
all loans, extensions of credit or other assets of Regent that are classified by
it as of December 31, 1997 (the "Asset Classification"); and no amounts of
loans, extensions of credit or other assets that are classified as of December
31, 1997 by any regulatory examiner as "Other Assets Especially Mentioned",
"Substandard", "Doubtful," "Loss," or words of similar import are excluded from
the amounts disclosed in the Asset Classification, other than amounts of loans,
extensions of credit or other assets that were charged off
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by Regent prior to December 31, 1997; and in the case of RBC and Regent only,
the allowance for loan and lease losses disclosed in its SEC Documents were, and
the allowance for loan and lease losses disclosed in its SEC Documents for
periods ending after the date of this Plan will be, adequate as of the date
thereof, under generally accepted accounting principles consistently applied to
banks and bank holding companies and all other applicable regulatory
requirements for all losses reasonably anticipated in the ordinary course of
business as of the date thereof based on information available as of such date;
and in the case of RBC and Regent only, the assets comprising other real estate
owned and in-substance foreclosures included in any of its non-performing assets
are carried net of reserves at the lower of cost or market value based on
current independent appraisals or current management appraisals.
(T) Affiliates. Except as Previously Disclosed, in the case of RBC and
Regent only, to the best of its knowledge, there is no person who, as of the
date of this Plan, may be deemed to be an "affiliate" of RBC or Regent as that
term is used in Rule 145 under the Securities Act.
(U) Takeover Laws; Dissenters' Rights. In the case of RBC and Regent
only, it has taken all necessary action to exempt the transactions contemplated
by this Plan (including those contemplated by the Stock Option Agreement) from,
or the transactions contemplated by this Plan (including those contemplated by
the Stock Option Agreement) are otherwise exempt from, the requirements of any
"moratorium," "control share," "fair price," "affiliate transaction," "control
transaction," "business combination" or other anti-takeover laws and regulations
(collectively, the "Takeover Laws") of the Commonwealth of Pennsylvania or the
State of New Jersey, including, without limitation, Chapter 25 of the
Pennsylvania Business Corporation Law, the New Jersey Shareholders Protection
Act and the New Jersey Corporation Takeover Bid Disclosure Law. Holders of RBC
Common Stock and JBI Common Stock do not have dissenters' or appraisal rights in
connection with the execution of this Plan or the consummation of any of the
transactions contemplated hereby.
(V) Environmental Matters. Except as Previously Disclosed, in the case
of RBC and Regent only, to the best of their knowledge:
(i) No Hazardous Substances (as hereinafter defined) have been
stored, treated, dumped, spilled, disposed, discharged, released or deposited
at, under or on (1) any property now owned, occupied, leased or held or managed
in a representative or fiduciary capacity ("Present Property") by RBC or any of
its subsidiaries, (2) any property previously owned, occupied, leased or held or
managed in a representative or fiduciary capacity
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("Former Property") by RBC or any of its subsidiaries during the term of such
previous ownership, occupancy, lease, holding or management or (3) any
Participation Facility (as hereinafter defined) during the time that RBC or any
of its subsidiaries participated in the management of, or may be deemed to be or
to have been an owner or operator of, such Participation Facility, where such
storage, treatment, dumping, spilling, disposing, discharging, releasing or
depositing would have a Material Adverse Effect on RBC and its subsidiaries,
taken as a whole.
(ii) Neither RBC nor any of its subsidiaries disposed of, or
arranged for the disposal of, Hazardous Substances from any Present Property,
Former Property or Participation Facility, and no owner or operator of a
Participation Facility during the time that RBC or any of its subsidiaries
participated in the management of, or may be deemed to be or to have been an
owner or operator of, such Participation Facility, where such disposal or
arranging for disposal would have a Material Adverse Effect on RBC and its
subsidiaries, taken as whole.
(iii) No Hazardous Substances have been stored, treated,
dumped, spilled, disposed, discharged, released or deposited at, under or on any
Loan Property (as hereinafter defined), where such storage, treatment, dumping,
spilling, disposing, discharging, releasing, depositing or violation would have
a Material Adverse Effect on RBC and its subsidiaries, taken as a whole, nor is
there, with respect to any such Loan Property, any violation of environmental
law which could materially adversely affect the value of such Loan Property to
an extent which could prevent or delay RBC or any of its subsidiaries from
recovering the full value of its loan in the event of a foreclosure on such Loan
Property.
(iv) Neither RBC nor any of its subsidiaries (i) is aware of
any investigations contemplated, pending or completed by any environmental
regulatory authority with respect to any Present Property, Former Property, Loan
Property or Participation Facility, (ii) has received any information requests
from any environmental regulatory authority or (iii) been named as a potentially
responsible or liable party in any Superfund, Resource Conservation and Recovery
Act, Toxic Substances Control Act or Clean Water Act proceeding or other
equivalent state or federal proceeding.
(v) As used in this Plan, (i) "Participation Facility" shall
mean any property or facility of which the relevant person or entity (A) has at
any time participated in the management or (B) may be deemed to be or to have
been an owner or operator, (ii) "Loan Property" shall mean any real property in
which the relevant person or entity holds a security interest in an amount
greater than $50,000 and (iii) "Hazardous Substances" shall mean (x) any
flammable substances, explosives, radioactive materials,
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hazardous materials, hazardous substances, hazardous wastes, toxic substances,
pollutants, contaminants and any related materials or substances specified in
any applicable federal or state law or regulation relating to pollution or
protection of human health or the environment (including, without limitation,
ambient or indoor air, surface water, groundwater, land surface or subsurface
strata) and (y) friable asbestos, polychlorinated biphenyls, urea formaldehyde
and petroleum and petroleum- containing products and wastes.
(W) Tax Matters. Except as Previously Disclosed, (i) all reports and
returns with respect to Taxes (as defined below) that are required to be filed
by or with respect to it (collectively, the "Tax Returns"), have been duly
filed, or requests for extensions have been timely filed and have not expired,
for all periods immediately preceding the Merger Effective Date except to the
extent such filing is not yet due or all such failures to file, taken together,
are not reasonably likely to have either by themselves or in the aggregate with
one or more other events, occurrences or circumstances, a Material Adverse
Effect on it, and such Tax Returns were true, complete, accurate and correct in
all material respects, (ii) all taxes (which shall mean federal, state, local or
foreign income, gross receipts, windfall profits, severance, property,
production, sales, use, occupancy, license, excise, franchise, employment,
withholding or similar taxes imposed on the income, properties, operations or
activities of it, together with any interest, additions, or penalties with
respect thereto and any interest in respect of such additions or penalties,
collectively the "Taxes") shown to be due on the Tax Returns have been paid in
full on or before the due date or are being contested in good faith and
adequately reserved for, in accordance with GAAP, on its consolidated balance
sheet, (iii) the Tax Returns have never been examined by the Internal Revenue
Service, (iv) no written notice of deficiency, pending audit or assessment with
respect to the Tax Returns has been received from the appropriate state, local
or foreign taxing authority, or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired, (v) all
Taxes due with respect to completed and settled examinations have been paid in
full or otherwise adequately reserved in accordance with GAAP on its
consolidated balance sheet, (vi) no issues have been raised by the relevant
taxing authority in connection with the examination of any of the Tax Returns
which are reasonably likely to result in a determination that would have, either
by themselves or in the aggregate with one or more other events, occurrences or
circumstances, a Material Adverse Effect on it, except as reserved against, in
accordance with GAAP, in its Financial Reports, and (vi) no waivers of statutes
of limitations have been given by or requested with respect to any Taxes of it.
(X) Pooling; Reorganization. It is aware of no reason why the Merger
will fail to qualify (i) for pooling-of-interests
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accounting treatment or (ii) as a reorganization under Section 368(a) of the
Code.
(Y) Outstanding Securities. Except as set forth in the recitals to this
Plan, or Previously Disclosed pursuant to this Plan, in the case of RBC and
Regent only, neither it nor any of its subsidiaries has any securities (whether
capital stock or other equity securities, debt securities, or warrants, options
or rights to obtain the issuance of any such securities) authorized and reserved
for issuance and neither RBC nor Regent has any commitment to authorize, issue,
or sell any such shares or any securities or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or acquire
from such party, any such securities and no securities or obligations
representing any such rights are outstanding;
(Z) Articles and Bylaws. In the case of RBC and Regent only, it has
previously delivered to the other parties its Articles or Certificate of
Incorporation and Bylaws which are true, correct and complete copies of such
documents as in effect on the date of this Plan.
V. COVENANTS.
RBC and Regent hereby covenant to JBI, Jefferson and JBI Merger Sub, and JBI,
Jefferson and JBI Merger Sub hereby covenant to RBC and Regent, that:
5.01 Reasonable Best Efforts. Subject to the terms and conditions of
this Plan, it shall use commercially reasonable efforts in good faith to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, as promptly
as practicable so as to permit consummation of the Merger at the earliest
possible date and to otherwise enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other parties hereto, and
each party shall use, and shall cause each of their respective subsidiaries to
use, commercially reasonable efforts to cause to be satisfied the conditions
referred to in Article VI hereof, to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated by this Plan, to obtain all consents
(governmental or other) necessary or desirable for the consummation of the
transactions contemplated by this Plan and to defend any litigation seeking to
enjoin, prevent or delay the consummation of the transactions contemplated by
this Plan.
5.02 Irrevocable Proxies. In the case of RBC and Regent only, it shall
use its best efforts to cause each director and executive officer of RBC and
Regent to deliver to JBI on the date of this Plan or as promptly as practicable
thereafter,
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irrevocable proxies naming Betsy Z. Cohen, Harmon S. Spolan, or either of them,
as the attorneys-in-fact for such persons to vote the shares of RBC held in his
or her name (or to instruct the record holder of any such shares held in nominee
name for his or her benefit) for approval of this Plan, the Merger and the
transactions contemplated hereby.
5.03 Registration Statement.
(A) Each shall use its best efforts in good faith and in cooperation
with the other parties to promptly prepare and file with the SEC in accordance
with the requirements of the Securities Act, a registration statement (the
"Registration Statement") in connection with the issuance of the JBI Common
Stock contemplated by this Plan. Each shall use its best efforts to promptly
prepare and, if required, file with the SEC, a proxy or information statement to
be mailed to the holders of RBC Common Stock. RBC shall call a meeting of the
holders of RBC Common Stock to be held as soon as practicable after the
effective date of the Registration Statement for purposes of voting upon a
proposal seeking approval of this Plan and the Merger contemplated hereby, and,
subject to the right of the Board of Directors of RBC to withdraw or modify its
recommendations if such Board of Directors determines that it is required to do
so in the exercise of its fiduciary duties after consultation with counsel, it
shall recommend approval of this Plan and the transactions contemplated hereby,
and use its best efforts to obtain such approvals from the holders of RBC Common
Stock. RBC shall, at JBI's request, recess or adjourn its shareholders' meeting
if such recess or adjournment is deemed by JBI to be necessary or desirable.
(B) In the case of JBI only: (i) it shall use its best efforts to cause
the Registration Statement to be declared effective as soon as practicable after
the filing thereof; (ii) it shall use its best efforts to obtain, prior to the
effective date of the Registration Statement, all necessary state securities
laws or "blue sky" permits and approvals, provided that JBI shall not be
required by virtue thereof to submit to general jurisdiction in any state; (iii)
when the Registration Statement or any post-effective amendment or supplement
thereto shall become effective, and at all times subsequent to such
effectiveness, up to and including the date of the meetings, such Registration
Statement and all amendments or supplements thereto, with respect to all
information set forth therein furnished by RBC or Regent relating to RBC, Regent
or their subsidiaries and by JBI relating to JBI and its subsidiaries (a) will
comply as to form in all material respects with the provisions of the Securities
Act and any other applicable statutory or regulatory requirements, and (b) will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements contained
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therein not misleading; provided however, in no event shall any party hereto be
liable for any untrue statement of a material fact or omission to state a
material fact in the Registration Statement made in reliance upon and in
conformity with, written information concerning another party furnished by such
other party specifically for use in the Registration Statement.
5.04 Press Releases. Unless approved by the other parties hereto in
advance, no party will issue any press release or written statement for general
circulation relating to the transactions contemplated hereby, except as
otherwise required by law or applicable stock exchange, National Association of
Securities Dealers, Inc. ("NASD") or Nasdaq NMS rule.
5.05 Access; Information.
(A) Upon reasonable notice, each party hereto shall afford the other
parties hereto, and their officers, employees, counsel, accountants and other
authorized representatives, access, during normal business hours throughout the
period prior to the Merger Effective Date to all of its properties, books,
contracts, commitments and records and, during such period, it shall furnish
promptly to the other parties hereto, (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of federal
or state securities or banking laws, and (ii) all other information concerning
its business, properties and personnel as the other parties hereto may
reasonably request. No party shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of its customers, jeopardize the attorney-client or similar privilege
with respect to such information or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or agreement entered into prior to the date
hereof. The parties will use their reasonable best efforts to make appropriate
substitute disclosure arrangements, to the extent practicable, in circumstances
in which the restrictions of the preceding sentence apply.
(B) No investigation pursuant to this Section 5.05 by any party shall
affect or be deemed to modify or waive any representation or warranty made by
any other party hereto or the conditions to the obligation of the first party to
consummate the transactions contemplated by this Plan; and (2) each party hereto
will not use any information obtained pursuant to this Section 5.05 for any
purpose unrelated to this Plan, the consummation of the transactions
contemplated hereby and, if the Merger is not consummated, will hold all
information and documents obtained pursuant to this paragraph in confidence (as
provided in Section 8.06 hereof) unless and until such time as such information
or documents become publicly available other than by reason of any action or
failure to act by such party or as it is advised by counsel that any such
information or document is required by law
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or applicable stock exchange, NASD or Nasdaq NMS rule to be disclosed, and in
the event of the termination of this Plan, each party will, upon request by the
other party, deliver to the other all documents so obtained by it or destroy
such documents.
5.06 Acquisition Transactions.
(A) Prior to the Merger Effective Date, RBC shall not, and shall not
authorize or permit any of its subsidiaries or any of its or its subsidiaries'
directors, officers, employees, agents or representatives, directly or
indirectly, to solicit, initiate, facilitate or encourage (including by way of
furnishing or disclosing non-public information) any inquiries or the making of
any proposal with respect to any merger, consolidation or other business
combination involving it or its subsidiaries or the acquisition of all or
substantially all of the assets or capital stock of it and its subsidiaries
taken as a whole, or any similar transaction (an "Acquisition Transaction") or
negotiate, explore or otherwise engage in substantive discussions with any
person (other than JBI or its directors, officers, employees, agents and
representatives) with respect to any Acquisition Transaction or enter into any
agreement, arrangement or understanding requiring it to abandon, terminate or
fail to consummate the Merger or any other transactions contemplated by this
Agreement; provided that RBC may, in response to an unsolicited written proposal
with respect to an Acquisition Transaction from a third party, furnish
information to, and negotiate, explore or otherwise engage in substantive
discussions with such third party, and enter into any such agreement,
arrangement or understanding, in each case only if RBC's Board of Directors,
determines in good faith by a majority vote, after consultation with its
financial advisers and its outside legal counsel, that failing to take such
action would be a breach of the fiduciary duties of its Board of Directors in
connection with seeking an Acquisition Transaction that is more favorable to its
shareholders than the Merger.
(B) RBC shall promptly advise JBI in writing of the receipt of any
inquiries or proposals relating to an Acquisition Transaction, unless RBC's
Board of Directors determines in good faith by a majority vote, after
consultation with its outside legal counsel, that taking such action would be a
breach of the fiduciary duties of its Board of Directors in connection with
seeking an Acquisition Transaction that is more favorable to its shareholders
than the Merger.
5.07 Affiliate Agreements. In the case of RBC and Regent only, it will
cause each person who may be deemed to be an "affiliate" of RBC or Regent for
purposes of Rule 145 under the Securities Act to execute and deliver to JBI on
or before the mailing of the proxy statements for the meetings referred to in
Section 5.03 hereof an agreement in the form attached hereto as Exhibit D
restricting the disposition of such affiliate's shares
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of RBC Common Stock and the shares of JBI Common Stock to be received by such
person in exchange for such person's shares of RBC Common Stock or shares of JBI
Common Stock issuable pursuant to the exercise of the JBI Options, as
applicable.
5.08 Certain Modifications; Restructuring Changes. In the case of
Regent, it shall use its best efforts to make reasonable modifications and
changes to its loan, litigation and real estate valuation policies and practices
(including loan classifications and levels of reserves) prior to the Merger
Effective Date so as to be consistent on a mutually satisfactory basis with
those of JBI and generally accepted accounting principles. Regent shall not be
required to modify or change any such policies or practices, however, until (i)
satisfaction of the conditions set forth in Section 6.01 hereof, (ii)
commencement of the United States Department of Justice review period set forth
in 12 U.S.C. ss.1849; (iii) such time as Regent and JBI shall reasonably agree
that the Merger Effective Date will occur prior to public disclosure of such
modifications or changes in regular periodic earnings releases or periodic
reports filed with any Regulatory Authority, and (iv) such time as JBI
acknowledges in writing that all conditions to JBI's obligations to consummate
the Merger (and JBI's rights to terminate this Plan) have been waived or
satisfied; provided, however, that in all circumstances Regent shall make such
modifications and changes not later than immediately prior to the expiration of
the statutory waiting period referred to above in clause (ii). Regent's
representations, warranties and covenants contained in this Plan shall not be
deemed to be untrue or breached in any respect for any purpose as a consequence
of any modifications or changes undertaken solely on account of this Section
5.08 nor will any such modifications or changes affect or be considered in the
definition of "Material Adverse Effect" contained in Section 8.08 hereof.
5.09 Takeover Laws. In the case of each of RBC and Regent only, it
shall not take any action that would cause the transactions contemplated by this
Plan (including those contemplated by the Stock Option Agreement) to be subject
to any applicable state takeover statute in effect as of the date of this Plan
and RBC and Regent shall take all necessary steps to exempt (or ensure the
continued exemption of) the transactions contemplated by this Plan (including
those contemplated by the Stock Option Agreement) from any applicable state
takeover law, as now or hereafter in effect, including, without limitation, the
New Jersey Shareholders Protection Act and the New Jersey Corporation Takeover
Bid Disclosure Law.
5.10 No Rights Triggered. In the case of RBC and Regent only, it shall
take all necessary steps to ensure that the entering into of this Plan and the
consummation of the transactions contemplated hereby (including without
limitation
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the Merger and the transactions contemplated by the Stock Option Agreement) and
any other action or combination of actions, or any other transactions
contemplated hereby or thereby do not and will not (i) result in the grant of
any rights or claims under the Certificate of Incorporation or Bylaws of Regent
or RBC or under any agreement to which Regent or RBC is a party other than as
Previously Disclosed with respect to certain employment agreements, or (ii)
restrict or impair in any way the ability of JBI or JBI Merger Sub to exercise
the rights granted hereunder.
5.11 Regulatory Applications. It undertakes and agrees to use its best
efforts to cause the Merger to be effected, including, without limitation,
promptly preparing and filing any and all regulatory applications and disclosure
documents, and to take no action which would cause the Merger to fail to qualify
for pooling-of-interests accounting treatment.
5.12 Employees.
(A) In the case of JBI, prior to the completion of the Merger, it will
advise each of the current employees of RBC and Regent in writing that (i) it
will interview all current employees of Regent; (ii) it will consider in good
faith continuing to employ each such employee upon the completion of the Merger;
and (iii) any employee of Regent that is retained by JBI will be given credit
for his or her prior service with Regent for the purposes of determining the
entitlement to and amount of (a) retirement benefits provided under JBI's
current retirement plans (and any successor thereto) and (b) the required
employer contribution for the group health insurance currently provided by JBI.
(B) In the case of RBC and Regent, the employment agreements of each of
Robert B. Goldstein, Joel E. Hyman and Amanda Perkins, shall be amended or
replaced on terms acceptable to JBI or shall be terminated in accordance with
their terms or on such other terms as shall be acceptable to JBI.
5.13 Quarterly Information. In the case of RBC and Regent only, it
shall promptly after the end of each fiscal quarter after the date of this Plan
and on the Merger Effective Date provide JBI with a list of all of its loans,
extensions of credit or other assets that have been classified internally or by
any regulatory examiner since the date it provided JBI with the Asset
Classification.
5.14 Indemnification. In the case of JBI only:
(A) From and after the Merger Effective Date through the second
anniversary of the Merger Effective Date, it agrees to indemnify and hold
harmless each present and former director and officer of each of RBC and Regent
and each officer or employee of
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each of RBC and Regent that is serving as a director or trustee of another
entity expressly at the request or direction of RBC or Regent (each, an
"Indemnified Party"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, the "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, and whether or not the Indemnified Party is a party thereto,
arising out of matters existing or occurring at or prior to the Merger Effective
Date (including the transactions contemplated by this Plan), whether asserted or
claimed prior to, at or after the Merger Effective Date, to the fullest extent
permitted under the RBC Certificate of Incorporation, the charter of Regent, or
the bylaws of either in effect on the date hereof; provided, however, that no
Indemnified Party shall be entitled to indemnification for costs arising out of
any matter that such Indemnified Party had an obligation, pursuant to this Plan,
to Previously Disclose to JBI and did not so disclose.
(B) Any Indemnified Party wishing to claim indemnification under
Section 5.14(A) hereof, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify JBI thereof, but the failure
to so notify shall not relieve JBI of any liability it may have hereunder to
such Indemnified Party if such failure does not materially prejudice JBI. In the
event of any such claim, action, suit, proceeding or investigation, (i) JBI
shall have the right to assume the defense thereof with counsel reasonably
acceptable to the Indemnified Party and JBI shall not be liable to such
Indemnified Party for any legal expenses of other counsel subsequently incurred
by such Indemnified Party in connection with the defense thereof, except that if
JBI does not elect to assume such defense within a reasonable time or if there
are issues which constitute conflicts of interest between JBI and the
Indemnified Party, the Indemnified Party may retain counsel satisfactory to such
Indemnified Party, and JBI shall remain responsible for the reasonable fees and
expenses of such counsel, with respect to those matters as to which a conflict
of interest exists as set forth above, promptly as statements therefor are
received; provided, however, that JBI shall be obligated pursuant to this
Section 5.14(B) to pay for only one firm of counsel for all Indemnified Parties
in any one jurisdiction with respect to any given claim, action, suit,
proceeding or investigation unless the use of one counsel for such Indemnified
Parties would present such counsel with a conflict of interest; (ii) the
Indemnified Party will reasonably cooperate in the defense of any such matter
and (iii) JBI shall not be liable for any settlement effected by an Indemnified
Party without its prior written consent, which consent may not be withheld
unless such settlement is unreasonable in light of such claims, actions, suits,
proceedings
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or investigations against and defenses available to, such Indemnified Party.
(C) In the event JBI or any of its successors or assigns (1)
consolidates with or merges into any other corporation or entity 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 or entity, then, and in each case, to the extent
necessary, proper provision shall be made so that the successors and assigns of
JBI assume the obligations set forth in this Section 5.14.
(D) JBI shall maintain in effect for not less than two years from the
Merger Effective Date the policies of directors' and officers' liability
insurance most recently maintained by RBC, provided that JBI may substitute
therefor policies with reputable and financially sound carriers of at least the
same coverage containing terms and conditions which are no less advantageous for
so long as such substitution does not result in gaps or lapses in coverage, with
respect to claims arising from or relating to matters occurring prior to the
Merger Effective Date; provided that in no event shall JBI be required to spend
more than an amount per year equal to 250% of the current annual premiums paid
by RBC, (the "Premium Amount") to maintain or procure insurance coverage
pursuant hereto and further provided that if JBI is unable to obtain the
insurance called for by this Section 5.14, JBI shall obtain as much comparable
insurance as is available for the Premium Amount per year and, provided further,
that in lieu of the foregoing, JBI may renew any existing insurance or purchase
any "discovery period" insurance provided for thereunder. JBI shall pay all
expenses (including attorneys' fees) that may be incurred by any Indemnified
Party in enforcing the indemnity and other obligations provided for in this
Section 5.14.
(E) The provisions of this Section 5.14 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and their
respective heirs and representatives.
5.15 Accountants' Letters. Each of RBC and JBI shall use its reasonable
best efforts to cause to be delivered to JBI, and JBI's directors and officers
who sign the Registration Statement, letters of Grant Thornton LLP and Arthur
Andersen LLP dated (i) the date on which the Registration Statement shall become
effective and (ii) a date shortly prior to the Merger Effective Date, and
addressed to JBI, and such directors and officers, in form and substance
customary for "comfort" letters delivered by independent accountants in
accordance with Statement on Auditing Standards No. 72.
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5.16 Notification of Certain Matters. Except as may be otherwise
provided in Section 5.06(B) of this Agreement, each of RBC and JBI shall give
prompt notice to the other of any fact, event or circumstance known to it that
(i) is reasonably likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any Material Adverse Effect
with respect to it or (ii) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained herein.
5.17 Form S-8 Registration Statement. As soon as reasonably practicable
following the Merger Effective Date, JBI shall prepare and file with the SEC, in
accordance with the requirements of the Securities Act, a registration statement
on Form S-8 registering the shares of JBI Common Stock issuable upon exercise of
the JBI Options.
VI. CONDITIONS TO CONSUMMATION OF THE MERGER.
Consummation of the Merger is conditioned upon:
6.01 Shareholder Vote. Approval of (i) the Merger and the other
transactions contemplated hereby by the required vote of the shareholders of RBC
and as and to the extent required by law, by RBC as the sole shareholder of
Regent, and (ii) the Merger by the shareholders of JBI and JBI Merger Sub.
6.02 Regulatory Approvals. Procurement by JBI and RBC of all requisite
approvals and consents of Regulatory Authorities, and the expiration of
applicable statutory waiting periods relating thereto, provided, however, that
no such approval or consent shall have imposed any condition or requirement
(other than conditions or requirements Previously Disclosed) which would so
materially and adversely impact the economic or business benefits to JBI or RBC
of the transactions contemplated by this Plan that, had such condition or
required been known, such party would not, in its reasonable judgment, have
entered into this Plan.
6.03 Third Party Consents. All consents or approvals of all persons
(other than Regulatory Authorities) required for the consummation of the Merger
shall have been obtained and shall be in full force and effect, unless the
failure to obtain any such consent or approval is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on RBC or JBI.
6.04 No Injunction. There not being in effect any order, decree or
injunction of any court or agency of competent jurisdiction that enjoins or
prohibits consummation of the Merger Transaction or the Bank Merger.
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6.05 Pooling Letter. Receipt (i) by JBI from Grant Thornton LLP of a
letter to the effect that it is not aware of any facts and circumstances which
might cause the Merger not to qualify for pooling-of-interests accounting
treatment and (ii) by RBC from Arthur Andersen LLP of a letter to the effect
that it is not aware of any facts and circumstances which might cause the Merger
not to qualify for pooling-of-interests accounting treatment.
6.06 Legal Opinions.
(A) The receipt by RBC, Regent and their directors and officers of an
opinion, dated the Merger Effective Date, of Ledgewood Law Firm, P.C., counsel
for JBI and Jefferson, in form and substance reasonably satisfactory to RBC and
Regent; and
(B) The receipt by JBI and its directors and officers who sign the
Registration Statement of an opinion, dated the Merger Effective Date, of Duane,
Morris & Heckscher, LLP, in form and substance reasonably satisfactory to JBI.
6.07 Representations, Warranties and Covenants.
(A) (i) Each of the representations and warranties contained herein of
any party being true and correct as of the date of this Plan and upon the Merger
Effective Date with the same effect as though all such representations and
warranties had been made on the Merger Effective Date, except (x) for any such
representations and warranties made as of a specified date, which shall be true
and correct as of such date, (y) as expressly contemplated by this Plan, or (z)
for representations and warranties (other than the representations and
warranties set forth in Paragraph (A) of Article IV, which shall be true and
correct in all material respects) the inaccuracies of which relate to matters
that, individually or in the aggregate, do not materially adversely affect the
Merger and the other transactions contemplated by this Plan; (ii) each and all
of the agreements and covenants contained herein of any party to be performed
and complied with pursuant to this Plan and the other agreements contemplated
hereby prior to the Merger Effective Date shall have been duly performed and
complied with in all material respects, and (ii) JBI and RBC shall have received
a certificate signed by the Chief Executive Officer and the Chief Financial
Officer of the other party dated the Merger Effective Date, to such effect;
6.08 Effective Registration Statement. The Registration Statement shall
have become effective, no stop order suspending the effectiveness of the
Registration Statement having been issued and no proceedings for that purpose
having been initiated or threatened by the SEC or any other Regulatory
Authority.
6.09 Blue Sky Permits. JBI having received all state securities laws
and "blue sky" permits and other authorizations
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necessary in connection with the issuance of the JBI Common Stock as set forth
in the Registration Statement and to otherwise consummate the Merger.
6.10 Tax Opinions. JBI and RBC shall have received opinions from
Ledgewood Law Firm, P.C. (as to JBI) and Duane, Morris & Heckscher, LLP (as to
RBC) to the effect that each of the Merger Transaction and the Bank Merger
constitute a reorganization under Section 368 of the Code, which such opinions
may rely upon factual representations contained in certificates of officers of
JBI, JBI Merger Sub, RBC, Regent and others.
6.11 Nasdaq NMS Listing. The shares of JBI Common Stock issuable
pursuant to the Merger having been approved for listing on Nasdaq NMS, subject
to official notice of issuance.
6.12 Election of Directors and Officers. The election or appointment
immediately prior to the Merger Effective Date of those additional directors and
officers of Jefferson and JBI as specified in Section 1.01(D) hereof.
6.13 Opinion of Financial Advisor. RBC shall have received the written
opinion of Keefe, Bruyette & Woods, Inc., in form and substance satisfactory to
RBC, as to the fairness of the Merger Transaction to the shareholders of RBC
from a financial point of view, dated as of a date not less than five business
days prior to the date of mailing of the proxy statement with respect to the
Merger Transaction and the Bank Merger and such opinion shall not have been
withdrawn by Keefe, Bruyette & Woods, Inc. at any time prior to the Merger
Effective Date.
Provided, however, a failure to satisfy any of the conditions set forth
in Sections 6.05 and 6.06(B) hereof, shall only constitute conditions if
asserted by JBI; and a failure to satisfy any of the conditions set forth in
Sections 6.06(A), 6.11, 6.12 and 6.13 of this Article VI shall only constitute
conditions if asserted by RBC.
VII. TERMINATION.
7.01 Termination. This Plan may be terminated prior to the Merger
Effective Date either before or after receipt of required shareholder approvals:
(A) Mutual Consent. At any time prior to the Merger Effective Date, by
the mutual consent of JBI and RBC, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(B) Breach. At any time prior to the Merger Effective Date, by JBI or
RBC, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the
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event of (i) a breach by the other party of any representation or warranty
contained herein, which breach has not been cured within 30 days after the
giving of written notice to the breaching party of such breach and which
breaches, individually or in the aggregate, materially adversely affect the
Merger and the other transactions contemplated by this Plan, (ii) a material
breach by the other party of any of the covenants or agreements contained
herein, which breach has not been cured within 30 days after the giving of
written notice to the breaching party of such breach. For purposes of this
Section 7.01(B), no representation or warranty of JBI or RBC contained herein
shall be deemed untrue or incorrect, and no party hereto shall be deemed to have
breached a representation or warranty, as a consequence of the existence of any
fact, circumstance or event if such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent with
any other representations and warranties contained herein is not reasonably
likely to have a Material Adverse Effect on the party making such representation
or warranty.
(C) Delay. By JBI or RBC, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event that the
Merger is not consummated by September 30, 1998; provided, however, that (i) if
any required regulatory approval shall not have been received by September 30,
1998, such date shall be extended without any action by or on behalf of the
parties hereto until five business days after receipt of such required
regulatory approval, but in no event later than November 30, 1998, and (ii) such
date may be extended by an agreement in writing among the parties hereto
approved by their respective Boards of Directors and executed in the same manner
as this Plan.
(D) No Approval. By JBI or RBC, if its Board of Directors so determines
by a vote of a majority of the members of its entire Board, in the event that
any shareholder approval contemplated by Section 6.01 hereof is not obtained at
a meeting or meetings called for the purpose of obtaining such approval.
(E) Withdrawal of RBC Recommendation. By JBI, if the Board of Directors
of RBC shall (i) withdraw, modify or change its recommendation or approval in
respect of this Plan or the Merger in a manner adverse to JBI, or (ii) approve
or recommend any proposal other than by JBI in respect of any Acquisition
Transaction.
(F) Withdrawal of JBI Board Approval. By RBC, if the Board of Directors
of JBI shall withdraw, modify or change its recommendation or approval in
respect of this Plan or the Merger in a manner adverse to RBC.
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(G) Other Acquisition Transaction. Assuming RBC shall not have
contravened Section 5.06 hereof, by RBC to allow RBC to enter into an agreement
in respect of an Acquisition Transaction.
7.02 Effect of Termination and Abandonment. In the event of termination
of this Plan and the abandonment of the Mergers pursuant to this Article VII, no
party to this Plan shall have any liability or further obligation to any other
party hereunder except (i) as set forth in Section 8.01, (ii) that termination
will not relieve a breaching party from liability for any willful breach of this
Plan giving rise to such termination, (iii) that, upon the termination of this
Agreement by JBI pursuant to Section 7.01(B)(ii), Section 7.01(E) or upon
termination pursuant to Section 7.01(G), RBC shall pay JBI a fee, in immediately
available funds, equal to $1,500,000, and (iv) that, upon termination of this
Agreement by RBC pursuant to Section 7.01(B)(ii) or Section 7.01(F), JBI shall
pay RBC a fee, in immediately available funds, equal to $1,500,000.
VIII. OTHER MATTERS.
8.01 Survival. If the Merger Effective Date occurs, the agreements of
the parties in Sections 5.03(B), 8.01, 8.03, 8.04, 8.06, 8.07 and 8.09 hereof
shall survive the Merger Effective Date; all other representations, warranties,
agreements and covenants contained in this Plan shall be deemed to be conditions
of the Merger Transaction and shall not survive the Merger Effective Date. If
this Plan is terminated prior to the Merger Effective Date, the agreements and
representations of the parties in Sections 4.03(N), 5.05, 8.01, 8.04, 8.05, 8.06
and 8.09 hereof shall survive such termination.
8.02 Waiver or Amendment. Prior to the Merger Effective Date, any
provision of this Plan may be (i) waived by the party benefitted by the
provision, or (ii) amended or modified at any time (including the structure of
the transaction), by an agreement in writing among the parties hereto approved
by their respective Boards of Directors and executed in the same manner as this
Plan, except that, after the vote by the shareholders of RBC, the consideration
to be received by the shareholders of RBC for each share of RBC Common Stock
shall not thereby be decreased.
8.03 Counterparts. This Plan may be executed in one or more
counterparts, each of which shall be deemed to constitute an original. This Plan
shall become effective when one counterpart has been signed by each party
hereto.
8.04 Governing Law. This Plan shall be governed by, and interpreted in
accordance with, the substantive laws of the Commonwealth of Pennsylvania
without regard to its principles of conflicts of laws, except as federal law may
be applicable.
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<PAGE>
8.05 Expenses. Except as otherwise provided in Section 7.02 hereof or
in this Section 8.05, each party hereto will bear all expenses incurred by it in
connection with this Plan and the transactions contemplated hereby, except
printing expenses of the Registration Statement which shall be shared equally
between RBC and JBI.
8.06 Confidentiality. Except as otherwise provided in Section 5.05
hereof, each of the parties hereto and their respective agents, attorneys and
accountants will maintain the confidentiality of all information provided in
connection herewith which has not been publicly disclosed.
8.07 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed to have been duly given when
delivered by hand, telegram or telex (confirmed in writing) to such party at its
address set forth below or such other address as such party may specify by
notice to the parties hereto:
If to JBI, JBI Betsy Z. Cohen, Chairman
Merger Sub, or and Chief Executive Officer
Jefferson, to: JeffBanks, Inc.
1845 Walnut Street, 10th floor
Philadelphia, PA 19103
With, in each J. Baur Whittlesey, Esq.
instance, a copy to: Ledgewood Law Firm, P.C.
1521 Locust Street, 8th Floor
Philadelphia, PA 19102
If to RBC or Robert B. Goldstein, President
Regent, to: and Chief Executive Officer
Regent Bancshares Corp.
1430 Walnut Street
Philadelphia, PA 19102
With, in each Frederick W. Dreher, Esquire
instance, a copy to: Duane, Morris & Heckscher, LLP
Suite 4200
One Liberty Place
Philadelphia, PA 19103-2396
8.08 Definitions. Any term defined anywhere in this Plan shall have the
meaning ascribed to it for all purposes of this Plan (unless expressly noted to
the contrary). In addition:
(A) the term "knowledge" when used with respect to a party shall mean
the knowledge, after due inquiry, of any "Executive Officer" of such party, as
such term is defined in Regulation O of the FRB;
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<PAGE>
(B) the term "Material Adverse Effect" shall mean in the case of RBC or
Regent only, one or more events, occurrences or circumstances, which in the
aggregate, result, or are reasonably likely to result, in a decrease in the
shareholders' equity account of it, as determined in accordance with GAAP and as
measured from its financial statements as set forth in its Annual Report on Form
10-K for the year ended December 31, 1997, in an amount equal to or greater than
$600,000; provided, however, that the term Material Adverse Effect shall not
include the impact of (a) changes in banking and similar laws of general
applicability or interpretations thereof by courts or governmental authorities;
(b) changes in generally accepted accounting principles or regulatory accounting
requirements applicable to banks and bank holding companies generally, (c) with
respect to any loan of Regent, pursuant to Section 5.08 hereof, where the
financial condition of the borrower of such loan and the value of any and all
collateral securing such loan has not materially deteriorated, any material
increase in Regent's loan loss reserve with respect to such loan or any loan
charge-off with respect to such loan or any loan charge-off in an amount which,
in the view of JBI, should be reserved against possible losses on such loan or
charged-off with respect to such loan, (d) decreases in the valuation of
zero-coupon investment securities, to the extent that such decrease is not in
excess of $250,000, (e) Merger related expenses, to the extent that such
expenses are not in excess of $600,000 and (f) increases in the provision for
possible loan loss expense, to the extent that such increase is not in excess of
$500,000; and
(C) the term "Previously Disclosed" by a party shall mean information
set forth in a written disclosure letter that is delivered by that party to the
other party contemporaneously with the execution of this Plan and specifically
designated as information "Previously Disclosed" pursuant to this Plan.
8.09 Preserving Qualification of Merger Transaction as a Reorganization
under Section 368 of the Code. Neither JBI nor any of its subsidiaries shall
intentionally take, or cause to be taken, any actions that would cause the
Merger Transaction not to qualify as a "reorganization" within the meaning of
Section 368 of the Code.
8.10 Entire Understanding; No Third Party Beneficiaries. This Plan
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and supersedes any and all other
oral or written agreements heretofore made. Nothing in this Plan expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Plan.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
JEFFBANKS, INC.
By: /s/ Betsy Z. Cohen
------------------------------
Chairman and
Chief Executive Officer
JEFFBANKS ACQUISITIONCORP. V,
INC.
By: /s/ Betsy Z. Cohen
------------------------------
Chairman and
Chief Executive Officer
JEFFERSON BANK
By: /s/ Harmon S. Spolan
------------------------------
President
REGENT BANCSHARES CORP.
By: /s/ Robert B. Goldstein
------------------------------
President and
Chief Executive Officer
REGENT NATIONAL BANK
By: /s/ Robert B. Goldstein
------------------------------
Chairman and
Chief Executive Officer
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<PAGE>
ANNEX B
FORM OF
OPINION OF KEEFE BRUYETTE & WOODS, INC.
April __, 1998
The Board of Directors
Regent Bancshares Corp.
1430 Walnut Street
Philadelphia, PA 19102
Members of the Board:
You have requested our opinion as to the fairness from a financial
point of view to the shareholders of Regent Bancshares Corp. ("Regent") of the
exchange ratio in Regent's proposed merger (the "Merger") with JeffBanks,
Inc.("JeffBanks"). Pursuant to the terms of the Merger Agreement effective as of
March 18, 1998, each outstanding share of Common Stock, par value $0.10 per
share, of Regent will be converted into 0.303 of a share of common stock, par
value $1.00 per share, of JeffBanks, subject to the terms and conditions of the
Merger Agreement. As is more specifically set forth in the Merger Agreement,
Regent National Bank, the wholly-owned subsidiary of Regent Bancshares Corp.
will merge with and into Jefferson Bank, the wholly-owned subsidiary of
JeffBanks (the "Bank Merger").
In addition, upon consummation of the Merger, any valid stock option to
purchase shares of Regent Common Stock which is outstanding upon consummation of
the merger, will be converted into economically equivalent options to purchase
Common Stock of JeffBanks.
Keefe, Bruyette & Woods, Inc. ("KBW"), as part of its investment
banking business, is continually engaged in the valuation of bank holding
companies and banks, thrift holding companies and thrifts and their securities
in connection with mergers and acquisitions, underwritings, private placements,
competitive bidding processes, market making as a NASD market maker, and
valuations for various other purposes. As specialists in the securities of
banking companies, we have experience in, and knowledge of, the valuation of
banking enterprises. In the ordinary course of our business as a broker-dealer,
we may, from time to time, trade the securities of Regent and JeffBanks, for our
own account, and for the accounts of our customers and, accordingly, may at any
time hold a long or short position in such securities. To the extent we have any
such positions as of the date of this opinion it has been disclosed to Regent.
KBW has served as financial advisor to Regent in the negotiation of the Merger
Agreement and in rendering this fairness opinion and will receive a fee from
Regent for those services.
B-1
<PAGE>
In arriving at our opinion, we have reviewed, analyzed and relied upon
material bearing upon the financial and operating condition of Regent and
JeffBanks and the Merger, including among other things, the following:
i. Reviewed the Merger Agreement;
ii. Reviewed certain historical financial and other information
concerning Regent and JeffBanks;
iii. Reviewed certain historical financial and other information
concerning Regent and JeffBanks for the five years ended
December 31, 1997 and certain interim quarterly reports,
including Regent's and JeffBank's Annual Reports to
Stockholders and Annual Reports on Forms 10-K, and certain
interim quarterly reports on Form 10-Q for 1997;
iv. Held discussions with senior management of Regent and
JeffBanks with respect to their past and current financial
performance, financial condition and future prospects;
v. Reviewed certain internal financial data, projections and
other information of Regent and JeffBanks, including financial
projections prepared by management;
vi. Analyzed certain publicly available information of other
financial institutions that we deemed comparable or otherwise
relevant to our inquiry, and compared Regent and JeffBanks
from a financial point of view with certain of these
institutions;
viii. Compared the consideration to be paid by JeffBanks pursuant to
the Merger Agreement with the consideration paid by acquirors
in other acquisitions of financial institutions that we deemed
comparable or otherwise relevant to our inquiry;
ix. Conducted such other financial studies, analyses and
investigations and reviewed such other information as we
deemed appropriate to enable us to render our opinion.
In conducting our review and arriving at our opinion, we have relied
upon the accuracy and completeness of all of the financial and other information
provided to us or publicly available and we have not assumed any responsibility
for independently verifying the accuracy or completeness of any such
information. We have relied upon the management of Regent and JeffBanks as to
the reasonableness and achievability of the financial and operating forecasts
and projections (and the assumptions and bases therefor) provided to us, and we
have assumed that such forecasts and projections reflect the best currently
available estimates and judgments of such managements and that such forecasts
and projections will be realized
B-2
<PAGE>
in the amounts and in the time periods currently estimated by such managements.
We are not experts in the independent verification of the adequacy of allowances
for loan and lease losses and we have assumed that the current and projected
aggregate reserves for loan and lease losses for Regent and JeffBanks are
adequate to cover such losses. We did not make or obtain any independent
evaluations or appraisals of any assets or liabilities of Regent, JeffBanks, or
any of their respective subsidiaries nor did we verify any of Regent's or
JeffBank's books or records or review any individual loan or credit files.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including, among others, the following: (i)
the historical financial position and results of operations of Regent and
JeffBanks; (ii) the assets and liabilities of Regent and JeffBanks; and (iii)
the nature and terms of certain other merger transactions involving banks and
bank holding companies. We have also taken into account our assessment of
general economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuation and knowledge of
the banking industry generally. Our opinion is necessarily based upon conditions
as they exist and can be evaluated on the date hereof and the information made
available to us through the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the exchange ratio in the Merger is fair to the shareholders of
Regent from a financial point of view.
Very truly yours,
Keefe, Bruyette & Woods, Inc.
B-3
<PAGE>
AMENDED AND RESTATED STOCK OPTION AGREEMENT
AMENDED AND RESTATED STOCK OPTION AGREEMENT (this "Agreement"), dated
March 27, 1998 and effective as of March 18, 1998, between JeffBanks, Inc., a
Pennsylvania corporation ("Grantee"), and Regent Bancshares Corp., a New Jersey
corporation ("Issuer").
RECITALS
A. Grantee and Issuer have entered into an Agreement and Plan of Merger
dated as of March 18, 1998 (the "Merger Agreement").
B. As an inducement to the willingness of Grantee to continue to pursue
the transactions contemplated by the Merger Agreement, Issuer has agreed to
grant Grantee the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement the
parties hereto agree as follows:
1.(a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 678,430 fully paid and nonassessable shares of the common stock,
par value $.10 per share, of Issuer ("Common Stock") at a price per share equal
to $14.39 (such price, as adjusted if applicable, the "Option Price"); provided,
however, that in no event shall the number of shares for which this Option is
exercisable exceed 19.9% of the issued and outstanding shares of Common Stock.
The number of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach of any provision of the Merger Agreement.
2.(a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined) provided that the Holder shall have sent the written notice
of such exercise (as provided in subsection (e) of this Section 2) within three
months following the first Subsequent Triggering Event to occur (or such later
period as provided in Section 10). Each of the following shall be an "Exercise
Termination Event"" (i) the Merger Effective Date (as such term is defined in
the Merger Agreement); (ii) termination
<PAGE>
of the Merger Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial Triggering Event except
a termination by Grantee pursuant to Section 7.01(B) as a result of a willful
breach by Issuer or Section 7.01(E) of the Merger Agreement (each, a "Listed
Termination"); or (iii) the passage of 18 months (or such longer period as
provided in Section 10) after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a Listed
Termination. The term "Holder" shall mean the holder or holders of the Option.
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 representations, warranties, covenants or agreements contained in the Merger
Agreement such that Issuer shall be entitled to terminate the Merger Agreement
pursuant to Section 7.01(B) thereof and (ii) this Agreement shall automatically
terminate upon the proper termination of the Merger Agreement by Issuer pursuant
to Section 7.01(B)(ii) thereof as a result of the material breach by Grantee of
its covenants or agreements contained in the Merger Agreement or proper
termination of the Merger Agreement by Issuer pursuant to Section 7.01(F) of the
Merger Agreement.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or Regent National Bank (the "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as defined in the Merger
Agreement) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations thereunder) other than Grantee or any of its subsidiaries (each a
"Grantee Subsidiary") or the Board of Directors of Issuer (the "Issuer Board")
shall have recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction other than as contemplated by the Merger Agreement;
(ii) Any person other than the Grantee or any Grantee
Subsidiary shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of Common Stock
(the term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed
to approve the Merger Agreement and the Merger at a meeting which has been held
for that purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Merger Agreement or shall have been
cancelled prior to termination of the Merger Agreement if, prior to such meeting
(or if such meeting shall not have been held or shall have been cancelled, prior
to such termination), it shall have been publicly announced that any person
(other than Grantee or any Grantee Subsidiary) shall have made a bona fide
proposal to engage in an Acquisition Transaction;
-2-
<PAGE>
(iv) The Issuer Board shall have withdrawn or modified (or
publicly announced its intention to withdraw or modify) in any manner adverse to
Grantee its recommendation that the shareholders of Issuer approve the
transactions contemplated by the Merger Agreement, or Issuer or the Issuer
Subsidiary shall have authorized, recommended or proposed (or publicly announced
its intention to authorize, recommend or propose) an agreement to engage in an
Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders to engage in
an Acquisition Transaction and such proposal shall have been publicly announced;
(vi) Any person other than Grantee or any Grantee Subsidiary
shall have filed with the Securities and Exchange Commission ("SEC") a
registration statement or tender offer materials with respect to a potential
exchange or tender offer that would constitute an Acquisition Transaction;
(vii) Issuer shall have willfully breached any covenant or
obligation contained in the Merger Agreement in anticipation of engaging in an
Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary, and following such breach Grantee would be entitled to terminate the
Merger Agreement pursuant to Section 7.01(B) or Section 7.01(E) of the Merger
Agreement; or
(viii) Any person other than Grantee or any Grantee Subsidiary
shall have filed an application or notice with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") or other federal or state
bank regulatory or antitrust authority, which application or notice has been
accepted for processing, for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in clause (ii) of subsection (b) of this Section 2 except that the percentage
referred to therein shall be 25%.
(d) Issuer shall notify Grantee in writing of the occurrence of any
Initial Triggering Event or Subsequent Triggering Event (together, a "Triggering
Event") promptly after becoming aware of the occurrence thereof, it being
understood that the giving of such notice by Issuer shall not be a condition to
the right of the Holder to exercise the Option.
-3-
<PAGE>
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approval shall have been
obtained and any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option shall have
been exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of
March 18, 1998, between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities
Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a
written request therefor."
It is understood and agreed that (i) the reference to the resale restrictions of
the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance
-4-
<PAGE>
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 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 required the retention of such reference in the
reasonable opinion of counsel to the Holder; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the initial
preparation, issue and delivery of stock certificates under this Section 2 in
the name of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all at times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer (it
being agreed that this clause (ii) shall not be deemed to prohibit or restrict
Issuer from engaging in one or more transactions contemplated in Section 8(a)
hereof if the provisions of Section 8 hereof shall be complied with in
connection with each such transaction); (iii) promptly to take all action as may
from time to time be required (including (x) complying with all applicable
premerger notification, reporting and waiting period requirements specified in
15 U.S.C. Section 18a and regulations promulgated thereunder and (y) in the
event that, under the Bank Holding Company Act of 1956, as amended (the "BHCA"),
or the Change in Bank Control Act of 1978, as amended, or any state or other
federal banking law, prior approval of or notice to the Federal Reserve Board or
to any state or other federal regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board or such state or other federal regulatory authority as they may require)
in order to permit the Holder to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto; and (iv) promptly
to take all action provided in Sections 5 and 8 as and when required pursuant to
such Sections.
-5-
<PAGE>
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the Holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any 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 in substitution for
the lost, stolen, destroyed or mutilated Agreement.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon exercise
of the Option and the Option Price shall be subject to adjustment from time to
time as provided in this Section 5.
(a) In the event of any change in, or distributions in respect
of, the Common Stock by reason of stock dividends, splitups, mergers,
recapitalizations, combinations, subdivisions, exchanges of shares or the like,
the type and number of shares of Common Stock purchasable upon exercise hereof
shall be appropriately adjusted and proper provision shall be made so that, in
the event that any additional shares of Common Stock are to be issued or
otherwise become outstanding as a result of any such change (other than pursuant
to an exercise of the Option), the number of shares of Common Stock that remain
subject to the Option shall be increased so that, after such issuance and
together with shares of Common Stock previously issued pursuant to the exercise
of the Option (as adjusted on account of any of the foregoing changes in the
Common Stock), it equals 19.9% of the number of shares of Common Stock then
issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price immediately prior to the
adjustment by a fraction, the numerator of which shall be equal to the number of
shares of Common Stock purchasable prior to the adjustment and the denominator
of which shall be equal to the number of shares of Common Stock purchasable
after the adjustment.
6. Upon the occurrence of the first Subsequent Triggering Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within six months (or such later periods as provided in
Section 10) of such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent Holder of this Option ( or part thereof) or any of the
shares of Common Stock issued pursuant hereto), promptly prepare, file and keep
current a registration statement under the 1933 Act covering any shares issued
and
-6-
<PAGE>
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
such dispositions. Grantee shall have the right to demand no more than two such
registrations. Issuer shall bear the cost of such registrations (including, but
not limited to, Issuer's attorneys' fees, printing costs and filing fees),
except for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto. The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by Holder and
Issuer in the aggregate; and provided further, however, that if such reduction
occurs, then Issuer shall file a registration statement for the balance as
promptly as practicable thereafter as to which no reduction pursuant to this
Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the 12 month period referred to in
the first sentence of this section shall be increased to 24 months. Each such
Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements for Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights under this Section
6, in each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies. Notwithstanding anything
to the contrary contained herein, in no event shall the number of registrations
that Issuer is obligated to effect be increased by reason of the fact that there
shall be more than one Holder as a result of any assignment or division of this
Agreement.
7.(a) At any time after the occurrence of a Repurchase Event (as
defined below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
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by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the highest price per share of Common Stock
paid by any person that acquires beneficial ownership of 50% or more of the then
outstanding Common Stock, (ii) the price per share of Common Stock to be paid by
any third party pursuant to an agreement with Issuer entered into after the date
hereof and prior to the date the Holder gives notice of the required repurchase
of this Option or the Owner gives notice of the required repurchase of Option
Shares, as the case may be, (iii) the highest closing price for shares of Common
Stock within the six-month period immediately preceding the date the Holder
gives notice of the required repurchase of this Option or the Owner gives notice
of the required repurchase of Option Shares, as the case may be, or (iv) in the
event of a sale of all or any substantial part of the Issuer's or Issuer's
Subsidiary's assets or deposits, the sum of the net price paid in such sale of
such assets or deposits and the current market value of the remaining net assets
of Issuer or Issuer Subsidiary as determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as the case may be,
and reasonably acceptable to Issuer, divided by the number of shares of Common
Stock of Issuer outstanding at the time of such sale on a fully-diluted basis.
In determining the market/offer price, the value of consideration other than
cash shall be determined by a nationally recognized investment banking firm
selected by the Holder or Owner, as the case may be, and reasonably acceptable
to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law, regulation and
administrative policy from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days
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after the date on which Issuer is no longer so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or Option Shares whether in whole or to
the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price and/or (B) to the Owner, a certificate for the Option Shares it
is then so prohibited from repurchasing. If an Exercise Termination Event shall
have occurred prior to the date of the notice by Issuer described in the first
sentence of this subsection (c), or shall be scheduled to occur at any time
before the expiration of a period ending on the thirtieth day after such date,
the Holder shall nonetheless have the right to exercise the Option until the
expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall
be deemed to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee
or any Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction.
8.(a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such
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<PAGE>
merger or plan of exchange represent less than 50% of the outstanding shares and
share equivalents of the merged or acquiring company, or (iii) to sell or
otherwise transfer all or substantially all of its or the Issuer Subsidiary's
assets or deposits to any person, other than Grantee or a Grantee Subsidiary,
then, and in each such case, the agreement governing such transaction shall make
proper provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined), or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the
continuing or surviving person of a consolidation or merger with Issuer (if
other than Issuer), (ii) the acquiring person in a plan of exchange in which
Issuer is acquired, (iii) the Issuer in a merger or plan of exchange in which
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or substantially all of Issuer's assets or deposits (or the
assets or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the market/offer
price, as defined in Section 7.
(iv) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for one year immediately
preceding the consolidation, merger or sale in question, but in no event higher
than the closing price of the shares of 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 the person merging into Issuer or
by any company which controls or is controlled by such person, as the Holder may
elect.
(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 the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement (after giving
effect for such purpose to the provisions of Section 9), which agreement shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event
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<PAGE>
described in the first sentence of Section 8(a), divided by the Average Price.
The exercise price of the Substitute Option per share of Substitute Common Stock
shall then be equal to the Option Price multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a) and the denominator of which shall be the number of shares of
Substitute Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than the
maximum number of the shares of Substitute Common Stock permitted by the
preceding sentence but for this clause (e), the issuer of the Substitute Option
(the "Substitute Option Issuer") shall make a cash payment to Holder equal to
the excess of (i) the value of the Substitute Option without giving effect to
the limitation in this clause (e) over (ii) the value of the Substitute Option
after giving effect to the limitation in this clause (e). This difference in
value shall be determined by a nationally recognized investment banking firm
selected by the Holder and reasonably acceptable to the Issuer.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9.(a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notices of the required repurchase of Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise its respective rights to require the
Substitute Option Issuer to repurchase the Substitute Option and any Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or in the absence of such an agreement, a copy of this
Agreement) and/or certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case
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may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the provisions
of this Section 9. As promptly as practicable, and in any event within five
business days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or the portion thereof which the Substitute Option Issuer is not then
prohibited under applicable law, regulation and administrative policy from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in full, the Substitute Option Issuer shall immediately so
notify the Substitute Option Holder and/or the Substitute Share Owner and
thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Option Repurchase Price and/or the Substitute Share
Repurchase Price, respectively, which it is no longer prohibited from
delivering, within five business days after the date on which the Substitute
Option Issuer is no longer so prohibited; provided, however, that if the
Substitute Option Issuer is at any time after delivery of a notice of repurchase
pursuant to paragraph (b) of this Section 9 is prohibited under applicable law
or regulation, or as a consequence of administrative policy, from delivering to
the Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
the Substitute Option Repurchase Price and the Substitute Share Repurchase
Price, respectively, in full (and the Substitute Option Issuer hereby undertakes
to use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or
Substitute Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or the Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of Substitute Common
Stock for which the surrendered Substitute Option was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Substitute Option Repurchase Price less the portion thereof theretofore
delivered to the Substitute Option Holder and the denominator of which is the
Substitute Option Repurchase Price and/or (B) to the Substitute Share Owner, a
certificate for the Substitute Option Shares it is then so prohibited from
repurchasing. If an Exercise Termination Event shall have occurred prior to the
date of the notice by the Substitute Option Issuer described in the first
sentence of this subsection (c), or shall be scheduled to occur at any time
before the expiration of a period ending on the
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thirtieth day after such date, the Substitute Option Holder shall nevertheless
have the right to exercise the Substitute Option until the expiration of such
30-day period.
10. The 30-day, 6-month, 12-month, 18-month or 24-month periods of
exercise of certain rights under Sections 2, 6, 7, and 9 shall be extended: (i)
to the extent necessary to obtain all regulatory approvals for the exercise of
such rights (for so long as the Holder, Owner, Substitute Option Holder or
Substitute Share Owner, as the case may be, is using commercially reasonable
efforts to obtain such regulatory approvals), and for the expiration of all
statutory waiting periods; (ii) during the pendency of any temporary restraining
order, injunction or other legal bar to exercise of such rights; and (iii) to
the extent necessary to avoid liability under Section 16(b) of the 1934 Act by
reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board on the date hereof and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance, upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder following the date of
such Subsequent Triggering Event; provided, however, that until the date 15 days
following the date on which the Federal Reserve Board has approved an
application by Grantee to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the sole purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the
Federal Reserve Board.
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<PAGE>
13. Each of Grantee and Issuer will use its reasonable best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
17. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania, without regard to the
conflict of law principles thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
19. Except as otherwise expressly provided herein, 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.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings in respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit
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of and be binding upon the parties hereto and their respective successors and
permitted assignees. Nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors except as assignees, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
21. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
REGENT BANCSHARES CORP.
By: /s/ Robert B. Goldstein
-----------------------------------------
Name: Robert B. Goldstein
Title: President and Chief Executive Officer
JEFFBANKS, INC.
By: /s/ Betsy Z. Cohen
-----------------------------------------
Name: Betsy Z. Cohen
Title: Chairman and Chief Executive Officer
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Pursuant to the PBCL, the JBI Bylaws provide that a director is not
personally liable, as such, for monetary damages for any act taken, or any
failure to take action, unless (a) the director has breached or failed to
perform the duties of office and (b) the breach or failure constitutes
self-dealing, willful misconduct or recklessness. The JBI Bylaws do not
eliminate the personal monetary liability of a director where such director is
responsible or liable pursuant to any criminal statute or for the payment of
taxes.
Pursuant to the JBI Bylaws, JBI is required to indemnify any director
or officer who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he or she
is or was a director or officer.
Pursuant to the NJBCA, the RBC Certificate of Incorporation provides
that a director or officer is not personally liable for any breach of any duty
owed to RBC or its shareholders except to the extent expressly provided in the
NJBCA, and that the liability of the directors and officers of RBC is limited to
the fullest extent permitted by New Jersey law.
The RBC Bylaws require RBC to indemnify every director and officer to
the full extent permitted under the NJBCA or other applicable New Jersey law.
Item 21. Exhibits and Financial Statement Schedules.
a. Exhibits
2.1 Amended and Restated Agreement and Plan of Merger
between Registrant and RBC (included in Joint Proxy
Statement/Prospectus as Annex A).
2.2 Stock Option Agreement between RBC and Registrant
(included in Joint Proxy Statement/Prospectus as
Annex C).
3.1* Articles of Incorporation of Registrant.
3.2* By-Laws of Registrant.
4* Form of Certificate evidencing shares of
Registrant's Common Stock.
5** Opinion of Ledgewood Law Firm, P.C., as to the
legality of the securities being registered
(including consent).
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8.1** Opinion of Ledgewood Law Firm, P.C., as to federal
tax matters (including consent).
8.2** Opinion of Duane, Morris & Heckscher LLP, as to
federal tax matters (including consent).
10* JBI Key Employee Stock Option Plan.
12* Statements re computation of ratios.
21* Subsidiaries of the Registrant.
23.1 Consent of Grant Thornton LLP.
23.2 Consent of Arthur Andersen LLP.
23.3** Consent of Ledgewood Law Firm, P.C. (included in
Exhibits 5 and 8.1).
23.4** Consent of Duane, Morris & Heckscher LLP (included
in Exhibit 8.2).
23.5** Consent of Keefe, Bruyette & Woods, Inc.
24 Power of Attorney (included as part of signature
page to Registration Statement).
99.1** Form of proxy.
99.2 Form of Opinion of Keefe, Bruyette & Woods, Inc.
(included in Joint Proxy Statement/Prospectus as
Annex B).
99.3 Consent of John W. Rose.
99.4 Consent of Robert B. Goldstein.
b. Financial Statement Schedules.
Inapplicable.
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* Exhibits 3.1, 3.2, 12 and 21 appear in Exhibits 3 (i), 3(ii), 12 and 21,
respectively, of Registrant's registration statement on Form S-4, as
amended, Registration No. 33- 62428; Exhibits 3(i), 3(ii), 12 and 21 of
said registration statement are hereby incorporated herein by reference.
Exhibits 4 and 10 appear as Exhibits 4 and 10 to the Registrant's
registration statement on Form S-1, as amended, Registration No. 33-
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<PAGE>
70278; Exhibits 4 and 10 of said registration statement are hereby
incorporated herein by reference. Exhibit 12 has heretofore been filed
with the Commission, and is hereby incorporated herein by reference.
** To be filed by amendment.
Item 22. Undertakings.
1. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
2. The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through the use
of a prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
3. The registrant hereby undertakes that every prospectus (a) that is
filed pursuant to paragraph (2) immediately preceding, or (b) that purports to
meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at the time
shall be deemed to be the initial bona fide offering thereof.
4. The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-3
<PAGE>
5. The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
6. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
7. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to its Articles of Incorporation, Bylaws, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Philadelphia,
Commonwealth of Pennsylvania on April 28, 1998.
JEFFBANKS, INC.
By:/s/ Betsy Z. Cohen
----------------------------------
Betsy Z. Cohen, Chairman of the Board
and Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below in so signing also makes,
constitutes and appoints Betsy Z. Cohen, Harmon S. Spolan and Paul Frenkiel, and
each of them acting alone, his true and lawful attorney-in-fact, with full power
of substitution, for him in any and all capacities, to execute and cause to be
filed with the Securities and Exchange Commission any and all amendments and
post-effective amendments to this Registration Statement, with exhibits thereto
and other documents in connection therewith, and hereby ratifies and confirms
all that said attorney-in-fact or said attorney-in-fact's substitute or
substitutes may do or cause to be done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Betsy Z. Cohen
- ---------------------------------- Date: April 28, 1998
BETSY Z. COHEN, Chairman of
the Board, Chief Executive
Officer and Director
(Chief Executive Officer)
/s/ Edward E. Cohen
- --------------------------------------- Date: April 28, 1998
EDWARD E. COHEN, Chairman
of the Executive Committee
and Director
/s/ Paul Frankiel
- --------------------------------------- Date: April 28, 1998
PAUL FRENKIEL, Senior Vice
President - Finance, Chief
Financial Officer and
Treasurer (Chief Financial
and Accounting Officer)
/s/ William H. Lamb
- --------------------------------------- Date: April 28, 1998
WILLIAM H. LAMB
Secretary and Director
<PAGE>
/s/ James R. Sibel
- --------------------------------------- Date: April 28, 1998
JAMES R. SIBEL, Chief Credit
Officer and Director
/s/ Harmon S. Spolan
- --------------------------------------- Date: April 28, 1998
HARMON S. SPOLAN, President
and Director
/s/ Robert J. Coleman
- --------------------------------------- Date: April 28, 1998
ROBERT J. COLEMAN, Director
/s/ John G. Hoopes
- --------------------------------------- Date: April 28, 1998
JOHN G. HOOPES, Director
/s/ Hersh Kozlov
- --------------------------------------- Date: April 28, 1998
HERSH KOZLOV, Director
/s/ Arthur Makadon
- --------------------------------------- Date: April 28, 1998
ARTHUR MAKADON, Director
/s/ P. Sherrill Neff
- --------------------------------------- Date: April 28, 1998
P. SHERRILL NEFF, Director
/s/ William D. White
- --------------------------------------- Date: April 28, 1998
WILLIAM D. WHITE, Director
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We have issued our report dated January 15, 1998 (except for note 2, as
to which the date is March 19, 1998) accompanying the consolidated financial
statements of JeffBanks, Inc. and Subsidiaries appearing in the 1997 Annual
Report of the Company to its shareholders included in the Annual Report on Form
10-K for the year ended December 31, 1997 which are incorporated by reference in
this Joint Proxy Statement/Prospectus. We consent to the incorporation by
reference in the Joint Proxy Statement/Prospectus of the aforementioned report
and to the use of our name as it appears under the caption "Experts".
/s/ Grant Thornton LLP
- ----------------------
GRANT THORNTON LLP
Philadelphia, Pennsylvania
April 27, 1998
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-4 and Joint
Proxy Statement/Prospectus of our report dated January 20, 1998 (except with
respect to the matter discussed in Note 22, as to which the date is March 27,
1998) included in Regent Bancshares Corp.'s Form 10-K for the year ended
December 31, 1997 and to all references to our Firm included in this
Registration Statement on Form S-4 and Joint Proxy Statement/Prospectus.
/s/ Arthur Anderson LLP
-----------------------
ARTHUR ANDERSEN LLP
Roseland, New Jersey
April 27, 1998
<PAGE>
Exhibit 99.3
April 22, 1998
The Board of Directors
JeffBanks, Inc.
1845 Walnut Street, 10th Floor
Philadelphia, PA 19103
Ladies and Gentlemen:
I consent to serve as a director of JeffBanks, Inc. upon consummation
of the merger contemplated by the Amended and Restated Agreement and Plan of
Merger dated March 27, 1998 and effective as of March 18, 1998 by and among
Regent Bancshares, Corp., Regent National Bank, JeffBanks, Inc., JeffBanks
Acquisitioncorp. V, Inc. and Jefferson Bank.
Sincerely,
/s/ John W. Rose
----------------
JOHN W. ROSE
JWR:lmc
<PAGE>
Exhibit 99.4
April 22, 1998
The Board of Directors
JeffBanks, Inc.
1845 Walnut Street, 10th Floor
Philadelphia, PA 19103
Ladies and Gentlemen:
I consent to serve as a director of JeffBanks, Inc. upon consummation
of the merger contemplated by the Amended and Restated Agreement and Plan of
Merger dated March 27, 1998 and effective as of March 18, 1998 by and among
Regent Bancshares, Corp., Regent National Bank, JeffBanks, Inc., JeffBanks
Acquisitioncorp. V, Inc. and Jefferson Bank.
Yours very truly,
/s/ Robert B. Goldstein
-----------------------
ROBERT B. GOLDSTEIN
President & CEO
RBG:lmc
