<PAGE>
As Filed With The Securities And Exchange Commission on October 13, 2000
Registration No. 333-42980
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-Effective Amendment No. 2 to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
QUEENS COUNTY BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
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<S> <C> <C>
Delaware 6712 06-1377322
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification Number)
</TABLE>
38-25 Main Street
Flushing, New York 11354
(718) 359-6400
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
---------------
Joseph R. Ficalora
38-25 Main Street
Flushing, New York 11354
(718) 359-6400
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
---------------
Copies to:
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<S> <C>
Mark J. Menting, Esq. Omer S. J. Williams, Esq.
Sullivan & Cromwell Thacher Proffitt & Wood
125 Broad Street Two World Trade Center, 39th floor
New York, New York 10004 New York, New York 10048
(212) 558-4000 (212) 912-7400
</TABLE>
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Approximate Date of Commencement of the Proposed Sale of the Securities to
the Public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed
Offering Price Maximum Amount of
Title of Each Class of Securities Amount Per Share of Aggregate Registration
to be Registered to be Registered Common Stock Offering Price Fee(2)
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Common stock, par value $0.01 per
share, together with Preferred
Stock Purchase Rights, if any
(1)............................. 10,120,130(3) N/A $225,805,400.63 $59,613(4)
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(1) As of the date hereof, rights to purchase Series A Junior Participating
Preferred Stock issued pursuant to the Rights Agreement, dated as of
January 16, 1996, between Queens and ChaseMellon Shareholder Services, LLC,
as Rights Agent, (the "Rights") are attached to and trade with the common
stock, par value $0.01 per share of Queens County Bancorp, Inc. The value
of the attributable Rights, if any, is reflected in the market price of
Queens common stock.
(2) Previously paid.
(3) Represents maximum number of shares of Queens common stock, including
associated Rights, estimated to be issuable upon the consummation of the
merger of Haven Bancorp, Inc. ("Haven"), a Delaware corporation, with and
into Queens County Bancorp, Inc. ("Queens"), a Delaware corporation, based
on the number of shares of Haven common stock, par value $0.01 per share,
outstanding, or reserved for issuance under various plans, immediately
prior to the merger and the exchange of each such share of Haven common
stock for 1.04 shares of Queens common stock.
(4) Pursuant to Rules 457 (f) and 457 (c) under the Securities Act of 1933, as
amended, the registration fee is based on the average of the high and low
sales prices of Haven common stock, as reported on the NASDAQ National
Market System on July 26, 2000, and computed based on the estimated maximum
number of such shares that may be exchanged for the Queens common stock
being registered.
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<PAGE>
[HAVEN LETTERHEAD] [Queens County Bancorp, INC LOGO]
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
The boards of directors of Haven Bancorp, Inc. and Queens County Bancorp,
Inc. have unanimously approved a merger agreement that provides for the merger
of Haven with and into Queens, with Queens as the surviving corporation. This
transaction provides Haven and Queens stockholders with growth and
opportunities that would not have been available on a stand alone basis.
In the merger, Haven stockholders will receive 1.04 shares of Queens common
stock for each share of Haven common stock. The implied value of one share of
Haven common stock on October 12, 2000, the last practicable trading date
before the distribution of this document, was $28.14, based on the closing
price of Queens common stock on that date as reported on the Nasdaq National
Market, where shares of Queens common stock are listed under the symbol "QCSB."
This value will fluctuate prior to completion of the merger and, if you are a
Haven stockholder, you will not know the value of what you will receive in the
merger when you vote.
After completion of the merger, we expect that current Queens stockholders
will own approximately 68% of the combined company and Haven stockholders will
own approximately 32% of the combined company.
Haven stockholders generally will not recognize any federal income tax gain
or loss on the exchange of shares of Haven common stock for shares of Queens
common stock, except to the extent of cash received in lieu of fractional
shares. Please read carefully the discussion in "Material Federal Income Tax
Consequences" on page 66.
In order to complete our merger, the boards of directors of Haven and Queens
have each called special meetings of stockholders to be held on November 20,
2000 at 10:00 a.m., local time, at which Haven stockholders will be asked to
approve and adopt the merger agreement and Queens stockholders will be asked to
approve and adopt the merger agreement and to approve an amendment to the
Queens certificate of incorporation which will effect a change of the name of
Queens County Bancorp, Inc. to "New York Community Bancorp, Inc." Approval of
the amendment to Queens' certificate of incorporation is not a condition to
completing the merger, but approving and adopting the merger agreement will
result in the name change being effected anyway.
Your vote is important. We cannot complete the merger unless we receive the
necessary approvals from our stockholders at the stockholders' meetings.
Whether or not you plan to attend your stockholders' meeting, please take the
time to submit your proxy with voting instructions in accordance with the
instructions contained in this document. The places, dates and times of the
special meetings are as follows:
For Haven stockholders: For Queens stockholders:
November 20, 2000 November 20, 2000
10:00 a.m., local time 10:00 a.m., local time
Long Island Marriott Hotel Sheraton LaGuardia East Hotel
& Conference Center 135-20 39th Avenue
101 James Doolittle Boulevard Flushing, New York
Uniondale, New York
This document describes the stockholder meetings, the merger, the documents
related to the merger and other related matters. Please read this entire
document carefully.
/s/ Philip S. Messina /s/ Joseph R. Ficalora
Philip S. Messina Joseph R. Ficalora
Chairman and Chief Executive Officer Chairman, President and Chief Executive
Haven Bancorp, Inc. Officer
Queens County Bancorp, Inc.
Queens common stock is quoted on the Nasdaq National Market under the symbol
"QCSB." Haven common stock is quoted on the Nasdaq National Market under the
symbol "HAVN." Queens common stock will be quoted on the Nasdaq National Market
after the merger under the symbol "NYCB."
<PAGE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the Queens stock to be issued in the
merger and under this joint proxy statement/prospectus or determined if this
joint proxy statement/prospectus is accurate or adequate. Any representation
to the contrary is a criminal offense.
The shares of Queens stock to be issued in the merger are not savings or
deposit accounts or other obligations of any bank or savings association and
are not insured by the Federal Deposit Insurance Corporation or any other
governmental agency.
The date of this Joint Proxy Statement/Prospectus is October 13, 2000, and
it is first being mailed or otherwise delivered to Queens stockholders and
Haven stockholders on or about October 16, 2000.
<PAGE>
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, New York 11590
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of Haven Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of Haven stockholders will be
held at the Long Island Marriott Hotel & Conference Center, 101 James Doolittle
Boulevard, Uniondale, New York at 10:00 a.m. on November 20, 2000. The purpose
of the Haven special meeting is to consider and to vote upon the following
matters:
. a proposal to approve and adopt the Agreement and Plan of Merger, dated
as of June 27, 2000, by and between Queens County Bancorp, Inc. and
Haven Bancorp, Inc., pursuant to which Haven will be merged with and
into Queens; and
. such other business as may properly come before the special meeting of
stockholders or any adjournment or postponement thereof.
In the merger, Queens will be the surviving corporation, and it will change
its name to New York Community Bancorp, Inc. You will receive 1.04 shares of
Queens stock for each share of Haven stock that you own. Your attention is
directed to the proxy statement/prospectus accompanying this notice for a
complete discussion of the merger. A copy of the merger agreement is included
as Appendix A to the accompanying joint proxy statement/prospectus.
The Haven board of directors has fixed the close of business on October 11,
2000 as the record date for the Haven special meeting, and only Haven
stockholders of record at such time will be entitled to notice of and to vote
at the Haven special meeting or any adjournment or postponement thereof. In
order for the merger agreement to be approved and adopted, the holders of a
majority of the Haven shares outstanding and entitled to vote thereon on the
record date must vote in favor of the merger agreement. Therefore, your vote is
very important. A complete list of Haven stockholders entitled to vote at the
Haven special meeting will be made available for inspection by any Haven
stockholder for ten days prior to the Haven special meeting at the principal
executive offices of Haven and at the time and place of the Haven special
meeting.
All Haven stockholders entitled to notice of, and to vote at, the Haven
special meeting are cordially invited to attend the special meeting. However,
to ensure your representation at the special meeting, please submit your proxy
with voting instructions. You may submit your proxy with voting instructions by
mail if you promptly complete, sign, date and return the accompanying proxy
card in the enclosed self-addressed, stamped envelope. This will not prevent
you from voting in person, but it will help to secure a quorum and avoid added
solicitation costs. Any holder of Haven common stock who is present at the
Haven special meeting may vote in person instead of by proxy, thereby canceling
any previous proxy. In any event, a proxy may be revoked in writing at any time
before the Haven special meeting.
Haven's board of directors has unanimously approved and adopted the merger
agreement and recommends that Haven stockholders vote "FOR" approval and
adoption of the merger agreement.
Your Vote Is Important. Please Complete, Sign, Date and Return Your Proxy
Card Promptly, Whether or Not You Plan to Attend the Special Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Mark A. Ricca
Mark A. Ricca, Esq.
Corporate Secretary
Westbury, New York
October 13, 2000
<PAGE>
Queens County Bancorp, Inc.
38-25 Main Street
Flushing, New York 11354
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of Queens County Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of Queens stockholders will be
held at the Sheraton LaGuardia East Hotel, 135-20 39th Avenue, Flushing, New
York at 10:00 a.m., on November 20, 2000. The purpose of the Queens special
meeting is to consider and to vote upon the following matters:
. a proposal to approve and adopt the Agreement and Plan of Merger, dated
as of June 27, 2000, by and between Queens County Bancorp, Inc. and
Haven Bancorp, Inc., pursuant to which Haven will be merged with and
into Queens;
. a proposal to amend the Queens certificate of incorporation to change
the name of Queens County Bancorp, Inc. to "New York Community Bancorp,
Inc."; and
. such other business as may properly come before the Queens special
meeting or any adjournment or postponement thereof.
In the merger, Queens will be the surviving corporation, and it will change
its name to "New York Community Bancorp, Inc." Your attention is directed to
the joint proxy statement/prospectus accompanying this notice for a complete
discussion of the merger. A copy of the merger agreement is included as
Appendix A to the accompanying joint proxy statement/prospectus.
The Queens board of directors has fixed the close of business on October 12,
2000 as the record date for the Queens special meeting, and only Queens
stockholders of record at such time will be entitled to receive notice of and
to vote at the special meeting or any adjournment or postponement thereof. In
order for the merger agreement to be adopted, and the amendment effecting the
corporate name change to be approved, a majority of the shares of Queens stock
outstanding and entitled to vote thereon on the record date must be voted in
favor of the merger agreement and in favor of the corporate name change,
respectively. Therefore, your vote is very important. A complete list of Queens
stockholders entitled to vote at the Queens special meeting will be made
available for inspection by any Queens stockholder for ten days prior to the
Queens special meeting at the principal executive offices of Queens and at the
time and place of the Queens special meeting.
All Queens stockholders entitled to notice of, and to vote at, the Queens
special meeting are cordially invited to attend the Queens special meeting in
person. However, to ensure your representation at the special meeting, please
submit your proxy with voting instructions. You may submit your proxy with
voting instructions by mail if you promptly complete, sign, date and return the
accompanying proxy card in the enclosed self-addressed, stamped envelope. This
will not prevent you from voting in person, but it will help to secure a quorum
and avoid added solicitation costs. Any holder of Queens common stock who is
present at the Queens special meeting may vote in person instead of by proxy,
thereby canceling any previous proxy. In any event, a proxy may be revoked in
writing at any time before the Queens special meeting.
The Queens board of directors has unanimously adopted the merger agreement
and recommends that Queens stockholders vote "FOR" approval and adoption of the
merger agreement. The Queens board of directors has also unanimously adopted a
resolution setting forth the proposed corporate name change and recommends that
stockholders vote "FOR" the amendment to the Queens certificate of
incorporation.
Your Vote Is Important. Please Complete, Sign, Date and Return Your Proxy
Card Promptly, Whether or Not You Plan to Attend the Special Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Michael J. Lincks
Michael J. Lincks
Corporate Secretary
Flushing, New York
October 13, 2000
<PAGE>
TABLE OF CONTENTS
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Page
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QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE SPECIAL MEETINGS.. 1
SUMMARY................................................................. 3
Information about the Companies......................................... 3
Haven Stockholders Will Receive 1.04 Shares of Queens Common Stock per
Share of Haven Common Stock............................................ 3
Comparative Market Prices and Share Information......................... 4
Generally Tax-Free Transaction to Haven Stockholders.................... 4
Queens' Dividend Policy................................................. 4
Our Reasons for the Merger.............................................. 4
Haven's Board of Directors Recommends Stockholder Approval.............. 4
Haven's Financial Advisor Says the Exchange Ratio Is Fair, from a
Financial Point of View, to Haven's Stockholders....................... 4
Queens' Board of Directors Recommends Stockholder Approval.............. 5
Queens' Financial Advisor Says the Haven Exchange Ratio Is Fair, from a
Financial Point of View, to Queens..................................... 5
Neither Haven nor Queens Stockholders Have Appraisal Rights............. 5
The Merger Agreement; Expected Closing Time; Termination of the Merger
Agreement.............................................................. 5
Haven's Management and Board of Directors have Financial Interests in
the Merger............................................................. 6
Additions to the Board of Directors and Management of Queens, Queens
County Savings Bank and CFS Bank....................................... 6
Accounting Treatment of the Merger by Queens............................ 6
Queens Proposes an Amendment to its Certificate of Incorporation........ 7
A Comparison of the Rights of Holders of Queens and Haven Stock; the
Rights of Haven Stockholders will be Governed by New Governing
Documents after the Merger............................................. 7
Haven Granted a Stock Option to Queens.................................. 7
Queens and Haven Stockholder Rights Agreements.......................... 7
Queens Stock to be Accompanied by Stockholder Protection Rights......... 7
Regulatory Approvals We Must Obtain for the Merger...................... 8
The Merger.............................................................. 8
Haven will Hold its Special Meeting on November 20, 2000................ 8
Queens will Hold its Special Meeting on November 20, 2000............... 8
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF QUEENS............... 10
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF HAVEN................ 12
SELECTED CONSOLIDATED UNAUDITED PRO FORMA FINANCIAL DATA................ 14
COMPARATIVE PER SHARE DATA.............................................. 16
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS............... 17
THE QUEENS SPECIAL MEETING.............................................. 18
Matters to Be Considered................................................ 18
Proxies................................................................. 18
Solicitation of Proxies................................................. 19
Record Date............................................................. 19
Voting Rights and Vote Required......................................... 19
Recommendation of the Board of Directors................................ 20
THE HAVEN SPECIAL MEETING............................................... 21
Matters to Be Considered................................................ 21
Proxies................................................................. 21
</TABLE>
i
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Solicitation of Proxies................................................. 22
Record Date............................................................. 22
Voting Rights and Vote Required......................................... 22
Recommendation of the Board of Directors................................ 23
INFORMATION ABOUT THE COMPANIES......................................... 24
THE MERGER.............................................................. 26
General................................................................. 26
Structure............................................................... 26
Background to the Merger................................................ 27
Haven's Reasons for the Merger; Recommendation of Haven's Board of
Directors.............................................................. 28
Opinion of Financial Advisors--Haven.................................... 30
Queens' Reasons for the Merger; Recommendation of Queens' Board of
Directors.............................................................. 35
Opinion of Financial Advisors--Queens................................... 37
Additions to the Board and Management of Queens, Queens County Savings
Bank and CFS Bank...................................................... 46
Distribution of Queens Certificates..................................... 46
Fractional Shares....................................................... 47
Public Trading Markets.................................................. 47
Queens Dividends........................................................ 48
Absence of Appraisal Rights............................................. 48
Resales of Queens Stock by Affiliates................................... 48
Regulatory Approvals Required for the Merger............................ 49
Interests of Directors and Management in the Merger..................... 49
THE MERGER AGREEMENT.................................................... 54
Terms of the Merger..................................................... 54
Closing and Effective Time of the Merger................................ 54
Representations and Warranties.......................................... 54
Covenants and Agreements................................................ 56
Conditions to Consummation of the Merger................................ 58
Possible Alternative Merger Structure................................... 59
Amendment, Waiver and Termination of the Merger Agreement............... 59
AMENDMENT TO CERTIFICATE OF INCORPORATION OF QUEENS..................... 61
THE STOCK OPTION AGREEMENT.............................................. 62
General................................................................. 62
Purpose of the Stock Option Agreement................................... 62
Exercise; Expiration.................................................... 62
Queens' Rights Under the Stock Option Agreement......................... 63
ACCOUNTING TREATMENT.................................................... 65
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER.................. 66
DESCRIPTION OF QUEENS CAPITAL STOCK..................................... 68
General................................................................. 68
Common Stock............................................................ 68
Preferred Stock......................................................... 69
RIGHTS AGREEMENTS....................................................... 70
Queens Stockholder Protection Rights Agreement.......................... 70
Haven Rights Agreement.................................................. 71
COMPARISON OF STOCKHOLDERS' RIGHTS...................................... 72
General................................................................. 72
Comparison of Stockholders' Rights...................................... 72
</TABLE>
ii
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DISCUSSION OF ANTI-TAKEOVER PROTECTION IN QUEENS' CERTIFICATE OF
INCORPORATION AND BY-LAWS.............................................. 76
General................................................................. 76
Authorized Stock........................................................ 76
Classification of Board of Directors; No Cumulative Voting.............. 76
Size of Board; Vacancies; Removal of Directors.......................... 76
Special Meetings of Stockholders........................................ 76
Stockholder Action by Unanimous Written Consent......................... 77
Amendment of Certificate of Incorporation and By-Laws................... 77
REGULATION AND SUPERVISION OF QUEENS AFTER THE MERGER................... 78
General................................................................. 78
Regulatory Capital Requirements......................................... 78
Limitations on Capital Distributions.................................... 80
Transactions with Affiliates............................................ 81
Interstate Banking and Branching........................................ 82
Acquisition of Control.................................................. 82
Recent Legislation...................................................... 82
COMPARATIVE MARKET PRICES AND DIVIDENDS................................. 84
Queens Dividends........................................................ 85
PRO FORMA FINANCIAL INFORMATION......................................... 86
Unaudited Pro Forma Combined Condensed Consolidated Statement of
Financial Condition.................................................... 86
Unaudited Pro Forma Combined Condensed Consolidated Statement of
Financial Condition
As of June 30, 2000..................................................... 87
Unaudited Pro Forma Combined Condensed Consolidated Statement of Income
For the Year Ended December 31, 1999.................................... 88
Unaudited Pro Forma Combined Condensed Consolidated Statement of Income
For the Six Months Ended June 30, 2000.................................. 89
Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial
Statements
December 31, 1999 and June 30, 2000..................................... 90
EXPERTS................................................................. 93
OTHER MATTERS........................................................... 93
Queens 2001 Annual Meeting Stockholder Proposals........................ 93
Haven 2001 Annual Meeting Stockholder Proposals......................... 94
WHERE YOU CAN FIND MORE INFORMATION..................................... 95
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APPENDICES:
APPENDIX A --Agreement and Plan of Merger, dated as of June 27, 2000, by and
between Queens County Bancorp, Inc. and Haven Bancorp, Inc........... A-1
APPENDIX B --Stock Option Agreement, dated as of June 27, 2000, between Queens
County Bancorp, Inc. and Haven Bancorp, Inc.......................... B-1
APPENDIX C --Opinion of Salomon Smith Barney Inc................................. C-1
APPENDIX D --Opinion of Lehman Brothers Inc. .................................... D-1
</TABLE>
iii
<PAGE>
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about Queens and Haven from documents that are not included in or delivered
with this document. You can obtain documents incorporated by reference in this
document, other than certain exhibits to those documents, by requesting them in
writing or by telephone from the appropriate company at the following
addresses:
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<S> <C>
Queens County Bancorp, Inc. Haven Bancorp, Inc.
38-25 Main Street 615 Merrick Avenue
Flushing, NY 11354 Westbury, NY 11590
Attention: Vice President, Investor Attention: Catherine Califano, Senior
Relations Vice President and Chief Financial Officer
Telephone: (718) 359-6400 Telephone: (516) 683-4483
</TABLE>
You will not be charged for any of these documents that you request. Queens
and Haven stockholders requesting documents should do so by November 14, 2000
in order to receive them before the special meetings.
See "Where You Can Find More Information" on page 95.
<PAGE>
QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE SPECIAL MEETINGS
Q: What do I need to do now?
A: After you have carefully read this document, indicate on your proxy card how
you want your shares to be voted. Then complete, sign, date and mail your
proxy card in the enclosed postage paid return envelope as soon as possible.
This will enable your shares to be represented and voted at the Queens
special meeting or the Haven special meeting.
Q: Why is my vote important?
A: If you do not return your proxy card or vote in person at the appropriate
special meeting, it will be more difficult for Queens and Haven to obtain
the necessary quorum to hold their special meetings. In addition, the
failure of a Queens or a Haven stockholder to vote, by proxy or in person,
will have the same effect as a vote against the merger agreement. The merger
must be approved by the holders of a majority of the outstanding shares of
Queens stock and Haven stock entitled to vote at the respective special
meetings called for the purpose of voting on the proposal to approve and
adopt the merger agreement.
Q: If my shares are held in street name by my broker, will my broker
automatically vote my shares for me?
A: No. Your broker will not be able to vote your shares without instructions
from you. You should instruct your broker to vote your shares, following the
directions your broker provides.
Q: What if I fail to instruct my broker?
A: If you fail to instruct your broker to vote your shares and the broker
submits an unvoted proxy, the resulting broker non-vote will be counted
toward a quorum at the respective special meeting, but it will have the same
effect as a vote against the merger agreement.
Q: Can I attend the special meeting and vote my shares in person?
A: Yes. All stockholders are invited to attend their special meeting.
Stockholders of record can vote in person at the special meeting. If a
broker holds your shares in street name, then you are not the stockholder of
record and you must ask your broker how you can vote at the special meeting.
Q: Can I change my vote?
A: Yes. If you have not voted through your broker, there are three ways you can
change your vote after you have submitted your proxy card.
. First, you may send a written notice to the person to whom you submitted
your proxy stating that you would like to revoke your proxy.
. Second, you may complete and submit a new proxy card. The latest vote
actually received by Queens or Haven, as the case may be, before the
stockholders meeting will be counted, and any earlier votes will be
revoked.
. Third, you may attend the Queens special meeting, or the Haven special
meeting, as the case may be, and vote in person. Any earlier proxy will
thereby be revoked. However, simply attending the meeting without voting
will not revoke your proxy.
If you have instructed a broker to vote your shares, you must follow directions
you receive from your broker in order to change or revoke your vote.
Q: If I am a Haven stockholder, should I send in my stock certificates now?
A: No. You should not send in your stock certificates at this time.
Haven stockholders will need to exchange their Haven stock certificates for
Queens County
<PAGE>
Bancorp, Inc. stock certificates after we complete the merger. We will send
you instructions for exchanging Haven stock certificates at that time.
Queens stockholders do not need to exchange their stock certificates as a
result of the merger or the amendment to the Queens certificate of
incorporation.
Q. When do you expect to complete the merger?
A: We expect to complete the merger in the fourth quarter of fiscal year 2000.
However, we cannot assure you when or if the merger will occur. We must
first obtain the approvals of our stockholders at the special meetings and
the necessary regulatory approvals.
Q: Whom should I call with questions?
A: Queens stockholders should call the Queens County Bancorp, Inc. Investor
Relations Department at (718) 359-6400 with any questions about the merger
and related transactions.
Haven stockholders should call Mark A. Ricca, Esq., Haven Bancorp, Inc.'s
Corporate Secretary at (516) 683-4485 with any questions about the merger
and related transactions.
2
<PAGE>
SUMMARY
This summary highlights selected information from this document. It does not
contain all of the information that is important to you. We urge you to read
carefully the entire document and the other documents to which we refer in
order to fully understand the merger and the related transactions. See "Where
You Can Find More Information" on page 95. Each item in this summary refers to
the page of this document on which that subject is discussed in more detail.
Information about the Companies (page 24)
Queens County Bancorp, Inc.
Queens County Bancorp, Inc., also referred to as Queens, a Delaware
corporation and bank holding company organized in 1993, is the parent holding
company for Queens County Savings Bank, a savings bank chartered in New York
and subject to regulation by the New York State Banking Department and its
deposit insurer, the Federal Deposit Insurance Corporation. Queens County
Savings Bank is a community-oriented financial institution with operations in
the greater metropolitan New York area. Queens County Savings Bank is primarily
engaged in attracting retail deposits from the general public and investing
those deposits, together with funds generated through operations, in the
origination of mortgage loans on multi-family properties and one-to-four family
homes. In addition, through Queens County Savings Bank, Queens also originates
commercial real estate loans, construction loans, home equity loans and other
consumer loans. At June 30, 2000, Queens had total assets of $2.05 billion,
deposits of $1.04 billion, total stockholders' equity of $134.7 million and had
a market capitalization of $382.9 million.
Haven Bancorp, Inc.
Haven Bancorp, Inc., also referred to as Haven, a Delaware corporation
organized in 1993, is the holding company for CFS Bank, formerly known as
Columbia Federal Savings Bank, a federally chartered stock savings bank. Haven
is subject to regulation by its primary regulator, the Office of Thrift
Supervision, and its deposit insurer, the Federal Deposit Insurance
Corporation. Haven is headquartered in Westbury, New York, and its principal
business currently consists of the operation of its wholly owned subsidiary,
CFS Bank. CFS Bank's principal business has been and continues to be attracting
retail deposits from the general public and investing those deposits, together
with funds generated from operations and borrowings, primarily in one- to four-
family, owner-occupied residential mortgage loans. In addition, CFS Bank
invests in debt, equity and mortgage-backed securities and other marketable
securities to supplement its lending portfolio. Haven also has subsidiaries
engaged in securities brokerage and insurance. At June 30, 2000, Haven had
total assets of $2.93 billion, deposits of $2.15 billion, stockholders' equity
of $108.6 million and had a market capitalization of $169.3 million.
Haven Stockholders Will Receive 1.04 Shares of Queens Common Stock per Share of
Haven Common Stock (page 26)
As a result of the merger, each Haven stockholder will receive 1.04 shares
of Queens common stock for each share of Haven common stock held. We sometimes
refer to this 1.04-to-1 ratio as the Haven exchange ratio. Upon completion of
the merger, Queens stockholders will own approximately 68% of the combined
company and Haven stockholders will own approximately 32% of the combined
company. Generally, no fractional shares of Queens common stock will be issued
in the merger. In lieu of fractional shares, Haven stockholders will receive an
amount in cash based on the last reported sale price of Queens common stock on
the trading day immediately prior to the date on which the merger is completed.
Example: If you hold 110 shares of Haven common stock, you will receive 114
shares of Queens common stock and a cash payment in lieu of the .4 of a share
that you otherwise would have received.
3
<PAGE>
Comparative Market Prices and Share Information (pages 16 and 84)
Queens common stock is included for quotation on the Nasdaq National Market
under the symbol "QCSB." Haven common stock is included for quotation on the
Nasdaq National Market under the symbol "HAVN." The following table sets forth
the closing sale prices of Queens stock and Haven stock as reported on the
Nasdaq National Market on June 27, 2000, the last trading day before we
announced the merger, and for October 12, 2000, the last practicable trading
day before the distribution of this document. This table also shows the implied
value of one share of Haven stock, which we calculated by multiplying the
closing price of Queens stock on those dates by 1.04.
<TABLE>
<CAPTION>
Implied Value
Queens Haven of One Share
Common Common of Haven
Stock Stock Common Stock
------ ------ -------------
<S> <C> <C> <C>
June 27, 2000 $18.13 $18.13 $18.85
October 12, 2000 $27.06 $27.38 $28.14
</TABLE>
The market prices of both Queens stock and Haven stock will fluctuate prior
to the merger. Therefore, you should obtain current market quotations for
Queens stock and Haven stock.
Generally Tax-Free Transaction to Haven Stockholders (page 66)
Queens and Haven have received opinions from their respective legal counsel
that, based upon certain assumptions and qualifications and certain
representations of Queens and Haven, for federal income tax purposes, the
merger will qualify as a "reorganization" within the meaning of section 368(a)
of the Internal Revenue Code of 1986, as amended, and, accordingly, that Haven
stockholders will not recognize federal income tax gain or loss upon the
receipt of shares of Queens common stock in exchange for shares of Haven common
stock pursuant to the merger, except with respect to cash received in lieu of a
fractional share of Queens common stock.
This tax treatment may not apply to certain Haven stockholders and may
depend on your specific situation and on variables not within our control. We
urge you to contact your own tax advisor to understand fully how the merger
will affect you.
Queens' Dividend Policy (page 48)
During 1999 Queens paid cash dividends totaling $1.00. Queens currently pays
a quarterly dividend of $0.25, which is expected to continue, although the
Queens board of directors may change this dividend policy at any time.
Our Reasons for the Merger (pages 28 and 35)
Our companies are proposing to merge because we believe that:
. by combining them we can create a stronger company that will provide
significant benefits to our stockholders and customers alike;
. by bringing our customers and banking products together we can do a
better job of increasing our combined revenues and earnings than we
could if we did not merge; and
. the merger will strengthen the combined company's position as a
competitor in the financial services industry, which is rapidly changing
and growing more competitive.
Haven's Board of Directors Recommends Stockholder Approval (page 28)
The board consulted with financial and other advisors and considered many
factors in making its determination.
As a result, Haven's board of directors believes that the Haven exchange
ratio is fair to Haven's stockholders and in the best interests of Haven and
its stockholders and has unanimously adopted and approved the merger agreement.
Haven's board of directors unanimously recommends that Haven stockholders vote
"FOR" adoption and approval of the merger agreement.
Haven's Financial Advisor Says the Exchange Ratio Is Fair, from a Financial
Point of View, to Haven's Stockholders (page 30)
In deciding to approve the merger, the Haven board of directors considered
the opinion of its financial advisor, Lehman Brothers Inc., which was given to
Haven's board of directors, that the exchange ratio of 1.04 shares of Queens
common
4
<PAGE>
stock for each share of Haven common stock is fair to Haven's stockholders from
a financial point of view. A copy of this opinion is attached to this document
as Appendix D. Haven stockholders should read the opinion completely and
carefully to understand the assumptions made, matters considered and
limitations of the review undertaken by Lehman Brothers Inc. in providing its
opinion. Haven has agreed to pay approximately $2.9 million to Lehman Brothers
Inc., approximately $2.5 million of which is payable upon the completion of the
merger.
Queens' Board of Directors Recommends Stockholder Approval (page 35)
Queens' board of directors believes that the merger presents an excellent
opportunity to combine and expand two complementary sets of banking operations.
The board consulted with financial and other advisors, considered many
strategic and financial factors and determined that the merger would be
beneficial to Queens' strategic plans.
As a result, Queens' board of directors believes that the merger and the
corporate name change are in the best interests of Queens and its stockholders
and has unanimously adopted and approved the merger agreement and the corporate
name change. Queens' board of directors unanimously recommends that Queens
stockholders vote "FOR" adoption and approval of the merger agreement and the
corporate name change.
Queens' Financial Advisor Says the Haven Exchange Ratio Is Fair, from a
Financial Point of View, to Queens (page 37)
In deciding to approve the merger, the Queens board of directors considered
the opinion of its financial advisor, Salomon Smith Barney, Inc., which has
given an opinion to Queens' board of directors that the Haven exchange ratio is
fair to Queens from a financial point of view. A copy of this opinion is
attached to this document as Appendix C. Queens stockholders should read the
opinion completely and carefully to understand the assumptions made, matters
considered and limitations on the review undertaken by Salomon Smith Barney in
providing its opinion. Queens has agreed to pay $1.1 million to Salomon Smith
Barney, of which $850,000 is payable upon the completion of the merger.
Neither Haven nor Queens Stockholders Have Appraisal Rights (page 48)
Both companies are incorporated under Delaware law. Under Delaware law,
neither the stockholders of Queens nor the stockholders of Haven have any right
to a court determination, in a proceeding known as an appraisal, of the fair
value of their shares in connection with the merger.
The Merger Agreement; Expected Closing Time; Termination of the Merger
Agreement (page 54)
The merger agreement is attached as Appendix A to this document. We
encourage you to read it in its entirety because it is the legal document
governing the merger.
Merger Expected to Occur in Fourth Quarter of 2000 (page 54)
The merger will occur only after all of the conditions to its completion
have been satisfied or waived. Currently, we anticipate that the merger will
occur in the fourth quarter of 2000.
Conditions That Must Be Satisfied or Waived for the Merger to Occur (page 58)
As more fully described in this document and the merger agreement, the
completion of the merger depends on a number of conditions being satisfied or
waived, including receipt of stockholder and regulatory approvals and tax
opinions.
We cannot be certain when, or if, the conditions to the merger will be
satisfied or waived, or that the merger will be completed.
Termination of the Merger Agreement (page 59)
We may agree to terminate the merger agreement before completing the merger,
even after approval and adoption of the merger agreement by our stockholders,
as long as the termination is approved by each of our boards of directors.
5
<PAGE>
Also, either of us may decide to terminate the merger agreement before our
stockholders vote if the other party fails to recommend the approval and
adoption of the merger agreement to its stockholders.
In addition, either of us may decide to terminate the merger agreement, even
after adoption of the merger agreement by our stockholders, if certain
conditions in the merger agreement have not been met, such as obtaining the
necessary regulatory approvals, or the other party's material breach of a
representation or warranty.
Haven may also terminate the merger agreement if both (1) the average market
valuation of Queens stock falls below $14.65, and (2) the quotient obtained by
dividing the Queens market valuation by $18.3125 is less than 80% of the
quotient obtained by dividing the average market valuation of the stocks in an
index of comparable financial institutions by the initial valuation prices of
the index stocks. Should Haven give notice of its intention to terminate the
merger agreement based on this formula, Queens will have the right, but not the
obligation, to avoid termination by increasing the merger consideration.
Haven's Management and Board of Directors have Financial Interests in the
Merger (page 49)
Haven's directors and officers have interests in the merger as individuals
in addition to, or different from, their interests as stockholders, such as
receiving salaries and other benefits. For example, in connection with the
merger, Queens and CFS Bank have each entered into individual employment
agreements with two officers of Haven and CFS Bank providing for annual base
salaries of $400,000 and $165,000, respectively, which will go into effect if
and when the merger is completed. Queens and CFS Bank have also entered into a
three year consulting agreement with Philip S. Messina, Haven's Chairman and
Chief Executive Officer, which will go into effect if and when the merger is
completed and under which Mr. Messina will receive a fee of $500,000 per year.
In addition, under Haven's existing employment agreements and change in
control agreements with certain of its officers, cash payments and other
benefits may be due upon an officer's termination of employment following the
receipt of stockholder approval for the merger. The aggregate cash payments
under such agreements are approximately $15,300,000. Haven also maintains
director and employee compensation and benefit plans which provide for
additional benefits or accelerated payment of existing benefits following the
receipt of stockholder approval of the merger.
The merger agreement also provides that, after the merger, the Queens
director and officer insurance coverage will be provided to the former Haven
directors and officers by Queens and that officers or directors of Haven may be
indemnified by Queens for events that occurred before the merger.
Each of the Queens board of directors and the Haven board of directors was
aware of these interests of Haven management and directors and considered them
in its decision to approve the merger agreement.
Additions to the Board of Directors and Management of Queens, Queens County
Savings Bank and CFS Bank (page 46).
Three members of the Haven board of directors will be selected by Queens to
serve as directors of Queens, the board of directors of which will consist of
no more than 11 members for at least two years after the merger. Two members of
the Haven board of directors will be selected by Queens to serve as directors
of Queens County Savings Bank, the board of directors of which will consist of
10 members. The existing members of the CFS Bank board of directors will
resign, and Queens will select three members of the Haven board of directors to
serve as members of the CFS Bank board of directors, which will also consist of
11 directors.
All members of the Haven board of directors who are not selected to serve on
the board of directors of Queens, Queens County Savings Bank or CFS Bank will
be selected to serve on the Queens advisory board, as contemplated in the
merger agreement.
Accounting Treatment of the Merger by Queens (page 65)
Queens will account for the merger as a purchase for financial reporting
purposes.
6
<PAGE>
Queens Proposes an Amendment to its Certificate of Incorporation (page 61)
In addition to the merger, Queens is proposing to amend its certificate of
incorporation to change Queens' corporate name to "New York Community Bancorp,
Inc." Upon stockholder approval, this name change will be carried out as soon
as practicable after the Queens special meeting, regardless of the completion
of the merger with Haven.
A Comparison of the Rights of Holders of Queens and Haven Stock; the Rights of
Haven Stockholders will be Governed by New Governing Documents after the Merger
(page 72)
The rights of Haven stockholders will not materially change as a result of
the merger, due to the similarity of the Haven and Queens governing documents
and due to the fact that both companies are incorporated under Delaware law.
Haven's stockholders' rights will only change to the extent that Queens'
governing documents are materially different from Haven's, while Queens'
stockholders' rights will not change as a result of the merger. This document
contains descriptions of the stockholder rights under each of the Haven and
Queens governing documents, and describes the material differences between
them.
Haven Granted a Stock Option to Queens (page 62)
To induce Queens to enter into the merger agreement, Haven granted Queens an
option to purchase up to 1,800,000 shares of Haven common stock at a price per
share of $18.50; however, in no case may Queens acquire more than 19.9% of the
outstanding shares of Haven common stock pursuant to this stock option
agreement. Queens cannot exercise this option unless the merger is not
completed and specified triggering events occur. These events generally relate
to business combinations or acquisition transactions involving Haven and a
third party. We do not know of any event that has occurred as of the date of
this document that would allow Queens to exercise this option.
The option could have the effect of discouraging other companies from trying
to acquire Haven until the merger is completed. Haven may be required to
repurchase the option and any shares purchased under it at a predetermined
price, or Queens may choose to surrender the option to Haven for a cash payment
of $9 million.
The Haven stock option agreement is attached to this document as Appendix B.
Queens and Haven Stockholder Rights Agreements (page 70)
Queens On January 16, 1996, Queens adopted a stockholder protection rights
agreement, pursuant to which each issued share of Queens common stock has
attached to it one right to purchase, under conditions described in the
agreement and summarized in this document, a fraction of a share of
participating preferred stock of Queens. The Queens stockholder protection
rights agreement, including rights thereunder currently held by Queens
stockholders, will remain in place after the merger. See "RIGHTS AGREEMENTS--
Queens Stockholder Protection Rights Agreement" on page 70 for a description of
this agreement.
Haven On January 25, 1996, Haven adopted a stockholder protection rights
agreement, pursuant to which each share of Haven common stock has attached to
it one preferred share purchase right for each issued share of Haven common
stock held. The Haven rights plan is substantially similar to the Queens rights
plan. In connection with the execution of the merger agreement, Haven amended
the rights agreement to provide that Queens (as well as its affiliates and
associates) will not be deemed to be an "Acquiring Person," as defined in the
Haven rights agreement, by virtue of entering into the merger agreement and the
transactions contemplated thereby. See "RIGHTS AGREEMENTS--Haven Rights
Agreement" on page 71.
Queens Stock to be Accompanied by Stockholder Protection Rights (page 70)
Each share of Queens stock issued pursuant to the merger will have attached
to it one right to purchase, under the conditions described in the Queens
stockholder protection rights agreement and
7
<PAGE>
in this document, a fraction of a share of participating preferred stock of
Queens. These rights are currently held by Queens' stockholders under the
Queens stockholder protection rights agreement, which will remain in place
after the merger. See "RIGHTS AGREEMENTS--Queens Stockholder Protection Rights
Agreement" on page 70 for a description of this agreement.
Regulatory Approvals We Must Obtain for the Merger (page 49)
We cannot complete the merger unless we obtain the approval of the Board of
Governors of the Federal Reserve System. We have made the necessary filings
with the Federal Reserve Board.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the
regulations thereunder, require us to file notification of the proposed merger
with the Federal Trade Commission and the Department of Justice. Based on our
filings to date, the bank portion of the merger has been exempted from the
requirements of the HSR Act.
Although we do not know of any reason why we cannot obtain these regulatory
approvals in a timely manner, we cannot be certain when or if we will obtain
them.
The Merger (page 26)
We are proposing a merger of Haven with and into Queens, with Queens as the
surviving corporation. After the merger is completed, CFS Bank will be a
subsidiary of Queens, although it may be merged with and into Queens County
Savings Bank. Queens is also proposing a corporate name change for Queens, so
that Queens, the surviving corporation, shall be called "New York Community
Bancorp, Inc."
Haven will Hold its Special Meeting on November 20, 2000 (page 21)
The Haven special meeting will be held on November 20, 2000, at 10:00 a.m.,
local time, at the Long Island Marriott Hotel & Conference Center, 101 James
Doolittle Boulevard, Uniondale, New York. At the Haven special meeting Haven
stockholders will be asked:
1. To approve and adopt the merger agreement; and
2. To act on such other matters as may be properly brought before the Haven
special meeting.
Record Date. Haven stockholders may cast one vote at the Haven special
meeting for each share of Haven stock that you owned at the close of business
on October 11, 2000. At that date, there were 9,349,753 shares of Haven stock
entitled to be voted at the special meeting.
Required Vote. To approve and adopt the merger, the holders of a majority of
the outstanding shares of Haven stock entitled to be voted must vote in favor
of the merger agreement. Because approval is based on the affirmative vote of a
majority of shares outstanding, a Haven stockholder's failure to vote, a broker
non-vote or an abstention will have the same effect as a vote against the
merger.
As of October 11, 2000, directors and executive officers of Haven and their
affiliates beneficially owned or had the right to vote 1,669,469 shares of
Haven stock, or 17.9% of the outstanding Haven stock entitled to be voted at
the special meeting. At that date, directors and executive officers of Queens
and their affiliates, including Queens, owned or had the right to vote 69,469
shares of Haven stock, or less than 1% of the outstanding Haven common stock.
The directors and executive officers of Haven, and their respective affiliates,
have agreed to vote in favor of approval and adoption of the merger agreement.
Queens will Hold its Special Meeting on November 20, 2000 (page 18 )
The Queens special meeting will be held on November 20, 2000, at 10:00 a.m.,
local time, at the Sheraton LaGuardia East Hotel, 135-20 39th Avenue, Flushing,
New York. At the Queens special meeting Queens stockholders will be asked:
1. To approve and adopt the merger agreement;
2. To approve the corporate name change; and
3. To act on such other matters as may be properly brought before the
Queens special meeting.
8
<PAGE>
Record Date. Queens stockholders may cast one vote at the Queens special
meeting for each share of Queens stock that you owned at the close of business
on October 12, 2000. At that date, there were 20,122,640 shares of Queens stock
entitled to be voted at the special meeting.
Required Vote. To approve and adopt the merger agreement and to approve the
amendment giving effect to the corporate name change, the holders of a majority
of the outstanding shares of Queens stock entitled to vote must vote in favor
of the merger agreement and the amendment effecting the corporate name change.
Because approval is based on the affirmative vote of a majority of shares
outstanding, a Queens stockholder's failure to vote, a broker non-vote or an
abstention will have the same effect as a vote against the merger and the
corporate name change.
As of October 12, 2000, directors and executive officers of Queens and their
affiliates beneficially owned or had the right to vote 3,874,264 shares of
Queens stock, or 19.18% of the outstanding Queens stock entitled to be voted at
the special meeting. At that date, directors and executive officers of Haven
and their affiliates, including Haven, did not own or have the right to vote
any shares of Queens stock entitled to be voted at the meeting. The directors
and executive officers of Queens, and their respective affiliates, have
indicated that they intend to vote in favor of approval of the merger agreement
and the corporate name change.
9
<PAGE>
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF QUEENS
Set forth below are selected consolidated financial and other data of Queens
which are based on, and qualified in their entirety by, the consolidated
financial statements of Queens and subsidiary, including the notes thereto,
which are incorporated by reference in this Joint Proxy Statement/Prospectus
and should be read in conjunction with this document. The selected consolidated
financial and other data for Queens at June 30, 2000 and for the six-month
periods ended June 30, 2000 and June 30, 1999 were not audited, but in the
opinion of management, contain all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the financial
conditions and results for such periods. The results of operations for the six-
month period ended June 30, 2000 are not necessarily indicative of the results
of operations to be expected for the remainder of the year or any other interim
period.
The information in the following table should be read together with the
historical financial information that Queens has presented in its prior filings
with the SEC. Queens has incorporated this material into this document by
reference to those other filings. See "Where You Can Find More Information" on
page 95.
<TABLE>
<CAPTION>
At or for the
Six Months
Ended June 30, At or for the Year Ended December 31,
--------------------- --------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Unaudited)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings Summary:
Interest income......... $ 74,330 $ 68,051 $ 143,123 $ 134,277 $ 117,734 $ 102,304 $ 91,542
Interest expense........ 41,568 33,997 74,220 65,755 55,336 44,784 39,634
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income..... 32,762 34,054 68,903 68,522 62,398 57,520 51,908
Provision for loan
losses................. -- (2,000) (2,400) -- -- (2,000) 150
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses............ 32,762 36,054 71,303 68,522 62,398 59,520 51,758
Non-interest income..... 2,360 1,143 2,523 2,554 2,305 2,445 3,033
Non-interest expense.... 11,158 11,426 21,390 25,953 27,084 23,271 22,871
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income tax
expense................ 23,964 25,771 52,436 45,123 37,619 38,694 31,920
Income tax expense...... 8,600 10,085 20,772 18,179 14,355 17,755 11,737
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income.............. $ 15,364 $ 15,686 $ 31,664 $ 26,944 $ 23,264 $ 20,939 $ 20,183
========== ========== ========== ========== ========== ========== ==========
<CAPTION>
At or for the
Six Months
Ended June 30, At or for the Year Ended December 31,
--------------------- --------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Unaudited)
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Share Data:
Weighted average common
shares outstanding (in
thousands):
Basic:.................. 17,679 18,618 18,527 19,109 20,407 23,266 24,917
Diluted:................ 17,869 19,136 18,940 20,107 21,742 24,634 26,212
Net income per common
share:
Basic................... $ 0.87 $ 0.76 $ 1.71 $ 1.41 $ 1.14 $ 0.90 $ 0.81
Net income per common
share:
Diluted................. 0.86 0.76 1.67 1.34 1.07 0.85 0.77
Cash dividends per
common share........... 0.50 0.50 1.00 0.67 0.41 0.25 0.07
Book value per common
share.................. 7.47 7.74 7.52 8.13 8.82 9.43 8.87
Balance Sheet Summary:
Securities available for
sale................... 12,482 19,002 12,806 4,656 2,617 -- --
Securities held to
maturity............... 195,401 153,163 184,637 152,280 94,936 86,495 78,016
Loans receivable, net... 1,743,246 1,641,027 1,601,079 1,486,519 1,395,003 1,146,152 994,803
Total assets............ 2,047,633 1,874,998 1,906,835 1,746,882 1,603,269 1,358,656 1,240,882
Total deposits.......... 1,039,757 1,105,701 1,076,018 1,102,285 1,069,161 1,023,930 932,140
Total stockholders'
equity................. 134,732 144,602 137,141 149,406 170,515 211,419 217,630
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
At or for the Six
Months
Ended June 30, At or for the Year Ended December 31,
-------------------- -----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- --------- --------- --------- --------- --------- ---------
(Unaudited)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Ratios:
Return on average
assets(1).............. 1.57% 1.66% 1.69% 1.62% 1.61% 1.63% 1.72%
Return on average
stockholders'
equity(1).............. 23.77 21.32 22.99 17.32 12.95 10.10 9.70
Dividend payout......... 0.58 0.66 0.60 0.50 0.38 0.29 0.09
Average equity to
average assets......... 6.61 7.21 7.37 9.38 12.48 16.17 17.74
Net interest
margin(1)(2)........... 3.50 3.98 3.79 4.24 4.45 4.63 4.58
Efficiency ratio(3)..... 31.42 32.44 29.95 36.51 41.86 38.81 41.63
Asset Quality Ratios:
Allowance for loan
losses to loans
receivable, net........ 0.40 0.44 0.44 0.63 0.68 0.82 1.14
Non-performing
loans(4)............... $2,699 $5,114 $3,108 $6,193 $7,692 $9,659 $7,793
Non-performing loans to
loans receivable,
net(4)................. 0.17% 0.52% 0.19% 0.42% 0.55% 0.84% 0.78%
Non-performing assets to
total assets(5)(6)..... 0.15 0.50 0.17 0.38 0.54 0.76 0.69
</TABLE>
--------
(1) Data provided for the six months ended June 30, 1999 and 2000 is shown on
an annualized basis.
(2) Net interest margin represents net interest income divided by average
interest-earning assets.
(3) Efficiency ratio represents operating expense divided by the sum of net
interest income plus operating income.
(4) Non-performing loans consist of all mortgage loans delinquent 90 days or
more.
(5) Non-performing assets consist of all non-performing loans and real estate
acquired in foreclosure.
(6) For the periods indicated, Queens had no troubled debt restructurings.
11
<PAGE>
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF HAVEN
Set forth below are highlights from Haven's consolidated financial data as
of and for the years ended, December 31, 1999, 1998, 1997, 1996 and 1995 and
Haven's unaudited consolidated financial data as of and for the six months
ended June 30, 2000 and 1999. The results of operations for the six months
ended June 30, 2000 are not necessarily indicative of the results of operations
for the full year or any other interim period. Haven's management prepared the
unaudited information on the same basis as it prepared Haven's audited
consolidated financial statements. In the opinion of Haven's management, this
information reflects all adjustments, consisting of only normal recurring
adjustments, necessary for a fair presentation of this data for those dates.
This information should be read in conjunction with Haven's consolidated
financial statements and related notes included in Haven's Amended Annual
Report on Form 10-K for the year ended December 31, 1999 and Haven's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2000 and June 30, 2000
which are incorporated by reference in this joint proxy statement/prospectus
and from which this information is derived.
<TABLE>
<CAPTION>
For the Six Months
Ended June 30(1) For the Year Ended December 31,
------------------------ ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Unaudited)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings Summary:
Interest income......... $ 103,588 $ 84,716 $ 183,863 $ 151,685 $ 126,306 $ 109,253 $ 96,434
Interest expense........ 64,177 50,590 112,906 93,776 74,400 61,368 55,115
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income..... 39,411 34,126 70,957 57,909 51,906 47,885 41,319
Provision for loan
losses................. 1,150 1,555 3,625 2,665 2,750 3,125 2,775
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses............ 38,261 32,571 67,332 55,244 49,156 44,760 38,544
Non-interest income..... 17,320 16,845 32,231 24,611 13,219 8,983 8,678
Non-interest expense.... 44,495 39,874 80,093 68,779 45,154 37,884 31,448
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income tax
expense................ 11,086 9,542 19,470 11,076 17,221 15,859 15,774
Income tax expense...... 3,899 3,614 6,863 2,926 6,138 6,434 7,230
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income.............. $ 7,187(2) $ 5,928 $ 12,607 $ 8,150 $ 11,083 $ 9,425(3) $ 8,544
========== ========== ========== ========== ========== ========== ==========
<CAPTION>
As of or for the
Six Months
Ended June 30(1) As of or for the Year Ended December 31,
------------------------ ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Unaudited)
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Share Data:
Weighted average common
shares outstanding (in
thousands):
Basic:.................. 8,882 8,686 8,749 8,597 8,420 8,310 8,628
Diluted:................ 9,280 9,048 9,165 9,159 8,914 8,689 8,923
Net income per common
share:
Basic................... $ 0.81(2) $ 0.68 $ 1.44 $ 0.95 $ 1.32 $ 1.13(3) $ 0.99
Net income per common
share:
Diluted................. 0.77(2) 0.66 1.38 0.89 1.24 1.08(3) 0.96
Cash dividends per
common share........... 0.15 0.15 0.30 0.30 0.30 0.28 0.10
Book value per common
share.................. 11.90 12.72 11.73 13.53 12.85 11.49 10.92
Balance Sheet Summary:
Securities available for
sale................... 931,342 1,000,636 937,299 889,251 499,380 370,105 503,058
Loans receivable, net... 1,807,748 1,534,293 1,790,126 1,296,702 1,138,253 836,882 560,385
Total assets............ 2,930,616 2,796,440 2,965,850 2,395,523 1,974,890 1,583,545 1,472,816
Total deposits.......... 2,153,957 1,944,791 2,080,613 1,722,710 1,365,012 1,137,788 1,083,446
Stockholders' equity.... 108,550 113,909 105,583 119,867 112,865 99,384 98,519
</TABLE>
(footnotes on following page)
12
<PAGE>
<TABLE>
<CAPTION>
As of or for the
Six Months
Ended June 30,(1) As of or for the Year Ended December 31,
-------------------- -----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- --------- --------- --------- --------- --------- ---------
(Unaudited)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Ratio:
Return on average
assets................. 0.49% 0.46% 0.46% 0.37% 0.62% 0.62% 0.63%
Return on average
stockholders' equity... 13.78 10.01 11.03 6.92 10.41 9.83 9.27
Return on average assets
excluding restructuring
and SAIF assessment
charges(2)(3).......... 0.79 0.46 0.46 0.37 0.62 0.89 0.63
Return on average
stockholders' equity
excluding restructuring
and SAIF assessment
charges(2)(3).......... 22.35% 10.01% 11.03% 6.92% 10.41% 14.04% 9.27%
Average equity to
average assets......... 3.52 4.63 4.16 5.31 5.97 6.32 6.76
Dividend payout......... 0.19 0.23 0.22 0.34 0.24 0.25 0.10
Net interest margin(4).. 2.77 2.84 2.72 2.78 3.06 3.29 3.17
Asset Quality Data:
Allowance for loan
losses to total loans.. 0.94 0.97 0.92 1.07 1.09 1.26 1.51
Non-performing
loans(5)............... $ 6,952 $ 9,063 $ 7,711 $ 8,385 $ 12,532 $ 13,893 $ 16,877
Non-performing loans to
total loans(5)......... 0.38% 0.59% 0.42% 0.64% 1.09% 1.64% 2.97%
Non-performing assets to
total assets(6)........ 0.26 0.34 0.27 0.36 0.66 0.94 1.28
</TABLE>
--------
(1) Data provided for the six months ended June 30, 1999 and 2000 is shown on
an annualized basis.
(2) Net income for the six months ended June 30, 2000, excluding the net
restructuring charges of $6.9 million, would have been $11.6 million, or
$1.31 per basic common share ($1.26 per share, diluted).
(3) Net income for 1996 excluding the SAIF assessment charge of $6.8 million,
would have been $13.5 million, or $1.62 per basic common share ($1.55 per
share, diluted).
(4) Calculation is based on net interest income before provision for loan
losses divided by average interest-earning assets.
(5) Non-performing loans consist of all non-accrual loans and restructured
loans.
(6) Non-performing assets consist of all non-performing loans and real estate
owned.
13
<PAGE>
SELECTED CONSOLIDATED UNAUDITED PRO FORMA FINANCIAL DATA
(Dollars in thousands, except per share amounts)
The following table shows information about our financial condition and
operations, including basic and diluted earnings per common share, cash
dividends per common share and book value per common share after giving effect
to the merger. This information is called pro forma information in this
document. The tables set forth the information as if the merger had become
effective on June 30, 2000 in the case of the selected statement of financial
condition data presented, and as if the merger had become effective on January
1, 1999 for the year end information and January 1, 2000 for the six month
information in the case of the statements of operations data presented. The
unaudited pro forma data in the tables assume that the merger is accounted for
using the purchase method of accounting. This table should be read in
conjunction with, and is qualified in its entirety by, the historical financial
statements, including the notes thereto, of Queens and Haven incorporated by
reference herein and the more detailed pro forma financial information,
including the notes thereto, appearing elsewhere in this joint proxy
statement/prospectus. See "Where You Can Find More Information" on page 95 and
"PRO FORMA FINANCIAL INFORMATION on page 86." The unaudited pro forma
statements do not reflect any income and expense adjustments which may result
from the consolidation of the operations of Queens and Haven but does reflect
the anticipated restructuring of the balance sheet. The unaudited pro forma
statements are not necessarily indicative of the results that actually would
have occurred had the merger been consummated on the dates indicated, or which
may be attained in the future.
<TABLE>
<CAPTION>
As of
June 30, 2000
----------------
<S> <C> <C>
Selected Statement of Financial Condition
Data:
Total assets............................... $ 4,061,971
Securities available-for-sale.............. 612,835
Securities held-to-maturity................ 223,266
Loans and investments in real estate held-
for-sale.................................. 7,838
Loans receivable, net...................... 2,773,794
Deposits................................... 3,044,514
Borrowed funds............................. 611,531
Stockholders' equity....................... 309,119
<CAPTION>
For the For the
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
---------------- -----------------
<S> <C> <C>
Selected Statements of Operations Data:
Interest income............................ $ 158,150 $ 287,451
Interest expense........................... 83,166 141,968
----------- -----------
Net interest income........................ 74,984 145,483
Provision for loan losses.................. 1,150 1,225
----------- -----------
Net interest income after provision for
loan losses............................... 73,834 144,258
Non-interest income........................ 19,680 34,754
Non-interest expense....................... 58,881 107,938
----------- -----------
Income before income taxes................. 34,634 71,074
Income taxes............................... 12,345 27,327
----------- -----------
Net income................................. $ 22,289 $ 43,747
=========== ===========
Primary weighted average common stock
equivalents............................... 27,162,964 28,010,878
Fully diluted weighted average common stock
equivalents............................... 27,352,668 28,423,855
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
As of and for
the As of and for the
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
---------------- -----------------
<S> <C> <C>
Per Common Share Data(1)
Primary earnings per common share.......... $ 0.82 $ 1.56
Fully diluted earnings per common share.... 0.81 1.54
Cash dividends declared.................... 0.50 1.00
Book value................................. 11.23 --
Selected Financial Ratios(1)
Return on average assets................... 0.97% 0.95%
Return on average stockholders' equity..... 17.69 17.36
Stockholders' equity to total assets....... 7.61 N/A
General and administrative expense to
average assets............................ 2.55 2.38
Efficiency ratio(2)........................ 62.20 60.36
</TABLE>
--------
(1) Per Common Share Data and Selected Financial Ratios are presented only for
data relating to the pro forma combined condensed consolidated statements
of operations for the year ended December 31, 1999 and for the six months
ended June 30, 2000 and data relating to the pro forma combined condensed
consolidated statement of financial condition at June 30, 2000. Average
assets and average stockholders' equity for the periods presented were
calculated assuming the merger was consummated on December 31, 1999.
(2) Efficiency ratio represents operating expense divided by the sum of net
interest income plus operating income.
15
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth for Queens Common Stock and Haven Common
Stock certain historical, pro forma and pro forma equivalent per share
financial information. The pro forma and pro forma equivalent per share
information gives effect to the merger as if the merger had been effective on
the dates presented, in the case of the book value data presented, and as if
the merger had become effective January 1, 2000, in the case of the net income
and dividends declared data presented. The pro forma data in the tables assumes
that the merger is accounted for using the purchase method of accounting. See
"ACCOUNTING TREATMENT" on page 65. The information presented herein is based
on, and is qualified in its entirety by, the historical financial statements,
including the notes thereto, of Queens and Haven incorporated by reference
herein and the pro forma financial information, including the notes thereto,
appearing elsewhere in this document, and should be read in conjunction
therewith. See "Where You Can Find More Information" on page 95 and "PRO FORMA
FINANCIAL INFORMATION on page 86." The pro forma and equivalent pro forma per
share data in the following table is presented for comparative purposes only
and are not necessarily indicative of what the combined financial position or
results of operations would have been had the merger been consummated during
the periods or as of the date for which such pro forma tables are presented.
<TABLE>
<CAPTION>
Queens Haven Pro Forma Per Equivalent
Historical Historical Combined Haven Share(1)
---------- ---------- --------- --------------
<S> <C> <C> <C> <C>
Net income for the year ended
December 31, 1999:
Basic....................... $1.71 $1.44 $1.56(2) $1.62
Fully diluted............... 1.67 1.38 1.54(2) 1.60
Net income for the six months
ended June 30, 2000:
Basic....................... 0.87 0.81 0.82(2) 0.85
Fully diluted............... 0.86 0.77 0.81(2) 0.84
Cash Dividends Declared
For the year ended December
31, 1999:.................... 1.00 0.30 1.00(3) 1.04
For the six months ended June
30, 2000:.................... 0.50 0.15 0.50(3) 0.52
Book Value
As of December 31, 1999....... 7.52 11.73 -- --
As of June 30, 2000........... 7.47 11.90 11.23(4) 11.68
</TABLE>
--------
(1) Per equivalent Haven share is pro forma combined multiplied by 1.04.
(2) The pro forma net income per share amounts are calculated by totaling the
historical net income of Queens and Haven and dividing the resulting amount
by the average pro forma shares of Queens and Haven giving effect to the
merger. The average pro forma shares of Queens and Haven reflect Queens'
historical basic and diluted shares, plus historical basic and diluted
average shares of Haven as adjusted for an exchange ratio of 1.04 shares of
Queens common stock for each share of Haven common stock. The pro forma net
income per share amounts do not take into consideration any operating
efficiencies that may be realized as a result of, and stock purchases that
may be made in contemplation of, the merger.
(3) Pro forma cash dividends represents the Queens historical amount.
(4) The pro forma book value per share amounts are calculated by totaling the
historical stockholders' equity for Queens and Haven and dividing the
resulting amounts by the total Queens/Haven pro forma common shares
outstanding. Stockholders' equity at June 30, 2000 has been adjusted to
reflect the pro forma merger-related restructure charge, net of taxes,
anticipated to be recognized in connection with the merger. The
Queens/Haven pro forma common shares reflect Queens' historical common
shares outstanding and Queens' historical common shares outstanding as
adjusted for an exchange ratio of 1.04.
16
<PAGE>
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This document contains a number of forward-looking statements regarding the
financial condition, results of operations and business of Queens and Haven.
These statements may be made directly in this document or may be incorporated
in this document by reference to other documents and may include statements for
the period following the completion of the merger. You can find many of these
statements by looking for words such as "believes," "expects," "anticipates,"
"estimates," "potential" or similar expressions. Some of the factors that may
cause actual results to differ materially from those contemplated by the
forward-looking statements include, but are not limited to, the following:
. increases in competitive pressure among financial institutions or from
non-financial institutions;
. changes in the interest rate environment;
. changes in deposit flows, loan demand or real estate values;
. changes in accounting principles, policies or guidelines;
. general economic conditions, either nationally or in some or all of the
operating areas in which the combined company will be doing business, or
conditions in securities markets, or the banking industry;
. legislation or regulatory changes;
. technological changes; and
. the level of realization, if any, of expected cost savings from the
merger.
Because such forward-looking statements are subject to assumptions and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Haven stockholders and Queens
stockholders are cautioned not to place undue reliance on such statements,
which speak only as of the date of this document or the date of any document
incorporated by reference.
All subsequent written and oral forward-looking statements concerning the
merger or other matters addressed in this document and attributable to Queens
or Haven or any person acting on their behalf are expressly qualified in their
entirety by the cautionary statements contained or referred to in this section.
Except to the extent required by applicable law or regulation, neither Queens
nor Haven undertakes any obligation to release publicly any revisions to such
forward-looking statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events. However,
Queens and Haven will promptly amend this document in order to reflect any
facts or events arising after the effective date of this document which
individually or in the aggregate represent a fundamental change in the
information set forth herein.
17
<PAGE>
THE QUEENS SPECIAL MEETING
This section contains information from Queens for Queens stockholders about
the special stockholders meeting it has called to consider and adopt the merger
agreement and the corporate name change.
We are mailing this document to you as a Queens stockholder on or about
October 16, 2000. Together with this document, we are also sending you a notice
of the Queens special meeting and a form of proxy that is solicited by our
board of directors. The Queens special meeting will be held on November 20,
2000, at 10:00 a.m., local time, at Sheraton LaGuardia East Hotel, 135-20 39th
Avenue, Flushing, New York.
Matters to Be Considered
The purpose of the Queens special meeting is to vote on a proposal for the
approval and adoption of the merger agreement and to vote on a proposal for the
approval of an amendment to the Queens certificate of incorporation which will
change the name of Queens to "New York Community Bancorp, Inc."
You may be asked to vote upon other matters that may properly be submitted
to a vote at the Queens special meeting. You may also be asked to vote on a
proposal to adjourn or postpone the Queens special meeting. We could use any
adjournment or postponement for the purpose, among others, of allowing
additional time to solicit proxies.
Proxies
Each copy of this document mailed to Queens stockholders is accompanied by a
form of proxy with voting instructions for submission by mail. You should
complete and return the proxy card accompanying this document in order to
ensure that your vote is counted at the Queens special meeting, or any
adjournment or postponement thereof, regardless of whether you plan to attend
the special meeting. You may revoke your proxy at any time before the vote is
taken at the special meeting by
. submitting written notice of revocation to the Corporate Secretary of
Queens prior to the voting of such proxy,
. submitting a properly executed proxy of a later date, or
. voting in person at the special meeting; however, simply attending the
special meeting without voting will not revoke an earlier proxy.
Written notices of revocation and other communications regarding the revocation
of your proxy should be addressed to:
Queens County Bancorp, Inc.
38-25 Main Street
Flushing, NY 11354
Attention: Michael J. Lincks, Corporate Secretary
If your shares are held in street name, you should follow the instructions of
your broker regarding revocation of proxies.
All shares represented by valid proxies that we receive through this
solicitation, and that are not revoked, will be voted in accordance with the
instructions on the proxy card. If you make no specification on your proxy card
as to how you want your shares voted before signing and returning it, your
proxy will be voted "FOR" approval and adoption of the merger agreement and
approval of the corporate name change. The Queens board of directors is
currently unaware of any other matters that may be presented for action at the
special meeting. If other matters properly come before the special meeting, or
any adjournment or postponement thereof, we intend that shares represented by
properly submitted proxies will be voted, or not voted, by and at the
discretion of the persons named as proxies on the proxy card. However, proxies
that indicate a vote against approval and adoption of the merger agreement will
not be voted in favor of adjourning or postponing the special meeting to
solicit additional proxies.
18
<PAGE>
Queens stockholders should NOT send stock certificates with their proxy
cards. If the merger is completed and the corporate name change is effected,
Queens stockholders will not need to exchange their current stock certificates.
Solicitation of Proxies
We will bear the entire cost of soliciting proxies from you. In addition to
solicitation of proxies by mail, we will request that banks, brokers and other
record holders send proxies and proxy material to the beneficial owners of
Queens stock and secure their voting instructions, if necessary. We will
reimburse the record holders for their reasonable expenses in taking those
actions. We have also made arrangements with ChaseMellon Shareholder Services,
LLC to assist us in soliciting proxies and have agreed to pay them $5,500 plus
reasonable expenses for these services. If necessary, we may also use several
of our regular employees, who will not be specially compensated, to solicit
proxies from Queens stockholders, either personally or by telephone, telegram,
facsimile or letter.
Record Date
In accordance with Delaware law, Queens' by-laws and Nasdaq National Market
rules, the close of business on October 12, 2000 has been fixed by the Queens
board of directors as the record date for determining the Queens stockholders
entitled to receive notice of and to vote at the Queens special meeting. At
that time, 20,122,640 shares of Queens stock were outstanding, held by 701
holders of record.
Voting Rights and Vote Required
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Queens stock is necessary to constitute a
quorum at the special meeting. Abstentions and broker non-votes will be counted
solely for the purpose of determining whether a quorum is present but will not
be deemed to be counted as votes cast either FOR or AGAINST the merger
agreement or the corporate name change. Under the applicable Nasdaq National
Market rules, brokers or members who hold shares in street name for customers
who are the beneficial owners of such shares are prohibited from giving a proxy
to vote those shares with respect to the merger without specific instructions
from such customers. An unvoted proxy submitted by a broker is sometimes
referred to as a broker non-vote.
Approval and adoption of the merger agreement and the corporate name change
require the affirmative vote of the holders of a majority of the outstanding
shares of Queens stock entitled to vote at the Queens special meeting. You are
entitled to one vote for each share of Queens stock you held as of the record
date. However, Queens' certificate of incorporation provides that stockholders
of record who beneficially own in excess of 10% of the then-outstanding shares
of common stock of Queens are not entitled to any vote with respect to the
shares held in excess of the 10% limit. A person or entity is deemed to
beneficially own shares that are owned by an affiliate as well as by any person
acting in concert with such person or entity.
Because the affirmative vote of the holders of a majority of the outstanding
shares of Queens stock entitled to vote at the Queens special meeting is needed
for us to proceed with the merger, the failure to vote by proxy or in person,
abstentions and broker non-votes will have the same effect as votes against the
merger agreement. Accordingly, the Queens board of directors urges Queens
stockholders to complete, date and sign the accompanying proxy card and return
it promptly in the enclosed postage-paid envelope.
As of the record date:
. Directors and executive officers of Queens and their affiliates
beneficially owned 3,874,264 shares of Queens stock, or 19.18% of the
Queens stock outstanding on that date.
. Directors and executive officers of Haven and their affiliates did not
beneficially own any shares of Queens common stock.
19
<PAGE>
Recommendation of the Board of Directors
The Queens board of directors has unanimously approved and declared
advisable the merger agreement, the transactions it contemplates and the change
of Queens' name to "New York Community Bancorp, Inc." The Queens board of
directors believes that the merger agreement and the transactions it
contemplates are fair to Queens' stockholders and are in the best interests of
Queens and its stockholders and recommends that you vote "FOR" approval and
adoption of the merger agreement and the change of Queens' corporate name to
"New York Community Bancorp, Inc."
See "THE MERGER--Queens' Reasons for the Merger; Recommendation of Queens'
Board of Directors" on page 35 for a more detailed discussion of the Queens
board of directors' recommendation.
20
<PAGE>
THE HAVEN SPECIAL MEETING
This section contains information from Haven for Haven stockholders about
the special stockholders meeting it has called to consider and approve the
merger agreement.
We are mailing this document to you as a Haven stockholder on or about
October 16, 2000. Together with this document, we are also sending you a notice
of the Haven special meeting and a form of proxy that is solicited by our board
of directors. The special meeting will be held on November 20, 2000 at 10:00
a.m. local time at the Long Island Marriott Hotel & Conference Center, 101
James Doolittle Boulevard, Uniondale, New York, 11553.
Matters to Be Considered
The purpose of the Haven special meeting is to vote on a proposal for the
approval and adoption of the merger agreement.
You may be asked to vote upon any other matters that may properly be
submitted to a vote at the Haven special meeting. You may also be asked to vote
upon a proposal to adjourn or postpone the Haven special meeting. We could use
any adjournment or postponement for the purpose, among others, of allowing
additional time to solicit proxies.
Proxies
Each copy of this document mailed to Haven stockholders is accompanied by a
form of proxy with voting instructions for submission by mail. You should
complete and return the proxy card accompanying this document to ensure that
your vote is counted at the Haven special meeting, or any adjournment or
postponement thereof, regardless of whether you plan to attend the Haven
special meeting. You can revoke your proxy at any time before the vote is taken
at the Haven special meeting by
. submitting written notice of revocation to the Corporate Secretary of
Haven prior to the voting of such proxy,
. submitting a properly executed proxy of a later date, or
. voting in person at the special meeting; however, simply attending the
special meeting without voting will not revoke an earlier proxy.
Written notices of revocation and other communications about revoking your
proxy should be addressed to:
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, NY 11590
Attention: Mark A. Ricca, Esq., Corporate Secretary
If your shares are held in street name, you should follow the instructions of
your broker regarding revocation of proxies.
All shares represented by valid proxies we receive through this
solicitation, and not revoked, will be voted in accordance with your
instructions on the proxy card. If you make no specification on your proxy card
as to how you want your shares voted before signing and returning it, your
proxy will be voted "FOR" approval and adoption of the merger agreement. The
Haven board of directors is presently unaware of any other matters that may be
presented for action at the special meeting. If other matters do properly come
before the special meeting, or any adjournment or postponement thereof, we
intend that shares represented by properly submitted proxies will be voted, or
not voted, by and at the discretion of the persons named as proxies on the
proxy card. However, proxies that indicate a vote against approval and adoption
of the merger agreement will not be voted in favor of adjourning or postponing
the special meeting to solicit additional proxies.
21
<PAGE>
Haven stockholders should NOT send stock certificates with their proxy
cards. If the merger is completed, Haven stockholders will be mailed a
transmittal form within 3 business days after the completion of the merger with
instructions on how to exchange their current stock certificates for stock
certificates of Queens and cash in lieu of fractional shares, if applicable.
Solicitation of Proxies
We will bear the entire cost of soliciting proxies from you. In addition to
solicitation of proxies by mail, we will request that banks, brokers, and other
record holders send proxies and proxy material to the beneficial owners of
Haven stock and secure their voting instructions, if necessary. We will
reimburse the record holders for their reasonable expenses in taking those
actions. We have also made arrangements with Morrow & Co., Inc. to assist us in
soliciting proxies and have agreed to pay them $7,500 plus reasonable expenses
for these services. If necessary, we may use several of our regular employees,
who will not be specially compensated, to solicit proxies from Haven
stockholders, either personally or by telephone, telegram, facsimile or letter.
Record Date
In accordance with Delaware law, Haven's by-laws and the Nasdaq National
Market rules, the close of business on October 11, 2000 has been fixed by the
Haven board of directors as the record date for determining the Haven
stockholders entitled to receive notice of and to vote at the Haven special
meeting. At that time, 9,349,753 shares of Haven common stock were outstanding,
held by approximately 384 holders of record.
Voting Rights and Vote Required
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Haven stock is necessary to constitute a
quorum at the Haven special meeting. Abstentions and broker non-votes will be
counted for the purpose of determining whether a quorum is present but will not
be deemed to be counted as votes cast either FOR or AGAINST the merger
agreement. Under the applicable Nasdaq National Market rules, brokers or
members who hold shares in street name for customers who are the beneficial
owners of such shares are prohibited from giving a proxy to vote those shares
with respect to the merger without specific instructions from such customers.
An unvoted proxy submitted by a broker is sometimes referred to as a broker
non-vote.
As provided in Haven's certificate of incorporation, stockholders of record
who beneficially own in excess of 10% of the outstanding shares of common stock
of Haven are not entitled to any vote with respect to the shares held in excess
of the 10% limit. A person or entity is deemed to beneficially own shares that
are owned by an affiliate as well as persons acting in concert with such person
or entity.
Approval and adoption of the merger agreement requires the affirmative vote
of the holders of a majority of the outstanding shares of Haven stock entitled
to vote at the Haven special meeting after subtracting any shares in excess of
the limit mentioned above pursuant to Haven's certificate of incorporation. You
are entitled to one vote for each share of Haven stock you held as of the
record date.
Because the affirmative vote of the holders of a majority of the outstanding
shares of Haven stock entitled to vote at the Haven special meeting is needed
for us to proceed with the merger, the failure to vote by proxy or in person,
abstentions and broker non-votes will have the same effect as votes against the
merger agreement. Accordingly, the Haven board of directors urges Haven
stockholders to complete, date, and sign the accompanying proxy card and return
it promptly in the enclosed postage-paid envelope.
As of the record date:
. Directors and executive officers of Haven and their affiliates
beneficially owned 1,669,469 shares of Haven stock, or 17.9% of the
outstanding Haven stock at that date.
22
<PAGE>
. Directors and executive officers of Queens and their affiliates
beneficially owned 4,000 shares of Haven stock , or less than 1% of the
outstanding Haven stock at that date.
. Queens beneficially owns 65,469 shares of Haven stock, excluding the
shares subject to the Haven stock option described in "THE STOCK OPTION
AGREEMENT" on page 62.
Recommendation of the Board of Directors
The Haven board of directors has unanimously approved the merger agreement
and the transactions it contemplates. The Haven board of directors believes
that the merger agreement and the transactions it contemplates are fair to
Haven's stockholders and are in the best interests of Haven and its
stockholders and unanimously recommends that you vote "FOR" approval and
adoption of the merger agreement.
See "Haven's Reasons for the Merger; Recommendation of the Haven Board of
Directors" on page 28 for a more detailed discussion of the Haven board of
directors' recommendation.
23
<PAGE>
INFORMATION ABOUT THE COMPANIES
Queens County Bancorp, Inc.
38-25 Main Street
Flushing, New York 11354
(718) 359-6400
Queens County Bancorp, Inc., a Delaware corporation and bank holding company
organized in 1993, is a community-oriented financial institution headquartered
in Flushing, New York, in the Borough of Queens. It is the parent holding
company for Queens County Savings Bank, a savings bank chartered in New York
and subject to regulation by the New York State Banking Department. The Queens
County Savings Bank's deposits are insured by the Bank Insurance Fund, as
administered by the Federal Deposit Insurance Corporation. Queens County
Savings Bank, which operates ten traditional branch offices and three customer
service centers in Queens, and an eleventh branch office in Nassau, is
primarily engaged in attracting retail deposits from the general public and
investing those deposits, together with funds generated through operations, in
the origination of mortgage loans on multi-family properties. In addition,
through Queens County Savings Bank, Queens also originates one-to-four-family
home and commercial real estate loans, construction loans, home equity loans
and other consumer loans. Queens County Savings Bank also invests in U.S.
Treasury and Government agency securities and other investment securities.
Queens County Savings Bank's deposit gathering base is concentrated in the
communities surrounding its offices, while its primary lending area extends
throughout the greater metropolitan New York area. Greater metropolitan New
York has been, and continues to be, an area of significant competition among
financial institutions.
At June 30, 2000, Queens had total assets of $2.05 billion, deposits of
$1.04 billion and stockholders' equity of $134.7 million. At October 11, 2000,
Queens had a market capitalization of $554.6 million based on the closing per
share price of $27.56.
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, New York 11590
(516) 683-4100
Haven Bancorp, Inc. was incorporated under Delaware law on March 25, 1993 as
the holding company for CFS Bank, formerly known as Columbia Federal Savings
Bank, in connection with the conversion of CFS Bank from a federally chartered
mutual savings bank to a federally chartered stock savings bank. Haven is a
savings and loan holding company and is subject to regulation by its primary
regulator, the Office of Thrift Supervision (referred to as the OTS) and its
deposit insurer, the Federal Deposit Insurance Corporation. Haven is
headquartered in Westbury, New York and its principal business currently
consists of the operation of its wholly owned subsidiary, CFS Bank.
At June 30, 2000, Haven had total assets of $2.93 billion, deposits of $2.15
billion and stockholders' equity of $108.6 million. At October 10, 2000, Haven
had a market capitalization of $261.8 million based on the closing per share
price of $28.00.
CFS Bank became a federally chartered mutual savings bank in 1983. CFS Bank
is a member of the Federal Home Loan Bank System, and its deposit accounts are
insured by the Federal Deposit Insurance Corporation.
CFS Bank's principal business has been, and continues to be, attracting
retail deposits from the general public and investing those deposits, together
with funds generated from operations and borrowings, primarily in one- to four-
family, owner-occupied residential mortgage loans. Since 1994, CFS Bank has
gradually increased its activity in multi-family and commercial real estate
lending. In addition, CFS Bank invests in debt, equity
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and mortgage-backed securities and other marketable securities to supplement
its lending portfolio. Effective January 1, 1999, CFS Bank indefinitely
discontinued offering certain consumer loans, including home equity loans and
home equity lines of credit. At June 30, 2000, CFS Bank operated sixty-two
supermarket branches, with total deposits of $908.3 million, and eight
traditional branches, with total deposits of $1.24 billion.
On May 1, 1998, CFS Bank completed the purchase of a loan production
franchise of Intercounty Mortgage, Inc. The business operated as a division of
CFS Bank under the name CFS Mortgage (referred to as CFS Mortgage), originating
and purchasing residential loans for CFS Bank's portfolio and for sale in the
secondary market, primarily through six loan origination offices located in New
York, New Jersey and Pennsylvania. Loan sales in the secondary market were
primarily on a servicing-released basis, for which CFS Bank earns servicing-
released premiums. During the first quarter of 2000, CFS Bank sold parts of CFS
Mortgage and reorganized the remainder. As a result of this sale and
reorganization, CFS Bank incurred a $6.8 million net restructuring charge. CFS
Bank now offers customers residential mortgage products through a private label
originator. During the same quarter, CFS Bank incurred an additional
restructuring charge of $0.3 million related to the remainder of CFS Bank's
business operations.
CFS Insurance Agency, Inc., a wholly-owned subsidiary of Haven, provides
automobile, homeowners and casualty insurance to individuals, and various lines
of commercial insurance to individuals. CFS Bank also operates CFS Investments,
Inc., a wholly-owned subsidiary providing securities, brokerage services and
insurance.
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<PAGE>
THE MERGER
The following discussion contains material information pertaining to the
merger. This discussion is subject, and qualified in its entirety by reference,
to the merger agreement, stock option agreement and financial advisor opinions
attached as Appendices to this document. We encourage you to read and review
those documents as well as the discussion in this document.
General
This section provides material information about the merger of Queens and
Haven and the circumstances surrounding the merger. The next sections of this
document, entitled "THE MERGER AGREEMENT" on pages 54 through 60 and "The Stock
Option Agreement" on pages 62 through 64, have additional and more detailed
information regarding the legal documents that govern the merger, including
information about the conditions to completion of the merger and the provisions
for terminating or amending the merger agreement.
At the Queens special meeting, Queens stockholders will be asked to consider
and to vote upon a proposal to approve and adopt the merger agreement and a
proposal to approve the change of Queens' name. At the Haven special meeting,
Haven stockholders will be asked to consider and to vote upon a proposal to
approve and adopt the merger agreement. Adoption of the merger agreement will
constitute adoption of the transactions it contemplates, including, among
others, the merger of Haven with and into Queens.
We are furnishing this document to Queens stockholders and Haven
stockholders in connection with the solicitation of proxies by the boards of
directors of Queens and Haven for use at their respective special meetings of
stockholders and any adjournment or postponement of such meetings.
Structure
The merger agreement provides for the merger of Haven with and into Queens.
Queens will be the surviving corporation and, if it has not already done so,
will change its name to "New York Community Bancorp, Inc." At the completion of
the merger, CFS Bank will operate as a subsidiary of Queens, although Queens
expects to merge it with and into Queens County Savings Bank if regulatory
approval of such a merger is obtained. Queens may alter the method of effecting
the combination with Haven, provided that such change does not alter the
consideration to be issued to Haven stockholders, alter the tax treatment of
the transaction, materially impede or delay consummation of the merger or
adversely affect the obligations of Queens under the merger agreement.
Upon completion of the merger, Haven stockholders will receive 1.04 shares
of Queens common stock for each share of Haven common stock that they hold.
This exchange ratio is subject to upward adjustment only as described under
"THE MERGER AGREEMENT--Amendment, Waiver and Termination of the Merger
Agreement" on page 59. Haven stockholders will receive cash in lieu of any
fractional shares of Queens common stock that would have otherwise been issued
at the completion of the merger.
If the number of shares of common stock of Queens changes before the merger
is completed through a reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other similar event, then
an appropriate and proportionate adjustment will be made to the exchange ratio.
As a result of the merger, Queens stockholders immediately prior to the
merger will own approximately 68%, and Haven stockholders immediately prior to
the merger will own approximately 32%, of the outstanding Queens stock. These
percentages are based on the number of fully-diluted shares of Queens stock and
Haven stock calculated as of June 27, 2000, after taking into account the
exchange ratio.
Queens will account for the merger as a purchase for financial reporting
purposes. The merger is intended to qualify as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, for federal
income tax purposes.
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<PAGE>
Background to the Merger
The board of directors of Haven has focused on enhancing stockholder value
over time since CFS Bank's conversion to a stock savings bank in March, 1993
and the formation of Haven as the publicly-owned holding company for CFS Bank.
After the conversion, the principal alternatives considered by Haven have been
(i) pursuing a course of increasing stockholder value by remaining a community
bank and growing internally through the opening of new branches, (ii) pursuing
the acquisition of smaller institutions or entities related to financial
services, (iii) pursuing a merger of equals with one or more institutions in
CFS Bank's market area and (iv) an acquisition of Haven by another financial
institution.
In September 1999, the board of directors of Haven retained Lehman Brothers
Inc. (hereinafter referred to as Lehman Brothers) to render financial advisory
services to Haven, including reviewing options regarding Haven's residential
mortgage origination division. On September 22, 1999 and October 20, 1999, the
Haven board of directors met with Lehman Brothers to discuss Lehman Brothers'
analysis and the possibility of a business combination with, or sale of assets
to, another financial institution. In November 1999, Lehman Brothers discussed
with Queens the possibility of a business combination with Haven, and Queens
gave Haven a preliminary indication of interest subject to a number of
conditions. On November 22, 1999, the Haven board of directors met with Lehman
Brothers and Thacher Proffitt & Wood, its outside counsel (hereinafter referred
to as Thacher Proffitt), to discuss Queens' preliminary indication of interest,
as compared to Haven's value continuing as an independent institution. The
Haven board of directors determined that Haven should continue to pursue its
long-term business plan, while continuing to evaluate other strategic options.
During the period from June, 1999 through April, 2000, Haven was engaged in
a dispute with PL Capital Group, a holder of approximately 6% of Haven's common
stock, concerning the appointment of Richard Lashley and Garrett Goodbody to
the Haven board of directors and PL Capital Group's proxy solicitation in
opposition to Haven's nominees for election to its board of directors. On April
7, 2000, Haven entered into an agreement with PL Capital Group which provides,
among other things, for the appointment of Messrs. Lashley and Goodbody to the
Haven board of directors and for the termination of the PL Capital Group
solicitation.
On March 22, 2000, the board of directors of Haven met with Lehman Brothers
and Thacher Proffitt, to consider, among other items, strategic alternatives
ranging from pursuing a course of continuing as an independent financial
institution, a possible merger of equals with a similarly sized institution and
a possible sale of Haven to another financial institution. At the March 22,
2000 meeting, the Haven board of directors authorized Lehman Brothers to review
the strategic alternatives available to Haven, to identify potential merger
partners and acquirors of Haven and to prepare and distribute information
packages to those parties that expressed interest in reviewing the Haven
acquisition opportunity in order to obtain expressions of interest as to a
potential transaction with Haven. In addition, the Haven board of directors
formed the Special Committee to Explore Strategic Alternatives (referred to as
the special committee) comprised solely of outside directors to work with
Lehman Brothers in these efforts.
The special committee of the Haven board of directors met twice with Lehman
Brothers after the March 22, 2000 meeting to discuss various strategic
alternatives and beginning in April 2000, Lehman Brothers contacted a total of
twenty financial institutions that were identified by Lehman Brothers as
attractive partners for a possible business combination with Haven. Of these
twenty, twelve entered into confidentiality agreements with Haven and were
furnished with confidential information packages. Following discussions between
each of these twelve institutions and Lehman Brothers, six of the twelve
institutions requested to meet with senior management of Haven to discuss the
information provided. On May 8, 2000, after Haven and Lehman Brothers conducted
preliminary negotiations with these six institutions, Haven received written
preliminary indications of interest from four of the six institutions, which
preliminary indications of interest were discussed at meetings of the special
committee on May 9 and May 16, 2000 and at a meeting of the Haven board of
directors on May 17, 2000, at which Lehman Brothers and Thacher Proffitt were
present. The preliminary indication of interest from each institution was for
an acquisition transaction in which the stockholders of Haven would receive
either common stock, cash or a combination of common stock and cash. In each
case, the preliminary indication of interest was subject to, among other
things, the completion of a detailed due diligence review of Haven.
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<PAGE>
During May and June 2000, Lehman Brothers, together with senior management
of Haven, met with the four institutions that had submitted preliminary
indications of interest in order to address specific questions raised by the
parties regarding the information package previously provided to them and to
permit the institutions to perform a detailed due diligence review of Haven.
The four institutions and their legal and financial advisors then conducted a
due diligence review of Haven and held meetings with Haven's senior management
and with Lehman Brothers. This process resulted, on June 16, 2000, in Haven
receiving a revised indication of interest only from Queens for a 100% common
stock transaction.
Based on its evaluation of Queens' proposal, on June 21, 2000, the special
committee requested Lehman Brothers to contact Queens and determine if Queens
would increase its proposed exchange ratio, add certain provisions and modify
or eliminate certain conditions to its proposal. On June 22, 2000, the Haven
board of directors met with Lehman Brothers and Thacher Proffitt to discuss
Queens' proposal and the recommendation of the special committee. Joseph R.
Ficalora, Chairman, President and Chief Executive Officer of Queens, and
Salomon Smith Barney, Queens' financial advisors, also made a presentation to
the Haven board of directors on June 22, 2000 describing the benefits of a
business combination between Haven and Queens. On June 23, 2000, Lehman
Brothers advised the special committee of the Haven board of directors that
Queens was amenable to a number of changes requested by Haven. Queens presented
a formal proposal in which, among other things, the stockholders of Haven would
receive 1.04 shares of Queens common stock for each share of Haven common
stock. This exchange ratio would result in stockholders of Haven owning
approximately 32% of Queens on a pro forma combined basis. Based on Queens'
revised proposal, the special committee authorized senior management of Haven
to proceed with the negotiation of a definitive merger agreement with Queens.
At a meeting of the Haven board of directors held on June 27, 2000, Lehman
Brothers presented its written opinion to the Haven board of directors that the
exchange ratio was fair, from a financial point of view, to Haven stockholders.
During this meeting, Thacher Proffitt also reviewed the terms and conditions
contained in the merger agreement, including, among other things, pricing,
termination, representations and warranties, negative covenants, closing
conditions and treatment of Haven's employee benefit plans and arrangements.
Based on, among other things, the various factors discussed below under
"Haven's Reasons for the Merger; Recommendation of Haven's Board of Directors,"
the Haven board of directors unanimously approved the merger, the merger
agreement, the stock option agreement and the related transactions.
From time to time, Queens has considered various acquisitions in furtherance
of its strategy and its board of directors has discussed such acquisitions. The
Queens board of directors discussed the Haven merger in several informal
meetings and discussions before considering the merger at a meeting of the
Queens board of directors held on June 27, 2000. At this meeting, the Queens
board of directors reviewed the terms and conditions contained in the draft
merger agreement, including, among other things, pricing, termination, standard
representations and warranties, negative covenants, customary closing
conditions and treatment of Haven's employee benefit plans and arrangements.
Haven's Reasons for the Merger; Recommendation of Haven's Board of Directors
The board of directors of Haven believes that the merger is in the best
interests of Haven and its stockholders. The Haven board of directors therefore
has unanimously approved the merger agreement and unanimously recommends that
the Haven stockholders vote "FOR" approval and adoption of the merger
agreement.
In reaching its decision to approve and recommend the merger agreement, the
board of directors of Haven consulted with the management of Haven, as well as
its financial and legal advisors, and considered a number of factors, both from
a short-term and longer-term perspective, including the following material
factors:
. The Haven board of directors' belief that the merger will enable all
holders of Haven common stock to realize significant value when compared
to the market value per share of Haven common stock prior to Haven's
announcement on March 24, 2000 that it was exploring strategic
alternatives and
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<PAGE>
prior to the announcement of the merger on June 27, 2000. The market
value per share of Haven common stock, as represented by the closing
sale price, as reported on Nasdaq, was $14.06 on March 23, 2000, and was
$17.62 on June 26, 2000. Based upon an exchange ratio of 1-to-1.04, the
closing price of Queens common stock on June 26, 2000 of $18.50
represented a value to be received by holders of Haven common stock of
$19.24, and represented a premium to market of 9.3%. See "Background of
the Merger" on page 27, "Opinion of Financial Advisors--Haven" on page
30 and "Interests of Directors and Management in the Merger" on page 49.
. The Haven board of directors' familiarity with and review of Haven's
business, financial condition, results of operations, competitive
position and future prospects, including the potential growth,
development, productivity and profitability of Haven;
. The current and prospective environment in which Haven operates,
including national and local economic conditions, the competitive
environment for thrifts and other financial institutions generally, the
increased competition resulting from recent legislation allowing non-
banks to conduct banking activities, the trend toward consolidation in
the financial services industry and the likely effect of the foregoing
factors on Haven's potential growth, development, productivity, and
profitability;
. Pro forma financial information on the merger, including, among other
things, the pro forma book value and earnings per share;
. The financial information reviewed by management and Lehman Brothers
with the Haven board of directors regarding Queens and the performance
of Queens' common stock on both a historical and prospective basis and
the strategic fit between the parties, including:
. the combination of Haven's deposit gathering ability through its
supermarket and traditional branch franchise with Queens' multi-
family loan origination ability,
. the enhanced opportunities for operating efficiencies that could
result from the merger, and
. the respective contributions that each of the parties would bring to
a combined institution with respect to market capitalization,
financial condition, and results of operations.
. The Haven board of directors' review of the historical and prospective
market prices of Haven common stock compared to the merger
consideration, and the expectation of the Haven board of directors that
the merger will provide Haven stockholders with the opportunity to
receive a premium over the historical trading prices for their shares,
and that the consideration received by Haven stockholders in the merger
would constitute a favorable premium compared to expected future values
of Haven common stock under a variety of circumstances and assumptions;
. The fact that the receipt of Queens common stock by the Haven
stockholders in the merger would be on a tax-free basis for federal
income tax purposes (except with respect to cash received in lieu of
fractional shares);
. Haven's alternatives to the merger, including the range of possible
values of those alternatives and the timing and likelihood of actually
receiving those values;
. The results of the extensive process followed by Lehman Brothers to
obtain acquisition proposals and preliminary bids;
. The Haven board of directors' belief that Queens has a strong financial
and capital position and that the Queens common stock to be received by
Haven stockholders (including its dividend) presents a high long-term
intrinsic value, substantial capacity for future growth and considerable
potential for long-term strategic value to such stockholders;
. The presentations of Lehman Brothers to the Haven board of directors and
the special committee on May 16 and 17 and June 21, 22, 23 and 27, 2000
and Lehman Brothers' opinion that, as of June 27, 2000, the
consideration to be received by the stockholders of Haven was fair to
Haven's stockholders from a financial point of view;
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<PAGE>
. The review by the Haven board of directors with its legal and financial
advisors of the provisions of the merger agreement, the stock option
agreement, and other related documents, including the exchange ratio,
the ability of Haven to terminate the merger agreement under certain
circumstances if the value of Queens common stock declines, subject to
the right of Queens to increase the exchange ratio, Queens' agreeing to
appoint (a) three members of the Haven board of directors to the Queens
board of directors, (b) two members of the Haven board of directors to
the Queens County Savings Bank board of directors and (c) three members
of the Haven board of directors to the CFS Bank board of directors and
to create an advisory board for the remaining Haven board of directors
members to advise Queens with respect to deposit and lending activities
in Haven's former market area and to maintain and develop customer
relationships (see "THE MERGER--Interests of Directors and Management in
the Merger" on page 49).
This discussion of the information and factors considered by the Haven board
of directors is not intended to be exhaustive, but includes all material
factors considered by the Haven board of directors. The Haven board of
directors conducted a discussion of the factors described above, including
asking questions of Haven's management and Haven's legal and financial
advisors, and reached general consensus that the merger was in the best
interests of Haven and Haven stockholders. In reaching its determination to
adopt and recommend the merger, the Haven board of directors did not assign any
relative or specific weights to these factors, and individual directors may
have given differing weights to different factors. The Haven board of directors
relied on the experience and expertise of its financial advisor for
quantitative analysis of the financial terms of the merger. It should be noted
that this explanation of the Haven board's reasoning is forward-looking in
nature and, therefore, should be read in light of the factors discussed under
the heading "CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS" on page
17.
The Haven board of directors believes that the merger is in the best
interests of Haven and its stockholders. Accordingly, the Haven board of
directors has unanimously adopted and approved the merger agreement and
unanimously recommends that Haven stockholders vote "FOR" approval and adoption
of the merger agreement.
Opinion of Financial Advisors--Haven
Haven Bancorp, Inc. has retained Lehman Brothers to act as its financial
advisor in connection with the merger. Lehman Brothers is an internationally
recognized investment banking firm. Lehman Brothers, as part of its investment
banking business, is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bids, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
Haven retained Lehman Brothers based upon Lehman Brothers' experience,
expertise, reputation and its familiarity with Haven and the industry in
general and because its investment banking professionals have substantial
experience in transactions similar to the merger of Haven and Queens. As
compensation for its services, Haven has agreed to pay Lehman Brothers (i) a
retainer fee of $100,000, (ii) a fee of $300,000 upon rendering of a fairness
opinion by Lehman Brothers to the board of directors of Haven, which became
payable on June 27, 2000, (iii) a $50,000 fee upon public announcement of the
proposed merger, and (iv) a transaction fee equal to 1% of the merger
consideration, contingent upon and payable upon the completion of the merger.
Based upon the closing sale price of Queens common stock on October 10, 2000,
the transaction fee would be $2.914 million. The $300,000 fee payable to Lehman
Brothers for rendering a fairness opinion will be credited against the
transaction fee. In addition, Haven has agreed to reimburse Lehman Brothers for
its out-of-pocket expenses and indemnify Lehman Brothers and certain related
persons and entities against certain liabilities, including liabilities under
securities laws, incurred in connection with its services. In the past, Lehman
Brothers has also been engaged by Queens to render certain financial advisory
services. In the ordinary course of their business, Lehman Brothers and its
affiliates actively trade the debt and equity securities of Haven and Queens
for their own account and for the accounts of their customers and, accordingly,
may at any time hold a long or short position in such securities.
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As part of its role as financial advisor, Lehman Brothers rendered its
written opinion to the Haven board of directors on June 27, 2000 that, as of
the date of such opinion, and subject to the factors and assumptions set forth
in such opinion, the exchange ratio to be offered to Haven stockholders by
Queens in the merger is fair, from a financial point of view, to the Haven
stockholders. Lehman Brothers subsequently confirmed its June 27, 2000 opinion
by delivery to the Haven board of directors of a written opinion dated as of
the date of this Joint Proxy Statement/Prospectus. The full text of the Lehman
Brothers' opinion (referred to as the Lehman Brothers opinion) is attached
hereto as Appendix D. Haven's stockholders should read the Lehman Brothers
opinion for a discussion of assumptions made, matters considered and limits on
the review undertaken by Lehman Brothers in rendering its opinion. The summary
set forth in this Joint Proxy Statement/ Prospectus of the Lehman Brothers
opinion is qualified in its entirety by reference to the full text of the
Lehman Brothers opinion attached hereto.
No limitations were imposed by Haven on the scope of Lehman Brothers'
investigation or the procedures to be followed by Lehman Brothers in rendering
the Lehman Brothers opinion. In arriving at the Lehman Brothers opinion, Lehman
Brothers did not ascribe a specific range of value to Haven or Queens, but
rather made its determination as to the fairness, from a financial point of
view, of the exchange ratio to be offered by Queens to the Haven stockholders
in the merger on the basis of the financial and comparative analyses described
below. The Lehman Brothers opinion is for the use and benefit of the Haven
board of directors and was rendered to the Haven board of directors in
connection with its consideration of the merger. The Lehman Brothers opinion is
not intended to be and does not constitute a recommendation to any stockholder
of Haven as to how such stockholder should vote with respect to the merger.
Lehman Brothers was not requested to opine as to, and its opinion does not
address, Haven's underlying business decision to proceed with or effect the
merger.
In arriving at the Lehman Brothers opinion, Lehman Brothers reviewed and
analyzed:
. the merger agreement and the specific terms of the merger,
. publicly available information concerning Haven and Queens that Lehman
Brothers believed to be relevant to its analyses,
. financial and operating information with respect to the business,
operations and prospects of Haven and Queens furnished to it by Haven
and Queens,
. a trading history of Queens common stock and Haven common stock from
June 26, 1995 to the date of the Lehman Brothers opinion, and a
comparison of such trading histories with those other companies that it
deemed relevant,
. a comparison of the historical financial results and present financial
condition of Haven and Queens with those of other companies that Lehman
Brothers deemed relevant,
. a comparison of the financial terms of the merger with the financial
terms of certain other recent transactions that Lehman Brothers deemed
relevant, and
. the potential pro forma impact of the merger on Queens.
In addition, Lehman Brothers had discussions with the management of Queens
and Haven concerning their respective businesses, operations, assets, financial
conditions and prospects, and their estimates of cost savings, operating
synergies and other strategic benefits expected to result from a combination of
the businesses of Haven and Queens, and undertook such other studies, analyses
and investigations as it deemed appropriate.
In arriving at the Lehman Brothers opinion, Lehman Brothers assumed and
relied upon the accuracy and completeness of the financial and other
information used by it without assuming any responsibility for independent
verification of such information and further relied upon the assurances of the
managements of Haven and Queens that they were not aware of any facts or
circumstances that would make such information
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<PAGE>
inaccurate or misleading. With respect to the financial projections of Haven
and Queens, Lehman Brothers assumed that such projections were reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the respective managements of Haven and of Queens as to the future
financial performance of Haven, Queens and the combined entity, and that Haven
and Queens would perform, and that the combined entity will perform
substantially in accordance with such projections. In arriving at the Lehman
Brothers opinion, Lehman Brothers did not conduct a physical inspection of the
properties and facilities of Haven and Queens and did not make or obtain any
evaluations or appraisals of the assets or liabilities of Haven and Queens. In
addition, Lehman Brothers notes that it is not an expert in the evaluation of
loan portfolios or allowances for loan and real estate owned losses and assumed
that the allowances for loan and real estate owned losses provided to it by
Haven and Queens and used by it in its analysis and in arriving at the Lehman
Brothers opinion were, in the aggregate, adequate to cover all such losses. The
Lehman Brothers opinion was based upon market, economic and other conditions as
they existed on, and could be evaluated as of, the date of the Lehman Brothers
opinion.
In connection with the preparation and delivery of the Lehman Brothers
opinion to the Haven board of directors, Lehman Brothers performed a variety of
financial and comparative analyses, as described below. The preparation of a
fairness opinion involves various determinations as to the most appropriate and
relevant methods of financial and comparative analysis and the application of
those methods to the particular circumstances and, therefore, such an opinion
is not readily susceptible to summary description. Furthermore, in arriving at
the Lehman Brothers opinion, Lehman Brothers did not attribute any particular
weight to any analysis or factor considered by it, but rather made qualitative
judgments as to the significance and relevance of each analysis and factor.
Accordingly, Lehman Brothers believes that its analyses must be considered as a
whole and that considering any portion of such analyses and factors, without
considering all analyses and factors, could create a misleading or incomplete
view of the process underlying the Lehman Brothers opinion. In its analyses,
Lehman Brothers made numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many of which are
beyond the control of Haven and Queens. Any estimates contained in these
analyses are not necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or less favorable
than as set forth in such analyses. In addition, analyses relating to the value
of businesses do not purport to be appraisals or to reflect the prices at which
businesses may actually be sold.
Purchase Price Analysis. Based upon the exchange ratio of 1 to 1.04, the
closing price of Queens common stock on June 26, 2000 of $18.50 represented a
value to be received by holders of Haven common stock of $19.24 per share.
Based upon this implied transaction value per share, Lehman Brothers calculated
the purchase price-to-market, purchase price-to-book, purchase price-to-
tangible book, purchase price to earnings multiples and the implied core
deposit premium paid in the merger. The implied transaction value per share
yielded a premium to market price of 9.3% over the Haven closing price on June
26, 2000. In addition, Lehman Brothers also calculated that the premium of the
implied transaction value to the Haven closing market price at March 23, 2000,
the day before Haven publicly announced that they had hired Lehman Brothers to
assist in exploring strategic alternatives, was 36.8%. This analysis also
yielded a purchase price-to-book value multiple of 1.69x, a purchase price-to-
tangible book value multiple of 1.72x, a purchase price-to-latest twelve months
earnings per share multiple of 17.5x (based on Haven's earnings for the twelve
month period ended March 31, 2000), a purchase price-to-latest twelve months
core operating earnings (adjusted for a $7.1 million restructuring charge in
the first quarter of 2000) of 12.0x, a purchase price-to-estimated 2000
earnings per share multiple of 8.6x, a purchase price to estimated 2001
earnings per share multiple of 7.7x (based on estimates of Haven's 2000 and
2001 earnings published by the Institutional Brokers Estimate System, referred
to as I/B/E/S, as of June 27, 2000) and a 4.0% core deposit premium. I/ B/E/S
is a data service that monitors and publishes a compilation of earnings
estimates produced by selected research analysts regarding companies of
interest to institutional investors.
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Historical Stock Price Analysis. Lehman Brothers reviewed the historical
performance of Haven common stock for the one, two and five year periods ended
June 23, 2000. Lehman also compared the performance of Haven common stock to
the performance of Queens common stock and the performance of the S&P 500 Index
and Lehman Brothers Thrift Index. The results of these comparisons are set
forth in the following table:
<TABLE>
<CAPTION>
1 Year 2 Year 5 Year
------ ------ ------
Stock Price Performance
<S> <C> <C> <C>
Haven................................................. 25.5% (34.5%) 93.3%
Queens................................................ (43.7%) (35.2%) 155.3%
S&P 500............................................... 8.1% 28.8% 162.2%
Lehman Brothers Thrift Index.......................... (16.2%) (29.8%) 70.2%
Total Return(1)
Haven................................................. 27.9% (25.2%) 110.6%
Queens................................................ (41.4%) (31.3%) 189.5%
</TABLE>
--------
(1) Includes reinvestment of dividends
Comparable Company Analysis. Using publicly available information, Lehman
Brothers compared the financial performance and stock market valuation of Haven
and Queens with the following selected depository institutions deemed relevant
by Lehman Brothers: Astoria Financial Corporation, Dime Community Bancshares,
Inc., GreenPoint Financial Corp., Independence Community Bancorp, Richmond
County Financial Corp., Roslyn Bancorp and Staten Island Bancorp. For purposes
of such analysis, the financial information used by Lehman Brothers was as of
and for the quarter ended March 31, 2000. Stock market information was based on
closing market prices as of June 26, 2000. Earnings estimates for each company
were based on earnings published by First Call. The results of the analysis are
set forth in the following table:
<TABLE>
<CAPTION>
Peer
Group
Haven Queens Median
------ ------ ------
<S> <C> <C> <C>
Return on Average Assets.................... 0.63%(1) 1.58% 1.06%
Return on Average Equity.................... 18.0 (1) 23.5 11.0
Net Interest Margin......................... 2.74 3.58 3.31
Efficiency Ratio............................ 71.8 32.1 43.5
Tangible Common Equity/Assets............... 3.42 6.77 7.94
Borrowings/Assets........................... 23.0 37.5 31.7
Loans/Deposits.............................. 84.7 160.5 103.3
NPAs/Assets................................. 0.25 0.16 0.20
Allowance for Loan Losses/Non-performing
Loans...................................... 237.0 220.5 289.2
Stock Price/2000 EPS........................ 7.83x 10.5x 9.50x
Stock Price/2001 EPS........................ 6.91 9.54 8.57
Stock Price/2000 Cash EPS................... 7.37 7.91 8.91
Stock Price/Book Value...................... 1.55 2.49 1.15
Stock Price/Tangible Book Value............. 1.58 2.49 1.61
Dividend Yield.............................. 1.70% 5.41% 3.75%
</TABLE>
--------
(1) Excludes restructuring charge of $7.1 million.
Because of the inherent differences in the businesses, operations, financial
conditions and prospects of Queens and Haven and the companies included in the
comparable company analysis, Lehman Brothers believed that it was inappropriate
to, and therefore did not, rely solely on the quantitative results of its
analysis and, accordingly, also made qualitative judgments concerning
differences between Haven and Queens and the companies included in the
comparable company analysis which would affect the trading values of Haven and
Queens and the respective comparable companies.
33
<PAGE>
Comparable Transaction Analysis. Using publicly available information,
Lehman Brothers reviewed certain financial terms and characteristics, including
historical purchase price-to earnings ratios, the purchase price-to-book ratio,
the purchase price-to-tangible book ratio, premium-to-market price and the core
deposit premium paid at the time of transaction announcement, of 12 savings
institutions' merger or acquisition transactions (referred to as the
"comparable thrift transaction group") with values greater than $50 million
announced since June 1, 1999, which Lehman Brothers deemed to be comparable to
the present transaction. The comparable thrift transaction group considered by
Lehman Brothers in its analysis consisted of the following (identified by
acquiror / acquiree): Troy Financial Corp. / Catskill Financial Corp., Harris
Financial/ York Financial Corp., Niagara Bancorp Inc./ Iroquois Bancorp,
Richmond County Financial/ South Jersey Financial, Niagara Bancorp Inc./ CNY
Financial Corp., First Bancorp/ First Savings Bancorp, Webster Financial Corp./
MECH Financial Inc., North Fork Bancorp/ Reliance Bancorp, Staten Island
Bancorp/ First State Bancorp, North Fork Bancorp./ JSB Financial Inc., Hudson
United Bancorp/ Southern Jersey Bancorp. The results of this analysis are set
forth in the following table:
<TABLE>
<CAPTION>
Transaction Comparable Comparable
Multiple Group Average Group Median
----------- ------------- ------------
<S> <C> <C> <C>
Deal Price/Book Value........... 1.69x 1.61x 1.56x
Deal Price/Tangible Book Value.. 1.72 1.75 1.59
Deal Price/Trailing 12 Months
Earnings Per Share............. 17.5/12.0(1) 16.0 16.9
Deal Price/Forward Earnings Per
Share.......................... 8.6 15.9 16.3
Price to Market................. 1.09/1.37(3) 1.44(2) 1.26(2)
Core deposit Premium............ 4.0% 12.9% 11.3%
</TABLE>
--------
(1) Excludes $7.1 million restructuring charge.
(2) 30 days prior to announcement.
(3) Reflects closing price on 3/23/00, preceding announcement of sale process.
Because the market conditions, rationale and circumstances surrounding each
of the transactions analyzed were specific to each transaction and because of
the inherent differences in the businesses, operations, financial conditions
and prospects of Haven, Queens and the comparable thrift transaction group,
Lehman Brothers believed that it was inappropriate to, and therefore did not,
rely solely on the quantitative results of its analysis and, accordingly, also
made qualitative judgments concerning differences between the characteristics
of these transactions and the merger that would affect the acquisition values
of Haven and such acquired companies.
Discounted Cash Flow Analysis. Lehman Brothers discounted four years of
estimated cash flows of Haven (based upon estimates published by I/B/E/S),
assuming a dividend rate sufficient to maintain a tangible capital ratio
(defined as tangible common equity divided by tangible assets) of 5.50% and
using a range of discount rates of 17.5% to 18.5%. These rates were chosen to
reflect the different assumptions regarding required rates of return of holders
or prospective holders of Haven common stock. Lehman Brothers derived an
estimate of a range of terminal values by applying multiples ranging from 8
times to 10 times estimated year end 2004 net income assuming I/B/E/S estimates
and a growth rate of 10% for post 2001 earnings. This analysis yielded a range
of stand alone values for Haven common stock of approximately $17 to $22 per
share as compared to a per-share transaction value of $19.24 based on the
closing price of Queens common stock on June 26, 2000.
Pro Forma merger Analysis. Lehman Brothers analyzed the impact of the merger
on Queens County's and Haven's estimated earnings per share and cash earnings
per share based on published I/B/E/S estimates for 2001 earnings of Queens and
Haven. In connection with this analysis, management of Queens provided Lehman
Brothers with cost savings estimates and other earnings adjustments from the
merger, which were incorporated in the Lehman Brothers' analysis. Based on such
I/B/E/S estimates and management estimates of cost savings and other earnings
adjustments, as illustrated in the following table, the analysis indicated that
the
34
<PAGE>
merger would be accretive to projected 2001 earnings per share and 2001 cash
earnings per share for both companies' stockholders and would increase the
dividend per share paid to Haven stockholders.
<TABLE>
<CAPTION>
Queens Haven
--------------------- ---------------------
Projected Year Ended
December 31, 2001 Stand Alone Pro Forma Stand Alone Pro Forma
-------------------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Earnings Per Share.......... $1.95 $2.47 $2.51 $2.57
Cash Earnings Per Share..... 2.64 2.74 2.53 2.85
Dividend Per Share.......... 1.00 N/A 0.34 1.16
</TABLE>
Contribution Analysis. Lehman Brothers analyzed the respective contributions
of Queens and Haven to the combined company's pro forma balance sheet as of
March 31, 2000 and pro forma historic net income and cash net income for the
years 1998 and 1999 and the quarter ended March 31, 2000. In addition, Lehman
Brothers analyzed the respective contributions of Queens and Haven to the
combined company's pro forma net income based on I/B/E/S estimates of projected
2001 net income and 2001 cash net income. This analysis indicated the implied
contribution to the combined entity were as follows:
<TABLE>
<CAPTION>
Haven Queens
----- ------
<S> <C> <C>
Total Assets................................................ 60% 40%
Total Loans................................................. 52 48
Total Deposits.............................................. 67 33
Total Equity................................................ 43 57
1998 Net Income............................................. 23 77
1998 Cash Net Income........................................ 17 83
1999 Net Income............................................. 29 71
1999 Cash Net Income........................................ 23 77
March 31, 2000 Net Income................................... 38(1) 62
March 31, 2000 Cash Net Income.............................. 33(1) 67
2001 Estimated Net Income................................... 39 61
2001 Estimated Cash Net Income.............................. 32 68
Ownership Based on Exchange Ratio........................... 32 68
</TABLE>
--------
(1) Excludes $7.1 million restructuring charge.
As of the date of this document, Lehman Brothers is of the opinion that,
from a financial point of view, the exchange ratio to be offered by Queens to
the stockholders of Haven is fair to Haven stockholders.
Queens' Reasons for the Merger; Recommendation of Queens' Board of Directors
The Queens board of directors believes that the merger presents an excellent
opportunity to combine and expand two complementary sets of banking operations.
The board consulted with financial and other advisors and determined that the
merger was consistent with the strategic plans of Queens and was in the best
interests of Queens and its stockholders. In reaching its conclusion to approve
and adopt the merger agreement, the stock option agreement and the transactions
contemplated by those documents, the board considered a number of factors,
including the following:
. The merger consideration to be issued to Haven stockholders in relation
to the market value, book value and earnings per share of Haven common
stock;
. The Queens board's review, based in part on presentations by Salomon
Smith Barney, its financial advisor, and management, of the business,
operations and financial condition of Haven and CFS Bank, the prospects
of the combined institution, and the increased market presence,
economies of scale and cost savings opportunities for additional growth
made possible by the merger;
35
<PAGE>
. The Queens board's recognition of the complementary nature of the
markets served and products offered by Queens and Haven and the
expectation that the merger would provide it with opportunities for
additional growth, including expansion of high quality multi-family loan
production and potential increases to fee income;
. The Queens board's recognition of the potential growth opportunities
attendant upon the combination of Haven's strength as a deposit
generator with Queens' strength as a high quality asset generator;
. The impact that the merger is anticipated to have on Queens'
consolidated results of operations, including anticipated cost savings
(estimated to be $14.2 million pre-tax ($8.5 million after-tax)
representing approximately 20% of Haven's normalized estimated 2000
operating expenses) resulting from consolidation in certain areas, and
including the effect of a 20% repurchase of stock to be issued in the
transaction, such that management of Queens estimated that the
transaction would be approximately 26% accretive to earnings per share
in 2001, and approximately 3.7% accretive to cash earnings per share
(calculated as reported earnings plus non-cash charges for amortization
of goodwill, amortization relating to certain employee stock plans and
the elimination of certain ongoing purchase accounting adjustments
arising from asset and liability marks-to-market) in 2001, with
estimated pro forma earnings per share of $2.47 and estimated pro forma
cash earnings per share of $2.74 for 2001;
. The opinion of Salomon Smith Barney that the Haven exchange ratio is
fair, from a financial point of view, to Queens;
. The expected impact of the merger on depositors, customers and
communities served by Queens and Haven;
. The expectation that the merger will be a tax-free transaction to Queens
and its stockholders and that the merger will be accounted for under the
purchase method of accounting. See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER" on page 66 and "ACCOUNTING TREATMENT" on
page 65; and
. The terms of the merger agreement, the stock option agreement, and the
other documents executed in connection with the merger.
The Queens board of directors realizes that there can be no assurance about
future results, including results expected or considered in the factors listed
above, such as assumptions regarding price-to-earnings multiples, potential
revenue enhancements, anticipated cost savings and earnings accretion. However,
the board concluded that the potential positive factors outweighed the
potential risks of consummating the merger.
The foregoing discussion of the information and factors considered by the
Queens board of directors is not exhaustive, but includes all material factors
considered by the Queens board of directors. In view of the wide variety of
factors considered by the Queens board of directors in connection with its
evaluation of the merger and the complexity of such matters, the Queens board
of directors did not consider it practical to, nor did it attempt to, quantify,
rank or otherwise assign relative weights to the specific factors that it
considered in reaching its decision. The Queens board of directors conducted a
discussion of the factors described above, including asking questions of
Queens' management and Queens' legal and financial advisors, and reached
general consensus that the merger was in the best interests of Queens and
Queens stockholders. In considering the factors described above, individual
members of the Queens board of directors may have given different weight to
different factors. The Queens board of directors relied on the experience and
expertise of its financial advisor for quantitative analysis of the financial
terms of the merger. See "THE MERGER--Opinion of Financial Advisors--Queens" on
page 37. It should be noted that this explanation of the Queens board's
reasoning and all other information presented in this section is forward-
looking in nature and, therefore, should be read in light of the factors
discussed under the heading "CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS" on page 17.
36
<PAGE>
The Queens board of directors, at a meeting duly called and held on June 27,
2000, has, by a unanimous vote of the entire board, adopted and approved the
merger agreement and the corporate name change, and has determined that the
merger agreement and the transactions contemplated thereby, including the
merger, are fair to and in the best interests of Queens and the Queens
stockholders. Accordingly, the Queens board of directors recommends that Queens
stockholders vote "FOR" the merger agreement and vote "FOR" the approval of the
amendment to the Queens certificate of incorporation that effects the corporate
name change.
Opinion of Financial Advisors--Queens
Queens retained Salomon Smith Barney to act as its financial advisor in
connection with the merger. Queens selected Salomon Smith Barney based on its
experience, expertise and familiarity with Queens and its business. Salomon
Smith Barney is an internationally recognized investment banking firm and is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, leveraged buyouts, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
Pursuant to Salomon Smith Barney's engagement letter with Queens dated
November 10, 1999, Salomon Smith Barney rendered an opinion to the Queens board
of directors on June 27, 2000 to the effect that, based upon and subject to the
considerations set forth in its opinion, Salomon Smith Barney's experience as
investment bankers, its work described below and other factors it deemed
relevant, as of that date, the exchange ratio was fair, from a financial point
of view, to Queens.
The full text of Salomon Smith Barney's opinion, which sets forth the
assumptions made, general procedures followed, matters considered and limits on
the review undertaken, is included as Appendix C to this document. The summary
of Salomon Smith Barney's opinion set forth below is qualified in its entirety
by reference to the full text of the opinion. Stockholders are urged to read
Salomon Smith Barney's opinion carefully and in its entirety.
Although Salomon Smith Barney evaluated the fairness, from a financial point
of view, of the exchange ratio, the exchange ratio was determined by Queens and
Haven through arms-length negotiations.
Salomon Smith Barney has consented to the inclusion of the Salomon Smith
Barney opinion as Appendix C and has reviewed and consented to the inclusion of
this disclosure related to the Salomon Smith Barney opinion. In giving this
consent, Salomon Smith Barney does not admit that it comes within the category
of persons whose consent is required under Section 7 of the Securities Act or
the rules and regulations of the SEC under the Securities Act, nor does Salomon
Smith Barney admit that it is an expert with respect to any part of the
registration statement of which this document is a part within the meaning of
the term "experts" as used in the Securities Act or the rules and regulations
of the SEC under the Securities Act.
In arriving at its opinion, Salomon Smith Barney:
. reviewed a draft of the merger agreement;
. held discussions with certain senior officers, directors,
representatives and advisors of Queens and certain senior officers,
representatives and advisors of Haven concerning the businesses,
operations and prospects of Queens and Haven;
. examined publicly available business and financial information relating
to Queens and Haven, including information relating to certain strategic
implications and operational benefits anticipated to result from the
merger;
. reviewed the financial terms of the merger as set forth in the draft
merger agreement in relation to current and historical market prices and
trading volumes of the common stock of each of Queens and Haven,
historical and other operating data of Queens and Haven, publicly
available forecasts as to the
37
<PAGE>
future earnings of Queens and Haven, and the historical and forecasted
capitalization and financial condition of Queens and Haven;
. considered, to the extent publicly available, the financial terms of
certain other similar transactions that Salomon Smith Barney considered
relevant in evaluating the exchange ratio;
. analyzed certain financial, stock market and other publicly available
information relating to the businesses of other companies whose
operations Salomon Smith Barney considered relevant in evaluating those
of Queens and Haven;
. evaluated the pro forma financial impact of the merger on Queens; and
. conducted other analyses and examinations and considered other
information and financial, economic and market criteria as Salomon Smith
Barney deemed appropriate in arriving at its opinion.
In rendering its opinion, Salomon Smith Barney assumed and relied, without
independent verification, upon the accuracy and completeness of all financial
and other information and data publicly available or furnished to, or
otherwise reviewed by or discussed with, Salomon Smith Barney and further
relied on the assurances of the management of Queens and Haven that they were
not aware of any facts that would make any of that information inaccurate or
misleading. With respect to financial forecasts regarding Queens and Haven,
except with respect to cost savings and operating synergies related to the
merger, Salomon Smith Barney relied upon publicly available third-party equity
research forecasts, and it expressed no view with respect to such forecasts or
the assumptions on which they were based. With respect to forecasts of cost
savings and operating synergies forecasted by the management of Queens to
result from the merger, Salomon Smith Barney was advised by the management of
Queens that such forecasts were reasonably prepared on bases reflecting the
best currently available estimates and judgments of the management of Queens
as to the strategic implications and operational benefits anticipated to
result from the merger. Salomon Smith Barney expressed no view with respect to
such forecasts and other information and data or the assumptions on which they
were based. Salomon Smith Barney assumed, with the consent of the Queens board
of directors, that the merger would be treated as a tax-free reorganization
for federal income tax purposes and that it would qualify, and would be
accounted for, as a purchase in accordance with generally accepted accounting
principles. At the request of Queens, Salomon Smith Barney participated in an
evaluation of selected individual credit files of Haven, and assumed, with the
consent of the Queens board of directors, that the allowances for loan losses
for each of Queens and Haven are, in the aggregate, adequate to cover such
losses. Salomon Smith Barney is not an expert in the evaluation of loan or
lease portfolios for purposes of assessing the adequacy of the allowances for
losses with respect to those portfolios, and Salomon Smith Barney has not made
an independent evaluation of the adequacy of such allowances of Queens or
Haven. At the request of the Queens board of directors, Salomon Smith Barney
prepared an estimate of the potential sale value of certain of Haven's loans
and securities; however, Salomon Smith Barney did not seek any buyers for such
loans or securities and, therefore, no assurances were given by Salomon Smith
Barney as to the terms on which such loans or securities could actually be
sold. Salomon Smith Barney has not made or been provided with an independent
evaluation or appraisal of any of the other assets or liabilities, contingent
or otherwise, of Queens or Haven, nor has Salomon Smith Barney made any
physical inspection of the properties or assets of Queens or Haven.
Representatives of Queens advised Salomon Smith Barney, and Salomon Smith
Barney assumed, that the final terms of the merger agreement would not vary
materially from those set forth in the draft reviewed by Salomon Smith Barney.
Salomon Smith Barney further assumed that the merger would be consummated in a
timely fashion and in accordance with the terms of the merger agreement,
without waiver of any of the conditions to the merger contained in the merger
agreement.
Salomon Smith Barney's opinion relates to the relative values of Queens and
Haven. Salomon Smith Barney did not express any opinion as to what the value
of Queens common stock actually will be when issued
in the merger or the price at which Queens common stock will trade subsequent
to the announcement or consummation of the merger. Salomon Smith Barney was
not asked to consider, and Salomon Smith Barney's opinion did not address, the
relative merits of the merger as compared to any alternative business
strategies that
38
<PAGE>
might exist for Queens or the effect of any other transaction in which Queens
might engage. Salomon Smith Barney's opinion necessarily was based on
information available to it, and financial, stock market, and other conditions
and circumstances existing and disclosed to Salomon Smith Barney as of the date
of the opinion.
Salomon Smith Barney's advisory services and its opinion were provided for
the information of the Queens board of directors in its evaluation of the
merger, and Salomon Smith Barney's opinion is not intended to be, and does not
constitute, a recommendation to any stockholder as to how that stockholder
should vote on any matter relating to the proposed merger.
In connection with rendering its opinion, Salomon Smith Barney made a
presentation to the Queens board of directors on June 27, 2000 with respect to
the material analyses performed by Salomon Smith Barney in evaluating the
fairness to Queens from a financial point of view of the exchange ratio. The
following is a summary of that presentation. The summary includes information
presented in tabular format. In order to understand fully the financial
analyses used by Salomon Smith Barney, these tables must be read together with
the text of each summary. The tables alone do not constitute a complete
description of the financial analyses. The following quantitative information,
to the extent that it is based on market data, is, except as otherwise
indicated, based on market data as it existed at or prior to June 26, 2000 and
is not necessarily indicative of current or future market conditions.
Calculation of Implied Value of Exchange Ratio. Salomon Smith Barney noted
that the exchange ratio of 1.04 shares of Queens common stock for each share of
Haven common stock had an implied value of $19.24 per share of Haven common
stock based upon the closing price of Queens common stock on June 26, 2000 (the
trading day prior to the presentation by Salomon Smith Barney to the board of
directors of Queens), with the aggregate implied value of the consideration
being approximately $200 million.
Transaction Pricing Multiples. Based upon the exchange ratio of 1.04 and the
closing price of Queens common stock on June 26, 2000 of $18.50, Salomon Smith
Barney analyzed the implied per share transaction value of $19.24 as a multiple
of Haven's EPS for the last twelve-month period for which results were
available (LTM EPS) and estimated earnings per share for the years 2000
(including pre-restructuring and post-restructuring estimates for the year
2000) and 2001, fully diluted book value per share, and fully diluted tangible
book value per share. Salomon Smith Barney also analyzed the percentage premium
to deposits and the per share transaction value as a premium to both the
closing market price of Haven common stock on June 26, 2000 and the market
price prior to Haven's announcement on March 24, 2000 that it had hired Lehman
Brothers to explore strategic alternatives. These analyses indicated the
following (all dollar amounts are in millions, except per-share amounts):
<TABLE>
<CAPTION>
Haven Transaction
Reference Valuation
--------- -----------
<S> <C> <C>
Price/LTM EPS....................................... $ 1.60 12.0x
Price/2000E EPS..................................... $ 2.24 8.6x
Price/2000E Adjusted Pre-Restructuring EPS.......... $ 2.54 7.6x
Price/2000E Adjusted Post-Restructuring EPS......... $ 1.83 10.5x
Price/2001E EPS..................................... $ 2.51 7.7x
Price/Fully Diluted Book Value...................... $ 11.20 1.72x
Price/Fully Diluted Tangible Book Value............. $ 11.07 1.74x
Premium to Deposits................................. $ 2,151 3.9%
Premium to Market Price--June 26, 2000.............. $17.625 9.2%
Premium to Market Price--Pre-Merger Announcement.... -- 36.8%
</TABLE>
Salomon Smith Barney based its analyses of price/fully diluted book value,
price/fully diluted tangible book value, premium to deposits, and price/LTM EPS
on reference data at or for the twelve-month period ended March 31, 2000,
excluding $14.0 million of non-recurring pre-tax charges. The estimates of
earnings per share for 2000 and 2001 were based on median estimates as reported
by I/B/E/S. I/B/E/S is a data service that
39
<PAGE>
monitors and publishes compilations of earning estimates by selected research
analysts regarding companies of interest to institutional investors. The
estimates of pre-restructuring and post-restructuring earnings per share were
based on Queens' management estimates, including the sale of certain loans and
securities and 15 supermarket branches in the States of Connecticut and New
Jersey as part of the restructuring.
Comparable Companies Analysis. Salomon Smith Barney reviewed publicly
available financial and operating information for the following nine financial
institutions that Salomon Smith Barney considered comparable to Haven. We
sometimes refer to these institutions as the "Peer Group."
. Astoria Financial Corporation . North Fork Bancorporation, Inc.
. Dime Community Bancshares, Inc. . Richmond County Financial Corp.
. Flushing Financial Corporation . Roslyn Bancorp, Inc.
. Greenpoint Financial Corp. . Staten Island Bancorp, Inc.
. Independence Community Bank Corp.
For each institution in the Peer Group, Salomon Smith Barney computed the
ratio of the closing price of the institution's common stock on June 26, 2000
to the institution's estimated earnings per common share ("EPS") for 2000,
estimated earnings per share plus the amortization of goodwill and non-cash
compensation costs ("CEPS") for 2000, estimated EPS for 2001, estimated CEPS
for 2001, book value per share and tangible book value per share. Information
regarding book value per share and tangible book value per share was based on
publicly available financial data as of March 31, 2000. Information regarding
EPS and CEPS was based on median I/B/E/S estimates.
<TABLE>
<CAPTION>
Range for Median for
Peer Group Peer Group
----------- ----------
<S> <C> <C>
Multiple of June 26, 2000 price per share to Peer
Group institutions':
Estimated 2000 EPS............................. 6.4x-14.0x 9.3x
Estimated 2001 EPS............................. 6.0x-12.0x 8.5x
Estimated 2000 CEPS............................ 6.0x-13.3x 8.0x
Estimated 2001 CEPS............................ 5.7x-11.5x 7.4x
Book value per share........................... 1.01x-1.74x 1.12x
Tangible book value per share.................. 1.11x-2.78x 1.40x
</TABLE>
Based on this data, Salomon Smith Barney derived two reference ranges for
the implied per share value of Haven common stock, one based on I/B/E/S
estimates of Haven's EPS and one based on management estimates of Haven's
earnings per share adjusted for the sale of its mortgage operations, its
supermarket branches in Connecticut and New Jersey, and approximately $872
million of its one- to four-family mortgage loans, and excluding all non-
recurring charges (core earnings on a run-rate basis). In performing this
analysis, Salomon Smith Barney assumed that Haven would complete a proposed
restructuring. Salomon Smith Barney also assumed that a control premium of 30%
would be paid in respect of the shares of Haven common stock. The ranges of
implied per-share value of Haven common stock derived by Salomon Smith Barney
were as follows:
<TABLE>
<S> <C>
Using I/B/E/S EPS Estimates............................. $19.00 to $28.00
Using Management Core Earnings Estimates................ $14.00 to $20.00
</TABLE>
Precedent Transactions Analysis. Salomon Smith Barney analyzed publicly
available financial, operating, and stock market information for selected
comparable merger transactions in the thrift industry announced since January
1, 1999. Salomon Smith Barney divided these transactions into the following
four groups (in each case, the first-named company is the acquiror and the
second-named company is the acquired company in the transaction):
. New York Thrift Transactions. The following acquisitions of thrifts
operating in the State of New York were included in this group: Sound
Federal Bancorp/Peekskill Financial Corporation, Niagara
40
<PAGE>
Bancorp Inc./CNY Financial Corp., North Fork Bancorporation/Reliance
Bancorp Inc., and North Fork Bancorporation/JSB Financial Inc.
. Northeast Thrift Transactions. All acquisitions of thrifts operating in
New Jersey, Connecticut, New York, Maine, New Hampshire, Pennsylvania,
Rhode Island, Vermont or Massachusetts were included in this group:
Harris Financial MHC/York Financial Corp., Richmond County Financial
Corp./South Jersey Financial Corp., Sound Federal Bancorp/Peekskill
Financial Corporation, Niagara Bancorp Inc./CNY Financial Corp., Webster
Financial Corp./MECH Financial, Inc., North Fork Bancorporation/Reliance
Bancorp Inc., North Fork Bancorporation/JSB Financial Inc., Hudson River
Bancorp/SFS Bancorp, Independence Community Bank Corp./Broad National
Bancorporation, HUBCO Inc./Little Falls Bancorp Inc., and BSB Bancorp
Inc./Skaneateles Bancorp, Inc.
. National Thrift Transactions. The following acquisitions with
transaction values between $100 million and $500 million were included
in this group: Harris Financial MHC/York Financial Corp., Mutual Savings
Bank/First Northern Capital Corp., Webster Financial Corp./MECH
Financial, Inc., North Fork Bancorporation/Reliance Bancorp Inc.,
Provident Financial Group Inc./Fidelity Financial of Ohio Inc., BB&T
Corp./First Liberty Financial Corp., Fifth Third Bancorp/Emerald
Financial Corporation, Old Kent Financial Corp./CFSB Bancorp,
Independence Community Bank Corp./Broad National Bancorporation, BB&T
Corp./First Citizens Corporation, and Anchor BancCorp Wisconsin Inc/FCB
Financial Corp.
. National Thrift Transactions (Distressed Targets). The following
acquisitions in which the acquired company's return on average assets
did not exceed 0.75% were included in this group: Harris Financial
MHC/York Financial Corp., SouthBanc Shares Inc./Heritage Bancorp Inc.,
Provident Financial Group Inc./Fidelity Financial of Ohio Inc., HUBCO
Inc./Little Falls Bancorp Inc., and BSB Bancorp Inc./Skaneateles
Bancorp, Inc.
For each of the precedent transactions, Salomon Smith Barney derived the
following information:
. the ratio of the per share price in the transaction to the acquired
company's (1) LTM EPS, (2) book value per share, and (3) tangible book
value per share;
. the premium implied by the per share price in the transaction to the
market price per share of the acquired company's common stock on the
last trading day prior to the announcement of the transaction;
. the premium implied by the per share price in the transaction to the
market price per share of the acquired company's common stock one month
prior to the announcement of the transaction; and
. the premium over book value implied by the per share price in the
transaction to the acquired company's deposits.
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The results of these analyses are summarized in the following table:
<TABLE>
<CAPTION>
Precedent
Transactions
------------------
Range Median
----------- ------
<S> <C> <C>
New York Thrift Transactions
Ratio of transaction price to acquired company's:
LTM EPS.................................................... 15.0x-27.6x 19.0x
Book value per share....................................... 1.21x-1.98x 1.49x
Tangible book value per share.............................. 1.21x-2.80x 1.49x
Implied premium of transaction price to market price on
last trading day prior to announcement.................... 4.4%-83.3% 12.0%
Implied premium of transaction price to market price 1
month prior to announcement............................... 10.5%-83.3% 30.8%
Implied premium of transaction price to deposits........... 8.0%-19.6% 11.7%
Northeast Thrift Transactions
Ratio of transaction price to acquired company's:
LTM EPS.................................................... 13.4x-27.7x 18.6x
Book value per share....................................... 1.21x-2.83x 1.53x
Tangible book value per share.............................. 1.21x-2.84x 1.53x
Implied premium of transaction price to market price on
last trading day prior to announcement.................... 4.4%-83.3% 16.1%
Implied premium of transaction price to market price 1
month prior to announcement............................... 5.8%-83.3% 33.3%
Implied premium of transaction price to deposits........... 5.3%-19.6% 8.1%
National Thrift Transactions
Ratio of transaction price to acquired company's:
LTM EPS.................................................... 15.9x-28.0x 19.5x
Book value per share....................................... 1.61x-3.57x 2.21x
Tangible book value per share.............................. 1.61x-3.88x 2.80x
Implied premium of transaction price to market price on
last trading day prior to announcement.................... 5.9%-70.6% 36.7%
Implied premium of transaction price to market price 1
month prior to announcement............................... 22.3%-73.2% 52.5%
Implied premium of transaction price to deposits........... 6.1%-32.8% 17.0%
National Thrift Transactions (Distressed Targets)
Ratio of transaction price to acquired company's:
LTM EPS.................................................... 18.6x-29.6x 24.8x
Book value per share....................................... 1.03x-2.15x 1.61x
Tangible book value per share.............................. 1.03x-2.19x 1.61x
Implied premium of transaction price to market price on
last trading day prior to announcement.................... 4.5%-70.6% 33.2%
Implied premium of offer price to market price 1 month
prior to announcement..................................... 5.8%-77.8% 56.8%
Implied premium of transaction price to deposits........... 1.0%-16.9% 8.1%
</TABLE>
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Using financial information for Haven as of March 31, 2000, Salomon Smith
Barney derived a reference range for the implied per share value of Haven
common stock based on the results derived for each category of precedent
transactions. The ranges derived by Salomon Smith Barney are as follows:
<TABLE>
<S> <C>
New York Thrift Transactions............................. $16.00 to $23.00
Northeast Thrift Transactions............................ $17.00 to $22.00
National Thrift Transactions............................. $18.00 to $26.00
National Thrift Transactions (Distressed Targets)........ $18.00 to $27.00
</TABLE>
Salomon Smith Barney noted that the implied value per share of Haven common
stock ($19.24) based on the exchange ratio and the closing price of Queens
common stock on June 26, 2000 was within all four reference ranges of the
implied per share value of Haven common stock derived by Salomon Smith Barney
in its precedent transactions analysis.
Discounted Cash Flow Analysis. Salomon Smith Barney performed a discounted
cash flow analysis to derive a range of implied values per share of Haven
common stock, including certain cost savings expected to result from the
merger. In this analysis, Salomon Smith Barney assumed a weighted average cost
of capital of 11.8% to derive the present value of (1) Haven's estimated cash
flows available to stockholders for the fiscal years 2001 through 2005, plus
(2) Haven's terminal value at the end of fiscal 2005. Terminal values for Haven
were calculated based on a range of 6.0x to 9.0x 2006 EPS. In performing this
analysis, Salomon Smith Barney based Haven's estimated EPS on I/B/E/S estimates
and on an assumed long-term annual growth rate for Haven's EPS of 4.0%. EPS
data were adjusted to account for management's assumptions of cost savings
resulting from the merger of 17.1% of pre-tax overhead expense (75% achievable
in 2001 and 100% achievable in 2002 and thereafter, with an annual growth rate
of such cost savings of 3% per year after 2001), the sale of certain loans and
supermarket branches in Connecticut and New Jersey, the sale of Haven's one-to
four-family mortgage loans and the impact of replacing such loans with multi-
family mortgages, and the opportunity cost of incremental dividends. In
determining cash flows available to stockholders, Salomon Smith Barney assumed
that the following percentages of adjusted EPS would be paid to stockholders to
maintain a targeted tangible common equity to tangible asset ratio of 5%: (1)
0% in 2001, (2) 34.3% in 2002, (3) 101.2% in 2003, (4) 100.8% in 2004, and (5)
100.0% in 2005.
Based on these assumptions, Salomon Smith Barney derived a reference range
for the implied per share value of Haven common stock of $17.00 to $22.00.
Salomon Smith Barney noted that the implied value per share of Haven common
stock ($19.24) based on the exchange ratio and the closing price of Queens
common stock on June 26, 2000, was within the reference range of the implied
per share value of Haven common stock derived by Salomon Smith Barney in its
precedent transactions analysis.
Contribution Analysis. Salomon Smith Barney analyzed the relative
contribution that Queens and Haven would each be making to the combined company
with respect to certain financial and operating data. Salomon Smith Barney
based its analyses on financial data at, and for the twelve-month period ended,
March 31, 2000, and did not consider cost savings, restructuring adjustments or
other expected effects of the merger.
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<TABLE>
<CAPTION>
Contribution to the
Combined Company by:
-----------------------
Queens Haven
---------- ----------
<S> <C> <C>
Income Statement for the 12-month period ended
3/31/00
Net interest income............................ 48.1% 51.9%
Net interest income after provision for loan
losses........................................ 49.1 50.9
Total non-interest income...................... 8.1 91.9
Total non-interest expense..................... 20.7 79.3
Net income..................................... 67.9 32.1
Balance Sheet as of 3/31/00
Total securities............................... 17.3 82.7
Total net loans................................ 48.2 51.8
Total assets................................... 40.3 59.7
Total deposits................................. 32.9 67.1
Total trust preferred stock.................... 22.4 77.6
Total equity................................... 56.7 43.3
</TABLE>
Salomon Smith Barney compared this data with the expected 68.4% and 31.6%
pro forma fully diluted equity interest in the combined company of the current
common stockholders of Queens and Haven, respectively.
Projected Pro Forma Financial Analysis. Salomon Smith Barney analyzed the
estimated financial impact of the merger on Queens's EPS and CEPS. In
performing this analysis, Salomon Smith Barney relied on I/B/E/S estimates of
EPS, adjusted to account for management's assumptions of cost savings resulting
from the merger of 17.1% of pre-tax overhead expense (75% phased in in 2001 and
100% phased in in 2002, with an annual growth rate of such cost savings of 3%
per year after 2001), the purchase accounting adjustments resulting from the
mark to market of certain assets and liabilities of Haven, the sale of certain
loans and supermarket branches in Connecticut and New Jersey, the sale of
Haven's one-to four-family mortgage loans, the repurchase by Queens prior to
the merger of 20% of the shares of Queens common stock to be issued in the
merger at a price of $19.24 per share and a one-time restructuring charge in
connection with the merger of $31 million which would increase goodwill with no
immediate impact on the combined company's financial statements. Based on this
analysis, Salomon Smith Barney determined that the merger would be accretive to
Queens's EPS by 26.4%, 21.4% and 12.8% in 2001, 2002 and 2003, respectively,
and accretive to Queens's CEPS by 3.7%, 10.7% and 10.3% in 2001, 2002 and 2003,
respectively.
Historical Exchange Ratio Analysis. Salomon Smith Barney calculated the
ratio of the closing price per share of Haven common stock to the closing price
per share of Queens common stock for each trading day in a five year period
from June 26, 1995 to June 26, 2000 and a one year period from June 26, 1999 to
June 26, 2000 and compared five and one year ratios with the exchange ratio.
The results of these calculations showed over this period a high stock price
ratio of 1.503, a low stock price ratio of 0.357, a median five year stock
price ratio of 0.896, a median one year stock price ratio of 0.579 and current
stock price ratio of 0.953%, compared to the exchange ratio, 1.04. Based on
this data, the 1.04 exchange ratio represents a 30.8% discount to the high
stock price ratio, a 190.9% premium over the low stock price ratio, a 16.0%
premium over the median five year stock price ratio, a 79.7% premium over the
median one year stock price ratio and a 9.2% premium to the current stock price
ratio.
Comparative Market Position. Salomon Smith Barney reviewed the respective
market share, in terms of deposits, of each of Queens, Haven and the combined
company for markets in Queens County and concluded that Queens and Haven ranked
ninth and seventh, respectively, in market share for Queens and that the
combined company would rank sixth for market share in Queens among all
competitors. Salomon Smith Barney also compared Queens, Haven and the combined
company's market share and rankings in all markets
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<PAGE>
served versus other thrift institutions and concluded that Queens and Haven
ranked twelfth and eighth, respectively, in market share for thrifts in all
markets served and that the combined company would rank eighth for market share
for thrifts in all markets served.
Comparative Credit and Operating Analysis. Salomon Smith Barney reviewed
comparative performance ratios, per share operating statistics, capital ratios
and credit quality ratios for the years 1995 through 1999 and for the 12 month
period ended or as at March 31, 2000 for Queens, Haven and the combined
company. In each case, these statistics were compared to the comparable median
statistics of the peer group set out above. Estimated diluted earnings per
share growth rates were reviewed for the year 2000 for Queens and Haven. Pro
forma projected returns on average assets, returns on average common equity,
diluted earnings and selected capital ratios were reviewed for the years 2001
and 2002.
* * * * * * *
The preceding discussion is a summary of the material financial analyses
furnished by Salomon Smith Barney to the Queens board of directors but it does
not purport to be a complete description of the analyses performed by Salomon
Smith Barney or of its presentations to the Queens board of directors. The
preparation of financial analyses and fairness opinions is a complex process
involving subjective judgments and is not necessarily susceptible to partial
analysis or summary description. Salomon Smith Barney made no attempt to assign
specific weights to particular analyses or factors considered, but rather made
qualitative judgments as to the significance and relevance of all the analyses
and factors considered and determined to give its fairness opinion as described
above. Accordingly, Salomon Smith Barney believes that its analyses, and the
summary set forth above, must be considered as a whole, and that selecting
portions of the analyses and factors considered by Salomon Smith Barney,
without considering all of the analyses and factors, could create a misleading
or incomplete view of the processes underlying the analyses conducted by
Salomon Smith Barney and its opinion. With regard to the comparable company and
precedent transaction analyses summarized above, Salomon Smith Barney selected
the Peer Group and the precedent transactions on the basis of various factors,
including the size, financial condition and location of Queens and Haven;
however, no company or transaction utilized in the precedent transaction
analyses summarized above is identical to Queens, Haven or the merger. As a
result, these analyses are not purely mathematical, but also take into account
differences in financial and operating characteristics of the subject companies
and other factors that could affect the subject companies and transactions to
which Queens, Haven and the merger are being compared. In its analyses, Salomon
Smith Barney made numerous assumptions with respect to Queens, Haven, industry
performance, general business, economic, market and financial conditions, and
other matters, many of which are beyond the control of Queens and Haven. Any
estimates contained in Salomon Smith Barney's analyses are not necessarily
indicative of actual values or predictive of future results or values, which
may be significantly more or less favorable than those suggested by these
analyses. Estimates of values of companies do not purport to be appraisals or
necessarily to reflect the prices at which companies may actually be sold.
Because these estimates are inherently subject to uncertainty, none of Queens,
the Queens board of directors, Salomon Smith Barney or any other person assumes
responsibility if future results or actual values differ materially from the
estimates.
Salomon Smith Barney's analyses were prepared solely as part of Salomon
Smith Barney's analysis of the fairness of the exchange ratio in the merger and
were provided to the Queens board of directors in connection therewith. The
opinion of Salomon Smith Barney was only one of the many factors taken into
consideration by the Queens board of directors in making its determination to
approve the merger agreement and the merger. See "THE MERGER--Queens' Reasons
for the Merger; Recommendation of Queens' Board of Directors" on page 35.
In the ordinary course of its business, Salomon Smith Barney and its
affiliates may actively trade or hold the securities of both Queens and Haven
for its own account and for the account of customers and, accordingly, may at
any time hold a long or short position in these securities. Salomon Smith
Barney and its affiliates, including Citigroup Inc. and its affiliates, may
maintain other business relationships with Queens and Haven and their
respective affiliates.
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<PAGE>
Pursuant to Salomon Smith Barney's engagement letter, Queens agreed to pay
Salomon Smith Barney a total fee of $1.1 million for its services rendered in
connection with the merger, including the delivery of its opinion,
substantially all of which fee is contingent on execution of the merger
agreement or consummation of the merger or the receipt of a termination fee or
similar fee under the terms of the merger agreement. Queens has also agreed to
reimburse Salomon Smith Barney for its reasonable travel and other out-of-
pocket expenses incurred in connection with its engagement, including the
reasonable fees and disbursements of its counsel, and to indemnify Salomon
Smith Barney against specific liabilities and expenses relating to or arising
out of its engagement, including liabilities under the federal securities laws.
Additions to the Board and Management of Queens, Queens County Savings Bank and
CFS Bank.
Boards of Directors. The merger agreement provides that, after the
consummation of the merger, the board of directors of Queens will consist of
the current directors of Queens and three additional directors to be designated
by Queens from among the former directors of Haven. The merger agreement
further provides that, after the consummation of the merger, the board of
directors of Queens County Savings Bank will consist of the current directors
of Queens County Savings Bank and two additional directors to be designated by
Queens in its discretion from among the former directors of Haven. The merger
agreement provides that, at the effective time, the directors of CFS Bank will
resign, and the board of directors of CFS Bank will consist of three former
directors of Haven designated by Queens, in its discretion, and eight directors
who are currently directors of Queens or Queens County Savings Bank.
Queens has agreed that the total number of directors of Queens will not
exceed 11 for a two year period following the completion of the merger, except
that Queens may increase the size of the board in order to appoint one or more
new directors as part of the acquisition of another financial institution.
Management. At the time the merger agreement was executed, Queens and CFS
Bank entered into employment agreements with William J. Jennings, II and Dennis
Hodne, both current employees of Haven and/or CFS Bank, in order to ensure
their continued service to CFS Bank and Queens after the merger. The agreements
with Mr. Jennings provide that he will serve as Executive Vice President and
Director of Queens and Queens County Savings Bank and as President and a
Director of CFS Bank. The agreements with Mr. Hodne provide that he will serve
as Senior Vice President of Queens, Queens County Savings Bank and CFS Bank.
The initial term of both agreements is 36 calendar months from the effective
time of the merger.
Also, in connection with the merger agreement, Queens and CFS Bank have
entered into a consulting agreement with Philip S. Messina, the current
Chairman of the Board and Chief Executive Officer of Haven and CFS Bank, which
will take effect at the completion of the merger and have a term of three
years. The merger agreement also contemplates the creation of an advisory board
comprised of those directors of Haven who do not become directors of Queens,
Queens County Savings Bank or CFS Bank.
For more information see "THE MERGER--Interests of Directors and Management
in the Merger" on page 49.
Distribution of Queens Certificates
At or prior to the completion of the merger, Queens will cause to be
deposited, with a bank or trust company acting as exchange agent, certificates
representing shares of Queens common stock for the benefit of the holders of
certificates representing shares of Haven common stock and cash in lieu of any
fractional shares that would otherwise be issued in the merger.
Promptly after the completion of the merger, Queens will send or cause to be
sent transmittal materials to each holder of a Haven stock certificate for use
in exchanging Haven stock certificates for certificates representing shares of
Queens common stock and cash in lieu of fractional shares, if applicable.
Holders of Haven stock certificates should NOT surrender their Haven stock
certificates for exchange until they
46
<PAGE>
receive the letter of transmittal and instructions. The exchange agent will
deliver certificates for Queens stock and/or a check instead of any fractional
shares of Queens Stock once it receives the certificates representing a
holder's shares of Haven stock.
Holders of Haven stock certificates may exchange those certificates for
Queens stock certificates with the exchange agent for up to one year after the
completion of the merger. At the end of that period, any Queens stock
certificates and cash will be returned to Queens. Any holders of Haven stock
certificates who have not exchanged their certificates will be entitled to look
only to Queens, and only as general creditors of Queens, for Queens stock
certificates and any cash to be received instead of fractional shares of Queens
stock.
Any person claiming that a Haven stock certificate has been lost, stolen or
destroyed may receive a Queens stock certificate upon the making of an
affidavit of that fact, and Queens will issue Queens stock certificates to the
claimant and pay any applicable amounts of cash instead of fractional shares of
Queens stock. Queens may require the claimant to post a bond in a reasonable
amount as an indemnity against any claim that may be made against Queens with
respect to the lost, stolen or destroyed Haven stock certificate.
At or after the completion of the merger, there will be no transfers on the
stock transfer books of Haven of the shares of Haven stock that were
outstanding immediately prior to that time.
Fractional Shares
Queens will not issue any fractional shares of Queens common stock. Instead,
a Haven stockholder who would otherwise have received a fraction of a share of
Queens common stock pursuant to the Haven exchange ratio will receive cash. The
amount of cash received will be determined by multiplying the fraction of a
share of Queens common stock to which such holder would otherwise be entitled
by the last reported sales price per share of Queens common stock on the day
immediately preceding the consummation of the merger.
Public Trading Markets
Queens common stock is currently included for quotation on the Nasdaq
National Market under the symbol "QCSB." Haven common stock is currently
included for quotation on the Nasdaq National Market under the symbol "HAVN."
Upon completion of the merger, Haven common stock will be delisted from the
Nasdaq National Market and deregistered under the Securities Exchange Act of
1934, as amended. The newly issued Queens common stock issuable pursuant to the
merger agreement will be listed on the Nasdaq National Market. It is currently
contemplated that, upon approval of the corporate name change, the Queens
common stock will be included for quotation on the Nasdaq National Market under
the symbol "NYCB."
The shares of Queens stock to be issued in connection with the merger will
be freely transferable under the Securities Act, except for shares issued to
any stockholder who may be deemed to be an affiliate of Haven, as discussed in
"THE MERGER--Resales of Queens Stock by Affiliates" on page 48.
As reported on the Nasdaq National Market, the closing sale price per share
of Queens stock on June 27, 2000, the last day prior to the public announcement
of the merger was $18.13. The closing sale price per share of Haven stock on
June 27, 2000 was $18.13, as reported on the Nasdaq National Market. Based on
these closing sale prices per share, the implied per share value of Haven stock
was $18.85 as of that date. The closing sale price per share of Queens stock on
the Nasdaq National Market on October 12, 2000, the last practicable trading
day before the date of this document, was $27.06. The closing sale price per
share of Haven stock on the Nasdaq National Market on October 12, 2000, the
last practicable trading day before the date of this document, was $27.38. The
implied per share value of Haven stock was $28.14 as of that date. The implied
value of one share of Haven stock as of these dates was calculated by
multiplying Queen's closing sale price per share by 1.04, the exchange ratio.
Because the stock price of both of our companies will fluctuate, you should
obtain current quotations of these prices.
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<PAGE>
In connection with the announcement of the proposed merger, Queens indicated
that from time to time it would repurchase shares of Queens common stock and
Haven common stock, such that Queens would ultimately repurchase up to 20% of
the shares to be issued in the merger transaction. In connection with this
repurchase, Queens may, during the course of the solicitation being made by
this joint proxy statement/prospectus, be bidding for and purchasing shares of
Haven common stock, but not of Queens common stock.
Queens Dividends
Queens currently pays a quarterly dividend of $0.25, which is expected to
continue, although the Queens board of directors may change this dividend
policy at any time. During 1999, Haven paid cash dividends totaling $0.30 per
share, and Queens paid cash dividends totaling $1.00 per share.
Queens stockholders will be entitled to receive dividends when and if
declared by the Queens board of directors out of funds legally available for
dividends. The Queens board of directors will periodically consider the payment
of dividends, taking into account Queens' financial condition and level of net
income, Queens' future prospects, economic conditions, industry practices and
other factors, including applicable banking laws and regulations as discussed
in "REGULATION AND SUPERVISION OF QUEENS AFTER THE MERGER" on pages 78.
Absence of Appraisal Rights
Appraisal rights are statutory rights that enable stockholders who object to
extraordinary transactions, such as mergers, to demand that the corporation pay
the fair value for their shares as determined by a court in a judicial
proceeding instead of receiving the consideration offered to stockholders in
connection with the extraordinary transaction. Appraisal rights are not
available in all circumstances, and exceptions to such rights are set forth in
the laws of Delaware which is the state of incorporation of each company. These
exceptions are applicable with respect to the rights of Queens stockholders and
Haven stockholders.
Neither Haven nor Queens stockholders are entitled to appraisal rights under
Delaware law in connection with the merger because the shares of each of Haven
common stock and Queens common stock are designated as a national market system
security on an interdealer quotation system by the National Association of
Securities Dealers, Inc.
Resales of Queens Stock by Affiliates
Affiliates of Haven, as defined under Rule 145 under the Securities Act of
1933, as amended, generally may not sell their shares of Queens stock acquired
in the merger except pursuant to an effective registration statement under the
Securities Act or an applicable exemption from the registration requirements of
the Securities Act, including Rules 144 and 145 issued by the SEC under the
Securities Act. Affiliates include directors, executive officers, and
beneficial owners of 10% or more of any class of capital stock.
Under the merger agreement, Haven agreed to, and has, provided Queens with a
list of the persons who, to Haven's knowledge, may be deemed to be affiliates
of Haven. Haven has also delivered a letter of agreement from each of these
persons by which that person agrees, among other things, not to offer to sell,
transfer or otherwise dispose of any of the shares of Queens stock distributed
to him or her pursuant to the merger except in compliance with Rules 144 and
Rule 145 under the Securities Act, in a transaction that, in the opinion of
counsel reasonably satisfactory to Queens, is otherwise exempt from the
registration requirements of the Securities Act, or in an offering registered
under the Securities Act. Queens may place restrictive legends on its common
stock certificates that are issued to persons who are deemed to be affiliates
of Haven under the Securities Act. The form of these letters of agreement are
included as Exhibit A to the merger agreement, which is attached as Appendix A.
This document does not cover any resales of Queens stock received in the
merger by any person who may be deemed an affiliate of Haven.
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<PAGE>
Regulatory Approvals Required for the Merger
We have agreed to make or cause to be made all filings required in order to
obtain all regulatory approvals required to consummate the transactions
contemplated by the merger agreement, which includes approval from the Federal
Reserve Board. Although we filed this application on August 6, 2000, we have
not yet received final regulatory approval nor have any required notification
periods expired. The merger cannot proceed in the absence of these regulatory
approvals. We cannot assure you that these regulatory approvals will be
obtained, and, if obtained, we cannot assure you as to the date of any such
approvals or the absence of any litigation challenging such approvals.
Likewise, we cannot assure you that the United States Department of Justice or
any state attorney general will not attempt to challenge the merger on
antitrust grounds, and, if such a challenge is made, we cannot assure you as to
its result.
We are not aware of any material governmental approvals or actions that are
required for completion of the merger other than those described below. It is
presently contemplated that if any such additional governmental approvals or
actions are required, such approvals or actions will be sought. There can be no
assurance, however, that any such additional approvals or actions will be
obtained.
Federal Reserve Board. Consummation of the merger will require Queens to
receive the prior approval of the Federal Reserve Board under Section 4 of the
Bank Holding Company Act of 1956, as amended, to acquire control of Haven's
subsidiaries.
Inner City Press/Community on the Move has submitted a letter to the Federal
Reserve Board indicating its opposition to the notice submitted by Queens with
respect to the merger on the grounds of the CRA compliance of Queens County
Savings Bank and CFS Bank's Connecticut branches. Queens and Haven believe that
such opposition is without merit, although we cannot assure you that such
opposition will not delay or otherwise affect our obtaining regulatory approval
of the merger. As a result of the most recent Federal Deposit Insurance
Corporation and New York State Banking Department examinations, Queens County
Savings Bank received an overall CRA compliance rating of "Satisfactory," and
as a result of its most recent OTS examination, CFS Bank received an overall
CRA compliance rating of "Satisfactory."
Hart-Scott-Rodino Act. The Hart-Scott-Rodino Antitrust Improvements Act of
1976 provides that the merger may not be completed until premerger notification
filings have been made with the Antitrust Division of the U.S. Department of
Justice and the Federal Trade Commission, and the specified HSR Act waiting
period has expired or has terminated. On September 6, 2000, Queens filed all
necessary materials with respect to the bank portion of the merger, and has
been exempted from HSR Act requirements for that portion of the transaction.
Queens and Haven each intends to file a premerger notification and report form
with respect to the non-bank portion of the merger in mid-October.
Interests of Directors and Management in the Merger
General
In addition to the interests discussed in this section of this document,
certain members of management or the board of directors of Haven will be
members of management or the boards of directors of Queens, Queens County
Savings Bank or CFS Bank, or may serve on the Queens advisory board, as
contemplated in the merger agreement, and will receive compensation for such
services. Queens may also provide incentives to key employees to ensure that
they remain in the employ of Queens, Haven or their subsidiaries throughout the
merger integration process.
The Queens board of directors and the Haven board of directors were both
aware of these interests and considered them in their respective decisions to
approve and adopt the merger agreement.
New Employment Arrangements
In connection with the merger, Queens and CFS Bank have each entered into
individual employment agreements with William J. Jennings, II, President and a
director of Haven and CFS Bank, and with Dennis Hodne, Senior Vice President of
CFS Bank. The new employment agreements are substantially similar to the
employment agreements that Queens and Queens County Savings Bank have
previously entered into with Joseph R. Ficalora and other executives.
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<PAGE>
Under the new employment agreements, Mr. Jennings will serve as Executive
Vice President of Queens and Queens County Savings Bank, President of CFS Bank,
and a Director of all three entities at an annual base salary of $400,000. Mr.
Hodne will serve as Senior Vice President of all three entities at an annual
base salary of $165,000. The new employment agreements will take effect at the
closing of the merger. The agreements with Queens and Queens County Savings
Bank have an initial three-year term with daily extensions such that the term
of the new agreements will always be 3 years. The new employment agreements
with CFS Bank have initial three-year terms and each may be extended an
additional year on each anniversary of the beginning of the term so that, at
such extension, the remainder of the term of the agreement will be three years.
The new employment agreements provide that Mr. Jennings' existing change in
control agreements with Haven and CFS Bank and Mr. Hodne's existing change in
control agreement with CFS Bank will remain in effect for 12 months following
the closing of the merger. The change in control agreements will be amended
following the closing of the merger to provide that Messrs. Jennings and Hodne
will be entitled to severance pay following a change in control of Haven or of
CFS Bank by reason of a voluntary termination of employment only if such
voluntary termination of employment occurs during the nine month period
beginning three months after the closing; and to delete any provision entitling
the executive to a "gross-up" payment for any golden parachute excise taxes
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended. To
the extent that Mr. Jennings or Mr. Hodne receive any payments or benefits
under the change in control agreements, the amount of such payments and
benefits will be subtracted from any amount simultaneously owed under the new
employment agreements in connection with a termination of employment.
The new employment agreements provide that in the event that Queens, Queens
County Savings Bank or CFS Bank terminates Mr. Jennings' or Mr. Hodne's
employment for reasons other than for cause or disability or either executive
voluntarily resigns for good reason (as such terms are defined in the new
agreements), he will be entitled to severance pay equal to the remaining salary
and other cash compensation and benefits through the remainder of the term. If
Mr. Jennings or Mr. Hodne is terminated without cause or voluntarily resigns
for good reason following a change in control of Queens, Queens County Savings
Bank or CFS Bank, he will be entitled to (x) severance pay equal to the greater
of (i) the payments due under the remaining term of the agreement or (ii) 3
times his average annual compensation over the 3 years preceding termination;
(y) welfare benefit continuing for 3 years following termination; and (z) a
"gross-up" payment to compensate the executive for any golden parachute excise
taxes imposed by Section 4999 of the Internal Revenue Code. The amounts that
Messrs. Jennings and Hodne would receive under the change in control agreements
would be approximately $1,200,000 and $250,000, respectively.
Consulting Agreement
In connection with the merger, Queens and CFS Bank have entered into a
consulting agreement with Philip S. Messina, Chairman and Chief Executive
Officer of Haven, which will take effect at the closing of the merger and will
continue for three years. The consulting agreement provides that Mr. Messina
shall receive a fee of $500,000 per year, an office, secretary and a computer
located on the premises of CFS Bank, if necessary, to perform his services, as
well as the use of a car leased by Queens or CFS Bank plus all costs of car
insurance, repairs, maintenance, fuel and parking. In addition, the employment
agreement between Mr. Messina and Haven, dated November 22, 1999, shall
terminate as of the completion of the merger, but Mr. Messina shall receive a
cash payment equal to compensation and benefits he would have received had he
been employed for three additional years, plus continued welfare benefits for
his lifetime (excluding any amounts provided for excise tax indemnification
under Section 15 or any other provision) of the employment agreement on the day
of the completion of the merger. The cash payment that Mr. Messina would
receive is approximately $8,500,000.
Advisory Board
The merger agreement also provides that, at the completion of the merger,
Queens shall establish an advisory board and appoint to it those former
directors of Haven who are not designated to serve on the boards
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of Queens, Queens County Savings Bank or CFS Bank after the completion of the
merger. The purpose of the advisory board is to advise Queens with respect to
deposit and lending activities in Haven's former market area and to maintain
and develop customer relationships. Each member of the advisory board will be
appointed to an initial term of three years and will receive an annual retainer
fee of $30,000 for such services.
Effect of the Merger on Existing Haven Stock-Based Rights, including Stock
Options and Stock Grants
The merger agreement provides that, on completion of the merger, each
outstanding allocated and unexercised stock option to purchase shares of Haven
stock granted under CFS Bank's stock-based employee benefit plan will no longer
represent the right to acquire shares of Haven stock and will become a right to
receive Queens stock based on the Haven exchange ratio. However, the holder of
each option shall have the right to have such option canceled for a cash
payment equal to the excess, if any, of the market value of Queens common stock
used to value cash paid in lieu of fractional shares to Haven stockholders in
the merger, over the price at which the option holder would have been able to
acquire a share of Haven common stock upon exercise of the option immediately
before the merger.
Approval of the merger agreement by Queens stockholders and Haven
stockholders will also constitute approval of the conversion of Haven stock
options into Queens stock options as described above. Queens has agreed to
reserve for issuance sufficient shares of Queens common stock to satisfy the
obligations of assuming the Haven stock options. Queens has also agreed to file
a registration statement with respect to the Queens common stock issuable upon
exercise of the Haven stock options after the merger is completed.
The merger will affect some of Haven's employee and director stock-based
benefit plans. The merger agreement provides that, upon completion of the
merger, Haven may terminate the Columbia Federal Savings Bank Employee Stock
Ownership Plan (referred to as the "ESOP"). Should Haven decide to terminate
the ESOP, unallocated shares held in the ESOP will be sold to the extent
necessary to pay in full any outstanding ESOP loan, and any remaining
unallocated shares will be distributed to the accounts of the ESOP participants
as investment earnings in proportion to the amount held in each participant's
account as of the termination date. The accrued benefit in each account of each
participant shall be vested. Such benefit will be rolled over to her or his
account in the Incentive Savings Plan of Queens County Savings Bank or paid to
the participant.
Under the Columbia Federal Savings Bank Recognition and Retention Plan for
Outside Directors and the Columbia Federal Savings Bank Recognition and
Retention Plan for Officers and Employees, all awards made but not vested upon
the day of an employee's termination or director's removal shall be deemed
vested.
Under the Haven Bancorp, Inc. 1993 Incentive Stock Option Plan, all non-
statutory stock options, whether or not exercisable at the time of termination,
shall be deemed immediately exercisable for at least one year following the
participant's termination (except in the case of a termination for cause) and
all incentive stock options whether or not exercisable at the time of
termination shall be deemed immediately exercisable. An incentive stock option
exercised more than three months following the date of the merger will not be
treated as an incentive stock option.
Under the Haven Bancorp, Inc. 1996 Stock Incentive Plan all unvested options
and restricted stock grants will immediately vest and become immediately
exercisable. Generally, options under this plan expire on the earliest of: (i)
the last day of the one-year period commencing on the date the director ceases
to be an eligible director under the plan, other than due to a termination for
cause; (ii) the date the director ceases to be an eligible director under the
plan due to a termination for cause; and (iii) the last day of the ten-year
period commencing on the date on which the stock option under the plan was
granted.
The merger does not affect the 1993 Stock Option Plan for Outside Directors
or the Columbia Federal Savings Bank 401(k) Thrift Incentive Savings Plan.
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Effects of the Merger on Existing Haven and CFS Bank Severance Agreements
In addition to the new employment agreements for Mr. Jennings and Mr. Hodne
and the consulting agreement for Mr. Messina described above, the merger will
affect executive employment arrangements that Haven and/or CFS Bank has with
Thomas J. Seery, Executive Vice President, Catherine Califano, Senior Vice
President and Chief Financial Officer, Mark A. Ricca, Esq., Senior Vice
President and Secretary, Mark Divirgilio, Executive Vice President of CFS
Insurance Agency, Joseph LoBalsamo, Executive Vice President of CFS Insurance
Agency, Andrew Kaplan, President of CFS Investments, James Carpenter, Senior
Vice President, Arthur McDermott, Vice President and Auditor, Annette Esposito,
First Vice President, Patricia M. Schaubeck, Esq., First Vice President and
Acting General Counsel, and Janet Mangafas, Vice President.
In particular, if, at any time following the completion of the merger,
Messrs. Seery, Ricca, Divirgilio, LoBalsamo and Ms. Califano are terminated
(except if terminated for cause) they shall receive severance benefits in an
amount approximating compensation and benefits that they would have received
had they been employed three years following such termination. Each shall
receive in severance benefits: (i) a lump sum payment of the present value of
salary payments for 3 years, (ii) a lump sum payment of bonus payments for
3 years, (iii) additional benefits under all defined benefit and defined
contribution plans that he or she would have received had he or she continued
working for 3 more years, (iv) any stock awards that he or she would have
received under all stock-based employee benefit plans had he or she continued
working for 3 more years, (v) insurance benefits that he or she would have
received had he or she continued working for 3 more years, and (vi) fringe
benefits and perquisites he or she would have received had he or she continued
working for 3 more years. The amounts of change in control payments due to
Messrs. Seery, Ricca, Divirgilio, LoBalsamo and Ms. Califano would be
approximately $700,000, $1,000,000, $700,000, $700,000 and $650,000,
respectively.
If, within one year following the completion of the merger, Messrs. Kaplan,
Carpenter, and McDermott are terminated (except if terminated for cause) they
shall receive severance benefits in an amount approximating compensation and
benefits that they would have received had they been employed two years
following such termination. Each shall receive in severance benefits: (i) a
lump sum payment of the present value of salary payments for 2 years, (ii) a
lump sum payment of bonus payments for 2 years, (iii) additional benefits under
all defined benefit and defined contribution plans that he would have received
had he continued working for 2 more years, (iv) any stock awards that he would
have received under all stock-based employee benefit plans had he continued
working for 2 more years, (v) insurance benefits that he would have received
had he continued working for 2 more years, and (vi) fringe benefits and
perquisites he would have received had he continued working for 2 more years.
The amounts of change in control payments due to Messrs. Kaplan, Carpenter and
McDermott would be approximately $450,000, $350,000 and $300,000, respectively.
If, within one year following the completion of the merger, Mss. Esposito,
Schaubeck and Mangafas are terminated (except if terminated for cause) they
shall receive severance benefits in an amount approximating compensation and
benefits that they would have received had they been employed one year
following such termination. Each shall receive in severance benefits: (i) a
lump sum payment of the present value of salary payments for 1 year, (ii) a
lump sum payment of bonus payments for 1 year, (iii) additional benefits under
all defined benefit and defined contribution plans that she would have received
had she continued working for 1 more year, (iv) any stock awards that she would
have received under all stock-based employee benefit plans had she continued
working for 1 more year, (v) insurance benefits that she would have received
had she continued working for 1 more year, and (vi) fringe benefits and
perquisites she would have received had she continued working for 1 more year.
The amounts of change in control payments due to Mss. Esposito, Schaubeck and
Mangafas would be approximately $200,000, $150,000 and $150,000, respectively.
For each individual with a change in control arrangement with Haven or CFS
Bank, except for Messrs. Messina, Jennings and Hodne, in the event the change
in control payment to an individual would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code, such individual will receive an
additional tax reimbursement payment.
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Other Effects of the Merger on Haven Employee or Director Benefit Arrangements
The merger affects other benefits arrangements. Under a Supplemental
Retirement Agreement with CFS Bank, Mr. George S. Worgul, former Chairman of
the Board of Haven and CFS Bank, shall receive an accelerated payment of the
remainder of his retirement benefit in a lump sum no later than 14 days
following the merger.
Queens Employee Benefit Plans
The merger agreement provides that, as soon as practicable after the
completion of the merger, Queens shall implement a program of compensation and
benefits designed to cover all similarly situated employees of Queens,
including employees of CFS Bank, on a uniform basis. At Queens' discretion,
this program may contain any combination of new plans, continuation of plans
maintained by Queens or Queens County Savings Bank and continuation of plans
maintained by Haven or CFS Bank immediately prior to the merger.
The new plans instituted by Queens shall take account of the service,
eligibility and vesting of all employees of Queens, Queens County Savings Bank,
Haven and CFS Bank immediately before the merger. Queens shall also assume all
obligations of Haven and CFS with respect to Haven's or CFS Bank's severance
plans.
Indemnification and Directors' and Officers' Insurance
The merger agreement provides that, for six years from the completion of the
merger, Queens will indemnify each present director and officer of Haven and
its subsidiaries against all costs or expenses, including attorneys' fees or
other liabilities incurred, in connection with any claim arising out of matters
existing at or prior to the completion of the merger, including the
transactions contemplated by the merger agreement, to the fullest extent that
Haven and its subsidiaries are permitted to indemnify their directors and
officers under applicable laws, and their respective certificates of
incorporation or by-laws.
The merger agreement also provides that, for a period of six years following
the merger, Queens will provide directors' and officers' liability insurance
that serves to reimburse each present officer and director of Haven or any of
its subsidiaries for claims arising from facts or events occurring at or prior
to the completion of the merger. This insurance must provide at least the same
coverage and amounts, and provide terms and conditions no less advantageous
than the coverage maintained by Haven immediately prior to the merger.
Transactions Between Queens and Haven Pending the Merger
We have agreed that any transaction entered into between Queens and Haven,
and/or any of our respective subsidiaries, such as a sale of loans, may be
reversed by either Queens or Haven upon notice to the other party, if the
merger is not completed by March 31, 2001. As of the date of this document,
Queens County Savings Bank had assigned approximately $75 million of multi-
family loans to CFS Bank at fair market value.
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THE MERGER AGREEMENT
The following describes certain aspects of the proposed merger, including
material provisions of the merger agreement. The following description of the
merger agreement is subject to, and qualified in its entirety by reference to,
the merger agreement, which is attached as Appendix A to this document and is
incorporated by reference into this document. You are urged to read the merger
agreement carefully and in its entirety.
Terms of the Merger
The merger agreement provides for the merger of Haven with and into Queens.
Queens will be the surviving corporation after the merger and will be renamed
New York Community Bancorp, Inc. At the time the merger is completed each
outstanding share of Haven common stock, except for shares, if any, owned by
Haven as treasury stock or unallocated shares held by Haven in its or CFS
Bank's recognition and retention compensation plans or owned by Queens or a
subsidiary of Queens (other than shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted), will be automatically converted
into the right to receive 1.04 shares of Queens common stock, subject to upward
adjustment as provided in the merger agreement. See "--Amendment, Waiver and
Termination of the Merger Agreement" on page 59.
Queens will not issue any fractional shares of Queens in the merger.
Instead, a Haven stockholder who otherwise would have received a fraction of a
share of Queens common stock will receive an amount in cash, rounded to the
nearest cent. This cash amount shall be determined by multiplying the fraction
by the last reported sale price per share of Queens common stock as reported on
the Nasdaq National Market on the day immediately before the consummation of
the merger.
Closing and Effective Time of the Merger
The merger will be consummated only if all of the following occur:
. the merger agreement is approved and adopted by Queens stockholders,
. the merger agreement is approved and adopted by Haven stockholders,
. we obtain all required consents and approvals, and
. all other conditions to the merger discussed in this document and the
merger agreement are either satisfied or waived.
The merger will become effective when certificates of merger are filed with
the Secretary of State of the State of Delaware, or at a later time as may be
agreed upon by us and indicated in the certificates of merger in accordance
with applicable law. In the merger agreement, we have agreed that the effective
time of the merger shall be on the fifth business day following the date on
which the expiration of all applicable regulatory waiting periods shall occur
and all conditions to the merger have been satisfied or waived, or on another
mutually agreed date. It is currently anticipated that the effective time will
occur during the fourth quarter of 2000, but we cannot guarantee when or if the
merger will be consummated.
Representations and Warranties
The merger agreement contains various representations and warranties made by
each of us. Some of the representations and warranties are qualified by
materiality and other exceptions.
Both Queens and Haven made representations and warranties regarding the
following matters, among others:
. corporate organization and qualification in appropriate states;
. the ownership, organization, qualification in appropriate states and
good standing of our subsidiaries and, with respect to each of our
respective depository institutions, their insured status;
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. capitalization;
. corporate power and authority to enter into, and make binding, the
merger agreement and the stock option agreement;
. necessary stockholder approval and receipt of a fairness opinion;
. filings required to be made with governmental entities and consents
required to be obtained from third parties in connection with the merger
agreement, and a statement that the merger agreement and stock option
agreement do not conflict with governing documents or other agreements;
. regulatory, securities and other reports; financial statements, and
books and records;
. pending or threatened litigation or regulatory action;
. the absence of any material adverse change in business, financial
position or results of operations since March 31, 2000;
. title to properties, free and clear of liens;
. compliance with laws and accounting requirements;
. filing of tax returns; payment of taxes;
. fees payable to financial advisors in connection with the merger;
. insurance;
. material agreements;
. labor matters, including proceedings related to unfair labor practices;
. employee benefits matters, including employee benefit plans;
. properties and related environmental matters;
. knowledge as to whether the conditions to the merger can be satisfied;
. material interests of certain parties and ownership of shares of the
other party to the merger;
. brokered deposits; and
. the accuracy of the information provided for inclusion in the
registration statement of which this document is a part.
In addition, Haven alone made representations and warranties regarding the
following matters, among others:
. the conduct of business only in the ordinary and usual course since
March 31, 2000;
. loan portfolio and asset quality;
. investment securities and borrowings;
. the Haven stockholder protection rights agreement and anti-takeover
provisions; and
. indemnification agreements.
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Covenants and Agreements
Conduct of Haven's Business Pending the Merger
Haven has agreed as to itself and each of its subsidiaries that, from the
date of the merger agreement to the completion of the merger, unless otherwise
agreed or unless otherwise contemplated by the merger agreement or the stock
option agreement, among other things:
. Haven will use commercially reasonable efforts to conduct its business
only in the ordinary and usual course;
. Haven will use commercially reasonable efforts to preserve existing
organizations, assets, rights and relations;
. Haven will not knowingly take any action that will adversely affect the
ability of the parties to receive the approvals or fulfill the
obligations necessary to complete the merger;
. Haven will not, without the prior written consent of Queens, which will
not be unreasonably withheld:
. transfer or sell any material property or assets, other than to a
subsidiary or consistent with past practice;
. change any provision of its certificate of incorporation or by-laws,
or those of any subsidiary;
. enter into significant contracts not terminable within 30 days;
. cancel, release or assign indebtedness, or settle claims, in
individual amounts over $100,000;
. invest in debt securities, including mortgage-backed securities,
other than U.S. government or U.S. agency securities, and other than
reinvestments of principal and interest on mortgage-backed
securities consistent with past practice;
. make significant capital expenditures other than with respect to
existing binding commitments;
. make real estate loans secured by undeveloped land or real-estate
located outside New York, New Jersey and Connecticut, other than
real estate loans secured by one-to-four family homes;
. establish new branches or office facilities;
. make any acquisition or investment in any person which exceeds
$50,000, other than internal reorganizations involving existing
subsidiaries or consistent with past practice;
. incur additional borrowings, except as consistent with past
practice;
. except as consistent with past practice, establish, adopt or enter
into new, or change Haven's existing, compensation, benefits or
other arrangements for its employees, officers or directors;
. change accounting principles, other than as required by GAAP;
. make any tax election other than in the ordinary course of business
consistent with past practice; or
. take actions that would materially adversely affect its ability to
consummate the merger.
Conduct of Queens' Business Pending the Merger
Queens has each agreed as to itself and Queens County Savings Bank that,
from the date of the merger agreement to the completion of the merger, unless
otherwise agreed or unless otherwise contemplated by the merger agreement or
the stock option agreement among other things:
. not to materially change the nature of its or Queens County Savings
Bank's business plan or eliminate any material business line without
first consulting with the Chairman and Chief Executive Officer or the
President of Haven;
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. not to change its accounting principles other than as permitted by GAAP;
. not to take any action that would materially adversely affect its
ability to consummate the merger;
. not to change any provisions of its certificate of incorporation or by-
laws other than to increase the authorized capital stock or issue shares
of preferred stock thereunder;
. not to enter into an acquisition agreement with a third party which is
conditioned on Queens' not completing the merger; and
. not to elect to its board of directors any person who was not a member
of its board of directors as of June 27, 2000, subject to certain
exceptions.
Declaration and Payment of Dividends
We have agreed that, until the merger is completed, we will each only pay
regular quarterly dividends or distributions, provided that Queens' dividends
do not exceed $0.30 per share per quarter, and Haven's dividends do not exceed
$0.075 per share per quarter; the record date for payment of Haven's dividends
in the fourth quarter shall be postponed to conform to Queens' dividend record
date, which is expected to be in November 2000.
Agreement Not to Solicit Other Offers
Subject to the discharge of fiduciary duties, Haven has also agreed that it
will not, and will cause its subsidiaries and representatives and subsidiaries'
representatives not to, initiate, solicit or encourage any inquiries or any
offer relating to a merger, acquisition or other transaction involving the
purchase of all or a substantial part of the assets or any equity securities of
Haven or its subsidiaries. Subject to the discharge of fiduciary duties, Haven
has also agreed not to negotiate or provide any confidential information
relating to any such acquisition proposal. Haven has agreed that it will
immediately advise Queens following the receipt of any acquisition proposal.
Expenses and Fees
In general, each party will be responsible for all expenses incurred by it
in connection with the negotiation and consummation of the transactions
contemplated by the merger agreement. We have agreed, however, that Queens will
reimburse CFS Bank for any costs and expenses incurred by CFS Bank or Haven in
connection with any installations of equipment and wiring in CFS Bank's
offices. In the event that the merger agreement is terminated, Queens will
reimburse CFS Bank for the cost of restoring the offices to their condition
prior to the commencement of any such installation.
Other Agreements
The merger agreement contains additional agreements relating to our conduct
prior to completion of the merger, including the following:
. to convene a meeting of our respective stockholders in order to obtain
approval of the merger agreement;
. subject to fiduciary duties under applicable law, to have our respective
boards of directors maintain recommendations to our respective
stockholders in favor of the transactions contemplated by the merger
agreement;
. to make all respective regulatory and securities filings with applicable
governmental entities and to take other actions necessary to consummate
the merger;
. to afford the other party reasonable access to information pertaining to
each of us and that all information supplied will be true and correct
and not false or misleading;
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. to cause to be delivered to the other party a letter of an independent
certified public accountant regarding such accountant's review of the
delivering party's financial statements;
. to give prompt notice of any event or circumstance known that is
reasonably likely to result in a material adverse effect, a material
breach of either of our representations or agreements in the merger
agreement or the failure of a condition to completion of the merger;
. to consult with and obtain the consent of the other before issuing any
press release or other public statements with respect to the merger or
the merger agreement;
. to take all necessary steps within our control to avoid the application
to the merger of any applicable antitakeover laws or defensive
provisions of our respective certificates of incorporation or by-laws;
. Haven will cause its affiliates to enter into agreements intended to
assure compliance with securities rules in any sales of Queens or Haven
stock;
. not to take any action that would adversely affect tax treatment of the
merger;
. Queens will prepare and file a registration statement with respect to
the shares to be issued pursuant to the merger, and will use
commercially reasonable efforts to have NYCB common stock approved for
quotation on the Nasdaq National Market under the symbol "NYCB";
. Queens will honor severance agreements, employment agreements and change
in control agreements between Haven and its employees, and between CFS
Bank and its employees; and
. Queens will establish and implement a program of compensation and
benefits designed to apply to all similarly situated employees on a
uniform basis.
Conditions to Consummation of the Merger
Our respective obligations to consummate the merger are subject to the
fulfillment or waiver of certain conditions, including:
. the approval and adoption of the merger agreement by the holders of the
requisite number of shares of Haven stock and Queens stock,
respectively;
. the receipt and effectiveness of all governmental and other approvals,
registrations and consents and the expiration of all related waiting
periods required to consummate the merger and the issuance of Queens
stock;
. the absence of action by any court or other governmental entity that
prohibits consummation of the transactions contemplated by the merger
agreement;
. the registration statement with respect to the Queens common stock to be
issued pursuant to the merger shall have been declared effective, and
the Queens common stock shall be trading, subject only to official
notice of issuance, on the Nasdaq National Market;
. the truth and correctness of the representations and warranties of each
of us in the merger agreement, subject to certain specified exceptions,
and the performance by each of us in all material respects of our
obligations under the merger agreement;
. the receipt of an opinion of each of our tax counsel with respect to the
federal income tax effects of the merger; and
. the delivery by each of us of certificates indicating compliance with
the conditions in the merger agreement and delivery of letters of
independent certified public accountants regarding such accountants'
review of our financial statements.
We cannot provide assurance as to when or if all of the conditions to the
merger can or will be satisfied or waived by the appropriate party. As of the
date of this document, we have no reason to believe that any of these
conditions will not be satisfied.
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Possible Alternative Merger Structure
The merger agreement provides that Queens may change the structure of the
merger. No change may be made that:
. adversely affects what Haven stockholders would receive in the merger,
. adversely affects the tax treatment of the merger,
. adversely affects Queens' obligations under the merger agreement, or
. materially delays or impedes consummation of the merger.
Amendment, Waiver and Termination of the Merger Agreement
The provisions of the merger agreement may be waived by the party benefitted
by those provisions. The merger agreement may be amended or modified, in
accordance with applicable law, by our written agreement.
The merger agreement may be terminated, and the merger abandoned, by us at
any time before the merger is scheduled to be completed if both of our boards
of directors vote to do so. In addition, the merger agreement may be
terminated, and the merger abandoned:
. by action of a majority of either of our entire boards of directors if
. the merger is not consummated by March 31, 2001, unless the failure
to consummate the merger is due to the breach by the terminating
party of a representation, warranty or covenant contained in the
merger agreement,
. the stockholders of either Haven or Queens fail to approve and adopt
the merger agreement at the special stockholders' meetings called
for the purpose of considering and voting upon the merger agreement,
provided that the terminating party has recommended to its
stockholders the approval or adoption of the merger agreement, or,
. the non-terminating party materially breaches any representation,
warranty, covenant or agreement contained in the merger agreement
that causes the failure of a condition to closing and such breach
cannot be or has not been cured within 25 days after written notice
of such breach is given.
. by either of us if any governmental approval, consent or authorization
required for the consummation of the merger is denied, or any court or
governmental authority having jurisdiction over either of us shall have
issued a final, non-appealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated in the merger agreement,
or
. by Haven, at any time during the five-day period following the day on
which the approval of the merger by the Board of Governors of the
Federal Reserve System is received (referred to as the "valuation date")
if its board of directors so determines by a majority vote of the whole
board, if both of the following conditions are satisfied:
1. the market value of Queens common stock, calculated as an average of
the Queens common stock closing prices over a 15-day period
immediately preceding the valuation date, is less than $14.65; and
2. the quotient obtained by dividing the market value of Queens common
stock, calculated as described above, by $18.3125 is less than 80%
of the quotient obtained by dividing the market value of an index of
shares of financial institutions comparable to Queens and listed in
the merger agreement, calculated as an average over the fifteen-day
period immediately preceding the valuation date, by the initial
valuation prices of the index shares calculated using their June 28,
2000 closing sale prices.
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In order to exercise this termination right, Haven must give notice to
Queens during the five business day period following the valuation date,
although such election to terminate may be withdrawn by Haven at any time
during the fifteen business day period following the valuation date. During the
five business day period beginning with its receipt of Haven's notice, Queens
has the option to avoid termination of the merger agreement by electing to
increase the exchange ratio to the lesser of:
1. the quotient obtained by dividing $15.23 by the Queens market value,
calculated as described above, and
2. the quotient obtained by dividing (x) the product of (i) the
quotient obtained by dividing the market value of an index of
shares, calculated as described above, by $15.50, and (ii) the Haven
exchange ratio (as then in effect) by (y) the quotient of Queens
market value, calculated as described above, divided by $18.31.
If Queens provides timely notice to Haven of its election and the revised
exchange ratio, no termination will occur and the merger agreement will remain
in full force and effect in accordance with its terms (except that the exchange
ratio will be so modified).
This description of Haven's right to terminate the merger agreement because
of a decline in Queens' stock price is not complete and is qualified by
reference to the specific provisions of the merger agreement. The companies
comprising the index and the weights accorded those companies may change upon
the occurrence of certain events as set forth in the merger agreement.
It is not possible to know whether the price based termination right will be
triggered until after the valuation date. The Haven board of directors has made
no decision as to whether it would exercise its right to terminate the merger
agreement if the termination right were triggered. In considering whether to
exercise its termination right, the Haven board of directors would, consistent
with its fiduciary duties, take into account all relevant facts and
circumstances that exist at such time and would consult with its financial
advisors and legal counsel. If Haven's stockholders approve and adopt the
merger agreement at the Haven special meeting and thereafter the price-based
termination right is triggered, the Haven board of directors will have the
authority, consistent with its fiduciary duties, to elect either to complete
the merger, whether or not there is any increase in the exchange ratio and
without any further action by or resolicitation of the stockholders of Haven,
or to terminate the merger agreement.
Queens is under no obligation to increase the exchange ratio, and we cannot
assure you that Queens would elect to increase the exchange ratio if the Haven
board of directors were to exercise its right to terminate the merger agreement
as set forth above. Any such decision would be made by Queens in consultation
with its financial and legal advisors in light of the circumstances existing at
the time Queens has the opportunity to make such an election. If Queens'
stockholders approve and adopt the merger agreement at the Queens special
meeting and thereafter Haven exercises its termination right, the Queens board
of directors will have the authority, consistent with its fiduciary duties, to
elect either to increase the exchange ratio as described above and to complete
the merger without any further action by or resolicitation of the stockholders
of Queens, or to allow Haven to terminate the merger agreement.
Effect of Termination. If the merger agreement is terminated, it will
thereafter become void and there will be no liability on the part of Queens or
Haven or their respective officers or directors, except that:
. any such termination will be without prejudice to the rights of any
party arising out of the breach by the other party of any covenant,
representation or obligation contained in the merger agreement, and
. Haven and Queens each will bear its own expenses in connection with the
merger agreement and the transactions contemplated thereby, except as
otherwise provided in the merger agreement.
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AMENDMENT TO CERTIFICATE OF INCORPORATION OF QUEENS
The merger agreement contemplates that Queens' corporate name shall be
changed to "New York Community Bancorp, Inc." at the completion of the merger.
Accordingly, the Queens stockholders are being asked to approve the amendment
of the Queens certificate of incorporation which will give effect to this name
change. Should the Queens stockholders approve the name change, Queens'
corporate name shall be changed to "New York Community Bancorp, Inc." as soon
as practicable after the Queens special meeting, regardless of whether or not
the merger with Haven is consummated or the stockholders of Queens approve and
adopt the merger agreement.
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THE STOCK OPTION AGREEMENT
The following description, which sets forth the material provisions of the
Queens stock option agreement, is subject to the full text of, and qualified in
its entirety by reference to, the stock option agreement, which is attached as
Appendix B to this document and is incorporated herein by reference. You are
urged to read this document carefully and in its entirety.
General
As an inducement for Queens to enter into the merger agreement, Haven agreed
to grant Queens an option to purchase shares of Haven stock.
Under the stock option agreement, Queens can purchase up to 1,800,000 shares
of Haven common stock upon the occurrence of certain events described below.
Although this number is subject to adjustment in certain cases, including the
issuance of additional shares, the number of shares that may be acquired under
the stock option agreement will never exceed 19.9% of the number of shares of
Haven stock outstanding immediately before exercise of the option. The exercise
price of the option is $18.50 per share of Haven stock, but this price is
subject to adjustment in certain cases, including stock dividends,
recapitalizations and other changes in capitalization. The exercise price was
determined by using the closing sale price for Haven stock on June 28, 2000,
the day after the merger was announced.
Purpose of the Stock Option Agreement
Arrangements such as the stock option agreement are customarily entered into
in connection with mergers involving publicly traded companies to increase the
likelihood that the transactions will be completed in accordance with their
terms and to compensate Queens for the efforts undertaken and the expenses and
losses incurred by it if the transaction is not completed. The stock option
agreement may have the effect of discouraging offers by third parties to
acquire Haven, even if those persons were prepared to offer consideration to
Haven's stockholders that has a greater value than what these stockholders will
receive in the merger.
To our best knowledge, no event giving rise to the right to exercise the
stock option has occurred as of the date of this document.
Exercise; Expiration
Queens can exercise its option if both an initial triggering event and a
subsequent triggering event occur prior to the occurrence of an exercise
termination event, as these terms are described below. The purchase of any
shares of Haven stock pursuant to the option is subject to compliance with
applicable law, which may require regulatory approval.
The stock option agreement describes a number of different events as initial
triggering events. Generally, an initial triggering event will occur if Haven
enters into, proposes to enter into, or is the subject of an acquisition
transaction or a proposed acquisition transaction other than the merger
agreement with Queens and the transactions it contemplates.
As used in the stock option agreement, the term acquisition transaction
means:
. a merger or consolidation or any similar transaction, or bona fide
proposal of such a transaction, involving Haven, other than certain
mergers involving only Haven and its subsidiaries;
. a purchase, lease or other acquisition of all or any substantial part of
the assets or deposits of Haven or any of its subsidiaries; or
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. a purchase or other acquisition of securities representing 10% or more
of the voting power of the outstanding common stock of Haven or any of
its subsidiaries.
The stock option agreement generally defines the term subsequent triggering
event to mean any of the following events or transactions:
. the acquisition by a third party of beneficial ownership of 25% or more
of the outstanding common stock of Haven, or
. Haven or any of its subsidiaries, without the prior written consent of
Queens, enters into an agreement to engage in an acquisition transaction
with a third party, or the board of directors of Haven recommends that
its stockholders approve or accept any acquisition transaction, other
than the merger, provided that, for purposes of this definition of a
subsequent triggering event, the percentage referred to in the third
definition of acquisition transaction above shall be 25% rather than
10%.
The stock option agreement defines the term exercise termination event to
mean any of the following:
. completion of the merger;
. termination of the merger agreement in accordance with its terms before
an initial triggering event, provided that this would not include a
termination of the merger agreement by Queens based on a willful breach
by Haven of a representation, warranty, covenant or other agreement
contained in the merger agreement; or
. the passage of 12 months, subject to extension in order to obtain
required regulatory approvals, after termination of the merger
agreement, if the termination follows the occurrence of an initial
triggering event or is a termination of the merger agreement by Queens
based on a willful breach by Haven of a representation, warranty,
covenant or other agreement contained in the merger agreement.
If the option becomes exercisable, it may be exercised in whole or in part
within six months following the subsequent triggering event. Queens' right to
exercise the option and certain other rights under the stock option agreement
are subject to an extension in order to obtain required regulatory approvals
and comply with applicable regulatory waiting periods and to avoid liability
under the short-swing trading restrictions contained in Section 16(b) of the
Securities Exchange Act. Nevertheless, Queens may not exercise the option if it
is in breach of any of its covenants or agreements under the merger agreement.
Queens' Rights Under the Stock Option Agreement
At any time after a repurchase event, as this term is described below, upon
the request of Queens, Haven may be required to repurchase the option and all
or any part of the shares issued under the option. The repurchase of the option
will be at a price per share equal to the amount by which the option repurchase
price, as that term is defined in the stock option agreement, exceeds the
option price. The term repurchase event is defined to mean:
. the acquisition by any third party of beneficial ownership of 50% or
more of the then-outstanding shares of Haven's common stock, or
. the consummation of an acquisition transaction, provided that for
purposes of the definition of repurchase event, the percentage referred
to in the third definition of acquisition transaction above shall be 25%
rather than 10%.
The stock option agreement also provides that Queens may, at any time within
90 days after a repurchase event, surrender the option and any shares issued
under the option held by Queens for a cash fee equal to $9 million, adjusted if
there have been purchases of stock under the option and gains on sales of stock
purchased under the option, provided that Queens may not exercise its surrender
right if Haven repurchases the option, or a portion of the option.
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If, prior to an exercise termination event, Haven enters into certain
transactions in which it is not the surviving corporation, certain fundamental
changes in its capital stock occur, or Haven sells all or substantially all of
its or its significant subsidiaries' assets, the option will be converted into,
or be exchangeable for, a substitute option, at Queens' election, of
. the continuing or surviving person of a consolidation or merger with
Haven;
. the acquiring person in a plan of exchange in which Haven is acquired;
. Haven in a merger or plan of exchange in which Haven is the acquiring
person;
. the transferee of all or substantially all of the assets of Haven or its
significant subsidiary; or
. any person that controls any of these entities, as the case may be.
The substitute option will have the same terms and conditions as the
original option. However, if the terms of the substitute option cannot be the
same as those of the option by law, the terms of the substitute option will be
as similar as possible and at least as advantageous to Queens.
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ACCOUNTING TREATMENT
The merger will be accounted for as a "purchase," as that term is used under
generally accepted accounting principles, for accounting and financial
reporting purposes. Under purchase accounting, the assets and liabilities of
Haven as of the effective time of the merger will be recorded at their
respective fair values and added to those of Queens. Any excess of purchase
price over the fair values is recorded as goodwill. Financial statements of
Queens issued after the merger would reflect such fair values and would not be
restated retroactively to reflect the historical financial position or results
of operations of Haven.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER
The following section describes the material U.S. federal income tax
consequences of the merger to holders of Haven common stock who hold Haven
common stock as a capital asset within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (referred to as the Code). This
section does not apply to special classes of taxpayers, such as:
. financial institutions,
. insurance companies,
. tax-exempt organizations,
. dealers in securities or currencies,
. traders in securities that elect to use a mark to market method of
accounting,
. persons that hold Haven common stock as part of a straddle or conversion
transaction,
. persons who are not citizens or residents of the United States, and
. stockholders who acquired their shares of Haven common stock through the
exercise of an employee stock option or otherwise as compensation.
The following is based upon the Code, its legislative history, existing and
proposed regulations thereunder and published rulings and decisions, all as
currently in effect as of the date hereof, and all of which are subject to
change, possibly with retroactive effect. Tax considerations under state,
local and foreign laws are not addressed in this document. Determining the
actual tax consequences of the merger to you may be complex. They will depend
on your specific situation and on factors that are not within our control. You
should consult with your own tax advisor as to the tax consequences of the
merger in your particular circumstances, including the applicability and
effect of the alternative minimum tax and any state, local or foreign and
other tax laws and of changes in those laws.
Tax Consequences of the Merger Generally. It is a condition to the merger
that Haven receive an opinion of its counsel, Thacher Proffitt & Wood, to the
effect that the merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that
accordingly: (i) no gain or loss will be recognized by Queens, Queens County
Savings Bank, Haven or CFS Bank as a result of the merger; (ii) except to the
extent of any cash received in lieu of a fractional share interest in Queens
common stock, no gain or loss will be recognized by the stockholders of Haven
who exchange their Haven common stock for Queens common stock pursuant to the
merger; (iii) the tax basis of Queens common stock received by stockholders
who exchange their Haven common stock for Queens common stock in the merger
will be the same as the tax basis of Haven common stock surrendered pursuant
to the merger, reduced by the amount of any tax basis allocable to a
fractional share for which cash is received; and (iv) the holding period of
Queens common stock received by each stockholder in the merger will include
the holding period of Haven common stock exchanged therefor, provided that
such stockholder held such Haven common stock as a capital asset at the
effective time. It is also a condition to the merger that Queens receive an
opinion of its counsel, Sullivan & Cromwell, to the effect that the merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that accordingly: (i) no gain or
loss will be recognized by Queens, Queens County Savings Bank, Haven or CFS
Bank as a result of the merger; and (ii) except to the extent of any cash
received in lieu of a fractional share interest in Queens common stock, no
gain or loss will be recognized by the stockholders of Haven who exchange
their Haven common stock for Queens common stock pursuant to the merger.
Although the merger agreement allows us to waive this condition, we
currently do not anticipate doing so.
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In rendering these opinions, counsel may require and rely upon
representations contained in letters and certificates to be received from
Haven, Queens and others. Neither of these tax opinions will be binding on the
Internal Revenue Service. Neither Queens nor Haven intends to request any
ruling from the Internal Revenue Service as to the U.S. federal income tax
consequences of the merger.
Based on the above assumptions and qualifications and certain
representations of Queens and Haven, in the opinion of Sullivan & Cromwell,
counsel to Queens, and Thacher Proffitt & Wood, counsel to Haven, for U.S.
federal income tax purposes:
. the merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code;
. each of Queens and Haven will be a party to that reorganization within
the meaning of Section 368(b) of the Code;
. no gain or loss will be recognized by stockholders of Haven who receive
shares of Queens common stock in exchange for shares of Haven common
stock, except with respect to cash received in lieu of fractional share
interests;
. the holding period of Queens common stock received in exchange for
shares of Haven common stock will include the holding period of the
Haven common stock for which it is exchanged; and
. the basis of the Queens common stock received in the merger will be the
same as the basis of the Haven common stock for which it is exchanged,
less any basis attributable to fractional shares for which cash is
received.
Cash Received in Lieu of a Fractional Share of Queens Common Stock. A
stockholder of Haven who receives cash in lieu of a fractional share of Queens
common stock will be treated as having received the fractional share pursuant
to the merger and then as having exchanged the fractional share for cash in a
redemption by Queens subject to Section 302 of the Code. As a result, a Haven
stockholder will generally recognize gain or loss equal to the difference
between the amount of cash received and the portion of the basis of the shares
of Queens common stock allocable to his or her fractional interest. This gain
or loss will generally be capital gain or loss, and will be long-term capital
gain or loss if, as of the date of the exchange, the holding period for such
shares is greater than one year. Long-term capital gain of a non-corporate
holder is generally subject to tax at a maximum federal tax rate of 20%.
Backup Withholding and Information Reporting. Payments of cash to a holder
surrendering shares of Haven common stock will be subject to information
reporting and backup withholding at a rate of 31% of the cash payable to the
holder, unless the holder furnishes its taxpayer identification number in the
manner prescribed in applicable Treasury Regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup
withholding, and meets certain other conditions. Any amounts withheld from
payments to a holder under the backup withholding rules will be allowed as a
refund or credit against the holder's U.S. federal income tax liability,
provided the required information is furnished to the Internal Revenue Service.
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DESCRIPTION OF QUEENS CAPITAL STOCK
In this section, we describe the material features and rights of the Queens
capital stock after the merger. This summary is qualified in its entirety by
reference to applicable Delaware law, Queens' certificate of incorporation,
which is incorporated herein by reference to the Queens certificate of
incorporation filed as an exhibit to the registration statement of which this
document is a part, Queens' by-laws and the Queens rights agreement, as
described below. See "Where You Can Find More Information" on page 95.
General
Queens is authorized to issue 60,000,000 shares of common stock having a par
value of $.01 per share and 5,000,000 shares of preferred stock having a par
value of $.01 per share. Each share of the Queens common stock has the same
relative rights as, and is identical in all respects to, each other share of
Queens common stock.
As of June 30, 2000, 20,769,910 shares of Queens common stock and no shares
of Queens preferred stock were outstanding. In addition, 10,200,783 shares of
Queens common stock were held in the treasury of Queens, and 2,395,290 shares
of Queens common stock were reserved for issuance pursuant to Queens' employee
benefit plans and the Queens employee stock option agreement. After giving
effect to the merger on a pro forma basis, approximately 30,253,898 shares of
Queens common stock will be outstanding.
Common Stock
Dividends. Subject to certain regulatory restrictions, Queens County Savings
Bank can pay dividends out of statutory surplus or from certain net profits if,
as and when declared by its board of directors. Funds for Queens dividends are
generally provided through dividends from Queens County Savings Bank. The
payment of dividends by Queens County Savings Bank is subject to limitations
which are imposed by law and applicable regulation. See "Queens Dividends" on
page 85 and "REGULATION AND SUPERVISION OF QUEENS AFTER THE MERGER" on page 78.
The holders of common stock of Queens are entitled to receive and share equally
in such dividends as may be declared by the board of directors of Queens out of
funds legally available therefor. If Queens issues Preferred Stock, the holders
thereof may have a priority over the holders of the common stock with respect
to dividends.
Voting Rights. The holders of common stock of Queens possess exclusive
voting rights in Queens. They elect the Queens board of directors and act on
such other matters as are required to be presented to them under Delaware law
or as are otherwise presented to them by the board of directors. Each holder of
common stock is entitled to one vote per share and does not have any right to
cumulate votes in the election of directors. If Queens issues preferred stock,
holders of the preferred stock may also possess voting rights. Certain matters
require an 80% stockholder vote, which is calculated after giving effect to a
provision limiting voting rights. This provision in Queens' certificate of
incorporation provides that stockholders who beneficially own in excess of 10%
of the then-outstanding shares of common stock of Queens are not entitled to
any vote with respect to the shares held in excess of the 10% limit. A person
or entity is deemed to beneficially own shares that are owned by an affiliate
as well as persons acting in concert with such person or entity.
Liquidation. In the event of any liquidation, dissolution or winding up of
Queens County Savings Bank, Queens, as holder of the Queens County Savings
Bank's capital stock would be entitled to receive, after payment or provision
for payment of all debts and liabilities of Queens County Savings Bank
(including all deposit accounts and accrued interest thereon) and after
distribution of the balance in the special liquidation account to eligible
account holders, all assets of Queens County Savings Bank available for
distribution. In the event of liquidation, dissolution or winding up of Queens,
the holders of its common stock would be entitled to receive, after payment or
provision for payment of all of its debts and liabilities, all of the assets of
Queens available for distribution. If Preferred Stock is issued, the holders
thereof may have a priority over the holders of the Queens common stock in the
event of liquidation or dissolution.
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Preemptive Rights. Holders of Queens common stock are not entitled to
preemptive rights with respect to any shares which may be issued. The Queens
common stock is not subject to redemption.
Preferred Stock
Shares of Queens preferred stock may be issued with such designations,
powers, preferences and rights as the Queens board of directors may from time
to time determine. The Queens board of directors can, without stockholder
approval, issue preferred stock with voting, dividend, liquidation and
conversion rights which could dilute the voting strength of the holders of the
common stock and may assist management in impeding an unfriendly takeover or
attempted change in control.
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RIGHTS AGREEMENTS
The following is a description of the rights issued under each of the Queens
rights agreement and the Haven rights agreement as amended. This description is
subject to, and is qualified in its entirety by reference to, the text of each
rights agreement. The Queens rights agreement is incorporated herein by
reference to the Queens rights agreement which is filed as an exhibit to the
registration statement of which this document is a part.
Queens Stockholder Protection Rights Agreement
Each issued share of Queens common stock has attached to it one right issued
pursuant to a Stockholder Protection Rights Agreement, dated as of January 16,
1996, between Queens and ChaseMellon Shareholder Services, L.L.C., as rights
agent. Each right entitles its holder to purchase one one-hundredth of a share
of participating preferred stock of Queens at an exercise price of $120,
subject to adjustment, after the separation time, which means after the close
of business on the earlier of
. the tenth business day after commencement of a tender or exchange offer
that, if consummated, would result in the offeror becoming an "acquiring
person," which is defined in the rights agreement as a person
beneficially owning 10% or more of the outstanding shares of Queens
common stock; and
. the tenth business day after the first date of public announcement that
a person has become an acquiring person, which is also called the flip-
in date.
The rights are not exercisable until the business day following the
separation time. The rights expire on the earlier of
. the close of business on January 16, 2006;
. redemption, as described below;
. an exchange for common stock, as described below; or
. the merger of Queens into another corporation pursuant to an agreement
entered into prior to a flip-in date.
The Queens board of directors may, at any time prior to occurrence of a flip-in
date, redeem all the rights at a price of $0.01 per right.
If a flip-in date occurs, each right, other than those held by the acquiring
person or any affiliate or associate of the acquiring person or by any
transferees of any of these persons, will constitute the right to purchase
shares of Queens common stock having an aggregate market price equal to $240 in
cash, subject to adjustment. In addition, the Queens board of directors may at
any time between a flip-in date and the time that an acquiring person becomes
the beneficial owner of more than 50% of the outstanding shares of Queens
common stock elect to exchange the rights for shares of Queens common stock at
an exchange ratio of one share of Queens common stock per right.
Under the rights agreement, Queens may not consolidate or merge, or engage
in other similar transactions, with an acquiring person without entering into a
supplemental agreement with the acquiring person providing that, upon
consummation or occurrence of the transaction, each right shall thereafter
constitute the right to purchase common stock of the acquiring person having an
aggregate market price equal to $240 in cash, subject to adjustment.
These rights may not prevent a takeover of Queens. The rights, however, may
have antitakeover effects. The rights may cause substantial dilution to a
person or group that acquires 10% or more of the outstanding Queens common
stock unless the rights are first redeemed by the Queens board of directors.
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A description of the rights agreement specifying the terms of the rights has
been included in reports filed by Queens under the Securities Exchange Act. See
"Where You Can Find More Information" on page 95.
Haven Rights Agreement
On January 25, 1996, Haven adopted a rights agreement, pursuant to which
each issued share of Haven common stock has attached to it a right to purchase
one preferred share of Haven capital stock for each share of Haven common stock
held. Although the mechanics for exercising these rights are different from the
Queens' rights agreement, the Haven rights agreement is substantially the same
as the Queens rights agreement described above. Haven's rights are triggered on
the 20th business day following a flip-in event and are exercisable at a price
of $90 per right. Upon exercise, Haven stockholders would receive two times the
number of shares of Haven common stock that could be purchased at the then
current market price per share. In connection with the execution of the merger
agreement, Haven amended its rights agreement to provide that, for purposes of
determining whether Queens (as well as its affiliates and associates) is an
"Acquiring Person," as defined in Haven's rights agreement, Queens shall not be
deemed to be an "Acquiring Person" by virtue of (i) the execution of the merger
agreement, the stock option agreement, any ancillary voting agreements or the
affiliate letters (hereinafter referred to as a Covered Agreement), (ii) the
consummation of any transaction contemplated by any Covered Agreement or (iii)
additional purchases by Queens (as well as its affiliates and associates) of up
to 4.9% of the outstanding Haven common stock as of June 27, 2000.
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COMPARISON OF STOCKHOLDERS' RIGHTS
General
Queens and Haven are incorporated under the laws of the State of Delaware
and, accordingly, the rights of Queens stockholders and Haven stockholders are
governed by the laws of the State of Delaware. As a result of the merger, Haven
stockholders will become stockholders of Queens. Thus, following the merger,
the rights of Haven stockholders who become Queens stockholders in the merger
will continue to be governed by the laws of the State of Delaware and will also
then be governed by the Queens certificate of incorporation and the Queens by-
laws. The Queens certificate of incorporation and the Queens by-laws will be
unaltered by the merger, except to the extent that appropriate changes need to
be made with respect to the change of Queens' corporate name.
Comparison of Stockholders' Rights
Set forth on the following pages is a summary comparison of material
differences between the rights of a Queens stockholder under the Queens
certificate of incorporation, Queens by-laws, and Delaware law (left column)
and the rights of a stockholder under the Haven certificate of incorporation,
Haven by-laws and Delaware law (right column). The summary set forth below is
not intended to provide a comprehensive summary of Delaware law or of each
company's governing documents. This summary is qualified in its entirety by
reference to the full text of the Queens certificate of incorporation and
Queens by-laws, and the Haven certificate of incorporation and Haven by-laws.
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Queens Haven
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CAPITAL STOCK
Authorized Capital
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60 million (60,000,000) shares of 30 million (30,000,000) shares of
common stock, par value one cent common stock, par value one cent
($.01) per share, 5 million ($.01) per share, 2 million
(5,000,000) shares of preferred (2,000,000) shares of preferred
stock, par value one cent ($.01) per stock, par value one cent ($.01) per
share. As of October 12, 2000, there share. As of October 11, 2000, there
were 20,122,640 shares of Queens were 9,349,753 shares of Haven
common stock issued and outstanding, common stock issued and outstanding
2,395,290 shares reserved for and 767,956 shares reserved for
issuance and no shares of preferred issuance and no shares of preferred
stock issued and outstanding. stock issued and outstanding.
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BOARD OF DIRECTORS Classification
--------------------------------------------------------------------------------
Directors are divided into three classes. Each class serves a three-year
term and the classes are as nearly equal in size as possible.
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Number of Directors
--------------------------------------------------------------------------------
Such number as is fixed by the board of directors from time to time. Queens
currently has eight directors and Haven has eleven directors. See "THE
MERGER--Additions to the Board and Management of Queens, Queens County
Savings Bank and CFS Bank" on page 46 for a description of the Queens board
of directors after the merger.
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Removal
--------------------------------------------------------------------------------
Any director may be removed at any time but only for cause and only by the
affirmative vote of at least 80% of the voting power of all of the then-
outstanding shares of capital stock entitled to vote in the election of
directors.
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Vacancies and Newly Created Directorships
--------------------------------------------------------------------------------
Filled by a majority vote of the directors then in office. The person who
fills any such vacancy holds office for the unexpired term of the director
to whom such person succeeds.
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Qualifications
--------------------------------------------------------------------------------
There are no specific provisions in the Haven or Queens certificate of
incorporation or in the Haven or Queens by-laws regarding qualifications of
directors.
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Committees
--------------------------------------------------------------------------------
The by-laws create a Nominating Committee and permit the creation of other
committees.
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Queens Haven
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Special Meeting of the Board
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Special meetings of the board of Special meetings of the board of
directors may be called by one-third directors may be called by one-third
(1/3) of the directors then in (1/3) of the directors then in
office, or by the Chairman of the office, by the Chairman of the
Board. Board, or by the President.
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STOCKHOLDERS
Stockholder Action by Written Consent
--------------------------------------------------------------------------------
Any action required or permitted to be taken by stockholders must be
effected at an annual or special meeting and may not be effected by any
consent in writing by such stockholders.
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Special Meetings of Stockholders
--------------------------------------------------------------------------------
Pursuant to the by-laws of Queens and Haven, special meetings of
stockholders may only be called by the board of directors pursuant to a
resolution adopted by a majority of the total number of directors which the
corporation would have if there were no vacancies on the board of directors.
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Voting
--------------------------------------------------------------------------------
Elections for the board of directors are decided by a plurality of the votes
cast. All other questions are decided by a majority of the votes entitled to
be cast by the holders of stock represented and entitled to vote at a
meeting, except as otherwise required by law, the certificate of
incorporation, or the by-laws. Stockholders of record who beneficially own
in excess of 10% of the outstanding shares of common stock are not entitled
to any vote with respect to the shares held in excess of the 10% limit. A
person or entity is deemed to beneficially own shares that are owned by an
affiliate as well as by any person acting in concert with such person.
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Stockholder Proposals and Nominations of Directors
--------------------------------------------------------------------------------
Stockholders may nominate directors or submit proposals at any annual
meeting. In order to do so, a stockholder must (1) be a stockholder of the
company of record at the time of the giving of the notice for such annual
meeting; (2) be entitled to vote at such meeting; and (3) give notice of
director nominations or proposals to the Corporate Secretary no less than 90
days prior to the date of the annual meeting, provided that, in the event
that less than 100 days' notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by such stockholder
must be received not later than the close of business on the 10th calendar
day following the day on which public announcement is first made of the date
of the annual meeting.
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Amendment of Certificate of Incorporation
--------------------------------------------------------------------------------
The certificate of incorporation of both Queens and Haven provide that
amendment of those provisions relating to amendment of the certificate of
incorporation, restrictions on voting by beneficial owners of more than 10%
of the corporation's stock, written consents of stockholders, special
meetings of stockholders, classification of directors, director vacancies,
removal of directors, nomination of directors, number of directors, adoption
and amendment of by-laws, approval of business combinations, and
indemnification of directors and officers requires the affirmative vote of
80% of the voting power of the then-outstanding shares of capital stock
entitled to vote in the election of directors.
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Amendment of By-laws
--------------------------------------------------------------------------------
The by-laws of both Queens and Haven may be amended either by the vote of a
majority of the total number of directors which the corporation would have
if there were no vacancies on the board of directors, or by the affirmative
vote of the holders of at least 80% of the voting power entitled to vote in
the election of directors.
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Queens Haven
--------------------------------------------------------------------------------
Stockholder Rights Plans
--------------------------------------------------------------------------------
As discussed under "RIGHTS AGREEMENTS" on page 70.
--------------------------------------------------------------------------------
Business Combination Statutes and Provisions
--------------------------------------------------------------------------------
Section 203 of the Delaware General Corporation Law prohibits business
combinations, including mergers, sales and leases of assets, issuances of
securities and similar transactions by a corporation or a subsidiary, with an
interested stockholder, which is someone who beneficially owns 15% or more of
a corporation's voting stock, within three years after the person or entity
becomes an interested stockholder, unless
. the transaction that caused the person to become an interested
stockholder was approved by the board of directors of the target prior
to the transaction;
. after the completion of the transaction in which the person becomes an
interested stockholder, the interested stockholder holds at least 85%
of the voting stock of the corporation not including (a) shares held by
persons who are both officers and directors of the issuing corporation
and (b) shares held by specified employee benefit plans;
. after the person becomes an interested stockholder, the business
combination is approved by the board of directors and holders of at
least 66 2/3% of the outstanding voting stock, excluding shares held by
the interested stockholder; or
. the transaction is one of certain business combinations that are
proposed after the corporation had received other acquisition proposals
and that are approved or not opposed by a majority of certain
continuing members of the board of directors, as specified in the
Delaware General Corporation Law.
Neither Queens' nor Haven's certificate of incorporation or by-laws
contains an election, as permitted by Delaware law, to be exempt from the
requirements of Section 203.
The merger is not governed by the limitations set forth in Section 203
because the Haven board of directors approved the merger agreement and the
stock option agreement before they were executed.
--------------------------------------------------------------------------------
Limitations on Liability and Indemnification of Officers and Directors
--------------------------------------------------------------------------------
The certificates of incorporation of both Queens and Haven provide that,
except under certain circumstances, directors shall not be personally liable
to the company or its stockholders for monetary damages for breach of
fiduciary duty as a director, and also provide for virtually identical
indemnification of directors and officers, which is to the fullest extent
permitted under the Delaware General Corporation Law.
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DISCUSSION OF ANTI-TAKEOVER PROTECTION IN QUEENS' CERTIFICATE OF
INCORPORATION AND BY-LAWS
General
Certain provisions of the Queens certificate of incorporation and by-laws
described above in "Description of Queens Capital Stock" on page 68 may have
anti-takeover effects. These provisions may discourage attempts by others to
acquire control of Queens without negotiation with the Queens board of
directors. The effect of these provisions is discussed briefly below. In
addition to these provisions of the Queens certificate of incorporation and by-
laws, the rights agreement discussed in "RIGHTS AGREEMENTS--Queens Stockholder
Protection Rights Agreement" on page 70 may also have antitakeover effects. All
of the provisions discussed below are contained in Queens' certificate of
incorporation and by-laws currently.
Authorized Stock
The shares of Queens common stock and Queens preferred stock authorized by
Queens' certificate of incorporation but not issued provide the Queens board of
directors with the flexibility to effect certain financings, acquisitions,
stock dividends, stock splits and stock-based grants without the need for a
stockholder vote. The Queens board of directors, consistent with its fiduciary
duties, could also authorize the issuance of these shares, and could establish
voting, conversion, liquidation and other rights for the Queens preferred stock
being issued, in an effort to deter attempts to gain control of Queens.
Classification of Board of Directors; No Cumulative Voting
Queens' certificate of incorporation and by-laws provide that the board of
directors of Queens is divided into three classes of as nearly equal size as
possible, with one class elected annually to serve for a term of three years.
This classification of the Queens board of directors may discourage a takeover
of Queens because a stockholder with a majority interest in Queens would have
to wait for at least two consecutive annual meetings of stockholders to elect a
majority of the members of the Queens board of directors. Queens' certificate
of incorporation also does not and will not, after the merger, authorize
cumulative voting for the election of directors of Queens.
Size of Board; Vacancies; Removal of Directors
The provisions of Queens' certificate of incorporation and by-laws giving
the Queens board of directors the power to determine the exact number of
directors and to fill any vacancies or newly created positions, and allowing
removal of directors only for cause upon an 80% vote of stockholders are
intended to insure that the classified board provisions discussed above are not
circumvented by the removal of incumbent directors. Furthermore, since Queens
stockholders do not, and will not, after the merger, have the ability to call
special meetings of stockholders, a stockholder seeking to have a director
removed for cause generally will be able to do so only at an annual meeting of
stockholders. These provisions could make the removal of any director more
difficult, even if such removal were desired by the stockholders of Queens. In
addition, these provisions of Queens' certificate of incorporation and by-laws
could make a takeover of Queens more difficult under circumstances where the
potential acquiror seeks to do so through obtaining control of the Queens board
of directors.
Special Meetings of Stockholders
The provisions of Queens' certificate of incorporation and by-laws relating
to special meetings of stockholders are intended to enable the Queens board of
directors to determine if it is appropriate for Queens to incur the expense of
a special meeting in order to present a proposal to Queens stockholders. If the
Queens board of directors determines not to call a special meeting, stockholder
proposals could not be presented to the stockholders for action until the next
annual meeting, or until such proposal is properly presented before an
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earlier duly called special meeting, because stockholders cannot call a special
meeting. In addition, these provisions could make a takeover of Queens more
difficult under circumstances where the potential acquiror seeks to do so
through obtaining control of the Queens board of directors.
Stockholder Action by Unanimous Written Consent
The purpose of the provision in Queens' certificate of incorporation
prohibiting stockholder action by written consent is to prevent any person or
persons holding the percentage of the voting stock of Queens otherwise required
to take corporate action from taking such action without giving notice to other
stockholders and without the procedures of a stockholder meeting.
Amendment of Certificate of Incorporation and By-Laws
The requirements in Queens' certificate of incorporation and by-laws for an
80% stockholder vote for the amendment of certain provisions of Queens'
certificate of incorporation and Queens' by-laws is intended to prevent a
stockholder who controls a majority of the Queens stock from avoiding the
requirements of important provisions of Queens' certificate of incorporation or
by-laws simply by amending or repealing them. Thus, the holders of a minority
of the shares of the Queens stock could block the future repeal or modification
of Queens' by-laws and certain provisions of the certificate of incorporation,
even if such action were deemed beneficial by the holders of more than a
majority, but less than 80%, of the Queens stock.
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REGULATION AND SUPERVISION OF QUEENS AFTER THE MERGER
The following discussion sets forth the material elements of the regulatory
framework applicable to bank holding companies and their subsidiaries and
incorporates by reference certain information relevant to Queens and Haven
prior to the merger. This regulatory framework is intended primarily for the
protection of depositors and the federal deposit insurance funds and not for
the protection of security holders. To the extent that the following
information describes statutory and regulatory provisions, it is qualified in
its entirety by reference to those provisions. A change in the statutes,
regulations or regulatory policies applicable to Queens or its subsidiaries
(or, prior to the merger, Haven or its subsidiaries) may have a material effect
on its business. This section does not contain a complete description of all
statutes and regulations that may affect the business of Queens, Haven or their
subsidiaries, either before or after the merger.
Queens is currently a bank holding company and it is subject to regulation
under the Bank Holding Company Act of 1956, as amended, and to inspection,
examination and supervision by the Federal Reserve Board. Queens County Savings
Bank is a New York State-chartered savings bank subject to inspection,
examination and supervision by the FDIC, at the federal level, and by the New
York State Banking Department, at the state level. For further information
regarding regulation and supervision of Queens and its subsidiaries, see
discussions in the documents incorporated by reference into this document, such
as Queens' Annual Report on Form 10-K for the year ended December 31, 1999. See
"Where You Can Find More Information" on page 95.
Haven is currently a savings and loan holding company. Its primary
subsidiary, CFS Bank, is a federal savings association subject to regulation
under the Home Owners' Loan Act, as amended, and to inspection, examination and
supervision by the Office of Thrift Supervision, a federal regulatory agency.
For further information regarding regulation and supervision of Haven and its
subsidiaries, see the discussions in the documents incorporated by reference
into this document, such as Haven's Annual Report on Form 10-K for the year
ended December 31, 1999. See "Where You Can Find More Information" on page 95.
General
When Haven merges into Queens, the surviving corporation, Queens, will be a
bank holding company and will be regulated as Queens is currently regulated.
Under the Bank Holding Company Act, bank holding companies generally may not
acquire ownership or control of more than 5% of the voting shares or
substantially all the assets of any company, including a bank, without the
Federal Reserve Board's prior approval. In addition, bank holding companies
generally may engage, directly or indirectly, only in banking and those other
activities that are determined by the Federal Reserve Board to be closely
related to banking. Queens County Savings Bank and CFS Bank are also subject to
restrictions on their business and activities discussed in each of the Annual
Reports on Form 10-K for the year ended December 31, 1999 for both Queens and
Haven.
As a bank holding company, Queens' ability to pay dividends and make other
distributions on its stock will be largely dependent on its ability to receive
dividends and other funds from its primary subsidiaries, Queens County Savings
Bank and CFS Bank. Queens' ability to pay dividends and other distributions on
its stock is, therefore, affected by statutes and regulations relating to the
business of Queens County Savings Bank and CFS Bank that have the effect of
limiting transfers of funds from Queens County Savings Bank and CFS Bank to
Queens. The nature and extent of these restrictions depend upon, among other
things, Queens County Savings Bank and CFS Bank's level of regulatory capital
and its income.
Regulatory Capital Requirements
Maintenance of regulatory capital ratios required by the federal bank
regulatory agencies, such as the Federal Reserve Board, the FDIC and the OTS,
may affect the ability of a bank holding company or a depository institution to
pay dividends or other distributions on its stock. Failure to meet capital
requirements
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could subject a bank or a bank holding company to a variety of enforcement
remedies, including the termination of federal deposit insurance and to certain
restrictions on its business under "prompt corrective action" guidelines by the
federal bank regulatory agencies.
Queens and Queens County Savings Bank. Queens is subject to risk-based
capital requirements and guidelines imposed by the Federal Reserve Board, which
are substantially similar to the capital requirements and guidelines imposed by
the FDIC on the depository institutions, such as Queens County Savings Bank,
within its jurisdiction.
For this purpose, a depository institution's or holding company's assets and
certain specified off-balance-sheet commitments and obligations are assigned to
various risk categories. A depository institution's or holding company's
capital, in turn, is classified in one of three tiers: (i) core, or Tier 1,
capital, which includes common equity, certain noncumulative perpetual
preferred stock and related surplus, a limited amount of cumulative perpetual
preferred stock at the holding company level and minority interests in equity
accounts of consolidated subsidiaries, less goodwill and most intangible
assets; (ii) supplementary, or Tier 2, capital, which includes, among other
items, perpetual preferred stock not meeting the Tier 1 definition, mandatorily
convertible securities, subordinated debt and allowances for loan and lease
losses, subject to certain limitations; and (iii) market risk, or Tier 3,
capital, which includes qualifying unsecured subordinated debt. Risk-weighted
assets are determined by multiplying certain categories of the institution's
assets, including off-balance sheet equivalents, by an assigned risk weight of
0% to 100% based on the credit risk associated with those assets as specified
in the agencies' regulations.
Bank holding companies and depository institutions currently are required to
maintain Tier 1 capital and total capital (the sum of Tier 1, Tier 2 and Tier 3
capital) equal, respectively, to at least 4% and 8% of their total risk-
weighted assets. In addition, in order for a holding company or depository
institution to be considered well capitalized for regulatory purposes, its Tier
1 and total capital ratios must be at least 6% and 10% on a risk-adjusted
basis, respectively. At June 30, 2000, Queens and Queens County Savings Bank
met or exceeded all applicable regulatory capital ratios for being "well-
capitalized".
The Federal Reserve Board and the FDIC have also adopted rules to
incorporate market and interest rate risk components into their risk-based
capital standards. Under such risk assessment, examiners will evaluate a bank's
capital for interest rate risk on a case-by-case basis, with consideration of
both quantitative and qualitative factors such as the overall financial
condition of the bank and the level of other risks at the bank for which
capital is needed. Institutions with significant interest rate risk may be
required to hold additional capital.
The Federal Reserve Board and the FDIC also require bank holding companies
and depository institutions to maintain a minimum leverage ratio (Tier 1
capital to adjusted total assets) of 3% if the holding company or depository
institutions has the highest regulatory rating and is not experiencing
significant growth. All other bank holding companies or depository institutions
are required to maintain a minimum leverage ratio of at least 4%.
The Federal Reserve Board and the FDIC may set capital requirements higher
than the minimums noted above for holding companies or depository institutions
whose circumstances warrant it. For example, holding companies or depository
institutions experiencing or anticipating significant growth may be expected to
maintain capital positions substantially above the minimum supervisory levels
without significant reliance on intangible assets. Furthermore, the Federal
Reserve Board has indicated that it will consider a tangible Tier 1 capital
leverage ratio, deducting all intangibles, and other indicia of capital
strength in evaluating proposals for expansion or new activities.
CFS Bank. Under federal statute and OTS regulations, savings associations
are required to comply with three separate capital adequacy standards. These
institutions are required to have "core capital" equal to at least 3% of
adjusted total assets, "tangible capital" equal to at least 1.5% of adjusted
total assets and "total risk-based capital" equal to at least 8% of risk-
weighted assets.
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"Core capital" includes common stockholders' equity (including common stock,
common stock surplus and retained earnings but excluding any net unrealized
gains or losses, net of related taxes, on certain securities available for
sale), noncumulative perpetual preferred stock and any related surplus and
minority interests in the equity accounts of fully consolidated subsidiaries.
Intangible assets generally must be deducted from core capital, other than
certain servicing assets and purchased credit card relationships, subject to
limitations. "Tangible capital" means core capital less any intangible assets
(except for mortgage servicing assets includable in core capital) and
investments in subsidiaries engaged in activities not permissible for a
national bank.
For purposes of the risk-based capital requirement, "total risk-based
capital" means core capital plus supplementary capital, so long as the amount
of supplementary capital that is used to satisfy the requirement does not
exceed the amount of core capital. "Supplementary capital" includes, among
other things, subordinated debt issued pursuant to OTS regulations, general,
valuation loan and lease loss allowances up to a maximum of 1.25% of risk-
weighted assets, and up to 45% of unrealized gains on certain available-for-
sale equity securities. Risk-weighted assets are determined by multiplying
certain categories of the savings association's assets, including off-balance
sheet equivalents, by an assigned risk weight of 0% to 100% based on the credit
risk associated with those assets as specified in OTS regulations.
Under OTS regulations, an institution is treated as well capitalized if its
ratio of total risk-based capital to risk-weighted assets is 10% or more, its
ratio of core capital to risk-weighted assets is 6% or more, its ratio of core
capital to adjusted total assets is 5% or more and it is not subject to any
order or directive by the OTS to meet a specific capital level. At June 30,
2000, CFS Bank met or exceeded all applicable regulatory capital ratios for
being "well-capitalized".
The OTS has rules and policies similar to those of the Federal Reserve Board
and FDIC discussed above regarding evaluations for market and interest rate
risk of the institution's capital and requirements for additional capital in
circumstances that warrant it.
Limitations on Capital Distributions
Various federal and state statutory provisions limit the amount of dividends
that Queens County Savings Bank and CFS Bank are able to pay to Queens without
regulatory approval.
General. In general, and in addition to the limitations discussed below, CFS
Bank and Queens County Savings Bank may not pay dividends if, after paying
those dividends, either would fail to meet the required minimum levels under
risk-based capital guidelines, the minimum leverage ratio or the minimum
tangible capital ratio, or if the appropriate bank regulatory agency notified
the bank that it was in need of more than normal supervision. Under the Federal
Deposit Insurance Act, an insured depositary institution such as CFS Bank or
Queens County Savings Bank is prohibited from making capital distributions,
including the payment of dividends, if, after making such distribution, the
institution would become "undercapitalized" (as such term is used in the
Federal Deposit Insurance Act). Payment of dividends by CFS Bank or Queens
County Savings Bank also may be restricted at any time at the discretion of the
appropriate regulator if it deems the payment to constitute an unsafe and
unsound banking practice.
The Federal Reserve Board has also issued a policy statement regarding the
payment of dividends by bank holding companies. In general, the Federal Reserve
Board's policies provide that dividends should be paid only out of current
earnings and only if the prospective rate of earnings retention by the bank
holding company appears consistent with the organization's capital needs, asset
quality, and overall financial condition. The Federal Reserve's policies also
require that a bank holding company serve as a source of financial strength to
its subsidiary banks. These regulatory policies could affect the ability of
Queens to pay dividends or otherwise engage in capital distributions.
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Queens County Savings Bank. Under federal law, a state bank that is not a
member of the Federal Reserve System, such as Queens County Savings Bank,
cannot make any distribution or dividend if, following such distribution or
dividend, the bank would be undercapitalized under the laws and regulations
regarding regulatory capitalization of the bank. Under the New York State
Banking Law, Queens County Savings Bank may declare and pay dividends out of
its net profits, unless there is an impairment of capital, but approval of the
New York State Superintendent of Banks is required if the total of all
dividends declared in a calendar year would exceed the total of its net profits
for that year combined with its retained net profits of the preceding two
years, subject to certain adjustments.
CFS Bank. Under OTS regulations, as applicable to CFS Bank, limitations are
imposed upon all capital distributions by savings institutions, such as cash
dividends, payments to repurchase or otherwise acquire its shares, payments to
stockholders of another institution in a cash-out merger and other
distributions charged against capital. As the subsidiary of a savings and loan
holding company, CFS Bank currently must file a notice with the OTS for each
capital distribution. Upon completion of the merger, CFS Bank will be the
subsidiary of a bank holding company and will not automatically have to file a
notice for each capital distribution. However, certain distributions by CFS
Bank that may adversely affect capital of CFS Bank or may exceed certain
retained income limitations may require an application or a notice to the OTS.
Transactions with Affiliates
Under federal law and regulation, transactions between a bank, such as
Queens County Savings Bank and CFS Bank, and its affiliates, which term would
include the holding company after the merger, Queens, and other companies
controlled by Queens, are subject to quantitative and qualitative restrictions.
Banks are restricted in their ability to engage in certain types of
transactions with their affiliates, including transactions that could provide
funds to a holding company for the payment of capital distributions. These
covered transactions include
. lending or extending credit to an affiliate,
. purchasing assets from an affiliate,
. accepting securities issued by an affiliate as collateral for a loan or
extension of credit, and
. issuing a guarantee, acceptance or letter of credit on behalf of an
affiliate.
Covered transactions are permitted between a bank and a single affiliate up
to 10% of the capital stock and surplus of the bank, and between a bank and all
of its affiliates up to 20% of the capital stock and surplus of the bank. The
purchase of low-quality assets by a bank from an affiliate is not permitted.
Each loan or extension of credit to an affiliate by a bank must be secured by
collateral with a market value ranging from 100% to 130% of the amount of
credit extended, depending on the type of collateral. Notwithstanding, and in
addition to, the foregoing, federal savings associations, such as CFS Bank, are
not permitted to make a loan or extension of credit to any affiliate unless the
affiliate is engaged only in activities that the Federal Reserve Board has
determined to be permissible for bank holding companies and are not permitted
to purchase or invest in securities issued by an affiliate, other than shares
of a subsidiary.
Covered transactions between a bank and an affiliate, and other transactions
with or benefitting an affiliate, must be on terms and conditions at least as
favorable to the bank as those prevailing at the time for comparable
transactions with non-affiliated companies. This arm's-length requirement
applies to all covered transactions, as well as to
. the sale of securities or other assets to an affiliate,
. the payment of money or the furnishing of services to an affiliate,
. any transaction in which an affiliate acts as agent or broker or
receives a fee for its services to the bank or to any other person, and
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. any transaction or series of transactions with a third party if any
affiliate has a financial interest in the third party or is a
participant in the transaction or series of transactions.
Interstate Banking and Branching
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994, subject to specified requirements:
. bank holding companies, such as Queens, are permitted to acquire banks
and bank holding companies located in any state;
. any bank that is a subsidiary of a bank holding company is permitted to
receive deposits, renew time deposits, close loans, service loans and
receive loan payments as an agent for any other bank subsidiary of that
holding company, although some restrictions apply to federal savings
associations acting as agent for other bank subsidiaries of that bank
holding company; and
. banks are permitted to acquire branch offices outside their home states
by merging with out-of-state banks, by purchasing branches in other
states and by establishing new, or de novo, branches in other states.
Under the Riegle-Neal Act, each state had the opportunity either to opt
out of this provision, thereby prohibiting interstate branching in such
states, or to opt in at an earlier time, thereby allowing interstate
branching within that state. Furthermore, a state may opt in with
respect to de novo branching, thereby permitting a bank to open new
branches in a state in which the bank does not already have a branch. If
a state chooses not to opt in to de novo branching, then a bank can only
enter that state by acquiring an existing bank or branch.
Queens County Savings Bank is also subject to the requirements of New York
law regarding opening new branches in New York or outside New York. In
addition, Queens County Savings Bank is subject to the requirements of each
state for branching into that state, including whether that state has chosen to
opt into de novo branching. Any branching restrictions do not apply to CFS
Bank, which, as a federal savings association, may branch nationwide under
certain conditions.
Acquisition of Control
Before any company may acquire more than 5% of the voting securities of a
bank holding company such as Queens, that company must obtain approval of the
Federal Reserve Board. Also, under the Change in Bank Control Act, before any
person may acquire control of Queens, as a bank holding company, it must submit
60 days' prior written notice to the Federal Reserve Board and such notice must
not be disapproved.
Recent Legislation
On November 12, 1999, the President signed the Gramm-Leach-Bliley Financial
Modernization Act of 1999 into law. The Modernization Act:
. allows bank holding companies meeting management, capital and Community
Reinvestment Act standards to engage in a substantially broader range of
non-banking activities than previously was permissible, including
insurance underwriting and making merchant banking investments in
commercial and financial companies;
. allows insurers and other financial services companies to acquire banks;
. removes various restrictions that currently apply to bank holding
company ownership of securities firms and mutual fund advisory
companies; and
. establishes the overall regulatory structure applicable to bank holding
companies that also engage in insurance and securities operations.
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The modernization act also modifies other current financial laws, including
laws related to financial privacy and community reinvestment. The new financial
privacy provisions generally prohibit financial institutions, including us,
from disclosing nonpublic personal financial information to third parties
unless customers have the opportunity to opt out of the disclosure.
Queens will, during the regular course of its business, evaluate the
potential opportunities presented by the modernization act, including
evaluating its ability to engage in additional permitted activities or to
acquire other companies engaged in additional permitted activities.
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COMPARATIVE MARKET PRICES AND DIVIDENDS
Queens common stock and Haven common stock are included for quotation on the
Nasdaq National Market System. The following table sets forth the high and low
closing prices of shares of Queens common stock and Haven common stock as
reported on the Nasdaq National Market, and the quarterly cash dividends
declared per share for the periods indicated.
<TABLE>
<CAPTION>
Queens Haven
Common Stock Common Stock
------------- -------------
High Low Dividend(1)(2) High Low Dividend(3)
------ ------ -------------- ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter......... $17.63 $13.41 $0.07 $18.19 $13.88 $0.075
Second Quarter........ 21.33 15.85 0.09 19.13 15.25 0.075
Third Quarter......... 24.11 19.78 0.11 21.88 17.81 0.075
Fourth Quarter........ 27.00 22.94 0.13 23.00 19.13 0.075
1998
First Quarter......... 29.33 23.50 0.13 25.00 19.88 0.075
Second Quarter........ 31.42 27.25 0.17 28.75 24.75 0.075
Third Quarter......... 30.00 23.58 0.17 26.75 14.38 0.075
Fourth Quarter........ 30.56 22.88 0.20 17.63 10.38 0.075
1999
First Quarter......... 31.69 27.00 0.25 16.13 12.75 0.075
Second Quarter........ 35.69 27.00 0.25 16.50 10.50 0.075
Third Quarter......... 32.37 26.94 0.25 19.00 14.56 0.075
Fourth Quarter........ 32.44 25.75 0.25 17.13 14.38 0.075
2000
First Quarter......... 26.58 17.75 0.25 15.75 11.88 0.075
Second Quarter........ 20.93 17.25 0.25 19.13 13.75 0.075
Third Quarter......... 28.88 18.75 0.25 29.38 18.50 0.000
Fourth Quarter
(through
October 12).......... 28.38 27.06 -- 29.25 27.38 --
</TABLE>
--------
(1) Pursuant to the merger agreement, Queens may not, without the prior written
consent of Haven, make, declare or pay any cash dividends in excess of
$0.30 per share per quarter.
(2) Reflects shares issued as a result of a 4-for-3 stock split on August 22,
1996 and 3-for-2 stock splits on April 10, 1997, October 1, 1997 and
September 29, 1998. Queens' high and low stock prices and dividends for
prior periods have been adjusted to reflect the effect of such stock split.
(3) Pursuant to the merger agreement, Haven may not, without the prior written
consent of Queens, make, declare or pay any dividend on the Haven common
stock, except for its regular quarterly dividend of $0.075 per share. Haven
has also agreed to make the record date for such dividend the same as
Queens'.
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The following table sets forth the last reported sale price per share of
Queens common stock and Haven common stock on (i) March 31, 2000, (ii) June 27,
2000, the last business day preceding public announcement of the signing of the
merger agreement, and (iii) October 12, 2000, the last practicable date prior
to the mailing of this Joint Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
Queens Haven
Common Stock Common Stock
------------ ------------
<S> <C> <C>
March 31, 2000................................... $18.06 $15.63
June 27, 2000.................................... 18.13 18.13
October 12, 2000................................. $27.06 $27.38
</TABLE>
--------
(1) On June 27, 2000, the high and low sales prices of Queens common stock were
$18.75 and $17.69, respectively, and the high and low sales prices of Haven
common stock were $18.25 and $17.69, respectively, all as reported on the
Nasdaq National Market.
Haven and Queens stockholders are advised to obtain current market
quotations for Queens common stock and Haven common stock. The market price of
Queens common stock will fluctuate between the date of this Joint Proxy
Statement/Prospectus and the Effective Date. No assurance can be given
concerning the market price of Queens common stock before or after the
Effective Date.
Queens Dividends
Queens currently pays cash dividends at an annual rate of $1.00 per share,
which we expect will continue although the board of directors may change this
dividend policy at any time. During 1999, Queens paid cash dividends of $1.00
per share, and Haven paid cash dividends of $0.30 per share. Queens
stockholders will be entitled to receive dividends when and if declared by the
Queens board of directors out of funds legally available for dividends. The
Queens board of directors will periodically consider the payment of dividends,
taking into account Queens' financial condition and level of net income,
Queens' future prospects, economic conditions, industry practices and other
factors, including applicable banking laws and regulations as discussed in
"REGULATION AND SUPERVISION OF QUEENS AFTER THE MERGER" on page 78.
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PRO FORMA FINANCIAL INFORMATION
Queens County Bancorp. Inc. and Haven Bancorp, Inc.
Unaudited Pro Forma Combined Condensed Consolidated Statement of Financial
Condition
The following Unaudited Pro Forma Combined Condensed Consolidated Statement
of Financial Condition combines the historical Consolidated Statement of
Financial Condition of Queens and subsidiary and the adjusted historical
Consolidated Statement of Financial Condition of Haven and subsidiaries giving
effect to the consummation of the merger on June 30, 2000, using the purchase
method of accounting and giving effect to the related pro forma adjustments
described in the accompanying Notes to the Unaudited Pro Forma Combined
Condensed Consolidated Financial Statements. The following Unaudited Pro Forma
Combined Condensed Consolidated Statements of Operations for the year ended
December 31, 1999 and the six months ended June 30, 2000 combine the historical
Consolidated Statements of Operations of Queens and subsidiary and Haven and
subsidiaries giving effect to the merger as if the merger had become effective
on June 30, 2000, using the purchase method of accounting and giving effect to
the related pro forma adjustments described in the accompanying Notes to the
Unaudited Pro Forma Combined Condensed Consolidated Financial Statements.
The unaudited pro forma combined condensed consolidated financial statements
included herein are presented for informational purposes only. This information
includes various estimates and may not necessarily be indicative of the
financial position or results of operations that would have occurred if the
merger had been consummated on the date or at the beginning of the period
indicated or which may be obtained in the future. The unaudited pro forma
combined condensed consolidated financial statements and accompanying notes
should be read in conjunction with and are qualified in their entirety by
reference to the historical financial statements and related notes thereto of
Queens and subsidiary and Haven and subsidiaries information and notes thereto
appearing elsewhere herein.
86
<PAGE>
Queens County Bancorp. Inc. and Haven Bancorp, Inc.
Unaudited Pro Forma Combined Condensed Consolidated Statement of Financial
Condition
As of June 30, 2000
(In thousands)
<TABLE>
<CAPTION>
Queens Haven Pro Forma Pro Forma
Historical Historical Adjustment Combined
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks..... $ 17,249 $ 56,677 $ 73,926
Money market investments.... 6,000 5,753 11,753
Securities available for
sale....................... 12,482 931,342 $ (76,900)(D) 612,835
45,748 (D)
(36,959)(C)
(262,878)(G)
Securities held to maturity
and FHLB stock............. 195,401 27,865 223,266
Loans held for sale......... -- 7,838 (85,200)(D) 7,838
Loans receivable............ 1,750,277 1,824,983 (700,000)(G) 2,790,060
Allowance for loan losses... (7,031) (17,235) 8,000 (B) (16,266)
---------- ---------- ---------- ----------
Loans receivable, net....... 1,743,246 1,807,748 (777,200) 2,773,794
Excess of cost over fair
value of net assets
acquired and other
intangibles................ -- -- 129,104 (E) 129,104
Other assets................ 73,255 93,393 62,807 (D) 229,455
---------- ---------- ---------- ----------
Total assets................ 2,047,633 2,930,616 (916,278) 4,061,971
========== ========== ========== ==========
LIABILITIES
Deposits.................... 1,039,757 2,153,957 (5,200)(D) 3,044,514
(144,000)(G)
Borrowings.................. 801,315 643,131 (12,200)(D) 611,531
(818,878)(G)
(1,837)(D)
Other liabilities........... 71,829 24,978 -- 96,807
---------- ---------- ---------- ----------
Total liabilities........... 1,912,901 2,822,066 (982,115) 3,752,852
---------- ---------- ---------- ----------
STOCKHOLDERS' EQUITY
Common stock................ 310 100 (100)(F) 310
Additional paid-in-capital.. 150,966 53,190 (53,190)(F) 175,488
24,522 (C)
Retained earnings........... 149,403 94,926 (94,926)(F) 149,403
Treasury stock.............. (149,865) (8,155) 8,155 (F) --
Unearned compensation and
ESOP shares................ (16,013) (1,837) 149,865 (F)
Accumulated other
comprehensive.............. 1,837 (F) (16,013)
Loss...................... (69) (29,674) 29,674 (F) (69)
---------- ---------- ---------- ----------
Total stockholders'
equity................... 134,732 108,550 65,837 309,119
---------- ---------- ---------- ----------
Total liabilities and
stockholders equity........ $2,047,633 $2,930,616 $ (916,278) $4,061,971
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
combined condensed consolidated financial information.
87
<PAGE>
Queens County Bancorp. Inc. and Haven Bancorp, Inc.
Unaudited Pro Forma Combined Condensed Consolidated Statement of Income
For the Year Ended December 31, 1999
(In thousands, except shares and per share data)
<TABLE>
<CAPTION>
Queens Haven Pro Forma Pro Forma
Historical Historical Adjustment Combined
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income:
Loans......................... $ 131,618 $ 119,413 $ (51,170)(G) $ 215,647
15,786 (G)
Securities.................... 11,062 64,308 (21,240)(G) 71,219
17,089 (G)
Money market investments...... 443 142 585
---------- --------- --------- ----------
Total interest income....... 143,123 183,863 (39,535)(G) 287,451
---------- --------- --------- ----------
Interest expense:
Deposits...................... 43,937 75,441 (7,560)(G) 113,318
1,300 (G)
Borrowed funds................ 30,283 37,465 (51,098)(G) 28,850
12,200 (G)
---------- --------- --------- ----------
Total interest expense...... 74,220 112,906 (45,158)(G) 141,968
---------- --------- --------- ----------
Net interest income......... 68,903 70,957 5,623 145,483
Provision for loan losses....... -2,400 3,625 -- 1,225
---------- --------- --------- ----------
Net interest income after
provision for loan losses.... 71,303 67,332 5,623 144,258
---------- --------- --------- ----------
Non-interest income:
Net gains on sales
activities................... -- 750 750
Fee and other income.......... 2,523 31,481 34,004
---------- --------- ----------
Total non-interest income... 2,523 32,231 34,754
---------- --------- ----------
Non-interest expense
Compensation and benefits..... 13,458 44,687 58,145
Occupancy and equipment....... 2,289 12,988 15,277
Other......................... 5,643 22,418 28,061
Amortization of excess of cost
over fair value of net assets
acquired..................... 6,455 (K) 6,455
---------- --------- --------- ----------
Total non-interest expense.. 21,390 80,093 6,455 107,938
Income before income tax
expense........................ 52,436 19,470 (832) 71,074
Income tax expense.............. 20,772 6,863 (308)(I) 27,327
---------- --------- --------- ----------
Net income...................... $ 31,664 $ 12,607 $ (524) $ 43,747
========== ========= ========= ==========
Net income:
Applicable to common
stockholders:
Basic......................... $ 31,664 $ 12,607 $ 43,747
Diluted....................... 31,664 12,607 43,747
Net income per share:
Basic......................... 1.71 1.44 1.56
Diluted....................... 1.67 1.38 1.54
Weighted average common shares:
Basic......................... 18,526,890 8,749,336 28,010,878
Diluted....................... 18,939,867 9,165,862 28,423,855
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
combined condensed consolidated financial information.
88
<PAGE>
Unaudited Pro Forma Combined Condensed Consolidated Statement of Income
For the Six Months Ended June 30, 2000
(In thousands, except shares and per share data)
<TABLE>
<CAPTION>
Queens Haven Pro Forma Pro Forma
Historical Historical Adjustment Combined
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Interest income:
Loans........................ $ 67,729 $ 68,530 $ (25,585)(G) $ 118,567
7,893 (G)
Securities................... 6,472 34,798 (10,620)(G) 39,194
8,544 (G)
Money market investments..... 129 260 -- 389
---------- --------- --------- -----------
Total interest income...... 74,330 103,588 (19,768) 158,150
---------- --------- --------- -----------
Interest expense:
Deposits..................... 20,899 42,511 (3,780)(G) 60,280
650 (G)
Borrowed funds............... 20,669 21,666 (25,549)(G) 22,886
6,100 (G)
---------- --------- --------- -----------
Total interest expense..... 41,568 64,177 (22,579) 83,166
---------- --------- --------- -----------
Net interest income........ 32,762 39,411 2,811 74,984
Provision for loan losses...... -- 1,150 -- 1,150
---------- --------- --------- -----------
Net interest income after
provision for loan losses... 32,762 38,261 2,811 73,834
---------- --------- --------- -----------
Non-interest income:
Net gains on sales
activities.................. -- 126 -- 126
Fee and other income......... 2,360 17,194 -- 19,554
---------- --------- --------- -----------
Total non-interest income.. 2,360 17,320 -- 19,680
---------- --------- --------- -----------
Non-interest expense:
Compensation and benefits.... 6,919 19,578 -- 26,497
Occupancy and equipment...... 1,424 6,765 -- 8,189
Other........................ 2,815 18,152 -- 20,697
Amortization of excess of
cost over fair value of net
assets acquired............. -- -- 3,228 (K) 3,228
---------- --------- ---------
Total non-interest
expense................... 11,158 44,495 3,228 58,881
Income before income tax
expense....................... 23,964 11,086 (416)(H) 34,634
Income tax expense............. 8,600 3,899 (154)(I) 12,345
---------- --------- --------- -----------
Net income..................... $ 15,364 $ 7,187 $ (262) $ 22,289
========== ========= ========= ===========
Net income:
Applicable to common
stockholders:
Basic........................ $ 15,364 $ 7,187 $ 22,289
Diluted...................... 15,364 7,187 22,289
Net income per share:
Basic........................ 0.87 0.81 0.82
Diluted...................... 0.86 0.77 0.81
Weighted average common shares:
Basic........................ 17,678,976 8,882,499 27,162,964
Diluted...................... 17,868,680 9,277,421 27,352,668
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
combined condensed consolidated financial information.
89
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and June 30, 2000
(A) Basis of Presentation
The Unaudited Pro Forma Combined Condensed Consolidated Statement of
Financial Condition of Queens and subsidiary and Haven and subsidiaries at June
30, 2000 has been prepared as if the merger had been consummated on that date.
The Unaudited Pro Forma Combined Condensed Consolidated Statements of
Operations for the year ended December 31, 1999 and the six months ended June
30, 2000 were prepared as if the merger had been consummated on January 1, 1999
and January 1, 2000, respectively. The unaudited pro forma combined condensed
consolidated financial statements are based on the historical financial
statements of Queens and Haven after giving effect to the merger under the
purchase method of accounting and the assumptions and adjustments in the notes
that follow.
Assumptions relating to the pro forma adjustments set forth in the unaudited
pro forma combined condensed consolidated financial statements are summarized
as follows:
(i) Estimated fair values--Estimated fair values for securities
available for sale, loans, deposits and borrowings were obtained from
analysis performed by Salomon Smith Barney. The resulting net
discount/premium on securities held-to-maturity and loans, respectively,
for purposes of these pro forma financial statements, is being
accreted/amortized to interest income on a sum-of-the-years digits method
over eight and ten years, respectively. The actual discount/premium will be
accreted/amortized to interest income to produce a constant yield to
maturity. The resulting net premium and discount on deposits and
borrowings, respectively, is being amortized/accreted into interest expense
on a sum-of-the-years digits method over their remaining estimated lives.
(ii) Income taxes--a net deferred tax asset was recorded equal to the
deferred tax consequences associated with the differences between the tax
basis and book basis of the assets acquired and liabilities assumed, using
a statutory tax rate of 47%.
(B) The $8.0 million reversal from Haven's allowance for loan losses
resulted from the analysis of the portfolio retained after giving consideration
to the disposition of up to approximately $700.0 million in loans at the time
of closing of the merger. The reversal of the allowance is not reflected in the
Unaudited Pro Forma Combined Condensed Consolidated Statements of Operations as
the statements are prepared as if the merger had occurred on January 1, 2000.
The reversal of the allowance for loan losses is also not reflected in the
Unaudited Pro Forma Combined Condensed Consolidated Statements of Financial
Condition as of June 30, 2000.
(C)
<TABLE>
<CAPTION>
Cash 100% Stock Total
------- ---------- --------
(In thousands)
<S> <C> <C> <C>
Haven's total common shares outstanding(i)
(ii)........................................ $174,387 $174,387
Cash-out of incremental stock options, net of
tax(iii).................................... $ 5,959 5,959
Estimated transaction cost(iv)............... 31,000 31,000
------- -------- --------
$36,959 $174,387 $211,346
</TABLE>
--------
(i) Based on 9,119,219 shares of Haven common stock outstanding as of
June 30, 2000.
90
<PAGE>
QUEENS COUNTY BANCORP, INC. AND HAVEN BANCORP, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(ii) Based on average market closing price between June 23 and June
29, 2000 at $18.38125 of Queens common stock and exchange ratio
of 1.04 of Haven common stock to Queens common stock.
(iii) Assumes that none of the holders of Haven's stock options elect
to exchange such option of Queens' options. As of June 30, 2000,
there were 1,271,708 outstanding options to purchase Haven
common stock with a weighted average price of $10.02. Statutory
tax rate at 47%.
(iv) Estimated transaction costs of $31 million consist of the
following:
<TABLE>
<CAPTION>
(In
thousands)
----------
<S> <C>
Merger-related compensation and severance..................... $11,000
Professional services......................................... 4,000
System and facilities conversion and other expense............ 16,000
</TABLE>
(D) Purchase accounting adjustments are estimated as follows:
<TABLE>
<CAPTION>
(In thousands)
------------------
<S> <C> <C>
Haven's net assets-historical at June 30, 2000(i).... $108,550
Adjustments to Haven's statement of condition:....... $ 795
Termination of Haven's ESOP (payoff of loan
payable)............................................ 206
Termination of Haven's RRP........................... 836
Termination of Haven's ESOP Unearned compensation.... 1,837
Subtotal.............................................
Fair value adjustment:(ii)...........................
Securities available for sale(iii)................... (76,900)
Securities available for sale (to restore the
markdown on June 30, 2000).......................... 45,748
Loans receivable..................................... (85,200)
Deposits............................................. 5,200
Borrowings........................................... 12,200
Allowance for loan losses............................ 8,000
Subtotal--net fair value adjustments................. (90,952)
Tax effects of fair value adjustments at 47%......... 62,807
Total net adjustments to net assets acquired......... (28,145)
Adjusted net assets acquired......................... 82,242
</TABLE>
--------
(i) After adjustments as described above under note B.
(ii) Fair value adjustments in accordance with purchase accounting
under generally accepted accounting principles.
(iii) Based on the intent to accelerate the disposition of such
assets, an estimated purchase accounting adjustment was made.
(E) The excess of cost over the fair value of net assets acquired is set
forth below:
<TABLE>
<CAPTION>
(In thousands)
--------------
<S> <C>
Total cost:
Stock portion........................................... $174,387
Cash portion............................................ 36,959
Net assets acquired..................................... 211,346
Total excess of cost over the fair value of net assets
acquired................................................. 82,242
--------
$129,104
</TABLE>
91
<PAGE>
QUEENS COUNTY BANCORP, INC. AND HAVEN BANCORP, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(F) Purchase accounting adjustments to eliminate Haven's stockholders'
equity account
(G) Pro forma adjustments to interest income and interest expense were
calculated as follows:
<TABLE>
<CAPTION>
For the Year For the Six
Ended Months
December 31, Ended
1999 June 2000
------------ -----------
(In thousands)
<S> <C> <C>
Reduction in interest income on securities sold
to fund acquisition and restructuring ($300,000
at 7.08%)....................................... $(21,240) $(10,620)
Reduction in interest income on loans sold to
fund acquisition and restructuring ($700,000 at
7.31%).......................................... (51,170) (25,585)
Accretion of discount on securities (8 years by
using Sum of the Year Digit method)............. 17,089 8,544
Accretion of discount on loans (10 years by using
Sum of the Year Digit method)................... 15,786 7,893
-------- --------
Total net adjustments--interest income....... (39,535) (19,768)
Reduction in interest expense on deposits
($144,000 @5.25%)............................... (7,560) (3,780)
Reduction in interest on FHLB borrowings
($818,878 @6.24%)............................... (51,098) (25,549)
Amortization of premium on deposits (7 years by
using Sum of the Year Digit method)............. 1,300 650
Amortization of premium on FHLB borrowings (1
year)........................................... 12,200 6,100
-------- --------
Total net adjustments--interest expense...... (45,158) (22,579)
</TABLE>
(H) The amortization of the excess of cost over the fair value of net
assets acquired is assumed to be straight-line over a period of twenty
years.
(I) Income tax expense was calculated using Queen's estimated effective
tax rate of 37%.
(J) Basic and fully diluted weighted average number of common and common
stock equivalents utilized for the calculation per share for the
periods presented were calculated using Queen's historical weighted
average common and common stock equivalents plus 9,483,988 shares
issued to Haven stockholders under the terms of the merger agreement.
(K) The following table summarizes the estimated impact of the
amortization and accretion of the purchase accounting adjustments made
in connection with the merger on Queen's results of operation for the
next years:
<TABLE>
<CAPTION>
Projected Future Net Increase
Amounts for the (Decrease)
Years Ended Excess of Cost over Fair Net in Income
December 31, Value of Net Assets Acquired (Accretion) Before Taxes
---------------- ---------------------------- ----------- ------------
(In thousands)
<S> <C> <C> <C>
2000................ $ 6,455 $(19,375) $ 12,920
2001................ 6,455 (28,005) 21,550
2002................ 6,455 (24,436) 17,981
2003................ 6,455 (20,866) 14,411
2004................ 6,455 (17,297) 10,842
2005 and
thereafter......... 96,828 (34,800) (62,028)
</TABLE>
92
<PAGE>
EXPERTS
The consolidated financial statements of Queens and its subsidiaries as of
December 31, 1999 and 1998, and for each of the years in the three-year period
ended December 31, 1999, have been incorporated by reference into this document
and in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference in Queens' Annual Report on Form 10-K
for the year ended December 31, 1999, which is incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of Haven and its subsidiaries as of
December 31, 1999 and 1998, and for each of the years in the three-year period
ended December 31, 1999, have been incorporated by reference in this document
and in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference in Haven's Amended 1999 Annual Report on
Form 10-K, which is incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
Queens expects representatives of KPMG LLP to attend Queens' special
meeting, and Haven also expects representatives of KPMG LLP to attend Haven's
special meeting. These representatives will have an opportunity to make a
statement if they desire to do so, and we expect that they will be available to
respond to any appropriate questions you may have.
OTHER MATTERS
As of the date of this document, the Queens board of directors and the Haven
board of directors know of no matters that will be presented for consideration
at their respective special meetings other than as described in this document.
However, if any other matter shall properly come before these special meetings
or any adjournment or postponement thereof and shall be voted upon, the
proposed proxy will be deemed to confer authority to the individuals named as
authorized therein to vote the shares represented by the proxy as to any
matters that fall within the purposes set forth in the notice of special
meeting. However, no proxy that is voted against the merger agreement will be
voted in favor of any adjournment or postponement.
Queens 2001 Annual Meeting Stockholder Proposals
To be considered for inclusion in the Company's proxy statement and form of
proxy relating to the Annual Meeting of Stockholders to be held in 2001, a
shareholder proposal must be received by the Secretary of Queens at Queens'
offices at 38-25 Main Street, Flushing, New York 11354 not later than November
17, 2000. Any such proposal will be subject to 17 C.F.R. ss. 240.14a-8 of the
Rules and Regulations under the Securities Exchange Act of 1934, as amended.
The Queens by-laws provide an advance notice procedure for a stockholder to
properly bring business before an Annual Meeting. The stockholder must give
written advance notice to the Secretary of Queens not less than ninety (90)
days before the date originally fixed for such meeting, provided, however, that
in the event that less than one hundred (100) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder, to be timely, must be received not later than the close of
business on the tenth day following the date on which Queens' notice to
stockholders of the annual meeting date was mailed or such public disclosure
was made.
In order for notice of a stockholder proposal for consideration at Queens'
2001 Annual Meeting to be timely, Queens would have to receive such notice no
later than January 19, 2001, assuming that the 2001 Annual Meeting is held on
April 18, 2001 and that Queens provides at least 100 days' notice or public
disclosure of the date of the meeting. The advance notice by stockholders must
include the stockholder's name and address, as they appear on the Company's
records of stockholders, a brief description of the proposed business, the
reason for conducting such business at the Annual Meeting, the class and number
of shares of the
93
<PAGE>
Company's capital stock that are beneficially owned by such stockholder, and
any material interest of such stockholder in the proposed business. In the case
of nominations to the board of directors, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
Queens to include in its proxy statement and proxy relating to an annual
meeting any stockholder proposal which does not meet all of the requirements
for inclusion established by the SEC in effect at the time such proposal is
received.
Haven 2001 Annual Meeting Stockholder Proposals
Haven will hold a 2001 Annual Meeting of Stockholders only if the merger is
not consummated before the time of such meeting. To be considered for inclusion
in the proxy statement and proxy relating to the Annual Meeting of Stockholders
to be held in 2001, a stockholder proposal must be received by the Secretary of
Haven at 615 Merrick Avenue, Westbury, New York 11590, not later than December
7, 2000. Any such proposal will be subject to applicable laws, rules and
regulations, including 17 C.F.R. ss. 240.14a-8 of the Rules and Regulations
under the Exchange Act.
The Haven by-laws provide an advance notice procedure for a stockholder to
properly bring business before an Annual Meeting. The stockholder must give
written advance notice to the Secretary of Haven not less than ninety (90) days
before the date originally fixed for such meeting; provided, however, that in
the event less than one hundred (100) days' notice or prior public disclosure
of the date of the Annual meeting is given or made to stockholders, notice by
the stockholder to be timely must be received not later than the close of
business on the tenth day following the date on which Haven's notice to
stockholders of the Annual Meeting date was mailed or such public disclosure
was made. The advance notice by stockholders must include the stockholder's
name and address, as they appear on Haven's record of stockholders, a brief
description of the proposed business, the reason for conducting such business
at the Annual Meeting, the class and number of shares of Haven's capital stock
that are beneficially owned by such stockholder and any material interest of
such stockholder in the proposed business. In the case of nominations to the
Board of Directors, certain information regarding the nominee must be provided.
Nothing in this paragraph shall be deemed to require Haven to include in its
proxy statement and proxy relating to an Annual Meeting any stockholder
proposal which does not meet all of the requirements of inclusion established
by the SEC in effect at the time such proposal is received.
94
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Queens has filed with the SEC a registration statement under the Securities
Act that registers the distribution to Haven stockholders of the shares of
Queens stock to be issued in connection with the merger. The registration
statement, including the attached exhibits and schedules, contains additional
relevant information about Queens and Queens stock. The rules and regulations
of the SEC allow us to omit certain information included in the registration
statement from this document.
In addition, Queens and Haven file reports, proxy statements and other
information with the SEC under the Securities Exchange Act. You may read and
copy this information at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
also maintains an Internet worldwide web site that contains reports, proxy
statements and other information about issuers, like Queens and Haven, who file
electronically with the SEC. The address of the site is http://www.sec.gov.
You should also be able to inspect reports, proxy statements and other
information about Queens and Haven at the offices of the Nasdaq Stock Market,
Inc., 33 Whitehall Street, New York, New York 10004.
The SEC allows Queens and Haven to incorporate by reference information into
this document. This means that Queens and Haven can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is considered to be a part
of this document, except for any information that is superseded by information
that is included directly in this document.
This document incorporates by reference the documents listed below that
Queens and Haven previously filed with the SEC. They contain important
information about the companies and their financial condition.
<TABLE>
<CAPTION>
Queens SEC Filings Period or Date Filed
------------------ --------------------
<S> <C>
Annual Report on Form 10-K...................... Year ended December 31, 1999
Quarterly Reports on Form 10-Q.................. Quarters ended March 31, 2000 and June 30, 2000
Current Reports on Form 8-K..................... Filed on June 30, 2000 and October 12, 2000
The description of Queens common stock set forth
in the registration statement on Form 8-A (No.
0-22278) filed pursuant to Section 12 of the
Securities Exchange Act, including any amendment
or report filed with the SEC for the purpose of
updating this description....................... Filed on August 19, 1993
The description of the rights agreement,
contained in the registration statement on Form
8-A filed pursuant to Section 12 of the
Securities Exchange Act, including any amendment
or report filed with the SEC for the purpose of
updating this description....................... January 23, 1996
</TABLE>
95
<PAGE>
<TABLE>
<CAPTION>
Haven SEC Filings Period or Date Filed
----------------- --------------------
<C> <S>
Amended Annual Report on Form 10-K.............. Year ended December 31, 1999
Quarterly Reports on Form 10-Q.................. Quarters ended March 31, 2000 and June 30,
2000
Current Reports on Form 8-K..................... Filed on April 11, 2000, April 24, 2000 and
June 30, 2000
The description of Haven common stock set forth
in the registration statement on Form 8-A filed
pursuant to Section 12 of the Securities
Exchange Act, including any amendment or report
filed with the SEC for the purpose of updating
this description................................ Filed on April 26, 1993
</TABLE>
In addition, Queens and Haven also incorporate by reference additional
documents that either company may file with the SEC between the date of this
document and the date of the Queens special meeting or Haven special meeting.
These documents include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as
proxy statements.
Queens has supplied all information contained or incorporated by reference
in this document relating to Queens, as well as all pro forma financial
information, and Haven has supplied all information relating to Haven.
Documents incorporated by reference are available from Queens and Haven
without charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this document. You can
obtain documents incorporated by reference in this document by requesting them
in writing or by telephone from the appropriate company at the following
addresses:
Queens County Bancorp, Inc. Haven Bancorp, Inc.
Investor Relations Department Attention: Catherine Califano,
38-25 Main Street Senior Vice President and
Flushing, New York 11354 Chief Financial Officer
Phone: (718) 359-6400 615 Merrick Avenue
Westbury, New York 11590
Phone: (516) 683-4483
Queens and Haven stockholders requesting documents should do so by November
14, 2000 to receive them before the special meetings. You will not be charged
for any of these documents that you request. If you request any incorporated
documents from Queens or Haven, Queens or Haven will mail them to you by first
class mail, or another equally prompt means, within one business day after it
receives your request.
Neither Queens nor Haven has authorized anyone to give any information or
make any representation about the merger or our companies that is different
from, or in addition to, that contained in this document or in any of the
materials that have been incorporated into this document. Therefore, if anyone
does give you information of this sort, you should not rely on it. If you are
in a jurisdiction where offers to exchange or sell, or solicitations of offers
to exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
96
<PAGE>
APPENDIX A
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Agreement and Plan of merger
dated as of June 27, 2000
by and between
Queens County Bancorp, Inc.
and
Haven Bancorp, Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Article I The merger.................................................... A-1
Section 1.1. Structure of the Merger............................... A-1
Section 1.2. Effect on Outstanding Shares of Haven Common Stock.... A-2
Section 1.3. Exchange Procedures................................... A-2
Section 1.4. Stock Options......................................... A-4
Directors and Officers of Queens after Effective
Section 1.5. Time.................................................. A-5
Section 1.6. Certificate of Incorporation and By-laws.............. A-5
Article II Representations and Warranties............................... A-5
Section 2.1. Disclosure Letters.................................... A-5
Section 2.2. Standards............................................. A-5
Section 2.3. Representations and Warranties of Haven............... A-6
Section 2.4. Representations and Warranties of Queens.............. A-17
Article III Conduct Pending the Merger.................................. A-24
Conduct of Haven's Business Prior to the Effective
Section 3.1. Time.................................................. A-24
Section 3.2. Forbearance by Haven.................................. A-24
Conduct of Queens' Business Prior to the Effective
Section 3.3. Time.................................................. A-26
Section 3.4. Forbearance by Queens................................. A-26
Article IV Covenants.................................................... A-27
Section 4.1. Acquisition Proposals................................. A-27
Section 4.2. Certain Policies of Haven............................. A-28
Section 4.3. Access and Information................................ A-28
Section 4.4. Certain Filings, Consents and Arrangements............ A-29
Section 4.5. Antitakeover Provisions............................... A-30
Section 4.6. Additional Agreements................................. A-30
Section 4.7. Publicity............................................. A-30
Section 4.8. Stockholders Meetings................................. A-30
Section 4.9. Joint Proxy Statement-Prospectus; Comfort Letters..... A-31
Section 4.10. Registration of Queens Common Stock................... A-31
Section 4.11. Affiliate Letters..................................... A-32
Section 4.12. Notification of Certain Matters....................... A-32
Section 4.13. Directors and Officers................................ A-32
Section 4.14. Indemnification; Directors' and Officers' Insurance... A-32
Section 4.15. Tax-Free Reorganization Treatment..................... A-33
Section 4.16. Employees; Benefit Plans and Programs................. A-34
Section 4.17. Advisory Board........................................ A-35
Article V Conditions to Consummation.................................... A-35
Section 5.1. Conditions to Each Party's Obligations................ A-35
Section 5.2. Conditions to the Obligations of Queens............... A-36
Section 5.3. Conditions to the Obligations of Haven................ A-37
Article VI Termination.................................................. A-38
Section 6.1. Termination........................................... A-38
Section 6.2. Effect of Termination................................. A-40
Article VII Closing, Effective Date and Effective Time.................. A-41
Section 7.1. Effective Date and Effective Time..................... A-41
Section 7.2. Deliveries at the Closing............................. A-41
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Article VIII Certain Other Matters........................................ A-41
Section 8.1. Certain Definitions; Interpretation..................... A-41
Section 8.2. Survival................................................ A-41
Section 8.3. Waiver; Amendment....................................... A-41
Section 8.4. Counterparts............................................ A-42
Section 8.5. Governing Law........................................... A-42
Section 8.6. Expenses................................................ A-42
Section 8.7. Notices................................................. A-42
Section 8.8. Entire Agreement; etc................................... A-42
Section 8.9. Assignment.............................................. A-43
Section 8.10. Waiver of Jury Trial.................................... A-43
</TABLE>
Exhibits
Exhibit A - Form of Affiliate Letter [Section 4.11]
A-ii
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Section
------------ ----------------
<S> <C>
Advisory Board................................................ 4.17
Acquisition Transaction....................................... 3.4(g)
Acquisition Proposal.......................................... Intro
Agreement..................................................... Intro
Average Index Price........................................... 6.1(e)
Average Queens Market Value................................... 1.2(a)
Bank Regulator................................................ 2.3(i)
CFS Bank...................................................... 2.2(b)
Closing....................................................... 7.1
Closing Date.................................................. 7.1
Code.......................................................... Intro. Statement
Confidentiality Agreement..................................... 4.1
Converted Options............................................. 1.4(a)
Costs......................................................... 4.14(a)
Covered Agreements............................................ 8.8
Covered Person................................................ 2.3(y)
Derivatives Contract.......................................... 2.3(x)(ii)
DGCL.......................................................... 1.1
Disclosure Letter............................................. 2.1
Effective Date................................................ 7.1
Effective Termination Date.................................... 6.1(e)(ii)
Effective Time................................................ 7.1
Employment Agreements......................................... 2.3(y)
Environmental Law............................................. 2.3(q)(ii)
ERISA......................................................... 2.3(m)
ERISA Affiliate............................................... 2.4(n)
Exchange Act.................................................. 2.3(f)(i)
Exchange Agent................................................ 1.3(a)
Exchange Ratio................................................ 1.2(a)
Excluded Shares............................................... 1.2(a)
FDIA.......................................................... 2.3(a)(iii)
FDIC.......................................................... 2.3(a)(iv)
FHLB.......................................................... 2.3(a)(iv)
FRB........................................................... 2.4(f)(ii)
GAAP.......................................................... 2.2(b)
Governmental Entity........................................... 2.3(h)
Haven......................................................... Intro
Haven Certificate............................................. 1.2(a)
Haven Common Stock............................................ Intro. Statement
Haven Employee................................................ 4.16(a)
Haven Employee Plans.......................................... 2.3(m)
Haven's ESOP.................................................. 4.16(b)(iii)
Haven Option Agreement........................................ Intro. Statement
Haven Option.................................................. 1.4(a)
Haven Option Plans............................................ 1.4(a)
Haven Pension Plan............................................ 2.3(m)
Haven Preferred Stock......................................... 2.3(b)(i)
Haven Preferred Share Purchase Right.......................... 1.2(a)
Haven Qualified Plan.......................................... 2.3(m)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Defined Term Section
------------ ----------------
<S> <C>
Haven Rights Agreement......................................... 1.2(a)
Haven's Reports................................................ 2.3(f)(i)
Haven RRPs..................................................... 1.2
Hazardous Material............................................. 2.3(q)(ii)
HOLLA.......................................................... 2.3(a)
Indemnified Party.............................................. 4.14(a)
Index Group.................................................... 6.1(e)
Index Price.................................................... 6.1(e)
Index Ratio.................................................... 6.1(e)
Initial Queens Market Value.................................... 6.1(e)
IRS............................................................ 2.3(m)
Joint Proxy Statement-Prospectus............................... 2.3(e.e.)
Letter of Transmittal.......................................... 1.3(a)
Loan........................................................... 2.3(r)
Loan Property.................................................. 2.3(q)(ii)
Material Adverse Effect........................................ 2.2(b)
Maximum Agreement.............................................. 4.14(d)
Merger......................................................... 1.1
Merger Consideration........................................... 1.2(a)
NASD........................................................... 2.3(f)(ii)
Nasdaq Stock Market............................................ 4.10(c)
New Queens Directors........................................... 4.13(a)
New Compensation and Benefits Program.......................... 4.16(a)(ii)
Option Washout Payment......................................... 1.7(b)
OREO........................................................... 2.3(r)(iii)
OTS............................................................ 2.3(e)
Participation Facility......................................... 2.3(q)(ii)
PBGC........................................................... 2.3(m)
Queens......................................................... Intro. Statement
Queens Bank.................................................... 2.2(b)
Queens Common Stock............................................ 1.2(a)
Queens Employee Plan........................................... 2.4(n)
Queens Market Value............................................ 6.1(e)
Queens Pension Plan............................................ 2.4(n)
Queens Preferred Stock......................................... 2.4(b)(i)
Queens Qualified Plan.......................................... 2.4(n)
Queens Ratio................................................... 6.16
Queens Rights Agreement........................................ 1.2(a)
Queens' Reports................................................ 2.4(f)(i)
Registration Statement......................................... 2.3(ee)
Requisite Regulatory Approvals................................. 2.3(e)
SAIF........................................................... 2.3(a)(iv)
SEC............................................................ 2.3(f)(i)
Securities Act................................................. 2.3(ee)
SRO............................................................ 2.3(f)(ii)
Significant Subsidiary......................................... 2.3(a)
Starting Date.................................................. 6.1(e)
Stock Adjustment............................................... 1.2(b)
Stockholder Meeting............................................ 4.8
Subsidiary..................................................... 2.3(a)
Unsolicited Acquisition Proposal............................... 4.1
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Defined Term Section
------------ ----------
<S> <C>
Third Party Non-Regulatory Consents.................................. 5.1(b)
Valuation Date....................................................... 6.1(e)
Voting Debt.......................................................... 2.3(b)(ii)
</TABLE>
A-v
<PAGE>
AGREEMENT AND PLAN OF MERGER
This is an Agreement and Plan of merger, dated as of the 27th day of June,
2000 ("Agreement"), by and between Queens County Bancorp, Inc., a Delaware
corporation ("Queens"), and Haven Bancorp, Inc., a Delaware corporation
("Haven").
INTRODUCTORY STATEMENT
The Board of Directors of each of Queens and Haven (i) has determined that
this Agreement and the business combination and related transactions
contemplated hereby are in the best interests of Queens and Haven,
respectively, and in the best long-term interests of their respective
stockholders, (ii) has determined that this Agreement and the transactions
contemplated hereby are consistent with, and in furtherance of, their
respective business strategies and (iii) has approved, at meetings of each of
such Boards of Directors, this Agreement.
Concurrently with the execution and delivery of this Agreement, and as a
condition and inducement to Queens' willingness to enter into this Agreement,
Queens and Haven have entered into a stock option agreement ("Option
Agreement"), pursuant to which Haven has granted to Queens an option to
purchase shares of Haven's common stock, par value $.01 per share ("Haven
Common Stock"), upon the terms and conditions contained therein.
The parties hereto intend that the Merger shall qualify as a reorganization
under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as
amended ("Code"), for federal income tax purposes.
Queens and Haven desire to make certain representations, warranties and
agreements in connection with the business combination and related transactions
provided for herein and to prescribe various conditions to such transactions.
In consideration of their mutual promises and obligations hereunder, the
parties hereto adopt and make this Agreement and prescribe the terms and
conditions hereof and the manner and basis of carrying it into effect, which
shall be as follows:
ARTICLE I
The Merger
Section 1.1. Structure of the Merger. On the Effective Date (as defined
herein), Haven will merge with and into Queens ("Merger"), with Queens being
the surviving entity, pursuant to the provisions of, and with the effect
provided in, the Delaware General Corporation Law ("DGCL"). Subject to the
receipt of any necessary clearances, the parties intend that the name of the
Surviving Corporation shall be "New York Community Bancorp, Inc." (or a
variation thereof acceptable to Queens). Upon consummation of the Merger, the
separate corporate existence of Haven shall cease. Queens shall continue to be
governed by the laws of the State of Delaware, and its separate corporate
existence, with all of its rights, privileges, immunities, powers and
franchises, shall continue unaffected by the Merger. Queens may at any time
prior to the Effective Time change the method of effecting the combination with
Haven (including, without limitation, the provisions of this Article I) if and
to the extent it deems such change to be necessary or appropriate; provided,
however, that no such change shall (1) alter or change the amount or kind of
consideration to be issued to holders of Haven Common Stock as provided for in
this Agreement, (2) adversely affect the tax treatment of Haven or Haven's
stockholders as a result of receiving the Merger Consideration (as defined
herein), (3) materially impede or delay consummation of the transactions
contemplated by this Agreement or (4) adversely effect the obligations of
Queens hereunder. In the event of such an election, the parties agree to
execute an appropriate amendment to this Agreement in order to reflect such
election.
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<PAGE>
Section 1.2. Effect on Outstanding Shares of Haven Common Stock.
(a) By virtue of the Merger, automatically and without any action on the
part of the holders of Haven Common Stock, each share of Haven Common Stock
issued and outstanding at the Effective Time (as defined herein), other than
(i) shares held directly or indirectly by Queens (other than shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted), (ii)
shares held by Haven as treasury stock and (iii) unallocated shares held in the
Amended and Restated Columbia Federal Savings Bank Recognition and Retention
Plan for Officers and Employees and the Amended and Restated Columbia Federal
Savings Bank Recognition and Retention Plan for Outside Directors
(collectively, "Haven RRPs") (such shares referred to in clauses (i), (ii) and
(iii) being referred to herein as the "Excluded Shares"), together with the
related preferred share purchase right ("Haven Preferred Share Purchase Right")
issued pursuant to the Stockholder Rights Agreement ("Haven Rights Agreement"),
dated as of January 25, 1996, between Haven and Chemical Bank, as Rights Agent,
to the extent that they shall exist, shall become and be converted into the
right to receive 1.04 shares (the "Exchange Ratio") of Queens common stock par
value $0.01 per share ("Queens Common Stock"), together with the related
preferred share purchase right issuable pursuant to any rights agreement
entered into by Queens ("Queens Rights Agreement") provided, however, that
notwithstanding any other provision hereof, no fraction of a share of Queens
Common Stock and no certificates or scrip therefor will be issued in the
Merger; instead Queens shall pay to each holder of Haven Common Stock who would
otherwise be entitled to a fraction of a share of Queens Common Stock an amount
in cash, rounded to the nearest cent, determined by multiplying such fraction
by the last reported sale price of Queens Common Stock on the day immediately
preceding the Effective Time. The shares of Queens Common Stock and any cash
for fractional shares are collectively referred to in this Agreement as the
"Merger Consideration."
At and after the Effective Time, each certificate ("Haven Certificate")
previously representing shares of Haven Common Stock (except as specifically
set forth in this Section 1.2) shall represent only the right to receive the
Merger Consideration. The record holder of such outstanding Haven Certificate
shall, after the Effective Date, be entitled to vote the shares of Queens
Common Stock into which the shares of Haven Common Stock evidenced by such
certificate shall have been so converted on any matters on which the holders of
record of Queens Common Stock, as of any date subsequent to the Effective Date,
shall be entitled to vote.
(b) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Queens Common Stock shall have been changed into a
different number of shares or into a different class (or a record date for such
a change shall have been determined) by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares (each, a "Stock Adjustment"), the Exchange Ratio shall be adjusted
correspondingly to the extent appropriate to reflect the Stock Adjustment.
(c) As of the Effective Time, each Excluded Share shall be canceled and
retired and shall cease to exist, and no exchange or payment shall be made with
respect thereto. All shares of Queens Common Stock and Queens Preferred Stock
(as defined herein) that are held by Haven, if any, other than shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted, shall
become treasury stock of Queens.
Section 1.3. Exchange Procedures.
(a) Appropriate transmittal materials (the "Letter of Transmittal") will be
mailed within three business days after the Effective Date to each holder of
record of Haven Common Stock as of the Effective Time. Prior to the Effective
Time, Queens shall deposit, or shall cause to be deposited, with a bank or
trust company as shall be selected by Queens and reasonably acceptable to Haven
(the "Exchange Agent"), for the benefit of the holders of shares of Haven
Common Stock, for exchange in accordance with this Section 1.3, an estimated
amount of cash sufficient to pay the aggregate amount of cash in lieu of
fractional shares to be paid pursuant to Section 1.2(a), and Queens shall
reserve for issuance with its transfer agent and registrar a sufficient number
of shares of Queens Common Stock to provide for payment of the Queens Common
Stock.
A-2
<PAGE>
(b) The Letter of Transmittal shall (i) specify that delivery shall be
effected, and risk of loss and title to Haven Certificates shall pass, only
upon delivery of Haven Certificates to the Exchange Agent, (ii) be in a form
and contain any other provisions as Queens may reasonably determine and (iii)
include instructions for use in effecting the surrender of Haven Certificates
in exchange for the Merger Consideration. Upon the proper surrender of Haven
Certificates to the Exchange Agent, together with a properly completed and duly
executed Letter of Transmittal, the holder of such Haven Certificates shall be
entitled to receive in exchange therefor (1) a certificate representing that
number of whole shares of Queens Common Stock that such holder has the right to
receive pursuant to Section 1.2 and (2) a check in the amount equal to the cash
in lieu of fractional shares that such holder has the right to receive pursuant
to Section 1.2(a) and any dividends or other distributions to which such holder
is entitled pursuant to Section 1.3(c). Haven Certificates so surrendered shall
forthwith be canceled. No later than 10 business days following receipt of the
properly completed Letter of Transmittal and the requisite Haven Certificates,
the Exchange Agent shall distribute Queens Common Stock and cash as provided
herein. The Exchange Agent shall not be entitled to vote or exercise any rights
of ownership with respect to the shares of Queens Common Stock held by it from
time to time hereunder, except that it shall receive and hold all dividends or
other distributions paid or distributed with respect to such shares for the
account of the persons entitled thereto. If there is a transfer of ownership of
any shares of Haven Common Stock not registered in the transfer records of
Haven, the Merger Consideration shall be issued to the transferee thereof if
Haven Certificates representing such Haven Common Stock are presented to the
Exchange Agent, accompanied by all documents required, in the reasonable
judgment of Queens and the Exchange Agent, (x) to evidence and effect such
transfer and (y) to evidence that any applicable stock transfer taxes have been
paid.
(c) No interest will be paid on the cash in lieu of fractional shares.
Whenever a dividend or other distribution is declared by Queens on Queens
Common Stock, the record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all shares
issuable pursuant to this Agreement, but no dividends or other distributions
declared or made after the Effective Time with respect to Queens Common Stock
shall be remitted to any person entitled to receive shares of Queens Common
Stock hereunder until such person surrenders his or her Haven Certificates in
accordance with this Section 1.3. Upon the surrender of such person's Haven
Certificates, such person shall be entitled to receive any dividends or other
distributions, without interest thereon, which theretofore had become payable
with respect to shares of Queens Common Stock represented by such person's
Haven Certificates.
(d) From and after the Effective Time there shall be no transfers on the
stock transfer records of Haven of any shares of Haven Common Stock. If, after
the Effective Time, Haven Certificates are presented to Queens, they shall be
canceled and exchanged for the Merger Consideration deliverable in respect
thereof pursuant to this Agreement in accordance with the procedures set forth
in this Section 1.3.
(e) Any portion of the aggregate amount of cash to be paid in lieu of
fractional shares pursuant to Section 1.2(a), any dividends or other
distributions to be paid pursuant to this Section 1.3 that remains unclaimed by
the stockholders of Haven for six months after the Effective Time, as well as
any proceeds from any investments, shall be repaid by the Exchange Agent to
Queens upon the written request of Queens. After such request is made, any
stockholders of Haven who have not theretofore complied with this Section 1.3
shall look only to Queens for the Merger Consideration deliverable in respect
of each share of Haven Common Stock such stockholder holds, as determined
pursuant to Section 1.2 of this Agreement, without any interest thereon. If
outstanding Haven Certificates are not surrendered prior to the date on which
such payments would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed items shall, to the extent permitted
by any abandoned property, escheat or other applicable laws, become the
property of Queens (and, to the extent not in its possession, shall be paid
over to it), free and clear of all claims or interest of any person previously
entitled to such claims. Notwithstanding the foregoing, none of Queens, the
Exchange Agent or any other person shall be liable to any former holder of
Haven Common Stock for any amount delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
A-3
<PAGE>
(f) Queens and the Exchange Agent shall be entitled to rely upon Haven's
stock transfer books to establish the identity of those persons entitled to
receive the Merger Consideration, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of stock
represented by any Haven Certificate, Queens and the Exchange Agent shall be
entitled to deposit any Merger Consideration represented thereby in escrow with
an independent third party and thereafter be relieved with respect to any
claims thereto.
(g) If any Haven Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Haven
Certificate to be lost, stolen or destroyed and, if required by the Exchange
Agent, the posting by such person of a bond in such amount as the Exchange
Agent may direct as indemnity against any claim that may be made against it
with respect to such Haven Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Haven Certificate the Merger
Consideration deliverable in respect thereof pursuant to Section 1.2.
Section 1.4. Stock Options.
(a) Subject to Section 1.4(b), each option to purchase shares of Haven
Common Stock that has been issued by Haven and is outstanding at the Effective
Time (each, a "Haven Option") pursuant to the Haven Incentive Stock Option
Plan, the Haven Stock Option Plan for Outside Directors and the Haven Stock
Incentive Plan (collectively, the "Haven Option Plans") shall be converted into
an option to purchase shares of Queens Common Stock as follows:
(i) the aggregate number of shares of Queens Common Stock issuable upon
the exercise of each converted Haven Option after the Effective Time shall
be equal to the product of (A) the Exchange Ratio multiplied by (B) the
number of shares of Haven Common Stock issuable upon exercise of the Haven
Option immediately prior to the Effective Time, such product to be rounded
to the nearest whole share of Queens Common Stock; and
(ii) the exercise price per share of each converted Haven Option shall
be equal to the quotient of the exercise price of such Haven Option at the
Effective Time divided by the Exchange Ratio, such quotient to be rounded
to the nearest whole cent;
provided, however, that, in the case of any Haven Option that is intended to
qualify as an incentive stock option under Section 422 of the Code, the number
of shares of Queens Common Stock issuable upon exercise of and the exercise
price per share for such converted Haven Option determined in the manner
provided above shall be further adjusted in such manner as Queens may determine
to be necessary to conform to the requirements of Section 424(b) of the Code.
Options to purchase shares of Queens Common Stock that arise from the operation
of this Section 1.4 shall be referred to as the "Converted Options." All
Converted Options shall be exercisable for the same period and otherwise have
the same terms and conditions applicable to Haven Options that they replace.
Prior to the Effective Time, Queens shall take, or cause to be taken, all
necessary action to effect the intent of the provisions set forth in this
Section 1.4.
(b) Notwithstanding Section 1.4(a) and subject to the provisions of this
Section 1.4(b), any Haven Option shall, if so requested by the option holder,
be canceled and shall cease to be exercisable. Any such request shall be made
in writing in the form and manner specified by Haven and reasonably acceptable
to Queens and shall be delivered to Queens at least ten (10) business days
prior to the Effective Time. In consideration for such cancellation, each
holder of a Haven Option making such request shall be paid, with respect to
each Haven Option so canceled, an amount equal to the excess (if any) of the
product of the Queens Market Value (as defined herein) times the Exchange Ratio
over the price at which the holder may acquire a share of Haven Common Stock
upon exercise of such Haven Option (such excess, the "Option Cashout Payment").
Such payment shall be made as soon as practicable following the Effective Time
or, if later in the case of any holder of a Haven Option, the date on which
such holder delivers to Haven his written acceptance of an Option Cashout
Payment as full and complete consideration for the cancellation of each Haven
Option held by such
A-4
<PAGE>
holder. Haven shall take such action as is necessary or appropriate under the
terms of Haven's Option Plans to convert each Haven Option for which such a
request is timely made as of the Effective Time, into the right to receive an
Option Cashout Payment upon the terms and conditions set forth herein. Such
payment hereunder shall be subject to withholding for applicable federal, state
and local taxes.
(c) Prior to the date of Haven stockholders meeting contemplated by Section
4.8, Haven shall take, or cause to be taken, appropriate action under the terms
of any stock option plan, agreement or arrangement under which Haven Options
have been granted to provide for the conversion of Haven Options outstanding at
the Effective Time into Converted Options and to effect any other modifications
contemplated by Section 1.4(a).
(d) Concurrently with the reservation of shares of Queens Common Stock to
provide for the payment of the Merger Consideration, Queens shall take all
corporate action necessary to reserve for future issuance a sufficient
additional number of shares of Queens Common Stock to provide for the
satisfaction of its obligations with respect to the Converted Options. As soon
as practicable following the Effective Time, Queens shall (i) cause to be
executed and delivered to each holder of a Converted Option an agreement,
certificate or other instrument, in such form and of such substance as Queens
may reasonably determine, evidencing such holder's rights with respect to the
Converted Options; and (ii) file a registration statement on Form S-8 (or any
successor or other appropriate form) and make any state filings or obtain state
exemptions with respect to the Queens Common Stock issuable upon exercise of
the Converted Options.
Section 1.5. Directors and Officers of Queens after Effective Time. At the
Effective Time, the directors and officers of Queens shall consist of (a) the
directors and officers of Queens serving immediately prior to the Effective
Time and (b) such additional persons who shall become directors or officers of
Queens as contemplated by Section 4.13 and any employment agreements entered
into by and between Queens and any officer of Haven.
Section 1.6. Certificate of Incorporation and By-laws. The Certificate of
Incorporation and By-laws of Queens immediately after the Merger shall be those
of Queens as in effect immediately prior to the Effective Time, except as may
be affected by the proposed change of name of Queens.
ARTICLE II
Representations and Warranties
Section 2.1. Disclosure Letters. On or prior to the execution and delivery
of this Agreement, Haven and Queens each shall have delivered to the other a
letter (each, its "Disclosure Letter") setting forth, among other things,
facts, circumstances and events the disclosure of which is required or
appropriate in relation to any or all of their respective representations and
warranties (and making specific reference to the Section of this Agreement to
which they relate); provided that (a) no such fact, circumstance or event is
required to be set forth in the Disclosure Letter as an exception to a
representation or warranty if its absence is not reasonably likely to result in
the related representation or warranty being deemed untrue or incorrect under
the standards established by Section 2.2 and (b) the mere inclusion of a fact,
circumstance or event in a Disclosure Letter shall not be deemed an admission
by a party that such item represents a material exception or that such item is
reasonably likely to result in a Material Adverse Effect (as defined herein).
Section 2.2. Standards.
(a) No representation or warranty of Haven or Queens contained in Sections
2.3 or 2.4, respectively, shall be deemed untrue or incorrect, and no party
hereto shall be deemed to have breached a representation or warranty, on
account of the existence of any fact, circumstance or event unless, as a direct
or indirect consequence of such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent with
any paragraph of Sections 2.3 or 2.4, as applicable, there is reasonably likely
to exist a Material Adverse Effect (as defined herein). Haven's
representations, warranties and
A-5
<PAGE>
covenants contained in this Agreement shall not be deemed to be untrue or
breached as a result of effects arising solely from actions taken in compliance
with a written request of Queens.
(b) As used in this Agreement, the term "Material Adverse Effect" means
either (i) an effect which is material and adverse to the business, financial
condition or results of operations of Haven or Queens, as the context may
dictate, and its Subsidiaries taken as a whole; provided, however, that any
such effect resulting from any (A) changes in laws, rules or regulations or
generally accepted accounting principles ("GAAP") or interpretations thereof
that apply to both Queens and Queens County Savings Bank, a New York State
chartered savings bank ("Queens Bank") and Haven and CFS Bank, a federally
chartered savings association ("CFS Bank"), as the case may be, or (B) changes
in the general level of market interest rates shall not be considered in
determining if a Material Adverse Effect has occurred; or (ii) the failure of
(x) a representation or warranty contained in Section 2.3(a)(i) and (iv),
Section 2.3(d), Section 2.3(g)(iii), Section 2.4(a)(i) and (iv), Section
2.4(d), 2.4(g)(ii) or Section 2.4(l) to be true and correct or (y) a
representation or warranty contained in Section 2.3(a)(v), Section 2.3(b),
Section 2.3(c), clause (ii) of Section 2.3(e), Section 2.3(f)(i),
Section 2.3(k)(i)(E), the first sentence of Section 2.3(m), Section 2.3(p),
Section 2.3(u), Section 2.3(aa), Section 2.4(a)(v), Section 2.4(b), Section
2.4(c), clause (ii) of Section 2.4(e), Section 2.4(f)(i), the first sentence of
Section 2.4(n), Section 2.4(q), Section 2.4(u) and Section 2.4(y) to be true
and correct in all material respects.
(c) For purposes of this Agreement, "knowledge" shall mean, with respect to
a party hereto, actual knowledge of the members of the Board of Directors of
that party, its counsel or any officer of that party with the title ranking not
less than senior vice president.
Section 2.3. Representations and Warranties of Haven. Subject to Sections
2.1 and 2.2, Haven represents and warrants to Queens that, except as
specifically disclosed in Haven's Disclosure Letter:
(a) Organization. (i) Haven is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
is duly registered as a savings and loan holding company under the Home
Owners' Loan Act of 1933, as amended ("HOLA"). CFS Bank is a savings
association duly organized, validly existing and in good standing under the
laws of the United States of America and is a wholly-owned Subsidiary (as
defined herein) of Haven. Each Significant Subsidiary (as defined herein)
of Haven, other than CFS Bank, is a corporation, limited liability company
or partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization. Each of
Haven and its Significant Subsidiaries has all requisite power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted, and unless the context requires otherwise,
the term "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated,
which is consolidated with such party for financial reporting purposes or
which is controlled, directly or indirectly, by such party, and the term
"Significant Subsidiary" shall mean each Subsidiary that is a "significant
subsidiary" as defined in Regulation S-X, promulgated by the SEC (as
defined herein), as in effect as of the date hereof.
(ii) Haven and each of its Significant Subsidiaries has the
requisite corporate power and authority, and is duly qualified and is
in good standing, to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties
makes such qualification necessary.
(iii) Haven's Disclosure Letter sets forth all of Haven's
Subsidiaries and all entities (whether corporations, partnerships or
similar organizations), including the corresponding percentage
ownership, in which Haven owns, directly or indirectly, 5% or more of
the ownership interests as of the date of this Agreement and indicates
for each such Subsidiary, as of such date, its jurisdiction of
organization and the jurisdiction(s) wherein it is qualified to do
business. All such Subsidiaries and ownership interests are in
compliance with all applicable laws, rules and regulations relating to
direct investments in equity ownership interests. Haven owns, either
directly or indirectly, all of the outstanding capital stock of each of
its Subsidiaries. No Subsidiary of Haven other than CFS Bank is an
"insured depository institution" as defined in the Federal Deposit
Insurance Act, as amended
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("FDIA"), and the applicable regulations thereunder. All of the shares
of capital stock of each of the Subsidiaries held by Haven or any of
its other Subsidiaries are duly authorized and validly issued, fully
paid and nonassessable and not subject to any preemptive rights and are
owned by Haven or a Subsidiary of Haven free and clear of any claims,
liens, encumbrances or restrictions (other than those imposed by
applicable federal and state securities laws), and there are no
agreements or understandings with respect to the voting or disposition
of any such shares.
(iv) The deposits of CFS Bank are insured by the Savings Association
Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation
("FDIC") to the extent provided in the FDIA. CFS Bank is a member of
the Federal Home Loan Bank ("FHLB") of New York.
(v) As of the date of this Agreement, CFS Bank is "well managed" and
"well capitalized" as defined under applicable federal banking law and
regulation.
(b) Capital Structure. (i) As of the date of this Agreement, the
authorized capital stock of Haven consists of 30,000,000 shares of Haven
Common Stock and 2,000,000 shares of preferred stock, par value $.01 per
share ("Haven Preferred Stock"). As of the date of this Agreement, (A)
9,119,219 shares of Haven Common Stock were issued and outstanding, (B) no
shares of Haven Preferred Stock were issued and outstanding, (C) no shares
of Haven Common Stock were reserved for issuance, except that 1,299,962
shares of Haven Common Stock were reserved for issuance pursuant to Haven
Option Plans, which includes 1,299,962 shares reserved for issuance upon
the exercise of options that have already been granted under Haven Option
Plans, (D) no shares of Haven Preferred Stock were reserved for issuance
except pursuant to Haven Rights Agreement and (E) 799,531 shares of Haven
Common Stock were held by Haven in its treasury or by its Subsidiaries. The
authorized capital stock of CFS Bank consists of 10,500,000 shares of
common stock, par value $1.00 per share, and 2,000,000 shares of preferred
stock, par value $1.00 per share. As of this date of the Agreement, 1,000
shares of such common stock were outstanding, no shares of such preferred
stock were outstanding and all outstanding shares of such common stock
were, and as of the Effective Time will be, owned by Haven. All outstanding
shares of capital stock of Haven and CFS Bank are duly authorized and
validly issued, fully paid and nonassessable and not subject to any
preemptive rights and, with respect to shares held by Haven in its treasury
or by its Significant Subsidiaries, are free and clear of all liens,
claims, encumbrances or restrictions (other than those imposed by
applicable federal and state securities laws), and there are no agreements
or understandings with respect to the voting or disposition of any such
shares. Haven's Disclosure Letter sets forth a complete and accurate list
of all options to purchase Haven Common Stock that have been granted
pursuant to Haven Option Plans and all restricted stock grants under Haven
Option Plans and Haven RRPs, including the dates of grant, exercise prices,
dates of vesting, dates of termination and shares subject to each grant.
(ii) No bonds, debentures, notes or other indebtedness having the
right to vote on any matters on which stockholders of Haven may vote
("Voting Debt") are issued or outstanding.
(iii) Except for the Option Agreement, neither Haven nor any of its
Subsidiaries has or is bound by any outstanding options, warrants,
calls, rights, convertible securities, commitments or agreements of any
character obligating Haven or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, any additional
shares of capital stock of Haven or any of its Subsidiaries or
obligating Haven or any of its Subsidiaries to grant, extend or enter
into any such option, warrant, call, right, convertible security,
commitment or agreement. As of the date hereof, there are no
outstanding contractual obligations of Haven or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock
of Haven or any of its Subsidiaries.
(c) Authority. Haven has the requisite corporate power and authority to
enter into this Agreement, and, subject to approval of this Agreement by
the requisite vote of Haven's stockholders and receipt of all required
regulatory or governmental approvals, as contemplated by Section 5.1(b) of
this Agreement, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, and, subject to the approval of
this Agreement by Haven's stockholders, the consummation of the
transactions
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contemplated hereby, have been duly authorized by all necessary corporate
actions on the part of Haven. This Agreement has been duly executed and
delivered by Haven and constitutes a valid and binding obligation of Haven,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of
equity, whether applied in a court of law or a court of equity.
(d) Stockholder Approval; Fairness Opinion. The affirmative vote of the
holders of a majority of the outstanding shares of Haven Common Stock
entitled to vote on this Agreement is the only vote of the stockholders of
Haven required for approval of this Agreement by Haven and the consummation
by Haven of the Merger and the related transactions contemplated hereby.
Haven has received the written opinion of Lehman Brothers, Inc. to the
effect that, as of the date hereof, the Merger Consideration is fair, from
a financial point of view, to Haven's stockholders.
(e) No Violations. The execution, delivery and performance of this
Agreement and the Option Agreement by Haven do not, and the consummation of
the transactions contemplated hereby and thereby will not, constitute (i)
assuming (in the case of this Agreement only) receipt of all Requisite
Regulatory Approvals (as defined herein) and (in the case of this Agreement
only) requisite stockholder approvals, 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
Haven or any of its Significant Subsidiaries, or to which Haven or any of
its Significant Subsidiaries (or any of their respective properties) is
subject, (ii) a breach or violation of, or a default under, the certificate
of incorporation or bylaws of Haven or the similar organizational documents
of any of its Significant Subsidiaries or (iii) a breach or violation of,
or a default under (or an event which, with due notice or lapse of time or
both, would constitute a default under), or result in the termination of,
accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of
the properties or assets of Haven or any of its Significant Subsidiaries,
under, any of the terms, conditions or provisions of any note, bond,
indenture, deed of trust, loan agreement or other agreement, instrument or
obligation to which Haven or any of its Significant Subsidiaries is a
party, or to which any of their respective properties or assets may be
subject; and the consummation of the transactions contemplated hereby will
not require any approval, consent or waiver under any such law, rule,
regulation, judgment, decree, order, governmental permit or license or the
approval, consent or waiver of any other party to any such agreement,
indenture or instrument, other than (v) the approval of the holders of a
majority of the outstanding shares of Haven Common Stock referred to in
Section 2.3(d), (w) the approval of the Office of Thrift Supervision
("OTS") under the HOLA, the approval of the FDIC under Section 18(c) of the
FDIA, the approval of the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act of 1956, as amended (including the
approval for Queens to become a financial holding company in connection
with the Merger) and the approval of the NASD for a change in control of
any broker-dealers, (x) the declaration of effectiveness by the SEC (as
defined herein) of the Registration Statement (as defined herein) and the
SEC's approval of Haven's and Queens' proxy materials, (y) approval of the
Antitrust Division of the Department of Justice or the Federal Trade
Commission under the antitrust laws, including, without limitation, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the
expiration of any required waiting periods thereunder ((w), (x) and (y)
are, collectively, referred to as the "Requisite Regulatory Approvals") and
(z) such approvals, consents or waivers as are required under the federal
and state securities or "blue sky" laws in connection with the transactions
contemplated by this Agreement or Option Agreement.
(f) Reports. (i) As of their respective dates, none of the reports or
other statements filed by Haven on or subsequent to December 31, 1998 with
the Securities and Exchange Commission ("SEC") under Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange
Act") (collectively, "Haven's Reports"), contained, or will contain, any
untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading. Each of the financial statements of Haven
included in Haven's Reports complied, as of its respective date of
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filing with the SEC, in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto and has been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited financial statements, as
permitted by Form 10-Q of the SEC). Each of the consolidated statements of
condition, consolidated statements of operations, consolidated statements
of cash flows and consolidated statements of changes in stockholders'
equity contained or incorporated by reference in Haven's Reports (including
in each case any related notes and schedules) fairly presented, or will
fairly present, as the case may be, the financial condition, results of
operations, cash flows and stockholders' equity, as the case may be, of the
entity or entities to which it relates for the periods set forth therein
(subject, in the case of unaudited interim statements, to normal year-end
audit adjustments that are not material in amount or effect), in each case
in accordance with GAAP, except as may be noted therein.
(ii) Haven and each of its Subsidiaries have each timely filed all
material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since December 31, 1999 with (A) the OTS, (B) the
FDIC, (C) the SEC, (D) the National Association of Securities Dealers,
Inc. ("NASD"), and (E) any other self-regulatory organization ("SRO"),
and have paid all fees and assessments due and payable in connection
therewith.
(g) Absence of Certain Changes or Events. Since March 31, 2000, (i)
Haven and its Subsidiaries have not incurred any liability, except in the
ordinary course of their business consistent with past practice, (ii) Haven
and its Subsidiaries have conducted their respective businesses, other than
the negotiation, execution and delivery of this Agreement and ancillary
matters related thereto, only in the ordinary course of such businesses and
(iii) there has not been any Material Adverse Effect with respect to Haven.
(h) Absence of Claims. No litigation, proceeding, controversy, claim or
action before any court or any federal, state, local or foreign
governmental or regulatory body (each, a "Governmental Entity") is pending
against Haven or any of its Subsidiaries and, to the best of Haven's
knowledge, no such litigation, proceeding, controversy, claim or action has
been threatened.
(i) Absence of Regulatory Actions. Neither Haven nor any of its
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or any commitment letter or similar
written undertaking to, or is subject to any action, proceeding, order or
directive by, or is a recipient of any extraordinary supervisory letter
from, any federal or state governmental authority charged with the
supervision or regulation of depository institutions or depository
institution holding companies or engaged in the insurance of bank and/or
savings and loan deposits (each, a "Bank Regulator"), or has adopted any
board resolutions at the request of any Bank Regulator, nor has it been
advised by any Bank Regulator that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting)
any such action, proceeding, order, directive, written agreement,
memorandum of understanding, extraordinary supervisory letter, commitment
letter, board resolutions or similar written undertaking.
(j) Taxes. All federal, state, local and foreign tax returns required to
be filed by or on behalf of Haven or any of its Subsidiaries have been
timely filed, or requests for extensions have been timely filed and any
such extension shall have been granted and not have expired, and all such
filed returns are complete and accurate in all material respects. All taxes
shown on such returns, all taxes required to be shown on returns for which
extensions have been granted and all other taxes required to be paid by
Haven or any of its Subsidiaries have been paid in full or adequate
provision has been made for any such taxes on Haven's balance sheet (in
accordance with GAAP). For purposes of this Section 2.3(j), the term
"taxes" shall include all federal, state, local or foreign taxes, charges
or other assessments, including, without limitation, income, franchise,
gross receipts, real and personal property, real property transfer and
gains, wage and employment taxes. As of the date of this Agreement, there
is no audit examination, deficiency assessment, tax investigation or refund
litigation with respect to any taxes of Haven or any of
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its Subsidiaries, and no claim has been made by any authority in a
jurisdiction where Haven or any of its Subsidiaries do not file tax returns
that Haven or any such Subsidiary is subject to taxation in that
jurisdiction. All taxes, interest, additions and penalties due with respect
to completed and settled examinations or concluded litigation relating to
Haven or any of its Subsidiaries have been paid in full or adequate
provision has been made for any such taxes on Haven's balance sheet (in
accordance with GAAP). Haven and its Subsidiaries have not executed an
extension or waiver of any statute of limitations on the assessment or
collection of any material tax due that is currently in effect. Haven and
each of its Subsidiaries has withheld and paid all taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party, and Haven and each of its Subsidiaries has timely complied with all
applicable information reporting requirements under Part III, Subchapter A
of Chapter 61 of the Code and similar applicable state and local
information reporting requirements. Neither Haven nor any of its
Subsidiaries (i) has made an election under Section 341(f) of the Code,
(ii) has issued or assumed any obligation under Section 279 of the Code,
any high yield discount obligation as described in Section 163(i) of the
Code or any registration-required obligation within the meaning of Section
163(f)(2) of the Code that is not in registered form or (iii) is or has
been a United States real property holding corporation within the meaning
of Section 897(c)(2) of the Code.
(k) Agreements. (i) Except for this Agreement, the Option Agreement and
arrangements made in the ordinary course of business, Haven and its
Subsidiaries are not bound by any material contract (as defined in Item
601(b)(10) of Regulation S-K) to be performed after the date hereof that is
required to but has not been filed with or incorporated by reference in
Haven's Reports. Except as disclosed in Haven's Reports filed prior to the
date of this Agreement, neither Haven nor any of its Subsidiaries is a
party to an oral or written (A) consulting agreement (other than data
processing, software programming and licensing contracts entered into in
the ordinary course of business) not terminable on 60 days' or less notice,
(B) agreement with any executive officer or other key employee of Haven or
any of its Subsidiaries the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction
involving Haven or any of its Subsidiaries of the nature contemplated by
this Agreement or the Option Agreement, (C) agreement with respect to any
employee or director of Haven or any of its Subsidiaries providing any term
of employment or compensation guarantee extending for a period longer than
60 days or for the payment of in excess of $50,000 per annum, (D) agreement
or plan, including any stock option plan, phantom stock or stock
appreciation rights plan, restricted stock plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting or payment of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the Option Agreement or the
value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Agreement or the Option
Agreement or (E) agreement containing covenants that limit the ability of
Haven or any of its Subsidiaries to compete in any line of business or with
any person, or that involve any restriction on the geographic area in
which, or method by which, Haven (including any successor thereof) or any
of its Subsidiaries may carry on its business (other than as may be
required by law or any regulatory agency).
(ii) Neither Haven nor any of its Subsidiaries is in default under
or in violation of any provision of any note, bond, indenture,
mortgage, deed of trust, loan agreement, lease or other agreement to
which it is a party or by which it is bound or to which any of its
respective properties or assets is subject.
(iii) Haven and each of its Subsidiaries owns or possesses valid and
binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, service marks and trademarks
used in its businesses, and neither Haven nor any of its Subsidiaries
has received any notice of conflict with respect thereto that asserts
the right of others. Each of Haven and its Subsidiaries has performed
all the obligations required to be performed by it and are not in
default under any contract, agreement, arrangement or commitment
relating to any of the foregoing.
(l) Labor Matters. Neither Haven nor any of its Subsidiaries is or has
ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract or other agreement or
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understanding with a labor union or labor organization with respect to its
employees, nor is Haven or any of its Subsidiaries the subject of any
proceeding asserting that it has committed an unfair labor practice or
seeking to compel it or any such Subsidiary to bargain with any labor
organization as to wages and conditions of employment, nor is there any
strike, other labor dispute or organizational effort involving Haven or any
of its Subsidiaries pending or, to Haven's knowledge, threatened. Haven and
its Subsidiaries are in compliance with applicable laws regarding
employment of employees and retention of independent contractors and are in
compliance with applicable employment tax laws.
(m) Employee Benefit Plans. Haven's Disclosure Letter contains a
complete and accurate list of all pension, retirement, stock option, stock
purchase, stock ownership, savings, stock appreciation right, profit
sharing, deferred compensation, consulting, bonus, group insurance,
severance and other benefit plans, contracts, agreements and arrangements,
including, but not limited to, "employee benefit plans," as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), incentive and welfare policies, contracts, plans and
arrangements and all trust agreements related thereto with respect to any
present or former directors, officers or other employees of Haven or any of
its Subsidiaries (hereinafter referred to collectively as the "Haven
Employee Plans"). All Haven Employee Plans comply in all material respects
with all applicable requirements of ERISA, the Code and other applicable
laws; there has occurred no "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Code) which is likely to result in the
imposition of any material penalties or taxes under Section 502(i) of ERISA
or Section 4975 of the Code upon Haven or any of its Subsidiaries. No
liability to the Pension Benefit Guaranty Corporation ("PBGC") has been or
is expected by Haven or any of its Subsidiaries to be incurred with respect
to any Haven Employee Plan which is subject to Title IV of ERISA ("Haven
Pension Plan"), or with respect to any "single-employer plan" (as defined
in Section 4001(a) of ERISA) currently or formerly maintained by Haven or
any entity which is considered one employer with Haven under Section
4001(b)(1) of ERISA or Section 414 of the Code (an "ERISA Affiliate"). No
Haven Pension Plan had an "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, as of the last day of the end
of the most recent plan year ending prior to the date hereof; the fair
market value of the assets of each Haven Pension Plan exceeds the present
value of the "benefit liabilities" (as defined in Section 4001(a)(16) of
ERISA) under such Haven Pension Plan as of the end of the most recent plan
year with respect to the respective Haven Pension Plan ending prior to the
date hereof, calculated on the basis of the actuarial assumptions used in
the most recent actuarial valuation for such Haven Pension Plan as of the
date hereof; and no notice of a "reportable event" (as defined in Section
4043 of ERISA) for which the 30-day reporting requirement has not been
waived has been required to be filed for any Haven Pension Plan within the
12-month period ending on the date hereof. Neither Haven nor any of its
Subsidiaries has provided, or is required to provide, security to any Haven
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401(a)(29) of the Code. Neither Haven, its Subsidiaries, nor any
ERISA Affiliate has contributed to any "multiemployer plan," as defined in
Section 3(37) of ERISA, on or after September 26, 1980. Each Haven Employee
Plan that is an "employee pension benefit plan" (as defined in Section 3(2)
of ERISA) and which is intended to be qualified under Section 401(a) of the
Code (a "Haven Qualified Plan") has received a favorable determination
letter from the Internal Revenue Service ("IRS"), and Haven and its
Subsidiaries are not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no pending
or, to Haven's knowledge, threatened litigation, administrative action or
proceeding relating to any Haven Employee Plan. Except as provided
elsewhere in this Agreement, there has been no announcement or commitment
by Haven or any of its Subsidiaries to create an additional Haven Employee
Plan, or to amend any Haven Employee Plan, except for amendments required
by applicable law which do not materially increase the cost of such Haven
Employee Plan; and, Haven and its Subsidiaries do not have any obligations
for post-retirement or post-employment benefits under any Haven Employee
Plan that cannot be amended or terminated upon 60 days' notice or less
without incurring any liability thereunder, except for coverage required by
Part 6 of Title I of ERISA or Section 4980B of the Code, or similar state
laws, the cost of which is borne by the insured individuals. All
contributions required to be made under the terms of any Haven Employee
Plan have been timely made or
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have been reflected on Haven's Reports. With respect to Haven or any of its
Subsidiaries, for Haven Employee Plans listed in Haven's Disclosure Letter,
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment or series
of payments by Haven or any of its Subsidiaries to any person which is an
"excess parachute payment" (as defined in Section 280G of the Code),
increase or secure (by way of a trust or other vehicle) any benefits
payable under any Haven Employee Plan or accelerate the time of payment or
vesting of any such benefit. With respect to each Haven Employee Plan,
Haven has supplied to Queens a true and correct copy of (A) the annual
report on the applicable form of the Form 5500 series filed with the IRS
for the most recent three plan years, if required to be filed, (B) such
Haven Employee Plan, including amendments thereto, (C) each trust
agreement, insurance contract or other funding arrangement relating to such
Haven Employee Plan, including amendments thereto, (D) the most recent
summary plan description and summary of material modifications thereto for
such Haven Employee Plan, if Haven Employee Plan is subject to Title I of
ERISA, (E) the most recent actuarial report or valuation if such Haven
Employee Plan is a Haven Pension Plan and any subsequent changes to the
actuarial assumptions contained therein and (F) the most recent
determination letter issued by the IRS if such Haven Employee Plan is a
Haven Qualified Plan.
(n) Title to Assets. Haven and each of its Subsidiaries has good and
marketable title to its properties and assets (including any intellectual
property asset such as any trademark, service mark, trade name or
copyright) and property acquired in a judicial foreclosure proceeding or by
way of a deed in lieu of foreclosure or similar transfer, other than
property as to which it is lessee, in which case the related lease is valid
and in full force and effect. Each lease pursuant to which Haven or any of
its Subsidiaries is lessor is valid and in full force and effect, and no
lessee under any such lease is in default or in violation of any provisions
of any such lease. All material tangible properties of Haven and each of
its Subsidiaries are in a good state of maintenance and repair, conform
with all applicable ordinances, regulations and zoning laws and are
considered by Haven to be adequate for the current business of Haven and
its Subsidiaries.
(o) Compliance with Laws. Haven and each of its Subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with, all Governmental
Entities that are required in order to permit it to carry on its business
as it is presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect, and, to the
best knowledge of Haven, no suspension or cancellation of any of them is
threatened. Since the date of its incorporation, the corporate affairs of
Haven have not been conducted in violation of any law, ordinance,
regulation, order, writ, rule, decree or approval of any Governmental
Entity. The businesses of Haven and its Subsidiaries are not being, and
have not been conducted in violation of any law, ordinance, regulation,
order, writ, rule, decree or condition to approval of any Governmental
Entity or any policy or procedure.
(p) Fees. Other than financial advisory services performed for Haven by
Lehman Brothers, Inc. pursuant to an agreement dated September 17, 1999, a
true and complete copy of which is set forth in Haven's Disclosure Letter,
neither Haven nor any of its Subsidiaries, nor any of their respective
officers, directors, employees or agents, has employed any broker or finder
or incurred any liability for any financial advisory fees, brokerage fees,
commissions or finder's fees, and no broker or finder has acted directly or
indirectly for Haven or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
(q) Environmental Matters. (i) With respect to Haven and each of its
Subsidiaries:
(A) Each of Haven and its Subsidiaries, the Participation Facilities
(as defined herein), and, to Haven's knowledge, the Loan Properties (as
defined herein) are, and have been, in substantial compliance with, and
are not liable under, all Environmental Laws (as defined herein);
(B) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending
or, to Haven's knowledge, threatened, before any court, governmental
agency or board or other forum against Haven or any of its Subsidiaries
or any
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Participation Facility (x) for alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or (y)
relating to the presence of or release (as defined herein) into the
environment of any Hazardous Material (as defined herein), whether or
not occurring at or on a site owned, leased or operated by it or any of
its Subsidiaries or any Participation Facility;
(C) To Haven's knowledge, there is no suit, claim, action, demand,
executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency
or board or other forum relating to or against any Loan Property (or
Haven or any of its Subsidiaries in respect of such Loan Property) (x)
relating to alleged noncompliance (including by any predecessor) with,
or liability under, any Environmental Law or (y) relating to the
presence of or release into the environment of any Hazardous Material,
whether or not occurring at or on a site owned, leased or operated by a
Loan Property;
(D) To Haven's knowledge, the properties currently owned or operated
by Haven or any of its Subsidiaries (including, without limitation,
soil, groundwater or surface water on, under or adjacent to the
properties, and buildings thereon) are not contaminated with and do not
otherwise contain any Hazardous Material other than as permitted under
applicable Environmental Law;
(E) Neither Haven nor any of its Subsidiaries has received any
notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law;
(F) To Haven's knowledge, there are (i) no underground storage tanks
on, in or under any properties owned or operated by Haven or any of its
Subsidiaries, any Participation Facility or any Loan Property, and (ii)
no underground storage tanks have been closed or removed from any
properties owned or operated by Haven or any of its Subsidiaries, any
Participation Facility or any Loan Property; and
(G) To Haven's knowledge, during the period of (l) Haven's or any of
its Subsidiaries' ownership or operation of any of their respective
current properties, (m) Haven's or any of its Subsidiaries'
participation in the management of any Participation Facility or (n)
Haven's or any of its Subsidiaries' holding of a security interest in a
Loan Property, there has been no contamination by or release of
Hazardous Materials in, on, under or affecting such properties. To
Haven's knowledge, prior to the period of (x) Haven's or any of its
Subsidiaries' ownership or operation of any of their respective current
properties, (y) Haven's or any of its Subsidiaries' participation in
the management of any Participation Facility or (z) Haven's or any of
its Subsidiaries' holding of a security interest in a Loan Property,
there was no contamination by or release of Hazardous Material in, on,
under or affecting such properties.
(ii) The following definitions apply for purposes of this Section
2.3(q) and Section 2.4(r): (w) "Loan Property" means any property in
which the applicable party (or any of its Subsidiaries) holds a
security interest, and, where required by the context, includes the
owner or operator of such property, but only with respect to such
property; (x) "Participation Facility" means any property in which the
applicable party (or a Subsidiary of it) participates in the management
thereof (including all property held as trustee or in any other
fiduciary capacity) and, where required by the context, includes the
owner or operator of such property, but only with respect to such
property; (y) "Environmental Law" means (i) any federal, state or local
law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, legal doctrine, order, directive,
executive or administrative order, judgment, decree, injunction, legal
requirement or agreement with any Governmental Entity relating to (A)
the protection, preservation or restoration of the environment (which
includes, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, structures, soil, surface land,
subsurface land, plant and animal life or any other natural resource),
or to human health or safety as it relates to Hazardous Materials, or
(B) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
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production, release or disposal of, Hazardous Materials, in each case
as amended and as now in effect, including, without limitation, (1) the
Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act
of 1986, the Federal Water Pollution Control Act of 1972, the Federal
Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including, but not limited to,
the Hazardous and Solid Waste Amendments thereto and Subtitle I
relating to underground storage tanks), the Federal Solid Waste
Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Federal Occupational
Safety and Health Act of 1970 as it relates to Hazardous Materials, the
Federal Hazardous Substances Transportation Act, the Emergency Planning
and Community Right-To-Know Act, the Safe Drinking Water Act, the
Endangered Species Act, the National Environmental Policy Act, the
Rivers and Harbors Appropriation Act or any so-called "Superfund" or
"Superlien" law, each as amended and as now or hereafter in effect, and
(2) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result
of, the presence of or exposure to any Hazardous Material; and (z)
"Hazardous Material" means any substance (whether solid, liquid or gas)
which is or could be detrimental to human health or safety or to the
environment, currently or hereafter listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law, whether by type or by quantity,
including any substance containing any such substance as a component.
Hazardous Material includes, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous
waste, special waste, industrial substance, oil or petroleum, or any
derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos-containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
(r) Loan Portfolio; Allowance; Asset Quality. (i) With respect to each
loan owned by Haven or its Subsidiaries in whole or in part (each, a
"Loan"), to the best knowledge of Haven:
(A) the note and the related security documents are each legal,
valid and binding obligations of the maker or obligor thereof,
enforceable against such maker or obligor in accordance with their
terms;
(B) neither Haven nor any of its Subsidiaries, nor any prior holder
of a Loan, has modified the note or any of the related security
documents in any material respect or satisfied, canceled or
subordinated the note or any of the related security documents except
as otherwise disclosed by documents in the applicable Loan file;
(C) Haven or a Subsidiary is the sole holder of legal and beneficial
title to each Loan (or Haven's applicable participation interest, as
applicable), except as otherwise referenced on the books and records of
Haven;
(D) the note and the related security documents, copies of which are
included in the Loan files, are true and correct copies of the
documents they purport to be and have not been suspended, amended,
modified, canceled or otherwise changed except as otherwise disclosed
by documents in the applicable Loan file;
(E) there is no pending or threatened condemnation proceeding or
similar proceeding affecting the property that serves as security for a
Loan, except as otherwise referenced on the books and records of Haven;
(F) there is no litigation or proceeding pending or threatened
relating to the property that serves as security for a Loan that would
have a material adverse effect upon the related Loan; and
(G) with respect to a Loan held in the form of a participation, the
participation documentation is legal, valid, binding and enforceable.
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(ii) The allowance for possible losses reflected in Haven's audited
statements of condition at December 31, 1999 and March 31, 2000
(unaudited) were, and the allowance for possible losses shown on the
balance sheets in Haven's Reports for periods ending after March 31,
2000 will be, adequate, as of the dates thereof, under GAAP applicable
to stock savings banks consistently applied.
(iii) Haven's Disclosure Letter sets forth, as of May 31, 2000, by
category the amounts of all loans, leases, advances, credit
enhancements, other extensions of credit, commitments and interest-
bearing assets of Haven and its Subsidiaries that have been classified
by any bank examiner (whether regulatory or internal) as "Special
Mention," "Substandard," "Doubtful," "Loss" or words of similar import.
The other real estate owned ("OREO") included in any non-performing
assets of Haven or any of its Subsidiaries is carried net of reserves
at the lower of cost or fair value, less estimated selling costs, based
on current management appraisals or evaluations to the extent material;
provided, however, that "current" shall mean within the past 12 months.
(s) Deposits. None of the deposits of Haven or any of its Subsidiaries
is a "brokered" deposit.
(t) Haven Rights Agreement. The Haven Rights Agreement has been amended
(the form of which is set forth in Haven's Disclosure Letter) so as to
provide that Queens will not become an "Acquiring Person" and that no
"Shares Acquisition Date" or "Distribution Date" (as such terms are defined
in Haven Rights Agreement) will occur as a result of the approval,
execution or delivery of the Covered Agreements or any transactions
contemplated thereby, as well as additional purchases by Queens of up to
4.9% of the then outstanding Haven Common Stock.
(u) Antitakeover Provisions Inapplicable. Haven and its Subsidiaries
have taken all actions required to exempt Haven and Queens and the Covered
Agreements or any transactions contemplated thereby, as well as additional
purchases by Queens of up to 4.9% of the then outstanding Haven Common
Stock from any provisions of an antitakeover nature in their organization
certificates and bylaws and the provisions of Section 203 of the DGCL.
(v) Material Interests of Certain Persons. Except as disclosed in
Haven's Proxy Statement for its 2000 Annual Meeting of Stockholders, no
officer or director of Haven, or any "associate" (as such term is defined
in Rule 12b-2 under the Exchange Act) of any such officer or director, has
any material interest in any material contract or property (real or
personal), tangible or intangible, used in or pertaining to the business of
Haven or any of its Subsidiaries.
(w) Insurance. Haven and its Subsidiaries are presently insured, and
since December 31, 1998, have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good
business practice, customarily be insured. All of the insurance policies
and bonds maintained by Haven and its Subsidiaries are in full force and
effect, Haven and its Subsidiaries are not in default thereunder and all
material claims thereunder have been filed in due and timely fashion.
(x) Investment Securities; Borrowings. (i) Except for investments in
FHLB stock and pledges to secure FHLB borrowings and reverse repurchase
agreements entered into in arm's-length transactions pursuant to customary
commercial terms and conditions and entered into in the ordinary course of
business, and restrictions that exist for securities to be classified as
"held to maturity," none of the investments reflected in the consolidated
balance sheet of Haven included in Haven's Report on Form 10-K for the year
ended December 31, 1999, and none of the investment securities held by it
or any of its Subsidiaries since December 31, 1999, is subject to any
restriction (contractual or statutory) that would materially impair the
ability of the entity holding such investment freely to dispose of such
investment at any time.
(ii) Neither Haven nor any Subsidiary is a party to or has agreed to
enter into an exchange-traded or over-the-counter equity, interest
rate, foreign exchange or other swap, forward, future, option, cap,
floor or collar or any other contract that is not included on the
consolidated statements of condition and is a derivative contract
(including various combinations thereof) (each, a "Derivatives
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Contract") or owns securities that (A) are referred to generically as
"structured notes," "high risk mortgage derivatives," "capped floating
rate notes" or "capped floating rate mortgage derivatives" or (B) are
likely to have changes in value as a result of interest or exchange
rate changes that significantly exceed normal changes in value
attributable to interest or exchange rate changes, except for those
Derivatives Contracts and other instruments legally purchased or
entered into in the ordinary course of business, consistent with safe
and sound banking practices and regulatory guidance, and listed (as of
March 31, 2000) in Haven's Disclosure Letter or disclosed in Haven's
Reports filed on or prior to the date hereof.
(iii) Set forth in Haven's Disclosure Letter is a true and complete
list of Haven's borrowed funds (excluding deposit accounts) as of June
23, 2000.
(y) Indemnification. Neither Haven nor any of its Subsidiaries is a
party to any indemnification agreement with any of its present or future
directors, officers, employees, agents or other persons who serve or have
served as a director or officer of Haven or any of its Subsidiaries or who
serve or have served in any other capacity with any other enterprise at the
request of Haven (a "Covered Person"), except as provided in Haven's
employment agreements with Covered Persons ("Employment Agreements"), the
organization certificate or bylaws of Haven or any of its Subsidiaries, or
as required by any applicable law or regulation, and, to the best knowledge
of Haven, there are no claims for which any Covered Person would be
entitled to indemnification under the organization certificate or bylaws of
Haven or any of its Subsidiaries, under any applicable law or regulation or
under any indemnification agreement.
(z) Books and Records. The books and records of Haven and its
Subsidiaries on a consolidated basis have been, and are being, maintained
in accordance with applicable legal and accounting requirements and reflect
in all material respects the substance of events and transactions that
should be included therein.
(aa) Corporate Documents. Haven has made available to Queens true and
complete copies of its certificate of incorporation and bylaws and of CFS
Bank's organization certificate and bylaws. The minute books of Haven and
each Significant Subsidiary contain records of all meetings and other
corporate actions taken by their respective boards of directors (and each
committee thereof) and their stockholders and are complete and correct in
all material respects.
(bb) Liquidation Account. The Merger will not result in any payment or
distribution payable out of the liquidation account of CFS Bank established
in connection with CFS Bank's conversion from mutual to stock form.
(cc) Tax Treatment of the Merger. As of the date hereof, Haven has no
knowledge of any fact or circumstance that would prevent the transactions
contemplated by this Agreement from qualifying as a reorganization under
the Code.
(dd) Beneficial Ownership of Queens Common Stock. As of the date hereof,
Haven does not beneficially own any shares of Queens Common Stock and does
not have any option, warrant or right of any kind to acquire the beneficial
ownership of any shares of Queens Common Stock.
(ee) Registration Statement. The information regarding Haven to be
supplied by Haven for inclusion in (i) the Registration Statement (as
defined herein) on Form S-4 and/or such other form(s) as may be appropriate
to be filed under the Securities Act of 1933, as amended ("Securities
Act"), with the SEC by Queens for the purpose of, among other things,
registering the Queens Common Stock to be issued to Haven's stockholders in
the Merger (as amended or supplemented from time to time, the "Registration
Statement"), or (ii) the joint proxy statement to be filed with the SEC by
Haven and Queens under the Exchange Act and distributed in connection with
Haven's and Queens' respective meeting of stockholders to vote upon this
Agreement (together with the prospectus included in the Registration
Statement, the "Joint Proxy Statement-Prospectus") will not, at the time
such Registration Statement becomes effective, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
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Section 2.4. Representations and Warranties of Queens. Subject to Sections
2.1 and 2.2, Queens represents and warrants to Haven that, except as
specifically disclosed in Queens' Disclosure Letter:
(a) Organization. (i) Queens is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
is duly registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended. Queens Bank is a bank duly organized, validly
existing and in good standing under the laws of the State of New York and
is a wholly-owned Subsidiary of Queens. Each Significant Subsidiary of
Queens, other than Queens Bank is a corporation, limited liability company
or partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization. Each of
Queens and its Significant Subsidiaries has all requisite power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted.
(ii) Queens and each of its Subsidiaries has the requisite corporate
power and authority, and is duly qualified and is in good standing, to
do business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary.
(iii) Queens' Disclosure Letter sets forth all of Queens'
Subsidiaries and all entities (whether corporations, partnerships or
similar organizations), including the corresponding percentage
ownership, in which Queens owns, directly or indirectly, 5% or more of
the ownership interests as of the date of this Agreement and indicates
for each such Subsidiary, as of such date, its jurisdiction of
organization and the jurisdiction(s) wherein it is qualified to do
business. All such Subsidiaries and ownership interests are in
compliance with all applicable laws, rules and regulations relating to
direct investments in equity ownership interests. Queens owns, either
directly or indirectly, all of the outstanding capital stock of each of
its Subsidiaries. No Subsidiary of Queens other than Queens Bank is an
"insured depository institution" as defined in the FDIA and the
applicable regulations thereunder. All of the shares of capital stock
of each of the Subsidiaries held by Queens or any of its other
Subsidiaries are duly authorized and validly issued, fully paid and
nonassessable and not subject to any preemptive rights and are owned by
Queens or a Subsidiary of Queens free and clear of any claims, liens,
encumbrances or restrictions (other than those imposed by applicable
federal and state securities laws) and there are no agreements or
understandings with respect to the voting or disposition of any such
shares.
(iv) The deposits of Queens Bank are insured by the Bank Insurance
Fund or SAIF of the FDIC to the extent provided in the FDIA.
(b) Capital Structure. (i) As of the date of this Agreement, the
authorized capital stock of Queens consists of 60,000,000 shares of Queens
Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per
share ("Queens Preferred Stock"). As of the date of this Agreement, (A)
20,764,910 shares of Queens Common Stock were issued and outstanding, (B)
no shares of Queens Preferred Stock were issued and outstanding, (C) no
shares of Queens Common Stock were reserved for issuance, except that
2,400,290 shares of Queens Common Stock were reserved for issuance pursuant
to the Queens County Bancorp, Inc. 1993 Incentive Stock Option Plan, the
Queens County Savings Bank 1993 Directors' Stock Option Plan and the Queens
County Savings Bank 1997 Stock Option Plan, (D) no shares of Queens
Preferred Stock were reserved for issuance except pursuant to the Queens
Rights Agreement and (E) 10,205,783 shares of Queens Common Stock were held
by Queens in its treasury or by its Subsidiaries. The authorized capital
stock of Queens Bank consists of 30,000,000 shares of common stock, par
value $0.01 per share, and 5,000,000 shares of preferred stock, par value
$0.01 per share. As of the date of this Agreement, 1,000 shares of such
common stock were outstanding, no shares of such preferred stock were
outstanding and all outstanding shares of such common stock were, and as of
the Effective Time will be, owned by Queens. All outstanding shares of
capital stock of Queens and Queens Bank are duly authorized and validly
issued, fully paid and nonassessable and not subject to any preemptive
rights and, with respect to shares held by Queens in its treasury or by its
Significant Subsidiaries, are free and clear of all liens, claims,
encumbrances or restrictions (other than those imposed by applicable
federal or
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state securities laws) and, as of the date hereof, there are no agreements
or understandings with respect to the voting or disposition of any such
shares.
(ii) As of the date of this Agreement, no Voting Debt of Queens is
issued or outstanding.
(iii) As of the date of this Agreement, neither Queens nor any of
its Subsidiaries has or is bound by any outstanding options, warrants,
calls, rights, convertible securities, commitments or agreements of any
character obligating Queens or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, any
additional shares of capital stock of Queens or any of its Subsidiaries
or obligating Queens or any of its Subsidiaries to grant, extend or
enter into any such option, warrant, call, right, convertible security,
commitment or agreement. As of the date hereof, there are no
outstanding contractual obligations of Queens or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Queens or any of its Subsidiaries.
(c) Authority. Queens has the requisite corporate power and authority to
enter into this Agreement and, subject to approval of this Agreement by the
requisite vote of Queens' stockholders and receipt of all required
regulatory or governmental approvals, as contemplated by Section 5.1(b) of
this Agreement, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, and, subject to the approval of
this Agreement by Queens' stockholders, the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate actions on the part of Queens. This Agreement has been
duly executed and delivered by Queens and constitutes a valid and binding
obligation of Queens, enforceable in accordance with its terms subject to
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity, whether applied in a court of law or a court of
equity.
(d) Stockholder Approval; Fairness Opinion. The affirmative vote of the
holders of a majority of the outstanding shares of the Queens Common Stock
entitled to vote on this Agreement is the only vote of the stockholders of
Queens required for approval of this Agreement by Queens and the
consummation of the Merger and the related transactions contemplated
hereby. Queens has received the written opinion of Salomon Smith Barney to
the effect that, as of the date hereof, the Merger Consideration is fair,
from a financial point of view, to Queens.
(e) No Violations. The execution, delivery and performance of this
Agreement by Queens do not, and the consummation of the transactions
contemplated hereby will not, constitute (i) assuming receipt of all
Requisite Regulatory Approvals and requisite stockholder approvals, 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 Queens or any of its Significant Subsidiaries,
or to which Queens or any of its Significant Subsidiaries (or any of their
respective properties) is subject, (ii) a breach or violation of, or a
default under, the certificate of incorporation or bylaws of Queens or the
similar organizational documents of any of its Significant Subsidiaries or
(iii) a breach or violation of, or a default under (or an event which, with
due notice or lapse of time or both, would constitute a default under), or
result in the termination of, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or
other encumbrance upon any of the properties or assets of Queens or any of
its Subsidiaries, under, any of the terms, conditions or provisions of any
note, bond, indenture, deed of trust, loan agreement or other agreement,
instrument or obligation to which Queens or any of its Subsidiaries is a
party, or to which any of their respective properties or assets may be
subject; and the consummation of the transactions will not require any
approval, consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval, consent or
waiver of any other party to any such agreement, indenture or instrument,
other than (w) the approval of the holders of a majority of the outstanding
shares of Queens Common Stock referred to in Section 2.4(d), (x) the
Requisite Regulatory Approvals Requisite Regulatory Approvals, (y) the
declaration of effectiveness by the SEC of the Registration Statement and
the SEC's approval of Queens' and Haven's proxy materials and (z) such
approvals, consents or waivers as are required under the federal and state
securities or "blue sky" laws in connection with the transactions
contemplated by this Agreement.
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(f) Reports. (i) As of their respective dates, none of the reports or
other statements filed by Queens, on or subsequent to December 31, 1998,
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
(collectively, "Queens' Reports"), contained, or will contain, any untrue
statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Each of the financial statements of Queens included in Queens'
Report complied as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and have
been prepared in accordance with GAAP applied on a consistent basis during
the period involved (except as may be indicated in the notes thereto or, in
the case of unaudited financial statements, as permitted by Form 10-Q of
the SEC). Each of the consolidated statements of condition, consolidated
statements of operations, consolidated statements of cash flows and
consolidated statements of changes in stockholders' equity contained or
incorporated by reference in Queens' Reports (including in each case any
related notes and schedules) fairly presented, or will fairly present, as
the case may be, the financial condition, results of operations,
stockholders' equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein (subject, in
the case of unaudited interim statements, to normal year-end audit
adjustments that are not material in amount or effect), in each case in
accordance with GAAP, except as may be noted therein.
(ii) Queens and each of its Subsidiaries have each timely filed all
material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since December 31, 1999 with (A) the Federal Reserve
Board (the "FRB"), (B) the New York Banking Department, (C) the SEC,
(D) the NASD and (E) any other SRO, and have paid all fees and
assessments due and payable in connection therewith.
(g) Absence of Certain Changes or Events. Except as disclosed in Queens'
Reports filed on or prior to the date of this Agreement, from the date of
March 31, 2000, there has not been any Material Adverse Effect with respect
to Queens.
(h) Absence of Claims. No litigation, proceeding, controversy, claim or
action before any court or Governmental Entity is pending against Queens or
any of its Subsidiaries, and, to the best of Queens' knowledge, no such
litigation, proceeding, controversy, claim or action has been threatened.
(i) Absence of Regulatory Actions. Neither Queens nor any of its
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or any commitment letter or similar
written undertaking to, or is subject to any action, proceeding, order or
directive by, or is a recipient of any extraordinary supervisory letter
from, any Bank Regulator, or has adopted any board resolutions at the
request of any Bank Regulator, nor has it been advised by any Bank
Regulator that it is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such action, proceeding,
order, directive, written agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter, board resolutions or
similar written undertaking.
(j) Taxes. All federal, state, local and foreign tax returns required to
be filed by or on behalf of Queens or any of its Subsidiaries have been
timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all material respects. All taxes shown
on such returns, all taxes required to be shown on returns for which
extensions have been granted and all other taxes required to be paid by
Queens or any of its Subsidiaries have been paid in full or adequate
provision has been made for any such taxes on Queens' balance sheet (in
accordance with GAAP). For purposes of this Section 2.4(j), the term
"taxes" shall include all federal, state, local or foreign taxes, charges
or other assessments, including, without limitation, income, franchise,
gross receipts, real and personal property, real property transfer and
gains, wage and employment taxes.
(k) Agreements. (i) Except for arrangements made in the ordinary course
of business, as of the date hereof Queens and its Subsidiaries are not
bound by any material contract (as defined in Item 601(b)(10)
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of Regulation S-K) to be performed after the date hereof that is required
to but has not been filed with or incorporated by reference in Queens'
Report. Except as disclosed in Queens' Report filed prior to the date of
this Agreement, as of the date hereof neither Queens nor any of its
Subsidiaries is a party to an oral or written agreement containing
covenants that limit the ability of Queens or any of its Subsidiaries to
compete in any line of business or with any person, or that involve any
restriction on the geographic area in which, or method by which, Queens
(including any successor thereof) or any of its Subsidiaries may carry on
its business (other than as may be required by law or any regulatory
agency).
(ii) Neither Queens nor any of its Subsidiaries is in default under
or in violation of any provision of any note, bond, indenture,
mortgage, deed of trust, loan agreement, lease or other agreement to
which it is a party or by which it is bound or to which any of its
respective properties or assets is subject.
(iii) Queens and each of its Subsidiaries owns or possesses valid
and binding licenses and other rights to use without payment all
patents, copyrights, trade secrets, trade names, service marks and
trademarks used in its businesses, and neither Queens nor any of its
Subsidiaries has received any notice of conflict with respect thereto
that asserts the right of others. Each of Queens and its Subsidiaries
has performed all the obligations required to be performed by it and
are not in default under any contact, agreement, arrangement or
commitment relating to any of the foregoing.
(l) Queens Common Stock. The shares of Queens Common Stock to be issued
pursuant to this Agreement, when issued in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully paid and
non-assessable and not subject to any preemptive rights.
(m) Labor Matters. Neither Queens nor any of its Subsidiaries is or has
ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract or other agreement or understanding with a
labor union or labor organization with respect to its employees, nor is
Queens or any of its Subsidiaries the subject of any proceeding asserting
that it has committed an unfair labor practice or seeking to compel it or
any such Subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike, other labor dispute or
organizational effort involving Queens or any of its Subsidiaries pending
or, to Queens' knowledge, threatened. Queens and its Subsidiaries are in
compliance with applicable laws regarding employment of employees and
retention of independent contractors and are in compliance with applicable
employment tax laws.
(n) Employee Benefit Plans. Queens' Disclosure Letter contains a
complete and accurate list as of the date hereof of all pension,
retirement, stock option, stock purchase, stock ownership, savings, stock
appreciation right, profit sharing, deferred compensation, consulting,
bonus, group insurance, severance and other benefit plans, contracts,
agreements and arrangements, including, but not limited to, "employee
benefit plans," as defined in Section 3(3) of ERISA, incentive and welfare
policies, contracts, plans and arrangements and all trust agreements
related thereto with respect to any present or former directors, officers
or other employees of Queens or any of its Subsidiaries (hereinafter
referred to collectively as the "Queens Employee Plans"). All of the Queens
Employee Plans comply in all respects with all applicable requirements of
ERISA, the Code and other applicable laws; there has occurred no
"prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) which is likely to result in the imposition of any
penalties or taxes under Section 502(i) of ERISA or Section 4975 of the
Code upon Queens or any of its Subsidiaries. No liability to the PBGC has
been or is expected by Queens or any of its Subsidiaries to be incurred
with respect to any Queens Employee Plan which is subject to Title IV of
ERISA ("Queens Pension Plan"), or with respect to any "single-employer
plan" (as defined in Section 4001(a) of ERISA) currently or formerly
maintained by Queens or any entity which is considered one employer with
Queens under Section 4001(b)(1) of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). No Queens Pension Plan had an "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived, as
of the last day of the end of the most recent plan year ending prior to the
date hereof; the fair market value of the assets of each Queens Pension
Plan exceeds the present value of the "benefit liabilities" (as defined in
Section 4001(a)(16) of ERISA) under such Queens Pension
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Plan as of the end of the most recent plan year with respect to the
respective Queens Pension Plan ending prior to the date hereof, calculated
on the basis of the actuarial assumptions used in the most recent actuarial
valuation for such Queens Pension Plan as of the date hereof; and no notice
of a "reportable event" (as defined in Section 4043 of ERISA) for which the
30-day reporting requirement has not been waived has been required to be
filed for any Queens Pension Plan within the 12-month period ending on the
date hereof. Neither Queens nor any of its Subsidiaries has provided, or is
required to provide, security to any Queens Pension Plan or to any single-
employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code. Neither Queens, its Subsidiaries, nor any ERISA Affiliate has
contributed to any "multiemployer plan," as defined in Section 3(37) of
ERISA, on or after September 26, 1980. Each Queens Employee Plan that is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) and
which is intended to be qualified under Section 401(a) of the Code (a
"Queens Qualified Plan") has received a favorable determination letter from
the IRS, and Queens and its Subsidiaries are not aware of any circumstances
likely to result in revocation of any such favorable determination letter.
Each Queens Qualified Plan that is an "employee stock ownership plan" (as
defined in Section 4975(e)(7) of the Code) has satisfied all of the
applicable requirements of Sections 409 and 4975(e)(7) of the Code and the
regulations thereunder in all respects and any assets of any such Queens
Qualified Plan that are not allocated to participants' individual accounts
are pledged as security for, and may be applied to satisfy, any securities
acquisition indebtedness. There is no pending or, to Queens' knowledge,
threatened litigation, administrative action or proceeding relating to any
Queens Employee Plan. As of the date of this Agreement, there has been no
announcement or commitment by Queens or any of its Subsidiaries to create
an additional Queens Employee Plan, or to amend any Queens Employee Plan,
except for amendments required by applicable law which do not materially
increase the cost of such Queens Employee Plan; and, Queens and its
Subsidiaries do not have any obligations for post-retirement or post-
employment benefits under any Queens Employee Plan that cannot be amended
or terminated upon 60 days' notice or less without incurring any liability
thereunder, except for coverage required by Part 6 of Title I of ERISA or
Section 4980B of the Code, or similar state laws, the cost of which is
borne by the insured individuals. With respect to Queens or any of its
Subsidiaries, for the Employee Plans listed in Queens' Disclosure Letter,
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment or series
of payments by Queens or any of its Subsidiaries to any person which is an
"excess parachute payment" (as defined in Section 280G of the Code),
increase or secure (by way of a trust or other vehicle) any benefits
payable under any Queens Employee Plan or accelerate the time of payment or
vesting of any such benefit. All contributions required to be made under
the terms of any Queens Employee Plan have been timely made or have been
reflected on Queens' Reports. With respect to each Queens Employee Plan,
Queens has supplied to Haven a true and correct copy of (A) the annual
report on the applicable form of the Form 5500 series filed with the IRS
for the most recent three plan years, if required to be filed, (B) such
Queens Employee Plan, including amendments thereto, (C) each trust
agreement, insurance contract or other funding arrangement relating to such
Queens Employee Plan, including amendments thereto, (D) the most recent
summary plan description and summary of material modifications thereto for
such Queens Employee Plan, if the Queens Employee Plan is subject to Title
I of ERISA, (E) the most recent actuarial report or valuation if such
Queens Employee Plan is a Queens Pension Plan and any subsequent changes to
the actuarial assumptions contained therein and (F) the most recent
determination letter issued by the IRS if such Queens Employee Plan is a
Queens Qualified Plan.
(o) Title to Assets. Queens and each of its Subsidiaries has good and
marketable title to its properties and assets (including any intellectual
property asset such as any trademark, service mark, trade name or
copyright) and property acquired in a judicial foreclosure proceeding or by
way of a deed in lieu of foreclosure or similar transfer, other than
property as to which it is lessee, in which case the related lease is valid
and in full force and effect. Each lease pursuant to which Queens or any of
its Subsidiaries is lessor is valid and in full force and effect and no
lessee under any such lease is in default or in violation of any provisions
of any such lease. All material tangible properties of Queens and each of
its Subsidiaries are in a good state of maintenance and repair, conform
with all applicable ordinances, regulations and
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zoning laws and are considered by Queens to be adequate for the current
business of Queens and its Subsidiaries.
(p) Compliance with Laws. Queens and each of its Subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with, all Governmental
Entities that are required in order to permit it to carry on its business
as it is presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect, and, to the
best knowledge of Queens, no suspension or cancellation of any of them is
threatened. Since the date of its incorporation, the corporate affairs of
Queens have not been conducted in violation of any law, ordinance,
regulation, order, writ, rule, decree or approval of any Governmental
Entity. The businesses of Queens and its Subsidiaries are not being, and
have not been conducted in violation of any law, ordinance, regulation,
order, writ, rule, decree or condition to approval of any Governmental
Entity or any policy or procedure.
(q) Fees. Other than the financial advisory services performed for
Queens by Salomon Smith Barney, the fee for which is set forth in Queens'
Disclosure Letter, neither Queens nor any of its Subsidiaries, nor any of
their respective officers, directors, employees or agents, has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has
acted directly or indirectly for Queens or any of its Subsidiaries in
connection with this Agreement or the transactions contemplated hereby.
(r) Environmental Matters. With respect to Queens and each of its
Subsidiaries:
(i) Each of Queens and its Subsidiaries, the Participation
Facilities and, to Queens' knowledge, the Loan Properties are, and have
been, in substantial compliance with, and are not liable under, all
Environmental Laws;
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending
or, to Queens' knowledge, threatened, before any court, governmental
agency or board or other forum against Queens or any of its
Subsidiaries or any Participation Facility (x) for alleged
noncompliance (including by any predecessor) with, or liability under,
any Environmental Law or (y) relating to the presence of or release
into the environment of any Hazardous Material, whether or not
occurring at or on a site owned, leased or operated by it or any of its
Subsidiaries or any Participation Facility;
(iii) To Queens' knowledge, there is no suit, claim, action, demand,
executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency
or board or other forum relating to or against any Loan Property (or
Queens or any of its Subsidiaries in respect of such Loan Property) (x)
relating to alleged noncompliance (including by any predecessor) with,
or liability under, any Environmental Law or (y) relating to the
presence of or release into the environment of any Hazardous Material,
whether or not occurring at or on a site owned, leased or operated by a
Loan Property;
(iv) To Queens' knowledge, the properties currently owned or
operated by Queens or any of its Subsidiaries (including, without
limitation, soil, groundwater or surface water on, under or adjacent to
the properties, and buildings thereon) are not contaminated with and do
not otherwise contain any Hazardous Material other than as permitted
under applicable Environmental Law;
(v) Neither Queens nor any of its Subsidiaries has received any
notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law;
(vi) To Queens' knowledge, (A) there are no underground storage
tanks on, in or under any properties owned or operated by Queens or any
of its Subsidiaries, any Participation Facility or any Loan Property,
and (B) no underground storage tanks have been closed or removed from
any
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properties owned or operated by Queens or any of its Subsidiaries, any
Participation Facility or any Loan Property; and
(vii) To Queens' knowledge, during the period of (l) Queens' or any
of its Subsidiaries' ownership or operation of any of their respective
current properties, (m) Queens' or any of its Subsidiaries'
participation in the management of any Participation Facility or (n)
Queens' or any of its Subsidiaries' holding of a security interest in a
Loan Property, there has been no contamination by or release of
Hazardous Materials in, on, under or affecting such properties. To
Queens' knowledge, prior to the period of (x) Queens' or any of its
Subsidiaries' ownership or operation of any of their respective current
properties, (y) Queens' or any of its Subsidiaries' participation in
the management of any Participation Facility or (z) Queens' or any of
its Subsidiaries' holding of a security interest in a Loan Property,
there was no contamination by or release of Hazardous Material in, on,
under or affecting such properties.
(s) Deposits. As of the date hereof, none of the deposits of Queens or
any of its Subsidiaries is a "brokered" deposit.
(t) Insurance. Queens and its Subsidiaries are presently insured, and
since December 31, 1998, have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good
business practice, customarily be insured. All of the insurance policies
and bonds maintained by Queens and its Subsidiaries are in full force and
effect, Queens and its Subsidiaries are not in default thereunder and all
material claims thereunder have been filed in due and timely fashion.
(u) Borrowings. Set forth in Queens' Disclosure Letter is a true and
complete list of Queens' borrowed funds (excluding deposit accounts) as of
the date hereof.
(v) Books and Records. The books and records of Queens and its
Subsidiaries on a consolidated basis have been, and are being, maintained
in accordance with applicable legal and accounting requirements and reflect
in all material respects the substance of events and transactions that
should be included therein.
(w) Corporate Documents. Queens has made available to Haven true and
complete copies of its certificate of incorporation and bylaws and of
Queens Bank's organization certificate and bylaws. The minute books of
Queens and each Significant Subsidiary contain records of all meetings and
other corporate actions taken by their respective boards of directors (and
each committee thereof) and their stockholders and are complete and correct
in all material respects.
(x) Tax Treatment of the Merger. As the date hereof, Queens has no
knowledge of any fact or circumstance that would prevent the transactions
contemplated by this Agreement from qualifying as a reorganization under
the Code.
(y) Beneficial Ownership of Haven Common Stock. As of the date hereof,
Queens does not beneficially own any shares of Haven Common Stock and,
other than as contemplated by the Option Agreement, does not have any
option, warrant or right of any kind to acquire the beneficial ownership of
any shares of Haven Common Stock.
(z) Registration Statement. The information to be supplied by Queens for
inclusion in (i) the Registration Statement or (ii) the Joint Proxy
Statement-Prospectus will not, at the time such Registration Statement
becomes effective, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading.
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ARTICLE III
Conduct Pending the Merger
Section 3.1. Conduct of Haven's Business Prior to the Effective Time. Except
as expressly provided in this Agreement, during the period from the date of
this Agreement to the Effective Time, Haven shall, and shall cause its
Subsidiaries to, use commercially reasonable efforts to (i) conduct its
business in the ordinary course consistent with past practice, (ii) maintain
and preserve intact its business organization, properties, leases, employees
and advantageous business relationships and retain the services of its officers
and key employees, (iii) not knowingly take any action which would adversely
affect or delay the ability of Haven, CFS Bank, Queens or Queens Bank to
perform their respective covenants and agreements on a timely basis under this
Agreement, (iv) not knowingly take any action which would adversely affect or
delay the ability of Haven, CFS Bank, Queens or Queens Bank to obtain any
necessary approvals, consents or waivers of any governmental authority required
for the transactions contemplated hereby or which would reasonably be expected
to result in any such approvals, consents or waivers containing any material
condition or restriction, and (v) not knowingly take any action that results in
or is reasonably likely to have a Material Adverse Effect on Haven or CFS Bank.
Section 3.2. Forbearance by Haven. Without limiting the covenants set forth
in Section 3.1 hereof, except as otherwise provided in this Agreement and
except to the extent required by law or regulation or any Bank Regulator,
during the period from the date of this Agreement to the Effective Time, Haven
shall not, and shall not permit any of its Subsidiaries to, without the prior
written consent of Queens, which consent shall not be unreasonably withheld or
delayed:
(a) change any provisions of the certificate of incorporation or bylaws
of Haven or the similar governing documents of any of its Subsidiaries;
(b) issue any shares of capital stock or change the terms of any
outstanding stock options or warrants, issue, grant or sell any option,
warrant, call, commitment, stock appreciation right, right to purchase or
agreement of any character relating to the authorized or issued capital
stock of Haven except pursuant to (i) the exercise of stock options granted
pursuant to the Haven Option Plans in existence prior to the date hereof,
(ii) the exercise of stock options or warrants as set forth in Haven's
Disclosure Letter or consistent with Section 1.4 of this Agreement, (iii)
the Option Agreement or (iv) the terms of the Haven Rights Agreement;
adjust, split, combine or reclassify any capital stock; make, declare or
pay any dividend (except for (A) Haven's regular quarterly dividend of
$0.075, and (B) dividends by wholly-owned Subsidiaries) or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock. As
promptly as practicable following the date of this Agreement, the Board of
Directors of Haven shall cause its regular quarterly dividend record dates
and payment dates to be the same as Queens' regular quarterly dividend
record dates and payments dates for Queens Common Stock (i.e., Haven's
quarterly dividend expected to have a record date in September or October,
2000 shall be postponed to conform to the Queens dividend that is expected
to have a record date in November, 2000), and Haven shall not thereafter
change its regular dividend payment dates and record dates;
(c) other than in the ordinary course of business consistent with past
practice and pursuant to policies currently in effect (i) sell, transfer,
mortgage, encumber or otherwise dispose of any of its material properties,
leases or assets to any individual, corporation or other entity other than
a direct or indirect wholly-owned Subsidiary of Haven or (ii) cancel,
release or assign any indebtedness in individual amounts of greater than
$100,000 of any individual, corporation or other entity, except pursuant to
contracts or agreements in force at the date of this Agreement and which
have been disclosed to Queens;
(d) except to the extent required by law or as disclosed in Section
3.2(d) of Haven's Disclosure Letter or specifically provided for elsewhere
herein, increase the compensation or fringe benefits of any of its
employees or directors other than general increases in compensation to
employees having a title of Vice President and below made in the ordinary
course of business consistent with past practice, which increases
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do not exceed in any individual case 15% of the annual rate of base salary
in effect on the date of this Agreement for such individual and 6% in the
aggregate of the annual rate of base year salary in effect on the date of
this Agreement for such group, or pay any pension or retirement allowance
not required by any existing plan or agreement to any such employees or
directors, or become a party to, amend or commit itself to fund or
otherwise establish any trust or account related to any Haven Employee Plan
(as defined herein) with or for the benefit of any employee or director; or
voluntarily accelerate the vesting of any stock options or other
compensation or benefit;
(e) except as contemplated by Section 4.2, change its method of
accounting as in effect at December 31, 1999, except as required by changes
in GAAP as concurred in by Haven's independent auditors;
(f) except as set forth in Haven's Disclosure Letter, settle any claim,
action or proceeding involving any liability of Haven or any of its
Subsidiaries for money damages in excess of $100,000 or impose material
restrictions upon the operations of Haven or any of its Subsidiaries;
(g) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
or otherwise acquire or agree to acquire any assets, in each case which are
material, individually or in the aggregate, to Haven, except in
satisfaction of debts previously contracted;
(h) except pursuant to commitments existing at the date hereof which
have previously been disclosed to Queens, make any real estate loans
secured by undeveloped land or real estate located outside the States of
New York, New Jersey and Connecticut (other than real estate secured by
one-to-four family homes) or make any construction loan (other than
construction loans secured by one-to-four family homes) outside the States
of New York, New Jersey and Connecticut;
(i) establish or commit to the establishment of any new branch or other
office facilities other than as set forth in Haven's Disclosure Letter;
(j) take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code;
(k) make any investment in any debt security, including mortgage-backed
and mortgage-related securities, other than U.S. government and U.S.
government agency securities with final maturities not greater than two
years or reinvestments of interest on, and prepayments and payments at
maturity of the principal of mortgage-backed or mortgage-related securities
in mortgage-backed or mortgage-related securities that are purchased in the
ordinary course of business consistent with past practice;
(l) other than by and among CFS Bank and any of its Subsidiaries, make
any investment either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets of any
other individual, corporation or other entity other than (i) in the
ordinary course of business consistent with past practice in individual
amounts not to exceed $50,000, (ii) investments for Haven's portfolio made
in accordance with Section 3.2(k), (iii) the purchase of FHLB stock
necessary to maintain Haven's membership status with the FHLB of New York
and (iv) pursuant to contractual commitments existing as of the date hereof
as set forth in Section 3.2(l) of Haven's Disclosure Letter;
(m) enter into any contract or agreement that is not terminable within
30 days, or make any change in, or terminate, any of its leases or
contracts, other than with respect to those involving aggregate payments of
less than, or the provision of goods or services with a market value of
less than $100,000 per annum and other than contracts or agreements
permitted by other clauses of this Section 3.2;
(n) make, renegotiate, renew, increase, extend or purchase any (i) loan,
lease (credit equivalent), advance, credit enhancement or other extension
of credit, or make any commitment in respect of any of the foregoing,
except (a) in conformity with existing lending practices in amounts not to
exceed $500,000 to any individual borrower (except for commercial real
estate loans which shall be limited to $3.5 million
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to any individual borrower and except for small business and commercial
loans which shall be limited to $300,000 to any individual borrower) or (b)
loans or advances as to which Haven or any Subsidiary has a legally binding
obligation to make such loan or advances as of the date hereof; provided,
however, that Haven and its Subsidiaries may not make, renegotiate, renew,
increase, extend or purchase any loan that is underwritten based on no
verification of income or loans commonly known or referred to as "no
documentation loans;" or (ii) loans, advances or commitments to directors,
officers or other affiliated parties of Haven or any of its Subsidiaries;
(o) incur any additional borrowings beyond those set forth on Haven's
Disclosure Letter other than short-term (two years or less) FHLB borrowings
and reverse repurchase agreements consistent with past practice, or pledge
any of its assets to secure any borrowings other than as required pursuant
to the terms of borrowings of Haven or any Subsidiary in effect at the date
hereof or in connection with borrowings or reverse repurchase agreements
permitted hereunder. Deposits shall not be deemed to be borrowings within
the meaning of this paragraph;
(p) make any capital expenditures in excess of $50,000 per expenditure
other than (i) pursuant to binding commitments existing on the date hereof,
(ii) expenditures necessary to replace or maintain existing assets in good
repair and (iii) expenditures necessary to establish any new branches set
forth in Section 3.2(i) of Haven's Disclosure Letter;
(q) make any investment or commitment to invest in real estate or in any
real estate development project, other than real estate acquired in
satisfaction of defaulted mortgage loans and investments or commitments
approved by the Board of Directors of Haven or CFS Bank prior to the date
of this Agreement and disclosed in writing to Queens in Section 3.2(q) of
Haven's Disclosure Letter;
(r) elect to the Board of Directors of Haven any person who is not a
member of the Board of Directors of Haven as of the date of this Agreement;
(s) make any tax election other than in the ordinary course of business
consistent with past practice; or
(t) agree or commit to take any action that is prohibited by this
Section 3.2.
In the event that Queens does not respond in writing to Haven within four
business days of receipt by Queens of a written request for Haven to engage in
any of the actions for which Queens' prior written consent is required pursuant
to this Section 3.2, Queens shall be deemed to have consented to such action.
Any request by Haven or response thereto by Queens shall be made in accordance
with the notice provisions of Section 8.7, shall note that it is a request
pursuant to this Section 3.2 and shall state that a failure to respond within
four business days shall constitute consent.
Section 3.3. Conduct of Queens' Business Prior to the Effective Time. Except
as otherwise provided in this Agreement and except to the extent required by
law or regulation or any Bank Regulator, during the period from the date of
this Agreement to the Effective Time, Queens shall not, and shall not permit
Queens Bank to, materially change the nature of its or Queens Bank's business
plan or eliminate any material business line in existence on the date hereof
without first consulting with the Chairman of the Board and Chief Executive
Officer or the President of Haven.
Section 3.4. Forbearance by Queens. Except as otherwise provided in this
Agreement and except to the extent required by law or regulation or any Bank
Regulator, during the period from the date of this Agreement to the Effective
Time, Queens shall not, and shall not permit any of its Subsidiaries to,
without the prior written consent of Haven, which consent shall not be
unreasonably withheld or delayed:
(a) change any provisions of the certificate of incorporation or bylaws
of Queens, other than to increase the authorized capital stock of Queens or
issue shares of preferred stock thereunder;
(b) make, declare or pay any dividend (except for Queens' regular
quarterly dividend, which shall not be increased by more than $0.05 from
the prior quarter's dividend, and dividends of Queens'
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wholly-owned subsidiaries) or make any other distribution on its capital
stock or any securities or obligations convertible into or exchangeable for
any shares of its capital stock;
(c) knowingly take any action which (1) would materially adversely
affect its ability to consummate the Merger; (2) is reasonably likely to
prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code; or (3) is intended or is reasonably
likely to result in (i) any of its representations and warranties set forth
in this Agreement being or becoming untrue in any material respect at any
time at or prior to the Effective Time, (ii) any of the conditions to the
Merger set forth in Article V not being satisfied or (iii) a material
violation of any provision of this Agreement;
(d) change its method of accounting as in effect at December 31, 1999,
except as permitted by GAAP as concurred in by Queens' independent
auditors;
(e) elect to the Board of Directors of Queens any person who is not a
member of the Board of Directors of Queens as of the date of this Agreement
other than to fill a vacancy that arises due to the death, disability,
resignation or retirement of a director and if, within two years after the
Effective Time, a New Queens Director, New Queens Bank Director or
Continuing CFS Bank Director ceases to be a director of Queens, Queens Bank
or CFS Bank, respectively, thereby creating a vacancy on the Queens Board
of Directors, Queens Bank Board of Directors or the CFS Bank Board of
Directors (so long as it shall exist), such Board of Directors shall elect
a new member, selected by Queens, in its discretion. Queens shall give
first consideration to persons who were members of the Haven Board as of
the date hereof to fill such vacancy;
(f) enter into an agreement with respect to an Acquisition Transaction
(as defined herein) with a third party which is conditioned on Queens not
completing the Merger; provided that the foregoing shall not prevent Queens
or any of its Subsidiaries from acquiring any other assets or businesses or
from discontinuing or disposing of any of its assets or business if such
action is, in the reasonable judgment of Queens, desirable in the conduct
of the business of Queens and its Subsidiaries and would not, in the
reasonable judgment of Queens, likely delay the Effective Time to a date
subsequent to the date set forth in Section 7.1 of this Agreement. For
purposes of this Agreement, "Acquisition Transaction" shall mean (x) a
merger or consolidation, or any similar transaction, involving Queens, (y)
a purchase, lease or other acquisition of all or substantially all of the
assets of Queens or (z) a purchase or other acquisition (including by way
of merger, consolidation, share exchange or otherwise) of securities
representing 15% or more of the voting power of Queens; provided that the
term "Acquisition Transaction" does not include any internal merger or
consolidation involving only Queens and its Subsidiaries; or
(g) agree or commit to take any action that is prohibited by this
Section 3.4.
ARTICLE IV
Covenants
Section 4.1. Acquisition Proposals. Haven agrees that neither it nor any of
its Subsidiaries, nor any of the respective officers and directors of Haven or
any of its Subsidiaries, shall, and Haven shall direct and use its best efforts
to cause its employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to Haven's stockholders) with respect
to a merger, consolidation or similar transaction involving, or any purchase of
all or any significant portion of the assets or any equity securities of, Haven
or any of its material Subsidiaries (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or (b) engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
prevent Haven or its Board of Directors from (i) complying with Rule 14e-2
promulgated
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under the Exchange Act with regard to an Acquisition Proposal or (ii) (A)
providing information in response to a request therefor by a person who has
made an unsolicited bona fide written Acquisition Proposal (an "Unsolicited
Acquisition Proposal") if the Board of Directors receives from the person so
requesting such information executed confidentiality agreement on terms
substantially equivalent to those contained in such confidentiality agreements
between Queens and Haven, dated as of April 12, 2000 (the "Confidentiality
Agreement"); or (B) engaging in any negotiations or discussions with any person
who has made an Unsolicited Acquisition Proposal, if and only to the extent
that, in each such case referred to in clause (A) or (B) above, (x) the Board
of Directors of Haven, after consultation with outside legal counsel, in good
faith deems such action to be legally necessary for the proper discharge of its
fiduciary duties under applicable law and (y) the Board of Directors of Haven,
after consultation with its financial advisor, determines in good faith that
such Acquisition Proposal, if accepted, is reasonably likely to be consummated,
taking into account all legal, financial and regulatory aspects of the proposal
and the person making the proposal and would, if consummated, result in a more
favorable transaction than the transaction contemplated by this Agreement,
taking into account the long-term prospects and interests of Haven and its
stockholders. Haven will notify Queens immediately orally (within one business
day) and in writing (within three business days) if any such Acquisition
Proposals are received by, any such information is requested from or any such
negotiations or discussions are sought to be initiated or continued with Haven
after the date hereof, the identity of the person making such inquiry, proposal
or offer and the substance thereof and will keep Queens informed of any
developments with respect thereto immediately upon the occurrence thereof.
Subject to the foregoing, Haven will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing. Haven will
take the necessary steps to inform the appropriate individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 4.1. Haven will promptly request each person (other than Queens) that
has executed a confidentiality agreement prior to the date hereof in connection
with its consideration of a business combination with Haven or any of its
Subsidiaries to return or destroy all confidential information previously
furnished to such person by or on behalf of Haven or any of its Subsidiaries.
Section 4.2. Certain Policies of Haven.
(a) At the request of Queens, Haven shall cause CFS Bank to modify and
change its loan, litigation and real estate valuation policies and practices
(including loan classifications and levels of reserves) and investment and
asset/liability management policies and practices after the date on which all
Requisite Regulatory Approvals and stockholder approvals are received, and
after receipt of written confirmation from Queens that it is not aware of any
fact or circumstance that would prevent completion of the Merger, and prior to
the Effective Time so as to be consistent on a mutually satisfactory basis with
those of Queens Bank; provided, however, that Haven shall not be required to
take such action more than 30 days prior to the Effective Date; and provided,
further, that such policies and procedures are not prohibited by GAAP or any
applicable laws or regulations.
(b) Haven's representations, warranties and covenants contained in this
Agreement shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes undertaken solely on
account of this Section 4.2. Queens agrees to hold harmless, indemnify and
defend Haven and its Subsidiaries, and their respective directors, officers and
employees, for any loss, claim, liability or other damage caused by or
resulting from compliance with this Section 4.2.
Section 4.3. Access and Information.
(a) Upon reasonable notice, Haven and Queens shall (and shall cause their
respective Subsidiaries to) afford to the other and their respective
representatives (including, without limitation, directors, officers and
employees of such party and its affiliates and counsel, accountants and other
professionals retained by such party) such reasonable access during normal
business hours throughout the period prior to the Effective Time to the books,
records (including, without limitation, tax returns and work papers of
independent auditors), properties, personnel and to such other information as
either party may reasonably request; provided, however,
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that no investigation pursuant to this Section 4.3 shall affect or be deemed to
modify any representation or warranty made herein. In furtherance, and not in
limitation of the foregoing, Haven shall make available to Queens all
information necessary or appropriate for the preparation and filing of all real
property and real estate transfer tax returns and reports required by reason of
the Merger. Queens and Haven shall not, and shall cause their respective
representatives not to, use any information obtained pursuant to this Section
4.3 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. Subject to the requirements of applicable law,
each of Queens and Haven will keep confidential, and will cause their
respective representatives to keep confidential, all information and documents
obtained pursuant to this Section 4.3 or otherwise obtained in connection with
the transactions contemplated by this Agreement unless such information (i) was
already known to such party or an affiliate of such party, other than pursuant
to a confidentiality agreement or other confidential relationship, (ii) becomes
available to such party or an affiliate of such party from other sources not
known by such party to be bound by a confidentiality agreement or other
obligation of secrecy, (iii) is disclosed with the prior written approval of
the other party or (iv) is or becomes readily ascertainable from published
information or trade sources. In the event that this Agreement is terminated or
the transactions contemplated by this Agreement shall otherwise fail to be
consummated, each party shall promptly cause all copies of documents or
extracts thereof containing information and data as to another party hereto (or
an affiliate of any party hereto) to be returned to the party that furnished
the same or destroyed; provided, however, that an officer's certificate
attesting as to such destruction has been provided to the other party.
(b) During the period of time beginning on the day application materials are
deemed complete by the OTS, the FDIC and the FRB, to the extent an application
was required to be filed with such regulator, and continuing to the Effective
Time, including weekends and holidays, Haven shall cause CFS Bank to provide
Queens, Queens Bank and their authorized agents and representatives full access
to CFS Bank's offices after normal business hours for the purpose of installing
necessary wiring and equipment to be utilized by Queens Bank after the
Effective Time; provided that:
(i) reasonable advance notice of each entry shall be given to CFS Bank
and CFS Bank approves of each entry, which approval shall not be
unreasonably withheld;
(ii) CFS Bank shall have the right to have its employees or contractors
present to inspect the work being done;
(iii) to the extent practicable, such work shall be done in a manner
that will not interfere with CFS Bank's business conducted at any affected
branch offices;
(iv) all such work shall be done in compliance with all applicable laws
and government regulations, and Queens shall be responsible for the
procurement, at Queens' expense, of all required governmental or
administrative permits and approvals;
(v) Queens shall maintain appropriate insurance satisfactory to CFS Bank
in connection with any work done by Queens' agents and representatives
pursuant to this Section 4.3;
(vi) Queens shall reimburse CFS Bank for any out-of-pocket costs or
expenses incurred by CFS Bank in connection with this undertaking; and
(vii) in the event this Agreement is terminated in accordance with
Article VI hereof, Queens, within a reasonable time period and at its sole
cost and expense, will restore such offices to their condition prior to the
commencement of any such installation.
Section 4.4. Certain Filings, Consents and Arrangements. Queens and Haven
shall (a) as soon as practicable (and in any event within 45 days after the
date hereof) make, or cause to be made, any filings and applications and
provide any notices required to be filed or provided in order to obtain all
approvals, consents and waivers of Governmental Entities and third parties
necessary or appropriate for the consummation of the transactions contemplated
hereby or by Option Agreement; and (b) cooperate with one another in promptly
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(i) determining what filings and notices are required to be made or approvals,
consents or waivers are required to be obtained under any relevant federal or
state law or regulation or under any relevant agreement or other document and
(ii) making any such filings and notices, furnishing information required in
connection therewith and seeking timely to obtain any such approvals, consents
or waivers. Each party shall provide the other party with (i) a copy of all
applications, notices and filings referred to in this Section 4.4 together with
all attachments (other than biographical and financial disclosure forms), no
less than five days before filing such application, notice or filing with the
applicable Governmental Entity and (ii) a copy of all applications, notices and
filings referred to in this Section 4.4 filed with any Governmental Entity.
Each party shall notify the other of the receipt of any comments of any
Governmental Entity with respect to any application, notice or filing in
connection with this Agreement and shall provide the other party with copies of
all correspondence between that party or any representative of that party and
the Governmental Entity and copies of any amendments or supplements to any
application, notice or filing.
Section 4.5. Antitakeover Provisions.
(a) Haven and its Subsidiaries shall take all steps required by any relevant
federal or state law or regulation or under any relevant agreement or other
document (i) to exempt or continue to exempt Queens, the Covered Agreements and
any transactions contemplated thereby, as well as additional purchases by
Queens of up to 4.9% of then outstanding shares of Haven Common Stock, from any
provisions of an antitakeover nature in Haven's or its Subsidiaries'
certificates of incorporation or charters, as the case may be, and bylaws and
the provisions of Section 203 of the DGCL and (ii) upon the request of Queens,
to assist in any challenge to the applicability to the foregoing of Section 203
of the DGCL.
(b) Except for amendments approved in writing by Queens, Haven will not,
following the date hereof, amend or waive any of the provisions of, or take any
action to exempt any other persons from the provisions of, Haven Rights
Agreement in any manner that adversely affects Queens or Queens Bank with
respect to the consummation of the Merger or, except as provided in the next
sentence, redeem the rights thereunder; provided, however, that nothing herein
shall prevent Haven from amending or otherwise taking any action under the
Haven Rights Agreement to delay the Distribution Date (as defined in the Haven
Rights Agreement). If requested by Queens, but not otherwise, Haven will redeem
all outstanding Haven Preferred Share Purchase Rights at a redemption price of
not more than $.01 per Haven Preferred Share Purchase Right effective
immediately prior to the Effective Time.
Section 4.6. Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable
efforts to take promptly, or cause to be taken promptly, all actions and to do
promptly, or cause to be done promptly, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, as expeditiously as
possible, including using commercially reasonable efforts to obtain all
necessary actions or non-actions, extensions, waivers, consents and approvals
from all applicable Governmental Entities, effecting all necessary
registrations, applications and filings (including, without limitation, filings
under any applicable state securities laws) and obtaining any required
contractual consents and regulatory approvals.
Section 4.7. Publicity. The initial press release announcing this Agreement
shall be a joint press release and thereafter Haven and Queens shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the Merger and any other transaction contemplated
hereby and in making any filings with any Governmental Entity or with the
Nasdaq Stock Market or any national securities exchange with respect thereto.
Section 4.8. Stockholders Meetings. Haven and Queens each shall take all
action necessary, in accordance with applicable law and its respective
corporate documents, to convene a meeting of its respective stockholders (each,
a "Stockholder Meeting") as promptly as practicable for the purpose of
considering and voting on approval and adoption of the transactions provided
for in this Agreement. Except to the extent the Board of Directors of each of
Haven or Queens, as the case may be, after consultation with outside legal
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counsel, in good faith deems such action or inaction to be legally necessary
for the proper discharge of its fiduciary duties under applicable law the Board
of Directors of each of Haven and Queens shall (a) recommend at its Stockholder
Meeting that the stockholders vote in favor of and approve the transactions
provided for in this Agreement and (b) use its commercially reasonable efforts
to solicit such approvals. Haven and Queens, in consultation with the other,
shall each employ professional proxy solicitors to assist in contacting
stockholders in connection with soliciting favorable votes on the Merger. Haven
and Queens shall coordinate and cooperate with respect to the timing of their
respective Stockholder Meetings.
Section 4.9. Joint Proxy Statement-Prospectus; Comfort Letters. (i) Queens
and Haven shall cooperate with respect to the preparation of a Registration
Statement for the shares of Queens Common Stock to be issued in the Merger and
a Joint Proxy Statement-Prospectus for the purpose of taking stockholder action
on the Merger and this Agreement and file the Joint Proxy Statement-Prospectus
with the SEC as soon as practicable after the date hereof, respond to comments
of the staff of the SEC and, promptly after the Registration Statement is
declared effective by the SEC, mail the Joint Proxy Statement-Prospectus to the
respective holders of record (as of the applicable record date) of shares of
voting stock of each of Haven and Queens. Queens and Haven each represents and
covenants to the other that the Joint Proxy Statement-Prospectus, and any
amendment or supplement thereto, with respect to the information pertaining to
it or its Subsidiaries at the date of mailing to its stockholders and the date
of its Stockholder Meeting will be in compliance with the Exchange Act and all
relevant rules and regulations of the SEC and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(ii) Queens shall cause KPMG, LLP, its independent public accounting firm,
to deliver to Haven, and Haven shall cause KPMG, LLP, its independent public
accounting firm, to deliver to Queens and to its officers and directors who
sign the Registration Statement for this transaction, a "comfort letter" or
"agreed upon procedures" letter, in the form customarily issued by such
accountants at such time in transactions of this type, dated (a) the date of
the mailing of the Joint Proxy Statement-Prospectus for the Stockholders
Meeting of Haven and the date of mailing of the Joint Proxy Statement for the
Stockholders meeting of Queens, respectively, and (b) a date not earlier than
five business days preceding the date of the Closing (as defined herein).
Section 4.10. Registration of Queens Common Stock.
(a) Queens shall, as promptly as practicable following the preparation
thereof, file the Registration Statement (including any pre-effective or post-
effective amendments or supplements thereto) with the SEC under the Securities
Act in connection with the transactions contemplated by this Agreement, and
Queens and Haven shall use all reasonable efforts to have the Registration
Statement declared effective under the Securities Act as promptly as
practicable after such filing. Queens will advise Haven promptly after Queens
receives notice of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of the shares of capital
stock issuable pursuant to the Registration Statement, or the initiation or
threat of any proceeding for any such purpose, or of any request by the SEC for
the amendment or supplement of the Registration Statement or for additional
information. Queens will provide Haven with as many copies of such Registration
Statement and all amendments thereto promptly upon the filing thereof as Haven
may reasonably request.
(b) Queens shall use its commercially reasonable efforts to obtain, prior to
the effective date of the Registration Statement, all necessary state
securities laws or "blue sky" permits and approvals required to carry out the
transactions contemplated by this Agreement.
(c) Queens shall use its commercially reasonable efforts to list, prior to
the Effective Time, on the National Market System of The Nasdaq Stock Market,
Inc. ("Nasdaq Stock Market"), or on such other exchange as Queens Common Stock
shall then be trading, subject only to official notice of issuance, the shares
of Queens Common Stock to be issued by Queens in exchange for the shares of
Haven Common Stock.
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Section 4.11. Affiliate Letters. Promptly, but in any event within two weeks
after the execution and delivery of this Agreement, Haven shall deliver to
Queens a letter identifying all persons who, to the knowledge of Haven, may be
deemed to be "affiliates" of Haven under Rule 145 of the Securities Act
including, without limitation, all directors and executive officers of Haven.
Within two weeks after delivery of such letter, Haven shall deliver executed
letter agreements, each substantially in the form attached hereto as Exhibit A,
executed by each such person so identified as an affiliate of Haven agreeing
(i) to comply with Rule 145, and (ii) to be present in person or by proxy and
vote in favor of the Merger at the Haven Stockholders Meeting.
Section 4.12. Notification of Certain Matters. Each party shall give prompt
notice to the other of: (a) any event or notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by it or any of its Subsidiaries subsequent to
the date of this Agreement and prior to the Effective Time, under any contract
material to the financial condition, properties, businesses or results of
operations of such party and its Subsidiaries taken as a whole to which such
party or any Subsidiary is a party or is subject; and (b) any event, condition,
change or occurrence which individually or in the aggregate has, or which, so
far as reasonably can be foreseen at the time of its occurrence, is reasonably
likely to result in a Material Adverse Effect. Each of Haven and Queens shall
give prompt notice to the other party of any notice or other communication from
any third party alleging that the consent of such third party is or may be
required in connection with any of the transactions contemplated by this
Agreement.
Section 4.13. Directors and Officers.
(a) Queens agrees to cause three persons who are members of the Haven Board
of Directors on the date hereof, selected by Queens in its discretion, who are
willing so to serve ("New Queens Directors"), to be elected or appointed as
directors of Queens and two persons who are currently members of the Haven
Board of Directors, selected by Queens in its discretion, who are willing to so
serve ("New Queens Bank Directors") to be elected or appointed to the Board of
Directors of Queens Bank at, or as promptly as practicable after, the Effective
Time (such appointment or election of New Queens Directors and New Queens Bank
Directors, respectively, to be as evenly distributed as possible among the
classes of Queens and Queens Bank directors, respectively). The existing
members of the CFS Bank Board of Directors shall resign as of the Effective
Time, and the Board of Directors of CFS Bank, following the Effective Time,
shall include three members of the Haven Board of Directors as of the date
hereof, as selected by Queens in its discretion, and eight members from among
the existing Directors of Queens and Queens Bank, or otherwise as determined by
Queens ("Continuing CFS Bank Directors"). Queens may, in its discretion, select
the same person for more than one Board position. Queens agrees not to increase
the size of the Queens Board of Directors beyond 11 members for a period of two
years following the Effective Time; provided, however, that Queens may increase
the size of the Queens Board of Directors during such two year period in order
to appoint one or more persons to such board who, immediately prior to such
time, were directors of a financial organization then being acquired by Queens.
(b) Queens shall honor (i) the Employment Agreements and the Change in
Control Agreements between Haven and, respectively, those persons listed in
Section 4.13 of Haven's Disclosure Letter, each as amended and restated as of
the date set forth for such person therein and (ii) the Employment Agreements
and the Change in Control Agreements between CFS Bank and, respectively, those
persons listed in Section 4.13 of Haven's Disclosure Letter, each as amended
and restated as of the date set forth for such person therein.
Section 4.14. Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time through the sixth anniversary of the
Effective Date, Queens agrees to indemnify and hold harmless each director and
officer of Haven or any of its Subsidiaries as of the date of this Agreement
(each, an "Indemnified Party"), against any costs or expenses (including
reasonable attorneys'
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fees and expenses), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time (including the transactions contemplated by this Agreement,
including the entering into the Option Agreement), whether asserted or claimed
prior to, at or after the Effective Time, and to advance any such Costs to each
Indemnified Party as they are from time to time incurred, in each case to the
fullest extent such Indemnified Party would have been indemnified as a
director, officer or employee of Haven or any of its Subsidiaries under the
DGCL.
(b) Any Indemnified Party wishing to claim indemnification under Section
4.14(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Queens thereof, but the failure to so
notify shall not relieve Queens of any liability it may have hereunder to such
Indemnified Party if such failure does not materially prejudice the
indemnifying party. In the event of any such claim, action, suit, proceeding or
investigation, (i) Queens shall have the right to assume the defense thereof
with counsel reasonably acceptable to the Indemnified Party, and Queens 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 Queens does not elect to assume such defense within a
reasonable time or counsel for the Indemnified Party at any time advises that
there are issues which raise conflicts of interest between Queens and the
Indemnified Party, the Indemnified Party may retain counsel satisfactory to
such Indemnified Party, and Queens shall remain responsible for the reasonable
fees and expenses of such counsel as set forth above, to be paid promptly as
statements therefor are received; provided, however, that Queens shall be
obligated pursuant to this paragraph (b) to pay for only one firm of counsel
for all Indemnified Parties in any one jurisdiction with respect to any given
claim, action, suit, proceeding or investigation unless the use of one counsel
for such Indemnified Parties would present such counsel with a conflict of
interest; (ii) the Indemnified Party will reasonably cooperate in the defense
of any such matter; and (iii) Queens shall not be liable for any settlement
effected by an Indemnified Party without its prior written consent, which
consent may not be withheld or delayed unless such settlement is unreasonable
in light of such claims, actions, suits, proceedings or investigations against,
or defenses available to, such Indemnified Party.
(c) Queens shall pay all reasonable Costs, including attorneys' fees, that
may be incurred by any Indemnified Party in successfully enforcing the
indemnity and other obligations provided for in this Section 4.14 to the
fullest extent permitted under applicable law. The rights of each Indemnified
Party hereunder shall be in addition to any other rights such Indemnified Party
may have under applicable law.
(d) For a period of six years after the Effective Time, Queens shall cause
to be maintained in effect for the former directors and officers of Haven
coverage under Queens' policy of directors and officers liability insurance no
less advantageous to the beneficiaries thereof than the current policies of
directors' and officers' liability insurance maintained by Haven; provided,
however, that in no event shall Queens be obligated to expend, in order to
maintain or provide insurance coverage pursuant to this Subsection 4.14(d), any
premium per annum in excess of 200% of the amount of the annual premiums paid
as of the date hereof by Haven for such insurance ("Maximum Agreement");
provided, further, that if the amount of the annual premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum Amount, Queens
shall obtain the most advantageous coverage of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Amount; and
provided, further, that officers and directors of Haven may be required to make
application and provide customary representations and warranties to Queens'
insurance carrier for the purpose of obtaining such insurance.
Section 4.15. Tax-Free Reorganization Treatment. Prior to the Effective
Time, neither Queens nor Haven shall intentionally take, fail to take, or cause
to be taken or not taken, or cause or permit any of their respective
Subsidiaries to take, fail to take, or cause to be taken or not taken, any
action within its control that would disqualify the Merger as a reorganization
within the meaning of Section 368(a) of the Code. Subsequent to the Effective
Time, Queens shall not take any action within its control that would disqualify
the Merger as a tax-free reorganization under the Code.
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Section 4.16. Employees; Benefit Plans and Programs.
(a) Each person who is employed by Haven or CFS Bank immediately prior to
the Effective Time (a "Haven Employee") shall, at the Effective Time, become an
employee of Queens or Queens Bank or shall remain an employee of CFS Bank.
Beginning at the Effective Time, each Haven Employee shall serve Queens, Queens
Bank or CFS Bank in the same capacity in which he or she served immediately
prior to the Effective Time and upon the same terms and conditions generally
applicable to other employees of Queens or Queens Bank with comparable
positions, with the following special provisions:
(i) No Haven Employee shall be, or have or exercise the authority of, an
officer of Queens or Queens Bank unless and until elected or appointed an
officer of Queens or Queens Bank in accordance with Queens' or Queens
Bank's bylaws.
(ii) At or as soon as practicable following the Effective Time, Queens
and Queens Bank shall establish and implement a program of compensation and
benefits designed to cover all similarly situated employees on a uniform
basis ("New Compensation and Benefits Program"). The New Compensation and
Benefits Program may contain any combination of new plans, continuations of
plans maintained by Queens or Queens Bank immediately prior to the
Effective Time and continuation of plans maintained by Haven or CFS Bank
immediately prior to the Effective Time as Queens, in its discretion, may
determine. To the extent that it is not practicable to implement any
constituent part of the New Compensation and Benefits Program at the
Effective Time, Queens and Queens Bank shall continue in effect any
comparable plan maintained immediately prior to the Effective Time for the
respective employees of Queens, Haven, Queens Bank and CFS Bank for a
transition period. During the transition period, the persons who were
employees of Haven or CFS Bank immediately prior to the Effective Time who
become employees of Queens or Queens Bank or remain employees of CFS Bank
at the Effective Time shall continue to participate in the plans of Haven
and CFS Bank that are continued for transitional purposes, and all other
employees of Queens or Queens Bank will participate only in the comparable
plans of Queens and Queens Bank that are continued for transitional
purposes.
(iii) Each constituent part of the New Compensation and Benefits Program
shall recognize, in the case of persons employed by Queens, Queens Bank,
Haven or CFS Bank immediately prior to the Effective Time who are also
employed by Queens, Queens Bank or CFS Bank immediately after the Effective
Time, all service with Queens, Queens Bank, Haven or CFS Bank as service
with Queens, Queens Bank and CFS Bank for eligibility, participation,
vesting and all other such purposes except for purposes of any post-
retirement, health and life insurance benefits.
(iv) In the case of any constituent part of the New Compensation and
Benefits Program which is a life, health or long-term disability insurance
plan: (A) such plan shall not apply any preexisting condition limitations
for conditions covered under the applicable life, health or long-term
disability insurance plans maintained by Queens, Queens Bank, Haven and CFS
Bank as of the Effective Time, (B) each such plan which is a health
insurance plan shall honor any deductible and out of pocket expenses
incurred under the applicable life health plans maintained by Queens,
Queens Bank, Haven and CFS Bank as of the Effective Time and (C) each such
plan which is a life or long-term disability insurance plan shall waive any
medical certification otherwise required in order to assure the
continuation of coverage at a level not less than that in effect
immediately prior to the implementation of such plan (but subject to any
overall limit on the maximum amount of coverage under such plans).
(b) (i) Queens shall assume the obligations of Haven and CFS Bank with
respect to any severance plans or agreements identified in Haven's Disclosure
Letter, as they may be in effect at the Effective Time, and shall pay amounts
thereunder when due. In the event of the termination of employment of any
person who was an officer or employee of Haven or CFS Bank prior to the
Effective Time prior to the first anniversary of the Effective Time, such
person shall only be eligible for severance benefits under the plans referred
to in the
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preceding sentence. Thereafter, such person shall be entitled to a severance
benefit under the severance plan maintained by Queens or Queens Bank.
(ii) The amounts payable under the CFS Bank bonus programs shall be
determined for the period from January 1, 2000 through the Closing Date,
except that (A) the adjusted pre-tax net income and target goals shall be
adjusted and pro-rated for the portion of the year from January 1, 2000
through the Closing Date and (B) payments thereunder, as so adjusted, shall
be made as of the Closing Date.
(iii) Before the Effective Time, Haven may, in its sole and absolute
discretion, in accordance with applicable law, terminate any employee stock
ownership plan maintained by Haven ("Haven's ESOP") and cause Haven's ESOP
to sell unallocated shares held in the ESOP to the extent necessary to pay
in full any outstanding ESOP loan. In such event, any remaining unallocated
shares shall be distributed to the accounts of Haven's ESOP participants as
investment earnings in proportion to the amount held in each participant's
account as of the termination date.
Section 4.17. Advisory Board. Queens shall, promptly following the Effective
Time, cause all of the members of Haven's Board of Directors as of the date of
this Agreement, other than the New Queens Directors, New Queens Bank Directors
and Continuing CFS Bank Directors, who are willing to so serve to be elected or
appointed as members of Queens' advisory board ("Advisory Board"), the function
of which shall be to advise Queens with respect to deposit and lending
activities in Haven's former market area and to maintain and develop customer
relationships. The members of the Advisory Board shall be elected to serve an
initial term of three years beginning on the Effective Date. Each member of the
Advisory Board shall receive an annual retainer fee for such service of
$30,000, payable in monthly installments or in one lump sum at any time in
advance at the option of Queens.
ARTICLE V
Conditions to Consummation
Section 5.1. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Merger and any other transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions:
(a) this Agreement shall have been approved by (i) the requisite vote of
Haven's stockholders in accordance with applicable law and regulations and
(ii) the requisite vote of Queens' stockholders in accordance with
applicable law and regulations;
(b) (i) the Requisite Regulatory Approvals and any necessary regulatory
consents and waivers with respect to this Agreement and the transactions
contemplated hereby shall have been obtained and shall remain in full force
and effect, and all statutory waiting periods in respect thereof shall have
expired; and (ii) all other consents, waivers and approvals of any third
parties which are necessary to permit the consummation of the Merger and
the other transactions contemplated hereby (the "Third Party Non-Regulatory
Consents") shall have been obtained or made except for those Third Party
Non-Regulatory Consents the failure to obtain would not have, or would not
be reasonably likely to have, a Material Adverse Effect (x) on Haven and
its Subsidiaries taken as a whole or (y) on Queens and its Subsidiaries
taken as a whole. None of the approvals or waivers referred to herein shall
contain any term or condition which (A) would have, or would be reasonably
likely to have, a Material Adverse Effect on (x) Haven and its Subsidiaries
taken as a whole or (y) Queens and its Subsidiaries taken as a whole; or
(B) which would reduce, or would be reasonably likely to reduce, the
benefits of the transactions contemplated hereby to such a degree that the
Board of Directors of Queens determines, in its reasonable good faith
judgement, that Queens would not have entered into this Agreement had such
term or condition been known at the date hereof.
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<PAGE>
(c) no party hereto shall be subject to any order, decree or injunction
of a court or agency of competent jurisdiction which enjoins or prohibits
the consummation of the Merger or any other transactions contemplated by
this Agreement;
(d) no statute, rule or regulation shall have been enacted, entered,
promulgated, interpreted, applied or enforced by any Governmental Entity
which prohibits, restricts or makes illegal consummation of the Merger or
any other transactions contemplated by this Agreement;
(e) the Registration Statement shall have been declared effective by the
SEC, and no proceedings shall be pending or threatened by the SEC to
suspend the effectiveness of the Registration Statement; all required
approvals by state securities or "blue sky" authorities with respect to the
transactions contemplated by this Agreement shall have been obtained;
(f) Queens shall have caused to be listed on the Nasdaq Stock Market, or
on such other market on which shares of Queens Common Stock shall then be
trading, subject only to official notice of issuance, the shares of Queens
Common Stock to be issued by Queens in exchange for the shares of Haven
Common Stock.
Section 5.2. Conditions to the Obligations of Queens. The obligations of
Queens to effect the Merger, and any other transactions contemplated by this
Agreement shall be further subject to the satisfaction of the following
additional conditions, any one or more of which may be waived by Queens:
(a) each of the obligations of Haven required to be performed by it at
or prior to the Closing pursuant to the terms of this Agreement shall have
been duly performed and complied with in all material respects, and the
representations and warranties of Haven contained in this Agreement shall
be true and correct, subject to Sections 2.1 and 2.2, as of the date of
this Agreement and as of the Effective Time as though made at and as of the
Effective Time (except as to any representation or warranty which
specifically relates to an earlier date). Queens shall have received a
certificate to the foregoing effect signed by the chief executive officer
and the chief financial or principal accounting officer of Haven;
(b) all action required to be taken by, or on the part of, Haven to
authorize the execution, delivery and performance of this Agreement and the
consummation by Haven of the transactions contemplated hereby shall have
been duly and validly taken by the Board of Directors and stockholders of
Haven, as the case may be, and Queens shall have received certified copies
of the resolutions evidencing such authorization;
(c) Haven shall have obtained the consent or approval of each person
(other than the regulatory approvals or consents referred to in Section
5.1(b)) whose consent or approval shall be required in order to consummate
the Merger or to permit the succession by the surviving corporation
pursuant to the Merger to any obligation, right or interest of Haven or its
Subsidiaries under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument to which Haven or its
Subsidiaries is a party or is otherwise bound;
(d) Neither a Distribution Date nor a Shares Acquisition Date, as such
terms are defined in Haven Rights Agreement, shall have occurred, and Haven
Preferred Share Purchase Rights shall not have become nonredeemable and
shall not become nonredeemable upon consummation of the Merger, and Haven
Preferred Share Purchase Rights shall not become exercisable for capital
stock of Queens upon consummation of the Merger;
(e) Queens shall have received certificates (such certificates to be
dated as of a day as close as practicable to the Closing Date) from
appropriate authorities as to the corporate existence and good standing of
Haven;
(f) Queens shall have received an opinion of Sullivan & Cromwell,
counsel to Queens, dated as of the Effective Date, in form and substance
customary in transactions of the type contemplated hereby, and reasonably
satisfactory to Queens, substantially to the effect that on the basis of
the facts, representations
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<PAGE>
and assumptions set forth in such opinion which are consistent with the
state of facts existing at the Effective Time, the Merger will be treated
for federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code and that accordingly:
(i) no gain or loss will be recognized by Queens, Queens Bank, Haven
or CFS Bank as a result of the Merger; and
(ii) except to the extent of any cash received in lieu of a
fractional share interest in Queens Common Stock, no gain or loss will
be recognized by the stockholders of Haven who exchange their Haven
Common Stock for Queens Common Stock pursuant to the Merger.
Such opinion may be based on, in addition to the review of such matters
of fact and law as Sullivan & Cromwell considers appropriate, (x)
representations made at the request of Sullivan & Cromwell by Queens,
Queens Bank, Haven, CFS Bank, stockholders of Queens or Haven, or any
combination of such persons and (y) certificates provided at the request of
Sullivan & Cromwell by officers of Queens, Queens Bank, Haven, CFS Bank and
other appropriate persons.
Section 5.3. Conditions to the Obligations of Haven. The obligations of
Haven to effect the Merger and any other transactions contemplated by this
Agreement shall be further subject to the satisfaction of the following
additional conditions, any one or more of which may be waived by Haven:
(a) each of the obligations of Queens, required to be performed by it at
or prior to the Closing pursuant to the terms of this Agreement shall have
been duly performed and complied with in all material respects, and the
representations and warranties of Queens contained in this Agreement shall
be true and correct, subject to Sections 2.1 and 2.2, as of the date of
this Agreement and as of the Effective Time as though made at and as of the
Effective Time (except as to any representation or warranty which
specifically relates to an earlier date). Haven shall have received a
certificate to the foregoing effect signed by the chief executive officer
and the chief financial or principal accounting officer of Queens;
(b) all action required to be taken by, or on the part of, Queens to
authorize the execution, delivery and performance of this Agreement and the
consummation by Queens of the transactions contemplated hereby shall have
been duly and validly taken by the Board of Directors and stockholders of
Queens, as the case may be, and Haven shall have received certified copies
of the resolutions evidencing such authorization;
(c) Queens shall have obtained the consent or approval of each person
(other than the regulatory approvals or consents referred to in Section
5.1(b)) whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument to
which Queens or its Subsidiaries is a party or is otherwise bound, except
those for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a Material Adverse Effect on Queens
(after giving effect to the transactions contemplated hereby) or upon the
consummation of the transactions contemplated hereby;
(d) Haven shall have received certificates (such certificates to be
dated as of a day as close as practicable to the Closing Date) from
appropriate authorities as to the corporate existence and good standing of
Queens;
(e) Queens shall have taken such action as is required to assume the
covenants and conditions to be performed or kept by Haven in the Indenture,
dated as of February 12, 1997, in connection with Haven Capital Trust I,
and the Indenture, dated as of May 26, 1999, in connection with Haven
Capital Trust II in supplemental indentures;
(f) Haven shall have received an opinion of Thacher Proffitt & Wood,
counsel to Haven, dated as of the Effective Date, in form and substance
customary in transactions of the type contemplated hereby, and reasonably
satisfactory to Haven, substantially to the effect that on the basis of the
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the
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<PAGE>
Effective Time, the Merger will be treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code and
that accordingly:
(i) no gain or loss will be recognized by Queens, Queens Bank, Haven
or CFS Bank as a result of the Merger;
(ii) except to the extent of any cash received in lieu of a
fractional share interest in Queens Common Stock, no gain or loss will
be recognized by the stockholders of Haven who exchange their Haven
Common Stock for Queens Common Stock pursuant to the Merger;
(iii) the tax basis of Queens Common Stock received by stockholders
who exchange their Haven Common Stock for Queens Common Stock in the
Merger will be the same as the tax basis of Haven Common Stock
surrendered pursuant to the Merger, reduced by any amount allocable to
a fractional share interest for which cash is received and increased by
any gain recognized on the exchange; and
(iv) the holding period of Queens Common Stock received by each
stockholder in the Merger will include the holding period of Haven
Common Stock exchanged therefor, provided that such stockholder held
such Haven Common Stock as a capital asset on the Effective Date.
Such opinion may be based on, in addition to the review of such matters of
fact and law as Thacher Proffitt & Wood considers appropriate, (x)
representations made at the request of Thacher Proffitt & Wood by Queens,
Queens Bank, Haven, CFS Bank, stockholders of Queens or Haven, or any
combination of such persons and (y) certificates provided at the request of
Thacher Proffitt & Wood by officers of Queens, Queens Bank, Haven, CFS Bank and
other appropriate persons.
ARTICLE VI
Termination
Section 6.1. Termination. This Agreement may be terminated, and the Merger
abandoned, at or prior to the Effective Time, either before or after its
approval by the stockholders of Haven and Queens:
(a) by the mutual consent of Queens and Haven, if the Board of Directors
of each so determines by vote of a majority of the members of its entire
Board;
(b) by Queens or Haven, if its Board of Directors so determines by vote
of a majority of the members of its entire Board, in the event of (i) the
failure of the stockholders of Haven or Queens to approve the Agreement at
its Stockholder Meeting called to consider such approval; provided,
however, that Haven or Queens, as the case may be, shall only be entitled
to terminate the Agreement pursuant to this clause (i) if it has complied
in all material respects with its obligations under Sections 4.8 and 4.9,
or (ii) a material breach by the other party hereto of any representation,
warranty, covenant or agreement contained herein which causes the
conditions set forth in Section 5.2(a) (in the case of termination by
Queens) or Section 5.3(a) (in the case of the termination by Haven) not to
be satisfied and such breach is not cured within 25 business days after
written notice of such breach is given to the party committing such breach
by the other party or which breach is not capable of being cured by the
date set forth in Section 6.1(d) or any extension thereof;
(c) by Queens or Haven, by written notice to the other party, if either
(i) any approval, consent or waiver of a Governmental Entity required to
permit consummation of the transactions contemplated hereby shall have been
denied or (ii) any court or governmental authority of competent
jurisdiction shall have issued a final, unappealable order enjoining or
otherwise prohibiting consummation of the transactions contemplated by this
Agreement;
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<PAGE>
(d) by Queens or Haven, 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 March 31, 2001 unless the failure to so
consummate by such time is due to the breach of any representation,
warranty or covenant contained in this Agreement by the party seeking to
terminate;
(e) by Haven, if its Board of Directors so determines by a majority vote
of the members of its entire Board, at any time during the five day period
commencing on the Valuation Date, such termination to be effective on the
15th business day following such Valuation Date, ("Effective Termination
Date") if both of the following conditions are satisfied:
(i) the Queens Market Value on the Valuation Date is less than an
amount equal to 80% of the Initial Queens Market Value; and
(ii) the Queens Ratio shall be less than 0.80 times the Index Ratio;
subject, however, to the following three sentences. If Haven elects to
exercise its termination right pursuant to this Section 6.1(e), it shall
give prompt written notice thereof to Queens within five business days of
the Valuation Date; provided, that such notice of election to terminate may
be withdrawn at any time prior to the Effective Termination Date. During
the five business day period commencing with its receipt of such notice,
Queens shall have the option to increase the consideration to be received
by the holders of Haven Common Stock hereunder by adjusting the Exchange
Ratio to equal the lesser of (x) a number equal to a fraction, the
numerator of which is 0.832 multiplied by the Initial Queens Market Value
and the denominator of which is the Queens Market Value, and (y) the
quotient obtained by dividing (1) the product of the Index Ratio and the
Exchange Ratio (as then in effect) by (2) the Queens Ratio. If Queens so
elects, it shall give, within such five day period, written notice to Haven
of such election and the revised Exchange Ratio, whereupon no termination
shall be deemed to have occurred pursuant to this Section 6.1(e) and this
Agreement shall remain in full force and effect in accordance with its
terms (except as the Merger Consideration shall have been so modified).
For purposes of Section 6.1(e), the following terms shall have the meanings
indicated below:
"Average Index Price" shall mean the average of the daily Index Prices for
the 15 consecutive full trading days immediately preceding the Valuation Date.
"Index Group" means the 25 financial institution holding companies listed
below, the common stock of all of which shall be publicly traded and as to
which there shall not have been an Acquisition Transaction involving such
company publicly announced at any time during the period beginning on the date
of this Agreement and ending on the Valuation Date. In the event that the
common stock of any such companies ceases to be publicly traded or an
Acquisition Proposal involving any such companies is announced at any time
during the period beginning on the date of this Agreement and ending on the
Valuation Date, such company will be removed from the Index Group, and the
weights attributed to the remaining companies will be adjusted proportionately
for purposes of determining the Index Price on the relevant dates. The 25
financial institution holding companies and the weights attributed to them are
as follows:
<TABLE>
<CAPTION>
Holding Company Weighting
--------------- ---------
<S> <C>
Washington Federal, Inc. ......................................... 7.95%
Independence Community Bank Corp. ................................ 10.18
Commercial Federal Corporation ................................... 8.59
Webster Financial Corporation .................................... 6.45
Downey Financial Corp. ........................................... 4.26
Staten Island Bancorp, Inc. ...................................... 5.65
Richmond County Financial Corp. .................................. 4.38
American Financial Holdings, Inc. ................................ 4.37
MAF Bancorp, Inc. ................................................ 3.55
First Sentinel Bancorp, Inc. ..................................... 5.46
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Holding Company Weighting
--------------- ---------
<S> <C>
Harbor Florida Bancshares, Inc. .................................. 3.96
First Indiana Corporation ........................................ 1.91
FirstFed Financial Corp. ......................................... 2.63
United Community Financial Corp. ................................. 5.72
Seacoast Financial Services Corporation .......................... 3.85
OceanFirst Financial Corp. ....................................... 1.82
InterWest Bancorp, Inc. .......................................... 2.34
Dime Community Bancshares, Inc. .................................. 1.84
PFF Bancorp, Inc. ................................................ 2.02
First Federal Capital Corp. ...................................... 2.77
PBOC Holdings, Inc. .............................................. 3.01
First Financial Holdings Inc. .................................... 2.02
Andover Bancorp, Inc. ............................................ .96
Virginia Capital Bancshares, Inc. ................................ 1.56
CFS Bancorp, Inc. ................................................ 2.75
</TABLE>
"Index Price" on a given date shall mean the sum of the following: the
closing sales price of a share of common stock of each company comprising the
Index Group (as reported for such date on the consolidated transaction
reporting system for the stock exchange or market on which such common stock is
principally traded), multiplied by the applicable weighting for such common
stock.
"Initial Queens Market Value" means the average of (i) $18.125 and (ii) the
closing sales price of Queens Common Stock on the Starting Date, as reported on
the Nasdaq Stock Market. The Initial Queens Market Value shall be equitably
adjusted to take into effect any stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares, or similar
transaction between the date of this Agreement and the Valuation Date.
"Index Ratio" shall mean the quotient of the Average Index Price divided by
the Index Price on the Starting Date.
"Queens Market Value" shall be the average of the closing sale prices of a
share of Queens Common Stock, as reported on the principal stock exchange or
trading system upon which Queens Common Stock is then trading, for the 15
consecutive trading days immediately preceding the day on which the approval of
the FRB is received (such date being referred to herein as the "Valuation
Date").
"Queens Ratio" shall mean the quotient of the Queens Market Value divided by
the Initial Queens Market Value.
"Starting Date" shall mean June 28, 2000.
"Valuation Date" shall have the meaning set forth in this Section 6.1(e).
If Queens or any company belonging to the Index Group declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the date of this Agreement
and the Valuation Date, the prices for the common stock of such company shall
be appropriately adjusted for the purposes of applying this Section 6.1(e).
Section 6.2. Effect of Termination. In the event of the termination of this
Agreement by either Queens or Haven, as provided above, this Agreement shall
thereafter become void and there shall be no liability on the part of any party
hereto or their respective officers or directors, except that (a) any such
termination shall be without prejudice to the rights of any party hereto
arising out of the willful breach by any other party of any covenant,
representation or obligation contained in this Agreement and (b) the
obligations of the parties under Section 4.3(a) (the last three sentences
only), Section 6.2 and Section 8.6 shall survive.
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<PAGE>
ARTICLE VII
Closing, Effective Date and Effective Time
Section 7.1. Effective Date and Effective Time. The closing of the
transactions contemplated hereby ("Closing") shall take place at the offices of
Thacher Proffitt & Wood, Two World Trade Center, New York, New York 10048, on a
date ("Closing Date") that is no later than five business days following the
date on which the expiration of the last applicable waiting period in
connection with notices to and approvals of regulatory and governmental
authorities shall occur and all conditions to the consummation of this
Agreement are satisfied or waived, or on such other date as may be agreed to by
the parties. Prior to the Closing Date, Queens and Haven shall execute a
Certificate of Merger in accordance with all appropriate legal requirements,
which shall be filed as required by law on the Closing Date, and the Merger
provided for therein shall become effective upon such filing or at such time as
may be specified in such Certificate of Merger. The date of such filing or such
later effective time as specified in the Certificate of Merger is herein
referred to as the "Effective Date." The "Effective Time" of the Merger shall
be as set forth in the Certificate of Merger.
Section 7.2. Deliveries at the Closing. Subject to the provisions of
Articles V and VI, on the Closing Date there shall be delivered to Queens and
Haven the documents and instruments required to be delivered under Article V.
ARTICLE VIII
Certain Other Matters
Section 8.1. Certain Definitions; Interpretation. As used in this Agreement,
the following terms shall have the meanings indicated:
"business day" means each day except Saturday, Sunday or a day on which
banking institutions in New York are authorized or required by law to
remain closed.
"material" means material to Queens or Haven (as the case may be) and
its respective Subsidiaries, taken as a whole.
"person" includes an individual, corporation, limited liability company,
partnership, association, trust or unincorporated organization.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of, Exhibit or Schedule to,
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for ease of reference only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation." Any singular term in this Agreement
shall be deemed to include the plural, and any plural term the singular. Any
reference to gender in this Agreement shall be deemed to include any other
gender.
Section 8.2. Survival. Only those agreements and covenants of the parties
that are by their terms applicable in whole or in part after the Effective
Time, including Sections 4.14, 4.15, and 8.6 of this Agreement, shall survive
the Effective Time. All other representations, warranties, agreements and
covenants shall be deemed to be conditions of the Agreement and shall not
survive the Effective Time. If the Agreement shall be terminated, the
agreements of the parties in the last three sentences of Section 4.3(a),
Section 6.2, and Section 8.6 shall survive such termination.
Section 8.3. Waiver; Amendment. Prior to the Effective Time, any provision
of this Agreement may be: (i) waived in writing 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 between the parties hereto except
that, after the vote
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<PAGE>
by the stockholders of Haven or Queens, no amendment or modification may be
made that would reduce the Merger Consideration or contravene any provision of
the DGCL or federal banking laws, rules and regulations.
Section 8.4. Counterparts. This Agreement may be executed in counterparts
each of which shall be deemed to constitute an original, but all of which
together shall constitute one and the same instrument.
Section 8.5. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of New York, without
regard to conflicts of laws principles.
Section 8.6. Expenses. Except as provided in Section 4.3, each party hereto
will bear all expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby.
Section 8.7. Notices. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, overnight courier or facsimile
transmission (confirmed in writing) to such party at its address or facsimile
number set forth below or such other address or facsimile transmission as such
party may specify by notice to the other party hereto.
If to Haven, to:
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, New York 11590
Facsimile: 516-683-8344
Attention: Philip S. Messina, Chairman and Chief Executive Officer and
William J. Jennings II, President and Chief Operating Officer;
With copies to:
Thacher Proffitt & Wood, 38th Floor
Two World Trade Center
New York, New York 10048
Facsimile: 212-912-8371
Attention: Omer S.J. Williams, Esq.
If to Queens, to:
Queens County Bancorp, Inc.
38-25 Main Street
Flushing, New York 11354
Facsimile: 718-359-0888
Attention: Joseph R. Ficalora, Chairman, President and Chief Executive
Officer
With copies to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: 212-558-3345
Attention: Mark J. Menting, Esq.
Section 8.8. Entire Agreement; etc. This Agreement, the Option Agreement and
the Disclosure Letters together with any ancillary voting agreements and the
affiliate letters described in Section 4.11 hereof (the "Covered Agreements")
represent the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and supersede any and all other oral or
written agreements heretofore made.
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<PAGE>
All terms and provisions of this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns. Except for Sections 4.13 and 4.14, which confer rights on the parties
described therein, nothing in this Agreement is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement. The confidentiality agreement referred to in Section 4.1
hereof is hereby terminated. Nothing herein shall be deemed to prohibit Queens
from acquiring up to 4.9% of Haven's then outstanding Common Stock
Section 8.9. Assignment. This Agreement may not be assigned by either party
hereto without the written consent of the other party.
Section 8.10. Waiver of Jury Trial. Each party hereto acknowledges and
agrees that any controversy which may arise under any of the Covered Agreements
is likely to involve complicated and difficult issues, and therefore each party
hereby irrevocably and unconditionally waives any right such party may have to
a trial by jury in respect of any litigation, directly or indirectly, arising
out of, or relating to, any of the covered Agreements, or the transactions
contemplated by any of the Covered Agreements. Each party certifies and
acknowledges that (a) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in
the event of litigation, seek to enforce the foregoing waiver, (b) such party
understands and has considered the implications of this waiver, (c) such party
makes this waiver voluntarily, and (d) such party has been induced to enter
into this Agreement by, among other things, the mutual waivers and
certifications in this Section 8.10.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
Queens County Bancorp, Inc.
/s/ Joseph R. Ficalora
By: _________________________________
Joseph R. Ficalora
Chairman of the Board, President
and
Chief Executive Officer
Haven Bancorp, Inc.
/s/ Philip S. Messina
By: _________________________________
Philip S. Messina
Chairman of the Board
and Chief Executive Officer
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<PAGE>
Exhibit A
[Form of Affiliate Letter]
June 27, 2000
Queens County Bancorp, Inc.
38-25 Main Street, 2nd Floor
Flushing, New York 11354
Attention: Mr. Joseph R. Ficalora
Chairman, President and Chief Executive Officer
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of June ,
2000 (the "Merger Agreement"), by and between Queens County Bancorp, Inc., a
Delaware corporation ("Queens") and Haven Bancorp, Inc., a Delaware corporation
("Haven"). The Merger Agreement provides, among other things, for the merger of
Haven with and into Queens, with Queens being the surviving entity (the
"Merger"). Upon consummation of the Merger, each share of Haven common stock,
par value $0.01 per share ("Haven Common Stock") other than Excluded Shares (as
defined in the Merger Agreement) will become and be converted into the right to
receive 1.04 shares of common stock, par value $0.01 per share, of Queens
("Queens Common Stock") as determined pursuant to Section 1.2 of the Merger
Agreement. This Letter Agreement is being entered into pursuant to Section 4.11
of the Merger Agreement.
I have been advised that (i) the Merger constitutes a transaction covered by
Rule 145 of the Rules and Regulations (the "Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), and (ii) I may be deemed to be an affiliate of Haven, as
the term "affiliate" is defined for purposes of Rule 145 under the Act; and
that, accordingly, the shares of Queens Common Stock that I may acquire in
connection with the Merger may be disposed of only in conformity with the
provisions hereof.
I hereby represent and warrant to, and covenant with, Queens as follows:
1. I have full power to execute this Letter Agreement, to make the
representations, warranties and agreements herein and to perform my
obligations hereunder.
2. I have carefully read this Letter Agreement and, to the extent I felt
necessary, discussed its requirements and other applicable limitations upon
my ability to sell, transfer or otherwise dispose of shares of Queens
Common Stock with my counsel or counsel for Haven.
3. In the event I receive any shares of Queens Common Stock in exchange
for shares of Haven Common Stock as a result of the consummation of the
Merger, or any securities which may be paid as a dividend or otherwise
distributed thereon or with respect thereto or issued or delivered in
exchange or substitution therefor, or any option, right or other interest
(all such shares and securities being referred to herein as "Restricted
Securities"), and with respect to any such Restricted Securities:
(A) I will not make any sale, transfer or other disposition of
Restricted Securities in violation of the Act or the Regulations.
(B) I have been advised that the shares of Queens Common Stock to be
issued in the Merger have been registered under the Act by a
Registration Statement of Queens on Form S-4. However, I have also been
advised that because (i) at the time of the submission of the Merger
Agreement to a vote of the stockholders of Haven, I may be deemed an
affiliate of Haven, and (ii) the distribution by me of Queens Common
Stock has not been registered under the Act, that I may not sell,
transfer or otherwise dispose of Queens Common Stock issued to me in
the Merger or other Restricted Securities
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unless (a) such sale, transfer or other disposition has been registered
under the Act, (b) such sale, transfer or other disposition is made in
conformity with the volume and other limitations imposed by Rule 145
under the Act, or (c) in the opinion of counsel reasonably acceptable
to Queens, such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
(C) I understand that Queens is under no obligation to register the
sale, transfer or other disposition of shares of Queens Common Stock or
other Restricted Securities by me or on my behalf under the Act or to
take any other action necessary in order to make compliance with an
exemption from such registration available.
(D) I also understand that stop transfer instructions will be given
to Queens' transfer agent with respect to my Restricted Securities and
that there will be placed on the certificates for Restricted Securities
issued to me, or any substitutions therefor, a legend stating in
substance:
The shares represented by this certificate were issued in a
transaction to which Rule 145 under the Securities Act of 1933, as
amended, applies. The shares represented by this certificate may
only be transferred in accordance with the terms of an agreement
between the registered holder hereof and Queens County Bancorp, Inc.
("Queens"), a copy of which agreement is on file at the principal
office of Queens. A copy of such agreement shall be provided,
without charge, upon receipt by Queens of a written request.
(E) Unless a transfer of Restricted Securities is a sale made in
conformity with the provisions of Rule 145(d), or made pursuant to any
effective registration statement under the Act, Queens reserves the
right to put an appropriate legend on the certificate issued to my
transferee.
(F) It is understood and agreed that the legends set forth in
paragraphs D and E above shall be removed by delivery of substitute
certificates without such legend, and/or the issuance of a letter to
Queens' transfer agent removing such stop transfer instructions, if I
shall have delivered to Queens (i) a copy of a letter from the staff of
the Commission, or an opinion of counsel in form and substance
reasonably satisfactory to Queens, or other evidence reasonably
satisfactory to Queens, to the effect that such legend and/or stop
transfer instructions are not required for purposes of the Act or (ii)
reasonably satisfactory evidence or representations that the securities
represented by such certificates are being or have been transferred in
a transaction made in conformity with the provisions of Rule 145 under
the Act.
4. I recognize and agree that the foregoing provisions also apply to (A)
my spouse, (B) any relative of mine or my spouse occupying my home, (C) any
trust or estate in which I, my spouse or any such relative owns at least
10% beneficial interest or of which any of us serves as trustee, executor
or in any similar capacity and (D) any corporation or other organization in
which I, my spouse or any such relative owns at least 10% of any class of
equity securities or of the equity interest. It is understood that this
Letter Agreement shall be binding upon and enforceable against my
administrators, executors, representatives, heirs, legatees and devisees,
and any pledgee holding securities restricted pursuant to this Letter
Agreement.
5. I will (a) vote all shares of Haven Common Stock I then own in favor
of the Merger Agreement and the Merger at any meeting or meetings of
Haven's stockholders called to vote upon the Merger Agreement and the
Merger and (b) not vote such shares (or otherwise provide a proxy or
consent or enter into another voting agreement with respect thereto) in
favor of any other Acquisition Proposal (as defined in the Merger
Agreement).
6. Execution of this letter should not be construed as an admission on
my part that I am an "affiliate" of Haven, as described in the second
paragraph of this letter, or as a waiver of any rights I may have to object
to any claim that I am such an affiliate on or after the date of this
letter.
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7. This Letter Agreement shall terminate and be of no further force and
effect if the Merger Agreement is terminated pursuant to the terms thereof.
Very truly yours,
_____________________________________
Name:
Acknowledged as of the date
first written above
Queens County Bancorp, Inc.
By: _________________________________
Name:
Title:
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APPENDIX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 27, 2000, between QUEENS COUNTY
BANCORP, INC., a Delaware corporation ("Grantee"), and HAVEN BANCORP, INC., a
Delaware corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer are entering into an Agreement and Plan of
Merger (the "Merger Agreement");
WHEREAS, as a condition and an inducement to Grantee's entering into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined) on the terms and conditions set forth in this Agreement; and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement prior to the date hereof;
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 irrevocable option (the
"Option") to purchase, subject to the terms hereof, up to an aggregate of
1,800,000 fully paid and nonassessable shares of the common stock, par
value $0.01 per share, of Issuer ("Common Stock") at a price per share
equal to the last reported sale price per share of Common Stock as reported
on the National Association of Securities Dealers Composite Transactions
Tape on June 28, 2000; provided, however, that in the event Issuer issues
or agrees to issue any shares of Common Stock (other than shares of Common
Stock issued pursuant to stock options granted pursuant to any employee
benefit plan prior to the date hereof) at a price less than such average
price per share (as adjusted pursuant to subsection (b) of Section 5), the
price shall be equal to such lesser price (such price, as adjusted if
applicable, the "Option Price"); provided, further, that in no event shall
the number of shares for which this Option is exercisable exceed 19.9% of
the 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 l(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 six (6) months following such Subsequent
Triggering Event (or such later period as provided in Section 10). Each of
the following shall be an Exercise Termination Event: (i) the Effective
Time of the Merger; (ii) termination of the Merger Agreement in accordance
with the provisions thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event except a termination by Grantee
pursuant to Section 6.1(b)(ii) of the Merger Agreement (a "Listed
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Termination"); or (iii) the passage of twelve (12) 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.
(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 any subsidiary or group of subsidiaries that is, or
would on an aggregate basis constitute, a Significant Subsidiary (as
defined in Rule 1-02 of Regulation S-X promulgated by the Securities
and Exchange Commission (the "SEC") (each such subsidiary or group of
subsidiaries, an "Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered into an agreement
to engage in an Acquisition Transaction (as hereinafter defined) with
any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
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. For purposes of
this Agreement, (a) "Acquisition Transaction" shall mean (x) a merger
or consolidation, or any similar transaction, involving Issuer or any
Issuer Subsidiary (other than mergers, consolidations or similar
transactions involving solely Issuer and/or one or more wholly-owned
Subsidiaries of the Issuer, provided, any such transaction is not
entered into in violation of the terms of the Merger Agreement), (y) a
purchase, lease or other acquisition of all or any substantial part of
the assets or deposits of Issuer or any Issuer Subsidiary (except for
any supermarket branches and related deposits of the Issuer located in
New Jersey or Connecticut), or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power
of Issuer or any Issuer Subsidiary and (b) "Subsidiary" shall have the
meaning set forth in Rule 12b-2 under the 1934 Act;
(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 canceled 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 canceled, prior to such
termination), it shall have been publicly announced that any person
(other than Grantee or any of its Subsidiaries) shall have made, or
disclosed an intention to make, a bona fide proposal to engage in an
Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) in any manner adverse in
any respect to Grantee its recommendation that the shareholders of
Issuer approve the transactions contemplated by the Merger Agreement
after it shall have been publicly announced that any person (other than
Grantee or any of its Subsidiaries) shall have made, or disclosed an
intention to make, a bona fide proposal to engage in an Acquisition
Transaction, or Issuer or any Issuer Subsidiary shall have authorized,
recommended, proposed (or publicly announced its intention to
authorize, recommend or propose) an agreement to engage in an
Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary;
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(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; or
(vi) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that
would constitute an Acquisition Transaction (or filed a preliminary
proxy statement with the SEC with respect to a potential vote by its
shareholders to approve the issuance of shares to be offered in such an
exchange offer).
(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 (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (z) of the second sentence thereof
shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(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 Office of Thrift Supervision (the "OTS"), Board of
Governors of the Federal Reserve System (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 approvals 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
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder shall
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 , 2000,
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
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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 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 require the retention of such
reference in the 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 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 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; (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, under the Bank Holding Company Act of 1956, as amended (the "BHCA"),
Home Owners' Loan Act, as amended ("HOLA"), 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 OTS, 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 OTS or 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 herein to protect the rights of
the Holder against dilution.
4. This Agreement and the Option granted hereby are exchangeable,
without expense, at the option of the Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
Agreements providing for Options of different denominations entitling the
holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of
shares of Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any Agreements and related Options for
which this Agreement (and the Option granted hereby) may be exchanged. Upon
receipt by Issuer of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Agreement, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer
will execute and deliver a new Agreement of like tenor and date. Any such
new Agreement executed and delivered shall constitute an additional
contractual obligation on the part of
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Issuer, whether or not the Agreement so lost, stolen, destroyed or
mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option 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, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof shall be appropriately adjusted 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 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 a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within twelve (12) months (or such later period 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 issuable pursuant to this Option
and shall use its commercially reasonable 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 commercially reasonable 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 dispositions. Grantee shall have
the right to demand two such registrations. The Issuer shall bear the costs
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 the 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 twelve (12) month period referred to in the
first sentence of this section shall be increased to twenty-four (24)
months. Each such Holder shall provide all information reasonably
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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) and prior to the date that is six (6) months immediately
thereafter (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 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 price per share of Common Stock at which a tender or exchange
offer therefor has been made, (ii) the price per share of Common Stock to
be paid by any third party pursuant to an agreement with Issuer, (iii) the
highest closing price for shares of Common Stock within the one-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 Issuer's assets or
deposits, the sum of the net price paid in such sale for such assets or
deposits and the current market value of the remaining net assets of Issuer
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. 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 and regulation 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 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
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prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Holder and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase
Price, respectively, in full (and Issuer hereby undertakes to use its best
efforts to obtain (and to take all action necessary 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 the 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 described in
Section 2(b)(i) hereof, except that the percentage referred to in
clause (z) shall be 50%.
8. (a) In the event ("Substitute Option Repurchase 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
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 a substantial part of its or any
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 a substantial part of Issuer's assets or
deposits (or the assets or deposits of any Issuer Subsidiary).
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(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) Subject to paragraph (d) of this Section 8, 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 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 19.9% of the shares of Substitute Common Stock outstanding prior
to exercise 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.
(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") occurring after a Substitute Option Repurchase
Event and prior to the date that is six (6) months thereafter, the issuer
of the Substitute Option (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 one-month period immediately preceding
the date the Substitute Option Holder gives notice of the required
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repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the 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 the 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 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 and regulation 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
part or 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 ten (10) 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 subsection (b) of this Section 9
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 shall use its best efforts to
receive (and to take all action necessary to receive) all required
regulatory and legal approvals 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
the Substitute Shares either in whole or to the extent of prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly
(i) deliver to the Substitute Option Holder or 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 the
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 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 for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 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
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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; and (ii) 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 prior to 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, encumbrance 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 an Initial 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; provided, however, that until the date 15 days
following the date on which the OTS and Federal Reserve Board has approved,
to the extent required, 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 purpose of
conducting a widely dispersed public distribution on Grantee's behalf or
(iv) any other manner approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use its commercially reasonable
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 and the OTS under
HOLA, to the extent required, for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior
to the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option
Shares issued to and then owned by Grantee) to Issuer in exchange for a
cash fee equal to the Surrender Price; provided, however, that Grantee may
not exercise its rights pursuant to this Section 14 if Issuer has
repurchased the Option (or any portion thereof) or any Option Shares
pursuant to Section 7. The "Surrender Price" shall be equal to $9,000,000
(i) plus, if applicable, Grantee's purchase price with respect to any
Option Shares purchased by Grantee hereunder and (ii) minus, if applicable,
the sum of (1) the excess of (A) the net cash amounts, if any, received by
Grantee pursuant to the arm's-length sale of Option Shares (or any other
securities into which such Option Shares were converted or exchanged) to
any unaffiliated party, over (B) Grantee's purchase price of such Option
Shares, and (2) the net cash amounts, if any, received by Grantee pursuant
to an arms' length sale of any portion of the Option sold.
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(b) Grantee may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 14 by surrendering to Issuer, at its
principal office, a copy of this Agreement together with certificates for
Option Shares, if any, accompanied by a written notice stating (i) that
Grantee elects to relinquish the Option and Option Shares, if any, in
accordance with the provisions of this Section 14 and (ii) the Surrender
Price. The Surrender Price shall be payable in immediately available funds
on or before the fifth business day following receipt of such notice by
Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify
Grantee and thereafter deliver or cause to be delivered, from time to time,
to Grantee, the portion of the Surrender Price that it is no longer
prohibited from paying, within ten (10) business days after the date on
which Issuer is no longer so prohibited; provided, however, that if Issuer
at any time after delivery of a notice of surrender pursuant to paragraph
(b) of this Section 14 is prohibited under applicable law or regulation, or
as a consequence of administrative policy, from paying to Grantee the
Surrender Price in full, (i) Issuer shall (A) use its best efforts to
obtain (and to take all action necessary to obtain) all required regulatory
and legal approvals and to file any required notices as promptly as
practicable in order to make such payments, (B) within five days of the
submission or receipt of any documents relating to any such regulatory and
legal approvals, provide Grantee with copies of the same, and (c) keep
Grantee advised of both the status of any such request for regulatory and
legal approvals, as well as any discussions with any relevant regulatory or
other third party reasonably related to the same and (ii) Grantee may
revoke such notice of surrender by delivery of a notice of revocation to
Issuer and, upon delivery of such notice of revocation, the Exercise
Termination Date shall be extended to a date six months from the date on
which the Exercise Termination Date would have occurred if not for the
provisions of this Section 14(c) (during which period Grantee may exercise
any of its rights hereunder, including any and all rights pursuant to this
Section 14).
15. 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.
16. 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 l(a) hereof (as
adjusted pursuant to Section l(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.
17. 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.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of
Federal law are applicable).
19. 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.
20. 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
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hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted 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.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
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.
Queens County Bancorp, Inc.
/s/ Joseph R. Ficalora
By: _________________________________
Joseph R. Ficalora
Chairman of the Board, President
and
Chief Executive Officer
Haven Bancorp, Inc.
/s/ Philip S. Messina
By: _________________________________
Philip S. Messina
Chairman of the Board, President
and
Chief Executive Officer
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APPENDIX C
SALOMON SMITH BARNEY
----------------------------
A member of Citigroup [LOGO]
June 27, 2000
The Board of Directors
Queens County Bancorp, Inc.
38-25 Main Street
Flushing, NY 11354
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to Queens County Bancorp, Inc. (the "Company") of the Exchange Ratio (as
defined below) set forth in the Agreement and Plan of Merger (the "Agreement")
to be entered into by and between the Company and Haven Bancorp, Inc.
("Haven").
As more fully described in the Agreement and subject to the terms and
conditions thereof, (i) Haven will be merged with and into the Company (the
"Merger") under the name "New York Community Bank" or another name and (ii)
each outstanding share of the common stock, $.0l par value, of Haven (the
"Haven Common Stock") (other than Excluded Shares (as defined in the
Agreement)) will be converted into and exchangeable for the right to receive
1.04 shares (the "Exchange Ratio") of common stock, par value $.01 per share,
of the Company (the "Company Common Stock") (with cash paid in lieu of
fractional shares).
In arriving at our opinion, we reviewed a draft of the Agreement dated June
26, 2000, and held discussions with certain senior officers, directors and
other representatives and advisors of the Company and certain senior officers
and other representatives and advisors of Haven concerning the businesses,
operations and prospects of the Company and Haven. We examined certain publicly
available business and financial information relating to the Company and Haven
and discussed certain other information for the Company and Haven with the
managements of the Company and Haven, including information relating to certain
strategic implications and operational benefits anticipated to result from the
Merger. We reviewed the financial terms of the Merger as set forth in the
Agreement in relation to, among other things: current and historical market
prices and trading volumes of the Company Common Stock and Haven Common Stock;
the historical and other operating data of the Company and Haven; publicly
available forecasts, published by equity analysts, as to the future earnings of
the Company and Haven; and the historical and forecasted capitalization and
financial condition of the Company and Haven. We considered, to the extent
publicly available, the financial terms of certain other similar transactions
that we considered relevant in evaluation of the Exchange Ratio and analyzed
certain financial, stock market and other publicly available information
relating to the businesses of other companies whose operations we considered
relevant in evaluating those of the Company and Haven. We also evaluated the
pro forma financial impact of the Merger on the Company. In addition to the
foregoing, we conducted such other analyses and examinations and considered
such other information and financial, economic and market criteria as we deemed
appropriate in arriving at our opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed
by or discussed with us and have further relied upon the assurances of
managements of the Company and Haven that they are not aware of any facts that
would make any of such information inaccurate or misleading. With respect to
financial forecasts regarding the Company and Haven, we have relied on publicly
available third-party equity research forecasts, and we express no view with
respect to such forecasts or the assumptions on what they were based. With
respect to forecasts of cost savings and operating synergies forecasted by
management of the Company to result from the Merger, we have been advised by
the management of the Company that such forecasts were reasonably prepared on
bases reflecting the best
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currently available estimates and judgments of the management of the Company as
to the strategic implications and operational benefits anticipated to result
from the Merger. We express no view with respect to such forecasts and other
information and data or the assumptions on which they were based. We have
assumed, with your consent, that the Merger will be treated as a tax-free
reorganization for federal income tax purposes and that it qualifies, and will
be accounted for, as a "purchase" in accordance with generally accepted
accounting principles. Although, at the Company's request, we have participated
in an evaluation of selected individual credit files of Haven, for purposes of
this opinion we have, with your consent, assumed that the aggregate allowances
for such losses for each of the Company and Haven are in the aggregate adequate
to cover such losses. We are not experts in the evaluation of loan or lease
portfolios for purposes of assessing the adequacy of the allowances for losses
with respect thereto and we have not made an independent evaluation of the
adequacy of such allowances of the Company or Haven. Although, at the Company's
request we prepared an estimate of the potential sale value of certain of
Haven's loans and securities, we have not sought any buyers for such loans or
securities and no assurances can be given as to the terms on which such loans
or securities could actually be sold. We have not made or been provided with an
independent evaluation or appraisal of any of the other assets or liabilities
(contingent or otherwise) of the Company or Haven nor have we made any physical
inspection of the properties or assets of the Company or Haven. Representatives
of the Company have advised us, and we have assumed, that the final terms of
the Agreement will not vary materially from those set forth in the draft
reviewed by us. We have further assumed that the Merger will be consummated in
a timely fashion in accordance with the terms of the Agreement, without waiver
of any of the conditions to the Merger contained in the Agreement.
Our opinion, as set forth herein, relates to the relative values of the
Company and Haven. We are not expressing any opinion as to what the value of
the Company Common Stock actually will be when issued pursuant to the Merger or
the price at which the Company Common Stock will trade subsequent to the
announcement or consummation of the Merger. We were not requested to consider,
and our opinion does not address, the relative merits of the Merger as compared
to any alternative business strategies that might exist for the Company or the
effect of any other transaction in which the Company might engage. Our opinion
is necessarily based upon information available to us, and financial, stock
market and other conditions and circumstances existing and disclosed to us, as
of the date hereof and we assume no responsibility to update or revise our
opinion based upon circumstances or events after the date hereof.
Salomon Smith Barney Inc. is acting as financial advisor to the Company in
connection with the proposed Merger and will receive a fee for such services,
substantially all of which is payable only upon execution of the Agreement or
consummation of the Merger. In the ordinary course of our business, we and our
affiliates may actively trade or hold the securities of the Company and Haven
for our own account or for the accounts of our customers and, accordingly, may
at any time hold a long or short position in such securities. In addition, we
and our affiliates (including Citigroup Inc. and its affiliates) may maintain
relationships with the Company, Haven and their respective affiliates.
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of the Company in its evaluation of the
proposed Merger and our opinion is not intended to be and does not constitute a
recommendation to any stockholder as to how such stockholder should vote on any
matters relating to the proposed Merger.
Based upon and subject to the foregoing, our experience as investment
bankers, our work as described above and other factors we deemed relevant, we
are of the opinion that, as of the date hereof, the Exchange Ratio is fair,
from a financial point of view, to the Company.
Very truly yours,
/s/ Salomon Smith Barney Inc.
_____________________________________
Salomon Smith Barney Inc.
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APPENDIX D
[Lehman Letterhead]
June 27, 2000
Board of Directors
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, NY 11590
Members of the Board:
We understand that Haven Bancorp, Inc. (the "Company") and Queens County
Bancorp, Inc. ("Queens County") will enter into a definitive merger agreement
pursuant to which the Company will be merged with and into Queens County and
each share of common stock of the Company will be converted into the right to
receive 1.04 shares (the "Exchange Ratio") of common stock of Queens County
(the "Merger"). The terms and conditions of the Merger are set forth in more
detail in the Agreement and Plan of Merger dated as of June 27, 2000 by and
between the Company and Queens County (the "Merger Agreement"). We further
understand that, concurrently with the announcement of the Merger, Queens
County will announce that it is prepared to repurchase up to 20.0% of the
shares to be issued to the stockholders of the Company in the transaction to
support the price of Queens County's common stock following the announcement of
the Merger.
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, to
the Company of the Exchange Ratio to be offered by Queens County to the
stockholders of the Company in the Merger. We have not been requested to opine
as to, and our opinion does not in any manner address, the Company's underlying
business decision to proceed with or effect the Merger.
In arriving at our opinion, we reviewed and analyzed: (1) the Merger
Agreement and the specific terms of the Merger, (2) publicly available
information concerning the Company and Queens County that we believe to be
relevant to our analysis including without limitation annual reports on Form
10-K for the year ended December 31, 1999, quarterly reports on Form 10-Q for
the quarter ended March 31, 2000 and recent press releases for the Company and
Queens County, (3) financial and operating information with respect to the
business, operations and prospects of the Company furnished to us by the
Company, including without limitation projections prepared by management of the
Company and the master license agreement, as well as the individual supermarket
branch license agreements, entered into by the Company with Pathmark, Inc., (4)
financial and operating information with respect to the business, operations
and prospects of Queens County furnished to us by Queens County, (5) the
trading histories of the common stock of the Company and Queens County and a
comparison of these trading histories with those of other companies that we
deemed relevant, (6) a comparison of the historical financial results and
present financial condition of the Company and Queens County with those of
other companies that we deemed relevant, including without limitation
historical operating performance of the Company in terms of profitability as
measured by ROAA and ROAE and efficiency ratio as compared to its peer group,
(7) current third party research analyst estimates of the future financial
performance of the Company and Queens County, (8) a comparison of the financial
terms of the Merger with the financial terms of certain other recent
transactions that we deemed relevant, (9) the potential pro forma impact of the
Merger on the expected future financial performance of Queens County, (10) the
relative contributions of the Company and Queens County to the assets, equity,
earnings and overall financial performance of the combined company on a pro
forma basis, (11) the results of efforts to solicit indications of interest
from various other potential buyers with respect to an acquisition of all or
part of the Company, and (12) the increase in dividends expected to be received
by the Company's stockholders as a consequence of the Merger. In addition, we
have had discussions with the managements of the Company and Queens County
concerning their respective businesses, operations, assets, liabilities,
financial conditions and prospects, and the potential cost savings, operating
synergies and strategic benefits expected to result from a combination of the
businesses of the Company and Queens County, and have undertaken such other
studies, analyses and investigations as we deemed appropriate.
D-1
<PAGE>
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information used by us without assuming
any responsibility for independent verification of such information and have
further relied upon the assurances of management of the Company and Queens
County that they are not aware of any facts or circumstances that would make
such information inaccurate or misleading. With respect to the financial
projections of the Company and Queens County, upon advice of the Company and
Queens County, we have assumed that such projections have been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the respective managements of the Company and Queens County as to
the future financial performance of the Company and Queens County (including,
without limitation, with respect to projected cost savings and operating
synergies expected to result from a combination of the businesses of the
Company and Queens County). However, in arriving at our opinion, we also used
consensus estimates of future financial performance of the Company and Queens
County from third party research analysts and, with respect to the Company,
made certain adjustments to such estimates based on various assumptions as to
the future operations of the Company. We have discussed these adjusted
estimates for the future financial profitability of the Company with management
of the Company and they have agreed with the appropriateness of the use of such
adjusted estimates in performing our analysis. In arriving at our opinion, we
have not conducted a physical inspection of the properties and facilities of
Queens County or the Company and have not made or obtained any evaluations or
appraisals of the assets or liabilities of Queens County or the Company. In
addition, we are not experts in the evaluation of loan portfolios or allowances
for loan and real estate owned losses and, upon advice of the Company and
Queens County, we have assumed that the Company's and Queens County's current
allowances for loan and real estate owned losses (including for off-balance
sheet items) are in the aggregate adequate to cover all such losses. Our
opinion necessarily is based upon market, economic and other conditions as they
exist on, and can be evaluated as of, the date of this letter.
Upon advice of the Company and its legal and accounting advisors, we have
assumed that the Merger will qualify for purchase accounting treatment and as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and therefore as a tax-free transaction to the
stockholders of the Company.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the Exchange Ratio to be
offered by Queens County to the stockholders of the Company in the Merger is
fair to the Company.
We have acted as financial advisor to the Company in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon the consummation of the Merger. In addition, the Company has
agreed to indemnify us for certain liabilities that may arise out of the
rendering of this opinion. We also have performed and continue to perform
various investment banking services for Queens County and have received and
will receive customary fees for such services.
This opinion is for the use and benefit of the Board of Directors of the
Company and is rendered to the Board of Directors in connection with its
consideration of the Merger. This opinion is not intended to be and does not
constitute a recommendation to any stockholder of the Company as to how such
stockholder should vote with respect to the Merger.
Very truly yours,
LEHMAN BROTHERS
/s/ Mark H. Burton
By: _________________________________
Mark H. Burton
Managing Director
D-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Queens County Bancorp, Inc. (the "Company") certificate of incorporation
provides that no director of the Company shall be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for:
. any breach of the director's duty of loyalty to the company or its
stockholders,
. acts or omissions not in good faith or which involve intentional
misconduct or knowing violation of law,
. under Section 174 of the Delaware General Corporation Law (the "Act"),
or
. any transaction from which the director derived an improper personal
benefit.
The Company's certificate of incorporation also provides that each person
who is made party to a suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan, shall be indemnified and held
harmless by the Company to the fullest extent permitted by the Act or by
another other applicable law.
The Company's certificate of incorporation also permits the Company to
maintain insurance to protect itself and any director, officer, employee or
agent against any such liability, expense or loss.
Section 145 of the Act provides that, subject to certain limitations in the
case of suits brought by a corporation and derivative suits brought by a
corporation's stockholders in its name, a corporation may indemnify any person
who is made a party to any suit or proceeding by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation
against expenses, including attorney's fees, judgments, fines and amounts paid
in settlement reasonably incurred by him in connection with the action,
through, among other things, a majority vote of the directors who were not
parties to the suit or proceeding, if the person (1) acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and (2) in a criminal proceeding, had no reasonable cause
to believe his conduct was unlawful.
Section 145(b) of the Act provides that no such indemnification of
directors, officers, employees or agents may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
to the corporation, unless and only to the extent that the Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Item 21. Exhibits and Financial Statement Schedules.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of June 27, 2000, by and
between Queens County Bancorp, Inc. and Haven Bancorp, Inc. (included
as Appendix A to the Joint Proxy Statement/Prospectus contained in
this Registration Statement).
3.1 Certificate of Incorporation of Queens County Bancorp, Inc.
(incorporated herein by reference to Exhibit 3.1 to Queens' Form S-1,
Registration No. 33-66852, dated November 1, 1993).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
3.2 By-Laws of Queens County Bancorp, Inc. (incorporated herein by
reference to Exhibit 3.2 to Queens' Form S-1, Registration No. 33-
66852, dated November 1, 1993).
4.1 Rights Agreement, dated as of January 16, 1996, between Queens County
Bancorp, Inc. and ChaseMellon Shareholder Services, LLC, as Rights
Agent, including the form of rights certificate attached as Exhibit A
thereto (incorporated herein by reference to Exhibit 4 to Queens' Form
8-K dated January 24, 1996).
5.1 Opinion of Sullivan & Cromwell, counsel to Queens, regarding validity
of common stock being registered.
8.1 Opinion of Sullivan & Cromwell regarding material federal income tax
consequences.
8.2 Opinion of Thacher Proffitt & Wood regarding material federal income
tax consequences.
10.1 Stock Option Agreement, dated as of June 27, 2000, between Queens
County Bancorp, Inc. and Haven Bancorp, Inc. (included as Appendix B
to the Joint Proxy Statement/Prospectus contained in this Registration
Statement).
Agreement, dated June 27, 2000, by and between CFS Bank and Dennis
10.2 Hodne.*
Agreement, dated June 27, 2000, by and between Queens County Bancorp,
10.3 Inc. and Dennis Hodne.*
Agreement, dated June 27, 2000, by and between CFS Bank and William J.
10.4 Jennings II.*
10.5 Agreement, dated June 27, 2000, by and between Queens County Bancorp,
Inc. and William J. Jennings II.*
10.6 Consulting Agreement, dated June 27, 2000, by and among Queens County
Bancorp, Inc., CFS Bank and Philip S. Messina.*
23.1 Consent of KPMG LLP relating to Queens.
23.2 Consent of KPMG LLP relating to Haven.
23.3 Consent of Sullivan & Cromwell (included in the opinion filed as
Exhibit 8.1 to this Registration Statement).
23.4 Consent of Thacher Proffitt & Wood (included in the opinion filed as
Exhibit 8.2 to this Registration Statement).
23.5 Consent of Lehman Brothers Inc.
23.6 Consent of Salomon Smith Barney Inc.
24.1 Powers of Attorney.
99.1 Form of Proxy Materials of Queens County Bancorp, Inc.
99.2 Form of Proxy Materials of Haven Bancorp, Inc.
99.3 Opinion of Salomon Smith Barney Inc. (included as Appendix C to the
Joint Proxy Statement/Prospectus contained in this Registration
Statement).
99.4 Opinion of Lehman Brothers Inc. (included as Appendix D to the Joint
Proxy Statement/Prospectus contained in this Registration Statement).
</TABLE>
--------
* Previously filed
II-2
<PAGE>
Item 22. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose 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 that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) 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 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.
(c)(1) The undersigned registrant undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through 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), the
issuer undertakes that 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.
(2) The undersigned registrant hereby undertakes that every prospectus (i)
that is filed pursuant to paragraph (1) immediately preceding, or (ii) 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
II-3
<PAGE>
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 that time will be deemed to be the initial
bona fide offering thereof.
(d) 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 the foregoing provisions, 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.
(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 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.
(f) 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Queens County
Bancorp, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this Pre-
Effective Amendment No. 2 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Flushing, and
State of New York, on the 13th day of October, 2000.
QUEENS COUNTY BANCORP, INC.
/s/ Joseph R. Ficalora
By: _________________________________
Joseph R. Ficalora
Chairman, President and Chief
Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on October 13, 2000 by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<C> <S>
/s/ Michael J. Lincks Executive Vice President and
___________________________________________ Corporate Secretary
Michael J. Lincks
Senior Vice President,
/s/ Robert Wann Comptroller and Chief Financial
___________________________________________ Officer (Principal Financial and
Robert Wann Accounting Officer)
* Director
___________________________________________
Harold E. Johnson
* Director
___________________________________________
Donald M. Blake
* Director
___________________________________________
Max L. Kupferberg
* Director
___________________________________________
Henry E. Froebel
* Director
___________________________________________
Howard C. Miller
* Director
___________________________________________
Dominick Ciampa
* Director
___________________________________________
Richard H. O'Neill
*By: /s/ Joseph R. Ficalora Director
___________________________________________
Joseph R. Ficalora
Attorney-in-Fact
</TABLE>
II- 5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of June 27, 2000, between
Queens County Bancorp, Inc. and Haven Bancorp, Inc. (included as
Appendix A to the Joint Proxy Statement/Prospectus contained in this
Registration Statement).
3.1 Certificate of Incorporation of Queens County Bancorp, Inc.
(incorporated herein by reference to Exhibit 3.1 to Queens' Form S-1,
Registration No. 33-66852, dated November 1, 1993).
3.2 By-Laws of Queens County Bancorp, Inc. (incorporated herein by
reference to Exhibit 3.2 to Queens' Form S-1, Registration No. 33-
66852, dated November 1, 1993).
4.1 Rights Agreement, dated as of January 16, 1996, between Queens County
Bancorp, Inc. and ChaseMellon Shareholder Services, LLC, as Rights
Agent, including the form of rights certificate attached as Exhibit A
thereto (incorporated herein by reference to Exhibit 4 to Queens' Form
8-K dated January 24, 1996).
5.1 Opinion of Sullivan & Cromwell, counsel to Queens, regarding validity
of common stock being registered.
8.1 Opinion of Sullivan & Cromwell regarding material federal income tax
consequences.
8.2 Opinion of Thacher Proffitt & Wood regarding material federal income
tax consequences.
10.1 Stock Option Agreement, dated as of June 27, 2000, between Queens
County Bancorp, Inc. and Haven Bancorp, Inc. (included as Appendix B
to the Joint Proxy Statement/Prospectus contained in this Registration
Statement).
Agreement, dated June 27, 2000, by and between CFS Bank and Dennis
10.2 Hodne.*
Agreement, dated June 27, 2000, by and between Queens County Bancorp,
10.3 Inc. and Dennis Hodne.*
Agreement, dated June 27, 2000, by and between CFS Bank and William J.
10.4 Jennings II.*
10.5 Agreement, dated June 27, 2000, by and between Queens County Bancorp,
Inc. and William J. Jennings II.*
10.6 Consulting Agreement, dated June 27, 2000, by and among Queens County
Bancorp, Inc., CFS Bank and Philip S. Messina.*
23.1 Consent of KPMG LLP relating to Queens.
23.2 Consent of KPMG LLP relating to Haven.
23.3 Consent of Sullivan & Cromwell (included in the opinion filed as
Exhibit 8.1 to this Registration Statement).
23.4 Consent of Thacher Proffitt & Wood (included in the opinion filed as
Exhibit 8.2 to this Registration Statement).
23.5 Consent of Lehman Brothers Inc.
23.6 Consent of Salomon Smith Barney Inc.
24.1 Powers of Attorney.
99.1 Form of Proxy Materials of Queens County Bancorp, Inc.
99.2 Form of Proxy Materials of Haven Bancorp, Inc.
99.3 Opinion of Salomon Smith Barney Inc. (included as Appendix C to the
Joint Proxy Statement/Prospectus contained in this Registration
Statement).
99.4 Opinion of Lehman Brothers Inc. (included as Appendix D to the Joint
Proxy Statement/Prospectus contained in this Registration Statement).
</TABLE>
--------
* Previously filed
