AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON NOVEMBER 24, 1998
Registration No. 333-65675
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
PRE-EFFECTIVE
AMENDMENT
NO. 2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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UNITY BANCORP, INC.
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(Exact name of Registrant as Specified in its Charter)
DELAWARE
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(State or other Jurisdiction of incorporation or Organization)
22-3282551
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(I.R.S. Employer Identification Number)
64 OLD HIGHWAY 22, CLINTON, NEW JERSEY 08809
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(Address, including zip Code, and telephone number, including
area code, of angent for service)
JOHN TREMBLAY, PRESIDENT
UNITY BANCORP, INC.
64 OLD HIGHWAY 22
CLINTON, NEW JERSEY 07416
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
WITH A COPY TO:
ROBERT A. SCHWARTZ, ESQ.
JAMIESON, MOORE, PESKIN & SPICER
177 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
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Approximate date of commencement of proposed sale to the public: as soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 (the "Securities Act"), other than securities
offered only in connection with dividend or interest reinvestment plans,
check the following box. [ ]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
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UNITY BANCORP INC.
COMMON STOCK
In December 1996, we issued warrants to purchase shares of the Company's
common stock at an exercise price of $10.50 per share, as adjusted for stock
splits. These warrants expire at 5:00 p.m., eastern standard time, on December
15, 1998. The warrants trade on the American Stock Exchange. We have hired First
Colonial Securities Group, Inc. to act as Warrant Conversion Agent and the
shares of common stock hereby will be sold by First Colonial. Among other
things, First Colonial will purchase warrants which become available on the
American Stock Exchange. First Colonial will then exercise the warrants and
resell the Common Stock to the public. First Colonial will sell the common stock
at prices based on the then current market prices. As of date of this
Prospectus, Warrants permitting the purchase _____ shares of common stock were
outstanding.
We will not receive any proceeds from the sale of the common stock. We
will, however, receive proceeds from the exercise of warrants of $10.50 per
share.
The common stock is listed on the NASDAQ National Market under the symbol
"UNTY" and the Warrants are listed on the American Stock Exchange under the
symbol "UBI.WS".
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BEFORE PURCHASING THE COMMON STOCK, YOU SHOULD READ THE RISK FACTORS BEGINNING
ON PAGE 4.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE COMMON
STOCK OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF COMMON STOCK ARE NOT BANK DEPOSITS AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
FIRST COLONIAL SECURITIES GROUP, INC.
The date of this Prospectus is __________, 1998.
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TABLE OF CONTENTS
PAGE
Information Incorporated by
Reference ........................ 3
The Company ......................... 3
Selected Financial Data ............. 4
Recent Developments ................. 4
Risk Factors ........................ 5
Use of Proceeds ..................... 7
Plan of Distribution ................ 7
Warrant and Transfer Agent .......... 8
Legal Matters ....................... 8
Experts ............................. 8
Where You Can Find Additional
Information ....................... 9
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
We have incorporated by reference into this Prospectus the following
documents we filed with the Commission under the Securities Exchange Act of
1934:
o (i) the Annual Report on Form l0-KSB for the fiscal year ended
December 31, 1997
o (ii) the Proxy Statement for the 1998 Annual Meeting of
Shareholders,
o (iii) the Quarterly Reports on Form 10-QSB for the quarters
ended March 31, June 30, and September 30, 1998
o (iv) Current Reports on Form 8-K filed on July 28, September
15 and September 24, 1998 and
o (v) the description of the common stock contained in our
Registration Statement on Form 8-A filed under Section 12 of
the Exchange Act, including any amendment thereto or report
filed under the Exchange Act for the purpose of updating such
description.
In addition, any documents which we file with the Commission under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to termination of this offering are also incorporated by reference
into this Prospectus.
To the extent that any information in this Prospectus modifies or
supersedes information in a document incorporated by reference, the incorporated
document will be deemed to be modified or superseded for purposes of this
Prospectus, and the incorporated document will not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
You may obtain without charge, upon written or oral request, a copy of any
of the documents incorporated by reference herein, except for the exhibits,
unless such exhibits are specifically incorporated by reference herein. Your
request should be sent to Kevin Killian, Chief Financial Officer, Unity Bancorp,
Inc., 64 Old Highway 22, Clinton, New Jersey 08809.
THE COMPANY
Unity Bancorp, Inc. is a New Jersey business corporation and a holding
company for First Community Bank, which engages in a commercial banking business
in Hunterdon, Middlesex, Morris, Somerset and Union counties, New Jersey. We
direct the policies and coordinate the financial resources of the Bank. At
September 30, 1998, we had consolidated total assets of $238.5 million and
shareholders' equity of $21.7 million.
The Bank is a New Jersey state-chartered bank which commenced business in
1991. The Bank currently operates from its main office in Clinton, New Jersey
and from six branch offices located in Flemington, North Plainfield,
Springfield, Scotch Plains, Union and Linden, New Jersey . The deposits of the
Bank are insured by the Bank Insurance Fund of the FDIC up to applicable limits.
The operations of the Bank are subject to the supervision and regulation of the
New Jersey Department of Banking and Insurance and the FDIC.
We lend funds to individuals and businesses for personal and commercial
purposes. We emphasize the origination of loans with adjustable rates of
interest tied to our Prime Rate, with _____% of our loan portfolio consisting of
adjustable rate loans and _____% consisting of fixed rate loans. The interest
rates on our adjustable rate loans are repriced from time-to-time to reflect
changes, up or down, in our cost of funds. In order to be competitive with other
established banking institutions in our trade area, we charge rates which are
generally comparable to those charged by other lenders.
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In addition, we have been very active in providing loans to small
businesses through the United States Small Business Administration guaranteed
loan program. Under the SBA program, loans are available to small businesses
which meet certain criteria. Up to 90% of the principal of a loan to a qualified
business may be guaranteed by the United States Government. We sell the
guaranteed portion of our SBA loans into the secondary market and derive premium
income. Our ability to offer SBA loans on an ongoing basis is dependent upon,
among other factors, appropriation of funds by the federal government to the SBA
program. We have been designated a "preferred lender" for the states of New
Jersey, Delaware, New York and Pennsylvania by the SBA. This means that we may
originate SBA guaranteed loans without prior SBA approval, although the
guaranteed portion of this loan will be 80% for loans up to $100,000 and 75% for
loans over $100,000 and up to $1,000,000.
Our commercial loans are generally secured by business assets, personal
guarantees of the principals of closely-held businesses and often by the
personal assets of such principals. The loans are made to small and mid-sized
businesses in our trade area. Federal and state law and regulations restrict how
much any bank may lend to a single customer with the restrictions stated as a
percentage of the bank's primary capital. We believe that we can attract
commercial borrowers by providing competitive rates, superior services, local
decision-making and flexibility in loan structure. The Board of Directors
believes that small and mid-sized businesses are not always of primary
importance to larger banking institutions for commercial lending purposes,
whereas such businesses represent the main portion of our commercial loan
business.
We grant both secured and unsecured personal loans to finance the purchase
of automobiles, durable goods and other consumer goods. The Board of Directors
believes that our competitive interest rates and superior service (which
includes, among other things, convenience, personal attention and prompt local
decision-making) are important competitive factors in attracting personal loans
from credit-worthy consumers.
We also make residential and commercial real estate loans and, on a limited
basis, construction loans.
Our principal executive offices are located at 64 Old Route 22, Clinton,
New Jersey 08809, and our telephone number is (908) 730-7630.
SELECTED FINANCIAL DATA
On April 24, 1998 the Board of Directors of the Company declared a three
for two stock split payable June 1, 1998 to shareholders of record as of May 15,
1998. To give effect for this stock split, previously reported share and per
share information included in the Company's Annual Report on Form 10-KSB
incorporated by reference in this Registration Statement are adjusted as shown
in the following table:
AS REPORTED AS ADJUSTED
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YEAR ENDED
DECEMBER 31, 1997:
Basic earnings per share............... $1.02 $0.68
Diluted earnings per share............. 1.01 0.67
Weighted average number of
shares outstanding, basic............. 1,977,604 2,966,406
Weighted average number of
shares outstanding, diluted........... 1,999,180 2,998,770
Outstanding shares at December 31...... 1,985,485 2,978,228
YEAR ENDED
DECEMBER 31, 1996:
Basic earnings per share............... 0.74 0.49
Diluted earnings per share............. 0.73 0.49
Weighted average number of
shares outstanding, basic............. 1,419,855 2,129,783
Weighted average number of
shares outstanding, diluted........... 1,429,262 2,143,893
Outstanding shares at December 3....... 1,964,113 2,946,170
YEAR ENDED
DECEMBER 31, 1995
Basic earnings per share............... 0.83 0.56
Diluted earnings per share............. 0.83 0.56
Weighted average number of
shares outstanding, basic............. 1,203,774 1,805,661
Weighted average number of
shares outstanding, diluted........... 1,203,774 1,805,661
RECENT DEVELOPMENTS
We recently executed long-term leases for eight (8) new branch locations in
Cranford, Kenilworth, Berkeley Heights and Springfield in Union County and New
Brunswick, North Brunswick, South Plainfield and Edison, Middlesex County, New
Jersey. All of these facilities are existing bank branches, which are being
acquired without deposits or loans. The Union County branches are in our
existing trade area, while the Middlesex County branches are an
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extension of our trade area. In addition, we have executed a lease for a new
branch in Woodbridge Township, Middlesex County, New Jersey and we are in the
process of building a new branch in Whitehouse, Hunterdon County, New Jersey. We
anticipate that, pending regulatory approval, these 10 new branches will open in
stages from January through July, 1999, increasing our branch network to 18
offices. We also anticipate that we will incur a significant increase in
non-interest expense as these branches commence operation.
Effective September 21, 1998, our common stock began trading on the NASDAQ
National Market under the symbol "UNTY". From January 1997 to September 18,
1998, our common stock traded on the American Stock Exchange under the symbol
"UBI". Our warrants are traded on the American Stock Exchange under the symbol
"UBI.WS", and will continue to trade on the American Stock Exchange through
their expiration on December 15, 1998.
In November, we entered into a Letter of Intent to acquire Certified
Mortgage Associates, Inc., a Marlboro, New Jersey based mortgage banker. Under
the terms of the Letter of Intent, we are to pay a purchase price of $2.8
million in shares of our common stock. The actual number of shares of common
stock to be issued will be determined at the close of the transaction, based
upon the average of the bid and asked price of our common stock in the first 20
trading days in the 30 trading days prior to the closing. Under the terms of the
Letter of Intent, the principles of CMA, Mr. Barry Habib, Mr. Craig Frankel and
Mr. Norman Hunter, are to enter into Employment Agreements with us. If the
transaction had closed on October 30, 1998, we would have issued 242,424 shares
of our common stock to the principals of CMA. For the six months ended September
30, 1998, CMA had total revenues of $1.9 million. Consummation of this
transaction is subject to our executing a definitive acquisition agreement and
receipt of all necessary regulatory approvals.
On November 23, we announced that our Board had declared a 5% stock
dividend, payable January 8, 1999 to shareholders of record on December 21,
1998.
RISK FACTORS
Prospective investors should consider the following risk factors, in
addition to other information contained or incorporated by reference herein, in
connection with a decision to purchase our common stock.
DILUTIVE EFFECT OF THE ISSUANCE OF COMMON STOCK UPON THE EXERCISE OF WARRANTS
As of September 30, 1998, if all then outstanding Warrants were exercised,
we would have been required to issue 524,097 shares of common stock. We had
3,097,332 shares of common stock outstanding at September 30, 1998. Depending
upon our ability to invest the additional capital received upon the exercise of
these warrants, the issuance of the additional 524,097 shares of common stock
could cause dilution to our future per share earnings. At September 30, 1998,
our book value per share was $7.00. The exercise price of the Warrants is $10.50
per share.
ABILITY TO SUSTAIN GROWTH; PROFITABILITY
We have grown rapidly in the past five years and intend to continue to
grow rapidly in the near future. Our assets, deposits and net loans have
increased from $65.7 million, $59.6 million and $24.8 million, respectively at
the end of 1993 to $238.5 million, $215.2 million and $155.4 million at
September 30, 1998. Historically, our growth has been internally generated
through greater penetration of our existing markets and de novo branching.
Continued future growth may be accomplished through internal expansion and the
acquisition of financial institutions or existing branches. As a consequence of
our growth strategy, our short-term profitability could be negatively impacted
as we incur expense to fund growth before our investments generate significant
income.
Our continued rapid growth and success will depend on our ability to
attract additional deposits, locate sound loan and investment opportunities,
expand into new marketplaces and
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identify potential acquisition candidates. In addition, our continued rapid
growth and success also depends on the ability of our officers and key employees
to manage our growth effectively, to attract and retain skilled employees and to
expand the capabilities of our management information systems. Accordingly,
there can be no assurance that we will be successful in managing our expansion
and the failure to do so would adversely effect our financial position.
SOURCES OF DIVIDENDS ON COMMON STOCK
Unity Bancorp, Inc. is a legal entity separate and distinct from the Bank.
Unity Bancorp, Inc. has no material assets other than its ownership of the Bank.
Earnings of the company are wholly dependent on the earnings of the Bank, as the
company has engaged in no significant operations of its own. Accordingly, the
earnings of the company, and its ability to pay dividends on the common stock,
are largely dependent on the receipt by the company of earnings of the Bank in
the form of dividends. Any restriction on the ability of the Bank to pay
dividends could significantly and adversely affect the ability of the company to
pay dividends with respect to the common stock. The Bank's ability to pay
dividends or make other capital distributions to the company is governed by
regulations imposed by the New Jersey Department of Banking and Insurance and
the FDIC, the Bank's primary regulators. As of September 30, 1998, the Bank
would have been able to dividend up to $3.7 million to Unity Bancorp, Inc. under
these regulations.
COMPETITION
The Bank's principal market area is served by branch offices of large
commercial banks and thrift institutions. A number of these institutions have
substantially greater resources than we do to expend upon advertising and
marketing, and their substantially greater capitalization enables them to make
much larger loans. Our success depends a great deal upon our judgment that large
and mid-size financial institutions do not adequately serve small businesses in
principal market area and our ability to compete favorably for such customers.
LENDING RISKS
The risk of nonpayment (or deferred or delayed payment) of loans is
inherent in commercial banking. Such non payment, or delayed or deferred payment
of loans to the Bank, if they occur, may have a material adverse effect on our
earnings and overall financial condition. Additionally, in compliance with
applicable banking laws and regulations, the Bank maintains an allowance for
loan losses created through charges against earnings. As of September 30, 1998,
the Bank's allowance for loan losses was $1.6 million. The Bank's marketing
focus on small to medium-size businesses may result in the assumption by the
Bank of certain lending risks that are different from or greater than those
which would apply to loans made to larger companies. We seek to minimize our
credit risk exposure through credit controls which include evaluation of
potential borrowers, available collateral, liquidity and cash flow. However,
there can be no assurance that such procedures will actually reduce loan losses.
YEAR 2000
Our operations and financial results are highly dependent upon our ability
to rapidly and accurately process data through our internal and external
computer systems and processors. Our future performance may be adversely
affected by the ability of computer systems we own and use to read entries for
the Year 2000. Many computer systems currently in use are unable to distinguish
between the Year 2000 and the Year 1900, causing a variety of processing
difficulties. We outsource to a third-party many of our data processing
functions. Our ability to control the remediation of computer processing issues
is reduced because of this outsourcing. Although we are in the process of
remediating computer processing issues, both internally and those affecting our
service bureau, we can give you no assurances that we will be fully successfully
in remediating all Year 2000 issues. Failure to fully remediate Year 2000 issues
could adversely affect our future results of operations, impeding our ability to
calculate payments, interest due, service loans and perform other necessary
functions.
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SUPERVISION AND REGULATION
The federal and state laws and regulations applicable to our operations
give regulatory authorities extensive discretion in connection with their
supervisory and enforcement responsibilities, and generally have been
promulgated to protect depositors and the deposit insurance funds and not for
the purpose of protecting stockholders. These laws and regulations can
materially affect our future business. Laws and regulations now affecting us may
be changed at any time, and the interpretation of such laws and regulations by
bank regulatory authorities is also subject to change. We can give no assurance
that future changes in laws and regulations or changes in their interpretation
will not adversely effect our the business.
USE OF PROCEEDS
The total gross proceeds from the exercise of the warrants may range from
zero to $_______ , depending upon the number of warrants exercised. The proceeds
of the exercise of warrants will be paid directly to us. We will not receive any
proceeds from the sale of the common stock by First Colonial, however, we will
incur fixed expenses of approximately $50,000 in connection with the exercise of
the warrants, and we are obligated to pay First Colonial a total fee of the
lesser of $150,000 or 3.25% of the purchase price of shares issued upon the
exercise of warrants converted on or after October 14, 1998. We intend to use
the proceeds for general corporate purposes and to support our continued growth
and expansion both through internal expansion through our newly acquired
branches and the possible acquisition of other financial institutions, although
we do not currently have any agreements or commitments for specific
acquisitions.
PLAN OF DISTRIBUTION
The common stock offered hereby is being sold by First Colonial Securities
Group, Inc. The common stock will be acquired by First Colonial pursuant to the
terms of a Warrant Conversion Agency Agreement dated ____________, 1998 between
First Colonial Securities Group, Inc. and us (the "Warrant Conversion
Agreement"). Pursuant to the terms of the Warrant Conversion Agreement, First
Colonial will act as conversion agent to facilitate the exercise of warrants and
further to purchase warrants that become available on the open market, exercise
the warrants, and then sell the common stock purchased. First Colonial will
purchase the warrants from time-to-time at the then prevailing market prices on
the American Stock Exchange, where the warrants trade. No specific criteria have
or will be established for selecting warrants to purchase since whether and to
the extent any warrants are purchased will depend upon the current market
conditions and the number of sellers of warrants. Because the warrants are
traded on the American Stock Exchange, any holder of a warrant may, through a
registered broker/dealer, enter a sell order and sell their warrants through the
American Stock Exchange to any interested party, which may include First
Colonial. The open market purchases by First Colonial will continue until the
warrant expiration date.
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We will pay First Colonial a fee of the lesser of $150,000 or 3.25% of the
purchase price of shares issued upon the exercise of warrants converted on or
after the date of this Prospectus for its services as conversion agent and a
non-accountable expense allowance of $35,000. There are no provisions or
understandings requiring us to reimburse First Colonial in the event that the
value of the common stock falls between the time First Colonial exercises a
warrant and a subsequent resale of the common stock. All risk of market loss is
borne by First Colonial.
First Colonial will receive the net proceeds of the offering of common
stock. Although we will not receive proceeds from the sale of the common stock,
we will receive proceeds upon the exercise of the warrants by the warrant
holders, and we will use the proceeds for general corporate purposes and to
facilitate our plans for expansion.
We have agreed with First Colonial in the Warrant Conversion Agreement that
we will indemnify each other against certain liabilities, including certain
liabilities under the Securities Act, and to contribute to payments that each
may be required to make in respect thereof.
The foregoing includes a summary of the terms of the Warrant Conversion
Agreement and does not purport to be complete. Reference is made to a copy of
the Warrant Conversion Agreement that is on file as an exhibit to the
Registration Statement to which this Prospectus is a part.
WARRANT AND TRANSFER AGENT
Our warrant and transfer agent for the warrants and our common stock is
FCTC Transfer Services, LLP, with an office at 111 Wood Avenue South, Suite 206,
Iselin, New Jersey.
LEGAL MATTERS
The validity of the common stock being offered has been passed upon for us
by Jamieson, Moore, Peskin & Spicer, Morristown, New Jersey. Certain legal
matters will be passed upon for First Colonial by Klehr, Harrison, Harvey,
Branzberg & Ellers, LLP, Philadelphia, Pennsylvania.
EXPERTS
The consolidated balance sheets as of December 31, 1997 and 1996 and the
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1997, incorporated by
reference into our Annual Report on Form 10-KSB for the year ended December 31,
1997, which is incorporated by reference into this Registration Statement on
Form S-3, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto. The financial
statements are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said report.
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the informational requirements of the Exchange Act and
must file reports and other information with the SEC.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933, as amended, with respect to the common stock offered in
this document. As permitted by the rules and regulations of the SEC, this
document does not contain all the information set forth in the registration
statement. Such information, as well as the information filed under the Exchange
Act, can be examined without charge at the public reference facilities of the
SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
such material can be obtained from the SEC at prescribed rates. The SEC also
maintains an Internet address ("Web site") that contains reports, proxy and
information statements and other information regarding registrants, including
us, that file electronically with the SEC. The address for this Web site is
"http://www.sec.gov." The statements contained in this document as to the
contents of any contract or other document filed as an exhibit to the Form S-3
are, of necessity, brief descriptions and are not necessarily complete; each
such statement is qualified by reference to such contract or document.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR DOCUMENTS
TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO
SELL, OR THE SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED
HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL. THE AFFAIRS OF UNITY BANCORP, INC. OR FIRST COMMUNITY BANK
MAY CHANGE AFTER THE DATE OF THIS PROSPECTUS. DELIVERY OF THIS DOCUMENT AND THE
SALES OF SHARES MADE HEREUNDER DOES NOT MEAN OTHERWISE.
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UNTIL THE LATER OF __________, 199__ OR 25 DAYS AFTER COMMENCEMENT OF THE
OFFERING, ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITES AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
UNITY BANCORP, INC.
COMMON STOCK
----------
PROSPECTUS
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FIRST COLONIAL
SECURITIES GROUP, INC.
_________________, 1998
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee ............................... $ 1,678
Accounting Fees and Expenses ....................... 3,500
Legal Fees and Expense ............................ 35,000
Transfer Agent Fees ................................ 5,000
Miscellaneous Expenses ............................. 4,822
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Total ................................................. $50,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Ninth of the Certificate of Incorporation of the Registrant and
Section 145 of the Delaware General Corporation Law ("DGCL") provides that the
corporation shall indemnify its present and former officers, directors,
employees, and agents and persons serving at its request ("corporate agents")
against expenses, including attorney's fees, judgments, fines or amounts paid in
settlement, incurred in connection with any pending or threatened civil or
criminal proceeding involving the corporate agent by reason of his being or
having been a corporate agent if (a) the agent acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
the corporation, and (b) with respect to any criminal proceeding, the corporate
agent had no reasonable cause to believe his conduct was unlawful.
With respect to any derivative action, the Registrant is empowered to
indemnify a corporate agent against his expenses (but not his liabilities)
incurred in connection with any proceeding involving the corporate agent by
reason of his being or having been a corporate agent if the agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation. However, only the court in which the proceeding
was brought can empower a corporation to indemnify a corporate agent against
expenses with respect to any claim, issue or matter as to which the agent was
adjudged liable for negligence or misconduct.
Under Section 145 of the DGCL, the Registrant may indemnify a corporate
agent in a specific case if a determination is made by any of the following that
the applicable standard of conduct was met: (i) the Board of Directors, or a
committee thereof, acting by a majority vote of a quorum consisting of
disinterested directors; (ii) by independent legal counsel, if there is not a
quorum of disinterested directors or if the disinterested quorum empowers
counsel to make the determination; or (iii) by the shareholders.
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Section 145 of the DGCL further provides that a corporate agent is entitled
to mandatory indemnification to the extent that the agent is successful on the
merits or otherwise in any proceeding, or in defense of any claim, issue or
matter in the proceeding. In advance of the final disposition of a proceeding,
the Registrant may pay an agent's expenses if the agent agrees to repay the
expense unless it is ultimately determined he is entitled to indemnification.
Article Ninth of the Certificate of Incorporation of the Registrant also
provides that such indemnification shall not exclude any other rights to
indemnification to which a person may otherwise be entitled, and authorizes the
corporation to purchase insurance on behalf of any of the persons enumerated
against any liability whether or not the corporation would have the power to
indemnify him under the provisions of Article Ninth.
With respect to possible indemnification of officers, directors, and other
corporate agents for liabilities arising under the Securities Act, the
Registrant has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
ITEM 16. EXHIBITS
Exhibit No. Description
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1 Warrant Conversion Agency Agreement*
5 Opinion of Jamieson, Moore, Peskin & Spicer as to the
legality of the securities to be registered.
23(a) Consent of Arthur Andersen LLP.*
23(b) Consent of Jamieson, Moore, Peskin & Spicer (Included in
Exhibit 5 hereto).
24 Powers of Attorney of directors of Unity Bancorp, Inc.
- ------------
* Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to file, during any period in
which it offers or sells securities, a post-effective amendment to this
registration statement to include any additional or changed material information
on the plan of distribution.
12
<PAGE>
The undersigned Registrant hereby undertakes, for purposes of determining
any liability under the Securities Act of 1933, to treat each post effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide offering and
to file a post effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") 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 Act 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 Act and will
be governed by the final adjudication of such issue.
13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements of filing on Form S-3 and has duly caused this Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Clinton, State of New Jersey, as of this 24 day of November, 1998.
UNITY BANCORP, INC.
(Registrant)
By: /s/ ROBERT J. VAN VOLKENBURGH
__________________________________
Robert J. Van Volkenburgh
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacities indicated on
this 24 day of November, 1998.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ ROBERT J. VAN VOLKENBURGH
_______________________________ Chairman of the Board, November 24, 1998
Robert J. Van Volkenburgh Principal Executive
Officer and Director
/s/ DAVID D. DALLAS November 24, 1998
_______________________________ Director
David D. Dallas
/s/ PETER P. DETOMMASO November 24, 1998
_______________________________ Director
Peter P. DeTommaso
/s/ CHARLES S. LORING November 24, 1998
_______________________________ Director
Charles S. Loring
/s/ JOHN F. TREMBLAY November 24, 1998
_______________________________ Director
John F. Tremblay
/s/ KEVIN KILLIAN
_______________________________ Chief Financial Officer November 24, 1998
Kevin Killian (Principal Accounting
and Financial Officer)
</TABLE>
14
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
1 Warrant Conversion Agency Agreement*
5 Opinion of Jamieson, Moore, Peskin & Spicer as to the legality
of the securities to be registered.
23(a) Consent of Arthur Andersen LLP.*
23(b) Consent of Jamieson, Moore, Peskin & Spicer (Included in
Exhibit 5 hereto).
24 Powers of Attorney of directors of Unity Bancorp, Inc.
- ------------
* Filed herewith.
15
WARRANT CONVERSION AGENCY AGREEMENT
___________, 1998
FIRST COLONIAL SECURITIES GROUP INC.
10 Lake Center Executive Park
Suite 202
401 North Route 73
Marlton, NJ 08053
Dear Sirs:
Unity Bancorp, Inc., a New Jersey business corporation (the "Company") has
outstanding warrants (the "Warrants") each of which entitles the holder thereof
to purchase 1.5 shares of the Company's Common Stock, par value $______ per
share, (the "Common Stock") at an exercise price of $10.50 per Warrant for a
period of time, which expires at 5:00 P.M., Eastern Standard Time, on December
15, 1997, unless such period of time is extended by the Company (the "Warrant
Expiration Date"). The Company has listed the Warrants on the American Stock
Exchange and currently has an effective registration statement on Form S-3
registering the underlying shares of the Common Stock to be delivered upon the
exercise of such Warrants under Section 5 of the Securities Act of 1933, as
amended (the "Act"). The Common Stock is listed on the NASDAQ National Market.
The Company desires to enter into an agreement with First Colonial
Securities Group Inc. (the "Warrant Conversion Agent") by which it agrees to:
(1) contact holders of the Warrants to solicit the exercise of Warrants by such
holders or to recommend that the holders sell their Warrants in the open market,
and (2) subject to market conditions and other factors, purchase Warrants
available for sale on the open market prior to the Warrant Expiration Date,
exercise such Warrants into the Common Stock (the "Shares") and sell the Shares
through the Warrant Conversion Agent's retail distribution network and to a
lesser extent, through the institutional marketplace (the "Offering").
Furthermore, the Warrant Conversion Agent agrees to solicit interest in the
Common Stock of the Company after the Offering through their institutional and
retail sales network.
During the Offering, the price per share of the Shares to be sold by the
Warrant Conversion Agent will be at prevailing market prices, which will not
exceed the greater of the last sale or current asked price per share of the
Common Stock as reported in the NASDAQ National Market, adjusted for any
concession to dealers, which will not be increased more than once during any
trading day (the "Offer Price"). The Warrant Conversion Agent may also make
sales to securities traders at prices which represent concessions from the Offer
Price. The amount of such concessions is to be determined from time to time by
the Warrant Conversion Agent. Any Shares so offered are offered subject to prior
sale when, as and if received by the Warrant Conversion Agent and subject to
their right to reject orders in whole or in part.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
agree, intending to be legally bound hereby, as follows:
<PAGE>
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The Company
represents, warrants to, and agrees with the Warrant Conversion Agent that:
(a) A registration statement on Form S-3, relating to the sale of the
Shares acquired by the Warrant Conversion Agent as contemplated hereby has
been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder and has been filed with the
Commission. Copies of such registration statement have been delivered by
the Company to the Warrant Conversion Agent. As used in this Agreement,
unless the context otherwise requires, "Registration Statement" means that
registration statement (together with all documents incorporated therein by
reference) at the time when it becomes effective under the Act; and
"Prospectus" means the prospectus (together with all documents incorporated
therein by reference) included in the Registration Statement with any
changes contained in any prospectus filed with the Commission by the
Company with the consent of the Warrant Conversion Agent pursuant to Rule
424(b) of the Rules and Regulations.
(b) The Registration Statement, any post-effective amendment thereof,
and the Prospectus, as amended or supplemented, including any document
filed by the Company hereafter pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), prior to the termination of the Offering of any the Shares acquired
by the Warrant Conversion Agent hereunder ("Incorporated Document"), will
contain all statements that are required by the Act and the Rules and
Regulations; and the Registration Statement, any post-effective amendment
thereof and the Prospectus as amended or supplemented (including any
Incorporated Documents) will comply in all material respects with the
requirements of the Act and the Rules and Regulations and will not 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 not misleading; provided that the Company makes no representation
or warranty as to information contained in or omitted from the Registration
Statement or the Prospectus, or any amendments thereof or supplements
thereto, in reliance upon and in conformity with, written information
furnished to the Company by the Warrant Conversion Agent specifically for
inclusion therein.
(c) The authorized and outstanding capital stock of the Company as of
June 30, 1998, is as set forth in the Company's Form 10-QSB for the period
ended June 30, 1998. All of the outstanding shares of capital stock have
been duly authorized, validly issued, fully paid and nonassessable and are
duly listed on the NASDAQ National Market. All of the Warrants are, and the
Shares issuable upon exercise of the Warrants will, when issued, be validly
authorized, issued and outstanding, fully paid and non-assessable with no
personal liability attaching to the ownership thereof, and the Shares will
be listed on the NASDAQ National Market. The capital stock of the Company,
including the Shares, conforms to the description thereof contained or
incorporated by reference in the Prospectus. Except as contemplated by this
Agreement or as disclosed in or contemplated by the Prospectus or any
document incorporated by reference in the Registration Statement, there are
no preemptive or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, the Common Stock created by the
Company or any subsidiary of the Company other than pursuant to the
Company's certificate of incorporation,
1
<PAGE>
charter, bylaws or other governing documents, and neither the filing of the
Registration Statement nor the offering or sale of the Shares, as
contemplated by this Agreement, gives rise to any rights, other than those
which have been waived or satisfied, for or relating to the registration of
any shares of capital stock or other securities of the Company. Except as
contemplated by this Agreement or as disclosed in or contemplated by the
Prospectus or incorporated by reference in the Registration Statement,
neither the Company nor any subsidiary of the Company has outstanding any
option, warrant, convertible security, or other right permitting or
requiring it to issue, or convert any obligation into, or exchange any
obligation for, shares of capital stock, nor has the Company or any such
subsidiary agreed to issue or sell any shares of capital stock or any such
option, warrant, convertible security or other right.
(d) On and after the date hereof and prior to the Warrant Expiration
Date, there will be no change in the outstanding capital stock of the
Company and the Company will not issue or sell or enter into any agreement
(other than this Agreement), arrangement or understanding of any kind, or
take any action, for the issuance or sale of any capital stock of the
Company or warrants or options for the purchase of capital stock of the
Company or securities convertible into capital stock of the Company without
the prior approval of the Warrant Conversion Agent, except for (i) the
issuance of the Shares upon the exercise of the Warrants and (ii) the
issuance of Common Stock or options pursuant to any existing employee stock
option, stock purchase or restricted stock plans.
(e) As of the close of business on ___________, 1998, there were
_______ outstanding Warrants.
(f) Each Warrant is exercisable, until the close of business on the
Warrant Expiration Date, into 1.5 shares of the Company's Common Stock by
surrender of Warrant Certificates for exercise to FCTC Transfer Services,
LLP, of Iselin, New Jersey (the "Warrant and Transfer Agent"), prior to the
Warrant Expiration Date. The holder of each Warrant may purchase 1.5 fully
paid and nonassessable shares of the Common Stock for $10.50 each by
surrender of Warrant Certificates together with a check made payable to
"Unity Bancorp, Inc." for the exercise price to the Warrant and Transfer
Agent prior to the Warrant Expiration Date.
(g) Neither the Commission nor the Blue Sky or securities authority of
any jurisdiction has issued an order suspending the effectiveness of the
Registration Statement, preventing or suspending the use of the Prospectus,
the Registration Statement or any amendment thereof or supplement thereto,
refusing to permit the effectiveness of the Registration Statement, or
suspending the registration or qualification of the Shares; and none of
such authorities has instituted or threatened to institute any proceedings
with respect to such an order.
(h) Arthur Andersen, LLP, whose report appears in certain documents
incorporated by reference in the Registration Statement and the Prospectus,
are independent public or certified accountants with regard to the Company
as required by the Act and the Rules and Regulations.
(i) Except as described in or contemplated by the Registration
Statement and the Prospectus, there has not been any material adverse
change in or adverse development which materially adversely affects the
business, properties, condition (financial or other) or results of
operations of the Company and its subsidiaries taken as a whole from the
dates as of which
2
<PAGE>
information is given in the Registration Statement and the Prospectus.
(j) Neither the Company nor any of its subsidiaries is in violation of
its certificate of incorporation, charter, bylaws or other governing
documents, or applicable laws and regulations, or in default under any
agreement, indenture or instrument, the effect of which violation or
default would be material to the Company and its subsidiaries taken as a
whole.
(k) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and the issuance and
delivery of the Shares upon the exercise of the Warrants, will not (i)
conflict with or result in a breach of any of the terms and provisions of,
or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a default) or require, except for such consents as
have been obtained and are currently in effect, consent under or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to
the terms of any agreement or other instrument to which the Company or any
of its subsidiaries is a party or by which any of such companies or their
respective properties or assets may be bound or violate or conflict with
any judgment, decree, order, statute, rule or regulation of any court or
any public, government or regulatory agency or body which has jurisdiction
over the Company or any of its subsidiaries or any of their respective
properties or assets, which conflicts, breaches, defaults, violations or
liens would, in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or (ii) violate or conflict
with any provision of the certificate of incorporation, charter, bylaws, or
other governing documents of the Company or any of its subsidiaries. No
consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their respective properties or
assets is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby, including the exercise of the Warrants, and the
issuance, sale and delivery of the Shares pursuant to this Agreement,
except the registration under the Act of the Shares, and the consents,
approvals, authorizations, orders, registrations, filings, qualifications,
licenses and permits as may be required under state securities or Blue Sky
laws in connection with the acquisition and distribution of the Shares by
the Warrant Conversion Agent.
(l) The Company and each of its subsidiaries have been duly
incorporated, are validly existing and in good standing under the laws of
the jurisdiction of its respective incorporation; is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in the United States in which its ownership or lease of
property or the conduct of its businesses requires such qualification
(except where the failure to so qualify would not have a material adverse
effect upon the Company and its subsidiaries taken as a whole); and has all
corporate power and authority necessary to own or hold its properties and
to conduct the businesses in which it is engaged.
(m) The financial statements and schedules, including the related
notes, of the Company and its subsidiaries, incorporated by reference in
the Registration Statement or any Prospectus present fairly, and the
financial statements included in any Incorporated Document will present
fairly, the financial condition and results of operations of the entities
purported to be shown
3
<PAGE>
thereby at the dates and for the periods indicated, and have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as otherwise noted
therein.
(n) There is no litigation or governmental proceeding pending or, to
the knowledge of the Company, threatened against the Company or any of its
subsidiaries, which might, if adversely determined, materially adversely
affect the purchase and sale of the Shares or which might result in any
material adverse change in the financial condition, results of operations
or business of the Company and its subsidiaries taken as a whole or which
is required to be disclosed in the Registration Statement or the Prospectus
and which is not so disclosed.
(o) There are no contracts or other documents that are required to be
filed as exhibits to the Registration Statement by the Act or by the Rules
and Regulations or which were required to be filed as exhibits to any
document incorporated by reference in the Registration Statement which have
not been so filed.
(p) The documents incorporated by reference in the Registration
Statement and the Prospectus have been, and each Incorporated Document will
be, prepared by the Company in conformity in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder
and such documents have been, or in the case of an Incorporated Document
will be, timely filed as required thereby. Accurate copies of each of the
documents incorporated by reference in the Registration Statement and the
Prospectus have been delivered by the Company to the Warrant Conversion
Agent. The Prospectus (including the documents incorporated therein by
reference) contains all material information concerning the Company and its
business, does not contain an untrue statement of a material fact and does
not omit any information necessary to make the statements therein, in the
context made, not misleading.
(q) Neither the Company nor any of its officers, directors or
affiliates has taken or will take, directly or indirectly, prior to the
termination of the Offering contemplated by this Agreement, any action
designed to cause or result in, or which has constituted or which would
constitute, the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Shares.
(r) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company has not paid
or declared any dividends or other distributions with respect to its
capital stock (other than regular quarterly cash dividends); and (ii) there
has not been any change in the capital stock (other than (A) the sale of
Common Stock pursuant to this Agreement, (B) the issuance of shares of
Common Stock upon exercise of Warrants disclosed in the Registration
Statement as being outstanding, and (C) the issuance of shares of Common
Stock upon the exercise of outstanding stock options issued pursuant to the
Company's employee and director benefit plans.)
(s) This Agreement has been duly and validly authorized, executed and
delivered by the Company and is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except as enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the rights of
creditors generally
4
<PAGE>
and by equitable principles and except as obligations of the Company under
the indemnification provisions hereof may be limited under federal or state
securities laws.
(t) The Company and its subsidiaries have all necessary consents,
approvals, authorizations, orders, registrations, qualifications, licenses
and permits of and from all public, regulatory or governmental agencies and
bodies, material to the ownership of their respective properties and
conduct of their respective businesses as now being conducted and as
described in the Registration Statement and the Prospectus, except for such
authorizations, registrations, qualifications, licenses and permits, the
absence of which, singly or in the aggregate, would not have a material
adverse effect upon the Company, its financial condition or results of
operation, and no such consent, approval, authorization, order,
registration qualification, license or permit contains a materially
burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus. The conduct of the business of the Company
and each of its subsidiaries is in compliance in all material respects with
all applicable federal, state, local and foreign laws and regulations,
except where failure to be so in compliance would not materially adversely
affect the condition, business or results of operation of the Company and
its subsidiaries taken as a whole.
(u) The Company and its subsidiaries have filed all federal, state and
foreign income and franchise tax returns legally required to be filed by
the Company and such subsidiaries and have paid all taxes as shown as due
thereon except for taxes being contested in good faith, and the Company has
no knowledge of any material tax deficiency which has been asserted against
the Company or any subsidiary which could materially and adversely affect
the financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
2. PURCHASE, SALE AND DELIVERY. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, the Company and the Warrant Conversion Agent agree as follows:
(a) It is understood that the Warrant Conversion Agent intends to sell
the Shares at the Offer Price. Nothing contained herein shall limit the
right of the Warrant Conversion Agent, in its discretion, to determine the
price or prices at which, or the time or times when, any such Shares shall
be sold, whether or not prior to the Warrant Expiration Date and whether or
not for long or short accounts.
(b) From the date hereof until 5:00 P.M., Eastern Standard Time, on
the Warrant Expiration Date, the Warrant Conversion Agent intends to
purchase Warrants in the open market or otherwise, in such amounts and at
times and prices as it may deem advisable. The Warrant Conversion Agent
currently intends to exercise the Warrants purchased by it; however, the
Warrant Conversion Agent shall have the right, at its sole discretion, to
sell any Warrants prior to exercise. The Shares may be sold by the Warrant
Conversion Agent at prices prevailing from time to time in the open market.
The Company shall pay to the Warrant Conversion Agent on the Settlement
Date (as hereinafter defined), an amount equal to 3.25% of the aggregate
exercise price paid to the Company with respect to Warrants exercised from
October 14, 1998 through the Warrant Expiration Date, whether exercised by
the Warrant Conversion Agent or by other holders of Warrants (the
"Conversion Fee"), up to a maximum Conversion Fee of $150,000.
5
<PAGE>
3. CERTAIN FEES, EXPENSES AND PAYMENTS. As compensation to the Warrant
Conversion Agent for its commitment under this Agreement, the Company will pay
to the Warrant Conversion Agent on the Settlement Date, in addition to the
Conversion Fee, a non-accountable expense allowance in connection therewith of
$35,000. Such amount shall be paid by certified or official bank check or checks
payable in New York Clearing House funds, notwithstanding the termination of
this Agreement by any party hereto.
4. SETTLEMENT DATE. No later than the third business day after; (a) this
Agreement has been terminated by one or more of the parties hereto; (b) all
Warrants have been converted into shares of Common Stock; or (c) the Warrant
Expiration Date, whichever event occurs first, or such other date as shall be
mutually agreed by the parties (the "Settlement Date"), the parties shall
exchange all documents and instruments required by the terms of this Agreement
at the offices of the Warrant Conversion Agent, or such other location as may be
mutually agreed upon by the parties, for the payment by the Company of all fees
and expenses to the Warrant Conversion Agent. The Company shall pay such fees
and expenses to the Warrant Conversion Agent in accordance with Paragraphs 2(b)
and 3 hereof.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees:
(a) To furnish promptly to the Warrant Conversion Agent and to counsel
for the Warrant Conversion Agent an executed copy of the Registration
Statement as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith.
(b) To deliver promptly to the Warrant Conversion Agent such number of
conformed copies of the Registration Statement as originally filed and each
amendment thereto and such number of the Prospectus and each amended or
supplemented Prospectus, and any documents incorporated by reference in any
of the foregoing, as the Warrant Conversion Agent may reasonably request.
(c) To file with the Commission any amendment of the Registration
Statement or any supplement to the Prospectus as the Warrant Conversion
Agent may request for the purpose of describing the Warrant Conversion
Agent's plan of distribution for the Shares acquired by it hereunder or
that may, in the judgment of the Company or the Warrant Conversion Agent,
be required by the Act or requested by the Commission (including the staff
thereof); and to file in a timely manner with the Commission any document
required to be filed with the Commission pursuant to Sections 13, 14 or
15(d) of the Exchange Act and incorporated by reference in the Registration
Statement or the Prospectus.
(d) Prior to filing with the Commission any amendment of the
Registration Statement or supplement to the Prospectus, or to filing any
Prospectus pursuant to Rule 424 of the Rules and Regulations, or to filing
any document incorporated by reference in any of the foregoing, to furnish
copies thereof to the Warrant Conversion Agent and counsel for the Warrant
Conversion Agent and to obtain the consent of the Warrant Conversion Agent
to the filing.
(e) To advise the Warrant Conversion Agent promptly (i) when the
Registration Statement and any post-effective amendment thereto becomes
effective; (ii) of any request or proposed request by the Commission for an
amendment to the Registration Statement, a supplement to the
6
<PAGE>
Prospectus or any additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation or, to the Company's knowledge,
threat of any proceeding for that purpose; (iv) of receipt by the Company
of any notification with respect to the suspension of the qualification of
the Shares issuable upon the exercise of the Warrants or of the Shares for
sale in any jurisdiction or the initiation or, to the Company's knowledge,
threat of any proceeding for that purpose; and (v) of the happening of any
event which makes untrue any statement of a material fact made in the
Registration Statement or the Prospectus, or which requires the making of a
change in the Registration Statement or the Prospectus in order to make any
material statement therein not misleading.
(f) If the Company is aware that the Commission is contemplating the
issuance of any stop order suspending the effectiveness of the Registration
Statement, to use every reasonable effort to prevent the issuance of such
stop order, and if the Commission shall issue a stop order suspending the
effectiveness of the Registration Statement, to make every reasonable
effort to obtain the lifting of that order at the earliest possible time.
(g) As soon as practicable after the effective date of the
Registration Statement, to make generally available to its security holders
and to deliver to the Warrant Conversion Agent an earnings statement,
conforming with the requirements of Section 11(a) of the Act, covering a
period of at least twelve consecutive months beginning after the effective
date of the Registration Statement, which the Company will satisfy by
complying with Rule 158 under the Act and by making timely filings under
the Exchange Act.
(h) For a period of five years from the effective date of the
Registration Statement, to furnish to the Warrant Conversion Agent copies
of all public reports and all information, documents, reports and financial
statements furnished by the Company to stockholders or the Commission
pursuant to the Exchange Act or any rule or regulation of the commission
thereunder.
(i) To endeavor to qualify the Shares issuable upon the exercise of
the Warrants and the Shares for offer and sale under the securities laws of
such jurisdictions in the United States as the Warrant Conversion Agent may
reasonably request.
(j) To mail or cause to be mailed not later than 5:00 P.M., Eastern
Daylight Time, on the first business day after the Effective Date of the
Registration Statement a notice of the Warrant Expiration Date of all the
outstanding Warrants (the "Notice of Expiration Date") by first class mail
to the registered holders of such Warrants, together with a copy of the
Prospectus, and any other document requested to be delivered and mailed
therewith by the Warrant Conversion Agent.
(k) To pay (i) the costs incident to the preparation, printing and
filing under the Act of the Registration Statement and any amendments and
exhibits thereto, the Prospectus and any amendments or supplements to the
Prospectus and the several documents required to be furnished to the
Warrant Conversion Agent pursuant to this Agreement; (ii) the costs
incident to the preparation, printing, filing and distribution of the
Notice of Expiration Date and such other documents as may be distributed in
connection with the transactions contemplated by this Agreement, to the
Warrant Conversion Agent and the holders of the Warrants; (iii) the fees
and expenses (including fees and disbursements of counsel to the Warrant
Conversion Agent in
7
<PAGE>
connection therewith) of qualifying the Common Stock issuable upon exercise
of the Warrants and the Shares under the securities laws of the several
jurisdictions and of preparing and printing "Blue Sky" memoranda, if
necessary; (iv) the fees and expenses of listing the Common Stock issuable
upon exercise of the Warrants and the Shares on the NASDAQ National Market;
(v) all costs incident to the authorization, issuance, sale and delivery of
the Shares and all transfer taxes which may be required to be paid by the
Warrant Conversion Agent in connection with any exercise of the Warrants,
and consummation of the transactions contemplated by this Agreement,
including any transfer taxes payable on the sale of the Shares by the
Warrant Conversion Agent; and (vi) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement.
(l) To direct the Warrant Agent to advise the Warrant Conversion Agent
prior to the close of business on each business day through the Warrant
Expiration Date of the aggregate number of Warrants and the exercise on the
preceding business day and on a cumulative basis and otherwise to cooperate
with the Warrant Conversion Agent to facilitate the exercise of the
Warrants which shall be delivered to the Warrant and Transfer Agent on or
prior to the Warrant Expiration Date.
(m) To take no action prior to 5:00 P.M., Eastern Daylight Time, on
the Warrant Expiration Date, the effect of which would be to require an
adjustment in the exercise price of the Warrants from the present
indication set forth above.
(n) Not to withdraw or apply for withdrawal of the Registration
Statement prior to such time as the Warrant Conversion Agent shall have
advised the Company that the offering and sale of the Shares by the Warrant
Conversion Agent contemplated by this Agreement shall have been completed.
(o) During the 180 days following the effective date of the
Registration Statement, except with the Warrant Conversion Agent's prior
written consent and except for the issuance of the Shares and the issuance
of shares of the Common Stock or options pursuant to any existing employee
stock option, restricted stock or stock purchase plans, the Company will
not offer for sale, sell or otherwise dispose of, or file a registration
statement under the Act covering, any shares of its Common Stock, or sell
or grant options, or warrants with respect to, or securities convertible
into, any shares of its Common Stock.
6. CONDITION OF WARRANT CONVERSION AGENT OBLIGATIONS. The obligations of
the Warrant Conversion Agent hereunder are subject to the accuracy in all
material respects of the representations and warranties of the Company contained
herein, to the performance by the Company of its obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., Eastern Daylight Time, on _________, 1998, or at such later
date and time as shall be consented to in writing by the Warrant Conversion
Agent (the "Effective Date"); no stop order suspending such effectiveness,
nor any order directed to any document incorporated, or deemed to be
incorporated, by reference in the Registration Statement and the
Prospectus, shall have been issued, and prior to that time no stop order
proceeding shall have been initiated or threatened by the Commission and no
challenge by the Commission by appropriate proceedings shall have been
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made to the accuracy or adequacy of any document incorporated, or deemed to
be incorporated, by reference in the Registration Statement and the
Prospectus; any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise
shall have been complied with; and the Company shall not have filed with
the Commission the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or any Incorporated Document
without the consent of the Warrant Conversion Agent.
(b) The Warrant Conversion Agent shall not have discovered and
disclosed to the Company, or been informed by the Company, that the
Registration Statement or the Prospectus (including the documents
incorporated therein by reference) or any amendment thereof or supplement
thereto contains an untrue statement of a fact which, in the opinion of
counsel for the Warrant Conversion Agent, may be material or omits to state
a fact which, in the opinion of such counsel, may be material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) Since the respective dates as of which information is given in the
Prospectus there has not been any material change in the capital stock of
the Company or any material adverse change in the indebtedness for money
borrowed of the Company or any material adverse change in, or any
development that materially adversely affects, the business, properties,
financial condition or results of operations of the Company.
(d) Jamieson, Moore, Peskin & Spicer, counsel to the Company, shall
have furnished to the Warrant Conversion Agent its opinion (addressed to
the Warrant Conversion Agent), dated as of the Effective Date, which
opinion shall be in the format provided for and in accordance with the
terms of the Legal Opinion Accord of the ABA Section of Business Law, to
the effect that:
(i) Each of the Company and each of its subsidiaries (A) has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation; (B)
is duly qualified to do business and is in good standing as a foreign
corporation in all jurisdictions in which its ownership of property or
the conduct of its business requires such qualification (except where
the failure to so qualify would not have a material adverse effect
upon the Company and its subsidiaries taken as a whole); and (C) has
all corporate power and authority necessary to own its properties and
conduct the business in which it is engaged as described in the
Registration Statement;
(ii) The Warrants have been duly authorized and validly issued
and are nonassessable, and free of preemptive rights arising under the
Company's certificate of incorporation and bylaws, by operation of
law, or under any document filed as an exhibit to the Registration
Statement or any Incorporated Document, with no personal liability
attaching to the ownership thereof, and are duly listed on the
American Stock Exchange. The shares of Common Stock issuable upon the
exercise of the Warrants will, when issued upon full payment therefor,
be validly authorized, issued and outstanding, fully paid and
non-assessable and free of preemptive rights arising under the
Company's certificate of incorporation and bylaws, by operation of
law, or under any document filed as an exhibit to the Registration
Statement or any Incorporated Document, with no personal liability
attaching to the ownership thereof, and will be listed on the NASDAQ
National Market;
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(iii) The certificates evidencing the Shares to be sold hereunder
and the shares issued upon the exercise of the Warrants are in due and
proper form under New Jersey law. All corporate action required to be
taken for the authorization, issue, sale and delivery of the Shares
has been validly and sufficiently taken. The notices and procedures
used by the Company to effect the exercise of the Warrants comply with
the terms of the Warrant Certificate;
(iv) There are no preemptive or other rights to subscribe for or
to purchase, and no restrictions upon the voting or transfer of, the
Shares pursuant to the Company's corporate charter and bylaws or any
agreement or other instrument filed as an exhibit to the Registration
Statement or any Incorporated Document; and neither the filing of the
Registration Statement nor the offering or sale of the Shares gives
rise to any rights for or relating to the registration of any shares
of capital stock of the Company or any subsidiary of the Company
arising under the Company's certificate of incorporation and bylaws,
by operation of law, or under any document filed as an exhibit to the
Registration Statement or any Incorporated Document;
(v) The Common Stock conforms as to legal matters to the
statements concerning the Common Stock of the Company contained or
incorporated by reference in the Prospectus, and the authorized and
outstanding shares of capital stock of the Company are as set forth in
the Prospectus;
(vi) Such counsel has no reason to believe that either the
Registration Statement or the Prospectus (including any document
incorporated, or deemed to be incorporated by reference, in the
Prospectus) contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, except that counsel need
express no opinion with respect to the financial statements, schedules
and the notes thereto and other financial data included in the
Registration Statement or the Prospectus;
(vii) To counsel's actual knowledge, there is no litigation or
any governmental proceeding pending or threatened against the Company
or any of its subsidiaries which would adversely affect the subject
matter of this Agreement or is required to be disclosed in the
Prospectus which is not disclosed and correctly summarized therein;
(viii) To counsel's actual knowledge, there are no contracts or
other documents which are required to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations, or
which were required to be filed as exhibits to any document
incorporated by reference in the Prospectus by the Exchange Act or the
rules or regulations thereunder, which have not been filed as exhibits
to the Registration Statement or to such document or incorporated
therein by reference as permitted by the Rules and Regulations or the
rules and regulations under the Exchange Act, as the case may be;
(ix) To counsel's actual knowledge, neither the Company nor any
of its subsidiaries is in violation of its corporate charter or
bylaws, or, in default under any agreement, indenture or instrument
filed as an exhibit to the Registration Statement or to any
Incorporated Document, the effect of which violation or default would
be material to the Company and its subsidiaries taken as a whole;
(x) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement
of the Company; the execution, delivery
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and performance of this Agreement by the Company, will not conflict
with, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the assets of the Company or any of its
subsidiaries pursuant to the terms of, or constitute a default under,
any agreement, indenture or instrument filed as an exhibit to the
Registration Statement or any Incorporated Document, or result in a
violation of the corporate charter or bylaws of the Company or any of
its subsidiaries or any order, rule or regulation known to such
counsel of any court or governmental agency having jurisdiction over
the Company, any of its subsidiaries or their property; and no
consent, authorization or order of, or filing or registration with,
any court or governmental agency is required for the execution,
delivery and performance of this Agreement by the Company, except such
as may be required by the Act, the Exchange Act, or state securities
laws, or such as has been obtained by the Company;
(xi) To the best of such counsel's knowledge, since the end of
its last fiscal year, the Company has filed all documents and
amendments to previously filed documents required to be filed by it
pursuant to Sections 13, 14 or 15(d) of the Exchange Act;
(xii) The Registration Statement is effective under the Act, no
stop order suspending its effectiveness has been issued, and, to the
knowledge of such counsel, no proceeding for that purpose is pending
or threatened by the Commission;
(xiii) To the best of such counsel's knowledge, no order of the
Commission directed to any document incorporated or deemed to be
incorporated in the Prospectus has been issued and no challenge by the
Commission has been made to the accuracy or adequacy of any such
document;
(xiv) The Registration Statement and the Prospectus, when filed
with the Commission, complied as to form in all material respects with
the requirements of the Act and the Rules and Regulations and the
documents incorporated or deemed to be incorporated by reference in
the Prospectus, when filed with the Commission, complied as to form in
all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder, except, in both cases, as to
financial statements and financial and statistical data contained
therein, as to which counsel need not opine;
(xv) The exercisability of the Warrants shall expire at 5:00
P.M., Eastern Standard Time, on the Warrant Expiration Date.
In giving the opinions in subparagraph 6(d), counsel may rely as to matters of
law, other than the law of the United States and the State of New Jersey upon an
opinion or opinions of local counsel, reasonably acceptable to the Warrant
Conversion Agent both as to the identity of local counsel and the form and
substance of the opinion or opinions, who may be counsel for the Company, which
states that the Warrant Conversion Agent as entitled to rely thereon, provided
that any such opinion or opinions are delivered to the Warrant Conversion Agent
and that Jamieson, Moore, Peskin & Spicer shall state that they have no reason
to believe that such opinions are not correct.
(e) Arthur Andersen, LLP shall have delivered a letter addressed to
the Warrant Conversion Agent in form and substance satisfactory to the
Warrant Conversion Agent in all respects (including the non-material nature
of the changes or decreases, if any, referred to in
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clause (iii) below) dated as of the Effective Date:
(i) Confirming that they are independent public accountants
within the meaning of the Act and the Rules and Regulations and
stating that the section of the Registration Statement under the
caption "Experts" is correct insofar as it relates to them;
(ii) Stating that, in their opinion, the consolidated financial
statements of the Company audited by them and incorporated in the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Act and the Regulations;
(iii) Stating that, on the basis of specified procedures, which
included a reading of the latest available unaudited interim financial
statements of the Company (with an indication of the date of the
latest available unaudited interim financial statements), a reading of
the minutes of the meetings of the stockholders and the Board of
Directors of the Company and audit and compensation committees of such
Board, if any, and inquiries to certain officers and other employees
of the Company who are or were responsible for financial and
accounting matters and other specified procedures and inquiries,
nothing has come to their attention that would cause them to believe
that (A) the unaudited consolidated financial statements and related
schedules of the Company included in the Registration Statement, if
any (1) do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and
Regulations, or (2) were not fairly presented in conformity with
generally accepted accounting principles on a basis substantially
consistent with that of the audited consolidated financial statements
and related schedules included in the Registration Statement; or (B)
at a specified date, not more than five business days prior to the
date of such letter, there was any change in the capital stock or
consolidated long-term debt of the Company or any decrease in
consolidated interest earning assets, total assets or stockholders'
equity as compared with the amounts shown in the December 31, 1996 and
March 31, 1997 balance sheets of the Company included in the
Registration Statement, other than as set forth in or contemplated by
the Registration Statement and Prospectus, or if there was any change
or decrease, setting forth the amount of such change or decrease; and
(iv) Stating that they have compared specific dollar amounts,
numbers of shares and other information (including any pro forma
information) pertaining to the Company set forth in the Registration
Statement and Prospectus that have been specified by the Warrant
Conversion Agent prior to the date of this Agreement, to the extent
that such amounts, numbers, percentages and information may be derived
from the general accounting or other records of the Company, with the
results obtained from the application of specified readings, inquiries
and other appropriate procedures (which procedures do not constitute
an audit in accordance with generally accepted auditing standards) set
forth in the letter, and found them to be in agreement.
(f) On the Effective Date, the Company shall have furnished to the
Warrant Conversion Agent a certificate addressed to the Warrant Conversion
Agent, dated the Effective Date and executed by any two of the following:
(i) the Chairman of the Board;
(ii) the President; or
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(iii) any Executive Vice President or the Chief Financial Officer
of the Company stating that:
(A) The representations and warranties of the Company set
forth in Paragraph 1 are true and correct as of the Effective
Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied on or prior to the Effective Date;
(B) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any amendment thereof, no
stop order suspending the effectiveness of the Registration
Statement has been issued; and to the best of the knowledge of
the respective signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the Act;
(C) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus
and that, in his or her opinion and to the best of his or her
knowledge as of the Effective Date, the statements made in the
Registration Statement and the Prospectus are true and correct,
and neither the Registration Statement nor the Prospectus omits
to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
and
(D) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction
nor event has occurred which should have been disclosed in an
amendment to the Registration Statement or in a supplement to or
amendment of any prospectus which has not been disclosed.
All opinions and other documents deliverable hereunder shall be deemed to
be in compliance with the provisions hereof only if they are in form and
substance reasonably satisfactory to counsel for the Warrant Conversion Agent.
All statements in any certificate, letter or other document delivered pursuant
hereto by or on behalf of the Company and executed by an officer of the Company
shall be deemed to constitute representations and warranties of the Company. The
Company will furnish the Warrant Conversion Agent with such conformed copies of
such opinions, certificates, letters and other documents as the Warrant
Conversion Agent shall reasonably request.
If any conditions specified in this Paragraph 6 shall not have been
fulfilled when and as required by this Agreement, this Agreement and all
obligations of the Warrant Conversion Agent hereunder may be canceled at, or at
any time prior to, the Effective Date, by the Warrant Conversion Agent. Any such
cancellation shall be without liability of the Warrant Conversion Agent to the
Company. Notice of such cancellation shall be given to the Company in writing,
or by telegraph or telephone and confirmed in writing.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless the Warrant Conversion
Agent and each person, if any, who controls the Warrant Conversion Agent within
the meaning of either the Act or the Exchange Act from and against any loss,
claim, damage or liability, joint or several, and any ction in respect thereof,
to which the Warrant Conversion Agent or any such controlling
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<PAGE>
a person may become subject, under the Act, the Exchange Act, or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, the Prospectus, any Incorporated
Document, the Notice of Expiration Date or the Registration Statement or
Prospectus as amended or supplemented, any other information provided to holders
of Warrants or any other document filed with the Commission or any state
securities administrator, (ii) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) the breach of any of the
representations and warranties herein by the Company, and promptly shall
reimburse the Warrant Conversion Agent and each such controlling person in
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action, provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or the Prospectus or any amendment or supplement thereto
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Warrant Conversion Agent concerning the Warrant
Conversion Agent specifically for inclusion therein. The foregoing indemnity
agreement is in addition to any liability that the Company may otherwise have to
the Warrant Conversion Agent or any of the controlling person of the Warrant
Conversion Agent.
(b) The Warrant Conversion Agent shall indemnify and hold harmless the
Company, each of its directors and officers who signed the Registration
Statement and any person who controls the Company within the meaning of either
the Act or the Exchange Act from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof to which the
Company or any such director, officer or controlling person may become subject,
under the Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, the
Prospectus or the Registration Statement or Prospectus as amended or
supplemented, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company and concerning the Warrant Conversion Agent by or on behalf of the
Warrant Conversion Agent specifically for inclusion therein; and shall reimburse
the Company for any legal and other expenses reasonably incurred by the Company
or by any such director, officer or controlling person in investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action. The foregoing indemnity agreement is in addition to any liability
that the Warrant Conversion Agent may otherwise have to the Company or any of
its directors, officers or controlling persons.
(c) Promptly after receipt by an indemnified party under this Paragraph 7
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Paragraph 7, notify the indemnifying party in writing of the
claim or the commencement of that action, provided that the failure to notify
the indemnifying party shall relieve it from any liability under this Paragraph
7 as to the particular item
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<PAGE>
for which indemnification is being sought, but not from any liability that it
may have to an indemnified party otherwise than under this Paragraph 7. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Paragraph 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Warrant Conversion Agent shall have the right to employ counsel to represent
the Warrant Conversion Agent and its controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Warrant Conversion Agent against the Company under this Paragraph 7 if,
in the reasonable judgment of the Warrant Conversion Agent, either because there
may be legal defenses available to the indemnified parties which are different
from or additional to those available to the Company, there may exist a conflict
of interest which would make it inappropriate for the same counsel to represent
both the Company and the indemnified parties or for some other reason, it is
advisable for the Warrant Conversion Agent and its controlling persons to be
represented by separate counsel, and in that event the fees and expenses of such
separate counsel shall be paid by the Company. No indemnifying party shall be
liable for any settlement effected without its consent of any claim or action.
(d) If the indemnification provided for in this Paragraph 7 shall for any
reason be unavailable to an indemnified party under Paragraph 7(a) or 7(b) in
respect of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Warrant Conversion Agent on the other from the Offering of the Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Warrant Conversion Agent on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Warrant Conversion Agent on the other with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the
Offering of the Shares (before deducting expenses) received by the Company bear
to the total compensation (after deducting therefrom losses, if any, incurred in
selling the Shares) received by the Warrant Conversion Agent with respect to the
Offering. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Warrant Conversion Agent, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Warrant
Conversion Agent
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<PAGE>
agree that it would not be just and equitable if contributions pursuant to this
Paragraph 7(d) were to be determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Paragraph 7(d) shall be deemed to include,
for purposes of this Paragraph 7(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Paragraph 7(d),
the Warrant Conversion Agent shall not be required to contribute any amount in
excess of the amount by which the compensation (after deducting therefrom
losses, if any, incurred in the sale of the Shares) received by the Warrant
Conversion Agent pursuant to Paragraph 2(b) hereof exceeds the amount of any
damages that the Warrant Conversion Agent shall be required to pay by reason of
any such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent representation.
(e) The Warrant Conversion Agent confirms that the statements with respect
to the Offering of the Shares set forth on the cover page of, and under the
caption "Plan of Distribution of Warrant Conversion Agent" in the Prospectus are
correct and the Company and the Warrant Conversion Agent agree that such
statements constitute the only information furnished in writing to the Company
by or on behalf of the Warrant Conversion Agent for inclusion in the
Registration Statement or the Prospectus.
The foregoing contribution agreement shall in no way affect the
contribution liabilities of any person having liability under Section 11 of the
Act other than the Company, its directors and officers, and the Warrant
Conversion Agent and the persons controlling the Company or the Warrant
Conversion Agent.
Promptly after receipt by any party to this Agreement of notice of the
commencement of any action, suit or proceeding, such person will, if a claim for
contribution in respect thereof is to be made against another party (the
"contributing party"), notify the contributing party of the commencement thereof
within a reasonable time thereafter, but the omission so to notify the
contributing party will not relieve the contributing party from any liability it
may have to any party other than for contribution. Any notice given pursuant to
any other paragraph of this Section 7 shall be deemed to be like notice
hereunder. In case any such action, suit or proceeding is brought against any
party, and such person so notifies a contributing party of the commencement
thereof, the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified.
(f) The indemnity agreements contained in this Paragraph 7 and the
representations, warranties and agreements of the Company in Paragraphs 1 and 5
hereof shall survive the completion of the transactions contemplated hereby and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
indemnified party.
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8. OPEN MARKET TRANSACTIONS.
(a) Commencing upon the Effective Date and until 5:00 P.M., Eastern
Standard Time, on the Warrant Expiration Date, the Warrant Conversion Agent
shall purchase Warrants in the open market in such amounts and at such prices as
the Warrant Conversion Agent may deem advisable.
(b) It is understood that prior to the Effective Date and after the Warrant
Expiration Date, the Warrant Conversion Agent may offer to the public shares of
Common Stock, including shares acquired through the purchase and the exercise of
the Warrants at prices set from time to time by the Warrant Conversion Agent.
Each such price when set will not exceed the greater of the last sale or current
asked price of the Common Stock as reported in the NASDAQ National Market plus
the amount of any concession to dealers, and an offering price on any calendar
day will not be increased more than once during such day.
9. SALES TO SECURITIES DEALERS. The Warrant Conversion Agent may (but shall
be under no obligation to) make sales of the Shares acquired through the
exercise of the Warrants to securities dealers at prices which represent
concessions from the prices at which such Shares are then being offered to the
public. The amount of such concessions is to be determined from time to time by
the Warrant Conversion Agent. Any Shares so offered are offered subject to prior
sale, when, as and if received by the Warrant Conversion Agent and subject to
its right to reject orders in whole or in part.
10. SOLICITING CONVERSIONS. The Warrant Conversion Agent shall be obligated
to assist the Company in soliciting the exercise of the Warrants into shares of
the Common Stock by the holders thereof.
11. NOTICES. Except as otherwise provided in this Agreement:
(a) whenever notice is required by the provisions of this Agreement to
be given to the Company, such notice shall be in writing or by facsimile or
telex addressed to the Company at 64 Old Highway 22, Clinton, New Jersey,
08809, Attention: Chairman with a copy to Robert A. Schwartz, Jamieson,
Moore, Peskin & Spicer, 177 Madison Avenue, Morristown, New Jersey 07960.
(b) whenever notice is required by the provisions of this Agreement to
be given to the Warrant Conversion Agent, such notice shall be in writing
or by facsimile or telex addressed to the Warrant Conversion Agent, First
Colonial Securities Group, Inc., 10 Lake Center Executive Park, 401 North
Route 73, Suite 202, Marlton, New Jersey 08053, Attention: Ben Lichtenberg,
with a copy to Stephen M. Burdumy, Klehr, Harrison, Harvey, Branzburg &
Ellers, 1401 Walnut Street, Philadelphia, PA 19102.
12. EFFECTIVE DATE AND TERMINATION.
(a) The Company, by notice to the Warrant Conversion Agent, or the Warrant
Conversion Agent, by notice to the Company, may terminate this Agreement for the
reasons hereinafter provided in Subparagraphs 12(b) and (c), respectively;
however, the provisions of this Paragraph 12, Paragraphs 2(b), 3, 4, 5(k), 7 and
11 hereof shall at all times be effective and the giving of any notice shall not
affect any obligations of the Company or the Warrant Conversion Agent
thereunder.
(b) This Agreement may be terminated by the Company, by giving notice to
the Warrant
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Conversion Agent, if (i) trading in the Common Stock or Warrants, as
the case may be, has been suspended by the NASDAQ Stock Market or the American
Stock Exchange, respectively; (ii) the Company has been placed under a
regulatory memorandum of understanding or other written directive by any state
or federal bank supervisory agency; (iii) the Warrant Conversion Agent has
filed, or been involuntarily placed, under the protection of the United States
bankruptcy laws; or (iv) a general banking moratorium shall have been declared
by federal or state authorities.
(c) This Agreement may be terminated by the Warrant Conversion Agent, by
giving notice to the Company, if (i) a general banking moratorium shall have
been declared by federal or state authorities; (ii) the United States is or
becomes engaged in hostilities that result in the declaration of a national
emergency on or after the date hereof; (iii) the Company or any subsidiary shall
have sustained a loss or damage by fire, flood, accident or other calamity which
is material to the property, business or condition (financial or other) of the
Company and the subsidiaries considered as a whole, the Company or any
subsidiary shall have become a party or subject to litigation material to the
Company and the subsidiary considered as a whole, or there shall have been,
since the respective dates as of which information is given in the Registration
Statement or the Prospectus, any material adverse change or development in the
general affairs, condition (financial or other), business, key personnel,
capitalization, properties, results of operations, net worth or business
prospect of the Company and the subsidiaries considered as a whole, whether or
not arising in the ordinary course of business, which loss, damage or change, in
the judgment of the Warrant Conversion Agent shall render it inadvisable to
proceed with the transactions contemplated herein, whether or not such loss
shall have been insured; or (iv) trading in securities generally on the NYSE or
the American Stock Exchange or the over-the-counter market shall have been
suspended or minimum prices shall have been established on such exchange or
market by the Commission or by such exchange.
(d) If notice shall have been given by the Company pursuant to subsection
(a) of this Paragraph 13 hereof terminating this Agreement, or if the Company
shall fail to tender the Shares for delivery to the Warrant Conversion Agent for
any reason permitted under this Agreement, the Company shall nevertheless pay
the Warrant Conversion Agent the fees and expenses as provided under Paragraphs
2(b) and 3 hereof. In any event, the Company shall pay its own expenses in
accordance with Paragraph 5(k).
(e) Any notice referred to in this Paragraph 12 may be given at the
addresses specified in Paragraph 12 hereof in writing or by telegraph or
telephone, and if by telegraph or telephone, shall be immediately confirmed in
writing.
13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to
the benefit of and be binding upon the Warrant Conversion Agent, the Company and
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (a) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the person
or persons, if any, who control the Warrant Conversion Agent within the meaning
of the Act, and (b) the indemnity agreement of the Warrant Conversion Agent
contained in Paragraph 7 hereof shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person who controls the Company within the
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meaning of the Act. Nothing in this Agreement is intended or shall be construed
to give any person other than the persons mentioned in the preceding two
sentences any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein.
14. SURVIVAL OF INDEMNITIES, CONTRIBUTION, WARRANTIES AND REPRESENTATIONS.
The respective indemnity and contribution agreements of the Company and the
Warrant Conversion Agent contained in Section 7 hereof, the representations,
warranties and covenants of the Company contained herein and the representations
and warranties of the Warrant Conversion Agent contained herein shall remain
operative and in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
Warrant Conversion Agent or the Company or any of their respective directors or
officers, or any controlling person referred to in said Section 7, and shall
survive the payment for the Warrants and sale of the Shares.
15. CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) "BUSINESS DAY" means any day which the New York Stock Exchange is
open for trading;
(b) "SUBSIDIARY" has the meaning set forth in Rule 405 of the Rules
and Regulations; and
(c) any representation, warranty or opinion as to the accuracy and
completeness of any document included as an exhibit to the Registration
Statement shall be understood to refer to the authenticity and completeness
of the copy of such document included as such exhibit and not to the
contents of such document (and an opinion, certificate or other document
delivered pursuant to this Agreement may so state).
1. GOVERNING LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey. This Agreement
may be executed in one or more counterparts and, if executed in more than one
counterpart, the executed counterparts shall together constitute a single
instrument.
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If the foregoing correctly sets forth the agreement between the Company and
the Warrant Conversion Agent, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
UNITY BANCORP, INC.
By: ______________________________
Robert J. Van Volkenburgh,
Chairman
Accepted:
FIRST COLONIAL SECURITIES GROUP, INC.
By: ______________________________
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in Registration Statement No. 333-65675 on Form S-3 of our report
dated January 28, 1998, with respect to Unity Bancorp Inc.'s (Unity's) 1997
financial statements which were previously incorporated by reference into
Unity's Form 10-KSB for the year ended December 31, 1997 and to all references
to our Firm in this Registration Statement.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
November 24, 1998
