[RYAN, BECK LOGO]
May 26, 1998
To the Stockholders of Ryan, Beck & Co., Inc.:
We cordially invite you to attend the annual meeting (the "Meeting") of
the stockholders of Ryan, Beck & Co., Inc. ("Ryan, Beck"). The Meeting is to be
held at The Hilton at Short Hills, 41 JFK Parkway, Short Hills, New Jersey 07078
on Monday, June 29, 1998 at 11:00 a.m. At the Meeting you will be asked to vote
for the election of directors and to approve the Ryan, Beck & Co., Inc.
Long-Term Stock Incentive Plan (the "Plan").
At the Meeting we will also seek your approval of an Acquisition
Agreement (the "Acquisition Agreement") which provides for Ryan, Beck to be
merged (the "Merger") with BCP Acquisition Corporation ("BCP"), a wholly-owned
subsidiary of BankAtlantic Bancorp, Inc. ("Bancorp").
Upon completion of the Merger, each share of Ryan, Beck Common Stock
will be converted into 0.761 shares of Bancorp Class A Common Stock (the
"Conversion Ratio"); however, if the average of the closing sale prices per
share of Bancorp Class A Common Stock on the New York Stock Exchange (the
"NYSE") for the period of ten consecutive trading days ending with (and
including) the second trading day prior to the Closing Date (the "Average
Price") is less than $10.88, Ryan, Beck can notify Bancorp in writing of its
intention to terminate the Acquisition Agreement. The Acquisition Agreement
would then terminate unless within five business days following the receipt of
such notice, Bancorp agrees to increase the Conversion Ratio to an amount equal
to the quotient of $8.28 divided by the Average Price. Cash will be paid in lieu
of fractional shares.
Completion of the Merger is subject to certain conditions, including
the receipt of various regulatory approvals and approval of the Acquisition
Agreement by the affirmative vote, in person or by proxy, of a majority of the
votes cast by holders of Ryan, Beck Common Stock.
We urge you to read the attached Proxy Statement-Prospectus carefully.
It describes the Acquisition Agreement, the nominees for election to serve as
directors of Ryan, Beck until the Merger is consummated (or if the Merger is not
consummated, until the year 2001 or 1999 as described herein) and the Plan in
detail. Ryan, Beck granted options under the Plan in December 1997 subject to
shareholder approval of the Plan; however, if the Merger is consummated no
further options are expected to be granted under the Plan. A copy of the
Acquisition Agreement is included as Appendix A and the Plan is included as
Appendix D. We also urge you to read Bancorp's 1997 Annual Report on Form 10-K,
Bancorp's Quarterly Report on Form 10-Q for the quarter ended March 31, and
Bancorp's 1998 Current Reports on Form 8-K, copies of which are available as
indicated in the Proxy Statement-Prospectus under "Available Information" and
"Information Delivered and Incorporated by Reference".
Your Board of Directors has unanimously approved the Acquisition
Agreement and unanimously recommends that you vote "FOR" approval of the
Acquisition Agreement. Your Board of Directors unanimously recommends a vote
"FOR" its nominees for directors and "FOR" approval of the Plan. Your Board of
Directors unanimously recommends a vote "AGAINST" the Shareholder Proposal
described in the Proxy Statement.
It is very important that your shares be represented at the Meeting.
Whether or not you plan to attend, please complete, date and sign the enclosed
proxy card and return it promptly in the postage paid envelope we have provided.
On behalf of your Board of Directors,
BEN A. PLOTKIN
-------------------------------------
Ben A. Plotkin,
President and Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 29, 1998
To the Stockholders of Ryan, Beck & Co., Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Meeting") of Ryan, Beck & Co., Inc. ("Ryan, Beck") will be held on Monday, June
29, 1998, at 11:00 a.m., at The Hilton at Short Hills, 41 JFK Parkway, Short
Hills, New Jersey 07078, for the following purposes:
(1) To consider and vote upon a proposal to approve and adopt an
Acquisition Agreement, dated as of February 9, 1998 (the
"Acquisition Agreement"), by and among BankAtlantic Bancorp,
Inc. ("Bancorp"), Ryan, Beck & Co., Inc. ("Ryan, Beck") and
Bancorp's wholly-owned subsidiary BCP Acquisition Corporation
("BCP") which provides for Ryan, Beck to be merged with and
into BCP (the "Merger"). A copy of the Acquisition Agreement
is included as Appendix A to the accompanying Proxy
Statement-Prospectus. If the proposed Merger is consummated,
each share of Ryan, Beck Common Stock will be converted into
0.761 shares of Bancorp Class A Common Stock (the "Conversion
Ratio"), subject to adjustment as provided in the Acquisition
Agreement and as described in the Proxy Statement-Prospectus,
with cash paid in lieu of fractional shares.
(2) The election of the six persons named in the accompanying
Proxy Statement to serve as directors of Ryan, Beck for the
terms specified in the Proxy Statement until the Merger is
consummated or if the Merger is not consummated, until the
year 2001 or 1999 as described herein.
(3) Approval of the Ryan, Beck & Co., Inc. Long-Term Stock
Incentive Plan (the "Plan") which generally provides a
Committee comprised of two or more outside directors of Ryan,
Beck with authority to issue to officers and key employees of
Ryan, Beck incentive stock options, non-qualified stock
options and stock appreciation rights for up to a maximum of
400,000 shares, and awards of restricted stock for up to a
maximum of 100,000 shares. A maximum of 150,000 shares or
options may be issued to any one officer or employee. The Plan
also provides the Committee with authority to issue to outside
directors options or awards for up to a maximum of 7,500
shares per year.
(4) To vote on a shareholder proposal.
(5) To transact such other business as may properly come before
the Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on May 20, 1998
as the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting. Only stockholders of record at the close of business
on the record date will be entitled to notice of and to vote at the Meeting or
any adjournments or postponements thereof.
All stockholders are urged to attend the Meeting in person. It is
important that proxies be returned promptly. Therefore, whether or not you plan
to be present in person at the Meeting, please date, sign and complete the
enclosed proxy and return it in the enclosed envelope, which requires no postage
if mailed in the United States. If you decide to attend the Meeting, you may
revoke your proxy and vote your shares in person.
Livingston, New Jersey
May 26, 1998
By Order of the Board of Directors
LEONARD J. STANLEY
----------------------------------
Leonard J. Stanley
Corporate Secretary
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE ACQUISITION AGREEMENT, THE
NOMINEES FOR DIRECTORS AND THE PLAN AND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE ACQUISITION AGREEMENT, "FOR" THE NOMINEES FOR DIRECTORS AND "FOR" THE
PLAN. YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THE
SHAREHOLDER PROPOSAL DESCRIBED IN THE PROXY STATEMENT.
THE MATTERS TO BE CONSIDERED AT THE MEETING ARE OF GREAT IMPORTANCE TO THE
STOCKHOLDERS OF RYAN, BECK. ACCORDINGLY, STOCKHOLDERS ARE URGED TO READ AND
CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY STATEMENT-PROSPECTUS,
AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE>
PROXY STATEMENT OF PROSPECTUS OF BANKATLANTIC BANCORP, INC.
RYAN, BECK & CO., INC. for its Class A Common Stock to be
for its Annual Meeting of issued in connection with the merger of
Stockholders to be held on Ryan, Beck & Co., Inc. with and into a
June 29, 1998 and all adjournments wholly owned subsidiary of
or postponements thereof BankAtlantic Bancorp, Inc.
The Board of Directors of Ryan, Beck & Co., Inc. ("Ryan, Beck") has
called its annual meeting of Ryan, Beck stockholders (the "Meeting") to be held
on Monday, June 29, 1998. One purpose of the Meeting is to seek stockholder
approval of an Acquisition Agreement which provides for Ryan, Beck to be merged
with BCP Acquisition Corporation, a New Jersey-based corporation ("BCP"), with
BCP as the surviving corporation (the "Merger"). BCP is the wholly-owned
subsidiary of BankAtlantic Bancorp, Inc. ("Bancorp"). Bancorp is a unitary
savings bank holding company headquartered in Florida with over $3.5 billion in
assets. At the Meeting you will also be asked to vote for the election of six
directors to serve until the Merger is consummated, or if the Merger is not
consummated, until the year 2001 or 1999 (as described herein) and to approve
the Ryan, Beck & Co., Inc. Long-Term Stock Incentive Plan (the "Plan").
Bancorp has filed a Registration Statement with the Securities and
Exchange Commission (the "SEC") covering the shares of Bancorp Class A Common
Stock which will be issued in connection with the Merger. This Proxy
Statement-Prospectus serves two purposes. It is the Proxy Statement being used
by the Ryan, Beck Board of Directors to solicit proxies for the Meeting, and it
is the Prospectus of Bancorp regarding the Bancorp Class A Common Stock to be
issued to holders of Ryan, Beck Common Stock if the Merger is consummated. This
document does not serve as a prospectus to cover any resales of Bancorp Class A
Common Stock to be issued in connection with the Merger. Persons who are
considered "affiliates" of Ryan, Beck under applicable securities laws will be
subject to restrictions on their ability to resell the Bancorp Class A Common
Stock received by them in the Merger.
Upon consummation of the Merger, each share of Ryan, Beck Common Stock
will be converted into Bancorp Class A Common Stock, which is nonvoting and
traded on the New York Stock Exchange (the "NYSE"). The Acquisition Agreement
provides for a "Conversion Ratio" (i.e., the number of shares of Bancorp Class A
Common Stock into which each share of Ryan, Beck Common Stock will be converted)
of 0.761. Cash will be paid in lieu of fractional shares. Ryan, Beck may
terminate the Acquisition Agreement if the Average Price of Bancorp Class A
Common Stock is less than $10.88 (the "Floor"), unless Bancorp agrees to
increase the Conversion Ratio to an amount equal to the quotient of $8.28
divided by the Average Price (a "Price Termination Event"). The term "Average
Price" is defined in the Acquisition Agreement as the average of the closing
sale prices per share of Bancorp Class A Common Stock on the NYSE for the period
of ten consecutive trading days ending with (and including) the second trading
day prior to the Closing Date. The Conversion Ratio is subject to anti-dilution
adjustments specified in the Acquisition Agreement. Each option to acquire Ryan,
Beck Common Stock that is outstanding and unexercised at the effective time of
the Merger will be converted automatically into an option to purchase Bancorp
Class A Common Stock with an appropriate adjustment to reflect the Conversion
Ratio.
Consummation of the Merger is subject to certain conditions, including
receipt of various regulatory approvals and approval of the Acquisition
Agreement by the affirmative vote of the majority of the votes cast by holders
of shares of Ryan, Beck Common Stock.
This document is first being sent to Ryan, Beck stockholders on or
about May 26, 1998. It describes the Acquisition Agreement and includes a copy
of the Acquisition Agreement as Appendix A. Ryan, Beck stockholders are urged to
read this document carefully.
See "RISK FACTORS" beginning on page 25 for a discussion of certain
factors that should be considered by Ryan, Beck stockholders.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SEC OR ANY STATE SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
ALL INFORMATION REGARDING RYAN, BECK, CUMBERLAND ADVISORS AND
CUMBERLAND CONSULTING CONTAINED OR INCORPORATED BY REFERENCE IN THIS DOCUMENT
WAS SUPPLIED BY RYAN, BECK. ALL INFORMATION REGARDING BANCORP CONTAINED OR
INCORPORATED BY REFERENCE IN THIS DOCUMENT WAS SUPPLIED BY BANCORP.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FDIC OR ANY OTHER GOVERNMENTAL AGENCY.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN WHAT IS INCLUDED IN THIS DOCUMENT. IF SUCH INFORMATION
OR REPRESENTATION IS GIVEN OR MADE, IT MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS DOCUMENT AT ANY TIME, NOR ANY DISTRIBUTION OF
SHARES OF BANCORP CLASS A COMMON STOCK, SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
The date of this Proxy Statement-Prospectus is May 26, 1998.
<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION..........................................................1
INFORMATION DELIVERED AND INCORPORATED BY REFERENCE............................1
SUMMARY OF PROXY STATEMENT-PROSPECTUS..........................................3
Overview..............................................................3
The Meeting...........................................................3
Recommendation of the Board of Directors..............................4
The Companies ........................................................4
The Merger............................................................5
SELECTED CONSOLIDATED FINANCIAL DATA OF BANCORP...............................11
SELECTED CONSOLIDATED FINANCIAL DATA OF RYAN, BECK............................17
ACTUAL AND PRO FORMA PER SHARE DATA...........................................20
MARKET PRICE AND DIVIDEND MATTERS.............................................22
Market Price and Dividend History....................................22
Limitations on Dividends Under the Acquisition Agreement.............24
Dividend Limitations on Bancorp......................................24
RISK FACTORS..................................................................25
Abililty to Pay Dividends; Possible Issuance of
Additional Securities..............................................25
Lack of Voting Rights of Bancorp Class A Common Stock;
Voting Control.....................................................25
Loan Portfolio Considerations........................................26
Consumer Loan Portfolio - Indirect Automobile Lending................26
Recent Rapid Growth and Increased Operating Expenses.................26
Broad Acquisition Authority..........................................27
Acquisition Accounting; Impact of the Merger and Other
Acquisitions on Financial Statements...............................27
Real Estate Development Activities...................................28
Potential Impact of Changes in Interest Rates........................28
Regulatory Oversight.................................................29
Competition..........................................................29
INTRODUCTION .................................................................30
CERTAIN INFORMATION REGARDING BANCORP ........................................30
General..............................................................30
CERTAIN INFORMATION REGARDING RYAN, BECK......................................31
General..............................................................31
Recent Developments..................................................31
THE MEETING ..................................................................32
Purpose of the Meeting...............................................32
Record Date; Voting Rights; Proxies..................................32
Solicitation of Proxies..............................................33
Quorum...............................................................33
Required Vote........................................................33
I. THE PROPOSED MERGER AND RELATED MATTERS
THE PROPOSED MERGER...........................................................34
General Description..................................................34
Closing; Determination Date..........................................34
Consideration .......................................................34
Conversion of Ryan, Beck Options.....................................35
Cash in Lieu of Fractional Shares ...................................36
No Dissenters' Rights of Appraisal...................................36
Background of and Ryan, Beck's Reasons for the Merger................36
Ryan, Beck Reasons for the Merger; and Recommendation of
Ryan, Beck's Board of Directors......................................38
Bancorp's Reasons for the Merger.....................................39
Interests of Certain Persons in the Merger ..........................39
Opinion of Ryan, Beck's Financial Advisor............................41
Resale Considerations with Respect to the Bancorp
Class A Common Stock.................................................45
Underwriting Agreements Between Bancorp and Ryan, Beck...............45
Subordinated Capital Note............................................46
Conditions to the Merger.............................................46
Conduct of Business Pending the Merger...............................46
Customary Representations, Warranties and Covenants..................48
Regulatory Approvals.................................................48
Management and Operations After the Merger...........................48
Exchange of Certificates, Issuance of New Options....................48
Option Plans and Restricted Stock Awards.............................49
Effective Time; Amendments; Termination .............................50
Option to Bancorp for Ryan Beck Stock................................51
Termination Fee......................................................51
Accounting Treatment of the Merger...................................52
Federal Income Tax Consequences .....................................52
No Dissenters' Rights................................................53
DESCRIPTION OF BANCORP CAPITAL STOCK..........................................53
Description of Bancorp Class A Common Stock and
Class B Common Stock...............................................53
Description of Bancorp Preferred Stock...............................54
COMPARISON OF THE RIGHTS OF STOCKHOLDERS OF RYAN, BECK AND BANCORP............54
General .............................................................54
Classified Board of Directors........................................55
Rights of Dissenting Stockholders....................................55
Shareholder Voting Requirements; Action by Consent...................55
Distributions and Redemptions........................................56
Board Vacancies......................................................56
Shareholder Inspection of Books and Records..........................56
Removal of Directors.................................................57
Amendments to Charter................................................57
Special Meetings of Shareholders.....................................57
Affiliated Transactions; Shareholder Protection Legislation..........57
Other Constituencies.................................................58
Shareholder Rights Plans.............................................59
Limitations of Liability of Directors and Officers...................59
Indemnification......................................................59
Derivative Actions...................................................60
II. ELECTION OF RYAN, BECK DIRECTORS
ELECTION OF DIRECTORS.........................................................61
The Board of Directors...............................................61
NOMINEES FOR ELECTION AS DIRECTORS............................................61
The Board of Directors; Committees of the Board......................62
Remuneration of Directors............................................62
EXECUTIVE COMPENSATION........................................................65
Summary Compensation Table...........................................65
Option Grants in the Last Fiscal Year................................67
Aggregated Option Exercise in Last Fiscal Year
and Fiscal Year-End Option/Values....................................68
Senior Management Committee..........................................68
Executive Compensation Committee Report..............................68
PERFORMANCE GRAPH.............................................................70
Agreements with Employee-Directors and Other Key Executives..........70
III. APPROVAL OF THE RYAN, BECK & CO., INC. LONG-TERM STOCK INCENTIVE PLAN
APPROVAL OF THE PLAN..........................................................71
Types of Options and Awards..........................................71
Shares Subject to the Plan...........................................71
Termination and Amendment............................................72
Administration.......................................................72
Eligibility..........................................................72
New Plan Benefits....................................................73
Terms and Conditions of Stock Options................................73
Terms and Conditions of Stock Appreciation Rights....................75
Terms and Conditions of Restricted Stock.............................76
Federal Tax Consequences Under the Plan..............................76
IV. RYAN, BECK SHAREHOLDER PROPOSAL
SHAREHOLDER PROPOSAL..........................................................79
Shareholder's Supporting Statement...................................79
Ryan, Beck Response..................................................79
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................80
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS....................80
SHAREHOLDER PROPOSALS.........................................................80
OTHER MATTERS.................................................................80
LEGAL OPINION.................................................................81
EXPERTS.......................................................................81
APPENDIX A Acquisition Agreement by and among Bancorp, Ryan, Beck and BCP..A-1
EXHIBIT A - Voting Agreement...................................EA-1
EXHIBIT B - Form of Affiliate Letter...........................EB-1
EXHIBIT C - Summary of Terms and Codnitions of
Restricted Stock Award...........................EC-1
EXHIBIT D - Ben A. Plotkin Employment Agreement................ED-1
EXHIBIT E - Independence Agreement.............................EE-1
APPENDIX B Stock Option Agreement by and between Bancorp and Ryan, Beck....B-1
APPENDIX C Fairness Opinion of Duff & Phelps, LLC..........................C-1
APPENDIX D Ryan, Beck & Co., Inc. Long-Term Stock Incentive Plan...........D-1
APPENDIX E Ryan, Beck & Co., Inc. Annual Report on Form 10-K
for the year ended December 31, 1997.........................E-1*
APPENDIX F Ryan, Beck & Co., Inc. Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998.........................F-1*
*Previously filed with the SEC.
<PAGE>
AVAILABLE INFORMATION
BankAtlantic Bancorp, Inc. ("Bancorp") is subject to the information
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission" or the
"SEC"). Such reports, proxy statements and other information can be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's Regional
Offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511, and 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such materials can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission (such as Bancorp). The
address of the Commission's web site is http://www.sec.gov. In addition, Bancorp
Class A Common Stock is listed on The New York Stock Exchange (the "NYSE"), and
certain material as to Bancorp can be inspected at the offices of the NYSE at 20
Broad Street, New York, N.Y.
10005.
Ryan, Beck & Co., Inc. ("Ryan, Beck") is also subject to the
information requirements of the Exchange Act, and in accordance therewith files
reports, proxy statements and other information with the Commission. The
reports, proxy statements and other information filed by Ryan, Beck can be
obtained from the SEC in the same manner as Bancorp documents as set forth in
the preceding paragraph. In addition, Ryan Beck Common Stock is listed on The
Nasdaq Stock Market, and certain material as to Ryan, Beck can be inspected at
the offices of the National Association of Securities Dealers, Inc. ("NASD")
17-35 K Street, N.W., Washington, D.C. 20006.
Bancorp has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act (together with all amendments and supplements
thereto, the "Registration Statement"), with respect to the securities being
offered by this document (this "Proxy Statement-Prospectus," sometimes referred
to also as this "Proxy Statement"). As permitted by the rules and regulations of
the Commission, this Proxy Statement-Prospectus omits certain information,
exhibits and undertakings contained in the Registration Statement. For further
information with respect to Bancorp and the securities offered hereby, reference
is made to the Registration Statement, including the exhibits thereto.
Statements contained in this Proxy Statement-Prospectus or in any
document incorporated by reference herein, as to the contents of any document
referred to herein or therein, are not necessarily complete, and in each
instance reference is made to the copy of such document filed as an exhibit to
the Registration Statement or such other document, each such statement being
qualified in all respects by such reference.
INFORMATION DELIVERED AND INCORPORATED BY REFERENCE
The following documents filed by Bancorp with the Commission are
incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1997.
2. Quarterly Report on Form 10-Q for the quarter ended March 31,
1998.
3. Current Reports on Form 8-K filed with the Commission on February
13, 1998 and March 19, 1998.
4. Form 8-A filed by Bancorp to register its Class A Common Stock
pursuant to Section 12(b) of the Exchange Act and Form 8-A filed
by Bancorp to register its Class B Common Stock pursuant to
Section 12(g) of the Exchange Act.
A copy of Bancorp's Annual Report to Stockholders for the year ended
December 31, 1997 ("Bancorp's Annual Report") and Bancorp's Proxy Statement for
its Annual Meeting dated March 13, 1998 ("Bancorp's Proxy Statement") are
available to any holder of Ryan, Beck Common Stock, including any beneficial
owner, free of charge upon written or oral request as set forth hereinafter.
The following documents filed by Ryan, Beck with the
Commission are incorporated herein by reference.
1. Annual Report on Form 10-K for the year ended December 31, 1997.
2. Quarterly Report on Form 10-Q for the quarter ended March 31,
1998.
3. Current Report on Form 8-K filed with the Commission on February
17, 1998.
4. Form 8-A filed by Ryan, Beck to register its Common Stock pursuant
to Section 12(g) of the Exchange Act
A copy of Ryan, Beck's Annual Report on Form 10-K for the year ended
December 31, 1997 and its Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 is being delivered with this Proxy Statement-Prospectus.
All documents filed by Bancorp pursuant to Sections 13(a), 13(c), 14,
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
earlier of (i) the date of the annual meeting of stockholders of Ryan, Beck (the
"Meeting") to which this Proxy Statement-Prospectus relates, or (ii) the
termination of the Acquisition Agreement which is the subject of the Meeting,
are hereby incorporated by reference into this Proxy Statement-Prospectus and
shall be deemed a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement-Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Proxy
Statement-Prospectus.
This Proxy Statement-Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. These documents (not
including exhibits thereto, unless such exhibits are specifically incorporated
by reference into the information incorporated herein) are available free of
charge to any holder of Ryan, Beck Common Stock, including any beneficial owner,
upon written or oral request with respect to Bancorp materials, to the office of
the Bancorp Corporate Secretary, Jean Carvalho, BankAtlantic Bancorp, Inc., 1750
E. Sunrise Boulevard, Fort Lauderdale, Florida 33304; telephone (954) 760-5000;
and with respect to Ryan Beck materials, to the office of the Ryan, Beck
Corporate Secretary, Leonard J. Stanley, Ryan, Beck & Co., Inc., 220 South
Orange Avenue, Livingston, New Jersey 07039; telephone (973) 597-6000. Responses
to any such request will be made within one business day by sending the
requested documents by first class mail or other equally prompt means. In order
to ensure timely delivery of the documents in advance of the Meeting, any
request should be made by June 19, 1998.
CONTAINED WITHIN AND INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT-PROSPECTUS ARE CERTAIN FORWARD LOOKING STATEMENTS WITH RESPECT TO THE
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF BANCORP. FORWARD
LOOKING STATEMENTS CAN BE IDENTIFIED BY USE OF FORWARD-LOOKING TERMINOLOGY, SUCH
AS "EXPECT", "BELIEVE", OR "ANTICIPATE", OR EXPRESSIONS OF CONFIDENCE LIKE
"STRONG" OR "ON-GOING", OR SIMILAR STATEMENTS OR VARIATIONS OF SUCH TERMS. THESE
FORWARD LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES. FACTORS THAT
MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES:
(I) COMPETITIVE PRESSURES IN THE BANKING OR FINANCIAL SERVICES INDUSTRIES; (II)
ISSUES RELATING TO BANCORP'S RAPID GROWTH AND THE INTEGRATION OF NEWLY ACQUIRED
ENTITIES; (III) CHANGES IN INTEREST RATES; (IV) CHANGES IN THE ECONOMY OR
BUSINESS CONDITIONS, EITHER GENERALLY OR IN SOUTH FLORIDA; AND (V) CHANGES IN
THE REGULATORY ENVIRONMENT WHICH ADVERSELY AFFECT THE BUSINESS OF BANCORP.
The Acquisition Agreement originally provided for a Conversion Ratio of
0.609. However, following a 25% stock dividend issued by Bancorp on February 18,
1998 (the "February Stock Dividend"), the Conversion Ratio was adjusted to
0.761. All references in this Proxy Statement-Prospectus to the Conversion Ratio
and the Floor have been adjusted to reflect the February Stock Dividend.
<PAGE>
SUMMARY OF PROXY STATEMENT-PROSPECTUS
The following is a summary of certain information set forth elsewhere
in this Proxy Statement-Prospectus. This summary is necessarily incomplete and
is qualified by the more detailed information contained elsewhere or
incorporated by reference in this Proxy Statement-Prospectus. Holders of Ryan,
Beck common stock and options (together, "Ryan, Beck Securities") should
carefully read the entire Proxy Statement-Prospectus, the accompanying
Appendices and the documents incorporated herein by reference.
Overview
The Board of Directors of Ryan, Beck & Co., Inc. ("Ryan, Beck") has
called its annual meeting of Ryan, Beck stockholders (the "Meeting") to be held
on Monday, June 29, 1998. A primary item on the agenda for the Meeting is to
seek Ryan, Beck shareholder approval of an Acquisition Agreement, dated as of
February 9, 1998 (the "Acquisition Agreement"), by and among BankAtlantic
Bancorp, Inc. ("Bancorp"), BCP Acquisition Corporation ("BCP"), a wholly-owned
subsidiary of Bancorp, and Ryan, Beck. The Acquisition Agreement provides for
Ryan, Beck to be merged with BCP (the "Merger"), with BCP as the surviving
corporation which will thereafter change its name to "Ryan, Beck & Co., Inc."
Bancorp is a unitary savings bank holding company headquartered in Florida. A
copy of the Acquisition Agreement is attached as Appendix A to this Proxy
Statement-Prospectus.
Upon consummation of the Merger, each share of common stock, par value
$0.10 per share, of Ryan, Beck ("Ryan, Beck Common Stock") will be converted
into a number of shares (the "Conversion Ratio") of Class A common stock of
Bancorp, $0.01 par value ("Bancorp Class A Common Stock"). The Conversion Ratio
is currently established at 0.761; however, if the average of the closing sale
prices per share of Bancorp Class A Common Stock on the New York Stock Exchange
(the "NYSE") for the period of ten consecutive trading days ending with (and
including) the second trading day prior to the Closing Date (the "Average
Price") is less than $10.88 (the "Floor"), Ryan, Beck can notify Bancorp in
writing of its intention to terminate the Acquisition Agreement. The Acquisition
Agreement would then terminate unless within five business days following the
receipt of such notice, Bancorp agrees to increase the Conversion Ratio to an
amount equal to the quotient of $8.28 divided by the Average Price. Cash will be
paid in lieu of fractional shares. As provided in the Acquisition Agreement, the
Conversion Ratio and the Floor have been adjusted to reflect Bancorp's 25% stock
dividend issued in shares of Bancorp Class A Common Stock on February 18, 1998
(the "February Stock Dividend"). The Conversion Ratio and the Floor are subject
to further anti-dilution adjustments specified in the Acquisition Agreement.
In addition, the Proxy Statement solicits, on behalf of the Ryan, Beck
Board of Directors, proxies from the holders of Ryan, Beck Common Stock in favor
of the election of six persons to serve as directors of Ryan, Beck until the
Merger is consummated (or if the Merger is not consummated, until the year 2001
or 1999 as described herein) and in favor of approval and adoption of the Ryan,
Beck & Co., Inc. Long-Term Stock Incentive Plan (the "Plan"). A copy of the Plan
is attached as Appendix D to this Proxy Statement-Prospectus.
This document serves two purposes. It is the Proxy Statement being used
by the Ryan, Beck Board of Directors to solicit proxies for the Meeting, and it
is the Prospectus of Bancorp regarding the Bancorp Class A Common Stock to be
issued if the Merger is consummated. Therefore, this document is sometimes
referred to as either the "Proxy Statement-Prospectus" or the "Proxy Statement".
The Meeting
The Meeting will be held on Monday, June 29, 1998 at 11:00 a.m., at The
Hilton at Short Hills, 41 JFK Parkway, Short Hills, New Jersey 07078. At the
Meeting, holders of Ryan, Beck Common Stock will be asked to approve and adopt
the Acquisition Agreement, elect the six nominees to serve as directors of Ryan,
Beck, approve and adopt the Plan and vote on any other matters which are
properly presented at the Meeting.
Record holders of Ryan, Beck Common Stock at the close of business on
May 20, 1998 (the "Record Date") are entitled to notice of and to vote at the
Meeting. Holders of a majority of the outstanding shares of Ryan, Beck Common
Stock must be present or represented by proxy at the Meeting for a quorum. The
affirmative vote, in person or by proxy, of the majority of the votes cast by
holders of shares of Ryan, Beck Common Stock is required in order to approve the
Acquisition Agreement, the Plan and the shareholder proposal described on page
79 (the "Shareholder Proposal"). Nominees for Director who receive a plurality
of the votes cast of Ryan, Beck Common Stock will be elected directors of Ryan,
Beck. As of the Record Date, there were 3,764,787 outstanding shares of Ryan,
Beck Common Stock held by approximately 403 holders of record. The directors and
executive officers of Ryan, Beck as a group have voting control over 280,058 of
these shares (7.27%) and have agreed to or intend to vote them in favor of the
Acquisition Agreement, the election of the six nominees for directors and the
Plan. In addition, Bancorp has voting control over 100 of these shares all of
which shares Ryan, Beck expects will be voted in favor of the Acquisition
Agreement, the election of the six nominees for directors and the Plan.
Recommendation of the Board of Directors
The Ryan, Beck Board of Directors has unanimously approved the
Acquisition Agreement and unanimously recommends that holders of Ryan, Beck
Common Stock vote "FOR" the Acquisition Agreement. The Ryan, Beck Board of
Directors also unanimously recommends a vote "FOR" its nominees for directors
and "FOR" approval of the Plan. The Ryan, Beck Board of Directors also
unanimously recommends a vote "AGAINST" the Shareholder Proposal.
The Companies
Bancorp
Bancorp is a unitary savings bank holding company organized in April
1994 under the laws of the State of Florida for the purpose of becoming the
holding company for BankAtlantic, A Federal Savings Bank ("BankAtlantic"). At
March 31, 1998, Bancorp had consolidated total assets of approximately $3.5
billion and total stockholders' equity of approximately $217.0 million. Bancorp
owns all of the outstanding capital stock of BankAtlantic. BFC Financial
Corporation ("BFC"), which is controlled by the Chairman and Vice Chairman of
Bancorp, owned at May 1, 1998, 4,876,124 shares or approximately 47.3% of
Bancorp's issued and outstanding Class B Common Stock and 6,578,671 shares or
approximately 28.9% of Bancorp's issued and outstanding Class A Common Stock.
BankAtlantic, headquartered in Fort Lauderdale, Florida, is a
federally-chartered, federally-insured savings bank organized in 1952, which
provides traditional retail banking services and a wide range of commercial
banking products and related financial services. The principal business of
BankAtlantic is attracting checking and savings deposits from the public and
general business customers and using these deposits to originate commercial real
estate and business loans, residential and consumer loans, to purchase wholesale
residential loans from third parties and to make other permitted investments
including investments in mortgage-backed securities, tax certificates and other
investment securities.
BankAtlantic's deposit accounts are insured by the Federal Deposit
Insurance Corporation (the "FDIC") primarily through the Savings Association
Insurance Fund (the "SAIF"), with a small portion insured through the Bank
Insurance Fund (the "BIF"), both of which are administered by the FDIC.
BankAtlantic is regulated and examined by the Office of Thrift Supervision (the
"OTS") and the FDIC. Such regulation is intended for the protection of
depositors.
Bancorp's principal executive office is located at 1750 E. Sunrise
Boulevard, Fort Lauderdale, Florida 33304. Bancorp's telephone number is (954)
760-5000.
Ryan, Beck
Ryan, Beck is an investment firm that is principally engaged in the
underwriting, distribution and trading of tax-exempt, bank and thrift equity and
debt securities. Ryan, Beck provides investment banking, research and financial
advisory services primarily to financial services companies with a focus on
corporate finance and merger-related services. Ryan, Beck offers a general
securities brokerage business with investment products for retail and
institutional clients, as well as life insurance and annuity products. Ryan,
Beck's retail and institutional brokerage clients consist primarily of high net
worth individuals (primarily residents of New Jersey, other Mid-Atlantic and
Northeastern states and Florida), banking and thrift institutions (primarily
located in New Jersey, Pennsylvania and Florida) and, to a much lesser extent,
insurance companies and specialty finance companies. Ryan, Beck intends to
continue to serve its market niche in the financial services industry.
Ryan, Beck was organized in New Jersey in 1965, under the name of John
J. Ryan & Co., Incorporated, as a successor to various entities dating from
1946. Ryan, Beck changed its name to Ryan, Beck & Co., Inc. in 1981.
The principal executive office of Ryan, Beck is located at 220 South
Orange Avenue, Livingston, New Jersey 07039-5817 and its telephone number is
(973) 597-6000. Ryan, Beck is registered as a broker-dealer with the Securities
and Exchange Commission (the "SEC") and is a member of the National Association
of Securities Dealers, Inc. (the "NASD") and the Securities Investor Protection
Corporation (the "SIPC"). Accounts are insured up to $75,000,000 per customer.
The account protection applies when SIPC member firms fail financially and are
unable to meet obligations to customers, but does not protect against loss from
the rise and fall in market value of an investment. The first $500,000 (no more
than $100,000 of which may be cash awaiting reinvestment) is provided by SIPC,
and the balance is provided by a private insurer. Ryan, Beck is not a member of
any securities exchange.
The Merger
Description of the Merger; Effective Time
In the Merger, Ryan, Beck will be merged with and into BCP Acquisition
Corporation ("BCP"), a New Jersey corporation and wholly owned subsidiary of
Bancorp, with BCP as the surviving entity which will thereafter change its name
to "Ryan, Beck & Co., Inc." A closing under the Acquisition Agreement (the
"Closing") will occur on a date (the "Closing Date") to be determined by Bancorp
and set forth in a notice (the "Closing Notice") to Ryan, Beck. The Closing Date
specified by Bancorp in the Closing Notice will be as soon as practicable
following the receipt of all necessary approvals and consents of all regulatory
agencies and the expiration of all statutory waiting periods in respect thereof
and the satisfaction or waiver of all of the conditions to consummation of the
Merger (other than the delivery of documents to be delivered at the Closing).
The Closing may also be set for another day mutually agreed to by Bancorp and
Ryan, Beck. The parties currently anticipate closing in the second quarter of
1998. Simultaneous with or immediately following the Closing, Bancorp will file
a certificate of merger with the Secretary of State of New Jersey (the
"Certificate of Merger"). The Merger will become effective at the "Effective
Time", which will be a date and time agreed to by the parties and specified in
the Certificate of Merger. Bancorp and Ryan, Beck anticipate the Effective Time
will be the close of business on the Closing Date. If the parties fail to
specify the date and time in the Certificate of Merger, the Effective Time will
be the date and time the Certificate of Merger is filed. The exact Closing Date
and Effective Time are dependent upon satisfaction of all conditions precedent,
some of which are not under the control of Bancorp or Ryan, Beck.
Consideration
Upon consummation of the Merger, each share of Ryan, Beck Common Stock
will be converted into 0.761 shares of Bancorp Class A Common Stock (the
"Conversion Ratio"). Cash will be paid in lieu of fractional shares. The
Conversion Ratio is subject to anti-dilution adjustments specified in the
Acquisition Agreement. In addition, if the closing sale prices per share of
Bancorp Class A Common Stock on the NYSE for the period of ten consecutive
trading days ending with (and including) the second trading day prior to the
Closing Date the (the "Average Price") is less than $10.88 (the "Floor"), the
Board of Directors of Ryan, Beck will have certain rights to terminate the
Acquisition Agreement unless Bancorp agrees to increase the Conversion Ratio to
an amount equal to the quotient of $8.28 divided by the Average Price.
As provided in the Acquisition Agreement, the Conversion Ratio and the
Floor have been adjusted to reflect the February Stock Dividend, and information
set forth in this Proxy Statement-Prospectus reflects such adjustments. The
Conversion Ratio and the Floor are subject to further anti-dilution adjustments
as specified in the Acquisition Agreement.
Ryan, Beck stockholders are not assured of receiving any specific
market value of Bancorp Class A Common Stock. The price of Bancorp Class A
Common Stock at the Effective Time may be higher or lower than the market price
at the time of entering into the Acquisition Agreement, the time of mailing this
Proxy Statement-Prospectus or at the time of the Meeting. Ryan, Beck
stockholders are urged to obtain current market quotations for the Bancorp Class
A Common Stock and the Ryan, Beck Common Stock.
Cash in Lieu of Fractional Shares
No fractional shares of Bancorp Class A Common Stock will be issued in
exchange for Ryan, Beck Common Stock. Instead, holders of Ryan, Beck Common
Stock will receive cash equal to their fractional share interest multiplied by
the Average Price of Bancorp Class A Common Stock, without interest. All shares
of Bancorp Class A Common Stock to be issued to each holder of Ryan, Beck Common
Stock will be aggregated to constitute as many whole shares as possible before
determining the person's fractional share interest.
Conversion of Ryan, Beck Options
Pursuant to the Acquisition Agreement and at the Effective Time, each
outstanding option to purchase a share of Ryan, Beck Common Stock ("Ryan, Beck
Option") granted under Ryan, Beck's existing stock option plans and agreements
with its directors and employees will be assumed by Bancorp and automatically
converted upon similar terms into an option to purchase a number of shares of
Bancorp Class A Common Stock equal to the number of shares of Ryan, Beck Common
Stock that could have been purchased under the Ryan, Beck Option multiplied by
the Conversion Ratio, at a price per share equal to the option exercise price
under the Ryan, Beck Option divided by the Conversion Ratio.
No Dissenters' Rights of Appraisal
Under the New Jersey Business Corporation Act (the "NJBCA"), holders of
Ryan, Beck Common Stock are not entitled to dissenters' rights of appraisal in
connection with the Merger.
Federal Income Tax Consequences
The Merger is conditioned upon, among other things, the receipt by
Bancorp of an opinion of counsel to Bancorp dated the Closing Date to the effect
that the Merger will qualify as a tax-free reorganization as defined in Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"). The Merger is
also conditioned upon the receipt by Ryan, Beck of an opinion of counsel to
Ryan, Beck dated the Closing Date to the effect that the Merger will qualify as
a tax-free reorganization as defined in Section 368 of the Code, and no gain or
loss will be recognized by Ryan, Beck shareholders who receive Bancorp Class A
Common Stock, except with respect to cash received in lieu of fractional share
interests. Counsel to each of Bancorp and Ryan, Beck have delivered opinions
regarding such tax matters dated as of the date of this Proxy
Statement-Prospectus.
Accounting Treatment of the Merger
The Merger will be accounted for by Bancorp under the purchase method
of accounting in accordance with generally accepted accounting principles. Under
the purchase method of accounting, the excess of the purchase price paid over
the fair market value of tangible and identifiable intangible assets and
liabilities acquired ("Goodwill") is recorded as an intangible asset and such
asset is amortized as an expense over the period estimated to be benefited.
Required Regulatory Approvals
Consummation of the Merger is subject to change in control approval by
the NASD. Consummation of the Merger is further subject to prior receipt of a
Notification and Expiration of Waiting Period ("Notification") from both the
Federal Trade Commission ("FTC") and the Department of Justice ("DOJ") under the
Hart-Scott-Rodino Anti-Trust Improvement Act ("HSR"). Consummation of the Merger
is also subject to a notice filing with the OTS. An appropriate notice regarding
the Merger was filed with the OTS on March 4, 1998. The NASD approval was
obtained on May 11, 1998. The Notification was obtained from each of the FTC and
the DOJ on March 28, 1998.
Conditions to the Merger
There are a number of conditions to consummation of the Merger,
including a notice filing with the OTS, no objections from the FTC and DOJ, and
approval from the NASD; approval of the Acquisition Agreement by the Ryan, Beck
stockholders; an opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson,
P.A., counsel to Bancorp, and an opinion of Pitney, Hardin, Kipp & Szuch,
counsel to Ryan, Beck, that the Merger will result in a tax-free reorganization;
the listing, subject to official notice of issuance, on the NYSE of the Bancorp
Class A Common Stock to be issued in the Merger; Ryan, Beck entering into an
employment agreement with Ben A. Plotkin, President of Ryan, Beck in
substantially the form included as Exhibit D to the Acquisition Agreement; Ben
Plotkin being appointed as a member of the Board of Directors of Bancorp;
Bancorp entering into the Independence Agreement in substantially the form
included as Exhibit E to the Acquisition Agreement; and certain other customary
closing conditions.
Fairness Opinion
The Ryan, Beck Board of Directors has retained Duff & Phelps, LLC
("Duff & Phelps") to evaluate the terms of the Merger. Duff & Phelps delivered a
written opinion to the Ryan, Beck Board of Directors dated February 9, 1998 to
the effect that as of the date of such opinion, the consideration to be paid by
Bancorp to the Ryan, Beck stockholders for shares of Ryan, Beck Common Stock was
fair, from a financial point of view, and an updated written opinion dated May
26, 1998 to the effect that as of the date of such opinion, the consideration to
be paid by Bancorp to the Ryan, Beck stockholders for shares of Ryan, Beck
Common Stock is fair, from a financial point of view. Holders of Ryan, Beck
Common Stock are urged to, and should, read such opinion in its entirety. For
information concerning the matters reviewed, assumptions made and factors
considered by Duff & Phelps, see "THE PROPOSED MERGER -- Opinion of Financial
Advisor" and Appendix C to this Proxy Statement-Prospectus, which sets forth
Duff & Phelps' fairness opinion.
Termination Rights
The Acquisition Agreement may be terminated by either Ryan, Beck or
Bancorp if, among other reasons, the Effective Time has not occurred by August
31, 1998 other than due to failure of the terminating party to perform its
obligations under the Acquisition Agreement. The Acquisition Agreement may be
terminated by Bancorp if any person or entity acquires beneficial ownership or
the right to acquire beneficial ownership of more than 40% of the voting power
of Ryan, Beck or if a tender or exchange offer for more than 15% of Ryan, Beck's
capital stock is commenced and the Ryan, Beck Board fails to recommend against
such offer or takes no position. The Acquisition Agreement may be terminated by
Bancorp or Ryan, Beck if Ryan, Beck's Board of Directors approves another
competing transaction after determining, upon advice of counsel, that such other
transaction is more favorable to Ryan Beck's stockholders from a financial point
of view than the Merger. In addition, Ryan, Beck may terminate the Acquisition
Agreement if the Average Price of Bancorp Class A Common Stock is less than the
$10.88 Floor (a "Price Termination Event") unless Bancorp agrees to increase the
Conversion Ratio to an amount equal to the quotient of $8.28 divided by the
Average Price.
Stock Option to Bancorp for Ryan, Beck Shares; Termination Fee
As a material inducement to Bancorp to enter into the Acquisition
Agreement, Bancorp and Ryan, Beck entered into a Stock Option Agreement dated
February 9, 1998 (the "Stock Option Agreement"). Pursuant to the Stock Option
Agreement, Ryan, Beck has granted to Bancorp an option (the "Option"),
exercisable only under certain limited and specifically defined circumstances,
to purchase up to 714,000 newly issued shares of Ryan, Beck Common Stock,
representing approximately 19.9% of the outstanding shares of Ryan, Beck Common
Stock at the time the Option was granted, for a purchase price equal to $8.00
per share, the approximate trading price of the Ryan, Beck Common Stock on the
last trading day prior to public announcement of the proposed Merger. Bancorp
does not have any voting rights with respect to the shares of Ryan, Beck Common
Stock subject to the Option prior to exercise of the Option.
The Stock Option Agreement is attached to this Proxy
Statement-Prospectus as Appendix B hereto. In the event that certain
specifically enumerated "Exercise Events" occur and the Merger is not
consummated, Bancorp would recognize a gain on the sale of the shares of Ryan,
Beck Common Stock received pursuant to the exercise of the Option if such shares
of Ryan, Beck Common Stock were sold at prices exceeding $8.00 per share. The
Option also may be exercised for a cash spread payment in certain circumstances.
In addition, in the event that the Acquisition Agreement is terminated
due to the occurrence of certain specifically enumerated "Termination Fee
Events" (as hereafter defined) and within eighteen months thereafter Ryan, Beck
consummates or enters into a definitive agreement with another person or entity
for a Competing Transaction (as defined in the Acquisition Agreement) (other
than a tender offer or exchange offer for, or the acquisition by any person or
group of, less than 50% of Ryan, Beck's outstanding capital stock) then Ryan,
Beck in certain circumstances must pay Bancorp $2,000,000 (the "Termination
Fee"). The Termination Fee will be reduced or offset by any gain on the exercise
of the Option. The ability of Bancorp to exercise the Option and to cause up to
an additional 714,000 shares of Ryan, Beck Common Stock to be issued and the
requirement, in certain circumstances, that Ryan, Beck pay a Termination Fee may
be considered deterrents to other potential acquisitions of control of Ryan,
Beck, as the Option and the Termination Fee are likely to increase the cost of
an acquisition of all of the shares of Ryan, Beck Common Stock which would then
be outstanding.
Voting Agreements
Concurrently with the execution of the Acquisition Agreement and as a
material inducement to Bancorp's willingness to enter into the Acquisition
Agreement, each member of Ryan, Beck's Board of Directors executed separate
voting agreements with Bancorp (the "Voting Agreements"). The Voting Agreements
provide, among other things, that such individuals will vote all shares of Ryan,
Beck Common Stock beneficially owned by them (in the aggregate, approximately
8.4% of the outstanding shares of Ryan, Beck) in favor of the Acquisition
Agreement.
Interests of Certain Persons in the Merger
Directors and officers of Ryan, Beck may have interests in the Merger
which are different from and in addition to those which they have as
shareholders of Ryan, Beck. Below is a description of certain of these
interests.
Retention Pool: At the Effective Time, Bancorp has agreed to establish
a retention pool (the "Retention Pool") consisting of restricted shares of
Bancorp Class A Common Stock to be used to retain key employees of Ryan, Beck.
The value of the shares which will be dedicated to the Retention Pool will be
equal to 20% of the aggregate of the value of the shares of Bancorp Class A
Common Stock issued pursuant to the terms of the Merger and the value of the
shares of Bancorp Class A Common Stock dedicated to the Retention Pool
(excluding options issued in the Merger in exchange for Ryan, Beck Options and
excluding Bancorp Class A Common Stock issued in the Merger in exchange for
shares issued after February 9, 1998). The term "value" is defined in the
Acquisition Agreement to mean the number of shares of Bancorp Class A Common
Stock equal to the Average Price multiplied by the number of shares. Upon
entering into the Acquisition Agreement, management of Ryan, Beck, with the
approval of the Board of Directors of Ryan, Beck and, with the consent of
Bancorp, selected certain key employees of Ryan, Beck to participate in the
Retention Pool and allocated dollar amounts of the Retention Pool to such
employees, based upon the estimated dollar value at that time. The five
executive officers of Ryan, Beck who serve on the Senior Management Committee
(four of whom serve on the Board of Directors) were allocated approximately
$2,275,000 of the approximately $8.7 million in estimated value in the Retention
Pool, or approximately 26% of the amount. The allocations for all employees who
are participating in the Retention Pool are subject to adjustment at the Closing
and amounts will be finalized at or shortly before the Closing. The award is
subject to and conditioned upon the terms of an Award Agreement. The shares in
the Retention Pool will vest on the fourth anniversary of the Effective Date.
The shares will vest earlier if the participant's employment by Ryan, Beck (or
its successor) is terminated for any reason other than cause (as defined) or if
the participant's employment is terminated due to death, disability or
retirement.
Employment Agreements: In connection with the Merger, at the Effective
Time, Ben A. Plotkin, Ryan, Beck's President and Chief Executive Officer, will
enter into a new employment agreement with Ryan, Beck (the "Plotkin Agreement").
The Plotkin Agreement provides for the termination of Mr. Plotkin's previous
employment agreement in return for a payment by Ryan, Beck to Mr. Plotkin of
$780,000. The terms of the Plotkin Agreement provide that after the consummation
of the Merger, Mr. Plotkin will be employed as Chairman, President and Chief
Executive Officer of Ryan, Beck, thereby retaining the responsibility for the
day-to-day management and operations of Ryan, Beck. Under the agreement, Mr.
Plotkin is entitled to an annual base salary of $260,000, a discretionary annual
bonus and all other employee benefits available to Ryan, Beck employees. In the
first year after completion of the Merger, Mr. Plotkin is guaranteed an annual
bonus (including amounts credited to the Supplemental Bonus Plan) in an amount
no less than Mr. Plotkin's 1997 bonus of $1,025,000. Mr. Plotkin would also
receive severance pay and benefits if he is terminated without cause or resigns
for Good Reason (as defined in the Plotkin Agreement). The severance pay is
equal to the annual base salary plus, if discretionary bonuses are paid to other
employees of Ryan, Beck for the relevant year, then a bonus amount equal to the
average bonus amount paid to Mr. Plotkin in the last 2 years multiplied by a
fraction, the numerator of which is the number of days Mr. Plotkin was actively
employed during the year and denominator of which is 365. In connection with the
Merger, the employment agreement of Mr. Matthew Naula will also be terminated
and Mr. Naula will be entitled to receive $150,000 thereunder.
Stock Options. As of December 11, 1997, forty-one eligible employees
and directors of Ryan, Beck were granted options to acquire an aggregate of
203,000 shares of Ryan, Beck Common Stock at an exercise price of $6.875 per
share pursuant to the Plan which is subject to shareholder approval at this
Meeting. In addition, eligible employees and directors of Ryan, Beck had
previously been granted options to acquire an aggregate of 222,952 shares of
Ryan, Beck Common Stock at a weighted average exercise price of $5.413 per share
under Ryan, Beck's existing plans. All of these options remain outstanding on
the date of this Proxy Statement-Prospectus. Based on the 0.761 Conversion Ratio
and the reported closing price per share of Bancorp Class A Common Stock on the
dates specified below, the 203,000 options granted under the Plan had an
aggregate value of $581,320 and the 222,952 options granted under existing Ryan,
Beck plans had an aggregate value of $964,222 on February 9, 1998, the last full
trading day before public announcement of the signing of the Acquisition
Agreement, and an aggregate value of $699,576 and $1,094,265, respectively, on
May 22, 1998, the most recent trading day prior to the date of this Proxy
Statement-Prospectus.
Independence Agreement: In connection with the execution of the
Acquisition Agreement, Bancorp, Ryan, Beck and BCP negotiated an Independence
Agreement to be entered into as of the Closing wherein the terms of the
relationship between Bancorp and the Surviving Entity after consummation of the
Merger are clearly enumerated. In the Independence Agreement Bancorp, Ryan, Beck
and BCP agree that the Surviving Entity will remain as an independent autonomous
subsidiary of Bancorp with operations separate and apart from the operations of
Bancorp.
Indemnification: The Acquisition Agreement requires Bancorp and the
Surviving Entity in the Merger to indemnify, for a period of six years after the
Effective Time, present and former directors and executive officers of Ryan,
Beck and its subsidiaries to the fullest extent to which such persons would have
been entitled to indemnification under applicable law and Ryan, Beck's
Certificate of Incorporation and By-laws had the Merger not occurred, with
respect to any claims made against such person because he or she is or was
serving in such capacity in connection with actions or omissions occurring at or
prior to the Effective Date and actions or omissions occurring after the
Effective Date in connection with the transactions contemplated by the
Acquisition Agreement. The Acquisition Agreement also requires Bancorp to use
reasonable best efforts to maintain Ryan, Beck's existing directors' and
officers' liability insurance for a period of three years after the Effective
Time.
Board Membership: It is a condition to Ryan, Beck's obligations under
the Acquisition Agreement that Ben A. Plotkin, Ryan, Beck's President and Chief
Executive Officer, is appointed by Bancorp to Bancorp's Board of Directors at or
prior to the Effective Time.
Ownership of Bancorp Class A Common Stock and Bancorp Convertible
Bonds. As of the Record Date, the directors and executive officers of Ryan, Beck
beneficially owned an aggregate of 20,881 shares of Bancorp Class A Common Stock
and $180,000 of Bancorp 6.75% Convertible Subordinated Debentures.
Differences in Stockholders' Rights
Ryan, Beck is a business corporation incorporated under the NJBCA and
Bancorp is a unitary savings bank holding corporation incorporated under the
Florida Business Corporation Act (the "Florida Act"). The rights of Ryan, Beck
stockholders are currently governed by the NJBCA and Ryan, Beck's Certificate of
Incorporation and By-laws. At the Effective Time, each Ryan, Beck stockholder
will become a shareholder of Bancorp. The rights of Bancorp stockholders are
governed by the Florida Act and Bancorp's Articles of Incorporation and By-laws.
The NJBCA and the Florida Act, and the rights of stockholders thereunder, differ
with respect to voting requirements and various other matters.
Risk Factors
Ryan, Beck shareholders should consider carefully the factors discussed
under "RISK FACTORS", beginning at page 25, and elsewhere in this Proxy
Statement-Prospectus in evaluating the proposed Merger and the shares of Bancorp
Class A Common Stock offered hereby.
Costs
Each party to the Acquisition Agreement will bear all fees and expenses
incurred by it in connection with the Acquisition Agreement and the transactions
contemplated thereby, except that printing and mailing expenses for the Proxy
Statement-Prospectus will be shared equally by Ryan, Beck and Bancorp. In the
event of a termination of the Acquisition Agreement under certain circumstances,
Ryan, Beck must pay Bancorp the Termination Fee and in certain circumstances
must reimburse Bancorp for up to $500,000 of Bancorp's expenses. Any expense
reimbursement would be credited against the Termination Fee. Under very limited
circumstances, Bancorp must reimburse Ryan, Beck for up to $500,000 of Ryan,
Beck's expenses.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF BANCORP
The Selected Consolidated Financial Data presented below has been
derived from the audited Consolidated Financial Statements of Bancorp and is
qualified in its entirety by reference to the more detailed Consolidated
Financial Statements and Independent Auditors Reports incorporated by reference
herein. Where appropriate, amounts and percentages have been adjusted for the
January 1998, and July 1997 five-for-four common stock splits effected in the
form of 25% stock dividends, issued in February 1998 and August 1997,
respectively.
<TABLE>
<CAPTION>
At March 31, At December 31,
------------- ------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------------- -------------- ------------- ------------- -------------- ------------
(Unaudited) (In thousands)
<S> <C> <C> <C> <C> <C> <C>
Statement of Financial Condition:
Total assets............................ $ 3,526,508 $ 3,064,480 $ 2,605,527 $ 1,750,689 $ 1,539,653 $ 1,359,195
Loans receivable-net (1)................ 2,636,413 2,072,825 1,824,856 828,630 546,396 485,956
Mortgage-backed securities
held to maturity...................... 0 0 0 0 573,913 443,249
Securities available for sale........... 458,123 607,490 439,345 691,803 53,969 83,116
Investment and trading
securities, net (2)................... 56,303 60,280 54,511 49,856 211,776 97,701
Mortgage servicing rights............... 45,159 38,789 25,002 20,738 20,584 19,833
Cost over fair value of net
assets acquired and other
intangibles........................... 35,133 26,327 29,008 11,521 0 0
Deposits................................ 1,830,083 1,763,733 1,832,780 1,300,377 1,085,782 1,076,360
Subordinated debentures
and notes payable..................... 179,596 179,600 78,500 21,001 0 0
Guaranteed preferred beneficial
interest in Company's
Junior Subordinated Debentures........ 74,750 74,750 0 0 0 0
Advances from FHLB, federal
funds purchased and securities
sold under agreements to repurchase... 1,089,098 758,923 486,288 269,222 311,879 149,435
Total stockholders' equity.............. 217,043 207,171 147,704 120,561 105,520 90,652
</TABLE>
<PAGE>
(1) Includes $94.1 million, $160.1 million and $109.9 million of banker's
acceptances in 1998, 1997 and 1993, respectively.
(2) Excludes FHLB stock. Includes interest-bearing deposits in other banks,
securities purchased under agreement to resell and trading securities of
$7.8 million, $5.1 million and $9.1 million in 1998, 1997 and 1994,
respectively.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF BANCORP (continued)
<TABLE>
<CAPTION>
At or For the Years Ended December 31,
-----------------------------------------------------------------------------
1997 1996 1995 1994 1993
--------------- ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
(In thousands except per share data)
Operating results
Total interest income............................... $ 210,554 $ 152,631 $ 130,077 $ 98,549 $ 94,503
Total interest expense.............................. 115,191 77,031 65,686 41,431 35,987
--------------- -------------- -------------- --------------- -----------
Net interest income................................. 95,363 75,600 64,391 57,118 58,516
Provision for loan losses........................... 11,268 5,844 4,182 2,299 3,450
--------------- -------------- -------------- --------------- -----------
Net interest income after provision for loan losses. 84,095 69,756 60,209 54,819 55,066
--------------- -------------- -------------- --------------- -----------
Non-interest income:
Loan servicing and other loan fees.................. 4,640 4,216 3,524 3,365 2,229
Gains on sales of loans available for sale.......... 6,802 534 395 773 1,246
Gains on sales of mortgage servicing rights......... 7,905 4,182 2,744 484 0
Gains on sales of securities available for sale..... 2,367 5,959 0 0 0
Unrealized and realized gains (losses) on
trading securities................................ 2,463 0 589 (558) 0
Gain (loss) on sales of property and equipment, net. 852 3,061 18 272 (73)
Other............................................... 18,330 15,785 12,118 9,427 8,236
--------------- -------------- -------------- --------------- ------------
Total non-interest income........................... 43,359 33,737 19,388 13,763 11,638
--------------- -------------- -------------- --------------- ------------
Non-interest expense:
Employee compensation and benefits.................. 40,236 33,216 25,403 22,382 19,617
Occupancy and equipment............................. 18,666 13,615 10,831 8,061 8,417
SAIF special assessment............................. 0 7,160 0 0 0
Federal insurance premium........................... 1,084 2,495 2,750 2,673 2,750
Advertising and promotion........................... 2,196 2,079 2,144 1,495 960
Foreclosed asset activity, net...................... 118 (725) (3,178) (2,290) 1,243
Other............................................... 19,632 14,401 13,210 9,764 10,546
--------------- -------------- -------------- --------------- ------------
Total non-interest expense.......................... 81,932 72,241 51,160 42,085 43,533
--------------- -------------- -------------- --------------- ------------
Income before income taxes.......................... 45,522 31,252 28,437 26,497 23,171
Provision for income taxes.......................... 17,753 12,241 10,018 9,662 7,093
--------------- -------------- -------------- --------------- ------------
Net income....................................... 27,769 19,011 18,419 16,835 16,078
Dividend on non-cumulative preferred stock paid by
BFC escrow........................................ 0 0 0 0 147
Dividends on non-cumulative preferred stock......... 0 0 677 880 733
Amount classified as dividends on non-cumulative
preferred stock redemption........................ 0 0 1,353 (1) 0 0
--------------- -------------- -------------- --------------- ------------
Total dividends on non-cumulative preferred stock... 0 0 2,030 880 880
=============== ============== ============== =============== ============
Net income available for common shares $ 27,769 $ 19,011 $ 16,389 $ 15,955 $ 15,198
=============== ============== ============== =============== ============
Class A Common Stock: (7)
Basic earnings per share............................ $ 0.98 $ 0.64 $ N/A $ N/A $ N/A
Diluted earnings per share.......................... $ 0.78 $ 0.58 $ N/A $ N/A $ N/A
Basic weighted average of common shares
outstanding....................................... 18,029,784 17,616,000 N/A N/A N/A
Diluted weighted average of common shares
outstanding....................................... 27,893,534 21,968,058 N/A N/A N/A
Actual common shares outstanding at period end...... 21,509,159 18,128,782 N/A N/A N/A
Class B Common Stock:
Basic earnings per share............................ $ 0.94 $ 0.72 $ 0.64 (1) $ 0.64 $ 0.85
Diluted earnings per share.......................... $ 0.77 $ 0.66 $ 0.62 (1) $ 0.62 $ 0.66
Basic weighted average of common shares
outstanding....................................... 10,649,135 10,589,000 25,411,604 24,747,116 17,861,118
Diluted weighted average of common shares
outstanding....................................... 11,765,385 11,576,500 26,441,902 25,610,718 23,095,707
Actual common shares outstanding at period end...... 10,690,231 10,542,116 25,861,814 24,798,811 24,713,916
Book value per common share (all classes)........... $ 6.43 $ 5.15 $ 4.66 $ 3.92 $ 3.33
Tangible book value per common share (all classes).. $ 5.62 $ 4.14 $ 4.22 $ 3.92 $ 3.33
</TABLE>
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF BANCORP (continued)
<TABLE>
<CAPTION>
For the Quarter Ended March 31,
------------------------------------
1998 1997
-------------- ------------
(In thousands except per share data) (Unaudited)
<S> <C> <C>
Operating results
Total interest income............................... $ 59,810 $ 50,444
Total interest expense.............................. 35,117 26,164
-------------- --------------
Net interest income................................. 24,693 24,280
Provision for loan losses........................... 3,407 2,476
-------------- --------------
Net interest income after provision for loan losses. 21,286 21,804
-------------- --------------
Non-interest income:
Loan servicing and other loan fees.................. 492 1,571
Gains on sales of loans available for sale.......... 1,728 451
Gains on sales of mortgage servicing rights......... 2,038 2,433
Gains on sales of securities available for sale..... 1,720 253
Unrealized and realized gains (losses) on
trading securities................................. 171 (68)
Gain (loss) on sales of property and equipment, net. (2) (18)
Other............................................... 3,788 4,402
-------------- --------------
Total non-interest income........................... 9,935 9,024
-------------- --------------
Non-interest expense:
Employee compensation and benefits.................. 11,468 9,547
Occupancy and equipment............................. 5,128 4,792
Federal insurance premium........................... 262 208
Advertising and promotion........................... 491 369
Foreclosed asset activity, net...................... (169) 13
Other............................................... 5,730 5,471
-------------- --------------
Total non-interest expense.......................... 22,910 20,400
-------------- --------------
Income before income taxes.......................... 8,311 10,428
Provision for income taxes.......................... 3,055 4,087
-------------- --------------
Net income....................................... 5,256 6,341
Dividend on non-cumulative preferred stock paid by
BFC escrow........................................
Dividends on non-cumulative preferred stock.........
Amount classified as dividends on non-cumulative
preferred stock redemption........................
-------------- --------------
Total dividends on non-cumulative preferred stock...
============== ==============
Net income available for common shares $ 5,256 $ 6,341
============== ==============
Class A Common Stock: (7)
Basic earnings per share............................ $ 0.17 $ 0.22
Diluted earnings per share.......................... $ 0.14 $ 0.18
Basic weighted average of common shares
outstanding....................................... 21,809,903 18,146,296
Diluted weighted average of common shares
outstanding....................................... 38,764,353 27,107,913
Actual common shares outstanding at period end...... 22,383,185 18,252,888
Class B Common Stock:
Basic earnings per share............................ $ 0.15 $ 0.22
Diluted earnings per share.......................... $ 0.13 $ 0.18
Basic weighted average of common shares
outstanding....................................... 10,768,956 10,569,392
Diluted weighted average of common shares
outstanding....................................... 11,879,710 11,673,630
Actual common shares outstanding at period end...... 10,612,664 10,735,440
Book value per common share (all classes)........... $ 6.58 $ 5.26
Tangible book value per common share (all classes).. $ 5.51 $ 4.28
</TABLE>
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF BANCORP (continued)
<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------------------------------------------------
1997 1996 1995 1994 1993
------------- ------------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Other Financial and Statistical Data
Performance Ratios:
Return on average assets (2)........................ 1.01 % 0.94 % 1.07 % 1.17 % 1.25 %
Return on average equity (2)........................ 17.43 14.08 16.03 17.07 21.32
Cash dividend payout ratio (3)...................... 9.40 11.36 10.62 9.87 4.86
Average equity to average assets.................... 5.77 6.70 6.66 6.86 5.85
Average yield on loans, mortgage-backed securities,
tax certificates and investment securities........ 8.29 8.23 8.16 7.45 7.95
Average cost of deposits and borrowings............. 4.88 4.47 4.51 3.38 3.28
Net interest spread - during period (4)............. 3.41 3.76 3.65 4.07 4.67
Interest rate margin - during period (4)............ 3.75 4.08 4.04 4.32 4.90
Efficiency ratio (5)................................ 59.03 66.07 61.07 59.37 62.03
Other Financial Data:
Cash dividends per common share Class A(7) $ 0.0942 $ 0.0828 $ N/A $ N/A $ N/A
Cash dividends per common share Class B............. $ 0.0852 $ 0.0732 $ 0.068 $ 0.064 $ 0.032
Asset Quality Ratios:
Non-performing assets as a percent of total loans, tax
certificates and real estate owned................ 1.36 % 1.26 % 2.37 % 3.66 % 3.34 %
Net charge-offs as a percent of average loans....... 0.44 0.47 0.45 0.59 0.56
Loan loss allowance as a percent of total loans
including banker's acceptances.................... 1.35 1.39 2.24 2.89 3.38
Loan loss allowance as a percent of non-performing
loans............................................. 156.18 167.37 149.49 134.87 173.01
Non-performing loans as a percent of total loans.... 0.87 0.83 1.50 2.14 1.95
Non-performing assets as a percent of total assets.. 0.96 0.93 1.23 1.51 1.47
Ratio of earnings to fixed charges: (6)
Including interest on deposits...................... 1.39 1.40 1.43 1.63 1.63
Excluding interest on deposits...................... 1.95 2.34 2.41 3.50 5.67
Number of:
Offices (all full-service).......................... 65 56 43 32 31
Branches with ATMs.................................. 65 56 43 29 29
Non-Branch ATMs..................................... 184 164 154 153 0
Deposit accounts.................................... 229,272 218,061 120,067 110,002 113,459
Loans............................................... 39,427 37,707 23,172 15,319 19,163
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF BANCORP (continued)
For the Quarter Ended March 31,
------------------------------------
1998 1997
------------- -------------
(Unaudited)
<S> <C> <C>
Other Financial and Statistical Data (8)
Performance Ratios:
Return on average assets ........................... 0.67 % 0.96 %
Return on average equity ........................... 10.50 16.85
Cash dividend payout ratio ......................... 16.25 8.93
Average equity to average assets.................... 6.35 5.72
Average yield on loans, mortgage-backed securities,
tax certificates and investment securities........ 7.86 8.33
Average cost of deposits and borrowings............. 5.05 4.69
Net interest spread - during period (4)............. 2.81 3.64
Interest rate margin - during period (4)............ 3.18 3.95
Efficiency ratio ................................... 66.16 61.25
Other Financial Data:
Cash dividends per common share Class A $ 0.0264 $ 0.0207
Cash dividends per common share Class B............. $ 0.0240 $ 0.0186
Asset Quality Ratios:
Non-performing assets as a percent of total loans, tax
certificates and real estate owned................ 1.47 % 1.21 %
Net charge-offs as a percent of average loans....... 0.38 0.44
Loan loss allowance as a percent of total loans
including banker's acceptances.................... 1.12 1.40
Loan loss allowance as a percent of non-performing
loans............................................. 98.79 197.38
Non-performing loans as a percent of total loans.... 0.62 0.71
Non-performing assets as a percent of total assets.. 1.14 0.84
Ratio of earnings to fixed charges (6):
Including interest on deposits...................... 1.23 1.39
Excluding interest on deposits...................... 1.44 2.14
Number of:
Offices (all full-service).......................... 65 56
Branches with ATMs.................................. 65 56
Non-Branch ATMs..................................... 204 164
Deposit accounts.................................... 202,978 198,275
Loans............................................... 42,405 37,989
</TABLE>
<PAGE>
(1) The excess of the redemption price above the recorded amount of preferred
stock is considered a preferred stock dividend. The impact of the October
1995 preferred stock redemption for the year ended December 31, 1995 was a
reduction of $0.05 for basic and diluted earnings per share.
(2) ROA and ROE excluding the $7.2 million SAIF one-time special assessment
would have been 1.16% and 17.34%, respectively, for the year ended December
31, 1996.
(3) Cash dividends declared on common shares divided by net income available
for common shares. The cash dividend payout ratio for the year ended
December 31, 1995 excluding the October 1995 preferred stock redemption was
9.81%.
(4) Interest rate spread is equal to total interest earned on interest earning
assets divided by average interest earning assets, less the total of
interest expense divided by average interest-bearing liabilities. Interest
rate margin is equal to total interest earned on average interest earning
assets divided by average interest earning assets less the total of
interest expense divided by average interest earning assets. Interest rate
spread and margin during the periods is based upon daily average balances
of interest-bearing assets and liabilities.
(5) The efficiency ratio is operating expenses (non-interest expenses) as a
percent of net interest income plus non-interest income. Excluding the $7.2
million SAIF one-time special assessment, this ratio for the year ended
December 31, 1996 would have been 59.52%.
(6) Represents earnings before fixed charges, income taxes, and extraordinary
items and non-cumulative preferred stock dividends and redemption. Fixed
charges includes interest expense (inclusive or exclusive of interest on
deposits as indicated).
(7) Prior to 1996 there were no shares of Bancorp Class A Common Stock
outstanding. All common shares outstanding prior to 1996 were Class B
common shares.
(8) Ratios have been annualized where appropriate.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF RYAN, BECK
The Selected Consolidated Financial Data presented below has been
derived from the audited Consolidated Financial Statements of Ryan, Beck and is
qualified in its entirety by reference to the more detailed Consolidated
Financial Statements and Independent Auditors Reports, incorporated by reference
herein. Where appropriate, all share and per share data have been adjusted for
the 5% stock dividend declared on January 26, 1996 and paid on February 13,
1996.
<TABLE>
<CAPTION>
At or for the years ended December 31,
------------------------------------------------------------
1997 1996(1) 1995 1994 1993
--------- ---------- --------- --------- ---------
(In thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues
Principal transactions.............................. $ 16,012 $ 9,846 $ 13,224 $ 11,770 $ 14,122
Investment Banking.................................. 14,924 12,822 7,840 14,092 9,232
Commissions......................................... 5,202 4,291 2,802 2,362 3,456
Interest and dividends.............................. 1,328 1,329 894 641 675
Other............................................... 277 222 228 235 368
-------- ---------- ---------- --------- ----------
Total revenues.................................... 37,743 28,510 24,988 29,100 27,853
Interest expense.................................. 816 1,096 473 200 127
-------- ---------- ---------- --------- ----------
Net revenues...................................... 36,927 27,414 24,515 28,900 27,726
-------- ---------- ---------- --------- ----------
Non-interest expenses
Compensation and benefits........................... 21,349 18,831 15,235 15,526 15,358
Floor brokerage, exchange and clearing fees......... 2,230 2,085 1,730 1,131 1,737
Communications...................................... 1,763 1,408 1,288 1,074 1,174
Professional fees................................... 1,571 1,098 774 1,020 568
Occupancy, equipment rental and depreciation........ 1,435 1,316 991 822 883
Advertising and market development.................. 1,015 907 615 437 477
Other............................................... 1,425 1,412 1,016 1,010 744
---------- ---------- ---------- --------- ----------
Total non-interest expense........................ 30,788 27,057 21,649 21,020 20,941
---------- ---------- ---------- --------- ----------
Income before provision for income taxes............ 6,139 357 2,866 7,880 6,785
Provision for income taxes.......................... 2,274 97 1,078 3,114 2,631
---------- ---------- ---------- --------- ----------
Net income ......................................... $ 3,865 $ 260 $ 1,788 $ 4,766 $ 4,154
========== ========== ========== ========= ==========
Earnings per share
Basic .............................................. $ 1.13 $ .02 $ .50 $ 1.37 $ 1.12
Diluted............................................. $ 1.09 $ .02 $ .50 $ 1.32 $ 1.12
Weighted average shares
Basic............................................... 3,304 3,197 3,250 3,296 3,701
Diluted............................................. 3,537 3,522 3,560 3,609 3,701
Selected Statement of Financial Condition Data:
Total assets........................................ $ 56,592 $ 36,947 $ 38,126 $ 20,396 $ 19,442
Total liabilities (4)............................... 41,931 (3) 25,778 26,040 7,915 7,248
Total stockholders' equity.......................... 14,661 11,169 12,086 12,481 12,194
Book value per share - fully diluted (2)............ $ 4.09 $ 3.21 $ 3.40 $ 3.52 $ 3.29
Cash dividends declared per share................... $ .08 $ .20 $ .69 $ .91 $ .91
</TABLE>
(1) During 1996, Ryan, Beck took the following one time pre-tax charges: (a)
$1,327,000 as a result of severance payments related to the resignation of
two senior executives and Board members; (b) $83,000 for an abandoned debt
offering; and (c) $392,000 associated with the relocation of Ryan, Beck's
headquarters. Excluding these charges, net income for the year ended
December 31, 1996 would have been $1,341,000, or $.36 per share.
(2) Book value per share is computed by dividing total stockholders' equity by
the number of outstanding common shares plus shares issuable upon the
assumed conversion of Ryan, Beck's Series A Preferred Shares less the
unallocated Series A Preferred Shares under Ryan, Beck's Employee Stock
Ownership Plan. The Series A Preferred Shares of Ryan, Beck were redeemed
on September 11, 1997
(3) At December 31, 1997, Ryan, Beck had outstanding a $7,000,000 temporary
subordinated loan from a bank at the Federal funds rate plus 100 basis
points. This loan was required to maintain sufficient net capital in
accordance with SEC net capital rules. Under applicable NASD regulations,
Ryan, Beck is limited to three temporary subordinated loans in any rolling
12 month period. This loan was Ryan, Beck's second temporary subordinated
loan since October 14, 1997 and, therefore, Ryan, Beck is limited to one
additional temporary subordinated loan until after October 13, 1998. This
loan matured and was repaid on January 2, 1998.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF RYAN, BECK continued
<TABLE>
<CAPTION>
For the For the
Quarter ended Quarter ended
March 31, March 31,
---------------- ----------------
1998 1997
--------------- -----------------
(In thousands except per share amounts) (Unaudited)
<S> <C> <C>
Statement of Operations Data:
Revenues
Principal transactions.............................. $ 4,526 $ 3,875
Investment Banking.................................. 6,354 1,859
Commissions......................................... 1,632 1,154
Interest and dividends.............................. 328 349
Other............................................... 197 30
---------- -------------
Total revenues.................................... 13,047 7,267
Interest expense.................................. 157 204
---------- -------------
Net revenues...................................... 12,890 7,063
---------- -------------
Non-interest expenses
Compensation and benefits........................... 7,848 4,588
Floor brokerage, exchange and clearing fees......... 651 547
Communications...................................... 482 371
Professional fees................................... 408 315
Occupancy, equipment rental and depreciation........ 421 234
Advertising and market development.................. 320 163
Other............................................... 469 318
---------- -------------
Total non-interest expense........................ 10,649 6,536
---------- -------------
Income before provision for income taxes............ 2,241 527
Provision for income taxes.......................... 876 96
---------- -------------
Net income ......................................... $ 1,365 $ 431
========== =============
Earnings per share
Basic .............................................. $ .37 $ .12
Diluted............................................. $ .37 $ .12
Weighted average shares
Basic............................................... 3,562 3,167
Diluted............................................. 3,674 3,503
Selected Statement of Financial Condition Data:
Total assets........................................ $ 41,685 $ 28,716
Total liabilities................................... 24,779 (2) 17,337
Total stockholders' equity.......................... 16,906 11,379
Book value per share - fully diluted (1)............ $ 4.49 $ 3.27
Cash dividends declared per share................... $ .01 $ .05
</TABLE>
(1) Book value per share is computed by dividing total stockholders' equity by
the number of outstanding common shares plus shares issuable upon the
assumed conversion of Ryan, Beck's Series A Preferred Shares less the
unallocated Series A Preferred Shares under Ryan, Beck's Employee Stock
Ownership Plan. The Series A Preferred Shares of Ryan, Beck were redeemed
on September 11, 1997.
(2) Includes a $10 million subordinated loan from Bancorp.
<PAGE>
ACTUAL AND PRO FORMA PER SHARE DATA
The following table sets forth per share data relating to
dividends, net income and book value of Bancorp Class A Common Stock and Ryan,
Beck Common Stock, both on an actual (historical) basis and on a pro forma
combined basis, as adjusted for the February Stock Dividend. The pro forma per
share data assumes the Merger had been consummated at the beginning of the
periods presented.
The pro forma unaudited book value per share data and the pro
forma unaudited net income per share data give effect to Bancorp's acquisition
of Ryan, Beck accounted for under the purchase method of accounting.
The actual, pro forma and pro forma equivalent per share data
included in the table below is based on and derived from, and should be read in
conjunction with, the financial statements of Bancorp and Ryan, Beck
incorporated by reference herein and delivered herewith. See "INFORMATION
DELIVERED AND INCORPORATED BY REFERENCE." The pro forma data presented below is
not necessarily indicative of the results that would actually have been attained
if the Merger had been consummated as of the first day of the periods described
below or results that may be attained in the future. Accounting practice
dictates that pro forma results of operations exclude all intercompany revenues.
In 1997, Ryan, Beck derived approximately $4.5 million of gross revenues from
underwritings for, and advisory services provided to, Bancorp. Most expenses
associated with these revenues were not eliminated in preparing the pro forma
information.
<PAGE>
<TABLE>
<CAPTION>
At or For the At or For the
Quarter Ended Year Ended
March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
CASH DIVIDENDS DECLARED PER COMMON SHARE (1):
Bancorp Class A Common Stock $ 0.0264 $ 0.0942
Ryan, Beck- Actual 0.01 0.0800(2)
Ryan, Beck, Pro forma equivalent (3) 0.0209 0.0717
NET INCOME PER COMMON SHARE:
Bancorp Class A Common Stock - Actual
Basic 0.17 0.98
Diluted 0.14 0.78
Ryan, Beck - Actual
Basic 0.37 1.13
Diluted 0.37 1.09
Pro Forma:
Pro forma per share of Bancorp Class A Common Stock
Basic 0.17 0.84
Diluted 0.14 0.68
Ryan, Beck, Pro forma equivalent (3):
Basic 0.13 0.64
Diluted 0.11 0.52
BOOK VALUE PER COMMON AND COMMON EQUIVALENT SHARE
Bancorp Class A Common Stock - Actual 6.58 6.43
Ryan, Beck - Actual 4.49 4.09
Pro forma per share of Bancorp Class A Common Stock 6.99 6.87
Ryan, Beck Pro forma equivalent 5.32 5.23
</TABLE>
(1) For information regarding Bancorp's and Ryan, Beck's dividends, and the
market price of Bancorp and Ryan, Beck Common Stock, see "MARKET PRICE AND
DIVIDEND MATTERS".
(2) This amount represents a $.05 per share dividend in the first quarter of
1997, and $.01 per share dividends in the second, third and fourth quarters
of 1997. Based on the last three quarters of 1997 and the first quarter of
1998, annualized dividends per share of Ryan, Beck Common Stock would be
$.04.
(3) Equivalent pro forma data per share of Ryan, Beck Common Stock represents
Bancorp Class A Common Stock pro forma per share data multiplied by the
0.761 Conversion Ratio.
<PAGE>
MARKET PRICE AND DIVIDEND MATTERS
Market Price and Dividend History
Bancorp Class A Common Stock is listed on the New York Stock Exchange
(the "NYSE") under the symbol "BBX" and Ryan, Beck Common Stock is quoted on The
Nasdaq Stock Market under the symbol "RBCO". The Bancorp Class A Common Stock
commenced trading on the NYSE on August 20, 1997 and prior to that time was
quoted on The Nasdaq Stock Market under the symbol "BANCA". The following tables
set forth, for the periods indicated, the high and low closing prices per share
of Bancorp Class A Common Stock and Ryan, Beck Common Stock, as reported by the
NYSE (except for the periods prior to August 20, 1997, as reported by the Nasdaq
Stock Market) and The Nasdaq Stock Market, respectively, and quarterly dividends
per share.
All stock prices shown in the tables below have been rounded to
the nearest tenth of a cent. Bancorp's stock prices and dividends shown in the
tables have been adjusted to reflect 25% stock dividends issued to holders of
Bancorp's Class A Common Stock on July 31, 1996, March 9, 1997, August 19, 1997
and February 18, 1998.
<TABLE>
<CAPTION>
Market Market
Price Per Share Price Per Share
of Bancorp Class A of Ryan, Beck Equivalent Pro Forma Market Price Per
Common Stock Common Stock Share of Ryan, Beck Common Stock (1)
High Low High Low High Low
<S> <C> <C> <C> <C> <C> <C>
1996:
First Quarter........ $ 6.313 $ 6.125 $ 7.625 $ 6.750 $ 4.804 $ 4.661
Second Quarter....... $ 6.313 $ 5.625 $ 7.500 $ 6.625 $ 4.804 $ 4.281
Third Quarter........ $ 7.000 $ 5.375 $ 7.000 $ 5.375 $ 5.327 $ 4.090
Fourth Quarter....... $ 7.000 $ 6.500 $ 5.625 $ 3.750 $ 5.327 $ 4.947
1997:
First Quarter........ $ 8.438 $ 5.563 $ 5.000 $ 4.125 $ 6.421 $ 4.994
Second Quarter....... $ 9.000 $ 7.313 $ 5.250 $ 4.000 $ 6.849 $ 5.656
Third Quarter........ $12.813 $ 9.063 $ 7.250 $ 4.500 $ 9.751 $ 6.897
Fourth Quarter......... $13.063 $10.500 $ 8.125 $ 6.500 $ 9.941 $ 7.991
1998:
First Quarter......... $ 14.750 $ 11.547 $ 10.500 $ 7.500 $ 11.225 $ 8.787
Second Quarter
(through 5/22/98)..... $ 14.375 $ 12.500 $ 10.500 $ 9.250 $ 10.939 $ 9.513
</TABLE>
(1) Equivalent pro forma market price per share of Ryan, Beck Common Stock
represents the high and low closing prices per share of Bancorp Class A
Common Stock, multiplied by the Conversion Ratio. The Conversion Ratio is
subject to anti-dilution adjustments specified in the Acquisition
Agreement.
<PAGE>
<TABLE>
<CAPTION>
Equivalent Pro Forma
Bancorp Class A Ryan, Beck Dividends Per
Common Stock Common Stock Share of
Dividends Dividends Ryan, Beck
Per Share Per Share Common Stock (1)
------------- ------------ -----------------------
<S> <C> <C> <C>
1996:
First Quarter..... $ 0.021 $ 0.050 $ 0.016
Second Quarter.... $ 0.021 $ 0.050 $ 0.016
Third Quarter..... $ 0.021 $ 0.050 $ 0.016
Fourth Quarter.... $ 0.021 $ 0.050 $ 0.016
1997:
First Quarter..... $ 0.021 $ 0.050 $ 0.016
Second Quarter.... $ 0.021 $ 0.010 $ 0.016
Third Quarter..... $ 0.026 $ 0.010 $ 0.020
Fourth Quarter.... $ 0.026 $ 0.010 $ 0.020
1998:
First Quarter..... $ 0.026 $ 0.010 $ 0.020
</TABLE>
- ----------------------
(1) Equivalent pro forma cash dividends per share of Ryan, Beck Common Stock
represents Bancorp historical cash dividend rates per share, multiplied by
the 0.761 Conversion Ratio, rounded to the nearest tenth of a cent. The
current annualized dividend rate per share of Bancorp Class A Common Stock,
based upon the most recently declared quarterly dividend amount of $.0264
per share of Bancorp Class A Common Stock would be $.1056. On an equivalent
pro forma basis, such current annualized Bancorp dividend per share of Ryan,
Beck Common Stock would be $.0804, rounded to the nearest tenth of a cent.
See "MARKET PRICE AND DIVIDEND MATTERS Limitations on Dividends Under The
Acquisition Agreement." No assurance can be given as to future Bancorp
dividend payments. See "MARKET PRICE AND DIVIDEND MATTERS - Dividend
Limitations on Bancorp" and "RISK FACTORS - Ability to Pay Dividends;
Possible Issuance of Additional Securities"
<PAGE>
The following table presents for (i) February 9, 1998, the last full
trading day before public announcement of the signing of the Acquisition
Agreement, and (ii) the most recent date prior to the date of this Proxy
Statement-Prospectus on which such stock traded, the reported closing price per
share of Bancorp Class A Common Stock on the New York Stock Exchange and the
reported closing price per share of Ryan, Beck Common Stock on The Nasdaq Stock
Market and the equivalent price per share of Ryan, Beck Common Stock computed by
multiplying the closing price of Bancorp Class A Common Stock (as adjusted) on
each of the dates specified by the 0.761 Conversion Ratio.
<TABLE>
<CAPTION>
Equivalent Price
Per Share of
Bancorp Class A Ryan, Beck Ryan, Beck
Common Stock Common Stock Common Stock
--------------- ------------ -----------------
<S> <C> <C> <C>
February 9, 1998........... $ 12.797 $ 7.875 $ 9.739
May 22, 1998............... $ 13.563 $ 9.875 $ 10.321
</TABLE>
- --------------------------
Ryan, Beck stockholders are not assured of receiving any specific
market value of Bancorp Class A Common Stock. The price of Bancorp Class A
Common Stock at the Effective Time may be higher or lower than the market price
at the time of entering into the Acquisition Agreement, the time of mailing this
Proxy Statement-Prospectus or at the time of the Meeting. RYAN, BECK
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE BANCORP CLASS
A COMMON STOCK AND RYAN, BECK COMMON STOCK.
Limitations on Dividends Under the Acquisition Agreement
The Acquisition Agreement prohibits Ryan, Beck from declaring, setting
aside or paying any dividend or other distribution in respect of its capital
stock, except that Ryan, Beck may declare, set aside or pay regular cash
dividends of $0.04 per share per annum of Ryan, Beck Common Stock.
Dividend Limitations on Bancorp
The holders of Bancorp Class A Common Stock are entitled to receive
dividends when and if declared by Bancorp's Board of Directors out of funds
legally available therefor. Bancorp has paid regular quarterly cash dividends on
its common stock since its inception in 1994. The Bancorp Class B Common Stock
is also entitled to receive dividends when and if declared by Bancorp's Board of
Directors out of funds legally available therefor. The Bancorp Class A Common
Stock is entitled to receive cash dividends equal to at least 110% of any cash
dividends declared and paid on the Bancorp Class B Common Stock. The declaration
and payment of dividends by Bancorp will depend upon, among other things, the
results of operations, financial condition and cash requirements of Bancorp and
on the ability of BankAtlantic to pay dividends or otherwise advance funds to
Bancorp, which in turn is subject to OTS regulations and is based upon
BankAtlantic's regulatory capital levels and net income. See "RISK
FACTORS-Ability to Pay Dividends; Possible Issuance of Additional Securities."
<PAGE>
RISK FACTORS
A decision to approve the Acquisition Agreement and thereby acquire the
Bancorp Class A Common Stock involves various risks. Ryan, Beck shareholders
should carefully consider, together with the other information contained and
incorporated by reference in this Proxy Statement-Prospectus, the following
factors in evaluating the Merger and the shares of Bancorp Class A Common Stock
offered hereby.
Ability to Pay Dividends; Possible Issuance of Additional Securities
Although Bancorp holds all of the outstanding capital stock of
BankAtlantic, Bancorp is a legal entity separate and distinct from BankAtlantic.
BankAtlantic's ability to pay dividends or make other capital distributions to
Bancorp is governed by OTS regulations and is based on BankAtlantic's regulatory
capital levels and net income. Under these regulations, "capital distributions"
are defined as cash dividends, payments by a savings association to repurchase
or otherwise acquire its shares, payments to shareholders of another entity in a
cash-out merger, and other distributions charged against capital. An institution
that has regulatory capital that is at least equal to its capital requirements
(both before and after giving effect to the distribution), and that has not been
notified that it "is in need of more than normal supervision" is a Tier 1
association. Upon prior notice to, and non-objection by, the OTS, a Tier 1
association is permitted to make capital distributions during a calendar year of
up to the greater of (i) 100% of net income for the current calendar year, plus
50% of its capital surplus ("surplus" being the amount of capital in excess of
its capital requirements) or (ii) 75% of its net income over the most recent
four quarters. Any additional capital distributions would require prior
regulatory approval. BankAtlantic qualifies as a Tier 1 association under
applicable OTS regulations. There is no assurance, however, that BankAtlantic
will remain a Tier 1 association or that it will be in a position to make
capital distributions to Bancorp in an amount sufficient for Bancorp to pay
dividends on the Class A Common Stock. Additionally, all capital distributions
of BankAtlantic are subject to the OTS' right to object to a distribution on
safety and soundness grounds.
The ability of Bancorp to pay dividends on the Bancorp Class A Common
Stock will be significantly dependent on the ability of BankAtlantic to pay
dividends to Bancorp in amounts sufficient to service Bancorp's obligations,
including its obligation to pay interest on its outstanding 9% Subordinated
Debentures due 2005 ($21.0 million outstanding principal amount at March 31,
1998), 6 3/4% Convertible Subordinated Debentures due 2006 ($56.2 million
outstanding principal amount at March 31, 1998), 5 5/8% Convertible Subordinated
Debentures due 2007 ($100.0 million outstanding principal amount at March 31,
1998) and 9 1/2% Junior Subordinated Debentures due 2027 (which were issued in
April 1997 in connection with a $74.75 million offering of 9 1/2% Cumulative
Trust Preferred Securities by a wholly owned subsidiary of Bancorp) and to make
any other payments with respect to securities issued by Bancorp in the future
which are pari passu or have a preference over the Bancorp Class A Common Stock,
as applicable, with respect to the payment of principal, interest or dividends.
There is generally no restriction on the ability of Bancorp to issue securities
which are pari passu or have a preference over the Bancorp Class A Common Stock
nor is there any restriction on the ability of BankAtlantic to issue additional
capital stock or incur additional indebtedness. At May 1, 1998, there were
80,000,000 shares of Bancorp Class A Common Stock and 45,000,000 shares of
Bancorp Class B Common Stock authorized for issuance, of which approximately
41.8 million shares of Bancorp Class A Common Stock and 12.7 million shares of
Bancorp Class B Common Stock were outstanding or reserved for issuance pursuant
to stock option plans and conversion of outstanding convertible debentures.
Assuming the issuance of 3,547,141 shares of Bancorp Class A Common Stock in the
Merger, immediately after consummation of the Merger, approximately 34.7 million
shares of Bancorp Class A Common Stock and 32.3 million shares of Bancorp Class
B Common Stock will be authorized and available for issuance from time to time
in the discretion of Bancorp's Board of Directors, including issuances in
connection with acquisitions. It is not anticipated that shareholder approval
will be sought in connection with any such future issuances, unless such
approval is required by law or the rules of the NYSE or NASD. In addition,
Bancorp's Articles of Incorporation also provide Bancorp's Board of Directors
with the authority to issue up to 10,000,000 shares of preferred stock, and to
fix the relative rights and preferences of the preferred stock, in each case
without shareholder approval.
Lack of Voting Rights of Bancorp Class A Common Stock; Voting Control
Holders of Bancorp Class B Common Stock currently possess all voting
power of Bancorp. Holders of Bancorp Class A Common Stock will have no right to
vote in connection with the election of the directors of Bancorp or any other
matter except in limited circumstances as provided by Florida law. BFC, which
owned 4,876,124 shares or approximately 47.3% of Bancorp's issued and
outstanding Class B Common Stock at May 1, 1998, is in a position to
significantly influence the policies and management of Bancorp and effectively
elect a majority of Bancorp's Board of Directors. Additionally, Alan B. Levan,
the Chairman of the Board and Chief Executive Officer of Bancorp and
BankAtlantic and John E. Abdo, a director of Bancorp and the Vice- Chairman of
the Board and Chairman of the Executive Committee of BankAtlantic, beneficially
owned at May 1, 1998 approximately 45.8% and 15.8% of the shares of BFC,
respectively.
Loan Portfolio Considerations
Loans receivable, net at BankAtlantic increased by approximately $1.8
billion or 218.2% at March 31, 1998 from December 31, 1995. All loan category
balances increased in 1996 and 1997 and in the first quarter of 1998 due to
approximately $395.0 million of loans acquired in connection with the
acquisition of Bank of North America ("BNA") and $1.8 billion of wholesale
residential loan purchases during 1996 and 1997 and the three months ended March
31, 1998. Commercial real estate and construction and development loans at
BankAtlantic increased by approximately $236.5 million or 50.05% at March, 1998
from December 31, 1995. With respect to commercial real estate and construction
and development loans, the underlying real estate projects may be in the early
stages of development. Further, these loans are concentrated in Broward,
Miami-Dade and Palm Beach Counties, Florida. Recent increases in funding
availability from competitors for commercial real estate projects could result
in over building and a decline in real estate values. A decline in the real
estate market, or in economic conditions in general, in Broward, Miami-Dade and
Palm Beach counties could have a material adverse effect on BankAtlantic's
financial condition and results of operations. With respect to the wholesale
residential loan purchases, the real estate securing such loans is generally
located outside BankAtlantic's primary market area. Such loans are subject to
risks associated with the economy where the collateral is located and additional
risks regarding collection.
Consumer Loan Portfolio - Indirect Automobile Lending
During the past several years, Bancorp has experienced significant
growth in its consumer loan portfolio (excluding home equity loans). Part of
this growth was the result of Bancorp's acquisition of financial institutions
which had originated consumer loans in prior years, a significant amount of
which were indirect automobile loans (loans funded by the institution through
automobile dealers rather than funded directly by the institution to its retail
customers). Consumer loans increased to $269.1 million at March 31, 1998 from
$48.8 million at December 31, 1994. At March 31, 1998, $211.0 million of the
consumer loan portfolio consisted of indirect loans, primarily automobile loans.
Consumer loans, especially indirect automobile loans, present more credit risk
to Bancorp than other types of loans such as home equity or residential real
estate loans. During the year ended December 31, 1997 and the three months ended
March 31, 1998, consumer loan net charge-offs were $8.4 million and $2.1
million, respectively, of which $6.2 million and $1.8 million, respectively,
were attributable to indirect automobile loans. As a result of the nature of
indirect automobile loans and the growth in the consumer loan portfolio, there
is no assurance that there will not be additional losses in the future
associated with the consumer loan portfolio.
Recent Rapid Growth and Increased Operating Expenses
During the last two years, BankAtlantic has experienced rapid and
significant growth. Total assets of BankAtlantic have increased from $1.75
billion at December 31, 1995 to $2.6 billion at December 31, 1996, and to $3.5
billion at March 31, 1998. BankAtlantic also experienced a significant level of
loan growth. BankAtlantic's loan portfolio increased from $828.6 million at
December 31, 1995, to $2.5 billion excluding banker's acceptances at March 31,
1998. Part of such growth reflects BankAtlantic's acquisition of MegaBank and
BNA, two commercial banks located in South Florida.
To support and manage the expanded operations of BankAtlantic and to
provide management resources to support further expansion and growth,
BankAtlantic has hired additional personnel and has taken steps to enhance and
expand its operational and management information systems.
While BankAtlantic continues to monitor its rapid growth and the
adequacy of management and resources available to support such growth, there can
be no assurance that BankAtlantic will be successful in managing all elements
relating to its growth. The growth and expansion of operations through mergers
and acquisitions and internal growth has resulted in a significant increase in
assets, loans and deposits, as well as increases in non-interest expenses.
Employee compensation and benefits increased 21.13% from $33.2 million to $40.2
million from December 31, 1996 to December 31, 1997 and occupancy and equipment
costs increased 37.1% from $13.6 million to $18.7 million during such period.
Employee compensation and benefits increased 20.1% from $9.5 million during the
three months ended March 31, 1997 to $11.5 million during the three months ended
March 31, 1998 and occupancy and equipment costs increased 7.01% from $4.8
million during the first quarter of 1997 to $5.1 million during the first
quarter of 1998. Such increased expenses were primarily attributable to the BNA
acquisition and the opening of new branch offices, the start-up of two business
units and the conversion of a substantial portion of the data processing
functions to an outside service bureau. Expenses associated with such past
growth have had, and expenses associated with additional future growth may have,
an adverse impact on earnings.
There can be no assurance that BankAtlantic will continue to experience
rapid growth, or any growth in the future and, to the extent that it does
experience continued growth, there is no assurance that BankAtlantic will be
able to adequately and profitably manage such growth.
Broad Acquisition Authority
Under applicable law, Bancorp generally has broad authority with few
restrictions to engage in various types of business activities, including
investments in real estate, real estate development and real estate related
businesses. As part of Bancorp's previously announced intention of pursuing
acquisitions and investments in real estate related businesses as a means to
diversify its sources of non-interest income and to increase non-interest
revenues, BankAtlantic acquired the St. Lucie West Holding Corp. ("SLWHC") in
October 1997 for approximately $20 million. SLWHC is the developer of the master
planned community of St. Lucie West, a residential, commercial and industrial
development located in St. Lucie County, Florida. In addition, BankAtlantic and
Bancorp have made investments in real estate development projects located in
South Florida which are in each case minority interests in the developments. In
addition, on March 20, 1998 Bancorp acquired Leasing Technology, Inc. ("LTI"),
an equipment leasing and finance company located in South Florida, for a
purchase price of approximately $8.8 million. Bancorp will likely continue to
evaluate acquisition and investment opportunities in businesses that offer
Bancorp opportunities to diversify its sources of non-interest revenue. These
acquisitions of and investments in businesses not engaged in traditional banking
activities, including the acquisition of Ryan, Beck, subject Bancorp to the
risks inherent in the businesses of the acquired companies.
Acquisition Accounting; Impact of the Merger and other Acquisitions on Financial
Statements
The acquisition of Ryan, Beck, as well as the acquisition of SLWHC and
LTI, will be accounted for under the "purchase" method of accounting. Under the
purchase method, the assets and liabilities of the acquired entity are recorded
by Bancorp at their fair market values and any difference between the purchase
price and the fair value of the tangible and identifiable intangible assets and
liabilities is recorded as goodwill. Goodwill is generally amortized over the
period of expected benefit and such amortization of goodwill will reduce
earnings. Bancorp estimates that had the Merger been consummated as of March 31,
1998 Bancorp would have recorded an aggregate of approximately $25.2 million of
goodwill in connection with the Merger, of which $2.6 million is related to the
recently completed acquisition by Ryan, Beck of Cumberland Advisors and
Cumberland Consulting (see "CERTAIN INFORMATION REGARDING RYAN, BECK - Recent
Developments") and the remaining $22.6 million is associated with Ryan, Beck.
The goodwill of $2.6 million associated with the Cumberland entities will be
amortized on a straight line basis over 15 years resulting in an annual expense
of $171,000 that will be tax deductible and the goodwill of $22.6 million
associated with Ryan, Beck will be amortized on a straight line basis over 25
years resulting in an annual expense of $905,000 that will not be tax
deductible. These estimates of goodwill are subject to change based on various
factors including the share price of Bancorp Class A Common Stock declining
below $10.88 per share and further valuation of the fair value of net assets
acquired. While the acquisition of SLWHC did not result in the recognition of
any goodwill, Bancorp recorded an aggregate of approximately $9.5 million of
goodwill in connection with the LTI acquisition that will not be tax deductible.
These estimates of goodwill are preliminary and could be subject to change.
In addition, under generally accepted accounting principles Bancorp
will also be required to recognize as an expense the value of the restricted
shares of Bancorp Class A Common Stock dedicated to the Retention Pool, although
such shares will generally vest on the fourth anniversary of the Merger. The
value of the restricted shares to be dedicated to the Retention Pool, which is
estimated to be approximately $8.7 million based on the closing price of Bancorp
Class A Common Stock at February 9, 1998, will be amortized on a straight line
basis as compensation expense over the four year vesting period and, as with
goodwill, such amortization will reduce earnings.
Ryan, Beck previously acted as managing underwriter in various public
securities offerings by Bancorp. During 1996 and 1997, Ryan, Beck derived
revenues from such offerings of approximately $2.7 million and $4.5 million,
respectively. After consummation of the Merger, such revenues would be
eliminated as intercompany transactions from consolidated financial statements,
but certain expenses associated with such offerings would be recognized.
Real Estate Development Activities
Bancorp, through BankAtlantic's acquisition of SLWHC and its minority
interests in real estate development projects, is engaged in real estate
development and investment activities. In addition to its current investments in
joint ventures, BankAtlantic intends to invest in other real estate development
joint venture arrangements in which Bancorp contributes a significant amount of
equity with the expectation of profit sharing once a project is completed or
near completion. Bancorp or BankAtlantic may also provide financing to such
ventures on an arms' length basis. With respect to BankAtlantic's acquisition of
SLWHC, the developer's annual operating expenses are estimated to be
approximately $4.2 million and there is no assurance that periodic sales of
properties will be sufficient to ensure profitability in future periods. To the
extent that sales are not adequate to cover operating expenses, BankAtlantic may
have to provide additional funds to SLWHC.
Real estate activities are highly speculative and represent a high
degree of risk primarily because of the cyclical nature of the real estate
industry and the uncertainty of future market conditions. In particular the real
estate and home building industries are adversely affected by decreases in
employment levels, the availability and cost of financing and decreases in
demand. Real estate activities and investments can be negatively impacted by
unfavorable interest rates, over-building, a slow down in home sales and
construction, and a surplus of available real estate and related projects.
Results of real estate activities are also subject to significant volatility and
fluctuations in real estate values. Accordingly, adverse changes in real estate
values or in the economy, generally, could have a material adverse impact on
Bancorp's results of operations directly in addition to any impact such changes
may have in connection with its lending activities and loan portfolio.
Potential Impact of Changes in Interest Rates
BankAtlantic's profitability is dependent to a large extent on its net
interest income, which is the difference between its interest income on
interest-earning assets and its interest expense on interest-bearing
liabilities. BankAtlantic, like most financial institutions, is affected by
changes in general interest rate levels, which are currently at relatively low
levels, and by other economic factors beyond its control. Interest rate risk
arises from mismatches (i.e., the interest sensitivity gap) between the dollar
amount of repricing or maturing assets and liabilities, and is measured in terms
of the ratio of the interest rate sensitivity gap to total assets. More assets
repricing or maturing than liabilities over a given time frame is considered
asset-sensitive and is reflected as a positive gap, and more liabilities
repricing or maturing than assets over a given time frame is considered
liability- sensitive and is reflected as a negative gap. An asset-sensitive
position (i.e., a positive gap) will generally enhance earnings in a rising
interest rate environment and will negatively impact earnings in a falling
interest rate environment, while a liability-sensitive position (i.e., a
negative gap) will generally enhance earnings in a falling interest rate
environment and negatively impact earnings in a rising interest rate
environment. Fluctuations in interest rates are not predictable or controllable.
BankAtlantic has attempted to structure its asset and liability management
strategies to mitigate the impact on net interest income of changes in market
interest rates. At March 31, 1998, BankAtlantic had a one year negative
cumulative gap of 6.77%. This negative one year gap position may, as noted
above, have a negative impact on earnings in a rising interest rate environment.
During the first quarter of 1998, BankAtlantic experienced a high
volume of loan prepayments in its mortgage portfolio and in its servicing
portfolio which adversely affected earnings for the first quarter. Loan
servicing and other loan fee income declined by $1.4 million as a result of
increased mortgage prepayments during the period, including the writedown of
premiums associated with mortgage servicing rights ("MSRs") relating to the
prepaid loans. The yields earned with respect to the portion of BankAtlantic's
mortgage portfolio which were prepaid were greater than alternative short term
investments which also adversely impacted first quarter earnings. Significant
loan prepayments in BankAtlantic's mortgage portfolio and servicing portfolio in
the future could have a similar adverse effect on earnings. In addition, part of
BankAtlantic's historical business strategy has been to purchase MSRs in smaller
volumes and to combine and sell such MSRs as part of larger packages where the
premiums available are generally greater. Prepayments of the underlying loans
may also have an adverse effect on BankAtlantic's ability to sell MSRs at a
profit.
In addition, changes in general interest rate levels affect certain
assumptions made regarding the market value of certain of BankAtlantic's assets
and liabilities, including MSRs. At March 31, 1998, BankAtlantic held $45.2
million of MSRs. Generally, as interest rates fall, loan prepayments accelerate,
and Bancorp may be required under generally accepted accounting principles to
establish a valuation allowance to reflect a decline in the market value of its
MSRs, while at the same time generally accepted accounting principles generally
do not permit Bancorp to recognize increases in the market value of assets (with
the exception of trading and available for sale securities) which appreciate in
a falling interest rate environment. Accordingly, Bancorp's results of
operations could be adversely affected in any period to the extent a decrease in
interest rates adversely impacts the market value of its MSRs, which would be
recognized for financial statement purposes, while Bancorp is unable to
recognize for financial statement purposes any increase in the market value of
other assets or liabilities which may appreciate in value based on the same
factors.
Regulatory Oversight
BankAtlantic is subject to extensive regulation, supervision and
examination by the OTS as its chartering authority and primary federal
regulator, and by the FDIC, which insures its deposits up to applicable limits.
BankAtlantic is a member of the FHLB of Atlanta and is subject to certain
limited regulation by the Federal Reserve Board. As the holding company of
BankAtlantic, Bancorp is also subject to regulation and oversight by the OTS.
Such regulation and supervision governs the activities in which an institution
may engage and is intended primarily for the protection of the FDIC insurance
funds and depositors. Regulatory authorities have been granted extensive
discretion in connection with their supervisory and enforcement activities and
regulations have been implemented which have increased capital requirements,
increased insurance premiums and have resulted in increased administrative,
professional and compensation expenses. Any change in the regulatory structure
or the applicable statutes or regulations could have a material impact on
Bancorp and BankAtlantic and their operations. Additional legislation and
regulations may be enacted or adopted in the future which could significantly
affect the powers, authority and operations of BankAtlantic and BankAtlantic
competitors which in turn could have a material adverse affect on Bancorp,
BankAtlantic and their operations.
Competition
Bancorp competes with various types of financial institutions,
including other savings institutions, investment firms, commercial banks,
finance companies, mortgage banking companies, money market funds and credit
unions, many of which have substantially greater financial resources than
Bancorp and, in some cases, operate under fewer regulatory constraints. Bancorp
not only competes with financial institutions headquartered in the State of
Florida but also competes with a number of financial institutions headquartered
outside of Florida who are active in the state.
<PAGE>
INTRODUCTION
This Proxy Statement-Prospectus solicits, on behalf of the Board of
Directors of Ryan, Beck & Co., Inc. ("Ryan, Beck"), approval by the holders of
shares of common stock of Ryan, Beck, $0.10 par value per share ("Ryan, Beck
Common Stock"), of the Acquisition Agreement, dated as of February 9, 1998 (the
"Acquisition Agreement"), by and among BankAtlantic Bancorp, Inc. ("Bancorp"),
Ryan, Beck and Bancorp's wholly owned subsidiary, BCP Acquisition Corporation
("BCP"). Pursuant to the Acquisition Agreement, Ryan, Beck will be merged with
and into BCP (the "Merger"). A copy of the Acquisition Agreement is attached as
Appendix A to this Proxy Statement-Prospectus. Upon consummation of the Merger,
each outstanding share of Ryan, Beck Common Stock will be converted into the
right to receive 0.761 shares (the "Conversion Ratio") of Class A common stock
of Bancorp, $0.01 par value ("Bancorp Class A Common Stock"), subject to
adjustment as set forth in the Acquisition Agreement and more fully described in
this Proxy Statement-Prospectus, with cash paid in lieu of fractional shares. If
the average of the closing sale prices per share of Bancorp Class A Common Stock
on the New York Stock Exchange ("NYSE") for the period of ten consecutive
trading days ending with (and including) the second trading day prior to the
Closing Date (the "Average Price") is less than $10.88 (the "Floor"), Ryan, Beck
can notify Bancorp in writing of its intention to terminate the Acquisition
Agreement. The Acquisition Agreement would then terminate unless within five
business days following the receipt of such notice, Bancorp agrees to increase
the Conversion Ratio to an amount equal to the quotient of $8.28 divided by the
Average Price. As provided in the Acquisition Agreement, the Conversion Ratio
and the Floor have been adjusted to reflect Bancorp's 25% stock dividend issued
in shares of Bancorp Class A Common Stock on February 18, 1998 (the "February
Stock Dividend") and this Proxy Statement-Prospectus reflects such adjustments.
The Conversion Ratio and the Floor are subject to further anti-dilution
adjustments specified in the Acquisition Agreement. In addition, each
outstanding option to purchase a share of Ryan, Beck Common Stock ("Ryan, Beck
Option") pursuant to Ryan, Beck's existing stock option plans and agreements,
except the option granted to Bancorp, will be assumed by Bancorp and
automatically converted into an option to purchase a number of shares of Bancorp
Class A Common Stock equal to the number of shares of Ryan, Beck Common Stock
that could have been purchased under the Ryan, Beck Option multiplied by the
Conversion Ratio at a price per share of Ryan, Beck Common Stock equal to the
option exercise price under the Ryan, Beck Option divided by the Conversion
Ratio, all as more fully described in this Proxy Statement-Prospectus. See "THE
PROPOSED MERGER".
This Proxy Statement-Prospectus also solicits, on behalf of the Board
of Directors of Ryan, Beck votes for the election of six directors and the
approval of the Ryan, Beck & Co., Inc. Long-Term Stock Incentive Plan. It also
solicits votes against the shareholder proposal described on page 79 (the
"Shareholder Proposal").
All information and statements contained or incorporated by reference
herein with respect to Ryan, Beck, Cumberland Advisors and Cumberland Consulting
were supplied by Ryan, Beck and all information and statements contained or
incorporated by reference herein with respect to Bancorp were supplied by
Bancorp.
CERTAIN INFORMATION REGARDING BANCORP
General
Bancorp is a unitary savings bank holding company organized in April
1994 whose primary asset is the capital stock of BankAtlantic, a Federal Savings
Bank ("BankAtlantic"). At March 31, 1998, Bancorp had consolidated total assets
of approximately $3.5 billion and total stockholders' equity of approximately
$217.0 million. BFC Financial Corporation ("BFC"), which is controlled by the
Chairman and Vice Chairman of Bancorp, owned at May 1, 1998, 4,876,124 shares or
approximately 47.3% of Bancorp's issued and outstanding Class B Common Stock and
6,578,671 shares or approximately 28.9% of Bancorp's issued and outstanding
Class A Common Stock.
BankAtlantic, head-quartered in Fort Lauderdale, Florida, is a
federally-chartered, federally-insured, savings bank organized in 1952, which
provides a wide range of commercial banking products and related financial
services directly and through subsidiary corporations. The principal business of
BankAtlantic is attracting checking and savings deposits from the public and
general business customers and using these deposits to originate commercial real
estate and business loans, residential real estate loans and consumer loans, to
purchase wholesale residential loans from third parties and to make other
permitted investments including investments in mortgage-backed securities, tax
certificates and other investment securities.
BankAtlantic operates through 65 branch offices located primarily, with
14 branches in Miami-Dade, 26 branches in Broward and 13 branches in Palm Beach
Counties in South Florida as well as 12 branches located throughout Florida in
Walmart Superstores. As reported by an independent statistical reporting
service, BankAtlantic is currently the largest independent savings bank
headquartered in the State of Florida and second in size among all independent
financial institutions headquartered in the State of Florida based on deposits
at September 30, 1997 the most recent date utilized by such reporting service.
BankAtlantic considers itself to be a community bank, able to compete against
regional and super regional institutions by offering personalized service and
fast decision making. Bancorp believes that the rapid pace of consolidation
among Florida depository institutions, including the recent acquisition by
NationsBank Corporation of Barnett Banks, Inc., formerly the largest financial
institution headquartered in Florida, will result in additional opportunities
for Bancorp, including the potential for new and expanded customer
relationships.
BankAtlantic's deposit accounts are insured by the Federal Deposit
Insurance Corporation (the "FDIC") primarily through the Savings Association
Insurance Fund (the "SAIF"), with a small portion insured through the Bank
Insurance Fund ("BIF"), both of which are administered by the FDIC. BankAtlantic
is regulated and examined by the Office of Thrift Supervision (the "OTS") and
the FDIC. Such regulation is intended for the protection of depositors.
CERTAIN INFORMATION REGARDING RYAN, BECK
General
Ryan, Beck is an investment firm that is principally engaged in the
underwriting, distribution and trading of tax-exempt, bank and thrift equity and
debt securities. Ryan, Beck provides investment banking, research and financial
advisory services primarily to financial services companies with a focus on
corporate finance and merger-related services. Ryan, Beck offers a general
securities brokerage business with investment products for retail and
institutional clients, as well as life insurance and annuity products. Ryan,
Beck's retail and institutional brokerage clients consist primarily of high net
worth individuals (primarily residents of New Jersey, other Mid-Atlantic and
Northeastern states and Florida), banking and thrift institutions (primarily
located in New Jersey, Pennsylvania and Florida) and, to a much lesser extent,
insurance companies and specialty finance companies. Ryan, Beck intends to
continue to service its market niche in the financial services industry.
Ryan, Beck was organized in New Jersey in 1965, under the name of John
J. Ryan & Co., Incorporated, as a successor to various entities dating from
1946. Ryan, Beck changed its name to Ryan, Beck & Co., Inc. in 1981.
The principal executive office of Ryan, Beck is located at 220 South
Orange Avenue, Livingston, New Jersey 07039-5817 and its telephone number is
(973) 597-6000. Ryan, Beck is registered as a broker-dealer with the Securities
and Exchange Commission ( the "SEC") and is a member of the National Association
of Securities Dealers, Inc. (the "NASD") and the Securities Investor Protection
Corporation ("SIPC"). Accounts are insured up to $75,000,000 per customer. The
account protection applies when SIPC member firms fail financially and are
unable to meet obligations to customers, but does not protect against losses
from the rise and fall in market value of an investment. The first $500,000 (no
more than $100,000 of which may be cash awaiting reinvestment) is provided by
SIPC, and the balance is provided by a private insurer. Ryan, Beck is not a
member of any securities exchange.
Recent Developments
On February 27, 1998, Ryan, Beck completed the acquisition of
Cumberland Advisors ("CA"), a Vineland, New Jersey-based money manager with
approximately $400 million under management, and Cumberland Consulting
("Cumberland Consulting"), a Vineland, New Jersey-based financial advisor to
state and local government units (Cumberland Consulting together with CA
"Cumberland"). Pursuant to the acquisition, Ryan, Beck paid to the owners of
Cumberland cash in the amount of $1.3 million and issued 167,742 shares of Ryan,
Beck Common Stock at the closing. The agreement also contains a provision for
contingent payments including one contingent payment of $600,000 which has been
made. In turn, Ryan, Beck acquired Cumberland and Cumberland became a subsidiary
of Ryan, Beck. Cumberland continues to do business under the name of
"Cumberland." The transaction calls for the issuance of additional shares and
cash payable in the future if Cumberland meets or exceeds certain benchmarks
with a return of a portion of the cash and shares initially issued and issued in
any subsequent earn-out payment if Cumberland does not meet certain benchmarks.
THE MEETING
Purpose of the Meeting
The Meeting will be held on Monday, June 29, 1998 at 11:00 a.m., at The
Hilton at Short Hills, 41 JFK Parkway, Short Hills, New Jersey 07078. At the
Meeting, the holders of Ryan, Beck Common Stock will consider and vote upon the
approval and adoption of the Acquisition Agreement, the election of the six
nominees to serve as directors of Ryan, Beck until the Merger is consummated (or
if the Merger is not consummated until the year 2001 or 1999 as described
herein), approval and adoption of the Plan and any other matters as may properly
be brought before the Meeting and at any adjournments or postponements thereof.
This Proxy Statement-Prospectus is first being mailed to the holders of Ryan,
Beck Common Stock on or about May 26, 1998 and is accompanied by a
proxy card furnished in connection with the solicitation of proxies by the Ryan,
Beck Board of Directors for use at the Meeting.
The Board of Directors of Ryan, Beck has unanimously approved the
Acquisition Agreement and recommends a vote "FOR" approval and adoption of the
Acquisition Agreement. The Board of Directors of Ryan, Beck unanimously
recommends a vote "FOR" its nominees for directors and "FOR" approval of the
Plan. The Board of Directors of Ryan, Beck recommends a vote "AGAINST" the
Shareholder Proposal.
Record Date; Voting Rights; Proxies
The Board of Directors of Ryan, Beck has fixed the close of business on
May 20, 1998 as the record date for determining the holders of Ryan, Beck Common
Stock entitled to receive notice of and to vote at the Meeting (the "Record
Date"). Only holders of record of Ryan, Beck Common Stock at the close of
business on that date will be entitled to vote at the Meeting or at any
adjournment or postponement thereof.
At the close of business on the Record Date, there were 3,764,787
shares of Ryan, Beck Common Stock outstanding and entitled to vote at the
Meeting. Each share of Ryan, Beck Common Stock will be entitled to one vote upon
each matter properly submitted at the Meeting or at any adjournment or
postponement thereof.
Unless the shareholder specifies a different choice by means of his
proxy or revokes the proxy prior to the time it is exercised, all shares
represented by valid proxies received pursuant to this solicitation will be
voted (i) for approval of the Acquisition Agreement, (ii) in favor of the
election of the six nominees for directors who are named in this Proxy
Statement-Prospectus, (iii) for approval of the Plan and (iv) against the
Shareholder Proposal. Should any other matters properly come before the Meeting,
the persons named as proxies will vote upon such matters according to their
discretion unless the shareholder otherwise specifies in the proxy.
The presence of a shareholder at the Meeting will not automatically
revoke such shareholder's proxy. A shareholder may revoke any proxy that he or
she has given any time prior to its exercise. To do so, the shareholder must
file a written notice of revocation with, or deliver a duly executed proxy
bearing a later date to, Leonard J. Stanley, Corporate Secretary, Ryan, Beck &
Co., Inc., 220 South Orange Avenue, Livingston, New Jersey 07039, or attend the
Meeting and vote in person.
Votes cast by proxy or in person at the Meeting will be tabulated by
the election inspectors appointed for the Meeting, who will determine whether or
not a quorum is present. Where, as to any matter submitted to a vote of the
Ryan, Beck stockholders, proxies are marked as abstentions (or stockholders
appear in person but abstain from voting) or a broker indicates on a proxy that
it does not have discretionary authority with respect to certain shares, such
abstentions and "broker non-votes" will be treated as shares that are present
and entitled to vote for purposes of determining the presence of a quorum. At
the Annual Meeting, a plurality of the votes cast of shares of Ryan, Beck Common
Stock is required to elect directors and a majority of the votes cast by holders
of Ryan, Beck Common Stock is required to approve each of the Acquisition
Agreement, the Plan and the Shareholder Proposal. See " -- Required Vote."
RYAN, BECK STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH
THEIR PROXY CARDS. IF THE MERGER IS CONSUMMATED, STOCK CERTIFICATES SHOULD BE
DELIVERED IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF TRANSMITTAL
WHICH WILL BE SENT TO RYAN, BECK STOCKHOLDERS BY THE EXCHANGE AGENT PROMPTLY
AFTER THE EFFECTIVE TIME.
Solicitation of Proxies
In addition to using the mails, the directors, officers and employees
of Ryan, Beck may solicit proxies for the Meeting from stockholders personally,
by telephone or by facsimile. These officers, directors and employees will not
be specifically compensated for such services. Ryan, Beck has retained Corporate
Investor Communications Inc., a proxy soliciting firm ("CIC"), to assist in the
solicitation of proxies at a fee of $3,750, plus reimbursement of certain
out-of-pocket expenses estimated to be approximately $2,000. Ryan, Beck will
also make arrangements with brokerage firms and other custodians, nominees and
fiduciaries to send proxy materials to their principals and will reimburse such
parties for their expenses in doing so. The cost of soliciting proxies for the
Meeting, including the fees and expenses of CIC, will be borne by Ryan, Beck.
Quorum
The presence, in person or by proxy, of at least a majority of Ryan,
Beck Common Stock issued and outstanding and entitled to be voted at the Meeting
is necessary to constitute a quorum.
Required Vote
Each share of Ryan, Beck Common Stock will be entitled to one vote upon
each matter properly submitted at the Meeting or at any adjournment or
postponement thereof. The affirmative vote, in person or by proxy, of at least a
majority of the votes cast by the holders of shares of Ryan, Beck Common Stock
entitled to be voted at the Meeting is required in order to approve and adopt
the Acquisition Agreement, the Plan and the Shareholder Proposal. Nominees for
directors who receive a plurality of the votes cast of shares of Ryan, Beck
Common Stock entitled to be voted at the Meeting will be elected directors of
Ryan, Beck.
Since approval of each of the Acquisition Agreement and the Plan only
requires the affirmative vote of a majority of the votes cast on each such
proposal (provided that a quorum is present), abstentions and broker non-votes
will not be counted for the purpose of determining whether each proposal has
been approved (although they will count toward determining whether a quorum is
present). In addition, since directors are elected by a plurality of votes cast,
abstentions and broker non-votes will not affect the outcome of the election.
As of the Record Date, there were 3,764,787 outstanding shares of Ryan,
Beck Common Stock held by approximately 403 holders of record. The directors and
executive officers of Ryan, Beck as a group have voting control over 280,058 of
these shares (7.27%) and have agreed, pursuant to the Voting Agreements, to vote
them in favor of the Acquisition Agreement. In addition, Bancorp has voting
control over 100 of these shares all of which shares Ryan, Beck expects will be
voted in favor of the Acquisition Agreement, the nominees for directors and the
Plan and against the Shareholder Proposal. No consideration was paid to any of
the directors for their agreeing to enter into the Voting Agreements. Bancorp
required that the directors enter into the Voting Agreements as a condition to
Bancorp entering into the Acquisition Agreement.
The obligations of Ryan, Beck and Bancorp to consummate the Acquisition
Agreement are subject, among other things, to the condition that the Acquisition
Agreement and the transactions contemplated thereby be approved by the requisite
vote of the stockholders of Ryan, Beck. See "THE PROPOSED MERGER -- Conditions
to the Merger".
THE MATTERS TO BE CONSIDERED AT THE MEETING ARE OF GREAT IMPORTANCE TO
THE STOCKHOLDERS OF RYAN, BECK. ACCORDINGLY, STOCKHOLDERS ARE URGED TO READ AND
CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY STATEMENT-PROSPECTUS,
AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
I. THE PROPOSED MERGER AND RELATED MATTERS
THE PROPOSED MERGER
A copy of the Acquisition Agreement is attached as Appendix A to this
Proxy Statement-Prospectus and is incorporated by reference herein. This Proxy
Statement-Prospectus contains a description of all of the material terms and
provisions of the Merger and the Acquisition Agreement, as well as related
transactions, however, such description is qualified in its entirety by
reference to the Acquisition Agreement, including the exhibits thereto.
General Description
The Acquisition Agreement provides that, at the Effective Time, Ryan,
Beck will be merged into BCP, with BCP as the surviving entity (the "Surviving
Entity"). The separate identity and existence of Ryan, Beck will cease upon
consummation of the Merger and all property, rights, powers and franchises of
Ryan, Beck will vest in the Surviving Entity.
Closing; Determination Date
A closing under the Acquisition Agreement (the "Closing") will occur on
a date (the "Closing Date") to be determined by Bancorp and set forth in a
notice (the "Closing Notice") to Ryan, Beck. The Closing Date specified by
Bancorp in the Closing Notice shall be as soon as practicable following the
receipt of all necessary approvals and consents of all Regulatory Agencies and
the expiration of all statutory waiting periods in respect thereof and the
satisfaction or waiver of all of the conditions to consummation of the Merger
(other than the delivery of documents to be delivered at the Closing). The
Closing may also be set for another day mutually agreed to by Bancorp and Ryan,
Beck. The parties currently anticipate closing in the second quarter of 1998.
Simultaneous with or immediately following the Closing, Bancorp will file a
certificate of merger with the Secretary of State of New Jersey (the
"Certificate of Merger"). The Merger will become effective at the "Effective
Time", which will be a date and time agreed to by the parties and specified in
the Certificate of Merger. Bancorp and Ryan, Beck anticipate the Effective Time
will be the close of business on the Closing Date. If the parties fail to
specify the date and time in the Certificate of Merger, the Effective Time will
be the date and time the Certificate of Merger is filed. The exact Closing Date
and Effective Time are dependent upon satisfaction of all conditions precedent,
some of which are not under the control of Bancorp or Ryan, Beck.
Consideration
At the Effective Time, each outstanding share of Ryan, Beck Common
Stock will be converted into the right to receive 0.761 shares (the "Conversion
Ratio") of Bancorp Class A Common Stock.
As provided in the Acquisition Agreement, the Conversion Ratio and the
$10.88 Floor have been adjusted to reflect the February Stock Dividend and this
Proxy Statement-Prospectus reflects such adjustments. The Conversion Ratio and
the Floor are subject to further adjustment to take into account any other stock
split, stock dividend, reclassification, recapitalization, merger, combination
or exchange or similar transaction by Bancorp with respect to the Bancorp Class
A Common Stock occurring subsequent to February 18, 1998. In addition, in the
event that the Average Price is less than the $10.88 Floor, which would result
in each share of Ryan, Beck Common Stock being exchanged for Bancorp Class A
Common Stock with a value of less than $8.28, Ryan, Beck may elect to terminate
the Acquisition Agreement by providing notice of such termination to Bancorp,
which may then elect, at its sole option, to increase the Conversion Ratio to an
amount equal to the quotient of $8.28 divided by the Average Price. If Bancorp
so elects and increases the Conversion Ratio, the Acquisition Agreement will not
be terminated. The Average Price is defined in the Acquisition Agreement as the
average of the closing sale prices per share of Bancorp Class A Common Stock on
the NYSE for the period of ten consecutive trading days ending with (and
including) the second trading day prior to the Closing Date. There can be no
assurance that Ryan, Beck will exercise its right to terminate the Acquisition
Agreement if the conditions described above exist (a "Price Termination Event"),
and if Ryan, Beck does exercise its right to terminate the Acquisition
Agreement, there can be no assurance that Bancorp will elect to increase the
Conversion Ratio as provided in the Acquisition Agreement and as described
above.
Ryan, Beck stockholders are not assured of receiving any specific
market value of Bancorp Class A Common Stock. The price of Bancorp Class A
Common Stock at the Effective Time may be higher or lower than the market price
at the time of entering into the Acquisition Agreement, the time of mailing this
Proxy Statement-Prospectus, the time of the Meeting or the time certificates
representing shares of Bancorp Class A Common Stock are delivered in exchange
for shares of Ryan, Beck Common Stock following consummation of the Merger.
Thus, the value of the Bancorp Class A Common Stock actually received by holders
of Ryan, Beck Common Stock may be more or less than the value of the Bancorp
Class A Common Stock on the Effective Time resulting from the Conversion Ratio.
Ryan, Beck stockholders are urged to obtain current market quotations for the
Bancorp Class A Common Stock and the Ryan, Beck Common Stock.
It is not possible to know whether a Price Termination Event will occur
until after the Closing has been scheduled. The Ryan, Beck Board of Directors
has made no decision as to whether it would exercise its right to terminate the
Acquisition Agreement if there is a Price Termination Event. In considering
whether to exercise its termination right in such situation, the Ryan, Beck
Board of Directors would, consistent with its fiduciary duties, take into
account all relevant facts and circumstances that exist at such time and would
consult with its financial advisors and legal counsel. Approval of the
Acquisition Agreement by the stockholders of Ryan, Beck at the Meeting will
confer on the Ryan, Beck Board of Directors the power, consistent with its
fiduciary duties, to elect to consummate the Merger in the event of a Price
Termination Event regardless of whether there is any increase in the Conversion
Ratio and without any further action by, or resolicitation of, the stockholders
of Ryan, Beck. However, if the Average Price of the Bancorp Class A Common Stock
is materially less than $10.88, the Conversion Ratio is not increased, and the
Ryan, Beck Board of Directors determines that proceeding with the Merger at such
lower consideration is in the best interests of Ryan, Beck and its stockholders,
then the Ryan, Beck Board of Directors, consistent with its legal obligations
and fiduciary duties, would consider resoliciting shareholder approval of the
Merger at the lower consideration level. If Ryan, Beck elects to exercise its
termination right, it must provide Bancorp written notice of that decision.
During a five business-day period commencing with Bancorp's receipt of such
notice from the Ryan, Beck Board of Directors, Bancorp has the option, in its
sole discretion, to increase the Conversion Ratio in the manner set forth in the
Acquisition Agreement and agree to establish the Closing Date within ten
business days of receipt of Ryan, Beck's notice and thereby avoid such
termination of the Acquisition Agreement. Bancorp is under no obligation to so
increase the Conversion Ratio and there can be no assurance that Bancorp would
elect to increase the Conversion Ratio if Ryan, Beck were to exercise its right
to terminate the Acquisition Agreement as set forth above. Any such decision
would be made by Bancorp in light of the circumstances existing at the time
Bancorp has the opportunity to make such an election. If Bancorp elects to
increase the Conversion Ratio as set forth in the Acquisition Agreement, it must
give Ryan, Beck notice of that election prior to 11:59 p.m. on the fifth
business day following receipt of the notice of termination from Ryan, Beck, in
which case no termination of the Acquisition Agreement would occur as a result
of a Price Termination Event and the election by Ryan, Beck to provide a notice
of termination.
The foregoing discussion is qualified in its entirety by reference to
the applicable provisions in the Acquisition Agreement (a copy of which is set
forth as Appendix A to this Proxy Statement-Prospectus) relating to calculation
of the Conversion Ratio, the Average Price and a possible increase of the
Conversion Ratio as the result of a Price Termination Event.
Conversion of Ryan, Beck Options
At the Effective Time, each outstanding option to purchase a share of
Ryan, Beck Common Stock (a "Ryan, Beck Option") pursuant to Ryan, Beck's
existing stock option plans and agreements, except for the option granted to
Bancorp, will be assumed by Bancorp and automatically converted into an option
to purchase a number of shares of Bancorp Class A Common Stock equal to the
number of shares of Ryan, Beck Common Stock that could have been purchased under
the Ryan, Beck Option multiplied by the Conversion Ratio at an exercise price
per share of Ryan, Beck Common Stock equal to the option exercise price under
the Ryan, Beck Option divided by the Conversion Ratio. Upon exercise, any
options to purchase fractional shares resulting from such conversion will be
eliminated unless the terms of the option award provide otherwise. In the case
of any Ryan, Beck Option which was intended to qualify as an incentive stock
option under Section 422 of the Code, the option price, the number of shares
purchasable pursuant to such option and the terms and conditions of exercise
will be set in compliance with Section 424(a) of the Code. Ryan, Beck currently
has options to purchase an aggregate of 425,952 shares of Ryan, Beck Common
Stock outstanding under the Ryan, Beck & Co., Inc. 1986 Stock Option Plan, the
Ryan, Beck & Co., Inc. 1995 Stock Option Plan and the Ryan, Beck & Co., Inc.
1997 Long-Term Stock Incentive Plan, which is subject to shareholder approval
(collectively the "Ryan, Beck Plans"). Each Ryan, Beck Option will continue to
be governed by the Ryan, Beck Plan under which such option was granted and,
except as described above, will generally have the same duration and other terms
applicable prior to the Effective Time.
Cash in Lieu of Fractional Shares
No fractional shares of Bancorp Class A Common Stock will be issued in
exchange for Ryan, Beck Common Stock. Instead, holders of Ryan, Beck Common
Stock will receive cash equal to the fractional share interest multiplied by the
Average Price of Bancorp Class A Common Stock, without interest. All shares of
Bancorp Class A Common Stock to be issued to each holder of Ryan, Beck Common
Stock will be aggregated to constitute as many whole shares as possible before
determining such person's fractional share interest.
No Dissenters' Rights of Appraisal
The holders of the Ryan, Beck Common Stock are not entitled to
dissenters or appraisal rights under the NJBCA since the Bancorp Class A Common
Stock to be received pursuant to the Merger is presently listed on the NYSE.
Background of and Ryan, Beck's Reasons for the Merger
The Ryan, Beck Board of Directors determined late in 1997 that Ryan,
Beck should raise additional capital in the first part of 1998 in order, among
other things, to be able to expand Ryan, Beck's business through larger
underwritings. The issuance of new capital likely would have been dilutive to
Ryan, Beck's existing shareholders, and management of Ryan, Beck considered the
possibility of obtaining the additional capital through a business combination
with a partner willing to increase Ryan, Beck's capital.
The Ryan, Beck Board of Directors has periodically reviewed Ryan,
Beck's strategic options, including the possibility of a sale of Ryan, Beck to,
or combination of Ryan, Beck with, another entity. From time to time, management
of Ryan, Beck has received informal expressions of interest from potential
acquirors and merger partners and Ryan, Beck has negotiated to acquire other
businesses. During 1997, banks acquired a significant number of broker-dealers,
including Alex. Brown Inc., Robertson Stephens, The Ohio Company, Roney & Co.,
Wheat First, Piper Jaffray and Montgomery Securities, and as a consequence of
these acquisitions, the prospect for marketplace acceptance of the combination
of Ryan, Beck with a bank or thrift increased.
As 1997 progressed, the Board of Directors developed a more focused
approach toward acquisitions. In July 1997, the Board established an Acquisition
Committee, headed by Chairman Richard Neff, and gave the committee a broad
mandate. The Board had long recognized that Ryan, Beck's revenue stream was
narrow, with profitability and revenues heavily dependent on the success of the
corporate finance department in attracting underwriting and advisory work,
almost exclusively in the bank and thrift area. Moreover, the corporate finance
department in turn was dependent on a small number of senior personnel.
Consequently, the Board, and later the Acquisition Committee, focused on
expanding Ryan, Beck's revenue base and increasing the depth of its
infrastructure. Early in the year, Ryan, Beck acquired over 6,000 accounts from
a bankrupt broker-dealer. Later in the year discussions began in earnest to
acquire Cumberland Advisors and expand into the asset management business.
Nonetheless, the Board and the Acquisition Committee remained sensitive to the
need to further increase revenues, provide more diverse revenue sources and to
broaden the ranks of senior management.
Bancorp has been an investment banking client of Ryan, Beck since 1995.
In that time, Ryan, Beck has completed five significant financings for Bancorp.
In the course of routine contacts in late 1997, Mr. Levan, Chairman of Bancorp,
raised with Mr. Plotkin, President & Chief Executive Officer of Ryan, Beck, the
possibility of Bancorp acquiring Ryan, Beck. Mr. Plotkin indicated that Ryan,
Beck was considering raising additional capital in early 1998 and that an
acquisition in lieu of such an endeavor was worthy of exploration. Mr. Plotkin
indicated that he would discuss the matter with Chairman Neff and schedule a
follow up meeting. On December 12, 1997, Messrs. Neff, Plotkin and Levan met to
discuss the terms of a potential transaction. At this meeting, potential
transaction terms were discussed, including the price to be paid to
shareholders, the use of a retention pool to ensure that key revenue producing
officers and employees remained employed by Ryan, Beck and the post-acquisition
operation of Ryan, Beck as an autonomous, independent subsidiary of Bancorp.
Over the course of the next month, there were follow up telephone
conversations between the parties to discuss various issues and concerns. On
January 12, 1998, Ryan, Beck's Board of Directors met to discuss the general
terms of the Bancorp proposal. On January 18, 1998, Messrs. Plotkin and Levan
met to discuss future business strategies, diligence issues and potential
synergies.
A special meeting of the Board of Directors of Ryan, Beck was held on
January 21, 1998. During this meeting Mr. Levan made a presentation to the Board
concerning Bancorp, and discussed a full range of issues, including issues
relating to stock control, the Bancorp Class A Common Stock and Class B Common
Stock, and Bancorp's intention to operate Ryan, Beck as an autonomous,
independent subsidiary following the acquisition. Mr. Levan answered numerous
questions from Ryan, Beck Directors. Ryan, Beck's legal counsel briefed the
Board of Directors about the fiduciary responsibilities of the Directors. After
considering Mr. Levan's presentation, the Board authorized management to
commence negotiation of an agreement with Bancorp. Because the Board determined
that Ryan, Beck's management directors would have interests in the proposed
transaction separate from those of Ryan, Beck, the Board formed a special
committee of outside directors consisting of Messrs. Neff, Horn, Pangia,
Perlmutter and Rodino, and authorized the committee to independently review the
proposed transaction, the retention pool, and other related issues. The Outside
Directors Committee was also authorized to retain separate legal representation
and to utilize the services of an independent investment banking firm which
Ryan, Beck would retain in order to render advice both to the Outside Directors
Committee and to the full Board on the fairness of the proposed transaction to
Ryan, Beck's shareholders. After the full Board of Directors concluded its
meeting, the Outside Directors Committee met separately to consider and discuss
the proposed transaction. Pursuant to the full Board of Directors'
authorization, the Outside Directors Committee retained separate legal
representation.
On January 27, 1998 the Board of Directors met and further considered
the proposed transaction and other alternatives available to the Company. At the
completion of this meeting, the Outside Directors Committee met separately and
further discussed the proposed terms of the Merger.
On January 31, 1998 Mr. Levan and Mr. Plotkin negotiated by telephone
and discussed various business issues, including fixed versus floating exchange
ratios, the retention pool and independence issues with respect to future Ryan,
Beck operations.
On February 5, 1998 Ryan, Beck retained Duff & Phelps, LLC ("Duff &
Phelps") to render its opinion to the Board of Directors regarding the fairness
to holders of Ryan, Beck Common Stock, from a financial point of view, of the
consideration to be delivered to such shareholders in the proposed transaction
with Bancorp. Prior to retaining Duff & Phelps, Ryan, Beck management consulted
a well-recognized investment banking firm which declined the engagement because
of the relatively small size of the transaction and the fee involved. Members of
the Outside Directors Committee then interviewed two more firms, one of which
began analysis of the proposed transaction, but declined to proceed for a
variety of reasons relating to, among other factors, the price level (which they
believed was on the low end of the fairness range), the process, litigation
related to BFC Financial Corporation, and the size of the firm's fee. After
reviewing their credentials and believing them to be fully qualified, the
Outside Directors Committee selected, and the full Board approved, Duff &
Phelps. Ryan, Beck fully informed Duff & Phelps of the issues expressed by its
competitor in declining the engagement.
At a special Board meeting on February 7, 1998, the Board of Directors
was updated on the status of the negotiations with Bancorp. The Board also
discussed alternatives which had been presented to Ryan, Beck by Bancorp
regarding a fixed versus a floating exchange ratio. The Board considered a fixed
exchange ratio, with Ryan, Beck having a "walkaway" right to terminate the
transaction if the value (based on market price during a pricing period near
Closing) of the shares of Bancorp Class A Common Stock to be received in
exchange for each share of Ryan, Beck Common Stock fell below $8.28, and a
floating exchange ratio designed to deliver Bancorp Class A Common Stock with a
pricing period value of $9.75. After evaluating the two approaches, the Board
reached a consensus that a fixed exchange ratio with walkaway rights was
preferable to a floating exchange ratio since, among other things, the fixed
exchange ratio would allow Ryan, Beck shareholders to receive the full benefit
of any price increase in Bancorp Class A Common Stock.
On February 9, 1998, the Ryan, Beck Board of Directors met to review
and vote upon the Bancorp proposal. The Board was advised by management and by
Ryan, Beck's legal counsel on the terms and conditions contained in the
Acquisition Agreement and the Stock Option Agreement, and the negotiations which
had led to such terms. Duff & Phelps made a presentation regarding the matters
it had considered and the analyses it had performed in the course of its
engagement. Duff & Phelps advised the Board that, in its opinion, the
consideration to be received by shareholders of Ryan, Beck in the proposed
transaction was fair, from a financial point of view, to those shareholders. At
the Board's request, Duff & Phelps delivered a written opinion to the same
effect, dated February 9, 1998. All directors participated in discussions
concerning the proposed transaction and the course of action Ryan, Beck should
take. The Outside Directors Committee then met separately, considered these
matters, and determined to recommend to the full Board the approval of the
transaction and the relevant documents. The Outside Directors Committee
considered the same factors as the full Board of Directors, and, separately from
the full Board, asked questions of, and received advice from, Duff & Phelps
prior to reaching its determination to recommend the transaction. The full
Board, following its receipt of the Committee's recommendation, voted
unanimously to approve the transaction with Bancorp, and to authorize
management, on behalf of Ryan, Beck, to finalize, execute and deliver the
Acquisition Agreement, the Stock Option Agreement and all related documents.
Following the February 9 meeting, senior management of Ryan, Beck and
Bancorp, each duly authorized by its respective board of directors, executed the
Acquisition Agreement and Stock Option Agreement.
Ryan, Beck Reasons for the Merger; and Recommendation of Ryan, Beck's Board of
Directors.
The Ryan, Beck Board considered a number of factors, both favorable and
unfavorable, in reaching its conclusion to enter into the Acquisition Agreement
and the Stock Option Agreement and to recommend approval of the Acquisition
Agreement by the Ryan, Beck shareholders. The Outside Directors Committee
considered the same factors in determining to recommend the transaction to the
full Board of Directors. Described below are the material factors considered by
the Outside Directors Committee and by the full Board. In reaching their
respective determinations to approve the Acquisition, neither the Outside
Directors Committee nor the Board assigned any relative or specific weights to
these or other factors, and individual directors may have given differing
weights to different factors.
The material factors considered by the Outside Directors Committee and the Board
were the following:
(i) The significant premium over market price represented by the
Conversion Ratio. On February 9, 1998, the date of the final
meetings of the Ryan, Beck Board of Directors and the Outside
Directors Committee to consider the Merger, the closing price of
one share of Bancorp Class A Common Stock multiplied by the 0.761
Conversion Ratio ($9.739) represented a premium in excess of 20%
over the closing price of one share of Ryan, Beck Common Stock
($7.875);
(ii) The increased prospects for long-term shareholder value as part of
a larger organization with a more diversified revenue base and
earnings base;
(iii)The greater liquidity of Bancorp Class A Common Stock, which is
actively traded on the New York Stock Exchange, compared with
Ryan, Beck Common Stock. As reported by Duff & Phelps to the
Outside Directors Committee and the Board, during the three month
period ending January 31, 1998 the monthly trading volume in Ryan,
Beck Common Stock was less than 200,000 shares per month as
compared to more than 1,500,000 shares for Bancorp Class A Common
Stock;
(iv) The fact that annual dividends received by Ryan, Beck shareholders
on a pro forma basis would double in the Acquisition from $.04 to
$.08 per share;
(v) The non-voting nature of the Bancorp Class A Common Stock to be
received by Ryan, Beck shareholders, and the degree to which Alan
Levan may control Bancorp through his direct and indirect
shareholdings and his position as Chairman, President and Chief
Executive Officer of Bancorp;
(vi) The need for Ryan, Beck to raise additional capital, which would
most likely result in dilution to existing Ryan, Beck shareholders
if not done by means of the Acquisition or a similar transaction,
and Bancorp's agreement to supply additional capital in order for
Ryan, Beck to expand its business;
(vii)The critical need to retain Ryan, Beck's business and key revenue
producing officers and employees, whether Ryan, Beck remains a
stand-alone entity or combines with another entity, and the belief
of Ryan, Beck's management and Board that those critical
objectives could best be achieved through a transaction (such as
the Acquisition) which has a high likelihood of closing and has
the support of Ryan, Beck's key revenue producing officers and
employees, and through the Independence Agreement and retention
pool negotiated by Ryan, Beck management with Bancorp;
(viii) The substantial geographic distance between Bancorp and Ryan,
Beck's primary markets, and the positive effect that Ryan, Beck's
management and Board believes this distance is likely to have on
Ryan, Beck's post-acquisition ability to retain and grow its
financial institution investment banking clientele; and
(ix) The fairness opinion of Duff & Phelps and the presentation made by
Duff & Phelps to the Board of Directors.
The Ryan, Beck Board has unanimously approved the Acquisition and recommends
that the Ryan, Beck shareholders vote FOR approval of the Acquisition Agreement.
Bancorp's Reasons for the Merger
Bancorp is one of the largest independent financial institutions
headquartered in the State of Florida and strives to be responsive to the
banking needs of its customers and community. Bancorp is focused on continuing
to grow while preserving the personalized service and fast decision making
characteristic of community banks. Bancorp believes that its acquisition of
Ryan, Beck and Ryan, Beck's inclusion within Bancorp's organization is an
effective means of achieving Bancorp's goal of diversifying and strengthening
Bancorp's sources of non-interest revenue. At the same time, the alliance should
provide Bancorp's customers with access to the broad and diverse range of
products provided by Ryan, Beck's retail brokerage and investment advisory
businesses. Further, the capital strength of Bancorp should enable Ryan, Beck to
expand its business, permitting it to provide both Ryan Beck and Bancorp's
customers with a more diversified range of products and services than those
previously offered by Ryan, Beck or by a traditional depository institution.
Interests of Certain Persons in the Merger
In considering the recommendation of the Ryan, Beck Board of Directors
with respect to the Merger, holders of Ryan, Beck Common Stock should be aware
that certain members of the Board of Directors and management of Ryan, Beck have
interests in the Merger in addition to their interests generally as stockholders
of Ryan, Beck. To the extent material, such additional interests are described
below and except as described below, such persons have, to the best knowledge of
Ryan, Beck, no material interest in the Merger apart from those of stockholders
generally. The Ryan, Beck Board of Directors was aware of these interests and
considered them, among other matters, in approving the Acquisition Agreement and
the transactions contemplated thereby.
Retention Pool
At the Effective Time, Bancorp has agreed to establish a retention pool
(the "Retention Pool") consisting of restricted shares of Bancorp Class A Common
Stock to be used to retain key employees of Ryan, Beck. The value of the shares
which will be dedicated to the Retention Pool will be equal to 20% of the
aggregate of the value of the shares of Bancorp Class A Common Stock issued
pursuant to the terms of the Merger and the shares of Bancorp Class A Common
Stock dedicated to the Retention Pool (excluding options issued in the Merger in
exchange for Ryan, Beck Options and excluding Bancorp Class A Common Stock
issued in the Merger in exchange for shares issued after February 9, 1998). The
term "value" is defined in the Acquisition Agreement to mean the number of
shares of Bancorp Class A Common Stock equal to the Average Price multiplied by
the number of shares. Upon entering into the Acquisition Agreement, management
of Ryan, Beck, with the approval of the Board of Directors of Ryan, Beck and,
with the consent of Bancorp, selected certain key employees of Ryan, Beck to
participate in the Retention Pool and allocated dollar amounts of the Retention
Pool to such employees, based upon the estimated dollar value at that time. The
five executive officers of Ryan, Beck who serve on the Senior Management
Committee (four of whom serve on the Board of Directors) were allocated
approximately $2,275,000 of the approximately $8.7 million in estimated value in
the Retention Pool, or approximately 26% of the amount. The allocations for all
employees who are participating in the Retention Pool are subject to adjustment
at the Closing and the amounts will be finalized at or shortly before the
Closing. The award is subject to and conditioned upon the terms of an Award
Agreement. The shares in the Retention Pool will vest on the fourth anniversary
of the Effective Date. The shares will vest earlier if the participant's
employment by Ryan, Beck (or its successor) is terminated for any reason other
than cause (as defined) or if the participant's employment is terminated due to
death or disability.
Employment Agreements
In connection with the Merger, at the Effective Time, Ben A. Plotkin,
Ryan, Beck's President and Chief Executive Officer will enter into an employment
agreement with Ryan, Beck (the "Plotkin Agreement"). The terms of the Plotkin
Agreement provide that Mr. Plotkin will be employed as Chairman, President and
Chief Executive Officer of Ryan, Beck, thereby retaining the responsibility for
the day-to-day management and operations of Ryan, Beck. Additionally, Mr.
Plotkin's former employment agreement, an Amended and Restated Employment
Agreement dated as of March 18, 1997 between Ryan, Beck and Mr. Plotkin (the
"Former Plotkin Agreement") will be replaced and superseded by the Plotkin
Agreement and Ryan, Beck's obligations under the Former Plotkin Agreement will
be terminated in exchange for a lump sum payment by Ryan, Beck to Mr. Plotkin of
$780,000 (the "Buyout Sum"). Under the Plotkin Agreement, Mr. Plotkin is
entitled to an annual base salary of $260,000, a discretionary annual bonus, and
all other employee benefits available to Ryan, Beck employees. Under the Plotkin
Agreement, Mr. Plotkin will be paid a guaranteed bonus in the first year after
completion of the Merger, which will be an amount no less than Mr. Plotkin's
1997 bonus of $1,025,000. Mr. Plotkin is also entitled to severance pay and
benefits if he is terminated without cause or resigns for Good Reason (as
defined in the Plotkin Agreement). The severance pay is equal to the annual base
salary plus, if discretionary bonuses are paid to other employees of Ryan, Beck
for the relevant year, then a bonus amount equal to the average bonus amount
paid to Mr. Plotkin in the last 2 years multiplied by a fraction, the numerator
of which is the number of days Mr. Plotkin was actively employed during the year
and denominator of which is 365.
Furthermore, in connection with the Merger, the employment agreement
between Ryan, Beck and Matthew Naula, Ryan Beck's Vice Chairman, will also be
terminated and in connection with such termination Mr. Naula will receive
$150,000.
Independence Agreement
In connection with the Acquisition Agreement, Bancorp, Ryan, Beck and
BCP have agreed to enter into an Independence Agreement at the Effective Time
(the "Independence Agreement"). The Independence Agreement will provide that the
Surviving Entity of the Merger will, subject to certain conditions, remain as an
independent autonomous subsidiary of Bancorp. To this end, separate operating
budgets will be established for the Surviving Entity and the books and records
of the Surviving Entity will be maintained in a way which will accurately
reflect the separate operations and financial condition of the Surviving Entity.
Additionally, pursuant to the Independence Agreement, Alan B. Levan and Ben A.
Plotkin (so long as they are available and employed by Bancorp in the case of
Levan and the Surviving Entity in the case of Plotkin) and Richard B. Neff or
such other third party mutually agreed upon by Messrs. Levan and Plotkin, have
the right to designate those persons to serve as the members of the Surviving
Entity's Board of Directors. Bancorp will also commit pursuant to the terms of
the Independence Agreement to make available to the Surviving Entity such
resources, including capital, as the parties mutually agree is appropriate on
terms consistent with the past borrowings of Ryan, Beck and mutually agreeable
to Bancorp's and the Surviving Entity's Boards of Directors.
Indemnification
In the Acquisition Agreement, Bancorp and the Surviving Entity have
agreed, for a period of six years after the Effective Time, to indemnify each
person who is, has been, or becomes prior to the Effective Time, a director or
executive officer of Ryan, Beck or its Subsidiaries (collectively, the
"Indemnitees"), to the fullest extent to which the Indemnitees would have been
entitled to indemnification under the NJBCA and Ryan, Beck's Certificate of
Incorporation and By-laws as in effect on February 9, 1998 had the Merger not
occurred, with respect to any claims made against such person because he or she
is or was serving in such capacity in connection with actions or omissions
occurring at or prior to the Effective Time and acts or omissions occurring
after the Effective Time in connection with the transactions contemplated by the
Acquisition Agreement. In the Acquisition Agreement, Bancorp has also agreed to
use its reasonable best efforts to maintain Ryan, Beck's existing directors' and
officers' liability insurance policy (or a rider to Bancorp's then current
policy) for persons who were covered by such policy as of the date of the
Acquisition Agreement for a period of three years after the Effective Time at an
annual cost not to exceed 150 percent of the current annual premium payment
under Ryan, Beck's policy in effect on the date of the Acquisition Agreement.
Board Membership
It is a condition to Ryan, Beck's obligations under the Acquisition
Agreement that Ben A. Plotkin, Ryan, Beck's President and Chief Executive
Officer be appointed to Bancorp's Board of Directors at or prior to the
Effective Time. Mr. Plotkin, however, will not be entitled to any additional
compensation for serving on Bancorp's Board of Directors, other than
reimbursement for reasonable expenses incurred in connection with attendance at
board meetings.
Stock Options
As of December 11, 1997, forty-one eligible employees and directors of
Ryan, Beck were granted options to acquire an aggregate of 203,000 shares of
Ryan, Beck Common Stock at an exercise price of $6.875 per share pursuant to the
Plan which is subject to shareholder approval at this Meeting. In addition,
eligible employees and directors of Ryan, Beck had previously been granted
options to acquire an aggregate of 222,952 shares of Ryan, Beck Common Stock at
a weighted average exercise price of $5.413 per share under Ryan, Beck's
existing plans. All of these options remain outstanding on the date of this
Proxy Statement-Prospectus. Based on the 0.761 Conversion Ratio and the reported
closing price per share of Bancorp Class A Common Stock on the dates specified
below, the 203,000 options granted under the Plan had an aggregate value of
$581,320 and the 222,952 options granted under existing Ryan, Beck plans had an
aggregate value of $964,222, on February 9, 1998, the last full trading day
before public announcement of the signing of the Acquisition Agreement, and an
aggregate value of $699,576 and $1,094,265, respectively, on May 22, 1998, the
most recent trading day prior to the date of this Proxy Statement-Prospectus.
Ownership of Bancorp Class A Common Stock and Bancorp Convertible Bonds
As of the Record Date, the directors and executive officers of Ryan,
Beck beneficially owned an aggregate of 20,881 shares of Bancorp Class A Common
Stock and $180,000 of Bancorp 6.75% Convertible Subordinated Debentures.
Opinion of Ryan, Beck's Financial Advisor
Introduction
Duff & Phelps, LLC ("Duff & Phelps") has acted as financial advisor to
Ryan, Beck in connection with the Merger, and has assisted the Ryan, Beck Board
in its examination of the fairness, from a financial point of view, of the
Merger consideration to be paid to the Ryan, Beck stockholders. Duff & Phelps
provided advice both to the full Ryan, Beck Board of Directors and to the
Outside Directors Committee. The Outside Directors Committee met separately with
and consulted Duff & Phelps outside the presence of the full Board of Directors.
Duff & Phelps is one of the nation's largest independent specialty investment
banking and financial advisory firms. Duff & Phelps has been providing valuation
and financial advisory services to clients for over 60 years. Duff & Phelps
performs more than 300 engagements each year for clients ranging from small,
privately held companies to large, publicly traded corporations. Ryan, Beck
selected Duff & Phelps as its financial advisor based upon Duff & Phelps'
experience, ability and reputation.
On February 9, 1998, Duff & Phelps rendered its written opinion to the
Ryan, Beck Board to the effect that, as of the date of such opinion, the Merger
consideration to be paid by Bancorp to the Ryan, Beck stockholders for shares of
Common Stock was fair, from a financial point of view.
In arriving at its fairness opinion. dated February 9, 1998, Duff &
Phelps reviewed, among other items, the following information concerning Ryan,
Beck and Bancorp: the public financial statements of Ryan Beck and Bancorp
included in Annual Reports to Shareholders and Annual Reports on SEC Form 10-K
for the fiscal years ended December 31, 1996 and 1995 and their respective
quarterly reports on SEC Form 10-Q for the periods ended March 31, June 30 and
September 30, 1997; the 1997 earnings releases and unaudited 1997 financial
results for Ryan Beck and Bancorp; the fiscal year 1998 budget for Ryan, Beck as
prepared by management of Ryan, Beck; and certain other internal operating
reports prepared by management of Ryan, Beck. Duff & Phelps also reviewed
historical stock market prices and trading volume for both Ryan, Beck and
Bancorp. Duff & Phelps also reviewed the Acquisition Agreement, including the
exhibits thereto, and the Stock Option Agreement, substantially in the form
executed by both Ryan, Beck and Bancorp. In arriving at its fairness opinion,
dated February 9, 1998, Duff & Phelps took into account that BFC, which is
controlled by the Chairman and Vice Chairman of Bancorp, owned at December 31,
1997, approximately 45.6% of Bancorp's issued and outstanding Class B Common
Stock and approximately 30.6% of Bancorp's issued and outstanding Class A Common
Stock, and Duff & Phelps reviewed certain publicly available information with
respect to BFC and its controlling shareholders.
Duff & Phelps reviewed industry and financial information, which
included, among other items, financial and stock market data relating to
publicly held companies which Duff & Phelps deemed relevant for comparative
purposes to both Ryan, Beck and Bancorp, and change of control transactions
involving broker/dealer and investment banking firms. Duff & Phelps also
reviewed retention arrangements which were part of change-of-control
transactions involving broker/dealers and investment banking firms. All industry
information and data on public companies deemed comparable to Ryan, Beck or
Bancorp, in whole or in part, and used in Duff & Phelps analysis were obtained
from regularly published industry and investment sources, with the exception of
one private change of control transaction in which Duff & Phelps acted as
financial advisor. In addition, Duff & Phelps held discussions with senior
management of Ryan, Beck regarding past, current, and projected operations and
regarding discussions and contacts with other potential acquirers. Duff & Phelps
also held discussions with senior management of Bancorp regarding past, current
and projected operations. Duff & Phelps also took into account its assessment of
general economic, market and financial conditions, as well as its experience in
securities and business valuation, in general, and with respect to similar
transactions, in particular. Duff & Phelps did not make any independent
appraisals of the assets or liabilities of Ryan, Beck or of Bancorp.
In performing its analysis and rendering its opinion with respect to
the Merger, Duff & Phelps relied upon the accuracy and completeness of all
information provided to it, whether obtained from public or private sources,
including Ryan, Beck and Bancorp management, and did not attempt to
independently verify any such information. Duff & Phelps notes that nothing has
come to its attention in the course of its analysis to make Duff & Phelps
believe that it is not reasonable to rely on the information described above,
including the projections and reports of the management of Ryan, Beck. Duff &
Phelps' opinion further assumes that information supplied and representations
made by Ryan, Beck's management are substantially accurate regarding Ryan, Beck
and the background and terms of the Merger. Duff & Phelps has prepared its
opinion effective as of February 9, 1998. This opinion is necessarily based upon
market, economic, financial and other conditions as they exist and can be
evaluated as of such date. Ryan, Beck did not place any limitation upon Duff &
Phelps with respect to the procedures followed or factors considered by Duff &
Phelps in rendering its opinion.
Duff & Phelps delivered an updated fairness opinion dated May 26, 1998
which is attached hereto as Appendix C and updates the fairness opinion dated
February 9, 1998. In connection with its updated opinion, Duff & Phelps
confirmed the appropriateness of its reliance on the analyses used to render its
February 9, 1998 opinion by performing procedures to update certain of such
analyses and by reviewing the assumptions and conclusions contained in the
February 9, 1998 opinion.
THE FULL TEXT OF THE UPDATED WRITTEN FAIRNESS OPINION OF DUFF & PHELPS, WHICH
SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED,
LIMITATIONS ON AND SCOPE OF REVIEW BY DUFF & PHELPS IN RENDERING ITS OPINION, IS
ATTACHED AS APPENDIX C TO THIS PROXY STATEMENT-PROSPECTUS AND IS INCORPORATED
HEREIN BY REFERENCE. RYAN, BECK STOCKHOLDERS ARE URGED TO READ THE DUFF & PHELPS
UPDATED OPINION IN ITS ENTIRETY. THE DUFF & PHELPS UPDATED OPINION IS DIRECTED
TO THE FINANCIAL TERMS OF THE MERGER TO THE RYAN, BECK SHAREHOLDERS AND DOES NOT
CONSTITUTE A RECOMMENDATION BY DUFF & PHELPS TO ANY SHAREHOLDER OF RYAN, BECK AS
TO HOW HE OR SHE SHOULD VOTE ON THE ISSUE OF APPROVAL AND ADOPTION OF THE
ACQUISITION AGREEMENT.
Summary of Analyses
In preparing its opinion to the Ryan, Beck Board, Duff & Phelps
performed a variety of financial and comparative analyses regarding the
valuation of Ryan, Beck including (i) a discounted cash flow analysis of the
projected free cash flow of Ryan, Beck; (ii) a comparison of financial
performance and market valuation ratios of Ryan, Beck with those of publicly
traded companies Duff & Phelps deemed relevant for purposes of its opinion; and
(iii) a review of recent control transactions involving broker/dealers and
investment banking firms. In addition, Duff & Phelps has conducted other
studies, analyses and investigations as it deemed appropriate for purposes of
its opinion, including a comparison of financial performance and market
valuation ratios of Bancorp with those of publicly traded companies Duff &
Phelps deemed relevant for purposes of its opinion.
- -- Discounted Cash Flow Analysis. Duff & Phelps performed a discounted cash flow
analysis of the projected free cash flows of Ryan, Beck. Free cash flow is
defined as cash that is available to either reinvest in new businesses or to
distribute to investors in the form of dividends, stock buybacks, or debt
service. The projected free cash flows are discounted to the present at a rate
which reflects the relative risk associated with these flows as well as the
rates of return which both equity and debt investors could expect to realize on
alternative investment opportunities.
Ryan, Beck's future free cash flows were based on projected revenues,
net income, depreciation and amortization, working capital and capital
expenditure requirements for the fiscal years ending December 31, 1998 to
December 31, 2007. Ryan, Beck management provided Duff & Phelps with a budget
for the fiscal year ending December 31, 1998. Duff & Phelps' projections were
prepared from the perspective of a hypothetical buyer of a controlling interest
in Ryan, Beck including synergies that such a hypothetical buyer might expect.
Duff & Phelps discounted the resulting free cash flows at rates of 15% to 17%.
The discount rate range reflects, among other things, industry risks, the
relatively small market capitalization of Ryan, Beck, and current rates of
return required by investors in equity and debt instruments in general. The
discounted cash flow analysis resulted in a control price, or a reasonable
estimate of the price that a fully informed buyer would pay for all of the
Common Stock of Ryan, Beck. The discounted cash flow analysis yielded an
aggregate control price range of $31.2 million to $34.7 million or $8.70 to
$9.70 per share. The value conclusions exclude the acquisition of Cumberland
which is assumed to be acquired at fair market value.
- -- Comparable Company Analysis. In the comparable company analysis, Duff &
Phelps selected a set of publicly traded companies based on comparability to
Ryan, Beck. Although no single company chosen is exactly similar to Ryan, Beck,
these companies share many of the same operating characteristics and are
affected by many of the same economic forces. The value of Ryan, Beck is derived
from the rate at which these companies are capitalized in the market, after
adjusting for differences in operations and performance.
Using publicly available information, Duff & Phelps analyzed the
historical financial performance, stock prices and resulting valuation multiples
for the following regional securities brokerage firms: Advest Group, Inc.; J.W.
Charles Financial Services, Inc.; First Albany Companies, Inc.; GKN Holding
Corp.; Kinnard Investments, Inc.; Kirlin Holding Corporation; M.H. Meyerson &
Company, Inc.; Paulson Capital; Scott & Stringfellow Financial, Inc.; Siebert
Financial Corporation; and Stifel Financial Corporation (the "Ryan, Beck
Brokerage Comparable Companies"). Duff & Phelps also analyzed the historical
financial performance, stock prices and resulting valuation multiples for the
following investment banking firms: Bear Stearns Co., Inc.; Donaldson, Lufkin,
Jenrette, Inc.; Jefferies Group, Inc.; and Lehman Brothers Holdings, Inc. (the
"Ryan, Beck Investment Banking Comparable Companies").
Duff & Phelps compared the financial performance of Ryan, Beck with the
financial performance of the Ryan, Beck Brokerage Comparable Companies and the
Ryan, Beck Investment Banking Comparable Companies. Duff & Phelps adjusted all
financial performance measures for nonrecurring and extraordinary items.
Comparative statistics reveal the following: (i) five-year compounded annual
growth in revenues for Ryan, Beck was 15.5% versus a median of 15.9% for the
Ryan, Beck Brokerage Comparable Companies and a median of 17.8% for the Ryan,
Beck Investment Banking Comparable Companies; (ii) five-year compounded annual
growth in earnings per share ("EPS") for Ryan, Beck was 1.3% versus a median of
9.0% for the Ryan, Beck Brokerage Comparable Companies and a median of 24.0% for
the Ryan, Beck Investment Banking Comparable Companies; (iii) five-year average
and latest twelve months' net income margins for Ryan, Beck were 11.2% and
10.2%, respectively, versus medians of 4.4% and 5.2%, respectively, for the
Ryan, Beck Brokerage Comparable Companies and medians of 7.2% and 8.4%,
respectively, for the Ryan, Beck Investment Banking Comparable Companies; (iv)
five-year average and latest twelve months' returns on equity for Ryan, Beck
were 24.9% and 29.0%, respectively, versus medians of 13.4% and 17.4%,
respectively, for the Ryan, Beck Brokerage Comparable Companies and medians of
18.4% and 17.0%, respectively, for the Ryan, Beck Investment Banking Comparable
Companies. Five-year growth rates are based on fiscal years 1991 to 1996,
five-year averages are based on fiscal years 1992 to 1996, and the latest twelve
months for Ryan, Beck is for the period ended December 31, 1997.
Duff & Phelps analyzed the stock prices for the Ryan, Beck Brokerage
Comparable Companies and the Ryan, Beck Investment Banking Comparable Companies
as multiples of latest twelve months' and three-year average EPS available as of
the date of the opinion. The stock price for Ryan, Beck was assumed to be the
Merger consideration of approximately $9.75 per share as of the date of the Duff
& Phelps opinion. The median multiples of stock price to latest twelve months'
and three-year average EPS for the Ryan, Beck Brokerage Comparable Companies
were 14.6 x, and 20.4x, respectively. The median multiples of market value of
stock price to latest twelve months' and three-year average EPS for the Ryan,
Beck Investment Banking Comparable Companies were 12.1x, and 24.2x,
respectively. The stock price of Ryan, Beck as a multiple of latest twelve
months' and three-year average EPS was 8.9x and 15.2x, respectively. Duff &
Phelps also analyzed the stock prices as multiples of the book values of the
Ryan, Beck Brokerage Comparable Companies and the Ryan, Beck Investment Banking
Comparable Companies available as of the date of the opinion. The median
multiple of stock price to book value per share for the Ryan, Beck Brokerage
Comparable Companies was 1.9x. The median multiple of stock price to book value
per share for the Ryan, Beck Investment Banking Comparable Companies was 2.1x.
The multiple of stock price to book value per share for Ryan, Beck was 2.4x. All
multiples for the Ryan, Beck Brokerage Comparable Companies and the Ryan, Beck
Investment Banking Comparable Companies were, based upon closing stock prices as
of February 5, 1998. Based on the analysis of comparable companies, it is Duff &
Phelps' view that Ryan, Beck's valuation multiples, as implied by the Merger
consideration, are reasonable given its size and dependency on investment
banking and principal transaction business.
- -- Comparable Transactions Analysis. Duff & Phelps reviewed recent control
transactions involving securities brokerage firms as targets. Duff & Phelps
analyzed ten transactions that had been completed or were in the process of
completion from 1996 to the present. The median premium that buyers offered over
the trading price of the target firms before the announcement date of the
acquisition was 42.4% The median ratio of offer price to latest twelve months'
earnings was 12.5x and the median offer price to book value was 3.3x. This
compares to the equity value to latest twelve months' earnings ratio of 9.3x and
equity value to book value ratio of 2.4x for Ryan, Beck, assuming an equity
value of $35 million based on the aggregate Merger consideration as of the date
of the Duff & Phelps opinion (excluding the values of Cumberland and
in-the-money stock options owned by the management of Ryan Beck). The Merger
consideration represents a premium of approximately 22% over the trading price
of Ryan, Beck common stock prior to the announcement of the Merger. Based on the
comparable transactions analysis, it is Duff & Phelps' view that the valuation
of Ryan, Beck implied by the Merger consideration is reasonable.
- -- Comparable Company Analysis of Bancorp. Duff & Phelps selected a set of
publicly traded companies based on comparability to Bancorp. Although no single
company chosen is exactly similar to Bancorp, these companies share many of the
same operating characteristics and are affected by many of the same economic
forces. The purpose of this analysis was to ascertain the reasonableness of the
public market valuation of the Bancorp Class A Common Stock.
Using publicly available information, Duff & Phelps analyzed the
historical financial performance, stock prices and resulting valuation multiples
for the following regional banks and thrifts: Area Bancshares Corporation;
Carolina First Corporation; Community Trust Bancorp, Inc.; Fidelity Bankshares,
Inc.; First Palm Beach Bancorp, Inc.; Hancock Holding Company; Mainstreet Bank
Group, Inc.; Mid-America Bancorp; Peoples First Corporation; and Republic
Bancorp Inc. (the "Bancorp Comparable Companies").
Duff & Phelps compared the financial performance of Bancorp with the
financial performance of the Bancorp Comparable Companies. Duff & Phelps
adjusted all financial performance measures for extraordinary items. Comparative
statistics reveal the following: (i) latest twelve months' growth in EPS for
Bancorp was 32.1% versus a median of 11.0% for the Bancorp Comparable Companies;
(ii) five-year average and latest twelve months' returns on equity for Bancorp
were 14.6% and 17.0%, respectively, versus medians of 11.7% and 9.7%,
respectively, for the Bancorp Comparable Companies. Five-year averages are based
on fiscal years ended December 31, 1992 to 1996, and the latest twelve months is
for the period ended December 31, 1997 for Bancorp and the majority of the
Bancorp Comparable Companies.
Duff & Phelps analyzed the stock prices for the Bancorp Comparable
Companies as multiples of latest twelve months' and three-year average EPS
available as of the date of the opinion. The median multiples of stock price to
latest twelve months' and three-year average EPS for the Bancorp Comparable
Companies were 20.1x, and 23.2x, respectively. The stock price of Bancorp's
Class A Common Stock as a multiple of latest twelve months' and three-year
average earnings was 16.3x and 19.2x, respectively. Duff & Phelps also analyzed
the stock prices as multiples of the book values per share of the Bancorp
Comparable Companies available as of the date of the opinion. The median
multiple of stock price to book value per share for the Bancorp Comparable
Companies was 2.1x. The multiple stock price to book value per share for Bancorp
was 2.0x. All multiples for Bancorp and the Bancorp Comparable Companies were
based upon closing stock prices as of February 5, 1998. Based on this analysis,
the market valuation of the Bancorp Class A Common Stock is reasonable.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the process
underlying Duff & Phelps' fairness opinion. In arriving at its fairness opinion,
Duff & Phelps considered the results of all such analyses taken as a whole.
Furthermore, in arriving at its fairness opinion, Duff & Phelps did not
attribute any particular weight to any analysis or factor considered by it, but
rather made qualitative judgments as to the significance and relevance of each
analysis and factor. No company or transaction used in the above analyses as a
comparison is identical to Ryan, Beck, Bancorp or the Merger. The analyses were
prepared solely for purposes of Duff & Phelps providing its opinion to the Ryan,
Beck Board as to the fairness of the consideration to be received by the holders
of Ryan, Beck Common Stock in the Merger from a financial point of view, and do
not purport to be appraisals or necessarily reflect the prices at which
businesses or securities actually may be sold. Analyses based upon forecasts of
future results are not necessarily indicative of actual future results, which
may be significantly more or less favorable than suggested by such analyses.
Such analyses are based upon numerous factors or events beyond the control of
Ryan, Beck, its advisors or any other person, and are inherently uncertain.
Actual future results may be materially different from those forecasts.
Fee and Other Information
Duff & Phelps was retained by the Board of Directors of Ryan, Beck
under an engagement letter dated February 5, 1998. As compensation for its
services as financial advisor to Ryan, Beck in connection with the Merger, Ryan,
Beck agreed to pay Duff & Phelps a fee of $100,000, $25,000 of which was paid
upon receipt of Duff & Phelps' written fairness opinion dated February 9, 1998
and the remainder of which will be paid on or prior to Closing. No portion of
the fee paid to Duff & Phelps is contingent upon the conclusion reached in its
opinions. In addition, Ryan, Beck has agreed to reimburse Duff & Phelps for its
reasonable out-of-pocket expenses, including the fees and expenses of its legal
counsel, and to indemnify Duff & Phelps against certain liabilities, including
liabilities under the federal securities laws, relating to, arising out of or in
connection with its engagement.
Resale Considerations With Respect to the Bancorp Class A Common Stock
The shares of Bancorp Class A Common Stock that will be issued if the
Merger is consummated have been registered under the Securities Act of 1933, as
amended (the "Securities Act") and will be freely transferable, except for
shares received by persons, including directors and executive officers of Ryan,
Beck, who may be deemed to be "affiliates" of Ryan, Beck under Rule 145
promulgated under the Securities Act. An "affiliate" of an issuer is defined
generally as a person who directly, or indirectly through one or more
intermediaries, "controls", is controlled by, or is under common control with
the issuer. Directors, executive officers and 10% stockholders may be deemed to
control the issuer. Affiliates may not sell their shares of Bancorp Class A
Common Stock acquired pursuant to the Merger, except pursuant to an effective
registration statement under the Securities Act covering the Bancorp Class A
Common Stock or in compliance with Rule 145 or another applicable exemption from
the registration requirements of the Securities Act.
Persons who may be deemed to be "affiliates" of Ryan, Beck have
delivered letters to Bancorp in which they have agreed to certain restrictions
on their ability to sell, transfer or otherwise dispose of ("transfer") any
Ryan, Beck Common Stock owned by them and any Bancorp Class A Common Stock
acquired by them in the Merger. Pursuant to Rule 145, such persons have also
agreed to refrain from transferring Bancorp Class A Common Stock acquired by
them in the Merger, except in compliance with certain restrictions imposed by
Rule 145. Certificates representing the shares of Bancorp Class A Common Stock
acquired by each such person pursuant to the Merger will bear an appropriate
legend reflecting that the shares are restricted in accordance with the letter
signed by such person and may not be transferred except in compliance with such
restrictions.
Underwriting Agreements Between Bancorp and Ryan, Beck
Bancorp engaged Ryan, Beck as the managing or co-managing underwriter
of several recent public offerings of securities by Bancorp or its affiliates.
In connection with each of those offerings, Bancorp and Ryan, Beck entered into
underwriting agreements which contained, among other things, customary
provisions pursuant to which Bancorp agreed to indemnify Ryan, Beck for
liabilities arising under the Securities Act in connection with such offerings.
Subordinated Capital Note
In March, 1998, Bancorp loaned Ryan, Beck $10,000,000 in the form of a
three-year, unsecured subordinated note, bearing interest at the prime rate.
This subordinated loan was approved by the NASD and the loan qualifies as
regulatory capital for Ryan, Beck under the applicable net capital rules.
Bancorp will not have the right to call the loan in the event the Merger is not
consummated. This subordinated loan is not part of the Merger consideration, but
does supplement Ryan, Beck's net capital position both before and after the
Merger.
Conditions to the Merger
The obligation of each party to consummate the Merger is subject to
satisfaction or waiver of certain conditions, including (i) approval of the
Acquisition Agreement and the transactions contemplated thereby by the requisite
vote of the holders of Ryan, Beck Common Stock; (ii) the receipt of all
consents, approvals and authorizations of all necessary federal and state
government authorities and expiration of all required waiting periods, necessary
for the consummation of the Merger (see "-- Regulatory Approvals") without any
conditions, restrictions or requirements which the Bancorp Board of Directors
reasonably determines would (a) following the Effective Time, have a material
adverse effect on Bancorp or the Surviving Entity or (b) reduce the benefits of
the transactions contemplated by the Acquisition Agreement to such a degree that
Bancorp would not have entered into the Acquisition Agreement had such
requirements, restrictions or conditions been known at the time the Acquisition
Agreement was executed; (iii) the absence of the enactment, issuance,
promulgation or enforcement of any statute, rule, regulation, judgment, decree,
injunction or other order (whether temporary, preliminary or permanent) by a
Court or regulatory agency of competent jurisdiction prohibiting or making
illegal the consummation of the transactions contemplated by the Acquisition
Agreement; (iv) the effectiveness of the registration statement covering the
shares of Bancorp Class A Common Stock to be issued to Ryan, Beck stockholders,
and the qualification of the issuance of Bancorp Class A Common Stock in every
state where such qualification is required under applicable state securities
laws; (v) receipt of an approval for listing from the NYSE for the listing of
Bancorp Class A Common Stock to be issued in the Merger; (vi) execution of the
Plotkin Agreement; and (vii) mutual agreement by the Bancorp and Ryan, Beck
Boards of Directors regarding the officers and directors of the Surviving
Entity.
The obligation of Bancorp to consummate the Merger is also conditioned
on, among other things, (i) the continued accuracy in all material respects of
the representations and warranties of Ryan, Beck contained in the Acquisition
Agreement; (ii) the performance by Ryan, Beck, in all material respects, of its
obligations under the Acquisition Agreement; (iii) receipt of consents and
approvals of third parties required to effectuate the transactions contemplated
by the Acquisition Agreement; and (iv) receipt by Bancorp of an opinion from
Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. that, on the basis of
facts, representations and assumptions set forth in such opinion, the Merger
constitutes a reorganization under Section 368(a) of the Code.
The obligation of Ryan, Beck to consummate the Merger is also
conditioned on, among other things, (i) the continued accuracy in all material
respects of the representations and warranties of Bancorp contained in the
Acquisition Agreement; (ii) the performance by Bancorp, in all material
respects, of its obligations under the Acquisition Agreement; (iii) receipt of
an opinion of Pitney, Hardin, Kipp & Szuch to the effect that the exchange of
Ryan, Beck Common Stock for Bancorp Class A Common Stock is a tax-free
reorganization within the meaning of Section 368 of the Code and that no gain or
loss will be recognized by stockholders of Ryan, Beck who receive Bancorp Class
A Common Stock in exchange for shares of Ryan, Beck Common Stock except with
respect to cash received in lieu of fractional shares; (iv) the execution of the
Independence Agreement; and (v) the appointment of Ben A. Plotkin to the Board
of Directors of Bancorp.
Conduct of Business Pending the Merger
The Acquisition Agreement requires Ryan, Beck to conduct its business
prior to the Effective Time only in the ordinary and usual course of business,
except as permitted under the Acquisition Agreement or the Stock Option
Agreement or with the written consent of Bancorp. Under the Acquisition
Agreement, Ryan, Beck has agreed not to take certain actions nor permit its
subsidiaries to take certain actions without the prior written consent of
Bancorp or unless permitted by the Acquisition Agreement, including, among other
things, the following: (a) fail to use its best efforts to preserve intact its
business organizations and assets and maintain its rights, franchises and
existing relations with clients, customers, suppliers, employees and business
associates, (b) adjust, split combine or reclassify any capital stock; (c) make,
declare or pay any dividend (except for regular cash dividends at a rate not in
excess of $0.04 per share per annum on the Ryan, Beck Common Stock) or make any
other distribution on, or directly or indirectly redeem, purchase or otherwise
acquire any shares of Ryan, Beck capital stock; (d) grant any stock appreciation
rights or grant any person any right to acquire any shares of Ryan, Beck capital
stock; (e) issue any additional shares of capital stock, other than with respect
to the exercise of Ryan, Beck Options outstanding at the date of execution of
the Acquisition Agreement, or issue any security or obligation convertible into
or exchangeable for any shares of its capital stock; (f) enter into any
agreement, understanding or arrangement with respect to the sale or voting of
Ryan, Beck capital stock; (g) with certain exceptions, enter into, amend modify
or renew any employment, consulting, severance or similar agreements with any
director, officer or employee of Ryan, Beck or any of its subsidiaries; (h)
enter into, establish, adopt or amend any employee benefit, incentive or welfare
contract, plan or arrangement with respect to any directors, officers or
employees of Ryan, Beck or any of its Subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock or
other compensation or benefits payable thereunder; (i) except for sales of
securities or other investments or assets in the ordinary course of business,
sell, transfer, mortgage, encumber or otherwise dispose of or discontinue any of
Ryan, Beck's assets, business or properties; (j) except for the purchase of
securities or other investments or assets in the ordinary course or business
consistent with past practice, make any material investment either by purchase
of stock or securities, contributions to capital, property transfers, or
purchase of any property or assets of any other person other than a wholly owned
subsidiary of Ryan, Beck; (k) change any provision of its Certificate of
Incorporation or By-laws; (l) make any material change in its accounting methods
or practices, other than changes required in accordance with generally accepted
accounting principles; (m) except for transactions in the ordinary course of
business, enter into, terminate or change any material lease, contract or
agreement; (n) settle any claim, action or proceeding, except for any claim,
action or proceeding involving solely money damages in an amount, individually
and in the aggregate for all such settlements, not more than $50,000; (o) take
any action reasonably likely to prevent or impede the Merger from qualifying as
a reorganization within the meaning of Section 368(a) of the Code; (p) take any
action that would result in any of Ryan, Beck's representations or warranties
being untrue or incorrect at the Effective Time in any material respect or that
would cause any of its conditions to closing not to be satisfied; (q) incur any
significant liabilities, obligations or indebtedness for borrowed money (other
than certain refinancing transactions or under existing lines of credit) or make
any capital expenditures. other than in the ordinary course of business
consistent with past practices and policies; or (r) agree to do any of the
foregoing.
Under the Acquisition Agreement, Ryan, Beck cannot, and must instruct
its officers, directors, employees, agents or representatives not to, directly
or indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing nonpublic information), or take any other action knowingly to
facilitate, any inquiries or the making of any proposal or offer (including any
proposal or offer to Ryan, Beck stockholders) by any person, entity or group
(other than Bancorp) that constitutes, or may reasonably be expected to lead to,
a Competing Transaction (as defined below), or enter into or maintain or
continue discussions or negotiate with any person, entity or group in
furtherance of such inquiries or to obtain a Competing Transaction, or agree to
or endorse any Competing Transaction, or authorize or permit any others to take
any such action; provided, however, that notwithstanding the foregoing, Ryan,
Beck may enter into discussions or negotiations or provide any information in
connection with an unsolicited proposal from a third party to acquire Ryan, Beck
pursuant to a merger, consolidation, share exchange, tender offer, exchange
offer, business combination or other similar transaction or to acquire all or
substantially all of the assets of Ryan, Beck or any of its subsidiaries if, and
only to the extent that, the Ryan, Beck Board, after consultation with outside
legal counsel, determines in the exercise of its fiduciary responsibilities that
such discussions or negotiations should be commenced or such information should
be furnished and, prior to furnishing such information or entering into
discussions or negotiations Ryan, Beck uses all reasonable efforts to obtain
from such third party an executed confidentiality agreement. Ryan, Beck has
agreed to promptly communicate to Bancorp the terms of any proposal or offer,
whether written or oral, or any inquiry or contact, which it may receive with
respect to any such Competing Transaction, and the fact that it is having
discussions or negotiations with a third party with respect to a Competing
Transaction.
A "Competing Transaction" shall mean any of the following involving
Ryan, Beck or any of its subsidiaries: (i) any merger, consolidation, share
exchange, business combination, or other similar transaction (other than the
transactions contemplated by the Acquisition Agreement); (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition outside the ordinary
course of business of 15% or more of the assets of Ryan, Beck and its
subsidiaries, taken as a whole, in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for 15% or more of the
outstanding shares of Ryan, Beck's capital stock or the filing of a registration
statement under the Securities Act in connection therewith; (iv) any person
shall have acquired beneficial ownership or the right to acquire beneficial
ownership of, or any group shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 40% or more of the then
outstanding shares of Ryan, Beck's capital stock; (v) any public announcement of
a proposal, plan or intention to do any of the foregoing; provided that none of
the foregoing transactions or actions shall be deemed to constitute a Competing
Transaction unless such transaction or action was initiated, or initial
discussions or communications with respect thereto were initiated, prior to the
termination of the Acquisition Agreement.
Customary Representations, Warranties and Covenants
The Acquisition Agreement contains customary mutual representations and
warranties, as well as covenants, relating to, among other things, (a) corporate
organization and similar corporate matters; (b) the capital structures of each
of Bancorp and Ryan, Beck; (c) authorization, execution, delivery, performance
and enforceability of the Acquisition Agreement and related matters; (d)
cooperation on applications and filings; (e) documents filed by each of Bancorp
and Ryan, Beck with any regulatory agency, and the accuracy of information
contained therein; (f) absence of undisclosed liabilities; (g) absence of
certain material changes or events from December 31, 1996; (h) title to
properties and assets of Ryan, Beck; (i) the absence of material litigation; (j)
compliance with applicable laws; (k) matters relating to registrations by Ryan,
Beck with regulatory authorities; (l) certain material contracts of Ryan, Beck;
(m) the absence of any brokers or brokers' finders' fees; (n) director and
officer contracts and retirement, other employee plans of Ryan, Beck and matters
relating to the Employee Retirement Income Security Act of 1974, as amended; (o)
Ryan, Beck's labor relations; (p) insurance matters of Ryan, Beck; (q)
affiliates of Ryan, Beck; (r) state takeover laws applicable to Ryan, Beck; (s)
environmental compliance by Ryan, Beck; (t) filing of tax returns and payment of
taxes; (u) Ryan, Beck's activities relating to derivatives; (v) accounting
controls of Ryan, Beck; (w) proprietary rights of Ryan, Beck; (x) the absence of
knowledge that the Merger would fail to qualify as a tax-free reorganization;
(y) investment advisory activities of Ryan, Beck; (z) the absence of dissenters'
rights with respect to the Merger, the Acquisition Agreement or the transaction
contemplated thereunder; (aa) year 2000 compliance matters; and (bb) the
accuracy of information supplied by each of Bancorp and Ryan, Beck in connection
with the Registration Statement and this Proxy Statement-Prospectus.
Regulatory Approvals
Bancorp and Ryan, Beck have agreed to use their reasonable best efforts
to obtain all necessary regulatory approvals. In addition, consummation of the
Merger is subject, among other things, to prior receipt of all necessary
regulatory approvals without any conditions, restrictions or requirements which
the Bancorp Board of Directors reasonably determines would (a) following the
Effective Time, have a material adverse effect on Bancorp or the Surviving
Entity or (b) reduce the benefits of the transactions contemplated by the
Acquisition Agreement to such a degree that Bancorp would not have entered into
the Acquisition Agreement had such requirements, restrictions or conditions been
known at the time the Acquisition Agreement was executed. Consummation of the
Merger requires that no objection is raised to the Merger by the FTC or the DOJ
under the HSR, the NASD under its regulations and that a notice filing be made
with the OTS. The Notification was obtained from each of the FTC and the DOJ on
March 28, 1998. The NASD approval was obtained on May 11, 1998. An appropriate
notice was filed with the OTS on March 4, 1998. These approvals, Notifications
and filings do not constitute an endorsement of the Merger or a determination
that the terms of the Merger are fair to the shareholders of either Ryan, Beck
or Bancorp.
Management and Operations After the Merger
At the Effective Time, as a result of the Merger, Ryan, Beck will be
merged with and into BCP, with BCP as the Surviving Entity continuing to operate
under the name Ryan, Beck & Co. Inc. Following the Merger, the Surviving Entity,
as a wholly-owned subsidiary of Bancorp, will operate as a separate autonomous
entity with operations separate and apart from the operations of Bancorp. At the
Effective Time Bancorp, Ryan, Beck and BCP will enter into the Independence
Agreement which provides for the conditions under which the Surviving Entity
will remain autonomous. See "THE PROPOSED MERGER - Interests of Certain Persons
in the Merger - Independence Agreement" for specific information regarding the
Independence Agreement. On or before the Effective Time, Ben A. Plotkin, Ryan,
Beck's President and Chief Executive Officer will be appointed to Bancorp's
Board of Directors. Also at the Effective Time, Mr. Plotkin will enter into the
Plotkin Agreement. See "THE PROPOSED MERGER - Interests of Certain Persons in
the Merger - Employment Agreements" for specific information regarding this
employment agreement.
Exchange of Certificates, Issuance of New Options
At the Effective Time, holders of certificates formerly representing
shares of Ryan, Beck Common Stock will cease to have any rights as Ryan, Beck
stockholders and their certificates automatically will represent the shares of
Bancorp Class A Common Stock into which their shares of Ryan, Beck Common Stock
will have been converted by the Merger. As soon as practicable after the
Effective Time, Bancorp or an exchange agent selected by Bancorp and reasonably
acceptable to Ryan, Beck will send written instructions and a letter of
transmittal to each holder of Ryan, Beck Common Stock, indicating the method for
exchanging such holder's stock certificates for the certificates representing
those shares of Bancorp Class A Common Stock into which such holder's shares of
Ryan, Beck Common Stock have been exchanged. Holders of Ryan, Beck Common Stock
should not send in their stock certificates until they receive instructions from
Bancorp.
Each share of Bancorp Class A Common Stock for which shares of Ryan,
Beck Common Stock are exchanged will be deemed to have been issued at the
Effective Time. Accordingly, holders of Ryan, Beck Common Stock who receive
Bancorp Class A Common Stock in the Merger will be entitled to receive any
dividend or other distribution which may be payable to holders of record of such
Bancorp Class A Common Stock as of dates on or after the Effective Time.
However, no dividend or other distribution will actually be paid with respect to
any shares of Bancorp Class A Common Stock until the certificate or certificates
formerly representing shares of Ryan, Beck Common Stock have been surrendered,
at which time any accrued dividends and other distributions on such shares of
Bancorp Class A Common Stock will be paid without interest. See "--
Consideration".
Holders of outstanding certificates for Ryan, Beck Common Stock, upon
proper surrender of such certificates to Bancorp, will receive, promptly after
the Effective Time, a certificate representing the full number of shares of
Bancorp Class A Common Stock into which the shares of Ryan, Beck Common Stock
previously represented by the surrendered certificates have been converted. At
the time of issuance of the new stock certificate, each shareholder so entitled
will receive a check for the amount of the fractional share interest, if any, to
which the shareholder may be entitled.
Neither Bancorp nor Ryan, Beck nor any other person will be liable to
any former holder of Ryan, Beck Common Stock for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
If a certificate for Ryan, Beck Common Stock has been lost, stolen or
destroyed, the exchange agent will issue the merger consideration upon receipt
of appropriate evidence as to such loss, theft or destruction, appropriate
evidence as to the ownership of such certificate by the claimant, and
appropriate and customary indemnification.
Option Plans and Restricted Stock Awards
At the Effective Time, each outstanding option to purchase a share of
Ryan, Beck Common Stock ("Ryan, Beck Option") granted under Ryan, Beck's
existing stock option plans and agreements with its directors and employees will
be assumed by Bancorp, and each Ryan, Beck Option will be automatically
converted into an option to purchase a number of shares of Bancorp Class A
Common Stock equal to the number of shares of Ryan, Beck Common Stock that could
have been purchased under the Ryan, Beck Option multiplied by the Conversion
Ratio, at a price per share equal to the option exercise price under the Ryan,
Beck Option, divided by the Conversion Ratio. Upon exercise, any options to
purchase fractional shares resulting from any such adjustments will be
eliminated unless the terms of the option award provides otherwise. The
duration, vesting and other terms of the options will be the same as the
original Ryan Beck Option. Ryan, Beck currently has options outstanding under
the Ryan, Beck & Co., Inc. 1986 Stock Option Plan (the "1986 Plan"), the Ryan,
Beck & Co., Inc. 1995 Stock Option Plan (the "1995 Plan") and the Ryan, Beck &
Co., Inc. 1997 Long Term Stock Incentive Plan (the "1997 Plan").
The 1986 Plan and the 1995 Plan provides the Board of Directors with
discretionary authority to accelerate the vesting of the options granted under
those Plans in the event that Ryan, Beck adopts a plan of reorganization
pursuant to which it merges with another entity. The 1997 Plan also provides the
Board of Directors with discretionary authority to accelerate the vesting of
options and other awards in the event of a change in control such as the Merger.
However, Ryan, Beck under the Acquisition Agreement cannot exercise the
discretionary authority to accelerate such options.
Ryan, Beck also has granted restricted stock awards with various
vesting periods under its 1995 Restated and Amended Restricted Stock Plan. That
Plan provides for the mandatory lapse of all restriction periods upon a change
in control and, accordingly, all of those restrictions will lapse upon
consummation of the Merger.
From and after the Effective Time, each Ryan, Beck Option which is
converted into an option to purchase Bancorp Class A Common Stock will be
administered, operated and interpreted by a committee comprised of members of
the Board of Directors of Bancorp. Bancorp has reserved for issuance the number
of shares of Bancorp Class A Common Stock necessary to satisfy Bancorp's
obligations under such options, and has agreed to register such shares pursuant
to a Registration Statement on Form S-8 under the Securities Act within 30 days
after the Effective Time.
As of the Record Date, there were Ryan, Beck Options outstanding to
acquire 425,952 shares of Ryan, Beck Common Stock (203,000 of which are pursuant
to the 1997 Plan and therefore subject to shareholder approval).
Effective Time; Amendments; Termination
The Closing will occur on the Closing Date to be determined by Bancorp
and set forth in the Closing Notice to Ryan, Beck. The Closing Date specified by
Bancorp in the Closing Notice will be as soon as practicable after receipt of
all necessary regulatory approvals and consents, the expiration of all statutory
waiting periods and the satisfaction or waiver of the other conditions to
consummation of the Merger (other than the delivery of documents to be delivered
at the Closing). The Closing may also be set for another day mutually agreed to
by Bancorp and Ryan, Beck. The parties currently anticipate closing in the
second quarter of 1998. Simultaneous with or immediately following the Closing,
Bancorp will file a certificate of merger with the Secretary of State of the
State of New Jersey (the "Certificate of Merger"), which will specify the
Effective Time of the Merger, which will be a date and time agreed to by the
parties and specified in the Certificate of Merger. Bancorp and Ryan, Beck
anticipate the Effective Time will be the close of business on the Closing Date.
The exact Closing Date is dependent upon satisfaction of all conditions
precedent, some of which are not under the control of Bancorp or Ryan, Beck. See
"-- Conditions to the Merger" and "-- Regulatory Approvals".
The Acquisition Agreement may be amended, modified or supplemented with
respect to any of its terms at any time prior to the Effective Time only by the
mutual consent of Bancorp and Ryan, Beck. In addition, any provision of the
Acquisition Agreement may be waived at any time by the party entitled to the
benefit of such provision pursuant to a written instrument executed by the
appropriate party. However, after approval of the Acquisition Agreement by the
stockholders of Ryan, Beck, no amendment or waiver can be made which reduces the
amount or changes the form of consideration to be delivered to the stockholders
of Ryan, Beck without the further approval of such stockholders. The Merger is
also conditioned upon the receipt of an opinion of counsel to Ryan, Beck to the
effect that the Merger will qualify as a tax-free reorganization as defined in
Section 368 of the Code, and no gain or loss will be recognized by Ryan, Beck
shareholders who receive Bancorp Class A Common Stock, except with respect to
cash received in lieu of fractional share interests. While Bancorp and Ryan,
Beck have the contractual right to waive these conditions to closing, as of the
date of this Proxy Statement-Prospectus, neither Bancorp nor Ryan, Beck intend
to do so.
Both parties may terminate the Acquisition Agreement for a variety of
reasons. However, if the Acquisition Agreement is terminated due to an event
specified in clauses (iii) or (v) in the following paragraph or clauses (i),
(ii), (iii) or (iv) in the next paragraph, a "Termination Fee Event" occurs
which may, under certain circumstances, require Ryan, Beck to pay Bancorp the
Termination Fee or reimburse Bancorp for its expenses up to $500,000.
The Acquisition Agreement may be terminated by the mutual written
consent of Ryan, Beck and Bancorp. The Acquisition Agreement may also be
terminated by Ryan, Beck or Bancorp if, among other things, (i) the Effective
Time has not occurred on or before August 31, 1998 (the "Cutoff Date") unless
the failure of such occurrence is due to the failure of the party seeking to
terminate to perform its covenants in the Acquisition Agreement to be performed
at or prior to the Effective Time; (ii) any court or regulatory agency issues an
order, decree or ruling permanently enjoining, restraining or otherwise
prohibiting the Merger, and such order, decree, ruling or other action becomes
final or nonappealable; (iii) a vote of the stockholders of Ryan, Beck to
approve the Acquisition Agreement is taken and such stockholders fail to approve
the Acquisition Agreement and the transactions contemplated thereunder at the
Meeting; (iv) written notice is received which states that any regulatory
approvals necessary to consummate the transaction will not be approved or have
been denied or that such approval will be given with conditions that would cause
conditions in the Acquisition Agreement not to be satisfied; or (v) Ryan, Beck
or its stockholders receive an offer for a Competing Transaction that the Ryan,
Beck Board, after consultation with its outside legal and financial advisors,
determines in good faith is more favorable to Ryan, Beck stockholders from a
financial point of view than the transactions contemplated by the Acquisition
Agreement, and the Ryan, Beck Board accepts, recommends or resolves to accept or
recommend to its stockholders such Competing Transaction (provided that Ryan,
Beck must provide Bancorp with written notice of its intention to terminate at
least three business days prior to such termination by Ryan, Beck).
Bancorp may terminate the Acquisition Agreement if, among other things,
(i) a tender offer or exchange offer for more than 15% of the outstanding shares
of capital stock of Ryan, Beck is commenced and within ten business days
thereafter the Board of Directors of Ryan, Beck fails to recommend against
acceptance of such tender offer or exchange offer or takes no position with
respect to such offer; (ii) any person or group acquires beneficial ownership or
the right to acquire beneficial ownership of more than 40% of the then combined
voting power of all classes of the capital stock of Ryan, Beck; (iii) the Board
of Directors of Ryan, Beck does not recommend to its stockholders approval of
the Acquisition Agreement and the transactions contemplated thereunder or
withdraws, modifies or changes its recommendation to approve the Acquisition
Agreement in a manner adverse to Bancorp; or (iv) Ryan, Beck breaches in a
material respect any representation, warranty, covenant, agreement or obligation
under the Acquisition Agreement and does not cure such breach within 30 days
after receipt by Ryan, Beck of a notice of breach. Bancorp may also terminate
the Acquisition Agreement if the conditions to Bancorp's obligations to close
are not satisfied and are not capable of being satisfied by the Cutoff Date.
Ryan, Beck may terminate the Acquisition Agreement if, among other
things, (i) Bancorp breaches in a material respect any representation, warranty,
covenant, agreement or obligation under the Acquisition Agreement and does not
cure such breach within 30 days after receipt by Bancorp of a notice of breach;
(ii) Duff & Phelps withdraws its Fairness Opinion prior to the date that the
Proxy Statement-Prospectus is first mailed to the holders of Ryan, Beck Common
Stock (provided that Ryan, Beck's right to terminate under this subsection
terminates on the date that the Proxy Statement-Prospectus is first mailed to
Ryan, Beck stockholders); or (iii) the Average Price is less than $10.88 and
Ryan, Beck notifies Bancorp in writing of its intention to terminate the
Acquisition Agreement and Bancorp does not within five days of receipt of such
notice agree to increase the Conversion Ratio to an amount equal to the quotient
of $8.28 divided by the Average Price. Ryan, Beck may also terminate the
Acquisition Agreement if the conditions for Ryan, Beck to close are not
satisfied and are not capable of being satisfied by the Cutoff Date.
In the event of a termination, each party will retain all rights and
remedies it may have at law or equity under the Acquisition Agreement. Upon a
termination of the Acquisition Agreement, the transactions contemplated thereby
will be abandoned without further action by any party and each party will bear
its own expenses (except for printing and mailing expenses relating to this
Proxy Statement-Prospectus, which will be shared equally by Bancorp and Ryan,
Beck). Certain provisions of the Acquisition Agreement relating to, among other
things, confidentiality, payment of the Termination Fee and expenses, litigation
between the parties and governing law and remedies, will survive any
termination.
Option to Bancorp for Ryan, Beck Stock
As a material inducement to Bancorp to enter into the Acquisition
Agreement, Bancorp and Ryan, Beck entered into a Stock Option Agreement dated
February 9, 1998 (the "Stock Option Agreement"). Pursuant to the Stock Option
Agreement, Ryan, Beck has granted to Bancorp an option (the "Option"),
exercisable only under certain limited and specifically defined circumstances,
to purchase up to 714,000 newly issued shares of Ryan, Beck Common Stock,
representing approximately 19.9% of the outstanding shares of Ryan, Beck Common
Stock at the time the Option was granted, for a purchase price equal to $8.00
per share, the approximate trading price of the Ryan, Beck Common Stock on the
last trading day prior to public announcement of the proposed Merger. Bancorp
does not have any voting rights with respect to the shares of Ryan, Beck Common
Stock subject to the Option prior to exercise of the Option. The Stock Option
Agreement is attached to this Proxy Statement-Prospectus as Appendix B hereto.
In the event that certain specifically enumerated "Exercise Events" occur and
the Merger is not consummated, Bancorp would recognize a gain on the sale of the
shares of Ryan, Beck Common Stock received pursuant to the exercise of the
Option if such shares of Ryan, Beck Common Stock were sold at prices exceeding
$8.00 per share. The Option also may be exercised for a cash spread payment in
certain circumstances. The Termination Fee, described below, will be reduced or
offset by any gain on the exercise of the Option.
Termination Fee
In the event that the Acquisition Agreement is terminated due to the
occurrence of a "Termination Fee Event" and within eighteen months thereafter
Ryan, Beck enters into a definitive agreement with respect to a Competing
Transaction or a Competing Transaction is consummated (other than a tender offer
or exchange offer for, or the acquisition by a person or group of, less than 50%
of Ryan, Beck's outstanding capital stock) then Ryan, Beck must pay Bancorp
$2,000,000 (the "Termination Fee"). However, if the Acquisition Agreement is
terminated because the Ryan, Beck shareholders fail to approve the transaction,
Bancorp would not be owed a Termination Fee unless a Competing Transaction had
been proposed or publicly announced on or before the meeting date. The
Termination Fee will be reduced or offset by any gain on the exercise of the
Option granted to Bancorp under the Stock Option Agreement. In addition, in the
event that the Acquisition Agreement is terminated due to the occurrence of a
Termination Fee Event (except that a Termination Fee Event will not occur if the
shareholders of Ryan, Beck fail to approve the Merger and the Voting Agreements
are not materially breached), Ryan, Beck will be required to reimburse Bancorp
for its reasonable expenses incurred in connection with the Acquisition
Agreement and the transactions contemplated thereby up to $500,000, regardless
of whether a Competing Transaction is subsequently entered into or consummated.
However, any reimbursement of expenses would be credited against any amounts
owed Bancorp as a Termination Fee.
The Stock Option Agreement and the potential for the payment to Bancorp
of the Termination Fee is intended to increase the likelihood that the Merger
will be consummated in accordance with the terms of the Acquisition Agreement.
The ability of Bancorp to exercise the Option and to cause up to an additional
714,000 shares of Ryan, Beck Common Stock to be issued and the requirement, in
certain circumstances, to pay the Termination Fee may be considered deterrents
to other potential acquisitions of control of Ryan, Beck, as the Option and the
Termination Fee are likely to increase the cost of an acquisition of all of the
shares of Ryan, Beck Common Stock which would then be outstanding.
Also, if the Acquisition Agreement is terminated by Ryan, Beck due to
the material breach by Bancorp of any representation or covenant, Bancorp is
required to reimburse Ryan, Beck for its reasonable expenses incurred in
connection with the Acquisition Agreement and the transactions contemplated
thereby up to $500,000.
Accounting Treatment of the Merger
The Merger will be accounted for by Bancorp under the purchase method
of accounting in accordance with generally accepted accounting principles. Under
the purchase method of accounting, the excess of the purchase price paid over
the fair market value of tangible and identifiable intangible assets and
liabilities acquired ("Goodwill") is recorded as an intangible asset and such
asset is amortized as an expense over the period estimated to be benefited and
it is anticipated that such expense will not be deductible for income tax
purposes.
Federal Income Tax Consequences
THE FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW MAY NOT BE APPLICABLE
TO CERTAIN CLASSES OF TAXPAYERS, INCLUDING INSURANCE COMPANIES, SECURITIES
DEALERS, FINANCIAL INSTITUTIONS, FOREIGN PERSONS AND PERSONS WHO ACQUIRED SHARES
OF RYAN, BECK COMMON STOCK PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR
RIGHTS OR OTHERWISE AS COMPENSATION. RYAN, BECK STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISERS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF
THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL AND
OTHER TAX LAWS.
General. It is intended that the Merger will be treated as a tax-free
reorganization as defined in Section 368(a)(1)(A) of the Code and that,
accordingly, no gain or loss will be recognized by Bancorp or Ryan, Beck or by
the stockholders of Ryan, Beck upon the exchange of their shares of Ryan, Beck
Common Stock solely for shares of Bancorp Class A Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a fractional share
interest in Bancorp Class A Common Stock). Counsel to Bancorp is required, as a
condition of Closing, to provide an opinion to Bancorp dated the Closing Date
with respect to the matter covered by the foregoing sentence. Stearns, Weaver,
Miller, Weissler, Alhadeff & Sitterson, P.A., counsel to Bancorp, has provided
an opinion dated the date of this Proxy Statement-Prospectus that the Merger
will qualify as a tax-free reorganization as defined in section 368 of the code.
Counsel to Ryan, Beck is also required, as a condition of closing, to provide an
opinion to Ryan, Beck dated the Closing Date with respect to the matters within
this paragraph. Pitney, Hardin, Kipp & Szuch, counsel to Ryan, Beck, has
provided an opinion dated on or about the date of this Proxy
Statement-Prospectus that the Merger will qualify as a tax-free reorganization
as defined in section 368 of the Code.
Consequences of Receipt of Cash in Lieu of Fractional Shares. Cash
received by a Ryan, Beck shareholder in lieu of any fractional share interest
will be treated as having been received as a payment in exchange for such
fractional share interest, and, provided the fractional share would have
constituted a capital asset in the hands of such shareholder, the shareholder
should in general recognize capital gain or loss in an amount equal to the
difference between the amount of cash received and the portion of the adjusted
basis in Ryan, Beck Common Stock allocable to the fractional share interest.
Basis of Bancorp Class A Common Stock. The basis of Bancorp Class A
Common Stock received by a Ryan, Beck shareholder who receives solely Bancorp
Class A Common Stock will be the same as the basis of such shareholder's Ryan,
Beck Common Stock surrendered in exchange therefor.
Holding Period. The holding period of shares of Bancorp Class A Common
Stock received in the Merger by holders of Ryan, Beck Common Stock will include
the period during which such shares of Ryan, Beck Common Stock surrendered in
exchange therefor were held by the holder thereof, provided such shares of Ryan,
Beck Common Stock were held as capital assets.
No Dissenters' Rights
Stockholders of Ryan, Beck do not have dissenters' rights of appraisal
in connection with the Merger.
DESCRIPTION OF BANCORP CAPITAL STOCK
Description of Bancorp Class A Common Stock and Class B Common Stock
The following is a summary description of the material terms and
provisions of Bancorp's capital stock, however such description does not purport
to be complete and is subject to the more detailed provisions of Bancorp's
Articles of Incorporation and Bylaws and is qualified in its entirety by
reference thereto.
The authorized capital stock of Bancorp consists of 80,000,000 shares
of Bancorp Class A Common Stock, 45,000,000 shares of Bancorp Class B Common
Stock, and 10,000,000 shares of preferred stock, par value $.01 per share (the
"Bancorp Preferred Stock"). As of May 1, 1998, Bancorp had 22,476,543 shares of
Bancorp Class A Common Stock and 10,318,382 shares of Bancorp Class B Common
Stock issued and outstanding and no shares of Bancorp Preferred Stock were
outstanding.
The Bancorp Class A Common Stock and Bancorp Class B Common Stock have
substantially identical terms except that (i) the Bancorp Class B Common Stock
is entitled to one vote per share while Bancorp Class A Common Stock has no
voting rights other than those which may be required by Florida law in certain
limited circumstances and (ii) the Bancorp Class A Common Stock is entitled to
receive cash dividends equal to at least 110% of any cash dividends declared and
paid on the Bancorp Class B Common Stock.
Voting
The holders of Bancorp Class B Common Stock currently possess exclusive
voting rights in Bancorp. Shares of Bancorp Preferred Stock issued in the future
may be granted voting rights at the discretion of Bancorp's Board of Directors.
On matters submitted to the shareholders of Bancorp, the holders of Bancorp
Class B Common Stock will be entitled to one vote for each share held, while
holders of Bancorp Class A Common Stock will not be entitled to vote except as
may be required by Florida law. Under the Florida Act, holders of Bancorp Class
A Common Stock would currently be entitled to vote as a separate voting group on
certain amendments to Bancorp's Articles of Incorporation including, without
limitation, amendments which (i) increase or decrease the authorized number of
shares of Bancorp Class A Common Stock, (ii) change the designation, rights,
preferences or limitations of the Bancorp Class A Common Stock, (iii) create a
new class of shares, or increase the rights, preferences or number of authorized
shares, which would have rights or preferences with respect to distributions or
dissolution that are prior, superior or substantially equal to the Bancorp Class
A Common Stock, or (iv) effect an exchange or reclassification of shares of
another class of stock into shares of Bancorp Class A Common Stock or of Bancorp
Class A Common Stock into shares of another class. In addition, under the
Florida Act, holders of Bancorp Class A Common Stock would currently be entitled
to vote as a separate voting group on any plan of merger or plan of share
exchange which contains a provision which, if included in a proposed amendment
to the Articles of Incorporation, would require their vote as a separate voting
group. No shares have cumulative voting rights.
Dividends
Holders of shares of Bancorp Class A Common Stock and Bancorp Class B
Common Stock are entitled to receive such dividends as may be declared by
Bancorp's Board of Directors out of funds legally available therefor. The
holders of Bancorp Class A Common Stock are entitled to receive cash dividends
in an amount equal to at least 110% of any cash dividends declared and paid on
the Bancorp Class B Common Stock. With respect to dividends other than cash
(including stock splits and stock dividends), the distribution per share with
respect to Bancorp Class A Common Stock will be identical to the distribution
per share with respect to Bancorp Class B Common Stock, except that a stock
dividend or other distribution to holders of Bancorp Class A Common Stock may be
declared and issued in Bancorp Class A Common Stock while a stock dividend or
other distribution to holders of Bancorp Class B Common Stock may be declared
and issued in either Bancorp Class A Common or Bancorp Class B Common Stock (at
the discretion of the Board) provided that the number of any shares so issued
is, on a per share basis, the same. The ability of Bancorp to pay cash dividends
is subject to the ability of BankAtlantic to pay dividends or make other
distributions to Bancorp, which in turn is subject to limitations which are
imposed by law and regulation. See "Risk Factors-Ability to Pay Dividends;
Possible Issuance of Additional Securities."
Liquidation Rights
In the event of any liquidation or dissolution of Bancorp, all assets
of Bancorp legally available for distribution after payment or provision for
payment of: (i) all debts and liabilities of Bancorp; (ii) any accrued dividend
claims; (iii) liquidation preferences of any Bancorp Preferred Stock which may
be outstanding; and (iv) any interests in Bancorp's liquidation account, will be
distributed ratably, in cash or in kind, among the holders of Bancorp Class A
Common Stock and Bancorp Class B Common Stock.
Other Characteristics
Neither the Bancorp Class A Common Stock nor the Bancorp Class B Common
Stock is entitled to any preemptive right to subscribe for or receive any shares
of any class of stock of Bancorp (or any securities convertible into shares of
stock of Bancorp) issued in the future.
Description of Bancorp Preferred Stock
By amendment to its Articles of Incorporation without shareholder vote,
Bancorp may provide for one or more classes of Bancorp Preferred Stock, which
must be separately identified. The shares of any such class may be divided into
and issued in series, with each series separately designated so as to
distinguish the shares thereof from the shares of all other series and classes.
The terms of each series shall be set forth in a supplementary section to
Bancorp's Articles of Incorporation and may provide for, among other things,
board representation, voting rights and dividend and liquidation preferences.
All shares of the same class must be identical except as to certain relative
rights and preferences specified in Bancorp's Articles of Incorporation, as to
which there may be variations between different series.
COMPARISON OF THE RIGHTS OF STOCKHOLDERS
OF RYAN, BECK AND BANCORP
General
Bancorp is a unitary savings bank holding company incorporated under
Florida law and the rights of its shareholders are governed by the Florida
Business Corporation Act (the "Florida Act") and the Articles of Incorporation
and By-laws of Bancorp. Ryan, Beck is a New Jersey corporation and the rights of
its shareholders are governed by the New Jersey Business Corporation Act (the
"NJBCA") and the Certificate of Incorporation and By-laws of Ryan, Beck. If the
Merger is consummated, former Ryan, Beck shareholders will become shareholders
of Bancorp, and former Ryan, Beck option holders will become option holders of
Bancorp. The rights of such former Ryan, Beck shareholders as Bancorp
shareholders will be governed by the Florida Act and the Articles of
Incorporation and By-laws of Bancorp. Although it is not practical to compare
all differences between (i) Florida law and the Articles of Incorporation and
By-laws of Bancorp and (ii) New Jersey law and the Certificate of Incorporation
and By-laws of Ryan, Beck, the following is a summary of the material
differences which may materially affect the rights of Ryan, Beck shareholders.
Classified Board of Directors
The Florida Act permits a Florida corporation to provide for the
classification of directors and Bancorp's By-laws contain such a provision
dividing Bancorp's Board of Directors into three classes with one class of
directors generally elected for a three-year term at each annual meeting.
The NJBCA permits a New Jersey corporation to provide for the
classification of directors in its certificate of incorporation. Ryan, Beck's
Certificate of Incorporation contains such a provision and divides the Ryan,
Beck Board into three classes, to be as nearly equal in number of directors as
possible, and with one class of directors generally elected for a three-year
term at each annual meeting.
Rights of Dissenting Stockholders
A shareholder of a Florida corporation, with certain exceptions, has
the right to dissent from, and obtain payment of the fair value of his shares in
the event of (1) a merger or consolidation to which the corporation is a party,
(2) a sale or exchange of all or substantially all of the corporation's property
other than in the usual and regular course of business, (3) the approval of a
control share acquisition, (4) a statutory share exchange to which the
corporation is a party as the corporation whose shares will be acquired, (5) an
amendment to the articles of incorporation if the shareholder is entitled to
vote on the amendment and the amendment would adversely affect the shareholder
and (6) any corporate action taken to the extent that the articles of
incorporation provide for dissenters' rights with respect to such action. The
Florida Act provides that unless a corporation's articles of incorporation
provide otherwise, which Bancorp's Articles of Incorporation do not, a
shareholder does not have dissenters' rights with respect to a plan of merger,
share exchange or proposed sale or exchange of property if the shares held by
the shareholder are either registered on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc., or held of
record by 2,000 or more shareholders. A shareholder of a Florida corporation may
dissent as to less than all the shares registered in his name, and in such
event, the shareholder's rights shall be determined as if the shares to which he
dissented and the other shares were registered in the names of different
shareholders.
The NJBCA provides that, unless a corporation's certificate of
incorporation provides otherwise, or unless a shareholder vote was not required
to approve the transaction, shareholders are entitled to dissent from a merger
or consolidation, and from certain sales, leases, exchanges or other
dispositions of all or substantially all the assets of a corporation. But,
unless a corporation's certificate of incorporation provides otherwise (which
Ryan, Beck's Certificate of Incorporation does not) a shareholder shall not have
the right to dissent with respect to shares (1) of a class or series which is
listed on a national securities exchange or is held of record by not less than
1,000 holders on the record date fixed to determine the shareholders entitled to
vote upon the plan of merger or consolidation, or (2) for which such shareholder
will receive cash, stock or other securities so listed or held or a combination
of cash and such securities. A shareholder of a New Jersey corporation may not
dissent as to less than all of the shares owned beneficially by him and with
respect to which a right of dissent exists. In addition, a New Jersey
corporation may provide in its certificate of incorporation that holders of all
its shares, or of a particular class or series thereof, shall have the right to
dissent from specified corporate actions.
Bancorp's Class A Common Stock is listed on the NYSE and held by more
than 1,000 persons. Therefore, holders of Ryan, Beck Common Stock do not have
dissenters' rights of appraisal in the Merger under the NJBCA or Ryan, Beck's
Certificate of Incorporation. See "THE MERGER -- No Dissenters Rights of
Appraisal".
Shareholder Voting Requirements; Action by Consent
Under both the Florida Act and NJBCA, directors are generally elected
by a plurality of the votes cast by the shareholders entitled to vote at a
shareholders' meeting at which a quorum is present. Under Florida law with
respect to matters other than the election of directors, unless a greater number
of affirmative votes is required by the statute or the corporation's articles or
certificate of incorporation (but not its by-laws), if a quorum exists, action
on any matter is generally approved by the shareholders if the votes cast by the
holders of the shares represented at the meeting and entitled to vote on the
matter favoring the action exceed the votes cast opposing the action. In the
case of a merger, consolidation, or a sale, lease or exchange of all or
substantially all of the assets of a Florida corporation, except in limited
circumstances in which no shareholder vote is required, the affirmative vote of
the holders of a majority of the issued and outstanding shares entitled to vote
is required under the Florida Act. Under New Jersey law with respect to any
action, other than the election of directors, a majority of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote thereon is
required to approve the action, unless a greater vote is required by the
certificate of incorporation.
The Florida Act permits shareholder action to be taken without a
meeting if consents are signed by the holders of outstanding shares representing
not less than the minimum number of votes that would be necessary to take such
action at a meeting where all shares entitled to vote were present. New Jersey
has a similar provision but requires advance notice to shareholders not
consenting and the provision is not available for the annual election of
directors except by unanimous written consent.
THE BANCORP CLASS A COMMON STOCK HAS NO VOTING RIGHTS OTHER THAN AS
REQUIRED BY THE FLORIDA ACT. SEE "DESCRIPTION OF BANCORP CAPITAL STOCK-VOTING".
Distributions and Redemptions
A Florida corporation may make distributions to shareholders as long
as, after giving effect to such distribution (1) the corporation would be able
to pay its debts as they become due in the usual course of business and (2) the
corporation's total assets would not be less than the sum of its total
liabilities plus (unless the articles of incorporation permit otherwise, which
Bancorp's Articles of Incorporation do not) the amount that would be needed if
the corporation were to be dissolved at the time of the distribution to satisfy
the preferential rights upon dissolution of shareholders whose preferential
rights are superior to those receiving the distribution. The declaration and
payment of dividends by Bancorp will depend upon, among other things, the
results of operations, financial condition and cash requirements of Bancorp and
on the ability of BankAtlantic to pay dividends or otherwise advance funds to
Bancorp, which in turn is subject to OTS regulations and is based upon
BankAtlantic's regulatory capital levels and net income. See "Risk
Factors-Ability to Pay Dividends; Possible Issuance of Additional Securities".
A New Jersey corporation may make distributions to shareholders as long
as, after giving effect to such distribution (1) the corporation would be able
to pay its debts as they become due in the usual course of business and (2) the
corporation's total assets would not be less than its total liabilities. Under
both the Florida Act and the NJBCA, a corporation's redemption of its own
capital stock is deemed to be a distribution.
Board Vacancies
The Florida Act provides that a vacancy on the board of directors may
generally be filled by the affirmative vote of a majority of the remaining
directors, though less than a quorum of the board of directors, or by the
shareholders, unless the articles of incorporation provide otherwise. Bancorp's
Articles of Incorporation do not alter this provision.
Under the NJBCA, unless otherwise provided in the certificate of
incorporation or the by-laws, any vacancy occurring on the board may be filled
by the affirmative vote of a majority of the remaining directors, even though
less than a quorum of the board, or by a sole remaining director. Any
directorship not filled by the board may be filled by the shareholders at an
annual meeting or at a special meeting of shareholders called for that purpose.
Ryan, Beck's Certificate of Incorporation and By-laws do not alter the NJBCA
provisions regarding board vacancies.
Shareholder Inspection of Books and Records
Under the Florida Act, a shareholder is entitled to inspect and copy
the articles of incorporation, by-laws, certain board and shareholder
resolutions, certain written communications to shareholders, a list of the names
and business addresses of the corporation's directors and officers and the
corporation's most recent annual report, during regular business hours if the
shareholder gives at least five business days' prior written notice to the
corporation. In addition, a shareholder of a Florida corporation is entitled to
inspect and copy other books and records of the corporation during regular
business hours if the shareholder gives at least five business days' prior
written notice to the corporation and (1) the shareholder's demand is made in
good faith and for a proper purpose, (2) the demand describes with particularity
its purpose and the records to be inspected or copied and (3) the requested
records are directly connected with such purpose. The Florida Act provides also
that a corporation may deny any demand for inspection if the demand was made for
an improper purpose or if the demanding shareholder has, within two years
preceding such demand, sold or offered for sale any list of shareholders of the
corporation or any other corporation, has aided or abetted any person in
procuring a list of shareholders for such purpose or has improperly used any
information secured through any prior examination of the records of the
corporation or any other corporation. Moreover, a shareholder may not sell or
otherwise distribute any information or records inspected, and will be subject
to a civil penalty of $5,000 for a violation.
The provisions of the NJBCA governing inspection and copying of a
corporation's books and records are generally less restrictive than those of the
Florida Act. Specifically, the NJBCA permits any shareholder of record for at
least six months immediately preceding the demand, or any person holding, or
authorized in writing to hold, at least 5% of the outstanding shares of any
class or series, for any proper purpose and upon at least five days' written
demand, to make copies of and examine during usual business hours the minutes of
shareholder proceedings and the records of shareholders. Furthermore, any court
may, upon proof of proper purpose, compel the production for examination by a
shareholder of the account books and records, minutes and record of
shareholders. The court may prescribe limitations or conditions upon the
inspection, or award any other or further relief the court deems just and
proper.
Removal of Directors
The Florida Act provides that shareholders may remove one or more
directors with or without cause unless the articles of incorporation provide
that directors may be removed only for cause. A director may generally be
removed only if the number of votes cast to remove him exceed the number of
votes cast not to remove him. Bancorp's Articles of Incorporation do not include
a provision limiting the removal of directors only for cause.
The NJBCA provides that shareholders may remove one or more or all the
directors of a corporation with cause or, unless otherwise provided for in the
certificate of incorporation, without cause by the affirmative vote of the
majority of the votes cast by the holders of shares entitled to vote for the
election of directors. However, shareholders of a corporation, like Ryan, Beck,
whose board of directors is classified are not entitled to remove directors
without cause.
Amendments to Charter
An amendment to a Florida corporation's articles of incorporation or a
New Jersey corporation's certificate of incorporation must be approved by the
corporation's shareholders, except that certain immaterial amendments specified
in the Florida Act and NJBCA may be made by the board of directors. Unless the
Florida Act, a Florida corporation's articles of incorporation or the board of
directors require that the votes cast in favor of the amendment exceed the votes
cast against the amendment. Bancorp's Articles of Incorporation do not include
any provision requiring greater than a majority of votes to amend its articles
of incorporation. The NJBCA provides that unless the New Jersey corporation's
certificate of incorporation requires a greater vote, the vote required to
approve an amendment is the majority of the votes cast at a meeting of
shareholders at which a quorum is present. Ryan, Beck's Certificate of
Incorporation requires a greater vote in certain circumstances.
Special Meetings of Shareholders
Special meetings of a Florida corporation's shareholders may be called
by its board of directors, by the persons authorized to do so in its articles of
incorporation or by-laws or by the holders of not less than 10% of all votes
entitled to be cast on any issue proposed to be considered at the special
meeting, unless a greater percentage not to exceed 50% is required by the
articles of incorporation. Under Bancorp's By-laws, special meetings may be
called by the chairman, the president, a majority of directors or the holders of
not less than 10% of all votes entitled to be cast on any matter at the special
meeting.
Under the NJBCA, special shareholders' meetings may be called by the
board of directors or the president, or by other such officers, directors or
shareholders as may be provided in the by-laws. A special meeting may also be
ordered by the appropriate court upon the application of holders of not less
than 10% of all the shares entitled to vote at a meeting. Ryan, Beck's By-laws
provide that special shareholders' meetings may be called by the Chairman of the
Board, the Vice Chairman of the Board, the President or the Board.
Affiliated Transactions; Shareholder Protection Legislation
The Florida Act contains an affiliated transactions statute which
provides that certain transactions involving a corporation and a shareholder
owning 10% or more of the corporation's outstanding voting shares (an
"affiliated shareholder") must generally be approved by the affirmative vote of
the holders of two-thirds of the voting shares other than those owned by the
affiliated shareholder. The transactions covered by the statute include, with
certain exceptions, (1) mergers and consolidations to which the corporation and
the affiliated shareholder are parties, (2) sales or other dispositions of
substantial amounts of the corporation's assets to the affiliated shareholder,
(3) issuances by the corporation of substantial amounts of its securities to the
affiliated shareholder, (4) the adoption of any plan for the liquidation or
dissolution of the corporation proposed by or pursuant to an arrangement with
the affiliated shareholder, (5) any reclassification of the corporation's
securities which has the effect of substantially increasing the percentage of
the outstanding voting shares of the corporation beneficially owned by the
affiliated shareholder and (6) the receipt by the affiliated shareholder of
certain loans or other financial assistance from the corporation. These special
voting requirements do not apply in any of the following circumstances: (1) if
the transaction was approved by a majority of the corporation's disinterested
directors, (2) if the corporation did not have more than 300 shareholders of
record at any time during the preceding three years, (3) if the affiliated
shareholder has been the beneficial owner of at least 80 percent of the
corporation's outstanding voting shares for the past five years, (4) if the
affiliated shareholder is the beneficial owner of at least 90 percent of the
corporation's outstanding voting shares, exclusive of those acquired in a
transaction not approved by a majority of disinterested directors or (5) if the
consideration received by each shareholder in connection with the transaction
satisfies the "fair price" provisions of the statute. This statute applies to
any Florida corporation unless the original articles of incorporation or an
amendment to the articles of incorporation or by-laws contain a provision
expressly electing not to be governed by this statute. Such an amendment to the
articles of incorporation or by-laws must be approved by the affirmative vote of
a majority of disinterested shareholders and is not effective until 18 months
after approval. Bancorp's Articles of Incorporation and By-laws do not contain a
provision electing not to be governed by this statute.
The New Jersey Stockholders Protection Act (the "NJSPA") limits certain
transactions involving an "interested shareholder" and a "resident domestic
corporation." An "interested shareholder" is one that is directly or indirectly
a beneficial owner of 10% or more of the voting power of the outstanding voting
stock of a resident domestic corporation. The NJSPA prohibits certain business
combinations between an interested shareholder and a resident domestic
corporation for a period of five years after the date the interested shareholder
acquired its stock, unless the business combination was approved by the resident
domestic corporation's board of directors prior to the interested shareholder's
stock acquisition date. After the five-year period expires, the prohibition on
certain business combinations continues unless the combination is approved by
the affirmative vote of two-thirds of the voting stock not beneficially owned by
the interested shareholder, the combination is approved by the board prior to
the interested shareholder's stock acquisition date or certain fair price
provisions are satisfied.
The Florida Act also contains a control share acquisition statute which
provides that, with certain exceptions, a person who acquires shares in an
issuing public corporation in excess of certain specified thresholds will
generally not have any voting rights with respect to such shares unless the
voting rights are approved by a majority of the shares entitled to vote,
excluding interested shares. The thresholds specified in the Florida Act are the
acquisition of a number of shares representing: (1) 20 percent or more, but less
than 33% of all voting power of the corporation, (2) 33 percent or more but less
than a majority of all voting power of the corporation or (3) a majority or more
of all voting power of the corporation. This statute does not apply to
acquisitions of shares of a corporation if, prior to the pertinent acquisition
of shares, the corporation's articles of incorporation or by-laws provide that
the corporation shall not be governed by the statute. This statute also permits
a corporation to adopt a provision in its articles of incorporation or by-laws
providing for the redemption by the corporation of such acquired shares in
certain circumstances. Unless otherwise provided in the corporation's articles
of incorporation or by-laws prior to the pertinent acquisition of shares, in the
event that such shares are accorded full voting rights by the shareholders of
the corporation and the acquiring shareholder acquires a majority of the voting
power of the corporation, all shareholders who did not vote in favor of
according voting rights to such acquired shares are entitled to dissenters'
rights. Bancorp's Articles of Incorporation and By-laws do not contain any
provisions with respect to this statute.
Other Constituencies
The Florida Act and NJBCA both provide that directors, in discharging
their duties to the corporation and in determining what they believe to be in
the best interests of the corporation, may, in addition to considering the
effects of any corporate action on the shareholders and the corporation,
consider the effects of the corporate action on employees, suppliers and
customers of the corporation or its subsidiaries and the communities in which
the corporation and its subsidiaries operate.
Shareholder Rights Plans
The Florida Act has a provision which explicitly authorizes
corporations to adopt "poison pill" or "shareholder rights" plans. These plans
may be adopted in a number of forms, but generally involve the distribution by
the corporation to its shareholders of rights or options which are triggered by
a hostile takeover attempt or by a party acquiring a specified percentage of a
class of the corporation's securities. These plans can make hostile takeovers
excessively or prohibitively expensive unless the board of directors cancels the
plan.
Bancorp has not adopted this type of plan.
The NJBCA provides that a corporation may create and issue rights or
options entitling the holders to purchase from the corporation shares for such
consideration and upon such terms and conditions as may be fixed by the board,
subject to any provisions in respect thereof set forth in its certificate of
incorporation in effect before the authorization. Ryan, Beck has not adopted
this type of plan.
Limitations of Liability of Directors and Officers
The Florida Act provides that a director is not personally liable for
monetary damages to the corporation or any other person for any act or omission
as a director unless the director breached or failed to perform his statutory
duties as a director and such breach or failure (1) constitutes a violation of
criminal law, unless the director had reasonable cause to believe his conduct
was lawful or had no reasonable cause to believe his conduct was unlawful, (2)
constitutes a transaction from which the director derived an improper personal
benefit, (3) results in an unlawful distribution, (4) in a derivative action or
an action by a shareholder, constitutes conscious disregard for the best
interests of the corporation or willful misconduct or (5) in a proceeding other
than a derivative action or an action by a shareholder, constitutes recklessness
or an act or omission which was committed in bad faith or with malicious purpose
or in a manner exhibiting wanton and willful disregard of human rights, safety
or property.
Under New Jersey law, a corporation may include in its certificate of
incorporation a provision which would, subject to the limitations described
below, eliminate or limit directors' or officers' liability to the corporation
or its stockholders for monetary damage for breaches of their fiduciary duty as
a director. Under New Jersey law, a director or officer cannot be relieved from
liability or otherwise indemnified for any breach of duty based upon an act or
omission (i) in breach of such person's duty of loyalty to the corporation or
its stockholders, (ii) not in good faith or involving a knowing violation of
law, or (iii) resulting in receipt by such person of an improper personal
benefit. Bancorp's Certificate of Incorporation contains a provision which
limits a director's or officer's liability to the full extent permitted by New
Jersey law. Ryan, Beck has not adopted such a provision limiting director's or
officer's liability to the full extent permitted by New Jersey law.
Indemnification
Under the Florida Act and the NJBCA, a corporation may generally
indemnify its officers, directors, employees and agents against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement of
any proceedings (other than derivative actions), if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard is applicable in derivative actions, except that under the
Florida Act indemnification may be made only (1) for expenses (including
attorneys' fees) and certain amounts paid in settlement and (2) in the event the
person seeking indemnification has been adjudicated liable, amounts deemed
proper, fair and reasonable by the appropriate court upon application thereto
and under the NJBCA indemnification may be made only to the extent that a court
determines that despite the adjudication of liability such corporate agent is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper. The Florida Act and the NJBCA both provide that to the extent that such
persons have been successful in defense of any proceeding, they must be
indemnified by the corporation against expenses. Both Acts also provide that,
unless a corporation's articles or certificate of incorporation provide
otherwise, if a corporation does not so indemnify such persons, they may seek,
and a court may order, indemnification under certain circumstances even if the
board of directors or shareholders of the corporation have determined that the
persons are not entitled to indemnification.
In addition, under both Acts, expenses incurred by an officer or
director in connection with a proceeding may be paid by the corporation in
advance of the final disposition, upon receipt of an undertaking by such
director or officer to repay such amount if he is ultimately found not to be
entitled to indemnification by the corporation. Under the NJBCA, this provision
extends to all corporate agents, including employees, while under the Florida
Act employees and agents may be paid in advance upon such terms and conditions
deemed appropriate by the board of directors.
Bancorp's Articles of Incorporation and Ryan, Beck's Certificate of
Incorporation provide that directors and officers (executive officers in the
case of Ryan, Beck) and former directors and officers (executive officers in the
case of Ryan, Beck) will be indemnified to the fullest extent permitted by law.
Derivative Actions
Under the Florida Act and the NJBCA, a person may not bring a
derivative action unless the person was a shareholder of the corporation at the
time of the challenged transaction or unless the person acquired the shares by
operation of law from a person who was a shareholder at such time. The Florida
Act also provides that a complaint in a derivative proceeding must be verified
and must allege with particularity that a demand was made to obtain action by
the board of directors and that the demand was refused or ignored. Under the
Florida Act, a derivative proceeding may be settled or discontinued only with
court approval, and the court may dismiss a derivative proceeding if the court
finds that certain independent directors (or a committee of independent persons
appointed by such directors) have determined in good faith after conducting a
reasonable investigation that the maintenance of the action is not in the best
interests of the corporation. Both the Florida Act and the NJBCA provide that if
an action was brought without reasonable cause the court may require the
plaintiff to pay the defendant's reasonable expenses. Moreover, under the
Florida Act, if the plaintiff is successful the court may require the
corporation to pay the reasonable expenses of the plaintiff.
<PAGE>
II. ELECTION OF RYAN, BECK DIRECTORS
ELECTION OF DIRECTORS
The Board of Directors
Ryan, Beck's by-laws provide for the classification of the directors
into three classes, each consisting of approximately one-third of the Board and
standing for re-election once in each three year period. Accordingly, at the
Annual Meeting, Ryan, Beck's shareholders will be asked to elect four directors
for terms expiring in 2001 and two directors whose terms will expire in 1999. If
the Merger is consummated, the terms of all directors will expire upon
consummation of the Merger because BCP will be the Surviving Entity.
Unless a shareholder either indicates "withhold authority" on his proxy
or indicates on his proxy that his shares should not be voted for certain
nominees, it is intended that the persons named in the proxy will vote for the
election as directors of the six persons named in Table I below to serve until
the expiration of their respective terms and thereafter until their successors
shall have been duly qualified and elected. Discretionary authority is solicited
to vote for the election of a substitute for any of said nominees who, for any
reason presently unknown, cannot be a candidate for election. The Board has no
reason to believe that any of the named nominees is not available or will not
serve if elected.
Table I sets forth the names and ages of the nominees to the Board, the
other positions held by each such person within Ryan, Beck, the period during
which each such person has served on Ryan, Beck's Board, the period for which
such person has been nominated to serve and the principal occupations and
employment of each such person during the past five years. Table II sets forth
the same information with respect to those directors whose terms of office will
continue beyond the date of the Annual Meeting. Unless otherwise indicated, the
principal occupations and employment listed for each person has been his
principal occupation and employment for at least the past five years.
<TABLE>
<CAPTION>
TABLE I
NOMINEES FOR ELECTION AS DIRECTORS
CLASS I
Director Term
Name, Age Since Expires Business Experience for Past Five Years
--------- --------- -------- ---------------------------------------
<S> <C> <C> <C>
Richard B. Neff, 49 1994 2001 Chairman of the Board of Ryan, Beck; Executive Vice
President, Chief Financial Officer and Director of DiGiorgio,
Corporation; President and Chief Executive Officer of Las
Plumas Holding Co., LLC.
Peter W. Rodino, Jr., 88 1989 2001 Partner of Rodino & Rodino, P.C. (Attorneys at Law); U.S.
Congressman (January 1949 - January 1989).
Robert W. Pangia, 46 1997 2001 Self-employed; investment banker with Paine Webber
Incorporated, New York (1987-1996)
Benjamin Perlmutter, 73 1997 2001 Arbitrator, mediator, consultant, expert witness; President,
Benco, Inc. (distributor of building products) (1987-1996)
Leonard J. Stanley, 43 1997 1999 Chief Financial Officer of Ryan, Beck (November
1994-Present); Senior Vice President, Chief Administrative
Officer of Ryan, Beck (January 1997-Present); First Vice
President, Finance, Valley Savings Bank (1992-1994)
Jay Suskind, 33 1997 1999 Senior Vice President, Director of Trading of Ryan, Beck
(1998-Present), Director of Equity Trading of Ryan, Beck
(1993-1998); Trader, Sherwood Securities (1992-1993)
</TABLE>
<TABLE>
<CAPTION>
TABLE II
CONTINUING DIRECTORS
Director Term
Name, Age Since Expires Business Experience for Past Five Years
--------- --------- -------- ---------------------------------------
<S> <C> <C> <C>
Michael M. Horn, 58 1986 2000 Partner of McCarter & English (Attorneys at Law); Executive
Vice President of Ryan, Beck & Co. (December 1988 - April
1990).
Matthew R. Naula, 56 1981 2000 Vice Chairman of the Board (January 1997 to Present),
Executive Vice President of Ryan, Beck (December 1990 -
1996).
Ben A. Plotkin, 42 1993 2000 President and Chief Executive Officer of Ryan, Beck (January
1997 - Present); Senior Executive Vice President (January
1996 - January 1997); Executive Vice President (December
1990 - January 1996).
Jack R. Rosenthal, 73 1965 1999 Vice Chairman of the Board of Ryan, Beck (1987 - Present).
</TABLE>
The Board of Directors; Committees of the Board
The Board holds regularly scheduled meetings and meets on other
occasions when required by special circumstances. In addition to meeting as a
group to review Ryan, Beck's business, certain members of the Board also devote
their time and talents to one or more committees of the Board, described herein.
The Audit Committee of the Board (members: Messrs. Horn, Neff and Pangia)
provides general oversight in financial reporting and the adequacy of Ryan,
Beck's internal controls. The Audit Committee also recommends to the Board the
appointment of Ryan, Beck's independent public accountants. The Nominating
Committee of the Board (members: Messrs. Horn, Naula and Plotkin) recommends to
the Board those persons to be appointed or nominated for election to the Board.
The Acquisition Committee of the Board (members: Messrs. Neff, Plotkin, Naula
and Stanley) reviews Ryan, Beck's strategic options, including the possibility
of a sale of Ryan, Beck to, or combination of Ryan, Beck with, another entity.
The Compensation Committee of the Board (members: Messrs. Pangia, Rodino and
Neff) reviews Ryan, Beck's executive compensation levels. See "Executive
Compensation Committee Report."
In 1997 the Board held 13 meetings; the Audit Committee of the Board
held three meetings; the Nominating Committee of the Board held one meeting; the
Acquisition Committee held two meetings; and, the Compensation Committee of the
Board held three meetings. During 1997, each director attended at least 75% of
the aggregate of (i) the total number of meetings of the Board (held during the
period for which he has been a director) and (ii) the total number of meetings
held by all committees of the Board on which he served (during the period that
he served).
Remuneration of Directors
Each of Ryan, Beck's directors who is not also an officer of Ryan, Beck
(an "Outside Director") and not receiving contractual payments from Ryan, Beck
receives $30,000 per year ($22,500 in cash and $7,500 in Ryan Beck Common Stock
through the 1995 Restricted Stock Plan). The Chairman of the Board receives
$60,000 per year ($45,000 in cash and $15,000 in Ryan Beck Common Stock through
the 1995 Restricted Stock Plan).
The following table sets forth certain information as of May 19, 1998
with respect to the holdings of (i) each director and each executive officer of
Ryan, Beck for whom individual information is required to be set forth in this
Proxy Statement-Prospectus (the "Named Officers") under the rules of the
Securities and Exchange Commission ("SEC"), and by all of such executive
officers and directors as a group, and (ii) any holder of five percent of Ryan,
Beck Common Stock as determined in accordance with Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Except as set forth
below, Ryan, Beck's management is not aware of any other individual or entity
that owned of record or beneficially owned more than five percent of Ryan, Beck
Common Stock as of March 11, 1998. To Ryan, Beck's knowledge, except as
otherwise indicated in the footnotes to this table, each of the persons named in
the table has sole voting and/or investment power with respect to all shares of
Ryan, Beck Common Stock reported as beneficially owned by such persons.
<TABLE>
<CAPTION>
Directors and
Named Officers Number of Shares Percent
- ------------------------------- -------------------- -----------
<S> <C> <C> <C>
Richard B. Neff 27,932 (1) *
Ben A. Plotkin 145,993 (2) 3.86%
Matthew R. Naula 20,541 (3) *
Jack R. Rosenthal 5,490 (4) *
Leonard J. Stanley 20,550 (5) *
Jay Suskind 42,081 (6) 1.12%
Michael M. Horn 22,806 (7) *
Benjamin Perlmutter 3,871 *
Robert W. Pangia 2,559 *
Jonathan Klausner 25,211 (8) *
Peter W. Rodino, Jr. 2,438 *
All Directors and Named Officers 319,472 8.40%
as a Group (11 persons)
Five Percent Beneficial Owners
- ------------------------------
Bruce M. Chodash 429,114 11.41%
9 Rock Hill Drive
Livingston, NJ 07039
EQSF Advisers, Inc. 209,999 (9) 5.58%
Martin J. Whitman
767 Third Avenue
New York, NY 10017
</TABLE>
* Less then one percent
(1) Includes 16,900 shares of Ryan, Beck Common Stock held in a retirement plan
for Mr. Neff s benefit, 500 shares of Ryan, Beck Common Stock held in a SEP
retirement account for Mr. Neff s benefit, and 2,000 shares of Ryan, Beck
Common Stock held by his wife as custodian for his minor children. Also
includes 1,150 shares owned by Mr. Neff's mother and 1,000 shares owned by
Mr. Neff's daughter, with respect to which each has sole voting and
investment power and as to which he disclaims beneficial ownership.
(2) Includes 26,136 shares of Ryan, Beck Common Stock held in a retirement plan
for Mr. Plotkin's benefit and 15,432 shares of Ryan, Beck Common Stock held
in a joint account with his wife. Also includes 29,746 shares held by the
Ryan, Beck Restricted Stock Grant Committee for Mr. Plotkin's benefit and
3,641 shares held in Ryan, Beck & Co.'s Employee Stock Ownership Plan for
Mr. Plotkin's benefit, to which he may direct voting. Also includes 20,600
vested options.
(3) Includes 3,300 shares held by Ryan, Beck Restricted Stock Grant Committee
for Mr. Naula's benefit and 3,641 shares held in Ryan, Beck & Co.'s Employee
Stock Ownership Plan for Mr. Naula's benefit, to which he may direct voting.
(4) Includes 3,531 shares held in Ryan, Beck & Co.'s Employee Stock Ownership
Plan for Mr. Rosenthal's benefit, to which he may direct voting.
(5) Includes 5,775 shares of Ryan, Beck Common Stock held in a retirement plan
for Mr. Stanley's benefit and 2,248 shares of Ryan, Beck Common Stock held
in a joint account with his wife. Also includes 4,574 shares held by the
Ryan, Beck Restricted Stock Grant Committee for Mr. Stanley's benefit and
1,015 shares held in Ryan, Beck & Co.'s Employee Stock Ownership Plan for
Mr. Stanley's benefit, to which he may direct voting. Also includes 6,938
vested options.
(6) Includes 9,740 shares held by the Ryan, Beck Restricted Stock Grant
Committee for Mr. Suskind's benefit and 3,529 shares held in Ryan, Beck &
Co.'s Employee Stock Ownership Plan for Mr. Suskind's benefit to which he
may direct voting. Also includes 10,876 vested options.
(7) Includes 13,765 shares of Ryan, Beck Common Stock held in a retirement plan
for Mr. Horn's benefit and 2,819 shares of Ryan, Beck Common Stock held in a
retirement plan for his wife. Also includes 1,500 shares of Ryan, Beck
Common Stock held in a joint account with his wife.
(8) Includes 7,500 shares held by Mr. Klausner in a joint account with his wife.
Also includes 7,250 shares held by the Ryan, Beck Restricted Stock Grant
Committee for Mr. Klausner's benefit and 3,335 shares held in Ryan, Beck &
Co.'s Employee Stock Ownership Plan for Mr. Klausner's benefit, to which he
may direct voting. Also includes 1,000 vested options.
(9) Includes 161,941 shares of Ryan, Beck Common Stock held by EQSF Advisers,
Inc. and 48,058 shares of Ryan, Beck Common Stock held by Martin J. Whitman.
Mr. Whitman is the Chief Executive Officer and controlling person of EQSF
Advisers, Inc. Mr. Whitman disclaims beneficial ownership of shares owned by
EQSF Advisers, Inc.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the cash and non-cash compensation for
each of the last three fiscal years earned by the Chief Executive Officer of
Ryan, Beck and the other Named Officers.
<TABLE>
<CAPTION>
Long Term Compensation
Securities
Name & Principal Annual Compensation Restricted Underlying
Stock Options/ All Other
Position Year Salary($) Bonus($) Awards($)(2) SARs(#) Compensation($)(3)
-------- ---- --------- -------- ------------ ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Ben A. Plotkin 1997 213,462 942,500(1) 95,000 40,000 18,308
President and Chief 1996 200,000 671,000 0 20,000 17,534
Executive Officer 1995 187,500 490,000 0 31,500 21,187
Matthew R. Naula 1997 255,865 (4) 135,000 21,250 7,500 18,308
Executive Vice 1996 187,500 65,000 0 0 17,534
President 1995 187,500 62,500 0 0 21,187
Leonard J. Stanley 1997 100,000 79,500 21,750 17,500 18,308
Senior Vice President, Chief 1996 77,000 25,000 5,000 7,500 10,205
Financial Officer and Chief 1995 70,000 25,000 5,000 7,875 1,627
Administrative Officer
Jay Suskind 1997 120,000 137,000 33,000 10,000 18,308
Senior Vice President 1996 110,000 105,000 25,000 7,500 15,387
1995 100,000 120,000 25,000 15,750 21,187
Jonathan Klausner 1997 110,000 81,250 17,500 17,500 18,308
Senior Vice President 1996 105,000 27,000 30,000 2,500 15,387
1995 100,000 25,000 -0- -0- 21,187
</TABLE>
(1) In December, 1997, Ryan, Beck established the Ryan, Beck & Co., Inc.
Supplemental Bonus Plan (the "Deferred Compensation Plan"). Under the
Deferred Compensation Plan, the Compensation Committee may award
supplemental bonuses to eligible employees which bonuses are deferred and
not paid out until the earlier of the participant's tenth anniversary in the
Plan, or the first day of the fiscal year in which the participant ceases to
be one of the five highest paid executives in Ryan, Beck or a successor
whose securities are registered under the Exchange Act, qualifies for
benefits under the long-term disability plan, terminates employment or dies.
Except in the event of death, benefits are paid out in installments, the
installments being equal to a three year average of base salary. Ryan,
Beck's liability is an unfunded obligation, although the Company may use a
rabbi trust out of which benefits can be paid. A participant's bonus account
is credited with hypothetical earnings on the account, with "earnings"
determined by investments directed by the participant. As of January 1,
1998, Ryan, Beck declared Mr. Plotkin to be an eligible employee, awarded
Mr. Plotkin $300,000 under the Deferred Compensation Plan and authorized the
establishment of a rabbi trust. This $300,000 is included in the $942,500
bonus figure shown.
(2) The dollar amounts listed represent the value of the restricted stock at the
date of grant. In 1997, 15% of the year-end bonus was awarded in restricted
stock grants with one year vesting. In addition, as part of the Employee
Stock Purchase Program initiated in August, 1997, the Company matched
purchases of Ryan, Beck common stock providing a grant of one share for each
four shares purchased. The vesting period for this grant was also three
years. In addition, certain employees were eligible for similar matching
restricted stock grants in 1997. Based upon year-end values as of December
31, 1997, Mr. Plotkin, Mr. Naula, Mr. Stanley, Mr. Suskind and Mr. Klausner
held 29,746, 3,300, 4,574, 9,740, 7,250 shares of restricted stock,
respectively, with aggregate values of $241,686 for Mr. Plotkin, $26,813 for
Mr. Naula, $37,164 for Mr. Stanley, $79,138 for Mr. Suskind and $58,906 for
Mr. Klausner.
(3) Ryan, Beck maintains both an Employee Stock Ownership Plan ("ESOP") and a
tax-qualified 401(k) plan which has a profit-sharing component (the
"Profit-Sharing Plan"). This column reflects contributions under both plans.
Under the ESOP, contributions in cash or shares are made to the ESOP each
year and, as a result, shares are allocated to each eligible participant
each year. For 1997, the following amounts were allocated to the executive
officers, which are valued based upon the year-end closing price of Ryan,
Beck Common Stock: Ben A. Plotkin, $3,908; Matthew R. Naula, $3,908; Leonard
J. Stanley, $3,908; Jay Suskind, $3,908; and Jonathan Klausner, $3,908. The
Company makes annual contributions to the Profit Sharing Plan which are
expressed as a percentage of covered compensation. Contributions to the
Profit Sharing Plan are allocated to employees based upon a formula applied
to covered compensation, which was limited in 1997 to $160,000. For 1997,
the following executives received the following contributions under the
Profit Sharing Plan: Ben A. Plotkin, $14,400; Matthew R. Naula, $14,400;
Leonard J. Stanley, $14,400; Jay Suskind, $14,400; Jonathan Klausner,
$14,400. Shares allocated under the ESOP are fully vested if the
individual's years of service exceed seven years and will be fully vested if
the Plan is terminated. The ESOP will be terminated upon consummation of the
Merger. Profit-Sharing contributions are fully vested when the individual
has four years of credited service. The following persons have the following
years of credited service: Ben A. Plotkin, 10 years; Matthew R. Naula, 30
years; Leonard J. Stanley, 3 years; Jay Suskind, 5 years; Jonathan Klausner,
7 years. The dollar value of all perquisites provided to executive officers
did not exceed the lesser of $50,000 or 10% of the total of annual base
salary and bonus and, therefore, is not included.
(4) This dollar amount represents $187,500 paid as annual compensation and
$68,365 paid as commissions.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Annual Rates of Stock
Securities Percent of Total Exercise Price Appreciation
Underlying Options Granted or Base for Option Term
Options Granted to Employees Price Expiration
Name (#) in Fiscal Year ($/Sh) Date 5%($)(1) 10%($)(1)
---- --- -------------- ------ ---- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ben A. Plotkin 15,000 13.29% 5.000 06/18/07 47,167 119,531
25,000(2) 6.875 12/11/07 108,091 273,924
Matthew R. Naula 7,500(2) 2.49% 6.875 12/11/07 32,427 82,117
Leonard J. Stanley 7,500 5.81% 4.125 01/28/07 19,456 49,306
10,000(2) 6.875 12/11/07 43,237 109,570
Jay Suskind 10,000(2) 3.32% 6.875 12/11/07 43,237 109,570
Jonathan Klausner 7,500 5.81% 5.000 06/18/07 23,584 59,765
10,000(2) 6.875 12/11/07 43,237 109,570
</TABLE>
(1) Potential Realizable Values are based on an assumption that the stock price
of the Ryan, Beck Common Stock starts equal to the exercise price shown for
each particular option grant and appreciates at the annual rate shown
(compounded annually) from the date of grant until the end of the term of
the option. These amounts are reported net of the option exercise price, but
before any taxes associated with exercise of and the subsequent sale of the
underlying stock. The actual value, if any, an optionholder may realize will
be a function of the extent to which the stock price exceeds the exercise
price on the date the option is exercised and also will depend on the
optionholders continued employment through the vesting period. The actual
value to be realized by the optionholder may be greater or less than the
values estimated in this table.
(2) These Option Grants were awarded pursuant to the 1997 Plan and accordingly
are subject to shareholder approval of the 1997 Plan.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/VALUES
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money Options
Options at Fiscal at Fiscal Year-End
Shares Year-End (#) ($) Exercisable/
Acquired on Value Exercisable/ Unexercisable(1)
Name Exercise (#) Realized ($) Unexercisable
---- ------------ ------------ ------------------------ --------------------
<S> <C> <C> <C> <C>
Ben A. Plotkin 0 0 20,600/70,900 42,450/141,800
Matthew R. Naula 0 0 0/7,500 0/9,375
Leonard J. Stanley 0 0 6,938/25,937 16,018/64,704
Jay Suskind 0 0 10,876/22,374 19,660/36,346
Jonathan Klausner 0 0 1,000/19,000 4,125/42,125
</TABLE>
(1) Based on the closing price of Ryan, Beck Common Stock ($8.125) on December
31, 1997.
Senior Management Committee
On January 15, 1997, the Board established a Senior Management
Committee comprised of Ben A. Plotkin (Chairman), Jonathan Klausner, Matthew R.
Naula, Leonard J. Stanley and Jay Suskind to function as an office of the Chief
Executive Officer. As Chairman of the Senior Management Committee, Mr. Plotkin
acts as Ryan, Beck's Chief Executive Officer.
Executive Compensation Committee Report
General. Under rules established by the Securities and Exchange
Commission, Ryan, Beck is required to provide certain data and information in
regard to the compensation and benefits provided to Ryan, Beck's Chief Executive
Officer and other executive officers of Ryan, Beck. The disclosure requirements
for the Chief Executive Officer and other executive officers include the use of
tables and a report explaining the rationale and considerations that led to
fundamental executive compensation decisions affecting those individuals. In
fulfillment of this requirement, the following report has been prepared for
inclusion in this Proxy Statement.
Compensation Policies. The compensation program is structured to
recognize each executive's level of responsibility and to reward exceptional
individual and corporate performance. The Board takes into account both annual
operating results and the desirability of providing incentives for future
improvement. This includes the ability to implement Ryan, Beck's business plans,
as well as to react to unanticipated external factors which could have a
significant impact on corporate performance. Compensation decisions for all
executives, including the President, are based on the same criteria. Base annual
salaries for Ryan, Beck's executive officers are determined at the time Ryan,
Beck and such executive officer enter into the employment arrangement. At the
beginning of each year a determination is made whether to increase such annual
base salary and, if so, how much of an increase is warranted. Salary levels are
intended to reflect responsibilities in one or more of Ryan, Beck's operating
units and to be competitive with positions of similar responsibility in other
comparable investment banking and broker dealer organizations, whether publicly
owned or privately held.
Incentive Bonus Awards. Ryan, Beck's bonus pools are based either upon
Ryan, Beck's earnings performance for the year, or upon business unit revenue
and earnings performance. Ryan, Beck's President, certain other executive
officers, as well as non-commissioned eligible employees of Ryan, Beck are paid
bonuses semi-annually from a bonus pool based upon the performance of the
individual and the total results of the department and Ryan, Beck. The structure
and accrual rates for the corporate and various business unit bonus pools are
reviewed annually by the Compensation Committee and the Board. Specific
performance bonus awards for the executive officers are initially recommended by
the President and are submitted to the Committee for discussion and approval.
The bonus of any individual is based upon individual performance and future
potential. These assessments, which are subjective in nature, are made
semi-annually on a case-by-case basis. Starting in December 1997, 15% of the
incentive bonus was awarded in Ryan, Beck stock.
Long Term Incentive Compensation. Stock-based incentive awards are a
fundamental component of total compensation awarded each year to selected
officers of Ryan, Beck. These awards, which include restricted stock grants and
stock options, are designed to reinforce the importance of building long-term
value for Ryan, Beck's stockholders. Restricted stock grants provide an
immediate ownership interest and reinforce a long term orientation in decision
making. Restricted stocks are shares of common stock that convey to their holder
all the rights of a stockholder, including receipt of dividends. The shares are
restricted from being sold, transferred, or assigned for up to three years. In
most cases, the award recipient is required to purchase and hold an equal number
of shares in order to receive Ryan, Beck's grants. The awards granted in 1997
have a restriction period of one to three years. The number of shares of
restricted stock granted is based on individual performance and level of
responsibility.
Stock options directly align the financial interest of management with
those of stockholders by rewarding management only if, and to the extent that
the price of common stock appreciates in the future. Stock options have a term
of ten years and generally vest over a four or five year period. The number of
options granted to officers is based on individual performance and level of
responsibility. Award levels must be sufficient in size so that the recipient
develops strong incentives to achieve long-term corporate goals.
Compensation of the Chief Executive Officer.
The Compensation Committee used a combination of base salary, incentive
bonus compensation and a supplemental bonus plan to reward Mr. Plotkin for his
service as President and Chief Executive Officer. In establishing his bonus, the
Committee recognized that Mr. Plotkin during 1997 assumed the role of CEO and
continued his role as a primary contributor to Ryan, Beck's success in the
investment banking area. The Committee's decision on Mr. Plotkin's compensation
recognized both roles. The primary component in Mr. Plotkin's compensation is
related to and competitive with compensation of similar investment bankers. The
Committee also avoided the limitations contained in Section 162(m) of the
Internal Revenue Code relating to the deductibility of executive compensation in
excess of $1 million by utilizing a deferred bonus plan for additional
compensation. If the Acquisition Agreement had not been entered into, the
Committee intended to ask shareholders to approve an incentive bonus plan for
1998 and subsequent years, so as to avoid the 162(m) limits in the future.
To continue to align Mr. Plotkin's interests with those of the
shareholders, Mr. Plotkin was also awarded options for 15,000 shares in July,
1997 and options for 25,000 shares in December, 1997, both with a four year
vesting schedule. The options awarded in December, 1997 were awarded pursuant to
the 1997 Plan and accordingly are subject to shareholder approval of the 1997
Plan.
Mr. Plotkin's base salary was increased to $260,000 on January 1, 1998.
Compensation Committee: Robert W. Pangia, Richard B. Neff, and Peter W.
Rodino.
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the common stock of Ryan, Beck for the last five fiscal years with the
cumulative total return of the NASDAQ National Market (the "NASDAQ Market
Index") and the Media General Peer Group (a peer group consisting of 64
investment banks and broker dealers) over the same period (assuming the
investment of $100 in each on January 1, 1993, and the reinvestment of all
dividends).
[GRAPHIC OMITTED]
The chart below details the data points indicated in the above graph.
<TABLE>
<CAPTION>
Fiscal Year Ending December 31, 1992 1993 1994 1995 1996 1997
- ------------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
RYAN, BECK & CO. 100 137.65 158.33 193.09 124.91 223.05
NASDAQ MARKET INDEX 100 128.41 115.23 160.48 229.77 399.65
MG GROUP INDEX 100 119.95 125.94 163.35 202.99 248.30
</TABLE>
Agreements with Employee-Directors and Other Key Executives
Ben Plotkin. On March 18, 1997, Ryan, Beck and Ben A. Plotkin entered
into an amendment (the "Amendment") to the amended and restated employment
agreement dated as of December 14, 1995 (the "Plotkin Agreement") pursuant to
which Mr. Plotkin serves as President of Ryan, Beck and Chairman of the Senior
Management Committee. As Chairman of the Senior Management Committee, Mr.
Plotkin also acts as the Chief Executive Officer of Ryan, Beck. The term of the
Plotkin Agreement is for three years commencing on December 14, 1995 with one
year being added to the term at each anniversary date of the effective date
provided Mr. Plotkin is actively employed by Ryan, Beck on the anniversary date
The Plotkin Agreement provides that either party may terminate the
agreement at any time upon 30 days' written notice. In the event that Ryan, Beck
terminates the Plotkin Agreement, Mr. Plotkin will be entitled to receive a lump
sum payment equal to $150,000 times the number of years remaining in the term of
the agreement, prorated for any partial years. In the event that Ryan, Beck
terminates the Plotkin Agreement with Cause (as defined in the agreement), Mr.
Plotkin will be entitled to a payment of $75,000.
In the event of a Change of Control of Ryan, Beck, if Mr. Plotkin's
employment with Ryan, Beck is terminated without cause or he resigns for good
reason (as that term is defined in the Plotkin Agreement), Mr. Plotkin will be
entitled to receive a lump sum payment equal to his annual base salary then in
effect for the remaining term of the agreement and all unvested shares of
Restricted Stock and all unvested Options granted to Mr. Plotkin in that
agreement will immediately vest. In the event that a Change of Control were
deemed to have occurred on the date hereof, Mr. Plotkin would be entitled to
receive a payment of approximately $780,000 if his employment was terminated
without cause or he resigns for good reason (as defined in the Plotkin
Agreement).
Matthew R. Naula. On December 4, 1996, Ryan, Beck and Mr. Naula entered
into a new employment agreement (the "Naula Agreement") pursuant to which Mr.
Naula is employed as an Executive Vice President of Ryan, Beck. The Naula
Agreement provides that Mr. Naula will be paid $187,500 per year, of which
$120,000 represents salary and the balance represents a draw against commissions
with respect to the sale of securities and other financial products by Mr.
Naula.
The Naula Agreement may be terminated upon thirty days notice by either
party, in which case Mr. Naula will be entitled to a lump sum payment of
$150,000. In the event of termination with Cause (as defined in the agreement),
Mr. Naula will be entitled to a lump sum payment of $75,000.
Both Mr. Plotkin's and Mr. Naula's agreements are expected to be
terminated in connection with the Merger.
III. APPROVAL OF THE RYAN, BECK & CO., INC.
LONG-TERM INCENTIVE STOCK OPTION PLAN
APPROVAL OF THE PLAN
The Board has approved for submission to Ryan, Beck's shareholders the
Ryan Beck & Co., Inc. Long-Term Stock Incentive Plan (the "Plan") as set forth
in Exhibit B to this Proxy Statement. The full text of the Plan is attached to
this Proxy Statement as Exhibit B and the following description of the Plan is
qualified in its entirety by reference to Exhibit B. The purposes of the Plan
are to provide additional incentive to officers and key employees of Ryan, Beck
and its Subsidiaries, to motivate such officers and employees to faithfully and
diligently perform their responsibilities, to attract and retain competent and
dedicated individuals, to assist Ryan, Beck in attracting and retaining highly
qualified individuals to serve as directors and to align the interests of those
directors more closely with the interests of Ryan, Beck's shareholders. Pursuant
to the terms of the Plan, the Committee (as defined herein) has granted options
to acquire an aggregate of 203,000 shares to 41 eligible employees and
directors. The grant of these options is subject to shareholder approval of the
Plan.
Types of Options and Awards
The Plan provides that Ryan, Beck (i) may grant Eligible Employees
Incentive Stock Options, Non-qualified Stock Options, Restricted Stock Awards
and Stock Appreciation Rights and (ii) may grant Eligible Directors Restricted
Stock Awards and Non-qualified Stock Options. All options and awards granted
under the Plan are options for or awards relating to shares of Ryan, Beck Common
Stock. "Incentive Options" granted under the Plan are intended to constitute
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). "Non-qualified stock options" are
those options, which when granted or due to subsequent disqualification, do not
qualify as incentive stock options within the meaning of Section 422 of the
Code.
Shares Subject to the Plan
In approving the Plan, the Board provided for the issuance under the
Plan of 500,000 shares of which not more than 150,000 shares may be issued or
transferred pursuant to options and/or awards to any one Eligible Employee in
total and not more than 7,500 shares may be issued or transferred pursuant to
options and/or awards to any one Eligible Director per year. Subject to the
foregoing aggregate limitations, the maximum number of shares that may be issued
or transferred pursuant to options or awards for Incentive Stock Options,
Non-qualified Stock Options and Stock Appreciation Rights will be 400,000 and
that may be issued or transferred pursuant to awards of Restricted Stock will be
100,000.
The Plan provides that the Committee shall conclusively determine the
appropriate adjustments, if any, to the number of shares available and purchase
price for stock options and awards in the case of a change in Ryan, Beck's
capital stock. Any such adjustment to shares subject to outstanding Incentive
Stock Options will be made in a manner as not to constitute a modification as
defined by Section 425(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 425 of the Code.
Termination and Amendment
The Plan will terminate on the day preceding the tenth anniversary of
its effective date. However, the Board has the right to terminate the Plan at
any time.
The Board also has the right to amend the Plan. However, without the
approval of Ryan, Beck's stockholders no amendment may be made to the Plan if
the amendment would: (a) except as provided under the Plan for changes in
capitalization, increase the maximum number of shares as to which options or
awards may be granted under the Plan, (b) change the class of persons eligible
to participant, (c) change the minimum purchase price of shares pursuant to
options or awards as provided in the Plan, (d) extend the maximum period for
granting options under the Plan, or (e) otherwise materially increase the
benefits accruing to Eligible Employees or Eligible Directors under the Plan.
If the Merger is consummated, no further awards or options are expected
to be made under the Plan. Under the Acquisition Agreement, without the consent
of Bancorp, no further awards or options may be made under the Plan.
Administration
The Plan will be administered by a committee designated by the Board
(the "Committee"). Each member of the Committee will be a Non-Employee Director
(as defined in Rule 16b-3 of the Exchange Act) and an "outside director" within
the meaning of Section 162(m) of the Code. The Committee will identify each
officer, key employee or director qualified to receive an option or award (an
"Optionee" or "Grantee," respectively) and determine the number of shares
subject to each option or award, the date of grant and the terms and conditions
governing the option or award. The Committee will also be charged with the
responsibility of interpreting the Plan and making all administrative
determinations thereunder. Grants to Eligible Directors will be subject to the
approval of the entire Board.
Eligibility
All officers and other key employees of Ryan, Beck or any Subsidiary
designated by the Committee will be eligible to receive options or awards under
the Plan ("Eligible Employees"). Members of the Board of Ryan, Beck who are not
employees of Ryan, Beck or any Subsidiary and designated by the Committee will
be eligible to receive options or awards under the Plan ("Eligible Directors").
The Committee has granted certain options under the Plan which are subject to
Shareholder approval of the Plan. Other than as set forth in the table below,
Ryan, Beck is unable, at the present time, to determine the identity or number
of officers, other key employees and directors who may receive options or awards
pursuant to the Plan in the future since discretion for the grant of options or
awards will be vested in the Committee.
The following table presents information concerning the number of
options and awards and the corresponding dollar value of such options and awards
to be received by or allocated to the Named Officers, executive officers as a
group, nonexecutive officers and employees as a group, and any person receiving
5% or more of the 500,000 shares and awards initially available pursuant to the
Plan. The following table also presents information concerning the number of
options granted to directors.
<PAGE>
NEW PLAN BENEFITS
RYAN, BECK & CO., INC. LONG-TERM STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Appreciation for Option Term
of 10 years
----------------------------------------
Name and Position 5% ($)(1) 10% ($)(1) Number of Units(2)
----------------- --------- ---------- ------------------
<S> <C> <C> <C>
Ben Plotkin.................................... 108,091 273,924 25,000
President & C.E.O.
Matthew R. Naula............................... 32,427 82,1175 7,500
Executive Vice President
Leonard J. Stanley............................. 43,236 109,569 10,000
Senior Vice President, Chief
Financial Officer and Chief
Administrative Officer
Jay Suskind.................................... 43,236 109,569 10,000
Senior Vice President
Jonathan Klausner.............................. 43,236 109,569 10,000
Senior Vice President
Executive Officer Group........................ 270,228 684,751 62,500
Non-Executive Officer/Employee Group........... 1,433,427 2,282,493 128,000
Eligible Directors............................. 54,045 136,962 12,500
</TABLE>
(1) Potential Realizable Values are based on an assumption that the stock price
of the Ryan, Beck Common Stock starts equal to the exercise price shown for
each particular option and appreciates at the annual rate shown (compounded
annually) from the date of grant until the end of the term of the option
(ten years). These amounts are reported net of the option exercise price,
but before any taxes associated with exercise of and the subsequent sale of
the underlying stock. The actual value, if any, an Optionee may realize will
be a function of the extent to which the stock price exceeds the exercise
price on the date the option is exercised and also will depend on the
Optionee's continued employment through the vesting period. The actual value
to be realized by the Optionee may be greater or less than the values
estimated in this table. The shareholders of Ryan, Beck would realize
appreciation from the date of grant in the aggregate $16,272,704 using the
5% assumption and $41,217,913 using the 10% assumption.
(2) All options to Eligible Employees vest in four years and the Board has
determined not to accelerate such options if the Merger is approved. The
Director Options vest in one year but will accelerate if the Merger is
consummated.
Terms and Conditions of Stock Options
Term
All options granted under the Plan will be for such term as the
Committee determines, provided that all Incentive Stock Options will not be
exercisable after the expiration of ten years from the date granted and all
Non-qualified Stock Options will be exercisable after the expiration of ten
years and one day from the date granted. The Plan provides that any options
which are intended to be Incentive Stock Options and are granted to an Optionee
who owns more than 10% of Ryan, Beck Common Stock (a "Ten-Percent Shareholder")
must have terms of five years or less.
Purchase Price
The Plan provides that the purchase price shall be set forth in the
Agreement between the Eligible Employee or Eligible Director and Ryan, Beck,
provided that the purchase price per share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a share at the time the
option is granted and the purchase price per share under each Non-qualified
Stock Option shall not be less than 50% of the Fair Market Value of a share at
the time the option is granted. Incentive Stock Options granted to Ten-Percent
Shareholders must bear an exercise price of not less than 110% of the Fair
Market Value of the stock purchasable thereunder on the date of grant. The Plan
defines "fair market value" as: (A) if the Shares are admitted to quotation on
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or other comparable quotation system and have been designated as a
National Market System ("NMS") security, Fair Market Value on any date shall be
the last sale price reported for the Shares on such system on such date or on
the last day preceding such date on which a sale was reported, (B) if the Shares
are admitted to quotation on NASDAQ and have not been designated a NMS security,
Fair Market Value on any date shall be the average of the highest bid and lowest
asked prices of the Shares on such system on such date, or (C) if the Shares are
admitted to trading on a national securities exchange, Fair Market Value on any
date shall be the last sale price reported for the Shares on such exchange on
such date or on the last date preceding such date on which a sale was reported.
The Plan provides that the purchase price for shares acquired pursuant
to the exercise of any option is payable in full at the time of exercise. The
purchase price may be paid in cash, by check, or at the discretion of the
Committee and upon such terms and conditions as the Committee shall approve, by
transferring shares to Ryan, Beck. Not less than 100 shares may be purchased at
any time upon the exercise of an option unless the number of shares so purchased
constitutes the total number of shares then purchasable under the option.
Exercise Period
The Plan provides that if an Optionee's employment terminates by reason
of death or disability, the right of the Optionee, his or her estate,
beneficiary or representative to exercise any outstanding, vested options will
terminate one year following such termination of employment and shall thereafter
terminate. If an Optionee's employment terminates by reason of retirement,
resignation or dismissal for "Cause" (as defined in the Plan), the right of the
Optionee to exercise any outstanding, vested options will terminate on the date
of such termination of employment. If an Optionee's termination of employment is
for any other reason, the Option will be exercisable for a period of ninety days
following such termination of employment and shall thereafter terminate.
Directors' Options
The Plan provides the Committee, after obtaining specific approval by
the Board of Ryan, Beck, with the authority to grant Non-qualified Options to
Eligible Directors. The exercise price of such options will be the Fair Market
Value on the first trading day of February following the date of grant, or such
other day as the Board shall specify, with a term of up to ten years, which term
will terminate no more than three months after the director ceases to serve as a
director for any reason, other than for death or Disability (in which case the
options may be exercisable for up to one year after termination).
Change in Control Provisions
In the event of a Change in Control, the Board, by written notice to
the Optionee, may accelerate the vesting of some or all of the outstanding
options, may terminate some or all of the outstanding options after a limited
period of exercisability (which may be as short as 30 days) and may pay the
appreciation in value of the options in securities or stock in cancellation of
the options.
The Plan defines "Change in Control" to mean any of the following
events: (i) when Ryan, Beck or a Subsidiary acquires actual knowledge that any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act), other than an affiliate of Ryan, Beck or a Subsidiary or an employee
benefit plan established or maintained by Ryan, Beck, a Subsidiary or any of
their respective affiliates, is or becomes the beneficial owner (as defined in
Rule 13d-3 of the Exchange Act) directly or indirectly, of securities of Ryan,
Beck representing more than twenty-five percent (25%) of the combined voting
power of Ryan, Beck's then outstanding securities (a "Control Person") without
the approval of the Continuing Directors (as hereafter defined) in office when
such person acquires more than ten percent (10%) of the combined voting power,
(ii) upon the first purchase of Ryan, Beck's common stock pursuant to a tender
or exchange offer (other than a tender or exchange offer made by Ryan, Beck, a
Subsidiary or an employee benefit plan established or maintained by Ryan, Beck,
a Subsidiary or any of their respective affiliates), (iii) upon consummation of
any of the following if it requires the approval by Ryan, Beck's stockholders
(A) a merger or consolidation of Ryan, Beck with or into another corporation
(other than a merger or consolidation which provides that at least a majority of
the directors of the surviving or resulting corporation immediately after the
transaction are Continuing Directors (in either case, a "Non-Control
Transaction")) , (B) a sale or disposition of all or substantially all of Ryan,
Beck's assets (other than the formation of a holding company) or (C) a plan of
liquidation or dissolution of Ryan, Beck, or (iv) if during any period of two
(2) consecutive years, individuals who at the beginning of such period
constitute the Board (the "Continuing Directors") cease for any reason to
constitute at least two-thirds thereof or, following a Non-Control Transaction,
two-thirds of the board of directors of the surviving or resulting corporation;
provided that any individual whose election or nomination for election as a
member of the Board (or, following a Non-Control Transaction, the board of
directors of the surviving or resulting corporation) was approved by a vote of
at least two-thirds of the Continuing Directors then in office shall be
considered a continuing Director.
The Merger will constitute a Change in Control, but the Acquisition
Agreement prevents the Board from accelerating any options or awards which by
their terms do not automatically accelerate.
Terms and Conditions of Stock Appreciation Rights
Term
All Stock Appreciation Rights available for issuance under the Plan
will be for such term as the Committee determines, provided that all Stock
Appreciation Rights will not be exercisable after the expiration of ten years
from the date granted. If granted in connection with an option, such Stock
Appreciation Right shall be subject to the same term as the related option.
Exercise
The Plan provides that a Stock Appreciation Right granted in connection
with an option is exercisable only at such time or times and to the extent that
the related Option is exercisable and will not be transferable except to the
extent the related option is transferable. If such Stock Appreciation Right is
connected to an Incentive Stock Option it will be exercisable only if the Fair
Market Value of a share on the date of exercise exceeds the purchase price of
the related Incentive Stock Option. The Plan provides that a Stock Appreciation
Right unrelated to an option will be exercisable according to the conditions as
to exercisability set forth in the Agreement between the Grantee and Ryan, Beck.
If a Grantee's employment terminates by reason of death or Disability, the right
of the Grantee, his or her estate, beneficiary or representative to such Stock
Appreciation Right will be exercisable for a period of one (1) year following
such termination of employment and shall thereafter terminate. If such Grantee's
employment terminates by reason of retirement, resignation or dismissal for
"Cause" (as defined in the Plan), the Stock Appreciation Right held by the
Grantee will be terminated on the date of the Grantee's termination of
employment. If a Grantee's termination of employment is for any other reason,
the Stock Appreciation Right will be exercisable for a period of ninety days
following such termination of employment and shall thereafter terminate.
Payment
The Plan provides that upon exercise of a Stock Appreciation Right
related to an option the Grantee will receive an amount determined by
multiplying (A) the excess of Fair Market Value of a share on the date of
exercise of such Stock Appreciation Right over the per share purchase price
under the related option, by (B) the number of shares as to which such Stock
Appreciation Right is being exercised. The Plan provides that upon exercise of a
Stock Appreciation Right unrelated to an option the Grantee will receive an
amount determined by multiplying (A) the excess of Fair Market Value of a share
on the date of exercise of such Stock Appreciation Right over the per share Fair
Market Value of a share on the date of the grant of the Stock Appreciation
Right, by (B) the number of shares as to which such Stock Appreciation Right is
being exercised. The Committee has discretion to make such payments either
solely in shares of Ryan, Beck Common Stock in a number determined at their Fair
Market Value on the date of exercise of the Stock Appreciation Right or in cash
or in a combination of cash and shares.
Restrictions
The Plan provides that no Stock Appreciation Right may be exercised
before the date six months after the date it is granted, except in the event of
death or Disability of the Grantee before the expiration of the six-month period
or in the event of a Change in Control.
Change in Control
In the event of a Change in Control, the Board, by written notice to
the Grantee, may accelerate the vesting of some or all of the outstanding Stock
Appreciation Rights and may terminate some or all of the outstanding Stock
Appreciation Rights after a limited period of exercisability (which may be as
short as 30 days).
No Stock Appreciation Rights have been granted pursuant to the Plan.
Terms and Conditions of Restricted Stock
Terms and Conditions
The Plan provides that upon granting a Restricted Stock Award an
Agreement between the Grantee and Ryan, Beck will set forth the restrictions,
terms, and conditions of the award. Such Agreement may require that an
appropriate legend be placed on share certificates. Upon the grant of the
Restricted Stock, the shares will be issued in the name of the Grantee as soon
as reasonably practicable after the purchase price, if any, is paid, and such
shares will be deposited with the Escrow Agent pending termination of the
restrictions which apply thereto. The Plan provides that upon delivery of such
shares to the Escrow Agent, the Grantee will have all rights of a stockholder
with respect to the shares, including the right to vote and the right to receive
all dividends paid or made with respect to the shares, unless the Committee, in
its discretion, determines that such payment of dividends should be deferred.
Awards of Restricted Stock to Eligible Directors
The Plan provides that the Committee may, subject to the approval of
the Board, grant awards of Restricted Stock to Eligible Directors with a Fair
Market Value equal to, and in lieu of, up to twenty-five percent of the
director's annual retainer fee. The awards will be made effective each July 1
and the number of shares shall be based upon the Fair Market Value of the shares
on such July 1 or such other date determined by the Committee which follows the
annual meeting of shareholders at which the director is elected. The Restricted
Stock awarded to an Eligible Director will be forfeited and automatically
transferred to and reacquired by Ryan, Beck unless the Eligible Director
continues to serve as a director on the Board for a period of a least six months
from the date of Grant, except in the event of death or Disability of the
Eligible Director or a Change in Control of Ryan, Beck, in which case all
restrictions will lapse.
Restrictions
The Plan provides that the restrictions upon the shares of Restricted
Stock will lapse at the time or times and on the terms, conditions and
satisfaction of performance criteria as the Committee determines as may be set
forth in the Agreement, provided however, such restrictions will only lapse if
the Grantee on the date of the lapse is then and has continuously been an
employee or director of Ryan, Beck or a Subsidiary from the date the award was
granted. When the restrictions lapse, Ryan, Beck will deliver to the Grantee a
certificate for the number of shares of common stock without any legend or
restrictions (except those required by federal or state securities laws)
equivalent to the number of shares of Restricted Stock for which the
restrictions have terminated.
No Restricted Stock has been granted pursuant to the Plan.
Federal Tax Consequences Under the Plan
The following is a summary of the Federal income tax consequences of
transactions under the Plan, based on Federal income tax laws in effect on
January 1, 1998. This summary is not intended to be comprehensive and does not
describe state or local income tax consequences.
Pursuant to the Plan, Eligible Employees may be granted the following
benefits: incentive stock options, nonqualified stock options, stock
appreciation rights and restricted stock awards; and, Eligible Directors may be
granted the following benefits:
non-qualified stock options and restricted stock awards.
Incentive Stock Options. No income is realized by an optionee upon the
grant or exercise of an incentive stock option. If shares of common stock are
transferred to an optionee upon the exercise of an incentive stock option, and
if no disqualifying disposition of such shares is made by such optionee within
two years after the date of grant of the option or within one year after the
transfer of such shares to such optionee, then (1) upon the sale or exchange of
such shares, any amount realized in excess of the option exercise price will be
taxed to such optionee as a long-term capital gain and any loss sustained will
be treated as a long-term capital loss, and (2) no deduction will be allowed to
Ryan, Beck for Federal income tax purposes. The exercise of an incentive stock
option will give rise to an item of tax preference that may result in
alternative minimum tax liability for the optionee.
If common stock acquired upon the exercise of an incentive stock option
is disposed of prior to two years after the grant date or one year after the
exercise date, generally (1) the optionee will realize compensation (i.e.,
ordinary income) in the year of disposition in an amount equal to the excess (if
any) of the fair market value of such shares at exercise (or if less, the amount
realized on the disposition of such shares, if the shares are disposed of by
sale or exchange) over the option exercise price paid for such shares, and (2)
Ryan, Beck will be entitled to deduct the amount of compensation income, which
was taxed to the optionee for Federal income tax purposes, if it complies with
applicable reporting requirements (the "reporting requirements") and if the
amount represents an ordinary and necessary business expense of Ryan, Beck (the
"ordinary and necessary test"). Any further gain (or loss) realized by the
optionee will be taxed as short-term or long-term capital gain (or loss), as the
case may be, and will not result in any deduction by Ryan, Beck. Different rules
may apply if common stock is purchased by an optionee who is also an officer,
director or more than 10% shareholder. See "Special Rules Applicable to
Corporate Insiders," below.
If an incentive stock option is exercised more than three months
following the termination of employment, the exercise of the option will
generally be taxed in the same manner as the exercise of a nonqualified stock
option, except if the termination is due to the death or disability of the
employee.
Nonqualified Stock Options. Except as noted below, in the case of
nonqualified stock options: (1) no income is realized by the optionee at the
time the option is granted; (2) if the shares are unrestricted, the optionee
realizes ordinary income at exercise in an amount equal to the difference
between the option exercise price paid for the shares and the fair market value
of the shares on the date of exercise; (3) Ryan, Beck is entitled to a Federal
income tax deduction equal to the amount of income taxed to the optionee,
subject to Ryan, Beck's satisfaction of the reporting requirements and the
ordinary and necessary test; and (4) upon disposition of the common stock
acquired by exercise of the option, appreciation (or depreciation) occurring
after the date of exercise is treated as either short-term or long-term capital
gain (or loss), depending on the recipient's holding period of the shares.
Different rules may apply if common stock is purchased by an optionee who is
also an officer, director or more than 10% shareholder. See "Special Rules
Applicable to Corporate Insiders," below.
Stock Appreciation Rights. No income will be realized by a grantee in
connection with the grant of a stock appreciation right. When the right is
exercised, the grantee generally will be required to include in gross income as
ordinary income in the year of exercise an amount equal to the amount of cash
received and the fair market value of any shares of common stock received on the
exercise. At the same time, Ryan, Beck will be entitled to a deduction for
Federal income tax purposes equal to the amount included in the grantee's gross
income by reason of the exercise, subject to satisfaction of the reporting
requirements and the ordinary and necessary test.
Upon disposition of common stock acquired upon the exercise of a stock
appreciation right, appreciation (or depreciation) occurring after the date of
exercise will be treated as either short-term or long-term capital gain (or
loss), depending on the recipient's holding period of the shares. In addition,
different income recognition rules may apply if common stock is received on
exercise by a grantee who is also an officer, director or more than 10%
shareholder. See "Special Rules Applicable to Corporate Insiders," below.
Restricted Stock Awards. A recipient of restricted stock generally will
not be subject to tax at the time the restricted stock is received, but it will
be subject to tax at ordinary income rates on the excess of: 1) the fair market
value of the restricted stock when the restricted stock is first either
transferable or not subject to a substantial risk of forfeiture, over 2) the
amount (if any) paid for the stock by the recipient. However, a recipient who so
elects under Section 83(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), within 30 days of the date of transfer of the shares will recognize
taxable ordinary income in the year of receipt of the shares equal to the excess
of the fair market value of such shares of restricted stock at the time of such
transfer (determined without regard to the restrictions) over the purchase price
(if any) of such restricted stock. Upon the subsequent sale or exchange of such
stock, the recipient will recognize capital gain or loss measured by the
difference between the amount realized on the disposition and the basis of the
restricted stock, which will equal the sum of the amount paid for the stock,
plus the amount included in gross income upon the transfer.
If the restricted shares subject to a Section 83(b) election are
forfeited before they are vested, the recipient may be entitled to a capital
loss for Federal income tax purposes equal to the purchase price (if any) of the
forfeited shares, but the recipient will not be entitled to a loss with respect
to any income recognized as a result of the Section 83(b) election.
With respect to the sale of the shares after the forfeiture period has
expired, the holding period to determine whether the recipient has long-term or
short-term capital gain or loss generally begins when the restrictions expire
and the tax basis of such shares will generally be based on the fair market
value of such shares on such date. However, if the recipient timely elects to be
taxed as of the date of the transfer of shares, the holding period commences on
such date and the tax basis will be equal to the fair market value of the shares
on such date (determined without regard to the restrictions). The recipient's
employer generally will be entitled to a deduction equal to the amount that is
taxable as ordinary income to the recipient, subject to the reporting
requirements and the ordinary and necessary test.
Dividends on Restricted Stock. Dividends on restricted stock
transferred to a participant in the Plan which are paid prior to the time such
stock becomes vested or transferable by the recipient will generally be treated
as compensation which is taxable as ordinary income to the participant and will
be deductible by Ryan, Beck, subject to satisfaction of the reporting
requirements and the ordinary and necessary test. However, if the recipient of
restricted stock makes a timely Section 83(b) election with respect to the
stock, dividends paid on such stock will be treated as dividend income which is
taxable as ordinary income to the recipient, but will not be deductible by Ryan,
Beck.
Special Rules Applicable to Corporate Insiders. Generally, individuals
subject to Section 16(b) of the Exchange Act ("Insiders") are not taxed until
six months after exercise of a nonqualified stock option, with the excess of the
fair market value of the shares of common stock received upon exercise over the
option purchase price, determined as of the end of the six-month period, being
taxed as ordinary income, and the holding period for treating any gain (or loss)
as long-term capital gain (or loss) beginning at the end of such period. (A
similar rule applies with respect to shares received upon the exercise of stock
appreciation rights.) However, an Insider who elects to be taxed under Section
83(b) of the Code should be taxed on the excess of the fair market value of the
shares at the time of exercise over the option purchase price.
Stock Swaps. The Plan provides that, with Ryan, Beck's permission, an
optionee may transfer previously owned shares to Ryan, Beck to satisfy the
purchase price under an option (a "Stock Swap"). Generally, if an optionee
utilizes previously owned shares to purchase shares upon the exercise of an
incentive stock option, the optionee will not realize any gain upon the exchange
of the old shares for the new shares and will carry over into the same number of
new shares the basis and holding period for the old shares. If the optionee
purchases more shares than the number of old shares surrendered in the Stock
Swap, the incremental number of shares received in the Stock Swap will have a
basis of zero and a holding period beginning on the date of the exercise of the
incentive stock option. If, however, shares acquired through the exercise of an
incentive stock option are used in a Stock Swap prior to the end of the
statutory holding period applicable to the old shares, the Stock Swap will
constitute a disqualifying disposition of the old shares, resulting in the
immediate recognition of ordinary income (see "Incentive Stock Options," above).
If a Stock Swap is used to exercise a nonqualified stock option, the
use of old shares to pay the purchase price of an equal number of new shares
generally will be tax-free to the optionee, and he will carry over into the new
shares the basis and holding period of the old shares. However, if more shares
are acquired than surrendered, the incremental shares received in the Stock Swap
will generally be taxed as compensation income in an amount equal to their fair
market value at the time of the Stock Swap. The optionee's basis in those
additional shares will be their fair market value taken into account in
quantifying the optionee's compensation income and the holding period for such
shares will begin on the date of the Stock Swap.
Capital Gains. Under current law, a taxpayer's net capital gain (i.e.,
the amount by which the taxpayer's net long-term capital gains exceed his net
short-term capital losses) from a sale of shares is subject to a maximum federal
income tax rate of 20% if the shares have been held for more than 18 months, and
a maximum federal income tax rate of 28% if the shares have been held for more
than one year but less than 18 months. Ordinary income is subject to tax at
rates as high as 39.6%. Capital losses are currently deductible against capital
gains without limitation, but are currently deductible against ordinary income
in any year only to the extent of $3,000 ($1,500 in the case of a married
individual filing a separate return). Capital losses which are not currently
deductible by reason of the foregoing limitation may be carried forward to
future years.
IV. RYAN, BECK SHAREHOLDER PROPOSAL
SHAREHOLDER PROPOSAL
Mr. Zohar Ben-Dov, having an office at 5 Hamilton Street, P.O. Box
1787, Middleburg, Virginia 20118, beneficial owner of 150,425 shares of Ryan,
Beck Common Stock, has proposed the adoption of the following resolution and
furnished the following statement in support of his proposal:
RESOLVED, that the shareholders of Ryan, Beck & Co. hereby
recommend that the board of directors appoint a special
committee of outside directors for the purpose of soliciting,
reviewing and negotiating offers to acquire Ryan, Beck & Co.
on terms that are fair and in the best interests of the
shareholders.
Shareholder's Supporting Statement
The past several years have been a period of substantial and rapid
change in the securities industry in general. In light of the consolidation and
purchase of securities firms by much larger financial institutions and
securities firms, Proponent believes that Ryan, Beck & Co. would need to grow
substantially to be able to provide its customers with state-of-the-art services
and products and to attract talented officers and employees.
Proponent is of the opinion that the best way to maximize shareholder
value is to sell the corporation to a large securities firm or financial
institution. Proponent believes that the prospects for significant market value
appreciation, without a sale or merger of Ryan, Beck & Co., are limited.
Recently there have been a number of sales and mergers of securities
firms which have benefited the shareholders of these companies. Proponent
believes such a sale is in the best interest of the shareholders of Ryan, Beck &
Co.
Ryan, Beck Response
The Board of Directors unanimously recommends a vote Against the Proposal.
Because of the proposed Merger, the Board believes this Proposal is
moot. The Board believed it was appropriate to eliminate this Proposal to
streamline the Proxy Statement for this Meeting and to avoid confusion created
by the juxtaposition of this Proposal and the Merger. Therefore, the Chairman of
the Board asked the proponent to consider rescinding the Proposal in light of
the Merger. The proponent refused to do so unless Ryan, Beck abandoned its
intent to proceed with this Annual Meeting and hold only a special meeting.
The Board believes the Proposal is and was unnecessary. The Board,
consistent with its fiduciary duties, has frequently reviewed the actions and
policies that it believes will maximize value for all shareholders. In 1997,
when commercial banks began to acquire broker-dealers, the Board reevaluated its
position again and on July 15, 1997 established an Acquisition Committee of the
Board with a broad mandate.
The Board also believes the adoption of the Proposal would be adverse
to Ryan, Beck's and its shareholders' interests. The Proposal asks the Board to
establish a committee comprised solely of outside directors and directs the
Committee to sell Ryan, Beck. If the Merger were not approved for any reason,
the Board believes this Proposal would have a substantial adverse effect on the
business of Ryan, Beck. By taking away from Ryan, Beck its option to maintain
its independence and by making a public statement about a proposed sale of Ryan,
Beck, adoption of the Proposal would, in the Board's view, hurt its relationship
with its customers (who would face continuous uncertainty) and adversely affect
employee retention, loyalty and morale. Furthermore, by establishing a Committee
composed solely of outside directors, the Proposal divides the Committee from
Ryan, Beck's employees and senior management directors.
Therefore, the Board of Directors unanimously recommends your vote
Against the Proposal. Proxies solicited by the Board of Directors will be so
voted unless shareholders otherwise specify in their proxies.
The Shareholder Proposal will be approved if a majority of the votes
cast are voted for the Proposal.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Ryan, Beck's Certificate of Incorporation, as amended (the "Certificate
of Incorporation") requires Ryan, Beck to provide its directors and executive
officers with indemnification to the fullest extent permitted by law. In
addition, Ryan, Beck is obligated to provide to each of its directors and
certain senior officers with indemnification pursuant to indemnification
agreements between such persons and Ryan, Beck. These contracts confirm the
indemnity provided to such persons by Ryan, Beck's Certificate of Incorporation.
The agreements provide that Ryan, Beck will indemnify and hold harmless
such persons against expenses and liabilities incurred by or imposed upon them
in connection with any proceedings to which they may be made, or threatened to
be made, a party, or in which they may become involved, by reason of their
having been a director or officer; and that directors and certain senior
officers will be indemnified to the fullest extent permitted by law against all
expenses (including attorney's fees), judgments (other than in proceedings by,
or in the right of, Ryan, Beck), fines and settlement amounts, paid or incurred
by them and may have indemnification expenses advanced to them in any action or
proceeding, including any action by, or in the right of, Ryan, Beck, on account
of their service as a director or officer of Ryan, Beck or any subsidiary of
Ryan, Beck or as a director or officer of any other entity when they served in
such capacities at the request of Ryan, Beck.
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, independent certified public accountants, have
made an annual audit of Ryan, Beck's financial statements for the years ended
December 31, 1997 and 1996. A representative of Deloitte & Touche LLP will be
present at the Annual Meeting, will have the opportunity to make a statement if
they desire and will be available to answer questions.
SHAREHOLDER PROPOSALS
The Merger may be consummated prior to the 1999 Annual Meeting of
Stockholders of Ryan, Beck, in which event there would be no Ryan, Beck 1999
Annual Meeting. In the event Ryan, Beck holds a 1999 Annual Meeting of
Stockholders, unless such 1999 meeting is delayed, any proposal which a Ryan,
Beck shareholder wishes to have included in the proxy materials of Ryan, Beck
must have been presented to Ryan, Beck not later than November 20, 1998.
OTHER MATTERS
As of the date of this Proxy Statement, the Ryan, Beck Board of
Directors knows of no other matters to be presented for action by the
stockholders at the Meeting. If any other matters are properly presented,
however, it is the intention of the persons named in the enclosed proxy to vote
in accordance with their best judgment on such matters.
LEGAL OPINION
Certain legal matters relating to the issuance of the shares of Bancorp
Class A Common Stock offered hereby will be passed upon by Stearns Weaver Miller
Weissler Alhadeff & Sitterson, P.A., counsel to Bancorp.
EXPERTS
The consolidated financial statements of Ryan, Beck, incorporated
herein by reference from Ryan, Beck's Annual Report on Form 10-K for the years
ended December 31, 1997 and 1996, have been audited by Deloitte & Touche LLP,
independent certified public accountants, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing. The Consolidated Financial Statements of Ryan, Beck for the year ended
December 31, 1995 were audited by Trien, Rosenberg, Felix, Rosenberg, Barr &
Weinberg, independent certified public accountants, as stated in Ryan, Beck's
Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated
herein by reference, and has been so incorporated in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of Bancorp as of December 31,
1997 and 1996 and for each of the years in the three year period ended December
31, 1997 have been incorporated by reference herein in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
By Order of the Board of Directors
LEONARD J. STANLEY
----------------------------------
Leonard J. Stanley
Secretary
May 26, 1998
A copy of Ryan, Beck's Annual Report on Form 10-K for the year ended
December 31, 1997, and its Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, including financial statements, is being delivered with this
Proxy Statement.
<PAGE>
APPENDIX A
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT is entered into as of February 9, 1998,
between BANKATLANTIC BANCORP, INC., a Florida corporation ("Bancorp"), RYAN,
BECK & CO., INC., a New Jersey corporation (the "Company"), and BCP ACQUISITION
CORPORATION, a New Jersey corporation which is wholly-owned by Bancorp
("Acquisition").
Preliminary Statements
WHEREAS, Bancorp and the Company believe that the mutual best interests
of Bancorp and the Company and of their respective stockholders will be served
by the acquisition provided for herein in which the Company will, subject to the
terms and conditions set forth herein, be acquired by Bancorp through the merger
of the Company with and into Acquisition.
WHEREAS, Bancorp recognizes the value of maintaining and intends to
maintain the operations of the Company in an autonomous subsidiary after the
acquisition contemplated hereby; and
WHEREAS, Bancorp is a savings bank holding company with over $3 billion
of assets and has the resources and capital to enable the Company to grow and
pursue its business plan; and
WHEREAS, simultaneously with or prior to the execution of this
Agreement, the members of the Board of Directors of the Company executed and
delivered to Bancorp a voting agreement in the form attached hereto as Exhibit
A; and
WHEREAS, Bancorp and the Company have agreed, in connection with the
transactions contemplated hereby, to establish a retention program as described
in Section 5.17 hereto for the purpose of retaining the services of certain
employees of the Company following consummation of the transactions contemplated
hereby; and
WHEREAS, concurrently with the execution of this Agreement and as a
material inducement to Bancorp to enter into this Agreement, the Company and
Bancorp have entered into a Stock Option Agreement (the "Company Stock Option
Agreement") pursuant to which the Company has granted to Bancorp an option to
purchase from the Company shares of Company Common Stock, upon the terms and
subject to the conditions set forth therein;
Agreement
In consideration of the preliminary statements and the respective
covenants, representations and warranties contained in this Agreement, and
intending to be legally bound, the parties agree as set forth below.
DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
terms when used in this Agreement shall have the meanings indicated below:
"Acquisition Common Stock" means the common stock of Acquisition, par
value $.01 per share.
"Affiliate" has the meaning specified in Rule 144 promulgated by the
SEC under the Securities Act.
"Agreement" means this Acquisition Agreement together with all exhibits
and schedules referred to herein.
"Average Price" means the average of the closing sale prices per share
of Class A Common Stock on the NYSE for the period of 10 consecutive trading
days ending with (and including) the second trading day prior to the Closing
Date.
"Class A Common Stock" means the Class A Common Stock of Bancorp, par
value $0.01 per share.
"Class B Common Stock" means the Class B Common Stock of Bancorp, par
value $0.01 per share.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Common Stock" means the common stock of the Company, par value
$0.10 per share.
"Company Preferred Stock" means the preferred stock of the Company, par
value $0.10 per share.
"Company Subsidiary" means a Subsidiary of the Company.
"Cumberland Transaction" means the acquisition of Cumberland Advisors,
a New Jersey general partnership, substantially on the terms set forth in the
merger agreement relating to such acquisition as described in the disclosure
schedules to this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Florida BCA" means the Business Corporation Act of the State of
Florida.
"Guaranty" means, as to any Person, any contract, agreement or
understanding of such Person pursuant to which such Person guarantees the
indebtedness, liabilities or obligations of others, directly or indirectly, in
any manner, including agreements to purchase such indebtedness, liabilities or
obligations, or to supply funds to or in any manner invest in others, or to
otherwise assure the holder of such indebtedness, liabilities or obligations
against loss.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Knowledge" or "known", whether or not capitalized, means, with respect
to any representation or warranty or other statement in this Agreement qualified
by the knowledge of any party, that such party has made a reasonable
investigation as to the matters that are the subject of such representation,
warranty or other statement. Where reference is made to the knowledge of Bancorp
or the Company, such reference shall be deemed to include the officers and
managerial employees of Bancorp or the Company, respectively, all of whom shall
be deemed to have conducted the investigation required by this definition.
"Lien" means any lien, encumbrance, charge, security interest,
restriction (including any restriction on voting rights or disposition),
default, equity, claim or third party right of any nature whatsoever.
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect on the business, operations, financial condition, results of
operations or business prospects of such Person and its Subsidiaries, considered
as one enterprise.
"NASD" means the National Association of Securities Dealers, Inc.
"NASDAQ" means the National Market Segment of the NASDAQ Stock Market.
"New Jersey BCA" means the Business Corporation Act of the State of New
Jersey.
"NYSE" means the New York Stock Exchange, Inc.
"Person" means any natural person, corporation, unincorporated
organization, partnership, association, joint stock company, limited liability
company, joint venture, trust or government, or any agency or political
subdivision of any government, or any other entity.
"Regulatory Agency" means any federal, state or foreign governmental or
regulatory agency or authority or any Self-Regulatory Body.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Self-Regulatory Body" means any non-governmental self-regulatory
agency, commission or authority.
"Stockholder Voting Agreements" mean those certain agreements, in the
form attached hereto as Exhibit A, between certain stockholders of the Company
and Bancorp, dated as of the date hereof, pursuant to which, among other things,
each of such stockholders has agreed to vote his shares of Company Common Stock
in favor of the Merger.
"Subsidiary" of any Person means any Person, whether or not
capitalized, in which such Person owns, directly or indirectly, an equity
interest of 50% or more, or any Person which may be controlled, directly or
indirectly, by such Person, whether through the ownership of voting securities,
by contract, or otherwise.
ARTICLE I
THE MERGER
1.1 Merger: Closing Date, Closing and Effective Time. Unless a
different date, time and/or place are agreed to by the parties hereto, the
closing of the Merger (the "Closing") shall take place at 10:00 a.m., at such
place and on a date determined by Bancorp on at least five business days notice
(the "Closing Notice") given to the Company, which date (the "Closing Date")
shall be as soon as practicable following the receipt of all necessary approvals
and consents of all Regulatory Agencies and the expiration of all statutory
waiting periods in respect thereof and the satisfaction or waiver of all of the
conditions to the consummation of the Merger specified in Article VI hereof
(other than the delivery of certificates, opinions and other instruments and
documents to be delivered at the Closing). Simultaneous with or immediately
following the Closing, Bancorp and the Company shall cause to be filed a
certificate of merger in accordance with Section 10.7 of the New Jersey BCA, in
form and substance satisfactory to Bancorp and the Company, with the Secretary
of State of the State of New Jersey (the "Certificate of Merger"). The
Certificate of Merger shall specify as the "Effective Time" of the Merger a date
and time following the Closing agreed to by Bancorp and the Company (which date
and time the parties currently anticipate will be the close of business on the
Closing Date). In the event the parties fail to specify the date and time in the
Certificate of Merger, the Merger shall become effective upon (and the
"Effective Time" shall be) the filing of the Certificate of Merger. (As used
herein, the "Effective Date" of the Merger shall be the date of the Effective
Time.) The separate corporate existence of the Company shall thereupon cease and
Acquisition shall be the surviving corporation (the "Surviving Corporation") and
the separate corporate existence of Acquisition shall continue unaffected and
unimpaired by the Merger.
1.2 Certificate of Incorporation of Surviving Corporation. From and
after the Effective Time, and until further amended in accordance with the New
Jersey BCA, the Certificate of Incorporation of Acquisition shall be the
Certificate of Incorporation of the Surviving Corporation, except that after the
Effective Date of the Merger, the name of Acquisition shall be "Ryan, Beck &
Co., Inc.".
1.3 Bylaws of Surviving Corporation. The Bylaws of Acquisition, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until duly amended in accordance with such Bylaws and
applicable law.
1.4 Officers and Directors of Surviving Corporation. As of the
Effective Date, the officers and directors of the Surviving Corporation shall be
as mutually agreed to by the parties prior to the Effective Time, who shall
serve in each case until their respective successors are duly appointed or
elected and qualified, or until their earlier death, resignation or removal.
1.5 Articles of Incorporation of Bancorp. The Articles of Incorporation
of Bancorp shall not be affected by the Merger.
ARTICLE II
CONSIDERATION; SHARE EXCHANGE; OPTIONS
2.1 Conversion of Company Common Stock. At the Effective Time, each
share of Company Common Stock which is issued and outstanding immediately prior
to the Effective Time shall be converted without any action on the part of the
holder thereof into and be exchangeable for 0.609 shares of Class A Common Stock
(the "Conversion Ratio") (rounded to the nearest thousandth of a share), subject
to adjustment as provided in Section 7.1(m) hereof and subject to the payment of
cash in lieu of fractional shares in accordance with Section 2.6 hereof.
In the event Bancorp effects a stock split, stock dividend,
recapitalization or similar transaction with respect to Bancorp's outstanding
Class A Common Stock prior to the Effective Time, the Conversion Ratio set forth
in this Section 2.1 and the Average Price "collar" of $13.60 set forth in
Section 7.1(m) shall be proportionately adjusted as appropriate. For example,
with respect to the previously announced 25% stock dividend payable on February
18, 1998 to holders of record of Class A Common Stock on February 4, 1998, the
Conversion Ratio will be adjusted to .761 and the Average Price "collar" of
$13.60 set forth in Section 7.1(m) will be adjusted to $10.88.
2.2 Impact on Stock Options. At the Effective Time, each unexpired and
unexercised option to purchase shares of Company Common Stock (other than under
the Company Stock Option Agreement), whether or not then exercisable (a Company
Option"), shall be assumed by Bancorp, and each Company Option shall be
converted automatically into an option to purchase a number of shares of the
Class A Common Stock (a "Substitute Option") equal to the number of shares of
Company Common Stock that could have been purchased under the Company Option
multiplied by the Conversion Ratio as determined in Section 2.1 (except that
upon exercise any options to purchase fractional shares resulting from any such
adjustment shall be eliminated unless the terms of the option award provides
otherwise), at a price per share of Company Common Stock equal to the option
exercise price under the Company Option, divided by the Conversion Ratio as
determined in Section 2.1 (with the resulting exercise price rounded to the
nearest whole cent), provided that in the case of any Company Option intended to
qualify as an incentive stock option under Section 422 of the Code, the option
price, the number of shares purchasable pursuant to such option and the terms
and conditions of exercise of such option shall be determined in compliance with
Section 424(a) of the Code. The duration, vesting and other terms of the
Substitute Options shall be the same as the original Company Options, except
that references to the Company shall be deemed to be references to Bancorp.
2.3 Conversion of Acquisition Common Stock. At the Effective Time, each
share of Acquisition Common Stock that is issued and outstanding immediately
prior to the Effective Time shall thereafter represent one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation.
2.4 Exchange of and Payment for Company Common Stock.
(a) Bancorp will cause the exchange agent selected by Bancorp
(which shall be an exchange agent reasonably acceptable to the Company) (the
"Exchange Agent") to send to each record holder of shares of Company Common
Stock which shall have been converted into shares of Class A Common Stock in the
Merger an appropriate letter of transmittal for purposes of such stockholder's
obtaining certificates representing such shares of Class A Common Stock, which
letter of transmittal shall be mailed to such stockholder's address of record
provided by the Company. As soon as practicable after the Effective Time and
after surrender to the Exchange Agent of a properly executed letter of
transmittal and any certificates which immediately prior to the Effective Time
shall have represented any then issued and outstanding shares of Company Common
Stock, Bancorp shall, subject to the provisions of Section 2.4(c) hereof, cause
to be distributed to the person in whose name such Company Common Stock shall
have been registered, certificates registered in the name of such person
representing the shares of Class A Common Stock into which such shares of
Company Common Stock shall have been converted at the Effective Time and a check
payable to such person representing the payment of cash in lieu of fractional
shares determined in accordance with Section 2.6 hereof. Until surrendered as
contemplated by the preceding sentence, each certificate which immediately prior
to the Effective Time shall have represented any then issued and outstanding
shares of Company Common Stock shall be deemed at and after the Effective Time
to represent only the right to receive, upon such surrender, the certificates
and payment contemplated by the preceding sentence.
(b) No dividends or other distributions declared after the
Effective Time with respect to shares of Class A Common Stock and payable to the
holders of record thereof after the Effective Time shall be paid with respect to
Company Common Stock converted into Class A Common Stock in the Merger until
such properly executed letter of transmittal and any unsurrendered certificates
representing such shares of Company Common Stock are surrendered as provided
herein. Upon the surrender of such letter of transmittal and any such
outstanding certificates, however, there shall be paid to the record holder of
the certificates of Class A Common Stock issued in exchange for the shares of
Company Common Stock, the aggregate amount of dividends and distributions, if
any, which theretofore became payable in respect of the shares of Class A Common
Stock into which such Company Common Stock is converted, subject in any case to
any applicable escheat laws and unclaimed property laws. No interest shall be
payable on or in respect of the payment of such dividends or cash in lieu of
fractional shares on surrender of outstanding certificates.
(c) If any cash or certificate representing shares of Class A
Common Stock is to be paid to or issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it shall be a
condition of the payment or issuance thereof that the certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange shall pay to the Exchange Agent any transfer
or other taxes required by reason of the issuance of a certificate representing
shares of Class A Common Stock in any name other than that of the registered
holder of the certificate surrendered.
(d) Any portion of the Class A Common Stock or cash in lieu of
fractional shares payable hereunder that remains unclaimed by the stockholders
of the Company for 12 months after the Effective Time shall, if on deposit with
the Exchange Agent, be paid to the Company. Any stockholders of the Company who
have not theretofore complied with this Article II shall thereafter look only to
the Company for payment of the shares of Class A Common Stock or cash in lieu of
any fractional shares and any unpaid dividends and distributions on the Class A
Common Stock deliverable in respect of each share of Company Common Stock such
stockholder holds as determined pursuant to this Agreement without any interest
thereon. Notwithstanding the foregoing, none of the Company, Bancorp, the
Exchange Agent or any other person shall be liable to any former holder of
shares of Company Common Stock for any amount delivered in good faith to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(e) In the event any certificate which, immediately prior to
the Effective Time, represented Company Common Stock shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen or destroyed and the posting by
such person of a bond in such amount as Bancorp or the Exchange Agent may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed certificate the shares of Class A
Common Stock and any cash in lieu of fractional shares deliverable in respect
thereof pursuant to this Agreement.
2.5 No Further Transfers of Company Common Stock. After the Effective
Time, there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing such outstanding shares are presented
to the Surviving Corporation, they shall be canceled and exchanged for
certificates representing the shares of Class A Common Stock or cash in lieu of
fractional shares into which they were converted, or both, as provided in this
Article II.
2.6 Cash in Lieu of Fractional Shares. Notwithstanding any other
provision of this Agreement, no certificates or scrip representing fractional
shares of Class A Common Stock shall be issued upon the conversion of shares
which prior to the Effective Time shall have represented any then outstanding
shares of Company Common Stock, no dividend or distribution of Bancorp shall
relate to any fractional share otherwise issuable pursuant to the terms hereof
and such fractional share interests will not entitle the owner thereof to vote
or to any rights of a shareholder of Bancorp. In lieu of any fractional shares,
there shall be paid to each holder of shares of Company Common Stock who
otherwise would be entitled to receive a fractional share of Class A Common
Stock, an amount of dollars in cash (without interest) determined by multiplying
such fraction by the Average Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Bancorp as follows:
3.1 Organization, Standing and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Jersey. The Company is duly qualified to do business and is in good
standing in each jurisdiction (whether federal, state, local or foreign) where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified, except where the failure to be duly qualified is not
reasonably likely to have a Material Adverse Effect on the Company. The Company
and each of the Company Subsidiaries has in effect all federal, state, local,
and foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now conducted. The
Company and each of the Company Subsidiaries has the corporate power and
authority to carry on its business as it is now being conducted and to own or
lease all its properties and assets.
3.2 Capitalization. The authorized capital stock of the Company
consists of 30,000,000 shares of Company Common Stock, of which, as of the date
hereof, 3,594,933 shares were issued and outstanding and 88,000 were held in
treasury, and 2,000,000 shares of Company Preferred Stock, none of which, as of
the date hereof, were issued and outstanding and none of which were held in
treasury. All of the issued and outstanding shares of Company Common Stock have
been duly authorized and validly issued and are fully paid, non-assessable and
free of common law, statutory or contractual preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this Agreement,
except as set forth on Schedule 3.2 and except for the Company Stock Option
Agreement, the Company does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, stock appreciation rights, commitments
or agreements of any character calling for the purchase or issuance of any
shares of Company Common Stock or any other equity securities of the Company or
any securities representing the right to purchase or otherwise receive any
shares of Company Common Stock. Schedule 3.2 sets forth, as of the date hereof,
the number of shares of Company Common Stock that were reserved for issuance
upon the exercise of Company Options and the number of shares of Company Common
Stock purchasable under such options. Except as set forth in Schedule 3.2 and
except for shares reserved in connection with the Company Stock Option
Agreement, no other shares of Company Common Stock were reserved for issuance.
The Company has previously provided Bancorp with a list, as of the date hereof,
of the holders of Company Options, the date of each grant of a Company Option,
the number of shares subject to each such Company Option, the expiration date of
each such Company Option, the vesting schedule of each such Company Option and
the price at which each such Company Option may be exercised. Except as set
forth on Schedule 3.2 and except for the Company Stock Option Agreement, there
are no outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire, or to register for sale,
any shares of capital stock of the Company. Except as set forth on Schedule 3.2,
there are no outstanding contractual obligations of the Company or any Company
Subsidiary to vote or to dispose of any shares of the capital stock of any
Company Subsidiary.
3.3 Company Subsidiaries. Schedule 3.3 sets forth a list of all the
Company Subsidiaries, including the jurisdictions (whether federal, state, local
or foreign) in which such Company Subsidiaries are organized or qualified to do
business as a foreign corporation, a brief description of such Company
Subsidiary's principal activities and, if any of such Company Subsidiaries is
not wholly-owned by the Company or a Company Subsidiary, the percentage owned by
the Company or any Company Subsidiary and the names, addresses and percentage
ownership of any Person having an ownership interest in such Company Subsidiary.
No equity securities of any of the Company Subsidiaries are or may become
required to be issued (other than to the Company or a wholly-owned Company
Subsidiary), and there are no contracts, commitments, understandings or
arrangements by which any of the Company Subsidiaries is or may be bound to sell
or otherwise issue any shares of its capital stock, and there are no contracts,
commitments, understandings or arrangements relating to the rights of the
Company to vote or to dispose of such shares. All of the shares of capital stock
of each Company Subsidiary are fully paid and nonassessable and subject to no
common law, statutory or contractual preemptive rights and, except as set forth
on Schedule 3.3, are owned by the Company or a Company Subsidiary free and clear
of any Liens. Each Company Subsidiary is in good standing under the laws of the
jurisdiction in which it is incorporated or organized, and is duly qualified to
do business and in good standing in each jurisdiction (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified, except where the failure to be duly
qualified would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect on the Company. Except as set forth on Schedule
3.3, the Company does not own beneficially, directly or indirectly, any equity
securities or similar interests of any Person. Schedule 3.3 sets forth a list of
all equity securities the Company holds, directly or indirectly, and involving,
in the aggregate, ownership or control of 5% or more of any class of the
issuer's voting securities or 25% or more of the issuer's equity (treating
subordinated debt as equity); provided, that the Company is not required to list
on Schedule 3.3 any (i) securities held by it in its capacity as a broker-dealer
for the benefit of others, (ii) securities with a value of less than $250,000
held by it in its capacity as a market maker, and (iii) securities held by it
for less than thirty (30) days in its capacity as a market-maker. Schedule 3.3
lists or describes in reasonable detail all partnership, joint ventures or
similar entities, in which the Company owns or controls an interest, directly or
indirectly.
3.4 Corporate Authority. The Company has full corporate power and
authority to execute this Agreement and the Company Stock Option Agreement and
to consummate the transactions contemplated hereby and thereby. Subject to the
approval by its stockholders of this Agreement and the transactions contemplated
hereby, this Agreement and the Company Stock Option Agreement have been
authorized by all necessary corporate action of the Company and each is a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms.
3.5 No Violation. Except as set forth on Schedule 3.5, the execution,
delivery and performance of this Agreement and the Company Stock Option
Agreement and the consummation by the Company of the transactions contemplated
hereby and thereby, does not and will not (i) violate or conflict with the
Certificate of Incorporation or by-laws or other organizational documents of the
Company or of any Company Subsidiary and (ii) assuming that the consents and
approvals referred to in Section 3.6 are duly obtained (a) violate, conflict
with, or result in a breach of any of the provisions of, or constitute a default
(or an event which, with notice of lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration, or the
creation of any Lien upon any of the properties or assets of the Company or any
Company Subsidiary under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company or any Company Subsidiary is a
party or by which the Company or any Company Subsidiary may be bound, or to
which the Company or any Company Subsidiary or any of their respective
properties or assets may be subject, or (b) violate any judgment, ruling, order,
writ, injunction, decree, statute, rule or regulation applicable to the Company
or any Company Subsidiary or any of their respective properties or assets other
than violations, conflicts, breaches, defaults, terminations, accelerations, or
Lien creations which would not be reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on the Company or prevent the
consummation of the transactions contemplated by this Agreement or the Company
Stock Option Agreement.
3.6 Consent and Approvals. Other than in connection with (a) the HSR
Act, (b) the Securities Act, (c) the Exchange Act, (d) the securities laws of
any federal, state, local or foreign jurisdiction, and except as set forth on
Schedule 3.6, no consent, approval or authorization of, or registration,
qualification or filing with any federal, state, local or foreign Regulatory
Agency or other Person is required to be made by the Company in connection with
the execution, delivery or performance by the Company of this Agreement or the
Company Stock Option Agreement or the consummation by the Company of the
transactions contemplated hereby or thereby, other than consents, approvals,
authorizations, registrations, qualifications or filings, the failure of which
to obtain or make would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company or prevent the consummation
of the transactions contemplated by this Agreement or the Company Stock Option
Agreement.
3.7 Company Reports. Except as set forth on Schedule 3.7, the Company
and each Company Subsidiary has in all material respects timely filed all
reports, registrations, statements, and other filings, together with any
amendments required to be made with respect thereto, that were required to be
filed since December 31, 1994 with any Regulatory Agency, including, without
limitation, the SEC or the NASD (all such reports and statements, including the
financial statements, exhibits and schedules thereto, being collectively
referred to herein as the "Company Reports"), including, without limitation, all
reports, registrations, statements and filings required under the Securities
Act, the Exchange Act or any applicable state securities or "blue sky" laws, and
has paid all fees and assessments payable in connection therewith. As of their
respective dates, except as and to the extent amended or modified on a
subsequent date prior to the date of this Agreement, each of the Company Reports
complied in all material respects with the statutes, rules, regulations and
orders enforced or promulgated by the Regulatory Agency (including the SEC or
the NASD) with which they were filed and did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
3.8 Financial Statements. The Company has previously made available to
Bancorp copies of (a) the consolidated balance sheets of the Company and the
Company Subsidiaries as of December 31 for the fiscal years 1995 and 1996, and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for the fiscal years then ended, as reported in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Company 1996 Form 10-K") filed with the SEC under the Exchange Act, in each
case accompanied by the audit report of Deloitte & Touche, LLP, independent
public accountants with respect to the Company and (b) the unaudited
consolidated balance sheet of the Company and the Company Subsidiaries as of
September 30, 1997 and related consolidated statements of income, changes in
stockholders' equity and cash flows for the nine months then ended as reported
in the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1997 (collectively, the "Company Financial Statements"). The December 31,
1996 and the September 30, 1997 consolidated balance sheets of the Company
(including the related notes, where applicable) fairly present in all material
respects (subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount) the consolidated financial position of
the Company and the Company Subsidiaries as of the respective dates thereof, and
the other Company Financial Statements referred to in this Section 3.8, and any
Company Financial Statements filed by the Company with the SEC under the
Exchange Act after the date of this Agreement (including the related notes,
where applicable) will fairly present in all material respects (subject, in the
case of the unaudited statements, to recurring audit adjustments normal in
nature and amount) the results of the consolidated operations and changes in
stockholders' equity and consolidated financial position of the Company and the
Company Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth. Each of such Company Financial Statements (including
the related notes, where applicable) complies in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, and each of the Company Financial Statements
(including the related notes, where applicable) has been prepared in accordance
with generally accepted accounting principles consistently applied ("GAAP")
during the periods involved except, in each case, as indicated in such Company
Financial Statements or in the notes thereto. The books and records of the
Company and the Company Subsidiaries have been, and are being, maintained in
accordance with GAAP and any other applicable legal and accounting requirements.
3.9 Absence of Undisclosed Liabilities. Except as disclosed in the
Company Financial Statements, or as set forth on Schedule 3.9, neither the
Company nor any of the Company Subsidiaries has any obligation or liability
(contingent or otherwise), including liabilities under Environmental Laws (as
hereinafter defined), that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on the Company.
3.10 Absence of Certain Changes. The business of the Company and the
Company Subsidiaries has been conducted in the ordinary and usual course,
consistent with past practice, and there has not been: (1) since December 31,
1996, any event, occurrence, development or state of circumstances or facts
which has had or could reasonably be expected to constitute or result in a
Material Adverse Effect on the Company; or (2) since September 30, 1997, except
as set forth on Schedule 3.10 or in the Company Reports, any event, occurrence,
development or state of circumstances or facts which would result in a violation
of the covenants set forth in Section 5.1 of this Agreement had such events,
occurrences, developments or state of circumstances or facts occurred after the
date hereof.
3.11 Properties; Securities. Except as specifically reserved against or
otherwise disclosed in the Company Financial Statements (including the related
notes and schedules thereto) and except for those properties and assets that
have been sold or otherwise disposed of in the ordinary course of business, and
except as set forth on Schedule 3.11, the Company and the Company Subsidiaries
have good and marketable title, free and clear of all Liens to all of the
properties and assets, tangible or intangible, reflected in the Company
Financial Statements as being owned by the Company or the Company Subsidiaries
as of the dates thereof, other than those Liens that, individually or in the
aggregate, are not reasonably like to have a Material Adverse Effect on the
Company. The Company and the Company Subsidiaries do not, directly or
indirectly, control any real property not used in the ordinary course of their
business, except as set forth on Schedule 3.11. All buildings and all fixtures,
equipment and other property and assets which are held under leases or subleases
by any of the Company or the Company Subsidiaries are held under valid leases or
subleases enforceable in accordance with their respective terms. The properties
and assets now owned, leased or used by the Company and the Company Subsidiaries
are sufficient and adequate to carry on their businesses as presently conducted.
Except as set forth on Schedule 3.11 or reflected on the Company Financial
Statements, each of the Company and the Company Subsidiaries has good and
marketable title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free and
clear of any Lien. Such securities are valued on the books of the Company or the
Company Subsidiaries in accordance with GAAP.
3.12 Litigation; Regulatory Action.
(a) Except as set forth on Schedule 3.12(a) or in the Company
Reports, (1) no litigation, proceeding or controversy ("Litigation") before any
court, arbitrator, mediator or Regulatory Agency is pending against the Company
or any of the Company Subsidiaries and, to the Company's knowledge, no such
Litigation has been threatened; (2) neither the Company nor any of the Company
Subsidiaries nor any of their respective properties is a party to or is subject
to any order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission to, any
Regulatory Agency charged with the supervision or regulation of broker-dealers,
securities underwriting or trading, stock exchanges, commodities exchanges, or
insurance agents and brokers (including, without limitation, the SEC, the NYSE,
the NASD, or any other Self-Regulatory Body) or the supervision or regulation of
the Company or any of the Company Subsidiaries; and (3) neither the Company nor
any of the Company Subsidiaries has received any notice (whether or not in
writing) from any Regulatory Agency (i) that the Company or any Company
Subsidiary has or may have violated any of the statutes, rules, regulations, or
ordinances which such Regulatory Agency enforces, or has otherwise engaged in
any unlawful business practice, (ii) threatening to revoke any license,
franchise, permit, seat on any stock or commodities exchange, or governmental
authorization, (iii) requiring any of them (including any of the Company's or
the Company Subsidiary's, directors or controlling persons) to enter into a
cease and desist order, agreement, or memorandum of understanding (or requiring
the board of directors thereof to adopt any resolution or policy), (iv)
restricting or disqualifying the activities of the Company or any of the Company
Subsidiaries (except for restrictions generally imposed by rule, regulation or
administrative policy on broker-dealers generally) or (v) in any manner relating
to its capital adequacy, its management or its business. Set forth on Schedule
3.12(a) is a true and complete list, as of the date hereof, of all Litigation
affecting the Company, its assets or its officers or directors (to the extent
the Company might be obligated to provide indemnification with respect thereto)
pending or threatened arising out of any state of facts relating to the sale of
securities or investment products by the Company, the Company Subsidiaries or
any employees thereof (including, without limitation, equity or debt securities,
mutual funds, insurance contracts, annuities, partnership and limited
partnership interests, interests in real estate, investment banking services,
securities underwritings in which the Company or any Company Subsidiaries was a
manager, co-manager, syndicate member or distributor, Derivatives Contracts (as
hereinafter defined) or structured notes).
(b) Except as disclosed in Schedule 3.12(b), and except for
normal examinations conducted by a Regulatory Agency in the regular course of
the business of the Company and the Company Subsidiaries, no Regulatory Agency
has initiated any proceeding or, to the knowledge of the Company, investigation
into the business or operations of the Company or any Company Subsidiary since
December 31, 1994. Except as set forth on Schedule 3.12(b), there is no material
unresolved violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of the Company
or any Company Subsidiary.
3.13 Compliance with Laws. Except as set forth on Schedule 3.13, the
Company and each of the Company Subsidiaries and their respective officers and
employees: (a) in the conduct of its business (including, without limitation,
its municipal securities and NASDAQ market-making activities) is in compliance
in all material respects with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto or to the employees conducting such businesses, and the rules
of all Self-Regulatory Bodies applicable thereto; (b) has all permits, licenses,
authorizations, orders and approvals of, and has made all filings, applications
and registrations with, all Regulatory Agencies that are required in order to
permit them to own and operate their businesses as presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect and, to the Company's knowledge, no suspension or cancellation
of any of them is threatened or reasonably likely; and all such filings,
applications and registrations are current; and (c) is not aware of any pending
or threatened investigation, review or disciplinary proceedings by any
Regulatory Agency against the Company, any Company Subsidiary or any officer,
director or employee thereof.
3.14 Registrations. Except as set forth on Schedule 3.14, neither the
Company, nor any of the Company Subsidiaries or Affiliates of the Company, is
subject to regulation under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or the Investment Advisors Act of 1940, as amended
(the "Investment Advisors Act"). The Company and the Company Subsidiaries and
each of their employees which are or who are required to be registered as a
broker/dealer, a registered representative, an insurance agent or a sales person
with the SEC, the securities commission of any state or foreign jurisdiction or
any Self-Regulatory Body are duly registered as such and in good standing and
such registrations are in full force and effect. All federal, state and foreign
registration requirements have been complied with and such registrations as
currently filed, and all periodic reports required to be filed with respect
thereto, are accurate and complete in all material respects.
3.15 Material Contracts.
(a) Except as set forth on Schedule 3.15(a), neither the
Company nor any Company Subsidiary is a party to or bound by any contract,
arrangement, commitment or understanding (each a "Contract") (i) with respect to
the employment of any directors, executive officers, key employees or material
consultants, (ii) which is a "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K promulgated by the SEC under the Securities
Act) that has not been filed or incorporated by reference in the Company
Reports, (iii) which contains any material non-competition or exclusivity
provisions with respect to any business or geographic area in which business is
conducted with respect to the Company or any Company Subsidiary or which
restricts the conduct of any business by the Company or any Company Subsidiary
or any geographic area in which the Company or any Company Subsidiary may
conduct business or requires exclusive referrals of any business, (iv) with or
to a labor union or guild (including any collective bargaining agreement), (v)
under which any of the benefits of any other party thereto will be increased, or
the vesting of the benefits of any other party thereto will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of any other party thereto will be calculated on
the basis of any of the transactions contemplated by this Agreement or (vi)
which would prohibit or materially delay the consummation of the Merger or any
of the transactions contemplated by this Agreement. The Company has previously
made available to Bancorp true and correct copies of all employment, severance
and deferred compensation agreements with executive officers, key employees or
material consultants to which the Company or any Company Subsidiary is a party,
all of which are listed on Schedule 3.15(a). Each Contract of the type described
in this Section 3.15(a), whether or not set forth on Schedule 3.15(a), is
referred to herein as a "Company Contract", and neither the Company nor any
Company Subsidiary knows of, or has received notice of, any violation of any
Company Contract by any of the other parties thereto. Except as set forth on
Schedule 3.15(a), neither the Company nor any of the Company Subsidiaries is in
material default under any Company Contract to which it is a party, by which its
respective assets, business, or operations may be bound or affected, or under
which it or its respective assets, business, or operations receives benefits and
there has not occurred any event that with the lapse of time or the giving of
notice or both, would constitute such a material default. Except as set forth on
Schedule 3.15(a), there are no Contracts between any Affiliate of the Company,
on the one hand, and the Company or any Company Subsidiary, on the other hand.
(b) The Company and each of the Company Subsidiaries is in
compliance in all material respects with the terms of each Contract with any
Person to whom the Company or any Company Subsidiary provides services (a
"Client"), and each such Contract is in full force and effect with respect to
the applicable Client. Each extension of credit by the Company or any of the
Company Subsidiaries to any Client (i) is in full compliance with Regulation T
of the Federal Reserve Board or any substantially similar regulation of any
Regulatory Agency, (ii) is fully secured, and (iii) the Company or a Company
Subsidiary, as the case may be, has a first priority perfected security interest
in the collateral securing such extension.
3.16 No Brokers. Neither the Company nor any Company Subsidiary nor any
of their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or the transactions contemplated by this Agreement.
It shall not be deemed a breach of this Section 3.16 for the Company to employ
an investment banking firm to provide a fairness opinion in connection with the
transactions contemplated by this Agreement.
3.17 Employee Benefit Plans.
(a) Set forth on Schedule 3.17(a) is a complete list of all
bonus, deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted stock
and stock option plans, all employment or severance contracts, all medical,
dental, health and life insurance plans, all other employee benefit plans,
contracts or arrangements and any applicable "change of control" or similar
provisions in any plan, contract or arrangement maintained or contributed to by
the Company or any of the Company Subsidiaries for the benefit of employees,
former employees, directors or former directors of the Company or any of the
Company Subsidiaries or their beneficiaries (the "Compensation and Benefit
Plans"). True and complete copies of all Compensation and Benefit Plans,
including, but not limited to, any trust instruments and/or insurance contracts,
if any, forming a part thereof, and all amendments thereto have been supplied to
Bancorp.
(b) All "employee benefit plans" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than "multiemployer plans" within the meaning of Section 3(37)
of ERISA ("Multiemployer Plans"), covering employees or former employees of the
Company and the Company Subsidiaries (the "ERISA Plans"), to the extent subject
to ERISA, comply, in all material respects, with ERISA. Except as set forth on
Schedule 3.17(b), each ERISA Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
intended to be qualified, under Section 401(a) of the Code, has received,
pursuant to a request that accurately described such Pension Plan, a
determination letter to that effect from the Internal Revenue Service with
respect to all applicable statutes as enacted through 1994, and the Company is
not aware of any circumstances reasonably likely to result in the revocation of
any such favorable determination letter or that otherwise would adversely affect
the Pension Plan's qualified status under Code Section 401(a). There are no
pending, threatened or anticipated material claims (other than routine claims
for benefits) by, or on behalf of, or against any of the ERISA Plans. Neither
the Company nor any of the Company Subsidiaries has engaged in a transaction
with respect to any ERISA Plan that would subject the Company or any of the
Company Subsidiaries to a tax or penalty imposed by either Section 4975 of the
Code or Section 502(i) of ERISA in an amount which would be material to the
Company. With respect to each ERISA Plan, the transaction contemplated by this
Agreement is in compliance with ERISA and does not constitute a prohibited
transaction, within the meaning of the Code and ERISA, or an exemption from such
prohibition is available under the Code and ERISA.
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of the Company
Subsidiaries with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which is
considered one employer with the Company or any Company Subsidiary under Section
4001(a)(15) of ERISA or Section 414 of the Code (an "ERISA Affiliate"). Neither
the Company nor any of the Company Subsidiaries presently contributes to a
Multiemployer Plan, nor have they contributed to such a plan within the past
five calendar years. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the past 12 months.
(d) All contributions required to be made under the terms of
any ERISA Plan have been timely made. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA. Neither the Company nor any of the Company
Subsidiaries has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(e) Under each Pension Plan which is a single-employer plan,
as of the last day of the most recent plan year, the actuarially determined
present value of all "benefit liabilities", within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions
contained in the plan's most recent actuarial valuation) did not exceed the then
current value of the assets of such Plan, and there has been no material change
in the financial condition of such plan since the last day of the most recent
plan year.
(f) Neither the Company nor any of the Company Subsidiaries
has any obligations for retiree health and life benefits under any plan, except
as set forth on Schedule 3.17(f). There are no restrictions on the rights of the
Company or any of the Company Subsidiaries to amend or terminate any such Plan
without incurring any liability thereunder.
(g) Except as set forth on Schedule 3.17(g), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of the Company or any of
the Company Subsidiaries under any Compensation and Benefit Plan or otherwise
from the Company or any of the Company Subsidiaries, (ii) increase any benefits
otherwise payable under any Compensation and Benefit Plan, (iii) result in any
acceleration of the time of payment or vesting of any such benefit, or (iv)
result in the imposition to the recipient of any excise tax pursuant to Section
4999 of the Code.
3.18 No Knowledge. The Company knows of no reason why the regulatory
approvals referred to in Section 6.1(b) should not be obtained without the
imposition of any condition of the type referred to in such Section 6.1(b).
3.19 Labor Relations. Each of the Company and the Company Subsidiaries
is in compliance with all currently applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, the Immigration Reform and Control Act, the
Worker Adjustment and Retraining Notification Act, any such laws respecting
employment discrimination, disability rights or benefits, equal opportunity,
plant closure issues, affirmative action, workers' compensation, employee
benefits, severance payments, labor relations, employee leave issues, wage and
hour standards, occupational safety and health requirements and unemployment
insurance and related matters. Neither the Company nor any of the Company
Subsidiaries is engaged in any unfair labor practice and there is no unfair
labor practice complaint pending or threatened against the Company or any of the
Company Subsidiaries before the National Labor Relations Board. Neither the
Company nor any of the Company Subsidiaries is a party to, or is bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is the Company or any of the
Company Subsidiaries the subject of a proceeding asserting that it or any such
Company Subsidiary has committed an unfair labor practice (within the meaning of
the National Labor Relations Act) or seeking to compel the Company or such
Company Subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving the Company or any of the Company Subsidiaries pending or, to the
Company's knowledge, threatened, nor is the Company aware of any activity
involving its or any of the Company Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
3.20 Insurance. The Company and the Company Subsidiaries are insured
with reputable insurers against such risks and in such amounts as the management
of the Company reasonably has determined to be prudent in accordance with
industry practices. All of the insurance policies, binders, or bonds maintained
by the Company or the Company Subsidiaries are in full force and effect; the
Company and the Company Subsidiaries are not in default thereunder; and all
claims thereunder have been filed in due and timely fashion. Set forth on
Schedule 3.20 is a list of all insurance policies maintained by or for the
benefit of the Company or the Company Subsidiaries or their directors, officers,
employees or agents.
3.21 Affiliates. Except as set forth on Schedule 3.21, there is no
person who, as of the date of this Agreement, may be deemed to be an Affiliate
of the Company.
3.22 State Takeover Laws; Certificate of Incorporation. The Company has
taken all necessary action to exempt the Merger, this Agreement, the Company
Stock Option Agreement and the transactions contemplated hereby and thereby
from, and the Merger, this Agreement, the Company Stock Option Agreement and the
transactions contemplated hereby and thereby are exempt from (a) any applicable
state takeover laws, including, without limitation, the provisions of Sections
14A:10A-1 through 14A:10A-6 of the New Jersey BCA, (b) any applicable takeover
provisions in the Company's Certificate of Incorporation or By-laws, and (c) any
takeover provisions set forth in any Contract to which the Company is a party or
may be bound.
3.23 Environmental Matters. The Company and the Company Subsidiaries
have obtained and maintained in effect all material licenses, permits and other
authorizations required under all applicable laws, regulations and other
requirements of governmental or regulatory authorities relating to pollution or
to the protection of the environment ("Environmental Laws") and is in compliance
in all material respects with all Environmental Laws and with all such licenses,
permits and authorizations. There are no legal, administrative, arbitral or
other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that could reasonably result in the imposition, on
the Company or any Company Subsidiary, of any material liability or obligation
arising under common law or under any local, state or federal Environmental Law
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), pending or
threatened against the Company or any Company Subsidiary. To the knowledge of
the Company, there is no reasonable basis for any such proceeding, claim, action
or governmental investigation.
3.24 Taxes. Except as set forth on Schedule 3.24, (a) all federal,
state, local or foreign income, gross receipts, windfall profits, severance,
property, production, sales, use, license, excise, franchise, employment,
premium, recording, documentary, documentary stamp, real estate transfer,
transfer, back-up withholding or similar taxes, together with any interest,
additions, or penalties with respect thereto (collectively "Taxes"), imposed on
the income, properties or operations of the Company or the Company Subsidiaries
have been paid in full or have been adequately reserved against on the books of
the Company or the Company Subsidiaries, (b) all reports and returns with
respect to Taxes and tax related information reporting requirements that are
required to be filed by or with respect to the Company or the Company
Subsidiaries, including without limitation consolidated federal income tax
returns of the Company and the Company Subsidiaries (collectively, the "Company
Tax Returns"), have been duly filed or requests for extensions have been filed
and have not expired, and such Company Tax Returns were true, complete and
accurate in all material respects, (c) the Company Tax Returns have been
examined by the Internal Revenue Service or the appropriate state, local or
foreign taxing authority or the period for assessment of the Taxes in respect of
which such Company Tax Returns were required to be filed has expired, (d) all
Taxes due with respect to completed and settled examinations have been paid in
full, (e) no issues have been raised by the relevant taxing authority in
connection with the examination of any of the Company Tax Returns, except as
reserved against in the Company Financial Statements prior to the date of this
Agreement, (f) no waivers of statutes of limitations have been given by or
requested with respect to any Taxes of the Company or the Company Subsidiaries
and (g) neither the Company, the Company Subsidiaries, Bancorp nor any direct or
indirect Subsidiary of Bancorp, as a consequence of the Company's actions prior
to the Effective Time, will be obligated to make a payment to an individual that
would be a "parachute payment" as such term is defined in Section 280G of the
Code without regard to whether such payment is to be performed in the future.
3.25 Derivatives. All currently outstanding exchange-traded or
over-the-counter swap, forward future, option, cap, floor or collar financial
contracts or any other similar arrangements, when (a) entered into for the
Company's account or for the account of one or more of the Company Subsidiaries
were entered into (i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and (ii) with
counterparties believed to be financially responsible at the time; and each of
them constitutes the valid and legally binding obligation of the Company or
Company Subsidiary, enforceable in accordance with its terms, and each of them
is in full force and effect, and (b) when entered into on behalf of the
Company's Clients, were entered into in a manner consistent with the directions
of such Clients. Neither the Company nor any Company Subsidiary nor, to the
Company's knowledge, any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement. The Company Financial
Statements disclose the value of such agreements and arrangements entered into
for the Company's account on a mark-to-market basis in accordance with GAAP and,
since December 31, 1996, there has not been a change in such value that,
individually or in the aggregate, has resulted in a Material Adverse Effect on
the Company.
3.26 Accounting Controls. Each of the Company and the Company
Subsidiaries maintains systems of internal accounting controls sufficient to
provide reasonable assurances in the judgment of the Board of Directors of the
Company, that (a) all material transactions are executed in accordance with
management's general or specific authorization, (b) all material transactions
are recorded as necessary to permit the preparation of financial statements in
conformity with GAAP, (c) access to the material property and assets of the
Company and the Company Subsidiaries is permitted only in accordance with
management's general or specific authorization, and (d) the recorded
accountability for items is compared with the actual levels at reasonable
intervals and appropriate action is taken with respect to any differences.
3.27 Proprietary Rights. The Company and the Company Subsidiaries have
the right to use the names, service-marks, trademarks and other intellectual
property, including computer software applications, material to the conduct of
their business, all of which are listed on Schedule 3.27 and in the case of such
names, service-marks and trademarks, in each state of the United States, such
right of use is free and clear of any Liens, and no other person has the right
to use such names, service-marks or trademarks in any such state.
3.28 Reorganization. As of the date hereof, the Company is aware of no
reason why the Merger will fail to qualify as a reorganization under Section
368(a) of the Code.
3.29 Investment Advisory Activities. Except as set forth on Schedule
3.29, neither the Company nor any Company Subsidiary is or has been during the
past five years an "investment advisor" within the meaning of the Investment
Advisers Act, required to be registered, licensed or qualified as an investment
advisor under the Investment Advisers Act or subject to any liability or
disability by reason of any failure to be so registered, licensed or qualified.
Neither the Company nor any Company Subsidiary is or has been during the past
five years an "investment company" within the meaning of the Investment Company
Act.
3.30 Dissenters' Rights. No stockholder of the Company is entitled to
exercise or assert dissenters' or appraisal rights as a result of the Merger,
this Agreement or the transactions contemplated by this Agreement under the New
Jersey BCA or any other applicable law.
3.31 Opinion of Financial Advisor. Duff & Phelps, LLC ("Duff & Phelps")
has delivered to the board of directors of the Company its written opinion (the
"Fairness Opinion") to the effect that, as of February 9, 1998, the Conversion
Ratio to be offered to the stockholders of the Company is fair to such
stockholders from a financial point of view. The Company shall use its best
efforts to deliver or cause to be delivered to Bancorp a signed copy of the
Fairness Opinion.
3.32 Year 2000 Compliance. The Company has taken all reasonable steps
necessary to address the software, accounting and record keeping issues raised
by the Year 2000 and the Company does not expect the cost of addressing such
issues to have a Material Adverse Effect on the Company.
3.33 Accuracy of Information. No representation or warranty of the
Company contained in this Agreement, and none of the statements or information
concerning the Company or the Company Subsidiaries contained in this Agreement
or the exhibits and the schedules hereto, contains or will contain any untrue
statement of a material fact nor will such representations, warranties,
covenants or statements taken as a whole omit a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP AND ACQUISITION
Bancorp hereby represents and warrants to the Company as follows:
4.1 Organization, Standing and Authority. Each of Bancorp and
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida. Bancorp is duly qualified to do
business and is in good standing in each jurisdiction (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified, except where the failure to be duly
qualified is not reasonably likely to have a Material Adverse Effect on Bancorp.
Bancorp and each of its Subsidiaries has in effect all federal, state, local,
and foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now conducted,
except for such authorizations, the absence of which is not reasonably likely to
have a Material Adverse Effect on Bancorp. Bancorp and each of its Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own or lease all its properties and assets.
4.2 Capitalization. The authorized capital stock of Bancorp consists of
(i) 80,000,000 shares of Class A Common Stock, of which, as of the date hereof,
15,078,072 shares were issued and outstanding and none of which were held in
treasury, (ii) 45,000,000 shares of Class B Common Stock, of which, as of the
date hereof, 10,724,265 shares were issued and outstanding and none of which
were held in treasury and (iii) 10,000,000 shares of preferred stock, par value
$.01 per share, none of which, as of the date hereof, were issued and
outstanding and none of which were held in treasury. All of the issued and
outstanding shares of Class A Common Stock and Class B Common Stock have been
duly authorized and validly issued and are fully paid, non-assessable and free
of common law, statutory or contractual preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this Agreement,
except as set forth on Schedule 4.2, Bancorp does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, stock appreciation
rights, commitments or agreements of any character calling for the purchase or
issuance of any shares of Class A Common Stock, Class B Common Stock or any
other equity securities of Bancorp or any securities representing the right to
purchase or otherwise receive any shares of Class A Common Stock or Class B
Common Stock. Except as set forth on Schedule 4.2, there are no outstanding
contractual obligations of Bancorp or any of its Subsidiaries to repurchase,
redeem or otherwise acquire, or to register for sale, any shares of capital
stock of Bancorp. Except as set forth on Schedule 4.2, there are no outstanding
contractual obligations of Bancorp or any Subsidiary to vote or to dispose of
any shares of the capital stock of any of its Subsidiaries.
4.3 Corporate Authority. Each of Bancorp and Acquisition has full
corporate power and authority to execute this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been authorized by all
necessary corporate action of Bancorp and Acquisition and is a valid and binding
agreement of each of Bancorp and Acquisition enforceable in accordance with its
terms.
4.4 No Violation . The execution, delivery and performance of this
Agreement and the consummation by Bancorp and Acquisition of the transactions
contemplated hereby, does not and will not (i) violate or conflict with the
Articles of Incorporation or by-laws or other organizational documents of
Bancorp or any of its Subsidiaries and (ii) assuming that the consents and
approvals referred to in Section 4.5 are duly obtained (a) violate, conflict
with, or result in a breach of any of the provisions of, or constitute a default
(or an event which, with notice of lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration, or the
creation of any Lien upon any of the properties or assets of Bancorp or any of
its Subsidiaries under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Bancorp or any of its Subsidiaries is a party
or by which Bancorp or any of its Subsidiaries may be bound, or to which Bancorp
or any of its Subsidiaries or any of their respective properties or assets may
be subject, or (b) violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to Bancorp or any Subsidiary
thereof or any of their respective properties or assets.
4.5 Consent and Approvals. Other than in connection with (a) the HSR
Act, (b) the Securities Act, (c) the Exchange Act, (d) the securities laws of
any federal, state, local or foreign jurisdiction, and except as set forth on
Schedule 4.5, no consent, approval or authorization of, or registration,
qualification or filing with any federal, state, local or foreign Regulatory
Agency or other Person is required to be made by Bancorp or Acquisition in
connection with the execution, delivery or performance by Bancorp and
Acquisition of this Agreement or the consummation by Bancorp and Acquisition of
the transactions contemplated hereby, other than consents, approvals,
authorizations, registrations, qualifications or filings, the failure of which
to obtain or make would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Bancorp or prevent the consummation of
the transactions contemplated by this Agreement.
4.6 Bancorp Reports. Bancorp and each Subsidiary of Bancorp has in all
material respects timely filed all reports, registrations, statements, and other
filings, together with any amendments required to be made with respect thereto,
that were required to be filed since December 31, 1994 with any Regulatory
Agency, including, without limitation, the SEC (all such reports and statements,
including the financial statements, exhibits and schedules thereto, being
collectively referred to herein as the "Bancorp Reports"), including, without
limitation, all reports, registrations, statements and filings required under
the Securities Act, the Exchange Act or any applicable state securities or "blue
sky" laws, and has paid all fees and assessments payable in connection
therewith. As of their respective dates, except as and to the extent amended or
modified on a subsequent date prior to the date of this Agreement, each of the
Bancorp Reports complied in all material respects with the statutes, rules,
regulations and orders enforced or promulgated by the Regulatory Agency with
which they were filed and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
4.7 Financial Statements. Bancorp has previously made available to the
Company copies of (a) the consolidated statements of financial condition of
Bancorp and its Subsidiaries as of December 31 for the fiscal years 1995 and
1996, and the related consolidated statements of operations, stockholders'
equity and cash flows for the fiscal years then ended, as reported in Bancorp's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Bancorp 1996 Form 10-K") filed with the SEC under the Exchange Act, in each
case accompanied by the audit report of KPMG Pear Marwick LLP, independent
public accountants with respect to Bancorp and (b) the unaudited consolidated
statement of financial condition of Bancorp and its Subsidiaries as of September
30, 1997 and related consolidated statements of operations, stockholders' equity
and cash flows for the nine months then ended as reported in Bancorp's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997 (collectively, the
"Bancorp Financial Statements"). The December 31, 1996 and the September 30,
1997 consolidated statements of financial condition of Bancorp and its
Subsidiaries (including the related notes, where applicable) fairly present in
all material respects (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount) the consolidated
financial position of Bancorp and its Subsidiaries as of the respective dates
thereof, and the other Bancorp Financial Statements referred to in this Section
4.7, and any Bancorp Financial Statements filed by Bancorp with the SEC under
the Exchange Act after the date of this Agreement will fairly present in all
material respects (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount) the results of the
consolidated operations and changes in stockholders' equity and consolidated
financial position of Bancorp and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth. Each of such Bancorp
Financial Statements (including the related notes, where applicable) complies in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, and each of the
Bancorp Financial Statements (including the related notes, where applicable) has
been prepared in accordance with GAAP during the periods involved except, in
each case, as indicated in such Bancorp Financial Statements or in the notes
thereto.
4.8 Absence of Certain Changes. Since December 31, 1996, the business
of Bancorp and its Subsidiaries has been conducted in the ordinary and usual
course, consistent with past practice, and there has not been any event,
occurrence, development or state of circumstances or facts which has had or
could reasonably be expected to constitute or result in a Material Adverse
Effect on Bancorp.
4.9 Litigation; Regulatory Action.
(a) Except as disclosed in the Bancorp Reports, neither
Bancorp nor any of its Subsidiaries is a party to any Litigation before any
court, arbitrator, mediator or Regulatory Agency which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on Bancorp
and, to Bancorp's knowledge, no such Litigation has been threatened; and neither
it nor any of its Subsidiaries or any of its or their material properties or
their officers, directors or controlling persons is a party to or is the subject
of any order, decree, agreement, memorandum or understanding or similar
arrangement with, or a commitment letter or similar submission to, any
Regulatory Agencies, which is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on Bancorp and neither it nor any
of its Subsidiaries has been advised by any Regulatory Agencies that any such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum or understanding, commitment letter or similar submission.
(b) Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of Bancorp and its Subsidiaries, no
Regulatory Agency has initiated any proceeding or, to the knowledge of Bancorp,
investigation into the business or operations of Bancorp or any of Bancorp's
Subsidiaries since December 31, 1994. There is no material unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of Bancorp or any of its Subsidiaries.
4.10 Compliance with Laws. Bancorp and each of its Subsidiaries and
their respective officers and employees (a) is in compliance in all material
respects with all applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable thereto
or to the employees conducting such businesses and (b) has all permits,
licenses, authorizations, orders and approvals of, and have made all filings,
applications and registrations with, all Regulatory Agencies that are required
in order to permit them to own and operate their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to Bancorp's knowledge, no
suspension or cancellation of any of them is threatened or reasonably likely;
and all such filings, applications and registrations are current.
4.11 No Brokers. Neither Bancorp nor any of its Subsidiaries nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or the transactions contemplated by this Agreement.
4.12 Shares Authorized. The shares of Class A Common Stock to be issued
in exchange for shares of Company Common Stock upon consummation of the Merger
in accordance with Article II of this Agreement, have been duly authorized and,
when issued in accordance with the terms of this Agreement and in the case of
shares issued upon the exercise of Company Options, the related stock option
plan, will be validly issued, fully paid and nonassessable and subject to no
preemptive rights.
4.13 Absence of Undisclosed Liabilities. Except as disclosed in the
Bancorp Financial Statements, neither Bancorp nor any of its Subsidiaries has
any obligation or liability (contingent or otherwise), including liabilities
under Environmental Laws, that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on Bancorp.
4.14 Taxes. All Taxes imposed on the income, properties or operations
of Bancorp or its Subsidiaries have been paid in full or have been adequately
reserved against on the books of Bancorp or its Subsidiaries. All reports and
returns with respect to Taxes and tax related information reporting requirements
that are required to be filed by or with respect to Bancorp or its Subsidiaries,
including without limitation consolidated federal income tax returns of Bancorp
and its Subsidiaries (collectively, the "Bancorp Tax Returns"), have been duly
filed or requests for extensions have been filed and have not expired, and such
Bancorp Tax Returns were true, complete and accurate in all material respects.
The Bancorp Tax Returns have been examined by the Internal Revenue Service or
the appropriate state, local or foreign taxing authority or the period for
assessment of the Taxes in respect of which such Bancorp Tax Returns were
required to be filed has expired. All Taxes due with respect to completed and
settled examinations have been paid in full. No issues have been raised by the
relevant taxing authority in connection with the examination of any of Bancorp
Tax Returns, except as reserved against in the Bancorp Financial Statements
prior to the date of this Agreement. No waivers of statutes of limitations have
been given by or requested with respect to any Taxes of Bancorp or its
Subsidiaries.
4.15 Reserves. As of September 30, 1997, each of the allowance for loan
losses and the reserve for OREO properties in the Bancorp Financial Statements
was adequate pursuant to GAAP, and the methodology used to compute each of the
loan loss reserve and the reserve for OREO properties complies in all material
respects with GAAP and all applicable policies of the applicable Regulatory
Agencies.
4.16 Agreements with Regulators. Except as disclosed in writing to the
Company by Bancorp prior to the date of this Agreement, neither Bancorp nor any
Bancorp Subsidiary is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution submitted to a
regulatory authority or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any Regulatory Agency which restricts materially the conduct of its business, or
in any manner relates negatively to its capital adequacy, its credit or reserve
policies or its management, nor has Bancorp been advised by any Regulatory
Agency that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission. Neither Bancorp nor any Bancorp Subsidiary is required by
Section 32 of the Federal Deposit Insurance Act to give prior notice to a
Federal banking agency of the proposed addition to an individual to its board of
directors or the employment of an individual as a senior executive officer.
4.17 No Knowledge. Bancorp knows of no reason why the regulatory
approvals referred to in Section 6.1(b) should not be obtained without the
imposition of any condition of the type referred to in such Section 6.1(b).
4.18 Acquisition. Acquisition has no material liabilities or other
obligations other than those incurred or entered into in connection with this
Agreement or the transactions contemplated hereby. The authorized capital stock
of Acquisition consists of 2,500 shares of common stock, no par value, and all
issued and outstanding shares are owned solely Bancorp, free and clear of any
Liens.
4.19 Year 2000 Compliance. Bancorp has taken all reasonable steps
necessary to address the software, accounting and record keeping issues raised
by the Year 2000 and Bancorp does not expect the cost of addressing such issues
to have a Material Adverse Effect on Bancorp.
4.20 Accuracy of Information. No representation or warranty of Bancorp
contained in this Agreement, and none of the statements or information
concerning Bancorp and its Subsidiaries contained in this Agreement or the
exhibits and the schedules hereto, contains or will contain any untrue statement
of a material fact nor will such representations, warranties, covenants or
statements taken as a whole omit a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE V
COVENANTS
The Company hereby covenants to Bancorp, and Bancorp hereby covenants
to the Company, as applicable, that:
5.1 Forbearances of the Company. During the period from the date hereof
until the Effective Time, except as expressly contemplated by this Agreement,
the Company Stock Option Agreement or as set forth in Schedule 5.1, without the
prior written consent of Bancorp, the Company will not, and will cause each of
the Company Subsidiaries not to:
(a) conduct the business of the Company and the Company
Subsidiaries other than in the ordinary and usual course or fail to use its best
efforts to preserve intact their business organizations and assets and maintain
their rights, franchises and existing relations with clients, customers,
suppliers, employees and business associates, or take any action reasonably
likely to have an adverse affect upon the Company's ability to perform any of
its material obligations under this Agreement;
(b) (i) adjust, split, combine or reclassify any capital
stock; (ii) make, declare or pay any dividend (except for regular cash dividends
at a rate not in excess of $.04 per share per annum on the Company Common Stock)
or make any other distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock; (iii) grant any stock appreciation rights or grant any Person any right
to acquire any shares of its capital stock; (iv) issue any additional shares of
capital stock, other than with respect to exercise of currently outstanding
Company Options or any security or obligation convertible into or exchangeable
for any shares of its capital stock; or (v) enter into any agreement,
understanding or arrangement with respect to the sale or voting of its capital
stock;
(c) enter into, amend, modify or renew any employment,
consulting, severance or similar agreements or arrangements with any director,
officer or employee of the Company or any Company Subsidiary, pay any bonus, or
grant any salary or wage increase or increase any employee benefit (including
incentive or bonus payments), except (i) for normal individual increases in
compensation to employees in the ordinary course of business consistent with
past practice, (ii) for changes that are required by applicable law, (iii) for
bonuses paid in the ordinary course of business consistent with past practice,
(iv) for employment arrangements for, or grants of awards to newly hired
employees in the ordinary course of business consistent with past practice, or
(v) for the termination of employment contracts disclosed in the disclosure
schedules to this Agreement without the need to accrue more than $50,000 per
contract pursuant to such termination;
(d) enter into, establish, adopt or amend (except as may be
required by applicable law) any pension, retirement, stock option, stock
purchase, savings, profit sharing, deferred compensation, consulting, bonus,
group insurance or other employee benefit, incentive or welfare contract, plan
or arrangement, or any trust agreement (or similar arrangement) related thereto,
in respect of any director, officer or employee of the Company or any of the
Company Subsidiaries, or take any action to accelerate the vesting or
exercisability of stock options, restricted stock or other compensation or
benefits payable thereunder;
(e) except for sales of securities or other investments or
assets in the ordinary course of business consistent with past practice, sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any of its
assets, business or properties;
(f) except for the purchase of securities or other investments
or assets in the ordinary course of business consistent with past practice, make
any material investment either by purchase of stock or securities, contributions
to capital, property transfers, or purchase of any property or assets of any
other Person other than a wholly owned Subsidiary of the Company;
(g) amend the Company's Certificate of Incorporation, by-laws
or the certificate or articles of incorporation or by-laws (or similar governing
documents) of any of the Company Subsidiaries;
(h) implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by GAAP,
provided such GAAP required changes are agreed to by the Company's independent
public accountants;
(i) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material lease,
contract or agreement, or make any change in any of its material leases,
contracts or agreements, other than renewals of leases, contracts or agreements
without material changes of terms;
(j) settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually and in the aggregate for all such settlements, not more than
$50,000 and which is not reasonably likely to establish an adverse precedent or
basis for subsequent settlements;
(k) (i) take any action reasonably likely to prevent or impede
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code; or (ii) take any action that is intended or is reasonably
likely to result in (A) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (B) any of the conditions to the Merger set
forth in Article VI not being satisfied or (C) a violation of any provision of
this Agreement except, in each case, as may be required by applicable law or
regulation;
(l) other than in the ordinary course of business consistent
with past practice, incur (i) any indebtedness for borrowed money (other than
short-term indebtedness incurred to refinance existing short-term indebtedness,
and indebtedness under existing lines of credit), assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other Person, or make any loan or advance or (ii) any capital expenditures,
obligations or liabilities; and
(m) agree, commit to or enter into any agreement to take any
of the actions prohibited by this Section 5.1.
5.2 Forbearances of Bancorp. During the period from the date hereof
until the Effective Time, except as expressly contemplated by this Agreement,
without the prior written consent of the Company, Bancorp will not, and will
cause each of its Subsidiaries not to:
(a) make, declare, pay or set aside for payment any
extraordinary dividend; provided, however, the foregoing shall not apply to
increases in the quarterly dividend rate payable on the Class A Common Stock and
Class B Common Stock in the ordinary course of business consistent with past
practices or the payment of any stock dividends on such shares; and
(b) (i) take any action while knowing that such action would,
or is reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code; or (ii) take
any action that is intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(B) any of the conditions to the Merger set forth in Article VI not being
satisfied or (C) a violation of any provision of this Agreement except, in each
case, as may be required by applicable law or regulation.
5.3 Efforts. Subject to the terms and conditions of this Agreement,
each party hereto shall use its reasonable best efforts in good faith to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as to
permit consummation of the Merger on the Effective Date and to otherwise enable
consummation of the transactions contemplated hereby and shall cooperate fully
with the other parties hereto to that end (it being understood that any
amendments to the Registration Statement (as hereinafter defined) or a
resolicitation of proxies as a consequence of an acquisition agreement by
Bancorp or any of its Subsidiaries shall not violate this covenant).
5.4 Registration Statement; Proxy Statement. The Company and Bancorp
shall prepare a proxy statement/prospectus (the "Proxy Statement") to be mailed
to the holders of Company Common Stock in connection with the transactions
contemplated hereby and to be filed by Bancorp in a registration statement (the
"Registration Statement") with the SEC. When the Registration Statement or any
post-effective amendment or supplement thereto shall become effective, and at
all times subsequent to such effectiveness, up to and including the date of the
Meeting (as hereinafter defined), such Registration Statement and all amendments
or supplements thereto, with respect to all information set forth therein
furnished or to be furnished by or on behalf of the Company relating to the
Company or the Company Subsidiaries and by or on behalf of Bancorp relating to
Bancorp or its Subsidiaries (A) will comply in all material respects with the
provisions of the Securities Act and the Exchange Act and any other applicable
statutory or regulatory requirements, and (B) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading; provided, however, in no event shall any party hereto be liable for
any untrue statement of a material fact or omission to state a material fact in
the Registration Statement made in reliance upon, and in conformity with,
written information concerning another party furnished by or on behalf of such
other party specifically for use in the Registration Statement.
5.5 Registration Statement Effectiveness. Bancorp will advise the
Company, promptly after Bancorp receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed (after providing drafts in advance to the Company and its counsel for
review and comment), of the issuance of any stop order or the suspension of the
qualification of the Class A Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
5.6 Company Stockholder Approval. The Company shall take all such
action as may be necessary to call, notice and convene as promptly as
practicable a meeting of its stockholders (the "Meeting") to consider and vote
upon the Merger, this Agreement and the transactions contemplated hereby. The
Board of Directors of the Company has determined that the Merger is advisable
and in the best interests of the Company and its stockholders and shall
recommend in the Proxy Statement and otherwise that the Company's stockholders
approve the Merger, this Agreement, and the transactions contemplated hereby,
and otherwise use its best efforts to obtain stockholder approval of the Merger,
this Agreement, and the transactions contemplated hereby; provided that said
Board of Directors shall not be obligated to make such recommendation if the
Company shall have received an offer for a Competing Transaction that the Board
of Directors, after consultation with its outside legal counsel and financial
advisors, determines in good faith is more favorable to the stockholders of the
Company from a financial point of view than the transaction contemplated by this
Agreement.
5.7 Press Releases. The parties agree to reasonably cooperate in
issuing any press release or other public announcement (including any filings
made with the SEC) concerning this Agreement or the transactions contemplated
hereby. Nothing contained herein shall prevent any party from at any time
furnishing any information to any governmental authority which it is by law or
otherwise so obligated to disclose or from making any disclosure which its
counsel deems necessary or advisable in order to fulfill such party's disclosure
obligations under applicable law or the rules of the NYSE or NASDAQ; provided,
such party uses good faith efforts to notify the other party about such pending
disclosure and gives the other party a reasonable opportunity to cooperate in
preparing such disclosure.
5.8 Access; Information. Upon reasonable notice, the Company and
Bancorp shall each afford the other and its officers, employees, counsel,
accountants and other authorized representatives access, during normal business
hours throughout the period prior to the Effective Date, to all of its
properties, books, contracts, data processing system files, commitments and
records and, during such period, shall furnish promptly to the other (A) a copy
of each material report, schedule and other document filed by it and its
Subsidiaries with any Regulatory Agency, and (B) other than confidential client
or customer information which a party is prohibited from disclosing, all other
information concerning its business, properties and personnel as the other may
reasonably request, provided that no investigation pursuant to this Section 5.8
shall affect or be deemed to modify or waive any representation or warranty made
hereunder or the conditions to the obligations of either party to consummate the
transactions contemplated by this Agreement. Neither party will use any
information obtained pursuant to this Section 5.8 for any purpose unrelated to
the consummation of the transactions contemplated by this Agreement and, if this
Agreement is terminated, each party will hold all information and documents
obtained pursuant to this paragraph in confidence unless and until such time as
such information or documents become publicly available other than by reason of
any action or failure to act by such party or as it is advised by counsel in
writing that any such information or document is required by law or applicable
published stock exchange rule to be disclosed, and in the event of the
termination of this Agreement, such party will, upon request by the other,
deliver to the other all documents so obtained by it or destroy such documents.
5.9 Acquisition Proposals. The Company shall not, directly or
indirectly, and shall instruct its officers, directors, employees, Subsidiaries,
agents or advisors or other representatives (including, without limitation, any
investment banker, attorney or accountant retained by it), not to, directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing nonpublic information), or take any other action knowingly to
facilitate, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to its stockholders) that constitutes,
or may reasonably be expected to lead to, any Competing Transaction (as defined
below), or enter into or maintain or continue discussions or negotiate with any
person in furtherance of such inquiries or to obtain a Competing Transaction, or
agree to or endorse any Competing Transaction, or authorize or permit any of the
officers, directors or employees of the Company or any of the Company
Subsidiaries, or any investment banker, financial advisor, attorney, accountant
or other representative retained by the Company or any of the Company
Subsidiaries, to take any such action; provided, however, that nothing contained
in this Section 5.9 shall prohibit the Board of Directors of the Company from
furnishing information to, or entering into discussions or negotiations with,
any person in connection with an unsolicited proposal by such person to acquire
the Company pursuant to a merger, consolidation, share exchange, tender offer,
exchange offer, business combination or other similar transaction or to acquire
all or substantially all of the assets of the Company or any of the Company
Subsidiaries, if, and only to the extent that, (i) such Board of Directors,
after consultation with outside legal counsel, determines in good faith that
such action is required for such Board of Directors to comply with its duties to
its stockholders imposed by applicable law and (ii) prior to furnishing such
information to, or entering into discussions or negotiations with, such person,
such party uses all reasonable efforts to obtain from such person an executed
confidentiality agreement. The Company shall notify Bancorp promptly if any
proposal or offer, or any inquiry or contact with any person with respect
thereto, regarding a Competing Transaction is made. For purposes of this
Agreement, "Competing Transaction" shall mean any of the following involving the
Company or any of the Company Subsidiaries: (i) any merger, consolidation, share
exchange, business combination, or other similar transaction (other than the
transactions contemplated by this Agreement and the Cumberland Transaction);
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition
outside the ordinary course of business of 15% or more of the assets of the
Company and the Company Subsidiaries, taken as a whole, in a single transaction
or series of transactions; (iii) any tender offer or exchange offer for 15% or
more of the outstanding shares of capital stock of the Company or the filing of
a registration statement under the Securities Act in connection therewith; (iv)
any Person shall have acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder)
shall have been formed which beneficially owns or has the right to acquire
beneficial ownership of, 40% or more of the then outstanding shares of capital
stock of the Company; (v) any public announcement of a proposal, plan or
intention to do any of the foregoing; provided, however, that for purposes of
this Agreement and the Company Stock Option Agreement, none of the foregoing
transactions or actions shall be deemed to constitute a Competing Transaction
unless such transaction or action was initiated, or initial discussions or
communications with respect thereto were initiated, prior to the termination of
this Agreement.
5.10 Blue-Sky Filings. Bancorp shall use its reasonable efforts to
obtain all necessary state securities laws or "blue sky" permits and approvals,
provided that Bancorp shall not be required by virtue thereof to submit to
general jurisdiction in any state.
5.11 State Takeover Laws; Certificate of Incorporation. The Company
shall not take any action that would cause the transactions contemplated by this
Agreement to be subject to any applicable state takeover statute and the Company
shall take all necessary steps to exempt (or ensure the continued exemption of)
the transactions contemplated by this Agreement from (A) any applicable state
takeover law, as now or hereafter in effect, including, without limitation,
Sections 14A:10A-1 through 14A:10A-6 of the New Jersey BCA, (B) any applicable
takeover provisions in the Company's Certificate of Incorporation or By-laws,
and (C) any takeover provisions set forth in any agreement to which the Company
is a party or may be bound.
5.12 Affiliate Agreements. The Company will cause each person who may
be deemed by the Company to be an Affiliate of the Company (for purposes of Rule
145 under the Securities Act) to execute and deliver to Bancorp, as soon as
practicable after the date of this Agreement, and before the mailing of the
Proxy Statement for the Meeting, an agreement in the form attached hereto as
Exhibit B restricting the disposition of the shares of Class A Common Stock to
be received by such Affiliate in exchange for such Affiliate's shares of Company
Common Stock except in compliance with the applicable provisions of the
Securities Act and the rules and regulations thereunder. The Company represents
and warrants that Schedule 5.12 sets forth a list of all persons who, as of the
date of this Agreement, are Affiliates of the Company.
5.13 Shares Listed. Bancorp shall use its reasonable best efforts to
list, prior to the Effective Date, on the NYSE, upon official notice of
issuance, the shares of Class A Common Stock to be issued to the holders of
Company Common Stock pursuant to this Agreement.
5.14 Regulatory Applications. The parties hereto shall cooperate with
each other and use their reasonable best efforts to promptly prepare and file
all necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all permits, consents, approvals
and authorizations of all third parties and Regulatory Agencies which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger), and to comply fully with
the terms and conditions of all such permits, consents, approvals and
authorizations of all Regulatory Agencies. The parties hereto shall have the
right to review in advance, and, to the extent practicable, each will consult
the other on, in each case subject to applicable laws relating to the exchange
of information, all the information relating to the Company or Bancorp, as the
case may be, and any of their respective Subsidiaries, which appear in any
filing made with, or written materials submitted to, any third party or any
Regulatory Agency in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Regulatory
Agencies necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
5.15 Current Information.
(a) During the period from the date of this Agreement to the
Effective Date, each of the Company and Bancorp shall, and shall cause its
representatives to, confer on a regular and frequent basis with representatives
of the other.
(b) The Company shall promptly notify Bancorp of (1) any
material change in the business or operations of the Company or any Company
Subsidiary, (2) any material complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any Regulatory
Agency relating to the Company or any Company Subsidiary, (3) the institution or
the threat of material Litigation involving or relating to the Company or any
Company Subsidiary, or (4) any event or condition that might be reasonably
expected to cause any of the Company's representations or warranties set forth
herein not be true and correct as of the Effective Time or prevent the Company
from fulfilling its obligations hereunder; and in each case shall keep Bancorp
informed with respect thereto.
(c) Bancorp shall (1) promptly notify the Company of any event
or condition that might reasonably be expected to cause any of Bancorp's
representations or warranties set forth herein not to be true and correct as of
the Effective Time or prevent Bancorp from fulfilling its obligations hereunder
and (2) notify the Company immediately of any denial of any application filed by
Bancorp with any Regulatory Agency with respect to this Agreement, and in each
case shall keep the Company informed with respect thereto.
5.16 ESOP Termination. The Company shall take all steps necessary to
terminate the Company's Employee Stock Ownership Program (the "ESOP") effective
at or prior to the Effective Time. The termination of the ESOP shall be in
accordance with all applicable laws, statutes and regulations, including,
without limitation, ERISA, and shall not subject the Company or Bancorp to any
material obligation or liability.
5.17 Incentive Plan.
(a) Retention Pool. At the Effective Time, Bancorp will
establish a retention pool (the "Retention Pool") consisting of restricted
shares of Class A Common Stock to be used to retain key employees of the
Company. The value of the shares which will be dedicated to the Retention Pool
shall be equal to 20% of the aggregate of the value of the shares of Class A
Common Stock issued in the Merger (excluding options issued in the Merger in
exchange for other options and excluding shares of Class A Common Stock issued
in the Merger in exchange for shares of Company Common Stock which were issued
by the Company after the date of this Agreement) and the value of the shares
dedicated to the Retention Pool. As used in the previous sentence, the "value"
of the number of shares of Class A Common Stock shall be equal to the Average
Price multiplied by the number of shares. The individuals eligible for inclusion
in the Retention Pool and the respective allocations will be determined by the
management of the Company, in consultation with and subject to the approval of
Bancorp, prior to the Effective Time.
(b) Vesting. The shares of Class A Common Stock in the
Retention Pool shall vest on the fourth anniversary of the Effective Date
subject to the conditions and upon the terms and as set forth in Exhibit C
hereto.
(c) Eligibility. Eligibility to participate in the Retention
Pool shall require an individual to be employed by the Company as of the vesting
date and subject to the terms and conditions set forth in Exhibit C hereto.
(d) Adjustment. If an employee of the Company who has been
selected to participate in the Retention Pool shall forfeit the right to receive
shares of Class A Common Stock thereunder, as set forth in Exhibit C, the shares
allocated to that individual shall be cancelled and the number of shares of
Class A Common Stock in the Retention Pool shall be adjusted accordingly.
5.18 Indemnification/Liability Coverage.
(a) For six years after the Effective Date, or for such longer
period as contemplated by any applicable statute of limitations, Bancorp shall,
and shall cause the Surviving Corporation to, indemnify, defend and hold
harmless the present and former directors and executive officers of the Company
and the Company Subsidiaries (each, an "Indemnified Party"), against all
liabilities and expenses (including, without limitation, professional fees and
disbursements, investigation and other costs, settlements and judgments) arising
out of, or asserted or incurred in connection with any claim, action, suit,
investigation or proceeding (including any proceeding by or in the right of the
Company, or the Surviving Corporation as statutory successor to the Company)
alleging, (i) actions or omissions occurring at or prior to the Effective Date
(including, without limitation, actions or omissions in connection with the
transactions contemplated by this Agreement) and (ii) actions or omissions
occurring after the Effective Date in connection with the transactions
contemplated by this Agreement in either case (whether (i) or (ii)) to the
fullest extent that the Indemnified Parties would be entitled to indemnification
under the New Jersey BCA and the Company's Certificate of Incorporation and
Bylaws as in effect on the date hereof. In furtherance and not in limitation of
the foregoing, as of the Effective Date, Bancorp shall, and shall cause the
Surviving Corporation to, assume and reaffirm each of the existing
Indemnification Agreements (the "Indemnification Agreement") between the Company
and its present and former directors and certain executive officers (each of
which is listed on Schedule 5.18 and copies of which have been previously
delivered to Bancorp). Notwithstanding anything herein to the contrary,
Bancorp's and the Surviving Corporation's aggregate obligation pursuant to this
indemnity (including amounts paid under available insurance coverage) shall not
exceed $35,000,000.
(b) Bancorp shall use its reasonable best efforts to maintain
the Company's existing directors' and officers' liability insurance policy (or a
policy, including Bancorp's existing policy, providing comparable coverage
amount on terms no less favorable) covering persons who are currently covered by
such insurance for a period of three years after the Effective Date; provided,
that Bancorp shall not be obligated to make an annual premium payment in respect
to such policy (or replacement policy) which exceeds, for the portion related to
the Company's directors and officers, 150% of the annual premium payment on the
Company' current policy in effect as of the date of this Agreement; provided,
further, that if such coverage can only be obtained upon the payment of an
annual premium in excess of 150% of the annual premium payment of the Company's
current policy, Bancorp shall obtain such coverage as can reasonably be obtained
by paying a premium of 150% of the annual premium payment of the Company's
current policy in effect as of the date of this Agreement.
(c) Any Indemnified Party wishing to claim indemnification
under Section 5.18(a), upon learning of such claim, action, suit, proceeding or
investigation, shall promptly notify Bancorp thereof; provided, that the failure
so to notify shall not affect the obligations of Bancorp and the Surviving
Corporation under Section 5.18(a), unless such failure materially increases
Bancorp and the Surviving Corporation's liability under such Section. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Date and subject to the terms of the
relevant Indemnification Agreement), (1) Bancorp or the Surviving Corporation
shall have the right to assume the defense thereof, if it so elects, and the
Surviving Corporation shall pay all reasonable fees and expenses of counsel for
the Indemnified Parties promptly as statements therefor are received; provided,
however, that if Bancorp or the Surviving Corporation does not elect to assume
the defense thereof, the Indemnified Parties shall have the right to employ its
or their own counsel and Bancorp or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel; provided further, however, that
Bancorp and the Surviving Corporation shall be obligated pursuant to this
subsection (c) to pay for only one firm of counsel for all Indemnified Parties
in any jurisdiction for any single action, suits or proceedings arising out of
or related to a common body of facts, (2) the Indemnified Parties will cooperate
in the defense of any such matter, and (3) Bancorp and the Surviving Corporation
shall not be liable for any settlement effected without the prior written
consent of Bancorp. The provisions of this Section 5.18(c) shall not alter,
impair or be in derogation of the rights of the Company's present and former
directors and executive officers who were a party to an Indemnification
Agreement under their existing Indemnification Agreements with the Company, all
of which shall remain in effect and be assumed or affirmed, as the case may be,
by the Surviving Corporation and Bancorp as of the Effective Date in accordance
with and subject to Section 5.18(a).
5.19 SEC Filings. Each of the Company and Bancorp shall timely file all
reports on Form 10-K, Form 10-Q and Form 8-K and other documents required to be
filed by it with the SEC under the Exchange Act from the date of this Agreement
to the Effective Date.
5.20 Form S-8 Registration. Bancorp shall use all reasonable efforts to
file with the SEC within 30 days after the Effective Time a Registration
Statement on Form S-8 (or any successor form thereto) under the Securities Act
relating to shares of Class A Common Stock issuable (i) out of the Retention
Pool and (ii) upon exercise of a Company Option that was converted into a
Substitute Option pursuant to Section 2.2 hereof and upon exercise of any other
options which may be granted after the Effective Date under any stock option
plan of the Company in effect on the date of this Agreement.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
6.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligation of each of Bancorp and the Company to consummate the
transactions contemplated hereby is subject to the satisfaction or written
waiver by Bancorp and the Company prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approvals. This Agreement and the Merger shall
have been duly adopted by the requisite affirmative vote of the stockholders of
the Company.
(b) Regulatory Approval. All regulatory approvals required to
consummate the transactions contemplated hereby, shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which Bancorp reasonably determines
would (i) following the Effective Time, have a Material Adverse Effect on
Bancorp or the Surviving Corporation or (ii) reduce the benefits of the
transactions contemplated hereby to such a degree that Bancorp would not have
entered into this Agreement had such conditions, restrictions or requirements
been known at the date hereof.
(c) No Injunction. No court or Regulatory Agency of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statue, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits or
otherwise makes illegal consummation of the transactions contemplated by this
Agreement.
(d) Registration Statement. The Registration Statement shall
have been declared effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) Blue Sky Approvals. All permits and other authorizations
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of Class A Common Stock to be issued
in the Merger shall have been received and be in full force and effect.
(f) Listing. The shares of Class A Common Stock to be issued
in the Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(g) Employment Agreement. The Company shall have entered into
an employment agreement with Ben Plotkin substantially in the form of Exhibit D
hereto.
(h) Officers and Directors of the Surviving Corporation. The
officers and directors of the Surviving Corporation shall be mutually agreed
upon by the parties.
6.2 Conditions to Obligation of the Company. The obligation of the
Company to consummate the transactions contemplated by this Agreement is also
subject to the satisfaction or written waiver by the Company prior to the
Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Bancorp set forth in this Agreement shall be true and correct in
all material respects (except for representations and warranties qualified by
materiality or Material Adverse Effect which shall be true and correct in all
respects) as of the date of this Agreement and as of the Effective Time as
though made on and as of the Effective Date (except that representations and
warranties that by their terms speak as of the date of this Agreement or some
other date shall be true and correct as of such date); and the Company shall
have received a certificate, dated the Effective Date, signed on behalf of
Bancorp by an executive officer of Bancorp to such effect.
(b) Performance of Obligations of Bancorp. Bancorp shall have
performed in all material respects all agreements, covenants and obligations
required to be performed by it under this Agreement at or prior to the Effective
Time, including, without limitation, the establishment of the Retention Pool,
and the Company shall have received a certificate, dated the Effective Date,
signed on behalf of Bancorp by an executive officer of Bancorp to such effect.
(c) Opinion of the Company's Counsel. The Company shall have
received an opinion of Pitney, Hardin, Kipp & Szuch, special counsel to the
Company, dated the Effective Date, to the effect that on the basis of facts,
representations and assumptions set forth in such opinion, (i) the Merger
constitutes a "reorganization" within the meaning of Section 368(a) of the Code
and (ii) no gain or loss will be recognized by stockholders of the Company who
receive shares of Class A Common Stock in exchange for shares of Company Common
Stock, except with respect to cash received in lieu of fractional share
interests.
(d) Agreement with respect to Future Operations. The parties
will have entered into an agreement substantially in the form of Exhibit E
hereto, with respect to the future operations and management of the Company
after consummation of the transactions contemplated herein.
(e) Board Seat. Ben Plotkin shall be elected as a member of
the Board of Directors of Bancorp on or prior to the Effective Date.
6.3 Conditions to Obligation of Bancorp. The obligation of Bancorp to
consummate the transactions contemplated by this Agreement is also subject to
the satisfaction or written waiver by Bancorp prior to the Effective Time of
each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects (except for representations and warranties qualified by
materiality or Material Adverse Effect which shall be true and correct in all
respects) as of the date of this Agreement and as of the Effective Time as
though made on and as of the Effective Time (except that representations and
warranties that by their terms speak as of the date of this Agreement or some
other date shall be true and correct as of such date); and Bancorp shall have
received a certificate, dated the Effective Date, signed on behalf of the
Company by an executive officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all agreements, covenants and
obligations required to be performed by it under this Agreement at or prior to
the Effective Time; and Bancorp shall have received a certificate, dated the
Effective Date, signed on behalf of the Company by an executive officer of the
Company to such effect.
(c) Consents. The Company shall have obtained all consents and
approvals of third parties required to effectuate the transactions contemplated
by this Agreement, each of which shall have been obtained without the imposition
of any materially adverse terms or conditions.
(d) Opinion of Bancorp's Counsel. Bancorp shall have received
an opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., counsel
to Bancorp, dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the Merger
constitutes a reorganization under Section 368(a) of the Code.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time after the occurrence of any of the following events, but
prior to the Effective Date (notwithstanding any approval of this Agreement by
the stockholders of the Company):
(a) by mutual written consent of Bancorp and the Company;
(b) by either Bancorp or the Company, if any court or
Regulatory Agency shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting the
Merger, and such order, decree, ruling or other action shall have become final
and nonappealable;
(c) by either Bancorp or the Company, if the Merger has not
been consummated by August 31, 1998 (other than due to the failure of the party
seeking to terminate this Agreement to perform its obligations under this
Agreement required to be performed at or prior to the Effective Date);
(d) by either Bancorp or the Company, if the Meeting shall
have been held, and the stockholders of the Company shall have failed to approve
and adopt the Merger, this Agreement and the transactions contemplated hereby at
such meeting;
(e) by either Bancorp or the Company in the event that written
notice is received which states that any required regulatory approval
contemplated by Section 6.1(b) will not be approved or has been denied or shall
be approved only upon or subject to conditions that would cause the condition
set forth in Section 6.1(b) not to be satisfied;
(f) by Bancorp, if a tender offer or exchange offer for more
than 15% of the outstanding shares of capital stock of the Company is commenced,
and the Board of Directors of the Company, within ten business days after such
tender offer or exchange offer is so commenced, fails to recommend against
acceptance of such tender offer or exchange offer by its stockholders or takes
no position with respect to such offer;
(g) by Bancorp, if any Person or group (as that term is
defined under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder), shall have acquired beneficial ownership or the right
to acquire beneficial ownership of more than 40% of the then combined voting
power of all classes of the capital stock of the Company;
(h) by Bancorp, if the Board of Directors of the Company does
not recommend to its stockholders the approval of the Merger, this Agreement and
the transactions contemplated hereby, or withdraws, or modifies or changes in a
manner adverse to Bancorp, its recommendation to approve the Merger, this
Agreement and the transactions contemplated hereby, or shall have resolved to do
any of the foregoing;
(i) by Bancorp or the Company, if the Company or its
stockholders received an offer for a Competing Transaction that the Board of
Directors of the Company, after consultation with its outside legal counsel and
financial advisors, determines in good faith is more favorable to the
stockholders of the Company from a financial point of view than the transactions
contemplated by this Agreement, and the Board of Directors of the Company
accepts, recommends or resolves to accept or recommend to the Company's
stockholders such a Competing Transaction; provided that prior to such
termination by the Company, the Company shall provide Bancorp written notice of
its intention to terminate this Agreement pursuant to this Section 7.1(i) at
least three business days prior to such termination, which notice shall also
identify the Competing Transaction and accurately describe all material terms
thereof;
(j) by Bancorp, if there has been any breach of any
representation or warranty in this Agreement by the Company, which breach cannot
be or has not been cured within 30 days after the giving of written notice to
the Company (provided that Bancorp may terminate this Agreement pursuant to this
Section 7.1(j) only with respect to a breach or breaches that would permit
Bancorp not to consummate the Merger under the standards set forth in Section
6.3(a)), or if the Company breaches in any material respect any material
covenant of the Company contained in this Agreement and such breach cannot be or
has not been cured within 30 days of the giving of written notice to the
Company;
(k) by the Company, if there has been any breach of any
representation or warranty in this Agreement by Bancorp, which breach cannot be
or has not been cured within 30 days after the giving of written notice to
Bancorp (provided that the Company may terminate this Agreement pursuant to this
Section 7.1(k) only with respect to a breach or breaches that would permit the
Company not to consummate the Merger under the standards set forth in Section
6.2(a)), or if Bancorp breaches in any material respect any material covenant of
Bancorp contained in this Agreement and such breach cannot be or has not been
cured within 30 days of the giving of written notice to Bancorp; and
(l) by the Company, if Duff & Phelps shall have withdrawn its
Fairness Opinion prior to the date that the Proxy Statement is first mailed to
the holders of Company Common Stock; provided that the right of the Company to
terminate the Agreement pursuant to this Section 7.1(l) shall terminate on the
date that the Proxy Statement is first mailed to the holders of the Company
Common Stock.
(m) by the Company, if the Average Price is less than $13.60
and the Company notifies Bancorp in writing of its intention to terminate this
Agreement pursuant to this Section 7.1(m) and Bancorp does not within five
business days of receipt of such notice (i) agree to increase the Conversion
Ratio to an amount equal to the quotient of $8.28 divided by the Average Price
and (ii) agree to establish the Closing Date within ten business days of receipt
of the Company's notice under this Section 7.1(m).
7.2 Effect of Termination. In the event this Agreement is terminated
pursuant to this Article VII, the Merger shall be abandoned and this Agreement
shall become void and of no force and effect, without further action by any of
the parties to this Agreement, except for the agreements contained in the last
sentence of Section 5.8, and in Sections 8.8, 8.11, 8.12 and 8.13; provided
that, in addition to the amounts payable pursuant to Section 8.8, any
termination of this Agreement pursuant to this Article VII shall not relieve any
party from any liability for the breach of any material representation, warranty
or covenant contained in this Agreement or be deemed to constitute a waiver of
any remedy available for such breach. Subject to Section 5.8(B) hereof, upon
termination of this Agreement, each party shall return all documents and other
materials of any other party relating to the transactions contemplated by this
Agreement, whether so obtained before or after the execution of this Agreement,
to the party furnishing the same.
ARTICLE VIII
MISCELLANEOUS
8.1 Closing. Subject to the terms and conditions of this Agreement, the
consummation of the transactions contemplated hereby (the "Closing") will take
place at 10:00 a.m. on a date and at a place to be specified by Bancorp, which
shall be as soon as practicable after the satisfaction or waiver of the latest
to occur of the conditions set forth in Article VI hereof, unless extended by
mutual agreement of the parties.
8.2 Notices. Any notice or other communication under this Agreement
shall be in writing and shall be delivered personally or sent by registered
mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid
overnight courier to the parties at the addresses set forth below (or at such
other addresses as shall be specified by the parties by like notice).
If to Bancorp: BankAtlantic Bancorp, Inc.
1750 East Sunrise Boulevard
Fort Lauderdale, Florida 33304
Telecopy: (954) 768-0520
Attention: Alan B. Levan
Copy to: Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A.
150 West Flagler Street
Miami, Florida 33130
Telecopy: (305) 789-3395
Attention: Alison W. Miller, Esquire
If to the Company: Ryan, Beck & Co., Inc.
220 South Orange Avenue
Livingston, New Jersey 07039
Telecopy: (973) 597-1258
Attention: Ben A. Plotkin
Copy to: Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932
Telecopy: (973) 966-1550
Attention: Ronald H. Janis, Esq.
Such notices, demands, claims and other communications shall be deemed given
when actually received or (a) in the case of delivery by overnight service with
guaranteed next day delivery, the next day or the day designated for delivery,
(b) in the case of registered U.S. mail, five days after deposit in the U.S.
mail, or (c) in the case of facsimile, the date upon which the transmitting
party received confirmation of receipt by facsimile, telephone or otherwise.
8.3 Entire Agreement. This Agreement and the Schedules and Exhibits
hereto contain every obligation and understanding between the parties relating
to the subject matter hereof and merge all prior discussions, negotiations and
agreements, if any, between them, and none of the parties shall be bound by any
representations, warranties, covenants, or other understandings, other than as
expressly provided or referred to herein.
8.4 Assignment. This Agreement may not be assigned by any party without
the written consent of the other party; provided that Bancorp may assign this
Agreement to one of its Subsidiaries, whether such Subsidiary currently exists
or is formed in the future, without such written consent; and provided further
that Bancorp shall remain primarily liable for all of its obligations under this
Agreement. Subject to the preceding sentence, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, heirs, personal representatives, legal representatives, and
permitted assigns.
8.5 Waiver and Amendment. Any representation, warranty, covenant, term
or condition of this Agreement which may legally be waived, may be waived, or
the time of performance thereof extended, at any time by the party hereto
entitled to the benefit thereof, and any term, condition or covenant hereof may
be amended by the parties hereto at any time. Any such waiver, extension or
amendment shall be evidenced by an instrument in writing executed on behalf of
the appropriate party by a person who has been authorized by its Board of
Directors to execute waivers, extensions or amendments on its behalf. No waiver
by any party hereto, whether express or implied, of its rights under any
provision of this Agreement shall constitute a waiver of such party's rights
under such provisions at any other time or a waiver of such party's rights under
any other provision of this Agreement. No failure by any party hereto to take
any action against any breach of this Agreement or default by another party
shall constitute a waiver of the former party's right to enforce any provision
of this Agreement or to take action against such breach or default or any
subsequent breach or default by such other party.
8.6 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any Person
(including, without limitation, any stockholders or employees of the Company)
other than the parties hereto and their respective successors and permitted
assigns, any rights or remedies under or by reason of this Agreement, except
that the present and former directors and executive officers of the Company and
the Company Subsidiaries are intended beneficiaries of Section 5.18.
8.7 Severability. In the event that any one or more of the provisions
contained in this Agreement shall be declared invalid, void or unenforceable,
the remainder of the provisions of this Agreement shall remain in full force and
effect, and such invalid, void or unenforceable provision shall be interpreted
as closely as possible to the manner in which it was written.
8.8 Fees and Expenses.
(a) Except as provided below, all fees and expenses incurred
in connection with the Merger, this Agreement, the Company Stock Option
Agreement and the transactions contemplated by this Agreement and the Company
Stock Option Agreement shall be paid by the party incurring such fees or
expenses, except that the expenses payable in connection with printing and
mailing the Proxy Statement shall be shared equally between the Company and
Bancorp. In no event shall the aggregate fees and expenses incurred by or on
behalf of the Company in connection with the Merger, this Agreement and the
transactions contemplated hereby exceed $500,000 in the aggregate.
(b) If this Agreement shall be terminated pursuant to Section
7.1(d) and there has been a material breach of any Stockholder Voting Agreement
or if this Agreement shall be terminated pursuant to Sections 7.1(f), (g), (h),
(i) or (j), then the Company shall pay Bancorp an amount equal to all reasonable
expenses (including reasonable attorneys' and advisors' fees) incurred by
Bancorp and Acquisition in connection with this Agreement, the Stock Option
Agreement and the transactions contemplated by this Agreement and the Stock
Option Agreement up to $500,000 (the "Expense Reimbursement").
(c) If this Agreement shall be terminated pursuant to Sections
7.1(d) and on the date of the Meeting a Competing Transaction had been proposed
or publicly announced, or if this Agreement shall be terminated pursuant to
Sections 7.1(f), (g), (h), (i) or (j), and within eighteen (18) months
thereafter, the Company shall enter into a definitive agreement with respect to
any Competing Transaction or any Competing Transaction shall be consummated
(other than a tender offer or exchange offer for less than 50% of the
outstanding shares of capital stock of the Company or the acquisition by any
Person or group of less than 50% of the then outstanding shares of capital stock
of the Company), then the Company shall pay Bancorp an amount equal to
$2,000,000 (less any portion of the Expense Reimbursement theretofore paid) (the
"Termination Fee") and if all or any portion of the Expense Reimbursement has
not yet been paid, such portion of the Expense Reimbursement shall no longer be
payable upon payment of the Termination Fee.
(d) If this Agreement shall be terminated pursuant to Section
7.1(k), then Bancorp shall pay the Company an amount equal to all reasonable
expenses (including reasonable attorneys' fees and advisors' fees) incurred by
the Company in connection with this Agreement, the Stock Option Agreement and
the transactions contemplated hereby and thereby up to $500,000.
(e) Each party agrees that the actual damages accruing to
Bancorp from termination of this Agreement pursuant to those termination
provisions and circumstances referenced in Section 8.8(c) are incapable of
precise estimation and would be difficult to prove, and that the damages
stipulated herein bear a reasonable relationship to the potential injury likely
to be sustained in the event of termination pursuant to such occurrences. The
payments stipulated in Section 8.8(c) are intended by the parties to provide
just compensation in the event of termination pursuant to those termination
provisions referenced in Section 8.8(c), and is not intended to compel
performance or to constitute a penalty for nonperformance.
(f) Any payment required to be made pursuant to Sections
8.8(b), (c) or (d) shall be made to Bancorp or the Company, as applicable, not
later than five business days after the occurrence of the event for which such
party is entitled to payment and delivery by the party entitled to such payment
to the other of a notice of demand for payment, provided that the payment of
expenses pursuant to Sections 8.8(b) or (d) shall be within five business days
after delivery of an itemization setting forth in reasonable detail all expenses
of Bancorp, Acquisition or the Company, as applicable, for which such party is
entitled to reimbursement hereunder (which itemization may be supplemented and
updated from time to time until the 30th day after the party entitled to payment
delivers such notice of demand for payment). All payments required to be made
pursuant to this Section 8.8 shall be made by wire transfer of immediately
available funds to an account designated by the party entitled to payment in the
notice of demand for payment delivered pursuant to this Section 8.8(f).
(g) In the event Bancorp exercises the option granted under
the Company Stock Option Agreement, Bancorp shall, simultaneously with the
closing under the Company Stock Option Agreement, refund to the Company an
amount equal to any Termination Fee paid to Bancorp prior to such exercise less
an amount equal to the expenses incurred by Bancorp and Acquisition in
connection with the Merger, this Agreement, the Company Stock Option Agreement
and the transactions contemplated by this Agreement and the Company Stock Option
Agreement. In the event that after Bancorp has exercised the option granted
under the Company Stock Option Agreement, Bancorp becomes entitled to receive
the Termination Fee hereunder, the Termination Fee due to Bancorp from the
Company shall be an amount equal to (i) the Termination Fee less (ii) the
aggregate net profit realized by Bancorp pursuant to all exercises of the option
under the Company Stock Option Agreement.
8.9 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.11 Litigation; Prevailing Party. In the event of any litigation with
regard to this Agreement, the prevailing party shall be entitled to receive from
the non-prevailing party and the non-prevailing party shall pay upon demand all
reasonable fees and expenses of counsel for the prevailing party.
8.12 Injunctive Relief. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, without limitation, injunctive relief, specific performance or
other equitable remedies in addition to all other remedies provided hereunder or
available to the parties hereto at law or in equity.
8.13 Governing Law. This Agreement has been entered into and shall be
construed and enforced in accordance with the laws of the State of Florida
without reference to the choice of law principles thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in counterparts by their duly authorized officers, all as of the
date and year first above written.
BANKATLANTIC BANCORP, INC.
By: /s/ ALAN B. LEVAN
---------------------------
Name: Alan B. Levan
Title: Chairman
BCP ACQUISITION CORPORATION
By: /s/ ALAN B. LEVAN
---------------------------
Name: Alan B. Levan
Title:
RYAN, BECK & CO., INC.
By: /s/ BEN A. PLOTKIN
---------------------------
Name: Ben A. Plotkin
Title: President
<PAGE>
Exhibit A
FORM OF VOTING AGREEMENT
This Voting Agreement is entered into as of February __, 1998 between
BankAtlantic Bancorp, Inc., a Florida corporation ("Bancorp") and
________________________ ("Stockholder")
W I T N E S S E T H:
WHEREAS, simultaneously with the execution of this Agreement, Bancorp,
Ryan, Beck & Co., Inc., a New Jersey corporation (the "Company"), and BCP
Acquisition Corporation, a New Jersey corporation ("Acquisition"), have entered
into an Acquisition Agreement, dated as of the date hereof (the "Acquisition
Agreement"), pursuant to which Bancorp will acquire the Company through the
merger of the Company with and into Acquisition (the "Merger"); and
WHEREAS, in connection with the Merger, Stockholder will receive shares
of Bancorp's Class A Common Stock, par value $.01 per share, in exchange for
Stockholder's entire equity interest in the Company; and
WHEREAS, as a material inducement to Bancorp and Acquisition to enter
into the Acquisition Agreement and agree to acquire the Company, Stockholder,
who is also a member of the Board of Directors of the Company, has agreed to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, representations and warranties contained in this Agreement, the
parties agree as follows:
1. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Bancorp as follows:
(a) Title to Shares. Stockholder is now, and at all times
through the Effective Time of the Merger (the "Effective Time") will be,
directly or indirectly, the record holder or beneficial owner of _________
shares of the Company's issued and outstanding common stock, par value $.01 per
share (collectively, the "Stockholder Stock").
(b) Authority; Binding Agreement. Stockholder has full legal
capacity, right, power and authority to enter into this Agreement. This
Agreement has been duly executed and delivered by Stockholder, and constitutes
the legal, valid and binding obligation of Stockholder, enforceable in
accordance with its terms, except to the extent that its enforcement may be
limited by bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally and by general
principles of equity.
(c) The execution, delivery and performance of this Agreement
by the Stockholder, and the consummation of the transactions contemplated
hereby, do not and will not constitute a breach or violation of, or a default
under, any law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument of the Stockholder or
to which the Stockholder is subject or bound, or require consent or approval
under such law, rule, regulation, judgment, decree, order, governmental permit
or license or the consent or approval of any other party to any such agreement,
indenture or instrument.
2. Covenants of Stockholder.
(a) Vote of Stockholder Stock in Favor of Merger. Unless and
until the Merger Agreement shall have been validly terminated in accordance with
its terms (an "Event of Termination"), Stockholder agrees to vote, or cause all
of the Stockholder Stock to be voted, (i) in favor of the Merger,(ii) against
any merger, consolidation, share exchange, business combination, asset sale or
other extraordinary corporate transaction involving the Company, other than the
Merger, or any other action or agreement that would result in any of the
conditions to the Company's obligations under the Acquisition Agreement not
being fulfilled, or (iii) in favor of any other matter relating to consummation
of the transactions contemplated by the Acquisition Agreement. Stockholder also
agrees, unless and until an Event of Termination has occurred, to act in all
other respects to use his best efforts to cause the consummation of the Merger
and the transactions contemplated by the Acquisition Agreement.
(b) Sale of Stockholder Stock. Unless and until the occurrence
of an Event of Termination, Stockholder will not, directly or indirectly, (i)
tender or permit the tender into any tender or exchange offer of any shares of
Stockholder Stock, (ii) sell, transfer or otherwise dispose of or encumber or
permit the sale, transfer or other disposition or encumbrance of any shares of
Stockholder Stock or (iii) deposit any shares of Stockholder Stock into a voting
trust or enter into a voting agreement or arrangement with respect to such
Stockholder Stock or grant any proxy with respect thereto, except in each case
pursuant to the Acquisition Agreement.
3. Additional Shares. All references in this Agreement to Stockholder
Stock shall be deemed to include any shares of capital stock of the Company
subsequently acquired by Stockholder.
4. Miscellaneous.
(a) Notices. Any notice or other communication under this
Agreement shall be in writing and shall be delivered personally, by facsimile
transmission or by registered mail, return receipt requested, postage prepaid,
to the parties. Such notices, demands, claims and other communications shall be
deemed given when actually received or in the case of registered U.S. mail, on
the date the postal service first attempts delivery.
(b) Waiver and Amendment. This Agreement may only be amended
by an instrument in writing executed by the parties hereto. No failure by any
party hereto to take any action against any breach of this Agreement or default
by another party shall constitute a waiver of the former party's right to
enforce any provision of this Agreement or to take action against such breach or
default or any subsequent breach or default by such other party.
(c) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(d) Expenses. Except as otherwise provided herein or in the
Acquisition Agreement, all expenses incurred in connection with this Agreement
shall be paid by the party incurring such expenses.
(e) Prevailing Party. In the event of any litigation with
regard to this Agreement, the prevailing party shall be entitled to receive from
the non-prevailing party and the non-prevailing party shall pay upon demand all
reasonable fees and expenses of counsel for the prevailing party.
(f) Severability. In the event that any one or more of the
provisions contained in this Agreement shall be declared invalid, void or
unenforceable, the remainder of the provisions of this Agreement shall remain in
full force and effect, and such invalid, void or unenforceable provision shall
be interpreted as closely as possible to the manner in which it was written.
(g) Injunctive Relief. It is likely that remedies at law may
be inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, without limitation, injunctive relief, specific performance or
other equitable remedies in addition to all other remedies provided hereunder or
available to the parties hereto at law or in equity.
(h) Governing Law. This Agreement has been entered into and
shall be construed and enforced in accordance with the laws of the State of
Florida.
IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
BANKATLANTIC BANCORP, INC.
By:------------------------
Name:
Title:
STOCKHOLDER
--------------------------
Name:
<PAGE>
Exhibit B
Form of Affiliate Letter
BankAtlantic Bancorp, Inc.
1750 East Sunrise Boulevard
Fort Lauderdale, Florida 33304
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Ryan, Beck & Co., Inc., a New Jersey corporation (the "Company"),
as the term "affiliate" is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act'). I have been further advised that pursuant to
the terms of the Acquisition Agreement dated as of February , 1998 (the
"Acquisition Agreement") among BankAtlantic Bancorp, Inc., a Florida corporation
("Bancorp"), the Company and BCP Acquisition Corporation, a wholly owned
subsidiary of Bancorp ("Acquisition"), the Company will be merged with and into
Acquisition (the "Merger") and that as a result of the Merger, I may receive
shares of Bancorp's Class A Common Stock (as defined in the Acquisition
Agreement) in exchange for shares of Company Common Stock (as defined in the
Acquisition Agreement) owned by me.
I represent, warrant and covenant to Bancorp that in the event I
receive any Class A Common Stock as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
the Class A Common Stock in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Acquisition
Agreement and discussed its requirements and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
Class A Common Stock to the extent I believed necessary with my counsel
or counsel for the Company.
C. I have been advised that the issuance of Class A Common
Stock to me pursuant to the Merger will be registered with the
Commission under the Act on a Registration Statement on Form S-4.
However, I have also been advised that, since at the time the Merger
will be submitted for a vote of the stockholders of the Company I may
be deemed to have been an affiliate of the Company and the distribution
by me of the Class A Common Stock has not been registered under the
Act, that I may not sell, transfer or otherwise dispose of Class A
Common Stock issued to me in the Merger unless (i) such sale, transfer
or other disposition has been registered under the Act, (ii) such sale,
transfer or other disposition is made in conformity with the volume and
other limitations of Rule 145 promulgated by the Commission under the
Act, or (iii) in the opinion of counsel reasonably acceptable to
Bancorp, such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
D. I understand that Bancorp is under no obligation to
register the sale, transfer or other disposition of the Class A Common
Stock by me or on my behalf under the Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available.
E. I also understand that stop transfer instructions will be
given to Bancorp's transfer agent with respect to the Class A Common
Stock and that there will be placed on the certificates for the Class A
Common Stock issued to me, or any substitutions therefor, a legend
stating in substance:
"The securities represented by this certificate have
been issued in a transaction to which Rule 145 promulgated
under the Securities Act of 1933 applies and may only be sold
or otherwise transferred in compliance with the requirements
of Rule 145 or pursuant to a registration statement under said
act or an exemption from such registration."
F. I also understand that unless the transfer by me of my
Class A Common Stock has been registered under the Act or is a sale
made in conformity with the provisions of Rule 145, Bancorp reserves
the right to put the following legend on the certificates issued to my
transferee:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with,
any distribution thereof within the meaning of the Securities
Act of 1933 and may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs E
and F above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to Bancorp a copy of a letter
from the staff of the Commission, or an opinion of counsel in form and substance
reasonably satisfactory to Bancorp, to the effect that such legend is not
required for purposes of the Act.
I understand that pursuant to the Acquisition Agreement, no certificate
for Class A Common Stock shall be delivered to me in exchange for certificates
representing Company Common Stock until I have executed and delivered this
agreement.
Very truly yours,
By:--------------------------------
Name:
Accepted this day of
February, 1998 by
BANKATLANTIC BANCORP, INC.
By:-----------------------
Name:
Title:
<PAGE>
Exhibit C
SUMMARY OF TERMS AND CONDITIONS OF RESTRICTED STOCK AWARD
Grant: Restricted Shares of Class A Common Stock
("Restricted Shares").
Vesting: On the fourth anniversary date of the Merger (the
"Vesting Date").
Condition for Vesting: Participant has remained an active
full-time employee from the date of the Merger
through the Vesting Date.
Accelerated Vesting: If during the four year period following the
Merger, the Company should terminate participant's
employment for any reason other than Cause (as
defined below), Restricted Shares shall vest
immediately upon termination.
In the event employment is terminated due to death or
disability, remaining Restricted Shares shall vest
immediately upon such termination. (In the event of
death, participant's Restricted Shares shall be
provided to his designated beneficiary, or to his
estate if no beneficiary is named).
Cause: "Cause" shall mean: (i) continued failure to perform
substantially participant's duties with the Company
or one of its affiliates (other than any such failure
resulting from incapacity due to disability or death)
or (ii) engaging in illegal conduct or gross
misconduct which is materially injurious to the
Company.
Limitation on Vesting: If during the four year period the
Company terminates participant's employment for
Cause, no Restricted Shares shall vest following such
termination, and such Restricted Shares shall be
forfeited.
If during the four year period employment is
terminated by participant for any reason other than
death or disability, no Restricted Shares shall vest.
Other: This summary is not an employment agreement between
any participant and the Company.
Participant shall provide to the Company any Federal,
state, local or foreign taxes as shall be required to
be withheld pursuant to any applicable law or
regulation, and may request the Company to withhold
sufficient Restricted Shares to satisfy such
withholding requirement.
The Restricted Stock Plan will be administered by the
Company's Compensation Committee.
The foregoing is qualified in its entirety by reference to the plan.
<PAGE>
Exhibit D
FORM OF BEN A. PLOTKIN'S EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
_________, 1998, by and BEN A. PLOTKIN, whose address is 168 Western Drive,
Short Hills, New Jersey 07578 ("Executive"), and Ryan, Beck & Co., Inc., a New
Jersey corporation (the "Company"), a wholly-owned subsidiary of BankAtlantic
Bancorp, a Florida corporation ("Bancorp").
1. Pursuant to an Amended and Restated Employment Agreement dated
_________ (as amended through the date hereof, the "Prior Agreement"), between
Executive and the Company, Executive is currently employed by the Company as its
President and Chief Executive Officer.
2. The Company and Bancorp have entered into an Acquisition Agreement,
dated February 9, 1998 (such agreement, as the same may be amended from time to
time, is referred to as the "Acquisition Agreement"), pursuant to which Bancorp
will acquire the Company by merger of the Company into a wholly-owned subsidiary
of Bancorp (the "Merger"). At the Effective Date of the Merger, the Company and
Bancorp will execute an agreement governing the operation of the Company
independent from Bancorp (the "Independence Agreement").
3. The Company, Bancorp and the Executive desire that commencing with
the effective date of the Merger (the "Effective Date"), (i) the Executive be
employed as Chairman, President and Chief Executive Officer of the Company upon
the terms and conditions set forth in this Agreement, (ii) the Company's
obligations to the Executive under the Prior Agreement be terminated in exchange
for a lump sum payment to Executive of $780,000 (the "Buyout Sum") and the prior
Agreement be terminated; and (ii) the Prior Agreement be replaced and superseded
by this Agreement.
Accordingly, the parties agree as follows:
1. Employment, Title, Duties and Term.
1.1 Employment; Title; Duties. Subject to the terms and conditions of
this Agreement, the Company agrees to employ Executive during the term of
employment set forth in Section 1.2 below. Executive shall serve as President
and Chief Executive Officer of the Company and Chairman of the Company's Board
of Directors, shall be responsible for the day-to-day management and operations
of the Company and shall have such powers and perform such duties, consistent
with such executive capacity, as may be assigned or delegated to him from time
to time by the Board of Directors of the Company (the "Board of Directors").
Executive shall have the authority to hire employees of the Company, set their
salary and make purchases within the parameters of the Company's annual
operating and capital budget, which budget shall be subject to review and
approval by the Board of Directors and by Bancorp. All other officers of the
Company shall report directly to Executive, except as the Executive shall
otherwise determine, and except that the chief compliance officer and/or
internal auditor shall report directly to the Board of Directors. Executive's
primary office shall be located in Livingston, New Jersey unless Executive, the
Company and Bancorp mutually agree to change such location. Bancorp shall cause
Executive to be nominated for election by Bancorp's shareholders to serve as a
director of Bancorp during the Employment Period. If elected, Executive shall
serve as a director of Bancorp. Bancorp will use its best efforts to accomplish
such election. Executive shall not be entitled to receive any fees or other cash
compensation in addition to the compensation specifically set forth herein for
serving as a director, board committee member or officer of the Company, Bancorp
or any of their respective subsidiaries or affiliates. Executive accepts such
employment and agrees to perform all such services faithfully and diligently,
and to discharge the responsibilities thereof to the best of his ability.
Executive shall devote his full business time and attention and energies to the
duties of his employment.
1.2 Term and Payment.
(a) Except in the case of earlier termination, as hereinafter
specifically provided, the initial term of this Agreement shall be for two years
commencing on the Effective Date, with one year being added at the end of such
two year term and at each anniversary thereafter, provided that the Executive is
actively employed by the Company on such date.
(b) The Prior Agreement shall be terminated upon receipt by the
Executive of the Buyout Sum, which shall be paid to the Executive, subject to
federal and state tax withholding, on the date hereof.
2. Base Salary. Subject to the provisions herein regarding resignation,
termination with or without cause, death, and disability, the Company shall pay
the Executive a salary in connection with his services hereunder in the amount
of $260,000 per annum, subject to increase in the discretion of the Board of
Directors, but in any event not less than Executive's salary of the previous
year. The Executive's salary shall not be decreased without the Executive's
prior written approval. The salary under this Section 2 shall be payable to the
Executive not less frequently than monthly.
3. Bonus, Benefits and Expenses.
3.1 Bonuses and Other Benefits. The Company shall also cause the
Executive to receive, in addition to his salary, all other employee benefits
(including a bonus or bonuses if declared by the Board of Directors in its
discretion, and contributions to any profit sharing plan) in effect or hereafter
to be offered by the Company. During the first year of this Agreement, the bonus
paid to Executive shall not be less than $_________.
3.2 Reasonable Business Expenses. Executive is expected and is
authorized to incur reasonable expenses in the performance of his duties
hereunder, including such expenses for the promotion of the business of the
Company and Bancorp as entertainment, travel, and similar business expenses
incurred in the performance of his duties as allowed in the Company's expense
policy. The Company shall reimburse the Executive for all such expenses promptly
upon periodic presentation by Executive of an itemized account with
documentation of such expenses.
3.3 Vacation. Executive shall be entitled to annual vacation (without
deduction of salary or other compensation) in accordance with Bancorp's vacation
policy for employees in effect from time to time, but in no event less than four
weeks, such vacation to be taken at such time or times during such year as
determined by Executive.
3.4 Bancorp Directors' and Officers' Insurance. Executive shall be
entitled in connection with his service as a director of Bancorp to coverage
under any directors' and officers' insurance policy which Bancorp provides for
Bancorp's directors and officers.
3.5 Bancorp Option Plan. Executive shall be eligible to receive options
to acquire Bancorp Common Stock as determined by the Bancorp Stock Option
Committee pursuant to any plan maintained by Bancorp from time to time under
which stock options may be granted to executives of Bancorp and its
subsidiaries.
3.6 Continuation of Deferred Trust. During the term hereof the Company
shall use all reasonable efforts to continue in its current form the Company's
deferred trust compensation plan and the rabbi trust thereunder.
3.7 Automobile. The Company shall provide Executive with the use of an
appropriate Company-leased automobile and reimbursement for automobile related
expenses consistent with the Company's policy.
4. Death of the Executive.
(a) In the event of the Executive's death during the term of
this Agreement, the Company shall pay to the Executive's designated beneficiary,
or if no beneficiary has been designated then to the Executive's estate, in
addition to the salary earned by the Executive but unpaid as of the date of
death, the amount of the Executive's then current annual base salary. Said
amount shall be paid in a lump sum, within thirty (30) days after the date of
death.
(b) If, but only if, a bonus or bonuses are declared for the
salaried officers of the Company for such calendar year, the Company shall also
pay to the Executive's designated beneficiary or estate a cash bonus reflecting
Executive's performance for the partial calendar year in which his death occurs,
in an amount equal to the average of the bonus accrued by the Company for the
three previous fiscal years, multiplied by a fraction, the numerator of which is
the number of days of the calendar year in which Executive was actively employed
and the denominator of which is 365; then subtracting from the product so
calculated any cash bonus or bonuses previously paid to Executive relating to
(not necessarily paid during) such calendar year. Such bonus, if any, shall be
payable at such time as the Company next pays bonuses generally to other
executives.
(c) In the event of the death of the Executive, the
Executive's personal representative, executor or administrator, as the case may
be, shall be entitled, for the period set forth in the applicable plan, to
exercise stock options granted to him by the Company and Bancorp as would
otherwise have vested and been exercisable, had the Executive not died prior to
the date that such Options are exercised. All Options not so exercised shall
terminate.
5. Disability of the Executive. If the Executive is unable to perform
his regular duties and services by reason of illness or incapacity for a period
of four consecutive months in any 12 month period: (a) the Company shall
continue to pay his salary at his then current rate during such period of
illness or incapacity, less the amount of any disability insurance benefits paid
directly to the Executive from any policy or policies the premiums for which
have been paid by the Company, and (b) the Company may thereafter terminate the
Executive's employment under this Agreement upon payment of severance pay to the
Executive in a lump sum ten days following termination in the amount of the
Executive's annual base salary in effect immediately prior to the disability,
and assignment to the Executive at no cost to him of all rights which the
Company may then have in any disability income insurance policies on the
Executive, which shall become the property of the disabled Executive.
6. Termination and Severance Pay.
This Agreement may be terminated during its term as follows:
(a) Voluntary Resignation.
(i) The Executive may terminate this Agreement
without cause by voluntary resignation upon thirty (30) days' written notice to
the Company.
(ii) In that event, monetary compensation (salary or
otherwise) due to the Executive hereunder will be terminated upon the effective
date of the employment termination.
(iii) Following such termination of the Executive's
employment, the Company shall continue to provide such medical and other
benefits to Executive as it is required by law to provide and such other
benefits as called for pursuant to the Company's plans and policies, if any.
(b) Involuntary Termination Without Cause (or Resignation for
Good Reason).
(i) The Company may terminate this Agreement without
cause upon thirty (30) days' written notice to the Executive.
(ii) If Executive resigns from his employment
hereunder within six months of the occurrence of any of the events set forth
below (each such event being referred to as "Good Reason"), such resignation
shall have the same effect as a termination of this Agreement by the Company
without cause provided that the Company has no basis for terminating the
Executive pursuant to (c)(i) below (in which event it shall be treated as a
termination pursuant to (c)). Any of the following shall constitute "Good
Reason" hereunder: (a) the Company assigns Executive to a primary office located
outside of Livingston, New Jersey, Executive objects to such assignment in
writing and ten days pass following delivery of such written objection to
Bancorp and to the Board of Directors without such assignment being withdrawn;
(b) Executive is assigned any material duties inconsistent with his duties as a
President and Chief Executive Officer of the Company, (c) Executive is removed
from, or not re-elected to, his position as President and Chief Executive
Officer of the Company or any successor, or (d) persons are elected to the Board
of Directors other than those designated by the individuals specified in and
pursuant to the Independence Agreement without the prior written consent of
Executive, (e) Bancorp causes the Company to adopt substantive and material
policies with respect to the ongoing operations of the Company's business (such
as compensation of non-executive officers or more aggressive underwriting
policies) to which the Executive has indicated his opposition in a writing
delivered to Bancorp and to the Board of Directors and such policies are not
withdrawn within ten days after such written opposition is delivered, (f)
Bancorp fails to provide reasonably appropriate capital upon reasonable terms to
the Company to allow the company to operate and grow, Executive has notified
Bancorp of such failure in a writing delivered to Bancorp and to the Board of
Directors and such failure is not cured within ten days after such written
notice is delivered, (g) the annual base salary of the Executive is reduced, or
(h) Bancorp breaches this Agreement or the Independence Agreement and fails to
cure such breach within ten days after receiving written notice thereof from
Executive.
(iii) In the event the Company terminates this
Agreement without cause or the Executive resigns for Good Reason, the Company
shall pay severance pay to the Executive in an amount equal to the Executive's
annual base salary. Such severance pay shall be paid in a lump sum, within ten
(10) days after the effective date of termination.
(iv) If, but only if, a bonus or bonuses are declared
for the salaried officers of the Company for such calendar year, the Company
shall also pay Executive a cash bonus reflecting Executive's performance for the
partial calendar year in which such termination occurs, in an amount equal to
the average of the bonus accrued by the Company for the two previous fiscal
years, multiplied by a fraction, the numerator of which is the number of days of
the calendar year in which Executive was actively employed and the denominator
of which is 365; then subtracting from the product so calculated any cash bonus
or bonuses previously paid to Executive relating to (not necessarily paid
during) such calendar year. Such bonus, if any, shall be payable at such time as
the Company next pays bonuses generally to other executives.
(v) In the event of such termination without cause or
resignation for Good Reason, shares in the Company's retention pool created
pursuant to the Merger Agreement, awarded to or held by the Executive and which
have not fully vested shall automatically and fully vest and Executive shall
have a period of no less than three months following termination in which to
exercise such stock options.
(vi) Following such termination, the Company shall
continue to provide such medical and other benefits to Executive as it is
required by law to provide and such other benefits as called for pursuant to the
Company's then current plans and policies, if any.
(c) Involuntary Termination with Cause.
(i) The Company may terminate this Agreement for
cause by giving written notice to the Executive stating that it is the Company's
intention to terminate the Agreement effective immediately, and the Agreement
shall so terminate. The term "cause" as used in this Agreement shall mean any of
the following: (i) gross negligence, (ii) gross insubordination, (iii) material
violations of any regulatory compliance rules, or (iv) a felony conviction of
Executive.
(ii) Following such termination, the Company shall
continue to provide such medical and other benefits to Executive as it is
required by law to provide and such other benefits as called for pursuant to the
Company's then current plans and policies, if any.
7. Confidentiality.
(a) Non-Disclosure of Confidential Information. Except in the
course of his employment with the Company and in the pursuit of the business of
the Company or any of its subsidiaries or affiliates, Executive shall not, at
any time during or following the term hereof, disclose or use, any confidential
information or proprietary data of the Company or any of its subsidiaries or
affiliates.
(b) No Hire. During the term of this Agreement and for a
period of one year after the termination of this Agreement, Executive agrees
that he will not, directly or indirectly, for or on behalf of himself or any
other persons or entities, hire, initiate any offer of employment to or in a any
other manner solicit the services of any person or entity who was, at any time
during the one year period prior to the date of termination of this Agreement,
an employee, or sales agent of the Company; provided however, that this
provision shall not prohibit any person employing Executive from hiring any
former Company employee or sales agent who will not be supervised by or
reporting to the Executive.
(c) Specific Performance. Executive agrees that the Company
does not have an adequate remedy at law for the breach of this section and
agrees that he shall be subject to injunctive relief and equitable remedies as a
result of the breach of this section. The invalidity or unenforceability of any
provision of this Agreement shall not affect the force and effect of the
remaining valid portions.
(d) Survival. This section shall survive the termination of
Executive's employment hereunder and the expiration of this Agreement.
8. Notice.
Any notice to be given by either party under this Agreement
shall be in writing and hand-delivered, delivered by Federal Express (or a
similar courier) or mailed by certified mail with return receipt requested, and
addressed to the other party at the address stated herein or such other address
as may subsequently have been furnished by such other party in writing.. Any
such notice shall be deemed to have been given on the date of delivery or
mailing. Notices to the Company shall be sent to:
Ryan, Beck & Co.
200 South Orange Avenue
Livingston, NJ 07039
Attn.: CFO
and notices to the Executive shall be sent to him at:
9. Entire Agreement. Upon termination of the Prior agreement as set
forth herein, this Agreement shall set forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
whether written or oral will be superseded by this Agreement; provided, however,
that this Agreement shall not limit or in any way affect the rights, duties, or
obligations that the Executive may have under any benefit plan of the Company,
including, but not limited to, any pension plan, profit-sharing plan, or medical
or health plan.
10. Governing Law.
This Agreement has been executed and delivered in the State of New
Jersey and shall in all respects be governed by and construed and enforced in
accordance with the laws of New Jersey, including all matters of construction,
validity, and performance.
11. Modifications, etc.
No modification, amendment, or waiver of any of the provisions of this
Agreement shall be effective unless in writing specifically referring to this
Agreement and signed by both parties.
12. Enforcement of Agreement.
The failure of either party at any time to enforce any of the
provisions of this Agreement or to require performance by the other party of any
of the provisions hereof shall not operate as or be construed as a waiver of
such provisions or to affect either the validity of this Agreement, or any part
hereof, or the right of either party thereafter to enforce each and every
provision in accordance with the terms of this Agreement.
13. Severability.
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof, and this Agreement shall
be construed in all respects and to the fullest extent permitted by law as if
such invalid or unenforceable provision were omitted.
14. Binding Agreement; Assignment.
This Agreement shall be binding upon and shall inure to the benefit of
the Company and Bancorp any legal successor to either of the Company or Bancorp
shall be deemed to be substituted for the Company or Bancorp, as the case may
be, under the provisions hereof.
This Agreement shall also be binding upon and shall inure to the
benefit of the Executive, his heirs, executors, legal representatives and
assigns.
Other than as set forth above in this Section, none of the Company,
Bancorp or Executive shall have the right to assign its or his obligations or
duties hereunder.
15. Litigation: Prevailing Party. In the event of any litigation with
regard to this Agreement, the prevailing party shall be entitled to receive from
the non-prevailing party and the non-prevailing party shall pay upon demand all
reasonable fees and expenses of counsel for the prevailing party but in no event
shall such amount exceed $50,000.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives on the day and date first
above written.
RYAN, BECK & CO.
By: ______________________________
---------------------------------
EXECUTIVE
<PAGE>
Exhibit E
FORM OF INDEPENDENCE AGREEMENT
THIS INDEPENDENCE AGREEMENT (the "Agreement") is entered into as of
this ___________ day of ___________, 1998 by and among BankAtlantic Bancorp,
Inc., a Florida corporation ("Bancorp"), BCP Acquisition Corporation, a New
Jersey corporation which is wholly-owned by Bancorp ("Acquisition") and Ryan,
Beck & Co., Inc., a New Jersey company ("Ryan, Beck").
WHEREAS, the parties have entered into an Acquisition Agreement dated
___________, 1998 pursuant to which Ryan, Beck will be merged into Acquisition
(the "Acquisition Agreement"); and
WHEREAS, it is the parties desire to maintain the operations of Ryan,
Beck (which after its merger with Acquisition will be referred to herein as the
"Resulting Company") as an independent, autonomous subsidiary; and
WHEREAS, Bancorp is in a position to provide capital to the Resulting
Company to enable the Resulting Company to grow and pursue its business plan;
and
WHEREAS, the parties wish to evidence their respective understandings
with respect to the ongoing operations of the Resulting Company after the
merger.
NOW THEREFORE, in consideration of the sum of ten dollars and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Separate Subsidiary. The parties agree that the Resulting Company
will be operated as a separate autonomous entity with operations separate and
apart from the operations of Bancorp and Bancorp's other subsidiaries. To this
end, the parties agree and acknowledge that (a) separate operating budgets will
be established for the Resulting Company which are mutually acceptable to both
Bancorp and the Resulting Company and (b) the books and records of the Resulting
Company will be maintained in a way which will accurately reflect the separate
operations and financial condition of the Resulting Company. Further, to the
extent permitted under and subject to the Internal Revenue Code of 1986, as
amended and the governing provisions of ERISA, Bancorp will seek to maintain
Ryan, Beck's existing benefit plans in place for employees of the Resulting
Company after the merger.
2. Intercompany Transactions and Charges. The parties agree and
acknowledge that it is impossible at this time to predict the transactions
between and relative contributions of Bancorp and the Resulting Company after
the merger. However, in any event, for purposes of the internal budgets and
accounting contemplated by Paragraph 1, Bancorp and the Resulting Company will
not enter into or effect any transaction, or provide or receive any services
between the Resulting Company, on the one hand, and Bancorp and its subsidiaries
on the other hand, except at prices and on terms which are not materially
different than the prices and terms available for similar transactions and
services with unrelated third parties. Further, Bancorp will not, for such
purposes, charge the Resulting Company any intercompany charges or similar
charges, except that Bancorp may charge the Resulting Company for charges or
expenses actually incurred, whether directly by the Resulting Company or
attributable to the Resulting Company, for which the Resulting Company receives
an actual service or benefit. Additionally, Bancorp agrees that any restricted
shares of its Class A Common Stock, par value $.01 per share, granted under the
Incentive Plan (the "Plan") created pursuant to Section 5.17 of the Acquisition
Agreement which are forfeited pursuant to the terms of the Plan will revert to
Bancorp, and Bancorp stock options or restricted shares for a like amount of
shares shall be made available for grant to newly-hired employees and officers
of the Resulting Company (who are not participants in the Plan) pursuant to the
terms of the relevant Bancorp plan without any additional charge to the
Resulting Company for purposes of the internal budgets and accounting
contemplated by Paragraph 1 hereof.
3. Management.
(a) Bancorp, as the sole shareholder of the Resulting Company, agrees
to grant to Alan B. Levan and Ben A. Plotkin (so long as they are available and
employed by Bancorp in the case of Levan and the Resulting Company in the case
of Plotkin) and Richard B. Neff or such other third party as may be mutually
agreed upon by Messrs. Levan and Plotkin, the right to designate those persons
who shall serve as the members of the Resulting Company's Board of Directors;
provided, however, that any designee to the Resulting Company's Board of
Directors shall be acceptable to each of Messrs. Levan and Plotkin. Consistent
with the terms of this Agreement, Bancorp agrees to vote its shares of the
Resulting Company in favor of the election of the individuals so designated to
the Resulting Company's Board of Directors.
(b) The Board of Directors of the Resulting Company shall (i) elect the
officers of the Resulting Company who shall serve at the pleasure of the
Board,(ii) subject to the approval of Bancorp, establish annual budgets and
performance goals for the Resulting Company, (iii) designate a management
compensation committee which shall make recommendations to the Board regarding
the compensation of the Resulting Company's non-executive officers and employees
and recommendations to Bancorp regarding the compensation of executive officers
and the granting of options to purchase Bancorp common stock available under
Bancorp benefit plans and (iv) subject to anything to the contrary set forth
herein, exercise such other responsibilities as customarily exercised by the
Board of Directors of a corporation including, without limitation, the hiring
and firing of employees.
(c) Responsibilities of the Officers. Subject to the direction of the
Resulting Company's Board of Directors, the officers of the Company shall be
responsible for the day to day operations of the Resulting Company.
4. Resources of Bancorp. Bancorp agrees that it will make available to
the Resulting Company such resources as the parties mutually agree is
appropriate, including capital, on terms consistent with past borrowings of the
Company and mutually acceptable to the Boards of Directors of Bancorp and the
Resulting Company.
5. Extraordinary Events. The parties agree and acknowledge that,
without Bancorp's prior approval, Resulting Company will take no extraordinary
actions outside of the ordinary course of its business and will in no event (a)
incur debt in violation of any net capital requirements applicable to the
Company, (b) raise capital from third parties or issue any securities, (c) make
any acquisitions or investments in excess of $100,000 for investment purposes,
(d) settle lawsuits outside of the ordinary course of business or on terms which
could establish an adverse precedent for subsequent settlements or adversely
affect the Resulting Company's future operations or (e) change the compensation
of its executive officers.
6. Termination. This agreement shall terminate in the event (a) the
parties fail to agree upon a budget or performance goals for the Resulting
Company, (b) the Resulting Company materially fails to meet its previously
established performance goals other than as a consequence of adverse changes in
market conditions or (c) there occurs a material change in the executive
officers of the Resulting Company, including but not limited to, any change in
the Chief Executive Officer of the Resulting Company.
7. Miscellaneous Assignment.
(a) Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
(b) Waiver. Any of the parties hereto may extend the time for or waive
compliance with the performance of any obligation or other act of any other
party hereto. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
(c) No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
(including, without limitation, any employees of the Company) other than the
parties hereto and their respective successors and permitted assigns, any rights
or remedies under or by reason of this Agreement.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) Governing Law. This Agreement has been entered into and shall be
construed and enforced in accordance with the laws of the State of Florida
without reference to the choice of law principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in counterparts by their duly authorized officers, all as of the
date and year first above written.
BANKATLANTIC BANCORP, INC.
By:----------------------------------------------
Name:
Title:
BCP ACQUISITION CORPORATION
By:----------------------------------------------
Name:
Title:
RYAN, BECK & CO., INC.
By:----------------------------------------------
Name:
Title:
<PAGE>
APPENDIX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of February 9, 1998 (this
"Agreement"), between RYAN, BECK & CO., INC., a New Jersey corporation (the
"Company"), and BANKATLANTIC BANCORP, INC., a Florida corporation ("Bancorp").
WHEREAS, Bancorp, the Company and BCP Acquisition Corporation, a
Florida corporation and a wholly-owned subsidiary of Bancorp ("Acquisition"),
propose to enter into, simultaneously herewith, an Acquisition Agreement (the
"Acquisition Agreement"; capitalized terms used but not defined in this
Agreement shall have the meanings ascribed to them in the Acquisition Agreement)
which provides, upon the terms and subject to the conditions thereof, for the
acquisition by Bancorp of the Company through the merger of the Company with and
into Acquisition (the "Merger"); and
WHEREAS, as a condition to the willingness of Bancorp to enter into the
Acquisition Agreement, Bancorp has required that the Company agree, and in order
to induce Bancorp to enter into the Acquisition Agreement the Company has agreed
to grant Bancorp an option to purchase 714,000 newly issued shares of the
Company's common stock, par value $.10 per share (the "Company Common Stock"),
representing approximately 19.9% of the issued and outstanding shares of Company
Common Stock, in accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Acquisition Agreement, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.1 Grant of Stock Option. The Company hereby grants
to Bancorp, as of the date hereof (the "Grant Date") an irrevocable option (the
"Stock Option") to purchase up to 714,000 shares (the "Option Shares") of
Company Common Stock at a cash purchase price per Option Share equal to $8.00
(the "Purchase Price"), subject to the terms and conditions set forth herein.
SECTION 1.2 Exercise of Stock Option. (a) Subject to the
conditions set forth in Section 1.03 and to any additional requirements of Law,
the Stock Option may be exercised by Bancorp, in whole or in part, at any time
or from time to time after the occurrence of an Exercise Event (as defined
below) and prior to the Termination Date (as defined below).
(b) An "Exercise Event" shall occur for purposes of this
Agreement upon (i) the occurrence of any event or circumstance which, pursuant
to the terms of Section 8.8(c) of the Acquisition Agreement, entitles Bancorp to
the payment by the Company of the amount specified therein or (ii) the
termination of the Acquisition Agreement by Bancorp pursuant to the provisions
of Sections 7.1(f), (g) or (j) (and, with respect to Section 7.1(j), at the time
of such termination there exists a Competing Transaction) under circumstances
that would not then entitle Bancorp to the payment by the Company of the amount
specified in Section 8.8(c) (an Exercise Event described in this subsection (ii)
being further defined as a "Termination Exercise Event").
(c) The "Termination Date" shall occur for purposes of this
Agreement upon the first to occur of any of the following:
(i) the Effective Time;
(ii) the date which is 18 months after the occurrence of an
Exercise Event (unless prior thereto the Option shall have been
exercised); or
(iii) the termination of the Acquisition Agreement in any
manner which (A) would not trigger an Exercise Event and (B) in which
Bancorp would not be entitled pursuant to Section 8.8(c) of the
Acquisition Agreement to payment of the amount specified therein.
(d) In the event Bancorp wishes to exercise the Stock Option,
Bancorp shall send a written notice (a "Stock Exercise Notice") to the Company
specifying the total number of Option Shares Bancorp wishes to purchase, the
denominations of the certificate or certificates evidencing such Option Shares
which Bancorp wishes to receive, a date (subject to the earlier satisfaction or
waiver of the conditions set forth in Section 1.03) (a "Closing Date"), which
shall be a business day (as defined in the Acquisition Agreement) which is not
later than 10 business days and not earlier than the fifth business day after
delivery of such notice, and place for the closing of such purchase (a
"Closing").
(e) If at any time the Stock Option is then exercisable
pursuant to the terms of Section 1.02(a) hereof (other than as a result of a
Termination Exercise Event), Bancorp may elect, in lieu of exercising the Stock
Option to purchase Option Shares as provided in Section 1.02(a) hereof, to send
a written notice to the Company (a "Cash Exercise Notice"; either a Cash
Exercise Notice or a Stock Exercise Notice, an "Exercise Notice") specifying a
date not later than 10 business days and not earlier than the fifth business day
following the date such notice is given on which date the Company shall pay to
Bancorp an amount in cash equal to the Spread (as defined below) multiplied by
such number of Option Shares as Bancorp shall specify; provided, however, that
Bancorp shall not be entitled to receive cash from the Company equal to the
Spread pursuant to a Cash Exercise Notice unless a Competing Transaction shall
have been consummated (other than a tender offer or exchange offer for less than
50% of the outstanding shares of capital stock of the Company or the acquisition
by any Person or group of less than 50% of the then outstanding shares of
capital stock of the Company). As used herein, "Spread" shall mean the excess,
if any, over the Purchase Price of the higher of (x) if applicable, the highest
price per share of Company Common Stock paid by any person in a Competing
Transaction (the "Competing Purchase Price") or (y) the closing price of the
shares of Company Common Stock on NASDAQ on the last trading day immediately
prior to the date of the Cash Exercise Notice (the "Closing Price"). If the
Competing Purchase Price includes any property other than cash, the Competing
Purchase Price shall be the sum of (i) the fixed cash amount, if any, included
in the Competing Purchase Price plus (ii) the fair market value of such other
property. If such other property consists of securities with an existing public
trading market, the average of the closing prices (or the average of the closing
bid and asked prices if closing prices are unavailable) for such securities in
their principal public trading market on the five trading days ending five days
prior to the date of the Cash Exercise Notice shall be deemed to equal the fair
market value of such property. If such other property consists of something
other than cash or securities with an existing public trading market and, as of
the payment date for the Spread, agreement on the value of such other property
has not been reached, the Competing Purchase Price shall be deemed to be the
amount of any cash included in the Competing Purchase Price plus the fair market
value of such other property (as determined by a nationally recognized
investment banking firm jointly selected by Bancorp and the Company). For this
purpose, the parties shall use their reasonable commercial efforts to cause any
determination of the fair market value of such other property to be made within
three business days after the date of delivery of the Cash Exercise Notice. Upon
exercise of its right to receive the Spread pursuant to this Section 1.02(e),
the obligations of the Company to deliver Option Shares pursuant to Section
1.02(d) shall be terminated with respect to such number of Option Shares for
which Bancorp shall have elected to be paid the Spread.
SECTION 1.3 Conditions to Closing. The obligation of the
Company to deliver Option Shares or pay the Spread, as applicable, upon any
exercise of the Stock Option is subject to the following conditions:
(a) Such delivery or payment would not in any material respect
violate, or otherwise cause the material violation of, any Law,
including, without limitation, the HSR Act, applicable thereto; and
(b) There shall be no preliminary or permanent injunction or
other final, non-appealable judgment by a court of competent
jurisdiction preventing or prohibiting such exercise of the Stock
Option, the delivery of the Option Shares or payment of the Spread in
respect of such exercise.
SECTION 1.4 Closings. At each Closing, (i) in the event of a
Closing pursuant to Section 1.02(d), the Company shall deliver to Bancorp a
certificate or certificates evidencing the applicable number of Option Shares
(in the denominations specified therein), and Bancorp shall purchase each such
Option Share from the Company at the Purchase Price, or (ii) in the event of any
other Closing pursuant to Section 1.02(e), the Company shall deliver to Bancorp
cash in an amount determined pursuant to Section 1.02(e). All payments made
pursuant to this Agreement shall be made by wire transfer of immediately
available funds. Certificates evidencing Option Shares delivered hereunder may,
at the Company's election, contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933 OR AN EXEMPTION THEREFROM.
The Company shall, upon the written request of the holder thereof, issue such
holder a new certificate evidencing such Option Shares without such legend in
the event (x) such Option Shares have been registered pursuant to the Securities
Act, (y) such Option Shares have been sold in reliance on and in accordance with
Rule 144 under the Securities Act or (z) such holder shall have delivered to the
Company an opinion of counsel, in form and substance reasonably satisfactory to
the Company, to the effect that subsequent transfers of such Option Shares may
be effected without registration under the Securities Act.
SECTION 1.5 Adjustments upon Share Issuances, Changes in
Capitalization, Etc. (a) In the event of any change in Company Common Stock or
in the number of outstanding shares of Company Common Stock by reason of a stock
dividend, stock split, recapitalization, combination, exchange of shares or
similar transaction or any other extraordinary change in the corporate or
capital structure of the Company (including, without limitation, the declaration
or payment of an extraordinary dividend of cash, securities or other property),
the type and number of shares or securities to be issued by the Company upon
exercise of the Stock Option shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such transaction, so that
Bancorp shall receive upon exercise of the Stock Option the number and class of
shares or other securities or property that Bancorp would have received in
respect of Company Common Stock if the Stock Option had been exercised
immediately prior to such event, or the record date therefor, as applicable, and
elected to the fullest extent it would have been permitted to elect, to receive
such securities, cash or other property.
(b) In the event that the Company shall enter into an
agreement (other than the Acquisition Agreement) (i) to consolidate with or
merge into any Person, and shall not be the continuing or surviving corporation
of such consolidation or merger, (ii) to permit any Person to merge into the
Company and the Company shall be the continuing or surviving corporation, but,
in connection with such merger, the then outstanding shares of Company Common
Stock shall be changed into or exchanged for stock or other securities of the
Company or any other person or cash or any other property or then outstanding
shares of Company Common Stock shall after such merger represent less than 50%
of the outstanding shares and share equivalents of the surviving corporation or
(iii) to sell or otherwise transfer all or substantially all of its assets to
any Person then, and in each such case, proper provision shall be made in the
agreements governing such transaction so that Bancorp shall receive upon
exercise of the Stock Option the number and class of shares or other securities
or property that Bancorp would have received in respect of Company Common Stock
if the Stock Option had been exercised immediately prior to such transaction, or
the record date therefor, as applicable, and elected to the fullest extent it
would have been permitted to elect, to receive such securities, cash or other
property.
(c) The provisions of this Agreement, including, without
limitation, Sections 1.01, 1.02, 1.04 and 3.02, shall apply with appropriate
adjustments to any securities for which the Stock Option becomes exercisable
pursuant to this Section 1.05.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Bancorp as
follows:
SECTION 2.1 Authority Relative to this Agreement. The Company
is duly organized and validly existing under the laws of the State of New
Jersey. The Company has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate such
transactions. This Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. This Agreement has
been authorized by the Board of Directors of the Company for purposes of
Sections 14A:10A-1 through 14A:10A-6 of the New Jersey BCA.
SECTION 2.2 Authority to Issue Shares. The Company has taken
all necessary corporate action to authorize and reserve and permit it to issue,
and at all times from the date hereof through the Termination Date shall have
reserved, all the Option Shares issuable pursuant to this Agreement, and the
Company shall take all necessary corporate action to authorize and reserve and
permit it to issue all additional shares of Company Common Stock or other
securities which may be issued pursuant to Section 1.05, all of which, upon
their issuance and delivery in accordance with the terms of this Agreement,
shall be duly authorized, validly issued, fully paid and nonassessable, shall be
delivered free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on Bancorp's voting
rights, charges and other encumbrances of any nature whatsoever (other than this
Agreement) and shall not be subject to any preemptive rights. Without limiting
the generality of the foregoing, the Company has taken all necessary corporate
action so that the issuance of the option to Bancorp hereunder or the issuance
of shares of Company Common Stock or other securities pursuant to this Agreement
to Bancorp shall not subject Bancorp to any restrictions or limitations under
the Company's Certificate of Incorporation or Bylaws or the New Jersey BCA,
including, without limitation, the provisions of Sections 14A:10A-1 through
14A:10A-6.
SECTION 2.3 No Conflict; Required Filings and Consents. The
execution and delivery of this Agreement by the Company do not, and the
performance by the Company of its obligations pursuant to this Agreement and the
consummation of the transactions contemplated hereby will not, (i) require any
consent, approval, authorization or permit of, or filing with or notification to
(other than pursuant to the HSR Act, state securities and "blue sky" Laws, the
regulations of NASDAQ, if applicable, the rules of the NASD and the SEC) any
court or Regulatory Agency, (ii) conflict with or violate any provision of the
Certificate of Incorporation or Bylaws of the Company or any equivalent
organizational documents of any Company Subsidiary, (iii) assuming that all
consents, approvals, authorizations and permits described in this Section 2.03
have been obtained and all filings and notifications described in this Section
2.03 have been made, conflict with or violate any Law applicable to the Company
or any Company Subsidiary or by which any property or asset of the Company or
any Company Subsidiary is bound or affected or (iv) result in any breach of or
constitute a default (or an event which with the giving of notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien or other encumbrance on any property or asset of the Company
or any Company Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation, except, with respect to clauses (iii) and (iv), for any such
conflicts, violations, breaches, defaults or other occurrences which would
neither, individually or in the aggregate, prevent or materially delay the
performance by the Company of any of its obligations pursuant to this Agreement.
ARTICLE III
COVENANTS OF THE COMPANY
SECTION 3.1 Listing; Other Action. (a) The Company shall, at
its expense, use its best efforts to cause the Option Shares to be approved for
listing on NASDAQ, subject to notice of issuance, as promptly as practicable
following an Exercise Event, and shall provide prompt notice to NASDAQ of the
issuance of each Option Share.
(b) The Company shall use its best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate and make
effective the transactions contemplated hereunder, including, without
limitation, using its best efforts to obtain all licenses, permits, consents,
authorizations, orders and approvals of any court or Regulatory Agency. Without
limiting the generality of the foregoing, the Company shall when required in
order to effect the transactions contemplated hereunder make all necessary
filings, and thereafter make any other required or appropriate submissions,
under the HSR Act and shall supply as promptly as practicable to the appropriate
court or Regulatory Agency any additional information and documentary material
that may be requested pursuant to the HSR Act.
SECTION 3.2 Registration. (a) In the event that Bancorp shall
desire to sell any of the Option Shares within two years after the purchase of
such Option Shares pursuant hereto, and such sale requires, in the opinion of
counsel to Bancorp, which opinion shall be reasonably satisfactory to the
Company and its counsel, registration of such Option Shares under the Securities
Act, the Company shall cooperate with Bancorp and any underwriters in
registering such Option Shares for resale, including, without limitation,
promptly filing a registration statement which complies with the requirements of
applicable federal and state securities Laws and entering into an underwriting
agreement with such underwriters upon such terms and conditions as are
customarily contained in underwriting agreements with respect to secondary
distributions; provided, however, that the Company shall be entitled to delay
the filing or effectiveness of any registration statement for up to 30 days if
the offering would, in the reasonable judgment of the Board of Directors of the
Company, require premature disclosure of any material corporate development or
otherwise interfere with or adversely affect any pending or proposed offering of
securities of the Company or any other material transaction involving the
Company.
(b) If the Company Common Stock is registered pursuant to the
provisions of this Section 3.02, the Company agrees (i) to furnish copies of the
registration statement and prospectus relating to the Option Shares covered
thereby in such numbers as Bancorp may from time to time reasonably request and
(ii) if any event shall occur as a result of which it becomes necessary to amend
or supplement any registration statement or prospectus, to prepare and file
under the applicable securities Laws such amendments and supplements as may be
necessary to keep available for at least 90 days a prospectus covering the
Company Common Stock meeting the requirements of such securities Laws, and to
furnish Bancorp such numbers of copies of the registration statement and
prospectus as amended or supplemented as may reasonably be requested. The
Company shall bear the cost of the registration, including, but not limited to,
all registration and filing fees, printing expenses, and fees and disbursements
of counsel and accountants for the Company, except that Bancorp shall pay the
fees and disbursements of its counsel and the underwriting fees and selling
commissions applicable to the shares of Company Common Stock sold by Bancorp.
The Company shall indemnify and hold harmless Bancorp, its affiliates and its
officers and directors from and against any and all losses, claims, damages,
liabilities and expenses arising out of or based upon any statements contained
in, or omissions or alleged omissions from, each registration statement or
prospectus filed pursuant to this paragraph; provided, however, that this
provision shall not apply to any loss, liability, claim, damage or expense to
the extent it arises out of any untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by
Bancorp, its Affiliates and its officers and other representatives expressly for
use in any registration statement (or any amendment thereto) or any prospectus
filed pursuant to this paragraph. The Company shall also indemnify and hold
harmless each underwriter and each person who controls any underwriter within
the meaning of either the Securities Act or the Exchange Act against any and all
losses, claims, damages, liabilities and expenses arising out of or based upon
any statements contained in, or omissions or alleged omissions from, each
registration statement or prospectus filed pursuant to this paragraph; provided,
however, that this provision shall not apply to any loss, liability, claim,
damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by the underwriters expressly for use in any
registration statement (or any amendment thereto) or any prospectus filed
pursuant to this paragraph. Bancorp shall indemnify and hold harmless the
Company, its affiliates and its officers and directors against any and all
losses, claims, damages, liabilities and expenses arising out of or based upon
any untrue statements contained in, or omissions or alleged omissions from, each
registration statement or prospectus filed pursuant to this paragraph if such
statements, omissions or alleged omissions are made in reliance upon and in
conformity with written information furnished to the Company by Bancorp
expressly for use in any registration statement (or any amendment thereto) or
any prospectus filed pursuant to this paragraph.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP
Bancorp hereby represents and warrants to the Company as
follows:
SECTION 4.1 Purchase for Investment. Bancorp will acquire the
Option Shares for its own account for investment and not with a view towards any
resale or distribution of all or any part thereof.
ARTICLE V
TERMINATION OF AGREEMENT
SECTION 5.1 Termination. This Agreement, other than the rights
and obligations of the Company and Bancorp under Sections 3.01, 3.02 and 4.01
and Article VI, shall terminate on the Termination Date.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Amendment. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 6.2 Waiver. Either party hereto may (a) extend the
time for or waive compliance with the performance of any obligation or other act
of the other party hereto or (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 6.3 Fees and Expenses. Except as otherwise provided
herein or in Section 8.8 of the Acquisition Agreement, all fees and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such expenses.
SECTION 6.4 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or facsimile, by registered or certified mail (postage prepaid, return
receipt requested) or by a nationally recognized courier service to the
respective parties at their addresses as specified in Section 8.2 of the
Acquisition Agreement.
SECTION 6.5 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner to the fullest extent permitted by applicable Law in order
that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
SECTION 6.6 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by the Company without the prior written consent of Bancorp. This
Agreement and the rights, interests and obligations of Bancorp hereunder may be
freely assigned after an Exercise Event subject to the consent of the Company,
which shall not be unreasonably withheld, and subject to compliance with
applicable securities laws. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement, express
or implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 6.7 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity.
SECTION 6.8 Governing Law. Except to the extent that the Laws
of the jurisdiction of organization of any party hereto, or any other
jurisdiction, are mandatorily applicable to the matters arising under or in
connection with this Agreement, this Agreement shall be governed by the Laws of
the State of Florida.
SECTION 6.9 Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 6.10 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 6.11 Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings between the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
RYAN, BECK & CO., INC.
By: /s/ BEN A. PLOTKIN
-----------------------------------------------
Name: Ben A. Plotkin
Title: President
BANKATLANTIC BANCORP, INC.
By: /s/ ALAN B. LEVAN
-----------------------------------------------
Name: Alan B. Levan
Title: Chairman
<PAGE>
APPENDIX C
Duff & Phelps, LLC
311 South Wacker Drive, Suite 4200
Chicago, Illinois 60606
May 19, 1998
The Board of Directors
Ryan, Beck & Co., Inc.
220 South Orange Avenue
Livingston, New Jersey 07039
Attention Board of Directors:
Duff & Phelps, LLC ("Duff & Phelps") understands that pursuant to an Acquisition
Agreement dated February 9, 1998 between Ryan, Beck & Co., Inc. ("Ryan Beck")
and BankAtlantic Bancorp, Inc. ("BankAtlantic"), Ryan Beck and BankAtlantic
intend to consummate a merger transaction (the "Merger") in which shareholders
of Ryan Beck will received 0.761 of a share of BankAtlantic Class A common stock
(the "Class A common stock") per common share of Ryan Beck. Based on the closing
price of Class A common stock of $13.0625 of May 18, 1998, shareholders of Ryan
Beck will receive $9.94 per common share of Ryan Beck. You have asked Duff &
Phelps to render our opinion as to whether the merger is fair, from a financial
point of view, to the shareholders of Ryan Beck. This opinion updates and
supersededs the February 9, 1998 opinion, based on current stock market
conditions and economic outlook.
SUMMARY OF FINANCIAL TERMS OF THE MERGER
Under the terms of the Merger, each share of Ryan Beck common stock will be
exchanged into 0.761 of a share of Class A common stock. If the stock price of
BankAtlantic decreases to $10.88 or below, Ryan Beck can terminate the Merger.
The unexpired and unexercised stock options to purchase shares of Ryan Beck
common stock will be converted into options to purchase a number of shares of
the Class A common stock, as adjusted for the conversion ratio. BankAtlantic
will establish a retention pool (the "Retention Pool") consisting of restricted
shares of Class A common stock to be used to retain key employees. The value of
the shares dedicated to the Retention Pool will be equal to 20% of the aggregate
of the value of shares of Class A common stock issued in the Merger (excluding
options and shares issued in the acquisition of Cumberland Advisors, Inc. and
including shares to be issued in the Retention Pool). Based upon the closing
price on May 18, 1998 and 3,764,787 common shares of Ryan Beck outstanding
(including the common shares to be issued as part of the acquisition of
Cumberland Advisors, Inc.), the aggregate value to be paid in the Merger equals
$48.0 million (including the value of in-the-money stock options owed by the
management of Ryan, Beck), of which $39.1 million will be allocated to
shareholders and the remainder to the Retention Pool. All amounts will be
adjusted for the announced 5-for-4 stock split of the Class A common stock.
Ryan Beck has granted an option (the "Option") to BankAtlantic to purchase, upon
certain circumstances, newly issued common shares of Ryan Beck equal to
approximately 19.9% of the issued and outstanding shares of Ryan Beck common
stock. In addition, Ryan Beck will pay to BankAtlantic a termination fee (the
"Termination Fee") of $2 million, if the Merger is terminated and within
eighteen months thereafter, Ryan Beck shall enter into an agreement with respect
to another acquirer (other than a tender offer or exchange offer for less than
50% of the outstanding shares of capital stock of Ryan Beck). However, if after
BankAtlantic exercises the Option, BankAtlantic becomes entitled to receive the
Termination Fee, the Termination Fee due to BankAtlantic from Ryan Beck shall be
net of the aggregate net profit realized by BankAtlantic pursuant to its
exercise of the Option.
SCOPE OF ANALYSIS
In the course of our analysis for rendering this opinion, we have:
1. Reviewed the Acquisition Agreement;
2. Reviewed the public financial statements of Ryan Beck and BankAtlantic
including Annual Reports to Shareholders and Annual Reports on Form 10-K
for the fiscal years ended December 31, 1997, 1996 and 1995 and quarterly
reports on Form 10-Q for the periods ending March 31, 1998 and March 31,
June 30, September 30,1997 for Ryan, Beck and for BankAtlantic;
3. Reviewed certain operating and financial information provided to us by the
managements of Ryan Beck and BankAtlantic including internal budgets of
future financial results;
4. Interviewed certain members of management of Ryan Beck and BankAtlantic to
discuss their respective companies operations, historical results and
future outlook and their views of the operational and strategic benefits of
the Merger;
5. Reviewed the proforma financial impact of the Merger on BankAtlantic;
6. Reviewed the historical stock prices and trading volume of the common stock
of Ryan Beck and BankAtlantic;
7. Reviewed the financial information and market valuations of other publicly
traded companies that we deemed to be reasonably comparable to Ryan Beck
and BankAtlantic;
8. Conducted other studies and analyses, inquiries and investigations which we
deemed appropriate.
In the course of our review we have relied upon and assumed the accuracy and
completeness of the financial and other information provided to us, including
the background of the Merger, by Ryan Beck and BankAtlantic including the
assumptions made by the managements of the respective companies with respect to
the projected financial results of such businesses. All industry information and
data on public companies deemed comparable to Ryan Beck and BankAtlantic, in
whole or in part, and used in our analysis were obtained from regularly
published industry and investment sources. Our opinion is necessarily based on
the economic, market and other conditions in effect and the information
available to us as of the date hereof.
It is understood that this letter is intended for the benefit and use of the
Board of Directors of Ryan Beck and is not to be reproduced, disseminated or
referred to at any time in whole or in part without our prior written consent
which shall not be unreasonably withheld.
CONCLUSION
Based on and subject to the foregoing, it is our opinion that as of the date
hereof, the Merger is fair, from a financial point of view, to the shareholders
of Ryan Beck.
Respectfully Submitted
DUFF & PHELPS, LLC
<PAGE>
APPENDIX D
RYAN BECK & CO., INC.
LONG-TERM STOCK INCENTIVE PLAN
(Adopted by the Board of Directors on
December 11, 1997)
(Delegation of Plan Administration to
Committee approved by Resolution on December 11, 1997)
(Approved by Shareholders ____________ __, 1998)
1. Purpose. The purpose of the Plan is to provide additional
incentive to those officers and key employees of the Company and its
Subsidiaries whose substantial contributions are essential to the continued
growth and success of the Company's business in order to strengthen their
commitment to the Company and its Subsidiaries, to motivate such officers and
employees to faithfully and diligently perform their assigned responsibilities
and to attract and retain competent and dedicated individuals whose efforts will
result in the long-term growth and profitability of the Company. The Plan also
is intended to assist the Company in attracting and retaining the highest
quality of experienced persons to serve as directors and in aligning the
interests of the Eligible Directors of the Company more closely with the
interest of the Company's shareholders. To accomplish such purposes, the Plan
provides that the Company may grant Eligible Employees Incentive Stock Options,
Nonqualified Stock Options, Restricted Stock Awards and Stock Appreciation
Rights and may grant Eligible Directors, Restricted Stock Awards and
Non-Qualified Stock Options.
2. Definitions. For purposes of this Plan:
(a) "Agreement" means the written agreement between
the Company and an Optionee or Grantee evidencing the grant of an Option or
Award and setting forth the terms and conditions thereof.
(b) "Award" means a grant of Restricted Stock, Stock
Appreciation Rights, or any or all of them.
(c) "Board" means the Board of Directors of the
Company.
(d) "Cause" means the willful failure by an Optionee
or Grantee to perform his duties with the Company or with any Subsidiary or the
willful engaging in conduct which is injurious to the Company or any Subsidiary,
monetarily or otherwise.
(e) "Change in Capitalization" means any increase,
reduction, change or exchange of Shares for a different number or kind of shares
or other securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of warrants or
rights, stock dividend, stock split or reverse stock split, combination or
exchange of shares, repurchase of shares, change in corporate structure or
otherwise.
(f) "Change in Control" means any of the following
events: (i) when the Company or a Subsidiary acquires actual knowledge that any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act), other than an affiliate of the Company or a Subsidiary or an employee
benefit plan established or maintained by the Company, a Subsidiary or any of
their respective affiliates, is or becomes the beneficial owner (as defined in
Rule 13d-3 of the Exchange Act) directly or indirectly, of securities of the
Company representing more than twenty-five percent (25%) of the combined voting
power of the Company's then outstanding securities (a "Control Person") without
the approval of the Continuing Directors (as hereafter defined) in office when
such person acquires more than ten percent (10%) of the combined voting power,
(ii) upon the first purchase of the Company's common stock pursuant to a tender
or exchange offer (other than a tender or exchange offer made by the Company, a
Subsidiary or an employee benefit plan established or maintained by the Company,
a Subsidiary or any of their respective affiliates), (iii) upon consummation of
any of the following if it requires the approval by the Company's stockholders
(A) a merger or consolidation of the company with or into another corporation
(other than a merger or consolidation which provides that at least a majority of
the directors of the surviving or resulting corporation immediately after the
transaction are Continuing Directors (in either case, a "Non-Control
Transaction")) , (B) a sale or disposition of all or substantially all of the
Company's assets (other than the formation of a holding company) or (C) a plan
of liquidation or dissolution of the Company, or (iv) if during any period of
two (2) consecutive years, individuals who at the beginning of such period
constitute the Board (the "Continuing Directors") cease for any reason to
constitute at least two-thirds thereof or, following a Non-Control Transaction,
two-thirds of the board of directors of the surviving or resulting corporation;
provided that any individual whose election or nomination for election as a
member of the Board (or, following a Non-Control Transaction, the board of
directors of the surviving or resulting corporation) was approved by a vote of
at least two-thirds of the Continuing Directors then in office shall be
considered a continuing Director.
(g) "Code" means the Internal Revenue Code of 1986,
as amended.
(h) "Committee" means a committee consisting solely
of at least two (2) Non-Employee Directors (as defined in Rule 16b-3 of the
Exchange Act) of the Company who are also outside directors as defined pursuant
to Section 162(m) of the Code appointed by the Board to administer the Plan and
to perform the functions set forth herein.
(i) "Company" means Ryan Beck & Co., Inc., a New
Jersey corporation.
(j) "Disability" means the condition which results
when an individual has become permanently and totally disabled within the
meaning of Section 105(d)(4) of the Code.
(k) "Eligible Director," shall mean a member of the
Board who is not an employee of the Company or any Subsidiary.
(l) "Eligible Employee" means any officer or other
key employee of the Company or a Subsidiary designated by the Committee as
eligible to receive Options or Awards subject to the conditions set forth
herein.
(m) "Escrow Agent" means the escrow agent under the
Escrow Agreement, designated by the Committee.
(n) "Escrow Agreement" means an agreement between the
Company, the Escrow Agent and a Grantee, in the form specified by the Committee,
under which shares of Restricted Stock awarded pursuant hereto shall be held by
the Escrow Agent until either (i) the restrictions relating to such shares
expire and the shares are delivered to the Grantee or (ii) the Company
reacquires the shares pursuant hereto and the shares are delivered to the
Company.
(o) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(p) "Fair Market Value" means (A) if the Shares are
admitted to quotation on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or other comparable quotation system and
have been designated as a National Market System ("NMS") security, Fair Market
Value on any date shall be the last sale price reported for the Shares on such
system on such date or on the last day preceding such date on which a sale was
reported, (B) if the Shares are admitted to quotation on NASDAQ and have not
been designated a NMS security, Fair Market Value on any date shall be the
average of the highest bid and lowest asked prices of the Shares on such system
on such date, or (C) if the Shares are admitted to trading on a national
securities exchange, Fair Market Value on any date shall be the last sale price
reported for the Shares on such exchange on such date or on the last date
preceding such date on which a sale was reported.
(q) "Grantee" means a person to whom an Award has
been granted under the Plan.
(r) "Incentive Stock Option" means an Option within
the meaning of Section 422 of the Code.
(s) "Nonqualified Stock Option" means an Option which
is not an Incentive Stock Option.
(t) "Option" means an Incentive Stock Option, a
Nonqualified Stock Option, or either or both of them.
(u) "Optionee" means a person to whom an Option has
been granted under the Plan.
(v) "Parent" means any corporation in an unbroken
chain of corporations ending with the Company, if each of the corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock of one of the other corporations in such chain.
(w) "Plan" means the Ryan Beck & Co., Inc. Long-Term
Stock Incentive Plan as set forth in this instrument and as it may be amended
from time to time.
(x) "Restricted Stock" means Shares issued or
transferred to an Eligible Employee or an Eligible Director which are subject to
restrictions as provided in Section 8 hereof.
(y) "Shares" means the common stock, no par value, of
the Company (including any new, additional or different stock or securities
resulting from a Change in Capitalization).
(z) "Stock Appreciation Right" means a right to
receive all or some portion of the increase in the value of shares of Common
Stock as provided in Section 7 hereof.
(aa) "Subsidiary" means any corporation in an
unbroken chain of corporations, beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(bb) "Successor Corporation" means a corporation, or
a parent or subsidiary thereof, which issues or assumes a stock option in a
transaction to which Section 425(a) of the Code applies.
(cc) "Ten-Percent Stockholder" means an Eligible
Employee, who, at the time an Incentive Stock Option is to be granted to him,
owns (within the meaning of Section 422(b)(6) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company, a Parent or a Subsidiary within the meaning of Section
422(b)(6) of the Code.
3. Administration.
(a) The Plan shall be administered by the Board of
Directors of the Company or by a Committee to which the Board by resolution has
delegated its authority. The term Committee shall mean the Board of Directors if
there is no delegation to a Committee. If there is a delegation to a Committee,
the Committee shall hold meetings at such times as may be necessary for the
proper administration of the Plan. The Committee shall keep minutes of its
meetings. A majority of the Committee shall constitute a quorum and a majority
of a quorum may authorize any action. Each member of the Committee shall be a
Non-Employee Director (as defined in Rule 16b-3 of the Exchange Act) and an
outside director as defined pursuant to Section 162(m) of the Code; provided
that no failure to be so qualified shall invalidate any Option or Award. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan, the Options or
the Awards, and all members of the Committee shall be fully indemnified by the
Company with respect to any such action, determination or interpretation.
Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time:
(1) to determine those Eligible Employees to
whom Options shall be granted under the Plan and the number of Incentive Stock
Options and/or Nonqualified Options to be granted to each eligible Employee and
to prescribe the terms and conditions (which need not be identical) of each
Option, including the purchase price per share of each Option;
(2) to select those Eligible Employees to whom
Awards shall be granted under the Plan and to determine the number of shares of
Restricted Stock or Stock Appreciation Rights to be granted pursuant to each
Award, the terms and conditions of each Award, including the restrictions or
performance criteria relating to such shares or rights, the purchase price per
share, if any, of Restricted Stock and whether Stock Appreciation Rights will be
granted alone or in conjunction with an Option;
(3) subject to the approval of the Board in each
case, to select those Eligible Directors to whom Awards shall be granted under
the Plan and to determine the number of shares of Restricted Stock to be granted
pursuant to each Award, the terms and conditions of each Award, including the
restrictions relating to such shares and the purchase price per share, if any,
of Restricted Stock and to determine those Eligible Directors to whom
Nonqualified Stock Options may be granted and to prescribe the terms and
conditions (which need not be identical) of each Option, including the purchase
price per share of each Option;
(4) to construe and interpret the Plan and the
Options and Awards granted thereunder and to establish, amend and revoke rules
and regulations for the administration of the Plan, including, but not limited
to, correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the extent
it shall deem necessary or advisable to make the Plan fully effective, and all
decisions and determinations by the Committee in the exercise of this power
shall be final and binding upon the Company or a Subsidiary, the Optionees and
the Grantees, as the case may be;
(5) to determine the duration and purposes for
leaves of absence which may be granted to an Optionee or Grantee without
constituting a termination of employment or service for purposes of the Plan;
and
(6) generally, to exercise such powers and to
perform such acts as are deemed necessary or advisable to promote the best
interests of the Company with respect to the Plan.
4. Stock Subject to Plan.
(a) The maximum number of Shares that may be issued
or transferred pursuant to all Options and Awards under this Plan is 500,000 of
which not more than 150,000 Shares may be issued or transferred pursuant to
Options and/or Awards to any one Eligible Employee. Subject to the foregoing
aggregate limitations, the maximum number of Shares (i) that may be issued or
transferred pursuant to Options or Awards for Incentive Stock Options,
Non-Qualified Stock Options and Stock Appreciation Rights shall be 400,000, and
(ii) that may be issued or transferred pursuant to Awards of Restricted Stock
shall be 100,000 and (iii) that may be issued or transferred pursuant to Options
or Awards for Eligible Directors shall not exceed 7,500 per year per director.
In each case, upon a Change in Capitalization after December 11, 1997, the
Shares shall be adjusted to the number and kind of Shares of stock or other
securities existing after such Change in Capitalization.
(b) Whenever any outstanding Option or portion
thereof expires, is cancelled or is otherwise terminated (other than by exercise
of the Option or any related Stock Appreciation Right), the shares of Common
Stock allocable to the unexercised portion of such Option may again be the
subject of Options and Awards hereunder.
(c) Whenever any Shares subject to an Award or Option
are resold to the Company, or are forfeited for any reason pursuant to the terms
of the Plan, such Shares may again be the subject of Options and Awards
hereunder.
5. Eligibility. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible Employees
who will receive Options and/or Awards but no person shall receive any Options
or Awards unless he is an employee of the Company or a Subsidiary or is a
director of the Company at the time the Option or Award is granted.
6. Stock Options. The Committee may grant Options in
accordance with the Plan, the terms and conditions of which shall be set forth
in an Agreement. Each Option and Option Agreement shall be subject to the
following conditions:
(a) Purchase Price. The purchase price or the manner
in which the purchase price is to be determined for Shares under each Option
shall be set forth in the Agreement, provided that the purchase price per Share
under each Incentive Stock Option shall not be less than 100% of the Fair Market
Value of a Share at the time the Option is granted (110% in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder) and under each
Nonqualified Stock Option shall not be less than 50% of the Fair Market Value of
a Share at the time the Option is granted.
(b) Duration. Options granted hereunder shall be for
such term as the Committee shall determine, provided that (i) no Incentive Stock
Option shall be exercisable after the expiration of ten (10) years from the date
it is granted (five (5) years in the case of an Incentive Stock Option granted
to a Ten-Percent Stockholder) and (ii) no Nonqualified Stock Option shall be
exercisable after the expiration of ten (10) years and one (1) day from the date
it is granted. The Committee may, subsequent to the granting of any Option,
extend the term thereof but in no event shall the term as so extended exceed the
maximum term provided for in the preceding sentence.
(c) Non-Transferability. No Option granted hereunder
shall be transferable by the Optionee to whom granted otherwise than by will or
the laws of descent and distribution, and an Option may be exercised during the
lifetime of such Optionee only by the Optionee or his guardian or legal
representative. The terms of such Option shall be binding upon the
beneficiaries, executors, administrators, heirs and successors of the Optionee.
(d) Stock Options; Vesting. Subject to Section 6(h)
hereof and the related Agreement thereunder, each Option shall be exercisable in
such installments (which need not be equal) and at such times as may be
designated by the Committee and set forth in the Option Agreement. Unless
otherwise provided in the Agreement, to the extent not exercised, installments
shall accumulate and be exercisable, in whole or in part, at any time after
becoming exercisable, but not later than the date the Option expires.
Notwithstanding the foregoing, the Committee may accelerate the exercisability
of any Option or portion thereof at any time.
(e) Method of Exercise. The exercise of an Option
shall be made only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office, specifying
the number of Shares to be purchased and accompanied by payment therefor and
otherwise in accordance with the Agreement pursuant to which the Option was
granted. The purchase price for any shares purchased pursuant to the exercise of
an Option shall be paid in full upon such exercise in cash, by check, or, at the
discretion of the Committee and upon such terms and conditions as the Committee
shall approve, by transferring Shares to the Company. Any Shares transferred to
the Company as payment of the purchase price under an Option shall be valued at
their Fair Market Value on the day preceding the date of exercise of such
Option. If requested by the Committee, the Optionee shall deliver the Agreement
evidencing the Option and the Agreement evidencing any related Stock
Appreciation Right to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return such Agreement to the Optionee. Not less
than 100 Shares may be purchased at any time upon the exercise of an Option
unless the number of Shares so purchased constitutes the total number of Shares
then purchasable under the Option.
(f) Rights of Optionees. No Optionee shall be deemed
for any purpose to be the owner of any Shares subject to any Option unless and
until (i) the Option shall have been exercised pursuant to the terms thereof,
(ii) the Company shall have issued and delivered the Shares to the Optionee, and
(iii) the Optionee's name shall have been entered as a stockholder of record on
the books of the Company. Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such Shares.
(g) Termination of Employment. In the event that an
Optionee ceases to be employed by the Company or any Subsidiary, any outstanding
Options held by such Optionee shall, unless the Option Agreement evidencing such
Option provides otherwise, terminate as follows:
(1) If the Optionee's termination of employment
is due to his death or Disability, the Option shall be exercisable for a period
of one (1) year following such termination of employment, and shall thereafter
terminate;
(2) If the Optionee's termination of employment
is by the Company or a Subsidiary for Cause or is by the resignation or
retirement of the Optionee, the Option shall terminate on the date of the
Optionee's termination of employment; and
(3) If the Optionee's termination of employment
is for any other reason (including an Optionee's ceasing to be employed by a
Subsidiary as a result of the sale of such Subsidiary or an interest in such
Subsidiary), the Option (to the extent exercisable at the time of the Optionee's
termination of employment) shall be exercisable for a period of ninety (90) days
following such termination of employment, and shall thereafter terminate.
Notwithstanding the foregoing, the Committee may provide, either at the time an
Option is granted or thereafter, that the Option may be exercised after the
periods provided for in this Section 6(g), but in no event beyond the term of
the Option.
(h) Effect of Change in Control. In the event of a
Change in Control, the Board, by written notice to the Optionee, may accelerate
the vesting of some or all of the outstanding Options, may terminate some or all
outstanding Options after a limited period of exercisability (which may be as
short as 30 days) and may pay the appreciation in value of the Options in
securities or stock in cancellation of the Options. The Agreement entered into
between the Company and the Eligible Employee may provide for full or partial
vesting or early termination with respect to the Options granted thereunder in
the event of a Change in Control.
(i) Substitution and Modification. Subject to the
terms of the Plan, the Committee may modify outstanding Options or accept the
surrender of outstanding Options (to the extent not exercised) and grant new
Options in substitution for them. Notwithstanding the foregoing, no modification
of an Option shall alter or impair any rights or obligations under the Option
without the Optionee's consent, except as provided for in this Plan or the
Agreement.
(j) Directors Options. Notwithstanding anything else
in this Section 6 to the contrary, the Committee with the specific approval of
the Board may grant Nonqualified Options to Eligible Directors on the following
terms:
(1) the exercise price for the Options shall be
at Fair Market Value on the first trading day of February following the date of
grant, or such other day as the Board shall specify on the date of grant;
(2) the Options shall have a term of up to 10
years and may vest over a period of years, but shall terminate not more than 3
months after the director ceases to serve as a director for any reason, other
than for death or Disability (which may be exercisable for up to one year after
termination); and
(3) such other terms as the Committee may deem
advisable (which may be inconsistent with the terms applicable to Eligible
Employees).
7. Stock Appreciation Rights. The Committee may, in its
discretion, either alone or in connection with the grant of an Option, grant
Stock Appreciation Rights in accordance with the Plan, the terms and conditions
of which shall be set forth in an Agreement. If granted in connection with an
Option, a Stock Appreciation Right shall cover the same shares covered by the
Option (or such lesser number of shares as the Committee may determine) and
shall, except as provided in this Section 7, be subject to the same terms and
conditions as the related Option.
(a) Time of Grant. A Stock Appreciation Right may be
granted:
(i) at any time if unrelated to an Option; or
(ii) if related to an Option, either at the time
of grant, or at any time thereafter during the term of the Option.
(b) Stock Appreciation Rights Related to an Option.
(i) Payment. A Stock Appreciation Right granted
in connection with an Option shall entitle the holder thereof, upon exercise of
the Stock Appreciation Right or any portion thereof, to receive payment of an
amount computed pursuant to Section 7(b)(iii).
(ii) Exercise. Subject to Section 7(f), a Stock
Appreciation Right granted in connection with an Option shall be exercisable at
such time or times and only to the extent that the related Option is
exercisable, and will not be transferable except to the extent the related
Option may be transferable. A Stock Appreciation Right granted in connection
with an Incentive Stock Option shall be exercisable only if the Fair Market
Value of a Share on the date of exercise exceeds the purchase price specified in
the related Incentive Stock Option.
(iii) Amount Payable. Upon the exercise of a
Stock Appreciation Right related to an Option, the Grantee shall be entitled to
receive an amount determined by multiplying (A) the excess of the Fair Market
Value of a Share on the date of exercise of such Stock Appreciation Right over
the per Share purchase price under the related Option, by (B) the number of
Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.
(iv) Treatment of Related Options and Stock
Appreciation Rights Upon Exercise. Except as provided in Section 7(b)(v), (A)
upon the exercise of a Stock Appreciation Right granted in connection with an
Option, the Option shall be cancelled to the extent of the number of Shares as
to which the Stock Appreciation Right is exercised and (B) upon the exercise of
an Option granted in connection with a Stock Appreciation Right or the surrender
of such Option pursuant to Section 6(h) and the related Agreement thereunder,
the Stock Appreciation Right shall be cancelled to the extent of the number of
Shares as to which the Option is exercised or surrendered.
(v) Simultaneous Exercise of Stock Appreciation
Right and Option. The Committee may provide, either at the time a Stock
Appreciation Right is granted in connection with a Nonqualified Stock Option or
thereafter during the term of the Stock Appreciation Right, that, subject to
Section 7(f), upon exercise of such Option or the surrender of the Option
pursuant to Section 6(h) and the related Agreement thereunder, the Stock
Appreciation Right shall automatically be deemed to be exercised to the extent
of the number of Shares as to which the Option is exercised or surrendered. In
such event, the Grantee shall be entitled to receive the amount described in
Section 7(b)(iii) or 7(g) hereof, as the case may be (or some percentage of such
amount if so provided in the Agreement evidencing the Stock Appreciation Right),
in addition to the Shares acquired or cash received pursuant to the exercise or
surrender of the Option. If a Stock Appreciation Right Agreement contains an
automatic exercise provision described in this Section 7(b)(v) and the Option or
any portion thereof to which it relates is exercised within six (6) months from
the date the Stock Appreciation Right is granted, such automatic exercise
provision shall not be effective with respect to that exercise of the Option.
The inclusion in an Agreement evidencing a Stock Appreciation Right of a
provision described in this Section 7(b)(v) may be in addition to and not in
lieu of the right to exercise the Stock Appreciation Right as otherwise provided
herein and in the Agreement.
(c) Stock Appreciation Rights Unrelated to an Option.
The Committee may grant to Eligible Employees Stock Appreciation Rights
unrelated to Options. Stock Appreciation Rights unrelated to Options shall
contain such terms and conditions as to exercisability, vesting and duration as
the Committee shall determine, but in no event shall they have a term of greater
than ten (10) years. Upon the death or Disability of a Grantee, the Stock
Appreciation Rights held by that Grantee shall be exercisable for a period of
one (1) year following such termination of employment, and shall thereafter
terminate. If the Optionee's termination of employment is by the Company or a
Subsidiary for Cause or is by the resignation or retirement of the Optionee, the
Stock Appreciation Right shall terminate on the date of the Optionee's
termination of employment; and if the Optionee's termination of employment is
for any other reason (including an Optionee's ceasing to be employed by a
Subsidiary as a result of the sale of such Subsidiary or an interest in such
Subsidiary), the Stock Appreciation Right (to the extent exercisable at the time
of the Optionee's termination of employment) shall be exercisable for a period
of ninety (90) days following such termination of employment, and shall
thereafter terminate. Notwithstanding the foregoing, the Committee may provide,
either at the time an Stock Appreciation Right is granted or thereafter, that
the Stock Appreciation Right may be exercised after the periods provided for in
this Section 7(c), but in no event beyond 10 years after the grant of the Stock
Appreciation Right. The amount payable upon exercise of such Stock Appreciation
Rights shall be determined in accordance with Section 7(b)(iii), except that
"Fair Market Value of a Share on the date of the grant of the Stock Appreciation
Right" shall be substituted for "purchase price under the related Option."
(d) Method of Exercise. Stock Appreciation Rights
shall be exercised by a Grantee only by a written notice delivered in person or
by mail to the Secretary of the Company at the Company's principal executive
office, specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee, the
Grantee shall deliver the Agreement evidencing the Stock Appreciation Right
being exercised and the Agreement evidencing any related Option to the Secretary
of the Company who shall endorse thereon a notation of such exercise and return
such Agreements to the Grantee.
(e) Form of Payment. Payment of the amount determined
under Sections 7(b)(iii) or 7(c), may be made solely in whole shares of Common
Stock in a number determined at their Fair Market Value on the date of exercise
of the Stock Appreciation Right or, alternatively, at the sole discretion of the
Committee, solely in cash, or in a combination of cash and Shares as the
Committee deems advisable. If the Committee decides to make full payment in
Shares, and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash.
(f) Restrictions. No Stock Appreciation Right may be
exercised before the date six (6) months after the date it is granted, except in
the event that the death or Disability of the Grantee occurs before the
expiration of the six-month period or in the event of a Change in Control.
(g) Effect of Change in Control. In the event of a
Change in Control, the Board, by written notice to the Optionee, may accelerate
the vesting of some or all of the outstanding Stock Appreciation Rights and may
terminate some or all outstanding Stock Appreciation Rights after a limited
period of exercisability (which may be as short as 30 days). The Award entered
into between the Company and the Eligible Employee may provide for full or
partial vesting or mandatory early termination with respect to the Stock
Appreciation Rights granted thereunder in the event of a Change in Control.
8. Restricted Stock. The Committee may grant Awards of
Restricted Stock which shall be evidenced by an Agreement between the Company
and the Grantee. Each Agreement shall contain such restrictions, terms and
conditions as the Committee may require and (without limiting the generality of
the foregoing) such Agreements may require that an appropriate legend be placed
on Share certificates. Awards of Restricted Stock shall be subject to the
following terms and provisions:
(a) Rights of Grantee.
(1) Shares of Restricted Stock granted pursuant
to an Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted and the purchase price, if
any, is paid by the Grantee, provided that the Grantee has executed an Agreement
evidencing the Award, an Escrow Agreement, appropriate blank stock powers and
any other documents which the Committee, in its absolute discretion, may require
as a condition to the issuance of such Shares. If the Committee has required,
but the Grantee has failed to execute, the Agreement evidencing a Restricted
Stock Award, an Escrow Agreement or appropriate blank stock powers or if the
Grantee has failed to pay the purchase price, if any, for the Restricted Stock,
the Award shall be null and void. Shares issued in connection with a Restricted
Stock Award, together with the stock powers, shall be deposited with the Escrow
Agent. Except as restricted by the terms of the Agreement, upon the delivery of
the Shares to the Escrow Agent, the Grantee shall have all of the rights of a
stockholder with respect to such Shares, including the right to vote the Shares
and to receive, subject to Section 8(d), all dividends or other distributions
paid or made with respect to the Shares.
(2) If a Grantee receives rights or warrants
with respect to any Shares which were awarded to him as Restricted Stock, such
rights or warrants or any Shares or other securities he acquires by the exercise
of such rights or warrants may be held, exercised, sold or otherwise disposed of
by the Grantee free and clear of the restrictions and obligations provided by
this Plan.
(b) Non-Transferability. Until any restrictions upon
the Shares of Restricted Stock awarded to a Grantee shall have lapsed in the
manner set forth in Section 8(c), such Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated, nor
shall they be delivered to the Grantee. Upon the termination of employment of
the Grantee, all of such Shares with respect to which restrictions have not
lapsed shall be resold by the Grantee to the Company at the same price paid by
the Grantee for such Shares or shall be forfeited and automatically transferred
to and reacquired by the Company at no cost to the Company if no purchase price
had been paid for such Shares. The Committee may also impose such other
restrictions and conditions on the Shares as it deems appropriate.
(c) Awards of Restricted Stock to Eligible Directors.
Subject to the approval of the Board, the Committee may grant Awards of
Restricted Stock under this Plan to Eligible Directors with a Fair Market Value
equal to, and in lieu of, up to 25% of the director's annual retainer fee. Such
Eligible Director Awards shall be subject to the following additional terms and
provisions:
(i) The entire Board shall approve all Awards of
Restricted Stock to be granted under the Plan to Eligible Directors and the
number of shares of Restricted Stock to be granted pursuant to each Award;
(ii) The Awards for each year shall be made
effective each July 1 and the number of shares shall be based upon the Fair
Market Value of the Shares on such July 1 or such other date following the
annual meeting of shareholders at which the director is elected as specified by
the Board. The number of shares so determined shall be rounded down to the
nearest 50 shares;
(iii) The Restricted Stock awarded to an
Eligible Director shall be forfeited and automatically transferred to and
reacquired by the Company at no cost to the Company unless the Director
continues to serve as a director on the Board for a period of at least six
months from the date of Grant, except in the event of the death or Disability of
the Eligible Director or a Change in Control of the Company in which case all
restrictions shall lapse;
(iv) Notwithstanding any other provision of this
Plan, no provisions of this Plan relating to continued employment with the
Company or a subsidiary shall apply to Awards to Eligible Directors.
(d) Lapse of Restrictions.
(i) Restrictions upon Shares of Restricted Stock
awarded hereunder shall lapse at such time or times and on such terms,
conditions and satisfaction of performance criteria as the Committee may
determine; provided, however, that the restrictions upon such Shares shall lapse
only if the Grantee on the date of such lapse is then and has continuously been
an employee or director of the Company or a Subsidiary from the date the Award
was granted.
(ii) In the event of termination of employment
as a result of the death or Disability of a Grantee, restrictions upon Shares of
Restricted Stock awarded to such Grantee shall thereupon immediately lapse,
which proportion shall equal the number of full or partial months which have
elapsed from the date of the Award, divided by the number of months in the
original restricted period. The Committee may also decide at any time in its
absolute discretion and on such terms and conditions as it deems appropriate, to
remove or modify the restrictions upon Shares of Restricted Stock awarded
hereunder.
(iii) In the event of a Change in Control, the
Board may by written notice accelerate the vesting of any Award of Restricted
Stock. The Board or the Committee may also provide in an Award for acceleration
of vesting if there is a Change in Control.
(e) Treatment of Dividends. At the time of an Award
of Shares of Restricted Stock, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on Shares of Restricted Stock by the Company shall be deferred
until the earlier to occur of (i) the lapsing of the restrictions imposed upon
such Shares, in which case such dividends shall be paid over to the Grantee, or
(ii) the forfeiture of such Shares under Section 8(b) hereof, in which case such
dividends shall be forfeited to the Company, and such dividends shall be held by
the Company for the account of the Grantee until such time. In the event of such
deferral, interest shall be credited on the amount of such dividends held by the
Company for the account of the Grantee from time to time at such rate per annum
as the Committee, in its discretion, may determine. Payment of deferred
dividends, together with interest accrued thereon as aforesaid, shall be made
upon the earlier to occur of the events specified in (i) and (ii) of the
immediately preceding sentence, in the manner specified therein.
(f) Delivery of Shares. When the restrictions imposed
hereunder and in the Agreement expire or have been cancelled with respect to one
or more shares of Restricted Stock, the Company shall notify the Grantee and the
Escrow Agent of same. The Escrow Agent shall then return the certificate
covering the Shares of Restricted Stock to the Company and upon receipt of such
certificate the Company shall deliver to the Grantee (or such Grantee's legal
representative, beneficiary or heir) a certificate for a number of shares of
Common Stock, without any legend or restrictions (except those required by any
federal or state securities laws), equivalent to the number of Shares of
Restricted Stock for which restrictions have been cancelled or have expired. A
new certificate covering Shares of Restricted Stock previously awarded to the
Grantee which remain restricted shall be issued to the Grantee and held by the
Escrow Agent and the Agreement, as it relates to such shares, shall remain in
effect.
9. Loans.
(a) The Company or any Subsidiary may make loans to a
Grantee or Optionee in connection with the purchase of Shares pursuant to an
Award or in connection with the exercise of an Option, subject to the following
terms and conditions and such other terms and conditions not inconsistent with
the Plan, including the rate of interest, if any, as the Committee shall impose
from time to time.
(b) No loan made under the Plan shall exceed the sum
of (i) the aggregate purchase price payable pursuant to the Option or Award with
respect to which the loan is made, plus (ii) the amount of the reasonably
estimated income taxes payable by the Optionee or Grantee with respect to the
Option or Award. In no event may any such loan exceed the Fair Market Value, at
the date of exercise, of any such Shares.
(c) No loan shall have an initial term exceeding ten
(10) years; provided, that loans under the Plan shall be renewable at the
discretion of the Committee; and provided, further, that the indebtedness under
each loan shall become due and payable, as the case may be, on a date no later
than (i) one (1) year after termination of the Optionee's or Grantee's
employment due to death or Disability, or (ii) the date of termination of the
Optionee's or Grantee's employment for any reason other than death or
Disability.
(d) Loans under the Plan may be satisfied by an
Optionee or Grantee, as determined by the Committee, in cash or, with the
consent of the Committee, in whole or in part by the transfer to the Company of
Shares whose Fair Market Value on the date of such payment is equal to the cash
amount for which such Shares are transferred.
(e) A loan shall be secured by a pledge of Shares
with a Fair Market Value of not less than the principal amount of the loan.
After partial repayment of a loan, pledged shares no longer required as security
may be released to the Optionee or Grantee.
(f) Every loan shall meet all applicable laws,
regulations and rules of any governmental agency having jurisdiction.
10. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any, to
the maximum number and class of shares of stock with respect to which Options or
Awards may be granted under the Plan, the number and class of shares as to which
Options or Awards have been granted under the Plan, and the purchase price
therefor, if applicable.
(b) Any such adjustment in the Shares or other
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 425(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 425 of the Code.
(c) If, by reason of a Change in Capitalization, a
Grantee of an Award shall be entitled to new, additional or different shares of
stock or securities (other than rights or warrants to purchase securities), such
new additional or different shares shall thereupon be subject to all of the
conditions, restrictions and performance criteria which were applicable to the
Shares pursuant to the Award prior to such Change in Capitalization.
11. Effect of Certain Transactions. In the event of (i) the
liquidation or dissolution of the Company, (ii) a merger or consolidation in
which the Company is not the surviving corporation or (iii) the sale or
disposition of all or substantially all of the Company's assets, the Plan and
the Options and Awards issued hereunder provision shall be made in connection
with such transaction for the assumption of Options or Awards theretofore
granted under the Plan, or the substitution for such Options or Awards of new
options or awards of the Successor Corporation, with appropriate adjustment as
to the number and kind of shares and the purchase price for shares thereunder.
12. Release of Financial Information. If the Company produces
an annual report to stockholders, a copy of such report shall be delivered to
each Optionee and Grantee at the time such report is distributed to the
Company's stockholders. If the Company becomes subject to reporting requirements
under the Exchange Act, then upon request the Company shall furnish to each
Optionee and Grantee a copy of its most recent annual report and each quarterly
report and current report filed under the Exchange Act, since the end of the
Company's prior fiscal year.
13. Termination and Amendment of the Plan. The Plan
shall terminate on the day preceding the tenth anniversary of its effective date
and no Option or Award may be granted thereafter. The Board may sooner terminate
or amend the Plan at any time, and from time to time; provided, however, that,
except as provided in Sections 10 and 11 hereof, no amendment shall be effective
unless approved by the stockholders of the Company in accordance with applicable
law and regulations at an annual or special meeting held within twelve months
before or after the date of adoption of such amendment, where such amendment
will:
(a) increase the number of Shares as to which Options
or Awards may be granted under the Plan;
(b) change the class of persons eligible to
participate in the Plan;
(c) change the minimum purchase price of Shares
pursuant to Options or Awards as provided herein;
(d) extend the maximum period for granting or
exercising Options provided herein; or
(e) otherwise materially increase the benefits
accruing to Eligible Employees or Eligible Directors under the Plan.
Except as provided in Sections 10 and 11 hereof, rights and obligations
under any Option or Award granted before any amendment of the Plan shall not be
altered or impaired by such amendment, except with the consent of the Optionee
or Grantee, as the case may be.
14. Non-Exclusivity of the Plan. The adoption of the Plan by
the Board shall not be construed as amending, modifying or rescinding any
previously approved incentive arrangement or as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
15. Limitation of Liability. As illustrative of the
limitations of liability of the Company, but not intended to be exhaustive
thereof, nothing in the Plan shall be construed to;
(a) give any person any right to be granted an Option
or Award other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with
respect to Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company to
terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person in any particular
position at any particular rate of compensation or for any particular period of
time.
16. Regulations and Other Approvals; Governing Law.
(a) This Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of the
State of New Jersey without giving effect to the choice of law principles
thereof, except to the extent that such law is preempted by federal law.
(b) The obligation of the Company to sell or deliver
Shares with respect to Options and Awards granted under the Plan shall be
subject to all applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Committee.
(c) The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and Section 162(m) of the Code and the
Committee shall interpret and administer the provisions of the Plan or any
Agreement in a manner consistent therewith to the extent necessary. Any
provisions inconsistent with such Rule or Section shall be inoperative but such
provisions shall not affect the validity of the Plan or any grants thereunder.
(d) Except as otherwise provided in Section 13, the
Board may make such changes as may be necessary or appropriate to comply with
the rules and regulations of any government authority or to obtain for Eligible
Employees granted Incentive Stock Options the tax benefits under the applicable
provisions of the Code and regulations promulgated thereunder.
(e) Each Option and Award is subject to the
requirement that, if at any time the Committee determines, in its absolute
discretion, that the listing, registration or qualification of Shares issuable
pursuant to the Plan is required by any securities exchange or under any state
or federal law, or the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, the grant of
an Option or the issuance of Shares, no Options shall be granted or payment made
or Shares issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained free of any
conditions unacceptable to the Committee.
(f) In the event that the disposition of Shares
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act of 1933, as amended, and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act of 1933, as amended, or regulations
thereunder, and the Committee may require any individual receiving Shares
pursuant to the Plan, as a condition precedent to receipt of such Shares
(including upon exercise of an Option), to represent to the Company in writing
that the Shares acquired by such individual are acquired for investment only and
not with a view to distribution.
17. Miscellaneous.
(a) Multiple Agreements. The terms of each Option or
Award may differ from other Options or Awards granted under the Plan at the same
time, or at some other time. The Committee may also grant more than one Option
or Award to a given Eligible Employee or Eligible Director during the term of
the Plan, either in addition to, or in substitution for, one or more Options or
Awards previously granted to that Eligible Employee or Eligible Director. The
grant of multiple Options and/or Awards may be evidenced by a single Agreement
or multiple Agreements, as determined by the Committee.
(b) Withholding of Taxes. The Company shall have the
right to deduct from any distribution of cash to any Optionee or Grantee an
amount equal to the federal, state and local income taxes and other amounts
required by law to be withheld with respect to any Option or Award.
Notwithstanding anything to the contrary contained herein, if an Optionee or
Grantee is entitled to receive Shares upon exercise of an Option or pursuant to
an Award, the Company shall have the right to require such Optionee or Grantee,
prior to the delivery of such Shares, to pay to the Company the amount of any
federal, state or local income taxes and other amounts which the Company is
required by law to withhold. The Agreement evidencing any Incentive Stock
Options granted under this Plan shall provide that if the Optionee makes a
disposition, within the meaning of Section 425(c) of the Code and regulations
promulgated thereunder, of any Share or Shares issued to him or her pursuant to
his or her exercise of the Incentive Stock Option within the two-year period
commencing on the day after the date of grant of such Option or within the
one-year period commencing on the day after the date of transfer of the Share or
Shares to the Optionee pursuant to the exercise of such Option, he or she shall,
within ten (10) days of such disposition, notify the Company thereof and
immediately deliver to the Company any amount of federal income tax withholding
required by law.
(c) Designation of Beneficiary. Each Optionee and
Grantee may, with the consent of the Committee, designate a person or persons to
receive in the event of his/her death, any Option or Award or any amount payable
pursuant thereto, to which he/she would then be entitled. Such designation will
be made upon forms supplied by and delivered to the Company and may be revoked
in writing. If an Optionee fails effectively to designate a beneficiary, then
his/her estate will be deemed to be the beneficiary.
18. Effective Date. The effective date of the Plan shall be
the date of its adoption by the Board, subject only to the approval by the
affirmative vote of a majority of the votes cast at a meeting of stockholders at
which a quorum is present to be held on or before September 30, 1998. No Options
or Awards shall vest hereunder unless such shareholder approval is obtained.
