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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 12, 1999
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Statewide Financial Corp.
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(Exact name of registrant as specified in its charter)
New Jersey 0-26546 22-3397900
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(State or other jurisdiction of (Commission (IRS Employer
incorporation File Number) Identification No.)
70 Sip Avenue, Jersey City, New Jersey 07306
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 795-4000
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Item 5. Other Events
Independence Community Bank Corp., Brooklyn, New York ("ICBC") and the
Registrant have entered into an Agreement and Plan of Merger ("Agreement") dated
as of April 12, 1999, pursuant to which, and subject to the conditions and upon
the terms stated therein, Registrant will merge with and into ICBC, with ICBC
being the surviving corporation. Upon completion of this transaction,
Registrant's wholly-owned subsidiary, Statewide Savings Bank, S.L.A., will merge
into Independence Community Bank, Independence's wholly-owned subsidiary.
Pursuant to the Agreement, each share of common stock of the Registrant,
no par value per share ("Statewide Common Stock"), issued and outstanding at the
Effective Time (as defined in the Agreement) of the merger (other than (i)
shares of Statewide Common Stock held in treasury and (ii) shares of Statewide
Common Stock held directly or indirectly by ICBC or the Registrant or any of
their respective subsidiaries (collectively, the "Excluded Shares"), which
Excluded Shares shall be canceled and cease to exist and no consideration shall
be delivered in exchange therefor) will be converted into the right to receive,
at the election of the holder thereof, either (i) a number of shares of ICBC
Common Stock, $.01 par value per share ("ICBC Common Stock"), equal to the Final
Exchange Ratio (as hereinafter defined) or (ii) cash in an amount equal to the
Per Share Consideration (as hereinafter defined), provided, however, the
aggregate amount of cash consideration will amount to approximately $51.0
million; provided further, however, that approximately 50% of Statewide Common
Stock will be exchanged for ICBC Common Stock and approximately 50% of Statewide
Common Stock will be exchanged for cash, subject to the discussion below. Under
the terms of the Agreement, the Final Exchange Ratio equals the quotient
obtained by dividing the Per Share Consideration by the Average Closing Price
(as defined below). The Per Share Consideration is equal to the sum of the
aggregate cash consideration and the aggregate stock consideration divided by
the number of issued and outstanding shares of Statewide Common Stock at the
Effective Time of the merger. The aggregate stock consideration is the product
of one-half of the number of issued and outstanding shares of Statewide Common
Stock, times the Average Closing Price, times 2.0612. The Average Closing Price
for ICBC Common Stock will be the average of the reported closing sale prices
per share during the Pricing Period (which consists of the ten consecutive
trading days during which ICBC Common Stock is traded on the Nasdaq Stock Market
ending on the tenth business day immediately prior to the anticipated Effective
Time of the merger). The Agreement contains customary antidilution provisions.
In the event that the Registrant's stockholders elect to receive cash
exceeding the aggregate amount of cash available in the transaction, additional
shares of ICBC Common Stock in lieu of cash may be allocated to such
stockholders on a pro rata basis. Conversely, if Registrant's stockholders elect
to receive ICBC Common Stock in an amount in excess of the amount of stock
available in the transaction, such stockholders may be paid cash in lieu of
stock on a pro rata basis. To the extent possible, stockholders who express no
preference between cash and stock or fail to file an election will be allocated
ICBC Common Stock or cash in such a
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manner as to avoid or minimize adjustments in the type of consideration
requested by those stockholders who do file an election.
Consummation of the transactions contemplated by the Agreement is subject
to the terms and conditions contained in the Agreement, including, among other
things, the approval of the shareholders of Registrant and the receipt of
certain regulatory approvals. The transactions contemplated by the Agreement
will be submitted for approval at a special meeting of the shareholders of
Registrant, and the transaction is expected to close in the fourth quarter of
1999, but no later than January 31, 2000.
The foregoing description of the Agreement is qualified in its entirety by
reference to the complete text of the Agreement, which is filed as Exhibit 2.1
hereto and is incorporated by reference herein.
Immediately following the execution and delivery of the Agreement, ICBC
and Registrant entered into a Stock Option Agreement, dated as of April 12,
1999, pursuant to which Registrant granted ICBC the right, upon the terms and
subject to the conditions set forth therein, to purchase up to 803,531 shares,
or 19.9%, of the common stock of Registrant.
The forgoing description of the Stock Option Agreement is qualified in its
entirety by reference to the complete text of the Stock Option Agreement, which
is filed as Exhibit 2.2 hereto and is hereby incorporated herein by reference.
A copy of the press release, dated April 13, 1998, issued by ICBC and the
Registrant is attached as Exhibit 99.1 hereto and is hereby incorporated herein
by reference.
CONTAINED WITHIN AND INCORPORATED BY REFERENCE IN THIS CURRENT REPORT ON
FORM 8-K, INCLUDING THE EXHIBITS HERETO, ARE CERTAIN FORWARD LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
THESE STATEMENTS INCLUDE CERTAIN ESTIMATES AND PROJECTIONS REGARDING ICBC AND
THE REGISTRANT AND THE COMBINED COMPANIES FOLLOWING THE TRANSACTIONS
CONTEMPLATED BY THE AGREEMENT, INCLUDING WITHOUT LIMITATION ESTIMATES AND
PROJECTIONS RELATING TO THE PRO FORMA BUSINESS AND ASSETS OF THE COMBINED
COMPANIES, THE COST SAVINGS, REVENUE INCREASES AND RESTRUCTURING CHARGES
EXPECTED AS A RESULT OF THE MERGERS AND THE EXPECTED IMPACT OF THE TRANSACTION
ON EARNINGS PER SHARE OF THE CONSTITUENT COMPANIES.
SUCH STATEMENTS ARE NOT HISTORICAL FACTS AND INCLUDE EXPRESSIONS ABOUT
MANAGEMENT'S CONFIDENCE AND STRATEGIES AND MANAGEMENT'S EXPECTATIONS ABOUT THE
MERGER. THESE STATEMENTS MAY BE IDENTIFIED BY SUCH FORWARD-LOOKING TERMINOLOGY
AS "EXPECT", "LOOK", "BELIEVE", "ANTICIPATE", "MAY", "WILL", OR SIMILAR
STATEMENTS OR VARIATIONS OF SUCH TERMS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE
CERTAIN RISKS AND UNCERTAINTIES AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THE RESULTS DISCUSSED IN THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT
CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, RISKS AND UNCERTAINTIES
RELATED TO THE CONSUMMATION AND EXECUTION OF THE MERGERS (INCLUDING
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INTEGRATION ACTIVITIES), THE DIRECTION OF INTEREST RATES, CONTINUED LEVELS OF
LOAN QUALITY AND ORIGINATION VOLUME, CONTINUED RELATIONSHIPS WITH MAJOR
CUSTOMERS INCLUDING SOURCES FOR LOANS, SUCCESSFUL COMPLETION OF THE
IMPLEMENTATION OF YEAR 2000 TECHNOLOGY CHANGES, AS WELL AS THE EFFECTS OF
ECONOMIC CONDITIONS AND LEGAL AND REGULATORY BARRIERS AND STRUCTURE. ACTUAL
RESULTS MAY DIFFER MATERIALLY FOR SUCH FORWARD-LOOKING STATEMENTS. REGISTRANT
ASSUMES NO OBLIGATION FOR UPDATING ANY SUCH FORWARD-LOOKING STATEMENTS AT ANY
TIME.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits:
Exhibit 2.1 Agreement and Plan of Merger, dated as of April 12,
1999, by and between Independence Community Bank
Corp. and Registrant
Exhibit 2.2 Stock Option Agreement, dated as of April 12, 1999
by and between Registrant, as issuer, and Independence
Community Bank Corp., as grantee.
Exhibit 99.1 Press Release, dated April 13, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Dated: April 23, 1999
STATEWIDE FINANCIAL CORP. (Registrant)
By: BERNARD F. LENIHAN
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Senior Vice President and
Chief Financial Officer
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AGREEMENT AND PLAN OF MERGER
BETWEEN
INDEPENDENCE COMMUNITY BANK CORP.
AND
STATEWIDE FINANCIAL CORP.
DATED AS OF APRIL 12, 1999
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
PAGE
1.1 The Merger 1
1.2 Effective Time 2
1.3 Effects of the Merger 2
1.4 Conversion of Company Common Stock 2
1.5 Election Procedures 4
1.6 Stock Options 6
1.7 ICBC Common Stock 8
1.8 Tax Opinion Adjustment 8
1.9 Certificate of Incorporation 8
1.10 Bylaws 8
1.11 Directors and Officers 8
1.12 Tax Consequences 8
1.13 Bank Merger 9
1.14 Modification of Structure 9
ARTICLE II
EXCHANGE OF SHARES
2.1 ICBC to Make Shares Available 9
2.2 Exchange of Shares 9
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS FOR
REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules 11
3.2 Standards 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Corporate Organization 12
4.2 Capitalization 13
4.3 Authority; No Violation 14
4.4 Consents and Approvals 16
4.5 Reports 16
4.6 Financial Statements 16
4.7 Broker's Fees 17
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4.8 Absence of Certain Changes or Events 17
4.9 Legal Proceedings 18
4.10 Taxes 18
4.11 Employees 19
4.12 SEC Reports 20
4.13 Company Information 20
4.14 Compliance with Applicable Law 20
4.15 Certain Contracts 20
4.16 Agreements with Regulatory Agencies 21
4.17 Environmental Matters 22
4.18 Opinion 23
4.19 Approvals 23
4.20 Loan Portfolio 23
4.21 Property 24
4.22 Reorganization 25
4.23 Antitakeover Provisions Inapplicable 25
4.24 Insurance 25
4.25 Investment Securities; Borrowings; Deposits 25
4.26 Indemnification 26
4.27 Year 2000 Matters 26
4.28 Undisclosed Liabilities 26
4.29 Liquidation Account 26
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ICBC
5.1 Corporate Organization 27
5.2 Capitalization 27
5.3 Authority; No Violation 28
5.4 Consents and Approvals 29
5.5 Reports 30
5.6 Financial Statements 30
5.7 Broker's Fees 31
5.8 Absence of Certain Changes or Events 31
5.9 Legal Proceedings 31
5.10 Taxes 31
5.11 Employees 32
5.12 SEC Reports 33
5.13 ICBC Information 33
5.14 Compliance with Applicable Law 33
5.15 Ownership of Company Common Stock 33
5.16 Agreements with Regulatory Agencies 34
5.17 Opinion 34
5.18 Environmental Matters 34
5.19 Loan Portfolio 35
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5.20 Insurance 35
5.21 Year 2000 Matters 35
5.22 Approvals 36
5.23 Reorganization 36
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company 36
6.2 Covenants of ICBC 41
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters 42
7.2 Access to Information 43
7.3 Stockholder Meeting 43
7.4 Legal Conditions to Merger 43
7.5 Affiliates 44
7.6 Stock Exchange Listing 44
7.7 Employee Benefit Plans; Existing Agreements 44
7.8 Indemnification 48
7.9 Additional Agreements 49
7.10 Coordination of Dividends 49
7.11 Notification of Certain Matters 49
7.12 Certain Matters, Certain Revaluations, Changes and Adjustments 50
7.13 Appointments 50
7.14 Advisory Board 50
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger 51
8.2 Conditions to Obligations of ICBC 52
8.3 Conditions to Obligations of the Company 53
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination 55
9.2 Effect of Termination 56
9.3 Amendment 56
9.4 Extension; Waiver 56
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ARTICLE X
GENERAL PROVISIONS
10.1 Closing 57
10.2 Nonsurvival of Representations, Warranties and Agreements 57
10.3 Expenses 57
10.4 Notices 57
10.5 Interpretation 58
10.6 Counterparts 58
10.7 Entire Agreement 58
10.8 Governing Law 59
10.9 Severability 59
10.10 Publicity 59
10.11 Assignment; No Third Party Beneficiaries 59
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 12, 1999, between
Independence Community Bank Corp., a Delaware corporation ("ICBC"), and
Statewide Financial Corp., a New Jersey corporation (the "Company"). ICBC and
the Company are sometimes collectively referred to herein as the "Constituent
Corporations".
WHEREAS, the Boards of Directors of ICBC and the Company have determined
that it is in the best interests of their respective companies and their
stockholders to consummate the business combination transaction provided for
herein in which the Company will, subject to the terms and conditions set forth
herein, merge (the "Merger") with and into ICBC and immediately thereafter,
Statewide Savings Bank, S.L.A., the wholly owned subsidiary of the Company, will
be merged with and into Independence Community Bank, the wholly owned subsidiary
of ICBC (the "Bank Merger"); and
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to ICBC's willingness to enter into this
Agreement, ICBC and the Company have entered into a Stock Option Agreement (the
"Stock Option Agreement") pursuant to which the Company has granted to ICBC an
option to purchase shares of the Company's common stock, no par value per share
(the "Company Common Stock"), upon the terms and conditions therein contained;
and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, in
accordance with the Delaware General Corporation Law (the "DGCL") and the New
Jersey Business Corporation Act (the "NJBCA"), at the Effective Time (as defined
in Section 1.2 hereof), the Company shall merge with and into ICBC. ICBC shall
be the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") in the Merger, and shall continue its corporate existence under
the laws of the State of Delaware. The name of the Surviving Corporation shall
continue to be Independence Community Bank Corp. Upon consummation of the
Merger, the separate corporate existence of the Company shall terminate.
1.2 EFFECTIVE TIME. The Merger shall become effective as set forth in the
certificate of merger (the "Certificate of Merger") which shall be filed with
the Secretaries of State of the
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States of Delaware and New Jersey (the "Secretaries") on the Closing Date (as
defined in Section 10.1 hereof). The term "Effective Time" shall be the date and
time when the Merger becomes effective, as set forth in the Certificate of
Merger.
1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in Sections 259 and 261 of the DGCL and
Sections 14A:10-6 and 14A:10-7 of the NJBCA.
1.4 CONVERSION OF COMPANY COMMON STOCK. (a) At the Effective Time, subject
to Section 2.2(e) hereof, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than (i) shares of
Company Common Stock held in the Company's treasury, (ii) unallocated shares of
Company Common Stock held in the Statewide Financial Corp. Recognition and
Retention Plan for Executive Officers and Employees and the Statewide Financial
Corp. Recognition and Retention Plan for Outside Directors (the "Statewide
Recognition Plans"), and (iii) shares of Company Common Stock held directly or
indirectly by ICBC or the Company or any of their respective Subsidiaries (as
defined below)) except for DPC Shares, as such term is defined in Section 1.4(b)
hereof, shall by virtue of this Agreement and without any action on the part of
the Company, ICBC or the holder thereof, cease to be outstanding and shall be
converted into and become the right to receive, at the election of the holder
thereof as provided in Section 1.5, either:
(i) a number of shares of common stock, par value $0.01 per share, of
ICBC ("ICBC Common Stock") equal to the Final Exchange Ratio, or
(ii) cash in an amount equal to the Per Share Consideration.
(b) At the Effective Time, (i) all shares of Company Common Stock that are
owned by the Company as treasury stock, (ii) all unallocated shares of Company
Common Stock held in the Statewide Recognition Plans, and (iii) all shares of
Company Common Stock that are owned directly or indirectly by ICBC or the
Company or any of their respective Subsidiaries (other than shares of Company
Common Stock) held by ICBC or the Company or any of their respective
Subsidiaries in respect of a debt previously contracted (any such shares of
Company Common Stock, and shares of ICBC Common Stock which are similarly held,
being referred to herein as "DPC Shares"), shall be cancelled and shall cease to
exist and no stock of ICBC or other consideration shall be delivered in exchange
therefor. All shares of ICBC Common Stock that are owned by the Company or any
of its Subsidiaries (other than DPC Shares) shall become treasury stock of ICBC.
(c) On and after the Effective Time, holders of certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates") shall cease to have any rights as
stockholders of the Company, except the right to receive the consideration set
forth in this Article I, as such consideration may be adjusted pursuant to the
provisions of Section 9.1(g) hereof (the "Merger Consideration"), for each such
share held by them.
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(d) If, between the date of this Agreement and the Effective Time, the
shares of ICBC Common Stock shall be changed into a different number or class of
shares by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or a stock dividend thereon
shall be declared with a record date within said period, appropriate adjustments
shall be made to the Preliminary Stock Ratio, the Minimum Stock Ratio, the
Maximum Stock Ratio and the Exchange Ratio (as such terms are defined herein).
(e) For purposes of this Agreement, the following terms shall have the
meanings indicated:
"Aggregate Cash Consideration" shall mean (w) 0.5 multiplied by (x) the
Outstanding Shares Number multiplied by (y) $25.25.
"Aggregate Merger Consideration" shall mean the sum of (x) the
Aggregate Cash Consideration and (y) the Aggregate Stock Consideration.
"Aggregate Stock Consideration" shall mean (w) 0.5 multiplied by (x)
the Outstanding Shares Number multiplied by (y) the Average Closing
Price multiplied by (z) the Exchange Ratio.
"Average Closing Price" shall mean the average of the closing sale
prices per share for ICBC Common Stock as reported on the Nasdaq Stock
Market/National Market System ("Nasdaq Stock Market") (as reported by
The Wall Street Journal, or, if not reported thereby, another
authoritative source), during the ten (10) consecutive trading-day
period during which the shares of ICBC Common Stock are traded on the
Nasdaq Stock Market ending on the tenth business day immediately prior
to the anticipated Effective Time (the "Pricing Period").
"Exchange Ratio" shall 2.0612.
"Final Exchange Ratio" shall mean the quotient, rounded to the nearest
ten-thousandth, obtained by dividing the Per Share Consideration by the
Average Closing Price.
"Outstanding Shares Number" shall mean shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time, which
shares shall not exceed 4,037,847 plus up to an additional 515,202
shares issued pursuant to the Company Option Plans (as defined in
Section 1.6(a) hereof) after the date of this Agreement, plus any
shares of Company Common Stock issued pursuant to the Stock Option
Agreement.
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"Per Share Consideration" shall mean the quotient obtained by dividing
the Aggregate Merger Consideration by the Outstanding Shares Number.
1.5 ELECTION PROCEDURES. (a) An election form and other appropriate and
customary transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to Certificates shall pass, only upon
proper delivery of such Certificates to a bank or trust company designated by
ICBC and reasonably satisfactory to the Company (the "Exchange Agent")) in such
form as the Company and ICBC shall mutually agree (the "Election Form"), shall
be mailed at least 30 days prior to the anticipated Effective Time or on such
earlier date as ICBC and the Company shall mutually agree (the "Mailing Date")
to each holder of record of Company Common Stock as of five business days prior
to the Mailing Date ("Election Form Record Date").
Each Election Form shall permit a holder (or the beneficial owner through
appropriate and customary documentation and instructions) of outstanding Company
Common Stock to elect, subject to provisions of this Section 1.5, to receive, on
a per share basis, with respect to such holder's Company Common Stock (i) cash
(shares as to which such election is made, the "Cash Election Shares") or (ii)
ICBC Common Stock (shares as to which such election is made, the "Stock Election
Shares"). A holder of Company Common Stock may elect to receive a combination of
ICBC Common Stock and cash with respect to his shares of Company Common Stock.
Notwithstanding the foregoing, no holder of Company Common Stock may elect to
receive ICBC Common Stock pursuant to the election procedures provided herein
with respect to fewer than 100 shares of Company Common Stock. To be effective,
a properly completed Election Form shall be submitted to the Exchange Agent on
or before 5:00 p.m., New York City time, on the 20th day following the Mailing
Date (or such other time and date as ICBC and the Company may mutually agree)
(the "Election Deadline"); provided, however, that the Election Deadline may not
occur on or after the Closing Date (as defined in Section 10.1 hereof).
ICBC shall make available up to two separate Election Forms, or such
additional Election Forms as ICBC may permit, to all persons who become holders
(or beneficial owners) of Company Common Stock between the Election Form Record
Date and the close of business on the business day prior to the Election
Deadline. The Company shall provide to the Exchange Agent all information
reasonably necessary for it to perform as specified herein. An election shall
have been properly made only if the Exchange Agent shall have actually received
a properly completed Election Form by the Election Deadline.
An Election Form shall be deemed properly completed only if accompanied by
one or more Certificates (or customary affidavits and indemnification regarding
the loss or destruction of such Certificates or the guaranteed delivery of such
Certificates) representing all shares of Company Common Stock covered by such
Election Form, together with duly executed transmittal materials included with
the Election Form. If a stockholder either (i) does not submit a properly
completed Election Form in a timely fashion, or (ii) revokes its Election Form
prior to the Election Deadline, the shares of Company Common Stock held by such
stockholder shall be designated "No Election Shares." Shares of Company Common
Stock held by holders who
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acquired such shares subsequent to the Election Deadline will be designated "No
Election Shares." ICBC shall cause the Certificates described in clause (ii) of
the immediately preceding sentence to be promptly returned without charge to the
person submitting the Election Form upon written request to that effect from the
person who submitted the Election Form. Subject to the terms of this Agreement
and of the Election Form, the Exchange Agent shall have reasonable discretion to
determine whether any election, revocation or change has been properly or timely
made and to disregard immaterial defects in any Election Form, and any good
faith decisions of the Exchange Agent regarding such matters shall be binding
and conclusive. Neither ICBC nor the Exchange Agent shall be under any
obligation to notify any person of any defect in an Election Form.
(b) The "Cash Election Amount" shall be equal to the Per Share
Consideration multiplied by the total number of Cash Election Shares. Within
seven business days after the Election Deadline, unless the Effective Time has
not yet occurred, in which case as soon thereafter as practicable, ICBC shall
cause the Exchange Agent to effect the allocation among the holders of Company
Common Stock of rights to receive ICBC Common Stock or cash in the Merger in
accordance with the Election Forms as follows:
(i) If the Aggregate Cash Consideration is greater than the Cash
Election Amount, then:
(A) all Cash Election Shares shall be converted into the right
to receive an amount of cash equal to the Per Share Consideration,
(B) the Exchange Agent will select, on a pro rata basis, first
from among the holders of No Election Shares and then, if necessary,
from among the holders of Stock Election Shares, a sufficient number
of such shares ("Cash Designee Shares") such that the sum of Cash
Designee Shares and Cash Election Shares multiplied by the Per Share
Consideration equals as closely as practicable the Aggregate Cash
Consideration (the Cash Designee Shares shall be converted into the
right to receive an amount of cash equal to the Per Share
Consideration), and
(C) any Stock Election Shares and any No Election Shares, in
each case, not so selected as Cash Designee Shares shall be converted
into the right to receive ICBC Common Stock at the Final Exchange
Ratio.
(ii) If the Aggregate Cash Consideration is less than the Cash
Election Amount, then:
(A) all Stock Election Shares and all No Election Shares shall
be converted into the right to receive ICBC Common Stock at the Final
Exchange Ratio,
(B) the Exchange Agent will select, on a pro rata basis from
among the
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holders of Cash Election Shares, a sufficient number of such shares
("Stock Designee Shares") such that the number of Stock Designee
Shares multiplied by the Per Share Consideration equals as closely as
practicable the difference between the Cash Election Amount and the
Aggregate Cash Consideration (the Stock Designee Shares shall be
converted into the right to receive ICBC Common Stock at the Final
Exchange Ratio), and
(C) any Cash Election Shares not so selected as Stock Designee
Shares shall be converted into the right to receive an amount of cash
equal to the Per Share Consideration.
In the event that the Exchange Agent is required pursuant to Section
1.5(b)(i)(B) to designate from among all Stock Election Shares the Cash Designee
Shares to receive cash, each holder of Stock Election Shares shall be allocated
a pro rata portion of the remainder of the total Cash Designee Shares less the
number of No Election Shares which are Cash Designee Shares. Such proration
shall reflect the proportion that the number of Stock Election Shares of each
holder of Stock Election Shares bears to the total number of Stock Election
Shares. In the event the Exchange Agent is required pursuant to Section
1.5(b)(ii)(B) to designate from among all holders of Cash Election Shares the
Stock Designee Shares to receive ICBC Common Stock, each holder of Cash Election
Shares shall be allocated a pro rata portion of the total Stock Designee Shares.
Such proration shall reflect the proportion that the number of Cash Election
Shares of each holder of Cash Election Shares bears to the total number of Cash
Election Shares.
1.6 STOCK OPTIONS. (a) At the Effective Time, each option granted by the
Company to purchase shares of Company Common Stock (each a "Company Option")
pursuant to the Company's Stock Option Plans set forth in Section 4.2(a) of the
Company Disclosure Schedule (as hereinafter defined) (the "Company Option
Plans") which is outstanding and unexercised immediately prior thereto, whether
or not then vested or exercisable, will, at the election of the individual
holders of the Company Options be either:
(i) cancelled and all rights thereunder be extinguished ("Cancelled
Option Holder"), in consideration for which the Company shall make payment
immediately prior to the Effective Time an amount determined by multiplying
(A) the number of shares of Company Common Stock underlying such Company
Option by (B) an amount equal to the excess (if any) of (1) the Per Share
Consideration, over (2) the exercise price per share of such Company
Option; or
(ii) converted automatically into an option to purchase shares of ICBC
Common Stock ("Continuing Option Holder") in an amount, for a term and at
an exercise price determined as provided below (and otherwise subject to
the terms of the particular Company Option Plan pursuant to which each such
Company Option was issued, the agreements evidencing grants thereunder and
any other agreements between the Company and an optionee regarding Company
Options which have been delivered to ICBC prior to the date of this
Agreement):
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(A) the number of shares to be subject to the new option shall
be equal to the product of the number of shares of Company Common
Stock subject to the Company Option immediately prior to the Effective
Time and the Exchange Ratio, provided that any fractional shares of
ICBC Common Stock resulting from such multiplication shall be rounded
down to the nearest whole share;
(B) the exercise price per share of ICBC Common Stock under the
new option shall be equal to the exercise price per share of Company
Common Stock under the Company Option divided by the Exchange Ratio,
provided that such exercise price shall be rounded up to the nearest
cent; and
(C) The term or duration of the new option shall be the same as
that of the Company Option.
The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")) shall be and is intended to be effected
in a manner which is consistent with Section 424(a) of the Code and, to the
extent it is not so consistent, such Section 424(a) shall override anything to
the contrary contained herein. The duration and other terms of the new option
shall be the same as the original option except as provided for above and that
all references to the Company shall be deemed to be references to ICBC.
(b) In order for any Continuing Option Holder to have his or her Company
Options converted into an option to purchase ICBC Common Stock as set forth in
this Section 1.6(a) or for a Cancelled Option Holder to have his or her Company
Option converted into the right to receive cash, such Continuing Option Holder
or Cancelled Option Holder shall have executed a written election with respect
to such conversion or cancellation no later than the Election Deadline, which
written election shall be in such form as shall be prescribed by ICBC and
reasonably satisfactory to the Company. No payment shall be made to a Cancelled
Option Holder unless and until such holder has executed and delivered the
foregoing written election. In the event any holder of a Company Option fails to
make an election within the time frame set forth herein, the Company Option held
thereby shall automatically be converted at the Effective Time into an option to
purchase ICBC Common Stock in the amount and at the exercise price as calculated
pursuant to Section 1.6(a)(ii) hereof.
(c) Prior to the Effective Time, ICBC shall reserve for issuance the number
of shares of ICBC Common Stock necessary to satisfy ICBC's obligations under
Section 1.6(a) hereof. Promptly after the Effective Time (but in no event later
than twenty business days thereafter), ICBC shall file with the Securities and
Exchange Commission (the "SEC") a registration statement on an appropriate form
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the shares of ICBC Common Stock subject to options to acquire ICBC
Common Stock issued pursuant to Section 1.6(a) hereof, and shall use its best
efforts to maintain the current status of the prospectus contained therein, as
well as comply with applicable state securities or "blue sky" laws, for so long
as such options remain outstanding.
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(d) Prior to the Effective Time, the Company shall take or cause to be
taken all actions required under the Company Option Plans to provide for the
foregoing.
1.7 ICBC COMMON STOCK. Except for shares of ICBC Common Stock owned by the
Company or any of its Subsidiaries (other than DPC Shares), which shall be
converted into treasury stock of ICBC as contemplated by Section 1.4 hereof, the
shares of ICBC Common Stock issued and outstanding immediately prior to the
Effective Time shall be unaffected by the Merger and such shares shall remain
issued and outstanding.
1.8 TAX OPINION ADJUSTMENT. If either (i) the tax opinion referred to in
Section 8.2(c) cannot be rendered (as reasonably determined by Elias, Matz,
Tiernan & Herrick L.L.P.) or (ii) the tax opinion referred to in Section 8.3(c)
cannot be rendered (as reasonably determined by McCarter & English LLP), in
either case as a result of the Merger potentially failing to qualify as a
reorganization under Section 368(a) of the Code, then ICBC shall reduce the
Aggregate Cash Consideration to the minimum extent necessary to enable the
relevant tax opinion or opinions, as the case may be, to be rendered, and
correspondingly increase the Aggregate Stock Consideration, based on the Average
Closing Price for the ICBC Common Stock.
1.9 CERTIFICATE OF INCORPORATION. At the Effective Time, the Certificate of
Incorporation of ICBC, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable laws.
1.10 BYLAWS. At the Effective Time, the Bylaws of ICBC, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.11 DIRECTORS AND OFFICERS. The directors and officers of ICBC immediately
prior to the Effective Time, together with the director appointed pursuant to
Section 7.13 hereof, shall be the directors and officers of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified.
1.12 TAX CONSEQUENCES. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code and that this
Agreement shall constitute a "plan of reorganization" for purposes of Section
368 of the Code.
1.13 BANK MERGER. Promptly following the execution of this Agreement, ICBC
Bank (as defined below) and Company Bank (as defined below) shall enter into the
Agreement of Merger (the "Bank Merger Agreement") in the form annexed hereto as
Exhibit A (which shall qualify as a reorganization under Section 368(a) of the
Code) pursuant to which the Bank Merger Agreement will be effected pursuant to
and with the effect set forth in the rules and regulations of the New York State
Banking Department (the "Department"), the Federal Deposit Insurance Corporation
(the "FDIC"), the New Jersey Department of Banking and Insurance (the "New
Jersey Department") and the Office of Thrift Supervision (the "OTS"), if
applicable. The parties
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hereto intend that the Bank Merger shall become effective substantially
simultaneously with or immediately following the Effective Time. The
documentation relating to the Bank Merger shall provide that the directors of
ICBC Bank as the surviving entity of the Bank Merger shall be all of the
respective directors of ICBC Bank immediately prior to such merger together with
the director appointed pursuant to Section 7.13 hereof.
1.14 MODIFICATION OF STRUCTURE. Notwithstanding any provision of this
Agreement to the contrary, ICBC may elect, subject to the filing of all
necessary applications and the receipt of all required regulatory approvals, to
modify the structure of the transactions contemplated hereby so long as (i)
there are no adverse federal income tax consequences to the stockholders of the
Company as a result of such modification, (ii) the consideration to be paid to
holders of Company Common Stock, including shares of Company Common Stock
underlying the Company Options granted pursuant to the Company Option Plans,
under this Agreement is not thereby changed in kind or reduced in amount solely
because of such modification, and (iii) such modification will not be likely to
materially delay the Effective Time or materially delay or jeopardize receipt of
any required regulatory approvals or of the tax opinions required under Sections
8.2(c) and 8.3(c).
ARTICLE II
EXCHANGE OF SHARES
2.1 ICBC TO MAKE SHARES AVAILABLE. At or prior to the Effective Time, ICBC
shall deposit, or shall cause to be deposited, with the Exchange Agent, for the
benefit of the holders of Certificates, for exchange in accordance with this
Article II, certificates representing the shares of ICBC Common Stock, the cash
in lieu of fractional shares and an amount of cash sufficient to pay the
Aggregate Cash Consideration (such cash and certificates for shares of ICBC
Common Stock, together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund") to be issued pursuant to
Section 1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding
shares of Company Common Stock.
2.2 EXCHANGE OF SHARES. (a) As soon as practicable after the Effective
Time, and in no event more than seven business days thereafter, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates who
has not previously surrendered such Certificate or Certificates with a Form of
Election a form letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Exchange Agent) and instructions
for use in effecting the surrender of the Certificates in exchange for the
Merger Consideration into which the shares of Company Common Stock represented
by such Certificate or Certificates shall have been converted pursuant to this
Agreement. The Company shall have the right to review both the letter of
transmittal and the instructions prior to the Effective Time and provide
reasonable comments thereon. Upon surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration to which such holder of Company
Common Stock shall have become entitled pursuant to the provisions of Article I
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hereof, and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on any cash constituting Merger Consideration
(including the cash in lieu of fractional shares) and any unpaid dividends and
distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the Effective Time
with respect to ICBC Common Stock and payable to the holders of record thereof
shall be paid to the holder of any unsurrendered Certificate until the holder
thereof shall surrender such Certificate in accordance with this Article II.
After the surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of ICBC Common Stock, if any, represented by such
Certificate.
(c) If any certificate representing shares of ICBC Common Stock is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of ICBC Common Stock in any name other than
that of the registered holder of the Certificate surrendered, or required for
any other reason, or shall establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Company of the shares of Company Common Stock which were
issued and outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are presented for transfer
to the Exchange Agent, they shall be cancelled and exchanged for Merger
Consideration as determined in accordance with Article I and this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of ICBC Common Stock shall
be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to ICBC Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
ICBC. In lieu of the issuance of any such fractional share, ICBC shall pay to
each former stockholder of the Company who otherwise would be entitled to
receive a fractional share of ICBC Common Stock an amount in cash determined by
multiplying (i) the Average Closing Price by (ii) the fraction of a share of
ICBC Common Stock which such holder would otherwise be entitled to receive
pursuant to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for nine months after the Effective Time shall be
paid to ICBC. Any stockholders of the Company who have not theretofore complied
with this Article II shall thereafter look only to ICBC for payment of the cash,
shares of ICBC Common Stock, cash in lieu of fractional shares and unpaid
dividends and distributions on the ICBC Common Stock deliverable in respect
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of each share of Company Common Stock such stockholder holds as determined
pursuant to this Agreement, in each case, without any interest thereon. If
outstanding Certificates are not surrendered or the payment for them is not
claimed prior to the date on which such payments would otherwise escheat to or
become the property of any governmental unit or agency, the unclaimed items
shall, to the extent permitted by abandoned property and any other applicable
law, become the property of ICBC (and to the extent not in its possession shall
be paid over to it), free and clear of all claims or interest of any person
previously entitled to such claims. Notwithstanding the foregoing, none of ICBC,
the Company, the Exchange Agent or any other person shall be liable to any
former holder of shares of Company Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by ICBC, the
posting by such person of a bond in such amount as ICBC may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the cash and/or shares of ICBC Common Stock and cash in lieu of
fractional shares deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 DISCLOSURE SCHEDULES. Prior to the execution and delivery of this
Agreement, the Company has delivered to ICBC, and ICBC has delivered to the
Company, a schedule (in the case of the Company, the "Company Disclosure
Schedule," and in the case of ICBC, the "ICBC Disclosure Schedule") setting
forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more of such party's
representations or warranties contained in Article IV, in the case of the
Company, or Article V, in the case of ICBC, or to one or more of such party's
covenants contained in Article VI or agreements contained in Article VII;
provided, however, that notwithstanding anything in this Agreement to the
contrary, the mere inclusion of an item in a Disclosure Schedule as an exception
to a representation or warranty shall not be deemed an admission by a party that
such item represents a material exception or material fact, event or
circumstance or that such item has had or would have a Material Adverse Effect
(as defined herein) with respect to either the Company or ICBC, respectively.
3.2 STANDARDS. (a) No representation or warranty of the Company contained
in Article IV (other than the representations set forth in the first and third
sentences of Section 4.1(a), the first two sentences of Section 4.1(b) and
Sections 4.2, 4.6, 4.8(a), 4.10 and 4.18) or of ICBC contained in Article V
(other than the representations set forth in the first and third sentences of
Section 5.1(a), the first two sentences of Section 5.1(b) and Sections 5.2, 5.6
and 5.8) shall be deemed untrue or incorrect for any purpose under this
Agreement, and no party
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hereto shall be deemed to have breached a representation or warranty for any
purpose under this Agreement, in any case as a consequence of the existence or
absence of any fact, circumstance or event unless such fact, circumstance or
event, individually or when taken together with all other facts, circumstances
or events inconsistent with any representations or warranties contained in
Article IV, in the case of the Company, or Article V, in the case of ICBC, has
had a Material Adverse Effect with respect to the Company or ICBC, respectively.
(b) As used in this Agreement, the term "Material Adverse Effect" means,
with respect to ICBC or the Company, as the case may be, a material adverse
effect on (i) the business, results of operations or financial condition of such
party and its Subsidiaries taken as a whole, other than any such effect
attributable to or resulting from (x) any change in banking or similar laws,
rules or regulations of general applicability to banks, thrift institutions or
their holding companies or interpretations thereof by courts or governmental
authorities, (y) any change in GAAP (as defined herein) or regulatory accounting
principles applicable to banks, thrifts or their holding companies generally, or
(z) any action or omission of the Company or ICBC or any Subsidiary of either of
them taken with the prior written consent of the other party hereto or (ii) the
ability of such party and its Subsidiaries to consummate the transactions
contemplated hereby. As used in this Agreement, the word "Subsidiary" when used
with respect to any party means any corporation, partnership or other
organization, whether incorporated or unincorporated, which is consolidated with
such party for financial reporting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III, the Company hereby represents and warrants to ICBC
(subject to the Company Disclosure Schedule) as follows:
4.1 CORPORATE ORGANIZATION. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. The Company has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary. The Company is duly registered as a savings and loans
holding company under the Home Owners' Loan Act, as amended ("HOLA"), and the
regulations of the OTS promulgated thereunder. The Certificate of Incorporation
and Bylaws of the Company, copies of which are set forth in Section 4.1 of the
Company Disclosure Schedule, are true and correct copies of such documents as in
effect as of the date of this Agreement.
(b) Statewide Savings Bank, S.L.A. (the "Company Bank") is a New Jersey-
chartered stock savings and loan association duly organized, validly existing
and in good standing under the laws of the State of New Jersey. The deposit
accounts of the Company Bank are insured by the FDIC through the Savings
Association Insurance Fund (the "SAIF") to the fullest extent permitted by law,
and all premiums and assessments required to be paid in
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connection therewith have been paid when due. Each of the Company's other
Subsidiaries, whether direct or indirect, is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the Company's Subsidiaries has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or the location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
The certificate of incorporation, articles of association, bylaws and similar
governing documents of each Subsidiary of the Company, copies of which have
previously been delivered to ICBC, are true and correct copies of such documents
as in effect as of the date of this Agreement.
(c) The minute books of the Company and each of its Subsidiaries contain
true and correct records of all meetings and other corporate actions held or
taken since December 31, 1995 of their respective stockholders and Boards of
Directors (including committees of their respective Boards of Directors).
4.2 CAPITALIZATION. (a) The authorized capital stock of the Company
consists of 12,000,000 shares of Company Common Stock and 2,000,000 shares of
preferred stock, no par value per share ("Company Preferred Stock"). As of the
date hereof, there were 4,037,847 shares of Company Common Stock outstanding and
5,662 shares of Company Common Stock held by the Company as treasury stock. As
of the date hereof, there were (i) no shares of Company Common Stock reserved
for issuance upon exercise of outstanding stock options or otherwise except for
(x) 515,202 shares of Company Common Stock reserved for issuance pursuant to the
Company Option Plans described in Section 4.2(a) of the Company Disclosure
Schedule and (y) 803,531 shares of Company Common Stock reserved for issuance
upon exercise of the option granted to ICBC pursuant to the Stock Option
Agreement 4.2(a) and (ii) no shares of Company Preferred Stock issued or
outstanding, held in the Company's treasury or reserved for issuance upon
exercise of outstanding stock options or otherwise. All of the issued and
outstanding shares of Company Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Except as referred to
above or reflected in Section 4.2(a) of the Company Disclosure Schedule and the
Stock Option Agreement, the Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Company
Common Stock or Company Preferred Stock or any other equity security of the
Company or any securities representing the right to purchase or otherwise
receive any shares of Company Common Stock or any other equity security of the
Company. The names of the optionees, the date of each option to purchase Company
Common Stock granted, the number of shares subject to each such option, the
expiration date of each such option, any vesting schedule with respect to an
option which is not yet fully vested, and the price at which each such option
may be exercised under the Company Option Plans are set forth in Section 4.2(a)
of the Company Disclosure Schedule. The names of each of the executive officers
and directors (showing all other persons as a group as of each grant date) who
have received grants under the Statewide Recognition Plans, the date of each
award under such plans, the number of shares subject to each such award and the
vesting schedule for
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each outstanding award are set forth in Section 4.2(a) of the Company Disclosure
Schedule.
(b) Section 4.2(b) of the Company Disclosure Schedule sets forth a true and
correct list of all of the Subsidiaries of the Company, including a listing of
the jurisdiction of incorporation thereof. The Company owns, directly or
indirectly, all of the issued and outstanding shares of the capital stock of
each of such Subsidiaries, free and clear of all liens, charges, encumbrances
and security interests whatsoever, and all of such shares are duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. No
Subsidiary of the Company has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to purchase
or otherwise receive any shares of capital stock or any other equity security of
such Subsidiary. Assuming compliance by ICBC with Section 1.6 hereof, and the
satisfaction of the conditions contained in Sections 8.1 and 8.2 hereof, at the
Effective Time, there will not be any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character by which the Company
or any of its Subsidiaries will be bound calling for the purchase or issuance of
any shares of the capital stock of the Company or any of its Subsidiaries.
4.3 AUTHORITY; NO VIOLATION. (a) The Company has full corporate power and
authority to execute and deliver this Agreement and the Stock Option Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of the Company. The Board of
Directors of the Company has directed that this Agreement and the transactions
contemplated hereby be submitted to the Company's stockholders for approval at a
meeting of such stockholders and, except for the adoption of this Agreement by
the requisite vote of the Company's stockholders, no other corporate proceedings
on the part of the Company are necessary to approve this Agreement and the Stock
Option Agreement and to consummate the transactions contemplated hereby and
thereby. This Agreement and the Stock Option Agreement have been duly and
validly executed and delivered by the Company and (assuming due authorization,
execution and delivery by ICBC) this Agreement and the Stock Option Agreement
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(b) The Company Bank has full corporate power and authority to execute and
deliver the Bank Merger Agreement and, subject to the receipt of all regulatory
approvals and the approval of the Company as the sole stockholder of the Company
Bank, to consummate the transactions contemplated thereby. The execution and
delivery of the Bank Merger Agreement and the consummation of the transactions
contemplated thereby will be duly and validly approved by the Board of Directors
of the Company Bank and by the Company as the sole stockholder of the Company
Bank. Upon the due and valid approval of the Bank Merger Agreement by the
Company as the sole stockholder of the Company Bank and by the Board of
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Directors of the Company Bank, no other corporate proceedings on the part of the
Company Bank will be necessary to consummate the transactions contemplated
thereby. The Bank Merger Agreement, upon execution and delivery by the Company
Bank, will be duly and validly executed and delivered by the Company Bank and
will (assuming due authorization, execution and delivery by ICBC Bank)
constitute a valid and binding obligation of the Company Bank, enforceable
against the Company Bank in accordance with its terms, except as enforcement may
be limited by general principles of equity whether applied in a court of law or
a court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(c) Neither the execution and delivery of this Agreement and the Stock
Option Agreement by the Company or the execution and delivery of the Bank Merger
Agreement by the Company Bank, nor the consummation by the Company of the
transactions contemplated hereby or by the Stock Option Agreement or by the
Company Bank of the transactions contemplated by the Bank Merger Agreement, nor
compliance by the Company with any of the terms or provisions hereof or of the
Stock Option Agreement or by the Company Bank with the provisions of the Bank
Merger Agreement, will (i) violate any provision of the Certificate of
Incorporation or Bylaws of the Company, the Certificate of Incorporation or
Bylaws of the Company Bank or the certificate of incorporation, bylaws or
similar governing documents of any of its Subsidiaries, or (ii) assuming that
the consents and approvals referred to in Section 4.4 hereof are duly obtained,
(x) violate any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to the Company or any of its Subsidiaries,
or any of their respective properties or assets, or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of the Company or
any of its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party, or by which they or any of their respective properties or assets may
be bound or affected.
4.4 CONSENTS AND APPROVALS. Except for (a) the filing of applications and
notices, as applicable, with the OTS under the HOLA and the rules and
regulations of the OTS and with the FDIC under the Bank Merger Act and the
Federal Deposit Insurance Act and the rules and regulations of the FDIC, and
approval of such applications and notices, (b) the filing of such applications,
filings, authorizations, orders and approvals as may be required under
applicable state law (the "State Banking Approvals"), (c) the filing with the
SEC of a proxy statement in definitive form relating to the meeting of the
Company's stockholders to be held in connection with this Agreement and the
transactions contemplated hereby (the "Proxy Statement") and the filing and
declaration of effectiveness of the registration statement on Form S-4 (the
"Form S-4") in which the Proxy Statement will be included as part of the
prospectus contained therein, (d) the approval of this Agreement by the
requisite vote of the stockholders of the Company, (e) the filing of the
Certificate of Merger with the Secretaries pursuant to the DGCL and the NJBCA,
(f) approval of the listing of the ICBC Common Stock to be issued in the Merger
on the Nasdaq
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Stock Market, and (g) such other filings, authorizations or approvals as may be
set forth in Section 4.4 of the Company Disclosure Schedule, no consents or
approvals of or filings or registrations with any court, administrative agency
or commission or other governmental authority or instrumentality (each a
"Governmental Entity") or of or with any third party are necessary in connection
with (1) the execution and delivery by the Company of this Agreement and the
Bank Merger Agreement by the Company Bank and (2) the consummation by the
Company of the Merger and the Company Bank of the Bank Merger Agreement and the
other transactions contemplated hereby.
4.5 REPORTS. The Company and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December 31,
1995 with (i) the OTS, (ii) the FDIC, (iii) any state banking commissions or any
other state regulatory authority (each a "State Regulator") and (iv) any other
self-regulatory organization ("SRO") (collectively the "Regulatory Agencies"),
and have paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of the Company and its Subsidiaries, no Regulatory Agency
has initiated any proceeding or investigation into the business or operations of
the Company or any of its Subsidiaries since December 31, 1995. There is no
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 of its Subsidiaries.
4.6 FINANCIAL STATEMENTS. The Company has previously delivered to ICBC
copies of the consolidated statements of financial condition of the Company and
its Subsidiaries as of December 31, for the fiscal years 1998 and 1997, and the
related consolidated statements of income, shareholders' equity and cash flows
for the fiscal years 1998, 1997 and 1996, inclusive, as reported in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998
filed with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case accompanied by the audit report of KPMG LLP,
independent public accountants with respect to the Company. The December 31,
1998 consolidated statement of financial condition of the Company (including the
related notes, where applicable) fairly presents the consolidated financial
position of the Company and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 4.6 (including the
related notes, where applicable) fairly present, and the financial statements to
be filed with the SEC after the date hereof will fairly present (subject, in the
case of the unaudited statements, to recurring audit adjustments normal in
nature and amount), the results of the consolidated operations and consolidated
financial position of the Company and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; each of such statements
(including the related notes, where applicable) complies, and the financial
statements to be filed with the SEC after the date hereof will comply, with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements to be
filed with the SEC after the date hereof will be, prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, or, in the case of unaudited statements, as permitted by
Form 10-Q. The books and records of the Company and
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its Subsidiaries have been, and are being, maintained in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
4.7 BROKER'S FEES. Neither the Company nor any Subsidiary of the Company
nor any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with any of the transactions contemplated by this Agreement,
except that the Company has engaged, and will pay a fee or commission to,
Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") in accordance with the
terms of a letter agreement between Sandler O'Neill and the Company, a true and
correct copy of which has been previously delivered by the Company to ICBC.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Since December 31, 1998,
there has been no change or development or combination of changes or
developments which, individually or in the aggregate, has had a Material Adverse
Effect on the Company.
(b) Since December 31, 1998, the Company and its Subsidiaries have carried
on their respective businesses in the ordinary course consistent with their past
practices.
(c) Except as set forth in Section 4.8(c) of the Company Disclosure
Schedule, since December 31, 1998, neither the Company nor any of its
Subsidiaries has (i) increased the wages, salaries, compensation, pension, or
other fringe benefits or perquisites payable to any executive officer, employee,
or director from the amount thereof in effect as of December 31, 1998 (which
amounts have been previously disclosed to ICBC), granted any severance or
termination pay, entered into any contract to make or grant any severance or
termination pay, or paid any bonus (except for salary increases and bonus
payments made in the ordinary course of business consistent with past
practices), (ii) suffered any strike, work stoppage, slow-down, or other labor
disturbance, (iii) been a party to a collective bargaining agreement, contract
or other agreement or understanding with a labor union or organization, or (iv)
had any union organizing activities.
4.9 LEGAL PROCEEDINGS. (a) Neither the Company nor any of its Subsidiaries
is a party to any, and there are no pending or, to the Company's best knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against the
Company or any of its Subsidiaries or challenging the validity or propriety of
the transactions contemplated by this Agreement or the Bank Merger Agreement.
(b) There is no injunction, order, judgment, decree or regulatory
restriction imposed upon the Company, any of its Subsidiaries or the assets of
the Company or any of its Subsidiaries.
4.10 TAXES. (a) Each of the Company and its Subsidiaries has (i) duly and
timely filed or will duly and timely file (including applicable extensions
granted without penalty) all Tax Returns (as hereinafter defined) required to be
filed at or prior to the Effective Time, and such Tax Returns which have been
filed are, and those to be hereinafter filed will be, true, correct and complete
in all material respects, and (ii) paid in full or made adequate provision in
the financial
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statements of the Company (in accordance with GAAP) for all Taxes (as
hereinafter defined) shown to be due on such Tax Returns and will pay in full or
make adequate provision for all Taxes other than Taxes being contested by the
Company in good faith for which adequate provision for on the financial
statements of the Company (in accordance with GAAP) have been made. There are no
material liens for Taxes upon the assets of either the Company or its
Subsidiaries except for statutory liens for current Taxes not yet due. As of the
date hereof (i) neither the Company nor any of its Subsidiaries has requested
any extension of time within which to file any Tax Returns in respect of any
fiscal year which have not since been filed and no request for waivers of the
time to assess any Taxes are pending or outstanding, and (ii) except as set
forth in Section 4.10(a) of the Company Disclosure Schedule with respect to each
taxable period of the Company and its Subsidiaries, the federal and state income
Tax Returns of the Company and its Subsidiaries have been audited by the
Internal Revenue Service ("IRS") or appropriate state tax authorities or the
time for assessing and collecting income Tax with respect to such taxable period
has closed and such taxable period is not subject to review. Neither the Company
nor any of its Subsidiaries (i) has made an election under Section 341(f) of the
Code, (ii) except as set forth in Section 4.10(a) of the Company Disclosure
Schedule has made any payment, is obligated to make any payment, or is a party
to any agreement that could obligate it to make any payment that would not be
deductible under Section 280G of the Code, (iii) has issued or assumed any
obligation under Section 279 of the Code, any high yield discount obligation as
described in Section 163(i) of the Code or any registration-required obligation
within the meaning of Section 163(f)(2) of the Code that is not in registered
form, or (iv) is or has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code.
(b) For the purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including, but not
limited to income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any interest, penalties
or additions attributable thereto. For purposes of this Agreement, "Tax Return"
shall mean any return, report, information return or other document (including
any related or supporting information) with respect to Taxes.
4.11 EMPLOYEES. (a) Section 4.11(a) of the Company Disclosure Schedule sets
forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); "pension" plan, fund or program (within the
meaning of Section 3(2) of ERISA); each "stay in place" bonus, retention,
employment, consulting, independent contractor, termination, severance or change
in control agreement; and each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to by, or with respect to which an
obligation or liability exists of (the "Plans"), the Company, any of its
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), all of which together with the Company would be deemed a "single
employer" within the meaning of Section 4001 of the ERISA, for the benefit of
any employee or director or former employee or former director of the Company,
any Subsidiary or any ERISA
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Affiliate or any person who is an independent contractor or consultant to the
Company, any of its Subsidiaries or any ERISA Affiliate.
(b) The Company has heretofore delivered to ICBC with respect to each of
the Plans true and correct copies of each of the following documents if
applicable: (i) the Plan document, including all amendments thereto, and the
trust agreement or other funding arrangement including insurance contracts and
policies; (ii) the actuarial report for such Plan for each of the last two plan
years and any subsequent changes to actuarial assumptions; (iii) the most recent
determination letter from the IRS for such Plan; and (iv) the most recent Form
5500, summary plan description and related summaries of material modifications.
(c) Each of the Plans has been and is being operated and administered in
accordance with its terms and is in compliance in all material respects with
applicable law, including but not limited to, the Code and ERISA; each of the
Plans intended to meet the qualification requirements of Section 401(a) of the
Code has received a favorable determination letter from the IRS and the Company
is not aware of any circumstances likely to result in the revocation of any such
favorable determination letter except as set forth in Section 4.11(c) of the
Company Disclosure Schedule; except as set forth in Section 4.11(c) of the
Company Disclosure Schedule, no Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees of the Company, its Subsidiaries or any ERISA
Affiliate beyond their retirement or other termination of service, other than
(w) coverage mandated by applicable law, (x) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (y) deferred compensation benefits accrued as liabilities on the
books of the Company, its Subsidiaries or the ERISA Affiliates or (z) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary); neither the Company nor any ERISA Affiliate maintains any plans
subject to Title IV of ERISA; no Plan is a multiemployer plan (within the
meaning of Section 4001(a)(3) of ERISA and no Plan is a multiple employer plan
as defined in Section 413 of the Code; there are no pending or, to the knowledge
of the Company, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or any trusts related
thereto; and there is not currently any legally binding commitment by the
Company or any ERISA Affiliate to create an additional Plan or amend any Plan
(except amendments to comply with law which do not materially increase the cost
of such Plan), and except as set forth in Section 4.11(c) of the Company
Disclosure Schedule the Company and its Subsidiaries do not have any obligations
for post-retirement or post-employment welfare benefits that cannot be amended
or terminated upon sixty days' notice or less without incurring any liability
thereunder, except for coverage required by Part 6 of Title 1 of ERISA or
Section 4980B of the Code, the premium cost of which is borne (to the extent
permitted by law) by the insured individuals.
4.12 SEC REPORTS. The Company has previously delivered or made available to
ICBC a true and correct copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since December
31, 1995 by the Company with the SEC pursuant to the Securities Act or the
Exchange Act (the "Company Reports") and (b) communication mailed by the Company
to its stockholders since December 31, 1995, and no such registration statement,
prospectus, report, schedule, proxy statement or communication
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contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that information as of a later date shall be deemed to
modify information as of an earlier date. The Company has timely filed all
Company Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all
Company Reports complied with the published rules and regulations of the SEC
with respect thereto.
4.13 COMPANY INFORMATION. The information relating to the Company and its
Subsidiaries which is provided to ICBC by the Company for inclusion in the Proxy
Statement and the Form S-4, or in any other document filed with any other
regulatory agency in connection herewith, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement (except for such portions thereof that relate
only to ICBC or any of its Subsidiaries) will comply with the provisions of the
Exchange Act and the rules and regulations thereunder.
4.14 COMPLIANCE WITH APPLICABLE LAW. The Company and each of its
Subsidiaries hold, and have at all times held, all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are not in
default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to the
Company or any of its Subsidiaries, and neither the Company nor any of its
Subsidiaries knows of or has received notice of any violations of any of the
above.
4.15 CERTAIN CONTRACTS. (a) Except as set forth in Section 4.15(a) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to or bound by any contract (whether written or oral including, but not
limited to, any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan or other similar plan) (i) with respect to the
employment of any directors, officers, employees or consultants, (ii) which,
upon the consummation of the transactions contemplated by this Agreement or the
Bank Merger Agreement, will (either alone or upon the occurrence of any
additional acts or events) result in any payment or benefits (whether of
severance pay or otherwise) becoming due, or the acceleration or vesting of any
rights to any payment or benefits, from ICBC, the Company, the Surviving
Corporation or any of their respective Subsidiaries to any director, officer,
employee or consultant thereof, (iii) which is a material contract (as defined
in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after the date
of this Agreement that has not been filed or incorporated by reference in the
Company Reports, (iv) which is a consulting agreement (including data
processing, software programming and licensing contracts) not terminable on 30
days or less notice involving the payment of more than $75,000 per annum, (v)
which materially restricts the conduct of any line of business by the Company or
any of its Subsidiaries or (vi) any of the benefits of which will be increased,
or the vesting of the benefits of which will be accelerated, by the occurrence
of any of the transactions contemplated by this Agreement or the Bank Merger
Agreement, or the value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement or the Bank
Merger Agreement.
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Each contract, arrangement, commitment or understanding of the type described in
this Section 4.15(a), whether or not set forth in Section 4.15(a) of the Company
Disclosure Schedule, is referred to herein as a "Company Contract". The Company
has previously delivered to ICBC true and correct copies of each Company
Contract.
(b) With respect to Company Contracts, (i) each Company Contract is valid
and binding and in full force and effect and has received, if required, all
regulatory and/or shareholder approvals, (ii) the Company and each of its
Subsidiaries has performed all obligations required to be performed by it to
date under each Company Contract, (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
default on the part of the Company or any of its Subsidiaries under any Company
Contract, and (iv) no other party to any Company Contract is, to the knowledge
of the Company, in default in any respect thereunder.
(c) Section 4.15 of the Company Disclosure Schedule contains a schedule
showing the present value of the monetary amounts payable as of the date
specified in the schedule, whether individually or in the aggregate (including
good faith estimates of all amounts not subject to precise quantification as of
the date of this Agreement, such as tax indemnification payments in respect of
income and/or excise taxes), and identifying the types and estimated amounts of
the in-kind benefits due under any Plan or Company Contract (other than a
tax-qualified plan) for each director of the Company or Company Bank, each
officer of the Company or the Company Bank with the position of vice president
or higher and any consultant to the Company or the Company Bank, specifying the
assumptions in such schedule.
4.16 AGREEMENTS WITH REGULATORY AGENCIES. Neither the Company nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth on Section 4.16 of the Company
Disclosure Schedule, a "Regulatory Agreement"), any Governmental Entity that
restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business, nor has
the Company or any of its Subsidiaries been advised by any Governmental Entity
that it is considering issuing or requesting any Regulatory Agreement.
4.17 ENVIRONMENTAL MATTERS. (a) Except as set forth in Section 4.17(a) of
the Company Disclosure Schedule, each of the Company and its Subsidiaries, each
of the Participation Facilities and, to the best knowledge of the Company, the
Loan Properties (each as hereinafter defined), are in compliance with all
applicable federal, state and local laws, including common law, regulations and
ordinances, and with all applicable decrees, orders and contractual obligations
relating to pollution or the discharge of, or exposure to, Hazardous Materials
(as hereinafter defined) in the environment or workplace ("Environmental Laws");
(b) There is no suit, claim, action, proceeding or investigation pending
or, to the best knowledge of the Company, threatened (or to the best knowledge
of the Company, no past or
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present actions, activities, circumstances, conditions, events or incidents that
could form the basis of any such suit, claim, action, proceeding, investigation
or notice), before any Governmental Entity or other forum in which the Company,
any of its Subsidiaries, any Participation Facility or any Loan Property (or
person or entity whose liability for any such suit, claim, action, proceeding,
investigation or notice the Company, any of its Subsidiaries, Participation
Facility or Loan Property has or may have been retained or assumed either
contractually or by operation of law), has been or, with respect to threatened
proceedings, may be, named as a defendant (x) for alleged noncompliance
(including by any predecessor) with any Environmental Laws, or (y) relating to
the release, threatened release or exposure to or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Material whether or not occurring at or
on a site owned, leased or operated by the Company or any of its Subsidiaries,
any Participation Facility or any Loan Property;
(c) Except as set forth in Section 4.17(c) of the Company Disclosure
Schedule, to the best knowledge of the Company, during the period of (x) the
Company's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) the Company's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(z) the Company's or any of its Subsidiaries' interest in a Loan Property, there
has been no release of Hazardous Materials in, on, under or affecting any such
property. Except as set forth in Section 4.17(c) of the Company Disclosure
Schedule, to the best knowledge of the Company, prior to the period of (x) the
Company's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) the Company's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(z) the Company's or any of its Subsidiaries' interest in a Loan Property, there
was no release of Hazardous Materials in, on, under or affecting any such
property, Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of this Section 4.17: (x)
"Hazardous Materials" means any chemicals, pollutants, contaminants, wastes,
hazardous or toxic substances, petroleum or other regulated substances or
materials, (y) "Loan Property" means any property in which the Company or any of
its Subsidiaries holds a security interest, and, where required by the context,
said term means the owner or operator of such property; and (z) "Participation
Facility" means any facility in which the Company or any of its Subsidiaries
participates in the management and, where required by the context, said term
means the owner or operator of such property.
4.18 OPINION. Prior to the execution of this Agreement, the Company has
received an oral opinion from Sandler O'Neill to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the
Aggregate Merger Consideration is fair to the stockholders of the Company from a
financial point of view. Such opinion has not been amended or rescinded as of
the date of this Agreement.
4.19 APPROVALS. As of the date of this Agreement, the Company knows of no
reason why all regulatory approvals required for the consummation of the
transactions contemplated
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hereby (including, without limitation, the Merger and the Bank Merger) should
not be obtained.
4.20 LOAN PORTFOLIO. (a) Except as set forth in Schedule 4.20(a) of the
Company Disclosure Schedule, with respect to each loan owned by the Company or
its Subsidiaries in whole or in part (each, a "Loan"), to the best knowledge of
the Company:
(i) the note and the related security documents are each legal, valid
and binding obligations of the maker or obligor thereof, enforceable
against such maker or obligor in accordance with their terms;
(ii) neither the Company nor any of its Subsidiaries nor any prior
holder of a Loan has modified the note or any of the related security
documents in any material respect or satisfied, canceled or subordinated
the note or any of the related security documents except as otherwise
disclosed by documents in the applicable Loan file;
(iii) the Company or a Subsidiary is the sole holder of legal and
beneficial title to each Loan (or the Company's applicable participation
interest, as applicable), except as otherwise referenced on the books and
records of the Company;
(iv) the note and the related security documents, copies of which are
included in the Loan files, are true and correct copies of the documents
they purport to be and have not been suspended, amended, modified, canceled
or otherwise changed except as otherwise disclosed by documents in the
applicable Loan file;
(v) there is no pending or threatened condemnation proceeding or
similar proceeding affecting the property which serves as security for a
Loan, except as otherwise referenced on the books and records of the
Company;
(vi) there is no pending or threatened litigation or proceeding
relating to the property which serves as security for a Loan; and
(vii) with respect to a Loan held in the form of a participation, the
participation documentation is legal, valid, binding and enforceable.
(b) Except as set forth in Section 4.20(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any
written or oral (i) loan agreement, note or borrowing arrangement (including,
without limitation, leases, credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, "Loans"), under the terms of which the
obligor was, as of December 31, 1998, 90 days or more delinquent in payment of
principal or interest or in default of any other provision, or (ii) Loan with
any director, executive officer or five percent or greater stockholder of the
Company or any of its Subsidiaries, or to the knowledge of the Company, any
person, corporation or enterprise controlling, controlled by or under common
control with any of the foregoing. Section 4.20 of the Company Disclosure
Schedule sets forth (i) all of the Loans of the Company or any of its
Subsidiaries that as of December 31, 1998 were classified by any bank examiner
(whether
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regulatory or internal) as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit Risk
Assets", "Concerned Loans", "Watch List" or words of similar import, together
with the principal amount of and accrued and unpaid interest on each such Loan
and the identity of the borrower thereunder, (ii) by category of Loan (i.e.,
commercial, consumer, etc.), all of the other Loans of the Company and its
Subsidiaries that as of December 31, 1998 were classified as such, together with
the aggregate principal amount of and accrued and unpaid interest on such Loans
by category and (iii) each asset of the Company that as of December 31, 1998 was
classified as "Real Estate Owned" and the book value thereof.
4.21 PROPERTY. Each of the Company and its Subsidiaries has good and
marketable title free and clear of all liens, encumbrances, mortgages, pledges,
charges, defaults or equitable interests to all of the properties and assets,
real and personal, tangible or intangible, which are reflected on the
consolidated statement of financial condition of the Company as of December 31,
1998 or acquired after such date, except (i) liens for Taxes not yet due and
payable or contested in good faith by appropriate proceedings, (ii) pledges to
secure deposits and other liens incurred in the ordinary course of business,
(iii) such imperfections of title, easements and encumbrances, if any, as do not
interfere with the use of the respective property as such property is used on
the date of this Agreement, (iv) for dispositions and encumbrances of, or on,
such properties or assets in the ordinary course of business and (v) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar liens and encumbrances arising in the ordinary course of business. All
leases pursuant to which the Company or any Subsidiary of the Company, as
lessee, leases real or personal property are valid and enforceable in accordance
with their respective terms and neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any other party thereto, is in default
thereunder. All material tangible properties of the Company and each of its
Subsidiaries are in good state of maintenance and repair, conform with all
applicable ordinances, regulations and zoning laws and are considered by the
Company to be adequate for the current business of the Company and its
Subsidiaries.
4.22 REORGANIZATION. The Company has no reason to believe that the Merger
will fail to qualify as a reorganization under Section 368(a) of the Code.
4.23 ANTITAKEOVER PROVISIONS INAPPLICABLE. The Board of Directors of the
Company has approved the transactions contemplated by this Agreement, the Bank
Merger Agreement and the Stock Option Agreement such that the provisions of
Section 14A:10A-5 of the NJBCA and 49:5-3 of the New Jersey Revised Statutes and
Article VIII of the Company's Certificate of Incorporation will not apply to
this Agreement, the Bank Merger Agreement, the Stock Option Agreement or any of
the transactions contemplated hereby or thereby.
4.24 INSURANCE. The Company and its Subsidiaries are presently insured, and
since December 31, 1995 have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by the Company and its Subsidiaries are in full force and effect, the
Company and its Subsidiaries are not in default thereunder and all material
claims thereunder
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have been filed in due and timely fashion.
4.25 INVESTMENT SECURITIES; BORROWINGS; DEPOSITS. (a) Except for
investments in Federal Home Loan Bank Stock, pledges to secure Federal Home Loan
Bank borrowings and reverse repurchase agreements entered into in arm-length
transactions pursuant to normal commercial terms and conditions and entered into
in the ordinary course of business, restrictions that exist for securities to be
classified as "held to maturity," and securities pledged with respect to certain
public and fiduciary deposits in the ordinary course of business, none of the
investments reflected in the audited consolidated statement of financial
condition of the Company included in the Annual Report on Form 10-K for the year
ended December 31, 1998 and none of the investment securities held by it or any
of its Subsidiaries since December 31, 1998 is subject to any restriction
(contractual or statutory) that would materially impair the ability of the
entity holding such investment freely to dispose of such investment at any time.
(b) Neither the Company nor any Subsidiary is a party to or has agreed to
enter into an exchange-traded or over the-counter equity, interest rate, foreign
exchange or other swap, forward, future, option, cap, floor or collar or any
other contract that is a derivative contract (including various combinations
thereof) (each, a "Derivatives Contract") or owns securities that are referred
to generically as "structured notes," "high risk mortgage derivatives," "capped
floating rate notes" or "capped floating rate mortgage derivatives."
(c) Set forth in Section 4.25(c) of the Company Disclosure Schedule is a
true and correct list of the Company's borrowed funds (excluding deposit
accounts) as of the date hereof.
(d) None of the deposits of the Company or any of its Subsidiaries is a
"brokered" deposit.
4.26 INDEMNIFICATION. Except as provided in the Company Contracts or the
Certificate of Incorporation or Bylaws of the Company, neither the Company nor
any Company Subsidiary is a party to any indemnification agreement with any of
its present or former directors, officers, employees, agents or other persons
who serve or served in any other capacity with any other enterprise at the
request of the Company (a "Covered Person"), and, to the best knowledge of the
Company, there are no claims for which any Covered Person would be entitled to
indemnification under the Restated Certificate of Incorporation or Bylaws of the
Company or any Subsidiary of the Company, applicable law or regulation or any
indemnification agreement.
4.27 YEAR 2000 MATTERS. Section 4.27 of the Company Disclosure Schedule
contains a true and correct copy of the Company's plan for addressing year 2000
computer issues (the "Year 2000 Plan"). The Company is in compliance with the
Company's Year 2000 Plan. The Company Bank has been examined by the OTS with
respect to being "Year 2000 Compliant" and the Company Bank's Year 2000 Plan has
received the rating in connection therewith set forth in Section 4.27 of the
Company Disclosure Schedule. Neither the Company nor the Company Bank has
received any written communication from the OTS commenting adversely with
respect to the ability of the Company Bank to become Year 2000 compliant.
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4.28. UNDISCLOSED LIABILITIES. Except (a) for those liabilities that are
fully reflected or reserved against on the consolidated statement of financial
condition of the Company as of December 31, 1998 and (b) for liabilities
incurred in the ordinary course of business consistent with past practice since
December 31, 1998 that, either alone or when combined with all similar
liabilities, have not had, and could not reasonably be expected to have, a
Material Adverse Effect on the Company, neither the Company nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due).
4.29. LIQUIDATION ACCOUNT. Neither the Merger nor the Bank Merger will
result in any payment or distribution out of the Liquidation Account of the
Company Bank established in connection with the Company Bank's conversion from
mutual to stock form.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ICBC
Subject to Article III, ICBC hereby represents and warrants to the Company
(subject to the ICBC Disclosure Schedule) as follows:
5.1 CORPORATE ORGANIZATION. (a) ICBC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
ICBC has the corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. ICBC is duly registered as a savings and loan holding
company under the HOLA. The Certificate of Incorporation and Bylaws of ICBC,
copies of which have previously been delivered to the Company, are true and
correct copies of such documents as in effect as of the date of this Agreement.
(b) Independence Community Bank ("ICBC Bank") is a stock savings bank duly
organized, validly existing and in good standing under the laws of the State of
New York. The deposit accounts of ICBC Bank are insured by the FDIC through the
Bank Insurance Fund and the SAIF to the fullest extent permitted by law, and all
premiums and assessments required in connection therewith have been paid when
due. Each of ICBC's other Subsidiaries which is a "Significant Subsidiary" (each
a "Significant Subsidiary" and together the "Significant Subsidiaries") as such
term is defined in Regulation S-X promulgated by the SEC is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Significant Subsidiary of ICBC has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary. The Restated Organization
Certificate, Bylaws and other similar governing documents of ICBC Bank, copies
of which have previously been delivered to the Company, are true and correct
copies of such documents as in effect as of the date of this Agreement.
(c) The minute books of ICBC and each of its Significant Subsidiaries
contain true and correct records of all meetings and other corporate actions
held or taken since December 31, 1995 of their respective stockholders and
Boards of Directors (including committees of their respective Boards of
Directors).
5.2 CAPITALIZATION. (a) As of the date of this Agreement, the authorized
capital stock of ICBC consists of 125,000,000 shares of ICBC Common Stock and
25,000,000 shares of preferred stock, par value $0.01 per share ("ICBC Preferred
Stock"). As of the date hereof, there were 67,623,876 shares of ICBC Common
Stock and no shares of ICBC Preferred Stock issued and outstanding, and
8,419,874 shares of ICBC Common Stock held in ICBC's treasury. As of
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the date of this Agreement, no shares of ICBC Common Stock or ICBC Preferred
Stock were reserved for issuance, except that 7,041,088 shares of ICBC Common
Stock were reserved for issuance upon the exercise of stock options pursuant to
the Independence Community Bank Corp. 1998 Stock Option Plan (the "ICBC Stock
Plan") and 5,320,898 shares of ICBC Common Stock were reserved for issuance
pursuant to other previously announced pending acquisitions of other companies
by ICBC. All of the issued and outstanding shares of ICBC Common Stock have been
duly authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except as referred to above or
reflected in Section 5.2(a) of the ICBC Disclosure Schedule, ICBC does not have
and is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of ICBC Common Stock or ICBC Preferred Stock or any other equity
securities of ICBC or any securities representing the right to purchase or
otherwise receive any shares of ICBC Common Stock or ICBC Preferred Stock. The
shares of ICBC Common Stock to be issued pursuant to the Merger will be duly
authorized and validly issued and, at the Effective Time, all such shares will
be fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
(b) Section 5.2(b) of the ICBC Disclosure Schedule sets forth a true and
correct list of all of the ICBC Subsidiaries as of the date of this Agreement.
Except as set forth in Section 5.2(b) of the ICBC Disclosure Schedule, as of the
date of this Agreement, ICBC owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Subsidiaries of ICBC, free
and clear of all liens, charges, encumbrances and security interests whatsoever,
and all of such shares are duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, no
Subsidiary of ICBC has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character with any party that
is not a direct or indirect Subsidiary of ICBC calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Subsidiary.
5.3 AUTHORITY; NO VIOLATION. (a) ICBC has full corporate power and
authority to execute and deliver this Agreement and the Stock Option Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of ICBC, and no other corporate
proceedings on the part of ICBC are necessary to approve this Agreement and the
Stock Option Agreement and to consummate the transactions contemplated hereby
and thereby. This Agreement and the Stock Option Agreement have been duly and
validly executed and delivered by ICBC and (assuming due authorization,
execution and delivery by the Company) this Agreement and the Stock Option
Agreement constitute valid and binding obligations of ICBC, enforceable against
ICBC in accordance with their terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
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(b) ICBC Bank has full corporate power and authority to execute and deliver
the Bank Merger Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of the Bank Merger Agreement and the
consummation of the transactions contemplated thereby will be duly and validly
approved by the Board of Directors of ICBC Bank. Upon the due and valid approval
of the Bank Merger Agreement by ICBC, as the sole stockholder of ICBC Bank, and
by the Board of Directors of ICBC Bank, no other corporate proceedings on the
part of ICBC Bank will be necessary to consummate the transactions contemplated
thereby. The Bank Merger Agreement, upon execution and delivery by ICBC Bank,
will be duly and validly executed and delivered by ICBC Bank and will (assuming
due authorization, execution and delivery by ICBC Bank) constitute a valid and
binding obligation of ICBC Bank, enforceable against ICBC Bank in accordance
with its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(c) Except as set forth in Section 5.3(b) of the ICBC Disclosure Schedule,
neither the execution and delivery of this Agreement or the Stock Option
Agreement by ICBC or the Bank Merger Agreement by ICBC Bank, nor the
consummation by ICBC of the transactions contemplated hereby or thereby or by
ICBC Bank of the transactions contemplated by the Bank Merger Agreement, nor
compliance by ICBC with any of the terms or provisions hereof or thereof or by
ICBC Bank with any of the terms or provisions of the Bank Merger Agreement, will
(i) violate any provision of the Certificate of Incorporation or Bylaws of ICBC,
or the restated organization certificate, articles of incorporation or bylaws or
similar governing documents of any of its Subsidiaries or (ii) assuming that the
consents and approvals referred to in Section 5.4 are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to ICBC or any of its Subsidiaries or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of ICBC 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 ICBC or any of its Subsidiaries is a party, or
by which they or any of their respective properties or assets may be bound or
affected except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which either individually or in the aggregate
will not have or be reasonably likely to have a material adverse effect on
ICBC's ability to consummate the transactions contemplated hereby or ICBC Bank's
ability to consummate the transactions contemplated by the Bank Merger
Agreement.
5.4 CONSENTS AND APPROVALS. Except for (a) the filing of applications and
notices, as applicable, with the OTS under the HOLA and the rules and
regulations of the OTS, the FDIC under the Bank Merger Act and the Federal
Deposit Insurance Act and the rules and regulations of the FDIC, and approval of
such applications and notices, (b) the State Banking Approvals, (c) the filing
with the SEC of the Proxy Statement and the filing and declaration of
effectiveness of
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the Form S-4, (d) the filing of the Certificate of Merger with the Secretaries
pursuant to the DGCL and the NJBCA, (e) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of ICBC Common
Stock pursuant to this Agreement, (f) approval of the listing for quotation of
the ICBC Common Stock to be issued in the Merger on the Nasdaq Stock Market, and
(g) such other filings, authorizations or approvals as may be set forth in
Section 5.4 of the ICBC Disclosure Schedule, no consents or approvals of or
filings or registrations with any Governmental Entity or of or with any third
party are necessary in connection with (1) the execution and delivery by ICBC of
this Agreement and (2) the consummation by ICBC of the Merger and the other
transactions contemplated hereby.
5.5 REPORTS. ICBC and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December 31,
1995 with any Regulatory Agency, and have paid all fees and assessments due and
payable in connection therewith. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of ICBC and its
Subsidiaries, and except as set forth in Section 5.5 of the ICBC Disclosure
Schedule, no Regulatory Agency has initiated any proceeding or, to the knowledge
of ICBC, investigation into the business or operations of ICBC or any of its
Subsidiaries since December 31, 1995. There is no unresolved violation,
criticism or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of ICBC or any of its Subsidiaries.
5.6 FINANCIAL STATEMENTS. ICBC has previously made available to the Company
copies of (a) the consolidated statements of financial condition of ICBC and its
Subsidiaries as of March 31 for the fiscal years 1997 and 1998 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the fiscal years 1996, 1997 and 1998, inclusive, as reported in ICBC's
Annual Report on Form 10-K for the fiscal year ended March 31, 1998 filed with
the SEC under the Exchange Act, in each case accompanied by the audit report of
Ernst & Young LLP, independent public accountants with respect to ICBC, and (b)
the unaudited consolidated statement of financial condition of ICBC and its
Subsidiaries as of December 31, 1998 and the related unaudited consolidated
statements of operations, changes in stockholders' equity and cash flows for the
nine-month periods then ended as reported in ICBC's Quarterly Report on Form
10-Q for the period ended December 31, 1998 filed with the SEC under the
Exchange Act. The March 31, 1998 consolidated statement of financial condition
of ICBC (including the related notes, where applicable) fairly presents the
consolidated financial condition of ICBC and its Subsidiaries as of the date
thereof, and the other financial statements referred to in this Section 5.6
(including the related notes, where applicable) fairly present and the financial
statements to be filed with the SEC after the date hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and changes in stockholders' equity and consolidated financial
condition of ICBC and its Subsidiaries for the respective fiscal periods or as
of the respective dates therein set forth; each of such statements (including
the related notes, where applicable) complies, and the financial statements to
be filed with the SEC after the date hereof will comply in all material
respects, with applicable accounting requirements and with the
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published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been, and
the financial statements to be filed with the SEC after the date hereof will be,
prepared in accordance in all material respects with GAAP consistently applied
during the periods involved, except as indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q. The books and records
of ICBC and its Significant Subsidiaries have been, and are being, maintained in
accordance in all material respects with GAAP and any other applicable legal and
accounting requirements.
5.7 BROKER'S FEES. Neither ICBC nor any Subsidiary of ICBC, 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 any of the transactions contemplated by this Agreement, except
that ICBC has engaged, and will pay a fee or commission to, Merrill Lynch & Co.
("Merrill Lynch").
5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as may be disclosed in any
ICBC Report (as defined in Section 5.12) filed with the SEC prior to the date of
this Agreement, since December 31, 1998, there has been no change or development
or combination of changes or developments which, individually or in the
aggregate, has had a Material Adverse Effect on ICBC.
5.9 LEGAL PROCEEDINGS. As of the date of this Agreement, there are no
judicial, administrative, arbitral or other actions, suits, proceeding or
investigations pending or, to ICBC's knowledge, threatened, against ICBC or any
of its Subsidiaries which, if adversely determined. would materially adversely
affect the ability of ICBC to consummate the transactions contemplated hereby.
As of the date of this Agreement, to the best of ICBC's knowledge, there is no
reasonable basis for any other proceeding, claim, action or governmental
investigation against ICBC or any Subsidiary, except such proceedings, claims,
actions or governmental investigations which would not have a material adverse
effect on the ability of ICBC to consummate the transactions contemplated
hereby.
5.10 TAXES. Except as set forth in Section 5.10 of the ICBC Disclosure
Schedule, each of ICBC and its Subsidiaries has (i) duly and timely filed and
will duly and timely file (including applicable extensions granted without
penalty) all material Tax Returns required to be filed at or prior to the
Effective Time, and such Tax Returns are true and correct in all material
respects, and (ii) paid in full or made adequate provision in the financial
statements of ICBC (in accordance with GAAP) for all material Taxes shown to be
due on such Tax Returns. Except as set forth in Section 5.10 of the ICBC
Disclosure Schedule, (i) as of the date hereof, neither ICBC nor any of its
Subsidiaries has requested any extension of time within which to file any Tax
Returns in respect of any fiscal year which have not since been filed and no
request for waivers of the time to assess any Taxes are pending or outstanding,
and (ii) as of the date hereof, with respect to each taxable period of ICBC and
its Subsidiaries, the federal and state income Tax Returns of ICBC and its
Subsidiaries have been audited by the Internal Revenue Service or appropriate
state tax authorities or the time for assessing and collecting income Tax with
respect to such taxable period has closed and such taxable period is not subject
to review. Except as set forth in Section 5.10 of the ICBC Disclosure Schedule,
neither ICBC nor any of its Subsidiaries
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(i) has made an election under Section 341(f) of the Code, (ii) has issued or
assumed any obligation under Section 279 of the Code, any high yield discount
obligation as described in Section 163f(i) of the Code or any
registration-required obligation within the meaning of Section 163f(2) of the
Code that is not in registered form, (iii) has made any payment, is obligated to
make payment, or is party to any agreement that could obligate it to make any
payment that would not be deductible under Section 280G of the Code or (iv) is
or has been a United States real property holding corporation within the meaning
of Section 897(c)(2) of the Code.
5.11 EMPLOYEES. (a) Section 5.11(a) of the ICBC Disclosure Schedule sets
forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning of Section 3(1) of ERISA); "pension" plan, fund or program
(within the meaning of Section 3(2) of ERISA) that is sponsored, maintained or
contributed to or required to be contributed to as of the date of this Agreement
by, or with respect to which an obligation or liability exists of, ICBC, any of
its Subsidiaries or any trade or business, whether or not incorporated (an "ICBC
ERISA Affiliate"), all of which together with ICBC would be deemed a "single
employer" within the meaning of Section 4001 of ERISA, for the benefit of any
employee or former employee of ICBC, any Subsidiary or any ICBC ERISA Affiliate
(collectively, the "ICBC Plans").
(b) Except as set forth in Section 5.11(b) of the ICBC Disclosure Schedule,
each of the ICBC Plans is in compliance in all material respects with applicable
law, including but not limited to, the Code and ERISA; each of the ICBC Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code has
received a favorable determination letter from the IRS; no ICBC Plan has an
accumulated or waived funding deficiency within the meaning of Section 412 of
the Code; neither ICBC nor any ICBC ERISA Affiliate has incurred, directly or
indirectly, any liability to or on account of an ICBC Plan pursuant to Title IV
of ERISA (other than PBGC premiums); to the knowledge of ICBC, no proceedings
have been instituted to terminate any ICBC Plan that is subject to Title IV of
ERISA; no "reportable event," as such term is defined in Section 4043(c) of
ERISA, has occurred with respect to any ICBC Plan (other than a reportable event
with respect to which the thirty day notice period has been waived); no
condition exists that presents a material risk to ICBC of incurring a liability
to or on account of an ICBC Plan pursuant to Title IV of ERISA; no ICBC Plan is
a multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA and no
ICBC Plan is a multiple employer plan as defined in Section 413 of the Code;
there are no pending or, to the knowledge of ICBC, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the ICBC Plans or any trusts related thereto; the fair market value of the
assets of each ICBC Plan subject to Title IV of ERISA exceeds the present value
of the benefit liabilities (as defined in Section 4001(a)(16) of ERISA) under
such ICBC Plan as of the most recent plan year end prior to the date hereof,
calculated using the actuarial assumptions used in the most recent actuarial
valuation of such Plan as of the date hereof; with respect to each qualified
plan which is an employee stock ownership plan (as defined in Section 4975(e)(7)
of the Code), any assets of any such plan that are not allocated to
participants' individual accounts are pledged as security for, and may be
applied to satisfy, any securities acquisition indebtedness; and there is not
currently any legally binding commitment by ICBC or any ICBC ERISA Affiliate to
create an additional ICBC Plan or amend any ICBC Plan (except amendments to
comply with law
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which do not materially increase the cost of such Plan) and ICBC and its
Subsidiaries do not have any obligations for post-retirement or post-employment
welfare benefits that cannot be amended or terminated upon sixty days' notice or
less without incurring any liability thereunder, except for coverage required by
Part 6 of Title 1 of ERISA or Section 4980B of the Code, the premium cost of
which is borne (to the extent permitted by law) by the insured individuals.
5.12 SEC REPORTS. ICBC has previously delivered to the Company a true and
correct copy of each (a) final registration statement, prospectus, report,
schedule and definitive proxy statement filed since December 31, 1996 by ICBC
with the SEC pursuant to the Securities Act or the Exchange Act (the "ICBC
Reports") and (b) communication mailed by ICBC to its stockholders since March
13, 1998, and no such registration statement, prospectus, report, schedule,
proxy statement or communication contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that information as of a
later date shall be deemed to modify information as of an earlier date. ICBC has
timely filed all ICBC Reports and other documents required to be filed by it
under the Securities Act and the Exchange Act, and, as of their respective
dates, all ICBC Reports complied in all material respects with the published
rules and regulations of the SEC with respect thereto.
5.13 ICBC INFORMATION. The information relating to ICBC and its
Subsidiaries to be contained in the Proxy Statement and the Form S-4, or in any
other document filed with any other regulatory agency in connection herewith,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
(except for such portions thereof that relate only to the Company or any of its
Subsidiaries) will comply with the provisions of the Exchange Act and the rules
and regulations thereunder. The Form S-4 will comply with the provisions of the
Securities Act and the rules and regulations thereunder.
5.14 COMPLIANCE WITH APPLICABLE LAW. ICBC and each of its Subsidiaries
holds all licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to all, and
have complied in all material respect with and are not in default in any respect
under any, applicable law, statute, order, rule, regulation, policy and/or
guideline of any Governmental Entity relating to ICBC or any of its Subsidiaries
and neither ICBC nor any of its Subsidiaries knows of or has received notice of
any violations of any of the above.
5.15 OWNERSHIP OF COMPANY COMMON STOCK. Other than pursuant to the terms of
the Stock Option Agreement, neither ICBC nor any of its affiliates or associates
(as such terms are defined under the Exchange Act) beneficially owns, directly
or indirectly, or is a party to any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of, any shares of capital
stock of the Company (other than DPC Shares).
5.16 AGREEMENTS WITH REGULATORY AGENCIES. Neither ICBC nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any
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written agreement, consent agreement or memorandum of understanding with, or is
a party to any commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary supervisory letter
from, or has adopted any board resolutions at the request of (each, whether or
not set forth in Section 5.16 of the ICBC Disclosure Schedule, an "ICBC
Regulatory Agreement"), any Governmental Entity that restricts materially the
conduct of its business or that in any manner relates to its capital adequacy,
its credit policies, its management or its business, nor has ICBC or any of its
Subsidiaries been advised by any Governmental Entity that it is considering
issuing or requesting any ICBC Regulatory Agreement.
5.17 OPINION. Prior to the execution of this Agreement, ICBC has received
an oral opinion from Merrill Lynch to the effect that as of the date thereof and
based upon and subject to the matters set forth therein, the Aggregate Merger
Consideration pursuant to this Agreement is fair from a financial point of view
to ICBC. Such opinion has not been amended or rescinded as of the date of this
Agreement.
5.18 ENVIRONMENTAL MATTERS. (a) Each of ICBC and its Subsidiaries, each of
the Participation Facilities and, to the best knowledge of ICBC, the Loan
Properties (each as hereinafter defined), are in compliance with Environment
Laws and with all applicable decrees, orders and contractual obligations
relating to pollution or the discharge of, or exposure to, Hazardous Materials
in the environment or workplace;
(b) There is no suit, claim, action, proceeding or investigation pending
or, to the best knowledge of ICBC, threatened (or to the best knowledge of ICBC,
no past or present actions, activities, circumstances, conditions, events or
incidents that could form the basis of any such suit, claim, action, proceeding,
investigation or notice), before any Governmental Entity or other forum in which
ICBC, any of its Subsidiaries, any Participation Facility or any Loan Property
(or person or entity whose liability for any such suit, claim, action,
proceeding, investigation or notice ICBC, any of its Subsidiaries, Participation
Facility or Loan Property has or may have been retained or assumed either
contractually or by operation of law), has been or, with respect to threatened
proceedings, may be, named as a defendant (x) for alleged noncompliance
(including by any predecessor) with any Environmental Laws, or (y) relating to
the release, threatened release or exposure to or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Material whether or not occurring at or
on a site owned, leased or operated by ICBC or any of its Subsidiaries, any
Participation Facility or any Loan Property;
(c) To the best knowledge of ICBC, during the period of (x) ICBC's or any
of its Subsidiaries' ownership or operation of any of their respective current
or former properties, (y) ICBC's or any of its Subsidiaries' participation in
the management of any Participation Facility, or (z) ICBC's or any of its
Subsidiaries' interest in a Loan Property, there has been no release of
Hazardous Materials in, on, under or affecting any such property. To the best
knowledge of ICBC, prior to the period of (x) ICBC's or any of its Subsidiaries'
ownership or operation of any of their respective current or former properties,
(y) ICBC's or any of its Subsidiaries' participation in the management of any
Participation Facility, or (z) ICBC's or any of its
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Subsidiaries' interest in a Loan Property, there was no release of Hazardous
Materials in, on, under or affecting any such property, Participation Facility
or Loan Property; and
(d) The following definitions apply for purposes of this Section 5.18: (x)
"Hazardous Materials" means any chemicals, pollutants, contaminants, wastes,
hazardous or toxic substances, petroleum or other regulated substances or
materials, (y) "Loan Property" means any property in which ICBC or any of its
Subsidiaries holds a security interest, and, where required by the context, said
term means the owner or operator of such property; and (z) "Participation
Facility" means any facility in which ICBC or any of its Subsidiaries
participates in the management and, where required by the context, said term
means the owner or operator of such property.
5.19 LOAN PORTFOLIO. Except as set forth in Section 5.19 of the ICBC
Disclosure Schedule, neither ICBC nor any of its Subsidiaries is a party to any
written or oral Loans, other than Loans the unpaid principal balance of which
does not exceed $350,000, under the terms of which the obligor was, as of
December 31, 1998, 90 days or more delinquent in payment of principal or
interest or in default of any other provision. Section 5.19 of the ICBC
Disclosure Schedule sets forth (i) all of the Loans of ICBC or any of its
Subsidiaries that as of December 31, 1998 were classified by any bank examiner
(whether regulatory or internal) as "Other Loans Specially Mentioned", "Special
Mention", "Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit
Risk Assets", "Concerned Loans", "Watch List" or words of similar import,
together with the principal amount of and accrued and unpaid interest on each
such Loan and the identity of the borrower thereunder, (ii) by category of Loan
(i.e., commercial, consumer, etc.), all of the other Loans of ICBC and its
Subsidiaries that as of December 31, 1998 were classified as nonaccrual,
together with the aggregate principal amount on such Loans by category and (iii)
each asset of ICBC that as of December 31, 1998 was classified as "Other Real
Estate Owned" and the book value thereof.
5.20 INSURANCE. ICBC and its Subsidiaries are presently insured, and since
December 31, 1995 have been insured, for reasonable amounts with financially
sound and reputable insurance companies, against such risks as companies engaged
in a similar business would, in accordance with good business practice,
customarily be insured. All of the insurance policies and bonds maintained by
ICBC and its Subsidiaries are in full force and effect, ICBC and its
Subsidiaries are not in default thereunder and all material claims thereunder
have been filed in due and timely fashion.
5.21 YEAR 2000 MATTERS. Section 5.21 of the ICBC Disclosure Schedule
contains a true and correct copy of ICBC's plan for addressing year 2000
computer issues (the "Year 2000 Plan"). ICBC is in compliance with ICBC's Year
2000 Plan. ICBC Bank has been examined by the FDIC with respect to being "Year
2000 Compliant" and neither ICBC nor ICBC Bank has received any written
communication from the FDIC commenting adversely with respect to the ability of
ICBC Bank to become Year 2000 compliant.
5.22 APPROVALS. As of the date of this Agreement, ICBC knows of no reason
why all regulatory approvals required for the consummation of the transactions
contemplated hereby (including, without limitation, the Merger and the Bank
Merger) should not be obtained.
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5.23 REORGANIZATION. ICBC has no reason to believe that the Merger will
fail to qualify as a reorganization under Section 368(a) of the Code.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 COVENANTS OF THE COMPANY. Except as expressly provided in this
Agreement or the Stock Option Agreement, during the period from the date of this
Agreement to the Effective Time, the Company shall use commercially reasonable
efforts to, and shall cause its Subsidiaries to use commercially reasonable
efforts to, (i) conduct its business in the ordinary and usual course consistent
with past practices and prudent banking practice; (ii) maintain and preserve
intact its business organization, properties, leases, employees and advantageous
business relationships and retain the services of its officers and key
employees, (iii) take no action which would adversely affect or delay the
ability of the Company, the Company Bank, ICBC or ICBC Bank to perform its
covenants and agreements on a timely basis under this Agreement or the Stock
Option Agreement, and (iv) take no action which would adversely affect or delay
the ability of the Company, the Company Bank, ICBC or ICBC Bank to obtain any
necessary approvals, consents or waivers of any governmental authority required
for the transactions contemplated hereby or which would reasonably be expected
to result in any such approvals, consents or waivers containing any material
condition or restriction. Without limiting the generality of the foregoing, and
except as set forth in Section 6.1 of the Company Disclosure Schedule or as
otherwise specifically provided by this Agreement, the Stock Option Agreement or
consented to in writing by ICBC, the Company shall not, and shall not permit any
of its Subsidiaries to:
(a) solely in the case of the Company, declare or pay any dividends on, or
make other distributions in respect of, any of its capital stock, other than
normal quarterly dividends not in excess of $0.13 per share of Company Common
Stock;
(b) (i) repurchase, redeem or otherwise acquire (except for the acquisition
of DPC Shares, as such term is defined in Section 1.4(b) hereof) any shares of
the capital stock of the Company or any Subsidiary of the Company, or any
securities convertible into or exercisable for any shares of the capital stock
of the Company or any Subsidiary of the Company, (ii) split, combine or
reclassify any shares of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) issue, deliver or sell, or authorize
or propose the issuance, delivery or sale of, any shares of its capital stock or
any securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect to
any of the foregoing, except, in the case of clauses (ii) and (iii), for the
issuance of Company Common Stock upon the exercise or fulfillment of rights or
options issued or existing or grants made pursuant to the Company Option Plans
or the Stock Option Agreement, all to the extent outstanding and in existence on
the date of this Agreement as set forth in Section 6.1(b) of the Company
Disclosure Schedule and in accordance with their present terms;
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(c) amend its certificate of incorporation, or bylaws or other similar
governing documents;
(d) (i) initiate, solicit or encourage, directly or indirectly, any
inquiries or the making of any proposal or offer (including, without limitation,
any proposal or offer to stockholders of the Company) with respect to a merger,
consolidation or similar transaction involving, or any purchase, lease or other
acquisition of, all or more than 10% of the assets or any equity securities of
the Company or any of its Subsidiaries (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal"), (ii) engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
(iii) authorize or permit any of its directors, officers, employees or agents to
directly or indirectly engage in any of the activities specified in clauses (i)
or (ii); provided, however, that nothing contained in this Agreement shall
prevent the Company or its Board of Directors from engaging in any negotiations
or discussions with, or providing any confidential information or data to, any
person who has made an unsolicited bona fide written Acquisition Proposal, if
and only to the extent that, in each such case referred to above, (A) the Board
of Directors of the Company, based upon written advice of outside legal counsel,
in good faith deems such action to be legally necessary for the proper discharge
of its fiduciary duties under applicable law and (B) the Board of Directors of
the Company determines in good faith (based upon written advice of its financial
advisor) that such Acquisition Proposal, if accepted, is reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects of
the Acquisition Proposal and the person making the Acquisition Proposal and
would, if consummated, result in a more favorable transaction than the
transaction contemplated by this Agreement; provided further, however, that the
Company may communicate information about any such Acquisition Proposal to its
stockholders if, in the judgment of the Company's Board of Directors, based upon
the written advice of outside counsel, such communication is required under
applicable law. The Company will notify ICBC immediately orally (within one
calendar day) and in writing (within three calendar days) if any such inquiries,
proposals or offers are received by, any such information is requested from, or
any such negotiations or discussions are sought to be initiated or continued
with the Company after the date hereof, and the identity of the person making
such inquiry, proposal or offer and the substance thereof and will keep ICBC
informed of any developments with respect thereto immediately upon occurrence
thereof. Subject to the foregoing, the Company will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing. The Company
and its Subsidiaries will take the necessary steps to inform their respective
officers, directors, agents, and representatives (including, without limitation,
any investment banker, attorney or accountant retained by it) of the obligations
undertaken in this Section 6.1(d). The Company will promptly request each person
(other than ICBC) that has executed a confidentiality agreement prior to the
date hereof in connection with its consideration of a business combination with
the Company or any of its Subsidiaries to return or destroy all confidential
information previously furnished to such person by or on behalf of the Company
or any of its Subsidiaries. The Company shall take all steps reasonably
necessary to enforce all such confidentiality agreements;
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(e) make any capital expenditures other than those which (i) are made in
the ordinary course of business or are necessary to maintain existing assets in
good repair, (ii) are set forth in Section 6.1(e) of the Company Disclosure
Schedule, and (iii) in any event (excluding those expenditures set forth in
Section 6.1(e) of the Company Disclosure Schedule) are in an amount of no more
than $100,000 in the aggregate;
(f) enter into any new line of business;
(g) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire any assets, which would be material, individually or in the aggregate,
to the Company, other than in connection with foreclosures, settlements in lieu
of foreclosure or troubled loan or debt restructurings in the ordinary course of
business consistent with past practices;
(h) take any action that is intended or may reasonably be expected to
result in any of the conditions to the Merger set forth in Article VIII not
being satisfied;
(i) change its methods of accounting in effect at December 31, 1998, except
as required by changes in GAAP or regulatory accounting principles as concurred
in writing by the Company's independent auditors;
(j) (i) except as required by applicable law or as required to maintain
qualification pursuant to the Code, adopt, amend or terminate any employee
benefit plan (including, without limitation, any Plan) or any agreement,
arrangement, plan, trust, other funding arrangement or policy between the
Company or any Subsidiary of the Company and one or more of its current or
former directors, officers, employees or independent contractors except as
required pursuant to irrevocable commitments existing on the date of this
Agreement, change any trustee or custodian of the assets of any plan or transfer
plan assets among trustees or custodians, (ii) increase or accelerate payment of
in any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any Plan or agreement as in effect
as of the date hereof, except (A) as may be required pursuant to binding
commitments existing on the date hereof as set forth in Section 4.15 of the
Company Disclosure Schedule, (B) as may be required by applicable law, and (C)
in the case of employees who are not officers at the level of Vice President or
above, normal salary increases in the ordinary course of business consistent
with past practice, or (iii) grant or award any stock options, stock
appreciation rights, restricted stock, restricted stock units, performance units
or shares;
(k) other than activities in the ordinary course of business consistent
with past practice, sell, lease, encumber, assign or otherwise dispose of, or
agree to sell, lease, encumber, assign or otherwise dispose of, any of its
material assets, properties or other rights or agreements except as otherwise
specifically contemplated by this Agreement;
(l) other than in the ordinary course of business consistent with past
practice,
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incur any indebtedness for borrowed money or assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other individual, corporation or other entity;
(m) file any application to relocate or terminate the operations of any
banking office of it or any of its Subsidiaries;
(n) create, renew, amend or terminate or give notice of a proposed renewal,
amendment or termination of, any employment, consulting or severance agreement
or of any material contract, agreement or lease for goods, services or office
space to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or their respective properties is bound,
other than the renewal in the ordinary course of business of any lease the term
of which expires prior to the Closing Date;
(o) other than in the ordinary course of business consistent with past
practice, in individual amounts not to exceed $100,000, and other than
investments for the Company's portfolio made in accordance with Section 6.1(p),
make any investment either by purchase of stock or securities, contributions to
capital, property transfers or purchase of any property or assets of any other
individual, corporation or other entity;
(p) make any investment in any debt security, including mortgage-backed and
mortgage related securities, other than U.S. government and U.S. government
agency securities with final maturities not greater than five years or
mortgage-backed or mortgage related securities which would not be considered
"high risk" securities under applicable regulatory pronouncements, that are
purchased in the ordinary course of business consistent with past practice;
(q) enter into or terminate any contract or agreement, or make any change
in any of its leases or contracts, other than with respect to those involving
aggregate payments of less than, or the provision of goods or services with a
market value of less than, $100,000 per annum and other than contracts or
agreements covered by Section 6.1(t);
(r) settle any claim, action or proceeding involving any liability of the
Company or any of its Subsidiaries for money damages in excess of $100,000 or
involving any material restrictions upon the operations of the Company or any of
its Subsidiaries;
(s) except in the ordinary course of business and in amounts less than
$100,000, waive or release any material right or collateral or cancel or
compromise any extension of credit or other debt or claim;
(t) (i) make or commit to make any new loan or other extension of credit in
an amount of $300,000 or more, renew for a period in excess of one year any
existing loan or other extension of credit in an amount of $300,000 or more, or
increase by $300,000 or more the aggregate credit outstanding to any borrower or
group of affiliated borrowers, except such loan originations, commitments,
extensions, renewals or increases that have been reviewed by ICBC,
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or (ii) make, renegotiate, renew, increase, extend, modify or purchase any loan,
lease (credit equivalent), advance, credit enhancement or other extension of
credit, or make any commitment in respect of any of the foregoing, other than in
the ordinary course of business consistent with past practice and in strict
compliance with the Company's current Board-approved loan policies as in effect
on the date hereof;
(u) incur any additional borrowings beyond those set forth in Section
6.1(u) of the Company Disclosure Schedule other than short-term (with a final
maturity of two years or less) Federal Home Loan Bank borrowings and reverse
repurchase agreements consistent with past practice, or pledge any of its assets
to secure any borrowings other than as required pursuant to the terms of
borrowings of the Company or any Subsidiary in effect at the date hereof or in
connection with borrowings or reverse repurchase agreements permitted hereunder.
Deposits shall not be deemed to be borrowings within the meaning of this
paragraph;
(v) make any investment or commitment to invest in real estate or in any
real estate development project, other than real estate acquired in satisfaction
of defaulted mortgage loans and investments or commitments approved by the Board
of Directors of the Company prior to the date of this Agreement and disclosed in
writing to ICBC, provided, however, the Company shall not take any further
action with respect to the loans and properties set forth in Section 4.17 of the
Company Disclosure Schedule without the prior consent of ICBC;
(w) except pursuant to commitments existing at the date hereof which have
previously been disclosed in writing to the ICBC, make any real estate loans
secured by undeveloped land or real estate located outside the States of New
Jersey and New York, and provided further that lending relationships with
borrowers in other states existing as of the date of this Agreement may be
maintained;
(x) except for the opening of a branch office in Maplewood, New Jersey the
estimated costs of which have been previously disclosed to ICBC, establish or
make any commitment relating to the establishment of any new branch or other
office facilities other than those for which all regulatory approvals have been
obtained; with respect to any such new branch or other office facility for which
regulatory approval has been received, make any capital expenditures that in the
aggregate would exceed $50,000;
(y) organize, capitalize, lend to or otherwise invest in any Subsidiary, or
invest in or acquire a 10% or greater equity or voting interest in any firm,
corporation or business enterprise;
(z) appoint or nominate for election to the Board of Directors of the
Company any person who is not a member of the Board of Directors of the Company
as of the last Company Report; or
(aa) agree to do any of the foregoing.
6.2 COVENANTS OF ICBC. Except as expressly provided in this Agreement,
during the
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period from the date of this Agreement to the Effective Time, ICBC shall use
commercially reasonable efforts to, and shall cause its Subsidiaries to use
commercially reasonable efforts to, (i) conduct its business in the ordinary and
usual course consistent with past practices and prudent banking practice, (ii)
maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships and retain the services of its
officers and key employees, (iii) take no action which would adversely affect or
delay the ability of the Company or ICBC to perform its covenants and agreements
on a timely basis under this Agreement, and (iv) take no action which would
adversely affect or delay the ability of the Company, ICBC, the Company Bank or
ICBC Bank to obtain any necessary approvals, consents or waivers of any
governmental authority required for the transactions contemplated hereby or
which would reasonably be expected to result in any such approvals, consents or
waivers containing any material condition or restriction. Without limiting the
generality of the foregoing, and except as set forth in Section 6.2 of the ICBC
Disclosure Schedule or as otherwise specifically provided by the Agreement or
consented to in writing by the Company, ICBC shall not, and shall not permit any
of its Subsidiaries to:
(a) solely in the case of ICBC, declare or pay any dividends on or make any
other distributions in respect of any of its capital stock other than its
regular quarterly dividends;
(b) take any action that is intended or may reasonably be expected to
result in any of the conditions to the Merger set forth in Article VIII not
being satisfied;
(c) change its methods of accounting in effect at December 31, 1998, except
in accordance with changes in GAAP or regulatory accounting principles as
concurred in by ICBC's independent auditors;
(d) repurchase any of the ICBC Common Stock during the Pricing Period or
the three (3) consecutive trading days immediately preceding the commencement of
the Pricing Period; or
(e) agree to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 REGULATORY MATTERS. (a) Within sixty (60) days after the date hereof or
as soon as thereafter as is reasonably practicable, ICBC and the Company shall
promptly prepare and file with the SEC the Proxy Statement and ICBC shall
promptly prepare and file with the SEC the Form S-4, in which the Proxy
Statement will be included as a part of the prospectus contained therein. Each
of the Company and ICBC shall use its reasonable best efforts to have the Form
S-4 declared effective under the Securities Act as promptly as practicable after
such filing, and the Company shall thereafter mail the Proxy Statement to its
stockholders. ICBC shall also use its reasonable best efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement.
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(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to prepare and file within sixty (60) days after the
date hereof or as soon as thereafter as is reasonably practicable, all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger and the Bank Merger). The
Company and ICBC 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 ICBC, as the case may be, and any of their respective
Subsidiaries, which appear in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto shall act reasonably and as promptly as practicable.
The parties hereto agree that they will consult with each other with respect to
the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(c) ICBC and the Company shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement, the Form S-4 or any other statement,
filing, notice or application made by or on behalf of ICBC, the Company or any
of their respective Subsidiaries to any Governmental Entity in connection with
the Merger and the other transactions contemplated by this Agreement.
(d) ICBC and the Company shall promptly furnish each other with copies of
written communications received by ICBC or the Company, as the case may be, or
any of their respective Subsidiaries, Affiliates or Associates (as such terms
are defined in Rule 12b-2 under the Exchange Act as in effect on the date of
this Agreement) from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated hereby.
7.2 ACCESS TO INFORMATION. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each party shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the other party, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives and, during such period, it
shall, and shall cause its Subsidiaries to, make available to the other party
all information concerning its business, properties and personnel as the other
party may reasonably request.
Neither party nor any of its Subsidiaries shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of its customers, jeopardize any attorney-client
privilege or contravene any law, rule, regulation,
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order, judgment, decree, fiduciary duty or binding agreement entered into prior
to the date of this Agreement. The parties hereto will make appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply.
(b) All information furnished pursuant to Section 7.2(a) shall be subject
to, and each of the Company and ICBC shall hold all such information in
confidence in accordance with, the provisions of the confidentiality agreement,
dated March 30, 1999 the "Confidentiality Agreement"), between ICBC and the
Company.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
7.3 STOCKHOLDER MEETING. The Company shall take all steps necessary to duly
call, give notice of, convene and hold a meeting of its stockholders to be held
as soon as is reasonably practicable after the date on which the Form S-4
becomes effective for the purpose of voting upon the approval and adoption of
this Agreement and the consummation of the transactions contemplated hereby. The
Company will, through its Board of Directors, recommend to its stockholders
approval of this Agreement and the transactions contemplated hereby and such
other matters as may be submitted to its stockholders in connection with this
Agreement, unless the Board of Directors determines, based upon written advice
of outside legal counsel, that the fiduciary duties of such Board preclude it
from making such recommendation. The Company shall engage a nationally
recognized proxy solicitation firm mutually acceptable to the Company and ICBC
to assist the Company in solicitation of the approval and adoption of the
Agreement by its shareholders at the meeting thereof called to consider the
Agreement.
7.4 LEGAL CONDITIONS TO MERGER. Each of ICBC and the Company shall, and
shall cause its Subsidiaries to, use their reasonable best efforts (a) to take,
or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VIII hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by the Company or ICBC or any of their respective Subsidiaries in connection
with the Merger and the other transactions contemplated by this Agreement, and
to comply with the terms and conditions of such consent, authorization, order or
approval.
7.5 AFFILIATES. Promptly, but in any event within one week after the
execution and delivery of this Agreement, the Company shall deliver to ICBC a
letter identifying all persons who, to the knowledge of the Company, may be
deemed to be "affiliates" of the Company under Rule 145 of the Securities Act,
including, without limitation, all directors and executive officers of the
Company, together with executed letter agreements, each substantially in the
form of Exhibit B hereto, executed by each such person so identified as an
affiliate of the Company agreeing (i) to comply with Rule 145 and (ii) to be
present in person or by proxy and vote in favor of the Merger at the Company's
stockholders' meeting.
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7.6 STOCK EXCHANGE LISTING. ICBC shall use its reasonable best efforts to
cause the shares of ICBC Common Stock to be issued in the Merger to be approved
for listing for quotation on the Nasdaq Stock Market, subject to official notice
of issuance, as of the Effective Time.
7.7 EMPLOYEE BENEFIT PLANS; EXISTING AGREEMENTS. (a) As of or as soon as
practicable following the Effective Time, the employees of the Company and its
Subsidiaries (the "Company Employees") shall become employees of ICBC or a
Subsidiary thereof and shall be eligible to participate in the ICBC Plans in
which similarly situated employees of ICBC or ICBC Bank participate, to the same
extent as similarly situated employees of ICBC or ICBC Bank (it being understood
that inclusion of Company Employees in such employee benefit plans may occur at
different times with respect to different plans); provided, however, that (i)
nothing contained herein shall require ICBC or any of its Subsidiaries to make
any grants to any Company Employee under either the ICBC Stock Plan or the ICBC
1998 Recognition and Retention Plan and Trust Agreement, it being understood
that any such grants are completely discretionary, and (ii) nothing contained
herein shall require ICBC or any of its Subsidiaries to permit a Company
Employee who is receiving severance as a result of the transactions contemplated
by this Agreement pursuant to any employment, severance, consulting or other
compensation agreements, plans and arrangements with the Company or any of its
Subsidiaries to participate in any severance or change in control agreement or
plan offered by ICBC or any of its Subsidiaries.
(b) With respect to each ICBC Plan, for purposes of determining eligibility
to participate, vesting, entitlement to benefits and vacation entitlement (but
not for accrual of benefits under the ICBC defined benefit pension plan),
service with the Company or any Subsidiary shall be treated as service with
ICBC; provided, however, that such service shall not be recognized to the extent
that such recognition would result in a duplication of benefits. Such service
also shall apply for purposes of satisfying any waiting periods, evidence of
insurability requirements, or the application of any preexisting condition
limitations with respect to any ICBC Plan. Each ICBC Plan shall waive
pre-existing condition limitations to the same extent waived under the
applicable Company Plan. Company Employees shall be given credit for amounts
paid under a corresponding Company or any Subsidiary benefit plan during the
same period for purposes of applying deductibles, co-payments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms and
conditions of the ICBC Plan during the applicable plan year.
(c) As of the Effective Time, ICBC shall assume and honor and shall cause
the appropriate Subsidiaries of ICBC to assume and honor in accordance with
their terms all employment, severance and other compensation agreements, plans
and arrangements existing immediately prior to the execution of this Agreement
which are between the Company or any of its Subsidiaries and any officer or
employee thereof and which have been disclosed in Section 4.11(a) of the Company
Disclosure Schedule. ICBC acknowledges and agrees that (i) consummation of the
Merger constitutes a "Change in Control" for all purposes pursuant to such
agreements, plans and arrangements (except where otherwise indicated in
subsection (c) of
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Section 4.11(a) of the Company Disclosure Schedule), and (ii) in light of ICBC's
plans relating to management assignments and responsibilities with respect to
the business of ICBC from and after the Effective Time, each officer or employee
who is a party to, or is otherwise subject to, any such agreement, plan or
arrangement will, upon consummation of the Merger, be entitled to receive the
severance or other similar benefits that are provided thereunder in the event of
a voluntary termination of employment in connection with a Change in Control
(whether or not such person continues in the employment of ICBC or its
subsidiaries). Any officer or employee of the Company or any of its Subsidiaries
who is a party to an agreement set forth in subsection (c) of Section 4.11(a) of
the Company Disclosure Schedule (the "Executive Agreements") who intends to
terminate employment as of the Effective Time, or who otherwise becomes entitled
to benefits thereunder, shall be entitled to receive the cash benefits payable
under such agreement on the Closing Date by wire transfer of immediately
available funds to an account designated by such employee in writing and
delivered to ICBC not less than five (5) business days prior to the Closing
Date; provided, however, that the employee executes and delivers to the Company
an instrument in form and substance satisfactory to ICBC releasing ICBC and its
affiliates from any further liability for monetary payments under such
agreement. Notwithstanding anything contained herein to the contrary, (i) ICBC
acknowledges and agrees that the amounts reflected in Section 4.15(c) of the
Company Disclosure Schedule (A) have been calculated in a manner consistent
with, and according to, the provisions of the Executive Agreements (copies of
which have been furnished by the Company to ICBC), and (B) represent good faith
estimates of the amounts payable as of the future date specified therein based
upon assumptions regarding interest rates, compensation or the assumed Closing
Date, which are disclosed in Section 4.15(c) of the Company Disclosure Schedule,
and (ii) the amounts payable under such Plans will not exceed, individually or
in the aggregate, the amounts reflected in Section 4.15(c) of the Company
Disclosure Schedule (except to the extent that any good faith estimates
contained in Section 4.15(c) of the Company Disclosure Schedule change due to
changes in interest rates, compensation or the assumed Closing Date). To the
extent that an officer or employee of the Company or any of its Subsidiaries is
entitled to the continued receipt of health insurance, life insurance,
automobile allowance or other similar fringe benefits pursuant to an Executive
Agreement, and such officer or employee becomes a director, officer, employee or
consultant of ICBC or any of its Subsidiaries following the Effective Time and
as a result becomes entitled to receive the same fringe benefits in his or her
capacity as a director, officer, employee or consultant of ICBC or any of its
Subsidiaries, then the fringe benefits provided to such person shall be deemed
to be provided in connection with such person's service as a director, officer,
employee or consultant of ICBC or any of its Subsidiaries for so long as such
person serves in such capacity and shall be in lieu of, and not in addition to
(and for the sole purpose to avoid duplication of benefits), the same fringe
benefits that would have otherwise been provided pursuant to the Executive
Agreement.
(d) With respect to the Statewide Savings Bank, S.L.A. Employee Stock
Ownership Plan (the "ESOP"), the Company shall:
(i) take any actions necessary to cause the ESOP to be terminated
and for the balances in all Accounts (as defined in the ESOP) to become fully
vested and nonforfeitable as of the Closing Date;
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(ii) use its best efforts to cause the Trustee of the ESOP to make
such elections under Sections 1.4 and 1.5 of this Agreement with respect to
unallocated Company Common Stock as are necessary to obtain cash at least equal
to the remaining ESOP indebtedness;
(iii) cause the Trustee to use such cash to repay in full all such
outstanding ESOP indebtedness;
(iv) cause the shares of Company Common Stock and/or any cash
remaining in the suspense account maintained under the ESOP, after giving effect
to the repayment of ESOP indebtedness referred to in subparagraph (iii) above,
to be allocated as investment earnings of the ESOP (as of the Closing Date) to
the accounts of all ESOP participants who have account balances as of the
Closing Date, in proportion to the aggregate value of their respective Stock
Accounts and Investment Accounts (as defined in the ESOP) in accordance with the
applicable provisions of the ESOP;
(v) cause the account balances of all ESOP participants to be
distributed in a lump sum (or transferred in accordance with Section 401(a)(31)
of the Code) as soon as practicable following the later of (A) the Closing Date
or (B) the date of receipt of a favorable determination letter from the IRS
regarding the qualified status of the ESOP upon its termination; and
(vi) adopt amendment(s) to the ESOP, in form and substance
reasonably satisfactory to ICBC, which includes and provides for the actions
described in subparagraphs (i), (ii), (iii), (iv) and (v) above or as may be
requested by the IRS in connection with the request for a determination letter.
(e) As soon as practicable after the date hereof, the Company shall file a
request for a determination letter from the IRS regarding the continued
qualified status of the ESOP upon its termination. Prior to the Effective Time,
the Company and, following the Effective Time, ICBC shall use their respective
best efforts to obtain such favorable determination letter (including, but not
limited to, making such changes to the ESOP and the proposed allocations
described herein as may be requested by the IRS as a condition to its issuance
of a favorable determination letter). Neither the Company nor ICBC shall
implement any of the actions described in Sections 7.7(d)(iv) and (v) above
until receipt of such favorable determination letter.
(f) As of the Effective Time, each Company employee who is a participant in
the Statewide Savings Bank 401(k) Plan (the "Company 401(k) Plan") shall become
fully vested in his or her employer matching account balance in the Company
401(k) Plan and the Company 401(k) Plan will either be merged into the
Independence Savings Bank 401(k) Savings Plan in RSI Retirement Trust (the "ICBC
401(k) Plan") effective as of a date following the Effective Time selected by
ICBC or, if so elected by ICBC, terminated immediately prior to, on or after the
Effective Time. The determination as to whether the Company 401(k) Plan shall be
terminated or merged into the ICBC 401(k) Plan shall be made by ICBC. Effective
as of the date
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of the merger of the Company 401(k) Plan into the ICBC 401(k) Plan, if
applicable, or the termination of the Company 401(k) Plan (or the Effective
Time, if subsequent to such termination), if applicable, Company employees who
are then participating in the Company 401(k) Plan shall become participants in
the ICBC 401(k) Plan.
(g) As soon as practicable after the execution of this Agreement, the
Company will cooperate to cause the Statewide Recognition Plans to be amended
and other action taken, in a manner reasonably acceptable to ICBC, to provide
that the Statewide Recognition Plans will terminate upon the Effective Time;
provided, however, that any distribution of shares under the Statewide
Recognition Plans shall be effected in accordance with the requirements, if any,
of federal and state securities laws and regulations. No action shall be taken
that would adversely affect the rights of plan participants who hold outstanding
grants or awards of shares of Company Common Stock, whether before or after the
Effective Time. No further grants or awards shall be made under the Statewide
Recognition Plans following the date of this Agreement.
(h) ICBC agrees to honor the terms of each of the Company SERPs which have
been disclosed in Section 4.11 of the Company Disclosure Schedule. The Company
agrees not to establish any trust funds under the SERPs.
(i) Any person who is serving as an employee of either the Company or any
Subsidiary thereof as of the date of this Agreement (other than those employees
covered by either a written employment or severance agreement) whose employment
is discontinued by ICBC or any its Subsidiaries within six months after the
Effective Time (unless termination of such employment is for Cause (as defined
below)) shall be entitled to a severance payment from ICBC or its Subsidiaries
equal in amount to one week's base pay for each full year such employee was
employed by the Company or a Company Subsidiary or any successor or predecessor
thereto, subject to a minimum of two weeks' severance and a maximum of 26 weeks'
severance, provided that the benefits payable pursuant to this Section 7.7(i)
shall be in lieu of, and not in addition to, any amounts that may have otherwise
been payable pursuant to the Company's unwritten severance policy described in
subsection (d) of Section 4.11(a) of the Company Disclosure Schedule. For
purposes of this Section 7.7(i), "Cause" shall mean termination because of the
employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties or willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses).
7.8 INDEMNIFICATION. (a) It is understood and agreed that after the
Effective Time, ICBC shall indemnify and hold harmless, to the fullest extent
that the Company is permitted to indemnify (including advancement of expenses)
its directors and officers under New Jersey law or OTS regulations, as
applicable, and the Certificate of Incorporation and Bylaws of the Company as in
effect at the Effective Time, any person who is now, or has been at any time
prior to the date of this Agreement, or who becomes prior to the Effective Time,
a director, officer or employee of the Company or any of its Subsidiaries (the
"Indemnified Parties") against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to
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each Indemnified Party), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual claim, action,
suit, proceeding or investigation (whether asserted or arising before or after
the Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with ICBC; provided, however, that (1)
ICBC shall have the right to assume the defense thereof and upon such assumption
ICBC shall not be liable to any Indemnified Party for any legal expenses of
other counsel or any other expenses subsequently incurred by any Indemnified
Party in connection with the defense thereof, except that if ICBC elects not to
assume such defense or counsel for the Indemnified Parties reasonably advises
that there are issues which raise conflicts of interest between ICBC and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with ICBC, and ICBC shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties, (2)
ICBC shall in all cases be obligated pursuant to this paragraph to pay for only
one firm of counsel for all Indemnified Parties, (3) ICBC shall not be liable
for any settlement effected without its prior written consent (which consent
shall not be unreasonably withheld) and (4) ICBC shall have no obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 7.8, upon learning of any
such claim, action, suit, proceeding or investigation, shall promptly notify
ICBC thereof, provided that the failure to so notify shall not affect the
obligations of ICBC under this Section 7.8 except to the extent such failure to
notify materially prejudices ICBC. ICBC's obligations under this Section 7.8
shall continue in full force and effect for a period of six years from and after
the Effective Time; provided, however, that all rights to indemnification in
respect of any claim asserted or made within such period shall continue until
the final disposition of such claim.
(b) ICBC shall cause the persons serving as officers and directors of the
Company immediately prior to the Effective Time to be covered for a period of
six years from the Effective Time by the directors' and officers' liability
insurance policy maintained by the Company (provided that ICBC may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy or single premium
tail coverage with policy limits equal to the Company's existing annual coverage
limits) with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as such;
provided, however, that in no event shall ICBC be required to expend an
aggregate premium for such six-year period in excess of 200% of the current
annual premiums expended by the Company (the "Insurance Amount") to maintain or
procure insurance coverage, and further provided that if ICBC is unable to
maintain or obtain the insurance called for by this Section 7.8(b), ICBC shall
use all reasonable efforts to obtain as much comparable insurance as is
available for the Insurance Amount.
(c) In the event ICBC or any of its successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person, then, and in each such case, to the extent necessary, proper
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provision shall be made so that the successors and assigns of ICBC assume the
obligations set forth in this Section.
(d) The provisions of this Section 7.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
7.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such necessary action
as may be reasonably requested by ICBC.
7.10 COORDINATION OF DIVIDENDS. After the date of this Agreement, the
Company shall coordinate the declaration of any dividends in respect of the
Company Common Stock and the record dates and payment dates relating thereto
with that of the ICBC Common Stock, it being the intention of the parties that
the holders of ICBC Common Stock or Company Common Stock shall not receive more
than one dividend, or fail to receive one dividend, for any single calendar
quarter with respect to their shares of ICBC Common Stock and/or Company Common
Stock and any shares of ICBC Common Stock any holder of Company Common Stock
receives in exchange therefor in the Merger.
7.11 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt notice
to the others of (a) any event or notice of, or other communication relating to,
a default or event that, with notice or lapse of time or both, would become a
default, received by it or any of its Subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract material to
the financial condition, properties, businesses or results or operations of such
party and its Subsidiaries taken as a whole to which such party or any
Subsidiary is a party or is subject; and (b) any event, condition, change or
occurrence which individually or in the aggregate has, or which, so far as
reasonably can be foreseen at the time of its occurrence, is reasonably likely
to result in a Material Adverse Event. Each of the Company and ICBC shall give
prompt notice to the other party of any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
7.12 CERTAIN MATTERS, CERTAIN REVALUATIONS, CHANGES AND ADJUSTMENTS. At or
before the Effective Time, upon the request of ICBC, the Company shall,
consistent with GAAP, modify and change its loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) so as to be applied consistently on a mutually satisfactory basis with
those of ICBC and establish such accruals and reserves as shall be necessary to
reflect Merger-related expenses and costs incurred by the Company, provided,
however, that the Company shall not be required to take such action (A) more
than five days prior to the Effective Time, and (B) unless ICBC agrees in
writing that all conditions to closing set forth in Article VIII have been
satisfied or waived (other than those conditions relating to delivery of
documents on the Closing Date); and provided further, however, that no accrual
or
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reserve made by the Company or any Company Subsidiary pursuant to this Section
7.12 or any litigation or regulatory proceeding arising out of any such accrual
or reserve, shall constitute or be deemed to be a breach, violation of or
failure to satisfy any representation, warranty, covenant, condition or other
provision of this Agreement or otherwise be considered in determining whether
any such breach, violation or failure to satisfy shall have occurred.
7.13 APPOINTMENTS. Mr. Richel shall be appointed as a director and Vice
Chairman of the Board of Directors of ICBC as of the Effective Time, shall be
placed in the class of directors whose term is scheduled to expire in the year
2000, and upon the expiration of his term in the year 2000, the Board of
Directors shall nominate Mr. Richel to serve for an additional term of three
years. In addition, Mr. Richel will receive a five-year contract for services to
be actually rendered as a consultant and senior advisor following the Effective
Time, substantially in the form set forth in Section 7.13 of the ICBC Disclosure
Schedule. Mr. Richel shall also be appointed as a director of ICBC Bank as of
the Effective Time, shall be placed in the class of directors whose term is
scheduled to expire in the year 2000; and upon the expiration of his term in the
year 2000, ICBC agrees to re-elect Mr. Richel as a director of ICBC Bank for an
additional term of three years.
7.14 ADVISORY BOARD. ICBC Bank shall, effective as of the Effective Time,
cause each person serving as a director of the Company as of the date of this
Agreement, if such persons are willing to so serve, to be elected or appointed
as members of a Advisory Board to the ICBC Bank ("Advisory Board") to be
established by ICBC Bank, the function of which shall be to advise ICBC with
respect to deposit and lending activities in the Company's market area and to
maintain and develop customer relationships. The members of the Advisory Board
who are willing to so serve initially shall be elected or appointed for a term
of one year. ICBC Bank agrees to re-elect or re-appoint each of the initial
members of the Advisory Board to an additional one-year term following the
initial one-year term; provided, however, that ICBC Bank shall have no
obligation to re-elect or re-appoint any member if ICBC Bank reasonably
determines that such member has a conflict of interest that compromises such
member's ability to serve effectively as a member of the Advisory Board or any
cause exists that otherwise would allow for removal of such person as a director
of ICBC Bank if such person were a member of ICBC Bank's Board of Directors.
Each member of the Advisory Board shall receive a retainer fee for such service
at an annual rate of $20,000, which fees shall be payable in quarterly
installments or in one lump sum at any time in advance at the option of ICBC
Bank.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the holders of the outstanding shares of
Company Common
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Stock under applicable law and the Company's Certificate of Incorporation and
Bylaws.
(b) Listing of Shares. The shares of ICBC Common Stock which shall be
issued to the stockholders of the Company upon consummation of the Merger shall
have been authorized for listing for quotation on the Nasdaq Stock Market,
subject to official notice of issuance.
(c) Other Approvals. All necessary regulatory or governmental approvals,
consents or waivers 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 all other
consents, waivers and approvals of any third parties which are necessary to
permit the consummation of the Merger and the other transactions contemplated
hereby shall have been obtained or made except for those the failure to obtain
would not have a Material Adverse Effect (i) on the Company and its subsidiaries
taken as a whole or (ii) on ICBC and its Subsidiaries taken as a whole. None of
the approvals or waivers referred to herein shall contain any term or condition
which would have a Material Adverse Effect on the Surviving Corporation and its
Subsidiaries, taken as a whole, after giving effect to the Merger.
(d) Form S-4. The Form S-4 shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the Form S-4 shall have
been issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger shall be in effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal consummation of
the Merger.
(f) Affiliate Letters. ICBC shall have received the letter agreements
referred to in Section 7.5 hereof.
8.2 CONDITIONS TO OBLIGATIONS OF ICBC. The obligation of ICBC to effect the
Merger is also subject to the satisfaction or waiver by ICBC at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of the Company set forth in this Agreement (other
than those set forth in the first and third sentences of Section 4.1(a), the
first two sentences of Section 4.1(b) and Sections 4.2, 4.6, 4.8(a), 4.10 and
4.18) shall be true and correct as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date; and (ii) the
representations and warranties of the Company set forth in the first and third
sentences of Section 4.1(a), the first two sentences of Section 4.1(b) and
Sections 4.2, 4.6, 4.8(a), 4.10 and 4.18 of this
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Agreement shall be true and correct in all material respects (without giving
effect to Section 3.2 of this Agreement) as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date. ICBC
shall have received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to the
foregoing effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and ICBC shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(c) Federal Tax Opinion. ICBC shall have received an opinion from Elias,
Matz, Tiernan & Herrick L.L.P., counsel to ICBC ("ICBC's Counsel"), in form and
substance reasonably satisfactory to ICBC, dated the Effective Time,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code and that,
accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by ICBC or the Company as a
result of the Merger;
(ii) No gain or loss will be recognized by the stockholders of the
Company who exchange all of their Company Common Stock solely for ICBC Common
Stock pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in ICBC Common Stock); and
(iii) The aggregate tax basis of the ICBC Common Stock received by
stockholders who exchange all of their Company Common Stock solely for ICBC
Common Stock pursuant to the Merger will be the same as the aggregate tax basis
of the Company Common Stock surrendered in exchange therefor (reduced by any
amount allocable to a fractional share interest for which cash is received).
In rendering such opinion, ICBC's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of ICBC, the Company and others, reasonably satisfactory in form and
substance to such counsel.
(d) Accountant's Letter. The Company shall have caused to be delivered to
ICBC "cold comfort" letters or letters of procedures from the Company's
independent certified public accountants, dated (i) the date of the mailing of
the Proxy Statement to the Company's stockholders and (ii) a date not earlier
than five business days preceding the Closing Date and addressed to ICBC,
concerning such matters as are customarily covered in transactions of the type
contemplated hereby.
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(e) Approvals. Any and all permits, consents, waivers, clearances,
approvals and authorizations of all Governmental Entities and third parties
which are necessary in connection with the consummation of the Merger and the
Bank Merger shall have been obtained; provided, however, that no approval or
consent referred to in this Section 8.1(e) shall be deemed to have been received
if it shall include any term, condition or requirement that, individually or in
the aggregate, (i) would result in a material adverse effect on the results,
business, operation, assets, financial condition or prospects of ICBC on a
consolidated basis, or (ii) would reduce the economic or business benefits of
the transactions contemplated by this Agreement to ICBC in so significant a
manner that ICBC, in its reasonable judgement, would not have entered into this
Agreement.
8.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the Company
to effect the Merger is also subject to the satisfaction or waiver by the
Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of ICBC set forth in this Agreement (other than
those set forth in the first and third sentences of Section 5.1(a), the first
two sentences of Section 5.1(b) and Sections 5.2, 5.6 and 5.8 shall be true and
correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date; and (ii) the representations
and warranties of ICBC set forth in the first and third sentences of Section
5.1(a), the first two sentences of Section 5.1(b) and Sections 5.2, 5.6 and 5.8
of this Agreement shall be true and correct in all material respects (without
giving effect to Section 3.2 of this Agreement) as of the date of this Agreement
and (except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date. The Company shall have received a certificate signed on behalf of ICBC by
the Chief Executive Officer and the Chief Financial Officer of ICBC to the
foregoing effect.
(b) Performance of Obligations of ICBC. ICBC shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of ICBC by the Chief Executive Officer and the
Chief Financial Officer of ICBC to such effect.
(c) Federal Tax Opinion. The Company shall have received an opinion from
McCarter & English LLP (the "Company's Counsel"), in form and substance
reasonably satisfactory to the Company, dated the Effective Time, substantially
to the effect that, on the basis of facts, representations and assumptions set
forth in such opinion which are consistent with the state of facts existing at
the Effective Time, the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code and that, accordingly, for federal income
tax purposes:
(i) No gain or loss will be recognized by ICBC or the Company as a
result of the Merger;
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(ii) No gain or loss will be recognized by the stockholders of the
Company who exchange all of their Company Common Stock solely for ICBC Common
Stock pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in ICBC Common Stock); and
(iii) The aggregate tax basis of the ICBC Common Stock received by
stockholders who exchange all of their Company Common Stock solely for ICBC
Common Stock pursuant to the Merger will be the same as the aggregate tax basis
of the Company Common Stock surrendered in exchange therefor (reduced by any
amount allocable to a fractional share interest for which cash is received).
In rendering such opinion, the Company's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of ICBC, the Company and others, reasonably satisfactory in form and
substance to such counsel.
(d) Accountant's Letter. ICBC shall have caused to be delivered to the
Company "cold comfort" letters or letters of procedures from ICBC's independent
certified public accountants, dated (i) the date of the mailing of the Proxy
Statement to the Company's stockholders and (ii) a date not earlier than five
business days preceding the Closing Date and addressed to the Company,
concerning such matters as are customarily covered in transactions of the type
contemplated hereby.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company:
(a) by mutual consent of the Company and ICBC in a written instrument, if
the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either ICBC or the Company upon written notice to the other party
(i) 45 days after the date on which any request or application for a Requisite
Regulatory Approval shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 45-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, provided, however, that no party shall
have the right to terminate this Agreement pursuant to this Section 9.1(b)(i) if
such denial or request or recommendation for withdrawal shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable
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order enjoining or otherwise prohibiting the Merger;
(c) by either ICBC or the Company, if its Board of Directors so determines
by a vote of a majority of the members of its entire Board, if the Merger shall
not have been consummated on or before January 31, 2000, unless the failure of
the Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein;
(d) by either ICBC or the Company, if its Board of Directors so determines
by a vote of a majority of the members of its entire Board (provided that if the
Company is the terminating party, it shall not be in material breach of any of
its obligations under Section 7.3) if any approval of the stockholders of the
Company required for the consummation of the Merger shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting of
such stockholders or at any adjournment or postponement thereof;
(e) by either ICBC or the Company, if its Board of Directors so determines
by a vote of a majority of the members of its entire Board (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein), if there shall have
been a material breach of any of the representations or warranties set forth in
this Agreement on the part of the other party, which breach is not cured within
30 days following written notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the Closing; provided, however,
that neither party shall have the right to terminate this Agreement pursuant to
this Section 9.1(e) unless the breach of representation or warranty, together
with all other such breaches, would entitle the party receiving such
representation not to consummate the transactions contemplated hereby under
Section 8.2(a) (in the case of a breach of representation or warranty by the
Company) or Section 8.3(a) (in the case of a breach of representation or
warranty by ICBC);
(f) by either ICBC or the Company, if its Board of Directors so determines
by a vote of a majority of the members of its entire Board (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein), if there shall have
been a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within 30 days following receipt by the breaching party of written notice of
such breach from the other party hereto, or which breach, by its nature, cannot
be cured prior to the Closing; or
(g) By the Company, if, without breaching Section 6.1(d) hereof, the
Company shall have entered into a definitive agreement with a third party
providing for an Acquisition Transaction (as defined in the Stock Option
Agreement).
9.2 EFFECT OF TERMINATION. In the event of termination of this Agreement by
either ICBC or the Company as provided in Section 9.1, this Agreement shall
forthwith become void and have no effect except (i) Sections 7.2(b), 9.2 and
10.3 shall survive any termination of this Agreement and (ii) that
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liabilities or damages arising out of its
willful breach
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of any provision of this Agreement.
9.3 AMENDMENT. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of the
Company; provided, however, that after any approval of the transactions
contemplated by this Agreement by the Company's stockholders, there may not be,
without further approval of such stockholders, any amendment of this Agreement
which reduces the amount or changes the form of the consideration to be
delivered to the Company stockholders hereunder other than as contemplated by
this Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
9.4 EXTENSION; WAIVER. At any time prior to the Effective Time, each of the
parties hereto, by action taken or authorized by its Board of Directors, may, to
the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE X
GENERAL PROVISIONS
10.1 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on the first
day which is at least two and not more than five business days after the
satisfaction or waiver (subject to applicable law) of the latest to occur of the
conditions set forth in Article VIII hereof (other than those conditions which
relate to actions to be taken at the Closing) (the "Closing Date"), at the
offices of ICBC, unless another time, date or place is agreed to in writing by
the parties hereto; provided, however, that the Closing shall not occur until
after the Election Deadline.
10.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for those covenants and agreements contained herein and therein
which by their terms apply in whole or in part after the Effective Time,
including, but not limited to, the provisions of Section 9.5 hereof.
10.3 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses; provided, however, that the costs of printing
and mailing the Proxy Statement shall be
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borne equally by the parties hereto.
10.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to ICBC, to:
Independence Community Bank Corp.
195 Montague Street
Brooklyn, NY 11201
Attention: Chief Executive Officer
with a copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
734 Fifteenth Street, N.W., 12th Floor
Washington, DC 20005
Attention: Philip Ross Bevan, Esq.
and
(b) if to the Company, to:
Statewide Financial Corp.
70 Sip Avenue
Jersey City, New Jersey 07306
Attention: Chief Executive Officer
with a copy to:
McCarter & English LLP
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07101-0652
Attention: Michael M. Horn, Esq.
10.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless
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the context otherwise requires, shall be deemed to refer to April 12, 1999. No
provision of this Agreement shall be construed to require the Company, ICBC or
any of their respective Subsidiaries or affiliates to take any action that would
violate any applicable law, rule or regulation.
10.6 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
10.7 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein), together with the Stock Option Agreement and
the Confidentiality Agreement, constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
10.8 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable conflicts of law.
10.9 SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.10 PUBLICITY. Except as otherwise required by law or the rules of the
Nasdaq Stock Market, so long as this Agreement is in effect, neither ICBC nor
the Company shall, or shall permit any of its Subsidiaries to, issue or cause
the publication of any press release or other public announcement with respect
to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
10.11 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
IN WITNESS WHEREOF, ICBC and the Company have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
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INDEPENDENCE COMMUNITY BANK CORP.
By:
-------------------------------------
Name: Charles J. Hamm
Title: Chairman, President and Chief
Executive Officer
STATEWIDE FINANCIAL CORP.
By:
-------------------------------------
Name: Victor M. Richel
Title: Chairman, President and Chief
Executive Officer
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of April 12, 1999, between Independence
Community Bank Corp., a Delaware corporation ("Grantee"), and Statewide
Financial Corp., a New Jersey corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), providing for, among
other things, the merger of Issuer with and into Grantee (the "Merger");
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to an aggregate of
803,531 fully paid and nonassessable shares (the "Option Shares") of common
stock, no par value, of Issuer (the "Common Stock") at a price per share equal
to $19.86 (the "Option Price"); provided, however, that in no event shall the
number of shares for which this Option is exercisable exceed 19.9% of the issued
and outstanding shares of Common Stock without giving effect to any shares
subject to or issued pursuant to the Option. The number of shares of Common
Stock that may be received upon the exercise of the Option and the Option Price
are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), including, without limitation, pursuant to stock
option or other employee plans or as a result of the exercise of conversion
rights, the number of shares of Common Stock subject to the Option shall be
increased so that, after such event, such number equals 19.9% of the number of
shares of Common Stock then issued and outstanding without giving effect to any
shares subject to or issued pursuant to the Option. Nothing contained in this
Section l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer
to issue shares in breach of any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter
<PAGE>
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of the first exercise (as provided in paragraph (e) of this Section 2)
within six months following the first Subsequent Triggering Event to occur (or
such later period as provided in Section 10). Each of the following shall be an
Exercise Termination Event: (i) the Effective Time (as defined in the Merger
Agreement); (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event, except a termination by Grantee pursuant to Sections
9.1(e) or (f) of the Merger Agreement where the breach by Issuer giving rise to
such right of termination is willful; or (iii) the passage of 12 months after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a termination by Grantee pursuant to
Sections 9.1(e) or (f) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination is non-willful), provided that if an
Initial Triggering Event continues or occurs beyond such termination and prior
to the passage of such 12-month-period, the Exercise Termination Event shall be
12 months from the expiration of the Last Triggering Event but in no event more
than 18 months after such termination. The term "Last Triggering Event" shall
mean the last Initial Triggering Event to expire, and the term "Holder" shall
mean the holder or holders of the Option pursuant to this Agreement.
Notwithstanding anything to the contrary contained herein, the Option may not be
exercised at any time when Grantee shall be in willful material breach of any of
its covenants or agreements contained in the Merger Agreement such that Issuer
shall be entitled to terminate the Merger Agreement pursuant to Section 9.1(f)
thereof as a result of such a willful material breach.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any Subsidiary of Issuer (an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations
thereunder), other than Grantee or any Subsidiary of Grantee (a "Grantee
Subsidiary"), or the Board of Directors of Issuer (the "Issuer Board") shall
have recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary. For purposes of this Agreement, (a) "Acquisition Transaction" shall
mean (w) a merger or consolidation, or any similar transaction, involving Issuer
or any Issuer Subsidiary (other than mergers, consolidations or similar
transactions (i) involving solely Issuer and/or one or more wholly owned
Subsidiaries of Issuer, provided any such transaction is not entered into in
violation of the terms of the Merger Agreement, or (ii) in which the
stockholders of Issuer immediately prior to the completion of such transaction
own at least 50% of the Common Stock of Issuer (or the resulting or
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<PAGE>
surviving entity in such transaction) immediately after completion of such
transaction, provided any such transaction is not entered into in violation of
the terms of the Merger Agreement), (x) a purchase, lease or other acquisition
of all or any substantial part of the assets or deposits of Issuer or any Issuer
Subsidiary, (y) a purchase or other acquisition subsequent to the date hereof
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Issuer or any Issuer
Subsidiary or (z) any substantially similar transaction; and (b) "Subsidiary"
shall have the meaning set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person, other than Grantee or a Grantee Subsidiary, shall
have acquired beneficial ownership or the right to acquire beneficial ownership
of 10% or more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned thereto
in Section 13(d) of the 1934 Act, and the rules and regulations thereunder),
except that the percentage for Thomson, Horstmann & Bryant, Inc. shall be 14.25%
rather than 10% and the percentage for the Statewide Savings Bank, S.L.A.
Employee Stock Ownership Trust (ESOP") shall be 10.50% rather than 10%;
(iii) Any person, other than Grantee or a Grantee Subsidiary, shall
have made a bona fide proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(iv) The Issuer Board, without having received Grantee's prior
written consent, shall have withdrawn or modified (or publicly announced its
intent to withdraw or modify) in any manner adverse in any respect to Grantee,
its recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, or Issuer or any Issuer Subsidiary shall have
authorized, recommended or proposed, or publicly announced its intention to
authorize, recommend or propose, an agreement to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary;
(v) Any person, other than Grantee or a Grantee Subsidiary, shall
have filed with the Securities and Exchange Commission ("SEC") a registration
statement or tender offer materials with respect to a potential exchange or
tender offer that would constitute an Acquisition Transaction (or filed a
preliminary proxy statement with the SEC with respect to a potential vote by its
stockholders to approve the issuance of shares to be offered in such an exchange
offer);
(vi) After an overture is made by any person, other than Grantee or
a Grantee Subsidiary, to Issuer or its stockholders to engage in an Acquisition
Transaction, Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement and such breach (x) would entitle Grantee to
terminate the Merger Agreement (whether immediately or after the giving of
notice or passage of time or
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<PAGE>
both) and (y) shall not have been cured prior to the Notice Date (as defined
below); or
(vii) Any person, other than Grantee or a Grantee Subsidiary, shall
have filed an application or notice with the Office of Thrift Supervision
("OTS"), the New Jersey Department of Banking and Insurance ("Department") or
other federal or state bank regulatory or antitrust authority, which application
or notice has been accepted for processing, for approval to engage in an
Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than (a) Grantee or any
Grantee Subsidiary) of beneficial ownership of 25% or more of the then
outstanding Common Stock;
(ii) A termination of the Merger Agreement pursuant to Section
9.1(g) thereof; or
(iii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (y) of the second sentence thereof shall be 15%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event") of which it has notice, it being understood that the giving
of such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares of Common Stock it will purchase pursuant to such
exercise and (ii) a place and date not earlier than three business days nor
later than 60 business days from the Notice Date for the closing of such
purchase (the "Closing"); provided that if prior notification to or approval of
the OTS, the Department or any other regulatory or antitrust agency is required
in connection with such purchase, the Holder shall promptly file the required
notice or application for approval, shall promptly notify Issuer of such filing
and shall expeditiously process the same and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed. Any exercise of the Option shall be deemed to occur on the Closing
relating thereto. The term "business day" for purposes of this Agreement means
any day, excluding Saturdays, Sundays and any other day that is a legal holiday
in the State of New York or a day on which banking institutions in the State of
New York are authorized by law or executive order to close.
4
<PAGE>
(f) At a Closing, the Holder shall (i) pay to Issuer the aggregate purchase
price for the shares of Common Stock purchased pursuant to the exercise of the
Option in immediately available funds by wire transfer to a bank account
designated by Issuer, and (ii) present and surrender this Agreement to Issuer at
its principal executive offices, provided that the failure or refusal of the
Issuer to designate such a bank account or accept surrender of this Agreement
shall not preclude the Holder from exercising the Option.
(g) At a Closing, simultaneously with the delivery of immediately available
funds as provided in subsection (f) of this Section 2, Issuer shall deliver to
the Holder a certificate or certificates representing the number of shares of
Common Stock purchased by the Holder and, if the Option is exercised in part
only, a new Option evidencing the rights of the Holder thereof to purchase the
balance of the shares purchasable hereunder, and the Holder shall deliver to
Issuer a copy of this Agreement and a letter agreeing that the Holder will not
offer to sell or otherwise dispose of such shares in violation of applicable law
or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a Closing hereunder may be
endorsed (in the sole discretion of Issuer) with a restrictive legend that shall
read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder hereof
and Issuer and to resale restrictions arising under the Securities Act of
1933, as amended. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof without charge
upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the reasonable opinion of counsel to
the Holder; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under paragraph (e) of this Section 2, the
tender of the applicable purchase price in immediately available funds and the
tender of a copy of this Agreement to Issuer, the Holder shall be deemed,
subject to the receipt of any
5
<PAGE>
necessary regulatory approvals, to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates representing
such shares of Common Stock shall not then be actually delivered to the Holder.
Issuer shall pay all expenses, and any and all United States federal, state and
local taxes and other charges that may be payable in connection with the
preparation, issue and delivery of stock certificates under this Section 2 in
the name of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including without limitation (x) complying with all applicable premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
the Home Owners' Loan Act, as amended ("HOLA"), the Change in Bank Control Act
of 1978, as amended (the "CIBCA"), or any state or other federal banking law,
prior approval of or notice to the OTS, the Department or to any other state or
federal regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in connection with the preparation of such
applications or notices and providing such information to the OTS, the
Department or such other state or federal regulatory authority as they may
require) in order to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement and the Option granted hereby are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase on
the same terms and subject to the same conditions as are set forth herein in the
aggregate the same number of shares of Common Stock purchasable hereunder. The
terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, subject to the
aforementioned indemnification, if applicable, whether or not the Agreement so
lost, stolen, destroyed or
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<PAGE>
mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of Option Shares purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividend, split-up, merger, recapitalization,
combination, subdivision, conversion, exchange of shares, distribution on or in
respect of the Common Stock or similar transaction, the type and number of
Option Shares shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall receive
upon exercise of the Option the number and class of Option Shares that Grantee
would have held immediately after such event if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable.
(b) Whenever the number of Option Shares is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the Option Price by
a fraction, the numerator of which shall be equal to the number of Option Shares
purchasable prior to the adjustment and the denominator of which shall be equal
to the number of Option Shares purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee first
delivered within six months (or such later period as provided in Section 10)
following such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
Option Shares issued pursuant hereto), promptly prepare, file and keep current,
with respect to the Option and the Option Shares, a registration statement under
the 1933 Act and qualify such Option and Option Shares for resale or other
disposition under applicable state securities laws, in each case in accordance
with any plan of disposition requested by Grantee. Issuer will use all
reasonable efforts to cause such registration statement promptly to become
effective and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other dispositions.
Grantee shall have the right to demand two such registrations, provided that any
second registration shall be requested by Grantee within 12 months (or such
later period as provided in Section 10) following the occurrence of the
Subsequent Triggering Event. The Issuer shall bear the costs of such
registrations (including, but not limited to, Issuer's attorneys' fees, printing
costs and filing fees, except for underwriting discounts or commissions,
brokers' fees and the fees and disbursements of Grantee's counsel related
thereto). The foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option or Option Shares as provided
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above, Issuer is in registration with respect to an underwritten public offering
by Issuer of shares of Common Stock, and if in the good faith judgment of the
managing underwriter or managing underwriters, or, if none, the sole underwriter
or underwriters, of such offering, the inclusion of the Option and/or Option
Shares would interfere with the successful marketing of the shares of Common
Stock offered by Issuer, the number of shares represented by the Option and/or
the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; provided, however, that after any
such required reduction the number of shares represented by the Option and/or
the number of Option Shares to be included in such offering for the account of
the Holder shall constitute at least 25% of the total number of shares to be
sold by the Holder and Issuer in the aggregate; and provided further, however,
that if such reduction occurs, then Issuer shall file a registration statement
for the balance as promptly as practicable thereafter as to which no reduction
pursuant to this Section 6 shall be permitted or occur. Each such Holder shall
provide all information reasonably requested by Issuer for inclusion in any such
registration statement to be filed hereunder. If requested by any such Holder in
connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in secondary offering
underwriting agreements. Upon receiving any request under this Section 6 from
any Holder, Issuer agrees to send a copy thereof to any other person known to
Issuer to be entitled to registration rights under this Section 6, in each case
by promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall the number of registrations that
Issuer is obligated to effect be increased by reason of the fact that there
shall be more than one Holder as a result of any assignment or division of this
Agreement.
7. (a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, (i) at the request of any Holder
delivered within six months following such occurrence (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which the Option may then
be exercised, and (ii) at the request of the owner of Option Shares from time to
time (the "Owner"), delivered within six months following such occurrence (or
such later period as provided in Section 10), Issuer (or any successor thereto)
shall repurchase such number of the Option Shares from the Owner as the Owner
shall designate at a price (the "Option Share Repurchase Price") equal to the
Market/Offer Price. The term "Market/Offer Price" shall mean the highest of (i)
the price per share of Common Stock at which a tender offer or exchange offer
therefor has been made, (ii) the price per share of Common Stock to be paid by
any person, other than Grantee or a Grantee Subsidiary, pursuant to an agreement
with Issuer of the kind described in Section 2(b)(i), (iii) the highest closing
price for shares of Common Stock within the shorter of the period from the date
of this Agreement up to the date on which
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such required repurchase of the Option or Option Shares, as the case may be,
occurs or the six-month period immediately preceding the date of such required
repurchase of the Option or Option Shares, as the case may be, or (iv) in the
event of a sale or transfer of all or any substantial part of Issuer's assets or
deposits, the sum of the price paid in such sale for such assets or deposits and
the current market value of the remaining assets of Issuer as determined by a
nationally-recognized investment banking firm selected by a majority in interest
of the Holders or the Owners, as the case may be, and reasonably acceptable to
Issuer, divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally-recognized
investment banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that such Holder or Owner, as
the case may be, elects to require Issuer to repurchase this Option and/or
Option Shares in accordance with the provisions of this Section 7. As promptly
as practicable, and in any event within five business days after the surrender
of the Option and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto, Issuer shall deliver or cause to be
delivered to the Holder the Option Repurchase Price and/or to the Owner the
Option Share Repurchase Price therefor or the portion thereof that Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or regulatory
body or agency, from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify each Holder and/or each Owner and thereafter
deliver or cause to be delivered, from time to time, to such Holder and/or such
Owner, as appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from
delivering, within two business days after the date on which Issuer is no longer
so prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, or as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from delivering to the Holder and/or
the Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in part or in full (and Issuer hereby undertakes
to use all reasonable efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to accomplish such repurchase), such Holder or Owner may revoke its notice of
repurchase of the Option and/or the Option Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case,
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Issuer shall promptly (i) deliver to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price and/or the Option Share
Repurchase Price that Issuer is not prohibited from delivering with respect to
Options or Option Shares as to which the Holder or the Owner, as the case may
be, has not revoked its repurchase demand; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to such Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement to (i) consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary, and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquiror in such plan of exchange, (ii) permit any person, other than Grantee or
a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan of
exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) sell or otherwise transfer all or a
substantial part of its or any Issuer Subsidiary's assets or deposits to any
person, other than Grantee or a Grantee Subsidiary, then, and in each such case,
the agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of any Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that controls
the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) Issuer in a merger or plan of exchange in which Issuer is the
continuing or surviving or acquiring person, and (iv) the transferee of all or a
substantial part of Issuer's assets or deposits (or the assets or deposits of an
Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
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(iii) "Assigned Value" shall mean the Market/Offer Price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger, share exchange or sale in question, but in no event
higher than the closing price of the shares of Substitute Common Stock on the
day preceding such consolidation, merger, share exchange or sale; provided that
if Issuer is the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by the person merging
into Issuer or by any company which controls or is controlled by such person, as
the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option, provided
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall, to the extent legally permissible, be as
similar as possible to, and in no event less advantageous to the Holder than,
the terms of the Option. The issuer of the Substitute Option also shall enter
into an agreement with the then Holder or Holders of the Substitute Option in
substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.99% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.99% of the shares of Substitute Common Stock outstanding prior to exercise
but for this paragraph (e), the issuer of the Substitute Option (the "Substitute
Option Issuer") shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
this paragraph (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this paragraph (e). This difference in value shall
be determined by a nationally-recognized investment banking firm selected by a
majority in interest of the Holders and reasonably acceptable to the Acquiring
Corporation.
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(f) Issuer shall not enter into any transaction described in paragraph (a)
of this Section 8 unless (i) the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder, and (ii) such transaction does not result in a breach of the
Merger Agreement by the Issuer.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of each owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) Each Substitute Option Holder and Substitute Share Owner, as the case
may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within two business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor, or the
portion(s) thereof which the Substitute Option Issuer is not then prohibited
under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Substitute
Option and/or the Substitute Shares in part or in full, the Substitute Option
Issuer following a request for repurchase pursuant to this
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Section 9 shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or the Substitute Share Owner,
as appropriate, the portion of the Substitute Option Repurchase Price and/or the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within two business days after the date on which the
Substitute Option Issuer is no longer so prohibited; provided, however, that if
the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price, respectively,
in full (and the Substitute Option Issuer shall use all reasonable efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such repurchase), the
Substitute Option Holder and/or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either in whole or
to the extent of the prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly (i) deliver to the Substitute Option Holder or
Substitute Share Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that the Substitute
Option Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Substitute Option Holder, a new Substitute Option
evidencing the right of the Substitute Option Holder to purchase that number of
shares of the Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the surrendered Substitute
Option was exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Substitute Option Repurchase Price less
the portion thereof theretofore delivered to the Substitute Option Holder and
the denominator of which is the Substitute Option Repurchase Price, and/or (B)
to the Substitute Share Owner, a certificate for the Substitute Option Shares it
is then so prohibited from repurchasing.
10. The six-month periods for exercise of certain rights under Sections 2,
6, 7 and 12 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights (for so long as the Holder,
Owner, Substitute Option Holder or Substitute Share Owner, as the case may be,
is using its reasonable best efforts to obtain such regulatory approvals), and
for the expiration of all statutory waiting periods; (ii) during the pendency of
any temporary restraining order, injunction or other legal bar to exercise of
such rights; and (iii) to the extent necessary to avoid liability under Section
16(b) of the 1934 Act by reason of such exercise.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution
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and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Issuer Board
and no other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer and is a
valid and legally binding obligation of Issuer, enforceable against Issuer in
accordance with its terms, except that enforcement thereof may be limited by the
receivership, conservatorship and supervisory powers of bank regulatory agencies
generally as well as bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting enforcement of creditors rights generally and except that
enforcement thereof may be subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law) and
the availability of equitable remedies.
(ii) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority to execute and
deliver this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee and no other corporate proceedings on the part of Grantee are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by Grantee and
is a valid and legally binding obligation of Grantee.
(ii) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and
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obligations hereunder within six months following such Subsequent Triggering
Event; provided, however, that until the date 15 days following the date on
which the OTS approves an application by Grantee under the HOLA to acquire the
shares of Common Stock subject to the Option (if applicable), Grantee may not
assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the sole purpose of
conducting a widely dispersed public distribution on Grantee's behalf or (iv)
any other manner approved by the OTS.
13. Each of Grantee and Issuer will use all reasonable efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the OTS and/or the
Department, as applicable, for approval to acquire the shares issuable hereunder
and applying for listing or quotation of such shares on any exchange or
quotation system on which the Common Stock is then listed or quoted.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to Section 7
or Section 9, as the case may be, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer (which shall be binding on the
Substitute Option Issuer) to allow the Holder to acquire or to require Issuer or
Substitute Option Issuer, as the case may be, to repurchase such lesser number
of shares as may be permissible, without any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflict of law
principles thereof.
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18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
19. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, whether written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and permitted assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided herein.
21. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
INDEPENDENCE COMMUNITY BANK CORP.
By:/s/ CHARLES J. HAMM
------------------------------------------------------
Name: Charles J. Hamm
Title: Chairman, President and Chief Executive Officer
STATEWIDE FINANCIAL CORP.
By:/S/ VICTOR M. RICHEL
------------------------------------------------------
Name: Victor M. Richel
Title: Chairman, President and Chief Executive Officer
16
INDEPENDENCE COMMUNITY BANK CORP. AGREES TO ACQUIRE
STATEWIDE FINANCIAL CORP.
Brooklyn, New York April 13, 1999 - Independence Community Bank Corp.
("Independence")(NASDAQ:ICBC) and Statewide Financial Corp.
("Statewide")(NASDAQ:SFIN) jointly announced today the signing of a definitive
agreement pursuant to which Independence will acquire Statewide, a savings and
loan holding company headquartered in Jersey City, New Jersey. Upon completion
of the acquisition, Statewide's wholly-owned subsidiary, Statewide Savings Bank,
will merge into Independence Community Bank, Independence's wholly-owned
subsidiary.
Under the terms of the agreement, which was approved unanimously by both
boards of directors, Independence will issue in aggregate 4.16 million shares of
Independence common stock (using a fixed exchange ratio of 2.0612 Independence
shares per Statewide share for 50% of Statewide's common shares outstanding) and
$51 million in aggregate cash consideration ($25.25 per share for 50% of
Statewide common shares outstanding), subject to election, proration and
allocation procedures. At closing, shareholders electing cash or stock will
receive the same value. Based on Independence's closing price on April 12, 1999,
the transaction has an implied per share value of $25.31 per Statewide share for
an aggregate transaction value, including currently outstanding stock options,
of approximately $108 million.
The transaction will continue to build Independence's market share in New
Jersey. Upon the completion of Independence's pending acquisitions of Broad
National Bancorporation and Statewide, Independence will have deposit
liabilities of $1.0 billion in New Jersey. In fiscal 2002, Independence expects
the transaction to be accretive to GAAP earnings and strongly accretive to cash
earnings based on estimated consolidation savings.
Commenting on the transaction, Mr. Charles J. Hamm, Chairman, President and
CEO of Independence stated, "I am pleased to announce Independence's second
acquisition in New Jersey. This in-market transaction provides additional mass
in New Jersey, provides opportunities for synergies and further leverages the
proceeds from our conversion. The demographics of Statewide's urban markets are
similar to those of our core banking markets. These markets will
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provide Independence the opportunity to build on its success as one of New
York's largest multi-family lenders."
Mr. Victor M. Richel, Chairman, President and CEO of Statewide commented,
"Independence's very strong commitment to providing excellence in customer
service and satisfaction, coupled with a natural complement we have in serving
largely urban communities, are among the principal reasons we chose to partner
with them. Our very strong development of the commercial market combined with
the success of our Statewide Funding division, will be significantly enhanced by
Independence providing a larger platform for expanding our growth and meeting
customer needs. We are also pleased to be able to join with Broad National
Bancorporation to form a formidable New Jersey division of Independence. I
believe this strategic combination will clearly enhance Statewide's shareholder
value, while providing our customers and employees with local management
committed to delivering excellence in customer service."
Upon completion of the transaction, Mr. Richel will become a Vice Chairman
of the Board of Independence. Statewide's current Board of Directors will serve
as an Advisory Board.
In connection with the merger, Statewide has granted an option to
Independence to purchase up to 19.9% of Statewide's common shares currently
outstanding under certain circumstances.
The transaction will be accounted for as a purchase and will not affect
Independence's ability to repurchase shares of stock. Independence intends to
repurchase in the open market all the shares of common stock that will be issued
in the transaction. The transaction is subject to receipt of various regulatory
approvals, approval of Statewide shareholders and certain other conditions.
Statewide, headquartered in Jersey City, N.J., conducts thrift business and
offers commercial banking services through its 16 branches in Hudson, Union and
Bergen counties.
Independence was originally chartered in 1850 and currently operates 32
full service branches located in the greater New York City metropolitan area
including 26 branches located in the boroughs of Brooklyn and Queens.
Merrill Lynch & Co. served as financial advisor to Independence and Sandler
O'Neill served as financial advisor to Statewide.
This press release contains forward looking statements with respect to the
financial condition, results of operations and business of Independence and
Statewide and assuming the consummation of the merger, a combined Independence
and Statewide, including statements
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relating to, among other things,: (i) the cost savings and revenue enhancements
and accretion to reported earnings that will be realized from the merger; and
(ii) the restructuring charges expected to be incurred in connection with the
merger. 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 other
things, the following possibilities: (i) expected cost savings from the merger
cannot be fully realized or realized within the expected timeframe; (ii)
revenues following the merger are lower than expected; (iii) competitive
pressure among depository institutions increases significantly; (iv) costs
related to the integration of the business of Independence and Statewide are
greater than expected; (v) changes in the interest rate environment reduces
interest margins; (vi) general economic conditions, either nationally or in the
states in which the combined company will be doing business, are less favorable
than expected; (vii) legislation or regulatory requirements or changes adversely
affect the business in which the combined company will be engaged; and (viii)
changes may occur in the securities market.
Contact: John B. Zurell
Chief Financial Officer
Independence Community Bank Corp.
718/722-5420
Bernard F. Lenihan
Chief Financial Officer
Statewide Financial Corp.
201/795-4000
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