EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
By and Between
PROVIDENT SAVINGS BANK
And
RIDGEWOOD SAVINGS BANK OF NEW JERSEY
And
RIDGEWOOD FINANCIAL, INC.
And
RIDGEWOOD FINANCIAL, MHC
Dated as of August 28, 2000
AGREEMENT AND PLAN OF MERGER
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions...........................................................2
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01 Effects of Merger; Surviving Institutions.............................7
Section 2.02 Conversion and Cancellation of Shares; Effect on Depositors...........9
Section 2.03 Exchange Procedures..................................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
RIDGEWOOD SAVINGS, RIDGEWOOD FINANCIAL AND RIDGEWOOD MHC
Section 3.01 Organization.........................................................12
Section 3.02 Capitalization.......................................................13
Section 3.03 Authority; No Violation..............................................14
Section 3.04 Consents.............................................................15
Section 3.05 Financial Statements.................................................15
Section 3.06 Taxes................................................................16
Section 3.07 No Material Adverse Effect...........................................16
Section 3.08 Contracts............................................................16
Section 3.09 Ownership of Property; Insurance Coverage............................17
Section 3.10 Legal Proceedings....................................................18
Section 3.11 Compliance With Applicable Law.......................................18
Section 3.12 ERISA................................................................19
Section 3.13 Brokers, Finders and Financial Advisors..............................21
Section 3.14 Environmental Matters................................................21
Section 3.15 Loan Portfolio.......................................................22
Section 3.16 Information to be Supplied...........................................23
Section 3.17 Securities Documents.................................................24
Section 3.18 Related Party Transactions...........................................24
Section 3.19 Schedule of Termination Benefits.....................................24
Section 3.20 Deposits.............................................................24
Section 3.21 Fairness Opinion.....................................................24
Section 3.22 Antitakeover Provisions Inapplicable; Required Vote of Stockholders..25
Section 3.23 Derivative Transactions..............................................25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PROVIDENT
Section 4.01 Organization........................................................25
Section 4.02 Authority; No Violation.............................................26
Section 4.03 Consents............................................................26
Section 4.04 Compliance With Applicable Law......................................27
Section 4.05 Information to be Supplied..........................................27
Section 4.06 Financing...........................................................28
Section 4.07 Regulatory Approvals................................................28
Section 4.08 Legal Proceedings...................................................28
Section 4.09 Provident Financial Statements......................................28
Section 4.10 Provident Benefit Plans.............................................28
Section 4.11 Absence of Certain Changes..........................................29
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01 Conduct of Ridgewood's Business.....................................29
Section 5.02 Access; Confidentiality.............................................33
Section 5.03 Regulatory Matters and Consents.....................................33
Section 5.04 Taking of Necessary Action..........................................35
Section 5.05 Certain Agreements..................................................36
Section 5.06 No Other Bids and Related Matters...................................37
Section 5.07 Duty to Advise; Duty to Update the Ridgewood Disclosure Schedules...38
Section 5.08 Conduct of Provident's Business.....................................38
Section 5.09 Board and Committee Minutes.........................................39
Section 5.10 Undertakings by the Parties.........................................39
Section 5.11 Employee and Termination Benefits; Directors and Management.........42
Section 5.12 Duty to Advise; Duty to Update Provident's Disclosure Schedules.....46
ARTICLE VI
CONDITIONS
Section 6.01 Conditions to Obligations of Ridgewood Under this Agreement.........46
Section 6.02 Conditions to the Obligations of Provident Under this Agreement.....47
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination.........................................................49
Section 7.02 Effect of Termination...............................................50
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses............................................................50
Section 8.02 Non-Survival of Representations and Warranties......................51
Section 8.03 Amendment, Extension and Waiver.....................................51
Section 8.04 Entire Agreement....................................................51
Section 8.05 No Assignment.......................................................51
Section 8.06 Notices.............................................................51
Section 8.07 Captions............................................................52
Section 8.08 Counterparts........................................................53
Section 8.09 Severability........................................................53
Section 8.10 Governing Law.......................................................53
Section 8.11 Specific Performance................................................53
Exhibits:
Exhibit A Form of merger agreement relating to the Mid-Tier Merger
Exhibit B Form of merger agreement relating to the MHC Merger
Exhibit C Form of merger agreement relating to the Interim Merger
Exhibit D Form of merger agreement relating to the Bank Merger
Exhibit E Form of Ridgewood Voting Agreement
Exhibit 6.1 Form of Opinion of Counsel for Provident
Exhibit 6.2 Form of Opinion of Counsel for Ridgewood
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
August 28, 2000, is by and between (i) Provident Savings Bank, a New Jersey
chartered savings bank ("Provident"), and (ii) Ridgewood Savings Bank of New
Jersey, a New Jersey chartered savings bank ("Ridgewood Savings"), Ridgewood
Financial, Inc., a New Jersey chartered corporation ("Ridgewood Financial"), and
Ridgewood Financial, MHC, a New Jersey chartered mutual savings bank holding
company ("Ridgewood MHC"). Each of Provident, Ridgewood Savings, Ridgewood
Financial and Ridgewood MHC is sometimes individually referred to herein as a
"party," and Provident, Ridgewood Savings, Ridgewood Financial and Ridgewood MHC
are sometimes collectively referred to herein as the "parties."
RECITALS
1. Provident is a mutual savings bank with its principal offices
located in Jersey City, New Jersey.
2. Ridgewood MHC owns a majority of the outstanding capital stock of
Ridgewood Financial, which owns all of the outstanding capital stock of
Ridgewood Savings. Each of Ridgewood Savings, Ridgewood Financial and Ridgewood
MHC has its principal offices in Ridgewood, New Jersey.
3. The Boards of Directors of the respective parties deem it advisable
and in the best interests of the parties, including the depositors of Provident
and Ridgewood Savings, and the stockholders of Ridgewood Financial, for
Ridgewood Savings to merge with and into Provident with Provident as the
resulting savings bank, which merger will be effected as follows: (i) Ridgewood
Financial will exchange its charter for an interim New Jersey capital stock
savings bank charter and merge with and into Ridgewood Savings; (ii) Ridgewood
MHC will exchange its charter for an interim New Jersey capital stock savings
bank charter and merge with and into Ridgewood Savings; (iii) concurrently with
the charter exchanges and mergers into Ridgewood Savings in (i) and (ii) above,
the shares of Ridgewood Financial Common Stock held by Ridgewood MHC shall be
cancelled; (iv) an interim capital stock savings bank ("Interim") formed by
Provident as a wholly-owned subsidiary to facilitate the Merger, will merge with
and into Ridgewood Savings so that Ridgewood Savings becomes a wholly-owned
subsidiary of Provident; (v) concurrently with steps (i) through (iv), Provident
will purchase 100% of the outstanding shares of Ridgewood Financial Common Stock
held by stockholders other than Ridgewood MHC for cash pursuant to the terms of
this Agreement; (vi) immediately following the merger of Interim with and into
Ridgewood Savings, Ridgewood Savings will merge with into Provident, with
Provident as the surviving institution; and (vi) as a result of the foregoing,
the interests of Ridgewood Savings' depositors in Ridgewood MHC shall cease to
exist and will be converted into interests of the same nature in Provident.
4. The parties desire to provide for certain undertakings, conditions,
representations, warranties and covenants in connection with the transactions
contemplated by this Agreement.
In consideration of the premises and of the mutual representations,
warranties and covenants herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions. Except as otherwise provided herein, as used
in this Agreement, the following terms shall have the indicated meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Affiliate" means, with respect to any Person, any Person who
directly, or indirectly, through one or more intermediaries, controls,
or is controlled by, or is under common control of, such Person and,
without limiting the generality of the foregoing, includes any
executive officer or director of such Person and any Affiliate of such
executive officer or director.
"Agreement" means this agreement, and any amendment or
supplement hereto, which constitutes a "plan of merger" between
Provident, Ridgewood MHC, Ridgewood Financial and Ridgewood Savings.
"Applications" means the applications to be filed with the
appropriate Regulatory Authorities requesting approval or nonobjection
of the transactions described in this Agreement.
"Banking Act" means the New Jersey Banking Act of 1948, as
amended, N.J.S.A. Chapter 9A.
"Bank Merger" means the merger of Ridgewood Savings with and
into Provident, with Provident as the surviving institution.
"BHCA" means the Bank Holding Company Act of 1956, as amended.
"Closing Date" means the date determined by Provident, in
consultation with and upon no less than five (5) days prior written
notice to Ridgewood Financial, but in no event later than fifteen (15)
days after the last condition precedent pursuant to this Agreement has
been fulfilled or waived (including the expiration of any applicable
waiting period), or such other date as to which the parties shall
mutually agree.
"Department" means the New Jersey Department of Banking and
Insurance.
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"Dissenters' Shares" means shares of Ridgewood Financial
Common Stock that have not been voted in favor of approval of the
Merger and with respect to which appraisal rights, if any, have been
perfected in accordance with New Jersey law, in the event that holders
of Ridgewood Financial Common Stock are accorded dissenters' rights
under the Banking Act.
"Environmental Law" means any Federal or state law, statute,
rule, regulation, code, order, judgment, decree, injunction, common law
or agreement with any Federal or state governmental authority relating
to (i) the protection, preservation or restoration of the environment
(including air, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other
natural resource), (ii) human health or safety, or (iii) exposure to,
or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of,
hazardous substances, in each case as amended and now in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated from time to time
thereunder.
"Exchange Agent" means the third party entity selected by
Provident and reasonably acceptable to Ridgewood, as provided in
Section 2.03(a) of this Agreement.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLB" means the Federal Home Loan Bank.
"FRB" means the Board of Governors of the Federal Reserve
System.
"GAAP" means generally accepted accounting principles as in
effect at the relevant date and consistently applied.
"Hazardous Material" means any substance (whether solid,
liquid or gas) which is detrimental to human health or safety or to the
environment, currently listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated,
under any Environmental Law, whether by type or by quantity, including
any substance containing any such substance as a component. Hazardous
Material includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance, oil or petroleum, or any
derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos-containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
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"Interim" shall mean the interim stock savings association
formed by Provident as a wholly-owned subsidiary, which shall merge
with and into Ridgewood Savings so that Ridgewood Savings becomes a
wholly-owned subsidiary of Provident.
"Interim Merger" means the merger of Interim with and into
Ridgewood Savings, with Ridgewood Savings surviving the merger.
"IRC" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
"Loan Property" shall have the meaning given to such term in
Section 3.14(b) of this Agreement.
"Material Adverse Effect" shall mean, with respect to
Provident or Ridgewood Financial, any adverse effect on its assets,
financial condition or results of operations which is material to its
assets, financial condition or results of operations on a consolidated
basis, except for any material adverse effect caused by (i) any change
in the value of the assets of Provident or Ridgewood Financial
resulting from a change in interest rates generally, (ii) any
individual or combination of changes occurring after the date hereof in
any Federal or state law, rule or regulation or in GAAP, which
change(s) affect(s) financial institutions generally, or (iii) expenses
incurred in connection with this Agreement and the transactions
contemplated thereby.
"Merger" shall mean collectively the MHC Merger, the Mid-Tier
Merger, the Interim Merger and the Bank Merger.
"Merger Effective Date" means the date upon which the Merger
agreements and certifications are filed with the Department, in
accordance with N.J.S.A. 19:A-137.
"Merger Consideration" has the meaning given to that term in
Section 2.02(b) of this Agreement.
"MHC Interim Bank" means the interim New Jersey capital stock
savings bank into which Ridgewood MHC has converted immediately prior
to the MHC Merger.
"MHC Merger" means the merger of the MHC Interim Bank with and
into Ridgewood Savings, with Ridgewood Savings as the surviving
institution.
"Mid-Tier Interim Bank" means the interim New Jersey capital
stock savings into which Ridgewood Financial has converted immediately
prior to the Mid-Tier Merger.
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"Mid-Tier Merger" means the merger of the Mid-Tier Interim
Bank with and into Ridgewood Savings, with Ridgewood Savings as the
surviving institution.
"Participation Facility" shall have the meaning given to such
term in Section 3.14(b) of this Agreement.
"Person" means any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under
the Exchange Act).
"Provident" means Provident Savings Bank, a New Jersey
chartered mutual savings bank.
"Provident Disclosure Schedules" means the Disclosure
Schedules delivered by Provident to Ridgewood pursuant to Article III
of this Agreement.
"Provident Financials" means the audited consolidated
financial statements of Provident as of December 31, 1998 and 1999 and
for the three years ended December 31, 1999, including the notes
thereto.
"Provident Subsidiary" means any corporation, 50% or more of
the capital stock of which is owned, either directly or indirectly, by
Provident, except any corporation the stock of which is held as
security by Provident in the ordinary course of its lending activities.
"Proxy Statement" means the proxy statement together with any
supplements thereto to be transmitted to holders of Ridgewood Financial
Common Stock and, if required by any Regulatory Authority, any proxy
statement together with any supplements thereto to be transmitted by
Ridgewood MHC to the depositors of Ridgewood in connection with the
transactions contemplated by this Agreement.
"Regulatory Agreement" has the meaning given to that term in
Section 3.11 of this Agreement.
"Regulatory Authority" or "Regulatory Authorities" means any
agency or department of any Federal or state government, including
without limitation the Department, FRB, the FDIC, the SEC and the
respective staffs thereof.
"Ridgewood" means Ridgewood MHC, Ridgewood Financial,
Ridgewood Savings and/or any direct or indirect Subsidiary of such
entities.
"Ridgewood Disclosure Schedules" means the Disclosure
Schedules delivered by Ridgewood to Provident pursuant to Article III
of this Agreement.
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"Ridgewood Employee Plan" has the meaning given to that term
in Section 3.12 of this Agreement.
"Ridgewood Financial" means Ridgewood Financial, Inc., a New
Jersey corporation.
"Ridgewood Financials" means (i) the audited consolidated
financial statements of Ridgewood Financial as of December 31, 1998 and
1999 and for the three years ended December 31, 1999, including the
notes thereto, and (ii) the unaudited interim consolidated financial
statements of Ridgewood Financial as of each calendar quarter following
December 31, 1999 included in Securities Documents filed by Ridgewood
Financial.
"Ridgewood Financial Common Stock" means the common stock of
Ridgewood Financial described in Section 3.02(a).
"Ridgewood MHC" means Ridgewood Financial, MHC, a New Jersey
chartered mutual savings bank holding company.
"Ridgewood Pension Plan" has the meaning given to that term in
Section 3.12 of this Agreement.
"Ridgewood Regulatory Reports " means the FDIC Call Reports of
Ridgewood Savings and accompanying schedules, as filed with the FDIC
for each calendar quarter beginning with the quarter ended March 31,
1998, through the Closing Date, and all Annual, Quarterly and Current
Reports filed with the FRB by Ridgewood Financial or Ridgewood MHC from
March 31, 1998 through the Closing Date.
"Ridgewood Savings" means Ridgewood Savings Bank of New
Jersey, a New Jersey chartered stock savings bank.
"Ridgewood Subsidiary" means any corporation, 50% or more of
the capital stock of which is owned, either directly or indirectly, by
Ridgewood Financial, and includes Ridgewood Savings, except that it
does not include any corporation the stock of which is held in the
ordinary course of the lending activities of Ridgewood Savings.
"Rights" means warrants, options, rights, convertible
securities and other capital stock equivalents which obligate an entity
to issue its securities.
"▇▇▇▇ ▇▇▇▇" means ▇▇▇▇ ▇▇▇▇ & Co., Inc., the financial advisor
to Ridgewood in connection with the transactions provided for in this
Agreement.
"SAIF" means the Savings Association Insurance Fund, as
administered by the FDIC.
"SEC" means the Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated from time to time thereunder.
"Securities Documents" means all registration statements,
schedules, statements, forms, reports, proxy material, and other
documents required to be filed under the Securities Laws.
"Securities Laws" means the Securities Act and the Exchange
Act and the rules and regulations promulgated from time to time
thereunder.
"Subsidiary" means any corporation, 50% or more of the capital
stock of which is owned, either directly or indirectly, by another
entity, except any corporation the stock of which is held as security
by either Provident or Ridgewood, as the case may be, in the ordinary
course of its lending activities.
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01 Effects of Merger; Surviving Institutions. On the Merger
Effective Date the Merger will be effected as follows:
(a) The Mid-Tier Merger. Ridgewood Financial shall convert into
Mid-Tier Interim Bank and immediately thereafter merge with and into Ridgewood
Savings, with Ridgewood Savings as the surviving institution. Each stockholder
of Ridgewood Financial shall actually or constructively receive shares of
Ridgewood Savings in exchange for their shares of Ridgewood Financial. The
separate existence of Ridgewood Financial and the Mid-Tier Interim Bank shall
cease, and all of the property (real, personal and mixed), rights, powers and
duties and obligations of Ridgewood Financial and Mid-Tier Interim Bank shall be
taken and deemed to be transferred to and vested in Ridgewood Savings, as the
surviving institution in the Mid-Tier Merger, without further act or deed, all
in accordance with the applicable laws of the State of New Jersey, and
regulations of the Department. Ridgewood Financial, Mid-Tier Interim Bank and
Ridgewood Savings shall enter into the Mid-Tier Merger Agreement substantially
in the form of Exhibit A hereto.
(b) The MHC Merger. Ridgewood MHC shall convert into MHC Interim Bank
and immediately thereafter merge with and into Ridgewood Savings, with Ridgewood
Savings as the surviving institution. The separate existence of Ridgewood MHC
and the MHC Interim Bank shall cease, and all of the property (real, personal
and mixed), rights, powers and duties and obligations of Ridgewood MHC and MHC
Interim Bank shall be taken and deemed to be transferred to and vested in
Ridgewood Savings, as the surviving institution in the MHC Merger, without
further act or deed, all in accordance with the applicable laws of the State of
New Jersey, and regulations of the
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Department. Ridgewood MHC, MHC Interim Bank and Ridgewood Savings shall enter
into the MHC Merger Agreement substantially in the form of Exhibit B hereto.
(c) The Interim Merger. Interim shall merge with and into Ridgewood
Savings with Ridgewood Savings as the surviving institution in the Interim
Merger (the "Receiving Bank") and a wholly-owned subsidiary of Provident. The
separate existence of Interim shall cease, and all of the property (real,
personal and mixed), rights, powers and duties and obligations of Interim shall
be taken and deemed to be transferred to and vested in Ridgewood Savings, as the
Receiving Bank, without further act or deed, all in accordance with the
applicable laws of the United States and the State of New Jersey, and the
regulations of the Department. Provident shall cause Interim to, and Ridgewood
Savings shall, enter into the Interim Merger Agreement substantially in the form
of Exhibit C hereto.
(i) The Certificate of Incorporation of the Receiving Bank
shall be amended and restated to read in its entirety as the Certificate of
Incorporation of Interim as in effect immediately prior to the Merger Effective
Date; and the Bylaws of the Receiving Bank shall be amended and restated to read
in their entirety as the Bylaws of Interim, as in effect immediately prior to
the Merger Effective Date, until thereafter altered, amended or repealed in
accordance with applicable law.
(ii) The directors of Interim duly elected and holding office
immediately prior to the Merger Effective Date shall be the directors of the
Receiving Bank, each to hold office until his or her successor is elected and
qualified or otherwise in accordance with the Certificate of Incorporation and
Bylaws of the Receiving Bank.
(iii) The officers of Interim duly elected and holding office
immediately prior to the Merger Effective Date shall be the officers of the
Receiving Bank, each to hold office until his or her successor is elected and
qualified or otherwise in accordance with the Certificate of Incorporation and
the Bylaws of the Receiving Bank.
(d) The Bank Merger. Immediately following the Interim Merger,
Provident shall cause Ridgewood Savings to, and Ridgewood Savings shall, merge
with and into Provident, with Provident as the surviving institution (the "Bank
Merger"). The Bank Merger shall be effected pursuant to the Bank Merger
Agreement substantially in the form of Exhibit D hereto. As a result of the Bank
Merger, the existence of Ridgewood Savings shall cease and Provident shall be
the surviving association and continue its existence as a savings bank under the
laws of the State of New Jersey.
(e) Modification of Structure. Notwithstanding any provision of this
Agreement to the contrary, Provident 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 described in (a) through (d) above, and
the parties shall enter into such alternative transactions, so long as (i) there
are no adverse tax consequences to any of the stockholders of Ridgewood
Financial as a result of such modification, (ii) the Merger Consideration is not
thereby changed in kind or reduced in amount
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because of such modification, and (iii) such modification will not be likely to
materially delay or jeopardize receipt of any required regulatory approvals
required under Sections 6.02(d).
Section 2.02 Conversion and Cancellation of Shares; Effect on
Depositors
(a) On the Merger Effective Date, each issued and outstanding share of
Ridgewood Financial Common Stock held by Ridgewood MHC or MHC Interim Bank shall
be cancelled and shall cease to be outstanding. Ridgewood MHC and MHC Interim
Bank shall cease to have any rights as a stockholder of Ridgewood Savings.
(b) On the Merger Effective Date, by virtue of the Interim Merger and
without any action on the part of Ridgewood Savings, the holders of shares of
Ridgewood Financial Common Stock or the depositors of Ridgewood Savings:
(i) Each issued and outstanding share of Ridgewood Financial
Common Stock (except shares formerly held by Ridgewood MHC which shall have been
cancelled and except as otherwise provided in this clause (b)), shall cease to
be outstanding, shall cease to exist and (except to the extent there are
dissenters' rights and in such case with respect to shares as to which the
holder(s) seeks and perfects dissenters rights of appraisal) shall be converted
into the right to receive $15.00 in cash (the "Merger Consideration") and the
interests of depositors of Ridgewood Savings in Ridgewood MHC will be converted
into interests of the same nature in Provident (the "Depositor Conversion").
(ii) Any shares of Ridgewood Financial Common Stock which are
owned or held by either party hereto or any of their respective Subsidiaries
(other than in a fiduciary capacity or in connection with debts previously
contracted) at the Merger Effective Date shall cease to exist, the certificates
for such shares shall be canceled as promptly as practicable, such shares shall
not be converted into the Merger Consideration, and no cash shall be issued or
exchanged therefor.
(iii) The holders of certificates representing shares of
Ridgewood Financial Common Stock (any such certificate being hereinafter
referred to as a "Certificate") shall cease to have any rights as stockholders
of Ridgewood Financial.
(iv) Provident shall pay for any Dissenters' Shares in
accordance with New Jersey law and the holders thereof shall not be entitled to
receive the Merger Consideration; provided, that if appraisal rights under New
Jersey law with respect to any Dissenters' Shares shall have been effectively
withdrawn or lost, such shares will thereupon cease to be treated as Dissenters'
Shares and shall be converted into the right to receive the Merger Consideration
pursuant to Section 2.02(b).
(c) As a result of the Depositor Conversion, each holder of a deposit
account at Ridgewood Savings shall become a holder of a deposit account at
Provident with the same rights, privileges and obligations as a holder of a
deposit account at Provident at the effective time of the
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Bank Merger, and all deposit accounts established at Ridgewood Savings prior to
the Merger Effective Date shall be deemed to have been established at Provident
on the date that they were established at Ridgewood Savings.
Section 2.03 Exchange Procedures.
(a) As promptly as practicable after the Merger Effective Date, and in
any event within five business days of the Merger Effective Date, the Exchange
Agent shall mail to each holder of record of an outstanding share Certificate or
Certificates a Letter of Transmittal containing instructions for the surrender
of the Certificate or Certificates held by such holder for payment therefor.
Upon surrender of the Certificate or Certificates to the Exchange Agent in
accordance with the instructions set forth in the Letter of Transmittal, such
holder shall promptly receive in exchange therefor the Merger Consideration,
without interest thereon. Approval of this Agreement by the stockholders of
Ridgewood Financial shall constitute authorization for Provident to designate
and appoint the Exchange Agent, which appointment shall be reasonably acceptable
to Ridgewood Financial. Neither Provident nor the Exchange Agent shall be
obligated to deliver the Merger Consideration to a former stockholder of
Ridgewood Financial until such former stockholder surrenders his Certificate or
Certificates or, in lieu thereof, any such appropriate affidavit of loss and
indemnity agreement and bond as may be reasonably required by Provident.
(b) If payment of the Merger Consideration is to be made to a person
other than the person in whose name a Certificate surrendered in exchange
therefor is registered, it shall be a condition of payment 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 payment shall pay any transfer or other taxes required by
reason of the payment to a person other than 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.
(c) On or prior to the Merger Effective Date, Provident shall deposit
or cause to be deposited, in trust with the Exchange Agent, an amount of cash
equal to the aggregate Merger Consideration that the Ridgewood Financial
stockholders shall be entitled to receive on the Merger Effective Date pursuant
to Section 2.02 hereof.
(d) The payment of the Merger Consideration upon the conversion of
Ridgewood Financial Common Stock in accordance with the above terms and
conditions shall be deemed to have been issued and paid in full satisfaction of
all rights pertaining to such Ridgewood Financial Common Stock.
(e) Promptly following the date which is 12 months after the Merger
Effective Date, the Exchange Agent shall deliver to Provident all cash,
certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing shares of
Ridgewood
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Financial Common Stock may surrender such Certificate to Provident and (subject
to applicable abandoned property, escheat and similar laws) receive in
consideration therefor the Merger Consideration multiplied by the number of
shares of Ridgewood Financial Common Stock formerly represented by such
Certificate, without any interest or dividends thereon.
(f) After the close of business on the Merger Effective Date, there
shall be no transfers on the stock transfer books of Ridgewood Financial of the
shares of Ridgewood Financial Common Stock which are outstanding immediately
prior to the Merger Effective Date, and the stock transfer books of Ridgewood
Financial shall be closed with respect to such shares. If, after the Merger
Effective Date, Certificates representing such shares are presented for transfer
to the Exchange Agent, they shall be canceled and exchanged for the Merger
Consideration as provided in this Article II.
(g) In the event any certificate for Ridgewood Financial Common Stock
shall have been lost, stolen or destroyed, the Exchange Agent shall deliver
(except as otherwise provided in Section 2.02) in exchange for such lost, stolen
or destroyed certificate, upon the making of an affidavit of the fact by the
holder thereof, the cash to be paid in the Merger as provided for herein;
provided, however, that Provident may, in its sole discretion and as a condition
precedent to the delivery thereof, require the owner of such lost, stolen or
destroyed certificate to deliver a bond in such reasonable sum as Provident may
specify as indemnity against any claim that may be made against Ridgewood
Financial, Provident or any other party with respect to the certificate alleged
to have been lost, stolen or destroyed.
(h) Provident is hereby authorized, with the consent of Ridgewood, to
adopt additional rules and regulations with respect to the matters referred to
in this Section 2.03 not inconsistent with the provisions of this Agreement and
which do not adversely affect the rights of stockholders of Ridgewood Financial.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
RIDGEWOOD SAVINGS, RIDGEWOOD FINANCIAL AND RIDGEWOOD MHC
Ridgewood represents and warrants to Provident that the statements
contained in this Article III are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III), except as set forth in the Ridgewood
Disclosure Schedules delivered to Provident on or prior to the date hereof, and
except as to any representation or warranty which specifically relates to an
earlier date. Ridgewood has made a good faith effort to ensure that the
disclosure on each schedule of the Ridgewood Disclosure Schedules corresponds to
the section reference herein. However, for purposes of the Ridgewood Disclosure
Schedules, any item disclosed on any schedule therein is deemed to be fully
disclosed with respect to all schedules under which such item may be relevant.
11
Section 3.01 Organization.
(a) Ridgewood MHC is a New Jersey mutual savings bank holding company
duly organized, validly existing and in good standing under the laws of the
State of New Jersey, and is duly registered as a bank holding company under the
BHCA. Ridgewood MHC has full power and authority to carry on its business as now
conducted and is duly licensed or qualified to do business in the states of the
United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such qualification, except
where the failure to be so licensed or qualified would not have a Material
Adverse Effect on Ridgewood MHC. Except as set forth in Ridgewood Disclosure
Schedule 3.01(a), Ridgewood MHC has no subsidiary other than Ridgewood Financial
and Ridgewood Savings.
(b) Ridgewood Financial is a New Jersey corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey,
and is duly registered as a bank holding company under the BHCA. Ridgewood
Financial has the full 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 and is in good standing 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, except where the failure to be so
licensed, qualified or in good standing would not have a Material Adverse Effect
on the business, operations, assets, financial condition or prospects of
Ridgewood Financial and its subsidiaries taken as a whole. Other than shares of
capital stock in Ridgewood Savings and its subsidiaries, as identified below
(collectively, the "Ridgewood Subsidiaries"), Ridgewood Financial does not own
or control, directly or indirectly, or have the right to acquire directly or
indirectly, an equity interest in any corporation, company, association,
partnership, joint venture or other entity.
(c) Ridgewood Savings is a New Jersey capital stock savings bank
organized, validly existing and in good standing under the laws of the State of
New Jersey. Except as set forth in Ridgewood Disclosure Schedule 3.01(c),
Ridgewood Savings is the only Ridgewood Subsidiary. The deposits of Ridgewood
Savings are insured by the FDIC to the fullest extent permitted by law, and all
premiums and assessments required to be paid in connection therewith have been
paid when due by Ridgewood Savings. Each Ridgewood Subsidiary is identified in
Ridgewood Disclosure Schedule 3.01(c), and is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization.
(d) Ridgewood Savings is a member in good standing of the FHLB of New
York and owns the requisite amount of stock therein.
(e) Except as disclosed in Ridgewood Disclosure Schedule 3.01(g), the
respective minute books of Ridgewood MHC, Ridgewood Financial, Ridgewood Savings
and each Ridgewood Subsidiary accurately records, in all material respects, all
material corporate actions of their
12
respective stockholders and boards of directors (including committees) through
the date of this Agreement.
(f) Prior to the date of this Agreement, true and correct copies of the
certificates of incorporation and bylaws of Ridgewood Savings, Ridgewood
Financial and Ridgewood MHC, and each Ridgewood Subsidiary, have been made
available to Provident.
Section 3.02 Capitalization.
(a) The authorized capital stock of Ridgewood Financial consists of
10,000,000 shares of common stock, $0.10 par value ("Ridgewood Financial Common
Stock"), and 5,000,000 shares of Preferred Stock, no par value (the "Ridgewood
Preferred Stock"), of which 3,180,000 shares of Ridgewood Financial Common Stock
are outstanding, validly issued, fully paid and nonassessable and free of
preemptive rights. There are no shares of Ridgewood Financial Preferred Stock
issued and outstanding. There are no shares of Ridgewood Financial Common Stock
held by Ridgewood Financial as treasury stock. Neither Ridgewood Financial nor
any Ridgewood Subsidiary has or is bound by any Right of any character relating
to the purchase, sale or issuance or voting of, or right to receive dividends or
other distributions on any shares of Ridgewood Financial Common Stock, or any
other security of Ridgewood Financial or any Ridgewood Subsidiary, or any
securities representing the right to vote, purchase or otherwise receive any
shares of Ridgewood Financial Common Stock or any other security of Ridgewood
Financial, other than (i) as set forth in reasonable detail in the Ridgewood
Disclosure Schedule 3.02(a).
(b) Ridgewood MHC owns 1,685,400 shares of Ridgewood Financial Common
Stock, free and clear of any lien or encumbrance except as set forth in
Ridgewood Disclosure Schedule 3.02(b), which shares represent 53.0% of the total
shares of Ridgewood Financial issued and outstanding. Except for shares of
Ridgewood Financial Common Stock (and any equity interests that may be
attributed to Ridgewood MHC due to its ownership of Ridgewood Financial Common
Stock), Ridgewood MHC does not possess, directly or indirectly, any equity
interest in any corporation.
(c) To the best knowledge of Ridgewood Financial, no Person or "group"
(as that term is used in Section 13(d)(3) of the Exchange Act) other than
Ridgewood MHC, is the beneficial owner (as defined in Section 13(d) of the
Exchange Act) of 5% or more of the outstanding shares of Ridgewood Financial
Common Stock, except as disclosed in the Ridgewood Disclosure Schedule 3.02(c).
(d) The authorized capital stock of Ridgewood Savings consists of
10,000,000 shares of common stock, $2.00 par value, of which 100,000 shares are
issued and outstanding, validly issued, fully paid and nonassessable and free of
preemptive rights. All shares of Ridgewood Savings Common Stock issued and
outstanding are owned by Ridgewood Financial free and clear of any liens,
encumbrances, charges, restrictions or rights of third parties of any kind
whatsoever.
13
Section 3.03 Authority; No Violation.
(a) Ridgewood has full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Ridgewood and the completion by Ridgewood of
the transactions contemplated hereby have been duly and validly approved by the
requisite vote of the Boards of Directors of Ridgewood and, except for approval
of the stockholders of Ridgewood Financial and, if required, the depositors of
Ridgewood Savings, no other proceedings on the part of Ridgewood are necessary
to complete the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Ridgewood, the MHC Merger has been duly
and validly approved by the Board of Directors of Ridgewood MHC, the Mid-Tier
Merger has been duly and validly approved by the Board of Directors of Ridgewood
Financial, and the MHC Merger, Mid-Tier Merger, Interim Merger and Bank Merger
have been duly and validly approved by the Board of Directors of Ridgewood
Savings and, subject to approval by the stockholders of Ridgewood Financial and,
if required, the depositors of Ridgewood Savings and receipt of the required
approvals of the Regulatory Authorities, constitutes the valid and binding
obligations of Ridgewood Savings, Ridgewood Financial and Ridgewood MHC,
enforceable against them in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally,
and as to Ridgewood Savings, the conservatorship or receivership provisions of
the FDIA, and subject, as to enforceability, to general principles of equity.
(b) Subject to the receipt of approvals from the Regulatory Authorities
referred to in Section 5.03 hereof and the compliance by Ridgewood and Provident
with any conditions contained therein,
(A) the execution and delivery of this Agreement by Ridgewood,
(B) the consummation of the transactions contemplated hereby, and
(C) compliance by Ridgewood with any of the terms or provisions hereof,
will not (i) conflict with or result in a material breach of any provision of
the certificate of incorporation or bylaws of Ridgewood Financial or any
Ridgewood Subsidiary or the charter and bylaws of Ridgewood MHC; (ii) to the
best knowledge of Ridgewood, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Ridgewood
or any of the properties or assets of Ridgewood; or (iii) violate, conflict
with, result in a breach of any provisions of, 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, accelerate the performance required by, or result
in a right of termination or acceleration or the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or assets of
Ridgewood under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
investment or obligation to which Ridgewood 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 clauses (ii)
14
and (iii) above for violations which, individually or in the aggregate, would
not have a Material Adverse Effect on Ridgewood.
Section 3.04 Consents. Except as set forth in Ridgewood Disclosure
Schedule 3.04, and except for the consents, waivers, approvals, filings and
registrations from or with the Regulatory Authorities referred to in Section
5.03 hereof and compliance with any conditions contained therein, and the
approval of this Agreement by the requisite vote of the stockholders of
Ridgewood Financial and, if required, the depositors of Ridgewood Savings, no
consents, waivers or approvals of, or filings or registrations with, any
governmental authority are necessary, and, to the best knowledge of Ridgewood,
no consents, waivers or approvals of, or filings or registrations with, any
other third parties are necessary, in connection with (a) the execution and
delivery of this Agreement by Ridgewood, and (b) the completion by Ridgewood of
the transactions described in this Agreement.
Section 3.05 Financial Statements.
(a) Ridgewood has previously made available to Provident the Ridgewood
Regulatory Reports. The Ridgewood Regulatory Reports have been, or will be,
prepared in all material respects in accordance with applicable regulatory
accounting principles and practices throughout the periods covered by such
statements, and fairly present, or will fairly present in all material respects,
the consolidated financial position, results of operations and changes in
stockholders' equity of Ridgewood Savings and Ridgewood Financial, as the case
may be, as of and for the periods ended on the dates thereof, in accordance with
applicable regulatory accounting principles applied on a consistent basis.
(b) Ridgewood has previously made available to Provident the Ridgewood
Financials. The Ridgewood Financials have been prepared in accordance with GAAP,
and (including the related notes where applicable) fairly present in each case
in all material respects (subject in the case of the unaudited interim
statements to normal year-end adjustments), the consolidated financial
condition, results of operations and cash flows of Ridgewood Financial and the
Ridgewood Subsidiaries as of and for the respective periods ending on the dates
thereof, in accordance with GAAP applied on a consistent basis during the
periods involved, except as indicated therein, or in the case of unaudited
statements, as permitted by Form 10-QSB.
(c) At the date of each balance sheet included in the Ridgewood
Financials or the Ridgewood Regulatory Reports, Ridgewood Savings and Ridgewood
Financial did not have, and will not have, any liabilities, obligations or loss
contingencies of any nature (whether absolute, accrued, contingent or otherwise)
of a type required to be reflected in such Ridgewood Financials or Ridgewood
Regulatory Reports or in the footnotes thereto which are not fully reflected or
reserved against therein or fully disclosed in a footnote thereto, except for
liabilities, obligations and loss contingencies which are not material
individually or in the aggregate or which are incurred in the ordinary course of
business, consistent with past practice, and except for liabilities, obligations
and loss contingencies which are within the subject matter of a specific
representation and warranty
15
herein and subject, in the case of any unaudited statements, to normal,
recurring audit adjustments and the absence of footnotes.
Section 3.06 Taxes. Ridgewood Financial and the Ridgewood Subsidiaries
are members of the same affiliated group within the meaning of IRC Section
1504(a). Ridgewood has duly filed all Federal, state and material local tax
returns required to be filed by or with respect to Ridgewood on or prior to the
date hereof (all such returns being accurate and correct in all material
respects) and has duly paid or has made provisions for the payment of, all
material Federal, state and local taxes which have been incurred by or are due
or claimed to be due from Ridgewood by any taxing authority or pursuant to any
written tax sharing agreement on or prior to the date hereof other than taxes or
other charges which (i) are not delinquent, (ii) are being contested in good
faith, or (iii) have not yet been fully determined. Except as set forth in
Ridgewood Disclosure Schedule 3.06, as of the date of this Agreement, there is
no audit examination, deficiency assessment, tax investigation or refund
litigation with respect to any taxes of Ridgewood, and no claim has been made by
any authority in a jurisdiction where Ridgewood does not file tax returns that
Ridgewood is subject to taxation in that jurisdiction. Except as set forth in
Ridgewood Disclosure Schedule 3.06, Ridgewood has not executed an extension or
waiver of any statute of limitations on the assessment or collection of any
material tax due that is currently in effect. Ridgewood has withheld and paid
all taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor or stockholder,
and Ridgewood has timely complied with all applicable information reporting
requirements under Part III, Subchapter A of Chapter 61 of the IRC and similar
applicable state and local information reporting requirements.
Section 3.07. No Material Adverse Effect. Ridgewood has not suffered
any Material Adverse Effect since December 31, 1999.
Section 3.08. Contracts.
(a) Except as set forth in Ridgewood Disclosure Schedule 3.08(a),
Ridgewood is not a party to or subject to: (i) any employment, consulting or
severance contract or material arrangement with any past or present officer,
director or employee of Ridgewood except for "at will" arrangements; (ii) any
plan, material arrangement or contract providing for bonuses, pensions, options,
deferred compensation, retirement payments, profit sharing or similar material
arrangements for or with any past or present officers, directors or employees of
Ridgewood; (iii) any collective bargaining agreement with any labor union
relating to employees of Ridgewood; (iv) any agreement which by its terms limits
the payment of dividends by Ridgewood Savings or Ridgewood Financial; (v) any
instrument evidencing or related to material indebtedness for borrowed money
whether directly or indirectly, by way of purchase money obligation, conditional
sale, lease purchase, guaranty or otherwise, in respect of which Ridgewood is an
obligor to any person, which instrument evidences or relates to indebtedness
other than deposits, repurchase agreements, bankers' acceptances, advances from
the FHLB of New York, and "treasury tax and loan" accounts established in the
ordinary course of business and transactions in "Federal funds" or which
contains financial covenants or other restrictions (other than those relating to
the payment of principal and
16
interest when due) which would be applicable on or after the Closing Date to
Provident; or (vi) any contract (other than this Agreement) limiting the
freedom, in any material respect, of Ridgewood to engage in any type of banking
or bank-related business in which Ridgewood is permitted to engage under
applicable law as of the date of this Agreement.
(b) True and correct copies of agreements, plans, contracts,
arrangements and instruments referred to in Section 3.08(a), have been made
available to Provident on or before the date hereof, are listed in and attached
to Ridgewood Disclosure Schedule 3.08(a) and are in full force and effect on the
date hereof, and Ridgewood (nor, to the knowledge of Ridgewood, any other party
to any such contract, plan, arrangement or instrument) has not materially
breached any provision of, or is in default in any respect under any term of,
any such contract, plan, arrangement or instrument. Except as set forth in the
Ridgewood Disclosure Schedule 3.08(b), no party to any material contract, plan,
arrangement or instrument will have the right to terminate any or all of the
provisions of any such contract, plan, arrangement or instrument as a result of
the execution of, and the transactions contemplated by, this Agreement. Except
as set forth in Ridgewood Disclosure Schedule 3.08(b), none of the employees
(including officers) of Ridgewood possesses the right to terminate his/her
employment and receive or be paid (or cause Ridgewood to accrue on his/her
behalf) benefits solely as a result of the execution of this Agreement or the
consummation of the transactions contemplated thereby. Except as set forth in
Ridgewood Disclosure Schedule 3.08(b), no plan, contract, employment agreement,
termination agreement, or similar agreement or arrangement to which Ridgewood is
a party or under which Ridgewood may be liable contains provisions which permit
any employee or independent contractor to terminate it without cause and
continue to accrue future benefits thereunder. Except as set forth in Ridgewood
Disclosure Schedule 3.08(b), no such agreement, plan, contract, or arrangement:
(x) provides for acceleration in the vesting of benefits or payments due
thereunder upon the occurrence of a change in ownership or control of Ridgewood
or upon the occurrence of a subsequent event; or (y) requires Ridgewood to
provide a benefit in the form of Ridgewood Financial Common Stock or determined
by reference to the value of Ridgewood Financial Common Stock, except as
disclosed in Ridgewood Disclosure Schedule 3.08(b). Except as disclosed in
Ridgewood Disclosure Schedule 3.08(b), no such agreement, plan or arrangement
with respect to officers or directors of Ridgewood or to any of their respective
employees, provides for benefits which may cause an "excess parachute payment"
or the disallowance of a Federal income tax deduction under IRC Section 280G.
Section 3.09 Ownership of Property; Insurance Coverage.
(a) Except as disclosed in Ridgewood Disclosure Schedule 3.09,
Ridgewood has good and, as to real property, marketable title to all material
assets and properties owned by Ridgewood in the conduct of its business, whether
such assets and properties are real or personal, tangible or intangible,
including assets and property reflected in the balance sheets contained in the
Ridgewood Regulatory Reports and in the Ridgewood Financials or acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of in the ordinary course of business, since the date of such
balance sheets), subject to no material encumbrances, liens, mortgages, security
interests or pledges, except (i) those items which secure liabilities for public
or statutory obligations
17
or any discount with, borrowing from or other obligations to the FHLB of New
York, inter-bank credit facilities, or any transaction by Ridgewood acting in a
fiduciary capacity, and (ii) statutory liens for amounts not yet delinquent or
which are being contested in good faith. Ridgewood, as lessee, has the right
under valid and subsisting leases of real and personal properties used by
Ridgewood in the conduct of its businesses to occupy or use all such properties
as presently occupied and used by each of them. Except as disclosed in Ridgewood
Disclosure Schedule 3.09, such existing leases and commitments to lease
constitute operating leases for both tax and financial accounting purposes and
the lease expense and minimum rental commitments with respect to such leases and
lease commitments are as disclosed in the notes to the Ridgewood Financials.
(b) With respect to all material agreements pursuant to which Ridgewood
has purchased securities subject to an agreement to resell, if any, Ridgewood
has a lien or security interest (which to Ridgewood's knowledge is a valid,
perfected first lien) in the securities or other collateral securing the
repurchase agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby.
(c) Ridgewood currently maintains insurance considered by Ridgewood to
be reasonable for its operations, in accordance with good business practice.
Ridgewood has not received notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased. There are presently no material claims pending
under such policies of insurance and no notices have been given by Ridgewood
under such policies. All such insurance is valid and enforceable and in full
force and effect, and within the last three years, and Ridgewood has received
each type of insurance coverage for which it has applied and during such periods
has not been denied indemnification for any material claims submitted under any
of its insurance policies. Ridgewood Disclosure Schedule 3.09 identifies all
policies of insurance maintained by Ridgewood.
Section 3.10 Legal Proceedings. Except as disclosed in Ridgewood
Disclosure Schedule 3.10, Ridgewood is not a party to any, and there are no
pending or, to the best of Ridgewood's knowledge, threatened legal,
administrative, arbitration or other proceedings, actions or governmental
investigations of any nature (i) against Ridgewood, (ii) to which Ridgewood's
assets are or may be subject, (iii) challenging the validity or propriety of any
of the transactions contemplated by this Agreement, or (iv) which could
adversely affect the ability of Ridgewood to perform under this Agreement,
except for any proceedings, claims, actions, investigations or inquiries
referred to in clauses (i) or (ii) which, if adversely determined, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Ridgewood.
Section 3.11 Compliance With Applicable Law.
(a) Ridgewood holds all licenses, franchises, permits and
authorizations necessary for the lawful conduct of its businesses under, and has
complied in all material respects with, applicable laws, statutes, orders, rules
or regulations of any Federal, state or local governmental authority relating to
it, other than where such failure to hold or such noncompliance will neither
result in a
18
limitation in any material respect on the conduct of its business nor otherwise
have a Material Adverse Effect on Ridgewood. Ridgewood, directly or indirectly,
owns, or is licensed or otherwise possesses legally enforceable rights to use,
all patents, trademarks, trade names, service marks, copyrights and any
applications therefor, technology, know-how and tangible or intangible
proprietary information or material that are material to the business of
Ridgewood.
(b) Except as disclosed in Ridgewood Disclosure Schedule 3.11(b),
Ridgewood has not received any notification or communication from any Regulatory
Authority (i) asserting that Ridgewood is not in material compliance with any of
the statutes, regulations or ordinances which such Regulatory Authority
enforces; (ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to Ridgewood; (iii) requiring or
threatening to require Ridgewood, or indicating that Ridgewood may be required,
to enter into a cease and desist order, agreement or memorandum of understanding
or any other agreement with any Federal or state governmental agency or
authority which is charged with the supervision or regulation of banks or
engages in the insurance of bank deposits restricting or limiting, or purporting
to restrict or limit, in any material respect the operations of Ridgewood,
including without limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct, restrict or
limit, in any material manner the operations of Ridgewood, including without
limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement"). Ridgewood has not
consented to or entered into any currently effective Regulatory Agreement,
except as set forth in Ridgewood Disclosure Schedule 3.11. The most recent
regulatory rating given to Ridgewood Savings as to compliance with the Community
Reinvestment Act ("CRA") is satisfactory or better.
Section 3.12 ERISA.
(a) Ridgewood Disclosure Schedule 3.12(a) contains a complete and
accurate list of all pension, retirement, stock option, stock purchase, stock
ownership, savings, stock appreciation right, profit sharing, deferred
compensation, consulting, bonus, group insurance, severance and other benefit
plans, contracts, agreements and arrangements, including, but not limited to,
"employee benefit plans," as defined in Section 3(3) of ERISA, incentive and
welfare policies, contracts, plans and arrangements and all trust agreements
related thereto with respect to any present or former directors, officers or
other employees of Ridgewood (hereinafter collectively referred to as the
"Ridgewood Employee Plans" and individually as a "Ridgewood Employee Plan"). If
such plan, contract, agreement or arrangement is funded through a trust or third
party funding vehicle, such as an insurance contract, the Ridgewood Disclosure
Schedule 3.12 (a) includes such trust or other funding arrangement.
Each of the Ridgewood Employee Plans complies in all material respects
with all applicable requirements of ERISA, the IRC and other applicable laws;
and there has occurred no "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the IRC) for which no statutory
19
exemption exists under Section 408(b) of ERISA or Section 4975(d) of the IRC or
for which no administrative exemption has been granted under Section 408(a) of
ERISA.
Except as set forth in Ridgewood Disclosure Schedule 3.12(a), Ridgewood
has not contributed to a Ridgewood Employee Plan which is subject to Title IV of
ERISA (each such plan shall be referred to herein as a "Ridgewood Pension
Plan"). Neither Ridgewood nor any ERISA Affiliate has contributed to any
"multiemployer plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA).
No Ridgewood Pension Plan had an "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, as of the last day of
the end of the most recent plan year ending prior to the date hereof; the fair
market value of the assets of each Ridgewood Pension Plan exceeds the present
value of the "benefit liabilities" (as defined in Section 4001(a)(16) of ERISA)
under such Ridgewood Pension Plan as of the end of the most recent plan year
with respect to the respective Ridgewood Pension Plan ending prior to the date
hereof, calculated on the basis of the actuarial assumptions used in the most
recent actuarial valuation for such Ridgewood Pension Plan as of the date
hereof; and no notice of a "reportable event" (as defined in Section 4043 of
ERISA) for which the 30-day reporting requirement has not been waived has been
required to be filed for any Ridgewood Pension Plan within the 12-month period
ending on the date hereof.
(b) Each Ridgewood Employee Plan that is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the IRC has received a favorable determination
letter from the IRS, and Ridgewood is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. There is no
pending or, to Ridgewood's knowledge, threatened litigation, administrative
action or proceeding relating to any Ridgewood Employee Plan. There has been no
announcement or commitment by Ridgewood to create an additional Ridgewood
Employee Plan, or to amend any Ridgewood Employee Plan, except for amendments
required by applicable law; and, except as specifically identified in Ridgewood
Disclosure Schedules, Ridgewood does not have any obligations for
post-retirement or post-employment benefits under any Ridgewood Employee Plan
that cannot be amended or terminated upon 60 days' notice or less without
incurring any liability thereunder, except for coverage required by Part 6 of
Title I of ERISA or Section 4980B of the IRC, or similar state laws, the cost of
which is borne by the insured individuals. With respect to each Ridgewood
Employee Plan, Ridgewood has supplied to Provident a true and correct copy of
(A) the annual report on the applicable form of the Form 5500 series filed with
the IRS for the most recent three plan years, if required to be filed, (B) such
Ridgewood Employee Plan, including amendments thereto, (C) each trust agreement,
insurance contract or other funding arrangement relating to such Ridgewood
Employee Plan, including amendments thereto, (D) the most recent summary plan
description and summary of material modifications thereto for such Ridgewood
Employee Plan, if the Ridgewood Employee Plan is subject to Title I of ERISA,
and (E) the most recent determination letter issued by the IRS if such Employee
Plan is a Qualified Plan.
20
(c) No compensation payable by Ridgewood to any of its employees under
any Ridgewood Employee Plan (including by reason of the transactions
contemplated hereby) will be subject to disallowance under Section 162(m) of the
IRC.
(d) Except as set forth on Ridgewood Disclosure Schedule 3.12(d),
Ridgewood does not have any liability for any post-retirement health, medical or
similar benefit of any kind whatsoever, except as required by statute or
regulation. With respect to any benefit set forth on Ridgewood Disclosure
Schedule 3.12(d), such schedule identifies the method of funding and the funded
status of such benefit.
Section 3.13 Brokers, Finders and Financial Advisors. Except the
engagement of ▇▇▇▇ ▇▇▇▇ in connection with transactions contemplated by this
Agreement, neither Ridgewood, nor any of its officers, directors, employees or
agents, has engaged or retained any broker, finder or financial advisor in
connection with the transactions contemplated by this Agreement, or, except for
the commitments disclosed in Ridgewood Disclosure Schedule 3.13, incurred any
liability or commitment for any fees or commissions to any such person in
connection with the transactions contemplated by this Agreement, which has not
been reflected in the Ridgewood Financials.
Section 3.14. Environmental Matters.
(a) Except as set forth in Ridgewood Disclosure Schedule 3.14(a):
(i) To the best of Ridgewood's knowledge, the Participation
Facilities (as defined below) and the Loan Properties are, and have been, in
substantial compliance with all Environmental Laws;
(ii) There is no suit, claim, action, notice, demand,
executive or administrative order, directive, investigation or proceeding
pending or, to the knowledge of Ridgewood, threatened before any court,
governmental agency or board or other forum against any of them (x) for alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or release (as defined
herein) into the environment of any Hazardous Material (as defined herein),
whether or not occurring at or on a site owned, leased or operated by any of
them or any Participation Facility;
(iii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to the
knowledge of Ridgewood, threatened before any court, governmental agency or
board or other forum relating to or against any Loan Property (or Ridgewood in
respect of such Loan Property) (x) relating to alleged noncompliance (including
by any predecessor) with, or liability under, any Environmental Law or (y)
relating to the presence of or release into the environment of any Hazardous
Material;
(iv) The properties currently owned or operated by Ridgewood
(including, without limitation, soil, groundwater or surface water on, under or
adjacent to the properties, and buildings
21
thereon) are not contaminated with and do not otherwise contain any Hazardous
Material other than as permitted under any applicable Environmental Law;
(v) Ridgewood has not received any notice, demand letter,
executive or administrative order, directive or request for information from any
Federal, state, local or foreign governmental entity or any third party
indicating that it may be in violation of, or liable under, any Environmental
Law;
(vi) There are no underground storage tanks on, in or under
any properties owned or operated by Ridgewood and no underground storage tanks
have been closed or removed from any properties owned or operated by Ridgewood;
and
(vii) During the period of ownership or operation by Ridgewood
of any of its respective current properties, or during the period of
participation in the management of any Participation Facility by Ridgewood,
there has been no contamination by or release of Hazardous Materials in, on,
under or affecting such properties. Prior to the period of ownership or
operation by Ridgewood of any of its current properties, or prior to the period
of participation in the management of any Participation Facility by Ridgewood,
there was no contamination by or release of Hazardous Material in, on, under or
affecting such properties.
(b) As used in this section the term "Loan Property" means any property
in which the applicable party (or a Subsidiary of it) holds a security interest,
and, where required by the context, includes the owner or operator of such
property, but only with respect to such property. The term "Participation
Facility" means any facility in which the applicable party (or a Subsidiary of
it) participates in the management (including all property held as trustee or in
any other fiduciary capacity) and, where required by the context, includes the
owner or operator of such property, but only with respect to such property.
Section 3.15. Loan Portfolio.
(a) With respect to each loan owned by Ridgewood in whole or in part
(each, a "Loan"):
(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 Ridgewood 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;
22
(iii) Ridgewood is the sole holder of legal and beneficial
title to each Loan (or any applicable participation interest, as appropriate),
except as otherwise referenced on the books and records of Ridgewood;
(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 that serves as security for a Loan,
except as otherwise referenced on the books and records of Ridgewood;
(vi) there is no litigation or proceeding pending or
threatened relating to the property that serves as security for a Loan that
would have a Material Adverse Effect upon the related Loan, except as otherwise
disclosed by documents in the applicable Loan file;
(vii) with respect to a Loan held in the form of a
participation, the participation documentation is legal, valid, binding and
enforceable, except as otherwise disclosed by documents in the applicable Loan
file; and
(viii) no representation or warranty set forth in this Section
3.15 shall be deemed to be breached unless such breach, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
Ridgewood.
(b) The allowance for possible losses reflected in Ridgewood
Financial's audited statement of condition at December 31, 1999 was, and the
allowance for possible losses shown on the balance sheets in Ridgewood
Financial's Securities Documents for periods ending after December 31, 1999 have
been and will be, adequate, as of the dates thereof, under GAAP.
(c) Ridgewood Disclosure Schedule 3.15 sets forth by category all
loans, leases, advances, credit enhancements, other extensions of credit,
commitments and interest-bearing assets of Ridgewood, including the amounts
thereof and the name of the obligor, that have been classified (whether
regulatory or internal) as "Special Mention," "Substandard," "Doubtful," "Loss"
or words of similar import as of June 30, 2000. The other real estate owned
("OREO") included in any non-performing assets of Ridgewood is carried net of
reserves at the lower of cost or fair value, less estimated selling costs, based
on current independent appraisals or evaluations or current management
appraisals or evaluations; provided, however, that "current" shall mean within
the past 12 months.
Section 3.16. Information to be Supplied. Except for any information
provided by Provident concerning Provident for inclusion therein, the Proxy
Statement mailed to Ridgewood Financials' stockholders and, if necessary, the
depositors of Ridgewood Savings will not, at the time it or they
23
are mailed, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein not misleading.
The information supplied, or to be supplied, by Ridgewood for inclusion in the
Applications will, at the time such documents are filed with any Regulatory
Authority, be accurate in all material aspects.
Section 3.17. Securities Documents. Ridgewood Financial has made
available to Provident copies of its (i) annual reports on Form 10-KSB for the
years ended December 31, 1998 and 1999, (ii) quarterly reports on Form 10-QSB
for the quarters ended March 31 and June 30, 2000, and (iii) all proxy materials
used or for use in connection with any meeting of stockholders. Such reports and
such proxy materials complied, at the time filed, in all material respects, with
the Securities Laws.
Section 3.18. Related Party Transactions. Except as disclosed in
Ridgewood Disclosure Schedule 3.18, or as described in Ridgewood Financial's
proxy statement distributed in connection with the 2000 annual meeting of
stockholders (which previously has been provided to Provident), Ridgewood is not
a party to any transaction (including any loan or other credit accommodation)
with an Affiliate. Except as disclosed in Ridgewood Disclosure Schedule 3.18,
all such transactions (a) were made in the ordinary course of business, (b) were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other Persons,
and (c) did not involve more than the normal risk of collectability or present
other unfavorable features. Except as set forth in Ridgewood Disclosure Schedule
3.18, no loan or credit accommodation to an Affiliate is presently in default
or, during the three-year period prior to the date of this Agreement, has been
in default or has been restructured, modified or extended. Ridgewood has not
been notified that principal and interest with respect to any such loan or other
credit accommodation will not be paid when due or that the loan grade
classification accorded such loan or credit accommodation is inappropriate.
Section 3.19. Schedule of Termination Benefits. Ridgewood Disclosure
Schedule 3.19 includes a schedule of all termination benefits and related
payments that would be payable to the individuals identified thereon, under any
and all employment agreements, special termination agreements, supplemental
executive retirement plans, deferred bonus plans, deferred compensation plans,
salary continuation plans, or any compensation arrangement, or other pension
benefit or welfare benefit plan maintained by Ridgewood for the benefit of
officers or directors of Ridgewood (the "Benefits Schedule"), assuming their
employment or service is terminated as of June 30, 2000 and the Closing Date
occurs prior to such termination. No other individuals are entitled to benefits
under any such plans.
Section 3.20. Deposits. Except as set forth in Ridgewood Disclosure
Schedule 3.20, none of the deposits of Ridgewood is a "brokered" deposit as
defined in 12 U.S.C. Section 1831f(g).
Section 3.21. Fairness Opinion. Ridgewood Financial has received a
written opinion from ▇▇▇▇ ▇▇▇▇ to the effect that, subject to the terms,
conditions and qualifications set forth therein, as of the date thereof, the
Merger Consideration to be received by the stockholders of Ridgewood Financial
pursuant to this Agreement is fair to such stockholders from a financial point
of view and
24
the Depositor Conversion is fair from a financial point of view to the
depositors of Ridgewood Savings (the "Fairness Opinion").
Section 3.22 Antitakeover Provisions Inapplicable; Required Vote of
Stockholders. Except as set forth on Ridgewood Disclosure Schedule 3.22, and
except for approvals required under the Federal and state banking laws, the
transactions contemplated by this Agreement are not subject to any applicable
state takeover law. The affirmative vote of a majority of the votes cast by
stockholders of Ridgewood Financial Common Stock is necessary to approve this
Agreement and the transactions contemplated hereby.
Section 3.23 Derivative Transactions. Except as set forth in Ridgewood
Disclosure Schedule 3.23, Ridgewood has not entered into any futures contract,
option contract, interest rate caps, interest rate floors, interest rate
exchange agreement or other derivative instruments.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PROVIDENT
Provident represents and warrants to Ridgewood that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article IV), except as set forth in the Provident
Disclosure Schedules delivered by Provident on the date hereof. Provident has
made a good faith effort to ensure that the disclosure on each schedule of the
Provident Disclosure Schedules corresponds to the section referenced herein.
However, for purposes of the Provident Disclosure Schedules, any item disclosed
on any schedule therein is deemed to be fully disclosed with respect to all
schedules under which such item may be relevant.
Section 4.01. Organization.
(a) Provident is a mutual savings bank duly organized, validly existing
and in good standing under the laws of the State of New Jersey. The deposits of
Provident are insured by the FDIC to the fullest extent permitted by law, and
all premiums and assessments required to be paid in connection therewith have
been paid when due by Provident. Each Provident Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization.
(b) Provident is a member in good standing of the FHLB of New York and
owns the requisite amount of stock therein.
(c) Prior to the date of this Agreement, Provident has made available
to Ridgewood Financial true and correct copies of the certificate of
incorporation and bylaws of Provident.
(d) As of the Closing Date, Interim will have been duly organized and
will be validly
25
existing as a New Jersey chartered interim savings bank, and Interim will be a
wholly-owned subsidiary of Provident.
Section 4.02 Authority; No Violation.
(a) Provident has full power and authority to execute and deliver this
Agreement and Provident and Interim will have full power and authority to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Provident and the completion by Provident and Interim of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of Provident, and other than with respect to the organization
of Interim, no other corporate proceedings on the part of Provident are
necessary to complete the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Provident and, subject to
receipt of the required approvals of Regulatory Authorities described in Section
4.03 hereof, constitutes the valid and binding obligation of Provident,
enforceable against Provident in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally.
(b) Subject to the receipt of approvals from the Regulatory Authorities
referred to in Section 5.03 hereof and the compliance by Ridgewood and Provident
with any conditions contained therein,
(A) the execution and delivery of this Agreement by Provident,
(B) the consummation of the transactions contemplated hereby,
and
(C) compliance by Provident and Interim with any of the terms
or provisions hereof,
will not (i) conflict with or result in a breach of any provision of the
Certificate of Incorporation or bylaws of Provident or any Provident Subsidiary;
(ii) violate any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to Provident or any Provident Subsidiary
or any of their respective properties or assets; or (iii) violate, conflict
with, result in a breach of any provisions of, 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, accelerate the performance required by, or
result in a right of termination or acceleration or the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of Provident under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other investment or obligation to which Provident is a party, or by which it or
any of its properties or assets may be bound or affected.
Section 4.03. Consents. Except for consents, approvals, filings and
registrations from or with the Department, FDIC, FRB, SEC, and state "blue sky"
authorities, and compliance with any conditions contained therein, and the
approval of this Agreement by the stockholders of Ridgewood
26
Financial and, if necessary, the depositors of Ridgewood Savings, the
appropriate filings to be made with the Department, and the chartering of
interim savings banks by the Department, no consents or approvals of, or filings
or registrations with, any public body or authority are necessary, and no
consents or approvals of any third parties are necessary, or will be, in
connection with the execution and delivery of this Agreement by Provident, and
the completion by Provident of the transactions contemplated hereby. Provident
has no reason to believe that (i) any required consents or approvals will not be
received or will be received with conditions, limitations or restrictions
unacceptable to it or which would adversely impact Provident's ability to
complete the transactions described in this Agreement or that (ii) any public
body or authority, the consent or approval of which is not required or any
filing which is not required, will object to the completion of the transactions
described in this Agreement.
Section 4.04. Compliance With Applicable Law.
(a) Provident and the Provident Subsidiaries hold all licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
businesses under, and have complied in all material respects with, applicable
laws, statutes, orders, rules or regulations of any Federal, state or local
governmental authority relating to them, other than where such failure to hold
or such noncompliance will neither result in a limitation in any material
respect on the conduct of their businesses nor otherwise have a Material Adverse
Effect on Provident and its Subsidiaries taken as a whole.
(b) Except as set forth in Provident Disclosure Schedule 4.04(b),
neither Provident nor any Provident Subsidiary has received any notification or
communication from any Regulatory Authority (i) asserting that Provident or any
Provident Subsidiary is not in compliance with any of the statutes, regulations
or ordinances which such Regulatory Authority enforces; (ii) threatening to
revoke any license, franchise, permit or governmental authorization which is
material to Provident or any Provident Subsidiary; (iii) requiring or
threatening to require Provident or any Provident Subsidiary, or indicating that
Provident or any Provident Subsidiary may be required, to enter into a cease and
desist order, agreement or memorandum of understanding or any other agreement
restricting or limiting, or purporting to restrict or limit, in any manner the
operations of Provident or any Provident Subsidiary; or (iv) directing,
restricting or limiting, or purporting to direct, restrict or limit, in any
manner the operations of Provident or any Provident Subsidiary, including
without limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement"). Neither Provident nor any
Provident Subsidiary is a party to, nor has consented to any Regulatory
Agreement. The most recent regulatory rating given to Provident as to compliance
with the CRA is satisfactory or better.
Section 4.05. Information to be Supplied. The information to be
supplied by Provident for inclusion in the Proxy Statement or Proxy Statements
will not, at the time the Proxy Statement or Proxy Statements are mailed to
Ridgewood Financial stockholders or the depositors of Ridgewood Savings contain
any untrue statement of a material fact or omit to state any material fact
necessary
27
in order to make the statements therein not misleading. The information
supplied, or to be supplied, by Provident for inclusion in the Applications
will, at the time such documents are filed with any Regulatory Authority, be
accurate in all material respects.
Section 4.06. Financing. As of the date hereof Provident has, and at
the Merger Effective Date, Provident will have funds which are sufficient and
available to meet its obligations under this Agreement and to consummate in a
timely manner the transactions contemplated hereby and thereby, and Provident
will not fail to meet its capital requirements as a result thereof.
Section 4.07. Regulatory Approvals. Provident is not aware of any
reason that it cannot obtain any of the approvals of Regulatory Authorities
necessary to consummate the transactions contemplated by this Agreement and
Provident has not received any advice or information from any regulatory
authority indicating that such approvals will be denied or are doubtful or will
be unduly delayed.
Section 4.08. Legal Proceedings. Except as set forth in Provident
Disclosure Schedule 4.08 hereto, Provident is not a party to any, and there are
no pending or, to the best of Provident's knowledge, threatened legal,
administrative, arbitration or other proceedings, actions or governmental
investigations of any nature (i) against Provident, (ii) to which Provident's
assets are or may be subject, (iii) challenging the validity or propriety of any
of the transactions contemplated by this Agreement, or (iv) which could
adversely affect the ability of Provident to perform under this Agreement,
except for any proceedings, claims, actions, investigations or inquiries
referred to in clauses (i) or (ii) which, if adversely determined, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Provident. Provident has not consented to or entered into any
currently effective Regulatory Agreement.
Section 4.09. Provident Financial Statements. Provident has delivered
to Ridgewood copies of the consolidated statements of financial condition of
Provident as of December 31 1999, for the fiscal years of 1998 and 1999, and the
related consolidated statements of operations, changes in equity and cash flows
for the fiscal years 1997 through 1999, inclusive, in each case accompanied by
the audit report of independent public accountants. The consolidated statements
of financial condition of Provident referred to herein (including the related
notes, where applicable) fairly present the consolidated financial condition of
Provident as of the respective dates set forth therein, and the related
consolidated statements of operations, changes in equity and cash flows
(including the related notes, where applicable) fairly present the results of
the consolidated operations, changes in equity and cash flows of Provident of
the respective periods or as of the respective dates set forth therein, in each
case in conformity with GAAP consistently applied.
Section 4.10. Provident Benefit Plans. (a) Provident has provided
Ridgewood with a complete and accurate list of all pension, retirement, group
insurance, and other employee benefit plan and arrangements, including, but not
limited to, "employee benefit plans," as defined in Section 3(3) of ERISA,
incentive and welfare policies, contracts, plans and arrangements with respect
to any present employees of Provident (hereinafter collectively referred to as
the "Provident Employee
28
Plans" and individually as a "Provident Employee Plan"). Each of the Provident
Employee Plans complies in all material respects with all applicable
requirements of ERISA, the IRC and other applicable laws.
(b) No Provident Employee Plan which is subject to Title IV of ERISA
(each such plan shall be referred to herein as a "Provident Pension Plan") had
an "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, as of the last day of the end of the most recent plan
year ending prior to the date hereof; the fair market value of the assets of
each Provident Pension Plan exceeds the present value of the "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA) under such Provident
Pension Plan as of the end of the most recent plan year with respect to the
respective Provident Pension Plan ending prior to the date hereof, calculated on
the basis of the actuarial assumptions used in the most recent actuarial
valuation for such Provident Pension Plan as of the date hereof; and no notice
of a "reportable event" (as defined in Section 4043 of ERISA) for which the
30-day reporting requirement has not been waived has been required to be filed
for any Provident Pension Plan within the 12-month period ending on the date
hereof.
(c) Each Provident Employee Plan that is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the IRC has received a favorable determination
letter from the IRS, and Provident is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. There is no
pending or, to Provident's knowledge, threatened litigation, administrative
action or proceeding relating to any Provident Employee Plan.
Section 4.11. Absence of Certain Changes. Except as disclosed in
Schedule 4.11 or as provided for or contemplated in this Agreement, Provident
has not suffered any Material Adverse Effect since December 31, 1999.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01. Conduct of Ridgewoods Business.
(a) From the date of this Agreement to the Closing Date, Ridgewood will
conduct its business and engage in transactions, including extensions of credit,
only in the ordinary course and consistent with past practice and policies in
existence on the date hereof, except as otherwise required or contemplated by
this Agreement or with the written consent of Provident. Ridgewood will use its
reasonable good faith efforts, to (i) preserve its business organizations
intact, (ii) maintain good relationships with its employees, and (iii) preserve
the goodwill of its customers and others with whom business relationships exist.
From the date hereof to the Closing Date, except as otherwise consented to or
approved by Provident in writing (which approval will not be unreasonably
delayed or withheld) or as contemplated or required by this Agreement, Ridgewood
will not:
29
(i) amend or change any provision of its certificate of
incorporation, charter, or bylaws;
(ii) except as set forth in Ridgewood Disclosure Schedule
5.01(a)(ii), change the number of authorized or issued shares of its capital
stock or issue or grant any Right or agreement of any character relating to its
authorized or issued capital stock or any securities convertible into shares of
such stock, or split, combine or reclassify any shares of capital stock, or
declare, set aside or pay any dividend or other distribution in respect of
capital stock or redeem or otherwise acquire any shares of capital stock, except
that Ridgewood Financial may continue to pay its regular quarterly cash dividend
of $0.04 per share, with record and payment dates consistent with past practice;
Provided further, that if the Closing Date is more than forty-five (45) after
the next preceding Ridgewood Financial Common Stock dividend payment date,
Ridgewood Financial may declare and pay a final cash dividend per share at the
quarterly rate of $.04 per share, with the exact amount per share to be an
amount that is pro rata through the payment date (from the preceding payment
date);
(iii) except as set forth in the Ridgewood Disclosure Schedule
5.01(a)(iii), grant or agree to pay any bonus, severance or termination to,
enter into or amend, or take any action (other than executing this Agreement)
that would trigger obligations under any employment agreement, severance
agreement, supplemental executive agreement, or similar agreement or arrangement
with any of its directors, officers or employees, or increase in any manner the
compensation or fringe benefits of any employee, officer or director, except for
salary increases in the ordinary course of business consistent with past
practice or as may be required pursuant to legally binding commitments existing
on the date hereof set forth in Ridgewood Disclosure Schedules 3.08 and 3.12;
and Provided further, that bonuses may be paid to employees with respect the
year ending December 31, 2000 to the extent that the related expense has been
accrued (with no change in the method or amount of accrual during the calendar
year) and the bonuses are generally consistent (with respect to amounts and
persons covered) with past practices;
(iv) enter into or, except as may be required by law or by the
terms of this Agreement, modify any pension, retirement, stock option, stock
purchase, stock appreciation right, stock grant, savings, profit sharing,
deferred compensation, supplemental retirement, consulting, bonus, group
insurance or other employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect of any of its
directors, officers or employees; or make any contributions to any defined
contribution or defined benefit plan not in the ordinary course of business
consistent with past practice; or materially amend any Ridgewood Employee Plan
except to the extent such modifications or amendments do not result in an
increase in cost;
(v) except as otherwise provided in Section 5.06 of this
Agreement, merge or consolidate Ridgewood with any other corporation; sell or
lease all or any substantial portion of the assets or business of Ridgewood;
make any acquisition of all or any substantial portion of the business or assets
of any other person, firm, association, corporation or business organization
other
30
than in connection with foreclosures, settlements in lieu of foreclosure,
troubled loan or debt restructuring, or the collection of any loan or credit
arrangement between Ridgewood and any other person; enter into a purchase and
assumption transaction with respect to deposits and liabilities; permit the
revocation or surrender by Ridgewood of its certificate of authority to
maintain, or file an application for the relocation of, any existing branch
office, or file an application for a certificate of authority to establish a new
branch office;
(vi) sell or otherwise dispose of the capital stock of
Ridgewood or sell or otherwise dispose of any asset of Ridgewood other than in
the ordinary course of business consistent with past practice; subject any asset
of Ridgewood to any lien, pledge, security interest or other encumbrance (other
than in connection with deposits, repurchase agreements, bankers acceptances,
FHLB of New York advances, "treasury tax and loan" accounts established in the
ordinary course of business and transactions in "Federal funds" and the
satisfaction of legal requirements in the exercise of trust powers) other than
in the ordinary course of business consistent with past practice; incur any
indebtedness for borrowed money (or guarantee any indebtedness for borrowed
money), except in the ordinary course of business consistent with past practice;
(vii) take any action which would result in any of the
representations and warranties of Ridgewood set forth in Article III of this
Agreement becoming untrue as of any date after the date hereof (except as to any
representation or warranty which specifically relates to an earlier date) or in
any of the conditions set forth in Article VI hereof not being satisfied, except
in each case as may be required by applicable law;
(viii) change any method, practice or principle of accounting,
except as may be required from time to time by GAAP (without regard to any
optional early adoption date) or any Regulatory Authority responsible for
regulating Ridgewood;
(ix) waive, release, grant or transfer any material rights of
value or modify or change in any material respect any existing material
agreement or indebtedness to which Ridgewood is a party, other than in the
ordinary course of business, consistent with past practice;
(x) purchase any security for its investment portfolio not
rated "A" or higher by either Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investor
Services, Inc, or with a remaining term to maturity of more than five (5) years;
(xi) make any new loan or other credit facility commitment
(including without limitation, lines of credit and letters of credit) to any
borrower or group of affiliated borrowers in excess of $300,000 in the
aggregate, or increase, compromise, extend, renew or modify any existing loan or
commitment outstanding in excess of $300,000, except for loans secured by one-
to four-family, residential real property in an amount not exceeding $750,000
(on the basis of and consistent with existing lending policies) and except for
any commitments disclosed on the Ridgewood Disclosure Schedule 5.01(a)(xi).
31
(xii) except as set forth on the Ridgewood Disclosure Schedule
5.01(a)(xii), enter into, renew, extend or modify any other transaction with any
Affiliate;
(xiii) enter into any futures contract, option, interest rate
caps, interest rate floors, interest rate exchange agreement or other agreement
or, except in the ordinary course of business and consistent with past practice,
take any other action for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest;
(xiv) except for the execution of, and as otherwise provided
in, this Agreement, take any action that would give rise to a right of payment
to any individual under any employment agreement, or take any action that would
give rise to a right of payment to any individual under any Ridgewood Employee
Plan;
(xv) make any change in policies with regard to the extension
of credit, the establishment of reserves with respect to the possible loss
thereon or the charge off of losses incurred thereon, investment,
asset/liability management or other material banking policies in any material
respect except as may be required by changes in applicable law or regulations or
in GAAP or by applicable regulatory authorities;
(xvi) except as set forth in Ridgewood Disclosure Schedule
5.01(a)(xvi), make any capital expenditures in excess of $50,000 individually or
$100,000 in the aggregate, other than pursuant to binding commitments existing
on the date hereof and other than expenditures necessary to maintain existing
assets in good repair;
(xvii) purchase or otherwise acquire, or sell or otherwise
dispose of, any assets or incur any liabilities other than in the ordinary
course of business consistent with past practices and policies;
(xviii) incur any non-deposit liability in excess of $250,000
other than in the ordinary course of business consistent with past practice; or
(xix) agree to do any of the foregoing.
For purposes of this Section 5.01, unless provided for in a business
plan, budget or similar document delivered to Provident prior to the date of
this Agreement, it shall not be considered in the ordinary course of business
for Ridgewood to do any of the following: (i) except as set forth in Ridgewood
Disclosure Schedule 5.01, make any sale, assignment, transfer, pledge,
hypothecation or other disposition of any assets having a book or market value,
whichever is greater, in the aggregate in excess of $200,000, other than pledges
of assets to secure government deposits, to exercise trust powers, sales of
assets received in satisfaction of debts previously contracted in the normal
course of business, issuance of loans, sales of previously purchased government
guaranteed loans, or transactions in the investment securities portfolio by
Ridgewood or repurchase agreements made, in each case, in the ordinary course of
business; or (ii) except as set forth in Ridgewood
32
Disclosure Schedule 5.01, undertake or enter any lease, contract or other
commitment for its account, other than in the normal course of providing credit
to customers as part of its banking business, involving a payment by Ridgewood
of more than $50,000 annually, or containing a material financial commitment and
extending beyond 12 months from the date hereof.
Section 5.02. Access; Confidentiality.
(a) Ridgewood shall permit Provident and its representatives reasonable
access to its properties and make available to them all books, papers and
records relating to the assets, properties, operations, obligations and
liabilities of Ridgewood, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of meetings of boards
of directors (and any committees thereof) (other than minutes of any
confidential discussion of this Agreement and the transactions contemplated
hereby), and stockholders, organizational documents, bylaws, material contracts
and agreements, filings with any regulatory authority, accountants' work papers,
litigation files, plans affecting employees, and any other business activities
or prospects in which Provident may have a reasonable interest (provided that
Ridgewood shall not be required to provide access to any information that would
violate their attorney-client privilege or any employee or customer privacy
policies, laws or regulations). Ridgewood shall make its respective officers,
employees and agents and authorized representatives (including counsel and
independent public accountants) available to confer with Provident and its
representatives. Ridgewood Savings shall provide in a timely manner to
Provident's officer in charge of retail banking copies of current rate sheets
for all deposit and loan products. Ridgewood shall permit Provident, at its
expense, to cause a "phase I environmental audit" and a "phase II environmental
audit" to be performed at any physical location owned or occupied by Ridgewood,
provided that such audit is contracted for within forty-five days of the date of
this agreement and commenced as soon as practicable thereafter. The parties will
hold all such information delivered in confidence to the extent required by, and
in accordance with, the provisions of the confidentiality agreement, dated June
29, 2000, between Ridgewood and Provident (the "Confidentiality Agreement").
(b) Provident agrees to conduct such investigations and discussions
hereunder in a manner so as not to interfere unreasonably with normal operations
and customer and employee relationships of the other party.
(c) In addition to the access permitted by subparagraph (a) above, from
the date of this Agreement through the Closing Date, Ridgewood shall permit
employees of Provident reasonable access to information relating to problem
loans, loan restructurings and loan work-outs of Ridgewood Savings.
Section 5.03. Regulatory Matters and Consents.
(a) Provident will, in consultation with Ridgewood, prepare all
Applications and make all filings for, and use its best efforts to obtain as
promptly as practicable after the date hereof, all necessary permits, consents,
approvals, waivers and authorizations of all Regulatory Authorities
33
necessary or advisable to consummate the transactions contemplated by this
Agreement. Provident shall file the Applications within forty-five days of the
date of this Agreement, or as soon thereafter as is practicable.
(b) Ridgewood will furnish Provident with all information concerning
Ridgewood as may be necessary or advisable in connection with any Application or
filing made by or on behalf of Provident to any Regulatory Authority in
connection with the transactions contemplated by this Agreement.
(c) Provident and Ridgewood will promptly furnish the other with copies
of all material written communications to, or received by them from any
Regulatory Authority in respect of the transactions contemplated hereby, except
information which is filed by either party which is designated as confidential.
(d) Provident will use its best efforts to obtain all necessary
regulatory approvals to form Interim. Interim will not conduct any business
other than engaging in the Interim Merger.
(e) Ridgewood will use its best efforts to obtain all necessary
regulatory approvals to, and will, form the interim savings banks into which
Ridgewood MHC and Ridgewood Financial will convert, and will cause MHC Interim
Bank to merge with and into Ridgewood Savings with Ridgewood Savings as the
resulting institution, and will cause Mid-Tier Interim Bank to merge with and
into Ridgewood Savings with Ridgewood Savings as the resulting institution.
Ridgewood Financial and Ridgewood MHC will cancel all shares of Ridgewood
Financial Common Stock or Ridgewood Savings common stock held by Ridgewood MHC
or Ridgewood Financial. Neither MHC Interim Bank nor Mid-Tier Interim Bank will
conduct any business other than engaging in the MHC Merger and the Mid-Tier
Merger.
(f) The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Regulatory Authorities. Provident will
furnish Ridgewood Financial and its counsel with copies of all Applications
prior to filing with any Regulatory Authority and provide Ridgewood Financial a
reasonable opportunity to provide changes to such Applications, and copies of
all Applications filed by Provident.
(g) Ridgewood and Provident will cooperate with each other in the
foregoing matters and will furnish the responsible party with all information
concerning it and its subsidiaries as may be necessary or advisable in
connection with any Application or filing made by or on behalf of Provident or
Ridgewood to any Regulatory Authority in connection with the transactions
contemplated by this Agreement, and such information will be accurate and
complete in all material respects. In connection therewith, each party will
provide certificates and other documents reasonably requested by the other.
34
(h) If any (i) Regulatory Authority objects to a term or condition set
forth in this Agreement, and (ii) that term or condition is modified to the
satisfaction of the Regulatory Authority or is eliminated in order to satisfy
the Regulatory Authority, and (iii) such modification or elimination would cause
a reduction in benefits to the party for whom the term or condition was meant to
benefit, then the parties hereto shall use their best efforts to enter into an
alternative arrangement so that such benefits are not reduced, provided such
alternative arrangement is permissible under applicable law and is not
disapproved by any Regulatory Authority and provided further that such
alternative arrangement shall not be more costly than the original benefit that
has been or would be reduced as a result of an objection by a Regulatory
Authority.
Section 5.04. Taking of Necessary Action.
(a) Provident and Ridgewood shall each use its best efforts in good
faith to (i) furnish such information as may be required in connection with the
preparation of the documents referred to in Section 5.03 of this Agreement, and
(ii) take or cause to be taken all action necessary or desirable on its part
using its best efforts so as to permit completion of the Merger and the
transactions contemplated by this Agreement, including, without limitation, (A)
obtaining the consent or approval of each individual, partnership, corporation,
association or other business or professional entity whose consent or approval
is required for consummation of the transactions contemplated hereby (including
assignment of leases without any material change in terms), provided that
Ridgewood shall not agree to make any payments or modifications to agreements in
connection therewith without the prior written consent of Provident, and (B)
requesting the delivery of appropriate opinions, consents and letters from its
counsel and independent auditors. No party hereto shall take, or cause, or to
the best of its ability permit to be taken, any action that would substantially
impair the prospects of completing the Interim Merger pursuant to this
Agreement; provided that nothing herein contained shall preclude Provident or
Ridgewood from exercising its rights under this Agreement.
(b) Ridgewood MHC and Ridgewood Savings shall prepare, subject to the
review of Provident with respect to matters relating to Provident and the
transactions contemplated by this Agreement, the Proxy Statement to be filed by
Ridgewood Financial with the SEC and to be mailed to the stockholders of
Ridgewood Financial in connection with the meeting of its stockholders and
transactions contemplated hereby, which Proxy Statement shall conform to all
applicable legal requirements. Should it be required by Regulatory Authorities,
Ridgewood MHC and Ridgewood Savings shall prepare, subject to the review and
consent of Provident with respect to matters relating to Provident and the
transactions contemplated by this Agreement, the Proxy Statement to be filed by
Ridgewood MHC with the Regulatory Authorities and to be mailed to depositors in
connection with a meeting of depositors and the transactions contemplated
hereby. The parties shall cooperate with each other with respect to the
preparation of any Proxy Statement. Ridgewood Savings and Ridgewood MHC shall,
as promptly as practicable following the preparation thereof, file any Proxy
Statement with the Regulatory Authorities, and Ridgewood shall use all
reasonable efforts to have any Proxy Statement mailed to stockholders, and if
necessary depositors, as promptly as practicable after such filing, provided
that Ridgewood Financial and Ridgewood MHC shall have received an
35
updated Fairness Opinion as of a date no more than three days prior to the date
of the Proxy Statement (the "Updated Fairness Opinion"). Ridgewood Financial and
Ridgewood Savings will promptly advise Provident of the time when any Proxy
Statement has been filed and mailed, or of any comments from any Regulatory
Authority or any request by any Regulatory Authority for additional information.
Section 5.05. Certain Agreements.
(a) Provident shall maintain in effect for three years from the Merger
Effective Date, if available, the current directors' and officers' liability
insurance policy maintained by Ridgewood Financial (provided that Provident may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less favorable) with respect to matters
occurring prior to the Closing Date. In connection with the foregoing, Ridgewood
Financial agrees to provide such insurer or substitute insurer with such
representations as such insurer may request with respect to the reporting of any
prior claims.
(b) For a period of six years from the Merger Effective Date, Provident
agrees to indemnify, defend and hold harmless each present and former director
and officer of Ridgewood determined as of the Closing Date (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees and expenses), liabilities, judgments or amounts paid
in settlement (with the approval of Provident, which approval shall not be
unreasonably withheld) or in connection with any claim, action, suit, proceeding
or investigation arising out of matters existing or occurring at or prior to the
Merger Effective Date (a "Claim") in which an Indemnified Party is, or is
threatened to be made, a party or a witness based in whole or in part on, or
arising in whole or in part out of, the fact that such person is or was a
director or officer of Ridgewood, regardless of whether such Claim is asserted
or claimed prior to, at or after the Closing Date, to the fullest extent to
which directors and officers of Ridgewood are entitled under New Jersey law,
Ridgewood Financial's certificate of incorporation and bylaws, Ridgewood
Savings' and Ridgewood MHC's charter and bylaws, or other applicable law as in
effect on the date hereof (and Provident shall pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the extent permissible to a New Jersey corporation or savings bank, or Ridgewood
Financial's certificate of incorporation and bylaws; provided, that the person
to whom expenses are advanced provides an undertaking to repay such expenses if
it is ultimately determined that such person is not entitled to
indemnification). All rights to indemnification in respect of a Claim asserted
or made within the period described in the preceding sentence shall continue
until the final disposition of such Claim.
(c) Any Indemnified Party wishing to claim indemnification under
Section 5.05(b), upon learning of any Claim, shall promptly notify Provident,
but the failure to so notify shall not relieve Provident of any liability it may
have to such Indemnified Party except to the extent that such failure materially
prejudices Provident. In the event of any Claim, (i) Provident shall have the
right to assume the defense thereof (with counsel reasonably satisfactory to the
Indemnified Party) and shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other
36
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that, if Provident elects not to assume such defense
or counsel for the Indemnified Parties advises that there are issues which raise
conflicts of interest between Provident and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Provident shall
pay all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received, provided further that Provident
shall in all cases be obligated pursuant to this paragraph to pay for only one
firm of counsel for all Indemnified Parties, (ii) the Indemnified Parties will
cooperate in the defense of any such Claim and (iii) Provident shall not be
liable for any settlement effected without its prior written consent (which
consent shall not unreasonably be withheld).
(d) In the event Provident or any of is successors or assigns (i)
consolidates with or merges into any other Person and shall not continue or
survive 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 provision shall be made so that the
successors and assigns of Provident assume the obligations set forth in this
Section 5.05.
(e) The provisions of this Section 5.05 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
Section 5.06. No Other Bids and Related Matters. From and after the
date hereof until the termination of this Agreement, neither Ridgewood nor any
of its officers, directors, employees, representatives, agents or affiliates
(including, without limitation, any investment banker, attorney or accountant
retained by Ridgewood), will, directly or indirectly, initiate, solicit or
knowingly encourage (including by way of furnishing non-public information or
assistance), or facilitate knowingly, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its officers, directors, or
employees or any of its subsidiaries or any investment banker, financial
advisor, attorney, accountant or other representative retained by any of its
subsidiaries to take any such action, and Ridgewood shall notify Provident
orally (within two business days) and in writing (as promptly as practicable) of
all of the relevant details relating to all inquiries and proposals which it or
any such officer, director employee, investment banker, financial advisor,
attorney, accountant or other representative may receive relating to any of such
matters, provided, however, that nothing contained in this Section 5.06 shall
prohibit the Board of Directors from: (i) furnishing information to, or entering
into discussions or negotiations with any person or entity that makes an
unsolicited written, bona fide proposal, to acquire Ridgewood Financial and
Ridgewood Savings pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction, if, and only
to the extent that, (A) the Board of Directors of Ridgewood Financial receives a
written opinion from its independent financial advisor that such proposal may be
superior to the Merger from a financial point of view to Ridgewood Financial
stockholders, (B) legal counsel advises Ridgewood Financial that the proposed
acquiror may legally
37
acquire Ridgewood Financial and Ridgewood Savings, (C) the Board of Directors of
Ridgewood Financial, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is
necessary for the Board of Directors of Ridgewood Financial to comply with its
fiduciary duties to stockholders under applicable law (such proposal that
satisfies (A) (B) and (C) being referred to herein as a "Superior Proposal"),
(D) prior to furnishing such information to, or entering into discussions or
negotiations with, such person or entity, Ridgewood Financial (x) provides
reasonable notice to Provident to the effect that it is furnishing information
to, or entering into discussions or negotiations with, such person or entity and
(y) receives from such person or entity an executed confidentiality agreement in
form and substance identical in all material respects to the Confidentiality
Agreement, and (E) the Ridgewood Financial special meeting of stockholders
convened to approve this Agreement has not occurred; (ii) complying with Rule
14e-2 promulgated under the Exchange Act with regard to a tender or exchange
offer; or (iii) prior to the Ridgewood Financial special meeting of stockholders
convened to approve this Agreement, failing to make or withdrawing or modifying
its recommendation to stockholders, and entering into a Superior Proposal if
there exists a Superior Proposal and the Board of Directors of Ridgewood
Financial, after consultation with and based upon the advice of independent
legal counsel, determined in good faith that such action is necessary for such
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law. For purposes of this Agreement, "Acquisition Proposal" shall
mean any of the following (other than the transactions contemplated hereunder)
involving Ridgewood: (i) any merger, consolidation, share exchange, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 20% or more of the assets of
Ridgewood Financial or Ridgewood Savings, taken as a whole, in a single
transaction or series of transactions; (iii) any tender offer or exchange offer
for 20% or more of the outstanding shares of capital stock of Ridgewood
Financial or the filing of a registration statement under the Securities Laws in
connection therewith; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
Section 5.07. Duty to Advise; Duty to Update the Ridgewood Disclosure
Schedules. Ridgewood shall promptly advise Provident of any change or event
having a Material Adverse Effect on Ridgewood or which Ridgewood believes would
or would be reasonably likely to cause or constitute a material breach of any of
its representations, warranties or covenants set forth herein. Ridgewood shall
update the Ridgewood Disclosure Schedules as promptly as practicable after the
occurrence of an event or fact which, if such event or fact had occurred prior
to the date of this Agreement, would have been disclosed in the Ridgewood
Disclosure Schedules. The delivery of such updated Ridgewood Disclosure Schedule
shall not relieve Ridgewood from any breach or violation of this Agreement and
shall not have any effect for the purposes of determining the satisfaction of
the condition set forth in Sections 6.02(c) hereof.
Section 5.08. Conduct of Providents Business. From the date of this
Agreement to the Closing Date, Provident will use its best efforts to (x)
preserve its business organizations intact, (y) maintain good relationships with
employees, and (z) preserve for itself the goodwill of customers of Provident.
From the date of this Agreement to the Closing Date, Provident will not (i)
amend its
38
charter or bylaws in any manner inconsistent with the prompt and timely
consummation of the transactions contemplated by this Agreement; (ii) take any
action which would result in any of the representations and warranties of
Provident set forth in Article IV of this Agreement becoming untrue as of any
date after the date hereof or in any of the conditions set forth in Article VI
hereof not being satisfied, except in each case as may be required by applicable
law; (iii) take any action which would or is reasonably likely to adversely
effect or materially delay the receipt of the necessary approvals from the
Regulatory Authorities; (iv) take action which would or is reasonably likely to
materially and adversely affect Provident's ability to perform its covenants and
agreements under this Agreement; (v) take any action that would result in any of
the conditions to the transactions contemplated by this Agreement not being
satisfied; or (vi) agree to do any of the foregoing.
Section 5.09. Board and Committee Minutes. Ridgewood Savings, Ridgewood
Financial and Ridgewood MHC shall each provide to Provident, within twenty-five
(25) days after any meeting of their respective Board of Directors, or any
committee thereof, or any senior management committee, a copy of the minutes of
such meeting, except that with respect to any meeting held within twenty-five
(25) days of the Closing Date, such minutes shall be provided to each party
prior to the Closing Date. Ridgewood may exclude from the minutes matters (i)
relating to merger negotiations, (ii) associated with Section 5.06, or (iii)
relating to Ridgewood's discussions of possible breaches of this Agreement by
Provident.
Section 5.10. Undertakings by the Parties.
(a) From and after the date of this Agreement:
(i) Voting by Directors. Concurrently with the execution of
this Agreement, or within five business days thereof, the Directors of Ridgewood
Savings, Ridgewood Financial and Ridgewood MHC shall have entered into the
agreement set forth as Exhibit E to this Agreement;
(ii) Proxy Solicitor. If requested to do so by Provident,
Ridgewood Financial and/or Ridgewood MHC shall retain a proxy solicitor in
connection with the solicitation of stockholders and any necessary Ridgewood MHC
depositor approval of this Agreement and the transaction contemplated hereby;
(iii) Outside Service Bureau Contracts. If requested to do so
by Provident, Ridgewood Savings shall use its best efforts to obtain an
extension of any contract with an outside service bureau or other vendor of
services to Ridgewood Savings, on terms and conditions mutually acceptable to
Ridgewood Savings and Provident;
(iv) Board Meetings. Ridgewood Savings, Ridgewood Financial
and Ridgewood MHC shall permit a representative of Provident to attend meetings
of their Boards of Directors or the Executive Committees thereof (provided that
they shall not be required to permit the Provident
39
representative to remain present during any confidential discussion of the
Agreement and the transactions contemplated thereby);
(v) List of Nonperforming Assets. Ridgewood Savings shall
provide Provident, within ten (10) days of the end of each calendar month, a
written list of nonperforming assets (the term "nonperforming assets," for
purposes of this subsection, means (i) loans that are "troubled debt
restructuring" as defined in Statement of Financial Accounting Standards No. 15,
"Accounting by Debtors and Creditors for Troubled Debt Restructuring," (ii)
loans on nonaccrual, (iii) real estate owned, (iv) all loans ninety (90) days or
more past due as of the end of such month and (v) and impaired loans; and
(vi) Reserves and Merger-Related Costs. On or before the
Merger Effective Date, and at the request of Provident, Ridgewood Financial
shall establish such additional accruals and reserves as may be necessary to
conform the accounting reserve practices and methods (including credit loss
practices and methods) of Ridgewood Financial to those of Provident (as such
practices and methods are to be applied to Provident from and after the Closing
Date) and Provident's plans with respect to the conduct of the business of
Ridgewood Financial following the Merger and otherwise to reflect Merger-related
expenses and costs incurred by Ridgewood Financial, provided, however, that
Ridgewood Financial shall not be required to take such action unless Provident
agrees in writing that all conditions to closing set forth in Section 6.02 have
been satisfied or waived (except for the expiration of any applicable waiting
periods); prior to the delivery by Provident of the writing referred to in the
preceding clause, Ridgewood Financial shall provide Provident a written
statement, certified without personal liability by the chief executive officer
of Ridgewood Financial and dated the date of such writing, that the
representations made in Section 3.15 hereof are true as of such date or,
alternatively, setting forth in detail the circumstances that prevent such
representation from being true as of such date; and no accrual or reserve made
by Ridgewood Financial or any Ridgewood Subsidiary pursuant to this subsection,
or any litigation or regulatory proceeding arising out of any such accrual or
reserve, shall constitute or be deemed to be a breach or violation of any
representation, warranty, covenant, condition or other provision of this
Agreement or constitute a termination event within the meaning of Section
7.01(b) hereof. No action shall be required to be taken by Ridgewood Financial
pursuant to this Section 5.10(vi) if, in the opinion of Ridgewood Financial's
independent auditors, such action would contravene GAAP.
(vii) Stockholders and Depositors Meeting.
(A) Ridgewood Financial shall submit this Agreement
to its stockholders for approval at a meeting to be held as soon as practicable.
Subject to the receipt of the Updated Fairness Opinion, the Board of Directors
shall recommend approval of this Agreement to the Ridgewood Financial
stockholders. The Board of Directors of Ridgewood Financial may fail to make
such a recommendation, or withdraw, modify or change any such recommendation
only in connection with a Superior Proposal, as set forth in Section 5.06 of
this Agreement, and only if such Board of Directors, after having consulted with
and considered the written advice of outside counsel to such Board, has
determined that the making of such recommendation, or the failure so to
40
withdraw, modify or change its recommendation, would constitute a breach of the
fiduciary duties of such Board. Ridgewood Financial shall take all steps
necessary in order to hold a special meeting of stockholders for the purpose of
approving this Agreement as soon as is practicable and subject to its fiduciary
duties, but Ridgewood shall not be required to hold the special meeting of
stockholders prior to obtaining regulatory approval of the Merger. Ridgewood MHC
shall vote its shares in favor of this Agreement.
(B) If required by Regulatory Authorities, Ridgewood
MHC shall submit this Agreement to Ridgewood Savings depositors for approval,
and, subject to its fiduciary duties, Ridgewood MHC's Board of Directors shall
recommend approval of this Agreement to the depositors of Ridgewood Savings.
Ridgewood MHC shall take all steps necessary in order to hold a special meeting
of depositors for the purpose of approving this Agreement as soon as
practicable.
(viii) Systems Conversions. Ridgewood Savings and Provident
shall meet on a regular basis to discuss and plan for the conversion of
Ridgewood's data processing and related electronic informational systems to
those used by Provident, which planning shall include, but not be limited to,
discussion of the possible termination by Ridgewood of third-party service
provider arrangements effective at the Effective Time or at a date thereafter,
non-renewal of personal property leases and software licenses used by Ridgewood
in connection with its systems operations, retention of outside consultants and
additional employees to assist with the conversion, and outsourcing, as
appropriate, of proprietary or self-provided system services, it being
understood that Ridgewood shall not be obligated to take any such action prior
to the Effective Time and, unless Ridgewood otherwise agrees, no conversion
shall take place prior to the Effective Time. In the event that Ridgewood takes,
at the request of Provident, any action relative to third parties to facilitate
the conversion that results in the imposition of any termination fees, expenses
or charges, Provident shall indemnify Ridgewood for any such fees, expenses and
charges, and the costs of reversing the conversion process, if for any reason
the Merger is not consummated in accordance with the terms of this Agreement.
(b) From and after the date of this Agreement, Provident and Ridgewood
shall each:
(i) Filings and Approvals. Cooperate with the other in the
preparation and filing, as soon as practicable, of (A) the Applications, (B) any
Proxy Statement, (C) all other documents necessary to obtain any other approvals
and consents required to effect the completion of the Merger, and the
transactions contemplated by this Agreement, and (D) all other documents
contemplated by this Agreement;
(ii) Public Announcements. Cooperate and cause their
respective officers, directors, employees and agents to cooperate in good faith,
consistent with their respective legal obligations, in the preparation and
distribution of, and agree upon the form and substance of, any press release
related to this Agreement and the transactions contemplated hereby, and any
other public disclosures related thereto, including without limitation
communications to stockholders, internal announcements and customer disclosures,
but nothing contained herein shall prohibit either
41
party from making any disclosure which its counsel deems necessary, provided
that the disclosing party notifies the other party reasonably in advance of the
timing and contents of such disclosure;
(iii) Maintenance of Insurance. Maintain insurance in such
amounts as are reasonable to cover such risks as are customary in relation to
the character and location of its properties and the nature of its business;
(iv) Maintenance of Books and Records. Maintain books of
account and records in accordance with GAAP applied on a basis consistent with
those principles used in preparing the financial statements heretofore
delivered;
(v) Delivery of Securities Documents. Deliver to the other
copies of all Securities Documents simultaneously with the filing thereof; and
(vi) Taxes. File all Federal, state, and local tax
returns required to be filed by them on or before the date such returns are due
(including any extensions) and pay all taxes shown to be due on such returns on
or before the date such payment is due.
Section 5.11. Employee and Termination Benefits; Directors and
Management.
(a) Employee Benefits. Except as otherwise provided in Sections 5.11(d)
and (e) of this Agreement, as of or after the Merger Effective Date, and at
Provident's election and subject to the requirements of the IRC and ERISA, the
Ridgewood Employee Plans may continue to be maintained separately, consolidated,
or terminated, provided that if any Ridgewood Employee Plan is terminated,
Continuing Employees (as defined below) shall participate in any Provident
Employee Plan of a similar character (to the extent that one exists) as of the
first entry date coincident with or following such termination. Ridgewood
Continuing Employees (as defined below) shall participate in the Provident
Section 401(a) qualified Thrift Savings Plan not later than the first entry date
coincident with or following the Merger Effective Date, with recognition of
prior Ridgewood service for purposes of eligibility to participate and vesting,
but not benefits accrual, under such Provident plan. Ridgewood Continuing
Employees (as defined below) shall participate in the Provident Section 401(a)
qualified defined benefit pension plan not later than the first entry date
coincident with or following the date of termination of the Ridgewood defined
benefit pension plan or cessation of benefits accruals for future service under
such Ridgewood plan, and with recognition of prior Ridgewood service for
purposes of eligibility to participate and vesting, but not benefits accrual,
under such Provident plan. In the event of a consolidation of any or all of such
plans or in the event of termination of any Ridgewood Employee Plan, Ridgewood
employees who are participants in the Ridgewood Employee Plans and who continue
employment with Provident ("Continuing Employees") shall receive credit for
service with Ridgewood Savings (for purposes of eligibility and vesting
determination but not for benefit accrual purposes) under any existing Provident
benefit plan, or new Provident benefit plan in which such employees or their
dependents would be eligible to enroll, subject to any pre-existing conditions
or other exclusions to which such persons were subject under the Ridgewood
Employee Plans. Such service shall also apply for purposes of satisfying any
42
waiting periods, actively-at-work requirements, and evidence of insurability
requirements. Continuing Employees who become covered under a Provident health
plan shall be required to satisfy the deductible limitations of the Provident
health plan for the plan year in which coverage commences, without offset for
deductibles satisfied under the Ridgewood health plan, except to the extent,
prior to the Merger Effective Date, Ridgewood shall provide substantiation, in a
form satisfactory to Provident, of the dollar amount of such deductibles which
have been satisfied for such Continuing Employees.
In the event of any termination or consolidation of any
Ridgewood health plan with any Provident health plan, Provident shall make
available to Continuing Employees and their dependents employer-provided health
coverage on the same basis as it provides such coverage to Provident employees.
Unless a Continuing Employee affirmatively terminates coverage under a Ridgewood
health plan prior to the time that such Continuing Employee becomes eligible to
participate in the Provident health plan, no coverage of any of the Continuing
Employees or their dependents shall terminate under any of the Ridgewood health
plans prior to the time such Continuing Employees and their dependents become
eligible to participate in the health plans, programs and benefits common to all
employees of Provident and their dependents. In the event of a termination or
consolidation of any Ridgewood health plan, terminated Ridgewood employees and
qualified beneficiaries will have the right to continued coverage under group
health plans of Provident in accordance with IRC Section 4980B(f), consistent
with the provisions of subsection (b) below. In the event of any termination, or
consolidation of any Ridgewood health plan with any Provident health plan, any
pre-existing condition, limitation or exclusion in the Provident health plan
shall not apply to Continuing Employees or their covered dependents who have
satisfied such pre-existing condition exclusion waiting period under a Ridgewood
health plan with respect to such pre-existing condition on the Merger Effective
Date and who then change that coverage to Provident's health plan at the time
such Continuing Employee is first given the option to enroll in such Provident
health plan. In the event of a termination of or consolidation of any Ridgewood
health plan with any Provident health plan, Continuing Employees will be
required to seek reimbursement of claims arising prior to the Merger Effective
Date from the Ridgewood health plan and shall not be entitled to seek
reimbursement of claims arising prior to the Merger Effective Date from the
Provident health plan.
(b) It is the current intention of Provident to retain all current
employees of Ridgewood Savings, with the exception of those persons set forth in
Ridgewood Disclosure Schedule 5.11(b). Except as provided in Section 5.11(g)
hereof, nothing contained in this Agreement shall be construed to grant a
contract of employment to any employee of Ridgewood who becomes an employee of
Provident. Any Ridgewood employee whose employment is terminated involuntarily
(other than for cause) within one year of the Merger Effective Date shall
receive a lump sum severance payment equal to two weeks pay for each year of
employment with Ridgewood Savings.
(c) Provident shall establish a Ridgewood Savings Advisory Board of
Directors to consist of those persons who currently serve on the Ridgewood
Savings Board (with the exception of the Executive Vice President of Ridgewood
Savings), and such persons shall commence service on the
43
Advisory Board of Directors immediately following the Merger Effective Date. The
Advisory Board shall be maintained for at least three years following the Merger
Effective Date. Provident will consult with the Advisory Board as to whether the
Advisory Board will be continued or discontinued after the initial term. The
Advisory Board shall meet no less than quarterly and each Advisory Board member
shall receive an annual fee (payable in quarterly installments) that is set
forth on Ridgewood Disclosure Schedule 5.11(c) and which is equal to the annual
fees received by Ridgewood Savings directors for the last full year prior to the
Merger.
(d) At the Merger Effective Date, the Ridgewood Savings Bank of New
Jersey Employee Stock Ownership Plan (the " ESOP") shall be terminated on such
terms and conditions as contained in the ESOP (as of the date of this
Agreement). As soon as practicable after the receipt of a favorable
determination letter from the Internal Revenue Service ("IRS") as to the tax
qualified status of the ESOP upon its termination under Section 401(a) of the
IRC (the "Final Determination Letter"), distributions of the benefits under the
ESOP shall be made to the ESOP Participants. From and after the date of this
Agreement, in anticipation of such termination and distribution, Ridgewood and
its representatives before the Merger Effective Date, and Provident and its
representatives after the Merger Effective Date, shall use their best efforts to
apply for and to obtain such favorable Final Determination Letter from the IRS.
If Ridgewood and its representatives, before the Merger Effective Date, and
Provident and its representatives, after the Merger Effective Date, reasonably
determine that the ESOP cannot obtain a favorable Final Determination Letter, or
that the amounts held therein cannot be so applied, allocated or distributed
without causing the ESOP to lose its tax- qualified status, Ridgewood before the
Merger Effective Date, and Provident after the Merger Effective Date, shall take
such action as they may reasonably determine with respect to the distribution of
benefits to the ESOP Participants, provided that the assets of the ESOP shall be
held or paid only for the benefit of the ESOP Participants, as determined on the
Merger Effective Date, and provided further that in no event shall any portion
of the amounts held in the ESOP revert, directly or indirectly, to Ridgewood or
to Provident or any affiliate thereof. At the time distribution of benefits is
made under the ESOP on or after the Merger Effective Date, at the election of
the ESOP Participant, the amount thereof that constitutes an "eligible rollover
distribution" (as defined in Section 402(f)(2)(A) of the IRC) may be rolled over
by such ESOP Participant to any qualified Provident benefit plan that permits
rollover distributions or to any eligible individual retirement account.
(e) The Ridgewood Savings Bank of New Jersey 401(k) Plan (the "401(k)
Plan") shall be terminated as of, or prior to, the Merger Effective Date, and in
connection therewith the accounts held for those employees of Ridgewood who are
Ridgewood 401(k) Plan participants and beneficiaries (the "401(k) Plan
Participants") shall be fully vested on the date of such termination. As soon as
practicable after receipt of a favorable determination letter from the IRS as to
the tax-qualified status of the 401(k) Plan under Sections 401(a) and 501(a) of
the IRC upon its termination (the "401(k) Determination Letter"), all remaining
account balances held under the 401(k) Plan shall be distributed to, or rolled
over by, 401(k) Plan Participants pursuant to the distribution options available
to participants under the 401(k) Plan who terminate employment or otherwise
separate from service. Ridgewood and its representatives prior to the Merger
Effective Date, and Provident and its representatives after the Merger Effective
Date, shall use their best efforts to apply for and obtain such 401(k)
Determination Letter from the IRS. In the event that Ridgewood and its
representatives prior to the Merger Effective Date, and Provident
44
and its representatives after the Merger Effective Date, reasonably determine
that the 401(k) Plan cannot obtain a favorable 401(k) Determination Letter,
Ridgewood and its representatives prior to the Merger Effective Date and
Provident and its representatives afer the Merger Effective Date, shall take
such actions as they may reasonable determine, with respect to the distribution
of benefits to the 401(k) Plan Participants, provided that the assets of the
401(k) Plan shall be held or paid only for the benefit of such 401(k) Plan
Participants.
(f) Provident shall honor all obligations under the employment
agreements and other arrangements set forth in Ridgewood Disclosure Schedule
5.11(f) and shall make the payments required thereunder as set forth in
Ridgewood Disclosure Schedule 5.11(f). Provident will offer the president of
Ridgewood Savings Bank a consulting agreement in the form attached to Ridgewood
Disclosure Schedule 5.11(f), and payments to be made thereunder shall be in lieu
of amounts otherwise payable to her under her employment agreement.
(g) Provident will operate Ridgewood Savings as a division of Provident
for at least two years after the Merger Effective Date. It is the current
intention of Provident to operate Ridgewood Savings as a division of Provident
for three years after the Merger Effective Date. Ridgewood's offices at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ will serve as the Bergen County headquarters for
Provident's Bergen County trust and commercial lending operations. Provident
will consult with the Advisory Board at any time it considers changing this
structure. The current Executive Vice President and Chief Operating Officer of
Ridgewood Savings shall serve as division head for such period of time, pursuant
to a mutually acceptable three-year employment agreement. Effective as of the
first meeting of the Board of Managers of Provident following the Merger
Effective Date, one director of Ridgewood Savings designated by Provident shall
be appointed to the Board of Managers of Provident to serve a term that expires
no earlier than the annual meeting following the year ended December 31, 2001.
(h) Until the Merger Effective Date, Ridgewood shall be liable for all
obligations for continued health coverage pursuant to Section 4980B of the IRC
and Sections 601 through 609 of ERISA ("COBRA") with respect to each Ridgewood
Savings qualifying beneficiary (as defined in COBRA) who incurs a qualifying
event (as defined in COBRA) before the Merger Effective Date. Provident shall be
liable for (i) all obligations for continued health coverage under COBRA with
respect to each Ridgewood Savings qualified beneficiary (as defined in COBRA)
who incurs a qualifying event (as defined in COBRA) from and after the Merger
Effective Date, and (ii) for continued health coverage under COBRA from and
after the Merger Effective Date for each Ridgewood Savings qualified beneficiary
who incurs a qualifying event before the Merger Effective Date.
(i) As of the Merger Effective Date, the Directors' Retirement Plan
shall be terminated and all payments thereunder shall be made in a lump sum by
Ridgewood, as set forth in Ridgewood
45
Disclosure Schedule 5.11(i). In addition, other benefits as disclosed on
Schedule 5.11(i) shall continue to be provided to such Ridgewood directors while
they serve on the Ridgewood Savings Advisory Board of Directors.
Section 5.12. Duty to Advise; Duty to Update Providents Disclosure
Schedules. Provident shall promptly advise Ridgewood of any change or event
having a Material Adverse Effect on it or which it believes would or would be
reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants set forth herein. Provident shall
update Provident's Disclosure Schedules as promptly as practicable after the
occurrence of an event or fact which, if such event or fact had occurred prior
to the date of this Agreement, would have been disclosed in the Provident
Disclosure Schedule. The delivery of such updated Schedules shall not relieve
Provident from any breach or violation of this Agreement and shall not have any
effect for the purposes of determining the satisfaction of the condition set
forth in Section 6.01(c) hereof.
ARTICLE VI
CONDITIONS
Section 6.01. Conditions to Obligations of Ridgewood Under this
Agreement. The obligations of Ridgewood under this Agreement shall be subject to
satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by Ridgewood pursuant to Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, Provident and Interim to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated by this Agreement, shall have been duly and validly taken by
Provident and Interim, and Ridgewood Financial shall have received certified
copies of the resolutions evidencing such authorizations;
(b) Covenants. The obligations and covenants of Provident required by
this Agreement to be performed by Provident at or prior to the Closing Date
shall have been duly performed and complied with in all material respects;
(c) Representations and Warranties. Each of the representations and
warranties of Provident in this Agreement which is qualified as to materiality
shall be true and correct, and each such representation or warranty that is not
so qualified shall be true and correct in all material respects, in each case 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.
(d) Approvals of Regulatory Authorities. The Merger and the formation
of the interim savings banks required in connection therewith shall have
received all required approvals of Regulatory Authorities and all notice and
waiting periods required thereunder shall have expired or been terminated and
Interim shall have been chartered;
46
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) Officer's Certificate. Provident shall have delivered to Ridgewood
Financial a certificate, dated the Closing Date and signed, without personal
liability, by its chairman of the board or president, to the effect that the
conditions set forth in subsections (a) through (f) and (i) of this Section 6.01
have been satisfied, to the best knowledge of the officer executing the same;
(g) Opinion of Provident's Counsel. Ridgewood Financial shall have
received an opinion of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel to
Provident, dated the Closing Date, to the effect set forth on Exhibit 6.1
attached hereto; and
(h) Approval of Ridgewood Financial's Stockholders and Ridgewood
Savings Depositors. This Agreement and the transactions contemplated hereby
shall have been approved by;
(i) the stockholders of Ridgewood Financial by such vote as is
required under applicable laws of New Jersey and regulations and policy of the
Regulatory Authorities, Ridgewood Financial's certificate of incorporation and
bylaws, and under Nasdaq requirements applicable to it; and
(ii) to the extent required by the Regulatory Authorities,
by the depositors of Ridgewood Savings by such vote as is required.
(i) Funds Deposited with the Exchange Agent. On or prior to the Closing
Date, Provident shall have deposited or caused to be deposited, in trust with
the Exchange Agent, an amount of cash equal to the aggregate Merger
Consideration that the Ridgewood Financial stockholders shall be entitled to
receive on the Merger Effective Date pursuant to Section 2.02 of this Agreement.
(i) Updated Fairness Opinion. Prior to the mailing of the Proxy
Statement, Ridgewood shall have received the Updated Fairness Opinion.
Section 6.02. Conditions to the Obligations of Provident Under this
Agreement. The obligations of Provident hereunder shall be subject to
satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by Provident pursuant to Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, Ridgewood MHC, Ridgewood Financial and Ridgewood Savings to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated by this Agreement, shall have been
duly and validly taken by Ridgewood MHC, Ridgewood Financial and Ridgewood
Savings; and Provident shall have received certified copies of the resolutions
evidencing such authorizations;
47
(b) Covenants. The obligations and covenants of Ridgewood required by
this Agreement to be performed at or prior to the Closing Date shall have been
duly performed and complied with in all material respects;
(c) Representations and Warranties. Each of the representations and
warranties of Ridgewood in this Agreement which is qualified as to materiality
shall be true and correct, and each such representation or warranty that is not
so qualified shall be true and correct in all material respects, in each case 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.
(d) Approvals of Regulatory Authorities. The Merger and the formation
of the interim savings banks required in connection therewith shall have
received all required approvals of Regulatory Authorities (without the
imposition of any conditions that are in Provident's reasonable judgment unduly
burdensome, excluding standard conditions that are normally imposed by the
Regulatory Authorities in merger transactions); all notice and waiting periods
required thereunder shall have expired or been terminated; Ridgewood MHC shall
have converted into MHC Interim Bank; MHC Interim Bank shall have merged with
and into Ridgewood Savings with Ridgewood Savings as the resulting institution;
Ridgewood Financial shall have converted into Mid-Tier Interim Bank and Mid-Tier
Interim Bank shall have merged with and into Ridgewood Savings with Ridgewood
Savings as the resulting institution; and all shares of Ridgewood Financial
Common Stock and Ridgewood Savings common stock formerly held by Ridgewood MHC
shall have been canceled.
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) No Material Adverse Effect. Since December 31, 1999, there shall
not have occurred any Material Adverse Effect with respect to Ridgewood
Financial and Ridgewood Savings;
(g) Officer's Certificate. Ridgewood MHC, Ridgewood Financial and
Ridgewood Savings shall have delivered to Provident a certificate, dated the
Closing Date and signed, without personal liability, by the chairman of the
board or president of each, to the effect that the conditions set forth in
subsections (a) through (f) of this Section 6.02 have been satisfied, to the
best knowledge of the officer executing the same; and
(h) Opinions of Counsel. Provident shall have received an opinion of
▇▇▇▇▇▇▇, Spidi & ▇▇▇▇▇, P.C., counsel to Ridgewood Financial and Ridgewood MHC,
dated the Closing Date, to the effect set forth on Exhibit 6.2 attached hereto.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination. This Agreement may be terminated on or at any
time prior to the Closing Date:
(a) By the mutual written consent of the parties hereto;
(b) By either Provident, Ridgewood Financial or Ridgewood MHC acting
individually:
(i) if there shall have been a material breach of any
representation, warranty, covenant or other obligation of the other party and
the breach cannot be, or shall not have been, remedied within 30 days after
receipt by such other party of notice in writing specifying the nature of such
breach and requesting that it be remedied;
(ii) if the Closing Date shall not have occurred on or before
June 30, 2001, unless the failure of such occurrence shall be due to the failure
of the party seeking to terminate this Agreement to perform or observe its
obligations set forth in this Agreement required to be performed or observed by
such party on or before the Closing Date;
(iii) if either party has been informed in writing by a
Regulatory Authority whose approval or consent has been requested that such
approval or consent is denied, or is granted subject to any material change in
the terms of the Agreement, unless the failure of such occurrence shall be due
to the failure of the party seeking to terminate this Agreement to perform or
observe its agreements set forth herein required to be performed or observed by
such party on or before the Closing Date;
(iv) if the approval of the stockholders of Ridgewood
Financial and any approval of the depositors of Ridgewood Savings 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 stockholders or
depositors, as the case may be, or at any adjournment or postponement thereof;
or
(c) By Provident if (i) as provided in Section 5.10(a)(vii), the Board
of Directors of Ridgewood MHC or Ridgewood Financial withdraws its
recommendation of this Agreement, fails to make such recommendation or modifies
or qualifies its recommendation in a manner adverse to Provident, or (ii) in
reliance on Section 5.06 of this Agreement, Ridgewood MHC or Ridgewood Financial
enters into an agreement to be acquired by, or merge or combine with, a third
party in connection with a Superior Proposal.
(d) By Ridgewood Financial or Ridgewood MHC, upon two days' prior
notice to Provident, if, as a result of a Superior Proposal, the Board of
Directors of Ridgewood Financial or Ridgewood MHC determines, in good faith and
in consultation with counsel, that its fiduciary duties require that such
Superior Proposal be accepted.
49
Section 7.02. Effect of Termination. (a) Except as otherwise provided
in this Agreement, if this Agreement is terminated pursuant to Section 7.01
hereof, this Agreement shall forthwith become void (other than Section 5.02(a)
and Section 8.01 hereof, which shall remain in full force and effect), and there
shall be no further liability on the part of Provident or Ridgewood to the
other, except that no party shall be relieved or released from any liabilities
or damages arising out of its willful breach of any provision of this Agreement.
(b) As a condition of Provident's willingness, and in order to induce
Provident to enter into this Agreement and to reimburse Provident for incurring
the costs and expenses related to entering into this Agreement and consummating
the transactions contemplated by this Agreement, Ridgewood Financial (or
Ridgewood MHC) will make a cash payment to Provident of $1.0 million (the
"Expense Fee") if Provident has terminated this Agreement pursuant to Section
7.01(c) or Ridgewood Financial or Ridgewood MHC has terminated this Agreement
pursuant to Section 7.01(d), and in such event Ridgewood Financial and Ridgewood
MHC shall have no further liability to Provident. Any payment required under
this Section 7.02(b) shall be paid by Ridgewood Financial (or Ridgewood MHC) to
Provident (by wire transfer of immediately available funds to an account
designated by Provident) within five business days after written demand by
Provident.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Expenses. (a) Except as provided herein, each party
hereto shall bear and pay all costs and expenses incurred by it in connection
with the transactions contemplated hereby, including fees and expenses of its
own financial consultants, accountants and counsel.
(b) In the event of any termination of this Agreement pursuant to
Section 7.01(b)(i) hereof because of a breach of this Agreement by one of the
parties, in addition to any other damages and remedies that may be available to
the non-breaching party, the non-breaching party shall be entitled to payment
of, and the breaching party shall pay to the non-breaching party, all reasonable
out-of-pocket costs and expenses, including, without limitation, reasonable
legal, accounting and investment banking fees and expenses, incurred by the
non-breaching party in connection with entering into this Agreement and carrying
out of any and all acts contemplated hereunder; provided, however, that this
clause shall not be construed to relieve or release a breaching party from any
additional liabilities or damages arising out of its willful breach of any
provision of this Agreement.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, if the Agreement is terminated for any reason other than: (i) a
breach of the Agreement by Ridgewood, (ii) the failure of Ridgewood to obtain
stockholder (and if required, depositor) approval, or (iii) pursuant to Section
7.01(c) or (d), then Provident shall pay to Ridgewood Financial an amount in
cash equal to all out-of-pocket costs and expenses of Ridgewood Savings and
Ridgewood Financial, including, without limitation, reasonable legal, accounting
and investment banking fees and expenses incurred by Ridgewood Financial and
Ridgewood Savings in connection with entering into this Agreement and carrying
out any act contemplated hereunder up to a maximum of $350,000, provided
however,
50
that this paragraph (c) shall not be construed to relieve or release Provident
from any additional liabilities or damages arising out of its willful breach of
any provision of this Agreement
Section 8.02. NonSurvival of Representations and Warranties. All
representations, warranties and, except to the extent specifically provided
otherwise herein, agreements and covenants, other than those covenants set forth
in Sections 5.05 and 5.11, which will survive the Merger, shall terminate on the
Closing Date.
Section 8.03. Amendment, Extension and Waiver. Subject to applicable
law, at any time prior to the consummation of the transactions contemplated by
this Agreement, the parties may (a) amend this Agreement, (b) extend the time
for the performance of any of the obligations or other acts of either party
hereto, (c) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, or (d) waive
compliance with any of the agreements or conditions contained in Articles V and
VI hereof or otherwise. This Agreement may not be amended except by an
instrument in writing authorized by the respective Boards of Directors and
signed, by duly authorized officers, on behalf of the parties hereto. Any
agreement on the part of a party hereto to any extension or waiver shall be
valid only if set forth in an instrument in writing signed by a duly authorized
officer on behalf of such party, but such waiver or failure to insist on strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
Section 8.04. Entire Agreement. Except as set forth in this Agreement,
this Agreement, including the documents and other writings referred to herein or
delivered pursuant hereto, contains the entire agreement and understanding of
the parties with respect to its subject matter. Except as set forth in this
Agreement, this Agreement supersedes all prior arrangements and understandings
between the parties, both written or oral with respect to its subject matter.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors; provided, however, that nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto and their respective successors, any rights, remedies,
obligations or liabilities other than pursuant to Sections 2.02(b)(i), 2.03,
5.05 and 5.11(c), (f) and (i).
Section 8.05. No Assignment. Neither party hereto may assign any of its
rights or obligations hereunder to any other person, without the prior written
consent of the other party hereto.
Section 8.06. Notices. All notices or other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
prepaid registered or certified mail (return receipt requested), or sent by
telecopy, addressed as follows:
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(a) If to Provident to:
Provident Savings Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇
Executive Vice President,
Chief Operating Officer
and Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, PC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Ridgewood Savings or Ridgewood MHC, to:
Ridgewood Savings Bank of New Jersey
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
President, and Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.07. Captions. The captions contained in this Agreement are
for reference purposes only and are not part of this Agreement.
52
Section 8.08. Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
Section 8.09. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law. If
however, any provision of this Agreement is held invalid by a court of competent
jurisdiction, then the parties hereto shall in good faith amend this Agreement
to include an alternative provision that accomplishes a result that is as
substantially similar to the result originally intended as possible.
Section 8.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic internal law (including the law of
conflicts of law) of the State of New Jersey.
Section 8.11. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained in
this Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions thereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
53
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
PROVIDENT SAVINGS BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman of the Board,
Chief Executive Officer, and President
RIDGEWOOD FINANCIAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
RIDGEWOOD SAVINGS BANK OF NEW JERSEY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
RIDGEWOOD FINANCIAL, MHC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
54