Exhibit 10.3
AGREEMENT AND PLAN OF MERGER
by and between
LAKELAND BANCORP, INC.
and
HIGH POINT FINANCIAL CORP.
Dated as of December 7, 1998
INDEX TO DEFINITIONS
Acquiror...................................................... Introduction
Acquiror's Banks.............................................. Section 4.1.2
Acquiror Branch Property...................................... Section 4.20
Acquiror Common Stock......................................... Section 2.1.1
Acquiror Common Stock Market Price............................ Section 2.2.6
Acquiror Disclosure Schedules................................. Article IV
Acquiror Financial Statements................................. Section 4.4.1
Acquiror Meeting.............................................. Section 5.11
Acquiror Plans................................................ Section 4.13.1
Acquiror Real Property........................................ Section 4.20
Acquiror Statement of Condition Date.......................... Section 4.4.3
Acquiror Subsidiaries......................................... Section 4.1.2
Acquisition Agreement......................................... Section 5.1.2
Agreement..................................................... Introduction
Amount........................................................ Section 6.1.7
BHCA.......................................................... Section 3.1.1
Branch Property............................................... Section 3.24.1
Business Combination.......................................... Section 7.2.2
CERCLA........................................................ Section 3.24.1
Certificate................................................... Section 2.2.1
Certificate of Merger......................................... Section 1.2
Claims........................................................ Section 5.6.1
Closing....................................................... Section 1.4
Code.......................................................... Recital 3
Common Stock.................................................. Section 2.1.1
Common Stock Consideration.................................... Section 2.1.1
Common Trust Account Shares................................... Section 2.1.1
Company....................................................... Introduction
Company Affiliates............................................ Section 5.10.1
Company Board Recommendation.................................. Section 5.1.1
Company Collateral Shares..................................... Section 2.1.1
Company Disclosure Schedules.................................. Article III
Company Financial Statements.................................. Section 3.4.1
Company Meeting............................................... Section 5.11
Company Option Plans.......................................... Section 2.4
Company Statement of Condition Date........................... Section 3.4.3
Company Subsidiaries.......................................... Section 3.1.2
Competing Transaction......................................... Section 5.1.1
Competing Transaction Filing.................................. Section 7.2.2.3
Comptroller................................................... Section 3.3.2
Confidentiality Agreement..................................... Section 5.4
Constituent Corporations...................................... Section 1.2
Controlled Group Liability.................................... Section 3.17.1
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Costs......................................................... Section 7.2.1
Covered Person................................................ Section 3.16
Current Premium............................................... Section 5.6.3
D&O Insurance................................................. Section 5.6.3
Delivery Period............................................... Section 5.14
Department.................................................... Section 3.3.2
Effective Time................................................ Section 1.2
Environmental Law............................................. Section 3.24.1
ERISA Affiliate............................................... Section 3.17.1
Exchange Agent................................................ Section 2.2.1
Exchange Ratio................................................ Section 2.1.1
FDIC.......................................................... Section 3.1.2
FRB........................................................... Section 3.3.2
GAAP.......................................................... Section 3.4.1
Governmental Authority........................................ Section 3.3.2
Governmental Consents......................................... Section 6.1.2
Hazardous Substance........................................... Section 3.24.1
HSR Act....................................................... Section 5.5
ISRA.......................................................... Section 3.24.1
Indemnitees................................................... Section 5.6.1
Joint Proxy Statement/Prospectus.............................. Section 5.9
Letter Agreement.............................................. Section 5.15
Material Adverse Effect....................................... Section 3.1.1
Merger........................................................ Section 1.1
Multiemployer Plan............................................ Section 3.17.6
Multiple Employer Plan........................................ Section 3.17.6
NBSC.......................................................... Section 1.6
NBSC Seats.................................................... Section 1.6
NJDEP......................................................... Section 3.3.2
New Options................................................... Section 2.4
Nonsigning Affiliate.......................................... Section 2.2.1
Outside Date.................................................. Section 7.1.2
PCBs.......................................................... Section 3.24.1
Plans......................................................... Section 3.17.1
Prior Options................................................. Section 2.4
Qualified Acquiror Plan....................................... Section 4.13.3
Qualified Plan................................................ Section 3.17.3
RCRA.......................................................... Section 3.24.1
Real Property................................................. Section 3.24.1
Registration Statement........................................ Section 5.9
SEC........................................................... Section 3.3.2
SERPs......................................................... Section 6.1.7
Shares........................................................ Section 2.1.3
Side Letter................................................... Section 6.1.7
State Act..................................................... Section l .1
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Stock Option Agreement........................................ Recital 4
Surviving Corporation......................................... Section 1.3
Tax........................................................... Section 3.8.5
Tax Return.................................................... Section 3.8.6
Third Party Consents.......................................... Section 6.3.6
Transition Period............................................. Section 1.7
Withdrawal Liability.......................................... Section 3.17.1
Year 2000 Compliant........................................... Section 3.26
1933 Act...................................................... Section 3.9.1
1934 Act...................................................... Section 3.9.1
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of December 7,
1998, is made by and between LAKELAND BANCORP, INC., a New Jersey corporation
having its principal place of business at ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ("Acquiror") and HIGH POINT FINANCIAL CORP., a New Jersey
corporation having its principal place of business at ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company").
RECITALS
1. The respective Boards of Directors of the Acquiror and the Company have
each determined that it is in the best interests of the Acquiror and the Company
and their respective stockholders for the Company to merge with and into the
Acquiror upon the terms and subject to the conditions set forth herein.
2. The respective Boards of Directors of the Acquiror and the Company have
each approved the merger of the Company with and into the Acquiror, upon the
terms and subject to the conditions set forth herein.
3. For Federal income tax purposes, it is intended that such merger shall
qualify as a reorganization under the provisions of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code").
4. To induce the Acquiror to enter into this Agreement, simultaneously
with the execution and delivery of this Agreement, the Company has entered into
a Stock Option Agreement with the Acquiror (the "Stock Option Agreement"),
pursuant to which the Company has granted to the Acquiror an option to purchase
shares of Common Stock (as hereinafter defined) pursuant to the terms and
conditions set forth in the Stock Option Agreement.
5. For accounting purposes, it is intended that the above-mentioned merger
shall be accounted for as a "pooling of interests".
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the parties hereto
hereby agree as follows:
I. THE MERGER
1.1. Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.2), the Company shall be merged with
and into the Acquiror (the "Merger") and the separate corporate existence of the
Company shall thereupon cease in accordance with the applicable provisions of
the New Jersey Business Corporation Act (the "State Act").
1.2. Effective Time. As soon as practicable following fulfillment or
waiver of the conditions specified in Article VI and consummation of the closing
described herein, and provided that this Agreement has not been terminated or
abandoned pursuant to Section 7.1, the Company and the Acquiror (the
"Constituent Corporations") shall cause a certificate of merger complying with
the requirements of N.J.S.A. 14A:10-4.1 (the "Certificate of Merger") to be
filed with the New Jersey Department of the Treasury. The Merger shall become
effective at the time and date at which the Certificate of Merger is filed with
the New Jersey Department of the Treasury (the "Effective Time").
1.3. Effect of Merger. The Merger shall have the effects specified in
N.J.S.A. 14A:10-6. Without limiting the generality of the foregoing, the
Acquiror shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue to be governed by
the laws of the State of New Jersey, and the separate corporate existence of the
Company shall cease.
1.4. Consummation of Merger. The closing of the Merger (the "Closing")
shall take place (a) at the offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC, ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ as promptly as practicable after the later of
(i) the day of (and immediately following) the receipt of approval of the Merger
by the Company's stockholders and the Acquiror's stockholders and (ii) the day
on which the last of the conditions set forth in Article VI (other than the
condition set forth in Section 6.1.1) is satisfied or duly waived or (b) at such
other time and place and on such other date as the Acquiror and the Company may
agree.
1.5. Certificate of Incorporation and By-laws. The certificate of
incorporation of the Acquiror in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation, until duly amended in
accordance with its terms and the State Act. The by-laws of the Acquiror in
effect at the Effective Time shall be the by-laws of the Surviving Corporation,
until duly amended in accordance with their terms and the State Act.
1.6. Directors and Officers. The directors of the Acquiror immediately
prior to the Effective Time, together with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, shall be the directors, and the officers of the Acquiror
immediately prior to the Effective Time shall be the officers, of the Surviving
Corporation from and after the Effective Time, until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the terms of the Surviving
Corporation's certificate of incorporation and by-laws and the State Act. It is
the intention of the parties that for a period of six years after the Effective
Time, the Board of Directors of the Acquiror, to the extent consistent with its
fiduciary duties, will make nominations to its Board such that, if the
shareholders of the Acquiror vote in favor of such nominations, there will at
all times be represented on the Acquiror's Board of Directors at least three
(or, after ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ceases to serve on such Board, at least two)
individuals who, prior to the Effective Time, were members of the Board of
Directors of the Company. After the Effective Time, the Acquiror shall cause
one member of its Board of Directors to serve as a director of The National Bank
of Sussex County ("NBSC") and shall cause another of its directors, on a
rotating basis, to attend meetings of NBSC's Board of Directors as a non-voting
observer.
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1.7. NBSC as a Separate Subsidiary. At the Effective Time, NBSC, which is
currently a wholly-owned subsidiary of the Company, shall become a wholly-owned
subsidiary of the Acquiror. Except as set forth in the last sentence of Section
1.6, the Board of Directors of NBSC immediately prior to the Effective Time
shall continue to be the Board of Directors of NBSC immediately after the
Effective Time, the executive officers of NBSC immediately prior to the
Effective Time shall continue to be the executive officers of NBSC immediately
after the Effective Time, and the articles of association and by-laws of NBSC as
in existence immediately prior to the Effective Time shall continue to be the
articles of association and by-laws of NBSC immediately after the Effective
Time. It is intended that the Acquiror will not terminate the separate
corporate existence of NBSC as a subsidiary of the Acquiror for a period of two
years following the Effective Time (the "Transition Period"), unless required to
do so by law or governmental authorities or as a result of the fiduciary
obligations of the Acquiror's Board of Directors. The Acquiror has no present
intention to remove any of NBSC's directors or executive officers during the
Transition Period, provided that NBSC is managed in a manner consistent with the
Acquiror's overall business strategies, as such strategies may develop from time
to time. However, nothing herein shall be construed to limit the right of the
Acquiror to remove and/or replace any or all of the directors and executive
officers of NBSC at any time following the Effective Time, to amend the articles
of association and by-laws of NBSC at any time following the Effective Time or
otherwise to exercise the rights and prerogatives of the Acquiror as a
stockholder of NBSC at any time following the Effective Time, except that the
Acquiror shall not terminate the separate corporate existence of NBSC prior to
the end of the Transition Period unless required to do so by law or governmental
authorities or as a result of the fiduciary obligations of the Acquiror's Board
of Directors. The Acquiror intends to merge NBSC with one of its other bank
subsidiaries after the termination of the Transition Period.
II. CONVERSION OF SHARES
2.1. Conversion of Shares. Subject to Section 2.2.6, by virtue of the
Merger, automatically and without any action on the part of the holder thereof,
at the Effective Time, the following shall occur:
2.1.1. Each then-outstanding share of common stock, no par value, of
the Company ("Common Stock"), other than (a) shares owned by the Acquiror or any
direct or indirect wholly-owned subsidiary of the Acquiror (except for any
shares of Common Stock held in trust accounts, managed accounts or in any
similar manner as trustee or in a fiduciary capacity ("Common Trust Account
Shares") and shares held as collateral or in lieu of a debt previously
contracted ("Company Collateral Shares")) and (b) shares held in the treasury of
the Company shall be converted into the right to receive one and two tenths
(1.2) shares of the common stock, par value $2.50 per share, of the Acquiror
("Acquiror Common Stock"). The number of shares of Acquiror Common Stock into
which each share of Common Stock shall be converted is hereinafter referred to
as the "Exchange Ratio" or the "Common Stock Consideration". In the event that
the number of shares of Acquiror Common Stock issued and outstanding changes
prior to the Effective Time as a result of a stock split, stock dividend,
recapitalization or similar
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transaction with respect to the outstanding Acquiror Common Stock and the record
date thereof shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
2.1.2. Intentionally omitted.
2.1.3. Each of the then-outstanding shares of the Company's capital
stock ("Shares") owned by the Acquiror or any direct or indirect wholly-owned
subsidiary of the Acquiror (except for any Shares that are Company Trust Account
Shares or Company Collateral Shares) shall be canceled and retired.
2.1.4. Each Share issued and held in the Company's treasury shall be
canceled and retired.
2.2. Exchange of Certificates.
2.2.1. Exchange Agent. Prior to the Effective Time, the Acquiror
shall designate a bank or trust company that may be an affiliate of the Acquiror
to act as exchange agent (the "Exchange Agent") in connection with the Merger
pursuant to an exchange agency agreement providing for, among other things, the
matters set forth in this Section 2.2. Except as set forth herein, from and
after the Effective Time, each holder of a certificate representing outstanding
shares of Common Stock that is entitled to Common Stock Consideration (each such
certificate, a "Certificate") (other than any affiliate who (i) is neither a
director of the Company nor an employee director of any of its subsidiaries and
(ii) has not executed and delivered an affiliate's letter pursuant to Section
5.10, or a transferee from such affiliate (each, a "Nonsigning Affiliate"))
shall be entitled to receive in exchange therefor, upon surrender thereof to the
Exchange Agent, the Common Stock Consideration for each share of Common Stock so
represented by the Certificate surrendered by such holder thereof, with the
certificates representing shares of Acquiror Common Stock being properly issued
and countersigned and executed and authenticated, as appropriate.
Notwithstanding anything to the contrary contained in this Agreement, any
certificate held by any Nonsigning Affiliate shall only be deemed to be a
Certificate upon the later of (i) the execution and delivery of an affiliate's
letter by such Nonsigning Affiliate (as described in Section 5.10) and (ii) such
time as the failure of such Nonsigning Affiliate to deliver such an affiliate's
letter would not affect the treatment of the Merger as a pooling of interests.
2.2.2. Notice of Exchange. Promptly after the Effective Time, the
Acquiror shall cause the Exchange Agent to mail and/or make available to each
record holder of a Certificate a notice and letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent) advising such holder of the effectiveness of the Merger and the
procedures to be used in effecting the surrender of the Certificates for
exchange therefor. Upon surrender to the Exchange Agent of a Certificate,
together with such letter of transmittal duly executed and completed in
accordance with the instructions thereon, and such other documents as may
reasonably be requested, the Acquiror shall cause the Exchange Agent to promptly
deliver to the person entitled thereto the appropriate Common Stock
Consideration for each share of Common
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Stock so represented by the Certificate surrendered by such holder thereof, and
such Certificate shall forthwith be canceled.
2.2.3. Transfer. If delivery of all or part of the Common Stock
Consideration is to be made to a person other than the person in whose name a
surrendered Certificate is registered, it shall be a condition to such delivery
or the exchange of such Certificate that such surrendered Certificate be
properly endorsed or shall be otherwise in proper form for transfer and that the
person requesting such delivery or exchange shall have paid any transfer and
other taxes required by reason of such delivery or exchange in a name other than
that of the registered holder of the Certificate surrendered or shall have
established to the reasonable satisfaction of the Acquiror that such tax either
has been paid or is not payable.
2.2.4. Right to Common Stock Consideration. Until surrendered and
exchanged in accordance with this Section 2.2, each Certificate shall, after the
Effective Time, represent solely the right to receive the Common Stock
Consideration, multiplied by the number of shares of Common Stock evidenced by
such Certificate, together with any dividends or other distributions as provided
in Section 2.2.5, and shall have no other rights. From and after the Effective
Time, the Acquiror shall be entitled to treat any Certificates that have not yet
been surrendered for exchange as evidencing only the ownership of the aggregate
Common Stock Consideration into which the Shares represented by such
Certificates have been converted, notwithstanding any failure to surrender such
Certificates. Neither the Company nor the Acquiror shall be liable to any
holder of shares of Common Stock for any Common Stock Consideration (or
dividends, distributions or interest with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
2.2.5. Distribution with Respect to Unexchanged Certificates. No
dividends or other distributions with respect to Acquiror Common Stock declared
or paid by the Acquiror after the Effective Time and with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
until the holder of such Certificate surrenders such Certificate. Subject to
applicable law, following surrender of any such Certificate, there shall be paid
to the holder of the certificates representing shares of Acquiror Common Stock
issued in exchange therefor, without interest, (i) the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such shares of Acquiror Common Stock and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such shares of Acquiror Common Stock.
2.2.6. Fractional Shares. No certificates or scrip representing
fractional shares of Acquiror Common Stock shall be issued upon the surrender
for exchange of a Certificate or Certificates. No dividends or distributions of
the Acquiror shall be payable on or with respect to any fractional share, and no
such fractional share interest shall entitle the owner thereof to vote or to any
rights of stockholders of the Acquiror. In lieu of any such fractional shares,
holders of shares of Common Stock otherwise entitled to fractional shares shall
be entitled to receive promptly from the Exchange Agent a cash payment in an
amount equal to the fraction of such share of Acquiror Common Stock to which
such holder would otherwise be entitled multiplied
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by the average of the closing bid prices of Acquiror Common Stock during the
five consecutive business days ending three days prior to the date of the
Closing (the "Acquiror Common Stock Market Price").
2.2.7. No Interest. All payments of dividends or cash for fractional
shares shall be made without any payment of interest.
2.3. Dissenters' Rights. In accordance with N.J.S.A. 14A:11-1, no holder
of the Company's capital stock or the Acquiror's capital stock shall have the
right to dissent from the Merger.
2.4. Options. At the Effective Time, all options to purchase Common Stock
granted by the Company prior to the date hereof pursuant to the Company's 1987
Incentive Stock Option Plan, 1990 Employee Stock Option Incentive Plan, 1996
Employee Incentive Stock Option Plan and 1996 Non-Employee Director Stock Option
Plan (collectively, the "Company Option Plans") which are outstanding and
unexercised immediately prior to the Effective Time (the "Prior Options"), shall
be converted automatically into options to purchase shares of Acquiror Common
Stock (the "New Options"), in accordance with the terms of such options,
appropriately adjusted (as to both number of shares and exercise price) as
follows:
2.4.1. The number of shares of Acquiror Common Stock covered by each
New Option shall equal the number of shares of Common Stock covered by the
applicable Prior Option immediately prior to the Effective Time, multiplied by
the Exchange Ratio and rounded down to the nearest whole number;
2.4.2. The per share exercise price for each New Option shall equal
the per share exercise price under the applicable Prior Option immediately prior
to the Effective Time of the Merger, divided by the Exchange Ratio; and
2.4.3. In all other respects, the terms of the New Options shall be
identical to the terms of the Prior Options.
Notwithstanding the foregoing, in the case of any option to which Section 421 of
the Code applies by reason of its qualification under Section 422 of the Code,
the exercise price, the number of shares purchasable pursuant to such option and
the terms and conditions of exercise of such option shall be determined in order
to comply with Section 424(a) of the Code.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
References herein to "Company Disclosure Schedules" shall mean all of the
disclosure schedules required by this Article III, dated as of the date hereof
and referenced to the specific sections and subsections of Article III of this
Agreement, which either have been delivered by the Company to the Acquiror on
the date hereof or shall be delivered by the Company to the
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Acquiror during the Delivery Period (as defined in Section 5.14 hereof). The
Company hereby represents and warrants to the Acquiror as follows:
3.1. Corporate Organization.
3.1.1. Company. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey. The
Company has full power and authority, corporate and otherwise, 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 as a foreign
corporation 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, results of operations,
assets, condition (financial or otherwise) or prospects (a "Material Adverse
Effect") of the Company and each Company Subsidiary (as defined in Section
3.1.2), taken as a whole. The Company is registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHCA").
3.1.2. Subsidiaries. NBSC and NBSC's subsidiaries (all of which are
listed on the Company Disclosure Schedule) are the only Company Subsidiaries of
the Company. For purposes of this Agreement, (a) the term "Company Subsidiary"
means any corporation, partnership, company, joint venture, limited liability
company or other legal entity in which the Company, directly or indirectly, owns
at least a 50% stock or other equity interest or for which the Company, directly
or indirectly, acts as a general partner and (b) the term "Company Subsidiaries"
means each Company Subsidiary. NBSC is a national bank duly organized and
validly existing in stock form and in good standing under the laws of the United
States. All eligible accounts of depositors issued by NBSC are insured by the
Bank Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC") to the
fullest extent permitted by law. Each Company Subsidiary has full 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 as a foreign corporation 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 Company and
the Company Subsidiaries, taken as a whole. The Company Disclosure Schedule
sets forth true and complete copies of the Certificate of Incorporation and By-
laws, as in effect on the date hereof, of the Company and the Company
Subsidiaries. Except with respect to the Company Subsidiaries, the Company does
not own or control, directly or indirectly, any equity interest in any
corporation, company, association, partnership, limited liability company, joint
venture or other entity.
3.2. Capitalization. The authorized capital stock of the Company consists
solely of shares of Company Common Stock and shares of the preferred stock, no
par value, of the Company. As of the date hereof, there are no shares of such
preferred stock issued or outstanding and there are 3,811,480 shares of Company
Common Stock issued and outstanding.
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As of the date hereof, there are 151,500 shares of Company Common Stock issuable
upon exercise of outstanding Prior Options granted pursuant to the Company
Option Plans. The Company Disclosure Schedule sets forth a true and complete
copy of the Company Option Plans and a true and complete list of each
outstanding Prior Option issued pursuant thereto, describing the option holder,
the exercise price and the number of Shares covered by each Prior Option. The
Company and the Company Subsidiaries have not adopted any plan pursuant to which
capital stock may be issued other than the Company Option Plans and the
Company's Dividend Reinvestment Plan (a copy of which Dividend Reinvestment Plan
is included within the Company Disclosure Schedule). All issued and outstanding
shares of Company Common Stock, and all issued and outstanding shares of capital
stock of the Company Subsidiaries, have been duly authorized and validly issued,
have been issued without violating the preemptive or other rights of third-
parties, are fully paid, and are nonassessable. All of the outstanding shares of
capital stock of the Company Subsidiaries are owned by the Company or NBSC and
are free and clear of any liens, encumbrances, charges, restrictions or rights
of third parties. Except for the options issued and outstanding as of the date
hereof under the Company Option Plans and the Option granted to the Acquiror
pursuant to the Stock Option Agreement, dated the date hereof, and the Company's
obligations under its Dividend Reinvestment Plan, neither the Company nor any of
the Company Subsidiaries has granted or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the transfer, purchase, subscription or issuance of any
shares of capital stock of the Company or the Company Subsidiaries or has issued
any securities representing the right to purchase, subscribe or otherwise
receive any shares of such capital stock or any securities convertible into any
such shares, and there are no agreements or understandings to which the Company
or any of the Company Subsidiaries is a party with respect to the voting of any
such shares.
3.3. Authority; No Violation.
3.3.1. Authority. Subject to the approval of this Agreement and the
transactions contemplated hereby by the stockholders of the Company, the Company
has full power and authority, corporate and otherwise, to execute and deliver
this Agreement and the Stock Option Agreement and to consummate the transactions
contemplated hereby and thereby in accordance with the terms hereof and thereof.
The execution and delivery of this Agreement and the Stock Option Agreement and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly approved by the Board of Directors of the Company in accordance
with the Certificate of Incorporation of the Company and all applicable laws and
regulations. Except for such stockholder approval, no other corporate
proceedings on the part of the Company are necessary to consummate the
transactions so contemplated. This Agreement and the Stock Option Agreement
each constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
3.3.2. Neither the execution and delivery of this Agreement and the
Stock Option Agreement by the Company, nor the consummation by the Company of
the transactions contemplated hereby and thereby in accordance with the terms
hereof and thereof, or compliance by the Company with any of the terms or
provisions hereof and thereof, will (i) violate any provision of the Company's
Certificate of Incorporation or comparable governing instruments or
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By-laws, (ii) assuming that the consents and approvals set forth below are duly
obtained, violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to the Company or the Company
Subsidiaries or any of their respective properties or assets, or (iii) except as
set forth in the Company Disclosure Schedule, 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 the
creation of any lien, security interest, charge or other encumbrance upon any of
the respective properties or assets of the Company or the Company Subsidiaries
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, commitment, pledge, permit, deed of trust, license, lease, contract,
agreement or other instrument or obligation or any judgment, order, decree, law,
rule or other restriction of any Governmental Authority (as defined below), in
each case to which the Company or any of the Company Subsidiaries is a party, or
by which the Company or any of the Company Subsidiaries may be bound or to which
any of the assets or properties of the Company or any of the Company
Subsidiaries are subject except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a Material Adverse Effect on the
Company and the Company Subsidiaries, taken as a whole, and which will not
prevent or delay the consummation of the transactions contemplated hereby.
Except for consents and approvals of or filings or registrations with or notices
to the Board of Governors of the Federal Reserve System (the "FRB"), the Office
of the Comptroller of the Currency (the "Comptroller"), the FDIC, the New Jersey
Department of Banking and Insurance (the "Department"), the New Jersey
Department of Environmental Protection (the "NJDEP"), the Securities and
Exchange Commission (the "SEC"), the New Jersey Department of the Treasury,
other banking authorities, and the stockholders of the Company, no consents or
approvals of or filings or registrations with or notices to any third party or
any Governmental Authority are necessary on behalf of the Company in connection
with (x) the execution and delivery by the Company of this Agreement and the
Stock Option Agreement and (y) the consummation by the Company of the Merger and
the other transactions contemplated hereby and thereby. The term "Governmental
Authority" shall mean any nation, state or other political subdivision thereof
(including any local, municipal, city or county government), and any agency,
natural person or other entity exercising executive, legislative, regulatory or
administrative functions of or pertaining to government, and any corporation or
other entity owned or controlled by any of the foregoing.
3.4. Financial Statements.
3.4.1. The Company Disclosure Schedule sets forth copies of the
consolidated balance sheets of the Company as of December 31, 1996 and 1997 and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for the periods ended December 31, 1995, 1996 and 1997, in each
case accompanied by the audit report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public
accountants with respect to the Company, and the unaudited consolidated balance
sheet of the Company as of September 30, 1998, and the related unaudited
consolidated statements of income and cash flows for the nine months ended
September 30, 1997 and 1998 (collectively, the "Company Financial Statements").
The Company Financial Statements (including the related notes) have been
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods covered
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thereby (except as may be indicated therein or in the notes thereto), and fairly
present the consolidated financial condition of the Company as of the respective
dates set forth therein, and the related consolidated statements of income,
changes in stockholders' equity and cash flows of the Company for the respective
periods set forth therein.
3.4.2. No unrecorded funds or assets of the Company and the Company
Subsidiaries have been established for any purpose; no accumulation or use of
the funds of the Company and the Company Subsidiaries has been made without
being properly accounted for in the respective books and records of the Company
and the Company Subsidiaries; all payments by or on behalf of the Company and
the Company Subsidiaries have been duly and properly recorded and accounted for
in the books and records of the Company and the Company Subsidiaries; no false
or artificial entry has been made in the books and records of the Company and
the Company Subsidiaries for any reason; no payment has been made by or on
behalf of the Company and the Company Subsidiaries with the understanding that
any part of such payment is to be used for any purpose other than that described
in the documents supporting such payment; and the Company and the Company
Subsidiaries have not made, directly or indirectly, any illegal contributions to
any political party or candidate, either domestic or foreign, or any
contribution, gift, bribe, rebate, payoff, influence payment or kickback,
whether in cash, property or services, to any individual, corporation,
partnership or other entity, to secure business or to pay for business secured.
3.4.3. Except as and to the extent reflected, disclosed or reserved
against in the Company Financial Statements (including the notes thereto), as of
September 30, 1998 (the "Company Statement of Condition Date"), neither the
Company nor any of the Company Subsidiaries had any liabilities, whether
absolute, accrued, contingent or otherwise, material to the business,
operations, assets or financial condition of the Company and the Company
Subsidiaries, taken as a whole, which were required by GAAP (consistently
applied) to be disclosed in the Company's consolidated balance sheet as of the
Company Statement of Condition Date or the notes thereto and which were not so
disclosed. Since the Company Statement of Condition Date, the Company and the
Company Subsidiaries have not incurred any liabilities except in the ordinary
course of business and consistent with prudent banking practice or except as
directly related to the transactions contemplated by this Agreement.
3.5. Broker's and Other Fees. Except for Capital Consultants of
Princeton, Inc., neither the Company nor the Company Subsidiaries nor any of
their directors or officers has employed any broker or finder or incurred any
liability for any broker's or finder's fees or commissions in connection with
any of the transactions contemplated by this Agreement. All agreements with
Capital Consultants of Princeton, Inc. providing for the payment of fees in
connection with the Merger are set forth in the Company Disclosure Schedule.
There are no other fees (other than time charges billed at usual and customary
rates) payable by the Company or the Company Subsidiaries to any advisors,
including without limitation lawyers and accountants, in connection with the
Merger or which would be triggered by consummation of the Merger or the
termination of the services of such advisors by the Company or the Company
Subsidiaries.
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3.6. Absence of Certain Changes or Events.
3.6.1. There has not been any material adverse change in the
business, results of operations, assets, liabilities, properties, prospects or
condition (financial or otherwise) of the Company and the Company Subsidiaries,
taken as a whole, since the Company Statement of Condition Date, and to the best
of the Company's knowledge, no facts or conditions exist which are likely to
cause such a material adverse change in the future.
3.6.2. Except as set forth in the Company Disclosure Schedule, since
December 31, 1997, there has not been:
3.6.2.1 any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the Company and the Company
Subsidiaries taken as a whole;
3.6.2.2 any disposition, mortgage, pledge, or subjection to any lien,
claim, charge, option, or encumbrance of any property or asset of the Company or
any of the Company Subsidiaries, any commitment made or liability incurred by
the Company or any of the Company Subsidiaries, or any cancellation or
compromise of any debt or claim of the Company or any of the Company
Subsidiaries otherwise than in the ordinary course of business;
3.6.2.3 any dividend or distribution declared, set aside or paid in
respect of the Common Stock or any repurchase by the Company of shares of Common
Stock;
3.6.2.4 any employment contract entered into, or any increase or
decrease in the rates of compensation payable, as of the date of this Agreement,
to or to become payable by the Company or any of the Company Subsidiaries to any
of their officers, directors, employees or agents over or under the rates in
effect during the 12 months ended December 31, 1997, other than general
increases made in accordance with past practices; any declaration, payment,
commitment, or obligation of any kind for the payment by the Company or any of
the Company Subsidiaries of any bonus, additional salary or compensation outside
of the ordinary course of business; or any declaration, payment, commitment, or
obligation of any kind for the payment by the Company or any of the Company
Subsidiaries of any retirement, termination or severance benefits to officers,
directors, employees or consultants;
3.6.2.5 any amendment, termination or threatened termination of any
material contract, agreement, insurance policy, plan, lease, or license to which
the Company or any Company Subsidiary is a party or by which any such entity may
be bound, otherwise than in the ordinary course of business;
3.6.2.6 any material change by the Company or any of the Company
Subsidiaries in their method of doing business;
3.6.2.7 any other act, omission or transaction involving the
Company or any of the Company Subsidiaries outside of the ordinary course of
business; or
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3.6.2.8 any catastrophic event affecting the Company or any of the
Company Subsidiaries or their assets, such as, but not limited to, fire,
explosion, earthquake, accident, flood, condemnation, act of God or public
enemy, riot or civil disturbance.
3.7. Legal Proceedings. Except as disclosed in the Company Disclosure
Schedule, neither the Company nor any of the Company Subsidiaries is a party to
any, and there are no pending or, to the best of the Company's knowledge,
threatened, legal, administrative, arbitrable or other proceedings, claims,
actions or governmental investigations of any nature against the Company or the
Company Subsidiaries which, if decided adversely to the Company or the Company
Subsidiaries, would have a Material Adverse Effect on the Company and the
Company Subsidiaries taken as a whole. Except as disclosed in the Company
Disclosure Schedule, neither the Company nor the Company Subsidiaries are a
party to any order, judgment or decree entered in any lawsuit or proceeding.
3.8. Taxes and Tax Returns.
3.8.1. Each of the Company and the Company Subsidiaries have duly
filed or requested an extension to file in accordance with applicable law (and
until the Effective Time will so file or request such an extension in accordance
with applicable law) all Tax Returns required to be filed by it (including,
without limitation, all Tax Returns required to be filed on a consolidated,
combined or unitary basis). All such Tax Returns were true and complete in all
respects. Each of the Company and the Company Subsidiaries has duly paid (and
until the Effective Time will so pay) all Taxes due and payable, other than
Taxes that are being contested in good faith (and disclosed to the Acquiror in
writing). The Company and the Company Subsidiaries have established (and until
the Effective Time will establish) on their books and records reserves that are
adequate for the payment of all federal, state and local taxes not yet due and
payable to the extent required by GAAP (consistently applied). There is no lien
on any asset of any of the Company and the Company Subsidiaries that arose in
connection with any failure or alleged failure to pay any Tax. The Company
Disclosure Schedule identifies all federal, state, local and foreign income or
franchise Tax Returns filed with respect to any of the Company and the Company
Subsidiaries which have been examined by any Governmental Authority within the
past six years. No deficiency was asserted as a result of any such examination
which deficiency has not been finally resolved and paid in full. To the
knowledge of the Company, there are no audits or other administrative or court
proceedings presently pending nor any other disputes pending with respect to, or
claims asserted for, any Taxes of any of the Company and the Company
Subsidiaries. None of the Company and the Company Subsidiaries has given any
currently outstanding waivers or comparable consents regarding the application
of the statute of limitations with respect to any Taxes or Tax Returns.
3.8.2. Except as set forth in the Company Disclosure Schedule,
neither the Company nor any of the Company Subsidiaries (i) has requested any
extension of time within which to file any Tax Return which Tax Return has not
since been filed, (ii) is a party to any agreement providing for the allocation
or sharing of Taxes, (iii) is required to include in income any adjustment
pursuant to Section 481(a) of the Code by reason of a voluntary change in
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accounting method initiated by the Company or any of the Company Subsidiaries
(nor does the Company have any knowledge that the United States Internal Revenue
Service has proposed any such adjustment or change of accounting method), (iv)
has filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply, (v) has been a United States real property
holding corporation as defined in section 897(c)(2) of the Code during the
applicable period specified in section 897(c)(1)(A)(ii) of the Code, or (vi) has
any liability for the Taxes of any Person other than the Company and the Company
Subsidiaries under Treas. Reg. (S)1.1502-6 (or any similar provision of state,
local or foreign law), as a transferee or successor, by contract, or otherwise
3.8.3. The Company Disclosure Schedule sets forth true copies of all
Tax Returns filed by the Company and the Company Subsidiaries since January 1,
1994.
3.8.4. Each of the Company and the Company Subsidiaries (i) has
complied in all respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes from the wages or salaries of
employees and independent contractors, (ii) has paid over to the proper
Governmental Authorities all amounts required to be so withheld and (iii) is not
liable for any Taxes for failure to comply with such laws, rules and
regulations.
3.8.5. "Tax" means any of the following imposed by or payable to any
Governmental Authority: any income, gross receipts, license, payroll,
employment, excise, severance, stamp, business, occupation, premium, windfall
profits, environmental (including taxes under section 59A of the Code), capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, or value added tax, any alternative or add-on minimum
tax, any estimated tax, and any levy, impost, duty, assessment, withholding or
any other governmental charge of any kind whatsoever, in each case including any
interest, penalty, or addition thereto, whether disputed or not.
3.8.6. "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
3.9. Reports.
3.9.1. The Company Disclosure Schedule lists, and the Company has
previously delivered or will deliver during the Delivery Period to the Acquiror
a complete copy of, each (i) final registration statement, prospectus, annual,
quarterly or current report and definitive proxy statement filed by the Company
with the SEC (or maintained by the Company pursuant to rules of the SEC) since
January 1, 1996 pursuant to the Securities Act of 1933, as amended ("1933 Act"),
or the Securities Exchange Act of 1934, as amended (the "1934 Act"), and (ii)
communication (other than general advertising materials and press releases)
mailed by the Company to its stockholders as a group since January 1, 1996, and
each such final registration statement, prospectus, annual, quarterly or current
report, definitive proxy statement and communication, as of its date, complied
in all material respects with all applicable statutes, rules
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and regulations enforced or promulgated by the SEC and did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that information as of a later date shall be deemed to modify
information as of an earlier date.
3.9.2. The Company and NBSC have, since January 1, 1996, duly filed
with the Comptroller and the FRB, in a form and with such substance as was
correct, accurate and complete in all material respects, the monthly, quarterly
and annual financial reports required to be filed under all applicable laws and
regulations, and the Company has made available to the Acquiror accurate and
complete copies of all such reports.
3.10. Company and NBSC Information. The information relating to the
Company and the Company Subsidiaries (including NBSC) to be contained in the
Joint Proxy Statement/Prospectus (as defined in Section 5.9) to be delivered to
stockholders of the Company and the Acquiror in connection with the solicitation
of their approval of the Merger, as of the respective dates that the Joint Proxy
Statement/Prospectus is mailed to such stockholders, and up to and including the
dates of the meetings of stockholders to which such Joint Proxy
Statement/Prospectus relates, will not contain any untrue statement of a
material fact regarding the Company and the Company Subsidiaries or omit to
state a material fact regarding the Company and the Company Subsidiaries
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
3.11. Certain Contracts.
3.11.1. Except for Plans referenced in Section 3.17 and agreements
disclosed in the Company Disclosure Schedule, (i) neither the Company nor any of
the Company Subsidiaries is a party to or bound by any written contract or
understanding (whether written or oral) with respect to the employment of any
officers, employees, directors or consultants, and (ii) the consummation of the
transactions contemplated by this Agreement will not (either alone or upon the
occurrence of any additional acts or events) result in any payment (either of
severance pay or otherwise) becoming due from the Company or any of the Company
Subsidiaries to any officer, employee, director or consultant thereof. The
Company Disclosure Schedule sets forth true and correct copies of all severance
and employment agreements with officers, directors, employees, agents or
consultants to which the Company or any of the Company Subsidiaries is a party.
3.11.2. Except as disclosed in the Company Disclosure Schedule and
except for loan commitments issued in the ordinary course of business, (i) as of
the date of this Agreement, neither the Company nor any of the Company
Subsidiaries is a party to or bound by any commitment, agreement or other
instrument which is material to the business, operations, assets or financial
condition of the Company and the Company Subsidiaries taken as a whole, but in
no event shall a contract for less than $50,000 per year be deemed material
under this Section 3.11.2, (ii) no commitment, agreement or other instrument to
which the Company or any of the Company Subsidiaries is a party or by which any
of them is bound limits the freedom of the Company or any of the Company
Subsidiaries to compete in any line of business or with any
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person, and (iii) neither the Company nor any of the Company Subsidiaries is a
party to any collective bargaining agreement.
3.11.3. Except as disclosed in the Company Disclosure Schedule,
neither the Company nor any of the Company Subsidiaries or, to the knowledge of
the Company, any other party thereto, is in default in any material respect
under any lease, contract, mortgage, promissory note, deed of trust, loan or
other commitment (except those under which NBSC is or will be the creditor) or
arrangement, except for defaults which individually or in the aggregate would
not have a Material Adverse Effect on the Company and the Company Subsidiaries
taken as a whole.
3.12. Properties and Insurance.
3.12.1. The Company and the Company Subsidiaries have good and, as to
owned real property, marketable title to all material assets and properties,
whether real or personal, tangible or intangible, reflected in the Company's
consolidated balance sheet (as set forth in the Company Disclosure Schedule) as
of the Company Statement of Condition Date, or owned and acquired subsequent
thereto (except to the extent that such assets and properties have been disposed
of for fair value in the ordinary course of business since the Company Statement
of Condition Date), subject to no encumbrances, liens, mortgages, security
interests or pledges, except (i) those items that secure liabilities that are
reflected in said consolidated balance sheet or the notes thereto or that secure
liabilities incurred in the ordinary course of business after the date of such
consolidated balance sheet, (ii) statutory liens for amounts not yet delinquent
or which are being contested in good faith, (iii) such encumbrances, liens,
mortgages, security interests, pledges and title imperfections that are not in
the aggregate material to the business, operations, assets and financial
condition of the Company and the Company Subsidiaries taken as a whole and (iv)
with respect to owned real property, title imperfections noted in title reports
delivered to the Acquiror prior to the date hereof or to be delivered during the
Delivery Period. The Company and the Company Subsidiaries as lessees have the
right under valid and subsisting leases to occupy, use, possess and control all
real property leased by the Company and the Company Subsidiaries in all material
respects as presently occupied, used, possessed and controlled by the Company
and the Company Subsidiaries.
3.12.2. The business operations and all insurable properties and
assets of the Company and the Company Subsidiaries are insured for their benefit
against all risks which, in the reasonable judgment of the management of the
Company, should be insured against, in each case under policies or bonds issued
by insurers of recognized responsibility, in such amounts with such deductibles
and against such risks and losses as are in the opinion of the management of the
Company adequate for the business engaged in by the Company and the Company
Subsidiaries. As of the date hereof, the Company and the Company Subsidiaries
have not received any notice of cancellation or notice of a material amendment
of any such insurance policy or bond and are not in default under any such
policy or bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion. The Company Disclosure Schedule
sets forth a complete and accurate list of all primary and excess
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insurance coverage held by the Company and/or the Company Subsidiaries currently
or at any time during the past three years.
3.13. Minute Books. The minute books of the Company and the Company
Subsidiaries contain accurate records of all meetings held and other corporate
action taken by their respective stockholders and Boards of Directors (including
committees of their respective Boards of Directors), except where the failure to
so maintain such records would not constitute a material omission.
3.14. Reserves. As of the Company Statement of Condition Date, the
allowance for loan losses in the Company Financial Statements was adequate based
upon all factors required to be considered by the Company in determining the
amount of such allowance. The methodology used to compute the loan loss reserve
complies in all material respects with all applicable policies and regulations
of the Comptroller. As of the Company Statement of Condition Date, the reserve
for OREO properties in the Company Financial Statements was adequate based upon
all factors required to be considered by the Company in determining the amount
of such reserve.
3.15. No Parachute Payments. Except as set forth in the Company Disclosure
Schedule, no officer, director, employee or agent (or former officer, director,
employee or agent) of the Company or any of the Company Subsidiaries is entitled
to now, or will or may be entitled to as a consequence of this Agreement or the
Merger, any payment or benefit from the Company, any of the Company
Subsidiaries, the Acquiror or any of the Acquiror's Subsidiaries which, if paid
or provided, would constitute an "excess parachute payment", as defined in
Section 280G of the Code or regulations promulgated thereunder. The Company
Disclosure Schedule sets forth any accurate calculation of each such excess
parachute payment.
3.16. Indemnification. Except as set forth in the Certificate of
Incorporation and By-Laws of the Company or in the Company Disclosure Schedule,
(i) neither the Company nor any Company Subsidiary is a party to any
indemnification agreement with any of its present or future directors, officers,
employees, agents or other persons who serve or served in any other capacity
with any other enterprise at the request of the Company or any of the Company
Subsidiaries (a "Covered Person"), and (ii) to the knowledge of the Company,
there are no claims for which any Covered Person would be entitled to
indemnification under Section 5.6 if such provision were deemed to be in effect.
3.17. Employee Benefit Plans.
3.17.1 For purposes of this Section 3.17, the following terms shall
have the definitions given below:
"Controlled Group Liability" means any and all liabilities
under (i) Title IV of ERISA, (ii) section 302 of ERISA, (iii) sections 412 and
4971 of the Code, (iv) the continuation coverage requirements of section 601 et
seq. of ERISA and section 4980B of the Code, and (v) corresponding or similar
provisions of foreign laws or regulations, in each case other than pursuant to
the Plans.
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"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(13) of ERISA.
"Plans" means all "employee welfare benefit plans" within the
meaning of Section 3(1) of ERISA and all "employee pension benefit plans" within
the meaning of Section 3(2) of ERISA sponsored or maintained by the Company or
any of the Company Subsidiaries or to which the Company or any of the Company
Subsidiaries contributes or is obligated to contribute.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.
3.17.2. To the knowledge of the Company, with respect to each Plan,
the Company Disclosure Schedule sets forth a true, correct and complete copy of
the following (where applicable): (i) each writing constituting a part of such
Plan, including without limitation all plan documents, trust agreements, and
insurance contracts and other funding vehicles; (ii) the three most recent
Annual Reports (Forms 5500 Series) and accompanying schedules, if any; (iii) the
current summary plan description, if any; (iv) the most recent annual financial
report, if any; and (v) the most recent determination letter from the Internal
Revenue Service, if any.
3.17.3. Except as set forth in the Company Disclosure Schedule, the
Internal Revenue Service has issued a favorable determination letter with
respect to each Plan that is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code (a "Qualified Plan") and no circumstance
exists nor has any event occurred that could adversely affect the qualified
status of any Qualified Plan or the related trust in a manner that would have a
Material Adverse Effect on the Company and the Company Subsidiaries taken as a
whole.
3.17.4. All contributions required to be made to any Plan by any
applicable laws or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any Plan,
before the date hereof have been made or paid in full on or before the final due
date thereof and through the date of Closing will be made or paid in full on or
before the final due date thereof.
3.17.5. The Company and each of the Company Subsidiaries has
complied, and is now in compliance, in all material respects, with all
provisions of ERISA, the Code and all laws and regulations applicable to the
Plans. Each Plan has been operated in material compliance with its terms.
There is not now, and there are no existing circumstances that would give rise
to, any requirement for the posting of security with respect to any Plan or the
imposition of any lien on the assets of the Company or any of the Company
Subsidiaries under ERISA or the Code. No circumstance exists, and no event has
occurred, which could cause the Company or any of the
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Company Subsidiaries to incur liability, whether directly or indirectly, through
indemnification or otherwise, for any tax or penalty imposed pursuant to Section
4971, 4972, 4975, 4976, 4977, 4978, 4978B, 4979, 4980 or 4980B of the Code or
arising under Sections 502(i) or 502(l) of ERISA.
3.17.6. Except as set forth in the Company Disclosure Schedule, no
Plan is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA
(a "Multiemployer Plan") or a plan that has two or more contributing sponsors at
least two of whom are not under common control, within the meaning of Section
4063 of ERISA (a "Multiple Employer Plan"), nor have the Company or any of the
Company Subsidiaries or any of their respective ERISA Affiliates, at any time
within six years before the date hereof, contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer Plan. With respect to
each Multiemployer Plan described in the Company Disclosure Schedule: (i)
neither the Company nor any of the Company Subsidiaries nor any of their
respective ERISA Affiliates has incurred any Withdrawal Liability that has not
been satisfied in full; and (ii) neither the Company nor any of the Company
Subsidiaries nor any of their respective ERISA Affiliates has received any
notification, nor has any reason to believe, that any such plan is in
reorganization, is insolvent, has been terminated, or would be in
reorganization, be insolvent, or be terminated. Except for Multiemployer Plans
described in the Company Disclosure Schedule, no Plan is subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code.
3.17.7. No circumstance exists, and no event has occurred, that would
result in, any material Controlled Group Liability that would be a liability of
the Acquiror, the Company or any of the Company Subsidiaries following the
Closing. Without limiting the generality of the foregoing, neither the Company
nor any of the Company Subsidiaries nor any of their respective ERISA Affiliates
has engaged in any transaction described in Section 4069 or Section 4203 of
ERISA.
3.17.8. Except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA and except as set forth
in the Company Disclosure Schedule, neither the Company nor any of the Company
Subsidiaries has any material liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or dependents thereof.
3.17.9. Except as disclosed in the Company Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in, cause the accelerated vesting
or delivery of, or increase the amount or value of, any payment or benefit to
any employee, officer, director or consultant of the Company or any of the
Company Subsidiaries.
3.17.10. Except as disclosed in the Company Disclosure Schedule,
there are no pending or, to the knowledge of the Company, threatened claims
(other than claims for benefits in the ordinary course of business), lawsuits or
arbitrations which have been asserted or instituted against the Plans, any
fiduciaries thereof with respect to their duties to the Plans or the assets of
any of the trusts under any of the Plans.
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3.17.11. The Company Disclosure Schedule sets forth a list of each
employment, severance or similar agreement under which the Company or any of the
Company Subsidiaries is or could become obligated to provide compensation or
benefits in excess of $100,000 in any one calendar year, and the Company will
provide to the Acquiror during the Delivery Period a copy of each such
agreement.
3.18. Compliance with Laws and Orders. Except as set forth in the Company
Disclosure Schedule or as disclosed in the reports described in Section 3.9.1
filed by the Company with the SEC prior to the date of this Agreement, the
businesses of the Company and the Company Subsidiaries have not been, and are
not being, conducted in violation of any law, ordinance, regulation, judgment,
order, decree, license or permit of any Governmental Authority (including,
without limitation, in the case of Company Subsidiaries that are banks, all
statutes, rules and regulations pertaining to the conduct of the banking
business and the exercise of trust powers), except for violations which
individually or in the aggregate do not, and, insofar as reasonably can be
foreseen, in the future shall not, have a Material Adverse Effect on the Company
and the Company Subsidiaries, taken as a whole. Except as set forth in the
Company Disclosure Schedule, no investigation or review by any Governmental
Authority with respect to the Company or any of the Company Subsidiaries is
pending or, to the knowledge of the Company, threatened, nor has any
Governmental Authority indicated an intention to conduct the same, in each case
other than those the outcome of which is not reasonably expected to have a
Material Adverse Effect on the Company and the Company Subsidiaries, taken as a
whole.
3.19. Agreements with Bank Regulators. Neither the Company nor any of the
Company Subsidiaries is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, Board of Directors resolution
submitted to a regulatory authority or similar undertaking to, or is subject to
any order or directive by, or is a recipient of any extraordinary supervisory
letter from, any Governmental Authority which restricts materially the conduct
of its business, or in any manner relates to its capital adequacy, its credit or
reserve policies or its management, except for those the existence of which has
been described in the Company Disclosure Schedule, nor has the Company been
advised by any Governmental Authority that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission, except as disclosed
in the Company Disclosure Schedule. Neither the Company nor any Company
Subsidiary is required by Section 32 of the Federal Deposit Insurance Act to
give prior notice to a Federal banking agency of the proposed addition of an
individual to its board of directors or the employment of an individual as a
senior executive officer.
3.20. Accounting Matters. Neither the Company nor any of the Company
Subsidiaries nor, to the knowledge of the Company, any of the Company's other
affiliates, has taken or agreed to take any action that would prevent the
Acquiror from accounting for the business combination to be effected by the
Merger as a "pooling of interests."
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3.21. Company Action. The Board of Directors of the Company (at a meeting
duly called and held) has by the requisite vote of all directors present (a)
determined that the Merger is advisable and in the best interests of the Company
and its stockholders, (b) approved this Agreement and the Stock Option Agreement
and the transactions contemplated hereby and thereby, including the Merger, (c)
directed that this Agreement be submitted for consideration by the Company's
stockholders and (d) approved this Agreement, the Stock Option Agreement and the
Merger for purposes of Section 14A:10A-4 of the State Act.
3.22. Vote Required. The affirmative vote by holders of at least two-
thirds (2/3) of the outstanding shares of Common Stock is the only vote of the
holders of any class or series of Company capital stock necessary to approve
this Agreement and the transactions contemplated hereby.
3.23. No Triggering Events. Except as set forth in the Company Disclosure
Schedule, neither the execution and delivery by the Company of this Agreement
and the Stock Option Agreement, nor the consummation by the Company of the
transactions contemplated hereby and thereby will constitute a triggering event
(including a "first trigger"), under any Company Plans or any other plan or
agreement to which the Company or any of the Company Subsidiaries is bound, that
will, or upon the occurrence of subsequent events would, accelerate the time of
payment or vesting or increase the amount of compensation or benefits due any
director, officer, employee or former employee (or any dependent of a former
employee) of the Company or any Company Subsidiary.
3.24. Environmental Matters.
3.24.1. For purposes of this Agreement, the following terms shall
have the following meanings:
"Branch Property" means all real property presently or formerly owned or
operated by the Company or any Company Subsidiary on which branches or
facilities are or were located.
"Environmental Law" means any applicable federal, state or local statute,
law, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction, directive, requirement
or agreement with any Governmental Authority, now existing, relating to: (a) the
protection, preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), or to human health or safety, or (b) the 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. The term Environmental Law includes, without limitation, (x) the
following statutes, each as amended:
(i) the federal Clean Air Act;
(ii) the federal Clean Water Act;
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(iii) the federal Solid Waste Disposal Act (including the Resource
Conservation and Recovery Act and the Hazardous and Solid Waste Amendments
thereto) ("RCRA");
(iv) the federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (including the Superfund Amendments and
Reauthorization Act of 1986) ("CERCLA");
(v) the Federal Toxic Substances Control Act;
(vi) the federal Occupational Safety and Health Act of 1970;
(vii) the federal Emergency Planning and Community Right-to-Know Act
of 1986;
(viii) the federal Safe Drinking Water Act;
(ix) the federal Insecticide, Fungicide and Rodenticide Act;
(x) the New Jersey Industrial Site Recovery Act ("ISRA"); and
(xi) the New Jersey Spill Compensation and Control Act ("Spill Act"),
and (y) any common law or equitable doctrine (including, without limitation, any
basis for injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Substance.
"Hazardous Substance" means any substance, whether liquid, solid or gas,
listed, defined, designated, or classified as hazardous, toxic, radioactive, or
dangerous under any applicable Environmental Law, whether by type or by
quantity. "Hazardous Substance" includes, without limitation, (i) any
"hazardous substance" as defined in CERCLA or the Spill Act, (ii) any "hazardous
waste" as defined in RCRA, and (iii) any toxic waste, pollutant, contaminant,
hazardous substance, toxic substance, hazardous waste, special waste or
petroleum or any derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos containing material, urea formaldehyde foam insulation, lead
and polychlorinated biphenyls ("PCBs").
"Real Property" means the Branch Property, all real property classified by
the Company or any Company Subsidiary as OREO and all real property (including
property held as trustee or in any other fiduciary capacity) over which the
Company or any Company Subsidiary currently or formerly has exercised dominion,
management or control.
3.24.2. Except as set forth in the Company Disclosure Schedule or as
would not have a Material Adverse Effect on the Company and the Company
Subsidiaries taken as a whole:
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3.24.2.1 each of the Company and the Company Subsidiaries is
and has been in compliance with all applicable Environmental Laws at all times
since January 1, 1996;
3.24.2.2 to the knowledge of the Company, the Real Property
does not contain any Hazardous Substance in violation of any applicable
Environmental Law;
3.24.2.3 since January 1, 1995, neither the Company nor any
of the Company Subsidiaries has received any written notices, demand letters or
written requests for information from any Governmental Authority or any third-
party indicating that the Company or any of the Company Subsidiaries may be in
violation of, or liable under, any Environmental Law;
3.24.2.4 there are no civil, criminal or administrative
actions, suits, demands, claims, hearings, investigations or proceedings pending
or to the knowledge of the Company threatened against the Company or any of the
Company Subsidiaries with respect to the Company or any of the Company
Subsidiaries or the Real Property relating to any violation, or alleged
violation, of any Environmental Law or any condition of the Real Property;
3.24.2.5 no reports have been filed, or are required to be
filed, by the Company or any of the Company Subsidiaries concerning the release
of any Hazardous Substance or the threatened or actual violation of any
Environmental Law on or at the Real Property;
3.24.2.6 to the knowledge of the Company, there are no
underground storage tanks on, in or under any of the Branch Property other than
heating oil tanks used for purposes of heating such Branch Properties and no
underground storage tanks have been closed or removed from any Branch Property
while such Branch Property was owned or operated by the Company or any of the
Company Subsidiaries; and
3.24.2.7 to the knowledge of the Company, neither the Company
nor any of the Company Subsidiaries has incurred, and none of the Real Property
is presently subject to, any liabilities (fixed or, to the knowledge of the
Company, contingent) relating to any suit, settlement, court order,
administrative order, judgment or claim asserted or arising under any
Environmental Law.
3.24.3. There are no permits or licenses required under any
Environmental Law with respect to the Branch Property presently operated by the
Company or any of the Company Subsidiaries.
3.24.4. Except as set forth in the Company Disclosure Schedule,
neither the Company nor any of the Company Subsidiaries has received written
notice that any part of the Real Property has been or is listed as a site
containing Hazardous Substances pursuant to any Environmental Law.
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3.25. Labor Relations. Except as set forth in the Company Disclosure
Schedule, neither the Company nor any of the Company Subsidiaries is a party to
or bound by any collective bargaining agreement respecting its employees, nor is
there pending, or to the knowledge of the Company threatened, any strike, walk
out or other work stoppage or labor organizational effort with respect to any of
such employees.
3.26. Year 2000. To the extent that any functionality of any computer
system or software used by the Company or the Company Subsidiaries is dependent
upon or interdependent with the use or specification of any calendar date, the
Company and the Company Subsidiaries have used commercially reasonable efforts
(including without limitation seeking written confirmations from all material
customers of and vendors to the Company and the Company Subsidiaries that such
customers' and vendors' computer systems are "Year 2000 Compliant" (as
hereinafter defined)) in implementing, and have implemented, a plan pursuant to
which any such computer system shall be "Year 2000 Compliant," except where
failure to do so will not materially adversely affect the Company and the
Company Subsidiaries. For purposes of this Agreement, the term "Year 2000
Compliant" means that neither the performance nor the functionality of such
computer systems or software shall be materially affected by dates in, into and
between the 20th and 21st centuries. To be deemed "Year 2000 Compliant," such
computer systems shall conform in all material respects to the following basic
requirements: (i) no value for a current date shall cause any interruption in
the operations of the Company and the Company Subsidiaries (or of the vendors or
customers of the Company and the Company Subsidiaries) in which computer systems
or software are used; and (ii) any date-based functions shall operate and
perform in a consistent manner for dates in, into and between the 20th and 21st
centuries and such computer systems and software shall calculate, manipulate and
represent dates correctly, although no such computer systems shall use
particular date values for special meanings.
3.27. Disclosure. No representation or warranty contained in Article III
of this Agreement or in the Company Disclosure Schedule contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.
IV. REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
References herein to "Acquiror Disclosure Schedules" shall mean all of the
disclosure schedules required by this Article IV, dated as of the date hereof
and referenced to the specific sections and subsections of Article IV of this
Agreement, which either have been delivered by the Acquiror to the Company on
the date hereof or shall be delivered by the Acquiror to the Company during the
Delivery Period. The Acquiror hereby represents and warrants to the Company as
follows:
4.1. Corporate Organization.
4.1.1. Acquiror. The Acquiror is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey.
The Acquiror has full power and
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authority, corporate and otherwise, 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 as a foreign corporation 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 with respect to the Acquiror and each of the Acquiror Subsidiaries (as
defined in Section 4.1.2), taken as a whole. The Acquiror is registered as a
bank holding company under the BHCA.
4.1.2. Subsidiaries. Lakeland Bank and Metropolitan State Bank
(collectively, the "Acquiror's Banks") and Lakeland Investment Corporation and
M.S.B. Investment, Inc. are the only Acquiror Subsidiaries of Acquiror. For
purposes of this Agreement, (a) the term "Acquiror Subsidiary" means any
corporation, partnership, company, joint venture, limited liability company or
other legal entity in which Acquiror, directly or indirectly, owns at least a
50% stock or other equity interest or for which Acquiror, directly or
indirectly, acts as a general partner and (b) the term "Acquiror Subsidiaries"
means each Acquiror Subsidiary. Each of the Acquiror Banks is a state chartered
commercial bank duly organized and validly existing in stock form and in good
standing under the laws of the State of New Jersey. All eligible accounts of
depositors issued by the Acquiror Banks are insured by the Bank Insurance Fund
of the FDIC to the fullest extent permitted by law. Each Acquiror Subsidiary
has full 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 as a foreign corporation 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 Acquiror and the Acquiror Subsidiaries, taken as a whole. The Acquiror
Disclosure Schedule sets forth true and complete copies of the Certificate of
Incorporation and By-laws, as in effect on the date hereof, of the Acquiror.
Except with respect to the Acquiror Subsidiaries, the Acquiror does not own or
control, directly or indirectly, any equity interest in any corporation,
company, association, partnership, joint venture, limited liability company or
other entity.
4.2. Capitalization. The authorized capital stock of Acquiror consists
solely of shares of Acquiror Common Stock. As of September 30, 1998, there were
8,495,838 shares of Acquiror Common Stock issued and outstanding. As of the
date hereof, the Acquiror and the Acquiror Subsidiaries have not adopted any
plan pursuant to which capital stock may be issued other than the Acquiror's
Dividend Reinvestment Plan. All issued and outstanding shares of Acquiror
Common Stock, and all issued and outstanding shares of capital stock of the
Acquiror Subsidiaries, have been duly authorized and validly issued, have been
issued without violating the preemptive or other rights of third-parties, are
fully paid, and are nonassessable. All of the outstanding shares of capital
stock of the Acquiror Subsidiaries are owned by the Acquiror, directly or
indirectly, and are free and clear of any liens, encumbrances, charges,
restrictions or rights of third parties. Except with respect to the Acquiror's
obligations under its Dividend Reinvestment Plan, neither the Acquiror nor any
of the Acquiror Subsidiaries has granted or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of
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any character calling for the transfer, purchase, subscription or issuance of
any shares of capital stock of the Acquiror or the Acquiror Subsidiaries or has
issued any securities representing the right to purchase, subscribe or otherwise
receive any shares of such capital stock or any securities convertible into any
such shares, and there are no agreements or understandings to which the Acquiror
or the Acquiror Subsidiaries is a party with respect to the voting of any such
shares.
4.3. Authority, No Violation.
4.3.1. Authority. Subject to the approval of this Agreement and the
transactions contemplated hereby by the stockholders of the Acquiror, the
Acquiror has full power and authority, corporate and otherwise, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby in
accordance with the terms hereof. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of the Acquiror in accordance with
the Certificate of Incorporation of the Acquiror and all applicable laws and
regulations. Except for such stockholder approval, no other corporate
proceedings on the part of the Acquiror are necessary to consummate the
transactions so contemplated. This Agreement constitutes a valid and binding
obligation of the Acquiror, enforceable against the Acquiror in accordance with
its terms.
4.3.2. Neither the execution and delivery of this Agreement by the
Acquiror, nor the consummation by the Acquiror of the transactions contemplated
hereby in accordance with the terms hereof, or compliance by the Acquiror with
any of the terms or provisions hereof, will (i) violate any provision of the
Acquiror's Certificate of Incorporation or By-laws, (ii) assuming that the
consents and approvals set forth below are duly obtained, violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Acquiror or the Acquiror Subsidiaries or any of their
respective properties or assets, or (iii) except as set forth in the Acquiror
Disclosure Schedule, 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 the creation of any lien,
security interest, charge or other encumbrance upon any of the respective
properties or assets of the Acquiror or the Acquiror Subsidiaries under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
commitment, pledge, permit, deed of trust, license, lease, contract, agreement
or other instrument or obligation or any judgment, order, decree, law, rule or
other restriction of any Governmental Authority, in each case to which the
Acquiror or any of the Acquiror Subsidiaries is a party, or by which the
Acquiror or any of the Acquiror Subsidiaries may be bound or to which any of the
assets or properties of the Acquiror or any of the Acquiror Subsidiaries are
subject except, with respect to (ii) and (iii) above, such as individually or in
the aggregate will not have a Material Adverse Effect on the Acquiror and the
Acquiror Subsidiaries, taken as a whole, and which will not prevent or delay the
consummation of the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the FRB, the
Comptroller, the FDIC, the Department, the NJDEP, the SEC, the New Jersey
Department of the Treasury, other banking authorities, state securities
administrators and the stockholders of the Acquiror, no consents or approvals of
or filings or registrations with or notices to any third party or any
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Governmental Authority are necessary on behalf of the Acquiror in connection
with (x) the execution and delivery by the Acquiror of this Agreement and (y)
the consummation by the Acquiror of the Merger and the other transactions
contemplated hereby.
4.4. Financial Statements.
4.4.1. The Acquiror Disclosure Schedule sets forth copies of the
consolidated statements of condition of the Acquiror as of December 31, 1996 and
1997 and the related consolidated statements of income, changes in stockholders'
equity and cash flows for the years ended December 31, 1995, 1996 and 1997, in
each case accompanied by the audit report of Radics & Co., LLC, independent
public accountants with respect to the Acquiror, and the unaudited consolidated
statement of condition of the Acquiror as of September 30, 1998, and the related
unaudited consolidated statements of income and cash flows for the nine months
ended September 30, 1997 and 1998 (collectively, the "Acquiror Financial
Statements"). The Acquiror Financial Statements (including the related notes)
have been prepared in accordance with GAAP consistently applied during the
periods covered thereby (except as may be indicated therein or in the notes
thereto), and fairly present the consolidated financial condition of the
Acquiror as of the respective dates set forth therein, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows fairly present the results of the consolidated operations, changes in
stockholders' equity and cash flows of the Acquiror for the respective periods
set forth therein.
4.4.2. No unrecorded funds or assets of the Acquiror and the Acquiror
Subsidiaries have been established for any purpose; no accumulation or use of
the funds of the Acquiror and the Acquiror Subsidiaries has been made without
being properly accounted for in the respective books and records of the Acquiror
and the Acquiror Subsidiaries; all payments by or on behalf of the Acquiror and
the Acquiror Subsidiaries have been duly and properly recorded and accounted for
in the books and records of the Acquiror and the Acquiror Subsidiaries; no false
or artificial entry has been made in the books and records of the Acquiror and
the Acquiror Subsidiaries for any reason; no payment has been made by or on
behalf of the Acquiror and the Acquiror Subsidiaries with the understanding that
any part of such payment is to be used for any purpose other than that described
in the documents supporting such payment; and the Acquiror and the Acquiror
Subsidiaries have not made, directly or indirectly, any illegal contributions to
any political party or candidate, either domestic or foreign, or any
contribution, gift, bribe, rebate, payoff, influence payment or kickback,
whether in cash, property or services, to any individual, corporation,
partnership or other entity, to secure business or to pay for business secured.
4.4.3. Except as and to the extent reflected, disclosed or reserved
against in the Acquiror Financial Statements (including the notes thereto), as
of September 30, 1998 (the "Acquiror Statement of Condition Date"), neither the
Acquiror nor any of the Acquiror Subsidiaries had any liabilities, whether
absolute, accrued, contingent or otherwise, material to the business,
operations, assets or financial condition of the Acquiror and the Acquiror
Subsidiaries, taken as a whole, which were required by GAAP (consistently
applied) to be
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disclosed in the Acquiror's consolidated statement of condition as of the
Acquiror Statement of Condition Date or the notes thereto and which were not so
disclosed.
4.5. Broker's and Other Fees. Except for ▇▇▇▇, ▇▇▇▇ & Co., Inc., neither
the Acquiror nor the Acquiror Subsidiaries nor any of their directors or
officers has employed any broker or finder or incurred any liability for any
broker's or finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement. All agreements with ▇▇▇▇, ▇▇▇▇ &
Co., Inc. providing for the payment of fees in connection with the Merger are
set forth in the Acquiror Disclosure Schedule. There are no other fees (other
than time charges billed at usual and customary rates) payable by the Acquiror
or the Acquiror Subsidiaries to any advisors, including without limitation
lawyers and accountants, in connection with the Merger or which would be
triggered by consummation of the Merger or the termination of the services of
such advisors by the Acquiror or the Acquiror Subsidiaries.
4.6. Absence of Certain Changes or Events.
4.6.1. There has not been any material adverse change in the
business, results of operations, assets, liabilities, properties, prospects or
condition (financial or otherwise) of the Acquiror and the Acquiror
Subsidiaries, taken as a whole, since the Acquiror Statement of Condition Date,
and to the best of the Acquiror's knowledge, no facts or conditions exist which
are likely to cause such a material adverse change in the future.
4.6.2. Except as set forth in the Acquiror Disclosure Schedule, since
December 31, 1997, there has not been:
4.6.2.1 any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the Acquiror and the Acquiror
Subsidiaries taken as a whole;
4.6.2.2 any disposition, mortgage, pledge, or subjection to any lien,
claim, charge, option, or encumbrance of any property or asset of the Acquiror
or any of the Acquiror Subsidiaries, any commitment made or liability incurred
by the Acquiror or any of the Acquiror Subsidiaries, or any cancellation or
compromise of any debt or claim of the Acquiror or any of the Acquiror
Subsidiaries otherwise than in the ordinary course of business;
4.6.2.3 any dividend or distribution declared, set aside or paid in
respect of the Acquiror Common Stock or any repurchase by the Acquiror of shares
of Acquiror Common Stock;
4.6.2.4 any material change by the Acquiror or any of the Acquiror
Subsidiaries in their method of doing business; or
4.6.2.5 any catastrophic event affecting the Acquiror or any of the
Acquiror Subsidiaries or their assets, such as, but not limited to, fire,
explosion, earthquake, accident, flood, condemnation, act of God or public
enemy, riot or civil disturbance.
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4.7. Legal Proceedings. Except as disclosed in the Acquiror Disclosure
Schedule, and except for ordinary routine litigation incidental to the business
of the Acquiror and the Acquiror Subsidiaries, neither the Acquiror nor any of
the Acquiror Subsidiaries is a party to any, and there are no pending or, to the
best of the Acquiror's knowledge, threatened, legal, administrative, arbitrable
or other proceedings, claims, actions or governmental investigations of any
nature against the Acquiror or the Acquiror Subsidiaries which, if decided
adversely to Acquiror or the Acquiror Subsidiaries, would have a Material
Adverse Effect on the Acquiror and the Acquiror Subsidiaries, taken as a whole.
Except as disclosed in the Acquiror Disclosure Schedule, neither the Acquiror
nor the Acquiror Subsidiaries is a party to any order, judgment or decree
entered in any lawsuit or proceeding.
4.8. Reports.
4.8.1. The Acquiror Disclosure Schedule lists, and the Acquiror has
previously delivered or will deliver during the Delivery Period to the Company a
complete copy of, each (i) final registration statement, prospectus, annual,
quarterly or current report and definitive proxy statement filed by the Acquiror
with the SEC (or maintained by the Company in accordance with the rules of the
SEC) since January 1, 1996 pursuant to the 1933 Act or the 1934 Act and (ii)
communication (other than general advertising materials and press releases)
mailed by the Acquiror to its stockholders as a group since January 1, 1996 and
each such final registration statement, prospectus, annual, quarterly or current
report, definitive proxy statement and communication, as of its date, complied
in all material respects with all applicable statutes, rules and regulations
enforced or promulgated by the SEC and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that information as of a later date shall be deemed to modify information as of
an earlier date.
4.8.2. The Acquiror and the Acquiror Banks have, since January 1,
1996, duly filed with the FDIC, the Department and the FRB, in a form and with
such substance as was correct, accurate and complete in all material respects,
the monthly, quarterly and annual financial reports required to be filed under
all applicable laws and regulations, and the Acquiror has made or during the
Delivery Period will make available to the Company accurate and complete copies
of all such reports.
4.9. Acquiror and Acquiror Bank Information. The information relating to
the Acquiror and the Acquiror Banks to be contained in the Joint Proxy
Statement/Prospectus to be delivered to stockholders of the Company and the
Acquiror in connection with the solicitations of their approval of the Merger,
as of the dates that the Joint Proxy Statement/Prospectus is mailed to such
stockholders, and up to and including the dates of the meetings of stockholders
to which such Joint Proxy Statement/Prospectus relates, will not contain any
untrue statement of a material fact regarding the Acquiror and the Acquiror
Banks or omit to state a material fact regarding the Acquiror and the Acquiror
Banks required to be stated therein or necessary to
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make the statements therein, in light of the circumstances under which they were
made, not misleading.
4.10. Properties and Insurance.
4.10.1. The Acquiror and the Acquiror Subsidiaries have good and, as
to owned real property, marketable title to all material assets and properties,
whether real or personal, tangible or intangible, reflected in the Acquiror's
consolidated statement of condition (as set forth in the Acquiror Disclosure
Schedule) as of the Acquiror Statement of Condition Date, or owned and acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since the
Acquiror Statement of Condition Date), subject to no encumbrances, liens,
mortgages, security interests or pledges, except (i) those items that secure
liabilities that are reflected in said consolidated statement of condition or
the notes thereto or that secure liabilities incurred in the ordinary course of
business after the date of such consolidated statement of condition, (ii)
statutory liens for amounts not yet delinquent or which are being contested in
good faith, (iii) such encumbrances, liens, mortgages, security interests,
pledges and title imperfections that are not in the aggregate material to the
business, operations, assets and financial condition of the Acquiror and the
Acquiror Subsidiaries taken as a whole and (iv) with respect to owned real
property, title imperfections noted in title reports delivered to the Company
prior to the date hereof or to be delivered during the Delivery Period. The
Acquiror and the Acquiror Subsidiaries as lessees have the right under valid and
subsisting leases to occupy, use, possess and control all real property leased
by the Acquiror and the Acquiror Subsidiaries in all material respects as
presently occupied, used, possessed and controlled by the Acquiror and the
Acquiror Subsidiaries.
4.10.2. The business operations and all insurable properties and
assets of the Acquiror and the Acquiror Subsidiaries are insured for their
benefit against all risks which, in the reasonable judgment of the management of
the Acquiror, should be insured against, in each case under policies or bonds
issued by insurers of recognized responsibility, in such amounts with such
deductibles and against such risks and losses as are in the opinion of the
management of the Acquiror adequate for the business engaged in by the Acquiror
and the Acquiror Subsidiaries. As of the date hereof, the Acquiror and the
Acquiror Subsidiaries have not received any notice of cancellation or notice of
a material amendment of any such insurance policy or bond and are not in default
under any such policy or bond, no coverage thereunder is being disputed and all
material claims thereunder have been filed in a timely fashion. The Acquiror
Disclosure Schedule sets forth a complete and accurate list of all primary and
excess insurance coverage held by the Acquiror and/or the Acquiror Subsidiaries
currently or at any time during the past three years.
4.11. Minute Books. The minute books of the Acquiror and the Acquiror
Subsidiaries contain accurate records of all meetings held and other corporate
action taken by their respective stockholders and Boards of Directors (including
committees of their respective Boards of Directors), except where the failure to
so maintain such records would not constitute a material omission.
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4.12. Reserves. As of the Acquiror Statement of Condition Date, the
allowance for loan losses in the Acquiror Financial Statements was adequate
based upon all factors required to be considered by Acquiror in determining the
amount of such allowance. The methodology used to compute the loan loss reserve
complies in all material respects with all applicable FDIC policies. As of the
Acquiror Statement of Condition Date, the reserve for OREO properties in the
Acquiror Financial Statements was adequate based upon all factors required to be
considered by the Acquiror in determining the amount of such reserve.
4.13. Employee Plans.
4.13.1 For purposes of this Section 4.11, the following terms shall
have the definitions given below:
"Acquiror Plans" means all "employee welfare benefit plans" within the
meaning of Section 3(1) of ERISA and all "employee pension benefit plans" within
the meaning of Section 3(2) of ERISA sponsored or maintained by Acquiror or any
of the Acquiror Subsidiaries or to which the Acquiror or any of the Acquiror
Subsidiaries contributes or is obligated to contribute.
4.13.2. To the knowledge of the Acquiror, with respect to each
Acquiror Plan, the Acquiror Disclosure Schedule sets forth a true, correct and
complete copy of the following (where applicable): (i) each writing constituting
a part of such Acquiror Plan, including without limitation all plan documents,
trust agreements, and insurance contracts and other funding vehicles; (ii) the
three most recent Annual Reports (Forms 5500 Series) and accompanying schedules,
if any; (iii) the current summary plan description, if any; (iv) the most recent
annual financial report, if any; and (v) the most recent determination letter
from the Internal Revenue Service, if any.
4.13.3. Except as set forth in the Acquiror Disclosure Schedule, the
Internal Revenue Service has issued a favorable determination letter with
respect to each Acquiror Plan that is intended to be a "qualified plan" within
the meaning of Section 401(a) of the Code (a "Qualified Acquiror Plan") and no
circumstance exists nor has any event occurred that could adversely affect the
qualified status of any Qualified Acquiror Plan or the related trust in a manner
that would have a Material Adverse Effect on the Acquiror and the Acquiror
Subsidiaries taken as a whole.
4.13.4. All contributions required to be made to any Acquiror Plan by
any applicable laws or by any plan document or other contractual undertaking,
and all premiums due or payable with respect to insurance policies funding any
Acquiror Plan, before the date hereof have been made or paid in full on or
before the final due date thereof and through the date of Closing will be made
or paid in full on or before the final due date thereof.
4.13.5. The Acquiror and each of the Acquiror Subsidiaries has
complied, and is now in compliance, in all material respects, with all
provisions of ERISA, the Code and all laws and regulations applicable to the
Acquiror Plans. Each Acquiror Plan has been operated in
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material compliance with its terms. There is not now, and there are no existing
circumstances that would give rise to, any requirement for the posting of
security with respect to any Acquiror Plan or the imposition of any lien on the
assets of the Acquiror or any of the Acquiror Subsidiaries under ERISA or the
Code. No circumstance exists, and no event has occurred, which could cause the
Acquiror or any of the Acquiror Subsidiaries to incur liability, whether
directly or indirectly, through indemnification or otherwise, for any tax or
penalty imposed pursuant to Section 4971, 4972, 4975, 4976, 4977, 4978, 4978B,
4979, 4980 or 4980B of the Code or arising under Sections 502(i) or 502(l) of
ERISA.
4.13.6. Except as set forth in the Acquiror Disclosure Schedule, no
Acquiror Plan is a Multiemployer Plan or a Multiple Employer Plan, nor has the
Acquiror or the Acquiror Subsidiaries or any of their respective ERISA
Affiliates, at any time within six years before the date hereof, contributed to
or been obligated to contribute to any Multiemployer Plan or Multiple Employer
Plan. With respect to each Multiemployer Plan described in the Acquiror
Disclosure Schedule: (i) neither the Acquiror nor any of the Acquiror
Subsidiaries nor any of their respective ERISA Affiliates has incurred any
Withdrawal Liability that has not been satisfied in full; and (ii) neither the
Acquiror nor any of the Acquiror Subsidiaries nor any of their respective ERISA
Affiliates has received any notification, nor has any reason to believe, that
any such plan is in reorganization, is insolvent, has been terminated, or would
be in reorganization, be insolvent, or be terminated. Except for Multiemployer
Plans described in the Acquiror Disclosure Schedule, no Acquiror Plan is subject
to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code.
4.13.7. No circumstance exists, and no event has occurred, that would
result in, any material Controlled Group Liability that would be a liability of
the Acquiror or any of the Acquiror Subsidiaries following the Closing. Without
limiting the generality of the foregoing, neither the Acquiror nor any of the
Acquiror Subsidiaries nor any of their respective ERISA Affiliates has engaged
in any transaction described in Section 4069 or Section 4203 of ERISA.
4.13.8. Except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA and except as set forth
in the Acquiror Disclosure Schedule, neither the Acquiror nor any of the
Acquiror Subsidiaries has any material liability for life, health, medical or
other welfare benefits to former employees or beneficiaries or dependents
thereof.
4.13.9. Except as disclosed in Section 3.11.1(ii) to the Acquiror
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will result in, cause
the accelerated vesting or delivery of, or increase the amount or value of, any
payment or benefit to any employee, officer, director or consultant of the
Acquiror or the Acquiror Subsidiaries.
4.13.10. Except as disclosed in the Acquiror Disclosure Schedule,
there are no pending or, to the knowledge of the Acquiror, threatened claims
(other than claims for benefits in the ordinary course of business and claims
which would not have a Material Adverse Effect upon the Acquiror and the
Acquiror Subsidiaries, taken as a whole), lawsuits or arbitrations which
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have been asserted or instituted against the Acquiror Plans, any fiduciaries
thereof with respect to their duties to the Acquiror Plans or the assets of any
of the trusts under any of the Acquiror Plans.
4.14. Compliance with Laws and Orders. Except as set forth in the
Acquiror Disclosure Schedule or as disclosed in the reports described in Section
4.8.1 filed by the Acquiror with the SEC prior to the date of this Agreement,
the businesses of the Acquiror and the Acquiror Subsidiaries have not been, and
are not being, conducted in violation of any law, ordinance, regulation,
judgment, order, decree, license or permit of any governmental entity
(including, without limitation, in the case of Acquiror Subsidiaries that are
banks, all statutes, rules and regulations pertaining to the conduct of the
banking business and the exercise of trust powers), except for violations which
individually or in the aggregate do not, and, insofar as reasonably can be
foreseen, in the future shall not, have a Material Adverse Effect on the
Acquiror and the Acquiror Subsidiaries, taken as a whole. Except as set forth
in the Acquiror Disclosure Schedule, no investigation or review by any
Governmental Authority with respect to the Acquiror or any of the Acquiror
Subsidiaries is pending or, to the knowledge of the Acquiror, threatened, nor
has any Governmental Authority indicated an intention to conduct the same, in
each case other than those the outcome of which is not reasonably expected to
have a Material Adverse Effect on the Acquiror and the Acquiror Subsidiaries,
taken as a whole.
4.15. Agreements with Bank Regulators. Neither the Acquiror nor any
Acquiror Subsidiary is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, Board of Directors resolution
submitted to a Governmental Authority or similar undertaking to, or is subject
to any order or directive by, or is a recipient of any extraordinary supervisory
letter from, any Governmental Authority which restricts materially the conduct
of its business, or in any manner relates to its capital adequacy, its credit or
reserve policies or its management, except for those the existence of which has
been described in the Acquiror Disclosure Schedule, nor has the Acquiror been
advised by any Governmental Authority that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission, except as disclosed
in the Acquiror Disclosure Schedule. Neither the Acquiror nor any Acquiror
Subsidiary is required by Section 32 of the Federal Deposit Insurance Act to
give prior notice to a Federal banking agency of the proposed addition of an
individual to its board of directors or the employment of an individual as a
senior executive officer.
4.16. Accounting Matters. Neither the Acquiror nor any of the Acquiror's
Subsidiaries nor, to the Acquiror's knowledge, any of the Acquiror's other
affiliates, has taken or agreed to take any action that would prevent Acquiror
from accounting for the business combination to be effected by the Merger as a
"pooling of interests."
4.17. Acquiror Action. The Board of Directors of the Acquiror (at a
meeting duly called and held) has by the requisite vote of all directors present
(a) determined that the Merger is advisable and in the best interests of the
Acquiror and its stockholders, (b) approved this
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Agreement and the transactions contemplated hereby, including the Merger, and
(c) directed that the Agreement be submitted for consideration by the Acquiror's
stockholders.
4.18. Vote Required. The affirmative vote of a majority of the votes cast
by the holders of the outstanding shares of Acquiror Common Stock entitled to
vote thereon is the only vote of the holders of any class or series of Acquiror
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
4.19. No Triggering Events. Except as set forth in the Acquiror
Disclosure Schedule, neither the execution and delivery by the Acquiror of this
Agreement, nor the consummation by the Acquiror of the transactions contemplated
hereby will constitute a triggering event (including a "first trigger"), under
any Acquiror Plans or any other plan or agreement to which the Acquiror or any
of the Acquiror Subsidiaries is bound, that will, or upon the occurrence of
subsequent events would, accelerate the time of payment or vesting or increase
the amount of compensation or benefits due any director, officer, employee or
former employee (or any dependent of a former employee) of the Acquiror or any
Acquiror Subsidiary
4.20. Environmental Matters.
4.20.1. For purposes of this Agreement, the following terms shall
have the following meanings:
"Acquiror Branch Property" means all real property presently or formerly
owned or operated by the Acquiror or any Acquiror Subsidiary on which branches
or facilities are or were located.
"Acquiror Real Property" means the Acquiror Branch Property, all real
property classified by the Acquiror or any Acquiror Subsidiary as OREO and all
real property (including property held as trustee or in any other fiduciary
capacity) over which the Acquiror or any Acquiror Subsidiary currently or
formerly has exercised dominion, management or control.
4.20.2. Except as set forth in the Acquiror Disclosure Schedule or as
would not have a Material Adverse Effect on the Acquiror and the Acquiror
Subsidiaries taken as a whole:
4.20.2.1 each of the Acquiror and the Acquiror Subsidiaries is
and has been in compliance with all applicable Environmental Laws at all times
since January 1, 1996,
4.20.2.2 to the knowledge of the Acquiror, the Acquiror Real
Property does not contain any Hazardous Substance in violation of any applicable
Environmental Law,
4.20.2.3 since January 1, 1995, neither the Acquiror nor any
Acquiror Subsidiary has received any written notices, demand letters or written
requests for information from any Governmental Authority or any third-party
indicating that the Acquiror or such Acquiror Subsidiary may be in violation of,
or liable under, any Environmental Law.
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4.20.2.4 there are no civil, criminal or administrative actions,
suits, demands, claims, hearings, investigations or proceedings pending or to
the knowledge of the Acquiror, threatened against the Acquiror or any Acquiror
Subsidiary with respect to the Acquiror or any Acquiror Subsidiary or the
Acquiror Real Property relating to any violation, or alleged violation, of any
Environmental Law or any condition of the Acquiror Real Property;
4.20.2.5 no reports have been filed, or are required to be filed, by
the Acquiror or any Acquiror Subsidiary concerning the release of any Hazardous
Substance or the threatened or actual violation of any Environmental Law on or
at the Acquiror Real Property;
4.20.2.6 to the knowledge of the Acquiror, there are no underground
storage tanks on, in or under any of the Acquiror Branch Property and no
underground storage tanks have been closed or removed from any Acquiror Branch
Property while such Acquiror Branch Property was owned or operated by the
Acquiror or any of the Acquiror Subsidiaries; and
4.20.2.7 to the knowledge of the Acquiror, neither the Acquiror nor
any Acquiror Subsidiary has incurred, and none of the Acquiror Real Property is
presently subject to, any liabilities (fixed or, to the knowledge of the
Acquiror, contingent) relating to any suit, settlement, court order,
administrative order, judgment or claim asserted or arising under any
Environmental Law.
4.20.2.8 There are no permits or licenses required under any
Environmental Law with respect to the Acquiror Branch Property presently
operated by the Acquiror or any of the Acquiror Subsidiaries.
4.20.2.9 Except as set forth in the Company Disclosure Schedule,
neither the Acquiror nor any Acquiror Subsidiary has received written notice
that any part of the Acquiror Real Property has been or is listed as a site
containing Hazardous Substances pursuant to any Environmental Law.
4.21. Labor Relations. Except as set forth in the Acquiror Disclosure
Schedule, neither the Acquiror nor any of the Acquiror Subsidiaries is a party
to or bound by any collective bargaining agreement respecting its employees, nor
is there pending, or to the knowledge of the Acquiror threatened, any strike,
walk out or other work stoppage or labor organizational effort with respect to
any of such employees.
4.22. Year 2000. To the extent that any functionality of any computer
system or software used by the Acquiror or the Acquiror Subsidiaries is
dependent upon or interdependent with the use or specification of any calendar
date, the Acquiror and the Acquiror Subsidiaries have used commercially
reasonable efforts (including without limitation seeking written confirmations
from all material customers of and vendors to the Acquiror and the Acquiror
Subsidiaries that such customers' and vendors' computer systems are Year 2000
Compliant) in implementing, and have implemented, a plan pursuant to which any
such computer system shall be Year 2000 Compliant, except where failure to do so
will not materially adversely affect the Acquiror and the Acquiror Subsidiaries.
To be deemed Year 2000 Compliant, such computer
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systems shall conform in all material respects to the following basic
requirements: (i) no value for a current date shall cause any interruption in
the operations of the Acquiror and the Acquiror Subsidiaries (or of the vendors
or customers of the Acquiror and the Acquiror Subsidiaries) in which computer
systems or software are used; and (ii) any date-based functions shall operate
and perform in a consistent manner for dates in, into and between the 20th and
21st centuries and such computer systems and software shall calculate,
manipulate and represent dates correctly, although no such computer systems
shall use particular date values for special meanings.
4.23. Disclosure. No representation or warranty contained in Article IV
of this Agreement or in the Acquiror Disclosure Schedule contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.
V. COVENANTS
5.1. Acquisition Proposals.
5.1.1. The Company agrees that, during the term of this Agreement, it
shall not, and shall not authorize or permit any of its subsidiaries or any of
its or its subsidiaries' directors, officers, employees, agents or
representatives, directly or indirectly, to solicit, initiate, encourage or
facilitate, or furnish or disclose non-public information in furtherance of, any
inquiries or the making of any proposal with respect to any recapitalization,
merger, consolidation or other business combination involving the Company or any
of the Company Subsidiaries, or acquisition of any capital stock from the
Company (other than upon exercise of stock options which are outstanding as of
the date hereof) or 15% or more of the assets of the Company and the Company
Subsidiaries, taken as a whole, in a single transaction or a series of related
transactions, or any acquisition by the Company of any material assets or
capital stock of any other person, or any combination of the foregoing (a
"Competing Transaction"), or negotiate, explore or otherwise engage in
discussions with any person (other than the Acquiror or its directors, officers,
employees, agents and representatives) with respect to any Competing Transaction
or enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement; provided that, at any time prior to the approval
of the Merger by the stockholders of the Company, the Company may furnish
information to, and negotiate or otherwise engage in discussions with, any party
who delivers a written proposal for a Competing Transaction which was not
solicited or encouraged after the date of this Agreement if and so long as the
Board of Directors of the Company determines in good faith by a majority vote,
after consultation with and receipt of advice from its outside legal counsel,
that failing to take such action would constitute a breach of the fiduciary
duties of the Board of Directors of the Company under applicable laws and
determines that such a proposal is, after consulting with Capital Consultants of
Princeton, Inc. (or any other recognized investment banking firm), more
favorable to the Company's stockholders from a financial point of view than the
transactions contemplated by this Agreement (including any adjustment to the
terms and conditions proposed by the Acquiror in response to such Competing
Transaction). The Company will immediately cease all existing activities,
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discussions and negotiations with any parties conducted heretofore with respect
to any proposal for a Competing Transaction. Notwithstanding any other
provision of this Section 5.1, in the event that prior to the approval of the
Merger by the stockholders of the Company, the Board of Directors of the Company
determines in good faith by a majority vote, after consultation with and receipt
of advice from outside legal counsel, that failure to do so would constitute a
breach of the fiduciary duties of the Company's Board of Directors under
applicable laws, the Board of Directors of the Company may (subject to this and
the following sentences) withdraw, modify or change, in a manner adverse to the
Acquiror, its recommendation that the stockholders approve this Agreement (the
"Company Board Recommendation") and, to the extent applicable, comply with Rule
14e-2 promulgated under the 1934 Act with respect to a Competing Transaction by
disclosing such withdrawn, modified or changed Company Board Recommendation in
connection with a tender or exchange offer for Company securities, provided that
it uses all reasonable efforts to give the Acquiror two days prior written
notice of its intention to do so (provided that the foregoing shall in no way
limit or otherwise affect the Acquiror's right to terminate this Agreement
pursuant to Section 7.1.8). The Company's Board of Directors shall not, in
connection with any such withdrawal, modification or change of the Company Board
Recommendation, take any action to change the approval of the Board of Directors
of the Company for purposes of causing any state takeover statute or other state
law to be inapplicable to the transactions contemplated hereby, including the
Merger or the Stock Option Agreement. From and after the execution of this
Agreement, the Company shall immediately advise the Acquiror in writing of the
receipt, directly or indirectly, of any inquiries, discussions, negotiations, or
proposals relating to a Competing Transaction (including the specific terms
thereof and the identity of the other party or parties involved) and furnish to
the Acquiror within 24 hours of such receipt an accurate description of all
material terms (including any changes or adjustments to such terms as a result
of negotiations or otherwise) of any such written proposal in addition to any
information provided to any third party relating thereto. In addition, the
Company shall immediately advise the Acquiror, in writing, if the Board of
Directors of the Company shall make any determination as to any Competing
Transaction as contemplated by the proviso to the first sentence of this Section
5.1.1.
5.1.2. If, prior to the approval of the Merger by the Company's
stockholders, the Board of Directors of the Company shall determine in good
faith, after consultation with its financial and legal advisors, with respect to
any written proposal from a third party for a Competing Transaction received
after the date hereof that was not solicited or encouraged by the Company or any
of its subsidiaries or affiliates in violation of this Agreement that failure to
enter into such Competing Transaction would constitute a breach of the fiduciary
duties of the Board of Directors of the Company under applicable law and that
such Competing Transaction is more favorable to the Company's stockholders from
a financial point of view than the transactions contemplated by this Agreement
(including any adjustment to the terms and conditions of such transaction
proposed in writing by the Acquiror in response to such Competing Transaction)
and is in the best interest of the Company's stockholders and the Company has
received (x) the advice of its outside legal counsel as to whether failure to
enter into such a Competing Transaction would constitute a breach of the Board
of Directors' fiduciary duties under applicable law and (y) an opinion (a copy
of which, if delivered in writing, has been delivered to the Acquiror) from
Capital Consultants of Princeton, Inc. (or any other recognized investment
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banking firm) that the Competing Transaction is more favorable from a financial
point of view to the Company's stockholders than the transactions contemplated
by this Agreement (including any adjustment to the terms and conditions of such
transaction proposed in writing by the Acquiror), the Company may terminate this
Agreement and enter into a letter of intent, agreement-in-principle, acquisition
agreement or other similar agreement (each, an "Acquisition Agreement") with
respect to such Competing Transaction provided that, prior to any such
termination, (i) the Company has provided the Acquiror written notice that it
intends to terminate this Agreement pursuant to this Section 5.1.2, identifying
the Competing Transaction then determined to be more favorable and the parties
thereto and delivering an accurate description of all material terms (including
any changes or adjustments to such terms as a result of negotiations or
otherwise) of the Acquisition Agreement to be entered into for such Competing
Transaction, and (ii) at least three full business days after the Company has
provided the notice referred to in clause (i) above (provided that the advice
and opinion referred to in clauses (x) and (y) above shall continue in effect
without revocation, revision or modification), the Company delivers to the
Acquiror (A) a written notice of termination of this Agreement pursuant to this
Section 5.1.1, (B) a check in the amount of the Acquiror's Costs (as defined in
Section 7.2) as the same may have been estimated by the Acquiror in good faith
prior to the date of such delivery (subject to an adjustment payment between the
parties upon the Acquiror's definitive determination of such Costs), (C) a
written acknowledgment from the Company that (x) the termination of this
Agreement and the entry into the Acquisition Agreement for the Competing
Transaction will be a "Purchase Event" as defined in the Stock Option Agreement
and (y) the Stock Option Agreement shall be honored in accordance with its terms
and (D) a written acknowledgment from each other party to such Competing
Transaction that it is aware of the substance of the Company's acknowledgment
under clause (C) above and waives any right it may have to contest the matters
thus acknowledged by the Company.
5.2. Interim Operations of the Company. The Company shall terminate its
dividend reinvestment plan effective upon the execution of this Agreement and
shall notify its stockholders of such termination within ten days after the
execution of this Agreement. The Company shall (and shall cause each of the
Company Subsidiaries to) conduct its operations in the ordinary course except as
expressly contemplated by this Agreement and the transactions contemplated
hereby and use all reasonable efforts to maintain and preserve its business
organization and its material rights and franchises and to retain the services
of its officers and key employees and maintain relationships with customers,
suppliers, lessees, licensees and other third parties, and to maintain all of
its operating assets in their current condition (normal wear and tear excepted),
to the end that its goodwill and ongoing business shall not be impaired in any
material respect. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, the Company shall
not (and the Company shall cause each of the Company Subsidiaries not to),
except as otherwise expressly contemplated by this Agreement and the
transactions contemplated hereby, without the prior written consent of the
Acquiror:
5.2.1. Do or effect any of the following actions with respect to its
securities: (A) adjust, split, combine or reclassify its capital stock, (B)
make, declare, set aside or pay any dividend (other than regular quarterly
dividends on the Common Stock of $.02 per share with
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record and payment dates consistent with past practice provided that the
Company's stockholders shall not be entitled to receive a cash dividend from the
Company (prior to the Closing) and a cash dividend from the Acquiror (after the
Closing) within the same three month period and provided further that no such
dividend shall constitute an "extraordinary distribution" as defined in Treasury
Regulation (S)1.368-1T(e)(1)(ii)) or other distribution or payment (whether in
cash, stock or property) with respect to, or on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any shares of its
capital stock, (C) grant any person any right or option to acquire any shares of
its capital stock, (D) issue, deliver or sell or agree to issue, deliver or sell
any additional shares of its capital stock or any securities or obligations
convertible into or exchangeable or exercisable for any shares of its capital
stock or such securities (except pursuant to the exercise of stock options which
are both outstanding on the date hereof and disclosed on one or more exhibits
annexed hereto), or (E) enter into any agreement, understanding or arrangement
with respect to the sale, voting, registration or repurchase of its capital
stock;
5.2.2. Directly or indirectly sell, transfer, lease, pledge,
mortgage, encumber or otherwise dispose of any of its property or assets other
than in the ordinary course of business;
5.2.3. Make or propose any changes in its certificate of
incorporation or by-laws;
5.2.4. Merge or consolidate with any other person;
5.2.5. Acquire a material amount of assets or capital stock of any
other person:
5.2.6. Except pursuant to existing credit arrangements, incur,
create, assume or otherwise become liable for any indebtedness for borrowed
money or assume, guarantee, endorse or otherwise as an accommodation become
responsible or liable for the obligations of any other individual, corporation
or other entity, other than in the ordinary course of business, consistent with
past practice;
5.2.7. Create any subsidiaries;
5.2.8. Enter into or modify any employment, severance, termination or
similar agreements or arrangements with, or grant any bonuses, salary increases,
severance or termination pay to, any officer, director, consultant or employee
other than in the ordinary course of business consistent with past practice, or
otherwise increase the compensation or benefits provided to any officer,
director, consultant or employee except as may be required by applicable law or
in the ordinary course of business consistent with past practice;
5.2.9. Enter into, adopt or amend any employee benefit or similar
plan except as may be required by applicable law;
5.2.10. Change any method or principle of accounting in a manner that
is inconsistent with past practice except to the extent required by generally
accepted accounting principles as advised by the Company's regular independent
accountants;
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5.2.11. Modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to, any material agreement or any
confidentiality agreement to which the Company is a party;
5.2.12. Enter into any confidentiality agreements or arrangements
with respect to any transaction other than a transaction in the ordinary course
of business consistent with past practice;
5.2.13. Incur or commit to any capital expenditures, individually or
in the aggregate, in excess of 120% of the amount set forth in the capital
expenditure budget set forth in the Company's Disclosure Schedule;
5.2.14. Make any payments in respect of policies of directors' and
officers' liability insurance (premiums or otherwise) other than amounts paid
pursuant to current policies;
5.2.15. Take any action to exempt or make not subject to (x) the
provisions of the New Jersey Shareholder Protection Act (N.J.S.A. 14A:10A et
seq.) or (y) any other state takeover law or state law that purports to limit or
restrict business combinations or the ability to acquire or vote shares, any
person or entity (other than the Acquiror or its subsidiaries) or any action
taken thereby, which person, entity or action would have otherwise been subject
to the restrictive provisions thereof and not exempt therefrom;
5.2.16. Take any action, or knowingly omit to take any action, that
would, or that would reasonably be expected to, result in (A) any of the
representations and warranties of the Company set forth in Article III becoming
untrue in any material respect (or, with respect to representations and
warranties that are qualified as to materiality, in any respect) or (B) any of
the conditions to Closing set forth in Sections 6.1 or 6.2 not being satisfied;
5.2.17. Enter into or carry out any other transaction other than in
the ordinary and usual course of business;
5.2.18. Convene any meeting of (other than the meeting convened to
vote upon the Merger) or determine to submit any matter for stockholder action
(other than the Merger) unless the Acquiror has been given at least 45 days
prior written notice of such meeting or determination;
5.2.19. Take any action that would, in any such case, (i) materially
delay or adversely affect the ability of the Company to obtain any approvals of
governmental entities required to permit consummation of the Merger or (ii)
materially adversely affect its ability to perform its obligations under this
Agreement;
5.2.20. Change any of its existing policies and practices with
respect to taking any action that results or would be likely to result in it
being deemed to exercise dominion, management or control over collateral
securing any extension of credit; provided however that
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such practices comply with all Environmental Laws and provided further however
that the Company shall not take any such action with respect to any outstanding
extension of credit with a contractual amount due of $200,000 or more or in
connection with which there is reasonably anticipated to be an environmental
exposure of $50,000 or more without prior consultation with the Acquiror; or
5.2.21. Agree in writing or otherwise to take any of the foregoing
actions.
5.3. Acquiror Representations and Covenants. The Acquiror shall not take
any action, or knowingly omit to take any action, that would, or that would
reasonably be expected to, result in (A) any of the representations and
warranties of the Acquiror (other than representations and warranties made as of
a particular date) set forth in Article IV becoming untrue in any material
respect (or, with respect to representations and warranties that are qualified
as to materiality, in any respect) or (B) any of the conditions to closing set
forth in Sections 6.1 or 6.3 not being satisfied.
5.4. Access and Information. Upon reasonable notice, each of the Company
and the Acquiror shall (and shall cause each of its subsidiaries to) afford to
the other and their representatives (including, without limitation, directors,
officers and employees of the other party hereto and its affiliates and counsel,
accountants and other professionals retained by it) such access during normal
business hours throughout the period prior to the Effective Time to the books,
records (including, without limitation, tax returns and work papers of
independent auditors), properties, personnel and to such other information as
the Acquiror or the Company reasonably requests; provided, however, that neither
the Company nor the Acquiror shall be required to provide access to any such
information if the providing of such access (i) would violate a binding
contractual obligation, (ii) would, as advised by outside counsel, be reasonably
likely to result in the loss or impairment of any privilege with respect to such
information or (iii) would be precluded by any law, ordinance, regulation,
judgment, order, decree, license or permit of any governmental entity. Any
access granted to the Company and the Acquiror pursuant to this Section 5.4
shall not in any way limit any representation or warranty set forth in this
Agreement. The rights and obligations of each of the Acquiror and the Company
pursuant to the Confidentiality Letter Agreement, dated October 22, 1998
("Confidentiality Agreement"), between the Acquiror and the Company, shall
survive the execution and delivery of this Agreement, and all information
heretofore and hereafter obtained by the Acquiror, the Company or any of their
advisors pursuant to this Section 5.5 or otherwise shall be deemed to be covered
by the Confidentiality Agreement (subject to the exceptions provided for
therein), and in the case of the Acquiror, shall remain subject to the
provisions of such Confidentiality Agreement until the Effective Time and, in
the case of the Company shall remain subject to the provisions of such
Confidentiality Agreement in accordance with the terms thereof.
5.5. Certain Filings, Consents and Arrangements. The Acquiror and the
Company shall (a) promptly make their respective filings, and shall thereafter
use their best efforts promptly to make any required submissions, under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), with respect to the Merger and the other transactions contemplated by
this Agreement, (b) promptly file all applications and reports required to be
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filed with all applicable governmental entities between the date of this
Agreement and the Effective Time and promptly cause each Acquiror Subsidiary or
Company Subsidiary that is a bank to make all filings required to be made with
all applicable governmental entities, with respect to the Merger and the other
transactions contemplated by this Agreement, (c) cooperate with one another (i)
in promptly determining whether any other filings are required to be made or
consents, approvals, permits or authorizations are required to be obtained under
any other applicable federal, state or foreign law or regulation and (ii) in
promptly making any such filings, furnishing information required in connection
therewith and seeking timely to obtain any such consents, approvals, permits or
authorizations and (d) subject to the qualifications set forth in the proviso in
Section 5.4, deliver to the other parties to this Agreement copies of all such
reports and filings promptly after they are filed. Notwithstanding anything to
the contrary contained in this Agreement, the Acquiror shall not be required to
take any action that would subject it to any obligations under ISRA unless the
Effective Time shall have occurred.
5.6. Indemnification and Insurance.
5.6.1. For a period of six years after the Effective Time, the
Acquiror shall indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date hereof or who becomes prior to the
Effective Time, a director, officer (whether elected or appointed), employee or
agent of the Company or any subsidiary of the Company or serves or has served at
the request of the Company in any capacity with any other person (collectively,
the "Indemnitees") against any and all claims, damages, liabilities, losses,
costs, charges, expenses (including, without limitation, reasonable costs of
investigation, and the reasonable fees and disbursements of legal counsel and
other advisors and experts as incurred), judgments, fines, penalties and amounts
paid in settlement, asserted against, incurred by or imposed upon any
Indemnitee, (i) in connection with, arising out of or relating to any
threatened, pending or completed claim, action, suit or proceeding (whether
civil, criminal, administrative or investigative), including, without
limitation, any and all claims, actions, suits proceedings or investigations by
or on behalf of or in the right of or against the Company or any Company
Subsidiary or their affiliates, or by any present or former stockholder of the
Company (collectively, "Claims"), including, without limitation, any Claim which
is based upon, arises out of or in any way relates to the Merger, the Joint
Proxy Statement/Prospectus (as defined in Section 5.9), this Agreement, any of
the transactions contemplated by this Agreement, the Indemnitee's service as a
member of the Company's Board of Directors or any committee of the Company's
Board of Directors, the events leading up to the execution of this Agreement,
any statement, recommendation or solicitation made in connection therewith or
related thereto and any breach of any duty in connection with any of the
foregoing, and (ii) in connection with, arising out of or relating to the
enforcement of the obligations of Acquiror set forth in this Section 5.6, in
each case to the fullest extent permitted under any applicable law, but in no
event beyond the extent to which such indemnification would have been available
from the Company had the Claim been advanced on the date hereof.
5.6.2. In the event that the Acquiror or any of its successors or
assigns (i) reorganizes or consolidates with or merges into or enters into
another business combination transaction with any other person or entity and is
not the resulting, continuing or surviving
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corporation or entity of such consolidation, merger or transaction, or (ii)
liquidates, dissolves or transfers all or substantially all of its properties
and assets to any person or entity, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Acquiror
assume the obligations set forth in this Section 5.6.
5.6.3. The Acquiror shall use its best efforts to maintain the
Company's current officers' and directors' liability insurance ("D&O Insurance")
in full force and effect without reduction of coverage for a period of three
years after the Effective Time (provided that the Acquiror may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not substantially less advantageous); provided, however,
that Acquiror shall not be required to pay an annual premium therefor in excess
of one hundred percent (100%) of the last annual premium paid by the Company
prior to the date hereof (the "Current Premium"); and provided further, however,
that if such D&O Insurance expires, is terminated or canceled during such three-
year period, the Acquiror shall use its best efforts to obtain as much D&O
Insurance covering the Company's officers and directors as can be obtained for
the remainder of such period for a premium on an annualized basis not in excess
of one hundred percent (100%) of the Current Premium.
5.6.4. This Section 5.6 shall be construed as an agreement, as to
which the Indemnitees are intended to be third-party beneficiaries, between the
Acquiror and the Indemnitees, as unaffiliated third parties.
5.6.5. Any Indemnitee wishing to claim indemnification under this
Section 5.6, upon learning of any such claim, action, suit or proceeding, shall
promptly notify the Acquiror thereof, but the failure to so notify shall not
relieve Acquiror of any liability it may have to such Indemnitee if such failure
does not prejudice the Acquiror. In the event of any such claim, action, suit
or proceeding (whether arising before or after the Effective Time) as to which
the Acquiror agrees that indemnification under this Section 5.6 is applicable,
(a) the Acquiror shall have the right to assume the defense thereof and neither
the Acquiror nor the Surviving Corporation shall be liable to such Indemnitees
for any legal expenses of other counsel or any other expenses subsequently
incurred by such Indemnitees in connection with the defense thereof, except that
if the Acquiror elects not to assume such defense or counsel for the Indemnitees
advises that there are issues which raise conflicts of interest between the
Acquiror or the Surviving Corporation and the Indemnitees, the Indemnitees may
retain counsel satisfactory to them, and the Acquiror or the Surviving
Corporation shall pay the reasonable fees and expenses of such counsel for the
Indemnitees as statements therefor are received; provided, however, that the
Acquiror and the Surviving Corporation shall be obligated pursuant to this
Section 5.6.5 (a) to pay for only one firm of counsel for all Indemnitees in any
jurisdiction with respect to a matter unless the use of one counsel for such
Indemnitees would present such counsel with a conflict of interest and (b) the
Indemnitees will cooperate in the defense of any such matter. Neither the
Acquiror nor the Surviving Corporation shall be liable for settlement of any
claim, action or proceeding hereunder unless such settlement is effected with
its prior written consent; and provided further, however, that neither the
Acquiror nor the Surviving Corporation shall have any obligation hereunder to
any Indemnitee when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and non-
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appealable, that the indemnification of such Indemnitee in the manner
contemplated hereby is prohibited by applicable law.
5.7. Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take
promptly, or cause to be taken, all actions and to do promptly, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using its best efforts to obtain all necessary actions
or non-actions, extensions, waivers, consents and approvals from all applicable
governmental entities, effecting all necessary registrations and filings
(including, without limitation, making all filings under the HSR Act and any
applicable banking and securities laws) and obtaining any required contractual
consents. If, at any time after the Effective Time, the Surviving Corporation
considers or is advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets of either of
the Constituent Corporations acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out the purposes of this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of each of the Constituent Corporations or otherwise, all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of each of the Constituent Corporations or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and al right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out the
purposes of this Agreement.
5.8. Publicity. The initial press release announcing this Agreement shall
be a joint press release, and thereafter the Company and the Acquiror shall
consult with each other regarding any statements about the financial effects of
the transaction to analysts and before (i) issuing any press releases or
otherwise making public statements with respect to the transactions contemplated
hereby; or (ii) making any filings with any governmental entity with respect
thereto.
5.9. Joint Proxy Statement/Prospectus; Registration Statement. The
Acquiror and the Company shall cooperate in preparing a joint proxy
statement/prospectus (the "Joint Proxy Statement/Prospectus") which shall be
utilized to solicit proxies in connection with the meeting at which the
Company's stockholders will vote upon the Merger and the meeting at which the
Acquiror's stockholders will vote upon the Merger. Such document shall also
constitute a prospectus for the offer, sale and registration of the Acquiror's
capital stock pursuant to the Merger. Promptly after both the Acquiror and the
Company confirm that the Joint Proxy Statement/Prospectus is satisfactory for
filing in preliminary form, the Acquiror shall file such preliminary Joint Proxy
Statement/Prospectus with the SEC, such filing to be on a confidential basis to
the extent permitted by the rules of the SEC. Each party shall provide the
other with a copy of any written comments that it may receive from the Staff of
the SEC with respect to the Joint Proxy Statement/Prospectus and shall afford
the other party's representatives the opportunity to participate in any
telephonic conversation or meeting with the Staff of the SEC
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regarding the Joint Proxy Statement/Prospectus. Each party will afford the other
party and its counsel a full and complete opportunity to comment on any response
to any comments from the Staff of the SEC with respect to such Joint Proxy
Statement/Prospectus and will not file any amendment to such preliminary Joint
Proxy Statement/Prospectus unless such amendment is approved by the other party,
such approval not to be unreasonably withheld. The Acquiror shall prepare and
file with the SEC a registration statement on Form S-4 including such Joint
Proxy Statement/Prospectus (the "Registration Statement") as soon as is
reasonably practicable following receipt of final comments from the Staff of the
SEC on the Joint Proxy Statement/Prospectus (or advice that such Staff shall not
review such filing), and shall use all reasonable efforts to have the
Registration Statement declared effective by the SEC as promptly as practicable
and to maintain the effectiveness of such Registration Statement. Each party
will promptly advise the other party in writing if at any time prior to the
Company Meeting (as hereinafter defined) or the Acquiror Meeting (as hereinafter
defined) it shall obtain knowledge of any facts that might make it necessary or
appropriate to amend or supplement the Joint Proxy Statement/Prospectus or
Registration Statement in order to make the statements contained or incorporated
by reference therein not misleading or to comply with applicable law. The
Acquiror shall also take any action required to be taken under state blue sky or
securities laws in connection with the issuance of the Acquiror Common Stock
pursuant to the Merger, and the Company shall furnish the Acquiror all
information concerning the Company and the holders of its capital stock and
shall take any action as the Acquiror may reasonably request in connection with
any such action. The Acquiror will afford the Company and its counsel a
reasonable opportunity to comment on (i) the Registration Statement in
preliminary form prior to its being filed with the SEC, (ii) any response to any
comments from the Staff of the SEC with respect to such Registration Statement
in preliminary form and (iii) any proposed amendments to the Registration
Statement. Each party will promptly advise the other in writing if at any time
prior to the Company Meeting or the Acquiror Meeting it shall obtain knowledge
of any facts that might make it necessary or appropriate to amend or supplement
the Registration Statement in order to make the statements contained or
incorporated by reference therein not misleading or to comply with applicable
law.
5.10. Compliance with the 1933 Act and the 1934 Act; Pooling of Interests.
5.10.1. At least 45 days prior to the Effective Time, the Company
shall identify to the Acquiror all persons who were, at the time of the
execution of this Agreement, possible "affiliates" of the Company as that term
is used in paragraphs (c) and (d) of Rule 145 under the Securities Act and as
that term is used for purposes of determining whether the Merger qualifies for
"pooling of interests" accounting treatment (the "Company Affiliates").
5.10.2. The Company shall use its best efforts, which shall not,
however, require the Company to make any payment whatsoever for such purpose, to
obtain a written agreement (in the form and substance of the letter annexed
hereto as Appendix A) from each person who is identified as a possible Company
----------
Affiliate pursuant to Section 5.10.1, providing that (a) such person shall not
offer, sell, pledge, transfer or otherwise dispose of any shares of Common Stock
held by such Company Affiliate and any shares of Acquiror Common Stock to be
received by such Company Affiliate as Common Stock Consideration, except in
compliance with the
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applicable provisions of the 1933 Act and the rules and regulations (including
Rule 145) thereunder and (b) such person shall not sell or otherwise reduce such
person's risk relative to any shares of Common Stock during the period
commencing 30 days prior to the consummation of the Merger and will not sell or
otherwise reduce such person's risk relative to any shares of Acquiror Common
Stock until publication of financial results covering at least 30 days of
combined operations of the Acquiror and the Company.
5.10.3. Prior to the Closing, the Company shall deliver to the Acquiror
such consolidated financial statements of the Company as the Acquiror shall
reasonably request in order to enable the Acquiror to comply with its reporting
obligations under the 1934 Act, together with an executed report of the
Company's outside auditors with respect to all such financial statements that
have been audited. Such report shall be in form and substance satisfactory to
the Acquiror. The financial statements delivered pursuant to this Section
5.10.3 shall be prepared in accordance with GAAP and shall conform to all
provisions of the SEC's Regulation S-X, such that such financial statements are
suitable for filing by the Acquiror with the SEC in response to Items 2 and 7 of
the SEC's Current Report on Form 8-K. Immediately prior to the Closing, the
Company shall cause its outside auditors to deliver to the Acquiror an executed
consent, in form and substance satisfactory to the Acquiror and suitable for
filing by the Acquiror with the SEC, which consent shall authorize the Acquiror
to file with the SEC the report referred to in this Section 5.10.3 and all other
reports delivered by the Company hereunder.
5.11. Stockholders' Meetings. The Company shall take all action
necessary, in accordance with applicable law and its Certificate of
Incorporation and By-laws, to convene a special meeting or annual meeting of
stockholders (in either case, the "Company Meeting") as promptly as practicable
for the purpose of considering and taking action upon this Agreement. The Board
of Directors of the Company shall recommend that the holders of shares of
capital stock entitled to vote on the Merger vote in favor of and approve the
Merger and adopt this Agreement at the Company Meeting; provided, however, that
such recommendation may be withdrawn, modified or amended to the extent that the
Board of Directors of the Company determines, upon the advice of outside
counsel, that any such action is necessary, in the exercise of its fiduciary
obligations under applicable law. The Acquiror shall take all action necessary,
in accordance with applicable law and its Certificate of Incorporation and By-
laws, to convene a special meeting or annual meeting of stockholders (in either
case, the "Acquiror Meeting") as promptly as practicable for the purpose of
considering and taking action upon this Agreement. The Board of Directors of
the Acquiror shall recommend that the holders of shares of capital stock
entitled to vote on the Merger vote in favor of and approve the Merger and adopt
this Agreement at the Acquiror Meeting; provided, however, that such
recommendation may be withdrawn, modified or amended to the extent that the
Board of Directors of the Acquiror determines, upon the advice of outside
counsel, that any such action is necessary, in the exercise of its fiduciary
obligations under applicable law.
5.12. Pooling and Tax-Free Reorganization Treatment. Neither the Acquiror
nor the Company shall intentionally take, fail to take or cause to be taken or
not taken any action within
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its control, which would disqualify the Merger from being treated as a "pooling
of interests" for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Code.
5.13. ISRA Approval. The Company, at its sole cost and expense, shall
obtain, prior to the Effective Time, either (i) a written determination (based
upon an affidavit from the Company that is approved by the Acquiror prior to its
submission to the NJDEP) from the NJDEP that the transactions contemplated by,
or the properties subject to, this Agreement are not subject to the requirements
of ISRA, or (ii) a Remediation Agreement (in form and substance satisfactory to
the Acquiror) issued by the NJDEP pursuant to ISRA authorizing the consummation
of the transactions contemplated by this Agreement prior to the issuance of any
"Negative Declaration," "No Further Action Letter" or approval of any "Remedial
Action Workplan," as such terms are defined under ISRA, or (iii) "Negative
Declaration" or approvals of any "Remedial Action Workplan" (in either case in
form and substance satisfactory to the Acquiror) with respect to each property
in New Jersey which the Company or any Company Subsidiary owns or operates, in
each case to the extent that such property renders the provisions of ISRA
applicable to the transactions contemplated by this Agreement. The Company will
obtain and maintain a "Remediation Funding Source" in form and amount approvable
by the NJDEP as required in furtherance of the Company's obligations under this
covenant.
5.14. Due Diligence. Each party shall, by the close of business on
December 31, 1998 (the "Delivery Period"), deliver to the other party all lists
and other materials called for in Article III and Article IV, respectively,
which have not been provided on or before the date this Agreement is executed.
Based upon its review of such materials and any other information that it may
consider (including without limitation information received pursuant to Section
5.4 hereof), each party shall have the right, in its sole discretion, to
terminate this Agreement by written notice to the other party given by the close
of business on January 19, 1999. In the event that either party shall terminate
this Agreement in accordance with this Section 5.14, neither party shall have
any further liability to the other.
5.15. Intentionally omitted.
5.16. Post-Effective Time Operations. From and after the Effective Time
and through the end of the Transition Period, NBSC shall not take any of the
actions described in Section 5.2 hereof (the "Actions") without the prior
written consent of the Acquiror. During the Transition Period, the Acquiror
shall have the right to expand the list of Actions at any time and to obtain
injunctive relief to enforce the provisions of this Section 5.16.
VI. CONDITIONS
6.1. Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment, at or prior to the Effective Time, of the following conditions:
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6.1.1. The Merger shall have been approved and adopted by the
requisite vote of the holders of the Common Stock and by the requisite vote of
the holders of the Acquiror Common Stock.
6.1.1A. At the record date for the Company Meeting, the Company shall
have had at least 1,000 stockholders of record. At the record date for the
Acquiror Meeting, the Acquiror shall have had at least 1,000 stockholders of
record.
6.1.2. All authorizations, consents, orders or approvals of, and all
expirations of waiting periods imposed by, any Governmental Authority
(collectively, "Governmental Consents") which are necessary for the consummation
of the Merger (other than immaterial Governmental Consents, the failure to
obtain which would not have a material adverse effect on the Acquiror, the
Company, and their subsidiaries taken as a whole) shall have been obtained or
shall have occurred and shall be in full force and effect at the Effective Time;
provided, however, that the entry by a court, in any suit brought by a private
party or governmental entity challenging the Merger as violative of the
antitrust laws, of an order or decree permitting the Merger, but requiring that
any of the businesses, product lines or assets of the Acquiror or the Company be
held separate thereafter, shall not be deemed to satisfy the conditions
specified in this Section 6.1.2 unless the Acquiror consents to such
requirements.
6.1.3. The Registration Statement shall have become effective in
accordance with the provisions of the 1933 Act. No stop order suspending the
effectiveness of the Registration Statement shall have been issued by the SEC
and remain in effect.
6.1.4. The Acquiror shall have received (i) a letter, dated the date
of the Closing, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the Company's independent accountants,
to the effect that, for financial reporting purposes, such firm is unaware of
any reason why the Merger should not be accounted for as a pooling of interests
under GAAP if consummated in accordance with this Agreement and (ii) a letter,
dated the date of the Closing, from Radics & Co., LLC, the Acquiror's
independent accountants, to the effect that, for financial reporting purposes,
the Merger qualifies for pooling-of-interests accounting treatment under GAAP if
consummated in accordance with this Agreement.
6.1.5. No temporary restraining order, preliminary or permanent
injunction or other order by any federal or state court in the United States
which prevents the consummation of the Merger shall have been issued and remain
in effect.
6.1.6. The Company and the Acquiror shall have obtained an opinion of
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ reasonably satisfactory in form and substance to the Company
and the Acquiror, to the effect that (i) the Merger will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Code, (ii) no gain or
loss shall be recognized by the stockholders of the Company upon the conversion
of their Shares into shares of the Acquiror Common Stock pursuant to the terms
of the Merger (except for cash received in lieu of fractional shares) and (iii)
no gain or loss shall be recognized by the Company or Acquiror on account of the
Merger or the issuance of shares of capital stock pursuant to this Agreement.
In rendering its
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opinion, such firm may require and rely upon representations, standard for
transactions comparable to the Merger, contained in certificates of officers of
the Company and the Acquiror, or upon assumptions standard for transactions
comparable to the Merger.
6.1.7 At the Closing, the Acquiror shall have placed in "rabbi"
trusts (or other vehicles mutually agreed to by the parties) for the benefit of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ an amount (the "Amount") equal to
the present value of the aggregate amounts that would be owed to Messrs.
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇, respectively, upon their estimated retirement dates
pursuant to their respective Salary Continuation Agreements ("SERPs") with the
Company and NBSC. Such Amount shall be calculated using December 3, 1999 as ▇▇.
▇▇▇▇▇▇▇▇▇'▇ retirement date and March 22, 2017 as ▇▇. ▇▇▇▇▇▇▇▇▇▇▇'▇ retirement
date. In determining the Amount, the present value shall be calculated using an
interest rate equal to the "long-term applicable federal rate" as of the date of
Closing, as such rate is defined in Section 1274(d) of the Code. In addition,
at the Closing, the Company, the Acquiror, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇ shall have executed a letter (the "Side Letter") in form
satisfactory to the Company and the Acquiror pursuant to which the parties
acknowledge and agree that after the Closing, the Acquiror and its subsidiaries
will have no obligation to pay any additional amounts pursuant to such SERPs.
6.2. Conditions to Obligations of the Company to Effect the Merger. The
obligation of the Company to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the additional
following conditions:
6.2.1. The Acquiror shall have performed in all material respects its
covenants contained in this Agreement required to be performed at or prior to
the Effective Time.
6.2.2. The representations and warranties of the Acquiror contained
in this Agreement shall be true in all material respects (other than
representations and warranties of the Acquiror contained in this Agreement which
are qualified as to materiality, which shall be true in all respects) when made
and as of the Effective Time as if made at and as of such time, except as
expressly contemplated or permitted by this Agreement and except for
representations and warranties relating to a time or times other than the
Effective Time which were or shall be true in all material respects (other than
representations and warranties which are qualified as to materiality, which
shall be true in all respects) at such time or times.
6.2.3. During the period from October 1, 1998 through the Closing
Date, there shall not have been any event, act or omission (individually or in
the aggregate) which shall have had a Material Adverse Effect upon the Acquiror
and the Acquiror Subsidiaries, taken as a whole, nor any loss or damage to the
assets of the Acquiror and the Acquiror Subsidiaries, whether or not insured,
which materially affects the ability of the Acquiror and the Acquiror
Subsidiaries to conduct their business.
6.2.4. The Acquiror shall have delivered to the Company a
certificate, dated the date of the Closing, signed by the President or Vice
President and by the Chief Financial Officer
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of the Acquiror that, to the best of their knowledge and belief after due
inquiry, the conditions set forth in Sections 6.2.1, 6.2.2 and 6.2.3 have been
satisfied.
6.2.5. Prior to or at the Closing, the Acquiror shall have delivered
such other closing documents as shall be reasonably requested by the Company in
form and substance acceptable to the Company's counsel (which acceptance shall
not be unreasonably withheld), including a certificate of the Secretary or
Assistant Secretary of the Acquiror, dated the Closing Date, as to the
incumbency of any officer of the Acquiror executing this Agreement or any
document related hereto and covering such other matters as the Company may
reasonably request.
6.2.6. The Board of Directors of the Company shall have received an
opinion of Capital Consultants of Princeton, Inc., in form and substance
reasonably satisfactory to such Board, dated as of the date of the Joint Proxy
Statement/Prospectus, that the Merger is fair to the stockholders of the Company
from a financial point of view.
6.3. Conditions to Obligation of the Acquiror to Effect the Merger. The
obligation of the Acquiror to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the additional
following conditions:
6.3.1. The Company shall have performed in all material respects its
covenants contained in this Agreement required to be performed at or prior to
the Effective Time.
6.3.2. The representations and warranties of the Company contained in
this Agreement shall be true in all material respects (other than
representations and warranties of the Company contained in this Agreement which
are qualified as to materiality, which shall be true in all respects) when made
and as of the Effective Time as if made at and as of such time, except as
expressly contemplated or permitted by this Agreement and except for
representations and warranties relating to a time or times other than the
Effective Time which were or shall be true in all material respects (other than
representations and warranties which are qualified as to materiality, which
shall be true in all respects) at such time or times.
6.3.3. During the period from October 1, 1998 through the Closing
Date, there shall not have been any event, act or omission (individually or in
the aggregate) which shall have had a Material Adverse Effect upon the Company
and the Company Subsidiaries, taken as a whole, nor any loss or damage to the
assets of the Company and the Company Subsidiaries, whether or not insured,
which materially affects the ability of the Company and the Company Subsidiaries
to conduct their business.
6.3.4. The Company shall have delivered to the Acquiror a
certificate, dated the date of the Closing, signed by the President or Vice
President and by the Chief Financial Officer of the Company that, to the best of
their knowledge and belief after due inquiry, the conditions set forth in
Sections 6.3.1, 6.3.2 and 6.3.3 have been satisfied.
6.3.5. If requested by the Acquiror, the Acquiror and its directors
and officers who sign the Registration Statement shall have received from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, the
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Company's independent certified public accountants, an "agreed upon procedures"
letter, dated the date of the mailing of the Joint Proxy Statement/Prospectus to
the Company's stockholders, with respect to certain financial information
regarding the Company in the form customarily issued by such accountants at such
time in transactions of this type.
6.3.6. All consents of third parties (collectively, "Third Party
Consents") which are necessary for the consummation of the Merger (other than
immaterial Third Party Consents, the failure to obtain which would not have a
material adverse effect on the Acquiror, the Company, and their subsidiaries
taken as a whole) shall have been obtained and shall be in full force and effect
at the Effective Time.
6.3.7 The Acquiror shall have received letters, in the form of
Appendix A annexed hereto, from each person whom the Acquiror reasonably
----------
determines to be an affiliate of the Company for purposes of (a) the SEC's Rule
145 and (b) assuring that the Merger will be accounted for as a "pooling of
interests."
6.3.8. Prior to or at the Closing, the Company shall have delivered
such other closing documents as shall be reasonably requested by the Acquiror in
form and substance acceptable to the Acquiror's counsel (which acceptance shall
not be unreasonably withheld), including a certificate of the Secretary or
Assistant Secretary of the Company, dated the Closing Date, as to the incumbency
of any officer of the Company executing this Agreement or any document related
hereto and covering such other matters as the Acquiror may reasonably request.
6.3.9. The Board of Directors of the Acquiror shall have received an
opinion of ▇▇▇▇, ▇▇▇▇ & Co., Inc., in form and substance reasonably satisfactory
to such Board, dated as of the date of the Joint Proxy Statement/Prospectus,
that the Merger is fair to the stockholders of the Acquiror from a financial
point of view.
VII. TERMINATION
7.1. Events of Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of the Company and the Acquiror:
7.1.1. By mutual consent of the Boards of Directors (or committees
thereof) of the Acquiror and the Company;
7.1.2. By either the Acquiror or the Company if the Merger shall not
have been consummated on or before September 30, 1999 (the "Outside Date"),
provided the terminating party is not otherwise in material breach of its
obligations under this Agreement;
7.1.3. By either the Acquiror or the Company if this Agreement is not
approved at the Company Meeting;
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7.1.4. By either the Acquiror or the Company if this Agreement is not
approved at the Acquiror Meeting;
7.1.5. By the Acquiror or the Company, in the event of (i) a breach
by the other party of any representation or warranty contained herein, which
breach has not been cured within thirty (30) days after the giving of written
notice to the breaching party of such breach and which breach, individually or
in the aggregate when combined with other such breaches, would cause the
conditions set forth in Sections 6.2.2 or 6.3.2, as the case may be, not to be
met if the date of the action described above were the date of the Closing or
(ii) a material breach by the other party of any of the covenants or agreements
contained herein, which breach has not been cured within thirty (30) days after
the giving of written notice to the breaching party of such breach;
7.1.6. By the Company if any of the conditions specified in Sections
6.1 and 6.2 have not been met or waived by the Company at such time as such
conditions can no longer be satisfied;
7.1.7. By the Acquiror if any of the conditions specified in Sections
6.1 and 6.3 have not been met or waived by the Acquiror at such time as such
conditions can no longer be satisfied;
7.1.8. By the Acquiror if the Board of Directors of the Company shall
withdraw, modify or change the Company Board Recommendation in a manner adverse
to the Acquiror, or if the Board of Directors of the Company shall have refused
to affirm the Company Board Recommendation as promptly as practicable (but in
any case within 10 business days) after receipt of any written request from the
Acquiror which request was made on a reasonable basis;
7.1.9. By either the Acquiror or the Company pursuant to Section
5.14;
7.1.10. Intentionally omitted.
7.1.11. By the Company pursuant to Section 5.1.2; or
7.1.12. By the Acquiror if the Company shall have breached in any
material respect any of its obligations under the Stock Option Agreement.
7.2. Effect of Termination.
7.2.1. In the event of the termination of this Agreement pursuant to
Section 7.1, this Agreement, except for the provisions of Sections 5.4, 5.8,
7.2, 8.1 and 8.4, shall become void and have no effect, without any liability on
the part of any party or its directors, officers or stockholders.
Notwithstanding the foregoing, nothing in this Section 7.2 shall relieve any
party to this Agreement of liability for a material breach of any provision of
this Agreement and provided, further, however, that if it shall be judicially
determined that termination of this Agreement was caused by an intentional
breach of this Agreement, then, in addition to other remedies at law or equity
for breach of this Agreement, the party so found to have intentionally
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breached this Agreement shall indemnify and hold harmless the other parties for
their respective out-of-pocket costs, fees and expenses of their counsel,
accountants, financial advisors and other experts and advisors as well as fees
and expenses incident to negotiation, preparation and execution of this
Agreement and related documentation and stockholders' meetings and consents
("Costs").
7.2.2. The Company agrees that, if:
7.2.2.1 the Company terminates this Agreement pursuant to
Sections 5.1.2 and 7.1.11;
7.2.2.2 the Acquiror terminates this Agreement pursuant to
Section 7.1.8 (provided that such withdrawal, modification or change in the
Company Board Recommendation is not made in connection with a termination
pursuant to Section 7.1.5 or Section 7.1.9) or 7.1.12; or
7.2.2.3 (A) the Company or the Acquiror terminates this
Agreement pursuant to Section 7.1.3, (B) at the time of the failure by the
stockholders of the Company to so approve this Agreement (x) there is a publicly
announced or disclosed Competing Transaction with respect to the Company
involving a third party or (y) a third party shall have filed an application or
notice with the FRB or other Governmental Authority for approval to engage in a
Competing Transaction (a "Competing Transaction Filing"), and (C) in the event
that the circumstance described in either clause (B)(x) or clause (B)(y) occurs,
within 12 months after such termination, the Company shall enter into an
Acquisition Agreement for a Business Combination (as defined below) or shall
consummate a Business Combination;
7.2.2.4 (A) at the time of the termination of this Agreement by
the Company pursuant to Section 7.1.9, a third party has contacted the Company
concerning a possible Business Combination (as defined herein) and (B) in the
event that the circumstance described in clause (A) occurs, within 12 months
after such termination, the Company shall enter into an Acquisition Agreement
for a Business Combination or shall consummate a Business Combination;
then, with respect to Sections 7.2.2.3 and 7.2.2.4, (X) in the case of a
termination by the Acquiror pursuant to Section 7.1.8, within three business
days following any such termination, (Y) in the case of a termination by the
Company pursuant to Section 7.1.11 or a termination by the Acquiror pursuant to
Section 7.1.12, concurrently with such termination, or (Z) in the case of (i) a
termination by the Company or the Acquiror pursuant to Section 7.1.3 where a
Competing Transaction has been publicly announced or publicly disclosed or a
Competing Transaction Filing has been made prior to the Company Meeting
(including any adjournment or postponement thereof), or (ii) a termination by
the Company pursuant to Section 7.1.9 where a third party has contacted the
Company concerning a possible Business Combination, upon the earlier of the
consummation of a Business Combination or execution of a definitive agreement
with respect thereto, the Company will pay to the Acquiror in cash by wire
transfer in immediately available funds to an account designated by the Acquiror
in reimbursement for the
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Acquiror's expenses an amount in cash equal to the aggregate amount of the
Acquiror's Costs incurred in connection with pursuing the transactions
contemplated by this Agreement, including, without limitation, legal, accounting
and investment banking fees. For the purposes of this Section 7.2, "Business
Combination" means (i) a merger, consolidation, share exchange, business
combination or similar transaction involving the Company as a result of which
the stockholders of the Company prior to such transaction in the aggregate cease
to own at least 85% of the voting securities of the entity surviving or
resulting from such transaction (or the ultimate parent entity thereof), (ii) a
sale, lease, exchange, transfer or other disposition of more than 15% of the
assets of the Company and its subsidiaries, taken as a whole, in a single
transaction or a series of related transactions, or (iii) the acquisition, by a
person (other than the Acquiror or any affiliate thereof) or group (as such term
is defined under Section 13(d) of the 1934 Act and the rules and regulations
thereunder) of beneficial ownership (as defined in Rule 13d-3 under the ▇▇▇▇
▇▇▇) of more than 15% of the Common Stock whether by tender or exchange offer or
otherwise.
VIII. MISCELLANEOUS
8.1. Non-Survival of Representations, Warranties, and Agreements. The
representations, warranties and covenants in this Agreement shall terminate at
the Effective Time or the earlier termination of this Agreement pursuant to
Section 7.1, as the case may be; provided, however, that if the Merger is
consummated, Sections 2.1 through 2.4, 5.4, 5.6, and this Section 8.1 shall
survive the Effective Time to the extent contemplated by such Sections; and
provided, further, however that the last sentence of Section 5.4, all of Section
7.2, this Section 8.1, all of Section 8.9 and the Stock Option Agreement shall
in all events survive any termination of this Agreement.
8.2. Interpretation. For purposes of this Agreement, (i) unless the
contest of this Agreement expressly indicates otherwise, any singular term in
this Agreement shall include the plural and any plural term shall include the
singular, (ii) unless the contest of this Agreement expressly indicates
otherwise, the term section, schedule or appendix shall mean a section, schedule
or appendix of or to this Agreement and (iii) this Agreement shall not be
construed against the party that drafted all or a portion of this Agreement
merely by virtue of the fact that such party drafted all or a portion of this
Agreement.
8.3. Parties in Interest; Assignment. Except for Section 5.6 (which is
intended to be for the benefit of directors, officers and others to the extent
contemplated thereby and their beneficiaries, and which may be enforced by such
persons), this Agreement is not intended to nor shall it confer upon any person
(other than the parties hereto) any rights or remedies.
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8.4. Expenses.
8.4.1. If the Merger is consummated, all unpaid costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by either the Acquiror or the Surviving Corporation.
8.4.2. If this Agreement is terminated, except as otherwise provided
in Section 7.2 and in the Stock Option Agreement, all fees, costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses; provided,
however, in such instance, all costs and expenses incurred by the Company and
the Acquiror in printing the Joint Proxy Statement/Prospectus shall be shared
equally by the Company and the Acquiror. Final settlement with respect to
payment of fees, costs and expenses by the parties to this Agreement pursuant to
this Section 8.4.2 shall be made within thirty (30) days of the termination of
this Agreement.
8.5. Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof 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.
8.6. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party hereto. Upon any such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated by this Agreement are consummated to the
maximum extent possible.
8.7. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, by facsimile or
by direct or overnight courier or sent by certified, registered or express air
mail, postage prepaid, and shall be deemed given when delivered if delivered
personally, or by facsimile or courier, or if mailed, five days after the date
of mailing, as follows:
If to the Acquiror: ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
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With a copy to: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to the Company: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
With a copy to: ▇▇▇▇▇▇▇▇ & English
Four Gateway Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
8.8. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New Jersey without reference
to choice of law principles thereof.
8.9. Assignment; Successors and Assigns. This Agreement may not be
assigned, and any attempted assignment shall be null and void. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, permitted assigns and legal representatives.
8.10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
8.11. Titles and Headings. The titles, headings and list of definitions
in this Agreement are for reference purposes only, and shall not in any way
affect the meaning or interpretation of this Agreement.
8.12. Entire Agreement. This Agreement, including the Schedules and
Appendices attached thereto, the Stock Option Agreement and the Confidentiality
Agreement shall constitute the entire agreement among the parties with respect
to the matters covered hereby and shall
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supersede all previous written, oral or implied understandings among them with
respect to such matters.
8.13. Amendment and Modification. This Agreement may only be amended or
modified in a written instrument signed by the party against whom enforcement of
such amendment or modification is sought. Subsequent to the approval of this
Agreement by the stockholders of the Company, no such amendment shall be made
with respect to the Exchange Ratio without the approval of the Company's
stockholders. Subsequent to the approval of this Agreement by the stockholders
of the Acquirer, no such amendment shall be made with respect to the Exchange
Ratio without the approval of the Acquiror's stockholders.
8.13. Waiver. Except as otherwise required by law, any of the terms and
conditions of this Agreement may be waived at any time by the party or parties
entitled to the benefit thereof, but only by a writing signed by the party or
parties waiving such terms or conditions.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
LAKELAND BANCORP, INC.
By:
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
HIGH POINT FINANCIAL CORP.
By:
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
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