EXHIBIT 4.1
AGREEMENT AND PLAN
OF MERGER
between
SOVEREIGN BANCORP, INC.
and
WEST JERSEY BANCSHARES, INC.
September 29, 1995
AGREEMENT
TABLE OF CONTENTS
Page
BACKGROUND.................................................... 1
AGREEMENT..................................................... 1
ARTICLE I
THE MERGERS
Section 1.01 Definitions..................................... 2
Section 1.02 The Merger...................................... 6
Section 1.03 The Bank Merger................................. 13
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF WJB
Section 2.01 Organization.................................... 13
Section 2.02 Capitalization.................................. 14
Section 2.03 Authority; No Violation......................... 15
Section 2.04 Consents........................................ 16
Section 2.05 Financial Statements............................ 17
Section 2.06 Taxes........................................... 17
Section 2.07 No Material Adverse Change...................... 18
Section 2.08 Contracts....................................... 18
Section 2.09 Ownership of Property; Insurance Coverage....... 19
Section 2.10 Legal Proceedings............................... 20
Section 2.11 Compliance With Applicable Law.................. 21
Section 2.12 ERISA........................................... 22
Section 2.13 Brokers, Finders and Professionals.............. 23
Section 2.14 Environmental Matters........................... 23
Section 2.15 Loan Portfolio.................................. 23
Section 2.16 Information to be Supplied...................... 23
Section 2.17 Securities Documents............................ 24
Section 2.18 Related Party Transactions...................... 24
Section 2.19 Quality of Representations...................... 24
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SOVEREIGN
Section 3.01 Organization.................................... 25
Section 3.02 Capital Structure............................... 26
Section 3.03 Authority; No Violation......................... 26
Section 3.04 Consents........................................ 28
Section 3.05 Financial Statements............................ 28
Section 3.06 Taxes........................................... 29
Section 3.07 No Material Adverse Change...................... 29
Section 3.08 Legal Proceedings............................... 29
Section 3.09 Ownership of Property; Insurance Coverage....... 29
Section 3.10 Compliance With Applicable Law.................. 30
Section 3.11 Information to be Supplied...................... 30
Section 3.12 ERISA........................................... 30
Section 3.13 Securities Documents............................ 31
Section 3.14 Quality of Representations...................... 32
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.01 Conduct of WJB's Business....................... 32
Section 4.02 Access; Confidentiality......................... 34
Section 4.03 Regulatory Matters and Consents................. 35
Section 4.04 Taking of Necessary Action...................... 36
Section 4.05 Certain Agreements.............................. 37
Section 4.06 No Other Bids and Related Matters............... 39
Section 4.07 Duty to Advise; Duty to Update Disclosure
Schedules..................................................... 39
Section 4.08 Conduct of Sovereign's Business................. 40
Section 4.09 Board and Committee Minutes..................... 40
Section 4.10 Undertakings by Sovereign and WJB............... 40
Section 4.11 Employee Benefits and Severance................. 42
ARTICLE V
CONDITIONS
Section 5.01 Conditions to WJB's Obligations under this
Agreement..................................................... 43
Section 5.02 Conditions to Sovereign's Obligations under this
Agreement..................................................... 45
ARTICLE VI
TERMINATION, WAIVER AND AMENDMENT
Section 6.01 Termination..................................... 46
Section 6.02 Effect of Termination........................... 47
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses........................................ 48
Section 7.02 Non-Survival of Representations and Warranties.. 48
Section 7.03 Amendment, Extension and Waiver................. 48
Section 7.04 Entire Agreement................................ 48
Section 7.05 No Assignment................................... 49
Section 7.06 Notices......................................... 49
Section 7.07 Captions........................................ 50
Section 7.08 Counterparts.................................... 50
Section 7.09 Severability.................................... 50
Section 7.10 Governing Law................................... 50
Exhibit 1 WJB Affiliate Agreement
Exhibit 2 Stock Option Agreement
Exhibit 3 Bank Plan of Merger
Exhibit 4 Form of Opinion of Sovereign's Counsel
Exhibit 5 Form of Tax Opinion of Sovereign's
Counsel
Exhibit 6 Form of Opinion of WJB's Counsel
AGREEMENT
THIS AGREEMENT AND PLAN OF MERGER, dated as of
September 29, 1995, is made by and between SOVEREIGN BANCORP,
INC. ("Sovereign"), a Pennsylvania corporation, having its
principal place of business at 0000 Xxxxxxxxx Xxxxxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000, and WEST JERSEY BANCSHARES, INC.
("WJB"), a New Jersey corporation, having its principal place of
business at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000.
BACKGROUND
1. Sovereign and WJB desire for WJB to merge with and
into Sovereign, with Sovereign surviving such merger, in
accordance with the applicable laws of the Commonwealth of
Pennsylvania and the State of New Jersey, and in accordance with
the plan of merger set forth herein.
2. At or prior to the execution and delivery of this
Agreement, and as a condition and inducement to Sovereign's
execution of this Agreement (a) certain directors and officers of
WJB executed, in favor of Sovereign, a Letter Agreement dated
September 29, 1995, in the form attached hereto as Exhibit 1, and
(b) WJB granted to Sovereign an option to acquire, under certain
circumstances, WJB's common stock (the "Sovereign Option")
pursuant to a Stock Option Agreement between Sovereign and WJB
dated September 29, 1995, attached hereto as Exhibit 2.
3. Sovereign desires to merge West Jersey Community
Bank, a state commercial bank and a wholly-owned subsidiary of
WJB ("WJCB"), into and with Sovereign Bank, FSB, a federal
savings bank and a wholly-owned subsidiary of Sovereign
("Sovereign Bank"), with Sovereign Bank surviving such merger in
accordance with the Bank Plan of Merger in the form attached
hereto as Exhibit 3. Sovereign and WJB desire that following the
Effective Date of the Merger WJCB will be operated as a separate
and autonomous commercial bank division of Sovereign Bank for at
least three years.
4. Sovereign and WJB desire to provide the terms and
conditions governing the transactions contemplated herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants, agreements, representations and warranties
herein contained, the parties hereto, intending to be legally
bound, do hereby agree as follows:
ARTICLE I
THE MERGERS
Section 1.01 Definitions. As used in this Agreement,
the following terms shall have the indicated meanings (such
meanings to be equally applicable to both the singular and plural
forms of the terms defined):
Affiliate means, with respect to any Person, any
Person who directly, or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under
common control with, such Person and, without limiting the
generality of the foregoing, includes any executive officer,
director or 5% equity owner of such Person and any Affiliate
of such executive officer, director or 5% equity owner.
Agreement means this agreement, and any amendment
or supplement hereto, which constitutes a "plan of merger"
between Sovereign and WJB.
Applicable Exchange Ratio means (i) 0.7938 as
adjusted in accordance with Sections 1.02(e)(v) and 1.02(f)
or (ii) if the Sovereign Market Value is less than $9.52 or
greater than $11.64, the exchange ratio determined in
accordance with Sections 1.02(e)(iv), 1.02(e)(v) and
1.02(f).
Applications means the applications for regulatory
approval which are required by the transactions contemplated
hereby.
Articles of Merger means the articles of merger to
be executed by Sovereign and WJB and to be filed in the PDS
and the NJDS, in accordance with the applicable laws of the
Commonwealth of Pennsylvania and the State of New Jersey.
Bank Merger means the merger of WJCB with and into
Sovereign Bank, with Sovereign Bank surviving such merger,
contemplated by Section 1.03 of this Agreement.
Bank Plan of Merger has the meaning given to that
term in Section 1.03 of this Agreement.
BCL means the Pennsylvania Business Corporation
Law of 1988, as amended.
BHC Act means the Bank Holding Company Act of
1956, as amended.
Closing Date means the date determined by
Sovereign with the approval of WJB (which approval shall not
be unreasonably withheld), in its sole discretion, upon five
(5) days prior written notice to WJB, but in no event later
than thirty (30) days after the last condition precedent
pursuant to this Agreement has been fulfilled or waived, or
such other date as Sovereign and WJB shall agree.
Effective Date means the date upon which the
Articles of Merger shall be filed in the PDS and the NJDS,
and shall be the same as the Closing Date.
Environmental Law means any federal, state, local
or foreign law, statute, ordinance, rule, regulation, code,
license, permit, authorization, approval, consent, order,
judgment, decree, injunction or agreement with any
Regulatory Authority relating to (i) the protection,
preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface
soil, plant and animal life or any other natural resource),
and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release or disposal of any substance presently
listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous, or otherwise regulated,
whether by type or by quantity, including any material
containing any such substance as a component.
ERISA means the Employee Retirement Income
Security Act of 1974, as amended.
Exchange Act means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
from time to time thereunder.
FDIC means the Federal Deposit Insurance
Corporation.
FFIEC means the Federal Financial Institutions
Examination Council.
FRB means the Federal Reserve Board.
GAAP means generally accepted accounting
principles as in effect at any particular time.
HOLA means the Home Owners' Loan Act of 1933, as
amended.
IRC means the Internal Revenue Code of 1986, as
amended.
IRS means the Internal Revenue Service.
Material Adverse Effect shall mean, with respect
to Sovereign or WJB, any adverse effect on assets, business,
financial condition or results of operations which is
material on a consolidated basis.
Merger means the merger of WJB with and into
Sovereign, with Sovereign surviving such merger,
contemplated by this Agreement.
NJBCA means the New Jersey Business Corporation
Act, as amended.
NJDB means the Department of Banking of the State
of New Jersey.
NJDS means the New Jersey Department of State.
OTS means the Office of Thrift Supervision.
PDB means the Department of Banking of the
Commonwealth of Pennsylvania.
PDS means the Department of State of the
Commonwealth of Pennsylvania.
Person means any individual, corporation,
partnership, joint venture, association, trust or "group"
(as that term is defined under the Exchange Act).
Prospectus/Proxy Statement means the
prospectus/proxy statement, together with any supplements
thereto, to be transmitted to holders of WJB Common Stock in
connection with the transactions contemplated by this
Agreement.
Registration Statement means the registration
statement on Form S-4, including any pre-effective or
post-effective amendments or supplements thereto, as filed
with the SEC under the Securities Act with respect to the
Sovereign Common Stock and Sovereign Stock Purchase Rights
to be issued in connection with the transactions
contemplated by this Agreement.
Regulatory Agreement has the meaning given to that
term in Section 2.11 of this Agreement.
Regulatory Authority means any banking agency or
department of any federal or state government, including
without limitation the OTS, the FRB, the FDIC, the PDB, the
NJDB or the respective staffs thereof.
Rights means warrants, options, rights,
convertible securities and other capital stock equivalents
which obligate an entity to issue its securities.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933,
as amended, and the rules and regulations promulgated from
time to time thereunder.
Securities Documents means all registration
statements, schedules, statements, forms, reports, proxy
material, and other documents required to be filed under the
Securities Laws.
Securities Laws means the Securities Act and the
Exchange Act and the rules and regulations promulgated from
time to time thereunder.
Sovereign Bank means Sovereign Bank, FSB, a
federal savings bank, all the outstanding capital stock of
which is owned by Sovereign.
Sovereign Common Stock has the meaning given to
that term in Section 3.02(a) of this Agreement.
Sovereign Disclosure Schedule means a disclosure
schedule delivered by Sovereign to WJB pursuant to
Article III of this Agreement.
Sovereign Financials means (i) the audited
consolidated financial statements of Sovereign as of
December 31, 1994 and 1993 and for the three years ended
December 31, 1994, and (ii) the unaudited interim
consolidated financial statements of Sovereign as of each
calendar quarter thereafter included in Securities Documents
filed by Sovereign.
Sovereign Market Value has the meaning given to
such term in Section 1.02(e)(iii).
Sovereign Option means the option granted to
Sovereign to acquire shares of WJB Common Stock referenced
in the recitals to this Agreement.
Sovereign Rights Agreement means the Rights
Agreement dated as of September 19, 1989 between Sovereign
and Sovereign Bank, as rights agent, relating to Sovereign's
Series A Junior Participating Preferred Stock.
Sovereign Stock Purchase Rights means Rights to
purchase a unit of Sovereign's Series A Junior Participating
Preferred Stock in accordance with the terms of the
Sovereign Rights Agreement.
Sovereign Subsidiaries means any corporation or
bank, 50% or more of the capital stock of which is owned,
either directly or indirectly, by Sovereign, except any
corporation the stock of which is held in the ordinary
course of the lending activities of a bank.
Subsidiary means any corporation or bank, 50% or
more of the capital stock of which is owned, either directly
or indirectly, by another entity, except any corporation the
stock of which is held in the ordinary course of the lending
activities of a bank.
WJB Common Stock means the common stock of WJB
described in Section 2.02(a).
WJB Disclosure Schedule means a disclosure
schedule delivered by WJB to Sovereign pursuant to
Article II of this Agreement.
WJB Financials means (i) the audited consolidated
financial statements of WJB as of December 31, 1994 and 1993
and for the three years ended December 31, 1994, and
(ii) the unaudited interim consolidated financial statements
of WJB as of each calendar quarter thereafter included in
Securities Documents filed by WJB.
WJB Regulatory Reports means the Call Reports,
consolidated reports of condition and income, and
accompanying schedules, filed by WJCB with any Regulatory
Authority for each calendar quarter, beginning with the
quarter ended March 31, 1993, through the Closing Date.
WJB Subsidiaries means any corporation or bank,
50% or more of the capital stock of which is owned, either
directly or indirectly, by WJB, except any corporation the
stock of which is held in the ordinary course of the lending
activities of WJCB.
Section 1.02 The Merger.
(a) Closing. The closing will take place at
10:00 a.m. on the Closing Date at the offices of Xxxxxxx & Xxx,
000 Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx, unless another time
and place are agreed to by the parties hereto; provided, in any
case, that all conditions to closing set forth in Article V have
been satisfied or waived at or prior to the Closing Date. On the
Closing Date, WJB and Sovereign shall cause the Articles of
Merger to be duly executed and to be filed in the PDS and the
NJDS.
(b) The Merger. Subject to the terms and
conditions of this Agreement, on the Effective Date: WJB shall
merge with and into Sovereign; the separate existence of WJB
shall cease; Sovereign shall be the surviving corporation in the
Merger; and all of the property (real, personal and mixed),
rights, powers and duties and obligations of WJB shall be taken
and deemed to be transferred to and vested in Sovereign, as the
surviving corporation in the Merger, without further act or deed;
all debts, liabilities and duties of each of WJB and Sovereign
shall thereafter be the responsibility of Sovereign as the
surviving corporation; all in accordance with the applicable laws
of the Commonwealth of Pennsylvania and the State of New Jersey.
Following the Effective Date, WJCB will be operated as a separate
and autonomous commercial bank division of Sovereign Bank for at
least three years.
(c) Sovereign's Articles of Incorporation and
Bylaws. On and after the Effective Date, the Articles of
Incorporation and the Bylaws of Sovereign, as in effect
immediately prior to the Effective Date, shall automatically be
and remain the Articles of Incorporation and Bylaws of Sovereign,
as the surviving corporation in the Merger, until thereafter
altered, amended or repealed.
(d) Board of Directors and Officers of Sovereign
and Sovereign Bank.
(i) On the Effective Date, the Board of
Directors of Sovereign, as the surviving corporation in
connection with the Merger, shall consist of those persons
holding such office immediately prior to the Effective Date.
(ii) On the Effective Date, the officers of
Sovereign duly elected and holding office immediately prior to
the Effective Date shall be the officers of Sovereign, as the
surviving corporation in the Merger, existing on such Effective
Date.
(iii) On the effective date of the Bank
Merger, the officers of Sovereign Bank duly elected and holding
office immediately prior to such effective date shall be the
officers of Sovereign Bank, as the surviving corporation in the
Bank Merger, except for any other officers of WJB or WJCB as
Sovereign may designate as officers of Sovereign Bank. Each
shall hold office until his or her successor is elected and
qualified or otherwise in accordance with the Charter and Bylaws
of Sovereign Bank and the policies of Sovereign and Sovereign
Bank.
(iv) On the effective date of the Bank
Merger, the directors of Sovereign Bank as the surviving
institution in connection with the Bank Merger shall consist of
those persons holding such office immediately prior to the
Effective Date.
(v) On the effective date of the Bank
Merger, the officers of Sovereign Bank duly elected and holding
office immediately prior to such effective date shall be the
officers of the commercial bank division of Sovereign Bank,
except that Xxxx X. Xxx Xxxxxxx and Xxxxxx Xxxxx shall be
designated and elected as the Chief Executive Officer and the
Chief Financial Officer of the commercial bank division of
Sovereign Bank, respectively, and except that such other officers
of WJB or WJCB as Sovereign and WJB shall mutually agree shall be
designated and elected as officers of the commercial bank
division of Sovereign Bank.
(vi) On the effective date of the Bank
Merger, Sovereign will create an autonomous board of directors
for the commercial bank division of Sovereign Bank which shall
consist of seven individuals selected by WJB. Sovereign shall
cause such persons to be elected as directors of the commercial
bank division of Sovereign Bank effective as of the effective
date of the Bank Merger, and each shall hold office for at least
a period of three years from the Effective Date and until his
successor is elected and qualified, and each shall continue to
receive the same per meeting Board fees for service on the board
as such persons were receiving immediately prior to September 19,
1995.
(e) Conversion of Shares.
(i) Sovereign Common Stock.
(A) Each share of Sovereign Common
Stock issued and outstanding immediately prior to the
Effective Date shall, on and after the Effective Date,
continue to be issued and outstanding as an identical share
of Sovereign Common Stock.
(B) Each share of Sovereign Common
Stock issued and held in the treasury of Sovereign as of the
Effective Date, if any, shall, on and after the Effective
Date, continue to be issued and held in the treasury of
Sovereign.
(ii) WJB Common Stock.
(A) Subject to the provisions of
subparagraphs (B), (C) and (D) of this Section 1.02(e)(ii),
each share of WJB Common Stock issued and outstanding
immediately prior to the Effective Date (other than shares
of WJB Common Stock, if any, then owned by Sovereign or WJB
or any WJB Subsidiary) shall, on the Effective Date, by
reason of the Merger and without any action on the part of
the holder thereof, be converted into and become a right to
receive, subject to adjustment as provided in Sections
1.02(e)(iv), 1.02(e)(v) and 1.02(f), 0.7938 fully paid and
nonassessable shares of Sovereign Common Stock and the
corresponding percentage of Sovereign Stock Purchase Rights
pursuant to the Sovereign Rights Agreement.
(B) Each share of WJB Common Stock
owned by Sovereign or a Sovereign Subsidiary on the
Effective Date, if any, shall be cancelled.
(C) Each share of WJB Common Stock
issued and held in the treasury of WJB or owned by any WJB
Subsidiary as of the Effective Date, if any, shall be
cancelled, and no cash, stock or other property shall be
delivered in exchange therefor.
(D) No fraction of a whole share of
Sovereign Common Stock and no scrip or certificates therefor
shall be issued in connection with the Merger, including in
connection with an election made pursuant to Section
1.02(e)(ii)(E)(ii). Any former holder of WJB Common Stock
who would otherwise be entitled to receive a fraction of a
share of Sovereign Common Stock shall receive, in lieu
thereof, cash in an amount equal to such fraction of a share
multiplied by the market value of Sovereign Common Stock
(determined in accordance with the provisions of
Section 1.02(e)(iii) hereof).
(E) (i) Subject to the limitations set
forth in paragraph (iv) of this Section 1.02(e)(ii)(E),
each holder of an option to acquire WJB Common Stock
granted under the WJB 1989 Stock Option and Stock
Appreciation Rights Program (the "WJB Stock Option
Plan"), and each holder of a warrant to acquire WJB
Common Stock issued in connection with WJB's initial
public offering (the "IPO Warrants") shall be entitled
(and must elect, in a written notice delivered to
Sovereign at least five (5) business days before the
initial filing of the Registration Statement) to either
(A) receive an amount of shares of Sovereign common
stock equal to the difference between $8.40 and the
exercise price ("Sovereign Stock Election") or
(B) exchange his option or warrant to acquire WJB
Common Stock for an option to acquire Sovereign Common
Stock ("Sovereign Option Election"). Failure to
deliver the written notice required by this Section
1.02(e)(ii)(E)(i) shall be deemed an election to
exchange an option or warrant to acquire WJB Common
Stock for an option to acquire Sovereign Common Stock.
(ii) If an option or warrant
holder makes a Sovereign Stock Election, such option or
warrant holder will receive Sovereign Common Stock with
a market value in an amount equal to the product of
(A) the difference between (i) the Sovereign Market
Value multiplied by the Applicable Exchange Ratio, and
(ii) the exercise price of the option or warrant,
multiplied by (B) the number of shares of WJB Common
Stock covered by the option or warrant. For purposes
of this Section 1.02(e)(ii)(E)(ii), the "market value"
of the Sovereign Common Stock shall equal the Sovereign
Market Value.
(iii) If an option or warrant
holder makes a Sovereign Option Election, each option
or warrant shall be converted into and become an option
to acquire that number of shares of Sovereign Common
Stock equal to the number of shares of WJB Common Stock
covered by the option or warrant multiplied by the
Applicable Exchange Ratio and the exercise price shall
be the present stated exercise price of such option or
warrant divided by the Applicable Exchange Ratio.
(iv) No holder of an option to
acquire WJB Common Stock shall be entitled to make a
Sovereign Stock Election, if the effect would be to
prevent Sovereign from accounting for the Merger as a
pooling of interests.
(iii) Valuation of Sovereign Common Stock.
For purposes of this Agreement, the market value of a share
of Sovereign Common Stock shall be deemed to be the weighted
average, based on daily trading volume, of the closing sale
price of a share of Sovereign Common Stock, as reported on
the National Association of Securities Dealers Automated
Quotation System (Nasdaq) National Market System, for the
20 consecutive trading days immediately prior to the
Effective Date ("Sovereign Market Value").
(iv) Exchange Ratio Adjustment.
Notwithstanding the provisions of Section 1.02(e)(ii)
hereof: (i) if the Sovereign Market Value is less than
$9.52, then each share of WJB Common Stock issued and
outstanding immediately prior to the Effective Date to be
converted into Sovereign Common Stock shall be converted
into and become such number of shares of Sovereign Common
Stock, as shall equal the amount obtained by dividing $7.56
by the Sovereign Market Value; and (ii) if the Sovereign
Market Value is greater than $11.64, then each share of WJB
Common Stock issued and outstanding immediately prior to the
Effective Date to be converted into Sovereign Common Stock
shall be converted into and become such number of shares of
Sovereign Common Stock, as shall equal the amount obtained
by dividing $9.24 by the Sovereign Market Value.
(v) Anti-Dilution Provisions. If Sovereign
shall, at any time before the Effective Date, (A) issue a
dividend in shares of Sovereign Common Stock, (B) combine
the outstanding shares of Sovereign Common Stock into a
smaller number of shares, (C) subdivide the outstanding
shares of Sovereign Common Stock, or (D) reclassify the
shares of Sovereign Common Stock, then, in any such event,
(i) if the Applicable Exchange Ratio is determined pursuant
to Section 1.02(e)(ii), the Applicable Exchange Ratio shall
be adjusted by multiplying the Applicable Exchange Ratio by
a fraction the numerator of which is equal to the number of
shares of Sovereign Common Stock outstanding immediately
after the happening of such event and the denominator of
which is equal to the number of shares of Sovereign Common
Stock outstanding immediately prior to the happening of such
event; or (ii) if the Applicable Exchange Ratio is
determined pursuant to Section 1.02(e)(iv), the Sovereign
Market Values at which the Applicable Exchange Ratio is to
be adjusted under Section 1.02(e)(iv) shall each be adjusted
by multiplying such Sovereign Market Values by a fraction
the numerator of which is equal to the number of shares of
Sovereign Common Stock outstanding immediately prior to the
happening of such event and the denominator of which is
equal to the number of shares of Sovereign Common Stock
outstanding immediately after the happening of such event.
(f) Effective Date After June 30, 1996. If the
Effective Date occurs after June 30, 1996 and the book value of
WJB Common Stock on June 30, 1996 is less than the book value of
WJB Common Stock on the Effective Date, then the exchange ratio
shall be increased by an amount equal to (i) the difference
between the fully diluted tangible book value of WJB Common Stock
as of the last day of the month preceding the Effective Date and
the tangible book value of WJB Common Stock as of June 30, 1996,
divided by (ii) the Sovereign Market Value.
(g) Surrender and Exchange of WJB Stock
Certificates.
(i) Exchange of Certificates. Each holder
of shares of WJB Common Stock who surrenders to Sovereign
the certificate or certificates representing such shares
will be entitled to receive, as soon as practicable after
the Effective Date, in exchange therefor a certificate or
certificates for the number of whole shares of Sovereign
Common Stock into which such holder's shares of WJB Common
Stock have been converted by the Merger, together with a
check for cash in lieu of any fractional share in accordance
with Section 1.02(e)(ii)(D) hereof.
(ii) Rights Evidenced by Certificates. Each
certificate for shares of Sovereign Common Stock issued in
exchange for certificates for WJB Common Stock pursuant to
Section 1.02(g)(i) hereof will be dated the Effective Date
and be entitled to dividends and all other rights and
privileges pertaining to such shares of stock from the
Effective Date. Until surrendered, each certificate
theretofore evidencing shares of WJB Common Stock will, from
and after the Effective Date, evidence solely the right to
receive certificates for shares of Sovereign Common Stock
pursuant to Section 1.02(g)(i) hereof and a check for cash
in lieu of any fractional share in accordance with
Section 1.02(e)(ii)(D) hereof. If certificates for shares
of WJB Common Stock are exchanged for Sovereign Common Stock
at a date following one or more record dates for the payment
of dividends or of any other distribution on the shares of
Sovereign Common Stock, Sovereign will pay cash in an amount
equal to dividends theretofore payable on such Sovereign
Common Stock and pay or deliver any other distribution to
which holders of shares of Sovereign Common Stock have
theretofore become entitled. No interest will accrue or be
payable in respect of dividends or cash otherwise payable
under this Section 1.02(g) upon surrender of certificates
for shares of WJB Common Stock. Notwithstanding the
foregoing, no party hereto will be liable to any holder of
WJB Common Stock for any amount paid in good faith to a
public official or agency pursuant to any applicable
abandoned property, escheat or similar law. Until such time
as certificates for shares of WJB Common Stock are
surrendered by a WJB shareholder to Sovereign for exchange,
Sovereign shall have the right to withhold dividends or any
other distributions on the shares of Sovereign Common Stock
issuable to such shareholder.
(iii) Exchange Procedures. Each certificate
for shares of WJB Common Stock delivered for exchange under
this Section 1.02(g) must be endorsed in blank by the
registered holder thereof or be accompanied by a power of
attorney to transfer such shares endorsed in blank by such
holder. If more than one certificate is surrendered at one
time and in one transmittal package for the same shareholder
account, the number of whole shares of Sovereign Common
Stock for which certificates will be issued pursuant to this
Section 1.02(g) will be computed on the basis of the
aggregate number of shares represented by the certificates
so surrendered. If shares of Sovereign Common Stock or
payments of cash are to be issued or made to a person other
than the one in whose name the surrendered certificate is
registered, the certificate so surrendered must be properly
endorsed in blank, with signature(s) guaranteed, or
otherwise in proper form for transfer, and the person to
whom certificates for shares of Sovereign Common Stock is to
be issued or to whom cash is to be paid shall pay any
transfer or other taxes required by reason of such issuance
or payment to a person other than the registered holder of
the certificate for shares of WJB Common Stock which are
surrendered. As promptly as practicable after the Effective
Date, Sovereign shall send or cause to be sent to each
shareholder of record of WJB Common Stock transmittal
materials for use in exchanging certificates representing
WJB Common Stock for certificates representing Sovereign
Common Stock into which the former have been converted in
the Merger.
(iv) Closing of Stock Transfer Books;
Cancellation of WJB Certificates. Upon the Effective Date,
the stock transfer books for WJB Common Stock will be closed
and no further transfers of shares of WJB Common Stock will
thereafter be made or recognized. All certificates for
shares of WJB Common Stock surrendered pursuant to this
Section 1.02(g) will be cancelled by Sovereign.
(h) Payment Procedures. As soon as practicable
after the Effective Date, Sovereign shall make payment of the
cash consideration provided for in Section 1.02(e)(ii)(D) to each
person entitled thereto.
Section 1.03 The Bank Merger. Sovereign and WJB shall
use their best efforts to cause WJCB to merge with and into
Sovereign Bank, with Sovereign Bank surviving such merger,
simultaneously with or as soon as practicable after the Effective
Date. Concurrently with the execution and delivery of this
Agreement, Sovereign shall cause Sovereign Bank, and WJB shall
cause WJCB, to execute and deliver the Bank Plan of Merger
attached hereto as Exhibit 3.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF WJB
WJB hereby represents and warrants to Sovereign that,
except as specifically set forth in the WJB Disclosure Schedule
delivered to Sovereign by WJB within thirty (30) days of the date
hereof:
Section 2.01 Organization.
(a) WJB is a corporation duly organized, validly
existing and in good standing under the laws of the State of New
Jersey. WJB is a bank holding company duly registered under the
BHC Act. WJB has the corporate power and authority to carry on
its business and operations as now being conducted and to own and
operate the properties and assets now owned and being operated by
it. WJB is not qualified or licensed to do business as a foreign
corporation in any jurisdiction and is not required to be so
qualified or licensed as the result of the ownership or leasing
of property or the conduct of its business except where the
failure to be so qualified or licensed would not have a Material
Adverse Effect.
(b) WJCB is a banking corporation duly organized
and validly existing under the laws of the State of New Jersey.
WJCB has the corporate power and authority to carry on its
business and operations as now being conducted and to own and
operate the properties and assets now owned and being operated by
it. Neither WJCB nor any WJB subsidiary is qualified or licensed
to do business as a foreign corporation in any jurisdiction and
are not required to be so qualified or licensed as the result of
the ownership or leasing of property or the conduct of its
business except where the failure to be so qualified or licensed
would not have a Material Adverse Effect.
(c) There are no WJB Subsidiaries other than WJCB
and those identified in the WJB Disclosure Schedule. There are
no WJCB Subsidiaries other than those identified in the WJB
Disclosure Schedule.
(d) WJCB is a commercial bank the deposits of
which are insured by the Bank Insurance Fund of the FDIC to the
extent provided in the Federal Deposit Insurance Act.
(e) The respective minute books of WJB and WJCB
and each other WJB Subsidiary accurately record, in all material
respects, all material corporate actions of their respective
shareholders and boards of directors (including committees)
through the date of this Agreement, except actions taken at
meetings held within ten days of the date hereof, which actions
shall be accurately recorded in such minute books in due course.
(f) Prior to the date of this Agreement, WJB has
delivered to Sovereign true and correct copies of the Certificate
of Incorporation and Bylaws of WJB and the Charter and Bylaws of
WJCB as in effect on the date hereof.
Section 2.02 Capitalization.
(a) The authorized capital stock of WJB consists
of (a) 10,000,000 shares of common stock, par value $0.01 ("WJB
Common Stock"), of which (i) 1,958,196 shares are outstanding,
validly issued, fully paid and nonassessable and free of
preemptive rights and (ii) no shares are held by WJB as treasury
stock, and (b) 5,000,000 shares of preferred stock, par value
$0.01, none of which are issued or outstanding. Neither WJB nor
WJCB nor any other WJB Subsidiary has or is bound by any
subscription, option, warrant, call, commitment, agreement, plan
or other Right of any character relating to the purchase, sale or
issuance or voting of, or right to receive dividends or other
distributions on any shares of WJB Common Stock, WJB preferred
stock or any other security of WJB or any securities representing
the right to vote, purchase or otherwise receive any shares of
WJB Common Stock, WJB preferred stock or any other security of
WJB, other than for (i) shares issuable under the Sovereign
Option and (ii) 92,299 shares which WJB is obligated to issue, at
an average exercise price of $5.00, under the WJB Stock Option
Plan to its directors, officers and employees and officers and
employees of WJB Subsidiaries, including WJCB, and
(iii) 128,416 shares which are issuable pursuant to the IPO
Warrants. As of September 22, 1995, WJB had approximately 359
shareholders of record.
(b) The authorized capital stock of WJCB consists
of 5,000,000 shares of common stock, par value $2.00 per share
("WJCB Common Stock"), of which 1,000,000 shares are outstanding,
validly issued, fully paid, nonassessable, free of preemptive
rights and owned by WJB. Neither WJB nor any other WJB
Subsidiary has or is bound by any subscription, option, warrant,
call, commitment, agreement or other Right of any character
relating to the purchase, sale or issuance or voting of, or right
to receive dividends or other distributions on any shares of the
capital stock of any WJB Subsidiary or any other security of any
WJB Subsidiary or any securities representing the right to vote,
purchase or otherwise receive any shares of the capital stock or
any other security of any WJB Subsidiary. Except for WJCB, there
is no other WJB Subsidiary.
(c) Except as set forth in the WJB Disclosure
Schedule, neither (i) WJB, (ii) WJCB or (iii) any other WJB
Subsidiary, owns any equity interest, directly or indirectly, in
any other company or controls any other company, except for
equity interests held in the investment portfolios of WJB
Subsidiaries, equity interests held by WJB Subsidiaries in a
fiduciary capacity, and equity interests held in connection with
the commercial loan activities of WJB Subsidiaries. There are no
subscriptions, options, warrants, calls, commitments, agreements
or other Rights outstanding and held by WJB or WJCB with respect
to any other company's capital stock or the equity of any other
person.
(d) To the best of WJB's knowledge, no person or
"group" (as that term is used in Section 13(d)(3) of the Exchange
Act) is the beneficial owner (as defined in Section 13(d) of the
Exchange Act) of 5% or more of the outstanding shares of WJB
Common Stock, except as disclosed in WJB's proxy statement for
use in connection with its 1995 annual meeting of shareholders,
previously delivered to Sovereign or in the WJB Disclosure
Schedule.
Section 2.03 Authority; No Violation.
(a) WJB has full corporate power and authority to
execute and deliver this Agreement and to complete the
transactions contemplated hereby. WJCB has full corporate power
and authority to execute and deliver the Bank Plan of Merger and
to consummate the Bank Merger. The execution and delivery of
this Agreement by WJB and the completion by WJB of the
transactions contemplated hereby have been duly and validly
approved by the Board of Directors of WJB and, except for
approval by the shareholders of WJB as required under the NJBCA,
WJB's Certificate of Incorporation and Bylaws and Nasdaq
requirements applicable to it, no other corporate proceedings on
the part of WJB are necessary to complete the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by WJB, subject to approval of the
shareholders of WJB as required under the NJBCA, WJB's
Certificate of Incorporation and Bylaws and Nasdaq requirements
applicable to it, and subject to approvals from the Regulatory
Authorities referred to in Section 3.04 hereof, and constitutes a
valid and binding obligation of WJB, enforceable against WJB in
accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to general principles of
equity. Subject to approval by the shareholders of WJB and to
approvals from the Regulatory Authorities referred to in
Section 3.04 hereof, the Bank Plan of Merger, upon its execution
and delivery by WJCB, will constitute a valid and binding
obligation of WJCB, enforceable against WJCB in accordance with
its terms, subject to applicable conservatorship, receivership,
insolvency and similar laws affecting creditors' rights generally
and institutions the deposits of which are insured by the FDIC,
and subject, as to enforceability, to general principles of
equity.
(b) (A) The execution and delivery of this
Agreement by WJB, (B) the execution and delivery of the Bank Plan
of Merger by WJCB, (C) subject to receipt of approvals from the
shareholders of WJB and WJCB and from the Regulatory Authorities
referred to in Section 3.04 hereof and WJB's and Sovereign's
compliance with any conditions contained therein, the completion
of the transactions contemplated hereby, and (D) compliance by
WJB or WJCB with any of the terms or provisions hereof or of the
Bank Plan of Merger, will not (i) conflict with or result in a
breach of any provision of the Certificate of Incorporation or
Bylaws of WJB or any WJB Subsidiary or the Charter and Bylaws of
WJCB; (ii) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction
applicable to WJB or any WJB Subsidiary or any of their
respective properties or assets; or (iii) except as set forth in
the WJB 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 a right of termination or
acceleration or the creation of any lien, security interest,
charge or other encumbrance upon any of the properties or assets
of WJB or any WJB Subsidiary under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement, commitment or other instrument
or obligation to which WJB or any WJB Subsidiary is a party, or
by which they or any of their respective properties or assets may
be bound or affected, except for such violations, conflicts,
breaches or defaults under clause (ii) or (iii) hereof which,
either individually or in the aggregate, will not have a material
adverse effect on the assets, business, financial condition,
results of operations or business prospects of WJB and the WJB
Subsidiaries taken as a whole or the ability of WJB to perform
any of its obligations under this Agreement.
Section 2.04 Consents. Except for the consents,
approvals, filings and registrations from or with the Regulatory
Authorities referred to in Section 3.04 hereof and compliance
with any conditions contained therein, and the approval of this
Agreement by the shareholders of WJB under the NJBCA, and of the
Bank Plan of Merger by WJB as sole shareholder of WJCB under the
BHC Act, and by the WJCB Board of Directors, no consents or
approvals of, or filings or registrations with, any public body
or authority are necessary, and, except as set forth in the WJB
Disclosure Schedule, no consents or approvals of any third
parties are necessary, or will be, in connection with (a) the
execution and delivery of this Agreement by WJB or the Bank Plan
of Merger by WJCB, and (b) the completion by WJB of the
transactions contemplated hereby or by WJCB of the Bank Merger.
Section 2.05 Financial Statements.
(a) WJB has previously delivered, or will
deliver, to Sovereign the WJB Regulatory Reports. The WJB
Regulatory Reports have been, or will be, prepared in all
material respects in accordance with applicable regulatory
accounting principles and practices applied on a consistent basis
throughout the periods covered by such statements, and fairly
present, or will fairly present in all material respects, the
financial position, results of operations and changes in
shareholders' equity of WJB as of and for the periods ending on
the dates thereof, in accordance with applicable regulatory
accounting principles.
(b) WJB has previously delivered its audited
consolidated financial statements as of December 31, 1994 and
1993 and for the three years ended December 31, 1994. The WJB
Financials have been, or will be, prepared in accordance with
generally accepted accounting principles and practices throughout
the periods covered by such statements, and fairly present, or
will fairly present, the consolidated financial position, results
of operations and cash flows of WJB as of and for the periods
ending on the dates thereof, in accordance with generally
accepted accounting principles.
(c) At the date of each balance sheet included in
the WJB Financials or the WJB Regulatory Reports, neither WJB nor
WJCB nor any other prior banking subsidiary of WJCB (as the case
may be) had, or will have any liabilities, obligations or loss
contingencies of any nature (whether absolute, accrued,
contingent or otherwise) of a type required to be reflected in
such WJB Financials or WJB Regulatory Reports or in the footnotes
thereto which are not fully reflected or reserved against therein
or fully disclosed in a footnote thereto, except for liabilities,
obligations and loss contingencies which are not material in the
aggregate and which are incurred in the ordinary course of
business, consistent with past practice and except for
liabilities, obligations and loss contingencies which are within
the subject matter of a specific representation and warranty
herein and subject, in the case of any unaudited statements, to
normal, recurring audit adjustments and the absence of footnotes.
Section 2.06 Taxes.
(a) WJB and the WJB Subsidiaries are members of
the same affiliated group within the meaning of IRC
Section 1504(a). WJB has duly filed, and will file, all federal,
state and local tax returns required to be filed by or with
respect to WJB and all WJB Subsidiaries on or prior to the
Closing Date (all such returns being accurate and correct in all
material respects) and has duly paid or will pay, or made or will
make, provisions for the payment of all federal, state and local
taxes which have been incurred by or are due or claimed to be due
from WJB and any WJB Subsidiary by any taxing authority or
pursuant to any tax sharing agreement or arrangement (written or
oral) on or prior to the Closing Date other than taxes which
(i) are not delinquent or (ii) are being contested in good faith.
(b) No consent pursuant to IRC Section 341(f) has
been filed (or will be filed prior to the Closing Date) by or
with respect to WJB or any WJB Subsidiary.
Section 2.07 No Material Adverse Change.
WJB has not suffered any Material Adverse Effect since
June 30, 1995.
Section 2.08 Contracts.
(a) Except as described in WJB's proxy statement
for its 1995 annual meeting of shareholders and Annual Reports on
Form 10-K for the fiscal years ended December 31, 1992, 1993 and
1994, previously delivered to Sovereign, in the footnotes to the
audited consolidated financial statements of WJB as of
December 31, 1994 and 1993 and for the three years ended
December 31, 1994 or in the WJB Disclosure Schedule, neither WJB
nor any WJB Subsidiary is a party to or subject to: (i) any
employment, consulting or severance contract or arrangement with
any past or present officer, director or employee of WJB or any
WJB Subsidiary, except for "at will" arrangements; (ii) any plan,
arrangement or contract providing for bonuses, pensions, options,
deferred compensation, retirement payments, profit sharing or
similar arrangements for or with any past or present officers,
directors or employees of WJB or any WJB Subsidiary; (iii) any
collective bargaining agreement with any labor union relating to
employees of WJB or any WJB Subsidiary; (iv) any agreement which
by its terms limits the payment of dividends by any WJB
Subsidiary; (v) any instrument evidencing or related to
indebtedness for borrowed money whether directly or indirectly,
by way of purchase money obligation, conditional sale, lease
purchase, guaranty or otherwise, in respect of which WJB or any
WJB Subsidiary is an obligor to any person, which instrument
evidences or relates to indebtedness other than deposits,
repurchase agreements, bankers acceptances, letters of credit and
"treasury tax and loan" accounts established in the ordinary
course of business and transactions in "federal funds" or which
contains financial covenants or other restrictions (other than
those relating to the payment of principal and interest when due)
which would be applicable on or after the Closing Date to
Sovereign or any Sovereign Subsidiary; or (vi) any contract
(other than this Agreement) limiting the freedom of any WJB
Subsidiary to engage in any type of banking or bank-related
business permissible under law.
(b) True and correct copies of agreements, plans,
arrangements and instruments referred to in Section 2.08(a) or
described in the WJB proxy statement for its 1995 annual meeting
of shareholders or in a footnote to such audited consolidated
financial statements, including without limitation, the
employment contracts of Messrs. Xxxx X. Xxx Xxxxxxx, Xxxxxx Xxxxx
and Xxxxxxx X. XxXxxxx, Xx. and the severance agreement of
Xx. Xxxxxxx X. XxXxxxx, Xx., have been provided to Sovereign on
or before the date hereof and are in full force and effect on the
date hereof and neither WJB nor any WJB Subsidiary (nor, to the
knowledge of WJB, any other party to any such contract, plan,
arrangement or instrument) has breached any provision of, or is
in default in any material respect under any term of, any such
contract, plan, arrangement or instrument. Except as set forth
in the WJB Disclosure Schedule or in the employment contracts or
severance agreement specifically referred to in the first
sentence of this paragraph (b), no party to any material
contract, plan, arrangement or instrument that requires annual
payments in excess of $250,000 will have the right to terminate
any or all of the provisions of any such contract, plan,
arrangement or instrument as a result of the transactions
contemplated by this Agreement. None of the employees (including
officers) of WJB or any WJB Subsidiary, other than
Messrs. Van Xxxxxxx, Xxxxx and XxXxxxx, Jr., possesses the right
to terminate his or her employment as a result of the execution
of this Agreement. Except as set forth in the WJB Disclosure
Schedule, no plan, employment agreement, termination agreement,
or similar agreement or arrangement to which WJB or any WJB
Subsidiary is a party or under which WJB or any WJB Subsidiary
may be liable contains provisions which permit an employee or
independent contractor to terminate it without cause and continue
to accrue future benefits thereunder. Except as set forth in the
WJB Disclosure Schedule or the employment contracts or severance
agreement specifically referred to in the first sentence of this
paragraph (b), no such agreement, plan or arrangement
(x) provides for acceleration in the vesting of benefits or
payments due thereunder upon the occurrence of a change in
ownership or control of WJB or any WJB Subsidiary absent the
occurrence of a subsequent event, (y) provides for benefits which
may cause the disallowance of a federal income tax deduction
under IRC Section 280G; or (z) requires WJB or any WJB Subsidiary
to provide a benefit in the form of WJB Common Stock or
determined by reference to the value of WJB Common Stock.
Section 2.09 Ownership of Property; Insurance
Coverage.
(a) Except as disclosed in the WJB Disclosure
Schedule, WJB and the WJB Subsidiaries have, or will have as to
property acquired after the date hereof, good and, as to real
property, marketable title to all assets and properties owned by
WJB or any WJB Subsidiary in the conduct of their businesses,
whether such assets and properties are real or personal, tangible
or intangible, including assets and property reflected in the
balance sheets contained in the WJB Regulatory Reports and in the
WJB Financials or 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 date of
such balance sheets), subject to no encumbrances, liens,
mortgages, security interests or pledges, except (i) those items
that secure liabilities that are reflected in such balance sheets
or the notes thereto or that secure liabilities incurred in the
ordinary course of business after the date of the last such
balance sheet, (ii) statutory liens for amounts not yet
delinquent or which are being contested in good faith and
(iii) items permitted under Article IV and encumbrances, liens,
mortgages, security interests and pledges that do not in the
aggregate have a Material Adverse Effect on WJB. WJB and the WJB
Subsidiaries, as lessee, have the right under valid and
subsisting leases of real and personal properties used by WJB and
its Subsidiaries in the conduct of their businesses to occupy or
use all such properties as presently occupied and used by each of
them. Except as disclosed in the WJB Disclosure Schedule, WJB
believes that such existing leases and commitments to lease
constitute or will constitute operating leases for both tax and
financial accounting purposes and the lease expense and minimum
rental commitments with respect to such leases and lease
commitments are as disclosed in the Notes to the WJB financial
statements as of December 31, 1994 and 1993 and for the periods
ended December 31, 1992, 1993 and 1994.
(b) With respect to all agreements pursuant to
which WJB or any WJB Subsidiary has purchased securities subject
to an agreement to resell, if any, WJB or such WJB Subsidiary, as
the case may be, has a valid, perfected first lien or security
interest in the securities or other collateral securing the
repurchase agreement, and the value of such collateral equals or
exceeds the amount of the debt secured thereby.
(c) WJB and the WJB Subsidiaries currently
maintain insurance considered by WJB to be reasonable for their
respective operations and similar in scope and coverage to that
maintained by other businesses similarly engaged. Neither WJB
nor any WJB Subsidiary has received notice from any insurance
carrier that (i) such insurance will be cancelled or that
coverage thereunder will be reduced or eliminated, or
(ii) premium costs with respect to such policies of insurance
will be substantially increased. There are presently no material
claims pending under such policies of insurance and no notices
have been given by WJB or WJCB under such policies. All such
insurance is valid and enforceable and in full force and effect,
and within the last three years WJB has received each type of
insurance coverage for which it has applied and during such
periods has not been denied indemnification for any material
claims submitted under any of its insurance policies.
Section 2.10 Legal Proceedings. Except as set forth
in the WJB Disclosure Schedule, neither WJB nor any WJB
Subsidiary is a party to any, and there are no pending or, to the
best of WJB's knowledge, threatened legal, administrative,
arbitration or other proceedings, claims (whether asserted or
unasserted), actions or governmental investigations or inquiries
of any nature (i) against WJB or any WJB Subsidiary, (ii) to
which WJB or any WJB Subsidiary's assets are or may be subject,
(iii) challenging the validity or propriety of any of the
transactions contemplated by this Agreement, or (iv) which could
reasonably be expected to materially and adversely affect the
ability of WJB to perform under this Agreement, except for any
proceedings, claims, actions, investigations or inquiries
referred to in clauses (i) or (ii) which, if adversely
determined, individually or in the aggregate, could not be
reasonably expected to have a Material Adverse Effect.
Section 2.11 Compliance With Applicable Law.
(a) WJB and WJB Subsidiaries hold all licenses,
franchises, permits and authorizations necessary for the lawful
conduct of their businesses under, and have complied in all
material respects with, applicable laws, statutes, orders, rules
or regulations of any federal, state or local governmental
authority relating to them, other than where such failure to hold
or such noncompliance will neither result in a limitation in any
material respect on the conduct of their businesses nor otherwise
have a material adverse effect on the assets, business, financial
condition, the results of operations or business prospects of WJB
and its Subsidiaries taken as a whole.
(b) Except as set forth in the WJB Disclosure
Schedule, neither WJB nor any WJB Subsidiary has received any
notification or communication from any Regulatory Authority
(i) asserting that WJB or any WJB Subsidiary is not in
substantial compliance with any of the statutes, regulations or
ordinances which such Regulatory Authority enforces;
(ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to WJB or any WJB
Subsidiary; (iii) requiring or threatening to require WJB or any
WJB Subsidiary, or indicating that WJB or any WJB Subsidiary may
be required, to enter into a cease and desist order, agreement or
memorandum of understanding or any other agreement restricting or
limiting, or purporting to restrict or limit, in any manner the
operations of WJB or any WJB Subsidiary, including without
limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct,
restrict or limit, in any manner the operations of WJB or any WJB
Subsidiary, including without limitation any restriction on the
payment of dividends (any such notice, communication, memorandum,
agreement or order described in this sentence is hereinafter
referred to as a "Regulatory Agreement"). Except as set forth in
the WJB Disclosure Schedule, neither WJB nor any WJB Subsidiary
has consented to or entered into any Regulatory Agreement, except
as heretofore disclosed to Sovereign.
Section 2.12 ERISA. WJB has previously delivered, or
will deliver, to Sovereign true and complete copies of all
employee pension benefit plans within the meaning of ERISA
Section 3(2), profit sharing plans, stock purchase plans,
deferred compensation and supplemental income plans, supplemental
executive retirement plans, employment agreements, annual or long
term incentive plans, settlement plans, policies and agreements,
group insurance plans, and all other employee welfare benefit
plans within the meaning of ERISA Section 3(1) (including
vacation pay, sick leave, short-term disability, long-term
disability, and medical plans) and all other employee benefit
plans, policies, agreements and arrangements, all of which are
set forth in the WJB Disclosure Schedule, maintained or
contributed to for the benefit of the employees or former
employees (including retired employees) and any beneficiaries
thereof or directors or former directors of WJB or any WJB
Subsidiary, together with (i) the most recent actuarial (if any)
and financial reports relating to those plans which constitute
"qualified plans" under IRC Section 401(a), (ii) the most recent
annual reports relating to such plans filed by them,
respectively, with any government agency, and (iii) all rulings
and determination letters which pertain to any such plans.
Neither WJB nor any WJB Subsidiary, and no pension plan
maintained by WJB or any WJB Subsidiary, has incurred, directly
or indirectly, within the past six (6) years any liability under
Title IV of ERISA (including to the Pension Benefit Guaranty
Corporation) or to the IRS with respect to any pension plan
qualified under IRC Section 401(a), except liabilities to the
Pension Benefit Guaranty Corporation pursuant to ERISA
Section 4007, all of which have been fully paid, nor has any
reportable event under ERISA Section 4043(b) occurred with
respect to any such pension plan. Except as set forth on the WJB
Disclosure Schedule, with respect to each of such plans that is
subject to Title IV of ERISA, the present value of the accrued
benefits under such plan, based upon the actuarial assumptions
used for funding purposes in the plan's most recent actuarial
report dated December 31, 1994, did not, as of its latest
valuation date, exceed the then current value of the assets of
such plan allocable to such accrued benefits. Neither WJB nor
any WJB Subsidiary has incurred or is subject to any liability
under ERISA Section 4201 for a complete or partial withdrawal
from a multi-employer plan. All "employee benefit plans," as
defined in ERISA Section 3(3), comply and within the past six (6)
years have complied in all material respects with (i) relevant
provisions of ERISA and (ii) in the case of plans intended to
qualify for favorable income tax treatment, provisions of the IRC
relevant to such treatment. Except as disclosed in the WJB
Disclosure Schedule, neither WJB nor any WJB Subsidiary has a
material liability under any such plan which pursuant to GAAP is
required to be reflected on or disclosed in (pursuant to a
footnote or otherwise) the WJB Financials and which is not so
reflected or disclosed thereon. To the knowledge of WJB, except
as disclosed in the WJB Disclosure Schedule, no prohibited
transaction, breach of fiduciary duty or other transaction has
occurred within the past six (6) years with respect to any
employee benefit plan maintained by WJB or any WJB Subsidiary
which would result in the imposition, directly or indirectly, of
an excise tax or other penalty under ERISA or the IRC. WJB and
the WJB Subsidiaries provide continuation coverage under group
health plans for separating employees and "qualified
beneficiaries" in accordance with the provisions of IRC
Section 4980B(f). Such group health plans are in compliance with
Section 1862(b)(1) of the Social Security Act.
Section 2.13 Brokers, Finders and Professionals .
Except for WJB's engagement of Xxxx, Xxxx & Co., Inc., neither
WJB nor any WJB Subsidiary, nor any of their respective officers,
directors, employees or agents, has employed any broker, finder
or financial advisor, or, except for a commitment to pay Xxxx,
Xxxx & Co., Inc., incurred any liability or commitment for any
fees or commissions to any such person in connection with the
transactions contemplated by this Agreement. The WJB Disclosure
Schedule shall contain as an exhibit the engagement letter
between WJB and Xxxx, Xxxx & Co., Inc. Except as disclosed on
the WJB Disclosure Schedule, neither WJB nor any WJB Subsidiary,
nor any of their respective officers, directors, employees or
agents has engaged any third party or entered into any written or
oral agreement or contract, express or implied, with any third
party pursuant to which WJB or any WJB Subsidiary will be
obligated to pay such third party any fees for professional
services provided in connection with the Merger or the Bank
Merger.
Section 2.14 Environmental Matters. To the knowledge
of WJB, neither WJB nor any WJB Subsidiary, nor any properties
owned or operated by WJB or any WJB Subsidiary has been or is in
violation of, or liable in, any material respect under any
Environmental Law. There are no actions, suits or proceedings,
or written demands, claims or notices, or investigations
(including without limitation notices, demand letters or requests
for information from any environmental agency) instituted or
pending, or to the knowledge of WJB, threatened, relating to the
liability of any property owned or operated by WJB or any WJB
Subsidiary under any Environmental Law.
Section 2.15 Loan Portfolio. The allowance for loan
losses reflected, or to be reflected, in the WJB Regulatory
Reports, and shown, or to be shown, on the balance sheets
contained in the WJB Financials have been, or will be,
established in accordance with the requirements of generally
accepted accounting principles and all applicable regulatory
criteria.
Section 2.16 Information to be Supplied. The
information to be supplied by WJB and WJCB for inclusion in the
Registration Statement will not, to WJB's knowledge, at the time
the Registration Statement is declared effective pursuant to the
Securities Act, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein not misleading. The information supplied, or
to be supplied, by WJB for inclusion in the Applications will, to
WJB's knowledge, at the time such documents are filed with any
Regulatory Authority, be accurate in all material aspects.
Section 2.17 Securities Documents. WJB has delivered
to Sovereign copies of its (i) annual reports on SEC Form 10-K
for the years ended December 31, 1994, 1993 and 1992,
(ii) quarterly reports on SEC Form 10-Q for the quarters ended
March 31, 1995 and June 30, 1995, and (iii) proxy materials used
or for use in connection with its meetings of shareholders held
in 1995, 1994 and 1993. To WJB's knowledge, such reports and
such proxy materials complied, at the time filed with the SEC, in
all material respects, with the Exchange Act and all applicable
rules and regulations of the SEC.
Section 2.18 Related Party Transactions. Except as
disclosed in the proxy statement for use in connection with WJB's
1995 annual meeting of shareholders or in the footnotes to WJB's
consolidated financial statements as of December 31, 1994 and
1993 and for the three years ended December 31, 1994 or otherwise
disclosed in the WJB Disclosure Schedule, WJB is not a party to
any transaction (including any loan or other credit
accommodation) with any Affiliate of WJB (except a WJB
Subsidiary). All such transactions (a) were made in the ordinary
course of business, (b) were made on substantially the same
terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other
Persons, and (c) did not involve more than the normal risk of
collectability or present other unfavorable features. No loan or
credit accommodation to any Affiliate of WJB is presently in
default or, during the three year period prior to the date of
this Agreement, has been in default or has been restructured,
modified or extended. Neither WJB nor WJCB has been notified
that principal and interest with respect to any such loan or
other credit accommodation will not be paid when due or that the
loan grade classification accorded such loan or credit
accommodation by WJCB is inappropriate.
Section 2.19 Quality of Representations. The
representations made by WJB in this Agreement are true, correct
and complete in all material respects.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SOVEREIGN
Sovereign hereby represents and warrants to WJB that,
except as set forth in the Sovereign Disclosure Schedule
delivered by Sovereign to WJB on or prior to the date hereof:
Section 3.01 Organization.
(a) Sovereign is a corporation duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Each Sovereign Subsidiary is duly
organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation and each possesses full
corporate power and authority to carry on its respective business
and to own, lease and operate its properties as presently
conducted. Neither Sovereign nor any Sovereign Subsidiary is
required by the conduct of its business or the ownership or
leasing of its assets to qualify to do business as a foreign
corporation in any jurisdiction other than the Commonwealth of
Pennsylvania and the states of Delaware and New Jersey, except
where the failure to be so qualified would not have a Material
Adverse Effect. Sovereign is a savings and loan holding company
duly registered under the HOLA.
(b) Sovereign Bank is a federal savings bank,
duly organized and validly existing under the laws of the United
States of America. Sovereign Bank has the corporate power and
authority to carry on its business and operations as now being
conducted and to own and operate the properties and assets now
owned and being operated by it.
(c) Except for certain deposits formerly held by
Harmonia Savings Bank which are insured by the Bank Insurance
Fund of the FDIC to the extent provided in the Federal Deposit
Insurance Act, the deposits of Sovereign Bank are insured by the
Savings Association Insurance Fund of the FDIC to the extent
provided in the Federal Deposit Insurance Act.
(d) Prior to the execution of this Agreement,
Sovereign has delivered to WJB true and correct copies of the
Articles of Incorporation and Bylaws of Sovereign and the Charter
and Bylaws of Sovereign Bank, respectively, as in effect on the
date hereof.
(e) There are no Sovereign Subsidiaries other
than Sovereign Bank and the other Subsidiaries set forth in
Sovereign's Annual Report on Form 10-K for the year ended
December 31, 1994.
(f) The respective minute books of Sovereign and
Sovereign Bank accurately record in all material respects all
material corporate action of their respective shareholders and
boards of directors (including committees) through the date of
this Agreement.
Section 3.02 Capital Structure.
(a) Sovereign is authorized, by its Articles of
Incorporation, to issue (a) 100,000,000 shares of common stock,
no par value ("Sovereign Common Stock"), of which, at the date of
this Agreement, no shares were issued and held by Sovereign as
treasury stock and 46,733,000 shares are issued and outstanding,
and (b) 7,500,000 shares of preferred stock, no par value
("Sovereign Preferred Stock"), of which, at the date of this
Agreement, 200,000 shares of 6 1/4% Cumulative, Series B, are
issued and outstanding. All shares of Sovereign Common Stock and
Preferred Stock issued and outstanding are fully paid and
nonassessable and none were issued in violation of any preemptive
rights. Sovereign has no Rights authorized, issued or
outstanding, other than (i) the Sovereign Stock Purchase Rights,
and (ii) as authorized under Sovereign's employee benefit plans,
stock option plans, employee stock ownership plan, employee stock
purchase plan, and dividend reinvestment and stock purchase plan.
As of June 30, 1995, Sovereign had approximately
7400 shareholders of record. On the Effective Date all shares of
Sovereign Common Stock to be issued pursuant to the terms of
Section 1.02(e), when so issued, shall be fully paid and
nonassessable, shall not be issued in violation of any preemptive
rights and shall be free and clear of all liens, encumbrances and
restrictions created by or through Sovereign.
(b) To the best of Sovereign's knowledge, except
as disclosed in Sovereign's proxy statement dated March 17, 1995,
no person or "group" (as that term is used in Section 13(d)(3) of
the Exchange Act) is the beneficial owner of 5% or more of the
outstanding shares of Sovereign Common Stock.
(c) Except for a pledge of 15% of the outstanding
shares of the capital stock of Sovereign Bank to Mutual of New
York to secure certain indebtedness of Sovereign to Mutual of New
York more fully described in Note 9 of the Sovereign Financials
for the year ended December 31, 0000, Xxxxxxxxx owns all of the
capital stock of Sovereign Bank and its other subsidiaries, free
and clear of any lien or encumbrance. Except for the Sovereign
Subsidiaries, neither Sovereign nor its subsidiaries possess,
directly or indirectly, any material equity interest in any
corporation, except for equity interests held in the investment
portfolios of Sovereign Subsidiaries, equity interests held by
Sovereign Subsidiaries in a fiduciary capacity, and equity
interests held in connection with the commercial loan activities
of Sovereign Subsidiaries.
Section 3.03 Authority; No Violation.
(a) Sovereign has full corporate power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. Sovereign Bank has full
corporate power and authority to execute and deliver the Bank
Plan of Merger and to consummate the Bank Merger. The execution
and delivery of this Agreement by Sovereign and the consummation
by Sovereign of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of Sovereign
and no other corporate proceedings (including the approval of
Sovereign shareholders) on the part of Sovereign are necessary to
consummate the transactions contemplated hereby. The execution
and delivery of the Bank Plan of Merger by Sovereign Bank and the
consummation by Sovereign Bank of the Bank Merger have been duly
and validly approved by the Board of Directors of Sovereign Bank
and by Sovereign as sole shareholder of Sovereign Bank, and no
other corporate proceedings on the part of Sovereign Bank are
necessary to consummate the transactions contemplated by the Bank
Plan of Merger (including the approval of Sovereign
shareholders). This Agreement has been duly and validly executed
and delivered by Sovereign and, subject to receipt of the
required approvals of Regulatory Authorities described in
Section 3.04 hereof, constitutes the valid and binding obligation
of Sovereign, enforceable against Sovereign in accordance with
its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity. The Bank
Plan of Merger, upon its execution and delivery by Sovereign Bank
concurrently with the execution and delivery of this Agreement,
will constitute the valid and binding obligation of Sovereign
Bank, enforceable against Sovereign Bank in accordance with its
terms, subject to applicable conservatorship and receivership
provisions of the Federal Deposit Insurance Act, or insolvency
and similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity.
(b) (A) The execution and delivery of this
Agreement by Sovereign, (B) the execution and delivery of the
Bank Plan of Merger by Sovereign Bank, (C) subject to receipt of
approvals from the Regulatory Authorities referred to in
Section 3.04 hereof and WJB's and Sovereign's compliance with any
conditions contained therein, the consummation of the
transactions contemplated hereby, and (D) compliance by Sovereign
or Sovereign Bank or any other subsidiary with any of the terms
or provisions hereof or of the Bank Plan of Merger will not
(i) conflict with or result in a breach of any provision of the
articles of incorporation or bylaws of Sovereign or the charter
and bylaws of Sovereign Bank; (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Sovereign or Sovereign Bank or any other
subsidiary or any of their respective properties or assets; or
(iii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default),
under, result in the termination of, accelerate the performance
required by, or result in a right of termination or acceleration
or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of Sovereign or
Sovereign Bank or any other subsidiary under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement, commitment or other
instrument or obligation to which Sovereign or Sovereign Bank or
any other subsidiary is a party, or by which they or any of their
respective properties or assets may be bound or affected, except
for such violations, conflicts, breaches or defaults under
clause (ii) or (iii) hereof which, either individually or in the
aggregate, will not have a material adverse effect on the assets,
business, financial condition, business prospects or results of
operations of Sovereign and its Subsidiaries taken as a whole or
the ability of Sovereign to perform any of its obligations under
this Agreement.
Section 3.04 Consents. Except for consents and
approvals of or filings with the OTS, the PDB, the NJDB, the SEC,
the FDIC, the FRB, and state "blue sky" authorities, no consents
or approvals of, or filings or registrations with, any public
body or authority are necessary and no consents or approvals of
any third parties are necessary in connection with the execution
and delivery of this Agreement by Sovereign or the Bank Plan of
Merger by Sovereign Bank, or the consummation by Sovereign of the
transactions contemplated hereby or by Sovereign Bank of the Bank
Merger. To the best of Sovereign's knowledge, no fact or
condition exists which Sovereign has reason to believe will
prevent it or Sovereign Bank from obtaining the foregoing
consents and approvals.
Section 3.05 Financial Statements.
(a) Sovereign has previously delivered, or will
deliver, to WJB the Sovereign Financials. The Sovereign
Financials are, or will be, prepared in accordance with generally
accepted accounting principles and practices applied on a
consistent basis throughout the periods covered by such
statements, and fairly present, or will fairly present, the
consolidated financial position, results of operations and cash
flows of Sovereign as of and for the periods ending on the dates
thereof, in accordance with generally accepted accounting
principles. Sovereign will make its regulatory reports available
to WJB for inspection.
(b) At the date of any balance sheet included in
the Sovereign Financials, Sovereign or its subsidiaries did not
have any liabilities or obligations of any nature (whether
absolute, accrued, contingent or otherwise) of a type required to
be reflected in such Sovereign Financials or in the footnotes
thereto which are not fully reflected or reserved against therein
or disclosed in a footnote thereto, except for liabilities and
obligations which are not material in the aggregate and which are
incurred in the ordinary course of business, consistent with past
practice, and except for liabilities and obligations which are
within the subject matter of a specific representation and
warranty herein.
Section 3.06 Taxes. Sovereign and the Sovereign
Subsidiaries are members of the same affiliated group within the
meaning of IRC Section 1504(a). Sovereign has duly filed in
correct form all federal, state and local tax returns required to
be filed by or with respect to Sovereign and all Sovereign
Subsidiaries on or prior to the date hereof (all such returns
being accurate and correct in all material respects) and has duly
paid or made provisions for the payment of all federal, state and
local taxes which have been incurred by or are due or claimed to
be due from Sovereign and any Sovereign Subsidiary by any taxing
authority or pursuant to any tax sharing agreement or arrangement
(written or oral) on or prior to the date hereof other than taxes
which (i) are not delinquent or (ii) are being contested in good
faith.
Section 3.07 No Material Adverse Change. Sovereign
has not suffered any Material Adverse Effect since June 30, 1995.
Section 3.08 Legal Proceedings. Neither Sovereign nor
any Sovereign Subsidiary is a party to any, and there are no
pending or, to the best of Sovereign's knowledge, threatened
legal, administrative, arbitration or other proceedings, claims
(whether asserted or unasserted), actions or governmental
investigations or inquiries of any nature (i) against Sovereign
or any Sovereign Subsidiary, (ii) to which Sovereign's or any
Sovereign Subsidiary's assets are or may be subject,
(iii) challenging the validity or propriety of any of the
transactions contemplated by this Agreement, or (iv) which could
adversely affect the ability of Sovereign to perform under this
Agreement, except for any proceedings, claims, actions,
investigations or inquiries referred to in clauses (i) or (ii)
which, individually or in the aggregate, could not be reasonably
expected to materially and adversely affect the assets, business,
financial condition or results of operations of Sovereign and its
Subsidiaries taken as a whole.
Section 3.09 Ownership of Property; Insurance
Coverage.
(a) Sovereign and the Sovereign Subsidiaries have
good and, as to real property, marketable title to all assets and
properties owned by Sovereign or any of its Subsidiaries, whether
real or personal, tangible or intangible, including assets and
property reflected in the balance sheets contained in the
Sovereign Financials or 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
date of such balance sheets), subject to no encumbrances, liens,
mortgages, security interests or pledges, except (i) those items
that secure liabilities for borrowed money and that are described
in the Sovereign Disclosure Schedule or permitted under
Article IV hereof, and (ii) statutory liens for amounts not yet
delinquent or which are being contested in good faith. Sovereign
and the Sovereign Subsidiaries, as lessee, have the right under
valid and subsisting leases of real and personal properties used
by Sovereign and its Subsidiaries in the conduct of their
businesses to occupy and use all such properties as presently
occupied and used by each of them.
(b) Sovereign and the Sovereign Subsidiaries
currently maintain insurance in amounts considered by Sovereign
to be reasonable for their respective operations, and such
insurance is similar in scope and coverage to that maintained by
other businesses similarly engaged. Neither Sovereign nor any
Sovereign Subsidiary has received notice from any insurance
carrier that (i) such insurance will be cancelled or that
coverage thereunder will be reduced or eliminated or (ii) premium
costs with respect to such insurance will be substantially
increased. There are presently no material claims pending under
such policies of insurance and no notices have been given by
Sovereign or Sovereign Bank under such policies. All such
insurance is valid and enforceable and in full force and effect,
and within the last three years Sovereign has received each type
of insurance coverage for which it has applied and during such
periods has not been denied indemnification for any material
claims submitted under any of its insurance policies.
Section 3.10 Compliance With Applicable Law.
Sovereign and the Sovereign Subsidiaries hold all licenses,
franchises, permits and authorizations necessary for the lawful
conduct of their businesses under, and have complied in all
material respects with, applicable laws, statutes, orders, rules
or regulations of any federal, state or local governmental
authority relating to them, other than where such failure to hold
or such noncompliance will neither result in a limitation in any
material respect on the conduct of their businesses nor otherwise
have a material adverse effect on the assets, business, financial
condition, business prospects or results of operations of
Sovereign and its Subsidiaries taken as a whole.
Section 3.11 Information to be Supplied. The
information to be supplied by Sovereign for inclusion in the
Registration Statement will not, at the time the Registration
Statement is declared effective pursuant to the Securities Act,
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements
therein not misleading. The information supplied, or to be
supplied, by Sovereign for inclusion in the Applications will, at
the time such documents are filed with any Regulatory Authority,
be accurate in all material aspects.
Section 3.12 ERISA. Sovereign has previously
delivered to WJB true and complete copies of all employee pension
benefit plans within the meaning of ERISA Section 3(2), profit
sharing plans, stock purchase plans, deferred compensation and
supplemental income plans, supplemental executive retirement
plans, annual incentive plans, group insurance plans, and all
other employee welfare benefit plans within the meaning of ERISA
Section 3(1) (including vacation pay, sick leave, short-term
disability, long-term disability, and medical plans), all of
which are set forth on the Sovereign Disclosure Schedule,
maintained for the benefit of the employees or former employees
(including retired employees) and any beneficiaries thereof or
directors or former directors of Sovereign or any Sovereign
Subsidiary, together with (i) the most recent actuarial (if any)
and financial reports relating to those plans which constitute
"qualified plans" under IRC Section 401(a), (ii) the most recent
annual reports relating to such plans filed by them,
respectively, with any government agency, and (iii) all rulings
and determination letters which pertain to any such plans.
Neither Sovereign nor any Sovereign Subsidiary, and no pension
plan maintained by Sovereign or any Sovereign Subsidiary, has
incurred within the past six (6) years any liability to the
Pension Benefit Guaranty Corporation or to the IRS with respect
to any pension plan qualified under IRC Section 401(a), except
liabilities to the Pension Benefit Guaranty Corporation pursuant
to ERISA Section 4007, all of which have been fully paid, nor has
any reportable event under ERISA Section 4043(b) occurred with
respect to any such pension plan. Neither Sovereign nor any
Sovereign Subsidiary has incurred any liability under ERISA
Section 4201 for a complete or partial withdrawal from a multi-
employer plan. All "employee benefit plans," as defined in ERISA
Section 3(3), comply and within the past six (6) years have
complied in all material respects with ERISA. Except as
disclosed in the Sovereign Disclosure Schedule, neither Sovereign
nor any Sovereign Subsidiary has a material liability under any
such plan which is not reflected on the Sovereign Financials. To
the knowledge of Sovereign, except as disclosed in the Sovereign
Disclosure Schedule, no prohibited transaction (which shall mean
any transaction prohibited by ERISA Section 406 and not exempt
under ERISA Section 408), breach of fiduciary duty or other
transaction has occurred within the past six (6) years with
respect to any employee benefit plan maintained by Sovereign or
any Sovereign Subsidiary that would result in the imposition,
directly or indirectly, of an excise tax under IRC Section 4975.
Sovereign and the Sovereign Subsidiaries provide continuation
coverage under group health plans for separating employees in
accordance with the provisions of IRC Section 4980B(f). Such
group health plans are in compliance with Section 1862(b)(1) of
the Social Security Act.
Section 3.13 Securities Documents. Sovereign has
delivered, or will deliver, to WJB copies of its (i) annual
reports on SEC Form 10-K for the years ended December 31, 1994,
1993, and 1992, (ii) quarterly reports on SEC Form 10-Q for the
quarters ended March 31, 1995 and June 30, 1995, and (iii) proxy
statement dated March 17, 1995 used in connection with its annual
meeting of shareholders held in April 1995. To Sovereign's
knowledge, such reports and such proxy materials complied, at the
time filed with the SEC, in all material respects, with the
Exchange Act and the applicable rules and regulations of the SEC.
Section 3.14 Quality of Representations. The
representations made by Sovereign in this Agreement are true,
correct and complete in all material respects.
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.01 Conduct of WJB's Business.
(a) From the date of this Agreement to the
Closing Date, WJB and each WJB Subsidiary will conduct its
business and engage in transactions, including extensions of
credit, only in the ordinary course and consistent with past
practice and policies, except as otherwise required by this
Agreement or with the written consent of Sovereign. Sovereign
understands that WJB's business primarily consists of attracting
retail deposits and originating loans. WJB will use its best
efforts, and will cause WJCB to use its best efforts, to
(i) preserve its business organizations intact, (ii) maintain
good relationships with employees, and (iii) preserve for itself
the good will of customers of WJB and WJB Subsidiaries and others
with whom business relationships exist, provided that neither WJB
nor any WJB Subsidiary shall be required to take any unreasonable
or extraordinary action or any action that would conflict with
the terms hereof. From the date hereof to the Closing Date,
except as otherwise consented to or approved by Sovereign in
writing or as permitted or required by this Agreement, WJB will
not, and WJB will not permit any WJB Subsidiary to:
(i) amend or change any provision of its
Certificate of Incorporation or Bylaws;
(ii) change the number of authorized or
issued shares of its capital stock or issue or grant any
option, warrant, call, commitment, subscription, Right or
agreement of any character relating to its authorized or
issued capital stock or any securities convertible into
shares of such stock, or split, combine or reclassify any
shares of capital stock, or declare, set aside or pay any
dividend or other distribution in respect of capital stock,
or redeem or otherwise acquire any shares of capital stock,
except that (A) WJB may issue shares of WJB Common Stock
upon the valid exercise, subject to the terms of the letter
agreement attached hereto as Exhibit 1, of presently
outstanding options to acquire WJB Common Stock under the
WJB Stock Option Plan, and (B) WJB may issue shares of WJB
Common Stock upon the valid exercise, subject to the terms
of the letter agreement attached hereto as Exhibit 1, of
presently outstanding IPO Warrants; and WJB, consistent with
past practice, may not pay any cash dividend on any share of
WJB Common Stock outstanding. Subject to applicable
regulatory restrictions, if any, WJCB may pay a cash
dividend, in the aggregate, sufficient to fund any dividend
by WJB permitted hereunder;
(iii) grant any severance or termination pay
(other than pursuant to written policies or written
agreements of WJB or WJB Subsidiaries in effect on the date
hereof and provided to Sovereign prior to the date hereof)
to, or enter into any new or amend any existing employment
agreement with, or increase the compensation of, any
employee, officer or director of WJB or any WJB Subsidiary,
except for (A) routine periodic increases, individually and
in the aggregate, in accordance with past practice and
(B) normal bonuses paid in the ordinary course, except that
bonuses paid to Messrs. Van Xxxxxxx, Xxxxx and XxXxxxx shall
be paid in accordance with their employment agreements;
(iv) merge or consolidate WJB or any WJB
Subsidiary with any other corporation; sell or lease all or
any substantial portion of the assets or business of WJB or
any WJB Subsidiary; make any acquisition of all or any
substantial portion of the business or assets of any other
person, firm, association, corporation or business
organization other than in connection with the collection of
any loan or credit arrangement between any WJB Subsidiary
and any other person; enter into a purchase and assumption
transaction with respect to deposits and liabilities; permit
the revocation or surrender by any WJB Subsidiary of its
certificate of authority to maintain, or file an application
for the relocation of, any existing branch office, or file
an application for a certificate of authority to establish a
new branch office, provided that nothing contained herein
shall prohibit WJCB from pursuing its existing application
to open a full branch office in Caldwell, New Jersey;
(v) sell or otherwise dispose of the capital
stock of WJCB or sell or otherwise dispose of any asset of
WJB or of any WJB Subsidiary other than in the ordinary
course of business consistent with past practice; subject
any asset of WJB or of any WJB Subsidiary to a lien, pledge,
security interest or other encumbrance (other than in
connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in
the ordinary course of business and transactions in "federal
funds" and the satisfaction of legal requirements in the
exercise of trust powers) other than in the ordinary course
of business consistent with past practice; incur any
indebtedness for borrowed money (or guarantee any
indebtedness for borrowed money), except in the ordinary
course of business consistent with past practice;
(vi) take any action which would result in
any of the representations and warranties of WJB set forth
in this Agreement becoming untrue as of any date after the
date hereof or in any of the conditions set forth in
Article V hereof not being satisfied;
(vii) change any method, practice or
principle of accounting except for implementation of any new
SFAS standard;
(viii) waive, release, grant or transfer any
rights of value or modify or change in any material respect
any existing agreement to which WJB or any WJB Subsidiary is
a party, other than in the ordinary course of business,
consistent with past practice;
(ix) implement any pension, retirement,
profit sharing, bonus, welfare benefit or similar plan or
arrangement that was not in effect on the date of this
Agreement, or materially amend any existing plan or
arrangement except to the extent such amendments do not
result in an increase in cost;
(x) purchase any security for its investment
portfolio not rated "A" or higher by either Standard &
Poor's Corporation or Xxxxx'x Investor Services, Inc.;
(xi) except consistent with past practice,
make any loan or other credit facility commitment (including
without limitation, lines of credit and letters of credit)
to any Affiliate or compromise, extend, renew or modify any
such commitment outstanding;
(xii) except consistent with past practice,
enter into, renew, extend or modify any other transaction
with any Affiliate;
(xiii) enter into any swap or similar
commitment, agreement or arrangement;
(xiv) except for the execution of this
Agreement, take any action that would give rise to a right
of payment to any individual under any employment agreement;
(xv) intentionally and knowingly take any
action that would preclude satisfaction of the condition to
closing contained in Section 5.02(j) relating to financial
accounting treatment of the Merger; or
(xvi) agree to do any of the foregoing.
Section 4.02 Access; Confidentiality.
(a) From the date of this Agreement through the
Closing Date, WJB or Sovereign, as the case may be, shall afford
to, and shall cause each WJB Subsidiary or Sovereign Subsidiary
to afford to, the other party and its authorized agents and
representatives, complete access to their respective properties,
assets, books and records and personnel, at reasonable hours and
after reasonable notice; and the officers of WJB and Sovereign
will furnish any person making such investigation on behalf of
the other party with such financial and operating data and other
information with respect to the businesses, properties, assets,
books and records and personnel as the person making such
investigation shall from time to time reasonably request.
Notwithstanding the foregoing, neither Sovereign nor WJB shall be
required to provide access to or disclose information where such
access or disclosure would violate or prejudice the rights of any
customer or would contravene any law, rule, regulation, order or
judgment. The parties will use their best efforts to obtain
waivers of any such restriction and in any event make appropriate
substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply.
(b) WJB and Sovereign each agree to conduct such
investigation and discussions hereunder in a manner so as not to
interfere unreasonably with normal operations and customer and
employee relationships of the other party.
(c) If the transactions contemplated by this
Agreement shall not be consummated, WJB and Sovereign will each
destroy or return all documents and records obtained from the
other party or its representatives, during the course of its
investigation and will not directly or indirectly use such
information for any competitive or commercial purpose or for any
other purpose not expressly permitted hereby. Sovereign or WJB
will cause all information with respect to the other party and
its Subsidiaries obtained pursuant to this Agreement or
preliminarily thereto to be used solely for the purpose of
evaluating the Merger and the Bank Merger contemplated hereby and
to be treated as the sole property of the party delivering the
information until the consummation of the Merger contemplated
hereby, and will cause all such information to be kept
confidential, except to the extent such information is or becomes
public through no fault of the party to whom the information was
provided or any of its representatives or agents and except to
the extent disclosure of any such information is legally
required. WJB and Sovereign shall each give prompt notice to the
other party of any contemplated disclosure where such disclosure
is so legally required.
Section 4.03 Regulatory Matters and Consents.
(a) Sovereign and WJB will prepare all
Applications and make all filings for, and use their best efforts
to obtain as promptly as practicable after the date hereof, all
necessary permits, consents, approvals, waivers and
authorizations of all Regulatory Authorities necessary or
advisable to consummate the transactions contemplated by this
Agreement.
(b) Each party will furnish the other party with
all information concerning such party and its Subsidiaries as may
be necessary or advisable in connection with any Application or
filing made by or on behalf of the other party to any Regulatory
Authority in connection with the transactions contemplated by
this Agreement.
(c) Each party will promptly furnish the other
party with copies of written communications to, or received by
such party or any of its Subsidiaries from, any Regulatory
Authority in respect of the transactions contemplated hereby,
except information which is filed by such party which is
designated as confidential or contains an earnings projection.
(d) Each party will cooperate with the other
party in the foregoing matters and will furnish the other party
with all information concerning such party and its Subsidiaries
as may be necessary or advisable in connection with any filing
(including the Registration Statement (including the Prospectus/
Proxy Statement) and any report filed with the SEC) made, or
written material submitted, by or on behalf of such party to any
Regulatory Authority in connection with the transactions
contemplated by this Agreement, and such information will be
accurate and complete in all material respects. In connection
therewith, each party will provide certificates and other
documents reasonably requested by the other party.
(e) The parties shall each have the right to
review in advance and comment on all information relating to it
which appears in any filing made by the other party with, or
written material submitted by the other party to, any Regulatory
Authority in connection with the transactions contemplated
hereby.
Section 4.04 Taking of Necessary Action.
(a) Sovereign and WJB shall each use its best
efforts in good faith, and each of them shall cause its
Subsidiaries to use their best efforts in good faith, to
(i) furnish such information as may be required in connection
with the preparation of the documents referred to in Section 4.03
of this Agreement, and (ii) take or cause to be taken all action
necessary or desirable on its part using its best efforts so as
to permit completion of the Merger and the Bank Merger by
June 30, 1996, including, without limitation, (1) obtaining the
consent or approval of each individual, partnership, corporation,
association or other business or professional entity whose
consent or approval is required for consummation of the
transactions contemplated hereby, provided that neither WJB nor
any WJB Subsidiary shall agree to make any material payments or
modifications to agreements in connection therewith without the
prior written consent of Sovereign (which shall not be
unreasonably withheld), and further provided that nothing
contained herein shall be deemed to require WJB to obtain an
affiliate letter similar to the form attached hereto as
Exhibit 1, or any similar letter, from any shareholder who is not
an executive officer or director of WJB or WJCB, and
(2) requesting the delivery of appropriate opinions, consents and
letters from its counsel and independent auditors. No party
hereto shall take, or cause, or to the best of its ability permit
to be taken, any action that would substantially impair the
prospects of completing the Merger and the Bank Merger pursuant
to this Agreement and the Bank Plan of Merger; provided that
nothing herein contained shall preclude Sovereign or WJB or from
exercising its rights under this Agreement or the Option
Agreement.
(b) WJB and Sovereign shall promptly prepare a
Prospectus/Proxy Statement to be mailed to shareholders of WJB in
connection with the meeting of WJB shareholders and transactions
contemplated hereby, and to be filed by Sovereign with the SEC in
the Registration Statement, which Prospectus/Proxy Statement
shall conform to all applicable legal requirements. Sovereign
shall, as promptly as practicable following the preparation
thereof, file the Registration Statement with the SEC and WJB and
Sovereign shall use all reasonable efforts to have the
Registration Statement declared effective under the Securities
Act as promptly as practicable after such filing. Sovereign will
advise WJB, promptly after Sovereign receives notice thereof, of
the time when the Registration Statement has become effective or
any supplement or amendment has been filed, of the issuance of
any stop order or the suspension of the qualification of the
shares of capital stock issuable pursuant to the Registration
Statement, or the initiation or threat of any proceeding for any
such purpose, or of any request by the SEC for the amendment or
supplement of the Registration Statement or for additional
information. Sovereign shall use its best efforts to obtain,
prior to the effective date of the Registration Statement, all
necessary state securities laws or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by
this Agreement. Sovereign will provide WJB with as many copies
of such Registration Statement and all amendments thereto
promptly upon the filing thereof as WJB may reasonably request.
Section 4.05 Certain Agreements.
(a) Subject to Section 4.11 hereof, as soon as
practicable after the Effective Date, all employees of WJB and
WJB Subsidiaries whose employment is continued shall be employed
upon their existing terms and conditions with appropriate changes
in title to be consistent with Sovereign's management structure
and the operation of WJCB as a division of Sovereign Bank.
(b) (i) Except for any liability for trading in
WJB Common Stock while in possession of material nonpublic
information or disclosing material nonpublic information,
directly or indirectly, to any party who trades in WJB
Common Stock, for a period of six years from and after the
Effective Date, Sovereign shall indemnify, and advance
expenses in matters that may be subject to indemnification
to, persons who served as directors and officers of WJB or
any WJB Subsidiary on or before the Effective Date with
respect to liabilities and claims (and related expenses)
made against them resulting from their service as such prior
to the Effective Date in accordance with and subject to the
requirements and other provisions of Sovereign's articles of
incorporation and bylaws in effect on the date of this
Agreement and applicable provisions of law to the same
extent as Sovereign is obliged thereunder to indemnify and
advance expenses to its own directors and officers with
respect to liabilities and claims made against them
resulting from their service as such for Sovereign.
(ii) Sovereign shall maintain WJB's existing
directors' and officers' liability insurance policy (or a
policy providing comparable coverage amount on terms no less
favorable, including Sovereign's existing policy if it meets
the foregoing standard) covering (A) persons who are
currently covered by such insurance for costs set forth in
(i) above arising in connection with events prior to the
Effective Date for a period of six (6) years after the
Effective Date and (B) for all officers and directors of WJB
for service in such capacity with Sovereign after the
Effective Date.
(iii) Any Indemnified Party wishing to claim
indemnification under Section 4.05(b), upon learning of any
claim, action, suit, proceeding or investigation described
above, shall promptly notify Sovereign thereof; provided
that the failure so to notify shall not affect the
obligations of Sovereign under Section 4.05(b).
(iv) Sovereign shall pay all reasonable
costs, including attorney's fees, that may be incurred by an
Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 4.05(b). The
rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have
under applicable law.
(c) Sovereign agrees to honor all terms and
conditions of the employment contracts of Messrs. Van Xxxxxxx and
Xxxxx and to extend the term of such contracts on the same terms
and conditions (including without limitation equivalent employee
benefits) (except as otherwise provided herein) at the then
current salaries (subject to adjustment as provided therein) so
that they expire no earlier than the date three (3) years after
the Effective Date. Sovereign agrees to (i) amend the terms of
the employment agreements of Messrs. Van Xxxxxxx and Xxxxx to
provide that if either employee's employment is terminated
without cause or for good reason (each as defined in such
employment agreements except that the definition of good reason
shall be appropriately amended to be consistent with the post-
merger structure contemplated by this Agreement), the terminated
employee shall have the right to receive all payments which would
have been due under his employment agreement through the
remainder of the full term as amended pursuant hereto, and
(ii) amend any section thereof relating to incentive compensation
to account for the changes in the operation of WJB resulting from
the Merger so as to provide Messrs. Van Xxxxxxx and Xxxxx with
benefits equivalent to those that they would have received under
such sections had the Merger not occurred. Sovereign agrees to
honor all terms and conditions of the employment contract of
Xx. XxXxxxx, Jr. and the severance agreement of Xx. XxXxxxx, Sr.
(d) Following the Effective Date, WJCB will be
operated as a separate autonomous commercial bank division of
Sovereign Bank for at least three years.
Section 4.06 No Other Bids and Related Matters. So
long as this Agreement remains in effect, WJB shall not, nor
shall it permit any WJB Subsidiary or any other Affiliate of WJB
or any officer, director or employee of any of them, or any
investment banker, attorney, accountant or other representative
retained by WJB, any WJB Subsidiary or any other WJB Affiliate
to, directly or indirectly, solicit, encourage, initiate or
engage in discussions or negotiations with, or respond to
requests for information, inquiries, or other communications
from, any person other than Sovereign concerning the fact of, or
the terms and conditions of, this Agreement, or concerning any
acquisition of WJB, any WJB Subsidiary, or any substantial
portion of the assets or business thereof (except that WJB's
officers may respond to inquiries from analysts, Regulatory
Authorities and holders of WJB Common Stock in the ordinary
course of business); provided, however, that the Board of
Directors of WJB, on behalf of WJB, may respond to any offer or
request for information, inquiries, proposals or communications
through its representatives if such Board of Directors, after
having consulted with and considered the advice of outside
counsel, has determined that the failure to provide such
information or participate in such negotiations and discussions
would cause the members of such Board of Directors to breach
their fiduciary duties under applicable laws. WJB shall notify
Sovereign immediately if any such discussions or negotiations are
sought to be initiated with WJB by any person other than
Sovereign or if any such requests for information, inquiries,
proposals or communications are received from any person other
than Sovereign.
Section 4.07 Duty to Advise; Duty to Update Disclosure
Schedules. Each party shall promptly advise the other party of
any change or event having a Material Adverse Effect on it or on
any of its Subsidiaries, which it believes would or would be
reasonably likely to (a) cause or constitute a material breach of
any of its representations, warranties or covenants set forth
herein or (b) prevent or materially delay the consummation of the
transactions contemplated by this Agreement. Each party shall
update its Disclosure Schedule as promptly as practicable after
the occurrence of an event of fact which, if such event or fact
had occurred prior to the date of this Agreement, would have been
disclosed in such Disclosure Schedule. The delivery of such
updated Schedule shall not relieve either party from any breach
or violation of this Agreement and shall not have any effect for
the purposes of determining the satisfaction of the condition set
forth in Sections 5.01(b) or 5.02(b) hereof.
Section 4.08 Conduct of Sovereign's Business. From
the date of this Agreement to the Closing Date, Sovereign will
use its best efforts to (x) preserve its business organizations
intact, (y) maintain good relationships with employees, and
(z) preserve for itself the goodwill of customers of Sovereign
and Sovereign Subsidiaries and others with whom business
relationships exist.
Section 4.09 Board and Committee Minutes. WJB shall
provide to Sovereign, within 20 days after any meeting of the
Board of Directors of WJB or any WJB Subsidiary, or any committee
thereof, or any senior management committee, a copy of the
minutes of such meeting, except that with respect to any meeting
held within 20 days of the Closing Date, such minutes shall be
provided to Sovereign prior to the Closing Date.
Section 4.10 Undertakings by Sovereign and WJB.
(a) WJB shall:
(i) Voting by Directors. Use its best
efforts to cause all members of WJB's Board of Directors to
vote all shares of WJB's Common Stock over which they hold
sole voting power, and to cause all shares over which they
hold shared voting power to be voted, in favor of this
Agreement;
(ii) Phase I Environmental Audit. Permit
Sovereign, if Sovereign elects to do so, at its own expense,
to cause a "phase I environmental audit" to be performed at
any physical location owned or occupied by WJB or any WJB
Subsidiary on the date hereof;
(iii) Approval of Bank Plan of Merger.
Approve the Bank Plan of Merger as sole shareholder of WJB
(subject to receipt of all required consents and approvals)
and obtain the approval of, and cause the execution and
delivery of, the Bank Plan of Merger by WJCB;
(iv) Proxy Solicitor. If Sovereign requests
and agrees to bear the expense thereof, retain a proxy
solicitor in connection with the solicitation of WJB
shareholder approval of this Agreement;
(v) Timely Review. If requested by
Sovereign at Sovereign's sole expense, cause its independent
certified public accountants to perform a review of its
unaudited consolidated financial statements as of the end of
any calendar quarter, in accordance with Statement of
Auditing Standards No. 36, and to issue their report on such
financial statements as soon as is practicable thereafter;
(vi) Outside Service Bureau Contracts. If
requested to do so by Sovereign, use its best efforts to
obtain an extension of any contract with an outside service
bureau or other vendor of services to WJB or any WJB
Subsidiary, on terms and conditions mutually acceptable to
WJB and Sovereign;
(vii) Committee Meetings. Subject to
Section 4.02, permit a representative of Sovereign to attend
all committee meetings of WJB and WJCB management including,
without limitation, any loan committee or asset/liability
committee. Subject to Section 4.02, WJB shall respond
reasonably and in good faith to any request of Sovereign to
permit a representative of Sovereign to attend any meeting
of WJB's Board of Directors or the Executive Committee
thereof;
(viii) Shareholders' Meeting. Submit this
Agreement to its shareholders for approval at a meeting to
be held as soon as practicable, and, subject to
Section 4.06, use its best efforts to cause its Board of
Director to unanimously recommend approval of this Agreement
to its shareholders.
(b) Sovereign and WJB shall each:
(i) Filings and Approvals. Cooperate with
the other in the preparation and filing, as soon as
practicable, of (A) the Applications, (B) the Registration
Statement and related filings under state securities laws
covering the Sovereign Common Stock and related Sovereign
Stock Purchase Rights to be issued pursuant to the Merger,
(C) all other documents necessary to obtain any other
approvals and consents required to effect the completion of
the Merger and the Bank Merger, and (D) all other documents
contemplated by this Agreement;
(ii) Identification of WJB's Affiliates.
Cooperate with the other and use its best efforts to
identify those persons who may be deemed to be Affiliates of
WJB;
(iii) Public Announcements. Cooperate and
cause its respective officers, directors, employees and
agents to cooperate in good faith, consistent with their
respective legal obligations, in the preparation and
distribution of, and agree upon the form and substance of,
any press release related to this Agreement and the
transactions contemplated hereby, and any other public
disclosures related thereto, including without limitation
communications to WJB shareholders, WJB's internal
announcements and customer disclosures, but nothing
contained herein shall prohibit either party from making any
disclosure which its counsel deems necessary or from making
any such public disclosure after using its best efforts to
discuss such public disclosure with the other party in
advance.
(iv) Maintenance of Insurance. Maintain,
and cause their respective Subsidiaries to maintain,
insurance in such amounts as are reasonable to cover such
risks as are customary in relation to the character and
location of its properties and the nature of its business;
(v) Maintenance of Books and Records.
Maintain, and cause their respective Subsidiaries to
maintain, books of account and records in accordance with
generally accepted accounting principles applied on a basis
consistent with those principles used in preparing the
financial statements heretofore delivered;
(vi) Delivery of Securities Documents.
Deliver to the other, copies of all Securities Documents
simultaneously with the filing thereof;
(vii) Taxes. File all federal, state, and
local tax returns required to be filed by them or their
respective Subsidiaries on or before the date such returns
are due (including any extensions) and pay all taxes shown
to be due on such returns on or before the date such payment
is due, except to the extent such taxes are being contested
in good faith.
Section 4.11 Employee Benefits and Severance.
(a) Employee Benefits. On and after the
Effective Date, the employee pension and welfare benefit plans of
Sovereign and WJB may, at Sovereign's election, continue to be
maintained separately or consolidated, provided, however, that
WJB employees shall receive benefits at least as favorable, in
the aggregate, as the benefits to which they were entitled on
September 19, 1995. In the event of a consolidation of any or
all of such plans, WJB and WJCB employees shall receive credit
for service with WJB or WJCB under any Sovereign benefit plan, or
new Sovereign benefit plan in which such employees would be
eligible to enroll for purposes of eligibility and vesting
determination. Employees of WJB and WJCB who are retained as
employees of Sovereign or Sovereign Bank after the Effective Date
will be permitted to participate in Sovereign's 401(k) Plan and
Employee Stock Ownership Plan to the extent permitted by the
terms of such plans.
(b) Severance. Sovereign shall maintain employee
benefits (including, without limitation, life, health and
disability) for WJB and WJCB employees at levels which, in the
aggregate, are at least as favorable as such benefits which
existed as of September 19, 1995. Any employee of WJB or WJCB
that is terminated by Sovereign or Sovereign Bank after the
Effective Date, will receive severance benefits in accordance
with Sovereign's severance policy (employees of WJB and WJCB will
be given credit for prior years of service to WJB and WJCB).
(c) Directors. If Sovereign adopts a stock
option plan for the benefit of the directors of Sovereign Bank,
the members of the Board of Directors of the commercial bank
division of Sovereign Bank will be permitted to participate in
such plan until a date no later than three years from the
Effective Date.
(d) Combined Operating Results. Sovereign agrees
to file with the SEC a Current Report on Form 8-K containing
combined operating results of Sovereign and WJB for the one month
period ended on the last day of the first full calendar month
after the Effective Date. Sovereign shall make such filing
within thirty (30) days after the end of the such month period.
ARTICLE V
CONDITIONS
Section 5.01 Conditions to WJB's Obligations under
this Agreement. The obligations of WJB hereunder shall be
subject to satisfaction at or prior to the Closing Date of each
of the following conditions, unless waived by WJB pursuant to
Section 7.03 hereof:
(a) Corporate Proceedings. All action required
to be taken by, or on the part of, Sovereign and Sovereign Bank
to authorize the execution, delivery and performance of this
Agreement and the Bank Plan of Merger, respectively, and the
consummation of the transactions contemplated by this Agreement
and the Bank Plan of Merger, shall have been duly and validly
taken by Sovereign and Sovereign Bank; and WJB shall have
received certified copies of the resolutions evidencing such
authorizations;
(b) Covenants; Representations. The obligations
of Sovereign required by this Agreement to be performed by
Sovereign at or prior to the Closing Date shall have been duly
performed and complied with in all material respects; and the
representations and warranties of Sovereign set forth in this
Agreement shall be true and correct in all material respects, as
of the date of this Agreement, and as of the Closing Date as
though made on and as of the Closing Date, except as to any
representation or warranty which (i) specifically relates to an
earlier date or (ii) where the facts which cause the failure of
any representation or warranty to be so true and correct would
not, either individually or in the aggregate, constitute a
Material Adverse Effect with respect to Sovereign;
(c) Approvals of Regulatory Authorities. The
parties shall have received all required approvals of Regulatory
Authorities of the Merger, and delivered copies thereof to each
other; and all conditions thereof and notice and waiting periods
required thereunder shall have expired or been terminated;
(d) No Injunction. There shall not be in effect
any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits consummation of the
transactions contemplated hereby;
(e) No Material Adverse Effect. Since June 30,
1995, there shall not have occurred any Material Adverse Effect
with respect to Sovereign.
(f) Officer's Certificate. Sovereign shall have
delivered to WJB a certificate, dated the Closing Date and
signed, without personal liability, by its chairman or president,
to the effect that the conditions set forth in subsections (a)
through (e) of this Section 5.01 have been satisfied, to the best
knowledge of the officer executing the same;
(g) Opinion of Sovereign's Counsel. WJB shall
have received an opinion of Xxxxxxx & Xxx, counsel to Sovereign,
dated the Closing Date, in form and substance reasonably
satisfactory to WJB and its counsel to the effect set forth on
Exhibit 4 attached hereto;
(h) Registration Statement. The Registration
Statement shall be effective under the Securities Act and no
proceedings shall be pending or threatened by the SEC to suspend
the effectiveness of the Registration Statement; and all required
filings with the National Association of Securities Dealers and
all required approvals by state securities or "blue sky"
authorities with respect to the transactions contemplated by this
Agreement, shall have been obtained;
(i) Tax Opinion. The Merger shall qualify as a
reorganization within the meaning of Section 368(a)(1)(A) of the
IRC and WJB shall have received an opinion of Xxxxxxx & Xxx,
substantially to the effect set forth on Exhibit 5 attached
hereto; and
(j) Approval of WJB's Shareholders. This
Agreement and the transactions contemplated hereby shall have
been approved by the holders of at least the requisite number of
the outstanding shares of WJB's Common Stock entitled to vote
thereon.
(k) Investment Banking Opinion. WJB shall have
received an oral opinion from Xxxx, Xxxx & Co., Inc., received on
or before the date of this Agreement and updated in writing as of
a date within five (5) days of mailing the Prospectus/Proxy
Statement, to the effect that the consideration to be received by
WJB's shareholders pursuant to this Agreement is fair, from a
financial point of view, to WJB's shareholders.
Section 5.02 Conditions to Sovereign's Obligations
under this Agreement. The obligations of Sovereign hereunder
shall be subject to satisfaction at or prior to the Closing Date
of each of the following conditions, unless waived by Sovereign
pursuant to Section 7.03 hereof:
(a) Corporate Proceedings. All action required
to be taken by, or on the part of, WJB and WJCB to authorize the
execution, delivery and performance of this Agreement and the
Bank Plan of Merger, respectively, and the consummation of the
transactions contemplated by this Agreement and the Bank Plan of
Merger, shall have been duly and validly taken by WJB and WJCB;
and Sovereign shall have received certified copies of the
resolutions evidencing such authorizations;
(b) Covenants; Representations. The obligations
of WJB, required by this Agreement to be performed by it at or
prior to the Closing Date shall have been duly performed and
complied with in all material respects; and the representations
and warranties of WJB set forth in this Agreement shall be true
and correct in all material respects as of the date of this
Agreement, and as of the Closing Date as though made on and as of
the Closing Date, except as to any representation or warranty
which (i) specifically relates to an earlier date or (ii) where
the facts which cause the failure of any representation or
warranty to be so true and correct would not, either individually
or in the aggregate, constitute a Material Adverse Effect with
respect to WJB;
(c) Approvals of Regulatory Authorities. The
parties shall have received all required approvals of Regulatory
Authorities for the Merger, without the imposition of any term or
condition that would have a Material Adverse Effect on Sovereign
upon completion of the Merger; and all conditions thereof and
notice and waiting periods required thereunder shall have expired
or been terminated;
(d) No Injunction. There shall not be in effect
any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits consummation of the
transactions contemplated hereby;
(e) No Material Adverse Effect. Since June 30,
1995, there shall not have occurred any Material Adverse Effect
with respect to WJB;
(f) Officer's Certificate. WJB shall have
delivered to Sovereign a certificate, dated the Closing Date and
signed, without personal liability, by its chairman of the board
or president, to the effect that the conditions set forth in
subsections (a) through (e) of this Section 5.02 have been
satisfied, to the best knowledge of the officer executing the
same;
(g) Opinions of WJB's Counsel. Sovereign shall
have received an opinion of Xxxxx Cummis Xxxxxxxxx Xxxxx Tischman
Xxxxxxx & Xxxxx, P.A., counsel to WJB, dated the Closing Date, in
form and substance reasonably satisfactory to Sovereign and its
counsel to the effect set forth on Exhibit 6 attached hereto;
(h) Registration Statement. The Registration
Statement shall be effective under the Securities Act and no
proceedings shall be pending or threatened by the SEC to suspend
the effectiveness of the Registration Statement; and all required
approvals by state securities or "blue sky" authorities with
respect to the transactions contemplated by this Agreement, shall
have been obtained;
(i) Tax Opinion. Sovereign shall have received
an opinion of Xxxxxxx & Xxx, its counsel, substantially to the
effect set forth on Exhibit 5 attached hereto;
(j) Pooling Letter. Sovereign shall have
received an opinion from Ernst & Young to the effect that the
Merger will be treated as a "pooling of interests" for financial
accounting purposes.
(k) Phase I Environmental Audit Results. The
results of any "phase I environmental audit" conducted pursuant
to Section 4.11(a)(ii) with respect to owned or occupied bank
premises shall be reasonably satisfactory to Sovereign.
(l) Employment Agreements. Any employees
entitled to receive any severance payments under any employment
contracts as a result of the transactions contemplated by this
Agreement shall have waived such rights.
ARTICLE VI
TERMINATION, WAIVER AND AMENDMENT
Section 6.01 Termination. This Agreement may be
terminated by written notice on or at any time prior to the
Closing Date:
(a) By the mutual written consent of the parties
hereto;
(b) By Sovereign or WJB:
(i) if the Closing Date shall not have
occurred on or before June 30, 1996, unless the failure of
such occurrence shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe
its agreements set forth in this Agreement required to be
performed or observed by such party on or before the Closing
Date; or
(ii) if (A) either party has been informed
in writing by a Regulatory Authority whose approval or
consent has been requested that such approval or consent is
unlikely to be granted, or (B) a vote of the stockholders of
WJB is taken and such stockholders fail to approve this
Agreement and the transactions contemplated hereby, unless
the failure of any such occurrence shall be due to the
failure of the party seeking to terminate this Agreement to
perform or observe its agreements set forth herein required
to be performed or observed by such party on or before the
Closing Date.
(c) By WJB if, on the Closing Date the Sovereign
Market Value is less than $7.94, or by Sovereign if, on the
Closing Date the Sovereign Market Value is greater than $13.23
(in each case as adjusted for any occurrence referred to in
Section 1.02(e)(v); provided, however, that during the five-day
period commencing with its receipt of such notice, the party
having such termination right shall have the option of fixing the
Exchange Ratio at the Exchange Ratio determined if the Sovereign
Market Value is $7.94 or $13.23, as applicable. If either party
makes an election, within such five-day period, it shall give
prompt written notice to the other party of such election and the
revised Exchange Ratio, whereupon no termination shall have
occurred pursuant to this Section and this Plan shall remain in
effect in accordance with its terms (except as the Exchange Ratio
shall have been so modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer
to the Exchange Ratio as adjusted pursuant to this Section;
(d) Sovereign shall have received an opinion from
Ernst & Young that the Merger will not qualify as a "pooling of
interests" for financial accounting purposes; and
(e) By Sovereign or WJB if the other party has
breached any representation, warranty, covenant or agreement
contained herein in any material respect, and such breach (i) has
not been (or cannot be) cured by the earlier of 30 days after the
date on which written notice of such breach is given to the party
committing such breach or the Closing Date, and (ii) would
entitle the non-breaching party not to consummate the
transactions contemplated hereby under Article V;
Section 6.02 Effect of Termination. If this Agreement
is terminated pursuant to Section 6.01 hereof, this Agreement
shall forthwith become void (other than Section 4.02(c), Section
4.10(b)(iii) and Section 7.01 hereof, which shall remain in full
force and effect), and there shall be no further liability on the
part of Sovereign or WJB to the other, except for any liability
arising out of any uncured willful breach of any covenant or
other agreement contained in this Agreement or any fraudulent
breach of a representation or warranty.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses. Except for the cost of
printing and mailing the Proxy Statement/Prospectus which shall
be shared equally, Sovereign will reimburse WJB, on a monthly
basis and upon submission of customary documentation, for its
out-of-pocket expenses incurred in connection with the Merger
provided, however, that each party shall pay its own expenses,
including fees and expenses of its own financial consultants,
accountants and counsel, in the event that this Agreement shall
be terminated by Sovereign as a result of a material breach by
WJB of its obligations hereunder (provided that such breach is
not caused by a breach of Sovereign of its obligations hereunder)
and WJB shall reimburse Sovereign for all amounts Sovereign paid
to WJB in accordance with requirements of the first sentence of
this Section 7.01.
Section 7.02 Non-Survival of Representations and
Warranties. All representations, warranties and, except to the
extent specifically provided otherwise herein, agreements and
covenants, other than those covenants set forth in
Sections 4.05(b), (c) and (d) which will survive the Merger,
shall terminate on the Closing Date.
Section 7.03 Amendment, Extension and Waiver. Subject
to applicable law, at any time prior to the consummation of the
transactions contemplated by this Agreement, the parties may
(a) amend this Agreement, (b) extend the time for the performance
of any of the obligations or other acts of either party hereto,
(c) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, or
(d) waive compliance with any of the agreements or conditions
contained in Articles IV and V hereof or otherwise. This
Agreement may not be amended except by an instrument in writing
authorized by the respective Boards of Directors and signed, by
duly authorized officers, on behalf of the parties hereto. Any
agreement on the part of a party hereto to any extension or
waiver shall be valid only if set forth in an instrument in
writing signed by a duly authorized officer on behalf of such
party, but such waiver or failure to insist on strict compliance
with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
Section 7.04 Entire Agreement. This Agreement,
including the documents and other writings referred to herein or
delivered pursuant hereto, contains the entire agreement and
understanding of the parties with respect to its subject matter.
This Agreement supersedes all prior arrangements and
understandings between the parties, both written or oral with
respect to its subject matter. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective successors; provided, however, that nothing in this
Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto and their respective
successors, any rights, remedies, obligations or liabilities
other than pursuant to Sections 4.05(b), (c) and (d) and 4.11(c),
with respect to indemnification and directors and officers
liability insurance and certain other matters.
Section 7.05 No Assignment. Neither party hereto may
assign any of its rights or obligations hereunder to any other
person, without the prior written consent of the other party
hereto.
Section 7.06 Notices. All notices or other
communications hereunder shall be in writing and shall be deemed
given if delivered personally, mailed by prepaid registered or
certified mail (return receipt requested), or sent by telecopy,
addressed as follows:
(a) If to Sovereign, to:
Sovereign Bancorp, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxx X. Xxxxx, President and Chief
Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxx & Xxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esquire and
Xxxxxxx X. Xxxxxxx, Esquire
Telecopy No.: (000) 000-0000
(b) If to WJB, to:
West Jersey Bancshares, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxx Xxxxxxx, President
and Chief Executive Officer
Telecopy No.:
with copies to: Xxxxx Xxxxxx Xxxxxxxxx Xxxxx
Tischman Xxxxxxx & Xxxxx
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esquire
Xxxxxx X. Xxxxxxxx, Esquire
Telecopy No.: (000) 000-0000
Section 7.07 Captions. The captions contained in this
Agreement are for reference purposes only and are not part of
this Agreement.
Section 7.08 Counterparts. This Agreement may be
executed in any number of counterparts, and each such counterpart
shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
Section 7.09 Severability. If any provision of this
Agreement or the application thereof to any person or
circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent
permitted by law.
Section 7.10 Governing Law. This Agreement shall be
governed by and construed in accordance with the domestic
internal law (including the law of conflicts of law) of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
SOVEREIGN BANCORP, INC.
By:/s/Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Corporate Controller
Attest:/s/Xxxxxxxx X. Xxxxxxxx, Xx.
Xxxxxxxx X. Xxxxxxxx, Xx.
Secretary
WEST JERSEY BANCSHARES, INC.
By:/s/Xxxx X. Xxx Xxxxxxx
Xxxx X. Xxx Xxxxxxx,
President and Chief
Executive Officer
Attest:/s/Xxxxxxxxx X. Xxxxxxxxx
Secretary
Exhibit 1
September 29, 1995
Sovereign Bancorp, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Ladies and Gentlemen:
Sovereign Bancorp, Inc. ("Sovereign") and West Jersey
Bancshares, Inc. ("WJB") desire to enter into an agreement dated
September 29, 1995 ("Agreement"), pursuant to which, subject to
the terms and conditions set forth therein, (a) WJB will merge
with and into Sovereign with Sovereign surviving the merger, and
(b) shareholders of WJB will receive common stock of Sovereign in
exchange for common stock of WJB outstanding on the closing date
(the foregoing, collectively, referred to herein as the
"Merger").
Sovereign has required, as a condition to its execution and
delivery to WJB of the Agreement, that the undersigned, being
directors and executive officers of WJB, execute and deliver to
Sovereign this Letter Agreement.
Each of the undersigned, in order to induce Sovereign to
execute and deliver to WJB the Agreement, hereby irrevocably:
(a) Agrees to be present (in person or by proxy) at
all meetings of shareholders of WJB called to vote for approval
of the Merger so that all shares of common stock of WJB then
owned by him or her will be counted for the purpose of
determining the presence of a quorum at such meetings and to vote
all such shares (i) in favor of approval and adoption of the
Agreement and the transactions contemplated thereby (including
any amendments or modifications of the terms thereof approved by
the Board of Directors of WJB), and (ii) against approval or
adoption of any other merger, business combination,
recapitalization, partial liquidation or similar transaction
involving WJB;
(b) Agrees not to vote or execute any written consent
to rescind or amend in any manner any prior vote or written
consent, as a shareholder of WJB, to approve or adopt the
Agreement;
(c) Agrees to use his or her reasonable best efforts
to cause the Merger to be consummated;
(d) Agrees not to sell, transfer or otherwise dispose
of any common stock of WJB on or prior to the record date for the
meeting of WJB shareholders to vote on the Merger;
(e) Except as permitted by Section 4.06 of the
Agreement, agrees not to solicit, initiate or engage in any
negotiations or discussions with any party other than Sovereign
with respect to any offer, sale, transfer or other disposition
of, any shares of common stock of WJB now or hereafter owned by
him or her;
(f) Agrees not to offer, sell, transfer or otherwise
dispose of any shares of common stock of Sovereign received in
the Merger, except (i) at such time as a registration statement
under the Securities Act of 1933 ("Securities Act") covering
sales of such Sovereign common stock is effective and a
prospectus is made available under the Securities Act,
(ii) within the limits, and in accordance with the applicable
provisions of, Rule 145 under the Securities Act, or (iii) in a
transaction which, in the opinion of counsel satisfactory to
Sovereign or as described in a "no-action" or interpretive letter
from the staff of the Securities and Exchange Commission ("SEC"),
is not required to be registered under the Securities Act; and
acknowledges and agrees that Sovereign is under no obligation to
register the sale, transfer or other disposition of Sovereign
common stock by him or her or on his or her behalf, or to take
any other action necessary to make an exemption from registration
available;
(g) Notwithstanding the foregoing, agrees not to sell,
or in any other way reduce his or her risk relative to, any
shares of common stock of WJB or of common stock of Sovereign,
during the period commencing thirty days prior to the effective
date of the Merger and ending on the date on which financial
results covering at least thirty days of post-Merger combined
operations of Sovereign and WJB have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies;
(h) Agrees that Sovereign shall not be bound by any
attempted sale of any shares of Sovereign common stock, and
Sovereign's transfer agent shall be given an appropriate stop
transfer order and shall not be required to register any such
attempted sale, unless the sale has been effected in compliance
with the terms of this Letter Agreement; and further agrees that
the certificate representing his or her shares of Sovereign
common stock may be endorsed with a restrictive legend consistent
with the terms of this Letter Agreement;
(i) Acknowledges and agrees that the provisions of
subparagraphs (f), (g) and (h) hereof also apply to shares of
Sovereign common stock received in the Merger (or any shares of
WJB common stock or of Sovereign common stock, whether or not
received in the Merger, for the period referred to in
subparagraph (g) above) owned by (i) his or her spouse, (ii) any
of his or her relatives or relatives of his or her spouse
occupying his or her home, (iii) any trust or estate in which he
or she, his or her spouse, or any such relative owns at least a
10% beneficial interest or of which any of them serves as
trustee, executor or in any similar capacity, and (iv) any
corporation or other organization in which he or she, his or her
spouse, or any such relative owns at least 10% of any class of
equity securities or of the equity interest;
(j) Represents that he or she has no plan or intention
to sell, exchange, or otherwise dispose of any shares of common
stock of Sovereign to be received in the Merger prior to
expiration of the time period referred to in subparagraph (g)
hereof; and
(k) Represents that he or she has the capacity to
enter into this Letter Agreement and that it is a valid and
binding obligation enforceable against him or her in accordance
with its terms, subject to bankruptcy, insolvency and other laws
affecting creditors' rights and general equitable principles.
The obligations set forth herein shall terminate
concurrently with any termination of the Agreement.
________________________
This Letter Agreement may be executed in two or more
counterparts, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the
same Letter Agreement.
________________________
This Letter Agreement shall terminate concurrently with any
termination of the Agreement in accordance with its terms.
________________________
The undersigned intend to be legally bound hereby.
Sincerely,
__________________________________
Xxxx X. Xxx Xxxxxxx
__________________________________
Xxxxxxx X. XxXxxxx, Xx.
__________________________________
Xxxxxx Xxxxx
__________________________________
Xxxxxxx X. Xxxxxx
__________________________________
Xxxxxx X. XxXxxxx
__________________________________
Xxxxxxxx Xxxxx
__________________________________
Xxxxx X. Xxxxxxx
__________________________________
Xxxx X. Xxxxxxxx, III
__________________________________
Xxxx X. Xxxxxxxx
Exhibit 2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Stock Option Agreement")
dated September 29, 1995, is by and between SOVEREIGN BANCORP,
INC., a Pennsylvania corporation ("Sovereign") and WEST JERSEY
BANCSHARES, INC., a New Jersey corporation ("WJB").
BACKGROUND
1. Sovereign and WJB desire to enter into a Agreement
and Plan of Merger, dated September 29, 1995 (the "Agreement"),
providing, among other things, for the acquisition by Sovereign
of WJB through the merger of WJB with and into Sovereign, with
Sovereign surviving the merger (the "Merger").
2. As a condition to Sovereign to enter into the
Plan, WJB is granting to Sovereign an option to purchase up to
that number of shares of common stock of WJB as shall equal 19.9%
of WJB's shares of common stock issued and outstanding
immediately prior to such purchase, on the terms and conditions
hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual
covenants and agreements set forth herein, Sovereign and WJB,
intending to be legally bound hereby, agree:
1. Grant of Option. WJB hereby grants to Sovereign,
on the terms and conditions set forth herein, the option to
purchase (the "Option") up to that number of shares (the "Option
Shares") of common stock, no par value (the "Common Stock"), of
WJB as shall equal 19.9% of the shares of Common Stock issued and
outstanding immediately prior to such purchase, at a price per
share (the "Option Price") equal to the lower of (i) $8.40 or
(ii) the lowest price per share that a person or a group, other
than Sovereign or an affiliate of Sovereign, paid or offers to
pay after the date hereof for Common Stock in a transaction
constituting a Triggering Event under Section 2 hereof.
2. Exercise of Option. Provided that (i) Sovereign
shall not be in breach of the agreements or covenants contained
in this Agreement or the Plan, and (ii) no preliminary or
permanent injunction or other order against the delivery of
shares covered by the Option issued by any court of competent
jurisdiction in the United States shall be in effect, upon or
after the occurrence of a Triggering Event (as such term is
hereinafter defined) and until termination of this Stock Option
Agreement in accordance with the provisions of Section 20,
Sovereign may exercise the Option, in whole or in part, at any
time or one or more times, from time to time. As used herein,
the term "Triggering Event" means the occurrence of any of the
following events:
(a) a person or group (as such terms are defined
in the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder),
other than Sovereign or an affiliate of Sovereign, acquires
beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) of more than 9.9% of the then outstanding
shares of Common Stock;
(b) a person or group, other than Sovereign or an
affiliate of Sovereign, enters into an agreement or letter
of intent with WJB pursuant to which such person or group or
any affiliate of such person or group would (i) merge or
consolidate, or enter into any similar transaction, with
WJB, (ii) acquire all or substantially all of the assets or
liabilities of WJB or all or substantially all of the assets
or liabilities of West Jersey Community Bank ("WJCB"), or
(iii) acquire beneficial ownership of securities
representing, or the right to acquire beneficial ownership
or to vote securities representing, more than 9.9% of the
then outstanding shares of Common Stock or the then
outstanding shares of common stock of WJCB; or
(c) a person or group, other than Sovereign or an
affiliate of Sovereign, publicly announces a bona fide
proposal (including a written communication that is or
becomes the subject of public disclosure) for (i) any
merger, consolidation or acquisition of all or substantially
all the assets or liabilities of WJB or all or substantially
all the assets or liabilities of WJCB, or any other business
combination involving WJB or WJCB, or (ii) a transaction
involving the transfer of beneficial ownership of securities
representing, or the right to acquire beneficial ownership
or to vote securities representing, more than 9.9% of the
then outstanding shares of Common Stock or the then
outstanding shares of common stock of WJCB (collectively, a
"Proposal"), and thereafter, if such Proposal has not been
Publicly Withdrawn (as such term is hereinafter defined) at
least 30 days prior to the meeting of shareholders of WJB
called to vote on the Merger, WJB's shareholders fail to
approve the Merger by the vote required by applicable law at
the meeting of shareholders called for such purpose or such
meeting has been cancelled; or
(d) a person or group, other than Sovereign or an
affiliate of Sovereign, makes a bona fide Proposal and
thereafter, but before such Proposal has been Publicly
Withdrawn, WJB willfully takes any action in a manner which
would likely result in the failure of either party to
satisfy a material condition to the closing of the Merger or
materially reduce the value of the transaction to Sovereign;
or
(e) WJB breaches, in any material respect, any
binding term of the Agreement with respect to the Merger, or
this Stock Option Agreement after a Proposal is made and
before it is Publicly Withdrawn or publicly announces an
intention to authorize, recommend or accept any such
Proposal;
provided, however, that any purchase of shares upon exercise of
the Option shall be subject to compliance with applicable law.
If more than one of the transactions giving rise to a
Triggering Event under this Section is undertaken or effected,
then all such transactions shall give rise only to one Triggering
Event, which Triggering Event shall be deemed continuing for all
purposes hereunder until all such transactions are abandoned.
"Publicly Withdrawn" for purposes of this Section 2
shall mean an unconditional bona fide withdrawal of the Proposal
coupled with a public announcement of no further interest in
pursuing such Proposal or in acquiring any controlling influence
over WJB or in soliciting or inducing any other person (other
than Sovereign or an affiliate of Sovereign) to do so.
Notwithstanding the foregoing, the obligation of WJB to
issue Option Shares upon exercise of the Option shall be deferred
(but shall not terminate) (i) until the receipt of all required
governmental or regulatory approvals or consents necessary for
WJB to issue the Option Shares, or Sovereign to exercise the
Option, or until the expiration or termination of any waiting
period required by law, or (ii) so long as any injunction or
other order, decree or ruling issued by any federal or state
court of competent jurisdiction is in effect which prohibits the
sale or delivery of the Option Shares, and, in each case,
notwithstanding any provision to the contrary set forth herein,
the Option shall not expire or otherwise terminate.
WJB shall notify Sovereign promptly in writing of the
occurrence of any Triggering Event known to it, it being
understood that the giving of such notice by WJB shall not be a
condition to the right of Sovereign to exercise the Option. WJB
will not take any action which would have the effect of
preventing or disabling WJB from delivering the Option Shares to
Sovereign upon exercise of the Option or otherwise performing its
obligations under this Stock Option Agreement. In the event
Sovereign wishes to exercise the Option, Sovereign shall send a
written notice to WJB (the date of which is hereinafter referred
to as the "Notice Date") specifying the total number of Option
Shares it wishes to purchase and a place and date between two and
ten business days inclusive from the Notice Date for the closing
of such a purchase (a "Closing"); provided, however, that a
Closing shall not occur prior to two days after the later of
receipt of any necessary regulatory approvals or the expiration
of any legally required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any
Closing hereunder, (a) Sovereign will make payment to WJB of the
aggregate price for the Option Shares so purchased by wire
transfer of immediately available funds to an account designated
by WJB, (b) WJB will deliver to Sovereign a stock certificate or
certificates representing the number of Option Shares so
purchased, registered in the name of Sovereign or its designee,
in such denominations as were specified by Sovereign in its
notice of exercise, and (c) Sovereign will pay any transfer or
other taxes required by reason of the issuance of the Option
Shares so purchased.
A legend will be placed on each stock certificate
evidencing Option Shares issued pursuant to this Stock Option
Agreement, which legend will read substantially as follows:
"The shares of stock evidenced by this
certificate have not been the subject of a registration
statement filed under the Securities Act of 1933, as
amended (the "Act"), and declared effective by the
Securities and Exchange Commission. These shares may
not be sold, transferred or otherwise disposed of prior
to such time unless West Jersey Bancshares, Inc.
receives an opinion of counsel stating that an
exemption from the registration provisions of the Act
is available for such transfer."
4. Registration Rights. Upon or after the occurrence
of a Triggering Event and upon receipt of a written request from
Sovereign, WJB shall prepare and file as soon as practicable a
registration statement under the Securities Act of 1933, as
amended, with the Securities and Exchange Commission covering the
Option and such number of Option Shares as Sovereign shall
specify in its request, and WJB shall use its best efforts to
cause such registration statement to be declared effective in
order to permit the sale or other disposition of the Option and
the Option Shares, provided that Sovereign shall in no event have
the right to have more than one such registration statement
become effective, and provided further that WJB shall not be
required to prepare and file any such registration statement in
connection with any proposed sale with respect to which WJB's
counsel delivers to WJB and to Sovereign its opinion to the
effect that no such filing is required under applicable laws and
regulations with respect to such sale or disposition; provided,
however, that WJB may delay any registration of Option Shares
above for a period not exceeding 90 days provided WJB shall in
good faith determine that any such registration would adversely
affect an offering or contemplated offering of other securities
by WJB. Sovereign shall provide all information reasonably
requested by WJB for inclusion in any registration statement to
be filed hereunder. In connection with such filing, WJB shall
use its best efforts to cause to be delivered to Sovereign such
certificates, opinions, accountant's letters and other documents
as Sovereign shall reasonably request and as are customarily
provided in connection with registration of securities under the
Securities Act of 1933, as amended. WJB shall provide to
Sovereign such number of copies of the preliminary prospectus and
final prospectus and any amendments and supplements thereto as
Sovereign may reasonably request. All reasonable expenses
incurred by WJB in complying with the provisions of this
Section 4, including, without limitation, all registration and
filing fees, reasonable printing expenses, reasonable fees and
disbursements of counsel for WJB and blue sky fees and expenses,
shall be paid by WJB. Underwriting discounts and commissions to
brokers and dealers relating to the Option Shares, fees and
disbursements of counsel to Sovereign and any other expenses
incurred by Sovereign in connection with such filing shall be
borne by Sovereign. In connection with such filing, WJB shall
indemnify and hold harmless Sovereign against any losses, claims,
damages or liabilities, joint or several, to which Sovereign may
become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of
any material fact contained in any preliminary or final
registration statement or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and WJB
will reimburse Sovereign for any legal or other expense
reasonably incurred by Sovereign in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that WJB will not be liable in any case to the
extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such
preliminary or final registration statement or such amendment or
supplement thereto in reliance upon and in conformity with
written information furnished by or on behalf of Sovereign
specifically for use in the preparation thereof. Sovereign will
indemnify and hold harmless WJB to the same extent as set forth
in the immediately preceding sentence but only with reference to
written information furnished by or on behalf of Sovereign for
use in the preparation of such preliminary or final registration
statement or such amendment or supplement thereto; and Sovereign
will reimburse WJB for any legal or other expense reasonably
incurred by WJB in connection with investigating or defending any
such loss, claim, damage, liability or action.
5. Adjustment Upon Changes in Capitalization. In the
event of any change in the Common Stock by reason of stock
dividends, split-ups, recapitalizations, combinations,
conversions, divisions, exchanges of shares or the like, then the
number and kind of Option Shares and the Option Price shall be
appropriately adjusted.
6. Filings and Consents. Each of Sovereign and WJB
will use its best efforts to make all filings with, and to obtain
consents of, all third parties and governmental authorities
necessary to the consummation of the transactions contemplated by
this Stock Option Agreement. Within 10 days from the date
hereof, Sovereign shall file a report of beneficial ownership on
Form 13D with the Securities and Exchange Commission under the
Exchange Act which discloses the rights of Sovereign hereunder.
7. Representations and Warranties of WJB. WJB hereby
represents and warrants to Sovereign as follows:
(a) Due Authorization. WJB has full corporate
power and authority to execute, deliver and perform this
Stock Option Agreement and all corporate action necessary
for execution, delivery and performance of this Stock Option
Agreement has been duly taken by WJB. This Stock Option
Agreement constitutes a legal, valid and binding obligation
of WJB, enforceable against WJB in accordance with its terms
(except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer
and similar laws of general applicability relating to or
affecting creditors' rights or by general equity
principles).
(b) Authorized Shares. WJB has taken all
necessary corporate action to authorize and reserve for
issuance all shares of Common Stock that may be issued
pursuant to any exercise of the Option.
8. Representations and Warranties of Sovereign.
Sovereign hereby represents and warrants to WJB that Sovereign
has full corporate power and authority to execute, deliver and
perform this Stock Option Agreement and all corporate action
necessary for execution, delivery and performance of this Stock
Option Agreement has been duly taken by Sovereign. This Stock
Option Agreement constitutes a legal, valid and binding
obligation of Sovereign, enforceable against Sovereign in
accordance with its terms (except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles).
9. Specific Performance. The parties hereto
acknowledge that damages would be an inadequate remedy for a
breach of this Stock Option Agreement and that the obligations of
the parties hereto shall be specifically enforceable.
10. Entire Agreement. This Stock Option Agreement and
the Agreement constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, among
the parties or any of them with respect to the subject matter
hereof.
11. Assignment or Transfer. Sovereign may not sell,
assign or otherwise transfer its rights and obligations
hereunder, in whole or in part, to any person or group of persons
other than to a subsidiary of Sovereign. Sovereign represents
that it is acquiring the Option for Sovereign's own account and
not with a view to, or for sale in connection with, any
distribution of the Option or the Option Shares. Sovereign is
aware that neither the Option nor the Option Shares is the
subject of a registration statement filed with, and declared
effective by, the Securities and Exchange Commission pursuant to
Section 5 of the Securities Act of 1933, as amended, but instead
each is being offered in reliance upon the exemption from the
registration requirement provided by Section 4(2) thereof and the
representations and warranties made by Sovereign in connection
therewith.
12. Amendment of Stock Option Agreement. By mutual
consent of the parties hereto, this Stock Option Agreement may be
amended in writing at any time, for the purpose of facilitating
performance hereunder or to comply with any applicable regulation
of any governmental authority or any applicable order of any
court or for any other purpose.
13. Validity. The invalidity or unenforceability of
any provision of this Stock Option Agreement shall not affect the
validity or enforceability of any other provisions of this Stock
Option Agreement, which shall remain in full force and effect.
14. Notices. All notices, requests, consents and
other communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given when
delivered personally, by telegram or telecopy, or by registered
or certified mail (postage prepaid, return receipt requested) to
the respective parties as follows:
(i) If to Sovereign, to:
Sovereign Bancorp, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxx X. Xxxxx, President
and Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxx & Xxx
000 Xxxxx Xxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esquire
Xxxxxxx X. Xxxxxxx, Esquire
Telecopy No.: (000) 000-0000
(ii) If to WJB, to:
West Jersey Bancshares, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxx Xxxxxxx,
President and Check Executive
Officer
Telecopy No.:
with copies to: Xxxxx Xxxxxx Xxxxxxxxx Xxxxx
Tischman Xxxxxxx & Xxxxx
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esquire
Xxxxxx X. Xxxxxxxx, Esquire
Telecopy No.: (000) 000-0000
or to such other address as the person to whom notice is to be
given may have previously furnished to the others in writing in
the manner set forth above (provided that notice of any change of
address shall be effective only upon receipt thereof).
15. Governing Law. This Stock Option Agreement shall
be governed by and construed in accordance with the domestic
internal law (but not the law of conflicts of law) of the
Commonwealth of Pennsylvania.
16. Captions. The captions in this Stock Option
Agreement are inserted for convenience and reference purposes,
and shall not limit or otherwise affect any of the terms or
provisions hereof.
17. Waivers and Extensions. The parties hereto may,
by mutual consent, extend the time for performance of any of the
obligations or acts of either party hereto. Each party may waive
(i) compliance with any of the covenants of the other party
contained in this Stock Option Agreement and/or (ii) the other
party's performance of any of its obligations set forth in this
Stock Option Agreement.
18. Parties in Interest. This Stock Option Agreement
shall be binding upon and inure solely to the benefit of each
party hereto, and, nothing in this Stock Option Agreement,
express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by
reason of this Stock Option Agreement.
19. Counterparts. This Stock Option Agreement may be
executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Expenses. Subject to the terms of the Plan and
except as otherwise provided herein, all costs and expenses
incurred by the parties hereto in connection with the
transactions contemplated by this Stock Option Agreement or the
Option shall be paid by the party incurring such cost or expense.
21. Termination. This Stock Option Agreement shall
terminate and be of no further force or effect upon the earliest
to occur of (A) the Effective Time or (B) termination of the Plan
in accordance with the terms thereof.
IN WITNESS WHEREOF, each of the parties hereto,
pursuant to resolutions adopted by its Board of Directors, has
caused this Stock Option Agreement to be executed by its duly
authorized officer and has caused its corporate seal to be
affixed hereunto and to be duly attested, all as of the day and
year first above written.
SOVEREIGN BANCORP, INC.
By/s/Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx,
Corporate Controller
(CORPORATE SEAL)
Attest:/s/Xxxxxxxx X. Xxxxxxxx, Xx.
Xxxxxxxx X. Xxxxxxxx, Xx.,
Secretary
WEST JERSEY BANCSHARES, INC.
By/s/Xxxx X. Xxx Xxxxxxx
Xxxx X. Xxx Xxxxxxx,
President and Chief Executive
Officer
(CORPORATE SEAL)
Attest:/s/Xxxxxxxxx X. Xxxxxxxxx
Exhibit 3
BANK PLAN OF MERGER
THIS BANK PLAN OF MERGER ("Plan of Merger") dated
September 29, 1995, is by and between SOVEREIGN BANK, F.S.B., a
federal savings bank ("Sovereign Bank"), and WEST JERSEY
COMMUNITY BANK ("WJCB").
BACKGROUND
1. Sovereign Bank is a federal savings bank and a
wholly-owned subsidiary of Sovereign Bancorp, Inc., a
Pennsylvania corporation ("Sovereign"). The authorized capital
stock of Sovereign Bank consists of 1,000 shares of common stock,
par value $1.00 per share ("Sovereign Bank Common Stock"), of
which at the date hereof 1,000 shares are issued and outstanding.
2. WJCB is a commercial bank and a wholly-owned
subsidiary of West Jersey Bancshares, Inc., a New Jersey
corporation ("WJB"). The authorized capital stock of WJCB
consists of 5,000,000 shares of common stock, par value $2.00 per
share ("WJCB Common Stock"), of which at the date hereof one
million (1,000,000) shares are issued and outstanding.
3. The respective Boards of Directors of Sovereign
Bank and WJCB deem the merger of WJCB with and into Sovereign
Bank, pursuant to the terms and conditions set forth or referred
to herein, to be desirable and in the best interests of the
respective corporations and their respective shareholders.
4. The respective Boards of Directors of Sovereign
Bank and WJCB have adopted resolutions approving this Plan of
Merger. The respective Boards of Directors of Sovereign and WJB
have adopted resolutions approving an Agreement dated
September 29, 1995 (the "Agreement") between Sovereign and WJB,
pursuant to which this Plan of Merger is being executed by
Sovereign Bank and WJCB.
AGREEMENT
In consideration of the premises and of the mutual
covenants and agreements herein contained, and in accordance with
the applicable laws and regulations of the United States of
America, the State of New Jersey and the Commonwealth of
Pennsylvania, Sovereign Bank and WJCB, intending to be legally
bound hereby, agree:
ARTICLE I
MERGER
Subject to the terms and conditions of this Plan of
Merger and in accordance with the applicable laws and regulations
of the United States of America, the State of New Jersey and the
Commonwealth of Pennsylvania, on the Effective Date (as that term
is defined in Article V hereof): WJCB shall merge with and into
Sovereign Bank; the separate existence of WJCB shall cease; and
Sovereign Bank shall be the surviving corporation (such
transaction referred to herein as the "Merger" and Sovereign
Bank, as the surviving corporation in the Merger, referred to
herein as the "Surviving Bank"). Sovereign Bank will have its
home office at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000 and its branch offices at the locations listed on
Exhibit "A." Following the Effective Date, WJCB will be operated
as a separate and autonomous commercial bank division of
Sovereign Bank for at least three years.
ARTICLE II
CHARTER AND BYLAWS
On and after the Effective Date, the Charter and Bylaws
of Sovereign Bank, as in effect immediately prior to the
Effective Date, shall automatically be and remain the Charter and
Bylaws of the Surviving Bank, until altered, amended or repealed.
ARTICLE III
BOARD OF DIRECTORS AND OFFICERS
3.1 Board of Directors. On and after the Effective
Date, the directors of the Surviving Bank shall consist of
(i) the directors of Sovereign Bank duly elected and holding
office immediately prior to the Effective Date.
Name Residence Address
Xxxxxx X. Xxxxxx 0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Xxxxx X. Xxxxxxxxxx 000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxx X. Xxxx Xxxxxxx Xxxx, Xxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Xxxxx Xxxxx 00 Xxxxxxxx Xxxxx
Xxxxx Xxxxxxxx, Xxx Xxxxxx 00000
Xxxxxx X. Xxxxx 000 Xxxxx Xxxxx, Xxxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxx X. Xxxxxx 000 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Xxxxxxx X. Xxxx 0000 Xxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Xxxxx X. Xxxxxxxxxxx 000 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxx X. Xxxxxxx 00 Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Xxxxxx X. Xxxxxxxxx X.X. #00, Xxx 000X
Xxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxxxx X. Xxxxxxxxx Four Trent Place
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Xxx X. Xxxxx 00 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxx X. Xxxxxx Xxxxx Run and Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxx X. Xxxxxx 0 Xxxxxx Xxxxx
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
G. Xxxxxx Xxxxxx 00 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxx X. Xxxxxxx, Xx. Xxxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxxx Xxxxxxx, Xx. 000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
3.2 Officers. On and after the Effective Date, the
officers of the Surviving Bank shall consist of (i) the officers
of Sovereign Bank duly elected and holding office immediately
prior to the Effective Date.
ARTICLE IV
CONVERSION OF SHARES
4.1 Stock of Sovereign Bank. Each share of Sovereign
Bank Common Stock issued and outstanding immediately prior to the
Effective Date shall, on and after the Effective Date, continue
to be issued and outstanding as a share of common stock of the
Surviving Bank.
4.2 Stock of WJCB. Each share of WJCB Common Stock
issued and outstanding immediately prior to the Effective Date,
and each share of WJCB Common Stock issued and held in the
treasury of WJB as of the Effective Date, if any, shall, on the
Effective Date, be cancelled, and no cash, stock or other
property shall be delivered in exchange therefor.
ARTICLE V
EFFECTIVE DATE OF THE MERGER
The Merger shall be effective on the date on which all
filings with government agencies, as may be required under
applicable laws and regulations for the Merger to become
effective, are made and accepted by the applicable agencies (the
"Effective Date").
ARTICLE VI
EFFECT OF THE MERGER
6.1 Separate Existence. On the Effective Date: the
separate existence of WJCB shall cease; and all of the property
(real, personal and mixed), rights, powers, duties and
obligations of WJCB shall be taken and deemed to be transferred
to and vested in the Surviving Bank, without further act or deed,
as provided by applicable laws and regulations. Following the
Effective Date, WJCB will be operated as a separate and
autonomous commercial bank division of Sovereign Bank for at
least three years. The commercial bank division of Sovereign
Bank will be permitted during such three-year period to (i) set
its own policies with respect to interest rates and the other
terms and conditions of its business provided, however, such
policies are coordinated with Sovereign's asset/liability
management policy and (ii) retain the loan origination division
of WJCB existing immediately prior to the Effective Date.
6.2 Savings Accounts. After the Effective Date,
Sovereign Bank will continue to issue savings accounts on the
same basis as immediately prior to the Effective Date.
ARTICLE VII
CONDITIONS PRECEDENT
The obligations of Sovereign Bank and WJCB to effect
the Merger shall be subject to satisfaction, unless duly waived
by the party permitted to do so, of the conditions precedent set
forth in the Agreement.
ARTICLE VIII
TERMINATION
This Plan of Merger shall terminate upon any
termination of the Agreement in accordance with its terms;
provided, however, that any such termination of this Plan of
Merger shall not relieve any party hereto from liability on
account of a breach by such party of any of the terms hereof or
thereof.
ARTICLE IX
AMENDMENT
Subject to applicable law, this Plan of Merger may be
amended, by action of the respective Boards of Directors of the
parties hereto, at any time prior to consummation of the Merger,
but only by an instrument in writing signed by duly authorized
officers on behalf of the parties hereto.
ARTICLE X
MISCELLANEOUS
10.1 Extensions; Waivers. Each party, by a written
instrument signed by a duly authorized officer, may extend the
time for the performance of any of the obligations or other acts
of the other party hereto and may waive compliance with any of
the covenants, or performance of any of the obligations, of the
other party contained in this Plan of Merger.
10.2 Notices. Any notice or other communication
required or permitted under this Plan of Merger shall be given,
and shall be effective, in accordance with the provisions of
Section 7.06 of the Agreement.
10.3 Captions. The headings of the several Articles
and Sections herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning
or interpretation of, this Plan of Merger.
10.4 Counterparts. For the convenience of the parties
hereto, this Plan of Merger may be executed in several
counterparts, each of which shall be deemed the original, but all
of which together shall constitute one and the same instrument.
10.5 Governing Law. This Plan of Merger shall be
governed by and construed in accordance with the laws of the
United States of America and, in the absence of controlling
Federal law, in accordance with the laws of the Commonwealth of
Pennsylvania.
IN WITNESS WHEREOF, Sovereign Bank and WJCB have caused
this Bank Plan of Merger to be executed by their duly authorized
officers and their corporate seals to be hereunto affixed on the
date first written above.
SOVEREIGN BANK, F.S.B.
By_________________________________
Xxxxxxx X. Xxxx,
Senior Vice President
(CORPORATE SEAL)
Attest:____________________________
Xxxxxxxx X. Xxxxxxxx,
Secretary
WEST JERSEY COMMUNITY BANK
By_________________________________
(CORPORATE SEAL)
Attest:____________________________
EXHIBIT "A"
to Plan of Merger
List of Sovereign Bank
Branch Locations
ADDRESS COUNTY MSA
PENNSYLVANIA
1. 00 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxxxx Berks Reading 6680
2. 0000 X. 0xx Xxxxxx Xxxxxxx
at Xxxxxxxxx Avenue
Laureldale, Pennsylvania Berks Reading 6680
3. 000 Xxxx Xxxxxx at Park Road
Wyomissing, Pennsylvania Berks Reading 6680
4. 00 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx Berks Reading 6680
5. Reading Mall
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx Berks Reading 6680
6. K-Mart Shopping Center
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx Berks Reading 6680
7. Berkshire Mall
Wyomissing, Pennsylvania Berks Reading 6680
8. 000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Bucks Philadelphia 6160
9. Xxx. 000 & Xxxxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxxxxx, Xxxxxxxxxxxx 00000 Bucks Philadelphia 6160
10. 00 X. Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000 Bucks Philadelphia 6160
11. Pine Xxxxxx Plaza
Langhorne, Pennsylvania Bucks Philadelphia 6160
12. 000 Xxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
(limited service) Xxxxxxx Philadelphia 6160
13. 000 Xxxxxxxxxx Xxxx Xxxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxxxxxxx 00000 Delaware Philadelphia 6160
14. 00 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx Lancaster Lancaster 4000
15. 000 X. Xxxxxxx Xxxx at Grandview Drive
Ephrata, Pennsylvania Lancaster Lancaster 4000
16. 00 X. Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxx Lancaster Lancaster 4000
17. 000 Xxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxxxx Lancaster Lancaster 4000
18. K-Mart Shopping Center
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx Lancaster Lancaster 4000
19. 000-X Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx Lancaster Lancaster 4000
20. Xxxxx Xxxx
Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx Lancaster Lancaster 4000
21. Xxxx Xxxxx Xxxx
Xxxxxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx Lancaster Lancaster 4000
22. 0000 Xxxxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx Lehigh Allentown- 0240 Bethlehem
23. 000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx Xxxxxxxxxx Philadelphia 6160
49. 000 Xxxx Xxxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx Xxxxxxxxxx Philadelphia 6160
25. 000 Xxxxxxxxxx Xxxx
Xxxxxxxxx Xxxx, Xxxxxxxxxxxx Xxxxxxxxxx Philadelphia 6160
26. 0000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx Xxxxxxxxxx Philadelphia 6160
27. Routes 309 and 63
North Wales, Pennsylvania Xxxxxxxxxx Philadelphia 6160
28. Old York and Church Roads
Xxxxxx Park, Pennsylvania Xxxxxxxxxx Philadelphia 6160
29. 0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx Northampton Allentown- 0240 Bethlehem
30. 0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxx Northampton Allentown- 0240 Bethlehem
31. 000 Xxxxx Xxxxx Xxxxxx
P.O. Box 230
Easton, Pennsylvania Northampton Allentown- 0240
Bethlehem
32. 0000 Xxxxxxx Xxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxxxx Northampton Allentown- 0240 Bethlehem
33. 0000 Xxxx Xxxxx Xxxx.
Xxxxxxxxx, Xxxxxxxxxxxx Northampton Allentown- 0240 Bethlehem
34. 00 Xxxxxx Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx Northampton Allentown- 0240 Bethlehem
35. 0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx Philadelphia Philadelphia 6160
36. 0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx Philadelphia Philadelphia 6160
37. 000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx Xxxxxxxxxx Xxxx
XXX XXXXXX
38. 000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx Xxxxx Newark 5640
39. 000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxx Xxxxxx Xxxxx Newark 5640
40. 000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxxxxx, Xxx Xxxxxx Xxxxxx Xxxxxxx 8480
41. 000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx Xxxxxx Xxxxxxx 8480
42. 0000 Xxxxxxxxxx Xxx
Xxxxxxxxxxx, Xxx Xxxxxx Xxxxxx Xxxxxxx 8480
43. 00 Xxxxxxxxxx Xxxx
Xxxxxxxxx Xxxxxxxx, Xxx Xxxxxx Xxxxxx Xxxxxxx 8480
44. 000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx Xxxxxx Xxxxxxx 8480
45. 0000 Xxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx Xxxxxx Xxxxxxx 8480
46. 000 Xxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx Middlesex Middlesex-
Somerset- 5015
Hunterdon
47. Applegarth & Cranbury Roads
Cranbury, New Jersey Middlesex Middlesex-
Somerset-
Hunterdon- 5015
48. 000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx Middlesex Middlesex-
Somerset-
Hunterdon- 5015
49. 000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
50. 00 Xxxx Xxxxxx & Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
51. 00 Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
52. 3600 Xx. 0 Xxxxx & Xxxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx Monmouth Monmouth-Ocean 5190
53. 00 Xxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
54. 0000 Xxxxxxx 00 & Xxx Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
55. 0 Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx Monmouth Monmouth-Ocean 5190
56. Xxxxx Xxxxxx & Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
57. Monmouth & Xxxxxx Xxxxx
Xxxx Xxxx Xxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
58. Marlboro Mall
Xxxxx 00 & Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
59. Yorktowne Shopping Center
000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
60. 000 Xxxxxxxx
Xxxx Xxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
61. Covered Bridge
000 Xxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
62. 00 Xxxxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
63. 000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx Monmouth Monmouth-Ocean 5190
64. Xxxxxxx 0 & Xxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
65. 0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
66. Xxxxxxxxxxx Shopping Center
Deal Road and Highway 35
Ocean Township, New Jersey Monmouth Monmouth-Ocean 5190
67. 000 Xxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx Monmouth Monmouth-Ocean 5190
68. 000 Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000 Monmouth Monmouth-Ocean 5190
69. 000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx Xxxxxx Newark 5640
70. 000 Xxxxx 00
Xxxxxxxx, Xxx Xxxxxx Xxxxxx Newark 5640
71. 0 Xxxxxx Xxxxxxx
Xxxxx, Xxx Xxxxxx Xxxxxx Newark 5640
72. 000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx Newark 5640
73. 00 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx Xxxxxx Newark 5640
74. 000 Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx Xxxxxx Newark 5640
75. 000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx Xxxxxx Newark 5640
76. 000 Xxxx Xxxx
Xxxxxx, Xxx Xxxxxx Xxxxxx Newark 5640
77. 00 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx Xxxxxx Newark 5640
78. 000 Xxxxxxxxx Xxxxxx
Xxxx Xxxxxxx, Xxx Xxxxxx Xxxxxx Newark 5640
79. 0000 Xxxxx 00 Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 Ocean Monmouth-Ocean 5190
80. 00 Xxxxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxx Xxxxxx 00000 Ocean Monmouth-Ocean 5190
81. 0000 Xxxxx 00 Xxxx
Xxxx Xxxxx, Xxx Xxxxxx 00000 Ocean Monmouth-Ocean 5190
00 Xxxxx 00
Xxxxxxxx, Xxx Xxxxxx 00000 Ocean Monmouth-Ocean 5190
83. 000 Xxxxxxx Xxxxxxxxx
Xxxx Xxxxx, Xxx Xxxxxx 00000 Ocean Monmouth-Ocean 5190
84. 0000 Xxxxxxx 00 Xxxxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000 Ocean Monmouth-Ocean 5190
85. 00 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000 Ocean Monmouth-Ocean 5190
86. 0000 Xxxxxx Xxxxxx
Xxxx Xxxxx, Xxx Xxxxxx 00000 Ocean Monmouth-Ocean 5190
87. Xxxxxxx Shopping Center, Xxxx #00
Xxxxx Xxxx & Cherry Street
Xxxxxxx, New Jersey Ocean Monmouth-Ocean 5190
88. Xxxxx 0 & Xxxxx Xxxx
Xxxx Xxxxx, Xxx Xxxxxx 00000 Ocean Monmouth-Ocean 5190
89. 000 Xxxxx 00 Xxxx
Xxxx Xxxxx, Xxx Xxxxxx Ocean Monmouth-Ocean 5190
90. Xxxxx Xxxxx Xxxxxxxx Xxxxxx
X. Xxxxxx Xxxx Xxxx & New Prospect Road
Xxxxxxx, New Jersey Ocean Monmouth-Ocean 5190
91. 0000 Xxxxx Xxxxxx Xxxx
Xxxxx, Xxx Xxxxxx 00000 Ocean Monmouth-Ocean 5190
92. 000 Xxxxx 000
Xxxxxxx, Xxx Xxxxxx Ocean Ocean-Monmouth 5190
93. 0000 Xxxxx 00
Xxxxxxxxx, Xxx Xxxxxx Ocean Ocean-Monmouth 5190
94. 00 Xxxxxxxxx Xxxxxxxxx
Xxxxx, Xxx Xxxxxx Ocean Ocean-Monmouth 5190
95. 0000 Xxxxx 000
Xxxxxxx, Xxx Xxxxxx 00000
Rocky Hill, New Jersey Somerset Middlesex-
Somerset- 5015
Hunterdon
96. 00 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx Somerset Middlesex-
Somerset- 5015
Hunterdon
97. 0 Xxxxxxxx Xxxx
Xxxxx Xxxxxxxx, Xxx Xxxxxx Xxxxxx Newark 5640
98. 000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx Sussex Newark 5640
99. 000 Xxxxxx Xxxxxx
Elizabeth, New Jersey Union Newark 5640
100. 000 X. Xx. Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx Union Newark 5640
101. 0000 Xxxxxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx Union Newark 5640
102. 0 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx Union Newark 5640
103. 0000 Xxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxx Xxxxxx Union Newark 5640
104. 00 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx Union Newark 5640
105. 000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx Union Newark 5640
106. 0 Xxxxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx Xxxxx Xxxxxx 0000
107. 000 Xxxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx Union Newark 5640
108. 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000*
DELAWARE
109. 0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx New Castle Wilmington 9160
110. 000 X. Xxxx & Xxxx Xxxxxxx
Xxxxxx, Xxxxxxxx New Castle Wilmington 9160
111. 0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx New Castle Wilmington 9160
112. 000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx New Castle Wilmington 9160
* Presently a branch of WJCB.
EXHIBIT 4
FORM OF OPINION OF COUNSEL TO SOVEREIGN
WJB shall have received from counsel to Sovereign, an
opinion, dated as of the Closing Date, substantially to the
effect that, subject to normal exceptions and qualifications:
(a) Sovereign and Sovereign Bank have full corporate
power to carry out the transactions contemplated in the Agreement
and the Plan, respectively. The execution and delivery of the
Agreement and the Plan and the consummation of the transactions
contemplated thereunder have been duly and validly authorized by
all necessary corporate action on the part of Sovereign and
Sovereign Bank, and the Agreement and the Plan constitute valid
and legally binding obligations of Sovereign and Sovereign Bank,
respectively, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship, and
other laws affecting creditors' rights generally and institutions
the deposits of which are insured by the FDIC, and as may be
limited by the exercise of judicial discretion in applying
principles of equity. Subject to satisfaction of the conditions
set forth in the Agreement, neither the transactions contemplated
in the Agreement or the Plan, nor compliance by Sovereign and
Sovereign Bank with any of the respective provisions thereof,
will (i) conflict with or result in a breach or default under
(A) the articles of incorporation or bylaws of Sovereign or the
charter or bylaws of Sovereign Bank, or, (B) to the knowledge of
such counsel, any note, bond, mortgage, indenture, license,
agreement or other material instrument or obligation to which
Sovereign or Sovereign Bank is a party; or (ii) based on
certificates of officers and without independent verification, to
the knowledge of such counsel, result in the creation or
imposition of any material lien or encumbrance upon the property
of Sovereign or Sovereign Bank, except such material lien,
instrument or obligation that has been disclosed pursuant to the
Agreement or the Plan; or (iii) violate in any material respect
any order, writ, injunction or decree known to such counsel, or
any federal or Pennsylvania statute, rule or regulation
applicable to Sovereign or Sovereign Bank.
(b) Sovereign Bank is a validly existing
federally-chartered savings bank organized and in good standing
under the laws of the United States of America. The deposits of
Sovereign Bank are insured to the maximum extent provided by law
by the Federal Deposit Insurance Corporation.
(c) There is, to the knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or
investigation pending or threatened to which Sovereign or
Sovereign Bank is a party which would, if determined adversely to
Sovereign or Sovereign Bank, have a material adverse effect on
the financial condition or results of operation of Sovereign and
Sovereign Bank taken as a whole, or which presents a claim to
restrain or prohibit the transactions contemplated by the
Agreement and the Plan, respectively.
(d) No consent, approval, authorization or order of
any federal or state court or federal or state governmental
agency or body is required for the consummation by Sovereign or
Sovereign Bank of the transactions contemplated by the Agreement
and the Plan, except for such consents, approvals, authorizations
or orders as have been obtained.
(e) Upon the filing and effectiveness of the Articles
of Merger with the PDS, the Articles of Merger with the NJDS, and
Articles of Combination with the OTS in accordance with the
Agreement and the Plan, the mergers of Sovereign and WJB and of
Sovereign Bank and WJCB contemplated by the Agreement and the
Plan, respectively, will have been effected in compliance with
all applicable federal and Pennsylvania laws and regulations in
all material respects.
(f) The shares of Sovereign Common Stock to be issued
in connection with the merger of WJB and Sovereign contemplated
by the Agreement have been duly authorized and will, when issued
in accordance with the terms of the Agreement, be validly issued,
fully paid and nonassessable, free and clear of any mortgage,
pledge, lien, encumbrance or claim (legal or equitable).
(g) On the sole basis of such counsel's participation
in conferences with officers and employees of Sovereign in
connection with the Proxy Statement/Prospectus, and without other
independent investigation or inquiry, such counsel has no reason
to believe that the Proxy Statement/Prospectus, including any
amendments or supplements thereto (except for the financial
information, financial schedules and other financial or
statistical data contained therein and except for any information
supplied by WJB or WJCB for inclusion therein, as to which
counsel need express no belief), as of the date of mailing
thereof, contained any untrue statement of a material fact with
respect to Sovereign or omitted to state any material fact with
respect to Sovereign necessary to make any statement therein with
respect to Sovereign, in light of the circumstances under which
it was made, not misleading. Counsel may state in delivering
such opinion, that such counsel has not independently verified
and does not assume the responsibility for the accuracy,
completeness or fairness of any information or statements
contained in the Proxy Statement/Prospectus, except with respect
to identified statements of law or regulations or legal
conclusions relating to Sovereign or the transactions
contemplated in the Agreement and the Plan.
EXHIBIT 5
FORM OF TAX OPINION OF XXXXXXX & XXX
Sovereign and WJB shall have received an opinion of
Xxxxxxx & Xxx substantially to the effect that, under the
provisions of the IRC:
1. Provided the Merger qualifies as a statutory merger
under applicable law, the transfer by WJB of all of its assets to
Sovereign in exchange for Sovereign Common Stock (including
fractional share interests) and the assumption by Sovereign of
all of WJB's liabilities will constitute a reorganization within
the meaning of Section 368(a)(1)(A) of the IRC.
2. WJB and Sovereign will each be "a party to a
reorganization" within the meaning of Section 368(b) of the IRC.
3. Neither WJB nor Sovereign will recognize any gain or
loss upon the transfer of WJB's assets to Sovereign in exchange
solely for Sovereign Common Stock (including fractional share
interests) and the assumption by Sovereign of the liabilities of
WJB.
4. The basis of the WJB assets in the hands of Sovereign
will be the same as the basis of such assets in the hands of WJB
immediately prior to the Merger.
5. The holding period of the assets of WJB to be received
by Sovereign will include the period during which the assets were
held by WJB.
6. No gain or loss will be recognized by the shareholders
of WJB on the receipt of Sovereign Common Stock (including
fractional share interests) solely in exchange for their shares
of WJB Common Stock.
7. The basis of the Sovereign Common Stock (including
fractional share interests) to be received by the WJB
shareholders in the Merger will be the same as the basis of the
WJB Common Stock surrendered in exchange therefor.
8. The holding period of the Sovereign Common Stock
(including fractional share interests) to be received by the WJB
shareholders in the Merger will include the period during which
the WJB shareholders held their WJB Common Stock, provided the
shares of WJB Common Stock are held as a capital asset on the
Effective Date.
9. The payment of cash in lieu of fractional share
interests of Sovereign Common Stock will be treated as if the
fractional share interests were distributed as part of the Merger
and then redeemed by Sovereign. Such cash payments will be
treated as having been received as distribution in full payment
in exchange for the fractional share interests redeemed, as
provided in Section 302(a) of the IRC.
10. The Sovereign Stock Purchase Rights transferred with
the shares of Sovereign Common Stock will not constitute "other
property" within the meaning of Section 356(a)(1)(B) of the IRC.
11. As provided in Section 381(c)(2) of the IRC and related
Treasury regulations, Sovereign will succeed to and take into
account the earnings and profits, or deficit in earnings and
profits, of WJB as of the Effective Date. Any deficit in the
earnings and profits of Sovereign or WJB will be used only to
offset the earnings and profits accumulated after the Merger.
12. Pursuant to Section 381(a) of the IRC and related
Treasury regulations, Sovereign will succeed to and take into
account the items of WJB described in Section 381(c) of the IRC.
Such items will be taken into account by Sovereign subject to the
conditions and limitations of Sections 381, 382, 383, and 384 of
the IRC and the Treasury regulations thereunder.
13. Provided the Bank Merger constitutes a statutory merger
under applicable law, the Bank Merger will constitute a
reorganization within the meaning of Section 368(a)(1)(A) of the
IRC.
14. WJCB and Sovereign Bank will each be "a party to a
reorganization" within the meaning of Section 368(b) of the IRC.
15. Neither WJCB nor Sovereign Bank will recognize any gain
or loss upon the transfer of WJCB's assets to Sovereign Bank in
constructive exchange solely for Sovereign Bank common stock and
the assumption by Sovereign Bank of the liabilities of WJCB.
16. The basis of the WJCB assets in the hands of Sovereign
Bank will be the same as the basis of such assets in the hands of
WJCB immediately prior to the Bank Merger.
17. The holding period of the WJCB assets in the hands of
Sovereign Bank will include the period during which such assets
were held by WJCB.
18. No gain or loss will be recognized by Sovereign, as the
shareholder of WJCB, upon the constructive receipt of shares of
Sovereign Bank common stock in exchange for the WJCB common stock
surrendered in exchange therefor in the Bank Merger.
19. The basis of the Sovereign Bank common stock to be held
by Sovereign after the Bank Merger will equal the basis of such
stock immediately before the Bank Merger, increased by the basis
of the WJCB common stock surrendered in the constructive
exchange.
20. As provided in Section 381(c)(2) of the IRC and related
Treasury regulations, Sovereign Bank will succeed to and take
into account the earnings and profits, or deficit in earnings and
profits, of WJCB as of the effective date of the Bank Merger.
Any deficit in the earnings and profits of Sovereign Bank or WJCB
will be used only to offset the earnings and profits accumulated
after the Bank Merger.
21. Pursuant to Section 381(a) of the IRC and related
Treasury regulations, Sovereign Bank will succeed to and take
into account the items of WJCB described in Section 381(c) of the
IRC. Such items will be taken into account by Sovereign Bank
subject to the conditions and limitations of Sections 381, 382,
383, and 384 of the IRC and the Treasury regulations thereunder.
EXHIBIT 6
FORM OF OPINION OF COUNSEL TO WJB
Sovereign shall have received from counsel to WJB, an
opinion, dated as of the Closing Date, substantially to the
effect that, subject to normal exceptions and qualifications:
(a) WJB and WJCB have full corporate power to carry
out the transactions contemplated in the Agreement and the Plan,
respectively. The execution and delivery of the Agreement and
the Plan and the consummation of the transactions contemplated
thereunder have been duly and validly authorized by all necessary
corporate action on the part of WJB and WJCB, and the Agreement
and the Plan constitute a valid and legally binding obligation,
in accordance with their respective terms, of WJB and WJCB,
respectively, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship, and
other laws affecting creditors' rights generally and institutions
the deposits of which are insured by the FDIC, and as may be
limited by the exercise of judicial discretion in applying
principles of equity. Subject to satisfaction of the conditions
set forth in the Agreement, neither the transactions contemplated
in the Agreement and the Plan, nor compliance by WJB and WJCB
with any of the respective provisions thereof, will (i) conflict
with or result in a breach or default under (A) the certificate
of incorporation or bylaws of WJB or the charter or bylaws of
WJCB, or (B) based on certificates of officers and without
independent verification, to the knowledge of such counsel, any
note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which WJB or WJCB is a party; or
(ii) to the knowledge of such counsel, result in the creation or
imposition of any material lien, instrument or encumbrance upon
the property of WJB or WJCB, except such material lien,
instrument or obligation that has been disclosed to Sovereign
pursuant to the Agreement and the Plan, or (iii) violate in any
material respect any order, writ, injunction, or decree known to
such counsel, or any statute, rule or regulation applicable to
WJB or WJCB.
(b) WJCB is a validly existing state-chartered
commercial bank organized and in good standing under the laws of
the state of New Jersey. The deposits of WJCB are insured to the
maximum extent provided by law by the Federal Deposit Insurance
Corporation.
(c) There is, to the knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or
investigation pending or threatened to which WJB or WJCB is a
party which would, if determined adversely to WJB or WJCB, have a
material adverse effect on the business, properties, results of
operations, or condition, financial or otherwise, of WJB or WJCB
taken as a whole or which presents a claim to restrain or
prohibit the transactions contemplated by the Agreement and the
Plan, respectively.
(d) No consent, approval, authorization, or order of
any federal or state court or federal or state governmental
agency or body, or of any third party, is required for the
consummation by WJB or WJCB of the transactions contemplated by
the Agreement and the Plan, except for such consents, approvals,
authorizations or orders as have been obtained.
(e) On the sole basis of such counsel's participation
in conferences with officers and employees of WJB in connection
with the preparation of the Prospectus/Proxy Statement and
without other independent investigation or inquiry, such counsel
has no reason to believe that the Prospectus/Proxy Statement,
including any amendments or supplements thereto (except for the
financial information, financial statements, financial schedules
and other financial or statistical data contained therein and
except for any information supplied by Sovereign for inclusion
therein, as to which counsel need express no belief), as of the
date of mailing thereof and as of the date of the meeting of
shareholders of WJB to approve the merger, contained any untrue
statement of a material fact or omitted to state a material fact
necessary to make any statement therein, in light of the
circumstances under which it was made, not misleading. Counsel
may state in delivering such opinion, that such counsel has not
independently verified and does not assume any responsibility for
the accuracy, completeness or fairness of any information or
statements contained in the Prospectus/Proxy Statement, except
with respect to identified statements of law or regulations or
legal conclusions relating to WJB or WJCB or the transactions
contemplated in the Agreement and the Plan.
