AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 28, 1999
("Agreement"), is among Xxxxxx United Bancorp. ("HUB"), a New Jersey corporation
and registered bank holding company, Xxxxxx United Bank (the "Bank"), a New
Jersey state-chartered commercial banking corporation and wholly-owned
subsidiary of HUB, Southern Jersey Bancorp of Delaware, Inc., a Delaware
corporation and registered bank holding company ("SJBDI"), and Farmers and
Merchants National Bank, a national bank and wholly-owned subsidiary of SJBDI
("FAMNB").
RECITALS
The respective Boards of Directors of HUB and SJBDI have each
determined that it is in the best interests of HUB and SJBDI and their
respective shareholders for HUB to acquire SJBDI by merging SJBDI with and into
HUB with HUB surviving and SJBDI shareholders receiving the consideration
hereinafter set forth. Immediately after the merger of SJBDI into HUB, FAMNB
shall be merged with and into the Bank with the Bank surviving.
The respective Boards of Directors of SJBDI, HUB, the Bank and
FAMNB have each duly adopted and approved this Agreement and the Board of
Directors of SJBDI has directed that it be submitted to SJBDI's shareholders for
approval.
As a condition for HUB to enter into this Agreement, HUB has
required that it receive an option on certain authorized but unissued shares of
SJBDI Common Stock (as hereinafter defined) and, simultaneously with the
execution of this Agreement, SJBDI is issuing an option to HUB (the "HUB Stock
Option") to purchase certain shares of the authorized and unissued SJBDI Common
Stock subject to the terms and conditions set forth in the Agreement governing
the HUB Stock Option (the "HUB Stock Option Agreement").
As a condition for SJBDI to enter into this Agreement, SJBDI
has required that it receive an put option on certain authorized but unissued
shares of SJBDI Common Stock (as hereinafter defined) and, simultaneously with
the execution of this Agreement, HUB is issuing a put option to SJBDI (the
"SJBDI Put Option") to require HUB to purchase certain shares of the authorized
and unissued SJBDI Common Stock subject to the terms and conditions set forth in
the Agreement governing the HUB Stock Option Agreement.
NOW, THEREFORE, intending to be legally bound, the parties
hereto hereby agree as follows:
ARTICLE I - THE MERGER
1.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereafter defined), SJBDI shall be merged
with and into HUB (the "Merger") in accordance with the New Jersey Business
Corporation Act (the "NJBCA") and the Delaware General Corporation Law (the
"DGCL") and HUB shall be the surviving corporation (the "Surviving
Corporation").
1.2. Effect of the Merger. At the Effective Time, the
Surviving Corporation shall be considered the same business and corporate entity
as each of HUB and SJBDI and thereupon and thereafter, all the property, rights,
privileges, powers and franchises of each of HUB and SJBDI shall vest in the
Surviving Corporation and the Surviving Corporation shall be subject to and be
deemed to have assumed all of the debts, liabilities, obligations and duties of
each of HUB and SJBDI and shall have succeeded to all of each of their
relationships, as fully and to the same extent as if such property, rights,
privileges, powers, franchises, debts, liabilities, obligations, duties and
relationships had been originally acquired, incurred or entered into by the
Surviving Corporation. In addition, any reference to either of HUB and SJBDI in
any contract or document, whether executed or taking effect before or after the
Effective Time, shall be considered a reference to the Surviving Corporation if
not inconsistent with the other provisions of the contract or document; and any
pending action or other judicial proceeding to which either of HUB or SJBDI is a
party shall not be deemed to have abated or to have discontinued by reason of
the Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Merger had not been made; or the Surviving Corporation may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of HUB or SJBDI if the Merger had not occurred.
1.3. Certificate of Incorporation. As of the Effective Time,
the certificate of incorporation of HUB shall be the certificate of
incorporation of the Surviving Corporation until otherwise amended as provided
by law.
1.4. Bylaws. As of the Effective Time, the Bylaws of HUB shall
be the Bylaws of the Surviving Corporation until otherwise amended as provided
by law.
1.5. Directors and Officers. As of the Effective Time, the
directors and officers of HUB shall be the directors and officers of the
Surviving Corporation.
1.6 Closing, Closing Date and Effective Time. Unless a
different date, time and/or place are agreed to by the parties hereto, the
closing of the Merger (the "Closing") shall take place at 10:00 a.m., at the
offices of Pitney, Xxxxxx, Xxxx & Xxxxx, 000 Xxxxxx Xxxxx, Xxxxxxx Xxxx, Xxx
Xxxxxx, xx a date determined by HUB on at least five business days notice (the
"Closing Notice") given by HUB to SJBDI, which date (the "Closing Date") shall
be not less than seven nor more than 10 business days following the receipt of
all necessary regulatory, governmental and shareholder approvals and consents
and the expiration of all statutory waiting periods in respect thereof and the
satisfaction or waiver of all of the conditions to the consummation of the
Merger specified in Article VI hereof (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing).
The Closing Notice shall specify the scheduled Closing Date, and shall specify
the "Determination Date," which shall be the fifth business day prior to the
scheduled Closing Date. Simultaneous with or immediately following the Closing,
HUB and SJBDI shall cause to be filed certificates of merger, in form and
substance satisfactory to HUB and SJBDI, with the Department of the Treasury,
State of New Jersey (the "New Jersey Certificate of Merger") and with the
Secretary of State of the State of Delaware (the "Delaware Certificate of
Merger" and, together with the New Jersey Certificate of Merger, the
"Certificates of Merger"). The Certificates of Merger shall specify the
"Effective Time" of the Merger, which Effective Time shall be a date and time
following the Closing agreed to by HUB and SJBDI (which date and time the
parties currently anticipate will be the close of business on the Closing Date).
In the event the parties fail to specify the date and time in the Certificates
of Merger, the Merger shall become effective upon (and the "Effective Time"
shall be) the time of the filing of the later of the two Certificates of Merger.
1.7 The Bank Merger. Immediately following the Effective Time,
FAMNB shall be then merged with and into the Bank (the "Bank Merger") in
accordance with the provisions of the New Jersey Banking Act of 1948, as amended
(the "Banking Act") and applicable federal law. In the Bank Merger, the Bank
shall be the surviving bank (the "Surviving Bank"). Upon the consummation of the
Bank Merger, the separate existence of FAMNB shall cease and the Surviving Bank
shall be considered the same business and corporate entity as FAMNB and the Bank
and all of the property, rights, privileges, powers and franchises of FAMNB and
the Bank shall vest in the Surviving Bank and the Surviving Bank shall be deemed
to have assumed all of the debts, liabilities, obligations and duties of FAMNB
and the Bank and shall have succeeded to all or each of their relationships,
fiduciary or otherwise, as fully and to the same extent as if such property,
rights, privileges, powers, franchises, debts, obligations, duties and
relationships had been originally acquired, incurred or entered into by the
Surviving Bank. Upon the consummation of the Bank Merger, the certificate of
incorporation and Bylaws of the Bank shall be the certificate of incorporation
and Bylaws of the Surviving Bank and the officers and directors of the Bank
shall be the officers and directors of the Surviving Bank. Following the
execution of this Agreement, FAMNB and the Bank shall execute and deliver a
merger agreement (the "Bank Merger Agreement"), in form and substance reasonably
satisfactory to the parties hereto, as substantially set forth in Exhibit 1.7
hereto, for delivery to the Commissioner of the New Jersey Department of Banking
and Insurance (the "Department"), the Federal Deposit Insurance Corporation (the
"FDIC") and the Office of the Comptroller of the Currency (the "OCC") for
approval of the Bank Merger.
ARTICLE II - CONVERSION OF SJBDI SHARES
2.1. Conversion of SJBDI Common Stock. Each share of common
stock, par value $1.67 per share, of SJBDI ("SJBDI Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than Excluded Shares,
as hereinafter defined) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted as follows:
(a) Exchange of Common Stock; Exchange Ratio. Subject
to the provisions of this Section 2.1, each share of SJBDI Common Stock issued
and outstanding immediately prior to the Effective Time (other than Excluded
Shares) shall be converted at the Effective Time into the right to receive 1.26
shares (the "Exchange Ratio") of Common Stock, no par value, of HUB ("HUB Common
Stock") subject to adjustment as provided in Section 2.1(c) and subject to the
payment of cash in lieu of fractional shares in accordance with Section 2.2(e).
(b) Cancellation of SJBDI Certificates. After the
Effective Time, all such shares of SJBDI Common Stock (other than those canceled
pursuant to Section 2.1(d)) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate previously evidencing any such shares (other than those canceled
pursuant to Section 2.1(d)) shall thereafter represent the right to receive the
Merger Consideration (as defined in Section 2.2(b)). The holders of such
certificates previously evidencing such shares of SJBDI Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of SJBDI Common Stock except as otherwise provided herein
or by law. Such certificates previously evidencing such shares of SJBDI Common
Stock (other than those canceled pursuant to Section 2.1(d)) shall be exchanged
for certificates evidencing shares of HUB Common Stock issued pursuant to this
Article II, upon the surrender of such certificates in accordance with this
Article II. No fractional shares of HUB Common Stock shall be issued, and, in
lieu thereof, a cash payment shall be made pursuant to Section 2.2(e).
(c) Capital Changes. If between the date hereof and
the Effective Time the outstanding shares of HUB Common Stock shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, stock split, reclassification, recapitalization, merger,
combination or exchange of shares (a "Capital Change"), the Exchange Ratio shall
be correspondingly adjusted to reflect such stock dividend, stock split,
reclassification, recapitalization, merger, combination or exchange of shares.
(d) Excluded Shares. All shares of SJBDI Common Stock
held by SJBDI in its treasury or owned by HUB or by any of HUB's wholly-owned
subsidiaries (other than shares held as trustee or in a fiduciary capacity and
shares held as collateral on or in lieu of a debt previously contracted)
immediately prior to the Effective Time ("Excluded Shares") shall be canceled.
2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, HUB shall
deposit, or shall cause to be deposited, with Xxxxxx United Bank, Trust
Department or another bank or trust company designated by HUB and reasonably
acceptable to SJBDI (the "Exchange Agent"), for the benefit of the holders of
shares of SJBDI Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, certificates evidencing shares of HUB Common Stock
and cash in such amount such that the Exchange Agent possesses such number of
shares of HUB Common Stock and such amount of cash as are required to provide
all of the consideration required to be exchanged by HUB pursuant to the
provisions of this Article II (such certificates for shares of HUB Common Stock,
together with any dividends or distributions with respect thereto, and cash
being hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the HUB Common Stock and cash out
of the Exchange Fund in accordance with Sections 2.1 and 2.2(b). Except as
contemplated by Section 2.2(f) hereof, the Exchange Fund shall not be used for
any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable
either before or after the Effective Time, but in any event no later than five
business days after the Effective Time, HUB will instruct the Exchange Agent to
mail to each holder of record of a certificate or certificates which immediately
prior to the Effective Time evidenced outstanding shares of SJBDI Common Stock
(the "Certificates"), (i) a letter of transmittal (the form and substance of
which is reasonably agreed to by HUB and SJBDI prior to the Effective Time and
which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent and which shall have such other provisions as HUB may
reasonably specify) and (ii) instructions for effecting the surrender of the
Certificates in exchange for certificates evidencing shares of HUB Common Stock
and cash in lieu of fractional shares. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor (x) certificates evidencing that number of whole shares of
HUB Common Stock which such holder has the right to receive in respect of the
shares of SJBDI Common Stock formerly evidenced by such Certificate in
accordance with Section 2.1 and (y) cash in lieu of fractional shares of HUB
Common Stock to which such holder may be entitled pursuant to Section 2.2(e)
(the shares of HUB Common Stock and cash described in clauses (x) and (y) being
collectively referred to as the "Merger Consideration") and the Certificates so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of shares of SJBDI Common Stock which is not registered in the transfer records
of SJBDI, a certificate evidencing the proper number of shares of HUB Common
Stock and/or cash may be issued and/or paid in accordance with this Article II
to a transferee if the Certificate evidencing such shares of SJBDI Common Stock
is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the Effective Time to
evidence only the right to receive upon such surrender the Merger Consideration.
(c) Distributions with Respect to Unexchanged Shares of HUB
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to HUB Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of HUB Common Stock evidenced thereby, and no other part
of the Merger Consideration shall be paid to any such holder, until the holder
of such Certificate shall surrender such Certificate (or a suitable affidavit of
loss and customary bond). Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
certificates evidencing shares of HUB Common Stock issued in exchange therefor,
without interest, (i) promptly, the Merger Consideration to which such holder is
entitled pursuant to Section 2.2(b) and the amount of dividends or other
distributions with a record date on or after the Effective Time theretofore paid
with respect to the shares of HUB Common Stock to which such holder is entitled,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date on or after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such shares of HUB Common Stock.
(d) No Further Rights in SJBDI Common Stock. All shares of HUB
Common Stock issued and cash paid upon conversion of the shares of SJBDI Common
Stock in accordance with the terms hereof shall be deemed to have been issued or
paid in full satisfaction of all rights pertaining to such shares of SJBDI
Common Stock.
(e) No Fractional Shares; Median Pre-Closing Price. No
certificates or scrip evidencing fractional shares of HUB Common Stock shall be
issued upon the surrender for exchange of Certificates and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
shareholder of HUB. Cash shall be paid in lieu of fractional shares of HUB
Common Stock, based upon the Median Pre-Closing Price of the HUB Common Stock on
the Closing Date. The "Median Pre-Closing Price" shall be determined by taking
the price half-way between the Closing Prices left after discarding the four
lowest and four highest Closing Prices in the 10 consecutive trading day period
which ends on (and includes) the Determination Date. The "Closing Price" shall
mean the closing price of HUB Common Stock as supplied by the New York Stock
Exchange and published in The Wall Street Journal. A "trading day" shall mean a
day for which a Closing Price is so supplied and published. (The New York Stock
Exchange, or such other national securities exchange on which HUB Common Stock
may be traded after the date hereof, is referred to herein as the "NYSE")
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of SJBDI Common Stock for two
years after the Effective Time shall be delivered to HUB, upon demand, and any
holders of SJBDI Common Stock who have not theretofore complied with this
Article II shall thereafter look only to HUB for, and HUB will provide, the
Merger Consideration, dividends and distributions to which they are entitled.
(g) No Liability. Neither HUB, the Bank nor the Exchange Agent
shall be liable to any holder of shares of SJBDI Common Stock for any such
shares of HUB Common Stock or cash (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) Withholding Rights. HUB shall be entitled to deduct and
withhold, or cause the Exchange Agent to deduct and withhold, from funds
provided by the holder or from the consideration otherwise payable pursuant to
this Agreement to any holder of SJBDI Common Stock, the minimum amounts (if any)
that HUB is required to deduct and withhold with respect to the making of such
payment under the Code (as defined in Section 3.8), or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by HUB,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of SJBDI Common Stock in respect of which such
deduction and withholding was made by HUB.
2.3. Stock Transfer Books. At the Effective Time, the stock
transfer books of SJBDI shall be closed and there shall be no further
registration of transfers of shares of SJBDI Common Stock thereafter on the
records of SJBDI. On or after the Effective Time, any Certificates presented to
the Exchange Agent or HUB for transfer shall be converted into the Merger
Consideration.
2.4. SJBDI Stock Options. Other than the HUB Stock Option, all
options which may be exercised for issuance of SJBDI Common Stock (each, a
"Stock Option" and collectively the "Stock Options") are described in the SJBDI
Disclosure Schedule and are issued and outstanding pursuant to the Stock Option
and Stock Appreciation Plans adopted on March 25, 1993 and December 8, 1994
(collectively, the "SJBDI Stock Option Plan") and the agreements pursuant to
which such Stock Options were granted (each, an "Option Grant Agreement"). HUB
acknowledges and agrees to honor the provisions of the SJBDI Stock Option Plan
and the Option Grant Agreements, including those relating to vesting and
conversion in connection with a change in control of SJBDI. Each Stock Option
outstanding at the Effective Time shall be converted into the right to receive
immediately after the Effective Time a number of whole shares of HUB Common
Stock equal to the positive number (or zero, if the result is negative)
determined by (x) subtracting (i) the aggregate exercise price for the Stock
Option from (ii) the product determined by multiplying (A) the number of shares
of SJBDI Common Stock covered by the Stock Option, times (B) the Exchange Ratio,
times (C) the Closing Price, and (y) dividing the resulting number by the
Closing Price. No fractional shares of HUB Common Stock shall be issued pursuant
to this Section 2.4 and in lieu thereof, each optionee who would otherwise be
entitled to a fractional interest will receive an amount in cash determined by
multiplying such fractional interest by the Closing Price.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SJBDI
References herein to "SJBDI Disclosure Schedule" shall mean
all of the disclosure schedules required by this Article III, dated as of the
date hereof and referenced to the specific sections and subsections of Article
III of this Agreement, which have been delivered on the date hereof by SJBDI to
HUB. SJBDI hereby represents and warrants to HUB as follows:
3.1. Corporate Organization.
(a) SJBDI is a corporation duly organized and validly existing
under the laws of the State of Delaware. SJBDI has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed or qualified would not have a material adverse effect on the
business, operations, assets or financial condition of SJBDI and the SJBDI
Subsidiaries (as defined below), taken as a whole. SJBDI is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended (the
"BHCA").
(b) Each SJBDI Subsidiary and its jurisdiction of
incorporation is listed in the SJBDI Disclosure Schedule. For purposes of this
Agreement, the term "SJBDI Subsidiary" means any corporation, partnership, joint
venture or other legal entity in which SJBDI, directly or indirectly, owns at
least a 50% stock or other equity interest or for which SJBDI, directly or
indirectly, acts as a general partner, provided that to the extent that any
representation or warranty set forth herein covers a period of time prior to the
date of this Agreement, the term "SJBDI Subsidiary" shall include any entity
which was a SJBDI Subsidiary at any time during such period. The term "SJBDI
Subsidiary" shall not include any entity in which SJBDI's equity interest was
acquired pursuant to a debt previously contracted. FAMNB is a national bank duly
organized and validly existing in stock form under the laws of the United
States. All eligible accounts of depositors issued by FAMNB are insured by the
Bank Insurance Fund of the FDIC (the "BIF") to the fullest extent permitted by
law. Each SJBDI Subsidiary has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a material adverse effect on the business, operations, assets or
financial condition of SJBDI and the SJBDI Subsidiaries, taken as a whole.
(c) The SJBDI Disclosure Schedule sets forth true and complete
copies of the Certificate of Incorporation and Bylaws, as in effect on the date
hereof, of SJBDI and each SJBDI Subsidiary. Except as set forth in Disclosure
Schedule 3.1(b), FAMNB and SJBDI do not own or control, directly or indirectly,
any equity interest in any corporation, company, association, partnership, joint
venture or other entity.
3.2. Capitalization. The authorized capital stock of SJBDI
consists of 5,000,000 shares of SJBDI Common Stock, $1.67 par value, and 500,000
shares of SJBDI preferred stock, no par value ("SJBDI Preferred Stock"). As of
June 27, 1999, there were 1,307,683 shares of SJBDI Common Stock issued and
outstanding, including 179,602 treasury shares. As of June 27, 1999, there were
75,480 shares of SJBDI Common Stock issuable upon exercise of outstanding stock
options. No SJBDI Preferred Stock has been issued or is outstanding. The SJBDI
Disclosure Schedule contains (i) a list of all Stock Options, their strike
prices and expiration dates, and (ii) true and complete copies of the SJBDI
Stock Option Plan and a specimen of each form of Option Grant Agreement pursuant
to which any outstanding Stock Option was granted, including a list of each
outstanding Stock Option issued pursuant thereto. All Stock Options will be
fully vested on the Closing Date, in each case in accordance with the terms of
the SJBDI Stock Option Plan and Option Grant Agreements pursuant to which such
Stock Options were granted. All issued and outstanding shares of SJBDI Common
Stock, and all issued and outstanding shares of capital stock of each SJBDI
Subsidiary, have been duly authorized and validly issued, are fully paid,
nonassessable (other than pursuant to federal law), and free of preemptive
rights and are free and clear of any liens, encumbrances, charges, restrictions
or rights of third parties imposed by SJBDI or any SJBDI Subsidiary. Except for
the Stock Options listed on the SJBDI Disclosure Schedule and the HUB Stock
Option and the SJBDI Put Option, neither SJBDI nor FAMNB has granted nor is
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the transfer, purchase, subscription or
issuance of any shares of capital stock of SJBDI or FAMNB or any securities
representing the right to purchase, subscribe or otherwise receive any shares of
such capital stock or any securities convertible into any such shares; there are
no agreements or understandings with respect to voting of any such shares as to
which SJBDI or FAMNB is a party, and, to the knowledge of SJBDI, there are no
other agreements or understandings with respect to voting of any such shares.
3.3. Authority; No Violation.
(a) Subject to the approval of this Agreement and the
transactions contemplated hereby by all applicable regulatory authorities and by
the shareholders of SJBDI, and except as set forth in the SJBDI Disclosure
Schedule, SJBDI and FAMNB have the full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby in accordance with the terms hereof. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly approved by the directors of SJBDI and FAMNB in accordance with
their respective Certificates or Articles of Incorporation and Bylaws and
applicable laws and regulations. Except for such approvals, no other corporate
proceedings not otherwise contemplated hereby on the part of SJBDI or FAMNB are
necessary to consummate the transactions so contemplated. Without limiting the
foregoing, the SJBDI Board of Directors has taken all actions necessary so that
the transactions contemplated hereby will not be adversely affected by SJBDI's
Shareholder Rights Agreement dated November 30, 1989, as amended (the "SJBDI
Shareholder Rights Plan"). This Agreement has been duly and validly executed and
delivered by SJBDI and FAMNB, and constitutes a valid and binding obligation of
each of SJBDI and FAMNB, enforceable against SJBDI and FAMNB in accordance with
its terms, except to the extent that enforcement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, conservatorship,
receivership or other similar laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or the rights of
creditors of national banks or their holding companies, (ii) general equitable
principles, and (iii) laws relating to the safety and soundness of insured
depository institutions and except that no representation is made as to the
effect or availability of equitable remedies or injunctive relief.
(b) Neither the execution and delivery of this Agreement by
SJBDI or FAMNB, nor the consummation by SJBDI or FAMNB of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by SJBDI
or FAMNB with any of the terms or provisions hereof, will (i) violate any
provision of SJBDI's or FAMNB' Certificate or Articles of Incorporation or
Bylaws, (ii) assuming that the consents and approvals set forth below are duly
obtained, violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to SJBDI, FAMNB or any of their
respective properties or assets, or (iii) except as set forth in the SJBDI
Disclosure Schedule, violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the respective
properties or assets of SJBDI or FAMNB under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which SJBDI or FAMNB is a
party, or by which they or any of their respective properties or assets may be
bound or affected except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a material adverse effect on the
business, operations, assets or financial condition of SJBDI and the SJBDI
Subsidiaries, taken as a whole, and which will not prevent or materially delay
the consummation of the transactions contemplated hereby. Except for consents
and approvals of or filings or registrations with or notices to the Board of
Governors of the Federal Reserve System (the "FRB"), the FDIC, the Department,
the OCC, the New Jersey Department of Environmental Protection (the "DEP") (if
required), the Securities and Exchange Commission (the "SEC"), and the
shareholders of SJBDI, no consents or approvals of or filings or registrations
with or notices to any third party or any public body or authority are necessary
on behalf of SJBDI or FAMNB in connection with (x) the execution and delivery by
SJBDI of this Agreement and (y) the consummation by SJBDI of the Merger, and the
consummation by SJBDI and FAMNB of the other transactions contemplated hereby,
except (i) such as are listed in the SJBDI Disclosure Schedule and (ii) such as
individually or in the aggregate will not (if not obtained) have a material
adverse effect on the business, operations, assets or financial condition of
SJBDI and the SJBDI Subsidiaries taken as a whole or prevent or materially delay
the consummation of the transactions contemplated hereby. To the knowledge of
SJBDI, no fact or condition exists which SJBDI has reason to believe will
prevent it and FAMNB from obtaining the aforementioned consents and approvals.
3.4. Financial Statements; Reserves.
(a) The SJBDI Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of SJBDI as of December 31, 1997
and 1998, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows for the periods ended December 31, in
each of the three fiscal years 1996 through 1998, in each case accompanied by
the audit report of Xxxxx & Company, Certified Public Accountants, Professional
Association, independent public accountants with respect to SJBDI ("Xxxxx &
Co."), and the unaudited consolidated statement of condition of SJBDI as of
March 31, 1999 and the related unaudited consolidated statements of income and
cash flows for the three months ended March 31, 1998 and 1999, as reported in
SJBDI's Quarterly Report on Form 10-Q, filed with the SEC under the Securities
Exchange Act of 1934, as amended ("1934 Act") (collectively, the "SJBDI
Financial Statements"). In the opinion of the management of SJBDI and its
accountants, as of December 31, 1998, the allowance for loan losses in the SJBDI
Financial Statements was adequate pursuant to generally accepted accounting
principles ("GAAP") (consistently applied), and the methodology used to compute
the loan loss reserve complies in all material respects with GAAP (consistently
applied) and all applicable policies of the OCC. In the opinion of the
management of SJBDI and its accountants, as of December 31, 1998, the reserve
for OREO properties (or if no reserve, the carrying value of OREO properties) in
the SJBDI Financial Statements was adequate pursuant to GAAP (consistently
applied), and the methodology used to compute the reserve for OREO properties
(or if no reserve, the carrying value of OREO properties) complies in all
material respects with GAAP (consistently applied) and all applicable policies
of the OCC. In all other respects, the SJBDI Financial Statements (including the
related notes) have been prepared in accordance with GAAP consistently applied
during the periods involved (except as may be indicated therein or in the notes
thereto), and fairly present the consolidated financial condition of SJBDI as of
the respective dates set forth therein, and the related consolidated statements
of income, changes in stockholders' equity and cash flows fairly present the
results of the consolidated operations, changes in shareholders' equity and cash
flows of SJBDI for the respective periods set forth therein.
(b) The books and records of SJBDI and all of the SJBDI
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements.
(c) Except as and to the extent reflected, disclosed or
reserved against in the SJBDI Financial Statements (including the notes
thereto), as of December 31, 1998, neither SJBDI nor any SJBDI Subsidiary had
any liabilities, whether absolute, accrued, contingent or otherwise, material to
the business, operations, assets or financial condition of SJBDI and the SJBDI
Subsidiaries, taken as a whole which were required by GAAP (consistently
applied) to be disclosed in SJBDI's consolidated statement of condition as of
December 31, 1998 or the notes thereto. Since December 31, 1998, neither SJBDI
nor any SJBDI Subsidiary has incurred any liabilities except in the ordinary
course of business and consistent with past business practice, except as related
to the transactions contemplated by this Agreement or except as set forth in the
SJBDI Disclosure Schedule.
3.5. Broker's and Other Fees. Except as set forth on Section
3.5 of the SJBDI Disclosure Schedule, neither SJBDI nor the SJBDI Subsidiaries
nor any of their respective directors or officers has employed any broker or
finder or incurred any liability for any broker's or finder's fees or
commissions in connection with any of the transactions contemplated by this
Agreement. Other than as set forth on Section 3.5 of the SJBDI Disclosure
Schedule, there are no fees (other than time charges billed at usual and
customary rates) payable to any consultants, including lawyers and accountants,
in connection with this transaction or which would be triggered by consummation
of this transaction or the termination of the services of such consultants by
SJBDI or the SJBDI Subsidiaries.
3.6. Absence of Certain Changes or Events.
(a) Except as disclosed in the SJBDI Disclosure Schedule,
there has not been any SJBDI Material Adverse Change (as hereinafter defined)
since December 31, 1998 and to the knowledge of SJBDI, no fact or condition
exists which SJBDI believes will cause such a SJBDI Material Adverse Change in
the future. "SJBDI Material Adverse Change" means any change which is material
and adverse to the consolidated financial condition, results of operations,
business or assets of SJBDI and the SJBDI Subsidiaries taken as a whole, other
than (i) a change occurring after the date hereof in any federal or state law,
rule or regulation or in GAAP, which change affects banking institutions
generally, (ii) reasonable expenses incurred in connection with this Agreement
and the transactions contemplated hereby, (iii) payments to executive officers
or other employees of SJBDI or FAMNB pursuant to agreements or arrangements with
such persons, which agreements or arrangements are included in the SJBDI
Disclosure Schedule, or (iv) actions or omissions of SJBDI or any SJBDI
Subsidiary either specifically permitted by this Agreement or taken with the
prior written consent of HUB in contemplation of the transactions contemplated
hereby (including without limitation any actions taken by SJBDI or FAMNB
pursuant to Section 5.15 of this Agreement).
(b) Except as set forth in the SJBDI Disclosure Schedule,
neither SJBDI nor any SJBDI Subsidiary has taken or permitted to be taken any of
the actions set forth in Section 5.2 hereof between December 31, 1998 and the
date hereof and, except for execution of this Agreement, and the other documents
contemplated hereby, SJBDI and each SJBDI Subsidiary has conducted their
respective businesses only in the ordinary course, consistent with past
practice.
3.7. Legal Proceedings. Except as disclosed in the SJBDI
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of SJBDI and the SJBDI Subsidiaries, neither SJBDI nor any SJBDI
Subsidiary is a party to any, and there are no pending or, to the knowledge of
SJBDI, threatened legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature against SJBDI or any SJBDI
Subsidiary which, if decided adversely to SJBDI or any SJBDI Subsidiary, are
reasonably likely to have a material adverse effect on the business, operations,
assets or financial condition of SJBDI and the SJBDI Subsidiaries taken as a
whole. Except as disclosed in the SJBDI Disclosure Schedule, neither SJBDI nor
any SJBDI Subsidiary is a party to any order, judgment or decree entered in any
lawsuit or proceeding which is material to SJBDI or such SJBDI Subsidiary.
3.8. Taxes and Tax Returns.
(a) SJBDI and each SJBDI Subsidiary has duly filed (and until
the Effective Time will so file) all returns, declarations, reports, information
returns and statements ("Returns") required to be filed by it on or before the
Effective Time in respect of any federal, state and local taxes (including
withholding taxes, penalties or other payments required) and has duly paid (and
until the Effective Time will so pay) all such taxes due and payable, other than
taxes or other charges which are being contested in good faith (and disclosed to
HUB in writing) or against which reserves have been established. SJBDI and each
SJBDI Subsidiary has established (and until the Effective Time will establish)
on its books and records reserves that are adequate for the payment of all
federal, state and local taxes not yet due and payable, but are incurred in
respect of SJBDI or such SJBDI Subsidiary through such date. None of the federal
or state income tax returns of SJBDI or any SJBDI Subsidiary have been examined
by the Internal Revenue Service (the "IRS") or the New Jersey or Delaware
Divisions of Taxation within the past six years. To the knowledge of SJBDI,
except as disclosed in the SJBDI Disclosure Schedule, there are no audits or
other administrative or court proceedings presently pending nor any other
disputes pending with respect to, or claims asserted for, taxes or assessments
upon SJBDI or any SJBDI Subsidiary, nor has SJBDI or any SJBDI Subsidiary given
any currently outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any taxes or Returns.
(b) Except as disclosed in the SJBDI Disclosure Schedule,
neither SJBDI nor any SJBDI Subsidiary (i) has requested any extension of time
within which to file any Return which Return has not since been filed, (ii) is a
party to any agreement providing for the allocation or sharing of taxes, (iii)
is required to include in income any adjustment pursuant to Section 481(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), by reason of a
voluntary change in accounting method initiated by SJBDI or such SJBDI
Subsidiary (nor, to the knowledge of SJBDI, has the IRS proposed any such
adjustment or change of accounting method), or (iv) has filed a consent pursuant
to Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply.
(c) Except as set forth in Note 13 to the 1998 SJBDI Financial
Statements, neither SJBDI nor any SJBDI Subsidiary has any tax loss
carryforwards.
3.9. Employee Benefit Plans.
(a) Except as set forth on the SJBDI Disclosure Schedule,
neither SJBDI nor any SJBDI Subsidiary maintains or contributes to any "employee
pension benefit plan" (the "SJBDI Pension Plans") within the meaning of such
term in Section 3(2)(A) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), "employee welfare benefit plan" (the "SJBDI Welfare
Plans") within the meaning of such term in Section 3(1) of ERISA, stock option
plan, stock purchase plan, deferred compensation plan, severance plan, bonus
plan, employment agreement, director retirement program or other similar plan,
program or arrangement. Neither SJBDI nor any SJBDI Subsidiary has, since
September 2, 1974, contributed to any "Multiemployer Plan," within the meaning
of Section 3(37) of ERISA.
(b) SJBDI has previously delivered to HUB, and included in the
SJBDI Disclosure Schedule, a complete and accurate copy of each of the following
with respect to each of the SJBDI Pension Plans and SJBDI Welfare Plans, if any:
(i) plan document, summary plan description, and summary of material
modifications (if not available, a detailed description of the foregoing); (ii)
trust agreement or insurance contract, if any; (iii) most recent IRS
determination letter, if any; (iv) most recent actuarial report, if any; and (v)
most recent annual report on Form 5500.
(c) The present value of all accrued benefits, both vested and
non-vested, under each of the SJBDI Pension Plans subject to Title IV of ERISA,
based upon the actuarial assumptions used for funding purposes in the most
recent actuarial valuation prepared by such SJBDI Pension Plan's actuary, did
not exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the knowledge of SJBDI, the actuarial assumptions then
utilized for such plans were reasonable and appropriate as of the last valuation
date and reflect then current market conditions.
(d) During the last six years, the Pension Benefit Guaranty
Corporation ("PBGC") has not asserted any claim for liability against SJBDI or
any SJBDI Subsidiary which has not been paid in full.
(e) All premiums (and interest charges and penalties for late
payment, if applicable) due to the PBGC with respect to each SJBDI Pension Plan
have been paid. All contributions required to be made to each SJBDI Pension Plan
under the terms thereof, ERISA or other applicable law have been timely made,
and all amounts properly accrued to date as liabilities of SJBDI which have not
been paid have been properly recorded on the books of SJBDI .
(f) Except as disclosed in the SJBDI Disclosure Schedule, each
of the SJBDI Pension Plans, SJBDI Welfare Plans and each other employee benefit
plan and arrangement identified on the SJBDI Disclosure Schedule has been
operated in compliance in all material respects with the provisions of ERISA,
the Code, all regulations, rulings and announcements promulgated or issued
thereunder, and all other applicable governmental laws and regulations.
Furthermore, except as disclosed in the SJBDI Disclosure Schedule, if SJBDI
maintains any SJBDI Pension Plan, SJBDI has received or applied for a favorable
determination letter from the IRS which takes into account the Tax Reform Act of
1986 and (to the extent it mandates currently applicable requirements)
subsequent legislation, and SJBDI is not aware of any fact or circumstance which
would disqualify any plan.
(g) To the knowledge of SJBDI, no non-exempt prohibited
transaction, within the meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any SJBDI Welfare Plan or SJBDI Pension Plan
that would result in any material tax or penalty for SJBDI or any SJBDI
Subsidiary.
(h) No SJBDI Pension Plan or any trust created thereunder has
been terminated, nor have there been any "reportable events" (notice of which
has not been waived by the PBGC), within the meaning of Section 4034(b) of
ERISA, with respect to any SJBDI Pension Plan.
(i) No "accumulated funding deficiency," within the meaning of
Section 412 of the Code, has been incurred with respect to any SJBDI Pension
Plan.
(j) There are no material pending, or, to the knowledge of
SJBDI, material threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of, or against any of the SJBDI Pension Plans or the
SJBDI Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the SJBDI Disclosure Schedule.
(k) Except as disclosed in the SJBDI Disclosure Schedule, no
SJBDI Pension Plan or SJBDI Welfare Plan provides medical or death benefits
(whether or not insured) beyond an employee's retirement or other termination of
service, other than (i) coverage mandated by law or pursuant to conversion or
continuation rights set out in such Plan or an insurance policy providing
benefits thereunder, or (ii) death benefits under any SJBDI Pension Plan.
(l) Except with respect to customary health, life and
disability benefits, there are no unfunded benefit obligations which are not
accounted for by reserves shown on the SJBDI Financial Statements and
established in accordance with GAAP.
(m) With respect to each SJBDI Pension Plan and SJBDI Welfare
Plan that is funded wholly or partially through an insurance policy, there will
be no liability of SJBDI or any SJBDI Subsidiary as of the Effective Time under
any such insurance policy or ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events occurring prior to the Effective Time.
(n) Except (i) for payments and other benefits due pursuant to
the employment agreements included within the SJBDI Disclosure Schedule, and
(ii) as set forth in the SJBDI Disclosure Schedule, or as expressly agreed to by
HUB in writing either pursuant to this Agreement or otherwise, or as required by
law, the consummation of the transactions contemplated by this Agreement will
not (x) entitle any current or former employee of SJBDI or any SJBDI Subsidiary
to severance pay, unemployment compensation or any similar payment, or (y)
accelerate the time of payment or vesting, or increase the amount of any
compensation or benefits due to any current or former employee under any SJBDI
Pension Plan or SJBDI Welfare Plan.
(o) Except for the SJBDI Pension Plans and the SJBDI Welfare
Plans, and except as set forth on the SJBDI Disclosure Schedule, SJBDI has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of SJBDI or any
SJBDI Subsidiary or any predecessor of any thereof. The SJBDI Disclosure
Schedule sets forth: (i) true and complete copies of the agreements,
understandings or obligations with respect to each such current or former
director, officer or employee, and (ii) the most recent actuarial or other
calculation of the present value of such payments or benefits.
(p) Except as set forth in the SJBDI Disclosure Schedule,
SJBDI does not maintain or otherwise pay for life insurance policies (other than
group term life policies on employees) with respect to any director, officer or
employee. The SJBDI Disclosure Schedule lists each such insurance policy and
includes a copy of each agreement with a party other than the insurer with
respect to the payment, funding or assignment of such policy. To the knowledge
of SJBDI, neither SJBDI nor any SJBDI Pension Plan or SJBDI Welfare Plan owns
any individual or group insurance policies issued by an insurer which has been
found to be insolvent or is in rehabilitation pursuant to a state proceeding.
(q) Except as set forth in the SJBDI Disclosure Schedule,
SJBDI does not maintain any retirement plan or retiree medical plan or
arrangement for directors. The SJBDI Disclosure Schedule sets forth the complete
documentation and actuarial evaluation of any such plan.
3.10. Reports.
(a) The SJBDI Disclosure Schedule lists, and as to item (i)
below SJBDI has previously delivered to HUB a complete copy of, each (i) final
registration statement, prospectus, annual, quarterly or current report and
definitive proxy statement filed by SJBDI since January 1, 1997 pursuant to the
Securities Act of 1933, as amended ("1933 Act"), or the 1934 Act and (ii)
communication (other than general advertising materials and press releases)
mailed by SJBDI to its shareholders as a class since January 1, 1997, and each
such communication, as of its date, complied in all material respects with all
applicable statutes, rules and regulations and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading; provided
that information as of a later date shall be deemed to modify information as of
an earlier date.
(b) Since January 1, 1997, (i) SJBDI has filed all reports
that it was required to file with the SEC under the 1934 Act, and (ii) SJBDI and
FAMNB each has duly filed all material forms, reports and documents which it was
required to file with each agency charged with regulating any aspect of its
business, in each case in form which was correct in all material respects, and,
subject to permission from such regulatory authorities, SJBDI promptly will
deliver or make available to HUB accurate and complete copies of such reports.
As of their respective dates, each such form, report, or document, and each such
final registration statement, prospectus, annual, quarterly or current report,
definitive proxy statement or communication, complied in all material respects
with all applicable statutes, rules and regulations and did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading;
provided that information contained in any such document as of a later date
shall be deemed to modify information as of an earlier date. The SJBDI
Disclosure Schedule lists the dates of all examinations of SJBDI or FAMNB
conducted by either the FRB, the OCC or the FDIC since January 1, 1997 and the
dates of any responses thereto submitted by SJBDI or FAMNB.
3.11. SJBDI and FAMNB Information. The information relating to
SJBDI and FAMNB (unless objected to by SJBDI), this Agreement, and the
transactions contemplated hereby (except for information relating solely to HUB)
to be contained in the Proxy Statement-Prospectus (as defined in Section 5.6(a)
hereof) to be delivered to shareholders of SJBDI in connection with the
solicitation of their approval of the Merger, as of the date the Proxy
Statement-Prospectus is mailed to shareholders of SJBDI, and up to and including
the date of the meeting of shareholders to which such Proxy Statement-Prospectus
relates, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.12. Compliance with Applicable Law. Except as set forth in
the SJBDI Disclosure Schedule, SJBDI and each SJBDI Subsidiary holds all
licenses, franchises, permits and authorizations necessary for the lawful
conduct of its business and has complied with and is not in default in any
respect under any applicable law, statute, order, rule, regulation, policy
and/or guideline of any federal, state or local governmental authority relating
to SJBDI or such SJBDI Subsidiary (including, without limitation, consumer,
community and fair lending laws) (other than where the failure to have a
license, franchise, permit or authorization or where such default or
noncompliance will not result in a material adverse effect on the business,
operations, assets or financial condition of SJBDI and the SJBDI Subsidiaries
taken as a whole) and SJBDI has not received notice of violation of, and does
not know of any violations of, any of the above.
3.13. Certain Contracts.
(a) Except for plans referenced in Section 3.9 and disclosed
in the SJBDI Disclosure Schedule, (i) neither SJBDI nor any SJBDI Subsidiary is
a party to or bound by any written contract or any understanding with respect to
the employment of any officers, employees, directors or consultants, and (ii)
the consummation of the transactions contemplated by this Agreement will not
(either alone or upon the occurrence of any additional acts or events) result in
any payment (whether of severance pay or otherwise) becoming due from SJBDI or
any SJBDI Subsidiary to any officer, employee, director or consultant thereof.
The SJBDI Disclosure Schedule sets forth true and correct copies of all
severance or employment agreements with officers, directors, employees, agents
or consultants to which SJBDI or any SJBDI Subsidiary is a party.
(b) Except as disclosed in the SJBDI Disclosure Schedule and
except for loan commitments, loan agreements and loan instruments entered into
or issued by FAMNB in the ordinary course of business, (i) as of the date of
this Agreement, neither SJBDI nor any SJBDI Subsidiary is a party to or bound by
any commitment, agreement or other instrument which is material to the business,
operations, assets or financial condition of SJBDI and the SJBDI Subsidiaries
taken as a whole, (ii) no commitment, agreement or other instrument to which
SJBDI or any SJBDI Subsidiary is a party or by which either of them is bound
limits the freedom of SJBDI or any SJBDI Subsidiary to compete in any line of
business or with any person, and (iii) neither SJBDI nor any SJBDI Subsidiary is
a party to any collective bargaining agreement.
(c) Except as disclosed in the SJBDI Disclosure Schedule,
neither SJBDI nor any SJBDI Subsidiary or, to the knowledge of SJBDI, any other
party thereto, is in default in any material respect under any material lease,
contract, mortgage, promissory note, deed of trust, loan or other commitment
(except those under which FAMNB is or will be the creditor) or arrangement,
except for defaults which individually or in the aggregate would not have a
material adverse effect on the business, operations, assets or financial
condition of SJBDI and the SJBDI Subsidiaries, taken as a whole.
3.14. Properties and Insurance.
(a) Except as set forth in the SJBDI Disclosure Schedule,
SJBDI or a SJBDI Subsidiary has good and, as to owned real property, marketable
title to all material assets and properties, whether real or personal, tangible
or intangible, reflected in SJBDI's consolidated balance sheet as of December
31, 1998, or owned and acquired subsequent thereto (except to the extent that
such assets and properties have been disposed of in the ordinary course of
business since December 31, 1998 either (A) to third parties in arms' length
transactions or (B) to insiders or to directors or officers of SJBDI pursuant to
the approval of the board of directors of SJBDI and for fair value), subject to
no encumbrances, liens, mortgages, security interests or pledges, except (i)
those items that secure liabilities that are reflected in said balance sheet or
the notes thereto or that secure liabilities incurred in the ordinary course of
business after the date of such balance sheet, (ii) statutory liens for amounts
not yet delinquent or which are being contested in good faith, (iii) such
encumbrances, liens, mortgages, security interests, pledges and title
imperfections that are not in the aggregate material to the business,
operations, assets, and financial condition of SJBDI and the SJBDI Subsidiaries
taken as a whole and (iv) with respect to owned real property, title
imperfections noted in title reports delivered to HUB prior to the date hereof.
Except as affected by the transactions contemplated hereby, SJBDI or a SJBDI
Subsidiary as lessees have the right under valid and subsisting leases to
occupy, use, possess and control all real property leased by SJBDI and such
SJBDI Subsidiaries in all material respects as presently occupied, used,
possessed and controlled by SJBDI and SJBDI Subsidiaries.
(b) Except as set forth in the SJBDI Disclosure Schedule, the
business operations and all insurable properties and assets of SJBDI and each
SJBDI Subsidiary are insured for their benefit against all risks which, in the
reasonable judgment of the management of SJBDI, should be insured against, in
each case under policies or bonds issued by insurers of recognized
responsibility, in such amounts with such deductibles and against such risks and
losses as are in the opinion of the management of SJBDI adequate for the
business engaged in by SJBDI and the SJBDI Subsidiaries. As of the date hereof,
neither SJBDI nor any SJBDI Subsidiary has received any notice of cancellation
or notice of a material amendment of any such insurance policy or bond or is in
default under any such policy or bond, no coverage thereunder is being disputed
and all material claims thereunder have been filed in a timely fashion. The
SJBDI Disclosure Schedule sets forth in summary form a list of all insurance
policies of SJBDI and the SJBDI Subsidiaries.
3.15. Minute Books. The minute books of SJBDI and the SJBDI
Subsidiaries contain records of all meetings and other corporate action held of
their respective shareholders and Boards of Directors (including committees of
their respective Boards of Directors) that are complete and accurate in all
material respects.
3.16. Environmental Matters. Except as set forth in the SJBDI
Disclosure Schedule:
(a) Neither SJBDI nor any SJBDI Subsidiary has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that SJBDI or such SJBDI Subsidiary (either directly or as a
trustee or fiduciary, or as a successor-in-interest in connection with the
enforcement of remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or cleanup of any
condition resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters, which correction or
cleanup would be material to the business, operations, assets or financial
condition of SJBDI and the SJBDI Subsidiaries taken as a whole. SJBDI has no
knowledge that any toxic or hazardous substances or materials have been emitted,
generated, disposed of or stored on any real property owned or leased by SJBDI
or any SJBDI Subsidiary, as OREO or otherwise, or owned or controlled by SJBDI
or any SJBDI Subsidiary as a trustee or fiduciary (collectively, "Properties"),
in any manner that violates or, after the lapse of time is reasonably likely to
violate, any presently existing federal, state or local law or regulation
governing or pertaining to such substances and materials, the violation of which
would have a material adverse effect on the business, operations, assets or
financial condition of SJBDI and the SJBDI Subsidiaries, taken as a whole.
(b) SJBDI has no knowledge that any of the Properties has been
operated in any manner in the three years prior to the date of this Agreement
that violated any applicable federal, state or local law or regulation governing
or pertaining to toxic or hazardous substances and materials, the violation of
which would have a material adverse effect on the business, operations, assets
or financial condition of SJBDI and the SJBDI Subsidiaries taken as a whole.
(c) To the knowledge of SJBDI, SJBDI, each SJBDI Subsidiary
and any and all of their tenants or subtenants have all necessary permits and
have filed all necessary registrations material to permit the operation of the
Properties in the manner in which the operations are currently conducted under
all applicable federal, state or local environmental laws, excepting only those
permits and registrations the absence of which would not have a material adverse
effect upon the operations that require the permit or registration.
(d) To the knowledge of SJBDI, there are no underground
storage tanks on, in or under any of the Properties and no underground storage
tanks have been closed or removed from any of the Properties while the property
was owned, operated or controlled by SJBDI or any SJBDI Subsidiary.
3.17. No Parachute Payments. No officer, director, employee or
agent (or former officer, director, employee or agent) of SJBDI or any SJBDI
Subsidiary is entitled now, or will or may be entitled to as a consequence of
this Agreement or the Merger, to any payment or benefit from SJBDI, a SJBDI
Subsidiary, HUB or any HUB Subsidiary which if paid or provided would constitute
an "excess parachute payment", as defined in Section 280G of the Code or
regulations promulgated thereunder.
3.18. Agreements with Bank Regulators. Except as disclosed in
Section 3.18 in the SJBDI Disclosure Schedule, neither SJBDI nor any SJBDI
Subsidiary is a party to any agreement or memorandum of understanding with, or a
party to any commitment letter, board resolution submitted to a regulatory
authority or similar undertaking to, or is subject to any order or directive by,
or is a recipient of any extraordinary supervisory letter from, any court,
governmental authority or other regulatory or administrative agency or
commission, domestic or foreign ("Governmental Entity") which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies or its management, except for those the
existence of which has been disclosed in writing to HUB by SJBDI prior to the
date of this Agreement, nor has SJBDI been advised by any Governmental Entity
that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission, except as disclosed in writing to HUB by SJBDI prior to
the date of this Agreement. Except as disclosed in Section 3.18 in the SJBDI
Disclosure Schedule, neither SJBDI nor any SJBDI Subsidiary is required by
Section 32 of the Federal Deposit Insurance Act to give prior notice to a
Federal banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive officer,
except as disclosed in writing to HUB by SJBDI prior to the date of this
Agreement.
3.19. Year 2000 Compliance. SJBDI and the SJBDI Subsidiaries
have taken all reasonable steps necessary to address the software, accounting
and record keeping issues raised in order for the data processing systems used
in the business conducted by SJBDI and the SJBDI Subsidiaries to be
substantially Year 2000 compliant on or before the end of 1999 and, except as
set forth in the SJBDI Disclosure Schedule, SJBDI does not expect the future
cost of addressing such issues to be material. Neither SJBDI nor any SJBDI
Subsidiary has received a rating of less than satisfactory from any bank
regulatory agency with respect to Year 2000 compliance.
3.20. Accounting for the Merger: Reorganization. As of the
date hereof, after reviewing the terms of this Agreement, the stock repurchases
by HUB and SJBDI, and the employee benefit plans of SJBDI and FAMNB with SJBDI's
independent auditors, SJBDI does not have any reason to believe that the Merger
will fail to qualify (i) for pooling-of-interests accounting treatment under
GAAP, or (ii) as a reorganization under Section 368(a) of the Code.
3.21. Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HUB
References herein to the "HUB Disclosure Schedule" shall mean
all of the disclosure schedules required by this Article IV, dated as of the
date hereof and referenced to the specific sections and subsections of Article
IV of this Agreement, which have been delivered on the date hereof by HUB to
SJBDI. HUB hereby represents and warrants to SJBDI as follows:
4.1. Corporate Organization.
(a) HUB is a corporation duly organized and validly existing
and in good standing under the laws of the State of New Jersey. HUB has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the business,
operations, assets or financial condition of HUB and the HUB Subsidiaries
(defined below), taken as a whole. HUB is registered as a bank holding company
under the BHCA.
(b) Each HUB Subsidiary is listed in the HUB Disclosure
Schedule. For purposes of this Agreement, the term "HUB Subsidiary" means any
corporation, partnership, joint venture or other legal entity in which HUB
directly or indirectly, owns at least a 50% stock or other equity interest or
for which HUB, directly or indirectly, acts as a general partner provided that
to the extent that any representation or warranty set forth herein covers a
period of time prior to the date of this Agreement, the term "HUB Subsidiary"
shall include any entity which was an HUB Subsidiary at any time during such
period. Each HUB Subsidiary is duly organized and validly existing under the
laws of the jurisdiction of its incorporation. The Bank is a state-chartered
commercial banking corporation duly organized and validly existing under the
laws of the State of New Jersey. All eligible accounts of depositors issued by
the BIF to the fullest extent permitted by law. Each HUB Subsidiary has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on the business, operations, assets or financial
condition of HUB and the HUB Subsidiaries, taken as a whole. The HUB Disclosure
Schedule sets forth true and complete copies of the Certificate of Incorporation
and Bylaws of HUB as in effect on the date hereof.
4.2. Capitalization. The authorized capital stock of HUB
consists of 54,636,350 common shares, no par value ("HUB Common Stock"), and
10,609,000 shares of preferred stock ("HUB Authorized Preferred Stock"). As of
May 31, 1999, there were 40,633,204 shares of HUB Common Stock issued and
39,998,576 outstanding, and 634,628 shares of treasury stock, and no shares of
HUB Authorized Preferred Stock outstanding. Except as described in the HUB
Disclosure Schedule, there are no shares of HUB Common Stock issuable upon the
exercise of outstanding stock options or otherwise. All issued and outstanding
shares of HUB Common Stock and HUB Authorized Preferred Stock, and all issued
and outstanding shares of capital stock of HUB's Subsidiaries, have been duly
authorized and validly issued, are fully paid, nonassessable and free of
preemptive rights, and are free and clear of all liens, encumbrances, charges,
restrictions or rights of third parties. All of the outstanding shares of
capital stock of the HUB Subsidiaries are owned by HUB free and clear of any
liens, encumbrances, charges, restrictions or rights of third parties. Except as
described in the HUB Disclosure Schedule, neither HUB nor any HUB Subsidiary has
granted or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the transfer, purchase or
issuance of any shares of capital stock of HUB or any HUB Subsidiary or any
securities representing the right to purchase, subscribe or otherwise receive
any shares of such capital stock or any securities convertible into any such
shares, and there are no agreements or understandings with respect to voting of
any such shares.
4.3. Authority; No Violation.
(a) Subject to the receipt of all necessary governmental
approvals, HUB has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby in
accordance with the terms hereof. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of HUB in accordance with its
Certificate of Incorporation and applicable laws and regulations. Except for
such approvals, no other corporate proceedings on the part of HUB are necessary
to consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by HUB and constitutes a valid and binding
obligation of HUB, enforceable against HUB in accordance with its terms, except
to the extent that enforcement may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, conservatorship, receivership or other similar laws
now or hereafter in effect relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of bank holding
companies, (ii) general equitable principles, and (iii) laws relating to the
safety and soundness of insured depository institutions and except that no
representation is made as to the effect or availability of equitable remedies or
injunctive relief.
(b) Neither the execution or delivery of this Agreement by HUB
and the Bank, nor the consummation by HUB and the Bank of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by HUB
and the Bank with any of the terms or provisions hereof will (i) violate any
provision of the Certificate of Incorporation or Bylaws of HUB or the Bank, (ii)
assuming that the consents and approvals set forth below are duly obtained,
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to HUB, any HUB Subsidiary, or any of their
respective properties or assets, or (iii) violate, conflict with, result in a
breach of any provision of, constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of HUB or any HUB Subsidiary under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which HUB is a
party, or by which it or any of their properties or assets may be bound or
affected, except, with respect to (ii) and (iii) above, such as individually or
in the aggregate will not have a material adverse effect on the business,
operation, assets or financial condition of HUB and the HUB Subsidiaries, taken
as a whole, and which will not prevent or materially delay the consummation of
the transactions contemplated hereby. Except for consents and approvals of or
filings or registrations with or notices to the FDIC, the FRB, the OCC, the
Department, the SEC, or the Department of Treasury, State of New Jersey, no
consents or approvals of or filings or registrations with or notices to any
third party or any public body or authority are necessary on behalf of HUB in
connection with (x) the execution and delivery by HUB of this Agreement, and (y)
the consummation by HUB of the Merger and the other transactions contemplated
hereby, except such as are listed in the HUB Disclosure Schedule or in the
aggregate will not (if not obtained) have a material adverse effect on the
business, operation, assets or financial condition of HUB and the HUB
Subsidiaries, taken as a whole. To the knowledge of HUB, no fact or condition
exists which HUB has reason to believe will prevent it from obtaining the
aforementioned consents and approvals.
4.4. Financial Statements.
(a) The HUB Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of HUB as of December 31, 1997
and 1998, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows for the periods ended December 31, in
each of the three fiscal years 1996 through 1998, in each case accompanied by
the audit report of Xxxxxx Xxxxxxxx, LLP, independent public accountants with
respect to HUB ("Xxxxxx Xxxxxxxx"), and the unaudited consolidated statement of
condition of HUB as of March 31, 1999 and the related unaudited consolidated
statements of income and cash flows for the three months ended March 31, 1998
and 1999, as reported in HUB's Quarterly Report on Form 10-Q, filed with the SEC
under the Securities Exchange Act of 1934, as amended ("1934 Act")
(collectively, the "HUB Financial Statements"). The HUB Financial Statements
(including the related notes) have been prepared in accordance with GAAP
consistently applied during the periods involved (except as may be indicated
therein or in the notes thereto), and fairly present the consolidated financial
position of HUB as of the respective dates set forth therein, and the related
consolidated statements of income, changes in stockholders' equity and of cash
flows (including the related notes, where applicable) fairly present the
consolidated results of operations, changes in stockholders' equity and cash
flows of HUB for the respective fiscal periods set forth therein.
(b) The books and records of HUB and the HUB Subsidiaries are
being maintained in material compliance with applicable legal and accounting
requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or
reserved against in the HUB Financial Statements (including the notes thereto),
as of December 31, 1998 neither HUB nor any of the HUB Subsidiaries had any
obligation or liability, whether absolute, accrued, contingent or otherwise,
material to the business, operations, assets or financial condition of HUB or
any of the HUB Subsidiaries which were required by GAAP (consistently applied)
to be disclosed in HUB's consolidated statement of condition as of December 31,
1998 or the notes thereto. Except for the transactions contemplated by this
Agreement, and any other proposed acquisitions by HUB reflected in any Form 8-K
filed by HUB with the SEC since December 31, 1998, neither HUB nor any HUB
Subsidiary has incurred any liabilities since December 31, 1998 except in the
ordinary course of business and consistent with past practice (including for
other pending or contemplated acquisitions).
4.5. Broker's and Other Fees. Neither HUB nor any of its
directors or officers has employed any broker or finder or incurred any
liability for any broker's or finder's fees or commissions in connection with
any of the transactions contemplated by this Agreement.
4.6. Absence of Certain Changes or Events. There has not been
any HUB Material Adverse Change since December 31, 1998 and to the knowledge of
HUB, no facts or condition exists which HUB believes will cause a HUB Material
Adverse Change in the future. "HUB Material Adverse Change" means any change
which is material and adverse to the consolidated financial condition, results
of operations, business or assets of HUB and the HUB Subsidiaries taken as a
whole, other than (i) a change in the value of the respective investment and
loan portfolios of HUB and the HUB Subsidiaries as the result of a change in
interest rates generally, (ii) a change occurring after the date hereof in any
federal or state law, rule or regulation or in GAAP, which change affects
banking institutions generally, (iii) reasonable expenses incurred in connection
with this Agreement and the transactions contemplated hereby, (iv) changes
resulting from acquisitions by HUB or any HUB Subsidiary pending on the date
hereof or known to SJBDI, or (v) the entry, after the date hereof, by HUB or any
HUB Subsidiary into an agreement to acquire another entity.
4.7 Legal Proceedings. Except as disclosed in the HUB
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of HUB or any HUB Subsidiaries, neither HUB nor any HUB Subsidiary
is a party to any, and there are no pending or, to the knowledge of HUB,
threatened legal, administrative, arbitral or other proceedings, claims, actions
or governmental investigations of any nature against HUB or any of its
Subsidiaries which, if decided adversely to HUB or any HUB Subsidiaries, are
reasonably likely to have a material adverse effect on the business, operations,
assets or financial condition of HUB and the HUB Subsidiaries, taken as a whole.
Except as disclosed in the HUB Disclosure Schedule, neither HUB nor any HUB
Subsidiary is a party to any order, judgment or decree entered in any lawsuit or
proceeding which is material to HUB and the HUB Subsidiaries, taken as a whole.
4.8 Reports. Since January 1, 1997, HUB has filed all reports
that it was required to file with the SEC under the 1934 Act, all of which
complied in all material respects with all applicable requirements of the 1934
Act and the rules and regulations adopted thereunder. As of their respective
dates, each such report and each registration statement, proxy statement, form
or other document filed by HUB with the SEC, including without limitation, any
financial statements or schedules included therein, did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, provided that
information as of a later date shall be deemed to modify information as of an
earlier date. Since January 1, 1997, HUB and each HUB Subsidiary has duly filed
all material forms, reports and documents which they were required to file with
each agency charged with regulating any aspect of their business, in each case
which was correct in all material respects.
4.9 HUB Information. The information relating to HUB and the
HUB Subsidiaries (including, without limitation, information regarding other
transactions which HUB is required to disclose), this Agreement and the
transactions contemplated hereby in the Registration Statement and Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof), as of the date of
the mailing of the Proxy Statement-Prospectus, and up to and including the date
of the meeting of stockholders of SJBDI to which such Proxy Statement-Prospectus
relates, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement shall comply as to form in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
rules and regulations promulgated thereunder.
4.10 Compliance With Applicable Law. Except as set forth in
the HUB Disclosure Schedule, each of HUB and HUB's Subsidiaries holds all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business, and has complied with and is not in default in
any respect under any applicable law, statute, order, rule, regulation, policy
and/or guideline of any federal, state or local governmental authority relating
to HUB or HUB's Subsidiaries (including without limitation consumer, community
and fair lending laws) (other than where such default or noncompliance will not
result in a material adverse effect on the business, operations, assets or
financial condition of HUB and HUB's Subsidiaries taken as a whole) and HUB has
not received notice of violation of, and does not know of any violations of, any
of the above.
4.11 Funding and Capital Adequacy. At the Effective Time,
after giving pro forma effect to the Merger and any other acquisition which HUB
or the HUB Subsidiaries have agreed to consummate, HUB will be deemed "well
capitalized" under prompt corrective action regulatory capital requirements.
4.12 HUB Common Stock. As of the date hereof, HUB has
available and reserved shares of HUB Common Stock sufficient for issuance
pursuant to the Merger. The HUB Common Stock to be issued hereunder pursuant to
the Merger, when so issued, will be duly authorized and validly issued, fully
paid, nonassessable, free of preemptive rights and free and clear of all liens,
encumbrances or restrictions created by or through HUB, with no personal
liability attaching to the ownership thereof. The HUB Common Stock to be issued
hereunder pursuant to the Merger, when so issued, will be registered under the
1933 Act and issued in accordance with all applicable state and federal laws,
rules and regulations, and will be approved or listed for trading on the NYSE.
4.13 Agreements with Bank Regulators. Except as set forth in
the HUB Disclosure Schedule, neither HUB nor any HUB Subsidiary is a party to
any agreement or memorandum of understanding with, or a party to any commitment
letter, board resolution submitted to a regulatory authority or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, any Government Entity which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies or its management, nor has HUB been
advised by any Governmental Entity that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission. Except as set forth
in the HUB Disclosure Schedule, neither HUB nor any HUB Subsidiary is required
by Section 32 of the Federal Deposit Insurance Act to give prior notice to a
Federal banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive officer.
4.14 Taxes and Tax Returns.
(a) HUB and the HUB Subsidiaries have duly filed (and until
the Effective Time will so file) all Returns required to be filed by them in
respect of any federal, state and local taxes (including withholding taxes,
penalties or other payments required) and have duly paid (and until the
Effective Time will so pay) all such taxes due and payable, other than taxes or
other charges which are being contested in good faith (and disclosed to SJBDI in
writing) or against which reserves have been established. HUB and the HUB
Subsidiaries have established on their books and records reserves that are
adequate for the payment of all federal, state and local taxes not yet due and
payable, but are incurred in respect of HUB through such date. The HUB
Disclosure Schedule identifies the federal income tax returns of HUB and the HUB
Subsidiaries which have been examined by the IRS within the past six years. No
deficiencies were asserted as a result of such examinations which have not been
resolved and paid in full. The HUB Disclosure Schedule identifies the applicable
state income tax returns of HUB and the HUB Subsidiaries which have been
examined by the applicable authorities. No deficiencies were asserted as a
result of such examinations which have not been resolved and paid in full. To
the knowledge of HUB, there are no audits or other administrative or court
proceedings presently pending nor any other disputes pending with respect to, or
claims asserted for, taxes or assessments upon HUB or the HUB Subsidiaries, nor
has HUB or the HUB Subsidiaries given any currently outstanding waivers or
comparable consents regarding the application of the statute of limitations with
respect to any taxes or Returns.
(b) Except as set forth in the HUB Disclosure Schedule,
neither HUB nor any HUB Subsidiary (i) has requested any extension of time
within which to file any Return which Return has not since been filed, (ii) is a
party to any agreement providing for the allocation or sharing of taxes, (iii)
is required to include in income any adjustment pursuant to Section 481(a) of
the Code, by reason of a voluntary change in accounting method initiated by HUB
or the HUB Subsidiaries (nor does HUB have any knowledge that the IRS has
proposed any such adjustment or change of accounting method) or (iv) has filed a
consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply.
4.15 Employee Benefit Plans.
(a) Except as set forth on the HUB Disclosure Schedule,
neither HUB nor any HUB Subsidiary maintains or contributes to any "employee
pension benefit plan" (the "HUB Pension Plans") within the meaning of such term
in Section 3(2)(A) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), "employee welfare benefit plan" (the "HUB Welfare Plans")
within the meaning of such term in Section 3(1) of ERISA, stock option plan,
stock purchase plan, deferred compensation plan, severance plan, bonus plan,
employment agreement, director retirement program or other similar plan, program
or arrangement. Neither HUB nor any HUB Subsidiary has, since September 2, 1974,
contributed to any "Multiemployer Plan," within the meaning of Section 3(37) of
ERISA.
(b) HUB has previously delivered to SJBDI, and included in the
HUB Disclosure Schedule, a complete and accurate copy of each of the following
with respect to each of the HUB Pension Plans and HUB Welfare Plans, if any: (i)
plan document, summary plan description, and summary of material modifications
(if not available, a detailed description of the foregoing); (ii) trust
agreement or insurance contract, if any; (iii) most recent IRS determination
letter, if any; (iv) most recent actuarial report, if any; and (v) most recent
annual report on Form 5500.
(c) The present value of all accrued benefits, both vested and
non-vested, under each of the HUB Pension Plans subject to Title IV of ERISA,
based upon the actuarial assumptions used for funding purposes in the most
recent actuarial valuation prepared by such HUB Pension Plan's actuary, did not
exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the best of HUB' knowledge, the actuarial assumptions then
utilized for such plans were reasonable and appropriate as of the last valuation
date and reflect then current market conditions.
(d) During the last six years, the Pension Benefit Guaranty
Corporation ("PBGC") has not asserted any claim for liability against HUB or any
HUB Subsidiary which has not been paid in full.
(e) All premiums (and interest charges and penalties for late
payment, if applicable) due to the PBGC with respect to each HUB Pension Plan
have been paid. All contributions required to be made to each HUB Pension Plan
under the terms thereof, ERISA or other applicable law have been timely made,
and all amounts properly accrued to date as liabilities of HUB which have not
been paid have been properly recorded on the books of HUB .
(f) Except as disclosed in the HUB Disclosure Schedule, each
of the HUB Pension Plans, HUB Welfare Plans and each other employee benefit plan
and arrangement identified on the HUB Disclosure Schedule has been operated in
compliance in all material respects with the provisions of ERISA, the Code, all
regulations, rulings and announcements promulgated or issued thereunder, and all
other applicable governmental laws and regulations. Furthermore, except as
disclosed in the HUB Disclosure Schedule, if HUB maintains any HUB Pension Plan,
HUB has received or applied for a favorable determination letter from the IRS
which takes into account the Tax Reform Act of 1986 and (to the extent it
mandates currently applicable requirements) subsequent legislation, and HUB is
not aware of any fact or circumstance which would disqualify any plan.
(g) To the best knowledge of HUB, no non-exempt prohibited
transaction, within the meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any HUB Welfare Plan or HUB Pension Plan
that would result in any material tax or penalty for HUB or any HUB Subsidiary.
(h) No HUB Pension Plan or any trust created thereunder has
been terminated, nor have there been any "reportable events" (notice of which
has not been waived by the PBGC), within the meaning of Section 4034(b) of
ERISA, with respect to any HUB Pension Plan.
(i) No "accumulated funding deficiency," within the meaning of
Section 412 of the Code, has been incurred with respect to any HUB Pension Plan.
(j) There are no material pending, or, to the best knowledge
of HUB, material threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of, or against any of the HUB Pension Plans or the HUB
Welfare Plans, any trusts created thereunder or any other plan or arrangement
identified in the HUB Disclosure Schedule.
(k) Except as disclosed in the HUB Disclosure Schedule, no HUB
Pension Plan or HUB Welfare Plan provides medical or death benefits (whether or
not insured) beyond an employee's retirement or other termination of service,
other than (i) coverage mandated by law or pursuant to conversion or
continuation rights set out in such Plan or an insurance policy providing
benefits thereunder, or (ii) death benefits under any HUB Pension Plan.
(l) Except with respect to customary health, life and
disability benefits, there are no unfunded benefit obligations which are not
accounted for by reserves shown on the HUB Financial Statements and established
in accordance with GAAP.
(m) With respect to each HUB Pension Plan and HUB Welfare Plan
that is funded wholly or partially through an insurance policy, there will be no
liability of HUB or any HUB Subsidiary as of the Effective Time under any such
insurance policy or ancillary agreement with respect to such insurance policy in
the nature of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring prior to the Effective Time.
(n) Except (i) for payments and other benefits due pursuant to
the employment agreements included within the HUB Disclosure Schedule, and (ii)
as set forth in the HUB Disclosure Schedule, or as expressly agreed to by HUB in
writing either pursuant to this Agreement or otherwise, or as required by law,
the consummation of the transactions contemplated by this Agreement will not (x)
entitle any current or former employee of HUB or any HUB Subsidiary to severance
pay, unemployment compensation or any similar payment, or (y) accelerate the
time of payment or vesting, or increase the amount of any compensation or
benefits due to any current or former employee under any HUB Pension Plan or HUB
Welfare Plan.
(o) Except for the HUB Pension Plans and the HUB Welfare
Plans, and except as set forth on the HUB Disclosure Schedule, HUB has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of HUB or any
HUB Subsidiary or any predecessor of any thereof. The HUB Disclosure Schedule
sets forth: (i) true and complete copies of the agreements, understandings or
obligations with respect to each such current or former director, officer or
employee, and (ii) the most recent actuarial or other calculation of the present
value of such payments or benefits.
(p) Except as set forth in the HUB Disclosure Schedule, HUB
does not maintain or otherwise pay for life insurance policies (other than group
term life policies on employees) with respect to any director, officer or
employee. The HUB Disclosure Schedule lists each such insurance policy and
includes a copy of each agreement with a party other than the insurer with
respect to the payment, funding or assignment of such policy. To the best of HUB
`s knowledge, neither HUB nor any HUB Pension Plan or HUB Welfare Plan owns any
individual or group insurance policies issued by an insurer which has been found
to be insolvent or is in rehabilitation pursuant to a state proceeding.
(q) Except as set forth in the HUB Disclosure Schedule, HUB
does not maintain any retirement plan or retiree medical plan or arrangement for
directors. The HUB Disclosure Schedule sets forth the complete documentation and
actuarial evaluation of any such plan.
4.16 Contracts. Except as disclosed in the HUB Disclosure
Schedule, neither HUB nor any of the HUB Subsidiaries, or to the knowledge of
HUB, any other party thereto, is in default in any material respect under any
material lease, contract, mortgage, promissory note, deed of trust, loan or
other commitment (except those under which a banking subsidiary of HUB is or
will be the creditor) or arrangement, except for defaults which individually or
in the aggregate would not have a material adverse effect on the business,
operations, assets or financial condition of HUB and the HUB Subsidiaries, taken
as a whole.
4.17 Properties and Insurance.
(a) HUB and the HUB Subsidiaries have good and, as to owned
real property, marketable title to all material assets and properties, whether
real or personal, tangible or intangible, reflected in HUB's consolidated
balance sheet as of December 31, 1998, or owned and acquired subsequent thereto
(except to the extent that such assets and properties have been disposed of for
fair value in the ordinary course of business since December 31, 1998), subject
to no encumbrances, liens, mortgages, security interests or pledges, except (i)
those items that secure liabilities that are reflected in said balance sheet or
the notes thereto or that secure liabilities incurred in the ordinary course of
business after the date of such balance sheet, (ii) statutory liens for amounts
not yet delinquent or which are being contested in good faith, (iii) such
encumbrances, liens, mortgages, security interests, pledges and title
imperfections that are not in the aggregate material to the business,
operations, assets, and financial condition of HUB and the HUB Subsidiaries
taken as a whole and (iv) with respect to owned real property, title
imperfections noted in title reports. Except as disclosed in the HUB Disclosure
Schedule, HUB and the HUB Subsidiaries as lessees have the right under valid and
subsisting leases to occupy, use, possess and control all property leased by HUB
or the HUB Subsidiaries in all material respects as presently occupied, used,
possessed and controlled by HUB and the HUB Subsidiaries.
(b) The business operations and all insurable properties and
assets of HUB and the HUB Subsidiaries are insured for their benefit against all
risks which, in the reasonable judgment of the management of HUB, should be
insured against, in each case under policies or bonds issued by insurers of
recognized responsibility, in such amounts with such deductibles and against
such risks and losses as are in the opinion of the management of HUB adequate
for the business engaged in by HUB and the HUB Subsidiaries. As of the date
hereof, neither HUB nor any of the HUB Subsidiaries has received any notice of
cancellation or notice of a material amendment of any such insurance policy or
bond or is in default under any such policy or bond, no coverage thereunder is
being disputed and all material claims thereunder have been filed in a timely
fashion.
4.18. Environmental Matters. Except as disclosed in the HUB
Disclosure Schedule, neither HUB nor any of the HUB Subsidiaries has received
any written notice, citation, claim, assessment, proposed assessment or demand
for abatement alleging that HUB or any of the HUB Subsidiaries (either directly
or as a trustee or fiduciary, or as a successor-in-interest in connection with
the enforcement of remedies to realize the value of properties serving as
collateral for outstanding loans) is responsible for the correction or cleanup
of any condition resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters which correction or
cleanup would be material to the business, operations, assets or financial
condition of HUB and the HUB Subsidiaries taken as a whole. Except as disclosed
in the HUB Disclosure Schedule, HUB has no knowledge that any toxic or hazardous
substances or materials have been emitted, generated, disposed of or stored on
any real property owned or leased by HUB or any of the HUB Subsidiaries , as
OREO or otherwise, or owned or controlled by HUB or any HUB Subsidiary as a
trustee or fiduciary, in any manner that violates or, after the lapse of time is
reasonably likely to violate, any presently existing federal, state or local law
or regulation governing or pertaining to such substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of HUB and the HUB Subsidiaries, taken
as a whole.
4.19 Reserves. As of December 31, 1998, the allowance for
possible loan losses in the HUB Financial Statements was adequate pursuant to
GAAP (consistently applied), and the methodology used to compute the allowance
for possible loan losses complies in all material respects with GAAP
(consistently applied) and all applicable policies of the OCC. As of December
31, 1998, the valuation allowance for OREO properties in the HUB Financial
Statements was adequate pursuant to GAAP (consistently applied), and the
methodology used to compute the valuation allowance for OREO properties complies
in all material respects with GAAP (consistently applied) and all applicable
policies of the OCC.
4.20. Year 2000 Compliance. HUB and the HUB Subsidiaries have
taken all reasonable steps necessary to address the software, accounting and
record keeping issues raised in order for the data processing systems used in
the business conducted by HUB and the HUB Subsidiaries to be substantially Year
2000 compliant on or before the end of 1999 and HUB does not expect the future
cost of addressing such issues to be material. Neither HUB nor any HUB
Subsidiary has received a rating of less than satisfactory from any bank
regulatory agency with respect to Year 2000 compliance.
4.21 Accounting for the Merger; Reorganization. As of the date
hereof, after reviewing the terms of this Agreement, the stock repurchases by
HUB and SJBDI, other pending transactions involving HUB, and the employee
benefit plans of SJBDI and FAMNB with HUB's independent auditors, HUB does not
have any reason to believe that the Merger will fail to qualify (i) for
pooling-of-interests treatment under GAAP, or (ii) as a reorganization under
Section 368(a) of the Code. As of the date hereof, neither HUB nor any HUB
Subsidiary owns any shares of SJBDI Common Stock.
4.22 No Approval of HUB's Shareholders Currently Required.
Based upon laws and regulations applicable to HUB and currently in effect,
including the rules, regulations and policies of the NYSE, as of the date of
this Agreement, neither approval of this Agreement by the shareholders of HUB
nor approval of the transactions contemplated hereby by the shareholders of HUB
will be required.
4.23 Disclosure. No representation or warranty contained in
Article IV of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE V - COVENANTS OF THE PARTIES
5.1. Conduct of the Business of SJBDI. During the period from
the date of this Agreement to the Effective Time, SJBDI and FAMNB shall, and
shall cause each SJBDI Subsidiary to, conduct their respective businesses only
in the ordinary course and consistent with past business practice, except for
transactions permitted hereunder or with the prior written consent of HUB, which
consent will not be unreasonably withheld. Each of SJBDI and FAMNB also shall
use its reasonable best efforts to (i) preserve its business organization and
that of the SJBDI Subsidiaries intact, (ii) keep available to itself and the
SJBDI Subsidiaries the present services of their respective employees, and (iii)
preserve for itself and HUB the goodwill of its customers and those of the SJBDI
Subsidiaries and others with whom business relationships exist.
5.2. Negative Covenants. From the date hereof to the Effective
Time, except as otherwise approved by HUB in writing, or as set forth in the
SJBDI Disclosure Schedule, or as permitted or required by this Agreement,
neither SJBDI nor FAMNB will:
(a) change any provision of its Certificate or Articles of
Incorporation or any similar governing documents;
(b) change any provision of its Bylaws without the consent of
HUB which consent shall not be unreasonably withheld;
(c) change the number of shares of its authorized or issued
capital stock (other than upon exercise of stock options or warrants
described on the SJBDI Disclosure Schedule in accordance with the terms
thereof) or issue or grant any option, warrant, call, commitment,
subscription, right to purchase 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 its capital stock, or declare, set aside or pay any
dividend, or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock other than as
necessary to redeem the rights granted under its Amended Stockholders
Right Agreement dated April 11, 1996; provided, however, that nothing
contained herein shall be deemed to affect the ability of FAMNB to pay
dividends on their capital stock to SJBDI; and provided, further, that
this paragraph shall not prohibit SJBDI from taking actions
contemplated by Section 5.18 of this Agreement;
(d) grant any severance or termination pay (other than
pursuant to policies or contracts of SJBDI in effect on the date hereof
and disclosed to HUB in the SJBDI Disclosure Schedule) to, or enter
into or amend any employment or severance agreement with, any of its
directors, officers or employees; adopt any new employee benefit plan
or arrangement of any type; or award any increase in compensation or
benefits to its directors, officers or employees except in each case
(i) as required by law or (ii) as specified in Section 5.2 of the SJBDI
Disclosure Schedule;
(e) sell or dispose of any substantial amount of assets or
voluntarily incur any significant liabilities other than in the
ordinary course of business consistent with past practices and policies
or in response to substantial financial demands upon the business of
SJBDI or FAMNB;
(f) make any capital expenditures in excess of $100,000 in the
aggregate, other than pursuant to binding commitments existing on the
date hereof, expenditures necessary to maintain existing assets in good
repair and expenditures described in business plans or budgets
previously furnished to HUB, except as set forth in Section 5.2 of the
SJBDI Disclosure Schedule;
(g) file any applications or make any contract with respect to
branching or site location or relocation;
(h) agree to acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or entity or
make any new investments in securities other than investments in
government, municipal or agency bonds having a maturity of less than
five years;
(i) make any material change in its accounting methods or
practices, other than changes required in accordance with generally
accepted accounting principles or regulatory authorities;
(j) take any action that would result in any of its
representations and warranties contained in Article III of this
Agreement not being true and correct in any material respect at the
Effective Time or that would cause any of its conditions to Closing not
to be satisfied;
(k) without first conferring with HUB, make or commit to make
any new loan or other extension of credit in an amount of $100,000 or
more, renew for a period in excess of one year any existing loan or
other extension of credit in an amount of $100,000 or more, or increase
by $100,000 or more the aggregate credit outstanding to any borrower or
group of affiliated borrowers except such loan initiations, renewals or
increases that are committed as of the date of this Agreement and
identified on the SJBDI Disclosure Schedule and residential mortgage
loans made in the ordinary course of business in accordance with past
practice; or
(l) agree to do any of the foregoing.
5.3. No Solicitation. So long as this Agreement remains in
effect, SJBDI and FAMNB shall not, directly or indirectly, encourage or solicit
or hold discussions or negotiations with, or provide any information to, any
person, entity or group (other than HUB) concerning any merger or sale of shares
of capital stock or sale of substantial assets or liabilities not in the
ordinary course of business, or similar transactions involving SJBDI or either
of FAMNB (an "Acquisition Transaction"). Notwithstanding the foregoing, SJBDI
may enter into discussions or negotiations or provide information in connection
with an unsolicited possible Acquisition Transaction if the Board of Directors
of SJBDI, after consulting with counsel, determines in the exercise of its
fiduciary responsibilities that such discussions or negotiations should be
commenced or such information should be furnished. SJBDI shall promptly
communicate to HUB the terms of any proposal, whether written or oral, which it
may receive in respect of any such Acquisition Transaction and the fact that it
is having discussions or negotiations with a third party about an Acquisition
Transaction.
5.4. Current Information. During the period from the date of
this Agreement to the Effective Time, each of SJBDI and HUB will cause one or
more of its designated representatives to confer with representatives of the
other party on a monthly or more frequent basis regarding its business,
operations, properties, assets and financial condition and matters relating to
the completion of the transactions contemplated herein. On a monthly basis,
SJBDI agrees to provide HUB, and HUB agrees to provide SJBDI, with internally
prepared profit and loss statements no later than 25 days after the close of
each calendar month. As soon as reasonably available, but in no event more than
45 days after the end of each fiscal quarter (other than the last fiscal quarter
of each fiscal year), SJBDI will deliver to HUB and HUB will deliver to SJBDI
their respective quarterly reports on Form 10-Q, as filed with the SEC under the
1934 Act. As soon as reasonably available, but in no event more than 90 days
after the end of each calendar year, SJBDI will deliver to HUB and HUB will
deliver to SJBDI their respective Annual Reports on Form 10-K as filed with the
SEC under the 1934 Act.
5.5. Access to Properties and Records; Confidentiality.
(a) SJBDI and FAMNB shall permit HUB and its representatives,
and HUB shall permit, and cause each HUB Subsidiary to permit, SJBDI and its
representatives, reasonable access to their respective properties, and shall
disclose and make available to HUB and its representatives, or SJBDI and its
representatives as the case may be, all books, papers and records relating to
its assets, stock ownership, properties, operations, obligations and
liabilities, including, but not limited to, all books of account (including the
general ledger), tax records, minute books of directors' and shareholders'
meetings, organizational documents, Bylaws, material contracts and agreements,
filings with any regulatory authority, accountants' work papers, litigation
files, plans affecting employees, and any other business activities or prospects
in which HUB and its representatives or SJBDI and its representatives may have a
reasonable interest. Neither party shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of any customer, would contravene any law, rule, regulation, order or
judgment or would waive any privilege. Under circumstances in which the
restrictions of the preceding sentence apply, the parties will use their
reasonable best efforts to obtain waivers of any such restriction (other than
waivers of the attorney-client privilege) and in any event make appropriate
substitute disclosure arrangements. Notwithstanding the foregoing, SJBDI
acknowledges that HUB may be involved in discussions concerning other potential
acquisitions and HUB shall not be obligated to disclose such information to
SJBDI except as such information is disclosed to HUB's shareholders generally.
(b) All information furnished by the parties hereto previously
in connection with transactions contemplated by this Agreement or pursuant
hereto shall be used solely for the purpose of evaluating the Merger
contemplated hereby and shall be treated as the sole property of the party
delivering the information until consummation of the Merger contemplated hereby
and, if such Merger shall not occur, each party and each party's advisors shall
return to the other party all documents or other materials containing,
reflecting or referring to such information, will not retain any copies of such
information, shall use its reasonable best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. In the event that the Merger
contemplated hereby does not occur, all documents, notes and other writings
prepared by a party hereto or its advisors based on information furnished by the
other party shall be promptly destroyed. The obligation to keep such information
confidential shall continue for five years from the date the proposed Merger is
abandoned but shall not apply to (i) any information which (A) the party
receiving the information can establish by convincing evidence was already in
its possession prior to the disclosure thereof to it by the other party; (B) was
then generally known to the public; (C) became known to the public through no
fault of the party receiving such information; or (D) was disclosed to the party
receiving such information by a third party not bound by an obligation of
confidentiality; or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction.
(c) Without limiting the foregoing, HUB, directly or through
agents, for the 15 calendar day period (the "Due Diligence Period") immediately
following the date of this Agreement, shall have the right to perform due
diligence on SJBDI and FAMNB and a complete audit acquisition of SJBDI and
FAMNB. Within the Due Diligence Period, HUB shall have the right to terminate
this Agreement if the due diligence review by HUB causes HUB to reach a
conclusion about the financial condition, business, assets or the quality of the
representations and warranties of SJBDI or FAMNB, adverse from conclusions about
the same matters which HUB's senior executives held at the time HUB executed
this Agreement.
5.6. Regulatory Matters.
(a) For the purposes of holding the Shareholders Meeting (as
defined in Section 5.7 hereof), and qualifying under applicable federal and
state securities laws the HUB Common Stock to be issued to SJBDI shareholders in
connection with the Merger, the parties hereto shall cooperate in the
preparation and filing by HUB with the SEC of a Registration Statement including
a combined proxy statement and prospectus satisfying all applicable requirements
of applicable state and federal laws, including the 1933 Act, the 1934 Act and
applicable state securities laws and the rules and regulations thereunder (such
proxy statement and prospectus in the form mailed by SJBDI and HUB to the SJBDI
shareholders together with any and all amendments or supplements thereto, being
herein referred to as the "Proxy Statement-Prospectus" and the various documents
to be filed by HUB under the 1933 Act with the SEC to register the HUB Common
Stock for sale, including the Proxy Statement-Prospectus, are referred to herein
as the "Registration Statement").
(b) HUB shall furnish SJBDI with such information concerning
HUB and HUB Subsidiaries (including, without limitation, information regarding
other transactions which HUB is required to disclose) as is necessary in order
to cause the Proxy Statement-Prospectus, insofar as it relates to such
corporations, to comply with Section 5.6(a) hereof. HUB agrees promptly to
advise SJBDI if at any time prior to the Shareholders Meeting any information
provided by HUB in the Proxy Statement-Prospectus becomes incorrect or
incomplete in any material respect and promptly to provide SJBDI with the
information needed to correct such inaccuracy or omission. HUB shall promptly
furnish SJBDI with such supplemental information as may be necessary in order to
cause the Proxy Statement-Prospectus, insofar as it relates to HUB and the HUB
Subsidiaries, to comply with Section 5.6(a) after the mailing thereof to SJBDI
shareholders.
(c) SJBDI shall furnish HUB with such information concerning
SJBDI as is necessary in order to cause the Proxy Statement-Prospectus, insofar
as it relates to SJBDI, to comply with Section 5.6(a) hereof. SJBDI agrees
promptly to advise HUB if at any time prior to the Shareholders Meeting, any
information provided by SJBDI in the Proxy Statement-Prospectus becomes
incorrect or incomplete in any material respect and promptly to provide HUB with
the information needed to correct such inaccuracy or omission. SJBDI shall
promptly furnish HUB with such supplemental information as may be necessary in
order to cause the Proxy Statement-Prospectus, insofar as it relates to SJBDI
and FAMNB to comply with Section 5.6(a) after the mailing thereof to SJBDI
shareholders.
(d) HUB shall as promptly as practicable make such filings as
are necessary in connection with the offering of the HUB Common Stock with
applicable state securities agencies and shall use all reasonable efforts to
qualify the offering of such stock under applicable state securities laws at the
earliest practicable date. SJBDI shall promptly furnish HUB with such
information regarding the SJBDI shareholders as HUB requires to enable it to
determine what filings are required hereunder. SJBDI authorizes HUB to utilize
in such filings the information concerning SJBDI and FAMNB provided to HUB in
connection with, or contained in, the Proxy Statement-Prospectus. HUB shall
furnish SJBDI's counsel with copies of all such filings and keep SJBDI advised
of the status thereof. HUB and SJBDI shall as promptly as practicable file the
Registration Statement containing the Proxy Statement-Prospectus with the SEC,
and each of HUB and SJBDI shall promptly notify the other of all communications,
oral or written, with the SEC concerning the Registration Statement and the
Proxy Statement-Prospectus.
(e) HUB shall cause the HUB Common Stock issuable pursuant to
the Merger to be listed on the NYSE at the Effective Time.
(f) The parties hereto will cooperate with each other and use
their reasonable best efforts to prepare all necessary documentation, to effect
all necessary filings and to obtain all necessary permits, consents, approvals
and authorizations of all third parties and Governmental Entities necessary to
consummate the transactions contemplated by this Agreement as soon as possible,
including, without limitation, those required by the FDIC, the FRB, the OCC, the
Department and (if required) the DEP. Without limiting the foregoing, the
parties shall use reasonable business efforts to file for approval of the Merger
or waiver of the need for such approval by the appropriate bank regulatory
agencies within 45 days after the date hereof. The parties shall each have the
right to review in advance (and shall do so promptly) all filings with,
including all information relating to the other, as the case may be, and any of
their respective subsidiaries, which appears in any filing made with, or written
material submitted to, any third party or Governmental Entity in connection with
the transactions contemplated by this Agreement.
(g) Each of the parties will promptly furnish each other with
copies of written communications received by them or any of their respective
subsidiaries from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated hereby.
(h) SJBDI acknowledges that HUB is in or may be in the process
of acquiring other banks and financial institutions and that in connection with
such acquisitions, information concerning SJBDI may be required to be included
in the registration statements, if any, for the sale of securities of HUB or in
SEC reports in connection with such acquisitions. SJBDI agrees to provide HUB
with any non-confidential information, certificates, documents or other
materials about SJBDI as are reasonably necessary to be included in such other
SEC reports or registration statements, including registration statements which
may be filed by HUB prior to the Effective Time. SJBDI shall use its reasonable
efforts to cause its attorneys and accountants to provide HUB and any
underwriters for HUB with any consents, comfort letters, opinion letters,
reports or information which are necessary to complete the registration
statements and applications for any such acquisition or issuance of securities.
HUB shall reimburse SJBDI for reasonable expenses thus incurred by SJBDI should
this transaction be terminated for any reason. HUB shall not file with the SEC
any registration statement or amendment thereto or supplement thereof containing
information regarding SJBDI unless SJBDI shall have consented in writing to such
filing, which consent shall not be unreasonably delayed or withheld.
(i) Between the date of this Agreement and the Effective Time,
SJBDI shall cooperate with HUB to reasonably conform SJBDI's policies and
procedures regarding applicable regulatory matters to those of HUB, as HUB may
reasonably identify to SJBDI from time to time.
5.7. Approval of Shareholders. SJBDI will (i) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
shareholders of SJBDI (the "Shareholders Meeting") for the purpose of securing
the approval of those shareholders of this Agreement, (ii) subject to the
qualification set forth in Section 5.3 hereof and the right not to make a
recommendation or to withdraw a recommendation if (x) its investment banker
withdraws its fairness opinion prior to the Shareholders Meeting or (y) SJBDI's
Board of Directors, after consulting with counsel, determines in the exercise of
its fiduciary duties that such recommendation should not be made or should be
withdrawn, recommend to the shareholders of SJBDI the approval of this Agreement
and the transactions contemplated hereby and use its reasonable best efforts to
obtain, as promptly as practicable, such approval, and (iii) cooperate and
consult with HUB with respect to each of the foregoing matters.
5.8. Further Assurances.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to satisfy
the conditions to Closing and to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, using reasonable
efforts to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated by this Agreement and using its reasonable best efforts to prevent
the breach of any representation, warranty, covenant or agreement of such party
contained or referred to in this Agreement and to promptly remedy the same. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
Nothing in this section shall be construed to require any party to participate
in any threatened or actual legal, administrative or other proceedings (other
than proceedings, actions or investigations to which it is a party or subject or
threatened to be made a party or subject) in connection with consummation of the
transactions contemplated by this Agreement unless such party shall consent in
advance and in writing to such participation and the other party agrees to
reimburse and indemnify such party for and against any and all costs and damages
related thereto.
(b) HUB agrees that from the date hereof to the Effective
Time, except as otherwise approved by SJBDI in writing or as permitted or
required by this Agreement, HUB will use reasonable business efforts to maintain
and preserve intact its business organization, properties, leases, employees and
advantageous business relationships, and HUB will not, nor will it permit any
HUB Subsidiary to, take any action: (i) that would result in any of its
representations and warranties contained in Article IV of this Agreement not
being true and correct in any material respect at, or prior to, the Effective
Time, or (ii) that would cause any of its conditions to Closing not to be
satisfied, or (iii) that would constitute a breach or default of its obligations
under this Agreement, or (iv) to declare, set aside, make or pay any
extraordinary cash dividend in excess of $.05 per share of HUB Common Stock, or
(v) to enter into any agreement after the date hereof with respect to one or
more acquisitions that, individually or in the aggregate, can reasonably be
expected to materially adversely affect the ability of HUB to consummate the
Merger prior to the Cutoff Date (as such term is hereinafter defined), or (vi)
to agree to do any of the foregoing.
(c) HUB, the Bank, SJBDI and FAMNB will use reasonable efforts
to cause the Merger to occur on or before November 30, 1999.
5.9. Public Announcements. HUB and SJBDI shall cooperate with
each other in the development and distribution of all news releases and other
public filings and disclosures with respect to this Agreement or the Merger
transactions contemplated hereby, and HUB and SJBDI agree that unless approved
mutually by them in advance, they will not issue any press release or written
statement for general circulation relating primarily to the transactions
contemplated hereby, except as may be otherwise required by law or regulation
upon the advice of counsel.
5.10. Failure to Fulfill Conditions. In the event that HUB or
SJBDI determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to April 30,
2000 (the "Cutoff Date") and that it will not waive that condition, it will
promptly notify the other party. Except for any acquisition or merger
discussions HUB may enter into with other parties, SJBDI and HUB will promptly
inform the other of any facts applicable to SJBDI or HUB, respectively, or their
respective directors or officers, that would be likely to prevent or materially
delay approval of the Merger by any Governmental Entity or which would otherwise
prevent or materially delay completion of the Merger.
5.11. Employee Matters.
(a) Following consummation of the Merger, HUB agrees with
SJBDI to honor the existing written employment and severance contracts with
officers and employees of SJBDI and FAMNB that are included in the SJBDI
Disclosure Schedule, including without limitation the deferred compensation
agreements with Xxxxxxxx X. XxXxxxxxx, Xx., the Chairman of SJBDI ("XxXxxxxxx,
Sr.") and Xxxxxxxx X. XxXxxxxxx, Xx., the President of SJBDI ("XxXxxxxxx, Jr.").
(b) Following consummation of the Merger, HUB will decide
whether to continue FAMNB and/or SJBDI's pension and welfare plans for the
benefit of employees of FAMNB and SJBDI, or to have such employees become
covered under a HUB Pension and Welfare Plan. If HUB decides to cover FAMNB and
SJBDI employees under a HUB Pension and Welfare Plan, such employees will
receive credit for prior years of service with FAMNB and/or SJBDI for purposes
of determining eligibility to participate, and vesting, if applicable. No prior
existing condition limitation shall be imposed with respect to any medical
coverage plan as a result of the Merger.
(c) Any person who was serving as an employee of either SJBDI
or FAMNB immediately prior to the Effective Time (other than those employees
covered by either a written employment agreement or the arrangements set forth
in Section 5.11 of the SJBDI Disclosure Schedule) whose employment is
discontinued by HUB or the Bank or any of the HUB Subsidiaries within six months
after the Effective Time (unless termination of such employment is for Cause (as
defined below)) shall be entitled to a severance payment from the Bank equal in
amount to one week's base pay for each full year such employee was employed by
SJBDI or FAMNB or any successor or predecessor thereto or other SJBDI
Subsidiary, subject to a minimum of two weeks' severance and a maximum of 26
weeks' severance, together with any accrued but unused vacation leave with
respect to the calendar year in which termination occurs. For purposes of this
Section 5.11, "Cause" shall mean termination because of the employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties or willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses). Following the expiration of the foregoing severance policy,
any years of service recognized for purposes of this Section 5.11(c) will be
taken into account under the terms of any applicable severance policy of HUB.
(d) Employees of SJBDI and FAMNB who become employees of HUB
or any HUB Subsidiary shall become entitled to participate in HUB's defined
benefit pension plan in accordance with its terms. In this regard, each such
employee shall (i) receive, for purposes of participation and vesting only,
credit for all service with SJBDI or FAMNB and (ii) enter the HUB defined
benefit pension plan on the entry date concurrent with or next following the
employee's satisfaction of such plan's minimum participation requirements.
(e) Employees of SJBDI and FAMNB who become employees of HUB
or any HUB Subsidiary shall become entitled to participate in the applicable HUB
retirement savings plan ("401(k) Plan") in accordance with its terms. In this
regard, each such employee shall (i) receive, for purposes of participation and
vesting only, credit for all service with SJBDI or FAMNB, and (ii) enter the
applicable 401(k) Plan on the entry date concurrent with or next following the
employee's satisfaction of such plan's minimum participation requirements.
(f) SJBDI and FAMNB may continue to administer such bonus
programs and arrangements as are disclosed pursuant to this Agreement through
the Effective Time, provided that bonuses shall be paid only to the extent they
have been previously accrued and their payment will not cause SJBDI's earnings
to fall below budgeted amounts.
(g) During the Due Diligence Period, HUB and SJBDI shall agree
upon those employees of SJBDI or FAMNB who shall be eligible to receive a
"retention" bonus in an amount that HUB and SJBDI shall agree upon. Each
retention bonus shall be payable in the event that the employee (i) remains an
employee of SJBDI or FAMNB, as applicable, until the earlier of the fifteenth
day following successful substantial completion of the conversion of FAMNB's
computer systems to those of the Bank or June 30, 2000 and (ii) satisfactorily
fulfills the duties and responsibilities of the position of the employee through
such time; provided that HUB at its option may select an earlier time for
payment of any retention bonus; and provided, further, that retention bonuses,
in the aggregate, shall not exceed $250,000.
(h) HUB shall pay the cost of out-placement services for
employees who are terminated without Cause in connection with the Merger within
six (6) months after the Effective Time. HUB shall not be obligated to pay any
out-placement fees in connection with the foregoing or more than $50,000 in the
aggregate for such services.
(j) Prior to the Closing and effective as of the Effective
Time, HUB and SJBDI shall enter into non-compete agreements (the "Non-Compete
Agreements") with XxXxxxxxx, Sr. and XxXxxxxxx, Jr. having the terms set forth
in Section 5.11(j) of the HUB Disclosure Schedule, and other terms reasonably
satisfactory to HUB, and shall enter into such other agreements or arrangements
with HUB as are described in Section 5.11(j) of the HUB Disclosure Schedule.
(k) HUB at the Closing will offer each director of SJBDI a
position on a HUB regional advisory board.
5.12. Disclosure Supplements. From time to time prior to the
Effective Time, each party hereto will promptly supplement or amend (by written
notice to the other) its respective Disclosure Schedules delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Schedules or which is necessary to correct any
information in such Schedules which has been rendered materially inaccurate
thereby. For the purpose of determining satisfaction of the conditions set forth
in Article VI and subject to Sections 6.2(a) and 6.3(a), no supplement or
amendment to the parties' respective Disclosure Schedules which corrects any
representation or warranty which was untrue when made shall eliminate the other
party's right (if any) to terminate this Agreement based on the original untruth
of the representation or warranty; provided, that the other party shall be
deemed to have waived such right if it does not exercise such right within 15
days after receiving the correcting supplement or amendment.
5.13. Transaction Expenses of SJBDI.
(a) For planning purposes, SJBDI shall, within 30 days from
the date hereof, provide HUB with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by SJBDI in connection with this
transaction based on facts and circumstances then currently known, including the
fees and expenses of counsel, accountants, investment bankers and other
professionals. SJBDI shall promptly notify HUB if or when it determines that it
will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, SJBDI
shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. SJBDI shall accrue
and/or pay all of such amounts as soon as possible.
(c) SJBDI shall cause its professionals to render monthly
invoices within 15 days after the end of each month. SJBDI shall advise HUB
monthly of all out-of-pocket expenses which SJBDI has incurred in connection
with this transaction.
(d) HUB, in reasonable consultation with SJBDI, shall make all
arrangements with respect to the printing and mailing of the Proxy
Statement-Prospectus.
5.14 Indemnification.
(a) For a period of six years after the Effective Time, HUB
shall indemnify, defend and hold harmless each person who is now, or has been at
any time prior to the date hereof or who becomes prior to the Effective Time, a
director, officer, employee or agent of SJBDI or FAMNB or serves or has served
at the request of SJBDI or FAMNB in any capacity with any other person
(collectively, the "Indemnitees") against any and all claims, damages,
liabilities, losses, costs, charges, expenses (including, without limitation,
reasonable costs of investigation, and the reasonable fees and disbursements of
legal counsel and other advisers and experts as incurred), judgments, fines,
penalties and amounts paid in settlement, asserted against, incurred by or
imposed upon any Indemnitee by reason of the fact that he or she is or was a
director, officer, employee or agent of SJBDI or FAMNB or serves or has served
at the request of SJBDI or FAMNB in any capacity with any other person, in
connection with, arising out of or relating to (i) any threatened, pending or
completed claim, action, suit or proceeding (whether civil, criminal,
administrative or investigative), including, without limitation, any and all
claims, actions, suits, proceedings or investigations by or on behalf of or in
the right of or against SJBDI or FAMNB or any of their respective affiliates, or
by any former or present shareholder of SJBDI (each a "Claim" and collectively,
"Claims"), including, without limitation, any Claim which is based upon, arises
out of or in any way relates to the Merger, the Proxy Statement/Prospectus, this
Agreement, any of the transactions contemplated by this Agreement, the
Indemnitee's service as a member of the Board of Directors of SJBDI or FAMNB or
of any committee of SJBDI's or FAMNB's Board of Directors, the events leading up
to the execution of this Agreement, any statement, recommendation or
solicitation made in connection therewith or related thereto and any breach of
any duty in connection with any of the foregoing, or (ii) the enforcement of the
obligations of HUB set forth in this Section 5.14, in each case to the fullest
extent which SJBDI or FAMNB would have been permitted under any applicable law
and their respective Certificates of Incorporation or Bylaws had the Merger not
occurred (and HUB shall also advance expenses as incurred to the fullest extent
so permitted). Notwithstanding the foregoing, but subject to subsection (b)
below, HUB shall not provide any indemnification or advance any expenses with
respect to any Claim which relates to a personal benefit improperly paid or
provided, or alleged to have been improperly paid or provided, to the
Indemnitee, but HUB shall reimburse the Indemnitee for costs incurred by the
Indemnitee with respect to such Claim when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that the Indemnitee was not improperly paid or
provided with the personal benefit alleged in the Claim.
(b) From and after the Effective Time, HUB shall assume and
honor any obligation of SJBDI or FAMNB immediately prior to the Effective Time
with respect to the indemnification of the Indemnitees arising out of the
Certificate of Incorporation or Bylaws of SJBDI or FAMNB, or arising out of any
written indemnification agreements between SJBDI and/or FAMNB and such persons
disclosed in the SJBDI Disclosure Schedule, as if such obligations were pursuant
to a contract or arrangement between HUB and such Indemnitees.
(c) In the event HUB or any of its successors or assigns (i)
reorganizes or consolidates with or merges into or enters into another business
combination transaction with any other person or entity and is not the
resulting, continuing or surviving corporation or entity of such consolidation,
merger or transaction, or (ii) liquidates, dissolves or transfers all or
substantially all of its properties and assets to any person or entity, then,
and in each such case, proper provision shall be made so that the successors and
assigns of HUB assume the obligations set forth in this Section 5.14.
(d) HUB shall cause SJBDI's and FAMNB's officers and directors
to be covered under HUB's then current officers' and directors' liability
insurance policy for a period of six years after the Effective Time, or, in the
alternative, to be covered under an extension of SJBDI's and FAMNB's existing
officers' and directors' liability insurance policy. However, HUB shall only be
required to insure such persons upon terms and for coverages substantially
similar to SJBDI's and FAMNB's existing officers' and directors' liability
insurance.
(e) Any Indemnitee wishing to claim indemnification under this
Section 5.14 shall promptly notify HUB upon learning of any Claim, but the
failure to so notify shall not relieve HUB of any liability it may have to such
Indemnitee if such failure does not materially prejudice HUB. In the event of
any Claim (whether arising before or after the Effective Time) as to which
indemnification under this Section 5.14 is applicable, (x) HUB shall have the
right to assume the defense thereof and HUB shall not be liable to such
Indemnitees for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof,
except that if HUB elects not to assume such defense, or counsel for the
Indemnitees advises that there are issues which raise conflicts of interest
between HUB and the Indemnitees, the Indemnitees may retain counsel satisfactory
to them, and HUB shall pay the reasonable fees and expenses of such counsel for
the Indemnitees as statements therefor are received; provided, however, that HUB
shall be obligated pursuant to this Section 5.14(e) to pay for only one firm of
counsel for all Indemnitees in any jurisdiction with respect to a matter unless
the use of one counsel for multiple Indemnitees would present such counsel with
a conflict of interest that is not waived, and (y) the Indemnitees will
cooperate in the defense of any such matter. HUB shall not be liable for
settlement of any claim, action or proceeding hereunder unless such settlement
is effected with its prior written consent. Notwithstanding anything to the
contrary in this Section 5.14, HUB shall not have any obligation hereunder to
any Indemnitee when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and nonappealable,
that the indemnification of such Indemnitee in the manner contemplated hereby is
prohibited by applicable law or public policy.
5.15 Bank Policies and Bank Merger. Notwithstanding that SJBDI
believes that it has established all reserves and taken all provisions for
possible loan losses required by GAAP and applicable laws, rules and
regulations, SJBDI recognizes that HUB may have adopted different loan, accrual
and reserve policies (including loan classifications and levels of reserves for
possible loan losses). From and after the date of this Agreement to the
Effective Time and in order to formulate the plan of integration for the Bank
Merger, SJBDI and HUB shall consult and cooperate with each other with respect
to (i) conforming to the extent appropriate, based upon such consultation,
SJBDI's loan, accrual and reserve policies and SJBDI's other policies and
procedures regarding applicable regulatory matters, including without limitation
Federal Reserve, the Bank Secrecy Act and FDIC matters, to those policies of HUB
as HUB may reasonably identify to SJBDI from time to time, (ii) new extensions
of credit or material revisions to existing terms of credits by FAMNB, in each
case where the aggregate exposure exceeds $100,000, and (iii) conforming, based
upon such consultation, the composition of the investment portfolio and overall
asset/liability management position of SJBDI and FAMNB to the extent
appropriate; provided that any required change in SJBDI's practices in
connection with the matters described in clause (i) or (iii) above need not be
effected (A) more than five days prior to the Effective Time and (B) unless and
until HUB agrees in writing that all conditions precedent to the Closing have
occurred and HUB has provided the Closing Notice. No accrual or reserve made by
SJBDI or any SJBDI Subsidiary pursuant to this subsection, or any litigation or
regulatory proceeding arising out of any such accrual or reserve, shall
constitute or be deemed to be a breach or violation of any representation,
warranty, covenant, condition or other provision of this Agreement or to
constitute a termination event within the meaning of Section 7.1(d) or Section
7.1(g) hereof.
5.16 Pooling and Tax-Free Reorganization Treatment. Before the
Effective Time, neither HUB nor SJBDI shall intentionally take, fail to take, or
cause to be taken or not taken any action within its control, which would
disqualify the Merger as a "pooling-of-interests" for accounting purposes or as
a "reorganization" within the meaning of Section 368(a) of the Code. Subsequent
to the Effective Time, HUB shall not take and shall cause the Surviving
Corporation not to take any action within their control that would disqualify
the Merger as such a "reorganization" under the Code.
5.17 Comfort Letters. HUB shall cause Xxxxxx Xxxxxxxx, its
independent public accountants, to deliver to SJBDI, and SJBDI shall cause Xxxxx
& Co., its independent public accountants, to deliver to HUB and to its officers
and directors who sign the Registration Statement for this transaction, a
short-form "comfort letter" or "agreed upon procedures" letter, dated the date
of the mailing of the Proxy Statement-Prospectus for the Shareholders Meeting,
in the form customarily issued by such accountants at such time in transactions
of this type.
5.18 Regulatory Capital Issues. FAMNB is currently required by
the OCC to attain a leverage capital ratio of 6% by September 30, 1999 (the
"Regulatory Capital Requirement"). Promptly following the execution of this
Agreement, FAMNB shall request a waiver of the Regulatory Capital Requirement
from the OCC pending consummation of the Merger. If FAMNB fails to obtain such a
waiver, or if the OCC imposes conditions to the granting of such a waiver, SJBDI
and FAMNB shall confer with HUB regarding the appropriate method of complying
with the Regulatory Capital Requirement or the conditions to the waiver, as the
case may be, and SJBDI and FAMNB shall use their best efforts to comply with the
Regulatory Capital Requirement or the conditions to the waiver in a manner which
(a) does not involve the issuance of additional shares of SJBDI Common Stock and
(b) would not cause the Merger to fail to qualify for pooling-of-interests
accounting treatment. If, despite compliance with this Section 5.18, SJBDI or
FAMNB must take actions which would cause the Merger not to qualify for
pooling-of-interests accounting treatment, HUB shall have the right to terminate
this Agreement upon the taking of such actions by SJBDI or FAMNB.
5.19 Affiliates. Promptly, but in any event within two weeks,
after the execution and delivery of this Agreement, SJBDI shall deliver to HUB
(a) a letter identifying all persons who, to the knowledge of SJBDI, may be
deemed to be affiliates of SJBDI under Rule 145 of the 1933 Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of SJBDI and (b) use its reasonable best
efforts to cause each person who may be deemed to be an affiliate of SJBDI to
execute and deliver to HUB a letter agreement, substantially in the form of
Exhibit 5.19-1, agreeing to comply with Rule 145 and to refrain from
transferring shares as required by the pooling-of-interests accounting rules.
Within two weeks after the date hereof, HUB shall use its reasonable best
efforts to cause its directors and executive officers to enter into letter
agreements in the form of Exhibit 5.19-2 with HUB concerning the
pooling-of-interests accounting rules. HUB hereby agrees to publish, or file a
Form 8-K, Form 10-K or Form 10-Q containing, financial results covering at least
30 days of post-Merger combined operations of HUB and SJBDI as soon as
practicable (but in no event later than 15 days) following the close of the
first calendar month ending 30 days after the Effective Time, in form and
substance sufficient to remove the restrictions set forth in paragraph "B" of
Exhibit 5.19-1.
ARTICLE VI - CLOSING CONDITIONS
6.1. Conditions to Each Party's Obligations Under this
Agreement. The respective obligations of each party under this Agreement to
consummate the Merger shall be subject to the satisfaction, or, where
permissible under applicable law, waiver at or prior to the Effective Time of
the following conditions:
(a) Approval of Shareholders; SEC Registration. This Agreement
and the transactions contemplated hereby shall have been approved by the
requisite vote of the shareholders of SJBDI. The HUB Registration Statement
shall have been declared effective by the SEC and shall not be subject to a stop
order or any threatened stop order, and the issuance of the HUB Common Stock
shall have been qualified in every state where such qualification is required
under the applicable state securities laws. The HUB Common Stock to be issued in
connection with the Merger shall have been approved for listing on the NYSE.
(b) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the FDIC, the Department, the FRB, the OCC, the SEC and (if
necessary) the DEP) required to consummate the transactions contemplated hereby
shall have been obtained without the imposition of any non-standard or
non-customary term or condition which would materially impair the value of SJBDI
and FAMNB, taken as a whole, to HUB. All conditions required to be satisfied
prior to the Effective Time by the terms of such approvals and consents shall
have been satisfied; and all statutory waiting periods in respect thereof
(including the Xxxx-Xxxxx-Xxxxxx waiting period if applicable) shall have
expired.
(c) Suits and Proceedings. No order, judgment or decree shall
be outstanding against a party hereto or a third party that would have the
effect of preventing completion of the Merger; no suit, action or other
proceeding shall be pending or threatened by any Governmental Entity in which it
is sought to restrain or prohibit the Merger; and no suit, action or other
proceeding shall be pending before any court or Governmental Entity in which it
is sought to restrain or prohibit the Merger or obtain other substantial
monetary or other relief against one or more parties hereto in connection with
this Agreement and which HUB or SJBDI determines in good faith, based upon the
advice of their respective counsel, makes it inadvisable to proceed with the
Merger because any such suit, action or proceeding has a significant potential
to be resolved in such a way as to deprive the party electing not to proceed of
any of the material benefits to it of the Merger.
(d) Tax Opinion. HUB and SJBDI shall each have received an
opinion, dated as of the Effective Time, of Pitney, Xxxxxx, Xxxx & Xxxxx,
reasonably satisfactory in form and substance to SJBDI and its counsel and to
HUB, based upon representation letters reasonably required by such counsel,
dated on or about the date of such opinion, and such other facts and
representations as such counsel may reasonably deem relevant, to the effect
that: (i) the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368 of the Code; (ii)
no gain or loss will be recognized by SJBDI; (iii) no gain or loss will be
recognized by the SJBDI shareholders upon the exchange of SJBDI Common Stock
solely for HUB Common Stock; (iv) the tax basis of any HUB Common Stock received
in exchange for SJBDI Common Stock shall equal the basis of the recipient's
SJBDI Common Stock surrendered in the exchange, reduced by the amount of cash
received, if any, in the exchange, and increased by the amount of the gain
recognized, if any, in the exchange (whether characterized as dividend or
capital gain income); and (v) the holding period for any HUB Common Stock
received in exchange for SJBDI Common Stock will include the period during which
SJBDI Common Stock surrendered in the exchange was held, provided such stock was
held as a capital asset on the date of the exchange.
(e) Pooling of Interests. HUB shall have received a letter,
dated the Closing Date, from its accountants, Xxxxxx Xxxxxxxx, reasonably
satisfactory to HUB and SJBDI, to the effect that, based on a review of this
Agreement and related agreements and the facts and circumstances known to it,
the Merger shall be qualified to be treated by HUB as a pooling-of-interests for
accounting purposes.
6.2. Conditions to the Obligations of HUB Under this
Agreement. The obligations of HUB under this Agreement shall be further subject
to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of Obligations
of SJBDI and FAMNB. Except for those representations which are made as of a
particular date, the representations and warranties of SJBDI contained in this
Agreement shall be true and correct in all material respects on the Closing Date
as though made on and as of the Closing Date, except to the extent waived
pursuant to Section 5.12 hereof. SJBDI shall have performed in all material
respects the agreements, covenants and obligations to be performed by it prior
to the Closing Date. With respect to any representation or warranty which as of
the Closing Date has required a supplement or amendment to the SJBDI Disclosure
Schedule to render such representation or warranty true and correct in all
material respects as of the Closing Date, the representation and warranty shall
be deemed true and correct as of the Closing Date only if (i) the information
contained in the supplement or amendment to the Disclosure Schedule related to
events occurring following the execution of this Agreement and (ii) the facts
disclosed in such supplement or amendment would not either alone, or together
with any other supplements or amendments to the SJBDI Disclosure Schedule,
materially adversely affect the representation as to which the supplement or
amendment relates.
(b) Opinion of Counsel. HUB shall have received an opinion of
counsel to SJBDI, dated the Closing Date, in form and substance reasonably
satisfactory to HUB, substantially to the effect set forth in accordance with
Exhibit 6.2(b) hereto.
(c) Certificates. SJBDI shall have furnished HUB with such
certificates of its officers or other documents to evidence fulfillment of the
conditions set forth in this Section 6.2 as HUB may reasonably request.
(d) Legal Fees. SJBDI shall have furnished HUB with letters
from all attorneys representing SJBDI and FAMNB in any matters confirming that
all material legal fees have been paid in full for services rendered as of the
Effective Time.
(e) Merger Related Expense. SJBDI shall have provided HUB with
an accounting of all merger related expenses incurred by it through the Closing
Date, including a good faith estimate of such expenses incurred but as to which
invoices have not been submitted as of the Closing Date. The merger related
expenses of SJBDI, other than printing expenses (which are within the control of
HUB), shall be reasonable, taking into account normal and customary billing
rates, fees and expenses for similar transactions.
(f) Non-Compete Agreements. Each of XxXxxxxxx, Sr. and
XxXxxxxxx, Jr. shall have executed and delivered to HUB the Non-Compete
Agreements as set forth in Section 5.11.
6.3. Conditions to the Obligations of SJBDI Under this
Agreement. The obligations of SJBDI under this Agreement shall be further
subject to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of Obligations
of HUB. Except for those representations which are made as of a particular date,
the representations and warranties of HUB contained in this Agreement shall be
true and correct in all material respects on the Closing Date as though made on
and as of the Closing Date, except to the extent waived pursuant to Section 5.12
hereof. HUB shall have performed in all material respects the agreements,
covenants and obligations to be performed by it prior to the Closing Date. With
respect to any representation or warranty which as of the Closing Date has
required a supplement or amendment to the HUB Disclosure Schedule to render such
representation or warranty true and correct in all material respects as of the
Closing Date, the representation and warranty shall be deemed true and correct
as of the Closing Date only if (i) the information contained in the supplement
or amendment to the Disclosure Schedule related to events occurring following
the execution of this Agreement and (ii) the facts disclosed in such supplement
or amendment would not either alone, or together with any other supplements or
amendments to the HUB Disclosure Schedule, materially adversely affect the
representation as to which the supplement or amendment relates.
(b) Opinion of Counsel to HUB. SJBDI shall have received an
opinion of counsel to HUB, dated the Closing Date, in form and substance
reasonably satisfactory to SJBDI, substantially to the effect set forth in
accordance with Exhibit 6.3(b) hereto.
(c) Fairness Opinion. SJBDI shall have received an opinion
from First Capital Group, LLC, dated no more than three days prior to the date
the Proxy Statement-Prospectus is mailed to SJBDI's shareholders (and if it
shall become necessary to resolicit proxies thereafter, dated no more than three
days prior to the date of any substantive amendment to the Proxy
Statement-Prospectus), to the effect that, in its opinion, the consideration to
be paid to shareholders of SJBDI hereunder is fair to such shareholders from a
financial point of view ("Fairness Opinion").
(d) Certificates. HUB shall have furnished SJBDI with such
certificates of its officers and such other documents to evidence fulfillment of
the conditions set forth in this Section 6.3 as SJBDI may reasonably request.
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. This Agreement may be terminated prior to
the Effective Time, whether before or after approval of this Agreement by the
shareholders of SJBDI:
(a) by mutual written consent of the parties hereto;
(b) by HUB or SJBDI (i) if the Effective Time shall not have
occurred on or prior to the Cutoff Date unless the failure of such occurrence
shall be due to the failure of the party seeking to terminate this Agreement to
perform or observe its agreements set forth herein to be performed or observed
by such party at or before the Effective Time, or (ii) if a vote of the
shareholders of SJBDI is taken and such shareholders fail to approve this
Agreement at the meeting (or any adjournment or postponement thereof) held for
such purpose (provided that the terminating party shall not be in material
breach of any of its obligations under Section 5.7 hereof), or (iii) if a vote
of the shareholders of HUB is required by NYSE rules, such vote is taken and
such shareholders fail to approve this Agreement at the meeting (or any
adjournment or postponement thereof) held for such purpose (provided that the
terminating party shall not be in material breach of any of its obligations
under Section 5.7 hereof);
(c) by HUB or SJBDI upon written notice to the other if any
application for regulatory or governmental approval necessary to consummate the
Merger and the other transactions contemplated hereby shall have been denied or
withdrawn at the request or recommendation of the applicable regulatory agency
or Governmental Entity or by HUB upon written notice to SJBDI if any such
application is approved with conditions (other than conditions which are
customary or standard in such regulatory approvals) which would materially
impair the value of SJBDI and FAMNB, taken as a whole, to HUB;
(d) by HUB if (i) there shall have occurred a SJBDI Material
Adverse Change from that disclosed by SJBDI in SJBDI's Annual Report on Form
10-K for the year ended December 31, 1998, which change shall have resulted in a
material adverse effect on SJBDI (it being understood that those matters
disclosed in the SJBDI Disclosure Schedule shall not be deemed to constitute
such a material adverse effect); or (ii) there was a material breach in any
representation, warranty, covenant, agreement or obligation of SJBDI hereunder
and such breach shall not have been remedied within 30 days after receipt by
SJBDI of notice in writing from HUB to SJBDI specifying the nature of such
breach and requesting that it be remedied;
(e) by SJBDI, if (i) there shall have occurred a HUB Material
Adverse Change from that disclosed by HUB in HUB's Annual Report on Form 10-K
for the year ended December 31, 1998, which change shall have resulted in a
material adverse effect on HUB (it being understood that those matters disclosed
in the HUB Disclosure Schedule shall not be deemed to constitute such a material
adverse effect); or (ii) there was a material breach in any representation,
warranty, covenant, agreement or obligation of HUB hereunder and such breach
shall not have been remedied within 30 days after receipt by HUB of notice in
writing from SJBDI specifying the nature of such breach and requesting that it
be remedied;
(f) by SJBDI, if SJBDI's Board of Directors shall have
approved an Acquisition Transaction after determining, upon advice of counsel,
that such approval was necessary in the exercise of its fiduciary obligations
under applicable laws;
(g) by HUB if the conditions set forth in Sections 6.1 and 6.2
are not satisfied and are not capable of being satisfied by the Cutoff Date;
(h) by SJBDI if the conditions set forth in Sections 6.1 and
6.3 are not satisfied and are not capable of being satisfied by the Cutoff Date;
or
(i) by HUB within the Due Diligence Period if HUB, if the due
diligence review by HUB causes HUB to reach a conclusion about the financial
condition, business, assets or the quality of the representations and warranties
of SJBDI or FAMNB, adverse from conclusions about the same matters which HUB's
senior executives held at the time HUB executed this Agreement; or
(j) by SJBDI, if (either before or after the approval of this
Agreement by the stockholders of SJBDI) its Board of Directors so determines by
a vote of a majority of the members of its entire Board, at any time during the
three business day period commencing with (and including) the Determination
Date, if both of the following conditions are satisfied:
(x) the Median Pre-Closing Price of HUB Common Stock
on the Determination Date (the "Determination Price"), is less than the HUB
Floor Price. The "HUB Floor Price" is 70% of the HUB Average Starting Date
Price. The "HUB Average Starting Date Price" is the average of the high and low
sale prices of HUB Common Stock on the trading day immediately preceding the
date hereof (the "Starting Date"), as the same shall be adjusted to reflect any
Capital Change; and
(y) (A) the quotient obtained by dividing the
Determination Price by the HUB Average Starting Date Price (the "HUB Ratio") is
less than (B) the quotient obtained by dividing the number calculated using the
index of financial institutions set forth on Exhibit A hereto (the "Index
Price") as of the close of business on the Determination Date by the Index Price
as of the close of business on the Starting Date and subtracting 0.20 from the
quotient in this clause (y)(B) (such number being referred to herein as the
"Index Ratio").
Notwithstanding the foregoing, if SJBDI elects to exercise its
termination right pursuant to this subsection (j), it shall give prompt written
notice to HUB (provided that such notice of election to terminate may be
withdrawn at any time within the aforementioned three business day period)).
During the two business day period commencing with its receipt of such notice,
HUB shall have the option of increasing the consideration to be received by the
holders of SJBDI Common Stock hereunder by increasing the Exchange Ratio to
equal the lesser of (i) a number (rounded to four decimals) equal to a quotient,
the numerator of which is the HUB Floor Price multiplied by the Exchange Ratio
(as then in effect) and the denominator of which is the Determination Price, and
(ii) a number (rounded to four decimals) equal to a quotient, the numerator of
which is the Index Ratio multiplied by the Exchange Ratio (as then in effect)
and the denominator of which is the HUB Ratio. If HUB makes an election
contemplated by the preceding sentence, within such two business day period, it
shall give prompt written notice to SJBDI of such election and the revised
Exchange Ratio, whereupon no termination shall have occurred pursuant to this
subsection (j) and this Agreement 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 subsection (j).
(k) by HUB during the Due Diligence Period if the due
diligence review by HUB causes HUB to reach a conclusion about the financial
condition, business, assets or the quality of the representations and warranties
of SJBDI or FAMNB, adverse from conclusions about the same matters which HUB's
senior executives held at the time HUB executed this Agreement.
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either HUB or SJBDI pursuant to Section
7.1, this Agreement (other than Section 5.5(b), the penultimate sentence of
Section 5.6(h), this Section 7.2 and Section 8.1) shall forthwith become void
and have no effect, without any liability on the part of any party or its
officers, directors or shareholders. Nothing contained herein, however, shall
relieve any party from any liability for any breach of this Agreement.
7.3. Amendment. This Agreement may be amended by action taken
by the parties hereto at any time before or after adoption of this Agreement by
the shareholders of SJBDI but, after any such adoption, no amendment shall be
made which reduces the amount or changes the form of the consideration to be
delivered to the shareholders of SJBDI without the approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of all the parties hereto.
7.4. Extension; Waiver. The parties may, at any time prior to
the Effective Time of the Merger, (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto; or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party against which the waiver is
sought to be enforced.
ARTICLE VIII - MISCELLANEOUS
8.1. Expenses.
(a) Except as otherwise expressly stated herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including legal, accounting and investment banking fees and
expenses) shall be borne by the party incurring such costs and expenses.
Notwithstanding the foregoing, SJBDI may bear the expenses of FAMNB.
(b) Notwithstanding any provision in this Agreement to the
contrary, in the event that either of the parties shall willfully default in its
obligations hereunder, the non-defaulting party may pursue any remedy available
at law or in equity to enforce its rights and shall be paid by the willfully
defaulting party for all damages, costs and expenses, including without
limitation legal, accounting, investment banking and printing expenses, incurred
or suffered by the non-defaulting party in connection herewith or in the
enforcement of its rights hereunder.
8.2. Survival. The respective representations, warranties,
covenants and agreements of the parties to this Agreement shall not survive the
Effective Time, but shall terminate as of the Effective Time, except for Article
II, this Section 8.2 and Sections 5.5(b), 5.8(a), 5.11 and 5.14.
8.3. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or by reputable overnight courier or sent by registered or certified
mail, postage prepaid, as follows:
(a) If to HUB, to:
Xxxxxx United Bancorp.
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Attn.: Xxxxxxx X. Xxxxxxx, Chairman, President and
Chief Executive Officer
Copy to:
Xxxxxx United Bancorp.
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Attn.: X. Xxxx Van Borkulo-Xxxxx, Esq.
And copy to:
Pitney, Xxxxxx, Xxxx & Xxxxx
(mail to) X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
(deliver to) 000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Attn.: Xxxxxx X. Xxxxx, Esq.
(b) If to SJBDI, to:
Southern Jersey Bancorp of Delaware, Inc.
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. XxXxxxxxx, Xx., Chairman and CEO
Copy to:
Block and Xxxxxxxx, P.C.
00000 Xxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Block, Esq.
or such other addresses as shall be furnished in writing by any party, and any
such notice or communications shall be deemed to have been given as of the date
actually received.
8.4. Parties in Interest; Assignability. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing in this Agreement is intended to
confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement except the Indemnitees described
in Section 5.14. This Agreement and the rights and obligations of the parties
hereunder may not be assigned. In the event HUB reorganizes or consolidates with
or merges into or enters into another business combination transaction with any
other person or entity and is not the resulting, continuing or surviving
corporation or entity of such consolidation, merger or transaction, then proper
provision shall be made so that such resulting, continuing or surviving
corporation or entity assumes the obligations of HUB in this Agreement.
8.5. Entire Agreement. This Agreement, which includes the
Disclosure Schedules hereto and the other documents, agreements and instruments
executed and delivered pursuant to or in connection with this Agreement,
contains the entire Agreement between the parties hereto with respect to the
transactions contemplated by this Agreement and supersedes all prior
negotiations, arrangements or understandings, written or oral, with respect
thereto, other than any confidentiality agreements entered into by the parties
hereto.
8.6. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
8.7. Governing Law. This Agreement shall be governed by the
laws of the State of New Jersey, without giving effect to the principles of
conflicts of laws thereof.
8.8. Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
8.9. Knowledge. Whenever the phrase "to the knowledge of
SJBDI" or another similar qualification is used herein, the relevant knowledge
shall refer to the actual knowledge of XxXxxxxxx Sr., XxXxxxxxx, Jr., and the
Chief Financial Officer of SJBDI. Whenever the phrase "to the knowledge of HUB"
or another similar qualification is used herein, the relevant knowledge shall
refer to the actual knowledge of HUB's Chief Executive Officer, Chief Financial
Officer and Senior Loan Officer.
IN WITNESS WHEREOF, HUB, the Bank, SJBDI and FAMNB have caused
this Agreement to be executed by their duly authorized officers as of the day
and year first above written.
ATTEST: XXXXXX UNITED BANCORP
XXXXXXXX X. XXXXXX X. XXXX VAN BORKULO-XXXXX
By: ________________________ By: ___________________________
Xxxxxxxx X. Xxxxxx X. Xxxx Van Borkulo-Xxxxx
Assistant Corporate Secretary Executive Vice-President
ATTEST: SOUTHERN JERSEY BANCORP
OF DELAWARE, INC.
XXXX X. XXXXXX XXXXXXXX X. XxXXXXXXX
By: ________________________ By: _________________________________
Xxxx X. Xxxxxx, III Xxxxxxxx X. XxXxxxxxx, Xx.
Assistant Secretary Chairman and CEO
ATTEST: XXXXXX UNITED BANK
XXXXXXXX X. XXXXXX X. XXXX VAN BORKULO-XXXXX
By: ________________________ By: _________________________________
Xxxxxxxx X. Xxxxxx X. Xxxx Van Borkulo-Xxxxx
Assistant Corporate Secretary Executive Vice-President
ATTEST: FARMERS AND MERCHANT
NATIONAL BANK
XXXX X. XXXXXX XXXXXXXX X. XxXXXXXXX
By: ________________________ By: _________________________________
Xxxx X. Xxxxxx, III Xxxxxxxx X. XxXxxxxxx, Xx.
Assistant Secretary Chairman
Exhibit A to
Merger Agreement
Index
------------------------------------------------- ------------------------------
Company Name Ticker
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Carolina First CAFC
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Centura Banks CBC
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Commerce Bancorp CBH
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Commercial Federal CFB
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Community First Bank CFBX
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Cullen/Frost CFR
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
First Bancorp FBP
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
First Midwest FMBI
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
FirstMerit Corp. FMER
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Premier Bancshs PMB
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Provident Bancshs PBKS
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Xxxxx National Corp RIGS
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Silicon Val Bkshrs SIVB
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Susquehan Bkshs SUSQ
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Trust Co Bank NY TRST
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
United Bancshares UBSI
------------------------------------------------- ------------------------------
------------------------------------------------- ------------------------------
Whitney Hldg WTNY
------------------------------------------------- ------------------------------
The "Index Price" is determined by adding the price per common share of each of
the companies listed above on the appropriate date (i.e., the Starting Date or
the Determination Date, as the case nay be). If any company belonging to the
Index Group declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares, or similar
transaction between the Starting Date and the Determination Date, the price per
share of the common stock of such company on the Determination Date shall be
appropriately adjusted.
If, at any time after the Starting Date and before the Determination Date, the
common stock of any company on this Exhibit A ceases to be publicly traded or
any public announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization, such company shall
be removed from the Index Group effective as of the Starting Date (i.e., such
Company shall not be considered part of the Index Group for any purposes in
connection with this Merger Agreement).
EXHIBIT 5.19-1
FORM OF AFFILIATE LETTER FOR SJBDI AFFILIATES
_____________, 1999
Xxxxxx United Bancorp
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Gentlemen:
I am delivering this letter to you in connection with the
proposed acquisition (the "Merger") of SJBDI, a Delaware corporation and
registered bank holding company ("SJBDI"), by Xxxxxx United Bancorp, a New
Jersey corporation and registered bank holding company ("HUB"), pursuant to the
Agreement and Plan of Merger dated as of June 28 1999 (the "Agreement") between
SJBDI, and its wholly-owned subsidiary FAMNB, HUB and its bank subsidiary Xxxxxx
United Bank. Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Agreement. I currently own shares of SJBDI
Common Stock. As a result of the Merger, I will receive shares of HUB Common
Stock in exchange for my SJBDI Common Stock.
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of SJBDI, as the term "affiliate" is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations
promulgated under the Securities Act of 1933, as amended (the "1933 Act") by the
Securities and Exchange Commission ("SEC") and as the term "affiliate" is used
for purposes of the SEC's rules and regulations applicable to the determination
of whether a merger can be accounted for as a "pooling of interests" as
specified in the SEC's Accounting Series Release 135, as amended by Staff
Accounting Bulletins Nos. 65 and 76 ("ASR 135").
I represent to and agree with HUB that:
A. Transfer Review Restrictions. During the period beginning
on the date hereof and ending 30 days prior to the consummation of the Merger, I
shall not sell, transfer, reduce my risk with respect to or otherwise dispose of
("transfer") any SJBDI Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity who or which I control, to
transfer any SJBDI Common Stock owned by such person or entity, without
notifying HUB three business days in advance of the proposed transfer (the
"Notice Period") and giving HUB a reasonable opportunity to review the transfer
before it is consummated. HUB, if advised to do so by its independent public
accountants in writing a copy of which is provided to me, may instruct me prior
to the end of the Notice Period not to make or permit the transfer because it
may interfere with the "pooling of interests" treatment of the Merger. I shall
abide by any such instructions.
B. Transfer Restrictions During Merger Consummation Period. I
shall not transfer any SJBDI Common Stock owned by me, and I shall not permit
any relative who shares my home, or any person or entity who or which I control,
to transfer any SJBDI Common Stock owned by such person or entity during the
period beginning 30 days prior to the consummation of the Merger and ending
immediately after financial results covering at least 30 days of post-Merger
combined operations have been published by HUB by means of the filing of a Form
10-Q, Form 10-K or Form 8-K under the Securities Exchange Act of 1934, as
amended, the issuance of a quarterly earnings report, or any other public
issuance which satisfies the requirements of ASR 135, in each case except for
transfers by operation of law, by will or under the laws of descent and
distribution. For purposes of this paragraph only, "SJBDI Common Stock" includes
HUB Common Stock as converted. I understand that HUB has agreed to publish
financial results covering at least 30 days of post-Merger combined operations
of HUB and SJBDI as soon as practicable (but in no event later than 30 days)
following the close of the first calendar month ending 30 days after the
Effective Time.
C. Compliance with Rule 145. I have been advised that the
issuance of HUB Common Stock to me pursuant to the Merger will be registered
with the SEC under the 1933 Act on a Registration Statement on Form S-4.
However, I have also been advised that, since I may be deemed to be an affiliate
of SJBDI at the time the Merger is submitted for a vote of SJBDI's shareholders,
any transfer by me of HUB Common Stock is restricted under Rule 145 promulgated
by the SEC under the 1933 Act. I agree not to transfer any HUB Common Stock
received by me or any of my affiliates unless (i) such transfer is made in
conformity with the volume and other limitations of Rule 145 promulgated by the
XXX xxxxx xxx 0000 Xxx, (xx) in the opinion of HUB's counsel or counsel
reasonably acceptable to HUB, such transfer is otherwise exempt from
registration under the 1933 Act or (iii) such transfer is registered under the
1933 Act.
D. Stop Transfer Instructions; Legend on Certificates. I also
understand and agree that stop transfer instructions will be given to HUB's
transfer agents with respect to the HUB Common Stock received by me and any of
my affiliates and that there will be placed on the certificates of the HUB
Common Stock issued to me and any of my affiliates, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED AS OF
MARCH 31, 1998 BETWEEN THE REGISTERED HOLDER HEREOF AND XXXXXX UNITED
BANCORP, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES
OF XXXXXX UNITED BANCORP"
E. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUB Common Stock to the
extent I felt necessary with my counsel or counsel for SJBDI.
Execution of this letter is not an admission on my part that I
am an "affiliate" of SJBDI as described in the second paragraph of this letter,
or a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-----------------------------
Name:
Accepted this _____
day of _______, 1999 by
XXXXXX UNITED BANCORP
By: ______________________________
Name:
Title:
EXHIBIT 5.19-2
FORM OF AFFILIATE LETTER FOR HUB AFFILIATES
_______________, 1999
Xxxxxx United Bancorp
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of SJBDI, a Delaware corporation and registered
bank holding company, ("SJBDI") with and into Xxxxxx United Bancorp, a New
Jersey corporation and registered bank holding company ("HUB"), pursuant to the
Agreement and Plan of Merger dated as of June 28,1999 (the "Agreement") between
SJBDI, its subsidiaries, HUB and its bank subsidiary.
I currently own shares of HUB's common stock, no par value ("HUB Common Stock").
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of HUB, as the term "affiliate" is used for
purposes of the rules and regulations of the Securities and Exchange Commission
(the "SEC") applicable to the determination of whether a merger can be accounted
for as a "pooling of interests" as specified in the SEC's Accounting Series
Release 135, as amended by Staff Accounting Bulletins Nos.
65 and 76 ("ASR 135").
I represent and covenant with HUB and SJBDI that:
A. Transfer Restrictions Prior to Merger Consummation. During
the period beginning on the date hereof and ending 30 days prior to the
consummation of the Merger, I shall not sell, transfer, reduce my risk with
respect to or otherwise dispose of ("transfer") any HUB Common Stock owned by
me, and I shall not permit any relative who shares my home, or any person or
entity who or which I control, from transferring any HUB Common Stock owned by
such person or entity, without notifying HUB three business days in advance of
the proposed transfer (the "Notice Period") and giving HUB a reasonable
opportunity to object to the transfer before it is consummated. HUB, upon advice
of its independent public accountants, may instruct me prior to the end of the
Notice Period not to make or permit the transfer because it may interfere with
the "pooling of interests" treatment of the Merger. I shall abide by any such
instructions.
B. Post-Consummation Transfer Restrictions. During the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by HUB by means of filing of a Form 10-Q or Form
8-K under the Securities Exchange Act of 1934, the issuance of a quarterly
earnings report, or any other public issuance which satisfies the requirements
of ASR 135, I shall not transfer any HUB Common Stock owned by me, and I shall
not permit any relative who shares my home, or any person or entity who or which
I control, to transfer any HUB Common Stock owned by such person or entity, in
each case except for transfers by operation of law, by will or under the laws of
descent and distribution. I understand that HUB has agreed to publish financial
results covering at least 30 days of post-Merger combined operations of HUB and
SJBDI as soon as practicable (but in no event later than 30 days) following the
close of the first calendar month ending 30 days after the Effective Time.
C. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUB Common Stock to the
extent I felt necessary with my counsel or counsel for HUB.
Execution of this letter is not an admission on my part that I
am an "affiliate" of HUB as described in the second paragraph of this letter, or
a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-------------------------------------
Name:
Title:
Accepted this ____ day of
________________, 1999 by
XXXXXX UNITED BANCORP
By: ________________________________
Name:
Title:
EXHIBIT 6.2
FORM OF OPINION OF COUNSEL TO SJBDI
TO BE DELIVERED TO HUB ON THE EFFECTIVE TIME
(a) The execution and delivery of the Agreement and the
consummation of the transactions contemplated thereunder have been duly and
validly authorized by all necessary corporate action on the part of SJBDI and
FAMNB, and the Agreement constitutes a valid and legally binding obligation of
SJBDI and FAMNB enforceable in accordance with its terms, except as may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship, and other laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or the rights of
creditors of national banks or their holding companies, (ii) general equitable
principles, (iii) laws relating to the safety and soundness of insured
depository institutions, and (iv) implied covenants of good faith, fair dealing
and commercially reasonable conduct and by applicable public policies and laws,
and except that no opinion need be rendered as to the effect or availability of
equitable remedies or injunctive relief (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) Subject to satisfaction of the conditions set forth in the
Agreement, neither the transactions contemplated in the Agreement, nor
compliance by SJBDI and FAMNB with any of the provisions thereof, will (i)
conflict with or result in a breach or default under (A) the certificate of
incorporation or bylaws of SJBDI or the charter or bylaws of FAMNB, or (B) based
on certificates of officers of SJBDI and FAMNB and without independent
verification, to the actual knowledge of such counsel, any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which SJBDI
or FAMNB is a party and which was referenced in the SJBDI Disclosure Schedule;
or (ii) to the actual knowledge of such counsel, result in the creation or
imposition of any material lien, instrument or encumbrance upon the property of
SJBDI or FAMNB, except such material lien, instrument or obligation that has
been disclosed to HUB pursuant to the Agreement, or (iii) violate in any
material respect any order, writ, injunction, or decree known to such counsel,
or any corporation or banking law applicable to SJBDI or FAMNB.
(c) SJBDI is a corporation validly existing under the laws of
Delaware, FAMNB is a validly existing bank under the laws of and each of SJBDI
and FAMNB has the corporate power and authority to own or lease all of its
properties and assets and to conduct the business in which it is currently
engaged as described on pages __ and __ under the caption
"_____________________" in the Proxy Statement-Prospectus. The deposits of FAMNB
are insured to the maximum extent provided by law by the Federal Deposit
Insurance Corporation.
(d) Each SJBDI Subsidiary listed as such in the SJBDI
Disclosure Schedule is validly existing under the laws of the jurisdiction of
its incorporation.
(e) There is, to the actual knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or investigation
pending or threatened to which SJBDI or FAMNB is a party which would, if
determined adversely to SJBDI or FAMNB, have a material adverse effect on the
business, properties, results of operations, or condition, financial or
otherwise, of SJBDI and FAMNB taken as a whole or which presents a claim to
restrain or prohibit the transactions contemplated by the Agreement, except any
proceeding or investigation disclosed to HUB.
(f) All actions of the directors and shareholders of SJBDI and
FAMNB required by federal banking laws and regulations, Delaware law or New
Jersey law or by the Certificate of Incorporation or Bylaws of SJBDI or FAMNB,
to be taken by SJBDI or FAMNB to authorize the execution, delivery and
performance of the Agreement and consummation of the Merger have been taken.
(g) No consent, approval, authorization, or order of any
federal or state court or federal or state banking or securities agency or body,
or to such counsel's actual knowledge based on certificates of officers of SJBDI
and FAMNB and without independent verification, of any third party under any
note, bond, mortgage, indenture, license, agreement or other instrument referred
to in the SJBDI Disclosure Schedule, is required for the consummation by SJBDI
or FAMNB of the transactions contemplated by the Agreement, except for such
consents, approvals, authorizations or orders as have been obtained or which
would not have a material adverse effect upon HUB upon consummation of the
Merger.
In addition to the foregoing opinions, counsel shall state that on the
sole basis of such counsel's participation in conferences with officers and
employees of SJBDI 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, notes to financial statements, financial schedules and
other financial or statistical data and stock valuation information contained or
incorporated by reference therein and except for any information supplied by HUB
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 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
connection with the foregoing 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 SJBDI or FAMNB or the transactions contemplated in
the Agreement and that it is relying as to materiality as to factual matters on
certificates of officers and representatives of the parties to the Agreement and
other factual representations by SJBDI and FAMNB.
Such counsel's opinion shall be limited to matters governed by
the corporate laws of the State of Delaware and the federal securities and
banking laws and regulations of the United States of America.
EXHIBIT 6.3
FORM OF OPINION OF COUNSEL TO HUB
TO BE DELIVERED TO SJBDI ON THE EFFECTIVE TIME
(a) HUB is a corporation validly existing under the laws of
the State of New Jersey, the Bank is a validly existing New Jersey
state-chartered commercial banking corporation under the laws of the State of
New Jersey and each of HUB and the Bank has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business as
described in the Proxy Statement-Prospectus on pages __ and __ under the caption
"_________________________." HUB is registered as a bank holding company under
the BHCA.
(b) The authorized capital stock of HUB consists of
____________ shares of common stock, no par value per share ("HUB Common Stock")
and _____________ shares of preferred stock (the "Authorized Preferred Stock).
The HUB Common Stock to be issued in connection with the Merger in accordance
with Article II of the Agreement, when so issued in accordance therewith, will
be duly authorized, validly issued, fully paid and non-assessable, free of
preemptive rights and free and clear of all liens, encumbrances or restrictions
created by HUB.
(c) The execution and delivery of the Agreement and the
consummation of the transactions contemplated thereunder have been duly and
validly authorized by all necessary corporate action on the part of HUB and the
Bank, and the Agreement constitutes a valid and legally binding obligation of
HUB and the Bank enforceable in accordance with its terms, except as may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship, and other laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or the rights of
creditors of New Jersey chartered banks or their holding companies, (ii) general
equitable principles, (iii) laws relating to the safety and soundness of insured
depository institutions, and (iv) implied covenants of good faith, fair dealing
and commercially reasonable conduct and by applicable public policies and laws,
and except that no opinion need be rendered as to the effect or availability of
equitable remedies or injunctive relief (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) Subject to satisfaction of the conditions set forth in the
Agreement, neither the transactions contemplated in the Agreement, nor
compliance by HUB and the Bank with any of the provisions thereof, will (i)
conflict with or result in a breach or default under (A) the certificate of
incorporation or bylaws of HUB or the Bank or (B) based on certificates of
officers of HUB and the Bank and without independent verification, to the actual
knowledge of such counsel, any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which HUB or the Bank is a party
and which was referenced in the HUB Disclosure Schedule; or (ii) violate in any
material respect any order, writ, injunction, or decree known to such counsel,
or any corporation or banking law applicable to HUB or the Bank.
(e) All actions of the directors and shareholders of HUB and
the Bank required by federal banking laws and regulations and New Jersey law or
by the Certificate of Incorporation or Bylaws of HUB and the Bank, to be taken
by HUB and the Bank to authorize the execution, delivery and performance of the
Agreement and consummation of the Merger have been taken.
(f) Assuming that there has been due authorization of the
Merger by all necessary corporate and governmental proceedings on the part of
SJBDI and that SJBDI has taken all action required to be taken by it prior to
the Effective Time, upon the appropriate filing of the Certificate of Merger in
respect of the Merger with the Department of Treasury of the State of New Jersey
and the Delaware Secretary of State in accordance with Section 1.6 of the
Agreement, the Merger will become effective at the Effective Time, as such term
is defined in Section 1.6, and upon effectiveness of the Merger each share of
SJBDI Common Stock will be converted as provided in Article II of the Agreement.
(g) No approvals, authorizations, consents or other actions or
filings under federal banking law or New Jersey law ("Approvals") are required
to be obtained by HUB or the Bank in order to permit the execution and delivery
of the Agreement by HUB or the Bank and the performance by HUB or the Bank of
the transactions contemplated thereby other than those Approvals which have been
obtained or those Approvals or consents required to be obtained by SJBDI.
(h) The Registration Statement has been declared effective by
the Securities and Exchange Commission ("SEC") under the 1933 Act and we are not
aware that any stop order suspending the effectiveness has been issued under the
1933 Act or proceedings therefor initiated or threatened by the SEC.
(i) There is, to the actual knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or investigation
pending or threatened to which HUB or the Bank is a party which would, if
determined adversely to HUB or the Bank, have a material adverse effect on the
business, properties, results of operations, or condition, financial or
otherwise, of HUB and the Bank taken as a whole or which presents a claim to
restrain or prohibit the transactions contemplated by the Agreement, except any
proceeding or investigation disclosed to SJBDI.
In addition to the foregoing opinions, counsel shall state
that on the sole basis of such counsel's participation in conferences with
officers and employees of HUB 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, notes to financial statements,
financial schedules and other financial or statistical data and stock valuation
information contained or incorporated by reference therein and except for any
information supplied by SJBDI 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 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 connection with the foregoing 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 HUB or the Bank or the
transactions contemplated in the Agreement and that it is relying as to
materiality as to factual matters on certificates of officers and
representatives of the parties to the Agreement and other factual
representations by HUB and the Bank.
Such counsel's opinion shall be limited to matters governed by
the corporate and banking laws of the State of New Jersey and the federal
securities and banking laws and regulations of the United States of America.
