AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST o, 2000
REGISTRATION NO. [333- ]
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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QUEENS COUNTY BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 6712 06-1377322
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification Number)
38-25 MAIN STREET
FLUSHING, NEW YORK 11354
(718) 359-6400
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
------------------------------------
JOSEPH R. FICALORA
38-25 MAIN STREET
FLUSHING, NEW YORK 11354
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
------------------------------------
Copies to:
MARK J. MENTING, ESQ. OMER S. J. WILLIAMS, ESQ.
SULLIVAN & CROMWELL THACHER PROFFITT & WOOD
125 BROAD STREET TWO WORLD TRADE CENTER, 39TH FLOOR
NEW YORK, NEW YORK 10004 NEW YORK, NEW YORK 10048
(212) 558-4000 (212) 912-7400
------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
------------------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM
OFFERING PRICE PROPOSED
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT PER SHARE OF MAXIMUM AGGREGATE AMOUNT OF
REGISTERED TO BE REGISTERED COMMON STOCK OFFERING PRICE REGISTRATION FEE
Common stock, par value $0.01 per share, 10,120,130 (2) N/A $225,805,400.63 $59,613 (3)
together with Preferred Stock Purchase
Rights, if any (1)
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<FN>
(1) As of the date hereof, rights to purchase Series A Junior Participating Preferred Stock issued pursuant to the Rights
Agreement, dated as of January 16, 1996, between Queens and ChaseMellon Shareholder Services, LLC, as Rights Agent, (the
"Rights") are attached to and trade with the common stock, par value $0.01 per share of Queens County Bancorp, Inc. The value of
the attributable Rights, if any, is reflected in the market price of Queens common stock.
(2) Represents maximum number of shares of Queens common stock, including associated Rights, estimated to be issuable upon the
consummation of the merger of Haven Bancorp, Inc. ("Haven"), a Delaware corporation, with and into Queens County Bancorp, Inc.
("Queens"), a Delaware corporation, based on the number of shares of Haven common stock, par value $0.01 per share, outstanding,
or reserved for issuance under various plans, immediately prior to the merger and the exchange of each such share of Haven
common stock for 1.04 shares of Queens common stock.
(3) Pursuant to Rules 457 (f) and 457 (c) under the Securities Act of 1933, as amended, the registration fee is based on the
average of the high and low sales prices of Haven common stock, as reported on the NASDAQ National Market System on July 26,
2000, and computed based on the estimated maximum number of such shares that may be exchanged for the Queens common stock being
registered.
</FN>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
[QUEENS LETTERHEAD] [HAVEN LETTERHEAD]
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The boards of directors of Haven Bancorp, Inc. and Queens County
Bancorp, Inc. have unanimously approved a merger agreement that provides for the
merger of Haven with and into Queens, with Queens as the surviving corporation.
This transaction provides Haven and Queens stockholders with growth and
opportunities that would not have been available on a stand alone basis.
IN THE MERGER, HAVEN STOCKHOLDERS WILL RECEIVE 1.04 SHARES OF QUEENS
COMMON STOCK FOR EACH SHARE OF HAVEN COMMON STOCK. THE IMPLIED VALUE OF ONE
SHARE OF HAVEN COMMON STOCK ON AUGUST O, 2000, THE LAST PRACTICABLE TRADING DATE
BEFORE THE DISTRIBUTION OF THIS DOCUMENT, WAS [$O], BASED ON THE CLOSING PRICE
OF QUEENS COMMON STOCK ON THAT DATE AS REPORTED ON THE NASDAQ NATIONAL MARKET,
WHERE SHARES OF QUEENS COMMON STOCK ARE LISTED UNDER THE SYMBOL "QCSB". This
value will fluctuate prior to completion of the merger and, if you are a Haven
stockholder, you will not know the value of what you will receive in the merger
when you vote.
After completion of the merger, we expect that current Queens
stockholders will own approximately 68% of the combined company and Haven
stockholders will own approximately 32% of the combined company.
In order to complete our merger, the boards of directors of Haven and
Queens have each called special meetings of stockholders to be held on September
[o], 2000 at [10:00 a.m.], local time, at which Haven stockholders will be
asked to approve and adopt the merger agreement and Queens stockholders will be
asked to approve and adopt the merger agreement and to approve an amendment to
the Queens certificate of incorporation which will effect a change of the name
of Queens County Bancorp, Inc. to "New York Community Bancorp, Inc." Approval of
the amendment to Queens' certificate of incorporation is not a condition to
completing the merger, but approving and adopting the merger agreement will
result in the name change being effected anyway.
YOUR VOTE IS IMPORTANT. We cannot complete the merger unless we receive
the necessary approvals from our stockholders at the stockholders' meetings.
Whether or not you plan to attend your stockholders' meeting, please take the
time to submit your proxy with voting instructions in accordance with the
instructions contained in this document. The places, dates and times of the
special meetings are as follows:
FOR HAVEN STOCKHOLDERS: FOR QUEENS STOCKHOLDERS:
September [26], 2000 September [26], 2000
10:00 a.m., local time 10:00 a.m., local time
o o
o o
o, New York o, New York
This document describes the stockholder meetings, the merger, the
documents related to the merger and other related matters. PLEASE READ THIS
ENTIRE DOCUMENT CAREFULLY.
Philip S. Messina Joseph R. Ficalora
Chairman and Chief Chairman, President and
Executive Officer Chief Executive Officer
Haven Bancorp, Inc. Queens County Bancorp, Inc.
Queens common stock is quoted on the Nasdaq National Market under the
symbol "QCSB." Haven common stock is quoted on the Nasdaq National Market under
the symbol "HAVN." Queens common stock will be quoted on the Nasdaq National
Market after the merger under the symbol "NYCB".
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE QUEENS STOCK TO BE ISSUED IN THE
MERGER AND UNDER THIS PROXY STATEMENT/PROSPECTUS OR DETERMINED IF THIS PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE SHARES OF QUEENS STOCK TO BE ISSUED IN THE MERGER ARE NOT SAVINGS OR DEPOSIT
ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
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The date of this Joint Proxy Statement/Prospectus is August o, 2000,
and it is first being mailed or otherwise delivered to Queens stockholders and
Haven stockholders on or about August o, 2000.
HAVEN BANCORP, INC.
615 MERRICK AVENUE
WESTBURY, NEW YORK 11590
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of Haven Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of Haven stockholders
will be held at o, New York at [10:00] a.m. on September [26], 2000. The purpose
of the Haven special meeting is to consider and to vote upon the following
matters:
o a proposal to approve and adopt the Agreement and Plan of Merger,
dated as of June 27, 2000, between Queens County Bancorp, Inc. and
Haven Bancorp, Inc., pursuant to which Haven will be merged with and
into Queens; and
o such other business as may properly come before the special meeting of
stockholders or any adjournment or postponement thereof.
In the merger, Queens will be the surviving corporation, and it will
change its name to New York Community Bancorp, Inc.. You will receive 1.04
shares of Queens stock for each share of Haven stock that you own. Your
attention is directed to the proxy statement/prospectus accompanying this notice
for a complete discussion of the merger. A copy of the merger agreement is
included as Appendix A to the accompanying joint proxy statement/prospectus.
The Haven board of directors has fixed the close of business on August
[9], 2000 as the record date for the Haven special meeting, and only Haven
stockholders of record at such time will be entitled to notice of and to vote at
the Haven special meeting or any adjournment or postponement thereof. In order
for the merger agreement to be adopted, the holders of a majority of the Haven
shares outstanding and entitled to vote thereon on the record date must vote in
favor of the merger agreement. THEREFORE, YOUR VOTE IS VERY IMPORTANT. A
complete list of Haven stockholders entitled to vote at the Haven special
meeting will be made available for inspection by any Haven stockholder for ten
days prior to the Haven special meeting at the principal executive offices of
Haven and at the time and place of the Haven special meeting.
All Haven stockholders entitled to notice of, and to vote at, the Haven
special meeting are cordially invited to attend the special meeting. HOWEVER, TO
ENSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, PLEASE SUBMIT YOUR PROXY WITH
VOTING INSTRUCTIONS. YOU MAY SUBMIT YOUR PROXY WITH VOTING INSTRUCTIONS BY MAIL
IF YOU PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN
THE ENCLOSED SELF-ADDRESSED, STAMPED ENVELOPE. This will not prevent you from
voting in person, but it will help to secure a quorum and avoid added
solicitation costs. Any holder of Haven common stock who is present at the Haven
special meeting may vote in person instead of by proxy, thereby canceling any
previous proxy. In any event, a proxy may be revoked in writing at any time
before the Haven special meeting.
HAVEN'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND ADOPTED THE
MERGER AGREEMENT AND RECOMMENDS THAT HAVEN STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE MERGER AGREEMENT.
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Your Vote Is Important. Please Complete, Sign, Date and Return Your
Proxy Card Promptly, Whether or Not You Plan to Attend the Special Meeting.
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BY ORDER OF THE BOARD OF DIRECTORS,
Mark A. Ricca, Esq.
Corporate Secretary
Westbury, New York
August o, 2000
QUEENS COUNTY BANCORP, INC.
38-25 MAIN STREET
FLUSHING, NEW YORK 11354
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of Queens County Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of Queens stockholders
will be held at o, New York at [10:00] a.m., on September [26], 2000. The
purpose of the Queens special meeting is to consider and to vote upon the
following matters:
o a proposal to approve and adopt the Agreement and Plan of Merger,
dated as of June 27, 2000, between Queens County Bancorp, Inc. and
Haven Bancorp, Inc., pursuant to which Haven will be merged with and
into Queens;
o a proposal to amend the Queens certificate of incorporation to change
the name of Queens County Bancorp, Inc. to "New York Community
Bancorp, Inc."; and
o such other business as may properly come before the Queens special
meeting or any adjournment or postponement thereof.
In the merger, Queens will be the surviving corporation, and it will
change its name to "New York Community Bancorp, Inc." Your attention is directed
to the joint proxy statement/prospectus accompanying this notice for a complete
discussion of the merger. A copy of the merger agreement is included as Appendix
A to the accompanying proxy statement/prospectus.
The Queens board of directors has fixed the close of business on August
[9], 2000 as the record date for the Queens special meeting, and only Queens
stockholders of record at such time will be entitled to receive notice of and to
vote at the special meeting or any adjournment or postponement thereof. In order
for the merger agreement to be adopted, and the amendment effecting the
corporate name change to be approved, a majority of the shares of Queens stock
outstanding and entitled to vote thereon on the record date must be voted in
favor of the merger agreement and in favor of the corporate name change,
respectively. THEREFORE, YOUR VOTE IS VERY IMPORTANT. A complete list of Queens
stockholders entitled to vote at the Queens special meeting will be made
available for inspection by any Queens stockholder for ten days prior to the
Queens special meeting at the principal executive offices of Queens and at the
time and place of the Queens special meeting.
All Queens stockholders entitled to notice of, and to vote at, the
Queens special meeting are cordially invited to attend the Queens special
meeting in person. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE SPECIAL
MEETING, PLEASE SUBMIT YOUR PROXY WITH VOTING INSTRUCTIONS. YOU MAY SUBMIT YOUR
PROXY WITH VOTING INSTRUCTIONS BY MAIL IF YOU PROMPTLY COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED SELF-ADDRESSED, STAMPED
ENVELOPE. This will not prevent you from voting in person, but it will help to
secure a quorum and avoid added solicitation costs. Any holder of Queens common
stock who is present at the Queens special meeting may vote in person instead of
by proxy, thereby canceling any previous proxy. In any event, a proxy may be
revoked in writing at any time before the Queens special meeting.
THE QUEENS BOARD OF DIRECTORS HAS UNANIMOUSLY ADOPTED THE MERGER
AGREEMENT AND RECOMMENDS THAT QUEENS STOCKHOLDERS VOTE "FOR" APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT. THE QUEENS BOARD OF DIRECTORS HAS ALSO
UNANIMOUSLY ADOPTED A RESOLUTION SETTING FORTH THE PROPOSED CORPORATE NAME
CHANGE AND RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE AMENDMENT TO THE QUEENS
CERTIFICATE OF INCORPORATION.
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Your Vote Is Important. Please Complete, Sign, Date and Return Your
Proxy Card Promptly, Whether or Not You Plan to Attend the Special Meeting.
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BY ORDER OF THE BOARD OF DIRECTORS,
Michael J. Lincks
Corporate Secretary
Flushing, New York
August o, 2000
TABLE OF CONTENTS [PROVISIONAL]
PAGE
QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE SPECIAL MEETINGS......................................... 1
SUMMARY........................................................................................................ 3
Information about the Companies................................................................................ 3
Comparative Market Prices and Share Information ............................................................... 4
Our Reasons for the Merger .................................................................................... 4
Queens' Board of Directors Recommends Stockholder Approval..................................................... 4
Queens' Financial Advisor Says the Haven Exchange Ratio Is Fair, from a Financial Point of View, to Queens..... 4
Queens to Hold Special Meeting................................................................................. 5
Accounting Treatment........................................................................................... 7
Amendment to Queens Certificate of Incorporation; Comparison of Queens and Haven Stockholders Rights;
Haven Stockholder Rights to be Governed by New Governing Documents............................................. 8
Queens and Haven Stockholder Rights Agreements................................................................. 8
Queens Stock to be Accompanied by Stockholder Protection Rights................................................ 8
Regulatory Approvals We Must Obtain for the Merger............................................................. 8
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF QUEENS...................................................... 10
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF HAVEN....................................................... 12
SELECTED CONSOLIDATED PRO FORMA FINANCIAL DATA................................................................. 14
COMPARATIVE PER SHARE DATA..................................................................................... 16
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS..................................................................................... 18
THE QUEENS SPECIAL MEETING..................................................................................... 19
Matters to Be Considered....................................................................................... 19
Proxies........................................................................................................ 19
Solicitation of Proxies........................................................................................ 20
Record Date.................................................................................................... 20
Voting Rights and Vote Required................................................................................ 20
Recommendation of the Board of Directors....................................................................... 20
THE HAVEN SPECIAL MEETING...................................................................................... 22
Matters to Be Considered....................................................................................... 22
Proxies........................................................................................................ 22
Solicitation of Proxies........................................................................................ 23
Record Date.................................................................................................... 23
Voting Rights and Vote Required................................................................................ 23
Recommendation of the Board of Directors....................................................................... 24
INFORMATION ABOUT THE COMPANIES................................................................................ 25
THE MERGER..................................................................................................... 27
General........................................................................................................ 27
Background to the Merger....................................................................................... 28
Opinion of Financial Advisors -- Haven......................................................................... 31
Queens' Reasons for the merger; Recommendation of Queens' Board of Directors................................... 36
Additions to the Board and Management of Queens, Queens County Savings Bank and CFS Bank....................... 45
Distribution of Queens Certificates............................................................................ 46
Fractional Shares.............................................................................................. 46
Resales of Queens Stock by Affiliates.......................................................................... 47
i
Regulatory Approvals Required for the Merger................................................................... 48
Interests of Directors and Management in the Merger............................................................ 48
THE MERGER AGREEMENT........................................................................................... 52
Terms of the Merger............................................................................................ 52
Closing and Effective Time of the Merger....................................................................... 52
Representations and Warranties................................................................................. 52
Covenants and Agreements....................................................................................... 53
Conditions to Consummation of the Merger....................................................................... 56
Possible Alternative Merger Structure.......................................................................... 57
Amendment, Waiver and Termination of the Merger Agreement...................................................... 57
AMENDMENT TO CERTIFICATE OF INCORPORATION OF QUEENS............................................................ 60
THE STOCK OPTION AGREEMENT..................................................................................... 61
General........................................................................................................ 61
Purpose of the Stock Option Agreement.......................................................................... 61
Exercise; Expiration........................................................................................... 61
Queens' Rights Under the Stock Option Agreement................................................................ 62
ACCOUNTING TREATMENT........................................................................................... 64
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER......................................................... 65
DESCRIPTION OF QUEENS CAPITAL STOCK........................................................................... 67
General........................................................................................................ 67
Common Stock................................................................................................... 67
Preferred Stock................................................................................................ 68
RIGHTS AGREEMENTS.............................................................................................. 69
Queens Stockholder Protection Rights Agreement................................................................. 69
Haven Rights Agreement......................................................................................... 69
COMPARISON OF STOCKHOLDERS' RIGHTS............................................................................. 71
General........................................................................................................ 71
Comparison of Stockholders' Rights............................................................................. 71
DISCUSSION OF ANTI-TAKEOVER PROTECTION IN QUEENS' CERTIFICATE OF
INCORPORATION AND BY-LAWS...................................................................................... 76
General........................................................................................................ 76
Authorized Stock............................................................................................... 76
Classification of Board of Directors; No Cumulative Voting..................................................... 76
Size of Board; Vacancies; Removal of Directors................................................................. 76
Special Meetings of Stockholders............................................................................... 76
Stockholder Action by Unanimous Written Consent................................................................ 76
Amendment of Certificate of Incorporation and By-Laws.......................................................... 77
REGULATION AND SUPERVISION OF QUEENS........................................................................... 78
General........................................................................................................ 78
Regulatory Capital Requirements................................................................................ 78
Limitations on Capital Distributions........................................................................... 79
Transactions with Affiliates................................................................................... 80
Interstate Banking and Branching............................................................................... 80
Acquisition of Control......................................................................................... 81
Recent Legislation............................................................................................. 81
COMPARATIVE MARKET PRICES AND DIVIDENDS........................................................................ 82
Queens Dividends............................................................................................... 83
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AS OF JUNE 30, 2000....... 84
ii
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999........................................................................... 85
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2000......................................................................... 86
Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Statements
December 31, 1999 and June 30, 2000............................................................................ 87
EXPERTS........................................................................................................ 90
OTHER MATTERS.................................................................................................. 90
Queens 2001 Annual Meeting Stockholder Proposals............................................................... 90
Haven 2001 Annual Meeting Stockholder Proposals................................................................ 91
WHERE YOU CAN FIND MORE INFORMATION............................................................................ 92
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS......................................................................... 95
APPENDICES:
APPENDIX A -- Agreement and Plan of Merger, dated as of June 27, 2000,
between Queens County Bancorp, Inc. and Haven Bancorp, Inc..................................... A-1
APPENDIX B -- Stock Option Agreement, dated as of June 27, 2000,
between Queens County Bancorp, Inc. and Haven Bancorp, Inc..................................... B-1
APPENDIX C -- Opinion of Salomon Smith Barney, Inc........................................................... C-1
APPENDIX D -- Opinion of Lehman Brothers Inc................................................................. D-1
iii
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about Queens and Haven from documents that are not included in or delivered with
this document. You can obtain documents incorporated by reference in this
document, other than certain exhibits to those documents, by requesting them in
writing or by telephone from the appropriate company at the following addresses:
QUEENS COUNTY BANCORP, INC. HAVEN BANCORP, INC.
38-25 Main Street 615 Merrick Avenue
Flushing, NY 11354 Westbury, NY 11590
Attention: Vice President, Attention: Catherine Califano, Senior
Investor Relations Vice President and Chief
Telephone: (718) 359-6400 Financial Officer
Telephone: (516) 683-4483
You will not be charged for any of these documents that you request.
Queens and Haven stockholders requesting documents should do so by September o,
2000 in order to receive them before the special meetings.
See "Where You Can Find More Information" on pages o.
QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE SPECIAL MEETINGS
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully read this document, indicate on your proxy card
how you want your shares to be voted. Then complete, sign, date and mail
your proxy card in the enclosed postage paid return envelope as soon as
possible. This will enable your shares to be represented and voted at the
Queens special meeting or the Haven special meeting.
Q: WHY IS MY VOTE IMPORTANT?
A: If you do not return your proxy card or vote in person at the appropriate
special meeting, it will be more difficult for Queens and Haven to obtain
the necessary quorum to hold their special meetings. In addition, the
failure of a Queens or a Haven stockholder to vote, by proxy or in person,
will have the same effect as a vote against the merger agreement. The
merger must be approved by the holders of a majority of the outstanding
shares of Queens stock and Haven stock entitled to vote at the respective
special meetings called for the purpose of voting on the proposal to
approve and adopt the agreement and plan of merger.
Q: IF MY SHARES ARE HELD IN STREET NAME BY MY BROKER, WILL MY BROKER
AUTOMATICALLY VOTE MY SHARES FOR ME?
A: No. Your broker will not be able to vote your shares without instructions
from you. You should instruct your broker to vote your shares, following
the directions your broker provides.
Q: WHAT IF I FAIL TO INSTRUCT MY BROKER?
A: If you fail to instruct your broker to vote your shares and the broker
submits an unvoted proxy, the resulting broker non-vote will be counted
toward a quorum at the respective special meeting, but it will have the
same effect as a vote against the merger agreement.
Q: CAN I ATTEND THE SPECIAL MEETING AND VOTE MY SHARES IN PERSON?
A: Yes. All stockholders are invited to attend their special meeting.
Stockholders of record can vote in person at the special meeting. If a
broker holds your shares in street name, then you are not the stockholder
of record and you must ask your broker how you can vote at the special
meeting.
Q: CAN I CHANGE MY VOTE?
A: Yes. If you have not voted through your broker, there are three ways you
can change your vote after you have submitted your proxy card.
o First, you may send a written notice to the person to whom you
submitted your proxy stating that you would like to revoke your proxy.
o Second, you may complete and submit a new proxy card. The latest vote
actually received by Queens or Haven, as the case may be, before the
stockholders meeting will be counted, and any earlier votes will be
revoked.
o Third, you may attend the Queens special meeting, or the Haven special
meeting, as the case may be, and vote in person. Any earlier proxy will
thereby be revoked. However, simply attending the meeting without
voting will not revoke your proxy.
If you have instructed a broker to vote your shares, you must follow directions
you receive from your broker in order to change or revoke your vote.
Q: IF I AM A HAVEN STOCKHOLDER, SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. You should not send in your stock certificates at this time.
Haven stockholders will need to exchange their Haven stock certificates for
Queens County Bancorp, Inc. stock certificates after we complete the
merger. We will send you instructions for exchanging Haven stock
certificates at that time. Queens stockholders do not need to exchange
their stock certificates as a result of the merger or the amendment to the
Queens certificate of incorporation.
Q. WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: We expect to complete the merger in the fourth quarter of fiscal year 2000.
However, we cannot assure you when or if the merger will occur. We must
first obtain the approvals of our stockholders at the special meetings and
the necessary regulatory approvals.
Q: WHOM SHOULD I CALL WITH QUESTIONS?
A: Queens stockholders should call the Queens County Bancorp, Inc. Investor
Relations Department at (718) 359-6400 with any questions about the merger
and related transactions.
Haven stockholders should call Mark A. Ricca, Esq., Haven Bancorp, Inc.'s
Corporate Secretary at (516) 683-4485 with any questions about the merger
and related transactions.
2
SUMMARY
This summary highlights selected information from this document. It does
not contain all of the information that is important to you. We urge you to read
carefully the entire document and the other documents to which we refer in order
to fully understand the merger and the related transactions. See "Where You Can
Find More Information" on pages o. Each item in this summary refers to the page
of this document on which that subject is discussed in more detail.
INFORMATION ABOUT THE COMPANIES (PAGE O)
Queens County Bancorp, Inc.
Queens County Bancorp, Inc., also referred to as Queens, a Delaware corporation
and bank holding company organized in 1993, is the parent holding company for
Queens County Savings Bank, a savings bank chartered in New York and subject to
regulation by the New York State Banking Department and its deposit insurer, the
Federal Deposit Insurance Corporation. Queens County Savings Bank is a
community-oriented financial institution with operations in the greater
metropolitan New York area. Queens County Savings Bank is primarily engaged in
attracting retail deposits from the general public and investing those deposits,
together with funds generated through operations, in the origination of mortgage
loans on multi-family properties and one-to-four family homes. In addition,
through Queens County Savings Bank, Queens also originates commercial real
estate loans, construction loans, home equity loans and other consumer loans. At
June 30, 2000, Queens had total assets of $2.05 billion, deposits of $1.04
billion, total stockholders' equity of $134.7 million and had a market
capitalization of $382.9 million.
Haven Bancorp, Inc.
Haven Bancorp, Inc., also referred to as Haven, a Delaware corporation organized
in 1993, is the holding company for CFS Bank, formerly known as Columbia Federal
Savings Bank, a federally chartered stock savings bank. Haven is subject to
regulation by its primary regulator, the Office of Thrift Supervision, and its
deposit insurer, the Federal Deposit Insurance Corporation. Haven is
headquartered in Westbury, New York, and its principal business currently
consists of the operation of its wholly owned subsidiary, CFS Bank. CFS Bank's
principal business has been and continues to be attracting retail deposits from
the general public and investing those deposits, together with funds generated
from operations and borrowings, primarily in one-to-four-family, owner-occupied
residential mortgage loans. In addition, CFS Bank invests in debt, equity and
mortgage-backed securities and other marketable securities to supplement its
lending portfolio. Haven also has subsidiaries engaged in securities brokerage
and insurance. At June 30, 2000, Haven had consolidated total assets of $2.93
billion, deposits of $2.15 billion, stockholders' equity of $108.6 million and
had a market capitalization of $169.3 million.
THE MERGER (PAGE O)
We are proposing a merger of Haven with and into Queens, with Queens as the
surviving corporation. After the merger is completed, CFS Bank will be a
subsidiary of Queens. Queens is also proposing a corporate name change for
Queens, so that Queens, and the surviving corporation, shall be called "New York
Community Bancorp, Inc."
WHAT HAVEN STOCKHOLDERS WILL RECEIVE (PAGE O)
As a result of the merger, each Haven stockholder will receive 1.04 shares of
Queens common stock for each share of Haven common stock held. We sometimes
refer to this 1.04-to-1 ratio as the Haven exchange ratio. Upon completion of
the merger, Queens stockholders will own approximately 68% of the combined
company and Haven stockholders will own approximately 32% of the combined
company. Generally, no fractional shares of Queens common stock will be issued
in the merger. In lieu of fractional shares, Haven stockholders will receive an
amount in cash based on the last reported sale price of Queens common stock on
the trading day immediately prior to the date on which the merger is completed.
EXAMPLE: IF YOU HOLD 110 SHARES OF HAVEN COMMON STOCK, YOU WILL RECEIVE 114
SHARES OF
3
QUEENS COMMON STOCK AND A CASH PAYMENT IN LIEU OF THE .4 OF A SHARE THAT YOU
OTHERWISE WOULD HAVE RECEIVED.
COMPARATIVE MARKET PRICES AND SHARE INFORMATION (PAGES O AND O)
Queens common stock is included for quotation on the Nasdaq National Market
under the symbol "QCSB." Haven common stock is included for quotation on the
Nasdaq National Market under the symbol "HAVN." The following table sets forth
the closing sale prices of Queens stock and Haven stock as reported on the
Nasdaq National Market on June 27, 2000, the last trading day before we
announced the merger, and for August o, 2000, the last practicable trading day
before the date of this document. This table also shows the implied value of one
share of Haven stock, which we calculated by multiplying the closing price of
Queens stock on those dates by 1.04.
IMPLIED
VALUE OF ONE
QUEENS HAVEN SHARE OF
COMMON COMMON COMMON
STOCK STOCK STOCK
------ ------ ------------
June 27, 20000 $18.125 $18.125 $18.85
August o, 2000 $o $o $o
THE MARKET PRICES OF BOTH QUEENS STOCK AND HAVEN STOCK WILL FLUCTUATE PRIOR TO
THE MERGER. THEREFORE, YOU SHOULD OBTAIN CURRENT MARKET QUOTATIONS FOR QUEENS
STOCK AND HAVEN STOCK.
OUR REASONS FOR THE MERGER (PAGES O AND O)
Our Companies are proposing to merge because we believe that:
o by combining them we can create a stronger company that will provide
significant benefits to our stockholders and customers alike;
o by bringing our customers and banking products together we can do a
better job of increasing our combined revenues and earnings than we
could if we did not merge;
o the merger will strengthen the combined company's position as a
competitor in the financial services industry, which is rapidly
changing and becoming more competitive.
HAVEN'S BOARD OF DIRECTORS RECOMMENDS STOCKHOLDER APPROVAL (SEE PAGES 32-34)
The board consulted with financial and other advisors and considered many
factors in making its determination.
As a result, Haven's board of directors believes that the Haven exchange ratio
is fair to Haven's stockholders and in the best interests of Haven and its
stockholders and has unanimously adopted and approved the merger agreement.
Haven's board of directors unanimously recommends that Haven stockholders vote
"FOR" adoption and approval of the merger agreement.
HAVEN'S FINANCIAL ADVISOR SAYS THE EXCHANGE RATIO IS FAIR, FROM A FINANCIAL
POINT OF VIEW, TO HAVEN'S STOCKHOLDERS (SEE PAGES O)
In deciding to approve the merger, the Haven board of directors considered the
opinion of its financial advisor, Lehman Brothers Inc., which was given to
Haven's board of directors, that the exchange ratio of 1.04 shares of Queens
common stock for each share of Haven common stock is fair to Haven's
stockholders from a financial point of view. A copy of this opinion is attached
to this document as Appendix D. Haven stockholders should read the opinion
completely and carefully to understand the assumptions made, matters considered
and limitations of the review undertaken by Lehman Brothers Inc. in providing
its opinion. Haven has agreed to pay approximately $2.4 million to Lehman
Brothers Inc., approximately $1.9 million of which is payable upon the
completion of the merger.
QUEENS' BOARD OF DIRECTORS RECOMMENDS STOCKHOLDER APPROVAL (PAGE O)
Queens' board of directors believes that the merger presents a unique
opportunity to combine and expand two complementary sets of banking operations.
The board consulted with financial and other advisors, considered many strategic
and financial factors and determined that the merger would be beneficial to
Queens' strategic plans.
As a result, Queens' board of directors believes that the merger and the
corporate name change are in the best interests of Queens and its stockholders
and has unanimously adopted and approved the merger agreement and the corporate
name change. Queens' board of directors unanimously recommends that Queens
stockholders vote "FOR" adoption and approval of the merger agreement and the
corporate name change.
QUEENS' FINANCIAL ADVISOR SAYS THE HAVEN EXCHANGE RATIO IS FAIR, FROM A
FINANCIAL POINT OF VIEW, TO QUEENS (PAGE O)
In deciding to approve the merger, the Queens board of directors considered the
opinion of its financial advisor, Salomon Smith Barney, Inc., which has given an
opinion to Queens' board of directors that the Haven exchange ratio is fair to
Queens from a financial point of view. A copy of
4
this opinion is attached to this document as Appendix C. Queens stockholders
should read the opinion completely and carefully to understand the assumptions
made, matters considered and limitations on the review undertaken by Salomon
Smith Barney in providing its opinion. Queens has agreed to pay $1.1 million to
Salomon Smith Barney, of which $850,000 is payable upon the completion of the
merger.
HAVEN TO HOLD SPECIAL MEETING (PAGE O)
The Haven special meeting will be held on September [26], 2000, at [10:00 a.m.],
local time, at o, New York. At the Haven special meeting Haven stockholders will
be asked:
1. To approve and adopt the merger agreement;
2. To act on such other matters as may be properly brought before the Haven
special meeting.
Record Date. Haven stockholders may cast one vote at the Haven special meeting
for each share of Haven stock that you owned at the close of business on August
[9], 2000. At that date, there were o shares of Haven stock entitled to be voted
at the special meeting.
Required Vote. To approve and adopt the merger, the holders of a majority of the
outstanding shares of Haven stock entitled to be voted at the Haven special
meeting must vote in favor of the merger agreement. Because approval is based on
the affirmative vote of a majority of shares outstanding, a Haven stockholder's
failure to vote, a broker non-vote or an abstention will have the same effect as
a vote against the merger.
As of August o, 2000, directors and executive officers of Haven and their
affiliates beneficially owned or had the right to vote 1,694,478 shares of Haven
stock, or 17.13% of the outstanding Haven stock entitled to be voted at the
special meeting. At that date, directors and executive officers of Queens and
their affiliates, including Queens, owned or had the right to vote [4,000]
shares of Haven stock, or o of the outstanding Haven common stock. The directors
and executive officers of Haven, and their respective affiliates, have agreed to
vote in favor of approval and adoption of the merger agreement.
QUEENS TO HOLD SPECIAL MEETING (PAGE O)
The Queens special meeting will be held on September [26], 2000, at [10:00
a.m.]., local time, at o, New York. At the Queens special meeting Queens
stockholders will be asked:
1. To approve and adopt the merger agreement;
2. To approve the corporate name change; and
3. To act on such other matters as may be properly brought before the Queens
special meeting.
Record Date. Queens stockholders may cast one vote at the Queens special meeting
for each share of Queens stock that you owned at the close of business on August
[9], 2000. At that date, there were o shares of Queens stock entitled to be
voted at the special meeting.
Required Vote. To approve and adopt the merger agreement and to approve the
amendment giving effect to the corporate name change, the holders of a majority
of the outstanding shares of Queens stock entitled to vote on the record date
must vote in favor of the merger agreement and the amendment effecting the
corporate name change. Because approval is based on the affirmative vote of a
majority of shares outstanding, a Queens stockholder's failure to vote, a broker
non-vote or an abstention will have the same effect as a vote against the merger
and the corporate name change.
As of August o, 2000, directors and executive officers of Queens and their
affiliates beneficially owned or had the right to vote 3,887,750 shares of
Queens stock, or 18.64% of the outstanding Queens stock entitled to be voted at
the special meeting. At that date, directors and executive officers of Haven and
their affiliates, including Haven, owned or had the right to vote o shares of
Queens stock, or o% of the outstanding Queens stock entitled to be voted at the
meeting. The directors and executive officers of Queens, and their respective
affiliates, have indicated that they intend to vote in favor of approval of the
merger
5
agreement and the corporate name change.
THE MERGER AGREEMENT (PAGE O)
The merger agreement is attached as Appendix A to this document. We encourage
you to read it in its entirety because it is the legal document governing the
merger.
Merger Expected to Occur in Fourth Quarter of 2000 (page o)
The merger will occur only after all of the conditions to its completion have
been satisfied or waived. Currently, we anticipate that the merger will occur in
the fourth quarter of 2000.
Conditions That Must Be Satisfied or Waived for the Merger to Occur (page o)
As more fully described in this document and the merger agreement, the
completion of the merger depends on a number of conditions being satisfied or
waived, including receipt of stockholder and regulatory approvals and tax
opinions.
We cannot be certain when, or if, the conditions to the merger will be satisfied
or waived, or that the merger will be completed.
Termination of the Merger Agreement (page o)
We may agree to terminate the merger agreement before completing the merger,
even after the stockholders of each of Queens and Haven have adopted the merger
agreement, as long as the termination is approved by each of our boards of
directors.
Either of us may decide, without the consent of the other, to terminate the
merger agreement before our stockholders vote if the other party fails to
recommend the approval and adoption of the merger agreement to its stockholders.
In addition, either of us may decide, without the consent of the other, to
terminate the merger agreement, even after adoption of the merger agreement by
our stockholders, if:
o the merger has not been completed by March 31, 2001;
o any governmental approval, consent or waiver required to permit
consummation of the merger has been denied or any court or governmental
authority has issued a final, unappealable order enjoining or otherwise
prohibiting consummation of the merger or the related transactions; or
o the other party breaches its representations or warranties and the breach
has a material adverse effect, or the other party fails to perform its
material obligations under the merger agreement, in either case, in a
manner that cannot be or is not cured within 25 days after written notice
is made of the breach or failure.
Haven may terminate the merger agreement if both (1) the market valuation of
Queens Stock, as a 15 day average, falls below $14.65, and (2) the quotient
obtained by dividing the Queens market valuation by $18.3125 is less than 80% of
the quotient obtained by dividing the market valuation, calculated as a 15 day
average, of the stocks in an index of comparable financial institutions by the
initial valuation prices of the index stocks. Queens will have a right to
increase the merger consideration and avoid termination should Haven give notice
of its intention to terminate the merger agreement based on the valuation of
Queens stock.
FINANCIAL INTERESTS OF HAVEN'S MANAGEMENT AND BOARD OF DIRECTORS IN THE MERGER
(PAGE O)
Haven's directors and officers have interests in the merger as individuals in
addition to, or different from, their interests as stockholders, such as
receiving salaries and other benefits. For example, in connection with the
merger, Queens and CFS Bank have each entered into individual employment
agreements with certain officers of Haven and CFS Bank, which will go into
effect if and when the merger is completed. Queens and CFS Bank have also
entered into a consulting agreement with Philip S. Messina, Haven's Chairman and
Chief Executive Officer, which will go into effect if and when the merger is
completed.
In addition, under Haven's existing employment agreements and change in control
agreements with certain of its officers, cash payments and other benefits may be
due upon an officer's termination of employment following the receipt of
stockholder approval for the merger. Haven also maintains director and employee
compensation and benefit plans which provide for
6
additional benefits or accelerated payment of existing benefits following the
receipt of stockholder approval of the merger.
The merger agreement also provides that, after the merger, the Queens director
and officer insurance coverage will be provided to the former Haven directors
and officers by Queens and that officers or directors of Haven may be
indemnified by Queens for events that occurred before the merger.
Each of the Queens board of directors and the Haven board of directors was aware
of these interests of Haven management and directors and considered them in its
decision to approve the merger agreement.
ADDITIONS TO THE BOARD OF DIRECTORS AND MANAGEMENT OF QUEENS, QUEENS COUNTY
SAVINGS BANK AND CFS BANK (PAGE O).
Three members of the Haven board of directors will be selected by Queens to
serve as directors of Queens, the board of directors of which will consist of no
more than 11 members for at least two years after the merger. Two members of the
Haven board of directors will be selected by Queens to serve as directors of
Queens County Savings Bank, the board of directors of which will consist of 10
members. The existing members of the CFS Bank board of directors will resign,
and Queens will select three members of the Haven board of directors to serve as
members of the CFS Bank board of directors, which will also consist of 11
directors.
All members of the Haven board of directors who are not selected to serve on the
board of directors of Queens, Queens County Savings Bank or CFS Bank will be
selected to serve on the Queens advisory board, as contemplated in the merger
agreement.
HAVEN GRANTED STOCK OPTION TO QUEENS (PAGE O)
To induce Queens to enter into the merger agreement, Haven granted Queens an
option to purchase up to 1,800,000 shares of Haven common stock at a price per
share of $18.50; however, in no case may Queens acquire more than 19.9% of the
outstanding shares of Haven common stock pursuant to this stock option
agreement. Queens cannot exercise this option unless the merger is not completed
and specified triggering events occur. These events generally relate to business
combinations or acquisition transactions involving Haven and a third party. We
do not know of any event that has occurred as of the date of this document that
would allow Queens to exercise this option.
The option could have the effect of discouraging other companies from trying to
acquire Haven until the merger is completed. Haven may be required to repurchase
the option and any shares purchased under it at a predetermined price, or Queens
may choose to surrender the option to Haven for a cash payment of $9 million.
The Haven stock option agreement is attached to this document as Appendix B.
NO APPRAISAL RIGHTS (PAGE O)
Both companies are incorporated under Delaware law. Under Delaware law, neither
the stockholders of Queens nor the stockholders of Haven have any right to a
court determination, in a proceeding known as an appraisal, of the fair value of
their shares in connection with the merger.
ACCOUNTING TREATMENT (PAGE O)
Queens will account for the merger as a purchase for financial reporting
purposes.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (PAGE O)
Neither Queens nor Haven is required to complete the merger unless it receives a
legal opinion from its counsel to the effect that, based on certain factual
representations and assumptions, the merger will be treated as a
"reorganization" for federal income tax purposes. Therefore, we expect that, for
federal income tax purposes, you generally will not recognize any gain or loss
on the conversion of shares of Haven common stock into shares of Queens common
stock. You will be taxed, however, on any cash that you receive instead of any
fractional share of Queens common stock.
7
The merger is intended to qualify as a "reorganization" within the meaning of
section 368(a) of the Internal Revenue Code of 1986, for federal income tax
purposes.
This tax treatment may not apply to certain Haven stockholders and may depend on
your specific situation and on variables not within our control. We urge you to
contact your own tax advisor to understand fully how the merger will affect you.
AMENDMENT TO QUEENS CERTIFICATE OF INCORPORATION; COMPARISON OF QUEENS AND
HAVEN STOCKHOLDERS RIGHTS; HAVEN STOCKHOLDER RIGHTS TO BE GOVERNED BY NEW
GOVERNING DOCUMENTS (PAGE O)
In addition to the merger, Queens is proposing to amend Queens' certificate of
incorporation to change Queens' corporate name to "New York Community Bancorp,
Inc." Upon stockholder approval, this name change will be carried out as soon as
practicable after the Queens special meeting, regardless of the completion of
the merger with Haven.
The rights of Haven stockholders will not materially change as a result of the
merger, due to the similarity between the Haven and Queens governing documents
and the fact that both companies are incorporated under Delaware law. Queens
stockholders' rights will not change in the merger. This document contains
descriptions of the stockholder rights under each of the Haven and Queens
governing documents, and describes the material differences between them.
QUEENS AND HAVEN STOCKHOLDER RIGHTS AGREEMENTS (PAGE O)
Queens On January 16, 1996, Queens adopted a stockholder protection rights
agreement, pursuant to which each issued share of Queens common stock has
attached to it one right to purchase, under conditions described in the
agreement and summarized in this document, a fraction of a share of
participating preferred stock of Queens. The Queens stockholder protection
rights agreement, including rights thereunder currently held by Queens
stockholders, will remain in place after the merger. See "RIGHTS AGREEMENTS -
Queens Stockholder Protection Rights Agreement" on pages o for a description of
this agreement.
Haven On January 25, 1996, Haven adopted a stockholder protection rights
agreement, pursuant to which each issued share of Haven common stock has
attached to it one preferred share purchase right for each share of Haven common
stock held. The Haven rights plan is substantially similar to the Queens rights
plan. In connection with the execution of the merger agreement, Haven amended
the rights agreement to provide that Queens (as well as its affiliates and
associates) will not be deemed to be an "Acquiring Person", as defined in the
Haven rights agreement, by virtue of entering into the merger agreement and the
transactions contemplated thereby. See "RIGHTS AGREEMENTS - Haven Rights
Agreement" on page o."
QUEENS STOCK TO BE ACCOMPANIED BY STOCKHOLDER PROTECTION RIGHTS ( PAGE O)
Each share of Queens stock issued pursuant to the merger will have attached to
it one right to purchase, under the conditions described in the Queens
stockholder protection rights agreement, dated January 16, 1996, and this
document, a fraction of a share of participating preferred stock of Queens.
These rights are currently held by Queens' stockholders under the Queens
stockholder protection rights agreement, which will remain in place after the
merger. See "RIGHTS AGREEMENTS - Queens Stockholder Protection Rights Agreement"
on pages o for a description of this agreement.
REGULATORY APPROVALS WE MUST OBTAIN FOR THE MERGER ( PAGE O)
We cannot complete the merger unless we obtain the approval of the Board of
Governors of the Federal Reserve System. We expect to make the necessary filings
with the Federal Reserve Board shortly.
Although we do not know of any reason why we cannot obtain these regulatory
approvals in a timely manner, we cannot be certain when or if we will obtain
them.
8
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE (PAGE O)
This joint proxy statement/prospectus, including information included or
incorporated by reference in this document, contains certain forward-looking
statements with respect to the financial condition, results of operations,
plans, objectives, further performance and business of each of Queens and Haven,
as well as certain information relating to the merger. Also, statements preceded
by, followed by or that include the words "believes," "expects," "anticipates,"
"estimates," "potential" or similar expressions are forward-looking statements.
These forward-looking statements involve certain risks and uncertainties. Actual
results may differ materially from those contemplated by the forward-looking
statements due to various factors.
9
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF QUEENS
Set forth below are selected consolidated financial and other data of
Queens which are based on, and qualified in their entirety by, the consolidated
financial statements of Queens and subsidiary, including the notes thereto,
which are incorporated by reference in this Joint Proxy Statement/Prospectus and
should be read in conjunction with this document. The selected consolidated
financial and other data for Queens at June 30, 2000 and for the six-month
periods ended June 30, 2000 and June 30, 1999 were not audited, but in the
opinion of management, contain all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the financial
conditions and results for such periods. The results of operations for the
six-month period ended June 30, 2000 are not necessarily indicative of the
results of operations to be expected for the remainder of the year or any other
interim period.
The information in the following table should be read together with the
historical financial information that Queens has presented in its prior filings
with the SEC. Queens has incorporated this material into this document by
reference to those other filings. See "Where You Can Find More Information" on
pages o.
For the Six Months
Ended June 30, For the Year Ended December 31,
------------------------- ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
------------------------- ---------------------------------------------------------
(Unaudited) (Dollars in thousands, except per share data)
EARNINGS SUMMARY:
- -----------------
Interest income................. $74,330 $68,051 $143,123 $134,277 $117,734 $102,304 $91,542
Interest expense................ 41,568 33,997 74,220 65,755 55,336 44,784 39,634
Net interest income............. 32,762 34,054 68,903 68,522 62,398 57,520 51,908
Provision for loan losses....... -- (2,000) (2,400) -- -- (2,000) 150
Net interest income after
provision for loan losses....... 32,762 36,054 71,303 68,522 62,398 59,520 51,758
Non-interest income............. 2,360 1,143 2,523 2,554 2,305 2,445 3,033
Non-interest expense............ 11,158 11,426 21,390 25,953 27,084 23,271 22,871
Income before income tax expense 23,964 25,771 52,436 45,123 37,619 38,694 31,920
Income tax expense.............. 8,600 10,085 20,772 18,179 14,355 17,755 11,737
Net income...................... $15,364 $15,886 $ 31,664 $ 26,944 $ 23,264 $20,939 $20,183
For the Six Months
Ended June 30, For the Year Ended December 31,
------------------------- ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
------------------------- ---------------------------------------------------------
(Unaudited) (Dollars in thousands, except per share data)
SHARE DATA:
Weighted average common shares
outstanding (in thousands):
Basic:.......................... 17,679 18,618 18,527 19,109 20,407 23,266 24,917
Diluted:........................ 17,869 19,136 18,940 20,107 21,742 24,634 26,212
Net Income per common share:
Basic........................... $ 0.87 $ 0.76 $ 1.71 $ 1.41 $ 1.14 $ 0.90 $ 0.81
Net Income per common share:
Diluted......................... 0.86 0.76 1.67 1.34 1.07 0.85 0.77
Cash dividends per common share. 0.50 0.50 1.00 0.67 0.41 0.25 0.07
Book value per common share..... 7.47 7.74 7.52 8.13 8.82 9.43 8.87
BALANCE SHEET SUMMARY:
Securities available for sale... 12,482 19,002 12,806 4,656 2,617 -- --
Securities held to maturity..... 195,401 153,163 184,637 152,280 94,936 86,495 78,016
Efficiency ratio (6)............ 31.42 32.44 29.95 36.51 41.86 38.81 41.63
Loans receivable, net........... 1,743,246 1,641,027 1,601,079 1,486,519 1,395,003 1,146,152 994,803
Total assets.................... 2,047,633 1,874,998 1,906,835 1,746,882 1,603,269 1,358,656 1,240,882
Total deposits.................. 1,099,757 1,105,701 1,076,018 1,102,285 1,069,161 1,023,930 932,140
PERFORMANCE RATIOS:
Return on average assets(4)..... 1.57 1.66 1.69 1.62 1.61 1.63 1.72
Return on average stockholders'
equity(4)....................... 23.77 21.32 22.99 17.32 12.95 10.10 9.70
Dividend payout................. 0.58 0.66 0.60 0.50 0.38 0.29 0.09
Average equity to average assets 6.61 7.21 7.37 9.38 12.48 16.17 17.74
Net interest margin (5)......... 3.50 3.98 3.79 4.24 4.45 4.63 4.58
Efficiency Ratio (6)............ 31.42 32.44 29.95 36.51 41.86 38.81 41.63
10
For the Six Months
Ended June 30, For the Year Ended December 31,
------------------------- ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
------------------------- ---------------------------------------------------------
(Unaudited) (Dollars in thousands, except per share data)
ASSET QUALITY RATIO:
Allowance for loan losses to
Loans receivable, net........... 0.40 0.44 0.44 0.63 0.68 0.82 1.14
Non-performing loans............ 2,699 5,114 3,108 6,193 7,692 9,659 7,793
Non-performing loans to loans
receivable, Net................. 0.17 0.52 0.19 0.42 0.55 0.84 0.78
Non-performing assets to Total
Assets(2)(3).................... 0.15 0.50 0.17 0.38 0.54 0.76 0.69
<FN>
(1) Non-performing loans consist of all mortgage loans delinquent 90 days or
more.
(2) Non-performing assets consist of all non-performing loans and real estate
acquired in foreclosure.
(3) For the periods indicated, Queens had no troubled debt restructurings.
(4) Data provided for the six months ended June 30, 1999 and 2000 shown on an
annualized basis.
(5) Net interest margin represents net interest income divided by average
interest-earning assets.
(6) Efficiency ratio represents operating expense divided by the sum of net
interest income plus operating income.
</FN>
11
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF HAVEN
Set forth below are highlights from Haven's consolidated financial data
as of, and for the years ended, December 31, 1999, 1998, 1997, 1996 and 1995 and
Haven's unaudited consolidated financial data as of June 30, 2000 and 1999, and
for the six months ended June 30, 2000 and June 30, 1999. The results of
operations for the quarter ended June 30, 2000 are not necessarily indicative of
the results of operations for the full year or any other interim period. Haven's
management prepared the unaudited information on the same basis as it prepared
Haven's audited consolidated financial statements. In the opinion of Haven's
management, this information reflects all adjustments, consisting of only normal
recurring adjustments, necessary for a fair presentation of this data for those
dates. You should read this information together with Haven's consolidated
financial statements and related notes included in Haven's Annual Reports on
Form 10-K for the year ended December 31, 1999 and Haven's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2000 and June 30, 2000 which are
incorporated by reference in this joint proxy statement/prospectus and from
which this information is derived.
For the Six Months
Ended June 30, For the Year Ended December 31,
-------------- -------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
(Unaudited) (Dollars in thousands, except per share data)
EARNINGS SUMMARY:
Interest income................. $103,588 $84,716 $183,863 $151,685 $126,306 $109,253 $96,434
Interest expense................ 64,177 50,590 112,906 93,776 74,400 61,368 55,115
--------- ------- --------- ---------- ---------- ---------- --------
Net interest income............. 39,411 34,126 70,957 57,909 51,906 47,885 41,319
Provision for loan losses....... 1,150 1,555 3,625 2,665 2,750 3,125 2,775
--------- -------- ---------- ---------- ---------- ---------- ---------
Net interest income after
provision for loan losses....... 38,261 32,571 67,332 55,244 49,156 44,760 38,544
Non-interest income............. 17,320 16,845 32,231 24,611 13,219 8,983 8,678
Non-interest expense............ 44,495 39,874 80,093 68,779 45,154 37,884 31,448
--------- ------- --------- --------- --------- ---------- --------
Income before income tax
expense......................... 11,086 9,542 19,470 11,076 17,221 15,859 15,774
Income tax expense.............. 3,899 3,614 6,863 2,926 6,138 6,434 7,230
---------- -------- ---------- --------- ---------- ----------- ---------
Net Income...................... $7,187 (6) 5,928 $12,607 $8,150 $11,083 $9,425(2) $8,544
for the Six Months
Ended June 30, For the Year Ended December 31,
-------------- -------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
(Unaudited) (Dollars in thousands, except per share data)
SHARE DATA:
Weighted average common shares
outstanding (in thousands):
Basic:.......................... 8,882 8,686 8,749 8,597 8,420 8,310 8,628
Diluted:........................ 9,280 9,048 9,165 9,159 8,914 8,679 8,923
Net Income per common share:
Basic........................... $ 0.81 $ 0.68 $ 1.44 $ 0.95 $ 1.32 $1.13(1) $0.99
Net Income per common share:
Diluted......................... 0.77 0.66 1.38 0.89 1.24 1.08(1) 0.96
Cash dividends per common
share........................... 0.15 0.15 0.30 0.30 0.30 0.28 0.10
Book value per common share..... 11.90 12.72 11.73 13.53 12.85 11.49 10.92
BALANCE SHEET SUMMARY:
Securities available for sale... 931,342 1,000,636 937,299 889,251 499,380 370,105 503,058
Loans receivable, net........... 1,807,748 1,534,293 1,790,126 1,296,702 1,138,253 836,882 560,385
Total assets.................... 2,930,616 2,796,440 2,965,850 2,395,523 1,974,890 1,583,545 1,472,816
Total deposits.................. 2,153,957 1,944,791 2,080,613 1,722,710 1,365,012 1,137,788 1,083,446
Stockholders' equity............ 108,550 113,909 105,583 119,867 112,865 99,384 98,519
PERFORMANCE RATIO:
Return on average assets........ 0.49% 0.46% 0.46% 0.37% 0.62% 0.62% 0.63%
Return on average stockholder's
equity excluding restructuring
and SAIF assessment charge...... 22.35 10.01 11.03 6.92 10.41 14.04 9.27
Return on average assets
excluding restructuring and
SAIF assessment charge.......... 0.79 0.46 0.46 0.37 0.62 0.89 0.63
Return on average stockholder's
equity.......................... 13.78 10.01 11.03 6.92 10.41 9.83 9.27
Dividend payout................. 0.19 0.23 0.22 0.34 0.24 0.25 0.10
12
For the Six Months
Ended June 30, For the Year Ended December 31,
-------------- -------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
(Unaudited) (Dollars in thousands, except per share data)
for the Six Months
Average equity to average assets.. 3.52 4.63 4.16 5.31 5.97 6.32 6.76
Net interest margin(3)............ 2.77 2.84 2.72 2.78 3.06 3.29 3.17
ASSET QUALITY RATIO:
Allowance for loan losses to
total loans....................... 0.94 0.92 0.92 1.07 1.09 1.26 1.51
Non-performing loans.............. 6,952 9,063 7,711 8,385 12,532 13,893 16,877
Non-performing loans to total
loans(4).......................... 0.38 0.42 0.42 0.64 1.09 1.64 2.97
Non-performing assets to total
assets (5)........................ 0.26 0.27 0.27 0.36 0.66 0.94 1.28
<FN>
(1) Net income for 1996 excluding the SAIF assessment charge would have been
$13.5 million, or $1.62 per basic common share ($1.55 per share, diluted)
(2) Data provided for the six months ended June 30, 1999 and 2000 is shown on
an annualized basis.
(3) Calculation is based on net interest income before provision for loan
losses divided by average interest-earning assets.
(4) For purposes of calculating these ratios, non-performing loans consist of
all non-accrual loans and restructured loans.
(5) Non-performing assets consist of all non-performing loans and real estate
owned.
(6) Net income for the six months ended June 30, 2000, excluding the net
restructuring charges of $6.9 million, would have been $11.6 million, or
$1.31 per basic common share ($1.26 per share, diluted).
</FN>
13
SELECTED CONSOLIDATED UNAUDITED PRO FORMA FINANCIAL DATA
(Dollars in thousands, except per share amounts)
The following table shows information about our financial condition and
operations, including basic and diluted earnings per common share, cash
dividends per common share and book value per common share after giving effect
to the merger. This information is called pro forma information in this
document. The tables set forth the information as if the merger had become
effective on June 30, 2000 in the case of the selected statement of financial
condition data presented, and as if the merger had become effective on January
1, 1999 for the year end information and [January 1, 2000 for the six month
information] in the case of the statements of operations data presented. The
unaudited pro forma data in the tables assume that the merger is accounted for
using the purchase method of accounting. This table should be read in
conjunction with, and is qualified in its entirety by, the historical financial
statements, including the notes thereto, of Queens and Haven incorporated by
reference herein and the more detailed pro forma financial information,
including the notes thereto, appearing elsewhere in this Joint Proxy
Statement/Prospectus. See "Where You Can Find More Information" and "UNAUDITED
PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL INFORMATION." The unaudited
pro forma statements do not reflect any income and expense adjustments which may
result from the consolidation of the operations of Queens and Haven but does
reflect the anticipated restructuring of the balance sheet. The unaudited pro
forma statements are not necessarily indicative of the results that actually
would have occurred had the merger been consummated on the dates indicated, or
which may be attained in the future.
AS OF
SELECTED STATEMENT OF FINANCIAL CONDITION DATA: JUNE 30, 2000
Total assets.................................................... $ 4,061,971
Securities available-for-sale................................... 612,835
Securities held-to-maturity..................................... 223,266
Loans and investments in real estate held-for-sale.............. 7,838
Loans receivable, net........................................... 2,773,794
Deposits........................................................ 3,044,514
Borrowed funds.................................................. 611,531
Stockholders' equity............................................ 309,119
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
SELECTED STATEMENTS OF OPERATIONS DATA: JUNE 30, 2000 DECEMBER 31, 1999
Interest income................................................. $ 160,263 $ 297,676
Interest expense................................................ 83,266 142,168
Net interest income............................................. 76,997 149,508
Provision for loan losses....................................... 1,150 1,225
Net interest income after provision for loan losses............. 75,847 148,283
Non-interest income............................................. 19,680 36,891
Non-interest expense............................................ 51,824 110,075
Income before income taxes...................................... 43,703 75,099
Income taxes.................................................... 15,701 28,816
Net income...................................................... 28,003 46,282
Primary weighted average common stock equivalents............... 27,162,964 28,010,878
Fully diluted weighted average common stock..................... 27,352,668 28,423,855
equivalents
14
PER COMMON SHARE DATA(1) AS OF FOR THE YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
------------- ------------------
Primary earnings per common share................................... 1.03 1.65
Fully diluted earnings per common share............................. 1.02 1.63
Cash dividends declared............................................. 0.50 1.00
Book value.......................................................... 11.23 -
SELECTED FINANCIAL RATIOS(1)
Return on average assets............................................ 1.21% 1.00%
Return on average stockholders' equity.............................. 22.23% 18.37
Stockholders' equity to total assets................................ 7.61%
General and administrative expense to average assets................ 2.24% 2.38
Efficiency ratio(2)................................................. 53.60% 59.05
<FN>
(1) Per Common Share Data and Selected Financial Ratios are presented only for
data relating to the pro forma combined condensed consolidated statements
of operations for the year ended December 31, 1999 and for the six months
ended June 30, 2000 and data relating to the pro forma combined condensed
consolidated statement of financial condition at June 30, 2000. Average
assets and average stockholders' equity for the periods presented were
calculated assuming the merger was consummated on December 31, 1999.
(2) Efficiency ratio represents operating expense divided by the sum of net
interest income plus operating income.
</FN>
15
COMPARATIVE PER SHARE DATA
The following table sets forth for Queens Common Stock and Haven Common
Stock certain historical, pro forma and pro forma equivalent per share financial
information. The pro forma and pro forma equivalent per share information gives
effect to the merger as if the merger had been effective on the dates presented,
in the case of the book value data presented, and as if the merger had become
effective January 1, 2000, in the case of the net income and dividends declared
data presented. The pro forma data in the tables assumes that the merger is
accounted for using the purchase method of accounting. See "Accounting
Treatment" on page o. The information presented herein is based on, and is
qualified in its entirety by, the historical financial statements, including the
notes thereto, of Queens and Haven incorporated by reference herein and the pro
forma financial information, including the notes thereto, appearing elsewhere in
this document, and should be read in conjunction therewith. See "Where You Can
Find More Information" and "UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
FINANCIAL INFORMATION." The pro forma and equivalent pro forma per share data in
the following table is presented for comparative purposes only and are not
necessarily indicative of what the combined financial position or results of
operations would have been had the merger been consummated during the periods or
as of the date for which such pro forma tables are presented.
QUEENS HAVEN PRO FORMA PER EQUIVALENT
HISTORICAL HISTORICAL COMBINED HAVEN SHARE(1)
------------- ------------- ------------ ------------------
Net income for the year ended December 31, 1999:
Basic $ 1.71 $ 1.44 $ 1.65(2) $ 1.72
Fully diluted 1.67 1.38 1.63(2) 1.69
Net income for the six months ended June 30, 2000:
Basic 0.87 0.81 1.03 1.07
Fully diluted 0.86 0.77 1.02 1.06
Cash Dividends Declared
For the year ended December 31, 1999: 1.00 0.30 1.00 (3) 1.04
For the six months ended June 30, 2000: 0.50 0.15 0.50 (3) 0.52
BOOK VALUE
As of December 31, 1999 7.52 11.73 -- --
As of June 30, 2000 7.47 11.90(5) 11.23(4) 11.68
<FN>
(1) Per equivalent Haven share is pro forma combined multiplied by 1.04.
(2) The pro forma net income per share amounts are calculated by totaling the
historical net income of Queens and Haven and dividing the resulting amount
by the average pro forma shares of Queens and Haven giving effect to the
merger. The average pro forma shares of Queens and Haven reflect Queens'
historical basic and diluted shares, plus historical basic and diluted
average shares of Haven as adjusted for an exchange ratio of 1.04 shares of
Queens common stock for each share of Haven common stock. The pro forma net
income per share amounts do not take into consideration any operating
efficiencies that may be realized as a result of the merger.
(3) Pro forma cash dividends represents the Queens historical amount.
(4) The pro forma book value per share amounts are calculated by totaling the
historical stockholders' equity for Queens and Haven and dividing the
resulting amounts by the total Queens/Haven pro forma common shares
outstanding. Stockholders' equity at June 30, 2000 has been adjusted to
reflect the pro forma merger-related
</FN>
16
restructure charge, net of taxes, anticipated to be recognized in
connection with the merger. The Queens/Haven pro forma common shares
reflect Queens' historical common shares outstanding and Queens' historical
common shares outstanding as adjusted for an exchange ratio of 1.04.
(5) Haven historical book value per share as of June 30, 2000, as adjusted, is
$12.37. For a description of the adjustment, see Note B to "Notes to
Unaudited Pro Forma Combined Condensed Consolidated Financial Statements,
December 31, 1999 and June 30, 2000" at page o.
17
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This document contains a number of forward-looking statements regarding
the financial condition, results of operations and business of Queens and Haven.
These statements may be made directly in this document or may be incorporated in
this document by reference to other documents and may include statements for the
period following the completion of the merger. You can find many of these
statements by looking for words such as "believes," "expects," "anticipates,"
"estimates," "potential" or similar expressions. These forward-looking
statements involve substantial risks and uncertainties. Some of the factors that
may cause actual results to differ materially from those contemplated by the
forward-looking statements include, but are not limited to, the following
possibilities:
o there may be increases in competitive pressure among financial
institutions or from non-financial institutions;
o changes in the interest rate environment may reduce net interest
margins or may adversely affect mortgage origination operations;
o changes in deposit flows, loan demand or real estate values may
adversely affect our business;
o changes in accounting principles, policies or guidelines may cause our
financial condition to be perceived differently;
o general economic conditions, either nationally or in some or all of
the operating areas in which the combined company will be doing
business, or conditions in securities markets, or the banking
industry, may be less favorable than we currently anticipate;
o legislation or regulatory changes may adversely affect our business;
o technological changes may be more difficult or expensive than
anticipated;
o combining the businesses of Queens and Haven and retaining key
personnel may be more difficult or more costly than we expect;
o our revenues after the merger may be lower than we expect, or our
operating costs may be higher than we expect;
o the sale of assets and deposits contemplated by the merger may occur
at prices different and less favorable than we expect;
o expected cost savings from the merger may not be fully realized, may
not be realized at all, or may not be realized within the expected
time frame; or
o the timing and occurrence or non-occurrence of events may be subject
to circumstances beyond our control.
All written and oral forward-looking statements concerning the merger
or other matters addressed in this document and attributable to Queens or Haven
or any person acting on their behalf are expressly qualified in their entirety
by the cautionary statements contained or referred to in this section. Neither
Queens nor Haven undertakes any obligation to release publicly any revisions to
such forward-looking statements to reflect events or circumstances after the
date of this document or to reflect the occurrence of unanticipated events.
18
THE QUEENS SPECIAL MEETING
THIS SECTION CONTAINS INFORMATION FROM QUEENS FOR QUEENS STOCKHOLDERS
ABOUT THE SPECIAL STOCKHOLDERS MEETING IT HAS CALLED TO CONSIDER AND ADOPT THE
MERGER AGREEMENT AND THE CORPORATE NAME CHANGE.
We are mailing this document to you as a Queens stockholder on or about
August o, 2000. Together with this document, we are also sending you a notice of
the Queens special meeting and a form of proxy that is solicited by our board of
directors. The Queens special meeting will be held on September [26], 2000, at
[10:00 a.m.], local time, at o, New York o.
MATTERS TO BE CONSIDERED
The purpose of the Queens special meeting is to vote on a proposal for
the approval and adoption of the merger agreement and to vote on a proposal for
the approval of an amendment to the Queens certificate of incorporation which
will change the name of Queens to "New York Community Bancorp, Inc."
You may be asked to vote upon other matters that may properly be
submitted to a vote at the Queens special meeting. You may also be asked to vote
on a proposal to adjourn or postpone the Queens special meeting. We could use
any adjournment or postponement for the purpose, among others, of allowing
additional time to solicit proxies.
PROXIES
Each copy of this document mailed to Queens stockholders is accompanied
by a form of proxy with voting instructions for submission by mail. You should
complete and return the proxy card accompanying this document in order to ensure
that your vote is counted at the Queens special meeting, or ay adjournment or
postponement thereof, regardless of whether you plan to attend the special
meeting. You may revoke your proxy at any time before the vote is taken at the
special meeting by
o submitting written notice of revocation to the Corporate Secretary of
Queens prior to the voting of such proxy,
o submitting a properly executed proxy of a later date, or
o voting in person at the special meeting; however, simply attending the
special meeting without voting will not revoke an earlier proxy.
Written notices of revocation and other communications regarding the revocation
of your proxy should be addressed to:
Queens County Bancorp, Inc.
38-25 Main Street
Flushing, NY 11354
Attention: Michael J. Lincks, Corporate Secretary
If your shares are held in street name, you should follow the instructions of
your broker regarding revocation of proxies.
All shares represented by valid proxies that we receive through this
solicitation, and that are not revoked, will be voted in accordance with the
instructions on the proxy card. If you make no specification on your proxy card
as to how you want your shares voted before signing and returning it, your proxy
will be voted "FOR" approval and adoption of the merger agreement and approval
of the corporate name change. The Queens board of directors is currently unaware
of any other matters that may be presented for action at the special meeting. If
other matters properly come before the special meeting, or any adjournment or
postponement thereof, we intend that shares represented by properly submitted
proxies will be voted, or not voted, by and at the discretion of the persons
named as proxies on the proxy card. However, proxies that indicate a vote
against approval and adoption of the merger agreement will not be voted in favor
of adjourning or postponing the special meeting to solicit additional proxies.
19
QUEENS STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY
CARDS. IF THE MERGER IS COMPLETED AND THE CORPORATE NAME CHANGE IS EFFECTED,
QUEENS STOCKHOLDERS WILL NOT NEED TO EXCHANGE THEIR CURRENT STOCK CERTIFICATES.
SOLICITATION OF PROXIES
We will bear the entire cost of soliciting proxies from you. In
addition to solicitation of proxies by mail, we will request that banks, brokers
and other record holders send proxies and proxy material to the beneficial
owners of Queens stock and secure their voting instructions, if necessary. We
will reimburse the record holders for their reasonable expenses in taking those
actions. We have also made arrangements with ChaseMellon Shareholder Services,
LLC to assist us in soliciting proxies and have agreed to pay them $o plus
reasonable expenses for these services. If necessary, we may also use several of
our regular employees, who will not be specially compensated, to solicit proxies
from Queens stockholders, either personally or by telephone, telegram, facsimile
or letter.
RECORD DATE
In accordance with Delaware law, Queens' by-laws and Nasdaq National
Market rules, the close of business on August [9], 2000 has been fixed by the
Queens board of directors as the record date for determining the Queens
stockholders entitled to receive notice of and to vote at the Queens special
meeting. At that time, o shares of Queens stock were outstanding, held by o
holders of record.
VOTING RIGHTS AND VOTE REQUIRED
The presence, in person or by properly executed proxy, of the holders
of a majority of the outstanding shares of Queens stock is necessary to
constitute a quorum at the special meeting. Abstentions and broker non-votes
will be counted solely for the purpose of determining whether a quorum is
present but will not be deemed to be counted as votes cast either FOR or AGAINST
the merger agreement or the corporate name change. Under the applicable Nasdaq
National Market rules, brokers or members who hold shares in street name for
customers who are the beneficial owners of such shares are prohibited from
giving a proxy to vote those shares with respect to the merger without specific
instructions from such customers. An unvoted proxy submitted by a broker is
sometimes referred to as a broker non-vote.
Approval and adoption of the merger agreement and the corporate name
change require the affirmative vote of the holders of a majority of the
outstanding shares of Queens stock entitled to vote at the Queens special
meeting. You are entitled to one vote for each share of Queens stock you held as
of the record date. However, Queens' certificate of incorporation provides that
stockholders who beneficially own in excess of 10% of the then-outstanding
shares of common stock of Queens are not entitled to any vote with respect to
the shares held in excess of the 10% limit. A person or entity is deemed to
beneficially own shares that are owned by an affiliate as well as by any person
acting in concert with such person or entity.
BECAUSE THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF QUEENS STOCK ENTITLED TO VOTE AT THE QUEENS SPECIAL
MEETING IS NEEDED FOR US TO PROCEED WITH THE MERGER, THE FAILURE TO VOTE BY
PROXY OR IN PERSON, ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT
AS VOTES AGAINST THE MERGER AGREEMENT. ACCORDINGLY, THE BOARD OF DIRECTORS URGES
QUEENS STOCKHOLDERS TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
As of the record date:
o Directors and executive officers of Queens and their affiliates
beneficially owned 3,887,750 shares of Queens stock, or 18.64% of the
Queens stock outstanding on that date.
o Directors and executive officers of Haven and their affiliates did not
beneficially own any shares of Queens common stock.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Queens board of directors has unanimously approved and declared
advisable the merger agreement, the transactions it contemplates and the change
of Queens' name to "New York Community Bancorp, Inc." The Queens board of
directors believes that the merger agreement and the transactions it
contemplates are fair to Queens' stockholders and are in the best interests of
Queens and its stockholders and recommends that you vote "FOR" the
20
adoption of the merger agreement and the change of Queens' corporate name to
"New York Community Bancorp, Inc."
See "THE MERGER - Queens' Reasons for the Merger; Recommendation of
Queens' Board of Directors" on pages o for a more detailed discussion of the
Queens board of directors' recommendation.
21
THE HAVEN SPECIAL MEETING
THIS SECTION CONTAINS INFORMATION FROM HAVEN FOR HAVEN STOCKHOLDERS
ABOUT THE SPECIAL STOCKHOLDERS MEETING IT HAS CALLED TO CONSIDER AND APPROVE THE
MERGER AGREEMENT.
We are mailing this document to you as a Haven stockholder on or about
August o, 2000. Together with this document, we are also sending you a notice of
the Haven special meeting and a form of proxy that is solicited by our board of
directors. The special meeting will be held on September [26], 2000 at [10:00
a.m.] local time at o, New York, o.
MATTERS TO BE CONSIDERED
The purpose of the Haven special meeting is to vote on a proposal for
the approval and adoption of the merger agreement.
You may be asked to vote upon any other matters that may properly be
submitted to a vote at the Haven special meeting. You may also be asked to vote
upon a proposal to adjourn or postpone the Haven special meeting. We could use
any adjournment or postponement for the purpose, among others, of allowing
additional time to solicit proxies.
PROXIES
Each copy of this document mailed to Haven stockholders is accompanied
by a form of proxy with voting instructions for submission by mail. You should
complete and return the proxy card accompanying this document to ensure that
your vote is counted at the Haven special meeting, or any adjournment or
postponement thereof, regardless of whether you plan to attend the Haven special
meeting. You can revoke your proxy at any time before the vote is taken at the
Haven special meeting by
o submitting written notice of revocation to the Corporate Secretary of
Haven prior to the voting of such proxy,
o submitting a properly executed proxy of a later date, or
o voting in person at the special meeting; however, simply attending the
special meeting without voting will not revoke an earlier proxy.
Written notices of revocation and other communications about revoking your proxy
should be addressed to:
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, NY 11590
Attention: Mark A. Ricca, Esq., Corporate Secretary
If your shares are held in street name, you should follow the instructions of
your broker regarding revocation of proxies.
All shares represented by valid proxies we receive through this
solicitation, and not revoked, will be voted in accordance with your
instructions on the proxy card. If you make no specification on your proxy card
as to how you want your shares voted before signing and returning it, your proxy
will be voted "FOR" approval and adoption of the merger agreement. The Haven
board of directors is presently unaware of any other matters that may be
presented for action at the special meeting. If other matters do properly come
before the special meeting, or any adjournment or postponement thereof, we
intend that shares represented by properly submitted proxies will be voted, or
not voted, by and at the discretion of the persons named as proxies on the proxy
card. However, proxies that indicate a vote against approval and adoption of the
merger agreement will not be voted in favor of adjourning or postponing the
special meeting to solicit additional proxies.
HAVEN STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY
CARDS. IF THE MERGER IS COMPLETED, HAVEN STOCKHOLDERS WILL BE MAILED A
TRANSMITTAL FORM WITHIN 3 BUSINESS DAYS AFTER THE COMPLETION OF THE
22
MERGER WITH INSTRUCTIONS ON HOW TO EXCHANGE THEIR CURRENT STOCK CERTIFICATES FOR
STOCK CERTIFICATES OF QUEENS AND CASH IN LIEU OF FRACTIONAL SHARES, IF
APPLICABLE.
SOLICITATION OF PROXIES
We will bear the entire cost of soliciting proxies from you. In
addition to solicitation of proxies by mail, we will request that banks,
brokers, and other record holders send proxies and proxy material to the
beneficial owners of Haven stock and secure their voting instructions, if
necessary. We will reimburse the record holders for their reasonable expenses in
taking those actions. We have also made arrangements with Morrow & Co., Inc. to
assist us in soliciting proxies and have agreed to pay them $7,500 plus
reasonable expenses for these services. If necessary, we may use several of our
regular employees, who will not be specially compensated, to solicit proxies
from Haven stockholders, either personally or by telephone, telegram, facsimile
or letter.
RECORD DATE
In accordance with Delaware law, Haven's by-laws and the Nasdaq
National Market rules, the close of business on August [9], 2000 has been fixed
by the Haven board of directors as the record date for determining the Haven
stockholders entitled to receive notice of and to vote at the Haven special
meeting. At that time, o shares of Haven common stock were outstanding, held by
approximately o holders of record.
VOTING RIGHTS AND VOTE REQUIRED
The presence, in person or by properly executed proxy, of the holders
of a majority of the outstanding shares of Haven stock is necessary to
constitute a quorum at the Haven special meeting. Abstentions and broker
non-votes will be counted for the purpose of determining whether a quorum is
present but will not be deemed to be counted as votes cast either FOR or AGAINST
the merger agreement. Under the applicable Nasdaq National Market rules, brokers
or members who hold shares in street name for customers who are the beneficial
owners of such shares are prohibited from giving a proxy to vote those shares
with respect to the merger without specific instructions from such customers. An
unvoted proxy submitted by a broker is sometimes referred to as a broker
non-vote.
As provided in Haven's certificate of incorporation, stockholders of
record who beneficially own in excess of 10% of the outstanding shares of common
stock of Haven are not entitled to any vote with respect to the shares held in
excess of the 10% limit. A person or entity is deemed to beneficially own shares
that are owned by an affiliate as well as persons acting in concert with such
person or entity.
Approval and adoption of the merger agreement requires the affirmative
vote of the holders of a majority of the outstanding shares of Haven stock
entitled to vote at the Haven special meeting. You are entitled to one vote for
each share of Haven stock you held as of the record date.
BECAUSE THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF HAVEN STOCK ENTITLED TO VOTE AT THE HAVEN SPECIAL MEETING
IS NEEDED FOR US TO PROCEED WITH THE MERGER, THE FAILURE TO VOTE BY PROXY OR IN
PERSON, ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS VOTES
AGAINST THE MERGER AGREEMENT. ACCORDINGLY, THE HAVEN BOARD URGES HAVEN
STOCKHOLDERS TO COMPLETE, DATE, AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
As of the record date:
o Directors and executive officers of Haven and their affiliates
beneficially owned 1,694,478 shares of Haven stock, or 17.13% of the
outstanding Haven stock at that date.
o Directors and executive officers of Queens and their affiliates
beneficially owned 4,000 shares of Haven stock , or less than 1% of
the outstanding Haven stock at that date.
o Queens beneficially owned no shares of Haven stock, excluding the
shares subject to the Haven stock option described in "THE STOCK
OPTION AGREEMENT" on page o.
23
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Haven board of directors has unanimously approved the merger
agreement and the transactions it contemplates. The Haven board of directors
believes that the merger agreement and the transactions it contemplates are fair
to Haven's stockholders and are in the best interests of Haven and its
stockholders and unanimously recommends that you vote "FOR" the approval and
adoption of the merger agreement.
See "Haven's Reasons for the Merger; Recommendation of the Haven Board
of Directors" on pages o for a more detailed discussion of the Haven board of
directors' recommendation.
24
INFORMATION ABOUT THE COMPANIES
Queens County Bancorp, Inc.
38-25 Main Street
Flushing, New York 11354
(718) 359-6400
Queens County Bancorp, Inc., a Delaware corporation and bank holding company
organized in 1993, is a community-oriented financial institution headquartered
in Flushing, New York, in the Borough of Queens. It is the parent holding
company for Queens County Savings Bank, a savings bank chartered in New York and
subject to regulation by the New York State Banking Department. The Queens
County Savings Bank's deposits are insured by the Bank Insurance Fund, as
administered by the Federal Deposit Insurance Corporation. Queens County Savings
Bank, which operates ten traditional branch offices and three customer service
centers in Queens, and an eleventh branch office in Nassau, is primarily engaged
in attracting retail deposits from the general public and investing those
deposits, together with funds generated through operations, in the origination
of mortgage loans on multi-family properties. In addition, through Queens County
Savings Bank, Queens also originates one-to-four family home and commercial real
estate loans, construction loans, home equity loans and other consumer loans.
Queens County Savings Bank also invests in U.S. Treasury and Government agency
securities and other investment securities. Queens County Savings Bank's deposit
gathering base is concentrated in the communities surrounding its offices, while
its primary lending area extends throughout the greater metropolitan New York
area. Greater metropolitan New York has been, and continues to be, an area of
significant competition among financial institutions.
At June 30, 2000, Queens had total assets of $2.05 billion, deposits of $1.04
billion and stockholders' equity of $134.7 million. At August o, 2000, Queens
had a market capitalization of o million.
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, New York 11590
(516) 683-4100
Haven Bancorp, Inc. was incorporated under Delaware law on March 25, 1993 as the
holding company for CFS Bank, formerly known as Columbia Federal Savings Bank,
in connection with the conversion of CFS Bank from a federally chartered mutual
savings bank to a federally chartered stock savings bank. Haven is a savings and
loan holding company and is subject to regulation by its primary regulator, the
Office of Thrift Supervision (referred to as the "OTS") and its deposit insurer,
the Federal Deposit Insurance Corporation. Haven is headquartered in Westbury,
New York and its principal business currently consists of the operation of its
wholly owned subsidiary, CFS. At June 30, 2000, Haven had total assets of $2.93
billion, deposits of $2.15 billion and stockholders' equity of $108.6 million.
At August o, 2000, Haven had a market capitalization of $ o.
CFS Bank became a federally chartered mutual savings bank in 1983. CFS Bank is a
member of the Federal Home Loan Bank System, and its deposit accounts are
insured by the Federal Deposit Insurance Corporation.
CFS Bank's principal business has been, and continues to be, attracting retail
deposits from the general public and investing those deposits, together with
funds generated from operations and borrowings, primarily in one-to four-
family, owner-occupied residential mortgage loans. Since 1994, CFS Bank has
gradually increased its activity in multi-family and commercial real estate
lending. In addition, CFS Bank will invest in debt, equity and mortgage-backed
securities and other marketable securities to supplement its lending portfolio.
Effective January 1, 1999, CFS Bank indefinitely discontinued offering certain
consumer loans, including home equity loans and home equity lines of credit. At
June 30, 2000, CFS Bank operated 62 supermarket branches, with total deposits of
$908.3 million, and 8 traditional branches, with total deposits of $1.24
billion.
On May 1, 1998, CFS Bank completed the purchase of a loan production franchise
of Intercounty Mortgage, Inc. The business operated as a division of CFS Bank
under the name CFS Mortgage, originating and purchasing residential loans for
CFS Bank's portfolio and for sale in the secondary market, primarily through six
loan origination offices located in New York, New Jersey and Pennsylvania. Loan
sales in the secondary market were primarily on a
25
servicing-released basis, for which CFS earns servicing-released premiums.
During the first quarter of 2000, CFS Bank sold part of IMI and reorganized the
remainder. As a result of this sale and reorganization, CFS Bank incurred a $6.8
million restructuring charge. CFS Bank now offers customers residential mortgage
products through a private label originator.
CFS Insurance Agency, Inc., a wholly owned subsidiary of CFS Bank, provides
automobile, homeowners and casualty insurance to individuals, and various lines
of commercial insurance to individuals. CFS Bank also operates CFS Investments,
Inc., a wholly-owned subsidiary providing securities brokerage services and
insurance.
26
THE MERGER
The following discussion contains material information pertaining to
the merger. This discussion does not purport to be complete and is subject and
qualified in its entirety by reference to the merger agreement, stock option
agreement and financial advisor opinions attached as Appendices to this
document. We encourage you to read and review those documents as well as the
discussion in this document.
GENERAL
This section provides material information about the merger of Queens
and Haven and the circumstances surrounding the merger. The next sections of
this document, entitled "The Merger Agreement" on pages o through o and "The
Stock Option Agreement" on pages o through o, have additional and more detailed
information regarding the legal documents that govern the merger, including
information about the conditions to completion of the merger and the provisions
for terminating or amending the merger agreement.
At the Queens special meeting, Queens stockholders will be asked to
consider and to vote upon a proposal to approve and adopt the merger agreement
and a proposal to approve the change of Queens' name. At the Haven special
meeting, Haven stockholders will be asked to consider and to vote upon a
proposal to approve and adopt the merger agreement. Adoption of the merger
agreement will constitute adoption of the transactions it contemplates,
including, among others, the merger of Haven with and into Queens.
We are furnishing this document to Queens stockholders and Haven
stockholders in connection with the solicitation of proxies by the boards of
directors of Queens and Haven for use at their respective special meetings of
stockholders and any adjournments or postponements of such meetings.
STRUCTURE
The merger agreement provides for the merger of Haven with and into
Queens. Queens will be the surviving corporation and, if it has not already done
so, will change its name to "New York Community Bancorp, Inc." CFS Bank will
continue to exist upon completion of the merger and will operate as a subsidiary
of Queens. Queens may alter the method of effecting the combination with Haven,
provided that such change does not alter the consideration to be issued to Haven
stockholders, alter the tax treatment of the transaction, materially impede or
delay consummation of the merger or adversely affect the obligations of Queens
under the merger agreement.
Upon completion of the merger, Haven stockholders will receive 1.04
shares of Queens common stock for each share of Haven common stock that they
hold. This exchange ratio is subject to upward adjustment only as described
under "THE MERGER AGREEMENT--Amendment, Termination or Waiver of the Merger
Agreement" on page o. Haven stockholders will receive cash in lieu of any
fractional shares of Queens common stock that would have otherwise been issued
at the completion of the merger.
If the number of shares of common stock of Queens changes before the
merger is completed through a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar event, then an appropriate and proportionate adjustment will be made to
the exchange ratio.
As a result of the merger, Queens stockholders immediately prior to the
merger will own approximately 68%, and Haven stockholders immediately prior to
the merger will own approximately 32%, of the outstanding Queens stock. These
percentages are based on the number of fully-diluted shares of Queens stock and
Haven stock calculated as of o, 2000, after taking into account the exchange
ratio.
Queens will account for the merger as a purchase for financial
reporting purposes. The merger is intended to qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, for
federal income tax purposes.
27
BACKGROUND TO THE MERGER
The board of directors of Haven has focused on enhancing stockholder
value over time since CFS Bank's conversion to a stock savings bank in March,
1993 and the formation of Haven as the publicly-owned holding company for CFS
Bank. After the conversion, the principal alternatives considered by Haven have
been (i) pursuing a course of increasing stockholder value by remaining a
community bank and growing internally through the opening of new branches, (ii)
pursuing the acquisition of smaller institutions or entities related to
financial services, (iii) pursuing a merger of equals with one or more
institutions in CFS Bank's market area and (iv) an acquisition of Haven by
another financial institution.
In September 1999, the board of directors of Haven retained Lehman
Brothers Inc. (hereinafter referred to as Lehman Brothers) to render financial
advisory services to Haven, including reviewing options regarding Haven's
residential mortgage origination division. On September 22, 1999 and October 20,
1999, the Haven board of directors met with Lehman Brothers to discuss Lehman
Brothers' analysis and the possibility of a business combination with, or sale
of assets to, another financial institution. In November 1999, Lehman Brothers
discussed with Queens the possibility of a business combination with Haven, and
Queens gave Haven a preliminary indication of interest subject to a number of
conditions. On November 22, 1999, the Haven board of directors met with Lehman
Brothers and Thacher Proffitt & Wood, its outside counsel (hereinafter referred
to as Thacher Proffitt), to discuss Queens' preliminary indication of interest,
as compared to Haven's value continuing as an independent institution. The Haven
board of directors determined that Haven should continue to pursue its long-term
business plan, while continuing to evaluate other strategic options.
During the period from June, 1999 through April, 2000, Haven was
engaged in a dispute with PL Capital Group, a holder of approximately [6%] of
Haven's common stock, concerning the appointment of Richard Lashley and Garrett
Goodbody to the Haven board of directors and PL Capital Group's proxy
solicitation in opposition of Haven's nominees for election to its board of
directors. On April 7, 2000, Haven entered into an agreement with PL Capital
Group which provides, among other things, for the appointment of Messrs. Lashley
and Goodbody to the Haven board of directors and for the termination of the PL
Capital Group solicitation.
On March 22, 2000, the board of directors of Haven met with Lehman
Brothers and Thacher Proffitt, to consider, among other items, strategic
alternatives ranging from pursuing a course of continuing as an independent
financial institution, a possible merger of equals with a similarly sized
institution and a possible sale of Haven to another financial institution. At
the March 22, 2000 meeting, the Haven board of directors authorized Lehman
Brothers to review the strategic alternatives available to Haven, to identify
potential merger partners and acquirors of Haven and to prepare and distribute
information packages to those parties that expressed interest in reviewing the
Haven acquisition opportunity in order to obtain expressions of interest as to a
potential transaction with Haven. In addition, the Haven board of directors
formed the Special Committee to Explore Strategic Alternatives (referred to as
the special committee) comprised solely of outside directors to work with Lehman
Brothers in these efforts.
The special committee of the Haven board of directors met twice with
Lehman Brothers after the March 22, 2000 meeting to discuss various strategic
alternatives and beginning in April 2000, Lehman Brothers contacted a total of
20 financial institutions that were identified by Lehman Brothers as attractive
partners for a possible business combination with Haven. Of these 20, 11 entered
into confidentiality agreements with Haven and were furnished with confidential
information packages. Senior management of Haven met with six of these 11
institutions to discuss the information provided. On May 8, 2000, Haven received
written preliminary indications of interest from four institutions, which
preliminary indications of interest were discussed at meetings of the special
committee on May 9 and May 16, 2000 and at a meeting of the Haven board of
directors on May 17, 2000, at which Lehman Brothers and Thacher Proffitt were
present. The preliminary indication of interest from each institution was for an
acquisition transaction in which the stockholders of Haven would receive either
common stock, cash or a combination of common stock and cash. In each case, the
preliminary indication of interest was subject to, among other things, the
completion of a detailed due diligence review of Haven.
During May and June 2000, Lehman Brothers, together with senior
management of Haven, met with the four parties who had submitted the preliminary
indications of interest to address specific questions raised by the parties
regarding the information package previously provided to them and to permit the
institutions to perform a detailed due diligence review of Haven. This process
resulted, on June 16, 2000, in Haven receiving an indication of interest from
Queens for a 100% common stock transaction.
28
Based on its evaluation of Queens' proposal, on June 21, 2000, the
special committee requested Lehman Brothers to contact Queens and determine if
Queens would increase its proposed exchange ratio, add certain provisions and
modify or eliminate certain conditions to its proposal. On June 22, 2000, the
Haven board of directors met with Lehman Brothers and Thacher Proffitt to
discuss Queens' proposal and the recommendation of the special committee. Joseph
R. Ficalora, Chairman, President and Chief Executive Officer of Queens, and
Salomon Smith Barney, Queens' financial advisors, also made a presentation to
the Haven board of directors on June 22, 2000 describing the benefits of a
business combination between Haven and Queens. On June 23, 2000, Lehman Brothers
advised the special committee of the Haven board of directors that Queens was
amenable to a number of changes requested by Haven. Queens presented a formal
proposal in which, among other things, the stockholders of Haven would receive
1.04 shares of Queens common stock for each share of Haven common stock. This
exchange ratio would result in stockholders of Haven owning approximately 32% of
Queens on a pro forma combined basis. Based on Queens' revised proposal, the
special committee authorized senior management of Haven to proceed with the
negotiation of a definitive merger agreement with Queens.
At a meeting of the Haven board of directors held on June 27, 2000,
Lehman Brothers presented its written opinion to the Haven board of directors
that the exchange ratio was fair, from a financial point of view, to Haven
stockholders. During this meeting, Thacher Proffitt also reviewed the terms and
conditions contained in the merger agreement, including, among other things,
pricing, termination, representations and warranties, negative covenants,
closing conditions and treatment of Haven's employee benefit plans and
arrangements. Based on, among other things, the various factors discussed below
under "Haven's Reasons for the Merger; Recommendation of Haven's Board of
Directors," the Haven board of directors unanimously approved the merger, the
merger agreement, the stock option agreement and the related transactions.
From time to time, Queens has considered various acquisitions in
furtherance of its strategy and its board of directors has discussed such
acquisitions. The Queens board of directors discussed the Haven merger in
several informal meetings and discussions before considering the merger at a
meeting of the Queens board of directors held on June 27, 2000. At this meeting
the Queens board of directors reviewed the terms and conditions contained in the
draft merger agreement, including, among other things, pricing, termination,
standard representations and warranties, negative covenants, customary closing
conditions and treatment of Haven's employee benefit plans and arrangements.
HAVEN'S REASONS FOR THE MERGER; RECOMMENDATION OF HAVEN'S BOARD OF DIRECTORS
The board of directors of Haven believes that the merger is in the best
interests of Haven and its stockholders. The Haven board of directors therefore
has unanimously approved the merger agreement and unanimously recommends that
the Haven stockholders vote "FOR" the approval and adoption of the merger
agreement.
In reaching its decision to approve and recommend the merger agreement,
the board of directors of Haven consulted with the management of Haven, as well
as its financial and legal advisors, and considered a number of factors, both
from a short-term and longer-term perspective, including the following material
factors:
o The Haven board of directors' belief that the merger will enable all
holders of Haven common stock to realize significant value when
compared to the market value per share of Haven common stock prior to
Haven's announcement on March 24, 2000 that it was exploring strategic
alternatives and prior to the announcement of the merger on June 27,
2000. The market value per share of Haven common stock, as represented
by the closing sale price, as reported on Nasdaq, was $14.06 on March
23, 2000, and was $17.62 on June 26, 2000. See "--Background of the
Merger" on page o, "-- Opinion of Financial Advisors - Haven" on page
o and "--Interests of Management and Directors in the Merger" on page
o.
o The Haven board of directors' familiarity with and review of Haven's
business, financial condition, results of operations, competitive
position and future prospects, including the potential growth,
development, productivity and profitability of Haven;
o The current and prospective environment in which Haven operates,
including national and local economic conditions, the competitive
environment for thrifts and other financial institutions generally,
the increased competition resulting from recent legislation allowing
non-banks to conduct banking activities, the trend toward
consolidation in the financial services industry and the likely
29
effect of the foregoing factors on Haven's potential growth,
development, productivity, and profitability;
o Pro forma financial information on the merger, including, among other
things, the pro forma book value and earnings per share;
o The financial information reviewed by management and Lehman Brothers
with the Haven board of directors regarding Queens and the performance
of Queens' common stock on both a historical and prospective basis and
the strategic fit between the parties, including:
o the combination of Haven's deposit gathering ability through
its supermarket and traditional branch franchise with
Queens' multi-family loan origination ability,
o the enhanced opportunities for operating efficiencies that
could result from the merger, and
o the respective contributions that each of the parties would
bring to a combined institution with respect to market
capitalization, financial condition, and results of
operations.
o The Haven board of directors' review of the historical and prospective
market prices of Haven common stock compared to the merger
consideration, and the expectation of the Haven board of directors
that the merger will provide Haven stockholders with the opportunity
to receive a premium over the historical trading prices for their
shares, and that the consideration received by Haven stockholders in
the merger would constitute a favorable premium compared to expected
future values of Haven common stock under a variety of circumstances
and assumptions;
o The fact that the receipt of Queens common stock by the Haven
stockholders in the merger would be on a tax-free basis for federal
income tax purposes (except with respect to cash received in lieu of
fractional shares);
o Haven's alternatives to the merger, including the range of possible
values of those alternatives and the timing and likelihood of actually
receiving those values;
o The results of the extensive process followed by Lehman Brothers to
obtain acquisition proposals and preliminary bids;
o The Haven board of directors' belief that Queens has a strong
financial and capital position and that the Queens common stock to be
received by Haven stockholders (including its dividend) presents a
high long-term intrinsic value, substantial capacity for future growth
and considerable potential for long-term strategic value to such
stockholders;
o The presentations of Lehman Brothers to the Haven board of directors
and the special committee on May 16 and 17 and June 21, 22, 23 and 27,
2000 and Lehman Brothers' opinion that, as of June 27, 2000, the
consideration to be received by the stockholders of Haven was fair to
Haven's stockholders from a financial point of view;
o The review by the Haven board of directors with its legal and
financial advisors of the provisions of the merger agreement, the
stock option agreement, and other related documents, including the
exchange ratio, the ability of Haven to terminate the merger agreement
under certain circumstances if the value of Queens common stock
declines, subject to the right of Queens to increase the exchange
ratio, Queens' agreeing to appoint (a) three members of the Haven
board of directors to the Queens board of directors, (b) two members
of the Haven board of directors to the Queens County Savings Bank
board of directors and (c) three members of the Haven board of
directors to the CFS Bank board of directors and to create an advisory
board for the remaining Haven board of directors members to advise
Queens with respect to deposit and lending activities in Haven's
former market
30
area and to maintain and develop customer relationships (see "THE
MERGER--Interests of Directors and Management in the Merger" on page
o).
This discussion of the information and factors considered by the Haven
board of directors is not intended to be exhaustive, but includes all material
factors considered by the Haven board of directors. The Haven board of directors
conducted a discussion of the factors described above, including asking
questions of Haven's management and Haven's legal and financial advisors, and
reached general consensus that the merger was in the best interests of Haven and
Haven stockholders. In reaching its determination to adopt and recommend the
merger, the Haven board of directors did not assign any relative or specific
weights to these factors, and individual directors may have given differing
weights to different factors. The Haven board of directors relied on the
experience and expertise of its financial advisor for quantitative analysis of
the financial terms of the merger. It should be noted that this explanation of
the Haven board's reasoning is forward-looking in nature and, therefore, should
be read in light of the factors discussed under the heading "CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS" on page o.
THE HAVEN BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF HAVEN AND ITS STOCKHOLDERS. ACCORDINGLY, THE HAVEN BOARD OF
DIRECTORS HAS UNANIMOUSLY ADOPTED AND APPROVED THE MERGER AGREEMENT AND
UNANIMOUSLY RECOMMENDS THAT HAVEN STOCKHOLDERS VOTE "FOR" APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT.
OPINION OF FINANCIAL ADVISORS -- HAVEN
Haven Bancorp Inc. has retained Lehman Brothers to act as its financial
advisor in connection with the merger. Lehman Brothers is an internationally
recognized investment banking firm. Lehman Brothers, as part of its investment
banking business, is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bids, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
Haven retained Lehman Brothers based upon Lehman Brothers' experience,
expertise, reputation and its familiarity with Haven and the industry in general
and because its investment banking professionals have substantial experience in
transactions similar to the merger of Haven and Queens County. As compensation
for its services, Haven has agreed to pay Lehman Brothers (i) a retainer fee of
$100,000, (ii) a fee of $300,000 upon rendering of a fairness opinion by Lehman
Brothers to the board of directors of Haven, which became payable on June 27,
2000, (iii) a $50,000 fee upon public announcement of the proposed merger, and
(iv) a transaction fee equal to 1% of the merger consideration, contingent upon
and payable upon the completion of the merger. Based upon the closing sale price
of Queens common stock on August o, 2000, the transaction fee would be $o. The
$300,000 fee payable to Lehman Brothers for rendering a fairness opinion will be
credited against the transaction fee. In addition, Haven has agreed to reimburse
Lehman Brothers for its out-of-pocket expenses and indemnify Lehman Brothers and
certain related persons and entities against certain liabilities, including
liabilities under securities laws, incurred in connection with its services. In
the past, Lehman Brothers has also been engaged by Queens to render certain
financial advisory services. In the ordinary course of their business, Lehman
Brothers and its affiliates actively trade the debt and equity securities of
Haven and Queens for their own account and for the accounts of their customers
and, accordingly, may at any time hold a long or short position in such
securities.
As part of its role as financial advisor, Lehman Brothers rendered its
written opinion to the Haven board of directors on June 27, 2000 that, as of the
date of such opinion, and subject to the factors and assumptions set forth in
such opinion, the exchange ratio to be offered to Haven stockholders by Queens
in the merger is fair, from a financial point of view, to the Haven
stockholders. Lehman Brothers subsequently confirmed its June 27, 2000 opinion
by delivery to the Haven board of directors of a written opinion dated as of the
date of this Joint Proxy Statement/Prospectus. THE FULL TEXT OF THE LEHMAN
BROTHERS' OPINION (REFERRED TO AS THE "LEHMAN BROTHERS OPINION") IS ATTACHED
HERETO AS APPENDIX D. HAVEN'S STOCKHOLDERS SHOULD READ THE LEHMAN BROTHERS
OPINION FOR A DISCUSSION OF ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS ON
THE REVIEW UNDERTAKEN BY LEHMAN BROTHERS IN RENDERING ITS OPINION. THE SUMMARY
SET FORTH IN THIS JOINT PROXY STATEMENT/ PROSPECTUS OF THE LEHMAN BROTHERS
OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE LEHMAN
BROTHERS OPINION ATTACHED HERETO.
31
No limitations were imposed by Haven on the scope of Lehman Brothers'
investigation or the procedures to be followed by Lehman Brothers in rendering
the Lehman Brothers opinion. In arriving at the Lehman Brothers opinion, Lehman
Brothers did not ascribe a specific range of value to Haven or Queens, but
rather made its determination as to the fairness, from a financial point of
view, of the exchange ratio to be offered by Queens to the Haven stockholders in
the merger on the basis of the financial and comparative analyses described
below. The Lehman Brothers opinion is for the use and benefit of the Haven board
of directors and was rendered to the Haven board of directors in connection with
its consideration of the merger. The Lehman Brothers opinion is not intended to
be and does not constitute a recommendation to any stockholder of Haven as to
how such stockholder should vote with respect to the merger. Lehman Brothers was
not requested to opine as to, and its opinion does not address, Haven's
underlying business decision to proceed with or effect the merger.
In arriving at the Lehman Brothers opinion, Lehman Brothers reviewed
and analyzed:
o the merger agreement and the specific terms of the merger,
o publicly available information concerning Haven and Queens that Lehman
Brothers believed to be relevant to its analyses,
o financial and operating information with respect to the business,
operations and prospects of Haven and Queens furnished to it by Haven
and Queens,
o a trading history of Queens common stock and Haven common stock from
June 26, 1995 to the date of the Lehman Brothers opinion, and a
comparison of such trading histories with those other companies that
it deemed relevant,
o a comparison of the historical financial results and present financial
condition of Haven and Queens with those of other companies that
Lehman Brothers deemed relevant,
o a comparison of the financial terms of the merger with the financial
terms of certain other recent transactions that Lehman Brothers deemed
relevant, and
o the potential pro forma impact of the merger on Queens.
In addition, Lehman Brothers had discussions with the management of
Queens and Haven concerning their respective businesses, operations, assets,
financial conditions and prospects, and their estimates of cost savings,
operating synergies and other strategic benefits expected to result from a
combination of the businesses of Haven and Queens, and undertook such other
studies, analyses and investigations as it deemed appropriate.
In arriving at the Lehman Brothers opinion, Lehman Brothers assumed and
relied upon the accuracy and completeness of the financial and other information
used by it without assuming any responsibility for independent verification of
such information and further relied upon the assurances of the managements of
Haven and Queens that they were not aware of any facts or circumstances that
would make such information inaccurate or misleading. With respect to the
financial projections of Haven and Queens, Lehman Brothers assumed that such
projections were reasonably prepared on a basis reflecting the best currently
available estimates and judgments of the respective managements of Haven and of
Queens as to the future financial performance of Haven, Queens and the combined
entity, and that Haven and Queens would perform, and that the combined entity
will perform substantially in accordance with such projections. In arriving at
the Lehman Brothers opinion, Lehman Brothers did not conduct a physical
inspection of the properties and facilities of Haven and Queens and did not make
or obtain any evaluations or appraisals of the assets or liabilities of Haven
and Queens. In addition, Lehman Brothers notes that it is not an expert in the
evaluation of loan portfolios or allowances for loan and real estate owned
losses and assumed that the allowances for loan and real estate owned losses
provided to it by Haven and Queens and used by it in its analysis and in
arriving at the Lehman Brothers opinion were, in the aggregate, adequate to
cover all such losses. The Lehman Brothers opinion was based upon market,
economic and other conditions as they existed on, and could be evaluated as of,
the date of the Lehman Brothers opinion.
In connection with the preparation and delivery of the initial Lehman
Brothers opinion to the Haven board of directors, Lehman Brothers performed a
variety of financial and comparative analyses, as described below. The
preparation of a fairness opinion involves various determinations as to the most
appropriate and relevant methods of
32
financial and comparative analysis and the application of those methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Furthermore, in arriving at the Lehman
Brothers opinion, Lehman Brothers did not attribute any particular weight to any
analysis or factor considered by it, but rather made qualitative judgments as to
the significance and relevance of each analysis and factor. Accordingly, Lehman
Brothers believes that its analyses must be considered as a whole and that
considering any portion of such analyses and factors, without considering all
analyses and factors, could create a misleading or incomplete view of the
process underlying the Lehman Brothers opinion. In its analyses, Lehman Brothers
made numerous assumptions with respect to industry performance, general business
and economic conditions and other matters, many of which are beyond the control
of Haven and Queens. Any estimates contained in these analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth in
such analyses. In addition, analyses relating to the value of businesses do not
purport to be appraisals or to reflect the prices at which businesses may
actually be sold.
Purchase Price Analysis. Based upon the exchange ratio of one to 1.04,
the closing price of Queens common stock on June 26, 2000 of $18.50 represented
a value to be received by holders of Haven common stock of $19.24 per share.
Based upon this implied transaction value per share, Lehman Brothers calculated
the purchase price-to-market, purchase price-to-book, purchase price-to-tangible
book, purchase price to earnings multiples and the implied core deposit premium
paid in the merger. The implied transaction value per share yielded a premium to
market price of 9.2% over the Haven closing price on June 26, 2000. In addition,
Lehman also calculated that the premium of the implied transaction value to the
Haven closing market price at March 23, 2000, the day before Haven publicly
announced that they had hired Lehman Brothers to assist in exploring strategic
alternatives, was 36.8%. This analysis also yielded a purchase price-to-book
value multiple of 1.69x, a purchase price-to-tangible book value multiple of
1.72x, a purchase price-to-latest twelve months earnings per share multiple of
17.5x (based on Haven's earnings for the twelve month period ended March 31,
2000), a purchase price-to-latest twelve months core operating earnings
(adjusted for a $7.1 million restructuring charge in the first quarter of 2000)
of 12.0x, a purchase price-to-estimated 2000 earnings per share multiple of
8.6x, a purchase price to estimated 2001 earnings per share multiple of 7.7x
(based on estimates of Haven's 2000 and 2001 earnings published by the
Institutional Brokers Estimate System, referred to as I/B/E/S, as of June 27,
2000) and a 4.0% core deposit premium. I/B/E/S is a data service that monitors
and publishes a compilation of earnings estimates produced by selected research
analysts regarding companies of interest to institutional investors.
Historical Stock Price Analysis. Lehman Brothers reviewed the
historical performance of Haven common stock for the one, two and five year
periods ended June 23, 2000. Lehman also compared the performance of Haven
common stock to the performance of Queens common stock and the performance of
the S&P 500 Index and Lehman Brothers Thrift Index. The results of these
comparisons are set forth in the following table:
Stock Price Performance
- -----------------------
1 Year 2 Year 5 Year
------ ------ ------
Haven 25.5% (34.5%) 93.3%
Queens (43.7%) (35.2%) 155.3%
S&P 500 8.1% 28.8% 162.2%
Lehman Brothers Thrift Index (16.2%) (29.8%) 70.2%
Total Return(1)
- ---------------
Haven 27.9% (25.2%) 110.6%
Queens (41.4%) (31.3%) 189.5%
(1) Includes reinvestment of dividends
Comparable Company Analysis. Using publicly available information,
Lehman Brothers compared the financial performance and stock market valuation of
Haven and Queens with the following selected depository institutions deemed
relevant by Lehman Brothers: Astoria Financial Corporation, Dime Community
Bancshares, Inc., GreenPoint Financial Corp., Independence Community Bancorp,
Richmond County Financial Corp., Roslyn Bancorp and Staten Island Bancorp. For
purposes of such analysis, the financial information used by Lehman Brothers was
as of and for the quarter ended March 31, 2000. Stock market information was
based on closing market prices as of June 26, 2000. Earnings estimates for each
company were based on earnings published by First Call. The results of the
analysis are set forth in the following table:
33
Haven Queens Peer Group Median
Return on Average Assets 0.62% (1) 1.58% 1.06%
Return on Average Equity 18.0 (1) 23.5 11.0
Net Interest Margin 2.74 3.58 3.31
Efficiency Ratio 72.2 32.1 43.5
Tangible Common Equity/Assets 3.42 6.77 7.94
Borrowings/Assets 22.9 37.5 31.7
Loans/Deposits 84.7 160.5 103.3
NPAs/Assets 0.25 0.16 0.20
Allowance for Loan Losses/ 237.0 220.5 289.2
Non-performing Loans
Stock Price/2000 EPS 7.83x 10.5x 9.50x
Stock Price/2001 EPS 6.91 9.54 8.57
Stock Price/2000 Cash EPS 7.37 7.91 8.91
Stock Price/Book Value 1.55 2.49 1.15
Stock Price/Tangible Book Value 1.58 2.49 1.61
Dividend Yield 1.70 5.41 3.75
(1) Excludes restructuring charge of $7.1 million.
Because of the inherent differences in the businesses, operations, financial
conditions and prospects of Queens and Haven and the companies included in the
comparable company analysis, Lehman Brothers believed that it was inappropriate
to, and therefore did not, rely solely on the quantitative results of its
analysis and, accordingly, also made qualitative judgments concerning
differences between Haven and Queens and the companies included in the
comparable company analysis which would affect the trading values of Haven and
Queens and the respective comparable companies.
Comparable Transaction Analysis. Using publicly available information,
Lehman Brothers reviewed certain financial terms and characteristics, including
historical purchase price-to earnings ratios, the purchase price-to-book ratio,
the purchase price-to-tangible book ratio, premium-to-market price and the core
deposit premium paid at the time of transaction announcement, of 12 savings
institution merger or acquisition transactions (referred to as the "comparable
thrift transaction group") with values greater than $50 million announced since
June 1, 1999, which Lehman Brothers deemed to be comparable to the present
transaction. The comparable thrift transaction group considered by Lehman
Brothers in its analysis consisted of the following (identified by acquiror /
acquiree): Troy Financial Corp. / Catskill Financial Corp., Harris Financial/
York Financial Corp., Niagara Bancorp Inc./ Iroquois Bancorp, Richmond County
Financial/ South Jersey Financial, Niagara Bancorp Inc./ CNY Financial Corp.,
First Bancorp/ First Savings Bancorp, Webster Financial Corp./ MECH Financial
Inc., North Fork Bancorp/ Reliance Bancorp, Staten Island Bancorp/ First State
Bancorp, North Fork Bancorp./ JSB Financial Inc., Hudson United Bancorp/
Southern Jersey Bancorp. The results of this analysis are set forth in the
following table:
Transaction Comparable Comparable
Multiple Group Average Group Median
Deal Price/Book Value 1.69x 1.61x 1.56x
Deal Price/Tangible Book Value 1.72 1.75 1.59
Deal Price/Trailing 12 Months Earnings Per Share 12.0 16.0 16.9
(1)/17.5
Deal Price/Forward Earnings Per Share 8.6 15.9 16.3
Price to Market 1.09/1.37(3) 1.44(2) 1.26(2)
Core deposit Premium 4.0% 12.9% 11.3%
<FN>
(1) Excludes $7.1 million restructuring charge.
(2) 30 days prior to announcement.
(3) Reflects closing price on 3/23/00, preceding announcement of sale process.
</FN>
34
Because the market conditions, rationale and circumstances surrounding
each of the transactions analyzed were specific to each transaction and because
of the inherent differences in the businesses, operations, financial conditions
and prospects of Haven, Queens and the comparable thrift transaction group,
Lehman Brothers believed that it was inappropriate to, and therefore did not,
rely solely on the quantitative results of its analysis and, accordingly, also
made qualitative judgments concerning differences between the characteristics of
these transactions and the merger that would affect the acquisition values of
Haven and such acquired companies.
Discounted Cash Flow Analysis. Lehman Brothers discounted four years of
estimated cash flows of Haven (based upon estimates published by I/B/E/S),
assuming a dividend rate sufficient to maintain a tangible capital ratio
(defined as tangible common equity divided by tangible assets) of 5.50% and
using a range of discount rates of 17.5% to 18.5%. These rates were chosen to
reflect the different assumptions regarding required rates of return of holders
or prospective holders of Haven common stock. Lehman Brothers derived an
estimate of a range of terminal values by applying multiples ranging from 8
times to 10 times estimated year end 2004 net income assuming I/B/E/S estimates
and a growth rate of 10% for post 2001 earnings. This analysis yielded a range
of stand alone values for Haven Common Stock of approximately $17 to $22 per
share as compared to a per-share transaction value of $19.24 based on the
closing price of Queens common stock on June 26, 2000.
Pro Forma merger Analysis. Lehman Brothers analyzed the impact of the
merger on Queens County's and Haven's estimated earnings per share and cash
earnings per share based on published I/B/E/S estimates for 2001 earnings of
Queens and Haven. In connection with this analysis, management of Queens
provided Lehman Brothers with cost savings estimates and other earnings
adjustments from the merger, which were incorporated in the Lehman Brothers'
analysis. Based on such I/B/E/S estimates and management estimates of cost
savings and other earnings adjustments, as illustrated in the following table,
the analysis indicated that the merger would be accretive to projected 2001
earnings per share and 2001 cash earnings per share for both companies'
stockholders and would increase the dividend per share paid to Haven
stockholders.
Projected Year Ended December 31, 2001
- --------------------------------------
Queens Haven
------------------------ ------------------------
Stand Alone Pro Forma Stand Alone Pro Forma
----------- --------- ----------- ---------
Earnings Per Share $1.95 $2.47 $2.51 $2.57
Cash Earnings Per Share 2.64 2.74 2.53 2.85
Dividend Per Share 1.00 NA 0.34 1.16
Contribution Analysis. Lehman Brothers analyzed the respective
contributions of Queens and Haven to the combined company's pro forma balance
sheet as of March 31, 2000 and pro forma historic net income and cash net income
for 1998, 1999 and the quarter ended March 31, 2000. In addition, Lehman
Brothers analyzed the respective contributions of Queens and Haven to the
combined company's pro forma net income based on I/B/E/S estimates of projected
2001 net income and 2001 cash net income. This analysis indicated the implied
contribution to the combined entity were as follows:
($ in millions)
Haven Queens
Total Assets 60% 40%
Total Loans 52 48
Total Deposits 67 33
Total Equity 43 57
1998 Net Income 23 77
1998 Cash Net Income 17 83
1999 Net Income 29 71
1999 Cash Net Income 23 77
March 31, 2000 Net Income 38(1) 62
March 31, 2000 Cash Net Income 33(1) 67
2001 Estimated Net Income 39 61
2001 Estimated Cash Net Income 32 68
35
Ownership Based on Exchange Ratio 32 68
(1) Excludes $7.1 million restructuring charge.
As of the date of this document, Lehman Brothers is of the opinion
that, from a financial point of view, the exchange ratio to be offered by Queens
to the stockholders of Haven in the merger is fair to Haven Stockholders.
QUEENS' REASONS FOR THE MERGER; RECOMMENDATION OF QUEENS' BOARD OF DIRECTORS
The Queens board of directors believes that the merger presents an
excellent opportunity to combine and expand two complementary sets of banking
operations. The board consulted with financial and other advisors and determined
that the merger was consistent with the strategic plans of Queens and was in the
best interests of Queens and its stockholders. In reaching its conclusion to
approve and adopt the merger agreement, the stock option agreement and the
transactions contemplated by those documents, the board considered a number of
factors, including the following:
o The merger consideration to be issued to Haven stockholders in
relation to the market value, book value and earnings per share of
Haven common stock;
o The Queens board's review, based in part on presentations by Salomon
Smith Barney, its financial advisor, and management, of the business,
operations and financial condition of Haven and CFS Bank, the
prospects of the combined institution, and the increased market
presence, economies of scale and cost savings opportunities for
additional growth made possible by the merger;
o The Queens board's recognition of the complementary nature of the
markets served and products offered by Queens and Haven and the
expectation that the merger would provide it with opportunities for
additional growth, including expansion of high quality multi-family
loan production and potential increases to fee income;
o The Queens board's recognition of the potential growth opportunities
attendant upon the combination of Haven's strength as a deposit
generator with Queens' strength as a high quality asset generator;
o The impact that the merger is anticipated to have on Queens'
consolidated results of operations, including anticipated cost savings
(estimated to be $14.2 million pre-tax ($8.5 million after-tax)
representing approximately 20% of Haven's normalized estimated 2000
operating expenses) resulting from consolidation in certain areas, and
including the effect of a 20% repurchase of stock to be issued in the
transaction, such that management of Queens estimated that the
transaction would be approximately 26% accretive to earnings per share
in 2001, and approximately 3.7% accretive to cash earnings per share
(calculated as reported earnings plus non-cash charges for
amortization of goodwill, amortization relating to certain employee
stock plans and the elimination of certain ongoing purchase accounting
adjustments arising from asset and liability marks-to-market) in 2001,
with estimated pro forma earnings per share of $2.47 and estimated pro
forma cash earnings per share of $2.74 for 2001;
o The opinion of Salomon Smith Barney that the Haven exchange ratio is
fair, from a financial point of view, to Queens;
o The expected impact of the merger on depositors, customers and
communities served by Queens and Haven;
o The expectation that the merger will be a tax-free transaction to
Queens and its stockholders and that the merger will be accounted for
under the purchase method of accounting. See "MATERIAL FEDERAL INCOME
TAX CONSEQUENCES OF THE MERGER" on page o and "ACCOUNTING TREATMENT"
on page o; and
o The terms of the merger agreement, the stock option agreement, and the
other documents executed in connection with the merger.
36
The Queens board of directors realizes that there can be no assurance
about future results, including results expected or considered in the factors
listed above, such as assumptions regarding price-to-earnings multiples,
potential revenue enhancements, anticipated cost savings and earnings accretion.
However, the board concluded that the potential positive factors outweighed the
potential risks of consummating the merger.
The foregoing discussion of the information and factors considered by
the Queens board of directors is not exhaustive, but includes all material
factors considered by the Queens board of directors. In view of the wide variety
of factors considered by the Queens board of directors in connection with its
evaluation of the merger and the complexity of such matters, the Queens board of
directors did not consider it practical to, nor did it attempt to, quantify,
rank or otherwise assign relative weights to the specific factors that it
considered in reaching its decision. The Queens board of directors conducted a
discussion of the factors described above, including asking questions of Queens'
management and Queens' legal and financial advisors, and reached general
consensus that the merger was in the best interests of Queens and Queens
stockholders. In considering the factors described above, individual members of
the Queens board of directors may have given different weight to different
factors. The Queens board of directors relied on the experience and expertise of
its financial advisor for quantitative analysis of the financial terms of the
merger. See "THE MERGER -- Opinion of Financial Advisors -- Queens" on page o.
It should be noted that this explanation of the Queens board's reasoning and all
other information presented in this section is forward-looking in nature and,
therefore, should be read in light of the factors discussed under the heading
"CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS" on page o.
THE QUEENS BOARD OF DIRECTORS, AT A MEETING DULY CALLED AND HELD ON
JUNE 27, 2000, HAS, BY A UNANIMOUS VOTE OF THE ENTIRE BOARD, ADOPTED AND
APPROVED THE MERGER AGREEMENT AND THE CORPORATE NAME CHANGE, AND HAS DETERMINED
THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF QUEENS AND THE QUEENS
STOCKHOLDERS. ACCORDINGLY, THE QUEENS BOARD OF DIRECTORS RECOMMENDS THAT QUEENS
STOCKHOLDERS VOTE "FOR" THE MERGER AGREEMENT AND VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE QUEENS CERTIFICATE OF INCORPORATION THAT EFFECTS THE CORPORATE
NAME CHANGE.
OPINION OF FINANCIAL ADVISORS -- QUEENS
Queens retained Salomon Smith Barney to act as its financial advisor in
connection with the merger. Queens selected Salomon Smith Barney based on its
experience, expertise and familiarity with Queens and its business. Salomon
Smith Barney is an internationally recognized investment banking firm and is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, leveraged buyouts, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes.
Pursuant to Salomon Smith Barney's engagement letter with Queens dated
November 10, 1999, Salomon Smith Barney rendered an opinion to the Queens board
of directors on June 27, 2000 to the effect that, based upon and subject to the
considerations set forth in its opinion, Salomon Smith Barney's experience as
investment bankers, its work described below and other factors it deemed
relevant, as of that date, the exchange ratio was fair, from a financial point
of view, to Queens.
The full text of Salomon Smith Barney's opinion, which sets forth the
assumptions made, general procedures followed, matters considered and limits on
the review undertaken, is included as Appendix C to this document. The summary
of Salomon Smith Barney's opinion set forth below is qualified in its entirety
by reference to the full text of the opinion. STOCKHOLDERS ARE URGED TO READ
SALOMON SMITH BARNEY'S OPINION CAREFULLY AND IN ITS ENTIRETY.
Salomon Smith Barney has consented to the inclusion of the Salomon
Smith Barney opinion as Appendix C and has reviewed and consented to the
inclusion of this disclosure related to the Salomon Smith Barney opinion. In
giving this consent, Salomon Smith Barney does not admit that it comes within
the category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the SEC under the Securities Act,
nor does Salomon Smith Barney admit that it is an expert with respect to any
part of the registration statement of which this document is a part within the
meaning of the term "experts" as used in the Securities Act or the rules and
regulations of the SEC under the Securities Act.
In arriving at its opinion, Salomon Smith Barney:
37
o reviewed a draft of the merger agreement;
o held discussions with certain senior officers, directors,
representatives and advisors of Queens and certain senior officers,
representatives and advisors of Haven concerning the businesses,
operations and prospects of Queens and Haven;
o examined publicly available business and financial information
relating to Queens and Haven, including information relating to
certain strategic implications and operational benefits anticipated to
result from the merger;
o reviewed the financial terms of the merger as set forth in the draft
merger agreement in relation to current and historical market prices
and trading volumes of the common stock of each of Queens and Haven,
historical and other operating data of Queens and Haven, publicly
available forecasts as to the future earnings of Queens and Haven, and
the historical and forecasted capitalization and financial condition
of Queens and Haven;
o considered, to the extent publicly available, the financial terms of
certain other similar transactions that Salomon Smith Barney
considered relevant in evaluating the exchange ratio;
o analyzed certain financial, stock market and other publicly available
information relating to the businesses of other companies whose
operations Salomon Smith Barney considered relevant in evaluating
those of Queens and Haven;
o evaluated the pro forma financial impact of the merger on Queens; and
o conducted other analyses and examinations and considered other
information and financial, economic and market criteria as Salomon
Smith Barney deemed appropriate in arriving at its opinion.
In rendering its opinion, Salomon Smith Barney assumed and relied,
without independent verification, upon the accuracy and completeness of all
financial and other information and data publicly available or furnished to, or
otherwise reviewed by or discussed with, Salomon Smith Barney and further relied
on the assurances of the management of Queens and Haven that they were not aware
of any facts that would make any of that information inaccurate or misleading.
With respect to financial forecasts regarding Queens and Haven, except with
respect to cost savings and operating synergies related to the merger, Salomon
Smith Barney relied upon publicly available third-party equity research
forecasts, and it expressed no view with respect to such forecasts or the
assumptions on which they were based. With respect to forecasts of cost savings
and operating synergies forecasted by the management of Queens to result from
the merger, Salomon Smith Barney was advised by the management of Queens that
such forecasts were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of Queens as to the
strategic implications and operational benefits anticipated to result from the
merger. Salomon Smith Barney expressed no view with respect to such forecasts
and other information and data or the assumptions on which they were based.
Salomon Smith Barney assumed, with the consent of the Queens board of directors,
that the merger would be treated as a tax-free reorganization for federal income
tax purposes and that it would qualify, and would be accounted for, as a
purchase in accordance with generally accepted accounting principles. At the
request of Queens, Salomon Smith Barney participated in an evaluation of
selected individual credit files of Haven, and assumed, with the consent of the
Queens board of directors, that the aggregate allowances for such losses for
each of Queens and Haven are in the aggregate adequate to cover such losses.
Salomon Smith Barney is not an expert in the evaluation of loan or lease
portfolios for purposes of assessing the adequacy of the allowances for losses
with respect to those portfolios, and Salomon Smith Barney has not made an
independent evaluation of the adequacy of such allowances of Queens or Haven. At
the request of the Queens board of directors, Salomon Smith Barney prepared an
estimate of the potential sale value of certain of Haven's loans and securities;
however, Salomon Smith Barney did not seek any buyers for such loans or
securities and, therefore, no assurances were given by Salomon Smith Barney as
to the terms on which such loans or securities could actually be sold. Salomon
Smith Barney has not made or been provided with an independent evaluation or
appraisal of any of the other assets or liabilities, contingent or otherwise, of
Queens or Haven, nor has Salomon Smith Barney made any physical inspection of
the properties or assets of Queens or Haven. Representatives of Queens advised
Salomon Smith Barney, and Salomon Smith Barney assumed, that the final terms of
the merger agreement would not vary materially from those set forth in the draft
reviewed by Salomon Smith Barney. Salomon Smith Barney further assumed that the
merger would
38
be consummated in a timely fashion and in accordance with the terms of the
merger agreement, without waiver of any of the conditions to the merger
contained in the merger agreement.
Salomon Smith Barney's opinion relates to the relative values of Queens
and Haven. Salomon Smith Barney did not express any opinion as to what the value
of Queens common stock actually will be when issued in the merger or the price
at which Queens common stock will trade subsequent to the announcement or
consummation of the merger. Salomon Smith Barney was not asked to consider, and
Salomon Smith Barney's opinion did not address, the relative merits of the
merger as compared to any alternative business strategies that might exist for
Queens or the effect of any other transaction in which Queens might engage.
Salomon Smith Barney's opinion necessarily was based on information available to
it, and financial, stock market, and other conditions and circumstances existing
and disclosed to Salomon Smith Barney as of the date of the opinion.
SALOMON SMITH BARNEY'S ADVISORY SERVICES AND ITS OPINION WERE PROVIDED
FOR THE INFORMATION OF THE QUEENS BOARD OF DIRECTORS IN ITS EVALUATION OF THE
MERGER, AND SALOMON SMITH BARNEY'S OPINION IS NOT INTENDED TO BE, AND DOES NOT
CONSTITUTE, A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW THAT STOCKHOLDER
SHOULD VOTE ON ANY MATTER RELATING TO THE PROPOSED MERGER.
In connection with rendering its opinion, Salomon Smith Barney made a
presentation to the Queens board of directors on June 27, 2000 with respect to
the material analyses performed by Salomon Smith Barney in evaluating the
fairness to Queens from a financial point of view of the exchange ratio. The
following is a summary of that presentation. The summary includes information
presented in tabular format. IN ORDER TO UNDERSTAND FULLY THE FINANCIAL ANALYSES
USED BY SALOMON SMITH BARNEY, THESE TABLES MUST BE READ TOGETHER WITH THE TEXT
OF EACH SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE A COMPLETE DESCRIPTION OF
THE FINANCIAL ANALYSES. The following quantitative information, to the extent
that it is based on market data, is, except as otherwise indicated, based on
market data as it existed at or prior to June 26, 2000 and is not necessarily
indicative of current or future market conditions.
Calculation of Implied Value of Exchange Ratio. Salomon Smith Barney
noted that the exchange ratio of 1.04 shares of Queens common stock for each
share of Haven common stock had an implied value of $19.24 per share of Haven
common stock based upon the closing price of Queens common stock on June 26,
2000 (the trading day prior to the presentation by Salomon Smith Barney to the
board of directors of Queens), with the aggregate implied value of the
consideration being approximately $200 million.
Transaction Pricing Multiples. Based upon the exchange ratio of 1.04
and the closing price of Queens common stock on June 26, 2000 of $18.50, Salomon
Smith Barney analyzed the implied per share transaction value of $19.24 as a
multiple of Haven's EPS for the last twelve-month period for which results were
available (LTM EPS) and estimated earnings per share for the years 2000
(including pre-restructuring and post-restructuring estimates for the year 2000)
and 2001, fully diluted book value per share, and fully diluted tangible book
value per share. Salomon Smith Barney also analyzed the percentage premium to
deposits and the per share transaction value as a premium to both the closing
market price of Haven common stock on June 26, 2000 and the market price prior
to Haven's announcement on March 24, 2000 that it had hired Lehman Brothers to
explore strategic alternatives. These analyses indicated the following (all
dollar amounts are in millions, except per-share amounts):
39
HAVEN TRANSACTION
REFERENCE VALUATION
Price/LTM EPS $1.60 12.0x
Price/2000E EPS $2.24 8.6x
Price/2000E Adjusted Pre-Restructuring EPS $2.54 7.6x
Price/2000E Adjusted Post-Restructuring EPS $1.83 10.5x
Price/2001E EPS $2.51 7.7x
Price/Fully Diluted Book Value $11.20 1.72x
Price/Fully Diluted Tangible Book Value $11.07 1.74x
Premium to Deposits $2,151 3.9%
Premium to Market Price - June 26, 2000 $17.625 9.2%
Premium to Market Price - Pre-Announcement _ 36.8%
Salomon Smith Barney based its analyses of price/fully diluted book
value, price/fully diluted tangible book value, premium to deposits, and
price/LTM EPS on reference data at or for the twelve-month period ended March
31, 2000, excluding $14.0 million of non-recurring pre-tax charges. The
estimates of earnings per share for 2000 and 2001 were based on median estimates
as reported by I/B/E/S. I/B/E/S is a data service that monitors and publishes
compilations of earning estimates by selected research analysts regarding
companies of interest to institutional investors. The estimates of
pre-restructuring and post-restructuring earnings per share were based on
Queens' management estimates, including the sale of certain loans and securities
and 15 supermarket branches in the States of Connecticut and New Jersey as part
of the restructuring.
Comparable Companies Analysis. Salomon Smith Barney reviewed publicly
available financial and operating information for the following nine financial
institutions that Salomon Smith Barney considered comparable to Haven. We
sometimes refer to these institutions as the "Peer Group."
o Astoria Financial Corporation o North Fork Bancorporation, Inc.
o Dime Community Bancshares, Inc. o Richmond County Financial Corp.
o Flushing Financial Corporation o Roslyn Bancorp, Inc.
o Greenpoint Financial Corp. o Staten Island Bancorp, Inc.
o Independence Community Bank Corp.
For each institution in the Peer Group, Salomon Smith Barney computed
the ratio of the closing price of the institution's common stock on June 26,
2000 to the institution's estimated earnings per common share ("EPS") for 2000,
estimated cash earnings per share plus the amortization of goodwill (excluding
the amortization of marks to market) and non-cash compensation costs ("CEPS")
for 2000, estimated EPS for 2001, estimated CEPS for 2001, book value per share
and tangible book value per share. Information regarding book value per share
and tangible book value per share was based on publicly available financial data
as of March 31, 2000. Information regarding EPS and CEPS was based on median
I/B/E/S estimates.
MULTIPLE OF JUNE 26, 2000 PRICE Range for Median for
PER SHARE TO PEER GROUP Peer Group Peer Group
INSTITUTIONS':
Estimated 2000 EPS 6.4x-14.0x 9.3x
Estimated 2001 EPS 6.0x-12.0x 8.5x
Estimated 2000 CEPS 6.0x-13.3x 8.0x
Estimated 2001 CEPS 5.7x-11.5x 7.4x
Book value per share 1.01x-1.74x 1.12x
Tangible book value per share 1.11x-2.78x 1.40x
Based on this data, Salomon Smith Barney derived two reference ranges
for the implied per share value of Haven common stock, one based on I/B/E/S
estimates of Haven's EPS and one based on management estimates of
40
Haven's earnings per share adjusted for the sale of its mortgage operations, its
supermarket branches in Connecticut and New Jersey, and approximately $872
million of its one-to-four-family mortgage loans, and excluding all non-
recurring charges (core earnings on a run-rate basis). In performing this
analysis, Salomon Smith Barney assumed that Haven would complete a proposed
restructuring. Salomon Smith Barney also assumed that a control premium of 30%
would be paid in respect of the shares of Haven common stock. The ranges of
implied per-share value of Haven common stock derived by Salomon Smith Barney
were as follows:
Using I/B/E/S EPS Estimates $19.00 to $28.00
Using Management Core Earnings Estimates $14.00 to $20.00
Precedent Transactions Analysis. Salomon Smith Barney analyzed publicly
available financial, operating, and stock market information for selected
comparable merger transactions in the thrift industry announced since January 1,
1999. Salomon Smith Barney divided these transactions into the following four
groups (in each case, the first-named company is the acquiror and the
second-named company is the acquired company in the transaction):
o New York Thrift Transactions. The following acquisitions of thrifts
operating in the State of New York were included in this group: Sound
Federal Bancorp/Peekskill Financial Corporation, Niagara Bancorp
Inc./CNY Financial Corp., North Fork Bancorporation/Reliance Bancorp
Inc., and North Fork Bancorporation/JSB Financial Inc.
o Northeast Thrift Transactions. All acquisitions of thrifts operating
in New Jersey, Connecticut, New York, Maine, New Hampshire,
Pennsylvania, Rhode Island, Vermont or Massachusetts were included in
this group: Harris Financial MHC/York Financial Corp., Richmond County
Financial Corp./South Jersey Financial Corp., Sound Federal
Bancorp/Peekskill Financial Corporation, Niagara Bancorp Inc./CNY
Financial Corp., Webster Financial Corp./MECH Financial, Inc., North
Fork Bancorporation/Reliance Bancorp Inc., North Fork
Bancorporation/JSB Financial Inc., Hudson River Bancorp/SFS Bancorp,
Independence Community Bank Corp./Broad National Bancorporation, HUBCO
Inc./Little Falls Bancorp Inc., and BSB Bancorp Inc./Skaneateles
Bancorp, Inc.
o National Thrift Transactions. The following acquisitions with
transaction values between $100 million and $500 million were included
in this group: Harris Financial MHC/York Financial Corp., Mutual
Savings Bank/First Northern Capital Corp., Webster Financial
Corp./MECH Financial, Inc., North Fork Bancorporation/Reliance Bancorp
Inc., Provident Financial Group Inc./Fidelity Financial of Ohio Inc.,
BB&T Corp./First Liberty Financial Corp., Fifth Third Bancorp/Emerald
Financial Corporation, Old Kent Financial Corp./CFSB Bancorp,
Independence Community Bank Corp./Broad National Bancorporation, BB&T
Corp./First Citizens Corporation, and Anchor BancCorp Wisconsin
Inc/FCB Financial Corp.
o National Thrift Transactions (Distressed Targets). The following
acquisitions in which the acquired company's return on average assets
did not exceed 0.75% were included in this group: Harris Financial
MHC/York Financial Corp., SouthBanc Shares Inc./Heritage Bancorp Inc.,
Provident Financial Group Inc./Fidelity Financial of Ohio Inc., HUBCO
Inc./Little Falls Bancorp Inc., and BSB Bancorp Inc./Skaneateles
Bancorp, Inc.
For each of the precedent transactions, Salomon Smith Barney derived
the following information:
o the ratio of the per share price in the transaction to the acquired
company's (1) LTM EPS, (2) book value per share, and (3) tangible book
value per share;
o the premium implied by the per share price in the transaction to the
market price per share of the acquired company's common stock on the
last trading day prior to the announcement of the transaction;
o the premium implied by the per share price in the transaction to the
market price per share of the acquired company's common stock one
month prior to the announcement of the transaction; and
41
o the premium over book value implied by the per share price in the
transaction to the acquired company's deposits.
The results of these analyses are summarized in the following table:
PRECEDENT TRANSACTIONS
RANGE MEDIAN
NEW YORK THRIFT TRANSACTIONS
Ratio of transaction price to acquired company's:
LTM EPS 15.0x-27.6x 19.0x
Book value per share 1.21x-1.98x 1.49x
Tangible book value per share 1.21x-2.80x 1.49x
Implied premium of transaction price to market price on last trading day prior 4.4%-83.3% 12.0%
to announcement
Implied premium of transaction price to market price 1 month prior to 10.5%-83.3% 30.8%
announcement
Implied premium of transaction price to deposits 8.0%-19.6% 11.7%
NORTHEAST THRIFT TRANSACTIONS
Ratio of transaction price to acquired company's:
LTM EPS 13.4x-27.7x 18.6x
Book value per share 1.21x-2.83x 1.53x
Tangible book value per share 1.21x-2.84x 1.53x
Implied premium of transaction price to market price on last
trading day prior to announcement 4.4%-83.3% 16.1%
Implied premium of transaction price to market price 1 month
prior to announcement 5.8%-83.3% 33.3%
Implied premium of transaction price to deposits 5.3%-19.6% 8.1%
NATIONAL THRIFT TRANSACTIONS
Ratio of transaction price to acquired company's:
LTM EPS 15.9x-28.0x 19.5x
Book value per share 1.61x-3.57x 2.21x
Tangible book value per share 1.61x-3.88x 2.80x
Implied premium of transaction price to market price on last trading day prior 5.9%-70.6% 36.7%
to announcement
Implied premium of transaction price to market price 1 month 22.3%-73.2% 52.5%
prior to announcement
Implied premium of transaction price to deposits 6.1%-32.8% 17.0%
NATIONAL THRIFT TRANSACTIONS (DISTRESSED TARGETS)
Ratio of transaction price to acquired company's:
LTM EPS 18.6x-29.6x 24.8x
Book value per share 1.03x-2.15x 1.61x
Tangible book value per share 1.03x-2.19x 1.61x
Implied premium of transaction price to market price on last 4.5%-70.6% 33.2%
trading day prior to announcement
Implied premium of offer price to market price 1 month 5.8%-77.8% 56.8%
prior to announcement
Implied premium of transaction price to deposits 1.0%-16.9% 8.1%
Using financial information for Haven as of March 31, 2000, Salomon
Smith Barney derived a reference range for the implied per share value of Haven
common stock based on the results derived for each category of precedent
transactions. The ranges derived by Salomon Smith Barney are as follows:
42
New York Thrift Transactions $16.00 to $23.00
Northeast Thrift Transactions $17.00 to $22.00
National Thrift Transactions $18.00 to $26.00
National Thrift Transactions (Distressed Targets) $18.00 to $27.00
Salomon Smith Barney noted that the implied value per share of Haven
common stock ($19.24) based on the exchange ratio and the closing price of
Queens common stock on June 26, 2000 was within all four reference ranges of the
implied per share value of Haven common stock derived by Salomon Smith Barney in
its precedent transactions analysis.
Discounted Cash Flow Analysis. Salomon Smith Barney performed a
discounted cash flow analysis to derive a range of implied values per share of
Haven common stock, including certain cost savings expected to result from the
merger. In this analysis, Salomon Smith Barney assumed a weighted average cost
of capital of 11.8% to derive the present value of (1) Haven's estimated cash
flows available to stockholders for the fiscal years 2001 through 2005, plus (2)
Haven's terminal value at the end of fiscal 2005. Terminal values for Haven were
calculated based on a range of 6.0x to 9.0x 2006 EPS. In performing this
analysis, Salomon Smith Barney based Haven's estimated EPS on I/B/E/S estimates
and on an assumed long-term annual growth rate for Haven's EPS of 4.0%. EPS data
were adjusted to account for management's assumptions of cost savings resulting
from the merger of 17.1% of pre-tax overhead expense (75% achievable in 2001 and
100% achievable in 2002 and thereafter, with an annual growth rate of such cost
savings of 3% per year after 2001), the sale of certain loans and supermarket
branches in Connecticut and New Jersey, the sale of Haven's one-to four-family
mortgage loans and the impact of replacing such loans with multi-family
mortgages, and the opportunity cost of incremental dividends. In determining
cash flows available to stockholders, Salomon Smith Barney assumed that the
following percentages of adjusted EPS would be paid to stockholders to maintain
a targeted tangible common equity to tangible asset ratio of 5%: (1) 0% in 2001,
(2) 34.3% in 2002, (3) 101.2% in 2003, (4) 100.8% in 2004, and (5) 100.0% in
2005.
Based on these assumptions, Salomon Smith Barney derived a reference
range for the implied per share value of Haven common stock of $17.00 to $22.00.
Salomon Smith Barney noted that the implied value per share of Haven common
stock ($19.24) based on the exchange ratio and the closing price of Queens
common stock on June 26, 2000, was within the reference range of the implied per
share value of Haven common stock derived by Salomon Smith Barney in its
precedent transactions analysis.
Contribution Analysis. Salomon Smith Barney analyzed the relative
contribution that Queens and Haven would each be making to the combined company
with respect to certain financial and operating data. Salomon Smith Barney based
its analyses on financial data at, and for the twelve-month period ended, March
31, 2000, and did not consider cost savings, restructuring adjustments or other
expected effects of the merger.
CONTRIBUTION TO THE
COMBINED COMPANY BY:
QUEENS HAVEN
------ -----
INCOME STATEMENT FOR THE 12-MONTH PERIOD ENDED 3/31/00
Net interest income 48.1% 51.9%
Net interest income after provision for loan losses 49.1 50.9
Total non-interest income 8.1 91.9
Total non-interest expense 20.7 79.3
Net income 67.9 32.1
BALANCE SHEET AS OF THE 12-MONTH PERIOD ENDED 3/31/00
Total securities 17.3 82.7
Total net loans 48.2 51.8
Total Assets 40.3 59.7
Total Deposits 32.9 67.1
Total preferred stock 22.4 77.6
Total equity 56.7 43.3
43
Salomon Smith Barney compared this data with the expected 68.4% and
31.6% pro forma fully diluted equity interest in the combined company of the
current common stockholders of Queens and Haven, respectively.
Projected Pro Forma Financial Analysis. Salomon Smith Barney analyzed
the estimated financial impact of the merger on Queens's EPS and CEPS. In
performing this analysis, Salomon Smith Barney relied on I/B/E/S estimates of
EPS, adjusted to account for management's assumptions of cost savings resulting
from the merger of 17.1% of pre-tax overhead expense (75% achievable in 2001 and
100% achievable in 2002, with an annual growth rate of such cost savings of 3%
per year after 2001), the sale of certain loans and supermarket branches in
Connecticut and New Jersey, the sale of Haven's one-to four-family mortgage
loans, the repurchase by Queens prior to the merger of 20% of the shares of
Queens common stock to be issued in the merger at a price of $19.24 per share
and a one-time restructuring charge in connection with the merger of $31 million
which would increase goodwill with no immediate impact on the combined company's
financial statements. Based on this analysis, Salomon Smith Barney determined
that the merger would be accretive to Queens's EPS by 26.4%, 21.4% and 12.8% in
2001, 2002 and 2003, respectively, and accretive to Queens's CEPS by 3.7%, 10.7%
and 10.3% in 2001, 2002 and 2003, respectively.
Historical Exchange Ratio Analysis. Salomon Smith Barney calculated the
ratio of the closing price per share of Haven common stock to the closing price
per share of Queens common stock for each trading day in a five year period from
June 26, 1995 to June 26, 2000 and a one year period from June 26, 1999 to June
26, 2000 and compared five and one year ratios with the exchange ratio. The
results of these calculations showed over this period a high stock price ratio
of 1.503, a low stock price ratio of 0.357, a median five year stock price ratio
of 0.896, a median one year stock price ratio of 0.579 and current stock price
ratio of 0.953%, compared to the exchange ratio, 1.04. Based on this data, the
1.04 exchange ratio represents a 30.8% discount to the high stock price ratio, a
190.9% premium over the low stock price ratio, a 16.0% premium over the median
five year stock price ratio, a 79.7% premium over the median one year stock
price ratio and a 9.2% premium to the current stock price ratio.
Comparative Market Position. Salomon Smith Barney reviewed the
respective market share, in terms of deposits, of each of Queens, Haven and the
combined company for markets in Queens County and concluded that Queens and
Haven ranked seventh and ninth, respectively, in market share for Queens and
that the combined company would rank sixth for market share in Queens among all
competitors. Salomon Smith Barney also compared Queens, Haven and the combined
company's market share and rankings in all markets served versus other thrift
institutions and concluded that Queens and Haven ranked 12th and 8th,
respectively, in market share for thrifts in all markets served and that the
combined company would rank eighth for market share for thrifts in all markets
served.
Comparative Credit and Operating Analysis. Salomon Smith Barney
reviewed comparative profitability ratios, per share operating statistics,
capital ratios and credit quality ratios for the years 1995 through 1999 and for
the 12 month period ended or as at March 31, 2000 for Queens, Haven and the
combined company. In each case, these statistics were compared to the comparable
median statistics of the peer group set out above. Estimated diluted earnings
per share growth rates were reviewed for the year 2000 for Queens and Haven. Pro
forma projected returns on average assets, returns on average common equity,
diluted earnings and selected capital ratios were reviewed for the years 2001
and 2002.
* * * * * * *
The preceding discussion is a summary of the material financial
analyses furnished by Salomon Smith Barney to the Queens board of directors but
it does not purport to be a complete description of the analyses performed by
Salomon Smith Barney or of its presentations to the Queens board of directors.
The preparation of financial analyses and fairness opinions is a complex process
involving subjective judgments and is not necessarily susceptible to partial
analysis or summary description. Salomon Smith Barney made no attempt to assign
specific weights to particular analyses or factors considered, but rather made
qualitative judgments as to the significance and relevance of all the analyses
and factors considered and determined to give its fairness opinion as described
above. Accordingly, Salomon Smith Barney believes that its analyses, and the
summary set forth above, must be considered as a whole, and that selecting
portions of the analyses and factors considered by Salomon Smith Barney, without
considering all of the analyses and factors, could create a misleading or
incomplete view of the processes underlying the analyses conducted by Salomon
Smith Barney and its opinion. With regard to the comparable company and
precedent transaction analyses summarized above, Salomon Smith Barney selected
the Peer Group and the precedent transactions on the basis of various factors,
including the size, financial condition and location of Queens and Haven;
however, no company or transaction utilized in the precedent transaction
analyses summarized above is identical to Queens, Haven
44
or the merger. As a result, these analyses are not purely mathematical, but also
take into account differences in financial and operating characteristics of the
subject companies and other factors that could affect the subject companies and
transactions to which Queens, Haven and the merger are being compared. In its
analyses, Salomon Smith Barney made numerous assumptions with respect to Queens,
Haven, industry performance, general business, economic, market and financial
conditions, and other matters, many of which are beyond the control of Queens
and Haven. Any estimates contained in Salomon Smith Barney's analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested
by these analyses. Estimates of values of companies do not purport to be
appraisals or necessarily to reflect the prices at which companies may actually
be sold. Because these estimates are inherently subject to uncertainty, none of
Queens, the Queens board of directors, Salomon Smith Barney or any other person
assumes responsibility if future results or actual values differ materially from
the estimates.
Salomon Smith Barney's analyses were prepared solely as part of Salomon
Smith Barney's analysis of the fairness of the exchange ratio in the merger and
were provided to the Queens board of directors in connection therewith. The
opinion of Salomon Smith Barney was only one of the many factors taken into
consideration by the Queens board of directors in making its determination to
approve the merger agreement and the merger. See "THE MERGER -- Queens' Reasons
for the merger; Recommendation of Queens' Board of Directors" on page o.
In the ordinary course of its business, Salomon Smith Barney and its
affiliates may actively trade or hold the securities of both Queens and Haven
for its own account and for the account of customers and, accordingly, may at
any time hold a long or short position in these securities. Salomon Smith Barney
and its affiliates, including Citigroup Inc. and its affiliates, may maintain
other business relationships with Queens and Haven and their respective
affiliates.
Pursuant to Salomon Smith Barney's engagement letter, Queens agreed to
pay Salomon Smith Barney a total fee of $1.1 million for its services rendered
in connection with the merger, including the delivery of its opinion,
substantially all of which fee is contingent on execution of the merger
agreement or consummation of the merger or the receipt of a termination fee or
similar fee under the terms of the merger agreement. Queens has also agreed to
reimburse Salomon Smith Barney for its reasonable travel and other out-of-pocket
expenses incurred in connection with its engagement, including the reasonable
fees and disbursements of its counsel, and to indemnify Salomon Smith Barney
against specific liabilities and expenses relating to or arising out of its
engagement, including liabilities under the federal securities laws. In the
past, Salomon Smith Barney provided financial advisory and financial services to
Queens and received customary fees for those services.
ADDITIONS TO THE BOARD AND MANAGEMENT OF QUEENS, QUEENS COUNTY SAVINGS BANK AND
CFS BANK.
Boards of Directors. The merger agreement provides that, after the
consummation of the merger, the board of directors of Queens will consist of the
current directors of Queens and three additional directors to be designated by
Queens from among the former directors of Haven. The merger agreement further
provides that, after the consummation of the merger, the board of directors of
Queens County Savings Bank will consist of the current directors of Queens
County Savings Bank and two additional directors to be designated by Queens in
its discretion from among the former directors of Haven. The merger agreement
provides that, at the effective time, the directors of CFS Bank will resign, and
the board of directors of CFS Bank will consist of three former directors of
Haven designated by Queens, in its discretion, and eight directors who are
currently directors of Queens or Queens County Savings Bank.
Queens has agreed that the total number of directors of Queens will not
exceed 11 for a two year period following the completion of the merger, except
that Queens may increase the size of the board in order to appoint one or more
new directors as part of the acquisition of another financial institution.
Management. At the time the merger agreement was executed, Queens and
CFS Bank entered into employment agreements with William J. Jennings, II and
Dennis Hodne, both current employees of Haven and/or CFS Bank, in order to
ensure their continued service to CFS Bank and Queens after the merger. The
agreements with Mr. Jennings provide that he will serve as Executive Vice
President and Director of Queens and Queens County Savings Bank and as President
and a Director of CFS Bank. The agreements with Mr. Hodne provide that he will
serve as Senior Vice President of Queens; Queens County Savings Bank and CFS
Bank. The initial term of both agreements is 36 calendar months from the
effective time.
45
Also, in connection with the merger agreement, Queens and CFS Bank have
entered into a consulting agreement with Philip S. Messina, the current Chairman
of the Board and Chief Executive Officer of Haven and CFS Bank, which will take
effect at the completion of the merger and have a term of three years. The
merger agreement also contemplates the creation of an advisory board comprised
of those directors of Haven who do not become directors of queens, Queens County
Savings Bank or CFS Bank.
For more information see "THE MERGER -- Interests of Directors and
Management in the Merger" on page o.
DISTRIBUTION OF QUEENS CERTIFICATES
At or prior to the completion of the merger, Queens will cause to be
deposited, with a bank or trust company acting as exchange agent, certificates
representing shares of Queens common stock for the benefit of the holders of
certificates representing shares of Haven common stock and cash in lieu of any
fractional shares that would otherwise be issued in the merger.
Promptly after the completion of the merger, Queens will send or cause
to be sent transmittal materials to each holder of a Haven stock certificate for
use in exchanging Haven stock certificates for certificates representing shares
of Queens common stock and cash in lieu of fractional shares, if applicable.
HOLDERS OF HAVEN STOCK CERTIFICATES SHOULD NOT SURRENDER THEIR HAVEN STOCK
CERTIFICATES FOR EXCHANGE UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL AND
INSTRUCTIONS. The exchange agent will deliver certificates for Queens stock
and/or a check instead of any fractional shares of Queens Stock once it receives
the certificates representing a holder's shares of Haven stock.
Holders of Haven stock certificates may exchange those certificates for
Queens stock certificates with the exchange agent for up to one year after the
completion of the merger. At the end of that period, any Queens stock
certificates and cash will be returned to Queens. Any holders of Queens stock
certificates who have not exchanged their certificates will be entitled to look
only to Queens, and only as general creditors of Queens, for Queens stock
certificates and any cash to be received instead of fractional shares of Queens
stock.
Any person claiming that a Haven stock certificate has been lost,
stolen or destroyed may receive a Queens stock certificate upon the making of an
affidavit of that fact, and Queens will issue Queens stock certificates to the
claimant and pay any applicable amounts of cash instead of fractional shares of
Queens stock. Queens may require the claimant to post a bond in a reasonable
amount as an indemnity against any claim that may be made against Queens with
respect to the lost, stolen or destroyed Haven stock certificate.
At or after the completion of the merger, there will be no transfers on
the stock transfer books of Haven of the shares of Haven stock that were
outstanding immediately prior to that time.
FRACTIONAL SHARES
Queens will not issue any fractional shares of Queens common stock.
Instead, a Haven stockholder who would otherwise have received a fraction of a
share of Queens common stock pursuant to the Haven exchange ratio will receive
cash. The amount of cash received will be determined by multiplying the fraction
of a share of Queens common stock to which such holder would otherwise be
entitled by the last reported sales price per share of Queens common stock on
the day immediately preceding the consummation of the merger.
PUBLIC TRADING MARKETS
Queens common stock is currently included for quotation on the Nasdaq
National Market under the symbol "QCSB." Haven common stock is currently
included for quotation on the Nasdaq National Market under the symbol "HAVN."
Upon completion of the merger, Haven common stock will be delisted from the
Nasdaq National Market and deregistered under the Securities Exchange Act of
1934, as amended. The newly issued Queens common stock issuable pursuant to the
merger agreement will be listed on the Nasdaq National Market. It is currently
contemplated that, upon approval of the corporate name change, the Queens common
stock will be included for quotation on the Nasdaq National Market under the
symbol "NYCB."
The shares of Queens stock to be issued in connection with the merger
will be freely transferable under the Securities Act, except for shares issued
to any stockholder who may be deemed to be an affiliate of Haven, as discussed
in "THE MERGER -- Resales of Queens Stock by Affiliates" on page o.
46
As reported on the Nasdaq National Market, the closing sale price per
share of Queens stock on June 27, 2000, the last day prior to the public
announcement of the merger was $18.125. The closing sale price per share of
Haven stock on June 27, 2000 was $18.125, as reported on the Nasdaq National
Market. Based on these closing sale prices per share, the implied per share
value of Haven stock was $18.85 as of that date. The closing sale price per
share of Queens stock on the Nasdaq National Market on August o, 2000, the last
practicable trading day before the date of this document, was $o. The closing
sale price per share of Haven stock on the Nasdaq National Market on August o,
2000, the last practicable trading day before the date of this document, was $o.
The implied per share value of Haven stock was $o as of that date. The implied
value of one share of Haven stock as of these dates was calculated by
multiplying Queen's closing sale price per share by 1.04, the exchange ratio.
Because the stock price of both of our companies will fluctuate, you should
obtain current quotations of these prices.
QUEENS DIVIDENDS
Queens currently pays a quarterly dividend of $0.25, which is expected
to continue, although the Queens board of directors may change this dividend
policy at any time. During 1999, Haven paid cash dividends totaling $0.30 per
share, and Queens paid cash dividends totaling $1.00 per share.
Queens stockholders will be entitled to receive dividends when and if
declared by the Queens board of directors out of funds legally available for
dividends. The Queens board of directors will periodically consider the payment
of dividends, taking into account Queens' financial condition and level of net
income, Queens' future prospects, economic conditions, industry practices and
other factors, including applicable banking laws and regulations as discussed in
"REGULATION AND SUPERVISION OF QUEENS" on pages o.
ABSENCE OF APPRAISAL RIGHTS
Appraisal rights are statutory rights that enable stockholders who
object to extraordinary transactions, such as mergers, to demand that the
corporation pay the fair value for their shares as determined by a court in a
judicial proceeding instead of receiving the consideration offered to
stockholders in connection with the extraordinary transaction. Appraisal rights
are not available in all circumstances, and exceptions to such rights are set
forth in the laws of Delaware which is the state of incorporation of each
company. These exceptions are applicable with respect to the rights of Queens
stockholders and Haven stockholders.
Neither Haven nor Queens stockholders are entitled to appraisal rights
under Delaware law in connection with the merger because the shares of each of
Haven common stock and Queens common stock are designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc.
RESALES OF QUEENS STOCK BY AFFILIATES
Affiliates of Haven, as defined under Rule 145 under the Securities Act
of 1933, as amended, generally may not sell their shares of Queens stock
acquired in the merger except pursuant to an effective registration statement
under the Securities Act or an applicable exemption from the registration
requirements of the Securities Act, including Rules 144 and 145 issued by the
SEC under the Securities Act. Affiliates include directors, executive officers,
and beneficial owners of 10% or more of any class of capital stock.
Under the merger agreement, Haven agreed to, and has, provided Queens
with a list of the persons who, to Haven's knowledge, may be deemed to be
affiliates of Haven. Haven has also delivered a letter of agreement from each of
these persons by which that person agrees, among other things, not to offer to
sell, transfer or otherwise dispose of any of the shares of Queens stock
distributed to him or her pursuant to the merger except in compliance with Rules
144 and Rule 145 under the Securities Act, in a transaction that, in the opinion
of counsel reasonably satisfactory to Queens, is otherwise exempt from the
registration requirements of the Securities Act, or in an offering registered
under the Securities Act. Queens may place restrictive legends on its common
stock certificates that are issued to persons who are deemed to be affiliates of
Haven under the Securities Act. The form of these letters of agreement are
included as Exhibit A to the merger agreement, which is attached as Appendix A.
This document does not cover any resales of Queens stock received in
the merger by any person who may be deemed an affiliate of Haven.
47
We have agreed to make or cause to be made all filings required in
order to obtain all regulatory approvals required to consummate the transactions
contemplated by the merger agreement, which includes approval from the Federal
Reserve Board. We expect to file this application shortly and we have not yet
received final regulatory approval nor have any required notification periods
expired. The merger cannot proceed in the absence of these regulatory approvals.
We cannot assure you that these regulatory approvals will be obtained, and, if
obtained, we cannot assure you as to the date of any such approvals or the
absence of any litigation challenging such approvals. Likewise, we cannot assure
you that the United States Department of Justice or any state attorney general
will not attempt to challenge the merger on antitrust grounds, and, if such a
challenge is made, we cannot assure you as to its result.
We are not aware of any material governmental approvals or actions that
are required for completion of the merger other than those described below. It
is presently contemplated that if any such additional governmental approvals or
actions are required, such approvals or actions will be sought. There can be no
assurance, however, that any such additional approvals or actions will be
obtained.
Federal Reserve Board. Consummation of the merger will require Queens
to receive the prior approval of the Federal Reserve Board under Section 4 of
the Bank Holding Company Act of 1956 to acquire control of Haven's subsidiaries.
INTERESTS OF DIRECTORS AND MANAGEMENT IN THE MERGER
GENERAL
In addition to the interests discussed in this section of this
document, certain members of management or the board of directors of Haven will
be members of management or the boards of directors of Queens, Queens County
Savings Bank or CFS Bank, or may serve on the Queens advisory board, as
contemplated in the merger agreement, and will receive compensation for such
services. Queens may also provide incentives to key employees to ensure that
they remain in the employ of Queens, Haven or their subsidiaries throughout the
merger integration process.
The Queens board of directors and the Haven board of directors were
both aware of these interests and considered them in their respective decisions
to approve and adopt the merger agreement.
NEW EMPLOYMENT ARRANGEMENTS
In connection with the merger, Queens and CFS Bank have each entered
into individual employment agreements with William J. Jennings, II, President
and a director of Haven and CFS Bank, and with Dennis Hodne, Senior Vice
President of CFS Bank. The new employment agreements are substantially similar
to the employment agreements that Queens and Queens County Savings Bank have
previously entered into with Joseph R. Ficalora and other executives.
Under the new employment agreements, Mr. Jennings will serve as
Executive Vice President of Queens and Queens County Savings Bank, President of
CFS Bank, and a Director of all three entities at an annual base salary of
$400,000. Mr. Hodne will serve as Senior Vice President of all three entities at
an annual base salary of $165,000. The new employment agreements will take
effect at the closing of the merger. The agreements with Queens and Queens
County Savings Bank have an initial three-year term with daily extensions such
that the term of the new agreements will always be 3 years. The new employment
agreements with CFS Bank have initial three-year terms and each may be extended
an additional year on each anniversary of the beginning of the term so that, at
such extension, the remainder of the term of the agreement will be three years.
The new employment agreements provide that Mr. Jennings' existing change in
control agreements with Haven and CFS Bank and Mr. Hodne's existing change in
control agreement with CFS Bank will remain in effect for 12 months following
the closing of the merger. The change in control agreements will be amended
following the closing of the merger to provide that Messrs. Jennings and Hodne
will be entitled to severance pay following a change in control of Haven or of
CFS Bank by reason of a voluntary termination of employment only if such
voluntary termination of employment occurs during the nine month period
beginning three months after the closing; and to delete any provision entitling
the executive to a "gross-up" payment for any golden parachute excise taxes
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended. To the
extent that Mr. Jennings or Mr. Hodne receive any payments or benefits under the
change in control agreements, the amount of such payments and benefits will be
subtracted from any amount simultaneously owed under the new employment
agreements in connection with a termination of employment.
48
The new employment agreements provide that in the event that Queens,
Queens County Savings Bank or CFS Bank terminates Mr. Jennings' or Mr. Hodne's
employment for reasons other than for cause or disability or either executive
voluntarily resigns for good reason (as such terms are defined in the new
agreements), he will be entitled to severance pay equal to the remaining salary
and other cash compensation and benefits through the remainder of the term. If
Mr. Jennings or Mr. Hodne is terminated without cause or voluntarily resigns for
good reason following a change in control of Queens, Queens County Savings Bank
or CFS Bank, he will be entitled to (x) severance pay equal to the greater of
(i) the payments due under the remaining term of the agreement or (ii) 3 times
his average annual compensation over the 3 years preceding termination; (y)
welfare benefit continuing for 3 years following termination; and (z) a
"gross-up" payment to compensate the executive for any golden parachute excise
taxes imposed by Section 4999 of the Internal Revenue Code. The amounts that
Messrs. Jennings and Hodne would receive under the change in control agreements
would be approximately $o and $o, respectively.
CONSULTING AGREEMENT
In connection with the merger, Queens and CFS Bank have entered into a
consulting agreement with Philip S. Messina, Chairman and Chief Executive
Officer of Haven, which will take effect at the closing of the merger and will
continue for three years. The consulting agreement provides that Mr. Messina
shall receive a fee of $500,000 per year, an office, secretary and a computer
located on the premises of CFS Bank, if necessary, to perform his services, as
well as the use of a car leased by Queens or CFS Bank plus all costs of car
insurance, repairs, maintenance, fuel and parking. In addition, the employment
agreement between Mr. Messina and Haven, dated November 22, 1999, shall
terminate as of the completion of the merger, but Mr. Messina shall receive a
cash payment equal to compensation and benefits he would have received had he
been employed for three additional years, plus continued welfare benefits for
his lifetime (excluding any amounts provided for excise tax indemnification
under Section 15 or any other provision) of the employment agreement on the day
of the completion of the merger. The cash payment that Mr. Messina would receive
is approximately $o.
ADVISORY BOARD
The merger agreement also provides that, at the completion of the
merger, Queens shall establish an advisory board and appoint to it those former
directors of Haven who are not designated to serve on the boards of Queens,
Queens County Saving Bank, or CFS Bank after the effective time. The purpose of
the advisory board is to advise Queens with respect to deposit and lending
activities in Haven's former market area and to maintain and develop customer
relationships. Each member of the advisory board will be appointed to an initial
term of three years and will receive an annual retainer fee of $30,000 for such
services.
EFFECT OF THE MERGER ON EXISTING HAVEN STOCK-BASED RIGHTS, INCLUDING
STOCK OPTIONS AND STOCK GRANTS
The merger agreement provides that, on completion of the merger, each
outstanding allocated and unexercised stock option to purchase shares of Haven
stock granted under CFS Bank's stock-based employee benefit plan will no longer
represent the right to acquire shares of Haven stock and will become a right to
receive Queens stock based on the Haven exchange ratio. However, the holder of
each option shall have the right to have such option canceled for a cash payment
amount equal to the excess, if any, of the market value of Queens common stock
used to value cash paid in lieu of fractional shares to Haven stockholders in
the merger, over the price at which the option holder would have been able to
acquire a share of Haven common stock upon exercise of the option immediately
before the merger.
Approval of the merger agreement by Queens stockholders and Haven
stockholders will also constitute approval of the conversion of Haven stock
options into Queens stock options as described above. Queens has agreed to
reserve for issuance sufficient shares of Queens common stock to satisfy the
obligations of assuming the Haven stock options. Queens has also agreed to file
a registration statement with respect to the Queens common stock issuable upon
exercise of the Haven stock options after the merger is completed.
The merger will affect some of Haven's employee and director stock-
based benefit plans. The merger agreement provides that, upon completion of the
merger, Haven may terminate the Columbia Federal Savings Bank Employee Stock
Ownership Plan (referred to as the "ESOP"). Should Haven decide to terminate the
ESOP, unallocated shares held in the ESOP will be sold to the extent necessary
to pay in full any outstanding ESOP loan, and any remaining unallocated shares
will be distributed to the accounts of the ESOP participants as investment
earnings in proportion to the amount held in each participant's account as of
the termination date. The accrued benefit in each account of each participant
will be vested. Such benefit will be rolled over to her or his account in the
Incentive Savings Plan of Queens County Savings Bank or paid to the participant.
49
Under the Columbia Federal Savings Bank Recognition and Retention Plan
for Outside Directors and the Columbia Federal Savings Bank Recognition and
Retention Plan for Officers and Employees, all awards made but not vested upon
the day of an employee's termination or director's removal shall be deemed
vested.
Under the Haven Bancorp, Inc. 1993 Incentive Stock Option Plan, all
non-statutory stock options, whether or not exercisable at the time of
termination, shall be deemed immediately exercisable for at least one year
following the participant's termination (except in the case of a termination for
cause) and all incentive stock options whether or not exercisable at the time of
termination shall be deemed immediately exercisable. An incentive stock option
exercised more than three months following the date of the merger will not be
treated as an incentive stock option.
Under the Haven Bancorp, Inc. 1996 Stock Incentive Plan all unvested
options and restricted stock grants will immediately vest.
The merger does not affect the 1993 Stock Option Plan for Outside
Directors or the Columbia Federal Savings Bank 401(k) Thrift Incentive Savings
Plan.
EFFECTS OF THE MERGER ON EXISTING HAVEN SEVERANCE AGREEMENTS
In addition to the new employment agreements for Mr. Jennings and Mr.
Hodne and the consulting agreement for Mr. Messina described above, the merger
will affect executive employment arrangements that Haven and/or CFS Bank has
with Thomas J. Seery, Executive Vice President, Catherine Califano, Senior Vice
President and Chief Financial Officer, Mark A. Ricca, Esq., Senior Vice
President and Secretary, Mark Divirgilio, Executive Vice President of CFS
Insurance Agency, Joseph LoBalsamo, Executive Vice President of CFS Insurance
Agency, Andrew Kaplan, President of CFS Investments, James Carpenter, Senior
Vice President, Arthur McDermott, Vice President and Auditor, Annette Esposito,
First Vice President, Patricia M. Schaubeck, Esq., First Vice President and
Acting General Counsel, and Janet Mangafas, Vice President.
In particular, if, at any time following the completion of the merger,
Messrs. Seery, Ricca, Divirgilio, LoBalsamo and Ms. Califano are terminated
(except if terminated for cause) they shall receive severance benefits in an
amount approximating compensation and benefits that they would have received had
they been employed three years following such termination. Each shall receive in
severance benefits: (i) a lump sum payment of the present value of salary
payments for 3 years, (ii) a lump sum payment of bonus payments for 3 years,
(iii) additional benefits under all defined benefit and defined contribution
plans that he or she would have received had he or she continued working for 3
more years, (iv) any stock awards that he or she would have received under all
stock-based employee benefit plans had he or she continued working for 3 more
years, (v) insurance benefits that he or she would have received had he or she
continued working for 3 more years, and (vi) fringe benefits and perquisites he
or she would have received had he or she continued working for 3 more years. The
amounts of change in control payments due to Messrs. Seery, Ricca, Divirgilio,
LoBalsamo and Ms. Califano would be approximately o, o, o, o and o.
If, within one year following the completion of the merger, Messrs.
Kaplan, Carpenter, and McDermott are terminated (except if terminated for cause)
they shall receive severance benefits in an amount approximating compensation
and benefits that they would have received had they been employed two years
following such termination. Each shall receive in severance benefits: (i) a lump
sum payment of the present value of salary payments for 2 years, (ii) a lump sum
payment of bonus payments for 2 years, (iii) additional benefits under all
defined benefit and defined contribution plans that he would have received had
he continued working for 2 more years, (iv) any stock awards that he would have
received under all stock-based employee benefit plans had he continued working
for 2 more years, (v) insurance benefits that he would have received had he
continued working for 2 more years, and (vi) fringe benefits and perquisites he
would have received had he continued working for 2 more years. The amounts of
change in control payments due to Messrs. Kaplan, Carpenter and McDermott would
be approximately o, o and o.
If, within one year following the completion of the merger, Mss.
Esposito, Schaubeck and Mangafas are terminated (except if terminated for cause)
they shall receive severance benefits in an amount approximating compensation
and benefits that they would have received had they been employed one year
following such termination. Each shall receive in severance benefits: (i) a lump
sum payment of the present value of salary payments for 1 year, (ii) a lump sum
payment of bonus payments for 1 year, (iii) additional benefits under all
defined benefit and defined contribution plans that she would have received had
she continued working for 1 more year, (iv) any stock awards that she would have
received under all stock-based employee benefit plans had she continued working
for 1 more year, (v) insurance benefits that she would have received had she
continued working for 1 more year, and (vi) fringe benefits and perquisites she
would have received had she continued working for 1 more year. The amounts of
change in control payments due to Mss. Esposito, Schaubeck and Mangafas would be
approximately o, o and o.
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For each individual with a change in control arrangement with Haven or
CFS Bank except for Messrs. Messina, Jennings and Hodne, in the event the change
in control payment to an individual would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code, such individual will receive an
additional tax reimbursement payment.
OTHER EFFECTS OF THE MERGER ON HAVEN EMPLOYEE OR DIRECTOR BENEFIT
ARRANGEMENTS
The merger affects other benefits arrangements. Under a Supplemental
Retirement Agreement with CFS Bank, Mr. George S. Worgul, former Chairman of the
Board of Haven and CFS Bank, shall receive an accelerated payment of the
remainder of his retirement benefit in a lump sum no later than 14 days
following the merger.
QUEENS EMPLOYEE BENEFIT PLANS
The merger agreement provides that, as soon as practicable after the
completion of the merger, Queens shall implement a program of compensation and
benefits designed to cover all similarly situated employees of Queens, including
employees of CFS Bank, on a uniform basis. At Queens' discretion, this program
may contain any combination of new plans, continuation of plans maintained by
Queens or Queens County Savings Bank and continuation of plans maintained by
Haven or CFS Bank immediately prior to the merger.
The new plans instituted by Queens shall take account of the service,
eligibility and vesting of all employees of Queens, Queens County Savings Bank,
Haven and CFS Bank immediately before the merger. Queens shall also assume all
obligations of Haven and CFS with respect to Haven's or CFS Bank's severance
plans.
INDEMNIFICATION AND DIRECTORS' AND OFFICERS' INSURANCE
The merger agreement provides, for six years from the completion of the
merger, that Queens will indemnify each present director and officer of Haven
and its subsidiaries against all costs or expenses, including attorneys' fees or
other liabilities incurred, in connection with any claim arising out of matters
existing at or prior to the completion of the merger, including the transactions
contemplated by the merger agreement, to the fullest extent that Haven and its
subsidiaries are permitted to indemnify their directors and officers under
applicable laws, and their respective certificates of incorporation or by-laws.
The merger agreement also provides that, for a period of six years
following the merger, Queens will provide directors' and officers' liability
insurance that serves to reimburse each present officer and director of Haven or
any of its subsidiaries for claims arising from facts or events occurring at or
prior to the completion of the merger. This insurance must provide at least the
same coverage and amounts, and provide terms and conditions no less advantageous
than the coverage maintained by Haven immediately prior to the merger.
TRANSACTIONS BETWEEN QUEENS AND HAVEN PENDING THE MERGER
We have agreed that any transaction entered into between Queens and
Haven, and/or any of our respective subsidiaries, such as sale of loans, may be
reversed by either Queens or Haven upon notice to the other party, if the merger
is not completed by March 31, 2001. As of the date of this document, Queens
County Savings Bank had assigned approximately $75 million of multi-family loans
to CFS Bank at fair market value.
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THE MERGER AGREEMENT
The following describes certain aspects of the proposed merger,
including material provisions of the merger agreement. The following description
of the merger agreement does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the merger agreement, which is
attached as Appendix A to this document and is incorporated by reference in this
document. You are urged to read the merger agreement carefully and in its
entirety.
TERMS OF THE MERGER
The merger agreement provides for the merger of Haven with and into
Queens. Queens will be the surviving corporation after the merger and will be
renamed New York Community Bancorp, Inc. At the time the merger is completed
each outstanding share of Haven common stock, except for shares, if any, owned
by Haven as treasury stock or unallocated shares held by Haven in its or CFS
Bank's recognition and retention compensation plans or owned by Queens or a
subsidiary of Queens (other than shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted), will be automatically converted
into the right to receive 1.04 shares of Queens common stock, subject to upward
adjustment as provided in the merger agreement. See "-Amendment, Waiver and
Termination of the Merger Agreement" on page o.
Queens will not issue any fractional shares of Queens in the merger.
Instead, a Haven stockholder who otherwise would have received a fraction of a
share of Queens common stock will receive an amount in cash, rounded to the
nearest cent. This cash amount shall be determined by multiplying the fraction
by the last reported sale price per share of Queens common stock as reported on
the Nasdaq National Market on the day immediately before the consummation of the
merger.
CLOSING AND EFFECTIVE TIME OF THE MERGER
The merger will be consummated only if all of the following occur:
o the merger agreement is approved and adopted by Queens stockholders,
o the merger agreement is approved and adopted by Haven stockholders,
o we obtain all required consents and approvals, and
o all other conditions to the merger discussed in this document and the
merger agreement are either satisfied or waived.
The merger will become effective when certificates of merger are filed
with the Secretary of State of the State of Delaware, or at a later time as may
be agreed upon by us and indicated in the certificates of merger in accordance
with applicable law. In the merger agreement, we have agreed that the effective
time of the merger shall be on the fifth business day following the date on
which the expiration of all applicable regulatory waiting periods shall occur
and all conditions to the merger have been satisfied or waived, or on another
mutually agreed date. It is currently anticipated that the effective time will
occur during the fourth quarter of 2000, but we cannot guarantee when or if the
merger will be consummated.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains various representations and warranties
made by each of us. Some of the representations and warranties are qualified by
materiality and other exceptions.
Both Queens and Haven made representations and warranties regarding the
following matters, among others:
o corporate organization and qualification in appropriate states;
o the ownership, organization, qualification in appropriate states and
good standing of our subsidiaries and, with respect to each of our
respective depository institutions, their insured status;
o capitalization;
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o corporate power and authority to enter into, and make binding, the
merger agreement and the stock option agreement;
o necessary stockholder approval and receipt of a fairness opinion;
o filings required to be made with governmental entities and consents
required to be obtained from third parties in connection with the
merger agreement, and a statement that the merger agreement and stock
option agreement do not conflict with governing documents or other
agreements;
o regulatory, securities and other reports; financial statements, and
books and records;
o pending or threatened litigation or regulatory action;
o the absence of any material adverse change in business, financial
position or results of operations since March 31, 2000;
o title to properties, free and clear of liens;
o compliance with laws and accounting requirements;
o filing of tax returns; payment of taxes;
o fees payable to financial advisors in connection with the merger;
o insurance;
o material agreements;
o labor matters, including proceedings related to unfair labor
practices;
o employee benefits matters, including employee benefit plans;
o properties and related environmental matters;
o knowledge as to whether the conditions to the merger can be satisfied;
o material interests of certain parties and ownership of shares of the
other party to the merger;
o brokered deposits; and
o the accuracy of the information provided for inclusion in the
registration statement of which this document is a part.
In addition, Haven alone made representations and warranties regarding
the following matters, among others:
o the conduct of business only in the ordinary and usual course since
March 31, 2000;
o loan portfolio and asset quality;
o investment securities and borrowings;
o the Haven stockholder protection rights agreement and anti-takeover
provisions; and
o indemnification agreements.
COVENANTS AND AGREEMENTS
CONDUCT OF HAVEN'S BUSINESS PENDING THE MERGER
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Haven has agreed as to itself and each of its subsidiaries that, from
the date of the merger agreement to the completion of the merger, unless
otherwise agreed or unless otherwise contemplated by the merger agreement or the
stock option agreement, among other things:
o Haven will use commercially reasonable efforts to conduct its business
only in the ordinary and usual course;
o Haven will use commercially reasonable efforts to preserve existing
organizations, assets, rights and relations;
o Haven will not knowingly take any action that will adversely affect
the ability of the parties to receive the approvals or fulfill the
obligations necessary to complete the merger;
o Haven will not, without the prior written consent of Queens, which
will not be unreasonably withheld:
o other than to a subsidiary or consistent with past practice,
transfer or sell any material property or assets;
o change any provision of its certificate of incorporation or
by-laws, or those of any subsidiary;
o enter into significant contracts not terminable within 30 days;
o cancel, release or assign indebtedness, or settle claims, in
individual amounts over $100,000;
o invest in debt securities, including mortgage-backed securities,
other than U.S. government or U.S. agency securities, and other
than reinvestments of principal and interest on mortgage-backed
securities consistent with past practice;
o make significant capital expenditures other than with respect to
existing binding commitments;
o make real estate loans secured by undeveloped land or real-estate
located outside New York, New Jersey and Connecticut, other than
real estate loans secured by one-to-four family homes;
o establish new branches or office facilities;
o other than internal reorganizations involving existing
subsidiaries or consistent with past practice, not make any
acquisition or investment in any person which exceeds $50,000;
o except as consistent with past practice, incur additional
borrowings;
o except as consistent with past practice, establish, adopt or
enter into new, or change Haven's existing, compensation,
benefits or other arrangements for its employees, officers or
directors;
o change accounting principles, other than as required by GAAP;
o make any tax election other than in the ordinary course of
business consistent with past practice; or
o take actions that would materially adversely affect its ability
to consummate the merger.
CONDUCT OF QUEENS' BUSINESS PENDING THE MERGER
54
Queens has each agreed as to itself and Queens County Savings Bank
that, from the date of the merger agreement to the completion of the merger,
unless otherwise agreed or unless otherwise contemplated by the merger agreement
or the stock option agreement among other things:
o not to materially change the nature of its or Queens County Savings
Bank's business plan or eliminate any material business line without
first consulting with the Chairman and Chief Executive Officer or the
President of Haven;
o not to change its accounting principles other than as permitted by
GAAP;
o not to take any action that would materially adversely affect its
ability to consummate the merger;
o not to change any provisions of its certificate of incorporation or
by-laws other than to increase the authorized capital stock or issue
shares of preferred stock thereunder;
o not to enter into an acquisition agreement with a third party which is
conditioned on Queens' not completing the merger; and
o not to elect to its board of directors any person who was not a member
of its board of directors as of June 27, 2000, subject to certain
exceptions.
DECLARATION AND PAYMENT OF DIVIDENDS
We have agreed that, until the merger is completed, we will only pay
regular quarterly dividends or distributions, provided that Queens' dividends do
not exceed $0.30 per share per quarter, and Haven's dividends do not exceed
$0.075 per share per quarter; the record date for payment of Haven's dividends
in the fourth quarter shall be postponed to conform to Queens' dividend record
date, which is expected to be in November 2000.
AGREEMENT NOT TO SOLICIT OTHER OFFERS
Subject to the discharge of fiduciary duties, Haven has also agreed
that it will not, and will cause its subsidiaries and representatives and
subsidiaries' representatives not to, initiate, solicit or encourage any
inquiries or any offer relating to a merger, acquisition or other transaction
involving the purchase of all or a substantial part of the assets or any equity
securities of Haven or its subsidiaries. Subject to the discharge of fiduciary
duties, Haven has also agreed not to negotiate or provide any confidential
information relating to any such acquisition proposal. Haven has agreed that it
will immediately advise Queens following the receipt of any acquisition
proposal.
EXPENSES AND FEES
In general, each party will be responsible for all expenses incurred by
it in connection with the negotiation and consummation of the transactions
contemplated by the merger agreement. We have agreed, however, that Queens will
reimburse CFS Bank for any costs and expenses incurred by CFS Bank or Haven in
connection with any installations of equipment and wiring in CFS Bank's offices.
In the event that the merger agreement is terminated, Queens will reimburse CFS
Bank for the cost of restoring the offices to their condition prior to the
commencement of any such installation.
OTHER AGREEMENTS
The merger agreement contains additional agreements relating to our
conduct prior to completion of the merger, including the following:
o to convene a meeting of our respective stockholders in order to obtain
approval of the merger agreement;
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o subject to fiduciary duties under applicable law, to have our
respective boards of directors maintain recommendations to our
respective stockholders in favor of the transactions contemplated by
the merger agreement;
o to make all respective regulatory and securities filings with
applicable governmental entities and to take other actions necessary
to consummate the merger;
o to afford the other party reasonable access to information pertaining
to each of us and that all information supplied will be true and
correct and not false or misleading;
o to cause to be delivered to the other party a letter of an independent
certified public accountant regarding such accountant's review of the
delivering party's financial statements;
o to give prompt notice of any event or circumstance known that is
reasonably likely to result in a material adverse effect, a material
breach of either of our representations or agreements in the merger
agreement or the failure of a condition to completion of the merger;
o to consult with and obtain the consent of the other before issuing any
press release or other public statements with respect to the merger or
the merger agreement;
o to take all necessary steps within our control to avoid the
application to the merger of any applicable antitakeover laws or
defensive provisions of our respective certificates of incorporation
or by-laws;
o Haven will cause its affiliates to enter into agreements intended to
assure compliance with securities rules in any sales of Queens or
Haven stock;
o not to take any action that would adversely affect tax treatment of
the merger;
o Queens will prepare and file a registration statement with respect to
the shares to be issued pursuant to the merger, and will use
commercially reasonable efforts to have NYCB common stock approved for
quotation on the Nasdaq National Market under the symbol "NYCB";
o Queens will honor severance agreements, employment agreements and
change in control agreements between Haven and its employees, and
between CFS Bank and its employees; and
o Queens will establish and implement a program of compensation and
benefits designed to apply to all similarly situated employees on a
uniform basis;
CONDITIONS TO CONSUMMATION OF THE MERGER
Our respective obligations to consummate the merger are subject to the
fulfillment or waiver of certain conditions, including:
o the approval and adoption of the merger agreement by the holders of
the requisite number of shares of Haven stock and Queens stock,
respectively;
o the receipt and effectiveness of all governmental and other approvals,
registrations and consents and the expiration of all related waiting
periods required to consummate the merger and the issuance of Queens
stock;
o the absence of action by any court or other governmental entity that
prohibits consummation of the transactions contemplated by the merger
agreement;
o the registration statement with respect to the Queens common stock to
be issued pursuant to the merger shall have been declared effective,
and the Queens common stock shall be trading, subject only to official
notice of issuance, on the Nasdaq National Market;
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o the truth and correctness of the representations and warranties of
each of us in the merger agreement, subject to certain specified
exceptions, and the performance by each of us in all material respects
of our obligations under the merger agreement;
o the receipt of an opinion of each of our tax counsel with respect to
the federal income tax effects of the merger; and
o the delivery by each of us of certificates indicating compliance with
the conditions in the merger agreement and delivery of letters of
independent certified public accountants regarding such accountants'
review of our financial statements.
We cannot provide assurance as to when or if all of the conditions to
the merger can or will be satisfied or waived by the appropriate party. As of
the date of this document, we have no reason to believe that any of these
conditions will not be satisfied.
POSSIBLE ALTERNATIVE MERGER STRUCTURE
The merger agreement provides that Queens may change the structure of
the merger. No change may be made that:
o adversely affects what Haven stockholders would receive in the merger,
o adversely affects the tax treatment of the merger,
o adversely affects Queens' obligations under the merger agreement, or
o materially delays or impedes consummation of the merger.
AMENDMENT, WAIVER AND TERMINATION OF THE MERGER AGREEMENT
The provisions of the merger agreement may be waived by the party
benefitted by those provisions. The merger agreement may be amended or modified,
in accordance with applicable law, by our written agreement.
The merger agreement may be terminated, and the merger abandoned, by us
at any time before the merger is scheduled to be completed if both of our boards
of directors vote to do so. In addition, the merger agreement may be terminated,
and the merger abandoned:
o by action of a majority of either of our entire boards of directors if
o the merger is not consummated by March 31, 2001, unless the failure to
consummate the merger is due to the breach by the terminating party of
a representation, warranty or covenant contained in the merger
agreement,
o the stockholders of either Haven or Queens fail to approve and adopt
the merger agreement at the special stockholders' meetings called for
the purpose of considering and voting upon the merger agreement,
provided that the terminating party has recommended to its
stockholders the approval or adoption of the merger agreement, or,
o the non-terminating party materially breaches any representation,
warranty, covenant or agreement contained in the merger agreement that
causes the failure of a condition to closing and such breach cannot be
or has not been cured within 25 days after written notice of such
breach is given.
o by either of us if any governmental approval, consent or authorization
required for the consummation of the merger is denied, or any court or
governmental authority having jurisdiction over either of us shall
have issued a final, non-appealable order enjoining or otherwise
prohibiting consummation of the transactions contemplated in the
merger agreement, or
57
o by Haven, at any time during the five-day period following the day on
which the approval of the merger by the Board of Governors of the
Federal Reserve System is received (referred to as the "valuation
date") if its board of directors so determines by a majority vote of
the whole board, if both of the following conditions are satisfied:
1. the market value of Queens common stock, calculated as an average
of the Queens common stock closing prices over a 15-day period
immediately preceding the valuation date, is less than $14.65;
and
2. the quotient obtained by dividing the market value of Queens
common stock, calculated as described above, by $18.3125 is less
than 80% of the quotient obtained by dividing the market value of
an index of shares of financial institutions comparable to Queens
and listed in the merger agreement, calculated as an average over
the fifteen- day period immediately preceding the valuation date,
by the initial valuation prices of the index shares calculated
using their June 28, 2000 closing sale prices.
In order to exercise this termination right, Haven must give notice to
Queens during the five business day period following the valuation date,
although such election to terminate may be withdrawn by Haven at any time during
the fifteen business day period following the valuation date. During the five
business day period beginning with its receipt of Haven's notice, Queens has the
option to avoid termination of the merger agreement by electing to increase the
exchange ratio to the lesser of:
1. the quotient obtained by dividing $15.23 by the Queens market
value, calculated as described above, and
2. the quotient obtained by dividing (x) the product of (i) the
quotient obtained by dividing the market value of an index of
shares, calculated as described above, by $15.50, and (ii) the
Haven exchange ratio (as then in effect) by (y) the quotient of
Queens market value, calculated as described above, divided by
$18.3125.
If Queens provides timely notice to Haven of its election and the
revised exchange ratio, no termination will occur and the merger agreement will
remain in full force and effect in accordance with its terms (except that the
exchange ratio will be so modified).
This description of Haven's right to terminate the merger agreement
because of a decline in Queens' stock price is not complete and is qualified by
reference to the specific provisions of the merger agreement. The companies
comprising the index and the weights accorded those companies may change upon
the occurrence of certain events as set forth in the merger agreement.
It is not possible to know whether the price based termination right
will be triggered until after the valuation date. The Haven board of directors
has made no decision as to whether it would exercise its right to terminate the
merger agreement if the termination right were triggered. In considering whether
to exercise its termination right, the Haven board of directors would,
consistent with its fiduciary duties, take into account all relevant facts and
circumstances that exist at such time and would consult with its financial
advisors and legal counsel. If Haven's stockholders approve and adopt the merger
agreement at the Haven special meeting and thereafter the price-based
termination right is triggered, the Haven board of directors will have the
authority, consistent with its fiduciary duties, to elect either to complete the
merger, whether or not there is any increase in the exchange ratio and without
any further action by or resolicitation of the stockholders of Haven, or to
terminate the merger agreement.
Queens is under no obligation to increase the exchange ratio, and there
can be no assurance that Queens would elect to increase the exchange ratio if
the Haven board of directors were to exercise its right to terminate the merger
agreement as set forth above. Any such decision would be made by Queens in
consultation with its financial and legal advisors in light of the circumstances
existing at the time Queens has the opportunity to make such an election. If
Queens' stockholders approve and adopt the merger agreement at the Queens
special meeting and thereafter Haven exercises its termination right, the Queens
board of directors will have the authority, consistent with its fiduciary
duties, to elect either to increase the exchange ratio as described above and to
complete the merger
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without any further action by or resolicitation of the stockholders of Queens,
or to allow Haven to terminate the merger agreement.
Effect of Termination. If the merger agreement is terminated, it will
thereafter become void and there will be no liability on the part of Queens or
Haven or their respective officers or directors, except that:
o any such termination will be without prejudice to the rights of any
party arising out of the breach by the other party of any covenant,
representation or obligation contained in the merger agreement, and
o Haven and Queens each will bear its own expenses in connection with
the merger agreement and the transactions contemplated thereby, except
as otherwise provided in the merger agreement.
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AMENDMENT TO CERTIFICATE OF INCORPORATION OF QUEENS
The merger agreement contemplates that Queens' corporate name shall be
changed to "New York Community Bancorp, Inc." at the completion of the merger.
Accordingly, the Queens stockholders are being asked to approve the amendment of
the Queens certificate of incorporation which will give effect to this name
change. Should the Queens stockholders approve the name change, Queens'
corporate name shall be changed to "New York Community Bancorp, Inc." as soon as
practicable after the Queens special meeting, regardless of whether or not the
merger with Haven is consummated or the stockholders of Queens approve and adopt
the merger agreement.
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THE STOCK OPTION AGREEMENT
The following description sets forth the material provisions of the
Queens stock option agreement, but does not purport to be complete and is
subject to the full text of, and qualified in its entirety by reference to, the
stock option agreement, which is attached as Appendix B to this document and is
incorporated herein by reference. You are urged to read this document carefully
and in its entirety.
GENERAL
As an inducement for Queens to enter into the merger agreement, Haven
agreed to grant Queens an option to purchase shares of Haven stock.
Under the stock option agreement, Queens can purchase up to 1,800,000
shares of Haven common stock upon the occurrence of certain events described
below. Although this number is subject to adjustment in certain cases, including
the issuance of additional shares, the number of shares that may be acquired
under the stock option agreement will never exceed 19.9% of the number of shares
of Haven stock outstanding immediately before exercise of the option. The
exercise price of the option is $18.50 per share of Haven stock, but this price
is subject to adjustment in certain cases, including stock dividends,
recapitalizations and other changes in capitalization. The exercise price was
determined by using the closing sale price for Haven stock on June 28, 2000, the
day after the merger was announced.
PURPOSE OF THE STOCK OPTION AGREEMENT
Arrangements such as the stock option agreement are customarily entered
into in connection with mergers involving publicly traded companies to increase
the likelihood that the transactions will be completed in accordance with their
terms and to compensate Queens for the efforts undertaken and the expenses and
losses incurred by it if the transaction is not completed. The stock option
agreement may have the effect of discouraging offers by third parties to acquire
Haven, even if those persons were prepared to offer consideration to Haven's
stockholders that has a greater value than what these stockholders will receive
in the merger.
To our best knowledge, no event giving rise to the right to exercise
the stock option has occurred as of the date of this document.
EXERCISE; EXPIRATION
Queens can exercise its option if both an initial triggering event and
a subsequent triggering event occur prior to the occurrence of an exercise
termination event, as these terms are described below. The purchase of any
shares of Haven stock pursuant to the option is subject to compliance with
applicable law which may require regulatory approval.
The stock option agreement describes a number of different events as
initial triggering events. Generally, an initial triggering event will occur if
Haven enters into, proposes to enter into, or is the subject of an acquisition
transaction or a proposed acquisition transaction other than the merger
agreement with Queens and the transactions it contemplates.
As used in the stock option agreement, the term acquisition transaction
means:
o a merger or consolidation or any similar transaction, or bona fide
proposal of such a transaction, involving Haven, other than certain
mergers involving only Haven and its subsidiaries;
o a purchase, lease or other acquisition of all or any substantial part
of the assets or deposits of Haven or any of its subsidiaries; or
o a purchase or other acquisition of securities representing 10% or more
of the voting power of the outstanding common stock of Haven or any of
its subsidiaries.
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The stock option agreement generally defines the term subsequent
triggering event to mean any of the following events or transactions:
o the acquisition by a third party of beneficial ownership of 25% or
more of the outstanding common stock of Haven, or
o Haven or any of its subsidiaries, without the prior written consent of
Queens, enters into an agreement to engage in an acquisition
transaction with a third party, or the board of directors of Haven
recommends that its stockholders approve or accept any acquisition
transaction, other than the merger, provided that, for purposes of
this definition of a subsequent triggering event, the percentage
referred to in the third definition of acquisition transaction above
shall be 25% rather than 10%.
The stock option agreement defines the term exercise termination event
to mean any of the following:
o completion of the merger;
o termination of the merger agreement in accordance with its terms
before an initial triggering event, provided that this would not
include a termination of the merger agreement by Queens based on a
willful breach by Haven of a representation, warranty, covenant or
other agreement contained in the merger agreement; or
o the passage of 12 months, subject to extension in order to obtain
required regulatory approvals, after termination of the merger
agreement, if the termination follows the occurrence of an initial
triggering event or is a termination of the merger agreement by Queens
based on a willful breach by Haven of a representation, warranty,
covenant or other agreement contained in the merger agreement.
If the option becomes exercisable, it may be exercised in whole or in
part within six months following the subsequent triggering event. Queens' right
to exercise the option and certain other rights under the stock option agreement
are subject to an extension in order to obtain required regulatory approvals and
comply with applicable regulatory waiting periods and to avoid liability under
the short-swing trading restrictions contained in Section 16(b) of the
Securities Exchange Act. Nevertheless, Queens may not exercise the option if it
is in breach of any of its covenants or agreements under the merger agreement.
QUEENS' RIGHTS UNDER THE STOCK OPTION AGREEMENT
At any time after a repurchase event, as this term is described below,
upon the request of Queens, Haven may be required to repurchase the option and
all or any part of the shares issued under the option. The repurchase of the
option will be at a price per share equal to the amount by which the option
repurchase price, as that term is defined in the stock option agreement, exceeds
the option price. The term repurchase event is defined to mean:
o the acquisition by any third party of beneficial ownership of 50% or
more of the then-outstanding shares of Haven's common stock, or
o the consummation of an acquisition transaction, provided that for
purposes of the definition of repurchase event, the percentage
referred to in the third definition of acquisition transaction above
shall be 25% rather than 10%.
The stock option agreement also provides that Queens may, at any time
within 90 days after a repurchase event, surrender the option and any shares
issued under the option held by Queens for a cash fee equal to $9 million,
adjusted if there have been purchases of stock under the option and gains on
sales of stock purchased under the option, provided that Queens may not exercise
its surrender right if Haven repurchases the option, or a portion of the option.
If, prior to an exercise termination event, Haven enters into certain
transactions in which it is not the surviving corporation, certain fundamental
changes in its capital stock occur, or Haven sells all or substantially all of
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its or its significant subsidiaries' assets, the option will be converted into,
or be exchangeable for, a substitute option, at Queens' election, of
o the continuing or surviving person of a consolidation or merger with
Haven;
o the acquiring person in a plan of exchange in which Haven is acquired;
o Haven in a merger or plan of exchange in which Haven is the acquiring
person;
o the transferee of all or substantially all of the assets of Haven or
its significant subsidiary; or
o any person that controls any of these entities, as the case may be.
The substitute option will have the same terms and conditions as the
original option. However, if the terms of the substitute option cannot be the
same as those of the option by law, the terms of the substitute option will be
as similar as possible and at least as advantageous to Queens.
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ACCOUNTING TREATMENT
The merger will be accounted for as a "purchase," as that term is used
under generally accepted accounting principles, for accounting and financial
reporting purposes. Under purchase accounting, the assets and liabilities of
Haven as of the effective time of the merger will be recorded at their
respective fair values and added to those of Queens. Any excess of purchase
price over the fair values is recorded as goodwill. Financial statements of
Queens issued after the merger would reflect such fair values and would not be
restated retroactively to reflect the historical financial position or results
of operations of Haven.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following section describes the material U.S. federal income tax
consequences of the merger to holders of Haven common stock who hold Haven
common stock as a capital asset within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"), and is the opinion of
Thacher Proffitt & Wood, counsel to Haven, and Sullivan & Cromwell, counsel to
Queens. This section does not apply to special classes of taxpayers, such as:
o financial institutions,
o insurance companies,
o tax-exempt organizations,
o dealers in securities or currencies,
o traders in securities that elect to use a mark to market method of
accounting,
o persons that hold Haven common stock as part of a straddle or
conversion transaction,
o persons who are not citizens or residents of the United States, and
o stockholders who acquired their shares of Haven common stock through
the exercise of an employee stock option or otherwise as compensation.
The following represents general information only and is based upon the
Code, its legislative history, existing and proposed regulations thereunder and
published rulings and decisions, all as currently in effect as of the date
hereof, and all of which are subject to change, possibly with retroactive
effect. Tax considerations under state, local and foreign laws are not addressed
in this document. Determining the actual tax consequences of the merger to you
may be complex. They will depend on your specific situation and on factors that
are not within our control. You should consult with your own tax advisor as to
the tax consequences of the merger in your particular circumstances, including
the applicability and effect of the alternative minimum tax and any state, local
or foreign and other tax laws and of changes in those laws.
Tax Consequences of the merger Generally. It is a condition to the
merger that Haven receive an opinion of its counsel, Thacher Proffitt & Wood, to
the effect that the merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that
accordingly: (i) no gain or loss will be recognized by Queens, Queens County
Savings Bank, Haven or CFS Bank as a result of the merger; (ii) except to the
extent of any cash received in lieu of a fractional share interest in Queens
common stock, no gain or loss will be recognized by the stockholders of Haven
who exchange their Haven common stock for Queens common stock pursuant to the
merger; (iii) the tax basis of Queens common stock received by stockholders who
exchange their Haven common stock for Queens common stock in the merger will be
the same as the tax basis of Haven common stock surrendered pursuant to the
merger, reduced by the amount of any tax basis allocable to a fractional share
for which cash is received; and (iv) the holding period of Queens common stock
received by each stockholder in the merger will include the holding period of
Haven common stock exchanged therefor, provided that such stockholder held such
Haven common stock as a capital asset at the effective time. It is also a
condition to the merger that Queens receive an opinion of its counsel, Sullivan
& Cromwell, to the effect that the merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
and that accordingly: (i) no gain or loss will be recognized by Queens, Queens
County Savings Bank, Haven or CFS Bank as a result of the merger; and (ii)
except to the extent of any cash received in lieu of a fractional share interest
in Queens common stock, no gain or loss will be recognized by the stockholders
of Haven who exchange their Haven common stock for Queens common stock pursuant
to the merger.
Although the merger agreement allows us to waive this condition, we
currently do not anticipate doing so.
65
In rendering these opinions, counsel may require and rely upon
representations contained in letters and certificates to be received from Haven,
Queens and others. Neither of these tax opinions will be binding on the Internal
Revenue Service. Neither Queens nor Haven intends to request any ruling from the
Internal Revenue Service as to the U.S. federal income tax consequences of the
merger.
Based on the above assumptions and qualifications and certain
representations of Queens and Haven, for U.S. federal income tax purposes:
o the merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code;
o each of Queens and Haven will be a party to that reorganization within
the meaning of Section 368(b) of the Code;
o no gain or loss will be recognized by stockholders of Haven who
receive shares of Queens common stock in exchange for shares of Haven
common stock, except with respect to cash received in lieu of
fractional share interests;
o the holding period of Queens common stock received in exchange for
shares of Haven common stock will include the holding period of the
Haven common stock for which it is exchanged; and
o the basis of the Queens common stock received in the merger will be
the same as the basis of the Haven common stock for which it is
exchanged, less any basis attributable to fractional shares for which
cash is received.
Cash Received in Lieu of a Fractional Share of Queens common stock. A
stockholder of Haven who receives cash in lieu of a fractional share of Queens
common stock will be treated as having received the fractional share pursuant to
the merger and then as having exchanged the fractional share for cash in a
redemption by Queens subject to Section 302 of the Code. As a result, a Haven
stockholder will generally recognize gain or loss equal to the difference
between the amount of cash received and the portion of the basis of the shares
of Queens common stock allocable to his or her fractional interest. This gain or
loss will generally be capital gain or loss, and will be long-term capital gain
or loss if, as of the date of the exchange, the holding period for such shares
is greater than one year. Long-term capital gain of a non-corporate holder is
generally subject to tax at a maximum federal tax rate of 20%.
Backup Withholding and Information Reporting. Payments of cash to a
holder surrendering shares of Haven common stock will be subject to information
reporting and backup withholding at a rate of 31% of the cash payable to the
holder, unless the holder furnishes its taxpayer identification number in the
manner prescribed in applicable Treasury Regulations, certifies that such number
is correct, certifies as to no loss of exemption from backup withholding, and
meets certain other conditions. Any amounts withheld from payments to a holder
under the backup withholding rules will be allowed as a refund or credit against
the holder's U.S. federal income tax liability, provided the required
information is furnished to the Internal Revenue Service.
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DESCRIPTION OF QUEENS CAPITAL STOCK
In this section, we describe material features and rights of the Queens
capital stock after the merger. This summary is qualified in its entirety by
reference to applicable Delaware law, Queens' certificate of incorporation,
which is incorporated herein by reference to the Queens certificate of
incorporation filed as an exhibit to the registration statement of which this
document is a part, Queens' by-laws and the Queens rights agreement, as
described below. See "Where You Can Find More Information" on pages o.
GENERAL
Queens is authorized to issue 60,000,000 shares of common stock having
a par value of $.01 per share and 5,000,000 shares of preferred stock having a
par value of $.01 per share. Each share of the Queens common stock has the same
relative rights as, and is identical in all respects to, each other share of
Queens common stock.
As of June 30, 2000, 20,769,910 shares of Queens common stock and no
shares of Queens preferred stock were outstanding. In addition, 10,200,783
shares of Queens common stock were held in the treasury of Queens, and 2,395,290
shares of Queens common stock were reserved for issuance pursuant to Queens'
employee benefit plans and the Queens employee stock option agreement. After
giving effect to the merger on a pro forma basis, approximately 30,253,898
shares of Queens common stock will be outstanding.
COMMON STOCK
Dividends. Subject to certain regulatory restrictions, Queens County
Savings Bank can pay dividends out of statutory surplus or from certain net
profits if, as and when declared by its board of directors. Funds for Queens
dividends are generally provided through dividends from Queens County Savings
Bank. The payment of dividends by Queens County Savings Bank is subject to
limitations which are imposed by law and applicable regulation. See "Queens
Dividends" on page o and "REGULATION AND SUPERVISION OF QUEENS" on page o. The
holders of common stock of Queens are entitled to receive and share equally in
such dividends as may be declared by the board of directors of Queens out of
funds legally available therefor. If Queens issues Preferred Stock, the holders
thereof may have a priority over the holders of the common stock with respect to
dividends.
Voting Rights. The holders of common stock of Queens possess exclusive
voting rights in Queens. They elect the Queens board of directors and act on
such other matters as are required to be presented to them under Delaware law or
as are otherwise presented to them by the board of directors. Each holder of
common stock is entitled to one vote per share and does not have any right to
cumulate votes in the election of Directors. If Queens issues preferred stock,
holders of the preferred stock may also possess voting rights. Certain matters
require an 80% stockholder vote, which is calculated after giving effect to a
provision limiting voting rights. This provision in Queens' certificate of
incorporation provides that stockholders who beneficially own in excess of 10%
of the then-outstanding shares of common stock of Queens are not entitled to any
vote with respect to the shares held in excess of the 10% limit. A person or
entity is deemed to beneficially own shares that are owned by an affiliate as
well as persons acting in concert with such person or entity.
Liquidation. In the event of any liquidation, dissolution or winding up
of Queens County Savings Bank, Queens, as holder of the Queens County Savings
Bank's capital stock would be entitled to receive, after payment or provision
for payment of all debts and liabilities of Queens County Savings Bank
(including all deposit accounts and accrued interest thereon) and after
distribution of the balance in the special liquidation account to eligible
account holders, all assets of Queens County Savings Bank available for
distribution. In the event of liquidation, dissolution or winding up of Queens,
the holders of its common stock would be entitled to receive, after payment or
provision for payment of all of its debts and liabilities, all of the assets of
Queens available for distribution. If Preferred Stock is issued, the holders
thereof may have a priority over the holders of the Queens common stock in the
event of liquidation or dissolution.
Preemptive Rights. Holders of Queens common stock are not entitled to
preemptive rights with respect to any shares which may be issued. The Queens
common stock is not subject to redemption.
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Shares of Queens preferred stock may be issued with such designations,
powers, preferences and rights as the Queens board of directors may from time to
time determine. The Queens board of directors can, without stockholder approval,
issue preferred stock with voting, dividend, liquidation and conversion rights
which could dilute the voting strength of the holders of the common stock and
may assist management in impeding an unfriendly takeover or attempted change in
control.
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RIGHTS AGREEMENTS
The following is a description of the rights issued under each of the
Queens rights agreement and the Haven rights agreement as amended. This
description does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the text of each rights agreement. The Queens
rights agreement is incorporated herein by reference to the Queens rights
agreement which is filed as an exhibit to the registration statement of which
this document is a part.
QUEENS STOCKHOLDER PROTECTION RIGHTS AGREEMENT
Each issued share of Queens common stock has attached to it one right
issued pursuant to a Stockholder Protection Rights Agreement, dated as of
January 16, 1996, between Queens and ChaseMellon Shareholder Services, L.L.C.,
as rights agent. Each right entitles its holder to purchase one one-hundredth of
a share of participating preferred stock of Queens at an exercise price of $120,
subject to adjustment, after the separation time, which means after the close of
business on the earlier of
o the tenth business day after commencement of a tender or exchange
offer that, if consummated, would result in the offeror becoming an
"acquiring person," which is defined in the rights agreement as a
person beneficially owning 10% or more of the outstanding shares of
Queens common stock; and
o the tenth business day after the first date of public announcement
that a person has become an acquiring person, which is also called the
flip-in date.
The rights are not exercisable until the business day following the
separation time. The rights expire on the earlier of
o the close of business on January 16, 2006;
o redemption, as described below;
o an exchange for common stock, as described below; or
o the merger of Queens into another corporation pursuant to an agreement
entered into prior to a flip-in date.
The Queens board of directors may, at any time prior to occurrence of a flip-in
date, redeem all the rights at a price of $0.01 per right.
If a flip-in date occurs, each right, other than those held by the
acquiring person or any affiliate or associate of the acquiring person or by any
transferees of any of these persons, will constitute the right to purchase
shares of Queens common stock having an aggregate market price equal to $240 in
cash, subject to adjustment. In addition, the Queens board of directors may at
any time between a flip-in date and the time that an acquiring person becomes
the beneficial owner of more than 50% of the outstanding shares of Queens common
stock elect to exchange the rights for shares of Queens common stock at an
exchange ratio of one share of Queens common stock per right.
Under the rights agreement, Queens may not consolidate or merge, or
engage in other similar transactions, with an acquiring person without entering
into a supplemental agreement with the acquiring person providing that, upon
consummation or occurrence of the transaction, each right shall thereafter
constitute the right to purchase common stock of the acquiring person having an
aggregate market price equal to $240 in cash, subject to adjustment.
These rights may not prevent a takeover of Queens. The rights, however,
may have antitakeover effects. The rights may cause substantial dilution to a
person or group that acquires 10% or more of the outstanding Queens common stock
unless the rights are first redeemed by the Queens board of directors.
A description of the rights agreement specifying the terms of the
rights has been included in reports filed by Queens under the Securities
Exchange Act. See "Where You Can Find More Information" on pages o.
HAVEN RIGHTS AGREEMENT
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On January 25, 1996, Haven adopted a rights agreement, pursuant to
which each issued share of Haven common stock has attached to it a right to
purchase one preferred share of Haven capital stock for each share of Haven
common stock held. Although the mechanics for exercising these rights are
different from the Queens' rights agreement, the Haven rights agreement is
substantially the same as the Queens rights agreement described above. Haven's
rights are triggered on the 20th business day following a flip-in event and are
exercisable at a price of $90 per right. Upon exercise, Haven stockholders would
receive two times the number of shares of Haven common stock that could be
purchased at the then current market price per share. In connection with the
execution of the merger agreement, Haven amended its rights agreement to provide
that, for purposes of determining whether Queens (as well as its affiliates and
associates) is an "Acquiring Person", as defined in Haven's rights agreement,
Queens shall not be deemed to be an "Acquiring Person" by virtue of (i) the
execution of the merger agreement, the stock option agreement, any ancillary
voting agreements or the affiliate letters (hereinafter referred to as a Covered
Agreement), (ii) the consummation of any transaction contemplated by any Covered
Agreement or (iii) additional purchases by Queens (as well as its affiliates and
associates) of up to 4.9% of the outstanding Haven common stock as of June 27,
2000.
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COMPARISON OF STOCKHOLDERS' RIGHTS
GENERAL
Queens and Haven are incorporated under the laws of the State of
Delaware and, accordingly, the rights of Queens stockholders and Haven
stockholders are governed by the laws of the State of Delaware. As a result of
the merger, Haven stockholders will become stockholders of Queens. Thus,
following the merger, the rights of Haven stockholders who become Queens
stockholders in the merger will continue to be governed by the laws of the State
of Delaware and will also then be governed by the Queens certificate of
incorporation and the Queens by-laws. The Queens certificate of incorporation
and the Queens by-laws will be unaltered by the merger, except to the extent
that appropriate changes need to be made with respect to the change of Queens'
corporate name.
COMPARISON OF STOCKHOLDERS' RIGHTS
Set forth on the following pages is a summary comparison of material
differences between the rights of a Queens stockholder under the Queens
certificate of incorporation, Queens by-laws, and Delaware law (left column) and
the rights of a stockholder under the Haven certificate of incorporation, Haven
by-laws and Delaware law (right column). The summary set forth below is not
intended to provide a comprehensive summary of Delaware law or of each company's
governing documents. This summary is qualified in its entirety by reference to
the full text of the Queens certificate of incorporation and Queens by-laws, and
the Haven certificate of incorporation and Haven by-laws.
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QUEENS HAVEN
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CAPITAL STOCK
AUTHORIZED CAPITAL
- --------------------------------------------------------------------------------
60 million (60,000,000) shares of 30 million (30,000,000) shares of
common stock, par value one cent common stock, par value one cent
($.01) per share, 5 million ($.01) per share, 2 million
(5,000,000) shares of preferred (2,000,000) shares of preferred
stock, par value one cent ($.01) stock, par value one cent ($.01)
per share. As of August o, 2000, per share. As of August 1, 2000,
there were 20,769,910 shares of there were 9,124,719 shares of Haven
Queens common stock issued and common stock issued and outstanding
outstanding, 2,395,290 shares and o shares reserved for issuance
reserved for issuance and no shares and no shares of preferred stock
of preferred stock issued and issued and outstanding.
outstanding.
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BOARD OF DIRECTORS
CLASSIFICATION
- --------------------------------------------------------------------------------
Directors are divided into three classes. Each class serves a three-year term
and the classes are as nearly equal in size as possible.
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NUMBER OF DIRECTORS
- --------------------------------------------------------------------------------
Such number as is fixed by the board of directors from time to time. Queens
currently has eight directors and Haven has eleven directors. See "THE
MERGER-Additions to the Board and Management of Queens, Queens County Savings
Bank and CFS Bank" on page o for a description of the Queens board of directors
after the merger.
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REMOVAL
- --------------------------------------------------------------------------------
Any director may be removed at any time but only for cause and only by the
affirmative vote of at least 80% of the voting power of all of the
then-outstanding shares of capital stock entitled to vote in the election of
directors.
- --------------------------------------------------------------------------------
VACANCIES AND NEWLY CREATED DIRECTORSHIPS
- --------------------------------------------------------------------------------
Filled by a majority vote of the directors then in office. The person who fills
any such vacancy holds office for the unexpired term of the director to whom
such person succeeds.
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QUALIFICATIONS
- --------------------------------------------------------------------------------
There are no specific provisions in the Haven or Queens certificate of
incorporation or in the Haven or Queens by-laws regarding qualifications of
directors.
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COMMITTEES
- --------------------------------------------------------------------------------
The by-laws create a Nominating Committee and permit the creation of other
committees.
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QUEENS HAVEN
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SPECIAL MEETING OF THE BOARD
- --------------------------------------------------------------------------------
Special meetings of the board of Special meetings of the board of
directors may be called by directors may be called by
one-third (1/3) of the directors one-third (1/3) of the directors
then in office, or by the Chairman then in office, by the Chairman of
of the Board. the Board, or by the President.
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STOCKHOLDERS
STOCKHOLDER ACTION BY WRITTEN CONSENT
- --------------------------------------------------------------------------------
Any action required or permitted to be taken by stockholders must be effected at
an annual or special meeting and may not be effected by any consent in writing
by such stockholders.
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SPECIAL MEETINGS OF STOCKHOLDERS
- --------------------------------------------------------------------------------
Pursuant to the by-laws of Queens and Haven, special meetings of stockholders
may only be called by the board of directors pursuant to a resolution adopted by
a majority of the total number of directors which the corporation would have if
there were no vacancies on the board of directors.
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VOTING
- --------------------------------------------------------------------------------
Elections for the board of directors are decided by a plurality of the votes
cast. All other questions are decided by a majority of the votes entitled to be
cast by the holders of stock represented and entitled to vote at a meeting,
except as otherwise required by law, the certificate of incorporation, or the
by-laws. Stockholders of record who beneficially own in excess of 10% of the
outstanding shares of common stock are not entitled to any vote with respect to
the shares held in excess of the 10% limit. A person or entity is deemed to
beneficially own shares that are owned by an affiliate as well as by any person
acting in concert with such person.
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STOCKHOLDER PROPOSALS AND NOMINATIONS OF DIRECTORS
- --------------------------------------------------------------------------------
Stockholders may nominate directors or submit proposals at any annual meeting.
In order to do so, a stockholder must (1) be a stockholder of the company of
record at the time of the giving of the notice for such annual meeting; (2) be
entitled to vote at such meeting; and (3) give notice of director nominations or
proposals to the Corporate Secretary no less than 90 days prior to the date of
the annual meeting, provided that, in the event that less than 100 days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by such stockholder must be received not later than the
close of business on the 10th calendar day following the day on which public
announcement is first made of the date of the annual meeting.
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AMENDMENT OF CERTIFICATE OF INCORPORATION
- --------------------------------------------------------------------------------
The certificate of incorporation of both Queens and Haven provide that amendment
of those provisions relating to amendment of the certificate of incorporation,
restrictions on voting by beneficial owners of more than 10% of the
corporation's stock, written consents of stockholders, special meetings of
stockholders, classification of directors, director vacancies, removal of
directors, nomination of directors, number of directors, adoption and amendment
of by-laws, approval of business combinations, and indemnification of directors
and officers requires the affirmative vote of 80% of the voting power of the
then-outstanding shares of capital stock entitled to vote in the election of
directors.
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AMENDMENT OF BY-LAWS
- --------------------------------------------------------------------------------
The by-laws of both Queens and Haven may be amended either by the vote of a
majority of the total number of directors which the corporation would have if
there were no vacancies on the board of directors, or by the affirmative vote of
the holders of at least 80% of the voting power entitled to vote in the election
of directors.
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QUEENS HAVEN
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STOCKHOLDER RIGHTS PLANS
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As discussed under "RIGHTS AGREEMENTS" on pages o.
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BUSINESS COMBINATION STATUTES AND PROVISIONS
- --------------------------------------------------------------------------------
Section 203 of the Delaware General Corporation Law prohibits business
combinations, including mergers, sales and leases of assets, issuances of
securities and similar transactions by a corporation or a subsidiary, with an
interested stockholder, which is someone who beneficially owns 15% or more of a
corporation's voting stock, within three years after the person or entity
becomes an interested stockholder, unless
o the transaction that caused the person to become an interested
stockholder was approved by the board of directors of the target prior
to the transaction;
o after the completion of the transaction in which the person becomes an
interested stockholder, the interested stockholder holds at least 85%
of the voting stock of the corporation not including (a) shares held
by persons who are both officers and directors of the issuing
corporation and (b) shares held by specified employee benefit plans;
o after the person becomes an interested stockholder, the business
combination is approved by the board of directors and holders of at
least 66 2/3% of the outstanding voting stock, excluding shares held
by the interested stockholder; or
o the transaction is one of certain business combinations that are
proposed after the corporation had received other acquisition
proposals and that are approved or not opposed by a majority of
certain continuing members of the board of directors, as specified in
the Delaware General Corporation Law.
Neither Queens' nor Haven's certificate of incorporation or by-laws
contains an election, as permitted by Delaware law, to be exempt from the
requirements of Section 203.
The merger is not governed by the limitations set forth in Section 203
because the Haven board of directors approved the merger agreement and the stock
option agreement before they were executed.
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QUEENS HAVEN
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LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
- --------------------------------------------------------------------------------
The certificates of incorporation of both Queens and Haven provide that, except
under certain circumstances, directors shall not be personally liable to the
company or its stockholders for monetary damages for breach of fiduciary duty as
a director, and also provide for virtually identical indemnification of
directors and officers, which is to the fullest extent permitted under the
Delaware General Corporation Law.
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DISCUSSION OF ANTI-TAKEOVER PROTECTION IN QUEENS' CERTIFICATE OF
INCORPORATION AND BY-LAWS
GENERAL
Certain provisions of the Queens certificate of incorporation and
by-laws described above in "Description of Queens Capital Stock" on page o may
have anti-takeover effects. These provisions may discourage attempts by others
to acquire control of Queens without negotiation with Queens board of directors.
The effect of these provisions is discussed briefly below. In addition to these
provisions of the Queens certificate of incorporation and by-laws, the rights
agreement discussed in "RIGHTS AGREEMENTS--Queens Stockholder Rights Agreement"
on pages o may also have antitakeover effects. All of the provisions discussed
below are contained in Queens' certificate of incorporation and by-laws
currently.
AUTHORIZED STOCK
The shares of Queens common stock and Queens preferred stock authorized
by Queens' certificate of incorporation but not issued provide the Queens board
of directors with the flexibility to effect certain financings, acquisitions,
stock dividends, stock splits and stock-based grants without the need for a
stockholder vote. The Queens board of directors, consistent with its fiduciary
duties, could also authorize the issuance of these shares, and could establish
voting, conversion, liquidation and other rights for the Queens preferred stock
being issued, in an effort to deter attempts to gain control of Queens.
CLASSIFICATION OF BOARD OF DIRECTORS; NO CUMULATIVE VOTING
Queens' certificate of incorporation and by-laws provide that the board
of directors of Queens is divided into three classes of as nearly equal size as
possible, with one class elected annually to serve for a term of three years.
This classification of the Queens board of directors may discourage a takeover
of Queens because a stockholder with a majority interest in Queens would have to
wait for at least two consecutive annual meetings of stockholders to elect a
majority of the members of the Queens board of directors. Queens' certificate of
incorporation also does not and will not, after the merger, authorize cumulative
voting for the election of directors of Queens.
SIZE OF BOARD; VACANCIES; REMOVAL OF DIRECTORS
The provisions of Queens' certificate of incorporation and by-laws
giving the Queens board of directors the power to determine the exact number of
directors and to fill any vacancies or newly created positions, and allowing
removal of directors only for cause upon an 80% vote of stockholders are
intended to insure that the classified board provisions discussed above are not
circumvented by the removal of incumbent directors. Furthermore, since Queens
stockholders do not, and will not, after the merger, have the ability to call
special meetings of stockholders, a stockholder seeking to have a director
removed for cause generally will be able to do so only at an annual meeting of
stockholders. These provisions could make the removal of any director more
difficult, even if such removal were desired by the stockholders of Queens. In
addition, these provisions of Queens' certificate of incorporation and by-laws
could make a takeover of Queens more difficult under circumstances where the
potential acquiror seeks to do so through obtaining control of the Queens board
of directors.
SPECIAL MEETINGS OF STOCKHOLDERS
The provisions of Queens' certificate of incorporation and by-laws
relating to special meetings of stockholders are intended to enable the Queens
board of directors to determine if it is appropriate for Queens to incur the
expense of a special meeting in order to present a proposal to Queens
stockholders. If the Queens board of directors determines not to call a special
meeting, stockholder proposals could not be presented to the stockholders for
action until the next annual meeting, or until such proposal is properly
presented before an earlier duly called special meeting, because stockholders
cannot call a special meeting. In addition, these provisions could make a
takeover of Queens more difficult under circumstances where the potential
acquiror seeks to do so through obtaining control of the Queens board of
directors.
STOCKHOLDER ACTION BY UNANIMOUS WRITTEN CONSENT
The purpose of the provision in Queens' certificate of incorporation
prohibiting stockholder action by written consent is to prevent any person or
persons holding the percentage of the voting stock of Queens otherwise required
to
76
take corporate action from taking such action without giving notice to other
stockholders and without the procedures of a stockholder meeting.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BY-LAWS
The requirements in Queens' certificate of incorporation and by-laws
for an 80% stockholder vote for the amendment of certain provisions of Queens'
certificate of incorporation and Queens' by-laws is intended to prevent a
stockholder who controls a majority of the Queens stock from avoiding the
requirements of important provisions of Queens' certificate of incorporation or
by-laws simply by amending or repealing them. Thus, the holders of a minority of
the shares of the Queens stock could block the future repeal or modification of
Queens' by-laws and certain provisions of the certificate of incorporation, even
if such action were deemed beneficial by the holders of more than a majority,
but less than 80%, of the Queens stock.
77
REGULATION AND SUPERVISION OF QUEENS
The following discussion sets forth the material elements of the
regulatory framework applicable to bank holding companies and their subsidiaries
and incorporates by reference certain information relevant to Queens and Haven
prior to the merger. This regulatory framework is intended primarily for the
protection of depositors and the federal deposit insurance funds and not for the
protection of security holders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to those provisions. A change in the statutes, regulations or
regulatory policies applicable to Queens or its subsidiaries may have a material
effect on its business.
Queens is currently a bank holding company and it is subject to
regulation under the Bank Holding Company Act of 1956, as amended, and to
inspection, examination and supervision by the Federal Reserve Board. Queens
County Savings Bank is a New York State-chartered savings bank subject to
extensive inspection, examination and supervision by the FDIC, as its deposit
insurer, at the federal level, and by the New York State Banking Department, at
the state level. For further information regarding regulation and supervision of
Queens and its subsidiaries, see discussions in the documents incorporated by
reference into this document, such as Queens' Annual Report on Form 10-K for the
year ended December 31, 1999. See "Where You Can Find More Information" on page
o.
GENERAL
Under the Bank Holding Company Act, bank holding companies generally
may not acquire the ownership or control of more than 5% of the voting shares or
substantially all the assets of any company, including a bank, without the
Federal Reserve Board's prior approval. In addition, bank holding companies
generally may engage, directly or indirectly, only in banking and those other
activities that are determined by the Federal Reserve Board to be closely
related to banking.
As a bank holding company, Queens' ability to pay dividends and make
other distributions on its stock will be largely dependent on its ability to
receive dividends and other funds from Queens County Savings Bank and CFS Bank.
Queens' ability to pay dividends and other distributions on its stock is,
therefore, affected by statutes and regulations relating to the business of
Queens County Savings Bank and CFS Bank that have the effect of limiting
transfers of funds from Queens County Savings Bank and CFS Bank to Queens. The
nature and extent of these restrictions depend upon Queens County Savings Bank
and CFS Bank's level of regulatory capital and its income.
REGULATORY CAPITAL REQUIREMENTS
Queens is subject to risk-based capital requirements and guidelines
imposed by the Federal Reserve Board, which are substantially similar to the
capital requirements and guidelines imposed by the FDIC on the depository
institutions, such as Queens County Savings Bank, within its jurisdiction. For
this purpose, a depository institution's or holding company's assets and certain
specified off-balance-sheet commitments and obligations are assigned to various
risk categories. A depository institution's or holding company's capital, in
turn, is classified in one of three tiers: (i) core, or Tier 1, capital, which
includes common equity, non-cumulative perpetual preferred stock, a limited
amount of cumulative perpetual preferred stock at the holding company level and
minority interests in equity accounts of consolidated subsidiaries, less
goodwill, and most intangible assets; (ii) supplementary, or Tier 2, capital,
which includes, among other items, perpetual preferred stock not meeting the
Tier 1 definition, mandatorily convertible securities, subordinated debt and
allowances for loan and lease losses, subject to certain limitations; and (iii)
market risk, or Tier 3, capital, which includes qualifying unsecured
subordinated debt.
Bank holding companies currently are required to maintain Tier 1
capital and total capital (the sum of Tier 1, Tier 2 and Tier 3 capital) equal,
respectively, to at least 4% and 8% of their total risk-weighted assets,
including certain off-balance-sheet items, such as standby letters of credit. In
addition, in order for a holding company or depository institution to be
considered well capitalized for regulatory purposes, its Tier 1 and total
capital ratios must be at least 6% and 10% on a risk-adjusted basis,
respectively. At June 30, 2000, Queens County Savings Bank met or exceeded all
applicable regulatory capital ratios.
The Federal Reserve Board and the FDIC have also adopted rules to
incorporate market and interest rate risk components into their risk-based
capital standards. Under such risk assessment, examiners will evaluate a bank's
capital for interest rate risk on a case-by-case basis, with consideration of
both quantitative and qualitative factors such as the overall financial
condition of the bank and the level of other risks at the bank for which capital
is needed. Institutions with significant interest rate risk may be required to
hold additional capital.
78
The Federal Reserve Board also requires bank holding companies to
maintain a minimum leverage ratio (Tier 1 capital to adjusted total assets) of
4% unless the holding company has the highest regulatory rating and is not
experiencing significant growth, in which case the bank holding company must
maintain a minimum leverage ratio of 3%.
The Federal Reserve Board may set capital requirements higher than the
minimums noted above for holding companies whose circumstances warrant it. For
example, holding companies experiencing or anticipating significant growth may
be expected to maintain capital positions substantially above the minimum
supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve Board has indicated that it will consider a
tangible Tier 1 capital leverage ratio, deducting all intangibles, and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
Queens County Savings Bank and CFS Bank are subject to similar
risk-based and leverage capital requirements adopted by the FDIC and the Office
of Thrift Supervision, respectively.
Failure to meet capital requirements could subject a bank or a bank
holding company to a variety of enforcement remedies, including the termination
of federal deposit insurance and to certain restrictions on its business under
"prompt corrective action" guidelines by the federal banking regulators.
LIMITATIONS ON CAPITAL DISTRIBUTIONS
Various federal and state statutory provisions limit the amount of
dividends that Queens County Savings Bank and CFS Bank are able to pay to Queens
without regulatory approval.
Under federal law, a state bank that is not a member of the Federal
Reserve System, such as Queens County Savings Bank, cannot make any distribution
or dividend if, following such distribution or dividend, the bank would be
undercapitalized under the laws and regulations regarding regulatory
capitalization of the bank. Under New York law, as applicable to Queens County
Savings Bank, a bank's board may determine dividends on capital stock of the
bank in its discretion. However, no dividend shall be paid if:
o the capital stock of the bank would be impaired and
o the payment of such dividend would reduce the surplus of the bank, as
calculated under New York law, or the payment of such dividend would
cause the surplus of the bank, as calculated under New York law, to be
less than 50% of its capital stock.
Under OTS regulations, as applicable to CFS Bank, limitations are
imposed upon all capital distributions by savings institutions, such as cash
dividends, payments to repurchase or otherwise acquire its shares, payments to
stockholders of another institution in a cash-out merger and other distributions
charged against capital. As the subsidiary of a savings and loan holding
company, CFS Bank currently must file a notice with the OTS for each capital
distribution. Upon completion of the merger, CFS Bank will be the subsidiary of
a bank holding company and will not automatically have to file a notice for each
capital distribution. However, if the total amount of all capital distributions
(including a proposed capital distribution) for the applicable calendar year
exceeds net income for that year to date plus the retained net income for the
preceding two years, then the Bank must file an application to receive the
approval of the OTS for the proposed capital distribution.
In addition to the OTS limits, CFS Bank and Queens County Savings Bank
may not pay dividends if, after paying those dividends, it would fail to meet
the required minimum levels under risk-based capital guidelines and the minimum
leverage ratio and minimum tangible capital ratio, or if the OTS notified CFS
Bank that it was in need of more than normal supervision. Under the Federal
Deposit Insurance Act, an insured depositary institution such as CFS Bank or
Queens County Savings Bank is prohibited from making capital distributions,
including the payment of dividends, if, after making such distribution, the
institution would become "undercapitalized" (as such term is used in the Federal
Deposit Insurance Act). Payment of dividends by CFS Bank or Queens County
Savings Bank also may be restricted at any time at the discretion of the
appropriate regulator if it deems the payment to constitute an unsafe and
unsound banking practice.
79
TRANSACTIONS WITH AFFILIATES
Under federal law and regulation, transactions between a bank, such as
Queens County Savings Bank and CFS Bank, and its affiliates, which term includes
its holding company, Queens, and other companies controlled by its holding
company, are subject to quantitative and qualitative restrictions. Banks are
restricted in their ability to engage in certain types of transactions with
their affiliates, including transactions that could provide funds to a holding
company for the payment of capital distributions. These covered transactions
include
o lending or extending credit to an affiliate,
o purchasing assets from an affiliate,
o accepting securities issued by an affiliate as collateral for a loan
or extension of credit, and
o issuing a guarantee, acceptance or letter of credit on behalf of an
affiliate.
Covered transactions are permitted between a bank and a single
affiliate up to 10% of the capital stock and surplus of the bank, and between a
bank and all of its affiliates up to 20% of the capital stock and surplus of the
bank. The purchase of low-quality assets by a bank from an affiliate is not
permitted. Each loan or extension of credit to an affiliate by a bank must be
secured by collateral with a market value ranging from 100% to 130% of the
amount of credit extended, depending on the type of collateral.
Covered transactions between a bank and an affiliate, and other
transactions with or benefitting an affiliate, must be on terms and conditions
at least as favorable to the bank as those prevailing at the time for comparable
transactions with non-affiliated companies. This arm's-length requirement
applies to all covered transactions, as well as to
o the sale of securities or other assets to an affiliate,
o the payment of money or the furnishing of services to an affiliate,
o any transaction in which an affiliate acts as agent or broker or
receives a fee for its services to the bank or to any other person,
and
o any transaction or series of transactions with a third party if any
affiliate has a financial interest in the third party or is a
participant in the transaction or series of transactions.
INTERSTATE BANKING AND BRANCHING
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994, subject to specified requirements:
o bank holding companies, such as Queens, are permitted to acquire banks
and bank holding companies located in any state;
o any bank that is a subsidiary of a bank holding company is permitted
to receive deposits, renew time deposits, close loans, service loans
and receive loan payments as an agent for any other bank subsidiary of
that holding company, although some restrictions apply to federal
savings associations acting as agent for other bank subsidiaries of
that bank holding company; and
o banks are permitted to acquire branch offices outside their home
states by merging with out-of-state banks, by purchasing branches in
other states and by establishing new, or de novo, branches in other
states. Under the Riegle-Neal Act, each state had the opportunity
either to opt out of this provision, thereby prohibiting interstate
branching in such states, or to opt in at an earlier time, thereby
allowing interstate branching within that state. Furthermore, a state
may opt in with respect to de novo branching, thereby permitting a
bank to open new branches in a state in which the bank does not
already have a branch. If a state chooses not to opt in to de novo
branching, then a bank can only enter that state by acquiring an
existing bank or branch.
80
Queens County Savings Bank is also subject to the requirements of New
York law regarding opening new branches in New York or outside New York. In
addition, Queens County Savings Bank is subject to the requirements of each
state for branching into that state, including whether that state has chosen to
opt into de novo branching.
ACQUISITION OF CONTROL
Before any company may acquire more than 5% of the voting securities of
a bank holding company such as Queens, that company must obtain approval of the
Federal Reserve Board. Also, under the Change in Bank Control Act, before any
person may acquire control of Queens, as a bank holding company, it must submit
60 days' prior written notice to the Federal Reserve Board and such notice must
not be disapproved.
RECENT LEGISLATION
On November 12, 1999, the President signed the Gramm-Leach-Bliley
Financial Modernization Act of 1999 into law. The Modernization Act:
o allows bank holding companies meeting management, capital and
Community Reinvestment Act standards to engage in a substantially
broader range of non-banking activities than previously was
permissible, including insurance underwriting and making merchant
banking investments in commercial and financial companies;
o allows insurers and other financial services companies to acquire
banks;
o removes various restrictions that currently apply to bank holding
company ownership of securities firms and mutual fund advisory
companies; and
o establishes the overall regulatory structure applicable to bank
holding companies that also engage in insurance and securities
operations.
The modernization act also modifies other current financial laws,
including laws related to financial privacy and community reinvestment. The new
financial privacy provisions generally prohibit financial institutions,
including us, from disclosing nonpublic personal financial information to third
parties unless customers have the opportunity to opt out of the disclosure.
Queens will, during the regular course of its business, evaluate the
potential opportunities presented by the modernization act, including evaluating
its ability to engage in additional permitted activities or to acquire other
companies engaged in additional permitted activities.
81
COMPARATIVE MARKET PRICES AND DIVIDENDS
Queens common stock and Haven common stock are included for quotation
on the Nasdaq National Market System. The following table sets forth the high
and low closing prices of shares of Queens common stock and Haven common stock
as reported on the Nasdaq National Market, and the quarterly cash dividends
declared per share for the periods indicated.
QUEENS HAVEN
COMMON STOCK COMMON STOCK
------------ ------------
HIGH LOW DIVIDEND(1) HIGH LOW DIVIDEND(2)
1997
First Quarter $17.63 $13.41 $0.07 $18.19 $13.88 $0.075
Second Quarter 21.33(3) 15.85(3) 0.09(3) 19.13 15.25 0.075
Third Quarter 24.11 19.78 0.11 21.88 17.81 0.075
Fourth Quarter 27.00 22.94 0.13 23.00 19.13 0.075
1998
First Quarter 29.33 23.50 0.13 25.00 19.88 0.075
Second Quarter 31.42 27.25 0.17 28.75 24.75 0.075
Third Quarter 30.00(3) 23.58(3) 0.17(3) 26.75 14.38 0.075
Fourth Quarter 30.56 22.88 0.20 17.63 10.38 0.075
1999
First Quarter 31.69 27.00 0.25 16.13 12.75 0.075
Second Quarter 35.69 27.00 0.25 16.50 10.50 0.075
Third Quarter 32.37 26.94 0.25 19.00 14.56 0.075
Fourth Quarter 32.44 25.75 0.25 17.13 14.38 0.075
2000
First Quarter 26.58 17.75 0.25 15.75 11.88 0.075
Second Quarter 20.93 17.25 0.25 19.13 13.75 0.075
Third Quarter [23.125] o 0.25 o 18.37
(through August o)
- ------------------
<FN>
(1) Pursuant to the merger agreement, Queens may not, without the prior written
consent of Haven, make, declare or pay any cash dividends in excess of
$0.30 per share per quarter.
(2) Pursuant to the merger agreement, Haven may not, without the prior written
consent of Queens, make, declare or pay any dividend on the Haven common
stock, except for its regular quarterly dividend of $0.075 per share, the
record date for which, for the fourth quarter of 2000, shall be no earlier
than November, 2000.
(3) Reflects shares issued as a result of a 4-for-3 stock split on August 22,
1996 and 3-for-2 stock splits on April 10, 1997, October 1, 1997 and
September 29, 1998. Queens' high and low stock prices and dividends for
prior periods have been adjusted to reflect the effect of such stock split.
</FN>
The following table sets forth the last reported sale price per share
of Queens common stock and Haven common stock on (i) March 31, 2000, (ii) June
27, 2000, the last business day preceding public announcement of the signing of
the merger agreement, and (iii) August o, 2000, the last practicable date prior
to the mailing of this Joint Proxy Statement/Prospectus:
Queens Haven
Common Stock Common Stock
------------ ------------
March 31, 2000............................ $18.0625 $15.625
June 27, 2000............................. 18.125 18.125
August o, 2000............................ o o
- ------------------
(1) On June 27, 2000, the high and low sales prices of Queens common stock
were $18.75 and $17.6875, respectively, and the high and low sales prices
of Haven common stock were $18.25 and $17.6875, respectively, all as
reported on the Nasdaq National Market.
82
Haven and Queens stockholders are advised to obtain current market
quotations for Queens common stock and Haven common stock. The market price of
Queens common stock will fluctuate between the date of this Joint Proxy
Statement/Prospectus and the Effective Date. No assurance can be given
concerning the market price of Queens common stock before or after the Effective
Date.
QUEENS DIVIDENDS
Queens currently pays cash dividends at an annual rate of $1.00 per
share, which we expect will continue although the board of directors may change
this dividend policy at any time. During 1999, Queens paid cash dividends of
$1.00 per share, and Haven paid cash dividends of $0.30 per share. Queens
stockholders will be entitled to receive dividends when and if declared by the
Queens board of directors out of funds legally available for dividends. The
Queens board of directors will periodically consider the payment of dividends,
taking into account Queens' financial condition and level of net income, Queens'
future prospects, economic conditions, industry practices and other factors,
including applicable banking laws and regulations as discussed in "Regulation
and Supervision of Queens" on pages o.
83
QUEENS COUNTY BANCORP. INC. AND HAVEN BANCORP, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL CONDITION
The following Unaudited Pro Forma Combined Condensed Consolidated
Statement of Financial Condition combines the historical Consolidated Statement
of Financial Condition of Queens and subsidiary and the adjusted historical
Consolidated Statement of Financial Condition of Haven and subsidiaries giving
effect to the consummation of the merger on June 30, 2000, using the purchase
method of accounting and giving effect to the related pro forma adjustments
described in the accompanying Notes to the Unaudited Pro Forma Combined
Condensed Consolidated Financial Statements. The following Unaudited Pro Forma
Combined Condensed Consolidated Statements of Operations for the year ended
December 31, 1999 and the six months ended June 30, 2000 combine the historical
Consolidated Statements of Operations of Queens and subsidiary and Haven and
subsidiaries giving effect to the merger as if the merger had become effective
on June 30, 2000, using the purchase method of accounting and giving effect to
the related pro forma adjustments described in the accompanying Notes to the
Unaudited Pro Forma Combined Condensed Consolidated Financial Statements.
The unaudited pro forma combined condensed consolidated financial
statements included herein are presented for informational purposes only. This
information includes various estimates and may not necessarily be indicative of
the financial position or results of operations that would have occurred if the
merger had been consummated on the date or at the beginning of the period
indicated or which may be obtained in the future. The unaudited pro forma
combined condensed consolidated financial statements and accompanying notes
should be read in conjunction with and are qualified in their entirety by
reference to the historical financial statements and related notes thereto of
Queens and subsidiary and Haven and subsidiaries information and notes thereto
appearing elsewhere herein.
84
QUEENS COUNTY BANCORP. INC. AND HAVEN BANCORP, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT
OF FINANCIAL CONDITION
JUNE 30, 2000
(In thousands)
QUEENS HAVEN PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENT COMBINED
---------- ---------- ---------- --------
ASSETS
Cash and due from banks $17,249 $56,677 $73,926
Money market investments 6,000 5,753 11,753
Securities available for sale 12,482 931,342 $-76,900 (D) 612,835
45,748 (D)
-36,959 (C)
-262,878 (G)
Securities held to maturity 195,401 27,865 223,266
Loans held for sale 0 7,838 7,838
Loans receivable 1,750,277 1,824,983 -85,200 (B) 2,790,060
-700,000 (G)
Allowance for loan losses -7,031 -9,235 (B) -16,266
Loans receivable, net 1,743,246 1,815,748 (B) 2,773,794
Excess of cost of fair value of net
assets acquired and other intangibles 129,104 (E) 129,104
Other assets 73,255 89,633 (B) 66,567 (D) 229,455
Total assets 2,047,633 2,934,856 -920,518 4,061,971
LIABILITIES
Deposits 1,039,757 2,153,957 -5,200 (D) 3,044,514
-144,000 (G)
Federal funds purchased and
securities sold under
agreements to repurchase
Other short-term borrowings 801,315 643,131 -12,200 (D) 611,531
-818,878 (G)
-1,837 (D)
Other liabilities 71,829 24,978 96,807
Total liabilities 1,912,901 2,822,066 -982,115 3,752,852
STOCKHOLDERS' EQUITY
Common stock 310 100 -100 (F) 310
Additional paid-in-capital 150,966 53,190 -53,190 (F) 175,488
24,522 (C)
Retained earnings 149,403 99,166 (B) -99,166 (F) 149,403
Treasury stock -149,865 -8,155 8,155 (F) 0
Unearned compensation and ESOP shares -16,013 -1,837 149,865 (F)
Accumulated other comprehensive 1,837 (F) -16,013
Loss -69 -29,674 29,674 (F) -69
Total stockholders' equity 134,732 112,790 61,597 309,119
Total liabilities and stockholders equity 2,047,633 2,934,856 -920,518 4,061,971
The accompanying notes are an integral part of the
unaudited pro forma combined condensed
consolidated financial information.
85
QUEENS COUNTY BANCORP. INC. AND HAVEN BANCORP, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
QUEENS HAVEN PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENT COMBINED
---------- ---------- ---------- --------
Interest income: $ 131,618 $ 119, 413 $ (51,170) (G) 217,661
Loans 17,800 (G)
Securities 11,062 64,308 -21,240 (G) 73,430
Money market investments 443 142 19,300 (G) 585
Total interest income 143,123 183,863 -35,310 (G) 291,676
Interest expense:
Deposits 43,937 75,441 -7,560 (G) 113,318
1,500 (G)
(Reversal of) Borrowed funds 30,283 37,465 -51,098 (G) 28,850
12,200 (G)
Total interest expense 74,220 112,906 -44,958 (G) 142,168
Net interest income 68,903 70,957 9,648 149,508
Provision for loan losses -2,400 3,625 1,225
Net interest income after provision for
loan losses 71,303 67,332 9,648 148,283
Non-interest income:
Net gains on sales activities 0 750 750
Fee and other 2,523 33,618 36,141
Total non-interest income 2,523 34,368 36,891
Non-interest expense
General and administrative expense:
Compensation and benefits 13,458 44,687 58,145
Occupancy and equipment 2,289 12,988 15,277
Other 5,643 24,555 30,198
Amortization of excess of cost over fair
value of net assets acquired 6,455 (K) 6,455
Total general and administrative expense 21,390 82,230 6,455 110,075
Total non-interest expense 21,390 82,230 6,455 110,075
Income before income tax expense 52,436 19,470 3,193 75,099
Income tax expense 20,772 6,863 1,181 (I) 28,816
Income from continuing operations 31,664 12,607 2,011 46,282
Income from continuing operations
Applicable to common stockholders:
Basic 31,664 12,607 46,282
Diluted 31,664 12,607 46,282
Income from continuing operations per Share:
Basic 1.71 1.44 1.65
Diluted 1.67 1.38 1.63
Weighted average common shares:
Basic 18,526,890 8,749,336 28,010,878
Diluted 18,939,867 9,165,862 28,423,855
The accompanying notes are an integral part of the
unaudited pro forma combined condensed
consolidated financial information.
86
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(In thousands, except per share data)
QUEENS HAVEN PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENT COMBINED
---------- ---------- ---------- --------
Interest income:
Loans $67,729 $68,530 $-25,585 (G) $119,574
8,900 (G)
Securities 6,472 34,798 -10,620 (G) 40,300
9,650 (G)
Money Market investments 129 260 389
Total interest income 74,330 103,588 -17,655 160,263
Interest expense:
Deposits 20,899 42,511 -3,780 (G) 60,380
750 (G)
Borrowed funds 20,669 21,666 -25,549 (G) 22,886
6,100 (G)
Total interest expense 41,568 64,177 -22,479 83,266
Net interest income 32,762 39,411 4,824 76,997
Provision for loan losses 0 1,150 1,150
Net interest income after provision for
loan losses 32,762 38,261 4,824 75,847
Non-interest income:
Net gains on sales activities 0 126 126
Fee and other 2,360 17,194 19,554
Total non-interest income 2,360 17,320 19,680
Non-interest expense
General and administrative expense:
Compensation and benefits 6,919 19,578 26,497
Occupancy and equipment 1,424 6,765 8,189
Other 2,815 18,152 -7,057 (L) 13,910
Amortization of excess of cost over fair 0
value of net assets acquired 3,228 (K) 3,228
Total general and administrative 11,158 44,495 -3,829 51,824
expense
Total non-interest expense
Income before income tax expense 11,158 44,495 -3,829 51,824
Income tax expense 23,964 11,086 8,653 (H) 43,703
Income from continuing operations 8,600 3,899 3,202 (I) 15,701
Income From Continuing Operations 15,364 7,187 5,452 28,003
Applicable to Common Stockholders:
Basic 15,364 7,187 28,003
Diluted 15,364 7,187 28,003
Income From Continuing Operations Per Share:
Basic 0.87 0.81 1.03
Diluted 0.86 0.77 1.02
Weighted Average Common Shares:
Basic 17,678,976 8,882,499 27,162,964
Diluted 17,868,680 9,277,421 27,352,668
The accompanying notes are an integral part of the
unaudited pro forma combined condensed
consolidated financial information.
87
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000
(A) Basis of Presentation
The Unaudited Pro Forma Combined Condensed Consolidated Statement of
Financial Condition of Queens and subsidiary and Haven and subsidiaries at June
30, 2000 has been prepared as if the merger had been consummated on that date.
The Unaudited Pro Forma Combined Condensed Consolidated Statements of Operations
for the year ended December 31, 1999 and the six months ended June 30, 2000 were
prepared as if the merger had been consummated on January 1, 1999 and January 1,
2000, respectively. The unaudited pro forma combined condensed consolidated
financial statements are based on the historical financial statements of Queens
and Haven after giving effect to the merger under the purchase method of
accounting and the assumptions and adjustments in the notes that follow.
Assumptions relating to the pro forma adjustments set forth in the
unaudited pro forma combined condensed consolidated financial statements are
summarized as follows:
(i) Estimated fair values - Estimated fair values for securities
available for sale, loans, deposits and borrowings were obtained from
analysis performed by Salomon Smith Barney. The resulting net
discount/premium on securities held-to-maturity and loans, respectively,
for purposes of these pro forma financial statements, is being
accreted/amortized to interest income on a sum-of-the-years digits method
over eight and ten years, respectively. The actual discount/premium will be
accreted/amortized to interest income to produce a constant yield to
maturity. The resulting net premium and discount on deposits and
borrowings, respectively, is being amortized/accreted into interest expense
on a sum-of-the-years digits method over their remaining estimated lives.
(ii) Income taxes - a net deferred tax asset was recorded equal to the
deferred tax consequences associated with the differences between the tax
basis and book basis of the assets acquired and liabilities assumed, using
a statutory tax rate of 47%.
(B) The merger agreement requires Haven at the written request of
Queens to modify and change certain of its policies and practices, including
loan policies and practices, before the consummation of the merger so as to be
consistent on a mutually satisfactory basis with those of Queens subject to
compliance with generally accepted accounting principles and all applicable laws
and regulations. Haven is not obligated to take any such action until after the
date on which all required regulatory approvals and stockholder approvals are
received and after receipt of written confirmation from Queens that it is not
aware of any fact or circumstance that would prevent completion of the merger.
Queens has advised Haven that it expects to make such a request and that it
currently expects that compliance with such requirement will result in a
reversal of the allowance for loan losses of $8,000,000. Differences in policies
and practices of Haven and Queens which give rise to this additional provision
include, but are not limited to, evaluation of current and future economic
trends, estimation of fair value, particularly for collateral dependent loans,
designation of non-accrual loans and underwriting standards. A corresponding
deferred tax asset of $3,760,000 was recorded in other assets using Haven's
historical statutory tax rate of 47%. The provision is not reflected in the
Unaudited Pro Forma Combined Condensed Consolidated Statements of Operations as
the statements are prepared as if the merger had occurred on January 1, 2000.
The provision is a non-recurring charge which would have been recorded by Haven
prior to the merger assuming all regulatory and stockholder approvals were
obtained, Queens made a written request and the merger was consummated. The
reversal of the allowance for loan losses is reflected in the Unaudited Pro
Forma Combined Condensed Consolidated Statements of Financial Condition of June
30, 2000. Excluding this reversal of the allowance for loan losses, Haven's
actual historical allowance for loan losses was $17,235, loans receivable, net
were $1,807,748, other assets was $42,296, total assets was $2,930,616, and
retained earnings was $94,926. The following table reconciles the adjustments to
the historical Haven and subsidiaries Consolidated Statement of Financial
Condition at June 30, 2000 with the presentation of the Unaudited Pro Forma
Combined Condensed Consolidated Statement of Financial Condition as of June 30,
2000.
88
ADJUSTED
HISTORICAL HISTORICAL
HAVEN ADJUSTMENT HAVEN
(in thousands)
Allowance for loan losses $ -17,235 $ 8,000 $ -9,235
Other assets 42,296 -3,760 38,536
Retained earnings 94,926 4,240 99,166
CASH 100% STOCK TOTAL
C. Haven's total common shares outstanding(i) (ii) $ 174,387 $ 174,387
Cash-out of incremental stock options, net of tax(iii) $ 5,959 5,959
Estimated transaction cost(iv) 31,000 31,000
36,959 174,387 211,346
<FN>
(i) Based on 9,119,219 shares of Haven common stock outstanding as of
June 30, 2000.
(ii) Based on average market closing price between June 23 and June 29,
2000 at $18.38125 of Queens common stock and exchange ratio of 1.04
of Haven common stock to Queens common stock.
(iii) Assumes that none of the holders of Haven's stock options elect to
exchange such option of Queens' options. As of June 30, 2000, there
were 1,280,562 outstanding options to purchase Haven common stock
with a weighted average price of $8.83. Statutory tax rate at 47%.
(iv) Estimated transaction costs of $31 million consist of the following:
</FN>
In thousands
------------
Merger-related compensation and severance $ 11,000
Professional services 4,000
System and facilities conversion and other expense 16,000
D. Purchase accounting adjustments are estimated as follows:
Haven's net assets-historical at June 30, 2000(i) $ 112,790
Adjustments to Haven's statement of condition:
Termination of Haven's ESOP (payoff of loan payable) $ 795
Termination of Haven's RRP 206
Termination of Haven's Unearned compensation 836
Subtotal 1,837
Fair value adjustment:(ii)
Securities available for sale(iii) -76,900
Securities available for sale (to restore the markdown on June 30, 2000) 45,748
Loans receivable -85,200
Deposits 5,200
Borrowings 12,200
Subtotal - net fair value adjustments -98,952
Tax effects of fair value adjustments at 47% 66,567
Total net adjustments to net assets acquired -30,548
Adjusted net assets acquired 82,242
<FN>
(i) After adjustments as described above under note B.
(ii) Fair value adjustments in accordance with purchase accounting under
generally accepted accounting principles.
(iii) Based on the intent to accelerate the disposition of such assets, an
estimated purchase accounting adjustment was made.
</FN>
E. The excess of cost over the fair value of net assets acquired is set forth below:
Total cost:
Stock portion $ 174,387
Cash portion 36,959
Total 211,346
Net assets acquired 82,242
Total excess of cost over the fair value of net assets acquired 129,104
F. Purchase accounting adjustments to eliminate Haven's stockholders' equity account.
89
G. Pro forma adjustments to interest income and interest expense were
calculated as follows:
FOR THE YEAR ENDED FOR THE SIX MONTHS
DECEMBER 31, 1999 ENDED JUNE 30, 2000
(in thousands)
Reduction in interest income on securities sold to fund
acquisition and restructuring ($300,000 at 7.08%) -21,240 -10,620
Reduction in interest income on loans sold to fund acquisition
and restructuring ($700,000 at 7.31%) -51,170 -25,585
Accretion of discount on securities (8 years by using Sum of
the Year Digit method) 19,300 9,650
Accretion of discount on loans (10 years by using Sum of the
Year Digit method) 17,800 8,900
Total net adjustments - interest income -35,310 -17,655
Reduction in interest expense on deposits ($141,000 @5.25%) -7,560 -3,780
Reduction in interest on FHLB borrowings ($818,878 @6.24%) -51,098 -25,549
Amortization of premium on deposits (7 years by using Sum of
the Year Digit method) 1,500 750
Amortization of premium on FHLB borrowings (1 year) 12,200 6,100
Total net adjustments - interest expense -44,958 -22,479
H. The amortization of the excess of cost over the fair value of net assets
acquired is assumed to be straight-line over a Period of twenty years.
I. Income tax expense was calculated using Queen's estimated effective tax
rate of 37%.
J. Basic and fully diluted weighted average number of common and common
stock equivalents utilized for the calculation per share for the periods
presented were calculated using Queen's historical weighted average
common and common stock equivalents plus 9,483,988 shares issued to Haven
stockholders under the terms of the merger agreement.
K. The following table summarizes the estimated impact of the amortization
and accretion of the purchase accounting adjustments made in connection
with the merger on Queen's results of operation for the next years:
PROJECTED FUTURE NET INCREASE
AMOUNTS FOR THE (DECREASE)
YEARS ENDED EXCESS OF COST OVER FAIR NET IN INCOME
DECEMBER 31 VALUE OF NET ASSETS ACQUIRED (ACCRETION) BEFORE TAXES
2000 6,455 (23,410) 16,955
2001 6,455 (31,710) 25,255
2002 6,455 (27,710) 21,255
2003 6,455 (24,230) 17,775
2004 6,455 (19,240) 12,785
2005 and thereafter 96,828 (54,400) (42,428)
L. Adjustment made to reflect a non-recurring charge $7.1 million relating
to the closing of the Mortgage subsidiary.
90
EXPERTS
The consolidated financial statements of Queens and its subsidiaries as
of December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999 included in Queens' 1999 Annual Report on Form 10-K have
been incorporated by reference in this document in reliance upon the report of
KPMG LLP, independent certified public accountants, found in Queens' 1999 Annual
Report on Form 10-K which is incorporated by reference in this document, and
upon the authority of KPMG LLP as experts in accounting and auditing.
With respect to the unaudited interim financial information of Queens
for the periods ended March 31, 2000 and 1999 and June 30, 2000 and 1999 which
is incorporated herein by reference, KPMG LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their reports included in Queens' Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2000 and June 30, 2000 and
incorporated by reference herein, they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. KPMG LLP are not subject to
the liability provisions of Section 11 of the Securities Act of 1933 for their
reports on the unaudited interim financial information because those reports are
not "reports" or a "part" of the registration statement prepared or certified by
an accountant within the meaning of Sections 7 and 11 of the Securities Act of
1933, as amended.
With respect to the unaudited interim financial information of Haven
for the periods ended March 31, 2000 and 1999 and June 30, 2000 and 1999 which
is incorporated herein by reference, KPMG LLP have applied limited procedures in
accordance with professional standards for a review of such information, and
they did not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. KPMG LLP are not subject to the liability provisions of
Section 11 of the Securities Act of 1933 for their reports on the unaudited
interim financial information because those reports are not "reports" or a
"part" of the registration statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Securities Act of 1933, as
amended.
Queens expects representatives of KPMG LLP to attend Queens' special
meeting, and Haven also expects representatives of KPMG LLP to attend Haven's
special meeting. These representatives will have an opportunity to make a
statement if they desire to do so, and we expect that they will be available to
respond to any appropriate questions you may have.
OTHER MATTERS
As of the date of this document, the Queens board of directors and the
Haven board of directors know of no matters that will be presented for
consideration at their respective special meetings other than as described in
this document. However, if any other matter shall properly come before these
special meetings or any adjournments or postponements thereof and shall be voted
upon, the proposed proxy will be deemed to confer authority to the individuals
named as authorized therein to vote the shares represented by the proxy as to
any matters that fall within the purposes set forth in the notice of special
meeting. However, no proxy that is voted against the merger agreement will be
voted in favor of any adjournment or postponement.
QUEENS 2001 ANNUAL MEETING STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the Annual Meeting of Stockholders to be held in 2001,
a shareholder proposal must be received by the Secretary of Queens at Queens'
offices at 38-25 Main Street, Flushing, New York 11354 not later than November
17, 2000. Any such proposal will be subject to 17 C.F.R. ss. 240.14a-8 of the
Rules and Regulations under the Securities Exchange Act of 1934, as amended.
The Queens by-laws provide an advance notice procedure for a
stockholder to properly bring business before an Annual Meeting. The stockholder
must give written advance notice to the Secretary of Queens not less than ninety
(90) days before the date originally fixed for such meeting, provided, however,
that in the event that less than one hundred (100) days notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder, to be timely, must be received not later than the close of
business on the tenth day following the date on which Queens' notice to
stockholders of the annual meeting date was mailed or such public disclosure was
made.
In order for notice of a stockholder proposal for consideration at
Queens' 2001 Annual Meeting to be timely, Queens would have to receive such
notice no later than January 19, 2001, assuming that the 2001 Annual Meeting is
held on April 18, 2001 and that Queens provides at least 100 days notice or
public disclosure of the date of the meeting. The advance notice by stockholders
must include the stockholder's name and address, as they appear on the Company's
records of stockholders, a brief description of the proposed business, the
reason for conducting such business at the Annual Meeting, the class and number
of shares of the Company's capital stock that are beneficially owned by such
stockholder, and any material interest of such stockholder in the
91
proposed business. In the case of nominations to the board of directors, certain
information regarding the nominee must be provided. Nothing in this paragraph
shall be deemed to require Queens to include in its proxy statement and proxy
relating to an annual meeting any stockholder proposal which does not meet all
of the requirements for inclusion established by the SEC in effect at the time
such proposal is received.
HAVEN 2001 ANNUAL MEETING STOCKHOLDER PROPOSALS
Haven will hold a 2001 Annual Meeting of Stockholders only if the
merger is not consummated before the time of such meeting. To be considered for
inclusion in the proxy statement and proxy relating to the Annual Meeting of
Stockholders to be held in 2001, a stockholder proposal must be received by the
Secretary of Haven at 615 Merrick Avenue, Westbury, New York 11590, not later
than December 7, 2000. Any such proposal will be subject to applicable laws,
rules and regulations, including 17 C.F.R. ss. 240.14a-8 of the Rules and
Regulations under the Exchange Act.
The Haven by-laws provide an advance notice procedure for a stockholder
to properly bring business before an Annual Meeting. The stockholder must give
written advance notice to the Secretary of Haven not less than ninety (90) days
before the date originally fixed for such meeting; provided, however, that in
the event less than one hundred (100) days notice or prior public disclosure of
the date of the Annual meeting is given or made to stockholders, notice by the
stockholder to be timely must be received not later than the close of business
on the tenth day following the date on which Haven's notice to stockholders of
the Annual Meeting date was mailed or such public disclosure was made. The
advance notice by stockholders must include the stockholder's name and address,
as they appear on Haven's record of stockholders, a brief description of the
proposed business, the reason for conducting such business at the Annual
Meeting, the class and number of shares of Haven's capital stock that are
beneficially owned by such stockholder and any material interest of such
stockholder in the proposed business. In the case of nominations to the Board of
Directors, certain information regarding the nominee must be provided. Nothing
in this paragraph shall be deemed to require Haven to include in its proxy
statement and proxy relating to an Annual Meeting any stockholder proposal which
does not meet all of the requirements of inclusion established by the SEC in
effect at the time such proposal is received.
92
WHERE YOU CAN FIND MORE INFORMATION
Queens has filed with the SEC a registration statement under the
Securities Act that registers the distribution to Haven stockholders of the
shares of Queens stock to be issued in connection with the merger. The
registration statement, including the attached exhibits and schedules, contains
additional relevant information about Queens and Queens stock. The rules and
regulations of the SEC allow us to omit certain information included in the
registration statement from this document.
In addition, Queens and Haven file reports, proxy statements and other
information with the SEC under the Securities Exchange Act. You may read and
copy this information at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
also maintains an Internet worldwide web site that contains reports, proxy
statements and other information about issuers, like Queens and Haven, who file
electronically with the SEC. The address of the site is http://www.sec.gov.
You should also be able to inspect reports, proxy statements and other
information about Queens and Haven at the offices of the Nasdaq Stock Market,
Inc., 33 Whitehall Street, New York, New York 10004.
The SEC allows Queens and Haven to incorporate by reference information
into this document. This means that Queens and Haven can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is considered to be a part of
this document, except for any information that is superseded by information that
is included directly in this document.
93
This document incorporates by reference the documents listed below that
Queens and Haven previously filed with the SEC. They contain important
information about the companies and their financial condition.
QUEENS SEC FILINGS PERIOD OR DATE FILED
- -----------------------------------------------------------------------------------------------------------------
Annual Report on Form 10-K....................... Year ended December 31, 1999
Quarterly Reports on Form 10-Q................... Quarters ended March 31, 2000 and June 30, 2000
Current Reports on Form 8-K......................
The description of Queens common stock
set forth in the registration statement
on Form 8-A (No. 0-22278) filed pursuant to
Section 12 of the Securities Exchange Act,
including any amendment or report filed with
the SEC for the purpose of
updating this description........................ Filed on August 19, 1993
The description of the rights agreement,
contained in the registration statement
on Form 8-A filed pursuant to Section 12
of the Securities Exchange Act,
including any amendment or report filed
with the SEC for the purpose of updating
this description................................. o
HAVEN SEC FILINGS PERIOD OR DATE FILED
- -----------------------------------------------------------------------------------------------------------------
Annual Report on Form 10-K....................... Year ended December 31, 1999
Quarterly Reports on Form 10-Q................... Quarters ended March 31, 2000 and June 30, 2000
Current Reports on Form 8-K...................... Filed on April 11, 2000, April 24, 2000 and June 30, 2000
The description of Haven common
stock set forth in the registration
statement on Form 8-A filed pursuant to
Section 12 of the Securities Exchange Act,
including any amendment or report filed
with the SEC for the purpose of
updating this description........................ Filed on April 26, 1993
In addition, Queens and Haven also incorporate by reference additional
documents that either company may file with the SEC between the date of this
document and the date of the Queens special meeting or Haven special meeting.
These documents include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
Queens has supplied all information contained or incorporated by
reference in this document relating to Queens, as well as all pro forma
financial information, and Haven has supplied all information relating to Haven.
94
Documents incorporated by reference are available from Queens and Haven
without charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this document. You can
obtain documents incorporated by reference in this document by requesting them
in writing or by telephone from the appropriate company at the following
addresses:
QUEENS COUNTY BANCORP, INC. HAVEN BANCORP, INC.
Investor Relations Department Attention: Catherine Califano,
38-25 Main Street Senior Vice President and
Flushing, New York 11354 Chief Financial Officer
Phone: (718) 359-6400 615 Merrick Avenue
Westbury, New York 11590
Phone: (516) 683-4483
QUEENS AND HAVEN STOCKHOLDERS REQUESTING DOCUMENTS SHOULD DO SO BY O,
2000 TO RECEIVE THEM BEFORE THE SPECIAL MEETINGS. YOU WILL NOT BE CHARGED FOR
ANY OF THESE DOCUMENTS THAT YOU REQUEST. IF YOU REQUEST ANY INCORPORATED
DOCUMENTS FROM QUEENS OR HAVEN, QUEENS OR HAVEN WILL MAIL THEM TO YOU BY FIRST
CLASS MAIL, OR ANOTHER EQUALLY PROMPT MEANS, WITHIN ONE BUSINESS DAY AFTER IT
RECEIVES YOUR REQUEST.
NEITHER QUEENS NOR HAVEN HAS AUTHORIZED ANYONE TO GIVE ANY INFORMATION
OR MAKE ANY REPRESENTATION ABOUT THE MERGER OR OUR COMPANIES THAT IS DIFFERENT
FROM, OR IN ADDITION TO, THAT CONTAINED IN THIS DOCUMENT OR IN ANY OF THE
MATERIALS THAT HAVE BEEN INCORPORATED INTO THIS DOCUMENT. THEREFORE, IF ANYONE
DOES GIVE YOU INFORMATION OF THIS SORT, YOU SHOULD NOT RELY ON IT. IF YOU ARE IN
A JURISDICTION WHERE OFFERS TO EXCHANGE OR SELL, OR SOLICITATIONS OF OFFERS TO
EXCHANGE OR PURCHASE, THE SECURITIES OFFERED BY THIS DOCUMENT OR THE
SOLICITATION OF PROXIES IS UNLAWFUL, OR IF YOU ARE A PERSON TO WHOM IT IS
UNLAWFUL TO DIRECT THESE TYPES OF ACTIVITIES, THEN THE OFFER PRESENTED IN THIS
DOCUMENT DOES NOT EXTEND TO YOU. THE INFORMATION CONTAINED IN THIS DOCUMENT
SPEAKS ONLY AS OF THE DATE OF THIS DOCUMENT UNLESS THE INFORMATION SPECIFICALLY
INDICATES THAT ANOTHER DATE APPLIES.
95
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Queens County Bancorp, Inc. (the "Company") certificate of
incorporation provides that no director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for:
o any breach of the director's duty of loyalty to the company or its
stockholders,
o acts or omissions not in good faith or which involve intentional
misconduct or knowing violation of law,
o under Section 174 of the Delaware General Corporation Law (the "Act"),
or
o any transaction from which the director derived an improper personal
benefit.
The Company's certificate of incorporation also provides that each
person who is made party to a suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of the Company, or is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan, shall be indemnified and held harmless
by the Company to the fullest extent permitted by the Act or by another other
applicable law.
The Company's certificate of incorporation also permits the Company to
maintain insurance to protect itself and any director, officer, employee or
agent against any such liability, expense or loss.
Section 145 of the Act provides that, subject to certain limitations in
the case of suits brought by a corporation and derivative suits brought by a
corporation's stockholders in its name, a corporation may indemnify any person
who is made a party to any suit or proceeding by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation
against expenses, including attorney's fees, judgments, fines and amounts paid
in settlement reasonably incurred by him in connection with the action, through,
among other things, a majority vote of the directors who were not parties to the
suit or proceeding, if the person (1) acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and (2) in a criminal proceeding, had no reasonable cause to
believe his conduct was unlawful.
Section 145(b) of the Act provides that no such indemnification of
directors, officers, employees or agents may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation, unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
96
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
2.1 Agreement and Plan of Merger, dated as of June 27, 2000,
between Queens County Bancorp, Inc. and Haven Bancorp, Inc.
(included as Appendix A to the Joint Proxy
Statement/Prospectus contained in this Registration
Statement).
3.1 Certificate of Incorporation of Queens County Bancorp, Inc.
(incorporated herein by reference to Exhibit 3.1 to Queens'
Form S-1, Registration No. 33-66852, dated November 1, 1993).
3.2 By-Laws of Queens County Bancorp, Inc. (incorporated herein
by reference to Exhibit 3.2 to Queens' Form S-1, Registration
No. 33-66852, dated November 1, 1993).
4.1 Rights Agreement, dated as of January 16, 1996, between
Queens County Bancorp, Inc. and ChaseMellon Shareholder
Services, LLC, as Rights Agent, including the form of rights
certificate attached as Exhibit A thereto (incorporated
herein by reference to Exhibit 4 to Queens' Form 8-K dated
January 24, 1996).
5.1 Opinion of Sullivan & Cromwell, counsel to Queens, regarding
validity of securities being registered.*
8.1 Opinion of Sullivan & Cromwell regarding material federal
income tax consequences.*
8.2 Opinion of Thacher Proffitt & Wood regarding material federal
income tax consequences.
10.1 Stock Option Agreement, dated as of June 27, 2000, between
Queens County Bancorp, Inc. and Haven Bancorp, Inc. (included
as Appendix B to the Joint Proxy Statement/Prospectus
contained in this Registration Statement).
10.2 Agreement, dated June 27, 2000, by and between CFS Bank and
Dennis Hodne.
10.3 Agreement, dated June 27, 2000, by and between Queens County
Bancorp, Inc. and Dennis Hodne.
10.4 Agreement, dated June 27, 2000, by and between CFS Bank and
William J. Jennings II.
10.5 Agreement, dated June 27, 2000, by and between Queens County
Bancorp, Inc. and William J. Jennings II.
10.6 Consulting Agreement, dated June 27, 2000, by and among
Queens County Bancorp, Inc., Columbia Federal Savings Bank
and Philip S. Messina.
23.1 Consent of KPMG LLP relating to Queens.*
23.2 Consent of KPMG, LLP relating to Haven.*
23.3 Consent of Sullivan & Cromwell (included in the opinion filed
as Exhibit 8.1 to this Registration Statement).*
23.4 Consent of Thacher Proffitt & Wood (included in the opinion
filed as Exhibit 8.2 to this Registration Statement).
23.5 Consent of Lehman Brothers Inc. (included in the opinion
filed as Exhibit 99.3 to this Registration Statement).
23.6 Consent of Salomon Smith Barney Inc. (included in the opinion
filed as Exhibit 99.4 to this Registration Statement).
24.1 Powers of Attorney.*
97
99.1 Form of Proxy Card of Queens County Bancorp, Inc.*
99.2 Form of Proxy Card of Haven Bancorp, Inc.*
99.3 Opinion of Salomon Smith Barney Inc. (included as Appendix C
to the Joint Proxy Statement/Prospectus contained in this
Registration Statement).
99.4 Opinion of Lehman Brothers Inc. (included as Appendix D to
the Joint Proxy Statement/Prospectus contained in this
Registration Statement).
* To be filed by amendment.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering;
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
98
(c)(1) The undersigned registrant undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The undersigned registrant hereby undertakes that every prospectus
(i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Securities Act of
1933 and is used in connection with an offering of securities subject to Rule
415, will be filed as a part of an amendment to the Registration Statement and
will not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time will be deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(e) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
99
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Queens
County Bancorp, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Flushing, and State of New York.
QUEENS COUNTY BANCORP, INC.
By: /s/ Joseph R. Ficalora
-----------------------------
Joseph R. Ficalora
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below (other than Mr. Ficalora) constitutes and appoints Joseph R. Ficalora, and
Mr. Ficalora constitutes and appoints Michael J. Lincks, as the true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign the
Form S-4 Registration Statement and any or all amendments to the Form S-4
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the U.S. Securities and Exchange
Commission, respectively, granting unto said attorney-in-fact and agent full
power and authority to do and perform each and every act and things requisite
and necessary to be done as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Name Title
/s/ Joseph R. Ficalora Chairman of the Board, President and Chief
- ---------------------- Executive Officer (Principal Executive
Joseph R. Ficalora Officer)
/s/ Michael J. Lincks Executive Vice President and Corporate
- ---------------------- Secretary
Michael J. Lincks
/s/ Robert Wann Senior Vice President, Comptroller and
- ---------------------- Chief Financial Officer (Principal Financial
Robert Wann and Accounting Officer)
/s/ Harold E. Johnson Director
- ----------------------
Harold E. Johnson
100
/s/ Donald M. Blake Director
- ----------------------
Donald M. Blake
/s/ Max L. Kupferberg Director
- ----------------------
Max L. Kupferberg
/s/ Henry E. Froebel Director
- ----------------------
Henry E. Froebel
/s/ Howard C. Miller Director
- ----------------------
Howard C. Miller
/s/ Dominick Ciampa Director
- ----------------------
Dominick Ciampa
/s/ Richard H. O'Neill Director
- ----------------------
Richard H. O'Neill
101
APPENDIX A
================================================================================
AGREEMENT AND PLAN OF MERGER
dated as of June 27, 2000
by and between
Queens County Bancorp, Inc.
and
Haven Bancorp, Inc.
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER....................................................A-1
Section 1.1. Structure of the Merger.......................................A-1
Section 1.2. Effect on Outstanding Shares of Haven Common Stock............A-1
Section 1.3. Exchange Procedures...........................................A-2
Section 1.4. Stock Options.................................................A-3
Section 1.5. Directors and Officers of Queens after Effective Time.........A-4
Section 1.6. Certificate of Incorporation and By-laws......................A-4
ARTICLE II REPRESENTATIONS AND WARRANTIES................................A-4
Section 2.1. Disclosure Letters............................................A-4
Section 2.2. Standards.....................................................A-4
Section 2.3. Representations and Warranties of Haven.......................A-5
Section 2.4. Representations and Warranties of Queens.....................A-13
ARTICLE III CONDUCT PENDING THE MERGER...................................A-19
Section 3.1. Conduct of Haven's Business Prior to the Effective Time......A-19
Section 3.2. Forbearance by Haven.........................................A-19
Section 3.3. Conduct of Queens' Business Prior to the Effective Time......A-21
Section 3.4. Forbearance by Queens........................................A-21
ARTICLE IV COVENANTS....................................................A-22
Section 4.1. Acquisition Proposals........................................A-22
Section 4.2. Certain Policies of Haven....................................A-23
Section 4.3. Access and Information.......................................A-23
Section 4.4. Certain Filings, Consents and Arrangements...................A-24
Section 4.5. Antitakeover Provisions......................................A-24
Section 4.6. Additional Agreements........................................A-25
Section 4.7. Publicity....................................................A-25
Section 4.8. Stockholders Meetings........................................A-25
Section 4.9. Joint Proxy Statement-Prospectus; Comfort Letters............A-25
Section 4.10. Registration of Queens Common Stock..........................A-25
Section 4.11. Affiliate Letters............................................A-26
Section 4.12. Notification of Certain Matters..............................A-26
Section 4.13 Directors and Officers.......................................A-26
Section 4.14. Indemnification; Directors' and Officers' Insurance..........A-26
Section 4.15. Tax-Free Reorganization Treatment............................A-27
Section 4.16. Employees; Benefit Plans and Programs........................A-27
Section 4.17. Advisory Board...............................................A-28
ARTICLE V CONDITIONS TO CONSUMMATION...................................A-29
Section 5.1. Conditions to Each Party's Obligations.......................A-29
Section 5.2. Conditions to the Obligations of Queens......................A-29
Section 5.3. Conditions to the Obligations of Haven.......................A-30
ARTICLE VI TERMINATION..................................................A-31
Section 6.1. Termination..................................................A-31
Section 6.2. Effect of Termination........................................A-34
A-1
ARTICLE VII CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME...................A-34
Section 7.1. Effective Date and Effective Time............................A-34
Section 7.2. Deliveries at the Closing....................................A-34
ARTICLE VIII CERTAIN OTHER MATTERS........................................A-34
Section 8.1. Certain Definitions; Interpretation..........................A-34
Section 8.2. Survival.....................................................A-34
Section 8.3. Waiver; Amendment............................................A-34
Section 8.4. Counterparts.................................................A-35
Section 8.5. Governing Law................................................A-35
Section 8.6. Expenses.....................................................A-35
Section 8.7. Notices......................................................A-35
Section 8.8. Entire Agreement; etc........................................A-35
Section 8.9. Assignment...................................................A-36
Section 8.10. Waiver of Jury Trial.........................................A-36
Exhibits
Exhibit A - Form of Affiliate Letter [Section 4.11]
A-2
INDEX OF DEFINED TERMS
DEFINED TERM SECTION
Advisory Board..........................................................4.17
Acquisition Transaction...............................................3.4(g)
Acquisition Proposal ..................................................Intro
Agreement..............................................................Intro
Average Index Price...................................................6.1(e)
Average Queens Market Value ..........................................1.2(a)
Bank Regulator........................................................2.3(i)
CFS Bank..............................................................2.2(b)
Closing..................................................................7.1
Closing Date.............................................................7.1
Code........................................................Intro. Statement
Confidentiality Agreement................................................4.1
Converted Options.....................................................1.4(a)
Costs................................................................4.14(a)
Covered Agreements.......................................................8.8
Covered Person........................................................2.3(y)
Derivatives Contract..............................................2.3(x)(ii)
DGCL.....................................................................1.1
Disclosure Letter........................................................2.1
Effective Date...........................................................7.1
Effective Termination Date........................................6.1(e)(ii)
Effective Time...........................................................7.1
Employment Agreements.................................................2.3(y)
Environmental Law.................................................2.3(q)(ii)
ERISA.................................................................2.3(m)
ERISA Affiliate.......................................................2.4(n)
Exchange Act.......................................................2.3(f)(i)
Exchange Agent........................................................1.3(a)
Exchange Ratio........................................................1.2(a)
Excluded Shares.......................................................1.2(a)
FDIA.............................................................2.3(a)(iii)
FDIC..............................................................2.3(a)(iv)
FHLB..............................................................2.3(a)(iv)
FRB...............................................................2.4(f)(ii)
GAAP..................................................................2.2(b)
Governmental Entity...................................................2.3(h)
Haven..................................................................Intro
Haven Certificate.....................................................1.2(a)
Haven Common Stock..........................................Intro. Statement
Haven Employee.......................................................4.16(a)
Haven Employee Plans..................................................2.3(m)
Haven's ESOP....................................................4.16(b)(iii)
Haven Option Agreement......................................Intro. Statement
Haven Option..........................................................1.4(a)
Haven Option Plans....................................................1.4(a)
Haven Pension Plan....................................................2.3(m)
Haven Preferred Stock..............................................2.3(b)(i)
Haven Preferred Share Purchase Right..................................1.2(a)
Haven Qualified Plan..................................................2.3(m)
Haven Rights Agreement................................................1.2(a)
Haven's Reports....................................................2.3(f)(i)
Haven RRPs...............................................................1.2
Hazardous Material................................................2.3(q)(ii)
HOLLA.................................................................2.3(a)
Indemnified Party....................................................4.14(a)
A-3
Index Group...........................................................6.1(e)
Index Price...........................................................6.1(e)
Index Ratio...........................................................6.1(e)
Initial Queens Market Value...........................................6.1(e)
IRS...................................................................2.3(m)
Joint Proxy Statement-Prospectus...................................2.3(e.e.)
Letter of Transmittal.................................................1.3(a)
Loan..................................................................2.3(r)
Loan Property.....................................................2.3(q)(ii)
Material Adverse Effect...............................................2.2(b)
Maximum Agreement....................................................4.14(d)
Merger...................................................................1.1
Merger Consideration..................................................1.2(a)
NASD..............................................................2.3(f)(ii)
Nasdaq Stock Market..................................................4.10(c)
New Queens Directors.................................................4.13(a)
New Compensation and Benefits Program............................4.16(a)(ii)
Option Washout Payment................................................1.7(b)
OREO.............................................................2.3(r)(iii)
OTS...................................................................2.3(e)
Participation Facility............................................2.3(q)(ii)
PBGC..................................................................2.3(m)
Queens......................................................Intro. Statement
Queens Bank...........................................................2.2(b)
Queens Common Stock...................................................1.2(a)
Queens Employee Plan..................................................2.4(n)
Queens Market Value...................................................6.1(e)
Queens Pension Plan...................................................2.4(n)
Queens Preferred Stock.............................................2.4(b)(i)
Queens Qualified Plan.................................................2.4(n)
Queens Ratio............................................................6.16
Queens Rights Agreement ..............................................1.2(a)
Queens' Reports....................................................2.4(f)(i)
Registration Statement...............................................2.3(ee)
Requisite Regulatory Approvals........................................2.3(e)
SAIF..............................................................2.3(a)(iv)
SEC................................................................2.3(f)(i)
Securities Act.......................................................2.3(ee)
SRO...............................................................2.3(f)(ii)
Significant Subsidiary................................................2.3(a)
Starting Date.........................................................6.1(e)
Stock Adjustment......................................................1.2(b)
Stockholder Meeting......................................................4.8
Subsidiary............................................................2.3(a)
Unsolicited Acquisition Proposal.........................................4.1
Third Party Non-Regulatory Consents...................................5.1(b)
Valuation Date........................................................6.1(e)
Voting Debt.......................................................2.3(b)(ii)
A-4
AGREEMENT AND PLAN OF MERGER
This is an AGREEMENT AND PLAN OF MERGER, dated as of the 27th day of
June, 2000 ("Agreement"), by and between QUEENS COUNTY BANCORP, INC., a Delaware
corporation ("Queens"), and HAVEN BANCORP, INC., a Delaware corporation
("Haven").
INTRODUCTORY STATEMENT
The Board of Directors of each of Queens and Haven (i) has determined
that this Agreement and the business combination and related transactions
contemplated hereby are in the best interests of Queens and Haven, respectively,
and in the best long-term interests of their respective stockholders, (ii) has
determined that this Agreement and the transactions contemplated hereby are
consistent with, and in furtherance of, their respective business strategies and
(iii) has approved, at meetings of each of such Boards of Directors, this
Agreement.
Concurrently with the execution and delivery of this Agreement, and as
a condition and inducement to Queens' willingness to enter into this Agreement,
Queens and Haven have entered into a stock option agreement ("Option
Agreement"), pursuant to which Haven has granted to Queens an option to purchase
shares of Haven's common stock, par value $.01 per share ("Haven Common Stock"),
upon the terms and conditions contained therein.
The parties hereto intend that the Merger shall qualify as a
reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended ("Code"), for federal income tax purposes.
Queens and Haven desire to make certain representations, warranties and
agreements in connection with the business combination and related transactions
provided for herein and to prescribe various conditions to such transactions.
In consideration of their mutual promises and obligations hereunder,
the parties hereto adopt and make this Agreement and prescribe the terms and
conditions hereof and the manner and basis of carrying it into effect, which
shall be as follows:
ARTICLE I
THE MERGER
Section 1.1. Structure of the Merger. On the Effective Date (as defined
herein), Haven will merge with and into Queens ("Merger"), with Queens being the
surviving entity, pursuant to the provisions of, and with the effect provided
in, the Delaware General Corporation Law ("DGCL"). Subject to the receipt of any
necessary clearances, the parties intend that the name of the Surviving
Corporation shall be "New York Community Bancorp, Inc." (or a variation thereof
acceptable to Queens). Upon consummation of the Merger, the separate corporate
existence of Haven shall cease. Queens shall continue to be governed by the laws
of the State of Delaware, and its separate corporate existence, with all of its
rights, privileges, immunities, powers and franchises, shall continue unaffected
by the Merger. Queens may at any time prior to the Effective Time change the
method of effecting the combination with Haven (including, without limitation,
the provisions of this Article I) if and to the extent it deems such change to
be necessary or appropriate; provided, however, that no such change shall (1)
alter or change the amount or kind of consideration to be issued to holders of
Haven Common Stock as provided for in this Agreement, (2) adversely affect the
tax treatment of Haven or Haven's stockholders as a result of receiving the
Merger Consideration (as defined herein), (3) materially impede or delay
consummation of the transactions contemplated by this Agreement or (4) adversely
effect the obligations of Queens hereunder. In the event of such an election,
the parties agree to execute an appropriate amendment to this Agreement in order
to reflect such election.
Section 1.2. Effect on Outstanding Shares of Haven Common Stock.
(a) By virtue of the Merger, automatically and without any action
on the part of the holders of Haven Common Stock, each share of Haven Common
Stock issued and outstanding at the Effective Time (as defined herein), other
than (i) shares held directly or indirectly by Queens (other than shares held in
a fiduciary capacity or in satisfaction of a debt previously contracted), (ii)
shares held by Haven as treasury stock and (iii) unallocated shares held in the
Amended and Restated Columbia Federal Savings Bank Recognition and Retention
Plan for Officers and Employees and the Amended and Restated Columbia Federal
Savings Bank Recognition and Retention Plan for Outside Directors (collectively,
"Haven RRPs") (such shares referred to in clauses (i), (ii) and (iii) being
referred to herein as the "Excluded Shares"), together with the related
preferred share purchase right ("Haven Preferred Share Purchase Right") issued
pursuant to the Stockholder Rights Agreement ("Haven Rights Agreement"), dated
as of January 25, 1996, between Haven and Chemical Bank, as Rights Agent, to the
extent that they shall exist,
shall become and be converted into the right to receive 1.04 shares (the
"Exchange Ratio") of Queens common stock par value $0.01 per share ("Queens
Common Stock"), together with the related preferred share purchase right
issuable pursuant to any rights agreement entered into by Queens ("Queens Rights
Agreement") provided, however, that notwithstanding any other provision hereof,
no fraction of a share of Queens Common Stock and no certificates or scrip
therefor will be issued in the Merger; instead Queens shall pay to each holder
of Haven Common Stock who would otherwise be entitled to a fraction of a share
of Queens Common Stock an amount in cash, rounded to the nearest cent,
determined by multiplying such fraction by the last reported sale price of
Queens Common Stock on the day immediately preceding the Effective Time. The
shares of Queens Common Stock and any cash for fractional shares are
collectively referred to in this Agreement as the "Merger Consideration."
At and after the Effective Time, each certificate ("Haven
Certificate") previously representing shares of Haven Common Stock (except as
specifically set forth in this Section 1.2) shall represent only the right to
receive the Merger Consideration. The record holder of such outstanding Haven
Certificate shall, after the Effective Date, be entitled to vote the shares of
Queens Common Stock into which the shares of Haven Common Stock evidenced by
such certificate shall have been so converted on any matters on which the
holders of record of Queens Common Stock, as of any date subsequent to the
Effective Date, shall be entitled to vote.
(b) If, between the date of this Agreement and the Effective Time,
the outstanding shares of Queens Common Stock shall have been changed into a
different number of shares or into a different class (or a record date for such
a change shall have been determined) by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares (each, a "Stock Adjustment"), the Exchange Ratio shall be adjusted
correspondingly to the extent appropriate to reflect the Stock Adjustment.
(c) As of the Effective Time, each Excluded Share shall be
canceled and retired and shall cease to exist, and no exchange or payment shall
be made with respect thereto. All shares of Queens Common Stock and Queens
Preferred Stock (as defined herein) that are held by Haven, if any, other than
shares held in a fiduciary capacity or in satisfaction of a debt previously
contracted, shall become treasury stock of Queens.
Section 1.3. Exchange Procedures.
(a) Appropriate transmittal materials (the "Letter of
Transmittal") will be mailed within three business days after the Effective Date
to each holder of record of Haven Common Stock as of the Effective Time. Prior
to the Effective Time, Queens shall deposit, or shall cause to be deposited,
with a bank or trust company as shall be selected by Queens and reasonably
acceptable to Haven (the "Exchange Agent"), for the benefit of the holders of
shares of Haven Common Stock, for exchange in accordance with this Section 1.3,
an estimated amount of cash sufficient to pay the aggregate amount of cash in
lieu of fractional shares to be paid pursuant to Section 1.2(a), and Queens
shall reserve for issuance with its transfer agent and registrar a sufficient
number of shares of Queens Common Stock to provide for payment of the Queens
Common Stock.
(b) The Letter of Transmittal shall (i) specify that delivery
shall be effected, and risk of loss and title to Haven Certificates shall pass,
only upon delivery of Haven Certificates to the Exchange Agent, (ii) be in a
form and contain any other provisions as Queens may reasonably determine and
(iii) include instructions for use in effecting the surrender of Haven
Certificates in exchange for the Merger Consideration. Upon the proper surrender
of Haven Certificates to the Exchange Agent, together with a properly completed
and duly executed Letter of Transmittal, the holder of such Haven Certificates
shall be entitled to receive in exchange therefor (1) a certificate representing
that number of whole shares of Queens Common Stock that such holder has the
right to receive pursuant to Section 1.2 and (2) a check in the amount equal to
the cash in lieu of fractional shares that such holder has the right to receive
pursuant to Section 1.2(a) and any dividends or other distributions to which
such holder is entitled pursuant to Section 1.3(c). Haven Certificates so
surrendered shall forthwith be canceled. No later than 10 business days
following receipt of the properly completed Letter of Transmittal and the
requisite Haven Certificates, the Exchange Agent shall distribute Queens Common
Stock and cash as provided herein. The Exchange Agent shall not be entitled to
vote or exercise any rights of ownership with respect to the shares of Queens
Common Stock held by it from time to time hereunder, except that it shall
receive and hold all dividends or other distributions paid or distributed with
respect to such shares for the account of the persons entitled thereto. If there
is a transfer of ownership of any shares of Haven Common Stock not registered in
the transfer records of Haven, the Merger Consideration shall be issued to the
transferee thereof if Haven Certificates representing such Haven Common Stock
are presented to the Exchange Agent, accompanied by all documents required, in
the reasonable judgment of Queens and the Exchange Agent, (x) to evidence and
effect such transfer and (y) to evidence that any applicable stock transfer
taxes have been paid.
(c) No interest will be paid on the cash in lieu of fractional
shares. Whenever a dividend or other distribution is declared by Queens on
Queens Common Stock, the record date for which is at or after the Effective
Time, the declaration shall include dividends or other distributions on all
shares issuable pursuant to this Agreement, but no dividends or other
distributions
A-2
declared or made after the Effective Time with respect to Queens Common Stock
shall be remitted to any person entitled to receive shares of Queens Common
Stock hereunder until such person surrenders his or her Haven Certificates in
accordance with this Section 1.3. Upon the surrender of such person's Haven
Certificates, such person shall be entitled to receive any dividends or other
distributions, without interest thereon, which theretofore had become payable
with respect to shares of Queens Common Stock represented by such person's Haven
Certificates.
(d) From and after the Effective Time there shall be no transfers
on the stock transfer records of Haven of any shares of Haven Common Stock. If,
after the Effective Time, Haven Certificates are presented to Queens, they shall
be canceled and exchanged for the Merger Consideration deliverable in respect
thereof pursuant to this Agreement in accordance with the procedures set forth
in this Section 1.3.
(e) Any portion of the aggregate amount of cash to be paid in lieu
of fractional shares pursuant to Section 1.2(a), any dividends or other
distributions to be paid pursuant to this Section 1.3 that remains unclaimed by
the stockholders of Haven for six months after the Effective Time, as well as
any proceeds from any investments, shall be repaid by the Exchange Agent to
Queens upon the written request of Queens. After such request is made, any
stockholders of Haven who have not theretofore complied with this Section 1.3
shall look only to Queens for the Merger Consideration deliverable in respect of
each share of Haven Common Stock such stockholder holds, as determined pursuant
to Section 1.2 of this Agreement, without any interest thereon. If outstanding
Haven Certificates are not surrendered prior to the date on which such payments
would otherwise escheat to or become the property of any governmental unit or
agency, the unclaimed items shall, to the extent permitted by any abandoned
property, escheat or other applicable laws, become the property of Queens (and,
to the extent not in its possession, shall be paid over to it), free and clear
of all claims or interest of any person previously entitled to such claims.
Notwithstanding the foregoing, none of Queens, the Exchange Agent or any other
person shall be liable to any former holder of Haven Common Stock for any amount
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(f) Queens and the Exchange Agent shall be entitled to rely upon
Haven's stock transfer books to establish the identity of those persons entitled
to receive the Merger Consideration, which books shall be conclusive with
respect thereto. In the event of a dispute with respect to ownership of stock
represented by any Haven Certificate, Queens and the Exchange Agent shall be
entitled to deposit any Merger Consideration represented thereby in escrow with
an independent third party and thereafter be relieved with respect to any claims
thereto.
(g) If any Haven Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Haven Certificate to be lost, stolen or destroyed and, if required by the
Exchange Agent, the posting by such person of a bond in such amount as the
Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such Haven Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Haven Certificate the Merger
Consideration deliverable in respect thereof pursuant to Section 1.2.
Section 1.4. Stock Options.
(a) Subject to Section 1.4(b), each option to purchase shares of
Haven Common Stock that has been issued by Haven and is outstanding at the
Effective Time (each, a "Haven Option") pursuant to the Haven Incentive Stock
Option Plan, the Haven Stock Option Plan for Outside Directors and the Haven
Stock Incentive Plan (collectively, the "Haven Option Plans") shall be converted
into an option to purchase shares of Queens Common Stock as follows:
(i) the aggregate number of shares of Queens Common Stock
issuable upon the exercise of each converted Haven Option after the Effective
Time shall be equal to the product of (A) the Exchange Ratio multiplied by (B)
the number of shares of Haven Common Stock issuable upon exercise of the Haven
Option immediately prior to the Effective Time, such product to be rounded to
the nearest whole share of Queens Common Stock; and
(ii) the exercise price per share of each converted Haven
Option shall be equal to the quotient of the exercise price of such Haven Option
at the Effective Time divided by the Exchange Ratio, such quotient to be rounded
to the nearest whole cent;
provided, however, that, in the case of any Haven Option that is intended to
qualify as an incentive stock option under Section 422 of the Code, the number
of shares of Queens Common Stock issuable upon exercise of and the exercise
price per share for such converted Haven Option determined in the manner
provided above shall be further adjusted in such manner as Queens may determine
to be necessary to conform to the requirements of Section 424(b) of the Code.
Options to purchase shares of Queens Common Stock that arise from the operation
of this Section 1.4 shall be referred to as the "Converted Options." All
Converted Options shall be exercisable for the same period and otherwise have
the same terms and conditions applicable to Haven Options
A-3
that they replace. Prior to the Effective Time, Queens shall take, or cause to
be taken, all necessary action to effect the intent of the provisions set forth
in this Section 1.4.
(b) Notwithstanding Section 1.4(a) and subject to the provisions
of this Section 1.4(b), any Haven Option shall, if so requested by the option
holder, be canceled and shall cease to be exercisable. Any such request shall be
made in writing in the form and manner specified by Haven and reasonably
acceptable to Queens and shall be delivered to Queens at least ten (10) business
days prior to the Effective Time. In consideration for such cancellation, each
holder of a Haven Option making such request shall be paid, with respect to each
Haven Option so canceled, an amount equal to the excess (if any) of the product
of the Queens Market Value (as defined herein) times the Exchange Ratio over the
price at which the holder may acquire a share of Haven Common Stock upon
exercise of such Haven Option (such excess, the "Option Cashout Payment"). Such
payment shall be made as soon as practicable following the Effective Time or, if
later in the case of any holder of a Haven Option, the date on which such holder
delivers to Haven his written acceptance of an Option Cashout Payment as full
and complete consideration for the cancellation of each Haven Option held by
such holder. Haven shall take such action as is necessary or appropriate under
the terms of Haven's Option Plans to convert each Haven Option for which such a
request is timely made as of the Effective Time, into the right to receive an
Option Cashout Payment upon the terms and conditions set forth herein. Such
payment hereunder shall be subject to withholding for applicable federal, state
and local taxes.
(c) Prior to the date of Haven stockholders meeting contemplated
by Section 4.8, Haven shall take, or cause to be taken, appropriate action under
the terms of any stock option plan, agreement or arrangement under which Haven
Options have been granted to provide for the conversion of Haven Options
outstanding at the Effective Time into Converted Options and to effect any other
modifications contemplated by Section 1.4(a).
(d) Concurrently with the reservation of shares of Queens Common
Stock to provide for the payment of the Merger Consideration, Queens shall take
all corporate action necessary to reserve for future issuance a sufficient
additional number of shares of Queens Common Stock to provide for the
satisfaction of its obligations with respect to the Converted Options. As soon
as practicable following the Effective Time, Queens shall (i) cause to be
executed and delivered to each holder of a Converted Option an agreement,
certificate or other instrument, in such form and of such substance as Queens
may reasonably determine, evidencing such holder's rights with respect to the
Converted Options; and (ii) file a registration statement on Form S-8 (or any
successor or other appropriate form) and make any state filings or obtain state
exemptions with respect to the Queens Common Stock issuable upon exercise of the
Converted Options.
Section 1.5. Directors and Officers of Queens after Effective Time. At
the Effective Time, the directors and officers of Queens shall consist of (a)
the directors and officers of Queens serving immediately prior to the Effective
Time and (b) such additional persons who shall become directors or officers of
Queens as contemplated by Section 4.13 and any employment agreements entered
into by and between Queens and any officer of Haven.
Section 1.6. Certificate of Incorporation and By-laws. The Certificate
of Incorporation and By-laws of Queens immediately after the Merger shall be
those of Queens as in effect immediately prior to the Effective Time, except as
may be affected by the proposed change of name of Queens.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Disclosure Letters. On or prior to the execution and
delivery of this Agreement, Haven and Queens each shall have delivered to the
other a letter (each, its "Disclosure Letter") setting forth, among other
things, facts, circumstances and events the disclosure of which is required or
appropriate in relation to any or all of their respective representations and
warranties (and making specific reference to the Section of this Agreement to
which they relate); provided, that (a) no such fact, circumstance or event is
required to be set forth in the Disclosure Letter as an exception to a
representation or warranty if its absence is not reasonably likely to result in
the related representation or warranty being deemed untrue or incorrect under
the standards established by Section 2.2 and (b) the mere inclusion of a fact,
circumstance or event in a Disclosure Letter shall not be deemed an admission by
a party that such item represents a material exception or that such item is
reasonably likely to result in a Material Adverse Effect (as defined herein).
Section 2.2. Standards.
(a) No representation or warranty of Haven or Queens contained in
Sections 2.3 or 2.4, respectively, shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, on
account of the existence of any fact, circumstance or event unless, as a direct
or indirect consequence of such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent with
any paragraph of Sections 2.3 or 2.4, as
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applicable, there is reasonably likely to exist a Material Adverse Effect (as
defined herein). Haven's representations, warranties and covenants contained in
this Agreement shall not be deemed to be untrue or breached as a result of
effects arising solely from actions taken in compliance with a written request
of Queens.
(b) As used in this Agreement, the term "Material Adverse Effect"
means either (i) an effect which is material and adverse to the business,
financial condition or results of operations of Haven or Queens, as the context
may dictate, and its Subsidiaries taken as a whole; provided, however, that any
such effect resulting from any (A) changes in laws, rules or regulations or
generally accepted accounting principles ("GAAP") or interpretations thereof
that apply to both Queens and Queens County Savings Bank, a New York State
chartered savings bank ("Queens Bank") and Haven and CFS Bank, a federally
chartered savings association ("CFS Bank"), as the case may be, or (B) changes
in the general level of market interest rates shall not be considered in
determining if a Material Adverse Effect has occurred; or (ii) the failure of
(x) a representation or warranty contained in Section 2.3(a)(i) and (iv),
Section 2.3(d), Section 2.3(g)(iii), Section 2.4(a)(i) and (iv), Section 2.4(d),
2.4(g)(ii) or Section 2.4(l) to be true and correct or (y) a representation or
warranty contained in Section 2.3(a)(v), Section 2.3(b), Section 2.3(c), clause
(ii) of Section 2.3(e), Section 2.3(f)(i), Section 2.3(k)(i)(E), the first
sentence of Section 2.3(m), Section 2.3(p), Section 2.3(u), Section 2.3(aa),
Section 2.4(a)(v), Section 2.4(b), Section 2.4(c), clause (ii) of Section
2.4(e), Section 2.4(f)(i), the first sentence of Section 2.4(n), Section 2.4(q),
Section 2.4(u) and Section 2.4(y) to be true and correct in all material
respects.
(c) For purposes of this Agreement, "knowledge" shall mean, with
respect to a party hereto, actual knowledge of the members of the Board of
Directors of that party, its counsel or any officer of that party with the title
ranking not less than senior vice president.
Section 2.3. Representations and Warranties of Haven. Subject to
Sections 2.1 and 2.2, Haven represents and warrants to Queens that, except as
specifically disclosed in Haven's Disclosure Letter:
(a) Organization. (i) Haven is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is duly registered as a savings and loan holding company under the Home
Owners' Loan Act of 1933, as amended ("HOLA"). CFS Bank is a savings association
duly organized, validly existing and in good standing under the laws of the
United States of America and is a wholly-owned Subsidiary (as defined herein) of
Haven. Each Significant Subsidiary (as defined herein) of Haven, other than CFS
Bank, is a corporation, limited liability company or partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of Haven and its Significant Subsidiaries
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted, and unless the context
requires otherwise, the term "Subsidiary" when used with respect to any party
means any corporation or other organization, whether incorporated or
unincorporated, which is consolidated with such party for financial reporting
purposes or which is controlled, directly or indirectly, by such party, and the
term "Significant Subsidiary" shall mean each Subsidiary that is a "significant
subsidiary" as defined in Regulation S-X, promulgated by the SEC (as defined
herein), as in effect as of the date hereof.
(ii) Haven and each of its Significant Subsidiaries has the
requisite corporate power and authority, and is duly qualified and is in good
standing, to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary.
(iii) Haven's Disclosure Letter sets forth all of Haven's
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations), including the corresponding percentage ownership, in which Haven
owns, directly or indirectly, 5% or more of the ownership interests as of the
date of this Agreement and indicates for each such Subsidiary, as of such date,
its jurisdiction of organization and the jurisdiction(s) wherein it is qualified
to do business. All such Subsidiaries and ownership interests are in compliance
with all applicable laws, rules and regulations relating to direct investments
in equity ownership interests. Haven owns, either directly or indirectly, all of
the outstanding capital stock of each of its Subsidiaries. No Subsidiary of
Haven other than CFS Bank is an "insured depository institution" as defined in
the Federal Deposit Insurance Act, as amended ("FDIA"), and the applicable
regulations thereunder. All of the shares of capital stock of each of the
Subsidiaries held by Haven or any of its other Subsidiaries are duly authorized
and validly issued, fully paid and nonassessable and not subject to any
preemptive rights and are owned by Haven or a Subsidiary of Haven free and clear
of any claims, liens, encumbrances or restrictions (other than those imposed by
applicable federal and state securities laws), and there are no agreements or
understandings with respect to the voting or disposition of any such shares.
(iv) The deposits of CFS Bank are insured by the Savings
Association Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation
("FDIC") to the extent provided in the FDIA. CFS Bank is a member of the Federal
Home Loan Bank ("FHLB") of New York.
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(v) As of the date of this Agreement, CFS Bank is "well
managed" and "well capitalized" as defined under applicable federal banking law
and regulation.
(b) Capital Structure. (i) As of the date of this Agreement, the
authorized capital stock of Haven consists of 30,000,000 shares of Haven Common
Stock and 2,000,000 shares of preferred stock, par value $.01 per share ("Haven
Preferred Stock"). As of the date of this Agreement, (A) 9,119,219 shares of
Haven Common Stock were issued and outstanding, (B) no shares of Haven Preferred
Stock were issued and outstanding, (C) no shares of Haven Common Stock were
reserved for issuance, except that 1,299,962 shares of Haven Common Stock were
reserved for issuance pursuant to Haven Option Plans, which includes 1,299,962
shares reserved for issuance upon the exercise of options that have already been
granted under Haven Option Plans, (D) no shares of Haven Preferred Stock were
reserved for issuance except pursuant to Haven Rights Agreement and (E) 799,531
shares of Haven Common Stock were held by Haven in its treasury or by its
Subsidiaries. The authorized capital stock of CFS Bank consists of 10,500,000
shares of common stock, par value $1.00 per share, and 2,000,000 shares of
preferred stock, par value $1.00 per share. As of this date of the Agreement,
1,000 shares of such common stock were outstanding, no shares of such preferred
stock were outstanding and all outstanding shares of such common stock were, and
as of the Effective Time will be, owned by Haven. All outstanding shares of
capital stock of Haven and CFS Bank are duly authorized and validly issued,
fully paid and nonassessable and not subject to any preemptive rights and, with
respect to shares held by Haven in its treasury or by its Significant
Subsidiaries, are free and clear of all liens, claims, encumbrances or
restrictions (other than those imposed by applicable federal and state
securities laws), and there are no agreements or understandings with respect to
the voting or disposition of any such shares. Haven's Disclosure Letter sets
forth a complete and accurate list of all options to purchase Haven Common Stock
that have been granted pursuant to Haven Option Plans and all restricted stock
grants under Haven Option Plans and Haven RRPs, including the dates of grant,
exercise prices, dates of vesting, dates of termination and shares subject to
each grant.
(ii) No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which stockholders of Haven may vote
("Voting Debt") are issued or outstanding.
(iii) Except for the Option Agreement, neither Haven nor any
of its Subsidiaries has or is bound by any outstanding options, warrants, calls,
rights, convertible securities, commitments or agreements of any character
obligating Haven or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, any additional shares of capital stock of Haven
or any of its Subsidiaries or obligating Haven or any of its Subsidiaries to
grant, extend or enter into any such option, warrant, call, right, convertible
security, commitment or agreement. As of the date hereof, there are no
outstanding contractual obligations of Haven or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of Haven or
any of its Subsidiaries.
(c) Authority. Haven has the requisite corporate power and
authority to enter into this Agreement, and, subject to approval of this
Agreement by the requisite vote of Haven's stockholders and receipt of all
required regulatory or governmental approvals, as contemplated by Section 5.1(b)
of this Agreement, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, and, subject to the approval of this
Agreement by Haven's stockholders, the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
actions on the part of Haven. This Agreement has been duly executed and
delivered by Haven and constitutes a valid and binding obligation of Haven,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, whether
applied in a court of law or a court of equity.
(d) Stockholder Approval; Fairness Opinion. The affirmative vote
of the holders of a majority of the outstanding shares of Haven Common Stock
entitled to vote on this Agreement is the only vote of the stockholders of Haven
required for approval of this Agreement by Haven and the consummation by Haven
of the Merger and the related transactions contemplated hereby. Haven has
received the written opinion of Lehman Brothers, Inc. to the effect that, as of
the date hereof, the Merger Consideration is fair, from a financial point of
view, to Haven's stockholders.
(e) No Violations. The execution, delivery and performance of this
Agreement and the Option Agreement by Haven do not, and the consummation of the
transactions contemplated hereby and thereby will not, constitute (i) assuming
(in the case of this Agreement only) receipt of all Requisite Regulatory
Approvals (as defined herein) and (in the case of this Agreement only) requisite
stockholder approvals, a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of Haven or any of its
Significant Subsidiaries, or to which Haven or any of its Significant
Subsidiaries (or any of their respective properties) is subject, (ii) a breach
or violation of, or a default under, the certificate of incorporation or bylaws
of Haven or the similar organizational documents of any of its Significant
Subsidiaries or (iii) a breach or violation of, or a default under (or an event
which, with due notice or lapse of time or both, would constitute a default
under), or result in the termination of, accelerate the performance required by,
or result in the creation of any lien, pledge, security interest, charge or
other encumbrance upon any of the properties or assets of Haven or any of
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its Significant Subsidiaries, under, any of the terms, conditions or provisions
of any note, bond, indenture, deed of trust, loan agreement or other agreement,
instrument or obligation to which Haven or any of its Significant Subsidiaries
is a party, or to which any of their respective properties or assets may be
subject; and the consummation of the transactions contemplated hereby will not
require any approval, consent or waiver under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or the approval, consent
or waiver of any other party to any such agreement, indenture or instrument,
other than (v) the approval of the holders of a majority of the outstanding
shares of Haven Common Stock referred to in Section 2.3(d), (w) the approval of
the Office of Thrift Supervision ("OTS") under the HOLA, the approval of the
FDIC under Section 18(c) of the FDIA, the approval of the Board of Governors of
the Federal Reserve System under the Bank Holding Company Act of 1956, as
amended (including the approval for Queens to become a financial holding company
in connection with the Merger) and the approval of the NASD for a change in
control of any broker-dealers, (x) the declaration of effectiveness by the SEC
(as defined herein) of the Registration Statement (as defined herein) and the
SEC's approval of Haven's and Queens' proxy materials, (y) approval of the
Antitrust Division of the Department of Justice or the Federal Trade Commission
under the antitrust laws, including, without limitation, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, or the expiration of any
required waiting periods thereunder ((w), (x) and (y) are, collectively,
referred to as the "Requisite Regulatory Approvals") and (z) such approvals,
consents or waivers as are required under the federal and state securities or
"blue sky" laws in connection with the transactions contemplated by this
Agreement or Option Agreement.
(f) Reports. (i) As of their respective dates, none of the reports
or other statements filed by Haven on or subsequent to December 31, 1998 with
the Securities and Exchange Commission ("SEC") under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act")
(collectively, "Haven's Reports"), contained, or will contain, any untrue
statement of a material fact or omitted or will 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. Each
of the financial statements of Haven included in Haven's Reports complied, as of
its respective date of filing with the SEC, in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto and has been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited financial
statements, as permitted by Form 10-Q of the SEC). Each of the consolidated
statements of condition, consolidated statements of operations, consolidated
statements of cash flows and consolidated statements of changes in stockholders'
equity contained or incorporated by reference in Haven's Reports (including in
each case any related notes and schedules) fairly presented, or will fairly
present, as the case may be, the financial condition, results of operations,
cash flows and stockholders' equity, as the case may be, of the entity or
entities to which it relates for the periods set forth therein (subject, in the
case of unaudited interim statements, to normal year-end audit adjustments that
are not material in amount or effect), in each case in accordance with GAAP,
except as may be noted therein.
(ii) Haven and each of its Subsidiaries have each timely
filed all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file since December 31, 1999 with (A) the OTS, (B) the FDIC, (C) the SEC, (D)
the National Association of Securities Dealers, Inc. ("NASD"), and (E) any other
self-regulatory organization ("SRO"), and have paid all fees and assessments due
and payable in connection therewith.
(g) Absence of Certain Changes or Events. Since March 31, 2000,
(i) Haven and its Subsidiaries have not incurred any liability, except in the
ordinary course of their business consistent with past practice, (ii) Haven and
its Subsidiaries have conducted their respective businesses, other than the
negotiation, execution and delivery of this Agreement and ancillary matters
related thereto, only in the ordinary course of such businesses and (iii) there
has not been any Material Adverse Effect with respect to Haven.
(h) Absence of Claims. No litigation, proceeding, controversy,
claim or action before any court or any federal, state, local or foreign
governmental or regulatory body (each, a "Governmental Entity") is pending
against Haven or any of its Subsidiaries and, to the best of Haven's knowledge,
no such litigation, proceeding, controversy, claim or action has been
threatened.
(i) Absence of Regulatory Actions. Neither Haven nor any of its
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or any commitment letter or similar written
undertaking to, or is subject to any action, proceeding, order or directive by,
or is a recipient of any extraordinary supervisory letter from, any federal or
state governmental authority charged with the supervision or regulation of
depository institutions or depository institution holding companies or engaged
in the insurance of bank and/or savings and loan deposits (each, a "Bank
Regulator"), or has adopted any board resolutions at the request of any Bank
Regulator, nor has it been advised by any Bank Regulator that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar written undertaking.
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(j) Taxes. All federal, state, local and foreign tax returns
required to be filed by or on behalf of Haven or any of its Subsidiaries have
been timely filed, or requests for extensions have been timely filed and any
such extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all material respects. All taxes shown on
such returns, all taxes required to be shown on returns for which extensions
have been granted and all other taxes required to be paid by Haven or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such taxes on Haven's balance sheet (in accordance with GAAP). For purposes of
this Section 2.3(j), the term "taxes" shall include all federal, state, local or
foreign taxes, charges or other assessments, including, without limitation,
income, franchise, gross receipts, real and personal property, real property
transfer and gains, wage and employment taxes. As of the date of this Agreement,
there is no audit examination, deficiency assessment, tax investigation or
refund litigation with respect to any taxes of Haven or any of its Subsidiaries,
and no claim has been made by any authority in a jurisdiction where Haven or any
of its Subsidiaries do not file tax returns that Haven or any such Subsidiary is
subject to taxation in that jurisdiction. All taxes, interest, additions and
penalties due with respect to completed and settled examinations or concluded
litigation relating to Haven or any of its Subsidiaries have been paid in full
or adequate provision has been made for any such taxes on Haven's balance sheet
(in accordance with GAAP). Haven and its Subsidiaries have not executed an
extension or waiver of any statute of limitations on the assessment or
collection of any material tax due that is currently in effect. Haven and each
of its Subsidiaries has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, and Haven
and each of its Subsidiaries has timely complied with all applicable information
reporting requirements under Part III, Subchapter A of Chapter 61 of the Code
and similar applicable state and local information reporting requirements.
Neither Haven nor any of its Subsidiaries (i) has made an election under Section
341(f) of the Code, (ii) has issued or assumed any obligation under Section 279
of the Code, any high yield discount obligation as described in Section 163(i)
of the Code or any registration-required obligation within the meaning of
Section 163(f)(2) of the Code that is not in registered form or (iii) is or has
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code.
(k) Agreements. (i) Except for this Agreement, the Option
Agreement and arrangements made in the ordinary course of business, Haven and
its Subsidiaries are not bound by any material contract (as defined in Item
601(b)(10) of Regulation S-K) to be performed after the date hereof that is
required to but has not been filed with or incorporated by reference in Haven's
Reports. Except as disclosed in Haven's Reports filed prior to the date of this
Agreement, neither Haven nor any of its Subsidiaries is a party to an oral or
written (A) consulting agreement (other than data processing, software
programming and licensing contracts entered into in the ordinary course of
business) not terminable on 60 days' or less notice, (B) agreement with any
executive officer or other key employee of Haven or any of its Subsidiaries the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving Haven or any of its Subsidiaries
of the nature contemplated by this Agreement or the Option Agreement, (C)
agreement with respect to any employee or director of Haven or any of its
Subsidiaries providing any term of employment or compensation guarantee
extending for a period longer than 60 days or for the payment of in excess of
$50,000 per annum, (D) agreement or plan, including any stock option plan,
phantom stock or stock appreciation rights plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting or
payment of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the Option Agreement or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement or the Option Agreement or
(E) agreement containing covenants that limit the ability of Haven or any of its
Subsidiaries to compete in any line of business or with any person, or that
involve any restriction on the geographic area in which, or method by which,
Haven (including any successor thereof) or any of its Subsidiaries may carry on
its business (other than as may be required by law or any regulatory agency).
(ii) Neither Haven nor any of its Subsidiaries is in default
under or in violation of any provision of any note, bond, indenture, mortgage,
deed of trust, loan agreement, lease or other agreement to which it is a party
or by which it is bound or to which any of its respective properties or assets
is subject.
(iii) Haven and each of its Subsidiaries owns or possesses
valid and binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, service marks and trademarks used in its
businesses, and neither Haven nor any of its Subsidiaries has received any
notice of conflict with respect thereto that asserts the right of others. Each
of Haven and its Subsidiaries has performed all the obligations required to be
performed by it and are not in default under any contract, agreement,
arrangement or commitment relating to any of the foregoing.
(l) Labor Matters. Neither Haven nor any of its Subsidiaries is or
has ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization with respect to its employees, nor is Haven or any
of its Subsidiaries the subject of any proceeding asserting that it has
committed an unfair labor practice or seeking to compel it or any such
Subsidiary to bargain with any labor organization as to wages and conditions of
employment, nor is there any strike, other labor dispute or organizational
effort involving Haven or any of its Subsidiaries pending or, to Haven's
knowledge, threatened. Haven and its Subsidiaries are in compliance with
applicable laws
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regarding employment of employees and retention of independent contractors and
are in compliance with applicable employment tax laws.
(m) Employee Benefit Plans. Haven's Disclosure Letter contains a
complete and accurate list of all pension, retirement, stock option, stock
purchase, stock ownership, savings, stock appreciation right, profit sharing,
deferred compensation, consulting, bonus, group insurance, severance and other
benefit plans, contracts, agreements and arrangements, including, but not
limited to, "employee benefit plans," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), incentive and
welfare policies, contracts, plans and arrangements and all trust agreements
related thereto with respect to any present or former directors, officers or
other employees of Haven or any of its Subsidiaries (hereinafter referred to
collectively as the "Haven Employee Plans"). All Haven Employee Plans comply in
all material respects with all applicable requirements of ERISA, the Code and
other applicable laws; there has occurred no "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) which is likely to
result in the imposition of any material penalties or taxes under Section 502(i)
of ERISA or Section 4975 of the Code upon Haven or any of its Subsidiaries. No
liability to the Pension Benefit Guaranty Corporation ("PBGC") has been or is
expected by Haven or any of its Subsidiaries to be incurred with respect to any
Haven Employee Plan which is subject to Title IV of ERISA ("Haven Pension
Plan"), or with respect to any "single-employer plan" (as defined in Section
4001(a) of ERISA) currently or formerly maintained by Haven or any entity which
is considered one employer with Haven under Section 4001(b)(1) of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). No Haven Pension Plan had an
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, as of the last day of the end of the most recent plan year ending
prior to the date hereof; the fair market value of the assets of each Haven
Pension Plan exceeds the present value of the "benefit liabilities" (as defined
in Section 4001(a)(16) of ERISA) under such Haven Pension Plan as of the end of
the most recent plan year with respect to the respective Haven Pension Plan
ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such Haven Pension
Plan as of the date hereof; and no notice of a "reportable event" (as defined in
Section 4043 of ERISA) for which the 30-day reporting requirement has not been
waived has been required to be filed for any Haven Pension Plan within the
12-month period ending on the date hereof. Neither Haven nor any of its
Subsidiaries has provided, or is required to provide, security to any Haven
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code. Neither Haven, its Subsidiaries, nor any ERISA
Affiliate has contributed to any "multiemployer plan," as defined in Section
3(37) of ERISA, on or after September 26, 1980. Each Haven Employee Plan that is
an "employee pension benefit plan" (as defined in Section 3(2) of ERISA) and
which is intended to be qualified under Section 401(a) of the Code (a "Haven
Qualified Plan") has received a favorable determination letter from the Internal
Revenue Service ("IRS"), and Haven and its Subsidiaries are not aware of any
circumstances likely to result in revocation of any such favorable determination
letter. There is no pending or, to Haven's knowledge, threatened litigation,
administrative action or proceeding relating to any Haven Employee Plan. Except
as provided elsewhere in this Agreement, there has been no announcement or
commitment by Haven or any of its Subsidiaries to create an additional Haven
Employee Plan, or to amend any Haven Employee Plan, except for amendments
required by applicable law which do not materially increase the cost of such
Haven Employee Plan; and, Haven and its Subsidiaries do not have any obligations
for post-retirement or post-employment benefits under any Haven Employee Plan
that cannot be amended or terminated upon 60 days' notice or less without
incurring any liability thereunder, except for coverage required by Part 6 of
Title I of ERISA or Section 4980B of the Code, or similar state laws, the cost
of which is borne by the insured individuals. All contributions required to be
made under the terms of any Haven Employee Plan have been timely made or have
been reflected on Haven's Reports. With respect to Haven or any of its
Subsidiaries, for Haven Employee Plans listed in Haven's Disclosure Letter, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment or series of
payments by Haven or any of its Subsidiaries to any person which is an "excess
parachute payment" (as defined in Section 280G of the Code), increase or secure
(by way of a trust or other vehicle) any benefits payable under any Haven
Employee Plan or accelerate the time of payment or vesting of any such benefit.
With respect to each Haven Employee Plan, Haven has supplied to Queens a true
and correct copy of (A) the annual report on the applicable form of the Form
5500 series filed with the IRS for the most recent three plan years, if required
to be filed, (B) such Haven Employee Plan, including amendments thereto, (C)
each trust agreement, insurance contract or other funding arrangement relating
to such Haven Employee Plan, including amendments thereto, (D) the most recent
summary plan description and summary of material modifications thereto for such
Haven Employee Plan, if Haven Employee Plan is subject to Title I of ERISA, (E)
the most recent actuarial report or valuation if such Haven Employee Plan is a
Haven Pension Plan and any subsequent changes to the actuarial assumptions
contained therein and (F) the most recent determination letter issued by the IRS
if such Haven Employee Plan is a Haven Qualified Plan.
(n) Title to Assets. Haven and each of its Subsidiaries has good
and marketable title to its properties and assets (including any intellectual
property asset such as any trademark, service mark, trade name or copyright) and
property acquired in a judicial foreclosure proceeding or by way of a deed in
lieu of foreclosure or similar transfer, other than property as to which it is
lessee, in which case the related lease is valid and in full force and effect.
Each lease pursuant to which Haven or any of its Subsidiaries is lessor is valid
and in full force and effect, and no lessee under any such lease is in default
or in violation of any provisions of any such lease. All material tangible
properties of Haven and each of its Subsidiaries are in a good state of
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maintenance and repair, conform with all applicable ordinances, regulations and
zoning laws and are considered by Haven to be adequate for the current business
of Haven and its Subsidiaries.
(o) Compliance with Laws. Haven and each of its Subsidiaries has
all permits, licenses, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with, all Governmental
Entities that are required in order to permit it to carry on its business as it
is presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and, to the best knowledge of
Haven, no suspension or cancellation of any of them is threatened. Since the
date of its incorporation, the corporate affairs of Haven have not been
conducted in violation of any law, ordinance, regulation, order, writ, rule,
decree or approval of any Governmental Entity. The businesses of Haven and its
Subsidiaries are not being, and have not been conducted in violation of any law,
ordinance, regulation, order, writ, rule, decree or condition to approval of any
Governmental Entity or any policy or procedure.
(p) Fees. Other than financial advisory services performed for
Haven by Lehman Brothers, Inc. pursuant to an agreement dated September 17,
1999, a true and complete copy of which is set forth in Haven's Disclosure
Letter, neither Haven nor any of its Subsidiaries, nor any of their respective
officers, directors, employees or agents, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finder's fees, and no broker or finder has acted directly or
indirectly for Haven or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
(q) Environmental Matters. (i) With respect to Haven and each of
its Subsidiaries:
(A) Each of Haven and its Subsidiaries, the Participation
Facilities (as defined herein), and, to Haven's knowledge, the Loan
Properties (as defined herein) are, and have been, in substantial
compliance with, and are not liable under, all Environmental Laws (as
defined herein);
(B) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
Haven's knowledge, threatened, before any court, governmental agency or
board or other forum against Haven or any of its Subsidiaries or any
Participation Facility (x) for alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or (y)
relating to the presence of or release (as defined herein) into the
environment of any Hazardous Material (as defined herein), whether or not
occurring at or on a site owned, leased or operated by it or any of its
Subsidiaries or any Participation Facility;
(C) To Haven's knowledge, there is no suit, claim, action,
demand, executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency or
board or other forum relating to or against any Loan Property (or Haven or
any of its Subsidiaries in respect of such Loan Property) (x) relating to
alleged noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (y) relating to the presence of or release
into the environment of any Hazardous Material, whether or not occurring at
or on a site owned, leased or operated by a Loan Property;
(D) To Haven's knowledge, the properties currently owned or
operated by Haven or any of its Subsidiaries (including, without
limitation, soil, groundwater or surface water on, under or adjacent to the
properties, and buildings thereon) are not contaminated with and do not
otherwise contain any Hazardous Material other than as permitted under
applicable Environmental Law;
(E) Neither Haven nor any of its Subsidiaries has received
any notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law;
(F) To Haven's knowledge, there are (i) no underground
storage tanks on, in or under any properties owned or operated by Haven or
any of its Subsidiaries, any Participation Facility or any Loan Property,
and (ii) no underground storage tanks have been closed or removed from any
properties owned or operated by Haven or any of its Subsidiaries, any
Participation Facility or any Loan Property; and
(G) To Haven's knowledge, during the period of (l) Haven's or
any of its Subsidiaries' ownership or operation of any of their respective
current properties, (m) Haven's or any of its Subsidiaries' participation
in the management of any Participation Facility or (n) Haven's or any of
its Subsidiaries' holding of a security interest in a Loan Property, there
has been no contamination by or release of Hazardous Materials in, on,
under or affecting such properties. To Haven's knowledge, prior to the
period of (x) Haven's or any of its Subsidiaries' ownership or operation of
any of their respective current properties, (y) Haven's or any of its
Subsidiaries' participation in the management of any Participation
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Facility or (z) Haven's or any of its Subsidiaries' holding of a security
interest in a Loan Property, there was no contamination by or release of
Hazardous Material in, on, under or affecting such properties.
(ii) The following definitions apply for purposes of this
Section 2.3(q) and Section 2.4(r): (w) "Loan Property" means any property in
which the applicable party (or any of its Subsidiaries) holds a security
interest, and, where required by the context, includes the owner or operator of
such property, but only with respect to such property; (x) "Participation
Facility" means any property in which the applicable party (or a Subsidiary of
it) participates in the management thereof (including all property held as
trustee or in any other fiduciary capacity) and, where required by the context,
includes the owner or operator of such property, but only with respect to such
property; (y) "Environmental Law" means (i) any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, order, directive, executive or administrative
order, judgment, decree, injunction, legal requirement or agreement with any
Governmental Entity relating to (A) the protection, preservation or restoration
of the environment (which includes, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, structures, soil, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety as it relates to Hazardous Materials, or (B) the
exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of, Hazardous Materials, in each case as amended and as now in effect,
including, without limitation, (1) the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Water Pollution Control Act of 1972,
the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including, but not limited to, the
Hazardous and Solid Waste Amendments thereto and Subtitle I relating to
underground storage tanks), the Federal Solid Waste Disposal and the Federal
Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide
Act, the Federal Occupational Safety and Health Act of 1970 as it relates to
Hazardous Materials, the Federal Hazardous Substances Transportation Act, the
Emergency Planning and Community Right-To-Know Act, the Safe Drinking Water Act,
the Endangered Species Act, the National Environmental Policy Act, the Rivers
and Harbors Appropriation Act or any so-called "Superfund" or "Superlien" law,
each as amended and as now or hereafter in effect, and (2) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of or exposure to any Hazardous Material; and (z)
"Hazardous Material" means any substance (whether solid, liquid or gas) which is
or could be detrimental to human health or safety or to the environment,
currently or hereafter listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous, or otherwise regulated, under any Environmental
Law, whether by type or by quantity, including any substance containing any such
substance as a component. Hazardous Material includes, without limitation, any
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance, oil or petroleum, or any
derivative or by-product thereof, radon, radioactive material, asbestos,
asbestos-containing material, urea formaldehyde foam insulation, lead and
polychlorinated biphenyl.
(r) Loan Portfolio; Allowance; Asset Quality. (i) With respect to
each loan owned by Haven or its Subsidiaries in whole or in part (each, a
"Loan"), to the best knowledge of Haven:
(A) the note and the related security documents are each
legal, valid and binding obligations of the maker or obligor thereof,
enforceable against such maker or obligor in accordance with their terms;
(B) neither Haven nor any of its Subsidiaries, nor any prior
holder of a Loan, has modified the note or any of the related security
documents in any material respect or satisfied, canceled or subordinated
the note or any of the related security documents except as otherwise
disclosed by documents in the applicable Loan file;
(C) Haven or a Subsidiary is the sole holder of legal and
beneficial title to each Loan (or Haven's applicable participation
interest, as applicable), except as otherwise referenced on the books and
records of Haven;
(D) the note and the related security documents, copies of
which are included in the Loan files, are true and correct copies of the
documents they purport to be and have not been suspended, amended,
modified, canceled or otherwise changed except as otherwise disclosed by
documents in the applicable Loan file;
(E) there is no pending or threatened condemnation proceeding
or similar proceeding affecting the property that serves as security for a
Loan, except as otherwise referenced on the books and records of Haven;
(F) there is no litigation or proceeding pending or
threatened relating to the property that serves as security for a Loan that
would have a material adverse effect upon the related Loan; and
(G) with respect to a Loan held in the form of a
participation, the participation documentation is legal, valid, binding and
enforceable.
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(ii) The allowance for possible losses reflected in Haven's
audited statements of condition at December 31, 1999 and March 31, 2000
(unaudited) were, and the allowance for possible losses shown on the balance
sheets in Haven's Reports for periods ending after March 31, 2000 will be,
adequate, as of the dates thereof, under GAAP applicable to stock savings banks
consistently applied.
(iii) Haven's Disclosure Letter sets forth, as of May 31,
2000, by category the amounts of all loans, leases, advances, credit
enhancements, other extensions of credit, commitments and interest-bearing
assets of Haven and its Subsidiaries that have been classified by any bank
examiner (whether regulatory or internal) as "Special Mention," "Substandard,"
"Doubtful," "Loss" or words of similar import. The other real estate owned
("OREO") included in any non-performing assets of Haven or any of its
Subsidiaries is carried net of reserves at the lower of cost or fair value, less
estimated selling costs, based on current management appraisals or evaluations
to the extent material; provided, however, that "current" shall mean within the
past 12 months.
(s) Deposits. None of the deposits of Haven or any of its
Subsidiaries is a "brokered" deposit.
(t) Haven Rights Agreement. The Haven Rights Agreement has been
amended (the form of which is set forth in Haven's Disclosure Letter) so as to
provide that Queens will not become an "Acquiring Person" and that no "Shares
Acquisition Date" or "Distribution Date" (as such terms are defined in Haven
Rights Agreement) will occur as a result of the approval, execution or delivery
of the Covered Agreements or any transactions contemplated thereby, as well as
additional purchases by Queens of up to 4.9% of the then outstanding Haven
Common Stock.
(u) Antitakeover Provisions Inapplicable. Haven and its
Subsidiaries have taken all actions required to exempt Haven and Queens and the
Covered Agreements or any transactions contemplated thereby, as well as
additional purchases by Queens of up to 4.9% of the then outstanding Haven
Common Stock from any provisions of an antitakeover nature in their organization
certificates and bylaws and the provisions of Section 203 of the DGCL.
(v) Material Interests of Certain Persons. Except as disclosed in
Haven's Proxy Statement for its 2000 Annual Meeting of Stockholders, no officer
or director of Haven, or any "associate" (as such term is defined in Rule 12b-2
under the Exchange Act) of any such officer or director, has any material
interest in any material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of Haven or any of its
Subsidiaries.
(w) Insurance. Haven and its Subsidiaries are presently insured,
and since December 31, 1998, have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by Haven and its Subsidiaries are in full force and effect, Haven and
its Subsidiaries are not in default thereunder and all material claims
thereunder have been filed in due and timely fashion.
(x) Investment Securities; Borrowings. (i) Except for investments
in FHLB stock and pledges to secure FHLB borrowings and reverse repurchase
agreements entered into in arms-length transactions pursuant to customary
commercial terms and conditions and entered into in the ordinary course of
business, and restrictions that exist for securities to be classified as "held
to maturity," none of the investments reflected in the consolidated balance
sheet of Haven included in Haven's Report on Form 10-K for the year ended
December 31, 1999, and none of the investment securities held by it or any of
its Subsidiaries since December 31, 1999, is subject to any restriction
(contractual or statutory) that would materially impair the ability of the
entity holding such investment freely to dispose of such investment at any time.
(ii) Neither Haven nor any Subsidiary is a party to or has
agreed to enter into an exchange-traded or over-the-counter equity, interest
rate, foreign exchange or other swap, forward, future, option, cap, floor or
collar or any other contract that is not included on the consolidated statements
of condition and is a derivative contract (including various combinations
thereof) (each, a "Derivatives Contract") or owns securities that (A) are
referred to generically as "structured notes," "high risk mortgage derivatives,"
"capped floating rate notes" or "capped floating rate mortgage derivatives" or
(B) are likely to have changes in value as a result of interest or exchange rate
changes that significantly exceed normal changes in value attributable to
interest or exchange rate changes, except for those Derivatives Contracts and
other instruments legally purchased or entered into in the ordinary course of
business, consistent with safe and sound banking practices and regulatory
guidance, and listed (as of March 31, 2000) in Haven's Disclosure Letter or
disclosed in Haven's Reports filed on or prior to the date hereof.
(iii) Set forth in Haven's Disclosure Letter is a true and
complete list of Haven's borrowed funds (excluding deposit accounts) as of June
23, 2000.
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(y) Indemnification. Neither Haven nor any of its Subsidiaries is
a party to any indemnification agreement with any of its present or future
directors, officers, employees, agents or other persons who serve or have served
as a director or officer of Haven or any of its Subsidiaries or who serve or
have served in any other capacity with any other enterprise at the request of
Haven (a "Covered Person"), except as provided in Haven's employment agreements
with Covered Persons ("Employment Agreements"), the organization certificate or
bylaws of Haven or any of its Subsidiaries, or as required by any applicable law
or regulation, and, to the best knowledge of Haven, there are no claims for
which any Covered Person would be entitled to indemnification under the
organization certificate or bylaws of Haven or any of its Subsidiaries, under
any applicable law or regulation or under any indemnification agreement.
(z) Books and Records. The books and records of Haven and its
Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect in all
material respects the substance of events and transactions that should be
included therein.
(aa) Corporate Documents. Haven has made available to Queens true
and complete copies of its certificate of incorporation and bylaws and of CFS
Bank's organization certificate and bylaws. The minute books of Haven and each
Significant Subsidiary contain records of all meetings and other corporate
actions taken by their respective boards of directors (and each committee
thereof) and their stockholders and are complete and correct in all material
respects.
(bb) Liquidation Account. The Merger will not result in any
payment or distribution payable out of the liquidation account of CFS Bank
established in connection with CFS Bank's conversion from mutual to stock form.
(cc) Tax Treatment of the Merger. As of the date hereof, Haven has
no knowledge of any fact or circumstance that would prevent the transactions
contemplated by this Agreement from qualifying as a reorganization under the
Code.
(dd) Beneficial Ownership of Queens Common Stock. As of the date
hereof, Haven does not beneficially own any shares of Queens Common Stock and
does not have any option, warrant or right of any kind to acquire the beneficial
ownership of any shares of Queens Common Stock.
(ee) Registration Statement. The information regarding Haven to be
supplied by Haven for inclusion in (i) the Registration Statement (as defined
herein) on Form S-4 and/or such other form(s) as may be appropriate to be filed
under the Securities Act of 1933, as amended ("Securities Act"), with the SEC by
Queens for the purpose of, among other things, registering the Queens Common
Stock to be issued to Haven's stockholders in the Merger (as amended or
supplemented from time to time, the "Registration Statement"), or (ii) the joint
proxy statement to be filed with the SEC by Haven and Queens under the Exchange
Act and distributed in connection with Haven's and Queens' respective meeting of
stockholders to vote upon this Agreement (together with the prospectus included
in the Registration Statement, the "Joint Proxy Statement-Prospectus") will not,
at the time such Registration Statement becomes effective, 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 therein, in light of
the circumstances under which they are made, not misleading.
Section 2.4. Representations and Warranties of Queens. Subject to
Sections 2.1 and 2.2, Queens represents and warrants to Haven that, except as
specifically disclosed in Queens' Disclosure Letter:
(a) Organization. (i) Queens is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is duly registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended. Queens Bank is a bank duly organized, validly existing
and in good standing under the laws of the State of New York and is a
wholly-owned Subsidiary of Queens. Each Significant Subsidiary of Queens, other
than Queens Bank is a corporation, limited liability company or partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of Queens and its
Significant Subsidiaries has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
(ii) Queens and each of its Subsidiaries has the requisite
corporate power and authority, and is duly qualified and is in good standing, to
do business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary.
(iii) Queens' Disclosure Letter sets forth all of Queens'
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations), including the corresponding percentage ownership, in which
Queens owns, directly or indirectly, 5% or more of the ownership interests as of
the date of this Agreement and indicates for each such Subsidiary, as of such
date, its jurisdiction of organization and the jurisdiction(s) wherein it is
qualified to do business. All such Subsidiaries and ownership interests are in
compliance with all applicable laws, rules and regulations relating to direct
investments in equity
A-13
ownership interests. Queens owns, either directly or indirectly, all of the
outstanding capital stock of each of its Subsidiaries. No Subsidiary of Queens
other than Queens Bank is an "insured depository institution" as defined in the
FDIA and the applicable regulations thereunder. All of the shares of capital
stock of each of the Subsidiaries held by Queens or any of its other
Subsidiaries are duly authorized and validly issued, fully paid and
nonassessable and not subject to any preemptive rights and are owned by Queens
or a Subsidiary of Queens free and clear of any claims, liens, encumbrances or
restrictions (other than those imposed by applicable federal and state
securities laws) and there are no agreements or understandings with respect to
the voting or disposition of any such shares.
(iv) The deposits of Queens Bank are insured by the Bank
Insurance Fund or SAIF of the FDIC to the extent provided in the FDIA.
(b) Capital Structure. (i) As of the date of this Agreement, the
authorized capital stock of Queens consists of 60,000,000 shares of Queens
Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share
("Queens Preferred Stock"). As of the date of this Agreement, (A) 20,764,910
shares of Queens Common Stock were issued and outstanding, (B) no shares of
Queens Preferred Stock were issued and outstanding, (C) no shares of Queens
Common Stock were reserved for issuance, except that 2,400,290 shares of Queens
Common Stock were reserved for issuance pursuant to the Queens County Bancorp,
Inc. 1993 Incentive Stock Option Plan, the Queens County Savings Bank 1993
Directors' Stock Option Plan and the Queens County Savings Bank 1997 Stock
Option Plan, (D) no shares of Queens Preferred Stock were reserved for issuance
except pursuant to the Queens Rights Agreement and (E) 10,205,783 shares of
Queens Common Stock were held by Queens in its treasury or by its Subsidiaries.
The authorized capital stock of Queens Bank consists of 30,000,000 shares of
common stock, par value $0.01 per share, and 5,000,000 shares of preferred
stock, par value $0.01 per share. As of the date of this Agreement, 1,000 shares
of such common stock were outstanding, no shares of such preferred stock were
outstanding and all outstanding shares of such common stock were, and as of the
Effective Time will be, owned by Queens. All outstanding shares of capital stock
of Queens and Queens Bank are duly authorized and validly issued, fully paid and
nonassessable and not subject to any preemptive rights and, with respect to
shares held by Queens in its treasury or by its Significant Subsidiaries, are
free and clear of all liens, claims, encumbrances or restrictions (other than
those imposed by applicable federal or state securities laws) and, as of the
date hereof, there are no agreements or understandings with respect to the
voting or disposition of any such shares.
(ii) As of the date of this Agreement, no Voting Debt of
Queens is issued or outstanding.
(iii) As of the date of this Agreement, neither Queens nor
any of its Subsidiaries has or is bound by any outstanding options, warrants,
calls, rights, convertible securities, commitments or agreements of any
character obligating Queens or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, any additional shares of capital
stock of Queens or any of its Subsidiaries or obligating Queens or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, convertible security, commitment or agreement. As of the date hereof,
there are no outstanding contractual obligations of Queens or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of Queens or any of its Subsidiaries.
(c) Authority. Queens has the requisite corporate power and
authority to enter into this Agreement and, subject to approval of this
Agreement by the requisite vote of Queens' stockholders and receipt of all
required regulatory or governmental approvals, as contemplated by Section 5.1(b)
of this Agreement, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, and, subject to the approval of this
Agreement by Queens' stockholders, the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
actions on the part of Queens. This Agreement has been duly executed and
delivered by Queens and constitutes a valid and binding obligation of Queens,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, whether
applied in a court of law or a court of equity.
(d) Stockholder Approval; Fairness Opinion. The affirmative vote
of the holders of a majority of the outstanding shares of the Queens Common
Stock entitled to vote on this Agreement is the only vote of the stockholders of
Queens required for approval of this Agreement by Queens and the consummation of
the Merger and the related transactions contemplated hereby. Queens has received
the written opinion of Salomon Smith Barney to the effect that, as of the date
hereof, the Merger Consideration is fair, from a financial point of view, to
Queens.
(e) No Violations. The execution, delivery and performance of this
Agreement by Queens do not, and the consummation of the transactions
contemplated hereby will not, constitute (i) assuming receipt of all Requisite
Regulatory Approvals and requisite stockholder approvals, a breach or violation
of, or a default under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or instrument of
Queens or any of its Significant Subsidiaries, or to which Queens or any of its
Significant Subsidiaries (or any of their respective properties) is subject,
(ii) a breach
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or violation of, or a default under, the certificate of incorporation or bylaws
of Queens or the similar organizational documents of any of its Significant
Subsidiaries or (iii) a breach or violation of, or a default under (or an event
which, with due notice or lapse of time or both, would constitute a default
under), or result in the termination of, accelerate the performance required by,
or result in the creation of any lien, pledge, security interest, charge or
other encumbrance upon any of the properties or assets of Queens or any of its
Subsidiaries, under, any of the terms, conditions or provisions of any note,
bond, indenture, deed of trust, loan agreement or other agreement, instrument or
obligation to which Queens or any of its Subsidiaries is a party, or to which
any of their respective properties or assets may be subject; and the
consummation of the transactions will not require any approval, consent or
waiver under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or the approval, consent or waiver of any other
party to any such agreement, indenture or instrument, other than (w) the
approval of the holders of a majority of the outstanding shares of Queens Common
Stock referred to in Section 2.4(d), (x) the Requisite Regulatory Approvals, (y)
the declaration of effectiveness by the SEC of the Registration Statement and
the SEC's approval of Queens' and Haven's proxy materials and (z) such
approvals, consents or waivers as are required under the federal and state
securities or "blue sky" laws in connection with the transactions contemplated
by this Agreement.
(f) Reports. (i) As of their respective dates, none of the reports
or other statements filed by Queens, on or subsequent to December 31, 1998, with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
(collectively, "Queens' Reports"), contained, or will contain, any untrue
statement of a material fact or omitted or will 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. Each
of the financial statements of Queens included in Queens' Report complied as of
their respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto and have been prepared in accordance with GAAP
applied on a consistent basis during the period involved (except as may be
indicated in the notes thereto or, in the case of unaudited financial
statements, as permitted by Form 10- Q of the SEC). Each of the consolidated
statements of condition, consolidated statements of operations, consolidated
statements of cash flows and consolidated statements of changes in stockholders'
equity contained or incorporated by reference in Queens' Reports (including in
each case any related notes and schedules) fairly presented, or will fairly
present, as the case may be, the financial condition, results of operations,
stockholders' equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein (subject, in the
case of unaudited interim statements, to normal year-end audit adjustments that
are not material in amount or effect), in each case in accordance with GAAP,
except as may be noted therein.
(ii) Queens and each of its Subsidiaries have each timely
filed all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file since December 31, 1999 with (A) the Federal Reserve Board (the "FRB"), (B)
the New York Banking Department, (C) the SEC, (D) the NASD and (E) any other
SRO, and have paid all fees and assessments due and payable in connection
therewith.
(g) Absence of Certain Changes or Events. Except as disclosed in
Queens' Reports filed on or prior to the date of this Agreement, from the date
of March 31, 2000, there has not been any Material Adverse Effect with respect
to Queens.
(h) Absence of Claims. No litigation, proceeding, controversy,
claim or action before any court or Governmental Entity is pending against
Queens or any of its Subsidiaries, and, to the best of Queens' knowledge, no
such litigation, proceeding, controversy, claim or action has been threatened.
(i) Absence of Regulatory Actions. Neither Queens nor any of its
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or any commitment letter or similar written
undertaking to, or is subject to any action, proceeding, order or directive by,
or is a recipient of any extraordinary supervisory letter from, any Bank
Regulator, or has adopted any board resolutions at the request of any Bank
Regulator, nor has it been advised by any Bank Regulator that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar written undertaking.
(j) Taxes. All federal, state, local and foreign tax returns
required to be filed by or on behalf of Queens or any of its Subsidiaries have
been timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all material respects. All taxes shown on
such returns, all taxes required to be shown on returns for which extensions
have been granted and all other taxes required to be paid by Queens or any of
its Subsidiaries have been paid in full or adequate provision has been made for
any such taxes on Queens' balance sheet (in accordance with GAAP). For purposes
of this Section 2.4(j), the term "taxes" shall include all federal, state, local
or foreign taxes, charges or other assessments, including, without limitation,
income, franchise, gross receipts, real and personal property, real property
transfer and gains, wage and employment taxes.
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(k) Agreements. (i) Except for arrangements made in the ordinary
course of business, as of the date hereof Queens and its Subsidiaries are not
bound by any material contract (as defined in Item 601(b)(10) of Regulation S-K)
to be performed after the date hereof that is required to but has not been filed
with or incorporated by reference in Queens' Report. Except as disclosed in
Queens' Report filed prior to the date of this Agreement, as of the date hereof
neither Queens nor any of its Subsidiaries is a party to an oral or written
agreement containing covenants that limit the ability of Queens or any of its
Subsidiaries to compete in any line of business or with any person, or that
involve any restriction on the geographic area in which, or method by which,
Queens (including any successor thereof) or any of its Subsidiaries may carry on
its business (other than as may be required by law or any regulatory agency).
(ii) Neither Queens nor any of its Subsidiaries is in default
under or in violation of any provision of any note, bond, indenture, mortgage,
deed of trust, loan agreement, lease or other agreement to which it is a party
or by which it is bound or to which any of its respective properties or assets
is subject.
(iii) Queens and each of its Subsidiaries owns or possesses
valid and binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, service marks and trademarks used in its
businesses, and neither Queens nor any of its Subsidiaries has received any
notice of conflict with respect thereto that asserts the right of others. Each
of Queens and its Subsidiaries has performed all the obligations required to be
performed by it and are not in default under any contact, agreement, arrangement
or commitment relating to any of the foregoing.
(l) Queens Common Stock. The shares of Queens Common Stock to be
issued pursuant to this Agreement, when issued in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully paid and
non-assessable and not subject to any preemptive rights.
(m) Labor Matters. Neither Queens nor any of its Subsidiaries is
or has ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization with respect to its employees, nor is Queens or any
of its Subsidiaries the subject of any proceeding asserting that it has
committed an unfair labor practice or seeking to compel it or any such
Subsidiary to bargain with any labor organization as to wages and conditions of
employment, nor is there any strike, other labor dispute or organizational
effort involving Queens or any of its Subsidiaries pending or, to Queens'
knowledge, threatened. Queens and its Subsidiaries are in compliance with
applicable laws regarding employment of employees and retention of independent
contractors and are in compliance with applicable employment tax laws.
(n) Employee Benefit Plans. Queens' Disclosure Letter contains a
complete and accurate list as of the date hereof of all pension, retirement,
stock option, stock purchase, stock ownership, savings, stock appreciation
right, profit sharing, deferred compensation, consulting, bonus, group
insurance, severance and other benefit plans, contracts, agreements and
arrangements, including, but not limited to, "employee benefit plans," as
defined in Section 3(3) of ERISA, incentive and welfare policies, contracts,
plans and arrangements and all trust agreements related thereto with respect to
any present or former directors, officers or other employees of Queens or any of
its Subsidiaries (hereinafter referred to collectively as the "Queens Employee
Plans"). All of the Queens Employee Plans comply in all respects with all
applicable requirements of ERISA, the Code and other applicable laws; there has
occurred no "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) which is likely to result in the imposition of any
penalties or taxes under Section 502(i) of ERISA or Section 4975 of the Code
upon Queens or any of its Subsidiaries. No liability to the PBGC has been or is
expected by Queens or any of its Subsidiaries to be incurred with respect to any
Queens Employee Plan which is subject to Title IV of ERISA ("Queens Pension
Plan"), or with respect to any "single-employer plan" (as defined in Section
4001(a) of ERISA) currently or formerly maintained by Queens or any entity which
is considered one employer with Queens under Section 4001(b)(1) of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). No Queens Pension Plan had an
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, as of the last day of the end of the most recent plan year ending
prior to the date hereof; the fair market value of the assets of each Queens
Pension Plan exceeds the present value of the "benefit liabilities" (as defined
in Section 4001(a)(16) of ERISA) under such Queens Pension Plan as of the end of
the most recent plan year with respect to the respective Queens Pension Plan
ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such Queens Pension
Plan as of the date hereof; and no notice of a "reportable event" (as defined in
Section 4043 of ERISA) for which the 30-day reporting requirement has not been
waived has been required to be filed for any Queens Pension Plan within the
12-month period ending on the date hereof. Neither Queens nor any of its
Subsidiaries has provided, or is required to provide, security to any Queens
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code. Neither Queens, its Subsidiaries, nor any ERISA
Affiliate has contributed to any "multiemployer plan," as defined in Section
3(37) of ERISA, on or after September 26, 1980. Each Queens Employee Plan that
is an "employee pension benefit plan" (as defined in Section 3(2) of ERISA) and
which is intended to be qualified under Section 401(a) of the Code (a "Queens
Qualified Plan") has received a favorable determination letter from the IRS, and
Queens and its Subsidiaries are not aware of any circumstances likely to result
in revocation of any such favorable determination letter. Each Queens Qualified
Plan that is an
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"employee stock ownership plan" (as defined in Section 4975(e)(7) of the Code)
has satisfied all of the applicable requirements of Sections 409 and 4975(e)(7)
of the Code and the regulations thereunder in all respects and any assets of any
such Queens Qualified Plan that are not allocated to participants' individual
accounts are pledged as security for, and may be applied to satisfy, any
securities acquisition indebtedness. There is no pending or, to Queens'
knowledge, threatened litigation, administrative action or proceeding relating
to any Queens Employee Plan. As of the date of this Agreement, there has been no
announcement or commitment by Queens or any of its Subsidiaries to create an
additional Queens Employee Plan, or to amend any Queens Employee Plan, except
for amendments required by applicable law which do not materially increase the
cost of such Queens Employee Plan; and, Queens and its Subsidiaries do not have
any obligations for post-retirement or post-employment benefits under any Queens
Employee Plan that cannot be amended or terminated upon 60 days' notice or less
without incurring any liability thereunder, except for coverage required by Part
6 of Title I of ERISA or Section 4980B of the Code, or similar state laws, the
cost of which is borne by the insured individuals. With respect to Queens or any
of its Subsidiaries, for the Employee Plans listed in Queens' Disclosure Letter,
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment or series of
payments by Queens or any of its Subsidiaries to any person which is an "excess
parachute payment" (as defined in Section 280G of the Code), increase or secure
(by way of a trust or other vehicle) any benefits payable under any Queens
Employee Plan or accelerate the time of payment or vesting of any such benefit.
All contributions required to be made under the terms of any Queens Employee
Plan have been timely made or have been reflected on Queens' Reports. With
respect to each Queens Employee Plan, Queens has supplied to Haven a true and
correct copy of (A) the annual report on the applicable form of the Form 5500
series filed with the IRS for the most recent three plan years, if required to
be filed, (B) such Queens Employee Plan, including amendments thereto, (C) each
trust agreement, insurance contract or other funding arrangement relating to
such Queens Employee Plan, including amendments thereto, (D) the most recent
summary plan description and summary of material modifications thereto for such
Queens Employee Plan, if the Queens Employee Plan is subject to Title I of
ERISA, (E) the most recent actuarial report or valuation if such Queens Employee
Plan is a Queens Pension Plan and any subsequent changes to the actuarial
assumptions contained therein and (F) the most recent determination letter
issued by the IRS if such Queens Employee Plan is a Queens Qualified Plan.
(o) Title to Assets. Queens and each of its Subsidiaries has good
and marketable title to its properties and assets (including any intellectual
property asset such as any trademark, service mark, trade name or copyright) and
property acquired in a judicial foreclosure proceeding or by way of a deed in
lieu of foreclosure or similar transfer, other than property as to which it is
lessee, in which case the related lease is valid and in full force and effect.
Each lease pursuant to which Queens or any of its Subsidiaries is lessor is
valid and in full force and effect and no lessee under any such lease is in
default or in violation of any provisions of any such lease. All material
tangible properties of Queens and each of its Subsidiaries are in a good state
of maintenance and repair, conform with all applicable ordinances, regulations
and zoning laws and are considered by Queens to be adequate for the current
business of Queens and its Subsidiaries.
(p) Compliance with Laws. Queens and each of its Subsidiaries has
all permits, licenses, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with, all Governmental
Entities that are required in order to permit it to carry on its business as it
is presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and, to the best knowledge of
Queens, no suspension or cancellation of any of them is threatened. Since the
date of its incorporation, the corporate affairs of Queens have not been
conducted in violation of any law, ordinance, regulation, order, writ, rule,
decree or approval of any Governmental Entity. The businesses of Queens and its
Subsidiaries are not being, and have not been conducted in violation of any law,
ordinance, regulation, order, writ, rule, decree or condition to approval of any
Governmental Entity or any policy or procedure.
(q) Fees. Other than the financial advisory services performed for
Queens by Salomon Smith Barney, the fee for which is set forth in Queens'
Disclosure Letter, neither Queens nor any of its Subsidiaries, nor any of their
respective officers, directors, employees or agents, has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for Queens or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
(r) Environmental Matters. With respect to Queens and each of its
Subsidiaries:
(i) Each of Queens and its Subsidiaries, the Participation
Facilities and, to Queens' knowledge, the Loan Properties are, and have been, in
substantial compliance with, and are not liable under, all Environmental Laws;
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
Queens' knowledge, threatened, before any court, governmental agency or board or
other forum against Queens or any of its Subsidiaries or any Participation
Facility (x) for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the presence of or
release into the environment of any Hazardous Material, whether or not occurring
at or on a site owned, leased or operated by it or any of its Subsidiaries or
any Participation Facility;
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(iii) To Queens' knowledge, there is no suit, claim, action,
demand, executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency or board
or other forum relating to or against any Loan Property (or Queens or any of its
Subsidiaries in respect of such Loan Property) (x) relating to alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or release into the
environment of any Hazardous Material, whether or not occurring at or on a site
owned, leased or operated by a Loan Property;
(iv) To Queens' knowledge, the properties currently owned or
operated by Queens or any of its Subsidiaries (including, without limitation,
soil, groundwater or surface water on, under or adjacent to the properties, and
buildings thereon) are not contaminated with and do not otherwise contain any
Hazardous Material other than as permitted under applicable Environmental Law;
(v) Neither Queens nor any of its Subsidiaries has received
any notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign governmental
entity or any third party indicating that it may be in violation of, or liable
under, any Environmental Law;
(vi) To Queens' knowledge, (A) there are no underground
storage tanks on, in or under any properties owned or operated by Queens or any
of its Subsidiaries, any Participation Facility or any Loan Property, and (B) no
underground storage tanks have been closed or removed from any properties owned
or operated by Queens or any of its Subsidiaries, any Participation Facility or
any Loan Property; and
(vii) To Queens' knowledge, during the period of (l) Queens'
or any of its Subsidiaries' ownership or operation of any of their respective
current properties, (m) Queens' or any of its Subsidiaries' participation in the
management of any Participation Facility or (n) Queens' or any of its
Subsidiaries' holding of a security interest in a Loan Property, there has been
no contamination by or release of Hazardous Materials in, on, under or affecting
such properties. To Queens' knowledge, prior to the period of (x) Queens' or any
of its Subsidiaries' ownership or operation of any of their respective current
properties, (y) Queens' or any of its Subsidiaries' participation in the
management of any Participation Facility or (z) Queens' or any of its
Subsidiaries' holding of a security interest in a Loan Property, there was no
contamination by or release of Hazardous Material in, on, under or affecting
such properties.
(s) Deposits. As of the date hereof, none of the deposits of
Queens or any of its Subsidiaries is a "brokered" deposit.
(t) Insurance. Queens and its Subsidiaries are presently insured,
and since December 31, 1998, have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by Queens and its Subsidiaries are in full force and effect, Queens
and its Subsidiaries are not in default thereunder and all material claims
thereunder have been filed in due and timely fashion.
(u) Borrowings. Set forth in Queens' Disclosure Letter is a true
and complete list of Queens' borrowed funds (excluding deposit accounts) as of
the date hereof.
(v) Books and Records. The books and records of Queens and its
Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect in all
material respects the substance of events and transactions that should be
included therein.
(w) Corporate Documents. Queens has made available to Haven true
and complete copies of its certificate of incorporation and bylaws and of Queens
Bank's organization certificate and bylaws. The minute books of Queens and each
Significant Subsidiary contain records of all meetings and other corporate
actions taken by their respective boards of directors (and each committee
thereof) and their stockholders and are complete and correct in all material
respects.
(x) Tax Treatment of the Merger. As the date hereof, Queens has no
knowledge of any fact or circumstance that would prevent the transactions
contemplated by this Agreement from qualifying as a reorganization under the
Code.
(y) Beneficial Ownership of Haven Common Stock. As of the date
hereof, Queens does not beneficially own any shares of Haven Common Stock and,
other than as contemplated by the Option Agreement, does not have any option,
warrant or right of any kind to acquire the beneficial ownership of any shares
of Haven Common Stock.
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(z) Registration Statement. The information to be supplied by
Queens for inclusion in (i) the Registration Statement or (ii) the Joint Proxy
Statement-Prospectus will not, at the time such Registration Statement becomes
effective, 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 therein, in light of the circumstances under which they are made, not
misleading.
ARTICLE III
CONDUCT PENDING THE MERGER
Section 3.1. Conduct of Haven's Business Prior to the Effective Time.
Except as expressly provided in this Agreement, during the period from the date
of this Agreement to the Effective Time, Haven shall, and shall cause its
Subsidiaries to, use commercially reasonable efforts to (i) conduct its business
in the ordinary course consistent with past practice; (ii) maintain and preserve
intact its business organization, properties, leases, employees and advantageous
business relationships and retain the services of its officers and key
employees, (iii) not knowingly take any action which would adversely affect or
delay the ability of Haven, CFS Bank, Queens or Queens Bank to perform their
respective covenants and agreements on a timely basis under this Agreement, (iv)
not knowingly take any action which would adversely affect or delay the ability
of Haven, CFS Bank, Queens or Queens Bank to obtain any necessary approvals,
consents or waivers of any governmental authority required for the transactions
contemplated hereby or which would reasonably be expected to result in any such
approvals, consents or waivers containing any material condition or restriction,
and (v) not knowingly take any action that results in or is reasonably likely to
have a Material Adverse Effect on Haven or CFS Bank.
Section 3.2. Forbearance by Haven. Without limiting the covenants set
forth in Section 3.1 hereof, except as otherwise provided in this Agreement and
except to the extent required by law or regulation or any Bank Regulator, during
the period from the date of this Agreement to the Effective Time, Haven shall
not, and shall not permit any of its Subsidiaries to, without the prior written
consent of Queens, which consent shall not be unreasonably withheld or delayed:
(a) change any provisions of the certificate of incorporation or
bylaws of Haven or the similar governing documents of any of its Subsidiaries;
(b) issue any shares of capital stock or change the terms of any
outstanding stock options or warrants, issue, grant or sell any option, warrant,
call, commitment, stock appreciation right, right to purchase or agreement of
any character relating to the authorized or issued capital stock of Haven except
pursuant to (i) the exercise of stock options granted pursuant to the Haven
Option Plans in existence prior to the date hereof, (ii) the exercise of stock
options or warrants as set forth in Haven's Disclosure Letter or consistent with
Section 1.4 of this Agreement, (iii) the Option Agreement or (iv) the terms of
the Haven Rights Agreement; adjust, split, combine or reclassify any capital
stock; make, declare or pay any dividend (except for (A) Haven's regular
quarterly dividend of $0.075, and (B) dividends by wholly-owned Subsidiaries) or
make any other distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock. As promptly as practicable following the date of this Agreement, the
Board of Directors of Haven shall cause its regular quarterly dividend record
dates and payment dates to be the same as Queens' regular quarterly dividend
record dates and payments dates for Queens Common Stock (i.e., Haven's quarterly
dividend expected to have a record date in September or October, 2000 shall be
postponed to conform to the Queens dividend that is expected to have a record
date in November, 2000), and Haven shall not thereafter change its regular
dividend payment dates and record dates.
(c) other than in the ordinary course of business consistent with
past practice and pursuant to policies currently in effect (i) sell, transfer,
mortgage, encumber or otherwise dispose of any of its material properties,
leases or assets to any individual, corporation or other entity other than a
direct or indirect wholly-owned Subsidiary of Haven or (ii) cancel, release or
assign any indebtedness in individual amounts of greater than $100,000 of any
individual, corporation or other entity, except pursuant to contracts or
agreements in force at the date of this Agreement and which have been disclosed
to Queens;
(d) except to the extent required by law or as disclosed in
Section 3.2(d) of Haven's Disclosure Letter or specifically provided for
elsewhere herein, increase the compensation or fringe benefits of any of its
employees or directors other than general increases in compensation to employees
having a title of Vice President and below made in the ordinary course of
business consistent with past practice, which increases do not exceed in any
individual case 15% of the annual rate of base salary in effect on the date of
this Agreement for such individual and 6% in the aggregate of the annual rate of
base year salary in effect on the date of this Agreement for such group, or pay
any pension or retirement allowance not required by any existing plan or
agreement to any such employees or directors, or become a party to, amend or
commit itself to fund or otherwise establish any trust or account related to any
Haven Employee Plan (as defined herein) with or for the benefit of any employee
or director; or voluntarily accelerate the vesting of any stock options or other
compensation or benefit;
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(e) except as contemplated by Section 4.2, change its method of
accounting as in effect at December 31, 1999, except as required by changes in
GAAP as concurred in by Haven's independent auditors;
(f) except as set forth in Haven's Disclosure Letter, settle any
claim, action or proceeding involving any liability of Haven or any of its
Subsidiaries for money damages in excess of $100,000 or impose material
restrictions upon the operations of Haven or any of its Subsidiaries;
(g) acquire or agree to acquire, by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets, in each case which are
material, individually or in the aggregate, to Haven, except in satisfaction of
debts previously contracted;
(h) except pursuant to commitments existing at the date hereof
which have previously been disclosed to Queens, make any real estate loans
secured by undeveloped land or real estate located outside the States of New
York, New Jersey and Connecticut (other than real estate secured by one-to-four
family homes) or make any construction loan (other than construction loans
secured by one-to-four family homes) outside the States of New York, New Jersey
and Connecticut;
(i) establish or commit to the establishment of any new branch or
other office facilities other than as set forth in Haven's Disclosure Letter;
(j) take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(k) make any investment in any debt security, including
mortgage-backed and mortgage related securities, other than U.S. government and
U.S. government agency securities with final maturities not greater than two
years or reinvestments of interest on, and prepayments and payments at maturity
of the principal of mortgage-backed or mortgage related securities in
mortgage-backed or mortgage related securities that are purchased in the
ordinary course of business consistent with past practice;
(l) other than by and among CFS Bank and any of its Subsidiaries,
make any investment either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets of any other
individual, corporation or other entity other than (i) in the ordinary course of
business consistent with past practice in individual amounts not to exceed
$50,000, (ii) investments for Haven's portfolio made in accordance with Section
3.2(k), (iii) the purchase of FHLB stock necessary to maintain Haven's
membership status with the FHLB of New York and (iv) pursuant to contractual
commitments existing as of the date hereof as set forth in Section 3.2(l) of
Haven's Disclosure Letter;
(m) enter into any contract or agreement that is not terminable
within 30 days, or make any change in, or terminate, any of its leases or
contracts, other than with respect to those involving aggregate payments of less
than, or the provision of goods or services with a market value of less than
$100,000 per annum and other than contracts or agreements permitted by other
clauses of this Section 3.2;
(n) make, renegotiate, renew, increase, extend or purchase any (i)
loan, lease (credit equivalent), advance, credit enhancement or other extension
of credit, or make any commitment in respect of any of the foregoing, except (a)
in conformity with existing lending practices in amounts not to exceed $500,000
to any individual borrower (except for commercial real estate loans which shall
be limited to $3.5 million to any individual borrower and except for small
business and commercial loans which shall be limited to $300,000 to any
individual borrower) or (b) loans or advances as to which Haven or any
Subsidiary has a legally binding obligation to make such loan or advances as of
the date hereof; provided, however, that Haven and its Subsidiaries may not
make, renegotiate, renew, increase, extend or purchase any loan that is
underwritten based on no verification of income or loans commonly known or
referred to as "no documentation loans;" or (ii) loans, advances or commitments
to directors, officers or other affiliated parties of Haven or any of its
Subsidiaries;
(o) incur any additional borrowings beyond those set forth on
Haven's Disclosure Letter other than short-term (two years or less) FHLB
borrowings and reverse repurchase agreements consistent with past practice, or
pledge any of its assets to secure any borrowings other than as required
pursuant to the terms of borrowings of Haven or any Subsidiary in effect at the
date hereof or in connection with borrowings or reverse repurchase agreements
permitted hereunder. Deposits shall not be deemed to be borrowings within the
meaning of this paragraph;
(p) make any capital expenditures in excess of $50,000 per
expenditure other than (i) pursuant to binding commitments existing on the date
hereof, (ii) expenditures necessary to replace or maintain existing assets in
good repair and (iii) expenditures necessary to establish any new branches set
forth in Section 3.2(i) of Haven's Disclosure Letter;
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(q) make any investment or commitment to invest in real estate or
in any real estate development project, other than real estate acquired in
satisfaction of defaulted mortgage loans and investments or commitments approved
by the Board of Directors of Haven or CFS Bank prior to the date of this
Agreement and disclosed in writing to Queens in Section 3.2(q) of Haven's
Disclosure Letter;
(r) elect to the Board of Directors of Haven any person who is not
a member of the Board of Directors of Haven as of the date of this Agreement;
(s) make any tax election other than in the ordinary course of
business consistent with past practice; or
(t) agree or commit to take any action that is prohibited by this
Section 3.2.
In the event that Queens does not respond in writing to Haven
within four business days of receipt by Queens of a written request for Haven to
engage in any of the actions for which Queens' prior written consent is required
pursuant to this Section 3.2, Queens shall be deemed to have consented to such
action. Any request by Haven or response thereto by Queens shall be made in
accordance with the notice provisions of Section 8.7, shall note that it is a
request pursuant to this Section 3.2 and shall state that a failure to respond
within four business days shall constitute consent.
Section 3.3. Conduct of Queens' Business Prior to the Effective Time.
Except as otherwise provided in this Agreement and except to the extent required
by law or regulation or any Bank Regulator, during the period from the date of
this Agreement to the Effective Time, Queens shall not, and shall not permit
Queens Bank to, materially change the nature of its or Queens Bank's business
plan or eliminate any material business line in existence on the date hereof
without first consulting with the Chairman of the Board and Chief Executive
Officer or the President of Haven.
Section 3.4. Forbearance by Queens. Except as otherwise provided in
this Agreement and except to the extent required by law or regulation or any
Bank Regulator, during the period from the date of this Agreement to the
Effective Time, Queens shall not, and shall not permit any of its Subsidiaries
to, without the prior written consent of Haven, which consent shall not be
unreasonably withheld or delayed:
(u) change any provisions of the certificate of incorporation or
bylaws of Queens, other than to increase the authorized capital stock of Queens
or issue shares of preferred stock thereunder;
(v) make, declare or pay any dividend (except for Queens' regular
quarterly dividend, which shall not be increased by more than $0.05 from the
prior quarter's dividend, and dividends of Queens' wholly-owned subsidiaries) or
make any other distribution on its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock;
(w) knowingly take any action which (1) would materially adversely
affect its ability to consummate the Merger; (2) is reasonably likely to prevent
or impede the Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code; or (3) is intended or is reasonably likely to result in
(i) any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the Merger set forth in Article V
not being satisfied or (iii) a material violation of any provision of this
Agreement;
(x) change its method of accounting as in effect at December 31,
1999, except as permitted by GAAP as concurred in by Queens' independent
auditors;
(y) elect to the Board of Directors of Queens any person who is
not a member of the Board of Directors of Queens as of the date of this
Agreement other than to fill a vacancy that arises due to the death, disability,
resignation or retirement of a director and if, within two years after the
Effective Time, a New Queens Director, New Queens Bank Director or Continuing
CFS Bank Director ceases to be a director of Queens, Queens Bank or CFS Bank,
respectively, thereby creating a vacancy on the Queens Board of Directors,
Queens Bank Board of Directors or the CFS Bank Board of Directors (so long as it
shall exist), such Board of Directors shall elect a new member, selected by
Queens, in its discretion. Queens shall give first consideration to persons who
were members of the Haven Board as of the date hereof to fill such vacancy;
(z) enter into an agreement with respect to an Acquisition
Transaction (as defined herein) with a third party which is conditioned on
Queens not completing the Merger; provided, that the foregoing shall not prevent
Queens or any of its Subsidiaries from acquiring any other assets or businesses
or from discontinuing or disposing of any of its assets or business if such
action is, in the reasonable judgment of Queens desirable in the conduct of the
business of Queens and its Subsidiaries and would not, in the reasonable
judgment of Queens, likely delay the Effective Time to a date subsequent to the
date set forth in Section 7.1
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of this Agreement. For purposes of this Agreement, "Acquisition Transaction"
shall mean (x) a merger or consolidation, or any similar transaction, involving
Queens, (y) a purchase, lease or other acquisition of all or substantially all
of the assets of Queens or (z) a purchase or other acquisition (including by way
of merger, consolidation, share exchange or otherwise) of securities
representing 15% or more of the voting power of Queens; provided, that the term
"Acquisition Transaction" does not include any internal merger or consolidation
involving only Queens and its Subsidiaries; or
(aa) agree or commit to take any action that is prohibited by this
Section 3.4.
ARTICLE IV
COVENANTS
Section 4.1. Acquisition Proposals. Haven agrees that neither it nor
any of its Subsidiaries, nor any of the respective officers and directors of
Haven or any of its Subsidiaries, shall, and Haven shall direct and use its best
efforts to cause its employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to Haven's stockholders) with respect
to a merger, consolidation or similar transaction involving, or any purchase of
all or any significant portion of the assets or any equity securities of, Haven
or any of its material Subsidiaries (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or (b) engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
prevent Haven or its Board of Directors from (i) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal or
(ii) (A) providing information in response to a request therefor by a person who
has made an unsolicited bona fide written Acquisition Proposal (an "Unsolicited
Acquisition Proposal") if the Board of Directors receives from the person so
requesting such information executed confidentiality agreement on terms
substantially equivalent to those contained in such confidentiality agreements
between Queens and Haven, dated as of April 12, 2000 (the "Confidentiality
Agreement"); or (B) engaging in any negotiations or discussions with any person
who has made an Unsolicited Acquisition Proposal, if and only to the extent
that, in each such case referred to in clause (A) or (B) above, (x) the Board of
Directors of Haven, after consultation with outside legal counsel, in good faith
deems such action to be legally necessary for the proper discharge of its
fiduciary duties under applicable law and (y) the Board of Directors of Haven,
after consultation with its financial advisor, determines in good faith that
such Acquisition Proposal, if accepted, is reasonably likely to be consummated,
taking into account all legal, financial and regulatory aspects of the proposal
and the person making the proposal and would, if consummated, result in a more
favorable transaction than the transaction contemplated by this Agreement,
taking into account the long-term prospects and interests of Haven and its
stockholders. Haven will notify Queens immediately orally (within one business
day) and in writing (within three business days) if any such Acquisition
Proposals are received by, any such information is requested from or any such
negotiations or discussions are sought to be initiated or continued with Haven
after the date hereof, the identity of the person making such inquiry, proposal
or offer and the substance thereof and will keep Queens informed of any
developments with respect thereto immediately upon the occurrence thereof.
Subject to the foregoing, Haven will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. Haven will take the
necessary steps to inform the appropriate individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this Section 4.1.
Haven will promptly request each person (other than Queens) that has executed a
confidentiality agreement prior to the date hereof in connection with its
consideration of a business combination with Haven or any of its Subsidiaries to
return or destroy all confidential information previously furnished to such
person by or on behalf of Haven or any of its Subsidiaries.
Section 4.2. Certain Policies of Haven.
(a) At the request of Queens, Haven shall cause CFS Bank to modify
and change its loan, litigation and real estate valuation policies and practices
(including loan classifications and levels of reserves) and investment and
asset/liability management policies and practices after the date on which all
Requisite Regulatory Approvals and stockholder approvals are received, and after
receipt of written confirmation from Queens that it is not aware of any fact or
circumstance that would prevent completion of the Merger, and prior to the
Effective Time so as to be consistent on a mutually satisfactory basis with
those of Queens Bank; provided, however, that Haven shall not be required to
take such action more than 30 days prior to the Effective Date; and provided,
further, that such policies and procedures are not prohibited by GAAP or any
applicable laws or regulations.
(b) Haven's representations, warranties and covenants contained in
this Agreement shall not be deemed to be untrue or breached in any respect for
any purpose as a consequence of any modifications or changes undertaken solely
on account of this Section 4.2. Queens agrees to hold harmless, indemnify and
defend Haven and its Subsidiaries, and their respective
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directors, officers and employees, for any loss, claim, liability or other
damage caused by or resulting from compliance with this Section 4.2.
Section 4.3. Access and Information.
(a) Upon reasonable notice, Haven and Queens shall (and shall
cause their respective Subsidiaries to) afford to the other and their respective
representatives (including, without limitation, directors, officers and
employees of such party and its affiliates and counsel, accountants and other
professionals retained by such party) such reasonable access during normal
business hours throughout the period prior to the Effective Time to the books,
records (including, without limitation, tax returns and work papers of
independent auditors), properties, personnel and to such other information as
either party may reasonably request; provided, however, that no investigation
pursuant to this Section 4.3 shall affect or be deemed to modify any
representation or warranty made herein. In furtherance, and not in limitation of
the foregoing, Haven shall make available to Queens all information necessary or
appropriate for the preparation and filing of all real property and real estate
transfer tax returns and reports required by reason of the Merger. Queens and
Haven shall not, and shall cause their respective representatives not to, use
any information obtained pursuant to this Section 4.3 for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. Subject
to the requirements of applicable law, each of Queens and Haven will keep
confidential, and will cause their respective representatives to keep
confidential, all information and documents obtained pursuant to this Section
4.3 or otherwise obtained in connection with the transactions contemplated by
this Agreement unless such information (i) was already known to such party or an
affiliate of such party, other than pursuant to a confidentiality agreement or
other confidential relationship, (ii) becomes available to such party or an
affiliate of such party from other sources not known by such party to be bound
by a confidentiality agreement or other obligation of secrecy, (iii) is
disclosed with the prior written approval of the other party or (iv) is or
becomes readily ascertainable from published information or trade sources. In
the event that this Agreement is terminated or the transactions contemplated by
this Agreement shall otherwise fail to be consummated, each party shall promptly
cause all copies of documents or extracts thereof containing information and
data as to another party hereto (or an affiliate of any party hereto) to be
returned to the party that furnished the same or destroyed; provided, however,
that an officer's certificate attesting as to such destruction has been provided
to the other party.
(b) During the period of time beginning on the day application
materials are deemed complete by the OTS, the FDIC and the FRB, to the extent an
application was required to be filed with such regulator, and continuing to the
Effective Time, including weekends and holidays, Haven shall cause CFS Bank to
provide Queens, Queens Bank and their authorized agents and representatives full
access to CFS Bank's offices after normal business hours for the purpose of
installing necessary wiring and equipment to be utilized by Queens Bank after
the Effective Time; provided, that:
(i) reasonable advance notice of each entry shall be given to
CFS Bank and CFS Bank approves of each entry, which approval shall not be
unreasonably withheld;
(ii) CFS Bank shall have the right to have its employees or
contractors present to inspect the work being done;
(iii) to the extent practicable, such work shall be done in a
manner that will not interfere with CFS Bank's business conducted at any
affected branch offices;
(iv) all such work shall be done in compliance with all
applicable laws and government regulations, and Queens shall be responsible for
the procurement, at Queens' expense, of all required governmental or
administrative permits and approvals;
(v) Queens shall maintain appropriate insurance satisfactory
to CFS Bank in connection with any work done by Queens' agents and
representatives pursuant to this Section 4.3;
(vi) Queens shall reimburse CFS Bank for any out-of-pocket
costs or expenses incurred by CFS Bank in connection with this undertaking; and
(vii) in the event this Agreement is terminated in accordance
with Article VI hereof, Queens, within a reasonable time period and at its sole
cost and expense, will restore such offices to their condition prior to the
commencement of any such installation.
Section 4.4. Certain Filings, Consents and Arrangements. Queens and
Haven shall (a) as soon as practicable (and in any event within 45 days after
the date hereof) make, or cause to be made, any filings and applications and
provide any notices required to be filed or provided in order to obtain all
approvals, consents and waivers of Governmental Entities and third parties
necessary or
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appropriate for the consummation of the transactions contemplated hereby or by
Option Agreement; and (b) cooperate with one another in promptly (i) determining
what filings and notices are required to be made or approvals, consents or
waivers are required to be obtained under any relevant federal or state law or
regulation or under any relevant agreement or other document and (ii) making any
such filings and notices, furnishing information required in connection
therewith and seeking timely to obtain any such approvals, consents or waivers.
Each party shall provide the other party with (i) a copy of all applications,
notices and filings referred to in this Section 4.4 together with all
attachments (other than biographical and financial disclosure forms), no less
than five days before filing such application, notice or filing with the
applicable Governmental Entity and (ii) a copy of all applications, notices and
filings referred to in this Section 4.4 filed with any Governmental Entity. Each
party shall notify the other of the receipt of any comments of any Governmental
Entity with respect to any application, notice or filing in connection with this
Agreement and shall provide the other party with copies of all correspondence
between that party or any representative of that party and the Governmental
Entity and copies of any amendments or supplements to any application, notice or
filing.
Section 4.5. Antitakeover Provisions.
(a) Haven and its Subsidiaries shall take all steps required by
any relevant federal or state law or regulation or under any relevant agreement
or other document (i) to exempt or continue to exempt Queens, the Covered
Agreements and any transactions contemplated thereby, as well as additional
purchases by Queens of up to 4.9% of then outstanding shares of Haven Common
Stock, from any provisions of an antitakeover nature in Haven's or its
Subsidiaries' certificates of incorporation or charters, as the case may be, and
bylaws and the provisions of Section 203 of the DGCL and (ii) upon the request
of Queens, to assist in any challenge to the applicability to the foregoing of
Section 203 of the DGCL.
(b) Except for amendments approved in writing by Queens, Haven
will not, following the date hereof, amend or waive any of the provisions of, or
take any action to exempt any other persons from the provisions of, Haven Rights
Agreement in any manner that adversely affects Queens or Queens Bank with
respect to the consummation of the Merger or, except as provided in the next
sentence, redeem the rights thereunder; provided, however, that nothing herein
shall prevent Haven from amending or otherwise taking any action under the Haven
Rights Agreement to delay the Distribution Date (as defined in the Haven Rights
Agreement). If requested by Queens, but not otherwise, Haven will redeem all
outstanding Haven Preferred Share Purchase Rights at a redemption price of not
more than $.01 per Haven Preferred Share Purchase Right effective immediately
prior to the Effective Time.
Section 4.6. Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take promptly, or cause to be taken promptly, all actions and to do promptly,
or cause to be done promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, as expeditiously as possible,
including using commercially reasonable efforts to obtain all necessary actions
or non-actions, extensions, waivers, consents and approvals from all applicable
Governmental Entities, effecting all necessary registrations, applications and
filings (including, without limitation, filings under any applicable state
securities laws) and obtaining any required contractual consents and regulatory
approvals.
Section 4.7. Publicity. The initial press release announcing this
Agreement shall be a joint press release and thereafter Haven and Queens shall
consult with each other in issuing any press releases or otherwise making public
statements with respect to the Merger and any other transaction contemplated
hereby and in making any filings with any Governmental Entity or with the Nasdaq
Stock Market or any national securities exchange with respect thereto.
Section 4.8. Stockholders Meetings. Haven and Queens each shall take
all action necessary, in accordance with applicable law and its respective
corporate documents, to convene a meeting of its respective stockholders (each,
a "Stockholder Meeting") as promptly as practicable for the purpose of
considering and voting on approval and adoption of the transactions provided for
in this Agreement. Except to the extent the Board of Directors of each of Haven
or Queens, as the case may be, after consultation with outside legal counsel, in
good faith deems such action or inaction to be legally necessary for the proper
discharge of its fiduciary duties under applicable law the Board of Directors of
each of Haven and Queens shall (a) recommend at its Stockholder Meeting that the
stockholders vote in favor of and approve the transactions provided for in this
Agreement and (b) use its commercially reasonable efforts to solicit such
approvals. Haven and Queens, in consultation with the other, shall each employ
professional proxy solicitors to assist in contacting stockholders in connection
with soliciting favorable votes on the Merger. Haven and Queens shall coordinate
and cooperate with respect to the timing of their respective Stockholder
Meetings.
Section 4.9. Joint Proxy Statement-Prospectus; Comfort Letters. (i)
Queens and Haven shall cooperate with respect to the preparation of a
Registration Statement for the shares of Queens Common Stock to be issued in the
Merger and a Joint Proxy Statement-Prospectus for the purpose of taking
stockholder action on the Merger and this Agreement and file the Joint Proxy
Statement-Prospectus with the SEC as soon as practicable after the date hereof,
respond to comments of the staff of the SEC and, promptly after the Registration
Statement is declared effective by the SEC, mail the Joint Proxy
Statement-Prospectus to the
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respective holders of record (as of the applicable record date) of shares of
voting stock of each of Haven and Queens. Queens and Haven each represents and
covenants to the other that the Joint Proxy Statement-Prospectus, and any
amendment or supplement thereto, with respect to the information pertaining to
it or its Subsidiaries at the date of mailing to its stockholders and the date
of its Stockholder Meeting will be in compliance with the Exchange Act and all
relevant rules and regulations of the SEC and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(ii) Queens shall cause KPMG, LLP, its independent public
accounting firm, to deliver to Haven, and Haven shall cause KPMG, LLP, its
independent public accounting firm, to deliver to Queens and to its officers and
directors who sign the Registration Statement for this transaction, a "comfort
letter" or "agreed upon procedures" letter, in the form customarily issued by
such accountants at such time in transactions of this type, dated (a) the date
of the mailing of the Joint Proxy Statement-Prospectus for the Stockholders
Meeting of Haven and the date of mailing of the Joint Proxy Statement for the
Stockholders meeting of Queens, respectively, and (b) a date not earlier than
five business days preceding the date of the Closing (as defined herein).
Section 4.10. Registration of Queens Common Stock.
(a) Queens shall, as promptly as practicable following the
preparation thereof, file the Registration Statement (including any
pre-effective or post-effective amendments or supplements thereto) with the SEC
under the Securities Act in connection with the transactions contemplated by
this Agreement, and Queens and Haven shall use all reasonable efforts to have
the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. Queens will advise Haven promptly
after Queens receives notice of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order or the suspension of the qualification of the shares of
capital stock issuable pursuant to the Registration Statement, or the initiation
or threat of any proceeding for any such purpose, or of any request by the SEC
for the amendment or supplement of the Registration Statement or for additional
information. Queens will provide Haven with as many copies of such Registration
Statement and all amendments thereto promptly upon the filing thereof as Haven
may reasonably request.
(b) Queens shall use its commercially reasonable efforts to
obtain, prior to the effective date of the Registration Statement, all necessary
state securities laws or "blue sky" permits and approvals required to carry out
the transactions contemplated by this Agreement.
(c) Queens shall use its commercially reasonable efforts to list,
prior to the Effective Time, on the National Market System of The Nasdaq Stock
Market, Inc. ("Nasdaq Stock Market"), or on such other exchange as Queens Common
Stock shall then be trading, subject only to official notice of issuance, the
shares of Queens Common Stock to be issued by Queens in exchange for the shares
of Haven Common Stock.
Section 4.11. Affiliate Letters. Promptly, but in any event within two
weeks after the execution and delivery of this Agreement, Haven shall deliver to
Queens a letter identifying all persons who, to the knowledge of Haven, may be
deemed to be "affiliates" of Haven under Rule 145 of the Securities Act
including, without limitation, all directors and executive officers of Haven.
Within two weeks after delivery of such letter, Haven shall deliver executed
letter agreements, each substantially in the form attached hereto as Exhibit A,
executed by each such person so identified as an affiliate of Haven agreeing (i)
to comply with Rule 145, and (ii) to be present in person or by proxy and vote
in favor of the Merger at the Haven Stockholders Meeting.
Section 4.12. Notification of Certain Matters. Each party shall give
prompt notice to the other of: (a) any event or notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by it or any of its Subsidiaries
subsequent to the date of this Agreement and prior to the Effective Time, under
any contract material to the financial condition, properties, businesses or
results of operations of such party and its Subsidiaries taken as a whole to
which such party or any Subsidiary is a party or is subject; and (b) any event,
condition, change or occurrence which individually or in the aggregate has, or
which, so far as reasonably can be foreseen at the time of its occurrence, is
reasonably likely to result in a Material Adverse Effect. Each of Haven and
Queens shall give prompt notice to the other party of any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with any of the transactions contemplated by
this Agreement.
Section 4.13 Directors and Officers.
(a) Queens agrees to cause three persons who are members of the
Haven Board of Directors on the date hereof, selected by Queens in its
discretion, who are willing so to serve ("New Queens Directors"), to be elected
or appointed as directors of Queens and two persons who are currently members of
the Haven Board of Directors, selected by Queens in its discretion, who
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are willing to so serve ("New Queens Bank Directors") to be elected or
appointed to the Board of Directors of Queens Bank at, or as promptly as
practicable after, the Effective Time (such appointment or election of New
Queens Directors and New Queens Bank Directors, respectively, to be as evenly
distributed as possible among the classes of Queens and Queens Bank directors,
respectively). The existing members of the CFS Bank Board of Directors shall
resign as of the Effective Time, and the Board of Directors of CFS Bank,
following the Effective Time, shall include three members of the Haven Board of
Directors as of the date hereof, as selected by Queens in its discretion, and
eight members from among the existing Directors of Queens and Queens Bank, or
otherwise as determined by Queens ("Continuing CFS Bank Directors"). Queens may,
in its discretion, select the same person for more than one Board position.
Queens agrees not to increase the size of the Queens Board of Directors beyond
11 members for a period of two years following the Effective Time; provided,
however, that Queens may increase the size of the Queens Board of Directors
during such two year period in order to appoint one or more persons to such
board who, immediately prior to such time, were directors of a financial
organization then being acquired by Queens.
(b) Queens shall honor (i) the Employment Agreements and the
Change in Control Agreements between Haven and, respectively, those persons
listed in Section 4.13 of Haven's Disclosure Letter, each as amended and
restated as of the date set forth for such person therein and (ii) the
Employment Agreements and the Change in Control Agreements between CFS Bank and,
respectively, those persons listed in Section 4.13 of Haven's Disclosure Letter,
each as amended and restated as of the date set forth for such person therein.
Section 4.14. Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time through the sixth
anniversary of the Effective Date, Queens agrees to indemnify and hold harmless
each director and officer of Haven or any of its Subsidiaries as of the date of
this Agreement (each, an "Indemnified Party"), against any costs or expenses
(including reasonable attorneys' fees and expenses), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement, including the entering into the Option
Agreement), whether asserted or claimed prior to, at or after the Effective
Time, and to advance any such Costs to each Indemnified Party as they are from
time to time incurred, in each case to the fullest extent such Indemnified Party
would have been indemnified as a director, officer or employee of Haven or any
of its Subsidiaries under the DGCL.
(b) Any Indemnified Party wishing to claim indemnification under
Section 4.14(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Queens thereof, but the failure to so
notify shall not relieve Queens of any liability it may have hereunder to such
Indemnified Party if such failure does not materially prejudice the indemnifying
party. In the event of any such claim, action, suit, proceeding or
investigation, (i) Queens shall have the right to assume the defense thereof
with counsel reasonably acceptable to the Indemnified Party, and Queens shall
not be liable to such Indemnified Party for any legal expenses of other counsel
subsequently incurred by such Indemnified Party in connection with the defense
thereof, except that if Queens does not elect to assume such defense within a
reasonable time or counsel for the Indemnified Party at any time advises that
there are issues which raise conflicts of interest between Queens and the
Indemnified Party, the Indemnified Party may retain counsel satisfactory to such
Indemnified Party, and Queens shall remain responsible for the reasonable fees
and expenses of such counsel as set forth above, to be paid promptly as
statements therefor are received; provided, however, that Queens shall be
obligated pursuant to this paragraph (b) to pay for only one firm of counsel for
all Indemnified Parties in any one jurisdiction with respect to any given claim,
action, suit, proceeding or investigation unless the use of one counsel for such
Indemnified Parties would present such counsel with a conflict of interest; (ii)
the Indemnified Party will reasonably cooperate in the defense of any such
matter; and (iii) Queens shall not be liable for any settlement effected by an
Indemnified Party without its prior written consent, which consent may not be
withheld or delayed unless such settlement is unreasonable in light of such
claims, actions, suits, proceedings or investigations against, or defenses
available to, such Indemnified Party.
(c) Queens shall pay all reasonable Costs, including attorneys'
fees, that may be incurred by any Indemnified Party in successfully enforcing
the indemnity and other obligations provided for in this Section 4.14 to the
fullest extent permitted under applicable law. The rights of each Indemnified
Party hereunder shall be in addition to any other rights such Indemnified Party
may have under applicable law.
(d) For a period of six years after the Effective Time, Queens
shall cause to be maintained in effect for the former directors and officers of
Haven coverage under Queens' policy of directors and officers liability
insurance no less advantageous to the beneficiaries thereof than the current
policies of directors' and officers' liability insurance maintained by Haven;
provided, however, that in no event shall Queens be obligated to expend, in
order to maintain or provide insurance coverage pursuant to this Subsection
4.14(d), any premium per annum in excess of 200% of the amount of the annual
premiums paid as of the date hereof by Haven for such insurance ("Maximum
Agreement"); provided, further, that if the amount of the annual premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, Queens shall obtain the most
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advantageous coverage of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Amount; and provided, further, that officers
and directors of Haven may be required to make application and provide customary
representations and warranties to Queens' insurance carrier for the purpose of
obtaining such insurance.
Section 4.15. Tax-Free Reorganization Treatment. Prior to the Effective
Time, neither Queens nor Haven shall intentionally take, fail to take, or cause
to be taken or not taken, or cause or permit any of their respective
Subsidiaries to take, fail to take, or cause to be taken or not taken, any
action within its control that would disqualify the Merger as a reorganization
within the meaning of Section 368(a) of the Code. Subsequent to the Effective
Time, Queens shall not take any action within its control that would disqualify
the Merger as a tax-free reorganization under the Code.
Section 4.16. Employees; Benefit Plans and Programs.
(a) Each person who is employed by Haven or CFS Bank immediately
prior to the Effective Time (a "Haven Employee") shall, at the Effective Time,
become an employee of Queens or Queens Bank or shall remain an employee of CFS
Bank. Beginning at the Effective Time, each Haven Employee shall serve Queens,
Queens Bank or CFS Bank in the same capacity in which he or she served
immediately prior to the Effective Time and upon the same terms and conditions
generally applicable to other employees of Queens or Queens Bank with comparable
positions, with the following special provisions:
(i) No Haven Employee shall be, or have or exercise the
authority of, an officer of Queens or Queens Bank unless and until elected or
appointed an officer of Queens or Queens Bank in accordance with Queens' or
Queens Bank's bylaws;
(ii) At or as soon as practicable following the Effective
Time, Queens and Queens Bank shall establish and implement a program of
compensation and benefits designed to cover all similarly situated employees on
a uniform basis ("New Compensation and Benefits Program"). The New Compensation
and Benefits Program may contain any combination of new plans, continuations of
plans maintained by Queens or Queens Bank immediately prior to the Effective
Time and continuation of plans maintained by Haven or CFS Bank immediately prior
to the Effective Time as Queens, in its discretion, may determine. To the extent
that it is not practicable to implement any constituent part of the New
Compensation and Benefits Program at the Effective Time, Queens and Queens Bank
shall continue in effect any comparable plan maintained immediately prior to the
Effective Time for the respective employees of Queens, Haven, Queens Bank and
CFS Bank for a transition period. During the transition period, the persons who
were employees of Haven or CFS Bank immediately prior to the Effective Time who
become employees of Queens or Queens Bank or remain employees of CFS Bank at the
Effective Time shall continue to participate in the plans of Haven and CFS Bank
that are continued for transitional purposes, and all other employees of Queens
or Queens Bank will participate only in the comparable plans of Queens and
Queens Bank that are continued for transitional purposes.
(iii) Each constituent part of the New Compensation and
Benefits Program shall recognize, in the case of persons employed by Queens,
Queens Bank, Haven or CFS Bank immediately prior to the Effective Time who are
also employed by Queens, Queens Bank or CFS Bank immediately after the Effective
Time, all service with Queens, Queens Bank, Haven or CFS Bank as service with
Queens, Queens Bank and CFS Bank for eligibility, participation, vesting and all
other such purposes except for purposes of any post-retirement, health and life
insurance benefits.
(iv) In the case of any constituent part of the New
Compensation and Benefits Program which is a life, health or long-term
disability insurance plan: (A) such plan shall not apply any preexisting
condition limitations for conditions covered under the applicable life, health
or long-term disability insurance plans maintained by Queens, Queens Bank, Haven
and CFS Bank as of the Effective Time, (B) each such plan which is a health
insurance plan shall honor any deductible and out of pocket expenses incurred
under the applicable life health plans maintained by Queens, Queens Bank, Haven
and CFS Bank as of the Effective Time and (C) each such plan which is a life or
long-term disability insurance plan shall waive any medical certification
otherwise required in order to assure the continuation of coverage at a level
not less than that in effect immediately prior to the implementation of such
plan (but subject to any overall limit on the maximum amount of coverage under
such plans).
(b) (i) Queens shall assume the obligations of Haven and CFS Bank
with respect to any severance plans or agreements identified in Haven's
Disclosure Letter, as they may be in effect at the Effective Time, and shall pay
amounts thereunder when due. In the event of the termination of employment of
any person who was an officer or employee of Haven or CFS Bank prior to the
Effective Time prior to the first anniversary of the Effective Time, such person
shall only be eligible for severance benefits under the plans referred to in the
preceding sentence. Thereafter, such person shall be entitled to a severance
benefit under the severance plan maintained by Queens or Queens Bank.
(ii) The amounts payable under the CFS Bank bonus programs shall
be determined for the period from January 1, 2000 through the Closing Date,
except that (A) the adjusted pre-tax net income and target goals shall be
adjusted and pro-rated
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for the portion of the year from January 1, 2000 through the Closing Date and
(B) payments thereunder, as so adjusted, shall be made as of the Closing Date.
(iii) Before the Effective Time, Haven may, in its sole and
absolute discretion, in accordance with applicable law, terminate any employee
stock ownership plan maintained by Haven ("Haven's ESOP") and cause Haven's ESOP
to sell unallocated shares held in the ESOP to the extent necessary to pay in
full any outstanding ESOP loan. In such event, any remaining unallocated shares
shall be distributed to the accounts of Haven's ESOP participants as investment
earnings in proportion to the amount held in each participant's account as of
the termination date.
Section 4.17. Advisory Board. Queens shall, promptly following the
Effective Time, cause all of the members of Haven's Board of Directors as of the
date of this Agreement, other than the New Queens Directors, New Queens Bank
Directors and Continuing CFS Bank Directors who are willing to so serve to be
elected or appointed as members of Queens' advisory board ("Advisory Board"),
the function of which shall be to advise Queens with respect to deposit and
lending activities in Haven's former market area and to maintain and develop
customer relationships. The members of the Advisory Board shall be elected to
serve an initial term of three years beginning on the Effective Date. Each
member of the Advisory Board shall receive an annual retainer fee for such
service of $30,000, payable in monthly installments or in one lump sum at any
time in advance at the option of Queens.
ARTICLE V
CONDITIONS TO CONSUMMATION
Section 5.1. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Merger and any other transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions:
(a) this Agreement shall have been approved by (i) the requisite
vote of Haven's stockholders in accordance with applicable law and regulations
and (ii) the requisite vote of Queens' stockholders in accordance with
applicable law and regulations;
(b) (i) the Requisite Regulatory Approvals and any necessary
regulatory consents and waivers with respect to this Agreement and the
transactions contemplated hereby shall have been obtained and shall remain in
full force and effect, and all statutory waiting periods in respect thereof
shall have expired; and (ii) all other consents, waivers and approvals of any
third parties which are necessary to permit the consummation of the Merger and
the other transactions contemplated hereby (the "Third Party Non-Regulatory
Consents") shall have been obtained or made except for those Third Party
Non-Regulatory Consents the failure to obtain would not have, or would not be
reasonably likely to have, a Material Adverse Effect (x) on Haven and its
Subsidiaries taken as a whole or (y) on Queens and its Subsidiaries taken as a
whole. None of the approvals or waivers referred to herein shall contain any
term or condition which (A) would have, or would be reasonably likely to have, a
Material Adverse Effect on (x) Haven and its Subsidiaries taken as a whole or
(y) Queens and its Subsidiaries taken as a whole; or (B) which would reduce, or
would be reasonably likely to reduce, the benefits of the transactions
contemplated hereby to such a degree that the Board of Directors of Queens
determines, in its reasonable good faith judgement, that Queens would not have
entered into this Agreement had such term or condition been known at the date
hereof.
(c) no party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger or any other transactions contemplated
by this Agreement;
(d) no statute, rule or regulation shall have been enacted,
entered, promulgated, interpreted, applied or enforced by any Governmental
Entity which prohibits, restricts or makes illegal consummation of the Merger or
any other transactions contemplated by this Agreement;
(e) the Registration Statement shall have been declared effective
by the SEC, and no proceedings shall be pending or threatened by the SEC to
suspend the effectiveness of the Registration Statement; all required approvals
by state securities or "blue sky" authorities with respect to the transactions
contemplated by this Agreement shall have been obtained;
(f) Queens shall have caused to be listed on the Nasdaq Stock
Market, or on such other market on which shares of Queens Common Stock shall
then be trading, subject only to official notice of issuance, the shares of
Queens Common Stock to be issued by Queens in exchange for the shares of Haven
Common Stock.
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Section 5.2. Conditions to the Obligations of Queens. The obligations
of Queens to effect the Merger, and any other transactions contemplated by this
Agreement shall be further subject to the satisfaction of the following
additional conditions, any one or more of which may be waived by Queens:
(a) each of the obligations of Haven required to be performed by
it at or prior to the Closing pursuant to the terms of this Agreement shall have
been duly performed and complied with in all material respects, and the
representations and warranties of Haven contained in this Agreement shall be
true and correct, subject to Sections 2.1 and 2.2, as of the date of this
Agreement and as of the Effective Time as though made at and as of the Effective
Time (except as to any representation or warranty which specifically relates to
an earlier date). Queens shall have received a certificate to the foregoing
effect signed by the chief executive officer and the chief financial or
principal accounting officer of Haven;
(b) all action required to be taken by, or on the part of, Haven
to authorize the execution, delivery and performance of this Agreement and the
consummation by Haven of the transactions contemplated hereby shall have been
duly and validly taken by the Board of Directors and stockholders of Haven, as
the case may be, and Queens shall have received certified copies of the
resolutions evidencing such authorization;
(c) Haven shall have obtained the consent or approval of each
person (other than the regulatory approvals or consents referred to in Section
5.1(b)) whose consent or approval shall be required in order to consummate the
Merger or to permit the succession by the surviving corporation pursuant to the
Merger to any obligation, right or interest of Haven or its Subsidiaries under
any loan or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument to which Haven or its Subsidiaries is a party or is
otherwise bound;
(d) Neither a Distribution Date nor a Shares Acquisition Date, as
such terms are defined in Haven Rights Agreement, shall have occurred, and Haven
Preferred Share Purchase Rights shall not have become nonredeemable and shall
not become nonredeemable upon consummation of the Merger, and Haven Preferred
Share Purchase Rights shall not become exercisable for capital stock of Queens
upon consummation of the Merger;
(e) Queens shall have received certificates (such certificates to
be dated as of a day as close as practicable to the Closing Date) from
appropriate authorities as to the corporate existence and good standing of
Haven;
(f) Queens shall have received an opinion of Sullivan & Cromwell,
counsel to Queens, dated as of the Effective Date, in form and substance
customary in transactions of the type contemplated hereby, and reasonably
satisfactory to Queens, substantially to the effect that on the basis of the
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that accordingly:
(i) no gain or loss will be recognized by Queens, Queens
Bank, Haven or CFS Bank as a result of the Merger; and
(ii) except to the extent of any cash received in lieu of a
fractional share interest in Queens Common Stock, no gain or loss will be
recognized by the stockholders of Haven who exchange their Haven Common Stock
for Queens Common Stock pursuant to the Merger.
Such opinion may be based on, in addition to the review of such
matters of fact and law as Sullivan & Cromwell considers appropriate, (x)
representations made at the request of Sullivan & Cromwell by Queens, Queens
Bank, Haven, CFS Bank, stockholders of Queens or Haven, or any combination of
such persons and (y) certificates provided at the request of Sullivan & Cromwell
by officers of Queens, Queens Bank, Haven, CFS Bank and other appropriate
persons.
Section 5.3. Conditions to the Obligations of Haven. The obligations of
Haven to effect the Merger and any other transactions contemplated by this
Agreement shall be further subject to the satisfaction of the following
additional conditions, any one or more of which may be waived by Haven:
(a) each of the obligations of Queens, required to be performed by
it at or prior to the Closing pursuant to the terms of this Agreement shall have
been duly performed and complied with in all material respects, and the
representations and warranties of Queens contained in this Agreement shall be
true and correct, subject to Sections 2.1 and 2.2, as of the date of this
Agreement and as of the Effective Time as though made at and as of the Effective
Time (except as to any representation or warranty which specifically relates to
an earlier date). Haven shall have received a certificate to the foregoing
effect signed by the chief executive officer and the chief financial or
principal accounting officer of Queens;
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(b) all action required to be taken by, or on the part of, Queens
to authorize the execution, delivery and performance of this Agreement and the
consummation by Queens of the transactions contemplated hereby shall have been
duly and validly taken by the Board of Directors and stockholders of Queens, as
the case may be, and Haven shall have received certified copies of the
resolutions evidencing such authorization;
(c) Queens shall have obtained the consent or approval of each
person (other than the regulatory approvals or consents referred to in Section
5.1(b)) whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument to which
Queens or its Subsidiaries is a party or is otherwise bound, except those for
which failure to obtain such consents and approvals would not, individually or
in the aggregate, have a Material Adverse Effect on Queens (after giving effect
to the transactions contemplated hereby) or upon the consummation of the
transactions contemplated hereby;
(d) Haven shall have received certificates (such certificates to
be dated as of a day as close as practicable to the Closing Date) from
appropriate authorities as to the corporate existence and good standing of
Queens;
(e) Queens shall have taken such action as is required to assume
the covenants and conditions to be performed or kept by Haven in the Indenture,
dated as of February 12, 1997, in connection with Haven Capital Trust I, and the
Indenture, dated as of May 26, 1999, in connection with Haven Capital Trust II
in supplemental indentures;
(f) Haven shall have received an opinion of Thacher Proffitt &
Wood, counsel to Haven, dated as of the Effective Date, in form and substance
customary in transactions of the type contemplated hereby, and reasonably
satisfactory to Haven, substantially to the effect that on the basis of the
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that accordingly:
(i) no gain or loss will be recognized by Queens, Queens
Bank, Haven or CFS Bank as a result of the Merger;
(ii) except to the extent of any cash received in lieu of a
fractional share interest in Queens Common Stock, no gain or loss will be
recognized by the stockholders of Haven who exchange their Haven Common Stock
for Queens Common Stock pursuant to the Merger;
(iii) the tax basis of Queens Common Stock received by
stockholders who exchange their Haven Common Stock for Queens Common Stock in
the Merger will be the same as the tax basis of Haven Common Stock surrendered
pursuant to the Merger, reduced by any amount allocable to a fractional share
interest for which cash is received and increased by any gain recognized on the
exchange; and
(iv) the holding period of Queens Common Stock received by
each stockholder in the Merger will include the holding period of Haven Common
Stock exchanged therefor, provided that such stockholder held such Haven Common
Stock as a capital asset on the Effective Date.
Such opinion may be based on, in addition to the review of such
matters of fact and law as Thacher Proffitt & Wood considers appropriate, (x)
representations made at the request of Thacher Proffitt & Wood by Queens, Queens
Bank, Haven, CFS Bank, stockholders of Queens or Haven, or any combination of
such persons and (y) certificates provided at the request of Thacher Proffitt &
Wood by officers of Queens, Queens Bank, Haven, CFS Bank and other appropriate
persons.
ARTICLE VI
TERMINATION
Section 6.1. Termination. This Agreement may be terminated, and the
Merger abandoned, at or prior to the Effective Time, either before or after its
approval by the stockholders of Haven and Queens:
(a) by the mutual consent of Queens and Haven, if the Board of
Directors of each so determines by vote of a majority of the members of its
entire Board;
(b) by Queens or Haven, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event of (i) the
failure of the stockholders of Haven or Queens to approve the Agreement at its
Stockholder Meeting called to consider such approval; provided, however, that
Haven or Queens, as the case may be, shall only be entitled to
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terminate the Agreement pursuant to this clause (i) if it has complied in all
material respects with its obligations under Sections 4.8 and 4.9, or (ii) a
material breach by the other party hereto of any representation, warranty,
covenant or agreement contained herein which causes the conditions set forth in
Section 5.2(a) (in the case of termination by Queens) or Section 5.3(a) (in the
case of the termination by Haven) not to be satisfied and such breach is not
cured within 25 business days after written notice of such breach is given to
the party committing such breach by the other party or which breach is not
capable of being cured by the date set forth in Section 6.1(d) or any extension
thereof;
(c) by Queens or Haven, by written notice to the other party, if
either (i) any approval, consent or waiver of a Governmental Entity required to
permit consummation of the transactions contemplated hereby shall have been
denied or (ii) any court or governmental authority of competent jurisdiction
shall have issued a final, unappealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated by this Agreement;
(d) by Queens or Haven, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event that the
Merger is not consummated by March 31, 2001 unless the failure to so consummate
by such time is due to the breach of any representation, warranty or covenant
contained in this Agreement by the party seeking to terminate;
(e) by Haven, if its Board of Directors so determines by a
majority vote of the members of its entire Board, at any time during the five
day period commencing on the Valuation Date, such termination to be effective on
the 15th business day following such Valuation Date, ("Effective Termination
Date") if both of the following conditions are satisfied:
(i) the Queens Market Value on the Valuation Date is less
than an amount equal to 80% of the Initial Queens Market Value; and
(ii) the Queens Ratio shall be less than 0.80 times the Index
Ratio;
subject, however, to the following three sentences. If Haven elects to exercise
its termination right pursuant to this Section 6.1(e), it shall give prompt
written notice thereof to Queens within five business days of the Valuation
Date; provided, that such notice of election to terminate may be withdrawn at
any time prior to the Effective Termination Date. During the five business day
period commencing with its receipt of such notice, Queens shall have the option
to increase the consideration to be received by the holders of Haven Common
Stock hereunder by adjusting the Exchange Ratio to equal the lesser of (x) a
number equal to a fraction, the numerator of which is 0.832 multiplied by the
Initial Queens Market Value and the denominator of which is the Queens Market
Value, and (y) the quotient obtained by dividing (1) the product of the Index
Ratio and the Exchange Ratio (as then in effect) by (2) the Queens Ratio. If
Queens so elects, it shall give, within such five day period, written notice to
Haven of such election and the revised Exchange Ratio, whereupon no termination
shall be deemed to have occurred pursuant to this Section 6.1(e) and this
Agreement shall remain in full force and effect in accordance with its terms
(except as the Merger Consideration shall have been so modified).
For purposes of Section 6.1(e), the following terms shall have the
meanings indicated below:
"Average Index Price" shall mean the average of the daily Index
Prices for the 15 consecutive full trading days immediately preceding the
Valuation Date.
"Index Group" means the 25 financial institution holding companies
listed below, the common stock of all of which shall be publicly traded and as
to which there shall not have been an Acquisition Transaction involving such
company publicly announced at any time during the period beginning on the date
of this Agreement and ending on the Valuation Date. In the event that the common
stock of any such companies ceases to be publicly traded or an Acquisition
Proposal involving any such companies is announced at any time during the period
beginning on the date of this Agreement and ending on the Valuation Date, such
company will be removed from the Index Group, and the weights attributed to the
remaining companies will be adjusted proportionately for purposes of determining
the Index Price on the relevant dates. The 25 financial institution holding
companies and the weights attributed to them are as follows:
HOLDING COMPANY WEIGHTING
--------------- ---------
WASHINGTON FEDERAL, INC. 7.95%
INDEPENDENCE COMMUNITY BANK CORP. 10.18
COMMERCIAL FEDERAL CORPORATION 8.59
----------------------------------------------------------------
A-31
HOLDING COMPANY WEIGHTING
--------------- ---------
WEBSTER FINANCIAL CORPORATION 6.45
DOWNEY FINANCIAL CORP. 4.26
STATEN ISLAND BANCORP, INC. 5.65
RICHMOND COUNTY FINANCIAL CORP. 4.38
AMERICAN FINANCIAL HOLDINGS, INC. 4.37
MAF BANCORP, INC. 3.55
FIRST SENTINEL BANCORP, INC. 5.46
HARBOR FLORIDA BANCSHARES, INC. 3.96
FIRST INDIANA CORPORATION 1.91
FIRSTFED FINANCIAL CORP. 2.63
UNITED COMMUNITY FINANCIAL CORP. 5.72
SEACOAST FINANCIAL SERVICES CORPORATION 3.85
OCEANFIRST FINANCIAL CORP. 1.82
INTERWEST BANCORP, INC. 2.34
DIME COMMUNITY BANCSHARES, INC. 1.84
PFF BANCORP, INC. 2.02
FIRST FEDERAL CAPITAL CORP. 2.77
PBOC HOLDINGS, INC. 3.01
FIRST FINANCIAL HOLDINGS INC. 2.02
ANDOVER BANCORP, INC. .96
VIRGINIA CAPITAL BANCSHARES, INC. 1.56
CFS BANCORP, INC. 2.75
"Index Price" on a given date shall mean the sum of the following:
the closing sales price of a share of common stock of each company comprising
the Index Group (as reported for such date on the consolidated transaction
reporting system for the stock exchange or market on which such common stock is
principally traded, multiplied by the applicable weighting for such common
stock.
"Initial Queens Market Value" means the average of (i) $18.125 and
(ii) the closing sales price of Queens Common Stock on the Starting Date, as
reported on the Nasdaq Stock Market. The Initial Queens Market Value shall be
equitably adjusted to take into effect any stock dividend, reclassification,
recapitalization, split up, combination, exchange of shares, or similar
transaction between the date of this Agreement and the Valuation Date.
"Index Ratio" shall mean the quotient of the Average Index Price
divided by the Index Price on the Starting Date.
"Queens Market Value" shall be the average of the closing sale
prices of a share of Queens Common Stock, as reported on the principal stock
exchange or trading system upon which Queens Common Stock is then trading, for
the 15
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consecutive trading days immediately preceding the day on which the approval of
the FRB is received (such date being referred to herein as the "Valuation
Date").
"Queens Ratio" shall mean the quotient of the Queens Market Value
divided by the Initial Queens Market Value.
"Starting Date" shall mean June 28, 2000.
"Valuation Date" shall have the meaning set forth in this Section
6.1(e).
If Queens or 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 date of this
Agreement and the Valuation Date, the prices for the common stock of such
company shall be appropriately adjusted for the purposes of applying this
Section 6.1(e).
Section 6.2. Effect of Termination. In the event of the termination of
this Agreement by either Queens or Haven, as provided above, this Agreement
shall thereafter become void and there shall be no liability on the part of any
party hereto or their respective officers or directors, except that (a) any such
termination shall be without prejudice to the rights of any party hereto arising
out of the willful breach by any other party of any covenant, representation or
obligation contained in this Agreement and (b) the obligations of the parties
under Section 4.3(a) (the last three sentences only), Section 6.2 and Section
8.6 shall survive.
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
Section 7.1. Effective Date and Effective Time. The closing of the
transactions contemplated hereby ("Closing") shall take place at the offices of
Thacher Proffitt & Wood, Two World Trade Center, New York, New York 10048, on a
date ("Closing Date") that is no later than five business days following the
date on which the expiration of the last applicable waiting period in connection
with notices to and approvals of regulatory and governmental authorities shall
occur and all conditions to the consummation of this Agreement are satisfied or
waived, or on such other date as may be agreed to by the parties. Prior to the
Closing Date, Queens and Haven shall execute a Certificate of Merger in
accordance with all appropriate legal requirements, which shall be filed as
required by law on the Closing Date, and the Merger provided for therein shall
become effective upon such filing or at such time as may be specified in such
Certificate of Merger. The date of such filing or such later effective time as
specified in the Certificate of Merger is herein referred to as the "Effective
Date." The "Effective Time" of the Merger shall be as set forth in the
Certificate of Merger.
Section 7.2. Deliveries at the Closing. Subject to the provisions of
Articles V and VI, on the Closing Date there shall be delivered to Queens and
Haven the documents and instruments required to be delivered under Article V.
ARTICLE VIII
CERTAIN OTHER MATTERS
Section 8.1. Certain Definitions; Interpretation. As used in this
Agreement, the following terms shall have the meanings indicated:
"business day" means each day except Saturday, Sunday or a day on
which banking institutions in New York are authorized or required by
law to remain closed.
"material" means material to Queens or Haven (as the case may be)
and its respective Subsidiaries, taken as a whole.
"person" includes an individual, corporation, limited liability
company, partnership, association, trust or unincorporated
organization.
When a reference is made in this Agreement to Sections, Exhibits
or Schedules, such reference shall be to a Section of, Exhibit or Schedule to,
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for ease of reference only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation." Any singular term in this Agreement
shall be deemed to include the plural, and any plural term the singular. Any
reference to gender in this Agreement shall be deemed to include any other
gender.
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Section 8.2. Survival. Only those agreements and covenants of the
parties that are by their terms applicable in whole or in part after the
Effective Time, including Sections 4.14, 4.15, and 8.6 of this Agreement, shall
survive the Effective Time. All other representations, warranties, agreements
and covenants shall be deemed to be conditions of the Agreement and shall not
survive the Effective Time. If the Agreement shall be terminated, the agreements
of the parties in the last three sentences of Section 4.3(a), Section 6.2, and
Section 8.6 shall survive such termination.
Section 8.3. Waiver; Amendment. Prior to the Effective Time, any
provision of this Agreement may be: (i) waived in writing by the party
benefitted by the provision or (ii) amended or modified at any time (including
the structure of the transaction) by an agreement in writing between the parties
hereto except that, after the vote by the stockholders of Haven or Queens, no
amendment or modification may be made that would reduce the Merger Consideration
or contravene any provision of the DGCL or federal banking laws, rules and
regulations.
Section 8.4. Counterparts. This Agreement may be executed in
counterparts each of which shall be deemed to constitute an original, but all of
which together shall constitute one and the same instrument.
Section 8.5. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of New York, without
regard to conflicts of laws principles.
Section 8.6. Expenses. Except as provided in Section 4.3, each party
hereto will bear all expenses incurred by it in connection with this Agreement
and the transactions contemplated hereby.
Section 8.7. Notices. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, overnight courier or facsimile
transmission (confirmed in writing) to such party at its address or facsimile
number set forth below or such other address or facsimile transmission as such
party may specify by notice to the other party hereto.
If to Haven, to:
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, New York 11590
Facsimile: 516-683-8344
Attention: Philip S. Messina, Chairman and Chief Executive
Officer and William J. Jennings II,
President and Chief Operating Officer;
With copies to:
Thacher Proffitt & Wood, 38th Floor
Two World Trade Center
New York, New York 10048
Facsimile: 212-912-8371
Attention: Omer S.J. Williams, Esq.
If to Queens, to:
Queens County Bancorp, Inc.
38-25 Main Street
Flushing, New York 11354
Facsimile: 718-359-0888
Attention: Joseph R. Ficalora, Chairman, President and
Chief Executive Officer
With copies to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: 212-558-3345
Attention: Mark J. Menting, Esq.
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Section 8.8. Entire Agreement; etc. This Agreement, the Option
Agreement and the Disclosure Letters together with any ancillary voting
agreements and the affiliate letters described in Section 4.11 hereof (the
"Covered Agreements") represent the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersede any and all
other oral or written agreements heretofore made. All terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Except for Sections
4.13 and 4.14, which confer rights on the parties described therein, nothing in
this Agreement is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement. The
confidentiality agreement referred to in Section 4.1 hereof is hereby
terminated. Nothing herein shall be deemed to prohibit Queens from acquiring up
to 4.9% of Haven's then outstanding Common Stock
Section 8.9. Assignment. This Agreement may not be assigned by either
party hereto without the written consent of the other party.
Section 8.10. Waiver of Jury Trial. Each party hereto acknowledges and
agrees that any controversy which may arise under any of the Covered Agreements
is likely to involve complicated and difficult issues, and therefore each party
hereby irrevocably and unconditionally waives any right such party may have to a
trial by jury in respect of any litigation, directly or indirectly, arising out
of, or relating to, any of the covered Agreements, or the transactions
contemplated by any of the Covered Agreements. Each party certifies and
acknowledges that (a) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (b) such party
understands and has considered the implications of this waiver, (c) such party
makes this waiver voluntarily, and (d) such party has been induced to enter into
this Agreement by, among other things, the mutual waivers and certifications in
this Section 8.10.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
above written.
QUEENS COUNTY BANCORP, INC.
By: /S/ Joseph R. Ficalora
----------------------
Joseph R. Ficalora
Chairman of the Board, President and
Chief Executive Officer
HAVEN BANCORP, INC.
By: /S/ Philip S. Messina
---------------------
Philip S. Messina
Chairman of the Board
and Chief Executive Officer
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Exhibit A
- --------- -----------
[FORM OF AFFILIATE LETTER]
June 27, 2000
Queens County Bancorp, Inc.
38-25 Main Street, 2nd Floor
Flushing, New York 11354
Attention: Mr. Joseph R. Ficalora
Chairman, President and Chief Executive Officer
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of June
__, 2000 (the "Merger Agreement"), by and between Queens County Bancorp, Inc., a
Delaware corporation ("Queens") and Haven Bancorp, Inc., a Delaware corporation
("Haven"). The Merger Agreement provides, among other things, for the merger of
Haven with and into Queens, with Queens being the surviving entity (the
"Merger"). Upon consummation of the Merger, each share of Haven common stock,
par value $0.01 per share ("Haven Common Stock") other than Excluded Shares (as
defined in the Merger Agreement) will become and be converted into the right to
receive 1.04 shares of common stock, par value $0.01 per share, of Queens
("Queens Common Stock") as determined pursuant to Section 1.2 of the Merger
Agreement. This Letter Agreement is being entered into pursuant to Section 4.11
of the Merger Agreement.
I have been advised that (i) the Merger constitutes a transaction
covered by Rule 145 of the Rules and Regulations (the "Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), and (ii) I may be deemed to be an affiliate of
Haven, as the term "affiliate" is defined for purposes of Rule 145 under the
Act; and that, accordingly, the shares of Queens Common Stock that I may acquire
in connection with the Merger may be disposed of only in conformity with the
provisions hereof.
I hereby represent and warrant to, and covenant with, Queens as
follows:
1. I have full power to execute this Letter Agreement, to make the
representations, warranties and agreements herein and to perform my obligations
hereunder.
2. I have carefully read this Letter Agreement and, to the extent I
felt necessary, discussed its requirements and other applicable limitations upon
my ability to sell, transfer or otherwise dispose of shares of Queens Common
Stock with my counsel or counsel for Haven.
3. In the event I receive any shares of Queens Common Stock in exchange
for shares of Haven Common Stock as a result of the consummation of the Merger,
or any securities which may be paid as a dividend or otherwise distributed
thereon or with respect thereto or issued or delivered in exchange or
substitution therefor, or any option, right or other interest (all such shares
and securities being referred to herein as "Restricted Securities"), and with
respect to any such Restricted Securities:
(A) I will not make any sale, transfer or other disposition of
Restricted Securities in violation of the Act or the Regulations.
(B) I have been advised that the shares of Queens Common Stock
to be issued in the Merger have been registered under the Act by a
Registration Statement of Queens on Form S-4. However, I have also been
advised that because (i) at the time of the submission of the Merger
Agreement to a vote of the stockholders of Haven, I may be deemed an
affiliate of Haven, and (ii) the distribution by me of Queens Common
Stock has not been registered under the Act, that I may not sell,
transfer or otherwise dispose of Queens Common Stock issued to me in
the Merger or other Restricted Securities unless (a) such sale,
transfer or other disposition has been registered under the Act, (b)
such sale, transfer or other disposition is made in conformity with the
volume and other limitations imposed by Rule 145 under the
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Act, or (c) in the opinion of counsel reasonably acceptable to Queens,
such sale, transfer or other disposition is otherwise exempt from
registration under the Act.
(C) I understand that Queens is under no obligation to
register the sale, transfer or other disposition of shares of Queens
Common Stock or other Restricted Securities by me or on my behalf under
the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
(D) I also understand that stop transfer instructions will be
given to Queens' transfer agent with respect to my Restricted
Securities and that there will be placed on the certificates for
Restricted Securities issued to me, or any substitutions therefor, a
legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, APPLIES. THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND
QUEENS COUNTY BANCORP, INC. ("QUEENS"), A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE
OF QUEENS. A COPY OF SUCH AGREEMENT SHALL BE
PROVIDED, WITHOUT CHARGE, UPON RECEIPT BY QUEENS OF
A WRITTEN REQUEST.
(E) Unless a transfer of Restricted Securities is a sale made
in conformity with the provisions of Rule 145(d), or made pursuant to
any effective registration statement under the Act, Queens reserves the
right to put an appropriate legend on the certificate issued to my
transferee.
(F) It is understood and agreed that the legends set forth in
paragraphs D and E above shall be removed by delivery of substitute
certificates without such legend, and/or the issuance of a letter to
Queens' transfer agent removing such stop transfer instructions, if I
shall have delivered to Queens (i) a copy of a letter from the staff of
the Commission, or an opinion of counsel in form and substance
reasonably satisfactory to Queens, or other evidence reasonably
satisfactory to Queens, to the effect that such legend and/or stop
transfer instructions are not required for purposes of the Act or (ii)
reasonably satisfactory evidence or representations that the securities
represented by such certificates are being or have been transferred in
a transaction made in conformity with the provisions of Rule 145 under
the Act.
4. I recognize and agree that the foregoing provisions also apply to
(A) my spouse, (B) any relative of mine or my spouse occupying my home, (C) any
trust or estate in which I, my spouse or any such relative owns at least 10%
beneficial interest or of which any of us serves as trustee, executor or in any
similar capacity and (D) any corporation or other organization in which I, my
spouse or any such relative owns at least 10% of any class of equity securities
or of the equity interest. It is understood that this Letter Agreement shall be
binding upon and enforceable against my administrators, executors,
representatives, heirs, legatees and devisees, and any pledgee holding
securities restricted pursuant to this Letter Agreement.
5. I will (a) vote all shares of Haven Common Stock I then own in favor
of the Merger Agreement and the Merger at any meeting or meetings of Haven's
stockholders called to vote upon the Merger Agreement and the Merger and (b) not
vote such shares (or otherwise provide a proxy or consent or enter into another
voting agreement with respect thereto) in favor of any other Acquisition
Proposal (as defined in the Merger Agreement).
6. Execution of this letter should not be construed as an admission on
my part that I am an "affiliate" of Haven, as described in the second paragraph
of this letter, or as 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.
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7. This Letter Agreement shall terminate and be of no further force and
effect if the Merger Agreement is terminated pursuant to the terms thereof.
Very truly yours,
-------------------------------
Name:
Acknowledged as of the date
first written above
Queens County Bancorp, Inc.
By:-------------------------------
Name:
Title:
A-38
APPENDIX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 27, 2000, between QUEENS
COUNTY BANCORP, INC., a Delaware corporation ("Grantee"), and HAVEN BANCORP,
INC., a Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer are entering into an Agreement and Plan of
Merger (the "Merger Agreement");
WHEREAS, as a condition and an inducement to Grantee's entering into
the Merger Agreement, Issuer has agreed to grant Grantee the Option (as
hereinafter defined) on the terms and conditions set forth in this Agreement;
and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement prior to the date hereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase, subject to the terms hereof, up to an aggregate of
1,800,000 fully paid and nonassessable shares of the common stock, par value
$0.01 per share, of Issuer ("Common Stock") at a price per share equal to the
last reported sale price per share of Common Stock as reported on the National
Association of Securities Dealers Composite Transactions Tape on June 28, 2000;
provided, however, that in the event Issuer issues or agrees to issue any shares
of Common Stock (other than shares of Common Stock issued pursuant to stock
options granted pursuant to any employee benefit plan prior to the date hereof)
at a price less than such average price per share (as adjusted pursuant to
subsection (b) of Section 5), the price shall be equal to such lesser price
(such price, as adjusted if applicable, the "Option Price"); provided, further,
that in no event shall the number of shares for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Common Stock. The number of
shares of Common Stock that may be received upon the exercise of the Option and
the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section l(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach of any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 6.1(b)(ii) of the Merger Agreement (a
"Listed Termination"); or (iii) the passage of twelve (12) months (or such
longer period as provided in Section 10) after termination of the Merger
Agreement if such termination follows the occurrence of an Initial Triggering
Event or is a Listed Termination. The term "Holder" shall mean the holder or
holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any subsidiary or group of subsidiaries that is, or
would on an aggregate basis constitute, a Significant Subsidiary (as
defined in Rule 1-02 of Regulation S-X promulgated by the Securities
and Exchange Commission (the "SEC")) (each such subsidiary or group of
subsidiaries, an "Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered into an agreement
to engage in an Acquisition Transaction (as hereinafter defined) with
any person (the term "person" for purposes of this Agreement having
the meaning assigned
Page 2.
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and the rules and
regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer (the
"Issuer Board") shall have recommended that the shareholders of Issuer
approve or accept any Acquisition Transaction other than as
contemplated by the Merger Agreement. For purposes of this Agreement,
(a) "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any
Issuer Subsidiary (other than mergers, consolidations or similar
transactions involving solely Issuer and/or one or more wholly-owned
Subsidiaries of the Issuer, provided, any such transaction is not
entered into in violation of the terms of the Merger Agreement), (y) a
purchase, lease or other acquisition of all or any substantial part of
the assets or deposits of Issuer or any Issuer Subsidiary (except for
any supermarket branches and related deposits of the Issuer located in
New Jersey or Connecticut), or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power
of Issuer or any Issuer Subsidiary and (b) "Subsidiary" shall have the
meaning set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the
1934 Act, and the rules and regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has
been held for that purpose or any adjournment or postponement thereof,
or such meeting shall not have been held in violation of the Merger
Agreement or shall have been canceled prior to termination of the
Merger Agreement if, prior to such meeting (or if such meeting shall
not have been held or shall have been canceled, prior to such
termination), it shall have been publicly announced that any person
(other than Grantee or any of its Subsidiaries) shall have made, or
disclosed an intention to make, a bona fide proposal to engage in an
Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn or modified (or
publicly announced its intention to withdraw or modify) in any manner
adverse in any respect to Grantee its recommendation that the
shareholders of Issuer approve the transactions contemplated by the
Merger Agreement after it shall have been publicly announced that any
person (other than Grantee or any of its Subsidiaries) shall have
made, or disclosed an intention to make, a bona fide proposal to
engage in an Acquisition Transaction, or Issuer or any Issuer
Subsidiary shall have authorized, recommended, proposed (or publicly
announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person
other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its shareholders to engage
in an Acquisition Transaction and such proposal shall have been
publicly announced; or
(vi) Any person other than Grantee or any Grantee Subsidiary
shall have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that
would constitute an Acquisition Transaction (or filed a preliminary
proxy statement with the SEC with respect to a potential vote by its
shareholders to approve the issuance of shares to be offered in such
an exchange offer).
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (z) of the second sentence thereof
shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares
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Page 3.
it will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided, that if prior
notification to or approval of the Office of Thrift Supervision (the "OTS"),
Board of Governors of the Federal Reserve System (the "Federal Reserve Board")
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder
shall be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of _________,
2000, between the registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of 1933, as amended. A
copy of such agreement is on file at the principal office of Issuer
and will be provided to the holder hereof without charge upon receipt
by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of counsel to the Holder;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), Home Owners' Loan Act, as amended
("HOLA"), or the Change in Bank Control Act of 1978, as amended, or any state or
other federal banking law, prior approval of or notice to the OTS, the Federal
Reserve Board or to any state or other federal
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Page 4.
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the OTS or the Federal Reserve Board or such state
or other federal regulatory authority as they may require) in order to permit
the Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; and (iv) promptly to take all action
provided herein to protect the rights of the Holder against dilution.
4. This Agreement and the Option granted hereby are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep current
a registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its commercially reasonable
efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its commercially reasonable efforts to cause such registration statement
promptly to become effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary to effect such
sales or other dispositions. Grantee shall have the right to demand two such
registrations. The Issuer shall bear the costs of such registrations (including,
but not limited to, Issuer's attorneys' fees, printing costs and filing fees,
except for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and provided further, however, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this
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Page 5.
Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for Issuer. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as
defined below) and prior to the date that is six (6) months immediately
thereafter (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the one-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, or (iv) in the event of a sale
of all or any substantial part of Issuer's assets or deposits, the sum of the
net price paid in such sale for such assets or deposits and the current market
value of the remaining net assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as the
case may be, and reasonably acceptable to Issuer, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be, and reasonably acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its best efforts to obtain (and to take all action necessary
to obtain) all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such repurchase), the
Holder or Owner may revoke its notice of repurchase of the Option and/or the
Option Shares whether in whole or to the extent of the prohibition, whereupon,
in the latter case, Issuer shall promptly (i) deliver to the Holder and/or the
Owner, as appropriate, that portion of the Option Repurchase Price and/or the
Option Share Repurchase Price that Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Holder, a new Agreement
evidencing the right of the Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the
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Holder and the denominator of which is the Option Repurchase Price, and/or (B)
to the Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing. If an Exercise Termination Event shall have occurred prior to the
date of the notice by Issuer described in the first sentence of this subsection
(c), or shall be scheduled to occur at any time before the expiration of a
period ending on the thirtieth day after such date, the Holder shall nonetheless
have the right to exercise the Option until the expiration of such 30-day
period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be
deemed to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in
clause (z) shall be 50%.
8. (a) In the event ("Substitute Option Repurchase Event") that prior
to an Exercise Termination Event, Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or a Grantee
Subsidiary, or engage in a plan of exchange with any person, other than Grantee
or a Grantee Subsidiary and Issuer shall not be the continuing or surviving
corporation of such consolidation or merger or the acquirer in such plan of
exchange, (ii) to permit any person, other than Grantee or a Grantee Subsidiary,
to merge into Issuer or be acquired by Issuer in a plan of exchange and Issuer
shall be the continuing or surviving or acquiring corporation, but, in
connection with such merger or plan of exchange, the then outstanding shares of
Common Stock shall be changed into or exchanged for stock or other securities of
any other person or cash or any other property or the then outstanding shares of
Common Stock shall after such merger or plan of exchange represent less than 50%
of the outstanding shares and share equivalents of the merged or acquiring
company, or (iii) to sell or otherwise transfer all or a substantial part of its
or any Issuer Subsidiary's assets or deposits to any person, other than Grantee
or a Grantee Subsidiary, then, and in each such case, the agreement governing
such transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other
than Issuer), (ii) the acquiring person in a plan of exchange in which
Issuer is acquired, (iii) the Issuer in a merger or plan of exchange
in which Issuer is the continuing or surviving or acquiring person,
and (iv) the transferee of all or a substantial part of Issuer's
assets or deposits (or the assets or deposits of any Issuer
Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued
by the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii)"Assigned Value" shall mean the market/offer price, as
defined in Section 7.
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for one year immediately
preceding the consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common
stock issued by the person merging into Issuer or by any company which
controls or is controlled by such person, as the Holder may elect.
(c) Subject to paragraph (d) of this Section 8, the Substitute Option
shall have the same terms as the Option, provided that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option, such
terms shall be as similar as possible and in no event less advantageous to the
Holder. The issuer of the Substitute Option shall also enter into an agreement
with the then Holder or Holders of the Substitute Option in substantially the
same form as this Agreement (after giving effect for such purpose to the
provisions of Section 9), which agreement shall be applicable to the Substitute
Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option was exercisable
immediately
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prior to the event described in the first sentence of Section 8(a), divided by
the Average Price. The exercise price of the Substitute Option per share of
Substitute Common Stock shall then be equal to the Option Price multiplied by a
fraction, the numerator of which shall be the number of shares of Common Stock
for which the Option was exercisable immediately prior to the event described in
the first sentence of Section 8(a) and the denominator of which shall be the
number of shares of Substitute Common Stock for which the Substitute Option is
exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder") occurring after a Substitute Option Repurchase Event
and prior to the date that is six (6) months thereafter, the issuer of the
Substitute Option (the "Substitute Option Issuer") shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the one-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor or the
portion thereof which the Substitute Option Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within ten (10) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its best efforts to receive (and to take all
action necessary to receive) all required regulatory and legal approvals as
promptly as practicable in order to accomplish such repurchase), the Substitute
Option Holder and/or Substitute Share Owner may revoke its notice of repurchase
of the Substitute Option or the Substitute Shares either in whole or to the
extent of prohibition, whereupon, in the latter case, the Substitute Option
Issuer shall promptly (i) deliver to the Substitute Option Holder or Substitute
Share Owner, as appropriate, that portion of the Substitute Option Repurchase
Price or the Substitute Share Repurchase Price that
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Page 8.
the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option
Holder shall nevertheless have the right to exercise the Substitute Option until
the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights (for so long as the Holder, Owner, Substitute Option
Holder or Substitute Share Owner, as the case may be, is using commercially
reasonable efforts to obtain such regulatory approvals), and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board prior to the date hereof and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; provided, however,
that until the date 15 days following the date on which the OTS and Federal
Reserve Board has approved, to the extent required, an application by Grantee to
acquire the shares of Common Stock subject to the Option, Grantee may not assign
its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf or (iv)
any other manner approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use its commercially reasonable
efforts to make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve Board under the BHCA and the OTS under HOLA, to the extent
required, for approval to acquire the shares issuable hereunder, but Grantee
shall not be obligated to apply to state banking authorities for approval to
acquire the shares of Common Stock issuable hereunder until such time, if ever,
as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior
to the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price; provided, however, that Grantee may not exercise its
rights pursuant to this Section 14 if Issuer has repurchased the Option (or any
portion thereof) or any Option Shares pursuant to Section 7. The "Surrender
Price" shall be equal to $9,000,000 (i) plus, if applicable, Grantee's purchase
price with respect to any Option Shares purchased by Grantee hereunder and (ii)
minus, if applicable, the sum of (1) the excess of (A) the net cash amounts, if
any, received by Grantee pursuant to the arms' length sale of Option Shares (or
any other securities into which
B-8
Page 9.
such Option Shares were converted or exchanged) to any unaffiliated party, over
(B) Grantee's purchase price of such Option Shares, and (2) the net cash
amounts, if any, received by Grantee pursuant to an arms' length sale of any
portion of the Option sold.
(b) Grantee may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 14 by surrendering to Issuer, at its
principal office, a copy of this Agreement together with certificates for Option
Shares, if any, accompanied by a written notice stating (i) that Grantee elects
to relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the fifth business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within ten (10) business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its best efforts to obtain (and to take all action necessary to obtain) all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to make such payments, (B) within five days of
the submission or receipt of any documents relating to any such regulatory and
legal approvals, provide Grantee with copies of the same, and (c) keep Grantee
advised of both the status of any such request for regulatory and legal
approvals, as well as any discussions with any relevant regulatory or other
third party reasonably related to the same and (ii) Grantee may revoke such
notice of surrender by delivery of a notice of revocation to Issuer and, upon
delivery of such notice of revocation, the Exercise Termination Date shall be
extended to a date six months from the date on which the Exercise Termination
Date would have occurred if not for the provisions of this Section 14(c) (during
which period Grantee may exercise any of its rights hereunder, including any and
all rights pursuant to this Section 14).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law are applicable).
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and
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Page 10.
be binding upon the parties hereto and their respective successors and permitted
assignees. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors except as assignees, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
B-10
Page 11.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
QUEENS COUNTY BANCORP, INC.
By: /s/ Joseph R. Ficalora
----------------------
Joseph R. Ficalora
Chairman of the Board, President and
Chief Executive Officer
HAVEN BANCORP, INC.
By: /s/ Phillip S. Messina
----------------------
Philip S. Messina
Chairman of the Board
and Chief Executive Officer
B-11
APPENDIX C
SALOMON SMITH BARNEY
- ------- ----- ------
A member of Citigroup
June 27, 2000
The Board of Directors
Queens County Bancorp, Inc.
38-25 Main Street
Flushing, NY 11354
Members of the Board:
You have requested our opinion as to the fairness, from a financial
point of view, to Queens County Bancorp, Inc. (the "Company") of the Exchange
Ratio (as defined below) set forth in the Agreement and Plan of Merger (the
"Agreement") to be entered into by and between the Company and Haven Bancorp,
Inc. ("Haven").
As more fully described in the Agreement and subject to the terms and
conditions thereof, (i) Haven will be merged with and into the Company (the
"Merger") under the name "New York Community Bank" or another name and (ii) each
outstanding share of the common stock, $.0l par value, of Haven (the "Haven
Common Stock") (other than Excluded Shares (as defined in the Agreement)) will
be converted into and exchangeable for the right to receive 1.04 shares (the
"Exchange Ratio") of common stock, par value $.01 per share, of the Company (the
"Company Common Stock") (with cash paid in lieu of fractional shares).
In arriving at our opinion, we reviewed a draft of the Agreement dated
June 26, 2000, and held discussions with certain senior officers, directors and
other representatives and advisors of the Company and certain senior officers
and other representatives and advisors of Haven concerning the businesses,
operations and prospects of the Company and Haven. We examined certain publicly
available business and financial information relating to the Company and Haven
and discussed certain other information for the Company and Haven with the
managements of the Company and Haven, including information relating to certain
strategic implications and operational benefits anticipated to result from the
Merger. We reviewed the financial terms of the Merger as set forth in the
Agreement in relation to, among other things: current and historical market
prices and trading volumes of the Company Common Stock and Haven Common Stock;
the historical and other operating data of the Company and Haven; publicly
available forecasts, published by equity analysts, as to the future earnings of
the Company and Haven; and the historical and forecasted capitalization and
financial condition of the Company and Haven. We considered, to the extent
publicly available, the financial terms of certain other similar transactions
that we considered relevant in evaluation of the Exchange Ratio and analyzed
certain financial, stock market and other publicly available information
relating to the businesses of other companies whose operations we considered
relevant in evaluating those of the Company and Haven. We also evaluated the pro
forma financial impact of the Merger on the Company. In addition to the
foregoing, we conducted such other analyses and examinations and considered such
other information and financial, economic and market criteria as we deemed
appropriate in arriving at our opinion.
In rendering our opinion, we have assumed and relied, without
independent verification, upon the accuracy and completeness of all financial
and other information and data publicly available or furnished to or otherwise
reviewed by or discussed with us and have further relied upon the assurances of
managements of the Company and Haven that they are not aware of any facts that
would make any of such information inaccurate or misleading. With respect to
financial forecasts regarding the Company and Haven, we have relied on publicly
available third-party equity research forecasts, and we express no view with
respect to such forecasts or the assumptions on what they were based. With
respect to forecasts of cost savings and operating synergies forecasted by
management of the Company to result from the Merger, we have been advised by the
management of the Company that such forecasts were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
management of the Company as to the strategic implications and operational
benefits anticipated to result from the Merger. We express no view with respect
to such forecasts and other information and data or the assumptions on which
they were based. We have assumed, with your consent, that the Merger will be
treated as a tax-free reorganization for federal income tax purposes and that it
qualifies, and will be accounted for, as a "purchase" in
C-1
Queens County Bancorp, Inc.
June 27, 2000
Page 2
accordance with generally accepted accounting principles. Although, at the
Company's request, we have participated in an evaluation of selected individual
credit files of Haven, for purposes of this opinion we have, with your consent,
assumed that the aggregate allowances for such losses for each of the Company
and Haven are in the aggregate adequate to cover such losses. We are not experts
in the evaluation of loan or lease portfolios for purposes of assessing the
adequacy of the allowances for losses with respect thereto and we have not made
an independent evaluation of the adequacy of such allowances of the Company or
Haven. Although, at the Company's request we prepared an estimate of the
potential sale value of certain of Haven's loans and securities, we have not
sought any buyers for such loans or securities and no assurances can be given as
to the terms on which such loans or securities could actually be sold. We have
not made or been provided with an independent evaluation or appraisal of any of
the other assets or liabilities (contingent or otherwise) of the Company or
Haven nor have we made any physical inspection of the properties or assets of
the Company or Haven. Representatives of the Company have advised us, and we
have assumed, that the final terms of the Agreement will not vary materially
from those set forth in the draft reviewed by us. We have further assumed that
the Merger will be consummated in a timely fashion in accordance with the terms
of the Agreement, without waiver of any of the conditions to the Merger
contained in the Agreement.
Our opinion, as set forth herein, relates to the relative values of the
Company and Haven. We are not expressing any opinion as to what the value of the
Company Common Stock actually will be when issued pursuant to the Merger or the
price at which the Company Common Stock will trade subsequent to the
announcement or consummation of the Merger. We were not requested to consider,
and our opinion does not address, the relative merits of the Merger as compared
to any alternative business strategies that might exist for the Company or the
effect of any other transaction in which the Company might engage. Our opinion
is necessarily based upon information available to us, and financial, stock
market and other conditions and circumstances existing and disclosed to us, as
of the date hereof and we assume no responsibility to update or revise our
opinion based upon circumstances or events after the date hereof.
Salomon Smith Barney Inc. is acting as financial advisor to the Company
in connection with the proposed Merger and will receive a fee for such services,
substantially all of which is payable only upon execution of the Agreement or
consummation of the Merger. In the ordinary course of our business, we and our
affiliates may actively trade or hold the securities of the Company and Haven
for our own account or for the accounts of our customers and, accordingly, may
at any time hold a long or short position in such securities. In addition, we
and our affiliates (including Citigroup Inc. and its affiliates) may maintain
relationships with the Company, Haven and their respective affiliates.
Our advisory services and the opinion expressed herein are provided for
the information of the Board of Directors of the Company in its evaluation of
the proposed Merger and our opinion is not intended to be and does not
constitute a recommendation to any stockholder as to how such stockholder should
vote on any matters relating to the proposed Merger.
Based upon and subject to the foregoing, our experience as investment
bankers, our work as described above and other factors we deemed relevant, we
are of the opinion that, as of the date hereof, the Exchange Ratio is fair, from
a financial point of view, to the Company.
Very truly yours,
/s/ SALOMON SMITH BARNEY INC.
- -----------------------------
SALOMON SMITH BARNEY INC.
C-2
APPENDIX D
[Lehman Letterhead]
June 27, 2000
Board of Directors
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, NY 11590
Members of the Board:
We understand that Haven Bancorp, Inc. (the "Company") and Queens
County Bancorp, Inc. ("Queens County") will enter into a definitive merger
agreement pursuant to which the Company will be merged with and into Queens
County and each share of common stock of the Company will be converted into the
right to receive 1.04 shares (the "Exchange Ratio") of common stock of Queens
County (the "Merger"). The terms and conditions of the Merger are set forth in
more detail in the Agreement and Plan of Merger dated as of June 27, 2000 by and
between the Company and Queens County (the "Merger Agreement"). We further
understand that, concurrently with the announcement of the Merger, Queens County
will announce that it is prepared to repurchase up to 20.0% of the shares to be
issued to the stockholders of the Company in the transaction to support the
price of Queens County's common stock following the announcement of the Merger.
We have been requested by the Board of Directors of the Company to
render our opinion with respect to the fairness, from a financial point of view,
to the Company of the Exchange Ratio to be offered by Queens County to the
stockholders of the Company in the Merger. We have not been requested to opine
as to, and our opinion does not in any manner address, the Company's underlying
business decision to proceed with or effect the Merger.
In arriving at our opinion, we reviewed and analyzed: (1) the Merger
Agreement and the specific terms of the Merger, (2) publicly available
information concerning the Company and Queens County that we believe to be
relevant to our analysis including without limitation annual reports on Form
10-K for the year ended December 31, 1999, quarterly reports on Form 10-Q for
the quarter ended March 31, 2000 and recent press releases for the Company and
Queens County, (3) financial and operating information with respect to the
business, operations and prospects of the Company furnished to us by the
Company, including without limitation projections prepared by management of the
Company and the master license agreement, as well as the individual supermarket
branch license agreements, entered into by the Company with Pathmark, Inc., (4)
financial and operating information with respect to the business, operations and
prospects of Queens County furnished to us by Queens County, (5) the trading
histories of the common stock of the Company and Queens County and a comparison
of these trading histories with those of other companies that we deemed
relevant, (6) a comparison of the historical financial results and present
financial condition of the Company and Queens County with those of other
companies that we deemed relevant, including without limitation historical
operating performance of the Company in terms of profitability as measured by
ROAA and ROAE and efficiency ratio as compared to its peer group, (7) current
third party research analyst estimates of the future financial performance of
the Company and Queens County, (8) a comparison of the financial terms of the
Merger with the financial terms of certain other recent transactions that we
deemed relevant, (9) the potential pro forma impact of the Merger on the
expected future financial performance of Queens County, (10) the relative
contributions of the Company and Queens County to the assets, equity, earnings
and overall financial performance of the combined company on a pro forma basis,
(11) the results of efforts to solicit indications of interest from various
other potential buyers with respect to an acquisition of all or part of the
Company, and (12) the increase in dividends expected to be received by the
Company's stockholders as a consequence of the Merger. In addition, we have had
discussions with the managements of the Company and Queens County concerning
their respective businesses, operations, assets, liabilities, financial
conditions and prospects, and the potential cost savings, operating synergies
and strategic benefits expected to result from a combination of the businesses
of the Company and Queens County, and have undertaken such other studies,
analyses and investigations as we deemed appropriate.
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In arriving at our opinion, we have assumed and relied upon the
accuracy and completeness of the financial and other information used by us
without assuming any responsibility for independent verification of such
information and have further relied upon the assurances of management of the
Company and Queens County that they are not aware of any facts or circumstances
that would make such information inaccurate or misleading. With respect to the
financial projections of the Company and Queens County, upon advice of the
Company and Queens County, we have assumed that such projections have been
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the respective managements of the Company and Queens County as
to the future financial performance of the Company and Queens County (including,
without limitation, with respect to projected cost savings and operating
synergies expected to result from a combination of the businesses of the Company
and Queens County) However, in arriving at our opinion, we also used consensus
estimates of future financial performance of the Company and Queens County from
third party research analysts and, with respect to the Company, made certain
adjustments to such estimates based on various assumptions as to the future
operations of the Company. We have discussed these adjusted estimates for the
future financial profitability of the Company with management of the Company and
they have agreed with the appropriateness of the use of such adjusted estimates
in performing our analysis. In arriving at our opinion, we have not conducted a
physical inspection of the properties and facilities of Queens County or the
Company and have not made or obtained any evaluations or appraisals of the
assets or liabilities of Queens County or the Company. In addition, we are not
experts in the evaluation of loan portfolios or allowances for loan and real
estate owned losses and, upon advice of the Company and Queens County, we have
assumed that the Company's and Queens County's current allowances for loan and
real estate owned losses (including for off-balance sheet items) are in the
aggregate adequate to cover all such losses. Our opinion necessarily is based
upon market, economic and other conditions as they exist on, and can be
evaluated as of, the date of this letter.
Upon advice of the Company and its legal and accounting advisors, we
have assumed that the Merger will qualify for purchase accounting treatment and
as a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and therefore as a tax-free transaction to the
stockholders of the Company.
Based upon and subject to the foregoing, we are of the opinion as of
the date hereof that, from a financial point of view, the Exchange Ratio to be
offered by Queens County to the stockholders of the Company in the Merger is
fair to the Company.
We have acted as financial advisor to the Company in connection with
the Merger and will receive a fee for our services, a significant portion of
which is contingent upon the consummation of the Merger. In addition, the
Company has agreed to indemnify us for certain liabilities that may arise out of
the rendering of this opinion. We also have performed and continue to perform
various investment banking services for Queens County and have received and will
receive customary fees for such services.
This opinion is for the use and benefit of the Board of Directors of
the Company and is rendered to the Board of Directors in connection with its
consideration of the Merger. This opinion is not intended to be and does not
constitute a recommendation to any stockholder of the Company as to how such
stockholder should vote with respect to the Merger.
Very truly yours,
LEHMAN BROTHERS
By: /s/ Mark H. Burton
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Mark H. Burton
Managing Director
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