EXHIBIT 99.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT (the "Agreement' or the "Merger Agreement"), made as of the
16th day of September, 1997, by and between LAKELAND BANCORP, INC., a
corporation duly organized and existing under the laws of the State of New
Jersey (hereinafter referred to as "Lakeland"), having an address for purposes
of this Agreement located at 250 Oak Ridge Road, Oak Ridge, New Jersey 07438,
and METROPOLITAN STATE BANK, a Banking Corporation organized and existing under
the laws of the State of New Jersey (hereinafter referred to as "MSB"), having
an address for purposes of this Agreement located at 166 Changebridge Road,
Montville, New Jersey 07045,
W I T N E S S E T H
WHEREAS, Lakeland desires to acquire MSB by means of a transaction
(hereinafter collectively referred to as the "Merger") pursuant to which (i) a
wholly-owned subsidiary of Lakeland would be formed as a state-chartered bank,
(ii) such subsidiary would merge with and into MSB, (iii) MSB would become a
wholly-owned subsidiary of Lakeland and (iv) each of the outstanding shares of
capital stock of MSB would be automatically converted into the right to receive
shares of the Common Stock, par value $2.50 per share, of Lakeland (the
"Lakeland Stock"), all in accordance with, and subject to, the terms and
conditions hereinafter set forth;
WHEREAS, the Merger is intended to qualify as a reorganization within the
meaning of Section 368(a)(1)(A) by reason of Section 368(a)(2)(E) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Boards of Directors of Lakeland and MSB, deeming the Merger to
be in the best interests of Lakeland, MSB and their respective stockholders,
have each by duly adopted resolutions approved this Merger Agreement,
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger; Exchange of MSB Stock.
(a) Promptly following the execution of this Merger Agreement,
Lakeland will use its best efforts to cause (subject to necessary governmental
approvals) a new state-chartered bank (the "Subsidiary Bank") to be organized in
accordance with the laws of the State of New Jersey. All of the capital stock of
the Subsidiary Bank, other than directors' qualifying shares, if any, shall be
owned by Lakeland. Upon receipt of all governmental approvals necessary for the
formation of the Subsidiary Bank, the Subsidiary Bank and MSB will execute a
merger agreement (the "Subsidiary Bank Merger Agreement"), containing terms
consistent with the terms of this Merger Agreement, in such form as counsel for
Lakeland and MSB shall advise for the purpose of obtaining all necessary
approvals from the Department of Banking of the State of New Jersey.
(b) Subject to and in accordance with the provisions of this
Agreement, at the "Effective Time" (as defined herein) (i) the Subsidiary Bank
will be merged into MSB; (ii) all of the outstanding shares of the common stock,
par value $5.00 per share, of MSB ("MSB Stock"), other than "MSB Dissenting
Shares" (as defined in Section 1.11 hereof), will be converted into shares of
Lakeland Stock; (iii) all options to purchase MSB Stock which are outstanding
and unexercised at the Effective Time shall be converted into options to
purchase Lakeland Stock in accordance with Section 1.2 hereof; and (iv) all of
the outstanding capital stock of the bank resulting from the merger of the
Subsidiary Bank into MSB (the "Surviving Bank") will be owned by Lakeland. At
the Effective Time, by virtue of the Merger and without any action on the part
of any holder thereof:
(i) Any shares of MSB Stock held in the treasury of MSB shall be
canceled and retired, and no cash, securities or other consideration shall be
paid or delivered in exchange for such MSB Stock under this Agreement.
(ii) Each share of MSB Stock issued and outstanding immediately
prior to the Effective Time, which is not to be canceled and retired pursuant to
Section 1(b)(i) above or treated as an MSB Dissenting Share, shall be converted
into such number of shares (the "Exchange Number") of Lakeland Stock as shall be
determined pursuant to the provisions of Sections 1.1(c), 1.1(d) and 1.1(e)
hereof.
(iii) No MSB Dissenting Shares shall be converted into or
represent a right to receive Lakeland Stock under this Section 1.1(b) but shall
be subject to the provisions of Section 1.11 below.
(iv) Each authorized but unissued share of MSB Stock shall cease
to exist.
(c) In the event that the "Market Value" (as defined herein) is equal
to or greater than $22.50 per share but not greater than $31.00 per share, the
Exchange Number shall equal $26.20 divided by the Market Value. In the event
that the Market Value is less than $22.50 per share, the Exchange Number shall
be 1.164. In the event that the Market Value is greater than $31.00 per share,
the Exchange Number shall be 0.845. Either party shall have the right to
terminate the Merger in the event that the Market Value is less than $22.50 per
share.
(d) The term "Market Value" shall mean the average of the "Bid Prices"
(as defined herein) of a share of Lakeland Stock on the twenty "Accountable
Days" (as defined herein) during the "Determination Period" (as defined herein).
For purposes of this Merger Agreement, the following terms shall have the
following meanings:
(i) The term "Bid Price", with respect to a particular date,
shall mean the average of the highest and lowest bid price for a share of
Lakeland Stock quoted by the National Quotation Bureau, Inc. on such date.
(ii) The term "Determination Period" shall mean the twenty
consecutive business days ending on the day (the "Approval Day") on which the
approval of the Federal Reserve Board required for consummation of the Merger
shall be received by Lakeland; provided, however, that if an actual sale of
Lakeland Stock does not occur on at least ten of such business days, such period
shall be extended closer to the date hereof (on a consecutive date basis) by
such number of business days as shall be necessary to assure that at least ten
of the business days in such period are days on which an actual sale of Lakeland
Stock occurs.
(iii) The term "Accountable Day" shall mean (x) each of the
"Sales Days" (as defined herein) and each of the "Other Days" (as defined
herein). The term "Sales Days" shall mean each of the ten business days in the
Determination Period closest to the Approval Day on which an actual sale of
Lakeland Stock occurs. The term "Other Days" shall mean each of the ten business
days in the Determination Period, other than such ten Sales Days, that are the
closest to the Approval Day.
(e) The Exchange Number shall be appropriately adjusted if, prior to
the Closing, there is a stock split or other subdivision or consolidation of
shares, or any stock dividends or distributions, or other similar changes
affecting the capital stock of MSB or Lakeland; provided, however, that no
adjustment shall be made with respect to any event publicly announced by
Lakeland prior to the date hereof. Furthermore, no adjustment shall be made by
reason of the issuance of stock (1) by Lakeland or MSB upon the exercise of any
currently outstanding stock options or (2) by Lakeland pursuant to its dividend
reinvestment plan.
(f) All references in the remainder of this Agreement to the Exchange
Number shall mean the Exchange Number as adjusted in accordance with Section
1.1(e).
1.2. MSB Stock Options. As of the Effective Time, Lakeland shall assume the
rights and obligations of MSB under those stock options to purchase MSB Stock
granted by MSB prior to the date hereof pursuant to the Metropolitan State Bank
1988 Stock Option Plan, as amended prior to the date hereof (the "1988 MSB Stock
Option Plan"), or pursuant to an employment agreement, dated February 6, 1988,
between MSB and Paul P. Lubertazzi, as amended prior to the date hereof (the
"Employment Agreement"), which options are outstanding at the Effective Time
("Assumed Options"), to the extent such options shall not theretofore have been
exercised. Pursuant to such assumption, the holder of each Assumed Option shall
be entitled, subject to the terms of his stock option and compliance with
applicable law, to purchase the number of shares (rounded to the nearest whole
number) of Lakeland Stock determined by multiplying the number of shares of MSB
Stock covered by the Assumed Option by the Exchange Number; the price per share
of Lakeland Stock under each Assumed Option shall be determined by dividing the
price per share of MSB Stock specified in the Assumed Option by the Exchange
Number (rounded to the nearest penny), so that the aggregate price for all
shares covered by the Assumed Option shall remain substantially unchanged. Each
Assumed Option shall constitute a continuation of the corresponding stock option
issued under the 1988 MSB Stock Option Plan or pursuant to the Employment
Agreement, as the case may be, substituting Lakeland for MSB and Lakeland Stock
for MSB Stock in accordance with the foregoing conversion formula, substituting
the price per share determined in accordance with the foregoing formula, and
substituting a relationship with Lakeland or any of its subsidiaries for a
relationship with MSB, effective as of the Effective Time. Except as provided in
this Section 1.2, all of the terms and provisions of each Assumed Option shall
remain the same, including, but not limited to, the times when the Assumed
Option may be exercised. As soon as practicable after the Effective Time,
Lakeland will send written notice of the assumption of the Assumed Options to
each holder thereof. As of the Effective Time, Lakeland will have taken all
corporate and other action necessary to reserve sufficient shares of Lakeland
Stock for issuance upon exercise of the Assumed Options. Lakeland will prepare
and file with the Securities and Exchange Commission (the "SEC") one or more
registration statements on the appropriate form relating to the issuance of the
shares of Lakeland Stock underlying such Assumed Options upon the exercise
thereof and will use its best efforts to have such registration statement
declared effective as soon as practicable after the Effective Time, but in no
case later than six (6) months after the Effective Time.
1.3. No Fractional Interests. Neither certificates nor scrip for fractional
interests in shares of Lakeland Stock will be issued in connection with the
Merger, but in lieu thereof, each holder of MSB Stock who would otherwise have
been entitled to a fraction of a share of Lakeland Stock will be paid an amount
of cash equal to such fraction multiplied by the Market Value. All shares of MSB
Stock held by each record holder shall be aggregated before determining the need
to pay cash in lieu of fractional shares.
1.4. Meeting of Stockholders of MSB. Upon receipt of all requisite
regulatory approvals required in order to conduct the meeting described herein,
the Board of Directors of MSB shall duly call, and cause to be held, a special
meeting of the stockholders of MSB (the "Special Meeting") and shall direct that
this Merger Agreement and the Subsidiary Bank Merger Agreement be submitted to
said stockholders for the purpose of adopting and approving the same. The Board
of Directors of MSB shall, consistent with their fiduciary duties, recommend
that the stockholders of MSB vote to adopt and approve this Merger Agreement and
the Subsidiary Bank Merger Agreement. Lakeland and MSB shall cooperate in
soliciting proxies from stockholders of MSB in favor of approval of this Merger
Agreement and the Subsidiary Bank Merger Agreement pursuant to a proxy statement
included within the Registration Statement described in Section 7.1 hereof.
1.5. Filing of Subsidiary Bank Merger Agreement and Certification. In the
event that this Merger Agreement and the Subsidiary Bank Merger Agreement are
approved by at least two thirds of the outstanding shares of MSB Stock as of the
record date for the Special Meeting as required under N.J.S.A. 17:9A-137, such
approval shall be promptly certified by the president or a vice president of MSB
and the Subsidiary Bank and the certification shall be attached to the
Subsidiary Bank Merger Agreement (the "Certification"). Thereafter, upon
satisfaction or waiver of all conditions specified in Article VIII and Article
IX hereof and consummation of the Closing described in Article X hereof, the
Subsidiary Bank Merger Agreement and the Certification shall be filed in the
Department of Banking of the State of New Jersey by the parties hereto, all as
provided in N.J.S.A. 17:9A-137.
1.6. Effective Time. The Merger shall become effective (the "Effective
Time") at such time as the Subsidiary Bank Merger Agreement and the
Certification are deemed filed with the Department of Banking of the State of
New Jersey in accordance with N.J.S.A. 17:9A-137 following the Closing
contemplated by Article X hereof.
1.7. Directors.
(a) Within ten (10) days following the Effective Time, the Board of
Directors of Lakeland shall, consistent with their fiduciary duties, appoint
Paul P. Lubertazzi and another member of the Board of Directors of MSB (the
"Second Designee") to the Board of Directors of Lakeland. The Board of Directors
of MSB shall, prior to the Effective Time, designate one of their members to be
the Second Designee, provided that such person is acceptable to the Board of
Directors of Lakeland, consistent with their fiduciary duties. In the event that
Mr. Lubertazzi and/or the Second Designee is unable to take office, the Board of
Directors of MSB shall designate a substitute, acceptable to the Board of
Directors of Lakeland, to be appointed in his place by the Board of Directors of
Lakeland, consistent with their fiduciary duties.
(b) Within ten (10) days following the Effective Time, Lakeland shall,
consistent with its fiduciary duties, cause Paul P. Lubertazzi and another
member of the Board of Directors of MSB (the "Second Bank Board Designee") to be
appointed to the Board of Directors of Lakeland State Bank. The Board of
Directors of MSB shall, prior to the Effective Time, designate one of their
members to be the Second Bank Board Designee, provided that such person is
acceptable to the Board of Directors of Lakeland State Bank, consistent with
their fiduciary duties. In the event that Mr. Lubertazzi and/or the Second Bank
Board Designee is unable to take office, the Board of Directors of MSB shall
designate a substitute, acceptable to the Board of Directors of Lakeland State
Bank, to be appointed in his place by the Board of Directors of Lakeland State
Bank, consistent with their fiduciary duties.
(c) For a period commencing at the Effective Time and ending on the
earlier of (i) the third anniversary of the Effective Time or (ii) the date on
which Paul P. Lubertazzi ceases to serve as a full-time employee of MSB (such
period being hereinafter referred to as the "Transition Period"), all fees and
benefits payable to MSB Directors will not be reduced beyond the levels
currently being paid to MSB Directors. During the "Delivery Period" (as defined
in Section 6.1 hereof), MSB shall furnish to Lakeland a schedule describing such
fees and benefits.
(d) During the Transition Period, Lakeland shall cause two (2) of its
Directors, on a rotating basis, to attend meetings of the MSB Board of
Directors. MSB shall appoint such persons as non-voting observers for the
purpose of maintaining communication between the MSB Board and the Lakeland
Board.
1.8. MSB as a Separate Subsidiary. Upon the Effective Time, MSB, as the
Surviving Bank, shall become a wholly owned subsidiary of Lakeland. The Board of
Directors of MSB immediately prior to the Effective Time shall continue to be
the Board of Directors of MSB immediately after the Effective Time, the
executive officers of MSB immediately prior to the Effective Time shall continue
to be the executive officers of MSB immediately after the Effective Time, and
the Certificate of Incorporation and By-laws of MSB as in existence immediately
prior to the Effective Time shall continue to be the Certificate of
Incorporation and By-laws of MSB immediately after the Effective Time. Lakeland
shall not terminate the separate corporate existence of MSB as a subsidiary of
Lakeland during the Transition Period, unless required to do so by law or
governmental authorities or as a result of the fiduciary obligations of
Lakeland's Board of Directors. Lakeland has no present intention to remove any
of MSB's directors or executive officers during the Transition Period, provided
that MSB is managed in a manner consistent with Lakeland's overall business
strategies, as such strategies may develop from time to time. However, nothing
herein shall be construed to limit the right of Lakeland to remove and/or
replace any or all of the directors and executive officers of MSB at any time
following the Effective Time, to amend the Certificate of Incorporation and
By-laws of MSB at any time following the Effective Time or otherwise to limit
the rights and prerogatives of Lakeland as a stockholder of MSB at any time
following the Effective Time, except that Lakeland shall not terminate the
separate corporate existence of MSB prior to the end of the Transition Period
unless required to do so by law or governmental authorities or as a result of
the fiduciary obligations of Lakeland's Board of Directors.
1.9. Issuance and Delivery of Lakeland Common Stock.
(a) As soon as practicable after the Effective Time, Lakeland will
send a letter of transmittal to each record holder of certificates representing
shares of MSB Stock immediately prior to the Effective Time ("Old
Certificates"), which letter shall state the Exchange Number.
(b) Thereafter, upon surrender for cancellation to Lakeland's exchange
agent of a completed letter of transmittal, together with one or more Old
Certificates (or, in the event that the Old Certificates cannot be located, an
appropriate affidavit of loss and indemnity agreement and/or bond as may be
reasonably required in each case by Lakeland), Lakeland shall cause to be issued
and delivered to the holder of each surrendered Old Certificate a New
Certificate representing the appropriate number of shares of Lakeland Stock,
together with a check for payment of cash in lieu of fractional interests to be
issued in respect of the Old Certificates. No interest shall be paid with
respect to such cash payments.
(c) Until an outstanding Old Certificate has been surrendered and
exchanged as herein provided for a New Certificate (or until such time as the
record holder of an outstanding Old Certificate shall have delivered an
appropriate affidavit of loss and indemnity agreement and/or bond as may be
reasonably required by Lakeland, together with a completed letter of
transmittal), such outstanding Old Certificate shall be deemed for all corporate
purposes of Lakeland, other than the payment of dividends or other
distributions, to evidence ownership of the number of shares of Lakeland Stock
which were exchanged for the shares of MSB Stock formerly evidenced by the Old
Certificate. No dividends (whether payable in cash, stock or otherwise) or other
distributions which are declared on Lakeland Stock will be paid to any person
otherwise entitled to receive the same until such person's Old Certificates have
been surrendered in exchange for New Certificates in the manner herein provided,
but upon such surrender, such dividends and other distributions, if any, payable
from and after the Effective Time will be paid to such person. In no event shall
any person entitled to receive such dividends or other distributions be entitled
to receive interest thereon.
1.10. Stock Transfer Books. At the Effective Time, the stock transfer books
of MSB shall be closed and no transfer of MSB Stock shall thereafter be made.
1.11 MSB Dissenting Shares.
(a) The shares of MSB Stock held by those shareholders of MSB who have
timely and properly exercised their dissenter's rights in accordance with all
applicable laws, including without limitation the provisions of N.J.S.A.
17:9A-140 (collectively, the "Appraisal Laws"), are herein referred to as "MSB
Dissenting Shares". Each MSB Dissenting Share, the holder of which, as of the
Effective Time, has not effectively withdrawn or lost his dissenter's rights
under the Appraisal Laws, shall not be converted into Lakeland Stock, but the
holder thereof shall be entitled only to such rights as are granted by the
Appraisal Laws. Each holder of MSB Dissenting Shares who becomes entitled to
payment for his MSB Stock pursuant to the Appraisal Laws shall receive payment
therefor from the Surviving Bank (but only after the amount thereof shall have
been agreed upon or finally determined pursuant to the Appraisal Laws). If any
holder of MSB Dissenting Shares shall withdraw or lose his dissenter's rights
under the Appraisal Laws, such MSB Dissenting Shares shall be converted into
Lakeland Stock in accordance with the provisions of this Merger Agreement as if
such shares were not MSB Dissenting Shares.
(b) MSB will give Lakeland (i) prompt notice of any written
objections, notices, withdrawals of objections or notices and any other
instruments served pursuant to N.J.S.A. 17:9A-140 through 17:9A-145, inclusive,
and received by MSB, and (ii) the opportunity to direct all negotiations with
and proceedings with respect to holders of MSB Dissenting Shares. MSB, will not,
except with the prior written consent of Lakeland, (i) voluntarily make any
payment with respect to any demands for payment under N.J.S.A. 17:9A-140 or (ii)
settle or offer to settle any such demands.
(c) Either party may terminate this Merger Agreement if holders of
more than nine and one-half percent (9-1/2 %) of the outstanding shares of MSB
Stock file a written notice of dissent in accordance with N.J.S.A. 17:9A-140 .
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MSB; CERTAIN COVENANTS
MSB hereby represents and warrants to Lakeland as follows:
2.1. Organization; Good Standing; Power and Qualification. MSB is a
commercial bank duly organized, validly existing and in good standing under the
laws of the State of New Jersey, and has all requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as it is now being conducted. MSB has no direct or indirect subsidiaries other
than Metropolitan State Bank Investment, Inc. (the "MSB Subsidiary"), a New
Jersey corporation. MSB owns 100% of the outstanding capital stock of the MSB
Subsidiary. The MSB Subsidiary is duly organized, validly existing and in good
standing under the laws of the State of New Jersey and has all requisite
corporate power and authority to own, lease and operate its properties and to
conduct its business as it is now being conducted. MSB shall, during the
"Delivery Period" (as defined in Section 6.1 hereof) deliver to Lakeland's
counsel true, correct and complete copies of the Certificates of Incorporation
and By-laws, as amended to the date hereof, of MSB and the MSB Subsidiary.
Neither MSB nor the MSB Subsidiary is required to be qualified or licensed to do
business in any jurisdiction other than the State of New Jersey.
2.2. Capitalization. The authorized capital stock of MSB consists
solely of 1,500,000 shares of MSB Stock, of which 679,047 shares are issued and
outstanding and 0 shares are held by MSB as treasury stock. MSB has no
outstanding convertible securities, warrants, options, rights, calls or other
commitments of any nature to issue or sell its capital stock, other than stock
options described in Section 2.3 hereof. All of the issued and outstanding
capital stock of the MSB Subsidiary is owned directly by MSB.
2.3. MSB Stock Options. MSB shall, during the Delivery Period, deliver
to Lakeland a true, correct and complete list of each holder of stock options to
purchase MSB Stock outstanding on the date hereof (the "Outstanding Options"),
the number of shares under each such option to each such holder, the exercise
price of each such option and the dates on which each such option granted to
such holder becomes exercisable and the date on which each such option
terminates, and the stock option plan or agreement pursuant to which each such
option was issued. Such list shall identify which of the Outstanding Options
have been granted as incentive stock options under the Internal Revenue Code of
1986, as amended. MSB shall, during the Delivery Period, deliver to Lakeland a
true, correct and complete copy of each such stock option plan or agreement, as
amended to the date hereof, together with specimen stock options and/or copies
of the actual stock options. No Outstanding Options were granted to any person
who was not an employee of MSB on the date of grant. As of the date hereof, the
Outstanding Options covered a total of 32,821.25 shares of MSB Stock. All of the
Outstanding Options were granted pursuant to the 1988 MSB Stock Option Plan or
pursuant to the Employment Agreement.
2.4. Authority; No Violation, etc. Subject to the approval of this
Merger Agreement and the Subsidiary Bank Merger Agreement by the stockholders of
MSB, and subject to the parties' obtaining all necessary regulatory approvals,
MSB has all requisite corporate power to execute, deliver and perform its
obligations under this Merger Agreement. The execution and delivery of this
Merger Agreement and performance by MSB of all its obligations hereunder have
been duly approved and authorized by all requisite corporate action of MSB,
subject to the stockholder approval contemplated by this Merger Agreement and
the parties' obtaining all necessary regulatory approvals. This Merger Agreement
has been duly executed and delivered by MSB and, subject as aforesaid,
constitutes the legal, valid and binding agreement of MSB. Neither the execution
and delivery of this Merger Agreement by MSB nor compliance by MSB with any of
the provisions hereof will (a) conflict with or result in a breach of any
provisions of MSB's Certificate of Incorporation or by-laws, (b) violate, or
result with the passage of time in a violation of, or cause a default or
acceleration under, or give rise to any right to termination, cancellation,
severance or acceleration (whether immediately, or after the giving of notice,
or after the passage of time, or a combination thereof) under, or result in the
creation of any lien, charge or encumbrance on any assets of MSB or the MSB
Subsidiary pursuant to, any of the terms, conditions or provisions of any
agreement, instrument or obligation to which MSB or the MSB Subsidiary is a
party, or by which MSB or the MSB Subsidiary or any of their properties or
assets may be bound, and which would have or might reasonably be expected to
have a material adverse effect on the financial condition, results of
operations, business or prospects of MSB and the MSB Subsidiary, taken as a
whole, or (c) violate any Federal or state statute, rule or regulation or
judgment, order, writ, injunction or decree of any Federal or state court,
administrative agency or governmental body, in each case applicable to MSB or
the MSB Subsidiary, or any of their properties or assets, and which violation
would have, or might reasonably be expected to have, a material adverse effect
on the financial condition, results of operations, business or prospects of MSB
and the MSB Subsidiary, taken as a whole, or otherwise require any filing with,
or obtaining any permit, authorization, consent or approval of, any Federal,
State or local public body, commission or authority, except those approvals and
authorizations specified in Section 2.5 hereof and any filing, permit,
authorization, consent or approval required under the New Jersey Industrial Site
Recovery Act (N.J.S.A. 13:1K-6, et. seq.).
2.5. Governmental Approvals and Filings. No approval, authorization,
consent, license, clearance or order of, declaration or notification to, or
filing, registration or compliance with, any governmental or regulatory
authority is required in order to (a) consummate the Merger or (b) prevent the
termination of any material right, privilege, license or agreement of MSB or the
MSB Subsidiary, or to prevent any material loss to MSB or the MSB Subsidiary or
their businesses, taken as a whole, by reason of the Merger, except (i)
compliance with the banking laws of the State of New Jersey with respect to the
formation of the Subsidiary Bank and the consummation of all other aspects of
the Merger, (ii) compliance with the Federal Bank Holding Company Act, including
approval by the Federal Reserve Bank of New York, and the expiration of any
required waiting period, and (iii) the requirements of the Securities Act of
1933, the Securities Exchange Act of 1934 and any applicable state securities
law.
2.6. Equity Investments. MSB shall, during the Delivery Period,
deliver to Lakeland a true, correct and complete list of all voting shares or
other equity interests of any entity, other than the MSB Subsidiary, which are
owned, directly or indirectly, by MSB.
2.7. Financial Information. MSB has delivered to Lakeland the audited
consolidated statements of condition of MSB and the MSB Subsidiary as of
December 31, 1996 and December 31, 1995, the related audited consolidated
statements of income, changes in shareholders' equity and cash flows for each of
the three years ended December 31, 1996 (including the notes thereto), and the
consolidated unaudited statement of condition of MSB and the MSB Subsidiary as
at June 30, 1997, and the related unaudited consolidated statement of income and
unaudited consolidated statement of cash flows for the six months ended June 30,
1997 and 1996 (including the notes thereto). All of such financial statements,
with the related notes thereto, (i) are in accordance with the books and records
of MSB and the MSB Subsidiary, (ii) have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except if and as otherwise indicated therein, and (iii) fairly
present the financial position of MSB and the MSB Subsidiary at such dates and
the results of its operations and the cash flows for the respective periods
indicated therein, except, in the case of the unaudited statements, for normal
year-end adjustments. MSB shall, during the Delivery Period, deliver to Lakeland
true, correct and complete copies of the corporate income tax returns of MSB for
the 12 month periods ended December 31, 1996, 1995, 1994, 1993 and 1992. Based
on inquiries made of its accountants, MSB has available to it such information
as shall be required in order to assure that the financial statements described
in this Section 2.7 conform with Regulation S-X as promulgated by the SEC.
2.8. Regulatory Filings. MSB shall, during the Delivery Period,
deliver to Lakeland true, correct and complete copies of all reports filed by
MSB with the New Jersey Department of Banking and the Federal Deposit Insurance
Corporation during the past 36 months.
2.9. Absence of Changes. Since June 30, 1997, there has been no
material adverse changes in the assets, properties, business or condition,
financial or otherwise, of MSB and the MSB Subsidiary, taken as a whole. For
purposes of this Agreement, a loss suffered by MSB or the MSB Subsidiary, or a
reduction in value of any assets or properties of MSB or the MSB Subsidiary,
shall be deemed a material adverse change if such loss or reduction exceeds 5%
of the capital of MSB as of June 30, 1997. Since January 1, 1996, neither MSB
nor the MSB Subsidiary has taken any action outside of the ordinary course of
business, consistent with prior practice, other than actions taken in connection
with the Merger.
2.10. Agreements, etc. MSB shall, during the Delivery Period, deliver
to Lakeland a true, correct and complete list of, together with true, correct
and complete copies of, every agreement to which MSB or the MSB Subsidiary is a
party or by which MSB or the MSB Subsidiary is bound, which is performable in
the future and which, together with all other contracts of the same or similar
nature, provides for the future obligation to pay or receive more than $25,000
or is otherwise material to the business of MSB and the MSB Subsidiary, taken as
a whole, including but not limited to (a) leases of real estate or equipment,
(b) agreements for the sale of any assets of MSB or the MSB Subsidiary other
than in the ordinary course of business, (c) agreements pursuant to which MSB or
the MSB Subsidiary has borrowed money or may in the future borrow money, (d)
employment agreements, consulting agreements and salary continuation agreements,
(e) collective bargaining agreements, (f) license agreements, (g) capital
expenditure commitments, (h) joint venture agreements, (i) partnership
agreements, (j) operating agreements and (k) agreements restricting MSB's
ability to compete in any area; provided, however, that MSB need not list
outstanding loans to unaffiliated persons made by MSB in the ordinary course of
business or loan commitments and credit facilities made in the ordinary course
of business pursuant to which MSB may be obligated to lend money to unaffiliated
persons. Except for matters expressly disclosed on such list, (i) each of MSB
and the MSB Subsidiary has performed all obligations to be performed by it to
date under all contracts and other agreements which shall be included on such
list and is not in default thereunder and (ii) to the best knowledge of MSB,
there exists no default, or any event upon which the giving of notice or the
passage of time would give rise to any default, in the performance of any
obligation to be performed by any other party to any such contract or other
agreement.
2.11. Absence of Undisclosed Liabilities. MSB and the MSB Subsidiary
do not have any material liabilities (whether matured or unmatured, accrued,
absolute or contingent or otherwise) which were not reflected, reserved against,
accrued for or otherwise disclosed on MSB's balance sheet dated June 30, 1997
delivered to Lakeland prior to the date hereof, except for obligations to
perform the contracts and the agreements referred to in Section 2.10 hereof and
liabilities consistent with prudent banking practices which have arisen in the
ordinary course of business subsequent to June 30, 1997.
2.12. Condition of Tangible Assets. Those assets of MSB and the MSB
Subsidiaries that are tangible property are in generally good operating
condition and repair.
2.13. Litigation, etc. MSB shall, during the Delivery Period, deliver
to Lakeland a true, correct and complete list of: (a) actions, suits, claims,
investigations or proceedings (legal, administrative or arbitrative) pending or,
to the best knowledge of MSB, threatened against MSB or the MSB Subsidiary,
whether at law or in equity, whether civil or criminal in nature and whether
before or by any Federal, state, municipal or other governmental court,
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, other than those which are immaterial to the financial condition,
results of operations, business and prospects of MSB and the MSB Subsidiary,
taken as a whole; and (b) unsatisfied judgments, decrees, injunctions or orders
of any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against MSB or the MSB Subsidiary other than those which
are immaterial to the financial condition, results of operations, business and
prospects of MSB and the MSB Subsidiary, taken as a whole. No petition for
bankruptcy, voluntary or involuntarily, has been filed by or against MSB or the
MSB Subsidiary, neither MSB nor the MSB Subsidiary has made any assignment for
the benefit of its creditors and no receiver has been appointed for MSB or the
MSB Subsidiary or any of their assets.
2.14. Permits, Licenses, etc. MSB shall, during the Delivery Period,
deliver to Lakeland a true, correct and complete list of all licenses, permits,
orders and approvals issued by any department, commission, agency or other
instrumentality of any federal, state, county or local government which pertain
to the business conducted by MSB or the MSB Subsidiary, the absence, revocation
or non-renewal of which would have, or could reasonably be expected to have, a
material adverse effect on the financial condition, results of operations,
business or prospects of MSB and the MSB Subsidiary, taken as a whole.
2.15. Compliance with Laws. Neither MSB nor the MSB Subsidiary is in
violation, in any respect material to the financial condition, results of
operations, business or prospects of MSB and the MSB Subsidiary, taken as a
whole, of any federal, state, county or local law, ordinance, regulation or
order applicable to the business conducted by it. Each of MSB and the MSB
Subsidiary has all licenses, permits, orders and approvals of any governmental
or regulatory body which are required for the conduct of the business conducted
by it and which, if not held by it, could reasonably be expected to have a
material adverse effect upon the financial condition, results of operations,
business or prospects of MSB and the MSB Subsidiary, taken as a whole
(collectively, "Required Permits"). All such Required Permits are in full force
and effect, no violations are required to be or have been reported in respect of
any Required Permit and no proceeding is pending, or to the knowledge of MSB,
threatened, to revoke or limit any such Required Permit.
2.16. Brokers' or Finders' Fees, etc. No agent, broker, investment
banker, person or other firm acting on behalf of MSB or under the authority of
MSB is or will be entitled to any broker's or finder's fee or any other
commission or similar fee directly or indirectly from Lakeland, MSB or the MSB
Subsidiary in connection with any of the transactions contemplated hereby,
except for fees payable to Capital Consultants of Princeton, Inc. in connection
with its rendering of the fairness opinion contemplated by Section 8.12 hereof
and for other services rendered to MSB, which fees shall, in accordance with
Section 6.7 hereof, be the sole responsibility of MSB. During the Delivery
Period, MSB shall furnish to Lakeland a copy of an engagement letter setting
forth all fees payable by or on behalf of MSB to Capital Consultants of
Princeton, Inc.
2.17. Employees. MSB shall, during the Delivery Period, deliver to
Lakeland a true, correct and complete list of the names, positions and rates of
compensation of all employees of MSB and the MSB Subsidiary.
2.18. Name. During the last three (3) years, MSB has used no business
name other than the name Metropolitan State Bank and the name of the MSB
Subsidiary.
2.19. Environmental Matters. MSB and the MSB Subsidiary have never
engaged in any use or operation involving the storage, manufacture, generation
or transportation of hazardous substances, and there are no hazardous substances
located on any properties now or heretofore owned or operated by MSB or the MSB
Subsidiary, including but not limited to the premises in which the business of
MSB and the MSB Subsidiary is conducted, except as necessary for the conduct of
typical administrative or office activities. Each of MSB and the MSB Subsidiary
is in compliance in all material respects with all environmental laws, rules and
regulations applicable to it or to any property now or heretofore owned or
operated by MSB or the MSB Subsidiary. Neither MSB nor the MSB Subsidiary has
received notice of any violation of any such law, rule or regulation or of any
enforcement action by any governmental agency or authority pertaining to MSB or
the MSB Subsidiary or any property now or heretofore owned or operated by any of
them. Neither MSB nor the MSB Subsidiary has received notice of, and is not
otherwise aware of, any spills, releases or discharges of hazardous substances
on or from any property now or heretofore owned or operated by MSB or the MSB
Subsidiary. MSB and the MSB Subsidiary have not received any written notice,
citation, claim, assessment, proposed assessment or demand for abatement
alleging that MSB or the MSB Subsidiary (either directly or as a
successor-in-interest in connection with the enforcement of remedies to realize
the value of properties serving as collateral for outstanding loans) is
responsible for the correction or cleanup of any condition resulting from the
violation of any law, ordinance or other governmental regulation regarding
environmental matters which correction or cleanup would be material to the
business, operations, assets or financial condition of MSB and the MSB
Subsidiary, taken as a whole. For purposes of this Merger Agreement, the term
"hazardous substances" includes all substances defined as such under either the
Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C.A.
9601, et seq.) or the New Jersey Industrial Site Recovery Act (N.J.S.A. 13:1K,
et. seq.).
2.20. Benefit Plans; Employee Relations.
(a) (i) Each of MSB and the MSB Subsidiary is in material compliance
with all applicable Federal, state, local and foreign laws and regulations
respecting employment and employment practices, and terms and conditions of
employment and wages and hours, (ii) no collective bargaining agreement
presently covers (nor has any, in the past, covered) any employees of MSB or the
MSB Subsidiary, nor is any currently being negotiated by MSB or the MSB
Subsidiary, nor is MSB or the MSB Subsidiary a party to any other written
contract with or material enforceable oral commitment to any labor union, (iii)
there is no unfair labor practice complaint against MSB or the MSB Subsidiary
pending before the National Labor Relations Board or any comparable state, local
or foreign agency, and (iv) since January 1, 1994, there has been no labor
strike, dispute, slowdown, stoppage or organizational effort actually pending
or, to the best knowledge of MSB, threatened against or involving MSB or the MSB
Subsidiary.
(b) MSB shall, during the Delivery Period, deliver to Lakeland a true,
correct and complete list of, together with true, correct and complete copies
of, all written contracts with, or oral commitments for the employment,
retention or payment of any severance or other benefit to, any employee,
consultant or other person.
(c) MSB shall, during the Delivery Period, deliver to Lakeland a true,
correct and complete list of, all Employee Pension Benefit Plans (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), all Employee Welfare Benefit Plans (as defined in Section 3(1) of
ERISA), all incentive compensation plans (including stock option plans) and all
other employee benefit plans, arrangements or programs maintained by MSB and the
MSB Subsidiary in respect of their employees (including normal policies
concerning vacations, holidays and salary continuation during short absences for
illness or other reasons) (each, an "Employee Benefit Plan", and collectively,
the "Employee Benefit Programs"). MSB shall, during the Delivery Period, deliver
to Lakeland true, correct and complete copies of all plan documents and other
agreements, procedures and interpretations adopted in connection with the
Employee Benefit Programs and an accurate and complete copy of all employee
handbooks utilized at any time since January 1, 1994. With respect to each
Employee Benefit Plan, MSB shall, during the Delivery Period, deliver to
Lakeland a true, correct and complete list of, and true, correct and complete
copies of, the following:
(i) the most recent Internal Revenue Service ("IRS")
determination letter and related IRS submissions relating to each of the
Employee Pension Benefit Plans listed in such Section 2.20(c) (the "MSB
Retirement Plans");
(ii) the most recent Annual Report (Form 5500 Series) and
accompanying schedules and attachments of each of the Employee Welfare Benefit
Plans listed in such Section 2.20(c) (the "MSB Welfare Plans") and each of the
MSB Retirement Plans, as filed pursuant to applicable law for the last three (3)
years;
(iii) the Summary Plan Description (as currently in effect) and
summaries of material modifications distributed to employees for each of the MSB
Retirement Plans and MSB Welfare Plans; and
(iv) the three (3) most recent actuarial reports received with
respect to each of the MSB Retirement Plans that is a defined benefit plan.
(d) Each of the MSB Retirement Plans is in compliance in all material
respects with ERISA and will constitute qualified plans under the Code
immediately prior to the Effective Time.
(e) Each MSB Retirement Plan and each MSB Welfare Plans has been
operated in compliance in all material respects with ERISA.
(f) There are no actions, suits or claims pending or, to MSB's best
knowledge, threatened against any of the MSB Retirement Plans or MSB Welfare
Plans, or any administrator or fiduciary thereof.
(g) With respect to each of the MSB Retirement Plans and MSB Welfare
Plans as to which an Annual Report is required to be filed, no liabilities as of
the date of the most recent Annual Report relating to such Plan exist unless
specifically referred to in such Annual Report, and no material adverse change
has occurred with respect to the financial materials covered by such Annual
Report since the date thereof.
(h) No accumulated funding deficiency (within the meaning of Section
412 of the Code) exists with respect to any of the MSB Retirement Plans.
(i) The assets and liabilities of each funded Employee Benefit Plan
are fully and accurately reflected in the most recent Form 5500 furnished to
Lakeland.
(j) No "reportable event" (as defined in Section 4043 of ERISA) has
occurred with respect to any of the MSB Retirement Plans that are subject to
Title IV of ERISA.
(k) All of the MSB Welfare Plans are either self-funded, or are funded
through an insurance policy with an insurance company. As of the Effective Time,
neither MSB nor the MSB Subsidiary will be liable under any such insurance
policy for a retroactive rate adjustment or other liability arising our of
events occurring prior to the Effective Time.
(l) Neither MSB nor the MSB Subsidiary has ever participated in a
multi-employer plan as defined in Section 3(37)A of ERISA or a multiple employer
plan described in Section 413(c) of the Code.
(m) MSB does not provide any post-retirement or other post-termination
benefits to its former employees, except as required under Sections 601 through
609 of ERISA.
(n) Neither MSB nor the MSB Subsidiary has filed a notice of intent or
adopted any amendment of resolution, to terminate any Employee Benefit Plan.
(o) All required premium payments to the Pension Benefit Guaranty
Corporation, and all contributions required to be made under each Employee
Benefit Plan, have been paid when due.
(p) No excise taxes are payable under the Code with respect to any
Employee Benefit Plan.
(q) No nonexempt prohibited transaction, within the meaning of Section
4975 or Section 406 of ERISA, has occurred with respect to any of the MSB
Retirement Plans or any of the MSB Welfare Plans.
(r) Neither the execution nor the consummation of the transactions
contemplated by this Merger Agreement will (i) entitle any current or former
employee of MSB or the MSB Subsidiary to any severance pay or any similar
payment; (ii) accelerate the time of payments or vesting or increase the amount
of any benefit or compensation due any current or former employee under any MSB
Employee Benefit Plan; or (iii) result in payments not deductible under Section
280G of the Code.
(s) Notwithstanding any provision herein to the contrary, the
representations set forth in this Section 2.20 shall only be applicable to those
Employee Benefit Plans currently or previously maintained by or on behalf of
MSB.
2.21. Tax Matters.
(a) Each of MSB and the MSB Subsidiary has filed all Federal, state,
local and foreign income and other tax returns required to be filed by it, and
each such return is complete and accurate in all material respects. All taxes of
any nature whatsoever, with any related penalties, interest and liabilities (any
of the foregoing being referred to herein as a "Tax"), owed by MSB and the MSB
Subsidiary (whether or not shown on any Tax return) for any period ending on or
before the date hereof, have been paid. MSB and the MSB Subsidiary have adequate
reserves on their financial statements for any Taxes in excess of the amounts so
paid. Neither MSB nor the MSB Subsidiary currently is the beneficiary of any
extension of time within which to file any Tax return.
(b) MSB and the MSB Subsidiary have withheld and paid all Taxes
required to have been withheld and paid in connection with the amounts owing or
paid to any employee, independent contractor, creditor, shareholder or other
third party.
(c) There is no material dispute or claim concerning any Tax liability
of either MSB or the MSB Subsidiary either (i) claimed or raised by any
authority in writing or (b) as to which any of MSB, the MSB Subsidiary and their
respective directors and officers has knowledge based upon personal contact with
any agent of such authority. During the Delivery Period, MSB shall deliver to
Lakeland a true, correct and complete list of all federal, state, local and
foreign income Tax returns filed with respect to MSB and/or the MSB Subsidiary
for taxable periods ended on or after December 31, 1992. Such list shall
identify those income Tax returns that have been audited and those income Tax
returns that currently that are the subject of audit. During the Delivery
Period, MSB shall deliver to Lakeland correct and complete copies of all federal
income Tax returns, examination reports, and statements of deficiencies assessed
against, or agreed to by, MSB and/or the MSB Subsidiary, since December 31,
1992.
(d) Neither MSB nor the MSB Subsidiary has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to any Tax assessment or deficiency.
(e) Neither MSB nor the MSB Subsidiary has filed a consent under Code
Section 341(f) concerning collapsible corporations. Neither MSB nor the MSB
Subsidiary has made any material payments, is obligated to make any material
payments, or is a party to any agreement that under certain circumstances could
obligate it to make any material payments that will be nondeductible under Code
section 280G. Neither MSB nor the MSB Subsidiary has been a United States real
property holding corporation within the meaning of Code section 897(c)(2) during
the applicable period specified in Code section 897(c)(1)(A)(ii). Neither MSB
nor the MSB Subsidiary is a party to any Tax allocation or sharing arrangement.
Neither MSB nor the MSB Subsidiary (i) has been a member of an affiliated group
filing a consolidated federal income Tax return (other than a group the common
parent of which was MSB) or (ii) has any liability for the Taxes of any person
(other than MSB or the MSB Subsidiary) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise.
2.22. Insurance. The business operations and all insurable properties and
assets of MSB and the MSB Subsidiary are insured for their benefit against all
risks which, in the reasonable judgment of the management of MSB, should be
insured against, in each case under policies or bonds issued by insurers of
recognized responsibility, in such amounts with such deductibles and against
such risks and losses as are, in the opinion of the management of MSB, adequate
for the businesses engaged in by MSB and the MSB Subsidiary. MSB shall, during
the Delivery Period, deliver to Lakeland a true, correct and complete list of
all policies of liability, theft, fidelity, property damage and other forms of
insurance held by MSB and the MSB Subsidiary (specifying the insurer, amount of
coverage, annual premium, type of insurance, policy number and any pending
material claims thereunder). All policies to be included on such list shall be
outstanding and duly in force and all premiums with respect to such policies are
currently paid. Neither MSB nor the MSB Subsidiary has, during the past three
(3) fiscal years, been denied or had revoked, canceled or rescinded any policy
of insurance. MSB shall, during the Delivery Period, deliver to Lakeland a copy
of MSB's current directors and officers liability insurance policy.
2.23. Dealings with Officers and Directors. MSB shall, during the Delivery
Period, deliver to Lakeland a true, correct and complete list of transactions,
business relationships or indebtedness within the past three years involving MSB
or the MSB Subsidiary which is of a type described in Item 404 of Regulation S-K
(promulgated by the Securities and Exchange Commission ) or which is a "covered
transaction" as that term is defined in Section 23A of the Federal Reserve Act
(12 U.S. Code 371c), as amended. MSB and the MSB Subsidiary are not parties to
any agreement or understanding which provides for or contemplates such a
transaction, business relationship or indebtedness in the future. Except for the
Employee Benefit Programs referred to in Section 2.20 hereof, neither MSB nor
the MSB Subsidiary is a party to any agreement involving payments to any person
or entity based on the profits or gross revenues of MSB or the MSB Subsidiary.
2.24. Securities Exchange Act of 1934. No securities issued by MSB,
including but not limited to MSB Stock, are registered under the Securities
Exchange Act of 1934, and no such securities are required to be registered under
said Act.
2.25. Properties. Each of MSB and the MSB Subsidiary has good and, as to
owned real property, marketable title to all material assets and properties,
whether real or personal, tangible or intangible, reflected in MSB's
consolidated statement of condition as of December 31, 1996, or owned and
acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of for fair value in the ordinary course of
business since December 31, 1996), subject to no encumbrances, liens, mortgages,
security interests or pledges, except (i) those items that secure liabilities
that are reflected in such statement of condition or the notes thereto or that
secure liabilities incurred in the ordinary course of business after the date of
such statement of condition, (ii) statutory liens for amounts not yet delinquent
or which are being contested in good faith, (iii) such encumbrances, liens,
mortgages, security interests, pledges and title imperfections that are not in
the aggregate material to the business, results of operations, prospects and
financial condition of MSB and the MSB Subsidiary, taken as a whole, and (iv)
with respect to owned real property, title imperfections noted in title reports
to be delivered to Lakeland during the Delivery Period. Except as affected by
the transactions contemplated hereby, each of MSB and the MSB Subsidiary, as
lessee, has the right under valid and subsisting leases to occupy, use, possess
and control all real property leased by MSB or the MSB Subsidiary in all
material respects as presently occupied, used, possessed and controlled by MSB
or the MSB Subsidiary.
2.26. Minute Books. The minute books of MSB and the MSB Subsidiary contain
accurate records of all meetings and other corporate action held by the
stockholders and Boards of Directors (including committees of the Boards of
Directors) of MSB and the MSB Subsidiary, except where the failure to so
maintain such records would not have a material adverse effect on the business,
results of operations, prospects or financial condition of MSB and the MSB
Subsidiary, taken as a whole. During the Delivery Period (and thereafter), MSB
shall make such minute books available for review by Lakeland, its counsel and
other Lakeland representatives.
2.27. Reserves. As of December 31, 1996 and June 30, 1997, the allowance
for possible loan losses in MSB's consolidated balance sheets was adequate based
upon all factors required to be considered by MSB at that time in determining
the amount of such allowance. The methodology used to compute the allowance for
possible loan losses complied in all material respects with all applicable
policies of the FDIC and the New Jersey Department of Banking. As of June 30,
1997, the valuation allowance for OREO properties, if any, in MSB's consolidated
financial statements was adequate based upon all factors required to be
considered by MSB at that time in determining the amount of such allowance.
2.28. No Parachute Payments. No officer, director, employee or agent (or
former officer, director, employee or agent) of MSB or the MSB Subsidiary is
entitled now, or will or may be entitled to as a consequence of this Merger
Agreement or the Merger, to any payment or benefit from MSB or the MSB
Subsidiary or their successors which, if paid or provided, would constitute an
"excess parachute payment", as defined in Section 280G of the Internal Revenue
Code of 1986, as amended, or regulations promulgated thereunder.
2.29. Agreements with Bank Regulators. MSB is not a party to any commitment
letter, board resolution submitted to a regulatory authority or similar
undertaking to, and is not subject to any order or directive by, and is not a
recipient of any extraordinary supervisory letter from, any court, governmental
authority or other regulatory or administrative agency or commission, domestic
or foreign ("Governmental Entity"), which restricts materially the conduct of
its business, or in any manner relates to its capital adequacy, its credit or
reserve policies or its management, nor has MSB been advised by any Governmental
Entity that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission. MSB is not required by Section 32 of the Federal Deposit
Insurance Act to give prior notice to a Federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior executive officer.
2.30. Disclosure Schedule and Other Materials Furnished by MSB. All lists
and other materials to be furnished to Lakeland by MSB pursuant to this Article
II shall be true, correct and complete in all material respects and shall not
contain any untrue statement of a material fact or omit to state any material
fact which is necessary to make the statements contained therein not misleading.
2.31. Pooling of Interests. Based upon inquiries that it has made with its
accountants, senior management of MSB is not aware of any act or omission of MSB
or the MSB Subsidiary that would preclude, or materially interfere with,
Lakeland's accounting for the Merger as a pooling of interests.
2.32. Survival. The representations and warranties of MSB contained in this
Article II shall not survive the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LAKELAND
Lakeland hereby represents and warrants to MSB as follows:
3.1. Organization; Good Standing; Power; and Qualification. Lakeland is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of New Jersey and has all requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as it is now being conducted.
3.2. Capitalization. At July 1, 1997, the authorized capital stock of
Lakeland consisted of 7,050,819 shares of Lakeland Stock, of which 3,390,490
shares were issued and outstanding and no shares were held by Lakeland as
treasury stock. Upon the payment by Lakeland of a 5% stock dividend on October
15, 1997 to shareholders of record as of October 1, 1997 and the filing of any
required documents with the New Jersey Secretary of State, Lakeland's authorized
capital stock will be increased by the number of shares of Lakeland Stock issued
pursuant to such stock dividend. Lakeland has no outstanding convertible
securities, warrants, options, rights, calls or other commitments of any nature
to issue or sell its capital stock, other than pursuant to Lakeland's Dividend
Reinvestment Plan.
3.3. Intentionally omitted.
3.4. Authority; No Violation, etc. Subject to the parties' obtaining all
necessary regulatory approvals, Lakeland has all requisite corporate power to
execute, deliver and perform its obligations under this Merger Agreement. The
execution and delivery of this Merger Agreement and the performance by Lakeland
of its obligations hereunder have been duly approved and authorized by all
requisite corporate action of Lakeland, subject to the parties' obtaining all
necessary regulatory approvals. This Merger Agreement has been duly executed and
delivered by Lakeland and, subject as aforesaid, constitutes the legal, valid
and binding agreement of Lakeland. Neither the execution and delivery of this
Merger Agreement by Lakeland nor compliance by Lakeland with any of the
provisions hereof will (a) conflict with or result in a breach of any provision
of Lakeland's Certificate of Incorporation or by-laws, (b) violate, or result
with the passage of time in a violation of, or cause a default or acceleration
under, or give rise to any right to termination, cancellation, severance or
acceleration (whether immediately, or after the giving of notice, or after the
passage of time, or a combination thereof) under, or result in the creation of
any lien, charge or encumbrance on any of the assets of Lakeland or any
subsidiary of Lakeland pursuant to, any of the terms, conditions or provisions
of any agreement, instrument or obligation to which Lakeland or any subsidiary
of Lakeland is a party, or by which it or any of its properties or assets may be
bound, and which would have or might reasonably be expected to have a material
adverse effect on the financial condition or results of operations of Lakeland
and its subsidiaries, taken as a whole, or (c) violate any Federal or state
statute, rule or regulation or judgment, order, writ, injunction or decree of
any Federal or state court, administrative agency or governmental body, in each
case applicable to Lakeland or any subsidiary of Lakeland, or any of their
properties or assets, and which violation would have, or might reasonably be
expected to have, a material adverse effect on the financial condition or
results of operations of Lakeland and its subsidiaries, taken as a whole, or
otherwise require any filing with, or obtaining any permit, authorization,
consent or approval of, any Federal, state or local public body, commission or
authority, except those approvals and authorizations specified in Section 3.5
hereof and any filing, permit, authorization, consent or approval required under
the New Jersey Industrial Site Recovery Act (N.J.S.A. 13:1K-6, et. seq.).
3.5. Governmental Approvals and Filings. No approval, authorization,
consent, license, clearance or order of, declaration or notification to, or
filing, registration or compliance with, any governmental or regulatory
authority or compliance with, any governmental or regulatory authority is
required in order to (a) consummate the Merger or (b) prevent the termination of
any material right, privilege, license or agreement of Lakeland or any
subsidiary of Lakeland, or to prevent any material loss to Lakeland or any
subsidiary of Lakeland or their businesses, taken as a whole, by reason of the
Merger, except (i) compliance with the banking laws of the State of New Jersey
and with laws, rules and regulations applicable to the Federal Deposit Insurance
Corporation with respect to the formation of the Subsidiary Bank and the
consummation of all other aspects of the Merger, (ii) compliance with the
Federal Bank Holding Company Act, including approval by the Federal Reserve Bank
of New York, and the expiration of any required waiting period, and (iii) the
requirements of the Securities Act of 1933, the Securities Exchange Act of 1934
and any applicable state securities laws.
3.6. Brokers' or Finders' Fees, etc. No agent, broker, investment banker,
person or firm acting on behalf of Lakeland or under the authority of Lakeland
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee directly or indirectly from Lakeland in connection with any of
the transactions contemplated hereby, except for fees payable to Ryan, Beck &
Co., which fees shall, in accordance with Section 6.7 hereof, be the sole
responsibility of Lakeland. It is expressly understood that Ryan, Beck & Co. has
been retained solely by and is working solely for the benefit of Lakeland in
connection with this matter.
3.7. SEC Filings. Lakeland has filed all reports required to be filed by it
pursuant to the Securities Exchange Act of 1934, as amended, during the
thirty-six (36) months preceding the date of this Merger Agreement.
3.8. Pooling of Interests. Based upon inquiries that it has made with its
accountants, senior management of Lakeland is not aware of any act or omission
of Lakeland or Lakeland's subsidiaries that would preclude, or materially
interfere with, Lakeland's accounting for the Merger as a pooling of interests.
3.9. Survival. The representations and warranties of Lakeland contained in
this Article III shall not survive the Closing.
ARTICLE IV
COVENANTS OF MSB
4.1. Regular Course of Business. Except as otherwise consented to in
writing by Lakeland, prior to the Effective Time, MSB will (and will cause the
MSB Subsidiary to) carry on its business diligently and in the ordinary course
consistent with past practice through the date hereof, and, without limiting the
generality of the foregoing, MSB will use its best efforts to preserve its
present business organization (including that of the MSB Subsidiary) intact,
keep available the services of the present executive officers of MSB and the MSB
Subsidiary and preserve the present relationships of MSB and the MSB Subsidiary
with persons having business dealings with them; provided that MSB shall not be
required to take any unreasonable or extraordinary act or any action which would
conflict with any other term of this Merger Agreement.
4.2. Restricted Activities and Mergers. Except as otherwise consented to in
writing by Lakeland, prior to the Effective Time, MSB will not, and will not
permit the MSB Subsidiary, to:
(a) amend its Certificate of Incorporation or By-laws;
(b) issue, sell or deliver, or agree to issue, sell or deliver, any
shares of any class of capital stock of MSB or any securities or instruments
convertible into any such shares, or any options, subscriptions, warrants,
calls, commitments or other rights calling for the issuance, sale or delivery of
any such shares or convertible securities or instruments, except that MSB may
issue shares of MSB Stock upon exercise of the Outstanding Options;
(c) except in the ordinary course of business (and consistent with
past practice) (i) borrow, or agree to borrow, any funds or voluntarily incur,
assume or become subject to, whether directly or by way of guarantee or
otherwise, any obligation or liability (absolute or contingent), (ii) cancel or
agree to cancel any debts or claims, (iii) lease, sell or transfer, agree to
lease, sell or transfer, or grant or agree to grant any preferential rights to
lease or acquire, any of its assets, property or rights, (iv) make or permit any
amendment to or termination of any material contract, agreement, license or
other right to which it is a party or (v) mortgage or pledge any of its assets,
tangible or intangible;
(d) grant any increase in compensation, other than normal merit
increases consistent with its general prevailing practices or existing
employment agreements, to any employee or group of employees or to all employees
generally;
(e) enter into or make any change in any Employee Benefit Program,
except as required by law;
(f) acquire voting securities or any other ownership interest in any
corporation, association, joint venture, mutual savings association,
partnership, business trust or other business entity, or acquire control or
ownership of all or a substantial portion of the assets of any of the foregoing,
or merge, consolidate or otherwise combine with any other entity, or acquire any
branch of any entity engaged in the business of banking, or enter into any
agreement providing for any of the foregoing;
(g) directly or indirectly solicit or authorize the solicitation of or
enter into any agreement or understanding or, except to the extent required by
law, engage in any discussions with, or furnish any non-public information
concerning MSB or the MSB Subsidiary to, any person or entity other than
Lakeland or a representative thereof with respect to any offer or possible offer
from a third party (i) to purchase shares of any class of capital stock of MSB
or the MSB Subsidiary or any securities or instruments convertible into any such
shares, or to acquire any option, subscription, warrant, call, commitment or
other right to purchase or otherwise acquire any such shares or convertible
securities or instruments, (ii) to make a tender or exchange offer for any
shares of any class of capital stock of MSB or the MSB Subsidiary, (iii) to
purchase, lease or otherwise acquire all or a substantial portion of the assets
of MSB or the MSB Subsidiary, or (iv) to merge, consolidate or otherwise combine
with MSB or the MSB Subsidiary (the transactions described in (i), (ii), (iii)
and (iv) above are hereinafter sometimes referred to as "Acquisition
Transactions"); notwithstanding the foregoing, MSB may enter into discussions or
negotiations in connection with a possible Acquisition Transaction which was not
solicited by MSB if the Board of Directors of MSB, after consultation with
counsel, determines that such discussions or negotiations must be commenced in
the exercise of the Board's fiduciary responsibilities;
(h) take any action or omit to take any action which would cause any
representation, (including, without limitation, any representation made in
connection with the delivery of information during the Delivery Period) to be
untrue in any material respect (or, with respect to any representation qualified
as to materiality, to be untrue in any respect);
(i) except in the ordinary course of business, enter into or agree to
enter into any agreement or transaction material to the business of MSB and the
MSB Subsidiary, taken as a whole;
(j) grant any severance arrangement to any employee;
(k) take any action or omit to take any action which would preclude
Lakeland from accounting for the Merger as a pooling of interests;
(l) make any capital expenditure other than capital expenditures
included within one or more capital budgets delivered by MSB to Lakeland during
the Discovery Period;
(m) file any application or make any contract with respect to
branching, site locations or site relocations;
(n) agree to acquire in any manner whatsoever (other than to realize
upon collateral for a defaulted loan) any business or entity;
(o) make any material change in its accounting methods or practices,
other than changes required in accordance with generally accepted accounting
principles; or
(p) agree to do any of the foregoing.
4.3. Dividends and Distributions; Repurchases; Stock Splits. Except as
otherwise consented to in writing by Lakeland, prior to the Effective Time, MSB
will not declare or pay any dividend on its capital stock in cash, stock or
property, and will not redeem, repurchase or otherwise acquire any shares of its
capital stock, and will not approve or effect a stock split or other subdivision
or consolidation of its shares of capital stock.
4.4. Advice of Changes. MSB will promptly advise Lakeland in writing of (i)
any event occurring subsequent to the date of this Agreement which would render
any representation or warranty of MSB contained in this Agreement, if made on or
as of the date of such event or on or as of the Closing, untrue or inaccurate in
any material respect (or, with respect to representations or warranties that are
qualified as to materiality, inaccurate in any respect), (ii) any event
occurring subsequent to the date of this Agreement which would render any
information furnished to Lakeland by MSB pursuant to Article II of this
Agreement, if furnished on or as of the date of such event or on or as of the
Closing, untrue or inaccurate in any material respect (or, with respect to
information that is qualified as to materiality, inaccurate in any respect),
(iii) any material adverse change in the business of MSB and the MSB Subsidiary,
taken as a whole, (iv) any exercises of any Outstanding Options to purchase MSB
Stock and (v) any information which comes to the attention of MSB that indicates
either that any representation or warranty of MSB contained in this Agreement
was untrue or inaccurate in any material respect (or, with respect to
representations or warranties that are qualified as to materiality, inaccurate
in any respect) when made or that MSB failed to deliver all of the documentation
which MSB is required to deliver to MSB during the Delivery Period pursuant to
Article II hereof.
4.5. Merger Proposals. Commencing with the date of this Merger Agreement,
MSB will provide Lakeland with same-day notice of any offer MSB or the MSB
Subsidiary receives from or on behalf of any third party regarding a proposed
Acquisition Transaction, including, in such notice, the identity of the offeror
and the complete terms of any such offer, and will provide Lakeland with
same-day notice of the receipt of any information that such an offer is likely
to be made and any available details with respect to such potential offer.
4.6. Affiliates. MSB will deliver to Lakeland, as soon as practicable after
the execution of this Merger Agreement, but in no event later than twenty (20)
days hereafter, a letter identifying all persons who may be deemed to be
"affiliates" of MSB within the meaning of Rule 145 promulgated under the
Securities Act of 1933 or who may be deemed to be "affiliates" of MSB as that
term is used for purposes of qualifying for "pooling of interests" accounting
treatment (collectively, "MSB Affiliates"). MSB will furnish such information
and documents as Lakeland may request for the purpose of reviewing such letter.
MSB will cause each MSB Affiliate to issue and deliver to Lakeland within three
(3) weeks after the date hereof an agreement (an "Affiliate's Agreement"), in
such form as Lakeland's counsel shall reasonably require, to the effect that,
among other things, no Lakeland Stock to be acquired by such person in the
Merger will be disposed of by such person except in compliance with Rule 145
under the Securities Act of 1933 or another exemption from the registration
requirements of the Securities Act of 1933 or pursuant to an effective
registration statement under the Securities Act of 1933, and that such person
agrees to be bound by the rules which will permit the transaction contemplated
by this Merger Agreement to be treated as a pooling of interests for accounting
purposes.
4.7. Consents, Approvals and Filings.
(a) MSB will use its best efforts to comply as promptly as practicable
with the governmental requirements specified in Sections 2.4 and 2.5 hereof and
obtain all necessary approvals, authorizations, consents, licenses, clearances
or orders of governmental and regulatory authorities referred to in such
Sections; provided, however, that compliance with the Federal Bank Holding
Company Act and state securities laws shall primarily be Lakeland's
responsibility and provided that the responsibility for compliance with Federal
securities laws shall be allocated in accordance with Article VII hereof;
further provided, that MSB shall not be required to take any extraordinary
action or enter into any agreement which, in the reasonable opinion of MSB, is
unduly burdensome to MSB in order to obtain any such approvals, authorizations,
etc.
(b) MSB shall provide Lakeland with copies of all filings made by MSB
after the date hereof to the New Jersey Department of Banking, the Federal
Deposit Insurance Corporation and any other regulatory agency which has
authority to regulate MSB within two (2) business days of such filing.
(c) MSB shall prepare unaudited consolidated balance sheets and income
statements (in a manner consistent with prior practices) on a monthly basis and
shall furnish copies of such statements to Lakeland by the 10th day following
the end of each month.
4.8. Access to Records and Properties. MSB agrees to assist Lakeland in
conducting such investigations and reviews of the business, financial condition,
properties, assets, books and records of MSB and the MSB Subsidiary as Lakeland
deems necessary or desirable, and will provide, and will cause its independent
public accountants to provide, Lakeland and its employees, agents and
representatives full access to, and complete information concerning, all
properties, books, records (including tax returns filed or in preparation),
regulatory filings, personnel and premises, and audit work papers and other
records of its independent public accountants, pertaining to the business of MSB
and the MSB Subsidiary. Neither any investigation by Lakeland nor the receipt by
Lakeland of any data or information from MSB shall affect the right of Lakeland
to rely on the representations, warranties or covenants of MSB or the right of
Lakeland to terminate this Agreement as provided in Article XI hereof. MSB's
obligations, and Lakeland's rights, under this Section 4.8 shall be in addition
to, and not in lieu of, MSB's obligations and Lakeland's rights under Section
6.1 hereof.
4.9 Intentionally omitted.
4.10. 8-K. At least 10 days prior to the Effective Time, MSB shall furnish
Lakeland with all such information and financial statements as Lakeland may
reasonably require in order for Lakeland to prepare a Current Report on Form 8-K
(describing the Merger pursuant to Items 2 and 7 of such Form) for filing with
the SEC promptly after the Effective Time. Immediately prior to the Closing, MSB
shall cause its former and/or current independent accountants to provide any
report of such accountants which Lakeland determines must be included in such
filing on Form 8-K and a consent (in form and substance satisfactory to
Lakeland) to the filing of any report of such accountants which Lakeland
determines must be included or incorporated by reference in such filing on Form
8-K.
ARTICLE V
COVENANTS OF LAKELAND
5.1. Advice of Changes. Lakeland will promptly advise MSB, in writing, of
(i) any event occurring subsequent to the date of this Agreement which would
render any representation or warranty of MSB contained in this Agreement, if
made on or as of the date of such event or on or as of the Closing, untrue or
inaccurate in any material respect (or, with respect to representations or
warranties that are qualified as to materiality, inaccurate in any respect) and
(ii) any information which comes to the attention of MSB that indicates that any
representation or warranty of MSB contained in this Agreement was untrue or
inaccurate in any material respect (or, with respect to representations or
warranties that are qualified as to materiality, inaccurate in any respect) when
made.
5.2. Consents, Approvals and Filings. Lakeland will use its best efforts to
comply as promptly as practicable with the governmental requirements specified
in Sections 3.4 and 3.5 hereof and obtain all necessary approvals,
authorizations, consents, licenses, clearances or orders of governmental and
regulatory authorities referred to in such Sections; provided, however, that
responsibility for compliance with Federal securities laws shall be allocated in
accordance with Article VII hereof; and further provided that Lakeland shall not
be required to take any extraordinary action or enter into any agreement which
in the reasonable opinion of Lakeland is unduly burdensome to Lakeland in order
to obtain such approvals, authorizations, etc.
5.3. Affiliates. Lakeland will deliver to MSB, as soon as practicable after
the execution of this Merger Agreement, but in no event later than twenty (20)
days hereafter, a letter identifying all persons who may be deemed to be
"affiliates" of Lakeland as that term is used for purposes of qualifying for
"pooling of interests" accounting treatment (collectively, "Lakeland
Affiliates"). Lakeland will furnish such information and documents as MSB's
counsel may request for the purpose of reviewing such letter. Lakeland will
cause each Lakeland Affiliate to issue and deliver to MSB, within three (3)
weeks after the date hereof, an agreement, in such form as MSB's counsel shall
reasonably require, to the effect that, among other things, such person agrees
to be bound by the rules which will permit the transaction contemplated by the
Merger Agreement to be treated as a pooling of interests for accounting
purposes.
5.4. Directors and Officers Liability Insurance. During the Transition
Period, Lakeland shall take all steps necessary to assure that, with respect to
acts or omissions occurring prior to the Effective Time, the executive officers
and directors of MSB retain substantially the same directors and officers
liability insurance coverage as they have on the date hereof as executive
officers and directors of MSB.
5.5. Employment of Key Executive. Lakeland agrees to cause MSB to retain
Paul P. Lubertazzi as Chairman of the Board, Chief Executive Officer and
President of MSB following the Effective Time under the terms and conditions of
his current Employment Agreement and continuing until the end of the Transition
Period. In addition, to induce Mr. Lubertazzi to provide additional services
relating to the Transition Period and the integration of MSB into Lakeland's
consolidated enterprise, Lakeland shall offer to Mr. Lubertazzi an agreement
effective as of the Effective Time, in form and substance reasonably
satisfactory to him, pursuant to which (i) at a cost to Lakeland of $278,000,
Lakeland would (through a trust or such other approach as shall be reasonably
acceptable to Mr. Lubertazzi) provide to Mr. Lubertazzi an additional annuity
comparable to the annuity currently provided by MSB and (ii) at a cost to
Lakeland of $45,000, Lakeland would provide to Mr. Lubertazzi (through a trust
or such other approach as shall be reasonably acceptable to Mr. Lubertazzi)
certain retiree medical benefits.
ARTICLE VI
OTHER COVENANTS AND AGREEMENTS
6.1. Due Diligence. MSB shall, within fourteen (14) days following the date
of this Agreement (the "Delivery Period"), deliver to Lakeland all lists and
other materials called for in Article II hereof. Based upon its review of such
materials and any other information that it may consider (including without
limitation information received pursuant to Section 4.8 hereof), Lakeland shall
have the right, in its sole discretion, to terminate this Agreement by written
notice to MSB given within thirty five (35) days following the date of this
Agreement. In the event that Lakeland shall terminate this Agreement in
accordance with this Section 6.1, neither party shall have any further liability
to the other.
6.2. Confidentiality. Personnel of Lakeland have received in the course of
the negotiation of this Merger Agreement, and in the course of prior
negotiations, and are expected to continue to receive, confidential information
concerning the assets, methods of operation, loan and deposit pricing,
investment policies of MSB and the MSB Subsidiary, and other trade secrets and
confidential information concerning the business of MSB and the MSB Subsidiary;
and personnel of MSB have received in the course of the negotiation of this
Merger Agreement, and in the course of prior negotiations, and are expected to
continue to receive, confidential information concerning the assets, methods of
operation, loan and deposit pricing, investment policies of Lakeland and its
subsidiaries, and other trade secrets and confidential information concerning
the businesses of Lakeland and its subsidiaries. Such information has been
furnished by each party in good faith to the other party in confidence solely to
enable the other party to evaluate the proposed transaction, and with the
agreement that the party receiving such information will (1) treat all such
information at all times as being confidential and proprietary to the party
furnishing the information, (2) not divulge or make any unauthorized disclosure
of such confidential information to any third parties, and (3) not make any use
of such confidential information except in connection with its evaluation of the
other party's business for purposes of a proposed acquisition or merger
transaction. Following termination or cancellation of this Agreement, each party
shall, if requested to do so by the other, return all materials furnished to it
by the other which contain such confidential materials, without retaining any
copy thereof. The provisions of this Section 6.2 will be specifically
enforceable, entitling each party to injunctive relief against the other in
addition to such other relief as may be available. The provisions of this
Section 6.2 will survive any termination or cancellation of this Agreement.
Information shall cease to be protected by this Section 6.2 when and if it
enters the public domain through no fault of the party receiving such
information pursuant to this Agreement.
6.3. Expenses. Subject to the provisions of Article XI hereof, in the event
the Merger is not consummated, Lakeland and MSB will each separately bear its
own expenses incurred in connection with this Agreement or any transaction
contemplated hereby. However, printing expenses incurred in connection with the
registration statement, proxy statement and prospectus described in Section 7.1
hereof shall be shared equally by MSB and Lakeland.
6.4. Public Announcements. The parties intend to issue a joint press
release upon signing of this Merger Agreement. Thereafter, recognizing that they
each have independent obligations with respect to the dissemination of material
information to the public and to their respective shareholders, Lakeland and MSB
will, to the maximum extent feasible, advise and confer with each other prior to
the issuance of any reports, statements or releases (including reports,
statements or releases to their respective employees) pertaining to this
Agreement.
6.5. Further Assurances. Lakeland and MSB agree to execute and deliver such
instruments and take such other actions as either of them may reasonably
require, consistent with the fiduciary duties of their respective Boards of
Directors, in order to carry out the intent of this Agreement.
6.6 Post-Effective Time Operations. From and after the Effective Time and
through the end of the Transition Period, MSB shall not take any of the actions
described in Sections 4.2 and 4.3 hereof (the "Actions") without the prior
written consent of Lakeland. During the Transition Period, Lakeland shall have
the right to expand the list of Actions at any time and from time to time and to
obtain injunctive relief to enforce the provisions of this Section 6.6.
6.7. Fees of Investment Bankers, Attorneys and Accountants. All fees of
Capital Consultants of Princeton, Inc. for its services in connection with the
transaction contemplated by this Agreement, including but not limited to the
rendering of the fairness opinion contemplated by Section 8.12 hereof, shall be
the sole responsibility of MSB. All fees of Ryan, Beck & Co. or any other
investment banking firm retained by Lakeland for its services in connection with
the transaction contemplated by this Agreement shall be the sole responsibility
of Lakeland. All fees of Lowenstein, Sandler, Kohl, Fisher and Boylan, P.A. or
any other law firm retained by Lakeland shall be the sole responsibility of
Lakeland. All fees of Robert J. Romano, Jr. & Associates or any other law firm
retained by MSB shall be the sole responsibility of MSB. All fees of Radics &
Co., LLC or any other accounting firm retained by Lakeland shall be the sole
responsibility of Lakeland. All fees of Grant Thornton, LLP and any other
accounting firm retained by MSB to provide advice regarding MSB's financial
statements or tax matters shall be borne by MSB.
ARTICLE VII
PROXY AND REGISTRATION STATEMENTS
7.1. Preparation. Lakeland and MSB acknowledge that the transactions
contemplated hereby are subject to the provisions of the Securities Act of 1933
and Rule 145 promulgated thereunder by the Securities and Exchange Commission
(the "SEC"). Lakeland (which shall prepare the first draft of the "Prospectus"
and "Registration Statement" as defined herein) and MSB will cooperate in the
prompt preparation of a proxy statement for submission to the stockholders of
MSB in connection with the meeting of such stockholders referred to in Section
1.4 hereof. The proxy statement to be submitted to the stockholders of MSB, in
its definitive form, together with any and all amendments and supplements
thereto and all information incorporated by reference therein (the "MSB Proxy
Statement"), will also serve as the prospectus (the "Prospectus") to be included
in the Registration Statement (as defined below). Lakeland will file a
registration statement on Form S-4 (which registration statement, in the form it
is declared effective by the SEC, together with any and all amendments and
supplements thereto and all information incorporated by reference therein, is
referred to herein as the "Registration Statement") under and pursuant to the
provisions of the Securities Act of 1933 for the purpose of registering the
Lakeland Stock to be distributed to holders of MSB Stock in accordance with the
provisions of this Agreement. Each of MSB and Lakeland agrees to provide
promptly to the other such information concerning its business and financial
statements and affairs as, in the reasonable judgment of the other party or its
counsel, may be required or appropriate for inclusion in the Registration
Statement or the MSB Proxy Statement, or in any amendments or supplements
thereto, and to cause its counsel and auditors to cooperate with the other's
counsel and auditors in the preparation of the Registration Statement and the
MSB Proxy Statement. Lakeland agrees to use its best efforts to have the
Registration Statement declared effective under the Securities Act of 1933 as
soon as may be practicable; provided, however, that it is understood that
Lakeland shall not commence preparing the Registration Statement until after the
thirty-five (35) day period referenced in Section 6.1 hereof has been completed
and that the Registration Statement will contain financial information regarding
the nine month period ending September 30, 1997.
7.2. Representations, Warranties and Covenants of MSB. MSB represents and
warrants to Lakeland that the MSB Proxy Statement will not, at the time of its
issuance and at the time of the meeting of stockholders of MSB contemplated by
Section 1.4 hereof, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made, in the
light of the circumstances under which they are made, not misleading, except
that no representation is made with respect to information set forth or
incorporated by reference in the MSB Proxy Statement concerning Lakeland or its
subsidiaries furnished or approved by Lakeland. MSB will promptly advise
Lakeland in writing if at any time prior to the Effective Time it shall obtain
knowledge of any facts that might make it necessary or appropriate to amend or
supplement the Registration Statement or the MSB Proxy Statement in order to
make the statements contained or incorporated by reference therein not
misleading or to comply with applicable law.
7.3. Representations, Warranties and Covenants of Lakeland. Lakeland
represents and warrants to MSB that the Registration Statement (including the
MSB Proxy Statement), at the time it becomes effective and at the time of the
meeting of stockholders of MSB contemplated by Section 1.4 hereof, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, except that no
representation is made with respect to information set forth or incorporated by
reference in the Registration Statement (including the MSB Proxy Statement)
concerning MSB furnished or approved by MSB.
7.4. Mailings to Stockholders. MSB shall cause the MSB Proxy Statement to
be mailed to its stockholders as soon as practicable in accordance with
applicable Federal and state law; provided, however, that MSB shall not mail or
otherwise furnish the MSB Proxy Statement to its stockholders unless and until
Lakeland advises MSB that the Registration Statement is effective under the
Securities Act of 1933 and Lakeland advises MSB that it has received all
approvals required under applicable state securities and banking laws. Neither
Lakeland nor MSB will use any proxy material, other than the MSB Proxy Statement
and the other proxy material filed with the SEC prior to or concurrently with
the filing of the MSB Proxy Statement, without giving prior notice to the other.
7.5. Blue Sky. Lakeland will use its best efforts to obtain all necessary
blue sky permits and approvals required to carry out the transactions
contemplated by this Agreement. MSB will provide Lakeland with such information
as Lakeland shall reasonably request in order to enable Lakeland to comply with
this Section 7.5.
7.6. Tax Opinion. The Registration Statement shall contain (if required) an
opinion from Lowenstein, Sandler, Kohl, Fisher and Boylan, P.A., or other
counsel reasonably satisfactory to Lakeland, regarding the federal tax
consequences of the Merger to MSB stockholders.
7.7 Comfort Letter. At Lakeland's request and expense, MSB shall cause its
accountants to deliver to Lakeland and to its officers and directors who sign
the Registration Statement a short form "comfort letter" or "agreed upon
procedures" letter, dated the date of the mailing of the Proxy Statement, in the
form customarily issued by such accountants at such time in transactions
comparable to the Merger.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF LAKELAND
The obligations of Lakeland to consummate the transactions contemplated
hereby are subject to the satisfaction of the following conditions unless waived
by Lakeland:
8.1. Representations and Warranties; Deliveries. The representations and
warranties of MSB set forth in Article II and Article VII hereof shall be true
and correct in all material respects (provided that any such representations and
warranties which are qualified as to materiality shall be true and correct in
all respects) as of the date of this Agreement and as of the date of the Closing
contemplated by Article X hereof (the "Closing Date") as though made on and as
of the Closing Date. MSB shall have delivered to Lakeland during the Delivery
Period all of the information which MSB is required to deliver to Lakeland
pursuant to Article II hereof, which information shall have been accurate and
complete when delivered. No act or omission shall have occurred subsequent to
the Delivery Period which, if it had occurred prior to the end of the Delivery
Period, would have necessitated MSB's providing information to Lakeland which
was not actually provided to Lakeland during the Delivery Period.
8.2. Covenants. MSB shall have performed and complied in all material
respects with each and every covenant, agreement and condition required by this
Agreement to be performed or complied with by it prior to the Closing Date.
8.3. Certificates. MSB shall have furnished to Lakeland a certificate of
its President in form and substance reasonably satisfactory to Lakeland to the
effect that (i) the representations and warranties of MSB contained in Article
II and Article VII of this Agreement are true and correct in all material
respects (provided that any such representations and warranties which are
qualified as to materiality shall be true and correct in all respects) at and as
of the Closing Date as though such representations and warranties were made on
the date thereof, (ii) all information furnished to Lakeland by MSB pursuant to
Article II of this Agreement is true and correct in all material respects at and
as of the Closing Date as though such information was furnished on the Closing
Date, (iii) no act or omission has occurred subsequent to the Delivery Period
which, if it had occurred prior to the end of the Delivery Period, would have
necessitated MSB's providing information to Lakeland which was not actually
provided to Lakeland during the Delivery Period, (iv) MSB has complied with all
agreements, covenants and provisions of this Agreement required to be performed
or complied with by MSB prior to the Closing Date and (v) the condition set
forth in Section 8.6 hereof and, to the knowledge of such President, the
condition set forth in Section 8.7 hereof are each satisfied as of the Closing
Date. MSB shall also have furnished such other certificates as Lakeland's
counsel shall have reasonably requested.
8.4. Intentionally omitted.
8.5. Affiliates. Lakeland shall have received the letter identifying the
MSB Affiliates and the Affiliate Agreements required by Section 4.6 hereof.
8.6. Approval of Shareholders of MSB. The Subsidiary Bank Merger Agreement
and this Merger Agreement shall have been approved at a meeting of the
stockholders of MSB by the requisite vote of stockholders.
8.7. No Governmental or Other Proceeding or Litigation. No order of any
court or administrative agency (including without limitation any banking
regulatory authority) shall be in effect which restrains or prohibits any
transaction contemplated hereby or which would limit or otherwise affect in a
material respect Lakeland's ownership of MSB; no suit, action, or proceeding by
any governmental body or other person or entity, or investigation or inquiry by
any governmental body, shall be pending or threatened against Lakeland or MSB,
which challenges the validity or legality, or seeks to restrain the
consummation, of any transaction contemplated hereby or which seeks to limit or
otherwise affect Lakeland's ownership of MSB; and no written advice shall have
been received by Lakeland or MSB or their respective counsel from any
governmental body, and remain in effect, stating that an action or proceeding
will, if the Merger is consummated or sought to be consummated, be filed seeking
to invalidate or restrain said transaction or limit or otherwise affect
Lakeland's ownership of MSB.
8.8. Approvals and Consents. All approvals and authorizations of the public
authorities referred to in Sections 2.4, 2.5, 3.4 and 3.5 hereof or otherwise
required to consummate the Merger shall have been obtained, and no such consents
or approvals shall have imposed a condition to such consent or approval which in
the reasonable opinion of Lakeland is unduly burdensome, and all waiting periods
specified by law shall have passed. MSB shall have obtained all approvals and
consents as Lakeland's counsel shall reasonably request under any contract,
lease or agreement of MSB or the MSB Subsidiary to assure that MSB shall
continue to retain all of the benefits of such contract, lease or agreement
after the Effective Time.
8.9. Registration Statement Effective. The Registration Statement shall
have become effective prior to the mailing of the Proxy Statement by MSB to its
stockholders, no stop order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been initiated or threatened by the SEC.
8.10. Accountants' Opinion. Lakeland shall have received an opinion of
Radics & Co., L.L.C., in form and substance satisfactory to Lakeland, that the
Merger will qualify to be treated for accounting purposes as a pooling of
interests.
8.11. Tax Opinion. Lakeland shall have received an opinion of Lowenstein,
Sandler, Kohl, Fisher and Boylan, P.A., dated the Closing Date, to the effect
that the Merger constitutes a tax-free reorganization under Section 368(a) of
the Code. Such opinion shall be based upon assumptions standard for transactions
comparable to the Merger.
8.12. Fairness Opinions. The Board of Directors of MSB shall have received
an opinion of Capital Consultants of Princeton, Inc. in form and substance
reasonably satisfactory to said Board of Directors, dated as of the date of the
MSB Proxy Statement, that the Merger is fair to the stockholders of MSB from a
financial point of view. The opinion to be dated as of the date of the MSB Proxy
Statement shall be included in the MSB Proxy Statement.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF MSB
The obligations of MSB to consummate the transactions contemplated hereby
are subject to the satisfaction of the following conditions unless waived by
MSB:
9.1. Representations and Warranties. The representations and warranties of
Lakeland set forth in Article III and Article VII hereof shall be true and
correct in all material respects (provided that any such representations and
warranties which are qualified as to materiality shall be true and correct in
all respects) as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date.
9.2. Covenants. Lakeland shall have performed and complied in all material
respects with each and every covenant, agreement and condition required by this
Agreement to be performed or complied with by it prior to the Closing Date.
9.3. Certificates. Lakeland shall have furnished to MSB a certificate of
its President in form and substance reasonably satisfactory to MSB to the effect
that (i) the representations and warranties of Lakeland contained in Article III
and Article VII of this Agreement are true and correct in all material respects
(or, with respect to representations and warranties which are qualified as to
materiality, in all respects) at and as of the Closing Date as though such
representations and warranties were made on the date thereof, (ii) Lakeland has
complied with all terms, covenants and provisions of this Agreement required to
be performed or complied with by Lakeland prior to the Closing Date and (iii) to
the knowledge of Lakeland, the condition set forth in Section 9.7 hereof is
satisfied as of the Closing Date. Lakeland shall also have furnished such other
certificates as MSB's counsel shall have reasonably requested.
9.4. Intentionally omitted.
9.5. Tax Opinion. MSB shall have received an opinion of Lowenstein,
Sandler, Kohl, Fisher and Boylan, P.A., dated the Closing Date, to the effect
that the Merger constitutes a tax-free reorganization under Section 368(a) of
the Code. Such opinion shall be based upon assumptions standard for transactions
comparable to the Merger.
9.6. Approval of Shareholders of MSB. The Subsidiary Bank Merger Agreement
and this Merger Agreement shall have been approved at a meeting of the
stockholders of MSB by the requisite vote of stockholders.
9.7. No Governmental or Other Proceeding or Litigation. No order of any
court or administrative agency (including, without limitations any banking
regulatory authority) shall be in effect which restrains or prohibits any
transaction contemplated hereby or which would limit or otherwise affect in a
material respect Lakeland's ownership of MSB; no suit, action, or proceeding by
any governmental body or other person or entity, or investigation or inquiry by
any governmental body, shall be pending or, in the case of a governmental body,
threatened against Lakeland or MSB, which challenges the validity or legality,
or seeks to restrain the consummation, of any transaction contemplated hereby or
which seeks to limit or otherwise affect Lakeland's ownership of MSB; and no
written advice shall have been received by Lakeland or MSB or their respective
counsel from any governmental body, and remain in effect, stating that an action
or proceeding will, if the Merger is consummated or sought to be consummated, be
filed seeking to invalidate or restrain said transaction or limit or otherwise
affect Lakeland's ownership of MSB.
9.8. Approvals and Consents. All approvals and authorizations of the public
authorities referred to in Sections 2.4, 2.5, 3.4 and 3.5 hereof or otherwise
required to consummate the Merger shall have been obtained, and all waiting
periods specified by law shall have passed.
9.9. Registration Statement Effective. The Registration Statement shall
have become effective prior to the mailing of the Proxy Statement by MSB to its
stockholders, no stop order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been initiated or threatened by the SEC.
9.10. Fairness Opinions. The Board of Directors of MSB shall have received
an opinion of Capital Consultants of Princeton, Inc. in form and substance
reasonably satisfactory to said Board of Directors, dated as of the date of the
MSB Proxy Statement, that the Merger is fair to the stockholders of MSB from a
financial point of view. The opinion to be dated as of the date of the MSB Proxy
Statement shall be included in the MSB Proxy Statement.
9.11. Affiliates. MSB shall have received the letter identifying the
Lakeland Affiliates and the Affiliate Agreements required by Section 5.3 hereof.
9.12 Accountants' Opinion. Lakeland shall have received an opinion of
Radics & Co., L.L.C., in form and substance reasonably satisfactory to MSB, that
the Merger will qualify to be treated for accounting purposes as a pooling of
interests.
ARTICLE X
CLOSING
Unless this Agreement shall have been terminated pursuant to a provision of
Article XI hereof, a closing (the "Closing") will be held, as soon as
practicable after the satisfaction or waiver of the conditions set forth in
Articles VIII and IX hereof, at the offices of Lowenstein, Sandler, Kohl, Fisher
and Boylan, P.A., 65 Livingston Avenue, Roseland, New Jersey, or at such other
location to which the parties may agree. At the Closing, the documents referred
to in Articles VIII and IX hereof will be exchanged by the parties and,
immediately thereafter, the Bank Subsidiary Merger Agreement will be filed by
MSB and Lakeland with the Department of Banking of the State of New Jersey.
ARTICLE XI
TERMINATION
11.1. Termination. This Agreement may be terminated at any time prior to
Closing:
(a) by the mutual consent of Lakeland and MSB; or
(b) by Lakeland, by written notice to MSB, if (i) any representation
or warranty of MSB set forth in Article II or Article VII hereof shall not be
true and correct in all material respects (or, with respect to any such
representation or warranty that is qualified as to materiality, shall not be
true and correct in all respects), (ii) MSB shall breach any covenant or
agreement made by it herein or (iii) any other condition set forth in Article
VIII hereof shall not have been satisfied by April 30, 1998, provided that the
failure of such condition shall not be caused by a breach by Lakeland of any
covenant or agreement made by it herein; or
(c) by MSB, by written notice to Lakeland, if (i) any representation
or warranty of Lakeland set forth in Article III or Article VII hereof shall not
be true and correct in all material respects (or, with respect to any such
representation or warranty that is qualified as to materiality, shall not be
true and correct in all respects), (ii) Lakeland shall breach any covenant or
agreement made by it herein or (iii) any other condition set forth in Article IX
hereof shall not have been satisfied by April 30, 1998, provided that the
failure of such condition shall not be caused by a breach by MSB of any covenant
or agreement made by it herein; or
(d) by MSB, by written notice to Lakeland, if MSB, without violating
any of its covenants hereunder, shall have received an unsolicited offer to
enter into an Acquisition Transaction and the Board of Directors of MSB, after
consulting with counsel, shall have determined in the exercise of its fiduciary
duties that it should terminate this Agreement and pursue the potential
Acquisition Transaction; in the event that MSB shall exercise its right of
termination under this paragraph (d), MSB shall pay to Lakeland a termination
fee of $500,000 (plus any legal fees and expenses incurred by Lakeland in
enforcing its right to such fee) concurrent with the delivery of its notice of
termination and prior to executing any agreement pertaining to the Acquisition
Transaction; or
(e) by Lakeland or MSB if, at the Special Meeting, the stockholders of
MSB do not approve the Merger Agreement and the Subsidiary Bank Merger Agreement
by the requisite vote; or
(f) by Lakeland pursuant to Section 6.1 hereof; or
(g) by either party pursuant to Sections 1.1(c) or 1.11(c) hereof; or
(h) by Lakeland if there shall have occurred a material adverse change
(as defined with respect to MSB in Section 2.9 hereof) in the business,
prospects, financial condition or results of operations of MSB and the MSB
Subsidiary, taken as a whole, at any time since June 30, 1997; or
(i) by MSB if there shall have occurred a material adverse change in
the business, prospects, financial condition or results of operations of
Lakeland and its subsidiaries, taken as a whole, at any time since June 30,
1997.
11.2 Effect of Termination. In the event of the termination of this
Agreement by either Lakeland or MSB pursuant to Section 11.1, this Agreement
(other than all provisions herein regarding confidentiality, all provisions
herein regarding expenses and Article XI) and the Subsidiary Bank Merger
Agreement shall forthwith become void and have no effect, without liability on
the part of any party or its officers, directors, stockholders or agents, except
as otherwise provided in Section 11.1(d), 11.3 and 11.4 hereof.
11.3 Breach. Notwithstanding any provision in this Agreement to the
contrary, in the event that either of the parties shall willfully default in its
obligations hereunder, the non-defaulting party may pursue any remedy available
at law or in equity to enforce its rights and shall be paid by the willfully
defaulting party for all damages, costs and expenses, including without
limitation legal, accounting, investment banking and printing expenses, incurred
or suffered by the non-defaulting party in connection herewith or in the
enforcement of its rights hereunder if such non-defaulting party prevails. With
respect to the immediately preceding sentence, a misrepresentation shall provide
a basis for a suit to recover monetary damages (as distinguished from a basis
for terminating this Agreement) only if the party making such misrepresentation
shall have acted with the intention to defraud or to deliberately mislead the
other party.
11.4 Acquisition Transaction. If
(a) this Agreement is terminated by Lakeland due to a breach of a
covenant by MSB, by Lakeland or MSB pursuant to Section 11.1(e) hereof or by MSB
due to a failure to satisfy the condition set forth in Section 9.10 hereof; and
(b) at the time of such termination, a proposed Acquisition
Transaction has been publicly announced; and
(c) before or within twelve months after this Agreement is terminated,
(i) MSB shall have entered into an agreement to engage in an Acquisition
Transaction with any person other than Lakeland, or (ii) the Board of Directors
of MSB shall have approved an Acquisition Transaction or shall have recommended
that the stockholders of MSB approve or accept any Acquisition Transaction; and
(d) an Acquisition Transaction between MSB and another person shall
have closed (the "Acquisition Closing") within twenty-four (24) months after the
termination of this Agreement;
then MSB or its successor in interest shall pay to Lakeland, concurrent with the
Acquisition Closing, a termination fee equal to $500,000 (the "Termination Fee")
plus the legal fees and expenses incurred by Lakeland in enforcing its right to
the Termination Fee.
ARTICLE XII
MISCELLANEOUS
12.1. Parties in Interest. Nothing expressed or implied in this Agreement
is intended or shall be construed to confer upon or give to any person, firm or
corporation other than the parties hereto any rights or remedies under or by
reason of this Agreement or any transaction contemplated hereby, except as
specifically provided in this Agreement.
12.2. Entire Agreement; Amendments. This Agreement contains the entire
understanding of the parties with respect to its subject matter. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter, except as specifically provided to the contrary
herein. This Agreement may be amended only by a written instrument duly executed
by the parties, and any condition to a party's obligations hereunder may only be
waived in writing by such party.
12.3. Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
12.4. Notices. All notices, claims, certificates, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally or mailed (by registered or certified
mail, return receipt requested and postage prepaid) as follows:
If to Lakeland:
Lakeland Bancorp, Inc.
250 Oak Ridge Road
Oak Ridge, New Jersey 07438
Attention: John W. Fredericks, President
with copy to:
Peter H. Ehrenberg, Esq.
Lowenstein, Sandler, Kohl, Fisher & Boylan
65 Livingston Avenue
Roseland, New Jersey 07068
If to MSB:
Metropolitan State Bank
166 Changebridge Road
P.O. Box 425
Montville, New Jersey 07045-0425
Attention: Mr. Paul P. Lubertazzi, President
with copy to:
Robert J. Romano, Jr., Esq.
Robert J. Romano, Jr. & Associates
15 Essex Road
Paramus, New Jersey 07652
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. If mailed as
aforesaid, any such communication shall be deemed to have been given on the
third business day following that on which the piece of mail containing such
communication is posted; provided that any communication sent by telecopy or
telex and confirmed by mail (postage prepaid) shall be deemed to have been given
at the time of transmission.
12.5. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
12.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of New Jersey, without giving
effect to the choice of laws provisions thereof.
12.7. Gender and Number; Person. Any reference expressed in any gender
shall be deemed to include each of the other genders, and the singular shall be
deemed to include the plural and vice versa, unless the context otherwise
requires. The term "person" as used in this Agreement, unless the context
otherwise requires, shall include any individual and any corporation,
partnership, association, or other entity or group.
12.8. Waivers. Any party to this Agreement may, by written notice to the
other parties hereto, waive any provision of this Agreement. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
12.9. Assignments. This Agreement and all of the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by either
party hereto without the prior written consent of the other party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first above written.
LAKELAND BANCORP, INC. METROPOLITAN STATE BANK
By: /s/John W. Fredericks /s/ Paul P. Lubertazzi
__________________________________ By: _________________________
Name: John W. Fredericks Name: Paul P. Lubertazzi
Title: President Title: President