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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
KEARNY FEDERAL SAVINGS BANK
AND
KEARNY FINANCIAL CORP.
AND
KEARNY MHC
AND
WEST ESSEX BANK
AND
WEST ESSEX BANCORP, INC.
AND
WEST ESSEX BANCORP, M.H.C.
DATED AS OF SEPTEMBER 11, 2002
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AGREEMENT AND PLAN OF MERGER
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions.......................................................
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01 Effects of Merger; Surviving Institutions.........................
Section 2.02 Conversion and Cancellation of Shares; Effect on Members..........
Section 2.03 Payment for Shares................................................
Section 2.04 Cancellation of WEST ESSEX Bancorp Stock Options and Restricted
Stock.............................................................
Section 2.05 Availability of Information.......................................
Section 2.06 Employment Agreements.............................................
Section 2.07 Closing...........................................................
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
WEST ESSEX BANK, WEST ESSEX BANCORP AND WEST ESSEX MHC
Section 3.01 Organization......................................................
Section 3.02 Capitalization....................................................
Section 3.03 Authority; No Violation...........................................
Section 3.04 Consents..........................................................
Section 3.05 Regulatory Reports;Financial Statements...........................
Section 3.06 Taxes.............................................................
Section 3.07 No Material Adverse Effect........................................
Section 3.08 Contracts.........................................................
Section 3.09 Ownership of Property; Insurance Coverage.........................
Section 3.10 Legal Proceedings.................................................
Section 3.11 Compliance With Applicable Law....................................
Section 3.12 ERISA.............................................................
Section 3.13 Brokers, Finders and Financial Advisors...........................
Section 3.14 Environmental Matters.............................................
Section 3.15 Loan Portfolio....................................................
Section 3.16 Information to be Supplied........................................
Section 3.17 Fiduciary Accounts................................................
Section 3.18 Related Party Transactions........................................
Section 3.19 Schedule of Termination Benefits..................................
Section 3.20 Deposits..........................................................
Section 3.21 Fairness Opinion..................................................
Section 3.22 Antitakeover Provisions Inapplicable; Required Vote of
Stockholders......................................................
Section 3.23 Derivative Transactions...........................................
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Section 3.24 Labor.............................................................
Section 3.25 Material Interests of Certain Persons.............................
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF KEARNY
Section 4.01 Organization......................................................
Section 4.02 Authority; No Violation...........................................
Section 4.03 Consents..........................................................
Section 4.04 Compliance With Applicable Law....................................
Section 4.05 Information to be Supplied........................................
Section 4.06 Financing.........................................................
Section 4.07 Regulatory Approvals..............................................
Section 4.08 Legal Proceedings.................................................
Section 4.09 Kearny Financial Statements.......................................
Section 4.10 Kearny Benefit Plans..............................................
Section 4.11 Absence of Certain Changes........................................
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01 Conduct of WEST ESSEX's Business..................................
Section 5.02 Access; Confidentiality...........................................
Section 5.03 Regulatory Matters and Consents...................................
Section 5.04 Taking of Necessary Action........................................
Section 5.05 Certain Agreements................................................
Section 5.06 No Other Bids and Related Matters.................................
Section 5.07 Duty to Advise; Duty to Update the WEST ESSEX Disclosure
Schedules.........................................................
Section 5.08 Conduct of Kearny's Business......................................
Section 5.09 Board and Committee Minutes.......................................
Section 5.10 Undertakings by the Parties.......................................
Section 5.11 Employee and Termination Benefits; Directors and Management.......
Section 5.12 Duty to Advise; Duty to Update Kearny Disclosure Schedules........
Section 5.13 Transaction Expenses of WEST ESSEX................................
ARTICLE VI
CONDITIONS
Section 6.01 Conditions to Obligations of WEST ESSEX Under this Agreement.....
Section 6.02 Conditions to the Obligations of Kearny Under this Agreement......
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination.......................................................
Section 7.02 Effect of Termination.............................................
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ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses..........................................................
Section 8.02 Non-Survival of Representations and Warranties....................
Section 8.03 Amendment, Extension and Waiver...................................
Section 8.04 Entire Agreement..................................................
Section 8.05 No Assignment.....................................................
Section 8.06 Notices...........................................................
Section 8.07 Captions..........................................................
Section 8.08 Counterparts......................................................
Section 8.09 Severability......................................................
Section 8.10 Governing Law.....................................................
Section 8.11 Specific Performance..............................................
EXHIBITS:
Exhibit A Form of merger agreement relating to the Corporate Merger
Exhibit B Form of merger agreement relating to the Mid-Tier Merger
Exhibit C Form of merger agreement relating to the MHC Merger
Exhibit D Form of merger agreement relating to the Bank Merger
Exhibit E Form of WEST ESSEX Voting Agreement
Exhibit 6.1 Form of Opinion of Counsel for Kearny
Exhibit 6.2 Form of Opinion of Counsel for WEST ESSEX
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 11, 2002, is by and between (i) Kearny Federal Savings Bank, a
Federally-chartered savings bank ("Bank"), Kearny Financial Corp.
("Corporation"), a Federal MHC subsidiary holding company and the parent
corporation of Bank, Kearny MHC ("MHC"), a federal mutual holding company of the
Bank and the parent company of Corporation, and (ii) WEST ESSEX Bank, a
Federally-chartered savings bank ("WEST ESSEX Bank"), WEST ESSEX Bancorp, Inc.,
a Federal MHC subsidiary holding company ("WEST ESSEX Bancorp"), and WEST ESSEX
Bancorp, M.H.C., a Federally- chartered mutual holding company ("WEST ESSEX
MHC"). Each of Bank, Corporation, MHC, WEST ESSEX Bank, WEST ESSEX Bancorp and
WEST ESSEX MHC is sometimes individually referred to herein as a "party," and
collectively as the "parties."
RECITALS
1. Bank is a stock savings bank with its principal offices located in
Kearny, New Jersey. Corporation is its parent company for Bank and MHC is
Corporation's parent company and the mutual holding company for Bank. Bank,
Corporation and MHC all have their principal offices in Kearny, New Jersey.
2. WEST ESSEX MHC owns a majority of the outstanding capital stock of WEST
ESSEX Bancorp, which owns all of the outstanding capital stock of WEST ESSEX
Bank. WEST ESSEX Bank, WEST ESSEX Bancorp and WEST ESSEX MHC all have their
principal offices in Caldwell, New Jersey.
3. The Boards of Directors of the respective parties deem it advisable and
in the best interests of the parties, including the members of MHC and WEST
ESSEX MHC, and the stockholders of WEST ESSEX Bancorp, for the following merger
transactions: (i) WEST ESSEX Bancorp will merge with Corporation Merger Sub (a
wholly owned subsidiary of Corporation), with WEST ESSEX Bancorp as the
surviving entity; (ii) WEST ESSEX MHC will merge with MHC, with MHC as the
surviving entity; (iii) WEST ESSEX Bancorp will merge or consolidate with
Corporation, with Corporation as the surviving entity; (iv) WEST ESSEX Bank will
merge with and into Bank, with Bank as the surviving institution, and Bank will
remain a subsidiary of Corporation; (v) concurrently with steps (i) through
(iv), 100% of the outstanding shares of WEST ESSEX Bancorp Common Stock
previously held by stockholders other than WEST ESSEX MHC will be canceled and
exchanged for a payment of $35.10 per share in cash paid by Corporation or
Corporation Merger Sub pursuant to the terms of this Agreement; and (vi) as a
result of the foregoing, the interests of WEST ESSEX MHC members shall cease to
exist and will be converted into interests of the same nature in MHC.
4. The parties desire to provide for certain undertakings, conditions,
representations, warranties and covenants in connection with the transactions
contemplated by this Agreement.
In consideration of the premises and of the mutual representations,
warranties and covenants herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
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ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. DEFINITIONS.
Except as otherwise provided herein, as used in this Agreement, the
following terms shall have the indicated meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" means, with respect to any Person, any Person who directly, or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control of, such Person and, without limiting the generality
of the foregoing, includes any executive officer or director of such Person and
any Affiliate of such executive officer or director.
"Agreement" means this agreement, and any amendment or supplement hereto,
which constitutes a "plan of merger" between Bank, Corporation, MHC, WEST ESSEX
MHC, WEST ESSEX Bancorp and WEST ESSEX Bank.
"Applications" means the applications to be filed with the appropriate
Regulatory Authorities requesting approval or nonobjection of the transactions
described in this Agreement.
"Bank" means Kearny Federal Savings Bank, a Federally-chartered stock
savings bank.
"Bank Merger" means the merger of WEST ESSEX Bank with and into Bank, with
Bank as the surviving institution.
"Bank Subsidiary" means any corporation, 50% or more of the capital stock
of which is owned, either directly or indirectly, by Bank, except any
corporation the stock of which is held as security by Bank in the ordinary
course of its lending activities.
"Closing" means the closing of the Merger as set forth in Section 2.07 of
this Agreement.
"Closing Date" means the date determined by Kearny, in consultation with
and upon no less than five (5) days prior written notice to WEST ESSEX Bancorp,
but in no event later than fifteen (15) days after the last condition precedent
pursuant to this Agreement has been fulfilled or waived (including the
expiration of any applicable waiting period), or such other date as to which the
parties shall mutually agree.
"Corporate Merger" means the merger of Corporation Merger Sub with and
into WEST ESSEX Bancorp with WEST ESSEX Bancorp as the surviving entity.
"Corporation Merger Sub" means a wholly owned subsidiary of Corporation to
be incorporated to facilitate the merger of WEST ESSEX Bancorp and Corporation.
"Environment" means ambient air, surface water, groundwater, soil,
sediment and land.
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"Environmental Assessment" shall have the meaning given to such term in
Section 5.02(a) of this Agreement.
"Environmental Conditions" means any pollution or contamination or
threatened pollution or contamination of, or the Release or threatened Release
of Hazardous Materials into, the Environment.
"Environmental Law" means any Federal or state law, statute, rule,
regulation, code, order, judgment, decree, injunction, common law or agreement
with any Federal or state governmental authority relating to (i) the protection,
preservation or restoration of the environment (including air, surface water,
groundwater, drinking water supply, surface land, subsurface land, plant and
animal life or any other natural resource), (ii) human health or safety, or
(iii) exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of, hazardous substances, in each case as amended and now in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated from time to time thereunder.
"Exchange Agent" means the third party entity selected by Kearny and
reasonably acceptable to WEST ESSEX, as provided in Section 2.03(a) of this
Agreement.
"FinPro" means FinPro, Inc., the financial advisor to WEST ESSEX in
connection with the transactions provided for in this Agreement.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLB" means the Federal Home Loan Bank.
"GAAP" means generally accepted accounting principles as in effect at the
relevant date and consistently applied.
"Hazardous Material" means any substance (whether solid, liquid or gas)
which is detrimental to human health or safety or to the environment, currently
listed, defined, designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any Environmental Law, whether by type
or by quantity, including any substance containing any such substance as a
component. Hazardous Material includes, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance, oil or petroleum, or any derivative or
by-product thereof, radon, radioactive material, asbestos, asbestos-containing
material, urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
"HOLA" means the Home Owners' Loan Act of 1956, as amended.
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"IRC" or "Code" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
"ISRA" means the New Jersey Industrial Site Recovery Act, N.J.S.A.13:1K-6
et seq., and the regulations promulgated thereunder, N.J.A.C. 7:26B-1.1 et seq.
"Kearny" means the Bank, the Corporation, the MHC and/or any direct or
indirect Subsidiary of such entities.
"Kearny Disclosure Schedules" means the Disclosure Schedules delivered by
Kearny to WEST ESSEX pursuant to Article IV of this Agreement.
"Kearny Financials" means the audited consolidated financial statements of
Corporation as of June 30, 2001 and 2000 and for the three years ended June 30,
2001, including the notes thereto, and (ii) the unaudited interim consolidated
financial statements of the Corporation as of each calendar quarter following
December 31, 2001.
"Loan Property" means any property or facility in which WEST ESSEX (or a
Subsidiary of WEST ESSEX) holds a security interest and, where required by the
context, includes the owner and/or operator of such property or facility, but
only with respect to such property or facility.
"Material Adverse Effect" shall mean, with respect to Kearny or WEST
ESSEX, any adverse effect on its assets, financial condition or results of
operations which is material to its assets, financial condition or results of
operations on a consolidated basis, except for any material adverse effect
caused by (i) any change in the value of the assets of Kearny or WEST ESSEX
resulting from a change in interest rates generally, (ii) any individual or
combination of changes occurring after the date hereof in any Federal or state
law, rule or regulation or in GAAP, which change(s) affect(s) financial
institutions generally, or (iii) reasonable expenses incurred in connection with
this Agreement and the transactions contemplated thereby.
"Member Proxy Statement" means any proxy statement, if any, together with
any supplements thereto, to be transmitted by WEST ESSEX MHC to its members in
connection with the transactions contemplated by this Agreement if a vote of
such members is required by any Regulatory Authority.
"Merger" shall mean collectively the Corporate Merger, the MHC Merger, the
Mid-Tier Merger, the Bank Merger and any other mergers by interim corporate
entities necessary to effectuate the transactions contemplated by this
Agreement.
"Merger Effective Date" means the date upon which the articles of
combination as to the Merger are filed and endorsed by the OTS or as otherwise
stated in the articles of combination, in accordance with HOLA and the
regulations of the OTS.
"Merger Consideration" has the meaning given to that term in Section
2.02(a) of this Agreement.
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"MHC Merger" means the merger of the WEST ESSEX MHC with and into MHC with
MHC as the surviving entity.
"Mid-Tier Merger" means the merger of WEST ESSEX Bancorp with and into
Corporation with Corporation as the surviving entity.
"OTS" means the Office of Thrift Supervision.
"Participation Facility" means any property or facility in which WEST
ESSEX (or a Subsidiary of WEST ESSEX) participates in the management of such
property or facility (including all property or facilities held in trust or in
any other fiduciary capacity) and, where required by the context, includes the
owner and/or operator of such property, but only with respect to such property
or facility.
"Person" means any individual, corporation, partnership, joint venture,
association, trust or "group" (as that term is defined under the Exchange Act).
"Proxy Statement" means the proxy statement, together with any supplements
thereto, to be transmitted to holders of WEST ESSEX Bancorp Common Stock and, if
required by any Regulatory Authority, any proxy statement together with any
supplements thereto to be transmitted by WEST ESSEX MHC to the members of WEST
ESSEX MHC in connection with the transactions contemplated by this Agreement.
"Release" means any intentional or unintentional release, discharge,
spill, leaking, pumping, pouring, emitting, emptying, injection, disposal or
dumping.
"Regulatory Agreement" has the meaning given to that term in Section 3.11
of this Agreement.
"Regulatory Authority" or "Regulatory Authorities" means any agency or
department of any Federal or state government, including, without limitation,
the OTS, the FDIC, the SEC and the respective staffs thereof.
"Rights" means warrants, options, rights, convertible securities and other
capital stock equivalents which obligate an entity to issue its securities.
"SAIF" means the Savings Association Insurance Fund, as administered by
the FDIC.
"Sandler O'Neill" means Sandler O'Neill & Partners, LLP, the financial
advisor to Kearny in connection with the transactions provided for in this
Agreement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated from time to time thereunder.
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"Securities Documents" means all registration statements, schedules,
statements, forms, reports, proxy material, and other documents required to be
filed under the Securities Laws.
"Securities Laws" means the Securities Act and the Exchange Act and the
rules and regulations promulgated from time to time thereunder.
"Stockholder Proxy Statement" means the proxy statement together with any
supplements thereto to be transmitted to holders of WEST ESSEX Bancorp Common
Stock in connection with the transactions contemplated by this Agreement.
"Subsidiary" means any corporation, 50% or more of the capital stock of
which is owned, either directly or indirectly, by another entity, except any
corporation the stock of which is held as security by either Kearny or WEST
ESSEX, as the case may be, in the ordinary course of its lending activities.
"WEST ESSEX" means WEST ESSEX MHC, WEST ESSEX Bancorp, WEST ESSEX Bank
and/or any direct or indirect Subsidiary of such entities.
"WEST ESSEX Disclosure Schedules" means the Disclosure Schedules delivered
by WEST ESSEX to Kearny pursuant to Article III of this Agreement.
"WEST ESSEX Employee Plan" has the meaning given to that term in Section
3.12 of this Agreement.
"WEST ESSEX Bancorp" means WEST ESSEX Bancorp, Inc., a Federal MHC
subsidiary holding company.
"WEST ESSEX Bancorp Financials" means (i) the audited consolidated
financial statements of WEST ESSEX Bancorp as of December 31, 2001 and 2000 and
for the three years ended December 31, 2001, including the notes thereto, and
(ii) the unaudited interim consolidated financial statements of WEST ESSEX
Bancorp as of each calendar quarter following December 31, 2001 included in
Securities Documents filed by WEST ESSEX Bancorp.
"WEST ESSEX Bancorp Common Stock" means the common stock of WEST ESSEX
Bancorp described in Section 3.02(a).
"WEST ESSEX Bancorp Options" means the options awarded to acquire shares
of WEST ESSEX Bancorp Common Stock as set forth in Section 3.02 and as disclosed
at WEST ESSEX Disclosure Schedule 3.12(i).
"WEST ESSEX MHC" means WEST ESSEX Bancorp, M.H.C., a Federally-chartered
mutual holding company.
"WEST ESSEX Pension Plan" has the meaning given to that term in Section
3.12 of this Agreement.
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"WEST ESSEX Property" means any property or facility currently or formerly
owned, operated, leased or occupied by WEST ESSEX, or any of them (or a
predecessor of any of the foregoing), in connection with WEST ESSEX's business.
"WEST ESSEX Regulatory Reports " means the OTS Thrift Financial Reports
("TFRs") of WEST ESSEX Bank and accompanying schedules, as filed with the OTS
for each calendar quarter beginning with the quarter ended March 31, 1998,
through the Closing Date, and all Annual, Quarterly and Current Reports filed
with the OTS by WEST ESSEX Bancorp or WEST ESSEX MHC from March 31, 1998,
through the Closing Date.
"WEST ESSEX Restricted Stock" means awards of Common Stock under any stock
bonus plan of WEST ESSEX Bancorp or WEST ESSEX Bank as disclosed at WEST ESSEX
Disclosure Schedule 2.04(b).
"WEST ESSEX Bank" means WEST ESSEX Bank, a Federally- chartered stock
savings bank.
"WEST ESSEX Subsidiary" means any corporation, 50% or more of the capital
stock of which is owned, either directly or indirectly, by WEST ESSEX Bancorp,
and includes WEST ESSEX Bank, except that it does not include any corporation
the stock of which is held in the ordinary course of the lending activities of
WEST ESSEX Bank.
ARTICLE II
THE MERGER AND RELATED MATTERS
SECTION 2.01. EFFECTS OF MERGER; SURVIVING INSTITUTIONS.
On the Merger Effective Date, the Merger will be effected as follows:
(a) THE CORPORATE MERGER AND MID-TIER MERGER. Corporation Merger Sub shall
merge with and into WEST ESSEX Bancorp with WEST ESSEX Bancorp as the surviving
entity (the "Corporate Merger"). WEST ESSEX Bancorp and Corporation Merger Sub
shall enter into the Corporate Merger Agreement substantially in the form of
Exhibit A attached hereto. Immediately thereafter, WEST ESSEX Bancorp shall
merge with and into Corporation with Corporation as the surviving entity in
accordance with the Mid-Tier Merger Agreement substantially in the form of
Exhibit B attached hereto.
(b) THE MHC MERGER. WEST ESSEX MHC shall merge with and into MHC with MHC
as the surviving entity. The separate existence of WEST ESSEX MHC shall cease,
and all of the property (real, personal and mixed), rights, powers and duties
and obligations of WEST ESSEX MHC shall be taken and deemed to be transferred to
and vested in MHC, as the surviving entity in the MHC Merger, without further
act or deed, all in accordance with the applicable laws of the United States,
and regulations of the OTS. WEST ESSEX MHC and MHC shall enter into the MHC
Merger Agreement substantially in the form of Exhibit C attached hereto.
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(c) THE BANK MERGER. WEST ESSEX Bank shall merge with and into Bank, with
Bank as the surviving institution (the "Bank Merger"). The Bank Merger shall be
effected pursuant to the Bank Merger Agreement substantially in the form of
Exhibit D attached hereto. As a result of the Bank Merger, the existence of WEST
ESSEX Bank shall cease and Bank shall be the surviving association and continue
its existence as a savings bank under the laws of the United States.
(d) MODIFICATION OF STRUCTURE. Notwithstanding any provision of this
Agreement to the contrary, Kearny may elect, subject to the filing of all
necessary applications and the receipt of all required regulatory approvals, to
modify the structure of the transactions described in (a) through (c) above, and
the parties shall enter into such alternative transactions, so long as (i) there
are no adverse tax consequences to any of the stockholders of WEST ESSEX Bancorp
as a result of such modification, (ii) the Merger Consideration is not thereby
changed in kind or reduced in amount because of such modification, (iii) such
modification will not be likely to jeopardize receipt of any required regulatory
approvals required under Sections 6.02(d), or impair or prevent the satisfaction
of any conditions to the Closing.
SECTION 2.02. CONVERSION AND CANCELLATION OF SHARES; EFFECT ON MEMBERS.
(a) On the Merger Effective Date and in accordance with the Corporate
Merger, MHC Merger, Mid-Tier Merger and the Bank Merger:
(i) Each issued and outstanding share of WEST ESSEX Bancorp Common
Stock (except shares held by WEST ESSEX MHC) shall cease to
exist and shall be converted into the right to receive $35.10
in cash (the "Merger Consideration");
(ii) the interests of members of WEST ESSEX MHC will be converted
into interests of the same nature in the MHC (the "Member
Conversion").
(b) Any shares of WEST ESSEX Bancorp Common Stock which are owned or held
by either party hereto or any of their respective Subsidiaries (other than in a
fiduciary capacity or in connection with debts previously contracted) at the
Merger Effective Date shall cease to exist, the certificates for such shares
shall be canceled as promptly as practicable, such shares shall not be converted
into the Merger Consideration, and no cash shall be issued or exchanged
therefor.
(c) The holders of certificates representing shares of WEST ESSEX Bancorp
Common Stock (any such certificate being hereinafter referred to as a
"Certificate") shall cease to have any rights as stockholders of WEST ESSEX
Bancorp.
(d) As a result of the Member Conversion, each holder of a deposit account
at WEST ESSEX Bank as of the effective time of the Bank Merger shall become a
holder of a deposit account at the Bank with the same rights, privileges and
obligations as a holder of a deposit account at the Bank at the effective time
of the Bank Merger, and all deposit accounts established at WEST ESSEX Bank
prior to the Merger Effective Date shall be deemed to have been established at
the Bank on the date that they were previously established at WEST ESSEX Bank.
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SECTION 2.03. PAYMENT FOR SHARES.
(a) As promptly as practicable after the Merger Effective Date, and in any
event within five business days after the Merger Effective Date, the Exchange
Agent shall mail to each holder of record of an outstanding share Certificate or
Certificates a Letter of Transmittal containing instructions for the surrender
of the Certificate or Certificates held by such holder for payment therefor.
Upon surrender of the Certificate or Certificates to the Exchange Agent in
accordance with the instructions set forth in the Letter of Transmittal, such
holder shall promptly receive in exchange therefor the Merger Consideration,
without interest thereon. Approval of this Agreement by the stockholders of WEST
ESSEX Bancorp shall constitute authorization for Corporation to designate and
appoint the Exchange Agent, which appointment shall be reasonably acceptable to
WEST ESSEX Bancorp. Neither Corporation nor the Exchange Agent shall be
obligated to deliver the Merger Consideration to a former stockholder of WEST
ESSEX Bancorp until such former stockholder surrenders his Certificate or
Certificates or, in lieu thereof, any such appropriate affidavit of loss and
indemnity agreement and bond as may be reasonably required by Corporation.
(b) If payment of the Merger Consideration is to be made to a person other
than the person in whose name a Certificate surrendered in exchange therefor is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for transfer, and that the
person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate surrendered, or required for any other reason, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(c) On or prior to the Merger Effective Date, Kearny shall deposit or
cause to be deposited, in trust with the Exchange Agent, an amount of cash equal
to the aggregate Merger Consideration that the WEST ESSEX Bancorp stockholders
shall be entitled to receive on the Merger Effective Date pursuant to Section
2.02 hereof.
(d) The payment of the Merger Consideration upon the conversion of WEST
ESSEX Bancorp Common Stock in accordance with the above terms and conditions
shall be deemed to have been issued and paid in full satisfaction of all rights
pertaining to such WEST ESSEX Bancorp Common Stock.
(e) Promptly following the date which is 12 months after the Merger
Effective Date, the Exchange Agent shall deliver to Corporation all cash,
certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing shares of WEST
ESSEX Bancorp Common Stock may surrender such Certificate to Corporation and
(subject to applicable abandoned property, escheat and similar laws) receive in
consideration therefor the Merger Consideration multiplied by the number of
shares of WEST ESSEX Bancorp Common Stock formerly represented by such
Certificate, without any interest or dividends thereon.
(f) After the close of business on the Merger Effective Date, there shall
be no transfers on the stock transfer books of WEST ESSEX Bancorp of the shares
of WEST ESSEX Bancorp
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Common Stock which are outstanding immediately prior to the Merger Effective
Date, and the stock transfer books of WEST ESSEX Bancorp shall be closed with
respect to such shares. If, after the Merger Effective Date, Certificates
representing such shares are presented for transfer to the Exchange Agent, they
shall be canceled and exchanged for the Merger Consideration as provided in this
Article.
(g) In the event any certificate for WEST ESSEX Bancorp Common Stock shall
have been lost, stolen or destroyed, the Exchange Agent shall deliver (except as
otherwise provided in Section 2.02) in exchange for such lost, stolen or
destroyed certificate, upon the making of an affidavit of the fact by the holder
thereof, the cash to be paid in the Merger as provided for herein; provided,
however, that Corporation may, in its sole discretion and as a condition
precedent to the delivery thereof, require the owner of such lost, stolen or
destroyed certificate to deliver a bond in such reasonable sum as Corporation
may specify as indemnity against any claim that may be made against WEST ESSEX
Bancorp, Corporation or any other party with respect to the certificate alleged
to have been lost, stolen or destroyed.
(h) Corporation is hereby authorized, with the consent of WEST ESSEX, to
adopt additional rules and regulations with respect to the matters referred to
in this Agreement not inconsistent with the provisions of this Agreement and
which do not adversely affect the rights of stockholders of WEST ESSEX Bancorp.
SECTION 2.04. CANCELLATION OF WEST ESSEX BANCORP STOCK OPTIONS AND
RESTRICTED STOCK.
(a) Each WEST ESSEX Bancorp Option issued and outstanding on the date
hereof and remaining outstanding immediately prior to the Closing Date, as set
forth in WEST ESSEX Disclosure Schedule 3.12(i), whether or not the option is
then exercisable, shall be converted into the right to receive a cancellation
payment in an amount equal to the product of (i) the number of shares of WEST
ESSEX Bancorp Common Stock subject to such option immediately prior to the
Closing Date and (ii) the excess, if any, of the Merger Consideration over the
exercise price per share of such option, net of any cash which must be withheld
under federal and state income and employment tax requirements. Such cash
payments shall be made by WEST ESSEX Bancorp not later than the Closing Date in
consideration for, and shall result in, the settlement and cancellation of all
such WEST ESSEX Bancorp Options. As a condition to the receipt of a cash payment
in cancellation of options, each option holder shall execute and deliver a
cancellation agreement in form and substance reasonably satisfactory to Kearny.
(b) Each share of WEST ESSEX Restricted Stock issued and outstanding
immediately prior to the Closing Date, as set forth in WEST ESSEX Disclosure
Schedule 2.04(b), shall be canceled and exchanged for payment to be made to the
recipient or holder thereof by WEST ESSEX not later than the Closing Date in an
amount equal to the Merger Consideration, less any cash which must be withheld
under federal and state income and employment tax requirements; provided that
such recipient or holder shall deliver to WEST ESSEX a cancellation agreement in
form and substance reasonably satisfactory to Kearny prior to receipt of such
payment.
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SECTION 2.05. AVAILABILITY OF INFORMATION.
Promptly after the execution by the Parties of this Agreement, WEST ESSEX
shall provide to Kearny, its officers, employees, agents, and representatives
access, on reasonable notice and during customary business hours, to the books,
records, properties and facilities of WEST ESSEX and shall use its best efforts
to cause its officers, employees, agents and representatives to cooperate with
any reasonable request for information.
SECTION 2.06. EMPLOYMENT AGREEMENTS.
It is acknowledged that WEST ESSEX Bank currently has outstanding,
separate employment agreements and separate change of control agreements with
individuals detailed at WEST ESSEX Disclosure Schedule 2.06 ("Employment
Agreements"). Kearny will honor the terms of the Employment Agreements and WEST
ESSEX or Kearny shall make the payments required thereunder; details of such
estimated calculations are set forth in WEST ESSEX Disclosure Schedule 2.06;
provided that no such payments shall be made prior to delivery of an
acknowledgment and release agreement in form and substance reasonably
satisfactory to Kearny prior to delivery of such payments.
SECTION 2.07. CLOSING.
The closing of the Merger shall take place at the offices of the
Corporation in Kearny, New Jersey, or at such other location selected by Kearny,
on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
WEST ESSEX BANK, WEST ESSEX BANCORP AND WEST ESSEX MHC
WEST ESSEX represents and warrants to Kearny that the statements contained
in this Article III are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this Article III), except as set forth in the WEST ESSEX Disclosure
Schedules delivered to Kearny on or prior to the date hereof, and except as to
any representation or warranty which specifically relates to an earlier date.
WEST ESSEX has made a good faith effort to ensure that the disclosure on each
schedule of the WEST ESSEX Disclosure Schedules corresponds to the section
reference herein. However, for purposes of the WEST ESSEX Disclosure Schedules,
any item disclosed on any schedule therein is deemed to be fully disclosed with
respect to all schedules under which such item may be relevant.
SECTION 3.01. ORGANIZATION.
(a) WEST ESSEX MHC is a Federal mutual holding company duly organized,
validly existing and in good standing under the laws of the United States, and
is duly registered as a savings and loan holding company under the HOLA. WEST
ESSEX MHC has full power and authority to carry on its business as now conducted
and is duly licensed or qualified to do business in the states of the United
States and foreign jurisdictions where its ownership or leasing of property or
the
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conduct of its business requires such qualification, except where the failure to
be so licensed or qualified would not have a Material Adverse Effect on WEST
ESSEX MHC. Except as set forth in WEST ESSEX Disclosure Schedule 3.01(a), WEST
ESSEX MHC has no subsidiary other than WEST ESSEX Bancorp.
(b) WEST ESSEX Bancorp is a Federal MHC subsidiary holding company duly
organized, validly existing and in good standing under the laws of the United
States, and is duly registered as a savings and loan holding company under the
HOLA. WEST ESSEX Bancorp has the full corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed, qualified or in good standing would not have a Material Adverse
Effect on the business, operations, assets, financial condition or prospects of
WEST ESSEX Bancorp and its subsidiaries taken as a whole. Other than shares of
capital stock in WEST ESSEX Bank and its subsidiaries, as identified below
(collectively, the "WEST ESSEX Subsidiaries"), WEST ESSEX Bancorp does not own
or control, directly or indirectly, or have the right to acquire directly or
indirectly, an equity interest in any corporation, company, association,
partnership, joint venture or other entity.
(c) WEST ESSEX Bank is a Federal stock savings bank organized, validly
existing and in good standing under the laws of the United States. Except as set
forth in WEST ESSEX Disclosure Schedule 3.01(c), WEST ESSEX Bank is the only
WEST ESSEX Subsidiary. The deposits of WEST ESSEX Bank are insured by the FDIC
to the fullest extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid when due by WEST
ESSEX Bank. Each WEST ESSEX Subsidiary is identified in WEST ESSEX Disclosure
Schedule 3.01(c), and is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization.
(d) WEST ESSEX Bank is a member in good standing of the FHLB of New York
and owns the requisite amount of stock therein.
(e) Except as disclosed in WEST ESSEX Disclosure Schedule 3.01(e), the
respective minute books of WEST ESSEX MHC, WEST ESSEX Bancorp, WEST ESSEX Bank
and each WEST ESSEX Subsidiary accurately records, in all material respects, all
material corporate actions of their respective stockholders and boards of
directors (including committees) through the date of this Agreement.
(f) Prior to the date of this Agreement, true and correct copies of the
charter and bylaws of WEST ESSEX Bank, WEST ESSEX Bancorp and WEST ESSEX MHC,
and each WEST ESSEX Subsidiary, have been made available to Kearny.
SECTION 3.02. CAPITALIZATION.
(a) The authorized capital stock of WEST ESSEX Bancorp consists of
9,000,000 shares of common stock, $0.01 par value ("WEST ESSEX Bancorp Common
Stock"), and 1,000,000 shares
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of Preferred Stock, $0.01 par value (the "WEST ESSEX Preferred Stock"), of which
1,907,742 shares of WEST ESSEX Bancorp Common Stock are outstanding, validly
issued, fully paid and nonassessable, and free of preemptive rights which are
owned by parties other than WEST ESSEX MHC. Except for an aggregate of 191,835
shares of WEST ESSEX Bancorp Common Stock issuable upon exercise of stock
options, neither WEST ESSEX Bancorp nor any WEST ESSEX Subsidiary has or is
bound by any Right of any character relating to the purchase, sale or issuance
or voting of, or right to receive dividends or other distributions on any shares
of WEST ESSEX Bancorp Common Stock, or any other security of WEST ESSEX Bancorp
or any WEST ESSEX Subsidiary, or any securities representing the right to vote,
purchase or otherwise receive any shares of WEST ESSEX Bancorp Common Stock or
any other security of WEST ESSEX Bancorp, other than (i) as set forth in
reasonable detail in the WEST ESSEX Disclosure Schedule 3.02(a). There are no
shares of WEST ESSEX Bancorp Preferred Stock issued and outstanding. There are
401,068 shares of WEST ESSEX Bancorp Common Stock held by WEST ESSEX Bancorp as
treasury stock.
(b) WEST ESSEX MHC owns 2,937,651 shares of WEST ESSEX Bancorp Common
Stock, free and clear of any lien or encumbrance except as set forth in WEST
ESSEX Disclosure Schedule 3.02(b), which shares represent approximately 60.6
percent of the total shares of WEST ESSEX Bancorp issued and outstanding. Except
for shares of WEST ESSEX Bancorp Common Stock (and any equity interests that may
be attributed to WEST ESSEX MHC due to its ownership of WEST ESSEX Bancorp
Common Stock), WEST ESSEX MHC does not possess, directly or indirectly, any
equity interest in any corporation.
(c) To the best knowledge of WEST ESSEX Bancorp, no Person or "group" (as
that term is used in Section 13(d)(3) of the Exchange Act) other than WEST ESSEX
MHC, is the beneficial owner (as defined in Section 13(d) of the Exchange Act)
of 5% or more of the outstanding shares of WEST ESSEX Bancorp Common Stock,
except as disclosed in the WEST ESSEX Disclosure Schedule 3.02(c).
(d) The authorized capital stock of WEST ESSEX Bank consists of9,000,000
shares of common stock, $1.00 par value ("WEST ESSEX Bank Common Stock") and
1,000,000 shares of Preferred Stock, $1.00 par value, of which 100 shares of
common stock are issued and outstanding, validly issued, fully paid and
nonassessable and free of preemptive rights. All shares of WEST ESSEX Bank
Common Stock issued and outstanding are owned by WEST ESSEX Bancorp free and
clear of any liens, encumbrances, charges, restrictions or rights of third
parties of any kind whatsoever. There are no shares of preferred stock issued
and outstanding.
SECTION 3.03. AUTHORITY; NO VIOLATION.
(a) WEST ESSEX has full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by WEST ESSEX and the completion by WEST ESSEX of
the transactions contemplated hereby have been duly and validly approved by the
requisite vote of the Boards of Directors of WEST ESSEX and, except for approval
of the stockholders of WEST ESSEX Bancorp and, if required, the members of WEST
ESSEX MHC, no other proceedings on the part of WEST ESSEX are necessary to
complete the transactions contemplated hereby. This Agreement has been
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duly and validly executed and delivered by WEST ESSEX; the MHC Merger has been
duly and validly approved by the Board of Directors of WEST ESSEX MHC; the
Mid-Tier Merger has been duly and validly approved by the Board of Directors of
WEST ESSEX Bancorp; and the Bank Merger has been duly and validly approved by
the Board of Directors of WEST ESSEX Bank and, subject to approval by the
stockholders of WEST ESSEX Bancorp and, if required, the members of WEST ESSEX
MHC, and receipt of the required approvals of the Regulatory Authorities,
constitutes the valid and binding obligations of WEST ESSEX Bank, WEST ESSEX
Bancorp and WEST ESSEX MHC, enforceable against them in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally, and as to WEST ESSEX Bank, the conservatorship or
receivership provisions of the FDIA, and subject, as to enforceability, to
general principles of equity.
(b) Subject to the receipt of approvals from the Regulatory Authorities
referred to in Section 5.03 hereof and the compliance by WEST ESSEX and Kearny
with any conditions contained therein,
(A) the execution and delivery of this Agreement by WEST ESSEX,
(B) the consummation of the transactions contemplated hereby, and
(C) compliance by WEST ESSEX with any of the terms or provisions
hereof,
will not (i) conflict with or result in a material breach of any provision of
the charter or bylaws of WEST ESSEX; (ii) to the best knowledge of WEST ESSEX,
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to WEST ESSEX or any of the properties or assets
of WEST ESSEX; or (iii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of WEST ESSEX under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other investment or obligation to which WEST
ESSEX is a party, or by which they or any of their respective properties or
assets may be bound or affected, except in the case of clauses (ii) and (iii)
above for violations which, individually or in the aggregate, would not have a
Material Adverse Effect on WEST ESSEX.
SECTION 3.04. CONSENTS.
Except as set forth in WEST ESSEX Disclosure Schedule 3.04, and except for
the consents, waivers, approvals, filings and registrations from or with the
Regulatory Authorities referred to in Section 5.03 hereof and compliance with
any conditions contained therein, and the approval of this Agreement by the
requisite vote of the stockholders of WEST ESSEX Bancorp and, if required, the
members of WEST ESSEX MHC, no consents, waivers or approvals of, or filings or
registrations with, any governmental authority are necessary, and, to the best
knowledge of WEST ESSEX, no consents, waivers or approvals of, or filings or
registrations with, any other third parties are
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necessary, in connection with (a) the execution and delivery of this Agreement
by WEST ESSEX, and (b) the completion by WEST ESSEX of the transactions
described in this Agreement.
Section 3.05. FINANCIAL STATEMENTS; REGULATORY REPORTS; AND SECURITIES
DOCUMENTS.
(a) WEST ESSEX REGULATORY REPORTS. WEST ESSEX has previously made
available to Kearny, in WEST ESSEX Disclosure Schedule 3.05(a) or otherwise, the
WEST ESSEX Regulatory Reports. The WEST ESSEX Regulatory Reports have been, or
will be, prepared in all material respects in accordance with applicable
regulatory accounting principles and practices throughout the periods covered by
such statements, and fairly present, or will fairly present in all material
respects, the consolidated financial position, results of operations and changes
in stockholders' equity of WEST ESSEX Bank and WEST ESSEX Bancorp, as the case
may be, as of and for the periods ended on the dates thereof, in accordance with
applicable regulatory accounting principles applied on a consistent basis,
except as otherwise required or stated therein. Except as set forth in WEST
ESSEX Disclosure Schedule 3.05(a), WEST ESSEX has timely filed all Regulatory
Reports, together with any material amendments thereto that WEST ESSEX is
required to file with (i) OTS, (ii) the FDIC, and (iii) any other federal,
state, municipal, local or foreign government, banking, savings and loan,
insurance and other governmental or regulatory authority and the agencies and
staffs thereof, except where failure to so timely file did not have a Material
Adverse Effect on WEST ESSEX.
(b) WEST ESSEX FINANCIALS. WEST ESSEX has previously made available to
Kearny, in WEST ESSEX Disclosure Schedule 3.05(b) or otherwise, the WEST ESSEX
Financials. The WEST ESSEX Financials have been prepared in accordance with
GAAP, and (including the related notes where applicable) fairly present, in each
case in all material respects (subject in the case of the unaudited interim
statements to normal year-end adjustments), the consolidated financial
condition, results of operations and cash flows of WEST ESSEX Bancorp and the
WEST ESSEX Subsidiaries as of and for the respective periods ending on the dates
thereof, in accordance with GAAP applied on consistent basis during the periods
involved, except as indicated therein, or in the case of unaudited statements,
as permitted by Form 10-QSB.
(c) NO UNDISCLOSED LIABILITIES. WEST ESSEX does not have any obligations
or liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due, and regardless of when asserted),
including liabilities for any Tax (collectively, "Liabilities"), except: (i) as
reflected on the consolidated Balance Sheet of WEST ESSEX as of December 31,
2001, included in the WEST ESSEX Financials, (ii) for Liabilities that,
individually or in the aggregate, do not have a Material Adverse Effect on WEST
ESSEX, or that have arisen in the ordinary and usual course of business after
the date of such Balance Sheet, and which will be included in the next following
report provided to Kearny pursuant to Section 5.02(d), or (iii) as set forth in
the WEST ESSEX Disclosure Schedules.
(d) Securities Documents.
(i) WEST ESSEX has previously made available to Kearny, in WEST ESSEX
Disclosure Schedule 3.05(d) or otherwise, each Securities Document WEST ESSEX
Bancorp has filed, used or circulated since January 1, 1998 through the date of
this Agreement and will promptly deliver
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each Securities Document filed, used or circulated after the date hereof, each
in the form (including exhibits and any amendments thereto) filed with the SEC
(or, if not so filed, in the form used or circulated), including, without
limitation, WEST ESSEX Bancorp's Annual Reports on Form 10- KSB and Quarterly
Reports on Form 10-QSB.
(ii) No Securities Documents of WEST ESSEX Bancorp, on the date of
effectiveness in the case of such registration statements, or on the date of
filing in the case of such reports or schedules, or on the date of mailing in
the case of such proxy statements, and except as revised, amended or modified by
a subsequently filed document, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. WEST ESSEX Bancorp has timely filed all Securities
Documents required to be filed by it with the SEC, under various securities laws
and regulations for the last five years (or such shorter period as it may have
been subject to such filing requirements). All such documents, as finally
revised, modified or amended by any subsequently filed amendment, complied in
all material respects with applicable requirements of law.
SECTION 3.06. TAXES.
WEST ESSEX Bancorp and the WEST ESSEX Subsidiaries are members of the same
affiliated group within the meaning of IRC Section 1504(a). WEST ESSEX has duly
filed all Federal, state and material local tax returns required to be filed by
or with respect to WEST ESSEX on or prior to the date hereof (all such returns
being accurate and correct in all material respects) and has duly paid or has
made provisions for the payment of, all material Federal, state and local taxes
which have been incurred by or are due or claimed to be due from WEST ESSEX by
any taxing authority or pursuant to any written tax sharing agreement on or
prior to the date hereof other than taxes or other charges which (i) are not
delinquent, (ii) are being contested in good faith, or (iii) have not yet been
fully determined. Except as set forth in WEST ESSEX Disclosure Schedule 3.06, as
of the date of this Agreement, there is no audit examination, deficiency
assessment, tax investigation or refund litigation with respect to any taxes of
WEST ESSEX, and no claim has been made by any authority in a jurisdiction where
WEST ESSEX does not file tax returns that WEST ESSEX is subject to taxation in
that jurisdiction. Except as set forth in WEST ESSEX Disclosure Schedule 3.06,
WEST ESSEX has not executed an extension or waiver of any statute of limitations
on the assessment or collection of any material tax due that is currently in
effect. WEST ESSEX has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor or stockholder, and WEST ESSEX has timely
complied with all applicable information reporting requirements under Part III,
Subchapter A of Chapter 61 of the IRC and similar applicable state and local
information reporting requirements.
SECTION 3.07. NO MATERIAL ADVERSE EFFECT.
WEST ESSEX has not suffered any Material Adverse Effect since December 31,
2001.
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SECTION 3.08. CONTRACTS.
(a) Except as set forth in WEST ESSEX Disclosure Schedule 3.08(a), WEST
ESSEX is not a party to or subject to: (i) any employment, consulting, change in
control or severance contract or material arrangement with any past or present
officer, director or employee of WEST ESSEX except for "at will" arrangements;
(ii) any plan, material arrangement or contract providing for bonuses, pensions,
options, deferred compensation, retirement payments, profit sharing or similar
material arrangements for or with any past or present officers, directors or
employees of WEST ESSEX; (iii) any collective bargaining agreement with any
labor union relating to employees of WEST ESSEX; (iv) any agreement which by its
terms limits the payment of dividends by WEST ESSEX Bank or WEST ESSEX Bancorp;
(v) any instrument evidencing or related to material indebtedness for borrowed
money whether directly or indirectly, by way of purchase money obligation,
conditional sale, lease purchase, guaranty or otherwise, in respect of which
WEST ESSEX is an obligor to any person, which instrument evidences or relates to
indebtedness other than deposits, repurchase agreements, bankers' acceptances,
advances from the FHLB of New York, and "treasury tax and loan" accounts
established in the ordinary course of business and transactions in "Federal
funds" or which contains financial covenants or other restrictions (other than
those relating to the payment of principal and interest when due) which would be
applicable on or after the Closing Date to Kearny; or (vi) any contract (other
than this Agreement) limiting the freedom, in any material respect, of WEST
ESSEX to engage in any type of banking or bank-related business in which WEST
ESSEX is permitted to engage under applicable law as of the date of this
Agreement.
(b) True and correct copies of agreements, plans, contracts, arrangements
and instruments referred to in Section 3.08(a), have been made available to
Kearny on or before the date hereof, are listed in and attached to WEST ESSEX
Disclosure Schedule 3.08(a) and are in full force and effect on the date hereof,
and WEST ESSEX (nor, to the knowledge of WEST ESSEX, any other party to any such
contract, plan, arrangement or instrument) has not materially breached any
provision of, or is in default in any respect under any term of, any such
contract, plan, arrangement or instrument. Except as set forth in the WEST ESSEX
Disclosure Schedule 3.08(b), no party to any material contract, plan,
arrangement or instrument will have the right to terminate any or all of the
provisions of any such contract, plan, arrangement or instrument as a result of
the execution of, and the transactions contemplated by, this Agreement. Except
as set forth in WEST ESSEX Disclosure Schedule 3.08(b), none of the employees
(including officers) of WEST ESSEX possesses the right to terminate his/her
employment and receive or be paid (or cause WEST ESSEX to accrue on his/her
behalf) benefits solely as a result of the execution of this Agreement or the
consummation of the transactions contemplated thereby. Except as set forth in
WEST ESSEX Disclosure Schedule 3.08(b), no plan, contract, employment agreement,
change in control agreement, termination agreement, or similar agreement or
arrangement to which WEST ESSEX is a party or under which WEST ESSEX may be
liable contains provisions which permit any employee or independent contractor
to terminate it without cause and continue to accrue future benefits thereunder.
Except as set forth in WEST ESSEX Disclosure Schedule 3.08(b), no such
agreement, plan, contract, or arrangement: (x) provides for acceleration in the
vesting of benefits or payments due thereunder upon the occurrence of a change
in ownership or control of WEST ESSEX or upon the occurrence of a subsequent
event; or (y) requires WEST ESSEX to provide a benefit in the form of WEST ESSEX
Bancorp Common Stock or determined by reference to the value of WEST ESSEX
Bancorp Common Stock, except as disclosed in WEST ESSEX Disclosure Schedule
3.08(b). Except as disclosed in WEST ESSEX Disclosure Schedule 3.08(b), no such
agreement, plan or arrangement with respect to officers or directors of WEST
ESSEX or to any of their respective employees,
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provides for benefits which may cause an "excess parachute payment" or the
disallowance of a Federal income tax deduction under IRC Sections 280G and
162(m).
SECTION 3.09. OWNERSHIP OF PROPERTY; INSURANCE COVERAGE.
(a) Except as disclosed in WEST ESSEX Disclosure Schedule 3.09, WEST ESSEX
has good and, as to real property, marketable title to all material assets and
properties owned by WEST ESSEX in the conduct of its business, whether such
assets and properties are real or personal, tangible or intangible, including
assets and property reflected in the balance sheets contained in the WEST ESSEX
Regulatory Reports and in the WEST ESSEX Bancorp Financials or acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of in the ordinary course of business, since the date of such
balance sheets), subject to no material encumbrances, liens, mortgages, security
interests or pledges, except (i) those items which secure liabilities for public
or statutory obligations or any discount with, borrowing from or other
obligations to the FHLB of New York, inter-bank credit facilities, or any
transaction by WEST ESSEX acting in a fiduciary capacity, and (ii) statutory
liens for amounts not yet delinquent or which are being contested in good faith.
WEST ESSEX, as lessee, has the right under valid and subsisting leases of real
and personal properties used by WEST ESSEX in the conduct of its businesses to
occupy or use all such properties as presently occupied and used by each of
them. Except as disclosed in WEST ESSEX Disclosure Schedule 3.09, such existing
leases and commitments to lease constitute operating leases for both tax and
financial accounting purposes and the lease expense and minimum rental
commitments with respect to such leases and lease commitments are as disclosed
in the notes to the WEST ESSEX Bancorp Financials.
(b) With respect to all material agreements pursuant to which WEST ESSEX
has purchased securities subject to an agreement to resell, if any, WEST ESSEX
has a lien or security interest (which to WEST ESSEX's knowledge is a valid,
perfected first lien) in the securities or other collateral securing the
repurchase agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby.
(c) WEST ESSEX currently maintains insurance considered by WEST ESSEX to
be reasonable for its operations, in accordance with good business practice.
WEST ESSEX has not received notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased. There are presently no material claims pending
under such policies of insurance and no notices have been given by WEST ESSEX
under such policies. All such insurance is valid and enforceable and in full
force and effect, and within the last three years, and WEST ESSEX has received
each type of insurance coverage for which it has applied and during such periods
has not been denied indemnification for any material claims submitted under any
of its insurance policies. WEST ESSEX Disclosure Schedule 3.09 identifies all
policies of insurance maintained by WEST ESSEX.
SECTION 3.10. LEGAL PROCEEDINGS.
Except as disclosed in WEST ESSEX Disclosure Schedule 3.10, WEST ESSEX is
not a party to any, and there are no pending or, to the best of WEST ESSEX's
knowledge, threatened legal,
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administrative, arbitration or other proceedings, actions or governmental
investigations of any nature (i) against WEST ESSEX, (ii) to which WEST ESSEX's
assets are or may be subject, (iii) challenging the validity or propriety of any
of the transactions contemplated by this Agreement, or (iv) which could
adversely affect the ability of WEST ESSEX to perform under this Agreement,
except for any proceedings, claims, actions, investigations or inquiries
referred to in clauses (i) or (ii) which, if adversely determined, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on WEST ESSEX.
SECTION 3.11. COMPLIANCE WITH APPLICABLE LAW.
(a) WEST ESSEX holds all licenses, franchises, permits and authorizations
necessary for the lawful conduct of its businesses under, and has complied in
all material respects with, applicable laws, statutes, orders, rules or
regulations of any Federal, state or local governmental authority relating to
it, other than where such failure to hold or such noncompliance will neither
result in a limitation in any material respect on the conduct of its business
nor otherwise have a Material Adverse Effect on WEST ESSEX. WEST ESSEX, directly
or indirectly, owns, or is licensed or otherwise possesses legally enforceable
rights to use, all patents, trademarks, trade names, service marks, copyrights
and any applications therefor, technology, know-how and tangible or intangible
proprietary information or material that are material to the business of WEST
ESSEX.
(b) Except as disclosed in WEST ESSEX Disclosure Schedule 3.11(b), WEST
ESSEX has not received any notification or communication from any Regulatory
Authority (i) asserting that WEST ESSEX is not in material compliance with any
of the statutes, regulations or ordinances which such Regulatory Authority
enforces; (ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to WEST ESSEX; (iii) requiring or
threatening to require WEST ESSEX, or indicating that WEST ESSEX may be
required, to enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement with any Federal or state governmental
agency or authority which is charged with the supervision or regulation of banks
or engages in the insurance of bank deposits restricting or limiting, or
purporting to restrict or limit, in any material respect the operations of WEST
ESSEX, including without limitation any restriction on the payment of dividends;
or (iv) directing, restricting or limiting, or purporting to direct, restrict or
limit, in any material manner the operations of WEST ESSEX, including without
limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement"). WEST ESSEX has not
consented to or entered into any currently effective Regulatory Agreement,
except as set forth in WEST ESSEX Disclosure Schedule 3.11(b). The most recent
regulatory rating given to WEST ESSEX Bank as to compliance with the Community
Reinvestment Act ("CRA") is satisfactory or better. WEST ESSEX Bank is not in
the process of a regulatory review of CRA compliance and is aware of no intent
by Regulatory Authorities to issue WEST ESSEX a non-satisfactory CRA rating.
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SECTION 3.12. ERISA AND CERTAIN BENEFIT PLANS.
(a) EMPLOYEE PLANS. (i) WEST ESSEX Disclosure Schedule 3.12(a)(i) contains
a true and complete list of all "employee benefit plans," as defined in section
3(3) of ERISA, currently effective or terminated, written or oral, (A)that are
maintained or contributed to by WEST ESSEX, have been maintained or contributed
to by WEST ESSEX in the last (6) six years, or with respect to which WEST ESSEX
has or may have any liability, and (B) in which employees, former employees, or
directors of WEST ESSEX (or their family members or dependents) participate, or
under which they have a right to benefits. WEST ESSEX Disclosure Schedule
3.12(a)(i) further identifies as such any Employee Plan that is or was (A) a
"Defined Benefit Plan" (as defined in section 414(j) of the Code), (B) intended
to meet the requirements of section 401(a) or 403(a) of the Code (a "Qualified
Plan"), (C) a "Multi-employer Plan" (as defined in section 3(37) of ERISA)
and/or (D) subject to Title IV of ERISA (a "Title IV Plan"). For purposes of
this section, the term WEST ESSEX shall include any person that, together with
WEST ESSEX, would be treated as a single employer under section 414 of the Code
or section 4001 of ERISA.
(ii) WEST ESSEX Disclosure Schedule 3.12(a)(ii) contains a true and
complete list of all other deferred-compensation, profit-sharing, bonus,
incentive, savings, stock bonus, stock purchase, employee stock ownership, stock
option, phantom stock, stock appreciation, severance, separation, termination,
employment, change-in-control, supplemental unemployment, fringe benefit,
collective purchase, voluntary employees' beneficiary association (as defined in
section 501(c)(9) of the Code), insurance, split-dollar, vacation, holiday,
sick-leave, or other plans, agreements, contracts, policies, practices,
programs, commitments, understandings, and arrangements, other than those
subject to ERISA which are identified on WEST ESSEX Disclosure Schedule
3.12(a)(i), whether formal or informal, currently effective or terminated,
written or oral, (A) that are maintained or contributed to by WEST ESSEX, have
been maintained or contributed to by WEST ESSEX in the last (3) three years, or
with respect to which WEST ESSEX has or may have any liability, and (B) in which
employees, former employees, or directors of WEST ESSEX (or their family members
or dependents) participate, or under which they have a right to benefits. All
such plans, agreements, contracts, policies, programs, commitments,
undertakings, and arrangements set forth on WEST ESSEX Disclosure Schedule
3.12(a)(i) or 3.12(a)(ii) shall be collectively referred to as "Employee Plans."
(b) DOCUMENTATION. Except as disclosed in WEST ESSEX Disclosure Schedule
3.12(b), with respect to each Employee Plan, to the extent applicable, WEST
ESSEX has provided to Kearny current, accurate, and complete copies of: (i) the
documents comprising such Plan (or, to the extent no such copy exists, a
complete and accurate description thereof), (ii) any related trust agreement,
insurance contract, or other funding instrument, (iii) the most recent IRS
determination letter, as well as any other ruling, no-action letter, or advisory
opinion that pertains to such Plan from the IRS, Department of Labor, Pension
Benefit Guaranty Corporation, or any other governmental agency, (iv) the summary
plan description, as well as any other summary, description, or handbook of plan
benefits that is provided by WEST ESSEX to its employees concerning the extent
of benefits under the Plan, (v) all securities registration statements filed
with respect to such Employee Plan, (vi) all collective bargaining agreements
pursuant to which contributions to such Plan(s) have been or are being made, or
obligations have been or are being incurred, by WEST ESSEX, (vii) any current or
prior written communications relating to any promise or guarantee of retiree
health or death benefits,
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(viii) the contract(s) with any third-party administrator, provider, or insurer,
(ix) any documents relating to the correction (including self-correction) of any
operational or formal failure under the IRS employee plans compliance resolution
system; and (x) for the three most recent years (or since the date of the Plan's
inception): (A) the Form 5500 and attached schedules, (B) audited financial
statements, (C) actuarial valuation reports, and (D) attorney's response to an
auditor's request for information.
(c) COMPLIANCE WITH LAW. Each Employee Plan has been established and
administered in accordance with its terms and in material compliance with the
applicable provisions of ERISA, the Code, and other applicable laws, rules, and
regulations. Furthermore, no condition exists or event has occurred with respect
to any Employee Plan that would subject WEST ESSEX to any tax, fine, lien,
penalty, or other liability imposed by ERISA, the Code, or other applicable
laws, rules, and regulations. All reports, returns, and similar documents
required to be filed with any governmental agency, or to be distributed to any
plan participants, have been duly and timely filed or distributed. For each
Employee Plan with respect to which a Form 5500 has been filed, no material
change has occurred with respect to the matters covered by the most recent Form
since the date thereof.
(d) QUALIFIED PLANS. Each Qualified Plan is so qualified and has received
a favorable determination letter as to its qualification, and nothing has
occurred, whether by action or failure to act, that would adversely affect its
qualification or increase its costs. No "reportable event" (as defined in
section 4043 of ERISA), "prohibited transaction" (as defined in section 406 of
ERISA or section 4975 of the Code), or "accumulated funding deficiency" (as
defined in section 302 of ERISA and section 412 of the Code, whether or not
waived) has occurred, and no Employee Plan has been amended in a fashion that
would require security to be provided in accordance with section 401(a)(29) of
the Code. Except as set forth in WEST ESSEX Disclosure Schedule 3.12(d), WEST
ESSEX does not now and has not ever maintained a Defined Benefit Plan or Title
IV Plan or participated in a Multiemployer Plan, and WEST ESSEX has not ever
incurred any liability under Title IV of ERISA. Any shares of WEST ESSEX
purchased by an Employee Plan were purchased for no more than adequate
consideration as defined in the Code, ERISA, and Department of Treasury and
Department of Labor regulations.
(e) WELFARE BENEFITS. Expect as provided in WEST ESSEX Disclosure Schedule
3.12(e), WEST ESSEX does not provide, and is not now and has not ever been
obligated to provide, medical or death benefits with respect to any employees,
directors or former employees or former directors (or their family members)
after termination of employment, except as specifically required under section
4980B of the Code. WEST ESSEX has fully complied with the notice and
continuation coverage requirements of section 4980B of the Code and the
regulations thereunder with respect to each "welfare plan" (as defined in
section 3(1) of ERISA) that is or was, during any taxable year for which the
statute of limitations on the assessment of federal income taxes remains open
(by consent or otherwise), a group health plan within the meaning of section
5000(b)(1) of the Code.
(f) LITIGATION. With respect to any Employee Plan, (i) no actions, suits,
or claims (other than routine claims for benefits in the ordinary course) are
pending or, to the knowledge of WEST ESSEX, threatened, (ii) no facts or
circumstances exist that could give rise to any such actions, and (iii) no
administrative investigation, audit, or other administrative proceeding by the
IRS, Department of Labor, Pension Benefit Guaranty Corporation, or other
governmental agencies are
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pending, in progress, or, to the knowledge of WEST ESSEX, threatened, except, in
each case, for proceedings, actions or governmental investigations that could
not reasonably be foreseen to have a Material Adverse Effect on WEST ESSEX.
(g) SEVERANCE PAY. Except as provided in WEST ESSEX Disclosure Schedules
3.12(g) or (e), no Employee Plan exists that is in the nature of a severance,
separation, termination, or change- in-control agreement, contract, plan,
policy, program, commitment, understanding, or arrangement, or that would result
in the payment of any money or property, or accelerate the time of payment or
vesting, or provide any other rights, to any present employees, former
employees, or directors of WEST ESSEX (or their family members) as a result of
the transactions contemplated by this Agreement.
(h) GOLDEN PARACHUTE PAYMENTS AND EXCESSIVE REMUNERATION. Except as
provided in WEST ESSEX Disclosure Schedule 3.12(h), there is no agreement,
contract, plan, policy, program, commitment, understanding, or arrangement,
written or otherwise, covering any employees, former employees, or directors of
WEST ESSEX (or their family members) that, individually or collectively,
provides for benefits which may cause an "excess parachute payment" or could
give rise to the payment of any amount that would not be deductible pursuant to
the terms of section 280G or section 162(m) of the Code.
(i) OPTIONS. WEST ESSEX Disclosure Schedule 3.12(i) sets forth a true and
complete list of each current or former employee, officer, director, former
director of WEST ESSEX or other person or entity who holds, as of the date
hereof, any option, warrant, or other right ("Option") to purchase WEST ESSEX
stock, preferred stock, or restricted stock, together with the number of shares
and class of WEST ESSEX stock subject to such Option, the date of grant or
issuance, the extent to which such Option is vested and/or exercisable, the
exercise price, whether such Option is intended to qualify as an incentive stock
option with the meaning of section 422(b) of the Code, and the expiration date.
True and complete copies of each agreement (including amendments and
modifications thereto) between WEST ESSEX and each Option holder shall be
furnished promptly to Kearny.
(j) ACCOUNTING TREATMENT. All required, customary, or usual payments,
premiums, contributions, reimbursements, or accruals with respect to Employee
Plans have been made or properly accrued on the WEST ESSEX Financials. None of
the Employee Plans has any unfunded liabilities which are not reflected on the
books and records of WEST ESSEX. If such plan, contract, agreement or
arrangement is funded through a trust or third party funding vehicle, such as an
insurance contract, the WEST ESSEX Disclosure Schedule 3.12 (a) includes such
trust or other funding arrangement.
(k) WEST ESSEX does not have any liability to any person for any
post-retirement health, medical or similar benefit of any kind whatsoever,
except as required by statute or regulation.
SECTION 3.13. BROKERS, FINDERS AND FINANCIAL ADVISORS.
Except the engagement of Finpro, Inc. in connection with transactions
contemplated by this
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Agreement, neither WEST ESSEX, nor any of its officers, directors, employees or
agents, has engaged or retained any broker, finder or financial advisor in
connection with the transactions contemplated by this Agreement, or, except for
the commitments disclosed in WEST ESSEX Disclosure Schedule 3.13, incurred any
liability or commitment for any fees or commissions to any such person in
connection with the transactions contemplated by this Agreement, which has not
been reflected in the WEST ESSEX Bancorp Financials.
SECTION 3.14. ENVIRONMENTAL MATTERS.
(i) To their knowledge, the Participation Facilities, the WEST ESSEX
Properties and all operations conducted on the WEST ESSEX Properties and the
Participation Facilities are, and at all times have been, in compliance with
applicable Environmental Laws;
(ii) There are no suits, claims, actions, notices, demands, executive or
administrative orders, directives, investigations, proceedings or requests or
demands for information ("Environmental Proceedings") of any kind pending or, to
the knowledge of WEST ESSEX, threatened against WEST ESSEX or any of the WEST
ESSEX Properties or the Participation Facilities or any tenants or subtenants at
the any of the WEST ESSEX Properties or Participation Facilities, under
Environmental Laws in any court or before any governmental agency or board or
other forum, including, without limitation, Environmental Proceedings alleging,
asserting or relating to (y) noncompliance (including by a predecessor) with, or
liability under, any Environmental Law, or (z) the presence or Release of
Hazardous Materials into the Environment, whether or not occurring at, on, under
or from any WEST ESSEX Property or Participation Facility;
(iii) There are no Environmental Proceedings of any kind pending or, to
the knowledge of WEST ESSEX, threatened against any of the Loan Properties (or
WEST ESSEX in respect of any such Loan Properties) under Environmental Laws in
any court or before any governmental agency or board or other forum, including,
without limitation, Environmental Proceedings alleging, asserting or relating to
(y) noncompliance (including by a predecessor) with, or liability under, any
Environmental Law, or (z) the presence or Release of Hazardous Materials into
the Environment;
(iv) To their knowledge, there are no Environmental Conditions on, at,
under or emanating from any of the WEST ESSEX Properties or Participation
Facilities. No Hazardous Materials are being or, to their knowledge, have been
stored, used, treated or disposed of at or from any of the WEST ESSEX Properties
or the Participation Facilities other than in compliance with Environmental
Laws;
(v) WEST ESSEX has not received any notice, demand, letter, executive or
administrative order, directive or request for information from any federal,
state, local or foreign governmental entity or any third party indicating that
WEST ESSEX or any of the WEST ESSEX Properties or Participation Facilities is or
may be in violation of, or has liability under, any Environmental Law;
(vi) There are no above or below ground tanks or reservoirs used or
installed for the purpose of storage or containment of Hazardous Materials
("Tanks") at, on or under any of the WEST ESSEX Properties or Participation
Facilities, and no such Tanks have been abandoned on, or closed or removed from,
any of the WEST ESSEX Properties or Participation Facilities.
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(vii) There are no Hazardous Materials within any structure, equipment or
building on any of the WEST ESSEX Properties or the Participation Facilities
requiring remediation, decommissioning, decontamination, abatement or removal
pursuant to Environmental Laws;
(viii) None of the WEST ESSEX Properties or the Participation Facilities,
or any of the business operations that are now and have been conducted at the
WEST ESSEX Properties or the Participation Facilities, is an "industrial
establishment" as such term is defined under ISRA; and
(ix) WEST ESSEX has delivered to Kearny copies of all reports and audits,
summaries, proposals, recommendations, work plans, field and laboratory data in
WEST ESSEX's possession, custody or control relating or referring to
Environmental Conditions on, at, under or emanating from any of the WEST ESSEX
Properties or the Participation Facilities.
(x) No federal, state, regional or local governmental authority or other
third party has filed, obtained or asserted an encumbrance or lien upon any of
the WEST ESSEX Properties, the Participation Facilities or, to the knowledge of
WEST ESSEX, the Loan Properties as a result of any Environmental Conditions on,
at, under or emanating from such properties.
SECTION 3.15. LOAN PORTFOLIO.
(a) With respect to each loan owned by WEST ESSEX in whole or in part
(each, a "Loan"):
(i) the note and the related security documents are each legal,
valid and binding obligations of the maker or obligor thereof, enforceable
against such maker or obligor in accordance with their terms;
(ii) neither WEST ESSEX nor any prior holder of a Loan, has modified
the note or any of the related security documents in any material respect or
satisfied, canceled or subordinated the note or any of the related security
documents except as otherwise disclosed by documents in the applicable Loan
file;
(iii) WEST ESSEX is the sole holder of legal and beneficial title to
each Loan (or any applicable participation interest, as appropriate), except as
otherwise referenced on the books and records of WEST ESSEX;
(iv) the note and the related security documents, copies of which
are included in the Loan files, are true and correct copies of the documents
they purport to be and have not been suspended, amended, modified, canceled or
otherwise changed except as otherwise disclosed by documents in the applicable
Loan file;
(v) there is no pending or threatened condemnation proceeding or
similar proceeding affecting the property that serves as security for a Loan,
except as otherwise referenced on the books and records of WEST ESSEX;
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(vi) there is no litigation or proceeding pending or threatened
relating to the property that serves as security for a Loan that would have a
Material Adverse Effect upon the related Loan, except as otherwise disclosed by
documents in the applicable Loan file;
(vii) with respect to a Loan held in the form of a participation,
the participation documentation is legal, valid, binding and enforceable, except
as otherwise disclosed by documents in the applicable Loan file; and
(viii)no representation or warranty set forth in this Section 3.15
shall be deemed to be breached unless such breach, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
WEST ESSEX.
(b) The allowance for possible losses reflected in WEST ESSEX Bancorp's
audited statement of condition at December 31, 2001 was, and the allowance for
possible losses shown on the balance sheets in WEST ESSEX Bancorp's Securities
Documents for periods ending after December 31, 2001 have been and will be,
adequate, as of the dates thereof, under GAAP.
(c) WEST ESSEX Disclosure Schedule 3.15 sets forth by category all loans,
leases, advances, credit enhancements, other extensions of credit, commitments
and interest-bearing assets of WEST ESSEX, including the amounts thereof and the
name of the obligor, that have been classified (whether regulatory or internal)
as "Special Mention," "Substandard," "Doubtful," "Loss" or words of similar
import as of June 30, 2002. The other real estate owned ("OREO") included in any
non-performing assets of WEST ESSEX is carried net of reserves at the lower of
cost or fair value, less estimated selling costs, based on current independent
appraisals or evaluations or current management appraisals or evaluations;
provided, however, that "current" shall mean within the past 12 months.
SECTION 3.16. INFORMATION TO BE SUPPLIED.
Except for any information provided by Kearny concerning Kearny for
inclusion therein, the Proxy Statement mailed to WEST ESSEX Bancorp's
stockholders and, if necessary, the members of WEST ESSEX MHC will not, at the
time it or they are mailed, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein not misleading. The information supplied, or to be supplied, by WEST
ESSEX for inclusion in the Applications will, at the time such documents are
filed with any Regulatory Authority, be accurate in all material aspects.
SECTION 3.17. FIDUCIARY ACCOUNTS.
WEST ESSEX Bank has properly administered in all material respects all
accounts for which it acts as a fiduciary, including but not limited to accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents and applicable state and federal law and regulation and
common law. Neither WEST ESSEX nor any of its directors, officers or employees
has committed any breach of trust with respect to any such fiduciary account,
and the accountings for each such fiduciary account are true and correct and
accurately reflect the assets of such fiduciary account.
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SECTION 3.18. RELATED PARTY TRANSACTIONS.
Except as disclosed in WEST ESSEX Disclosure Schedule 3.18, or as
described in WEST ESSEX Bancorp's proxy statement distributed in connection with
the 2002 annual meeting of stockholders (which has been provided to Kearny),
WEST ESSEX is not a party to any transaction (including any loan or other credit
accommodation) with an Affiliate. Except as disclosed in WEST ESSEX Disclosure
Schedule 3.18, all such transactions (a) were made in the ordinary course of
business, (b) were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other Persons, and (c) did not involve more than the normal
risk of collectability or present other unfavorable features. Except as set
forth in WEST ESSEX Disclosure Schedule 3.18, no loan or credit accommodation to
an Affiliate is presently in default or, during the three-year period prior to
the date of this Agreement, has been in default or has been restructured,
modified or extended. WEST ESSEX has not been notified that principal and
interest with respect to any such loan or other credit accommodation will not be
paid when due or that the loan grade classification accorded such loan or credit
accommodation is inappropriate.
SECTION 3.19. SCHEDULE OF TERMINATION BENEFITS.
WEST ESSEX Disclosure Schedule 3.19 includes a schedule of all termination
benefits and related payments that would be payable to the individuals
identified thereon, under any and all employment agreements, special termination
agreements, supplemental executive retirement plans, deferred bonus plans,
deferred compensation plans, salary continuation plans, or any compensation
arrangement, or other pension benefit or welfare benefit plan maintained by WEST
ESSEX for the benefit of officers or directors of WEST ESSEX (the "Benefits
Schedule"), assuming their employment or service is terminated as of April 1,
2003 and the Closing Date occurs on or prior to such termination. No other
individuals are entitled to benefits under any such plans.
SECTION 3.20. DEPOSITS.
Except as set forth in WEST ESSEX Disclosure Schedule 3.20, none of the
deposits of WEST ESSEX is a "brokered" deposit as defined in 12 U.S.C. Section
1831f(g).
SECTION 3.21. FAIRNESS OPINION.
WEST ESSEX Bancorp has received an opinion from Finpro, Inc. to the effect
that, subject to the terms, conditions and qualifications set forth therein, as
of the date thereof, the Merger Consideration to be received by the stockholders
of WEST ESSEX Bancorp pursuant to this Agreement is fair to such stockholders
from a financial point of view and the Member Conversion is equitable to the
members of WEST ESSEX MHC (the "Fairness Opinion").
SECTION 3.22 ANTITAKEOVER PROVISIONS INAPPLICABLE; REQUIRED VOTE OF
STOCKHOLDERS.
Except as set forth on WEST ESSEX Disclosure Schedule 3.22, and except for
approvals required under the Federal and state banking laws, the transactions
contemplated by this Agreement are not subject to any applicable state takeover
law. The affirmative vote of a majority
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of the votes eligible to be cast by stockholders of WEST ESSEX Bancorp Common
Stock is necessary to approve this Agreement and the transactions contemplated
hereby.
SECTION 3.23 DERIVATIVE TRANSACTIONS.
Except as set forth in WEST ESSEX Disclosure Schedule 3.23, WEST ESSEX has
not entered into any futures contract, option contract, interest rate caps,
interest rate floors, interest rate exchange agreement or other derivative
instruments.
SECTION 3.24 LABOR.
No work stoppage involving WEST ESSEX is pending or, to the best knowledge
of WEST ESSEX, threatened. WEST ESSEX is not involved in or, to the best
knowledge of WEST ESSEX, threatened with or affected by, any labor dispute,
arbitration, lawsuit or administrative proceeding involving the employees of
WEST ESSEX. Employees of WEST ESSEX are not represented by any labor union nor
are any collective bargaining agreements otherwise in effect with respect to
such employees, and to the best of WEST ESSEX's knowledge, there have been no
efforts to unionize or organize any employees of WEST ESSEX during the past five
years.
SECTION 3.25 MATERIAL INTERESTS OF CERTAIN PERSONS.
(a) No officer or director of WEST ESSEX or any "associate" (as such term
is defined in Rule 14a-1 under the Exchange Act) or related interest of any such
person has any material interest in any material contract or property (real or
personal, tangible or intangible), used in, or pertaining to, the business of
WEST ESSEX.
(b) Except as set forth on WEST ESSEX Disclosure Schedule 3.18, or as
disclosed in WEST ESSEX Bancorp's proxy statement distributed in connection with
the 2002 annual meeting of stockholders, there are no insider loans as of the
date hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF KEARNY
Kearny represents and warrants to WEST ESSEX that the statements contained
in this Article IV are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article IV), except as set forth in the Kearny Disclosure
Schedules delivered by Kearny on the date hereof. Kearny has made a good faith
effort to ensure that the disclosure on each schedule of the Kearny Disclosure
Schedules corresponds to the section referenced herein. However, for purposes of
the Kearny Disclosure Schedules, any item disclosed on any schedule therein is
deemed to be fully disclosed with respect to all schedules under which such item
may be relevant.
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SECTION 4.01. ORGANIZATION.
(a) Bank is a stock savings bank duly organized, validly existing and in
good standing under the laws of the United States. The deposits of Bank are
insured by the FDIC to the fullest extent permitted by law, and all premiums and
assessments required to be paid in connection therewith have been paid when due
by Bank. Each Bank Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization. Corporation is a Federal MHC subsidiary holding company duly
organized, validly existing and in good standing under the laws of the United
States. MHC is a Federal mutual holding company of the Bank duly organized,
validly existing and in good standing under the laws of the United States.
(b) Bank is a member in good standing of the FHLB of New York and owns the
requisite amount of stock therein.
(c) Prior to the date of this Agreement, Kearny made available to WEST
ESSEX Bancorp true and correct copies of the charter and bylaws of Bank,
Corporation and MHC.
(d) As of the Closing Date, Corporation Merger Sub will have been duly
organized and will be validly existing as a federally-chartered corporation and
a wholly-owned subsidiary of the Corporation.
SECTION 4.02. AUTHORITY; NO VIOLATION.
(a) Kearny has full power and authority to execute and deliver this
Agreement and Corporation and MHC will have full power and authority to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Kearny and the completion by Kearny of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of Kearny, and no other corporate proceedings on the part of Kearny
are necessary to complete the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Kearny and, subject to
receipt of the required approvals of Regulatory Authorities described in Section
4.03 hereof, constitutes the valid and binding obligation of Kearny, enforceable
against Kearny in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally.
(b) Subject to the receipt of approvals from the Regulatory Authorities
referred to in Section 5.03 hereof and the compliance by WEST ESSEX and Kearny
with any conditions contained therein,
(A) the execution and delivery of this Agreement by Kearny,
(B) the consummation of the transactions contemplated hereby, and
(C) compliance by Kearny with any of the terms or provisions
hereof,
will not (i) conflict with or result in a breach of any provision of the charter
or bylaws of Kearny or any of its subsidiaries ("Kearny Subsidiary"); (ii)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Kearny or any Kearny Subsidiary
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or any of their respective properties or assets; or (iii) violate, conflict
with, result in a breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default),
under, result in the termination of, accelerate the performance required by, or
result in a right of termination or acceleration or the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of Kearny under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
investment or obligation to which Kearny is a party, or by which it or any of
its properties or assets may be bound or affected.
SECTION 4.03. CONSENTS.
Except for consents, approvals, filings and registrations from or with the
OTS, FDIC and SEC, and compliance with any conditions contained therein, and the
approval of this Agreement by the stockholders of WEST ESSEX Bancorp and, if
necessary, the members of WEST ESSEX MHC, the appropriate filings to be made
with the OTS, and the chartering of any necessary interim savings entities by
the OTS, no consents or approvals of, or filings or registrations with, any
public body or authority are necessary, and no consents or approvals of any
third parties are necessary, or will be, in connection with the execution and
delivery of this Agreement by Kearny, and the completion by Kearny of the
transactions contemplated hereby. Kearny has no reason to believe that (i) any
required consents or approvals will not be received or will be received with
conditions, limitations or restrictions unacceptable to it or which would
adversely impact Kearny's ability to complete the transactions described in this
Agreement or that (ii) any public body or authority, the consent or approval of
which is not required or any filing which is not required, will object to the
completion of the transactions described in this Agreement.
SECTION 4.04. COMPLIANCE WITH APPLICABLE LAW.
(a) Kearny and the Kearny Subsidiaries hold all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their businesses
under, and have complied in all material respects with, applicable laws,
statutes, orders, rules or regulations of any Federal, state or local
governmental authority relating to them, other than where such failure to hold
or such noncompliance will neither result in a limitation in any material
respect on the conduct of their businesses nor otherwise have a Material Adverse
Effect on Kearny and its Subsidiaries taken as a whole.
(b) Except as set forth in Kearny Disclosure Schedule 4.04(b), neither
Kearny nor any Kearny Subsidiary has received any notification or communication
from any Regulatory Authority (i) asserting that Kearny or any Kearny Subsidiary
is not in compliance with any of the statutes, regulations or ordinances which
such Regulatory Authority enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization which is material to Kearny or
any Kearny Subsidiary; (iii) requiring or threatening to require Kearny or any
Kearny Subsidiary, or indicating that Kearny or any Kearny Subsidiary may be
required, to enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement restricting or limiting, or purporting to
restrict or limit, in any manner the operations of Kearny or any Kearny
Subsidiary; or (iv) directing, restricting or limiting, or purporting to direct,
restrict or limit, in any manner the operations of Kearny or any Kearny
Subsidiary, including without limitation any restriction on the
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payment of dividends (any such notice, communication, memorandum, agreement or
order described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither Kearny nor any Kearny Subsidiary is a party to, nor has
consented to any Regulatory Agreement. The most recent regulatory rating given
to Bank as to compliance with the CRA is satisfactory or better.
SECTION 4.05. INFORMATION TO BE SUPPLIED.
The information to be supplied by Kearny for inclusion in the Proxy
Statement or Proxy Statements will not, at the time the Proxy Statement or Proxy
Statements are mailed to WEST ESSEX Bancorp stockholders or the members of WEST
ESSEX MHC contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein not misleading.
The information supplied, or to be supplied, by Kearny for inclusion in the
Applications will, at the time such documents are filed with any Regulatory
Authority, be accurate in all material respects.
SECTION 4.06. FINANCING.
As of the date hereof, Kearny has, and at the Merger Effective Date,
Corporation will have, funds which are sufficient and available to meet its
obligations under this Agreement and to consummate in a timely manner the
transactions contemplated by this Agreement, and Bank will not fail to meet its
capital requirements as a result thereof.
SECTION 4.07. REGULATORY APPROVALS.
Kearny is not aware of any reason that it cannot obtain any of the
approvals of Regulatory Authorities necessary to consummate the transactions
contemplated by this Agreement and Kearny has not received any advice or
information from any regulatory authority indicating that such approvals will be
denied or are doubtful or will be unduly delayed.
SECTION 4.08. LEGAL PROCEEDINGS.
Except as set forth in Kearny Disclosure Schedule 4.08 hereto, Kearny is
not a party to any, and there are no pending or, to the best of Kearny's
knowledge, threatened legal, administrative, arbitration or other proceedings,
actions or governmental investigations of any nature (i) against Kearny, (ii) to
which Kearny's assets are or may be subject, (iii) challenging the validity or
propriety of any of the transactions contemplated by this Agreement, or (iv)
which could adversely affect the ability of Kearny to perform under this
Agreement, except for any proceedings, claims, actions, investigations or
inquiries referred to in clauses (i) or (ii) which, if adversely determined,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Kearny. Kearny has not consented to or entered into
any currently effective Regulatory Agreement.
Section 4.09. KEARNY FINANCIAL STATEMENTS.
Kearny has delivered to WEST ESSEX copies of the consolidated statements
of financial condition of Kearny as of June 30, for the fiscal years of 2001 and
2000, and the related consolidated
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statements of operations, changes in equity and cash flows for the fiscal years
2000 through 2001, inclusive, in each case accompanied by the audit report of
independent public accountants. The consolidated statements of financial
condition of Kearny referred to herein (including the related notes, where
applicable) fairly present the consolidated financial condition of Kearny as of
the respective dates set forth therein, and the related consolidated statements
of operations, changes in equity and cash flows (including the related notes,
where applicable) fairly present the results of the consolidated operations,
changes in equity and cash flows of Kearny of the respective periods or as of
the respective dates set forth therein, in each case in conformity with GAAP
consistently applied.
SECTION 4.10. KEARNY BENEFIT PLANS.
(a) Kearny has provided WEST ESSEX with a complete and accurate list of
all pension, retirement, group insurance, and other employee benefit plan and
arrangements, including, but not limited to, "employee benefit plans," as
defined in Section 3(3) of ERISA, incentive and welfare policies, contracts,
plans and arrangements with respect to any present employees of Kearny
(hereinafter collectively referred to as the "Kearny Employee Plans" and
individually as a "Kearny Employee Plan"). Each of the Kearny Employee Plans
complies in all material respects with all applicable requirements of ERISA, the
IRC and other applicable laws.
(b) No Kearny Employee Plan which is subject to Title IV of ERISA (each
such plan shall be referred to herein as a "Kearny Pension Plan") had an
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, as of the last day of the end of the most recent plan year ending
prior to the date hereof; the fair market value of the assets of each Kearny
Pension Plan exceeds the present value of the "benefit liabilities" (as defined
in Section 4001(a)(16) of ERISA) under such Kearny Pension Plan as of the end of
the most recent plan year with respect to the respective Kearny Pension Plan
ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such Kearny Pension
Plan as of the date hereof; and no notice of a "reportable event" (as defined in
Section 4043 of ERISA) for which the 30-day reporting requirement has not been
waived has been required to be filed for any Kearny Pension Plan within the
12-month period ending on the date hereof.
(c) Each Kearny Employee Plan that is an "employee pension benefit plan"
(as defined in Section 3(2) of ERISA) and which is intended to be qualified
under Section 401(a) of the IRC has received a favorable determination letter
from the IRS, and Kearny is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no pending or,
to Kearny's knowledge, threatened litigation, administrative action or
proceeding relating to any Kearny Employee Plan.
SECTION 4.11. ABSENCE OF CERTAIN CHANGES.
Except as disclosed in Schedule 4.11 or as provided for or contemplated in
this Agreement, Kearny has not suffered any Material Adverse Effect since June
30, 2002.
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ARTICLE V
COVENANTS OF THE PARTIES
SECTION 5.01. CONDUCT OF WEST ESSEX'S BUSINESS.
(a) From the date of this Agreement to the Closing Date, WEST ESSEX will
conduct its business and engage in transactions, including extensions of credit,
only in the ordinary course and consistent with past practice and policies in
existence on the date hereof, except as otherwise required or contemplated by
this Agreement or with the written consent of Bank. WEST ESSEX will use its
reasonable good faith efforts, to (i) preserve its business organizations
intact, (ii) maintain good relationships with its employees, (iii) control
operating and compensation expenses and expenses incurred in connection with
this Agreement and (iv) preserve the goodwill of its customers and others with
whom business relationships exist. From the date hereof to the Closing Date,
except as otherwise consented to or approved by Kearny in writing or as
contemplated or required by this Agreement, which consent or approval shall not
be unreasonably withheld and in any case such request by WEST ESSEX for consent
or approval by Kearny shall be responded to within five business days, WEST
ESSEX will not:
(i) amend or change any provision of its charter or bylaws;
(ii) except as set forth in WEST ESSEX Disclosure Schedule
5.01(a)(ii), change the number of authorized or issued shares of its capital
stock or issue or grant any Right or agreement of any character relating to its
authorized or issued capital stock or any securities convertible into shares of
such stock, or split, combine or reclassify any shares of capital stock, or
declare, set aside or pay any dividend or other distribution in respect of
capital stock or redeem or otherwise acquire any shares of capital stock, except
that WEST ESSEX Bancorp may continue to pay its regular quarterly cash dividend
of $0.14 per share, with record and payment dates consistent with past practice;
Provided further, that if the Closing Date is more than forty-five (45) after
the next preceding WEST ESSEX Bancorp Common Stock dividend payment date, WEST
ESSEX Bancorp may declare and pay a final cash dividend per share at the
quarterly rate of $.14 per share, with the exact amount per share to be an
amount that is pro rata through the payment date (from the preceding payment
date);
(iii) except as set forth in the WEST ESSEX Disclosure Schedule
5.01(a)(iii), grant or agree to pay any bonus, severance or termination to,
enter into or amend, or take any action (other than executing this Agreement)
that would trigger obligations under any employment agreement, severance
agreement, supplemental executive agreement, or similar agreement or arrangement
with any of its directors, officers or employees, or increase in any manner the
compensation or fringe benefits of any employee, officer or director, except for
salary increases for non-officer employees in the ordinary course of business
and consistent with past practice or as may be required pursuant to legally
binding commitments existing on the date hereof as set forth in WEST ESSEX
Disclosure Schedules 3.08 and 3.12;
(iv) enter into or, except as may be required by law or by the terms
of this Agreement, modify any pension, retirement, stock option, stock purchase,
stock appreciation right, stock grant, savings, profit sharing, deferred
compensation, supplemental retirement, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement related thereto, in respect of any of its directors,
officers or employees; or make any contributions to any defined contribution or
defined benefit plan not in the ordinary course
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of business consistent with past practice; or materially amend any WEST ESSEX
Employee Plan except to the extent such modifications or amendments do not
result in an increase in cost;
(v) except as otherwise provided in Section 5.06 of this Agreement,
merge or consolidate WEST ESSEX with any other corporation; sell or lease all or
any substantial portion of the assets or business of WEST ESSEX; make any
acquisition of all or any substantial portion of the business or assets of any
other person, firm, association, corporation or business organization other than
in connection with foreclosures, settlements in lieu of foreclosure, troubled
loan or debt restructuring, or the collection of any loan or credit arrangement
between WEST ESSEX and any other person; enter into a purchase and assumption
transaction with respect to deposits and liabilities; permit the revocation or
surrender by WEST ESSEX of its certificate of authority to maintain, or file an
application for the relocation of, any existing branch office, or file an
application for a certificate of authority to establish a new branch office;
(vi) sell or otherwise dispose of the capital stock of WEST ESSEX
Bancorp or sell or otherwise dispose of any asset of WEST ESSEX other than in
the ordinary course of business consistent with past practice; subject any asset
of WEST ESSEX to any lien, pledge, security interest or other encumbrance (other
than in connection with deposits, repurchase agreements, bankers acceptances,
FHLB of New York advances, "treasury tax and loan" accounts established in the
ordinary course of business and transactions in "Federal funds" and the
satisfaction of legal requirements in the exercise of trust powers) other than
in the ordinary course of business consistent with past practice; incur any
indebtedness for borrowed money (or guarantee any indebtedness for borrowed
money), except in the ordinary course of business consistent with past practice;
(vii) take any action which would result in any of the
representations and warranties of WEST ESSEX set forth in Article III of this
Agreement becoming untrue as of any date after the date hereof (except as to any
representation or warranty which specifically relates to an earlier date) or in
any of the conditions set forth in Article VI hereof not being satisfied, except
in each case as may be required by applicable law;
(viii)change any method, practice or principle of accounting, except
as may be required from time to time by GAAP (without regard to any optional
early adoption date) or any Regulatory Authority responsible for regulating WEST
ESSEX;
(ix) waive, release, grant or transfer any material rights of value
or modify or change in any material respect any existing material agreement or
indebtedness to which WEST ESSEX is a party, other than in the ordinary course
of business, consistent with past practice;
(x) purchase or sell any security for its investment portfolio,
except for purchases of United States government treasury instruments, US
government agency securities and insured certificates of deposit, and in any
event with a maturity of two years or less, or federal funds;
(xi) make any new loan or other credit facility commitment
(including without limitation, lines of credit and letters of credit) to any
borrower or group of affiliated borrowers in excess of $250,000 in the
aggregate, or increase, compromise, extend, renew or modify any existing loan or
commitment outstanding in excess of $250,000, except for loans secured by one-
to four-
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family, residential real property in an amount not exceeding $500,000 (on the
basis of and consistent with existing lending policies) and except for any
commitments disclosed on the WEST ESSEX Disclosure Schedule 5.01(a)(xi).
(xii) except as set forth on the WEST ESSEX Disclosure Schedule
5.01(a)(xii), enter into, renew, extend or modify any other transaction with any
Affiliate;
(xiii)enter into any futures contract, option, interest rate caps,
interest rate floors, interest rate exchange agreement or other agreement or,
except in the ordinary course of business and consistent with past practice,
take any other action for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest;
(xiv) except for the execution of, and as otherwise provided in,
this Agreement, take any action that would give rise to a right of payment to
any individual under any employment agreement, or take any action that would
give rise to a right of payment to any individual under any WEST ESSEX Employee
Plan;
(xv) make any change in policies with regard to the extension of
credit, the establishment of reserves with respect to the possible loss thereon
or the charge off of losses incurred thereon, investment, asset/liability
management or other material banking policies in any material respect except as
may be required by changes in applicable law or regulations or in GAAP or by
applicable regulatory authorities;
(xvi) except as set forth in WEST ESSEX Disclosure Schedule
5.01(a)(xvi), make any capital expenditures in excess of $10,000 individually or
$25,000 in the aggregate, other than pursuant to binding commitments existing on
the date hereof and other than expenditures necessary to maintain existing
assets in good repair;
(xvii) purchase or otherwise acquire, or sell or otherwise dispose
of, any assets or incur any liabilities other than in the ordinary course of
business consistent with past practices and policies;
(xviii) incur any non-deposit liability in excess of $50,000 other
than in the ordinary course of business consistent with past practice;
(xix) enter into or extend any agreement for professional services,
including legal, accounting and consulting (provided that such limitation shall
not restrict continuation of services being rendered by existing accountants or
legal counsel engaged on matters associated with the transactions contemplated
by the Agreement);
(xx) incur expenses related to attending any conventions, meetings,
outings or similar events of any regional, state and national trade
organizations which exceeds more than $5,000 in the aggregate, except as set
forth at WEST ESSEX Disclosure Schedule 5.01(xx); or
(xxi) agree to do any of the foregoing.
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For purposes of this Section 5.01, unless provided for in a WEST ESSEX
Disclosure Schedule, business plan, budget or similar document delivered to
Kearny prior to the date of this Agreement, it shall not be considered in the
ordinary course of business for WEST ESSEX to do any of the following: (i)
except as set forth in WEST ESSEX Disclosure Schedule 5.01, make any sale,
assignment, transfer, pledge, hypothecation or other disposition of any assets
having a book or market value, whichever is greater, in the aggregate in excess
of $75,000, other than pledges of assets to secure government deposits, to
exercise trust powers, sales of assets received in satisfaction of debts
previously contracted in the normal course of business, issuance of loans, sales
of previously purchased government guaranteed loans, or transactions in the
investment securities portfolio by WEST ESSEX or repurchase agreements made, in
each case, in the ordinary course of business; or (ii) except as set forth in
WEST ESSEX Disclosure Schedule 5.01, undertake or enter any lease, contract or
other commitment for its account, other than in the normal course of providing
credit to customers as part of its banking business, involving a payment by WEST
ESSEX of more than $25,000 annually, or containing a material financial
commitment and extending beyond 12 months from the date hereof.
SECTION 5.02. ACCESS; CONFIDENTIALITY.
(a) WEST ESSEX shall permit Kearny and its representatives reasonable
access to its properties and make available to them all books, papers and
records relating to the assets, properties, operations, obligations and
liabilities of WEST ESSEX, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of meetings of boards
of directors (and any committees thereof) (other than minutes of any
confidential discussion of this Agreement and the transactions contemplated
hereby), and stockholders, organizational documents, bylaws, material contracts
and agreements, filings with any regulatory authority, accountants' work papers,
litigation files, plans affecting employees, and any other business activities
or prospects in which Kearny may have a reasonable interest (provided that WEST
ESSEX shall not be required to provide access to any information that would
violate their attorney-client privilege or any employee or customer privacy
policies, laws or regulations). WEST ESSEX shall make its respective officers,
employees and agents and authorized representatives (including counsel and
independent public accountants) available to confer with Kearny and its
representatives. WEST ESSEX Bank shall provide in a timely manner to Bank's
officer in charge of retail banking copies of current rate sheets for all
deposit and loan products. WEST ESSEX shall provide Kearny with access to
documents and records and access to and a license to enter the WEST ESSEX
Properties and the Participation Facilities to conduct, at Kearny's sole
expense, an environmental assessment of the WEST ESSEX Properties and the
Participation Facilities (the "Environmental Assessment"); provided that such
Environmental Assessment is scheduled to be conducted within thirty days of the
date of the Agreement and commenced within forty-five days of the date of the
Agreement. The Environmental Assessment may include, without limitation,
inspections of the WEST ESSEX Properties and the Participation Facilities,
invasive soil, surface water, groundwater and sediment sampling and a review of
records maintained by federal, state, regional, county or local governmental
authorities relating to WEST ESSEX, the WEST ESSEX Properties or the
Participation Facilities. The parties will hold all such information delivered
in confidence to the extent required by, and in accordance with, the provisions
of the confidentiality agreement, dated June 26, 2002, between WEST ESSEX and
Kearny (the "Confidentiality Agreement").
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(b) Kearny agrees to conduct such investigations and discussions hereunder
in a manner so as not to interfere unreasonably with normal operations and
customer and employee relationships of the other party.
(c) In addition to the access permitted by subparagraph (a) above, from
the date of this Agreement through the Closing Date, WEST ESSEX shall permit
employees of Bank access to information relating to problem loans, loan
restructurings and loan work-outs of WEST ESSEX Bank.
(d) Without in any way limiting the generality of this Section 5.02, WEST
ESSEX shall provide to Kearny within 30 days after the last day of each calendar
month between the date hereof and the Closing Date (i) consolidated financial
statements (including a balance sheet and income statement) as of, and for the
period ended, on such last day, in the form in which such statements are
prepared for use by WEST ESSEX's management, and (ii) such other information
customarily prepared for use by WEST ESSEX's management as Kearny may request.
SECTION 5.03. REGULATORY MATTERS AND CONSENTS.
(a) Kearny will, in consultation with WEST ESSEX, prepare all Applications
and make all filings for, and use its best efforts to obtain as promptly as
practicable after the date hereof, all necessary permits, consents, approvals,
waivers and authorizations of all Regulatory Authorities necessary or advisable
to consummate the transactions contemplated by this Agreement. Kearny shall file
the Applications within forty-five days of the date of this Agreement, or as
soon thereafter as is practicable.
(b) WEST ESSEX will furnish Kearny with all information concerning WEST
ESSEX as may be necessary or advisable in connection with any Application or
filing made by or on behalf of Kearny to any Regulatory Authority in connection
with the transactions contemplated by this Agreement.
(c) Kearny and WEST ESSEX will promptly furnish the other with copies of
all material written communications to, or received by them from any Regulatory
Authority in respect of the transactions contemplated hereby, except information
which is filed by either party which is designated as confidential.
(d) Kearny will use its best efforts to obtain all necessary regulatory
approvals to effectuate the transactions contemplated by this Agreement and
related exhibits and appendices.
(e) WEST ESSEX will use its best efforts to obtain all necessary
regulatory approvals to effectuate the transactions contemplated by this
Agreement and related exhibits and appendices.
(f) The parties hereto agree that they will consult with each other with
respect to the obtaining of all permits, consents, approvals and authorizations
of all third parties and Regulatory Authorities. Kearny will furnish WEST ESSEX
and its counsel with copies of all Applications prior to filing with any
Regulatory Authority and provide WEST ESSEX a reasonable opportunity to provide
changes to such Applications, and copies of all Applications filed by Kearny .
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(g) WEST ESSEX and Kearny will cooperate with each other in the foregoing
matters and will furnish the responsible party with all information concerning
it and its subsidiaries as may be necessary or advisable in connection with any
Application or filing made by or on behalf of Kearny or WEST ESSEX to any
Regulatory Authority in connection with the transactions contemplated by this
Agreement, and such information will be accurate and complete in all material
respects. In connection therewith, each party will provide certificates and
other documents reasonably requested by the other.
SECTION 5.04. TAKING OF NECESSARY ACTION.
(a) Kearny and WEST ESSEX shall each use its best efforts in good faith to
(i) furnish such information as may be required in connection with the
preparation of the documents referred to in Section 5.03 of this Agreement, and
(ii) take or cause to be taken all action necessary or desirable on its part
using its best efforts so as to permit completion of the Merger and the
transactions contemplated by this Agreement, including, without limitation, (A)
obtaining the consent or approval of each individual, partnership, corporation,
association or other business or professional entity whose consent or approval
is required for consummation of the transactions contemplated hereby (including
assignment of leases without any material change in terms), provided that WEST
ESSEX shall not agree to make any payments or modifications to agreements in
connection therewith without the prior written consent of Kearny, and (B)
requesting the delivery of appropriate opinions, consents and letters from its
counsel and independent auditors. No party hereto shall take, or cause, or to
the best of its ability permit to be taken, any action that would substantially
impair the prospects of completing the Bank Merger, the Corporate Merger, the
MHC Merger and the Mid-Tier Merger pursuant to this Agreement; provided that
nothing herein contained shall preclude Kearny or WEST ESSEX from exercising its
rights under this Agreement.
(b) WEST ESSEX shall prepare, subject to the review of Kearny with respect
to matters relating to Kearny and the transactions contemplated by this
Agreement, the Proxy Statement to be filed by WEST ESSEX Bancorp with the SEC
and to be mailed to the stockholders of WEST ESSEX Bancorp in connection with
the meeting of its stockholders and transactions contemplated hereby, which
Proxy Statement shall conform to all applicable legal requirements. Should it be
required by Regulatory Authorities, WEST ESSEX MHC and WEST ESSEX Bank shall
prepare, subject to the review and consent of Kearny with respect to matters
relating to Kearny and the transactions contemplated by this Agreement, the
Proxy Statement to be filed by WEST ESSEX MHC with the Regulatory Authorities
and to be mailed to members in connection with a meeting of members and the
transactions contemplated hereby. The parties shall cooperate with each other
with respect to the preparation of any Proxy Statement. WEST ESSEX shall, as
promptly as practicable following the preparation thereof and within forty-five
days of the date of this Agreement, file any Proxy Statement with the Regulatory
Authorities, and WEST ESSEX shall use all reasonable efforts to have any Proxy
Statement mailed to stockholders, and if necessary members, as promptly as
practicable after such filing. WEST ESSEX Bancorp and WEST ESSEX Bank will
promptly advise Kearny of the time when any Proxy Statement has been filed and
mailed, or of any comments from any Regulatory Authority or any request by any
Regulatory Authority for additional information.
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SECTION 5.05. CERTAIN AGREEMENTS.
(a) Kearny shall maintain in effect for three years from the Merger
Effective Date, if available, the current directors' and officers' liability
insurance policy maintained by WEST ESSEX Bancorp (provided that Kearny may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less favorable) with respect to matters
occurring prior to the Closing Date, provided such insurance coverage is
available at a reasonable premium. In connection with the foregoing, WEST ESSEX
Bancorp agrees to provide such insurer or substitute insurer with such
representations as such insurer may request with respect to the reporting of any
prior claims.
(b) For a period of six years from the Merger Effective Date, Kearny
agrees to indemnify, defend and hold harmless each present and former director
and officer of WEST ESSEX determined as of the Closing Date (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees and expenses), liabilities, judgments or amounts paid
in settlement (with the approval of Kearny, which approval shall not be
unreasonably withheld) or in connection with any claim, action, suit, proceeding
or investigation arising out of matters existing or occurring at or prior to the
Merger Effective Date (a "Claim") in which an Indemnified Party is, or is
threatened to be made, a party or a witness based in whole or in part on, or
arising in whole or in part out of, the fact that such person is or was a
director or officer of WEST ESSEX, regardless of whether such Claim is asserted
or claimed prior to, at or after the Closing Date, to the fullest extent to
which directors and officers of WEST ESSEX are entitled under Federal law, WEST
ESSEX Bancorp's charter and bylaws, WEST ESSEX Bank's and WEST ESSEX MHC's
charter and bylaws, or other applicable law as in effect on the date hereof (and
Kearny shall pay expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the extent permissible to a Federal
corporation or savings bank, or WEST ESSEX Bancorp's charter and bylaws;
provided, that the person to whom expenses are advanced provides an undertaking
to repay such expenses if it is ultimately determined that such person is not
entitled to indemnification). All rights to indemnification in respect of a
Claim asserted or made within the period described in the preceding sentence
shall continue until the final disposition of such Claim.
(c) Any Indemnified Party wishing to claim indemnification under Section
5.05(b), upon learning of any Claim, shall promptly notify Kearny, but the
failure to so notify shall not relieve Kearny of any liability it may have to
such Indemnified Party except to the extent that such failure materially
prejudices Kearny. In the event of any Claim, (i) Kearny shall have the right to
assume the defense thereof (with counsel reasonably satisfactory to the
Indemnified Party) and shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except that, if
Kearny elects not to assume such defense or counsel for the Indemnified Parties
advises that there are issues which raise conflicts of interest between Kearny
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Kearny shall pay all reasonable fees and expenses of
such counsel for the Indemnified Parties promptly as statements therefor are
received, provided further that Kearny shall in all cases be obligated pursuant
to this paragraph to pay for only one firm of counsel for all Indemnified
Parties, (ii) the Indemnified Parties will cooperate in the defense of any such
Claim and (iii) Kearny shall not be liable for any settlement effected without
its prior written consent (which consent shall not unreasonably be withheld).
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(d) In the event Kearny or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not continue or
survive such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Kearny assume the obligations set forth in this
Section 5.05.
(e) The provisions of this Section are intended to be for the benefit of,
and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
SECTION 5.06. NO OTHER BIDS AND RELATED MATTERS.
From and after the date hereof until the termination of this Agreement,
neither WEST ESSEX nor any of its officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by WEST ESSEX), will,
directly or indirectly, initiate, solicit or knowingly encourage (including by
way of furnishing non-public information or assistance), or facilitate
knowingly, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined below),
or enter into or maintain or continue discussions or negotiate with any person
or entity in furtherance of such inquiries or to obtain an Acquisition Proposal
or agree to or endorse any Acquisition Proposal, or authorize or permit any of
its officers, directors, or employees or any of its subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative retained by any of its subsidiaries to take any such action, and
WEST ESSEX shall notify Kearny orally (within one business day) and in writing,
within forty-eight hours, which writing shall be updated as promptly as
practicable, of all of the relevant details relating to all inquiries and
proposals which it or any such officer, director employee, investment banker,
financial advisor, attorney, accountant or other representative may receive
relating to any of such matters, PROVIDED, HOWEVER, that nothing contained in
this Section 5.06 shall prohibit the Board of Directors from: (i) furnishing
information to, or entering into discussions or negotiations with any person or
entity that makes an unsolicited written, bona fide proposal, to acquire WEST
ESSEX Bancorp and WEST ESSEX Bank pursuant to a merger, consolidation, share
exchange, business combination, tender or exchange offer or other similar
transaction, if, and only to the extent that, (A) the Board of Directors of WEST
ESSEX Bancorp receives a written opinion from its independent financial advisor
that such proposal may be superior to the Merger from a financial point of view
to WEST ESSEX Bancorp stockholders, (B) legal counsel advises WEST ESSEX Bancorp
that the proposed acquiror may legally acquire WEST ESSEX Bancorp and WEST ESSEX
Bank, (C) the Board of Directors of WEST ESSEX Bancorp, after consultation with
and based upon the advice of independent legal counsel, determines in good faith
that such action is necessary for the Board of Directors of WEST ESSEX Bancorp
to comply with its fiduciary duties to stockholders under applicable law (such
proposal that satisfies (A) (B) and (C) being referred to herein as a "Superior
Proposal"), (D) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, WEST ESSEX Bancorp (x)
provides reasonable notice to Kearny to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity and (y) receives from such person or entity an executed
confidentiality agreement in form and substance identical in all respects to the
Confidentiality Agreement, and (E) the WEST ESSEX Bancorp special meeting of
stockholders convened to approve this Agreement has not occurred; (ii) complying
with Rule 14e-2 promulgated under the Exchange Act with regard to a tender or
exchange offer; or (iii)
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prior to the WEST ESSEX Bancorp special meeting of stockholders convened to
approve this Agreement, failing to make or withdrawing or modifying its
recommendation to stockholders, and entering into a Superior Proposal if there
exists a Superior Proposal and the Board of Directors of WEST ESSEX Bancorp,
after consultation with and based upon the advice of independent legal counsel,
determined in good faith that such action is necessary for such Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law. For purposes of this Agreement, "Acquisition Proposal" shall mean any of
the following (other than the transactions contemplated hereunder) involving
WEST ESSEX: (i) any merger, consolidation, share exchange, business combination,
or other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 20% or more of the assets of WEST ESSEX Bancorp
or WEST ESSEX Bank, taken as a whole, in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for 20% or more of the
outstanding shares of capital stock of WEST ESSEX Bancorp or the filing of a
registration statement under the Securities Laws in connection therewith; or
(iv) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
SECTION 5.07. DUTY TO ADVISE; DUTY TO UPDATE THE WEST ESSEX DISCLOSURE
SCHEDULES.
WEST ESSEX shall promptly advise Kearny of any change or event having a
Material Adverse Effect on WEST ESSEX or which WEST ESSEX believes would or
would be reasonably likely to cause or constitute a material breach of any of
its representations, warranties or covenants set forth herein. WEST ESSEX shall
update the WEST ESSEX Disclosure Schedules as promptly as practicable after the
occurrence of an event or fact which, if such event or fact had occurred prior
to the date of this Agreement, would have been disclosed in the WEST ESSEX
Disclosure Schedules. The delivery of such updated WEST ESSEX Disclosure
Schedule shall not relieve WEST ESSEX from any breach or violation of this
Agreement and shall not have any effect for the purposes of determining the
satisfaction of the condition set forth in Sections 6.02(c) hereof.
SECTION 5.08. CONDUCT OF Kearny'S BUSINESS.
From the date of this Agreement to the Closing Date, Kearny will use its
best efforts to (a) preserve its business organizations intact, (b) maintain
good relationships with employees, and (c) preserve for itself the goodwill of
customers of Kearny. From the date of this Agreement to the Closing Date, Kearny
will not (i) amend its charter or bylaws in any manner inconsistent with the
prompt and timely consummation of the transactions contemplated by this
Agreement; (ii) take any action which would result in any of the representations
and warranties of Kearny set forth in Article IV of this Agreement becoming
untrue as of any date after the date hereof or in any of the conditions set
forth in Article VI hereof not being satisfied, except in each case as may be
required by applicable law; (iii) take any action which would or is reasonably
likely to adversely effect or materially delay the receipt of the necessary
approvals from the Regulatory Authorities; (iv) take action which would or is
reasonably likely to materially and adversely affect Kearny's ability to perform
its covenants and agreements under this Agreement; (v) take any action that
would result in any of the conditions to the transactions contemplated by this
Agreement not being satisfied; or (vi) agree to do any of the foregoing.
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SECTION 5.09. BOARD AND COMMITTEE MINUTES.
WEST ESSEX Bank, WEST ESSEX Bancorp and WEST ESSEX MHC shall each provide
to Kearny, within twenty (20) days after any meeting of their respective Board
of Directors, or any committee thereof, or any senior management committee, a
copy of the minutes of such meeting, except that with respect to any meeting
held within twenty (20) days of the Closing Date, such minutes shall be provided
to each party prior to the Closing Date. WEST ESSEX may exclude from the minutes
matters (i) relating to merger negotiations, (ii) associated with Section 5.06,
or (iii) relating to WEST ESSEX's discussions of possible breaches of this
Agreement by Kearny.
SECTION 5.10. UNDERTAKINGS BY THE PARTIES.
(a) From and after the date of this Agreement:
(i) VOTING BY DIRECTORS. Concurrently with the execution of this
Agreement, or within five business days thereof, the Directors of WEST ESSEX
Bank, WEST ESSEX Bancorp and WEST ESSEX MHC shall have entered into the
agreement set forth as Exhibit E to this Agreement;
(ii) PROXY SOLICITOR. If requested to do so by Kearny, WEST ESSEX
Bancorp and/or WEST ESSEX MHC shall retain a proxy solicitor in connection with
the solicitation of stockholders and any necessary WEST ESSEX MHC member
approval of this Agreement and the transaction contemplated hereby;
(iii) OUTSIDE SERVICE BUREAU CONTRACTS. If requested to do so by
Kearny, WEST ESSEX Bank shall use its best efforts to obtain an extension of any
contract with an outside service bureau or other vendor of services to WEST
ESSEX Bank, on terms and conditions mutually acceptable to WEST ESSEX Bank and
Bank;
(iv) BOARD MEETINGS. WEST ESSEX Bank, WEST ESSEX Bancorp and WEST
ESSEX MHC shall provide Kearny advance notice of the meetings of their Board of
Directors and shall permit a representative of Kearny to attend meetings of
their Boards of Directors or the Executive Committees thereof (provided that
they shall not be required to permit the Kearny representative to remain present
during any confidential discussion of the Agreement and the transactions
contemplated thereby);
(v) LIST OF NONPERFORMING ASSETS. WEST ESSEX Bank shall provide
Bank, within ten (10) days of the end of each calendar month, a written list of
nonperforming assets (the term "nonperforming assets," for purposes of this
subsection, means (i) loans that are "troubled debt restructuring" as defined in
Statement of Financial Accounting Standards No. 15, "Accounting by Debtors and
Creditors for Troubled Debt Restructuring," (ii) loans on nonaccrual, (iii) real
estate owned, (iv) all loans ninety (90) days or more past due as of the end of
such month and (v) and impaired loans; and
(vi) RESERVES AND MERGER-RELATED COSTS. On or before the Merger
Effective Date, and at the request of Kearny, WEST ESSEX shall establish such
additional accruals and reserves as may be necessary to conform the accounting
reserve practices and methods (including credit loss practices and methods) of
WEST ESSEX to those of Kearny (as such practices and methods are to be applied
to Kearny from and after the Closing Date) and Kearny's plans with respect to
the conduct
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of the business of WEST ESSEX following the Merger and otherwise to reflect
Merger-related expenses and costs incurred by WEST ESSEX Bancorp, provided,
however, that WEST ESSEX shall not be required to take such action unless Kearny
agrees in writing that all conditions to closing set forth in Section 6.02 have
been satisfied or waived (except for the expiration of any applicable waiting
periods); prior to the delivery by Kearny of the writing referred to in the
preceding clause, WEST ESSEX shall provide Kearny a written statement, certified
without personal liability by the chief executive officer of WEST ESSEX Bancorp,
WEST ESSEX Bank and WEST ESSEX MHC and dated the date of such writing, that the
representations made in Section 3.15 hereof are true as of such date or,
alternatively, setting forth in detail the circumstances that prevent such
representation from being true as of such date; and no accrual or reserve made
by WEST ESSEX or any WEST ESSEX Subsidiary pursuant to this subsection, or any
litigation or regulatory proceeding arising out of any such accrual or reserve,
shall constitute or be deemed to be a breach or violation of any representation,
warranty, covenant, condition or other provision of this Agreement or constitute
a termination event within the meaning of Section 7.01(b) hereof. No action
shall be required to be taken by WEST ESSEX pursuant to this Section 5.10(vi)
if, in the opinion of WEST ESSEX's independent auditors, such action would
contravene GAAP.
(vii) STOCKHOLDERS AND MEMBERS MEETING.
(A) WEST ESSEX Bancorp shall submit this Agreement to its
stockholders for approval at a meeting to be held as soon as practicable. The
Board of Directors shall recommend approval of this Agreement to the WEST ESSEX
Bancorp stockholders and the Board of Directors of WEST ESSEX MHC will vote all
of the shares of WEST ESSEX Bancorp owned by WEST ESSEX MHC in favor of the
Agreement; provided that the Board of Directors of WEST ESSEX Bancorp may fail
to make such a recommendation or vote the shares of WEST ESSEX MHC for the
Agreement, or withdraw, modify or change any such recommendation only in
connection with a Superior Proposal, as set forth in Section 5.06 of this
Agreement, and only if such Board of Directors, after having consulted with and
considered the written advice of outside counsel to such Board, has determined
that the making of such recommendation, or the failure so to withdraw, modify or
change its recommendation, would constitute a breach of the fiduciary duties of
such Board. WEST ESSEX Bancorp shall take all steps necessary in order to hold a
meeting of stockholders for the purpose of approving this Agreement as soon as
is practicable. WEST ESSEX MHC shall vote its shares in favor of this Agreement.
(B) If required by Regulatory Authorities, WEST ESSEX MHC
shall submit this Agreement to WEST ESSEX MHC members for approval, and, subject
to its fiduciary duties, WEST ESSEX MHC's Board of Directors shall recommend
approval of this Agreement to the members of WEST ESSEX MHC and shall vote all
member proxies held by WEST ESSEX MHC in favor of such approval at any meeting
of members of WEST ESSEX MHC. WEST ESSEX MHC shall take all steps necessary in
order to hold a meeting of members for the purpose of approving this Agreement
as soon as practicable.
(viii)SYSTEMS CONVERSIONS. WEST ESSEX Bank and Bank shall meet on a
regular basis to discuss and plan for the conversion of WEST ESSEX's data
processing and related electronic informational systems to those used by Bank,
which planning shall include, but not be limited to, discussion of the possible
termination by WEST ESSEX of third-party service provider arrangements
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effective at the Closing Date or at a date thereafter, non-renewal of personal
property leases and software licenses used by WEST ESSEX in connection with its
systems operations, retention of outside consultants and additional employees to
assist with the conversion, and outsourcing, as appropriate, of proprietary or
self-provided system services, it being understood that WEST ESSEX shall not be
obligated to take any such action prior to the Closing Date and, unless WEST
ESSEX otherwise agrees, no conversion shall take place prior to the Closing
Date. In the event that WEST ESSEX takes, at the request of Bank, any action
relative to third parties to facilitate the conversion that results in the
imposition of any termination fees, expenses or charges, Kearny shall indemnify
WEST ESSEX for any such fees, expenses and charges, and the costs of reversing
the conversion process, if for any reason the Merger is not consummated in
accordance with the terms of this Agreement.
(b) From and after the date of this Agreement, Kearny and WEST ESSEX shall
each:
(i) FILINGS AND APPROVALS. Cooperate with the other in the
preparation and filing, as soon as practicable, of (1) the Applications, (2) any
Proxy Statement, (3) all other documents necessary to obtain any other approvals
and consents required to effect the completion of the Merger, and the
transactions contemplated by this Agreement, and (4) all other documents
contemplated by this Agreement;
(ii) PUBLIC ANNOUNCEMENTS. Cooperate and cause their respective
officers, directors, employees and agents to cooperate in good faith, consistent
with their respective legal obligations, in the preparation and distribution of,
and agree upon the form and substance of, any press release related to this
Agreement and the transactions contemplated hereby, and any other public
disclosures related thereto, including without limitation communications to
stockholders, internal announcements and customer disclosures, but nothing
contained herein shall prohibit either party from making any disclosure which
its counsel deems necessary, provided that the disclosing party notifies the
other party reasonably in advance of the timing and contents of such disclosure;
(iii) MAINTENANCE OF INSURANCE. Maintain insurance in such amounts
as are reasonable to cover such risks as are customary in relation to the
character and location of its properties and the nature of its business;
(iv) MAINTENANCE OF BOOKS AND RECORDS. Maintain books of account and
records in accordance with GAAP applied on a basis consistent with those
principles used in preparing the financial statements heretofore delivered;
(v) DELIVERY OF SECURITIES DOCUMENTS. Deliver to the other copies of
all Securities Documents simultaneously with the filing thereof; and
(vi) TAXES. File all Federal, state, and local tax returns required
to be filed by them on or before the date such returns are due (including any
extensions) and pay all taxes shown to be due on such returns on or before the
date such payment is due.
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SECTION 5.11. EMPLOYEE AND TERMINATION BENEFITS; DIRECTORS AND MANAGEMENT.
(a) EMPLOYEE BENEFITS. Except as otherwise provided in Section 5.11(c) of
this Agreement, as of or after the Merger Effective Date, and at Kearny's
election and subject to the requirements of the IRC and ERISA, the WEST ESSEX
Employee Plans may continue to be maintained separately, consolidated, or
terminated, provided that if any WEST ESSEX Employee Plan is terminated,
Continuing Employees (as defined below) shall participate in any Kearny Employee
Plan of a similar character (to the extent that one exists) as of the first
entry date coincident with or following such termination. WEST ESSEX Continuing
Employees (as defined below) shall participate in the Kearny Thrift Plan
(sponsored by the Financial Institutions Thrift Plan) not later than the first
entry date coincident with or following the Merger Effective Date, with
recognition of prior WEST ESSEX service for purposes of eligibility to
participate and vesting, but not benefits accrual, under such Kearny plan. WEST
ESSEX Continuing Employees (as defined below) shall participate in the Kearny
Pension Plan (sponsored by the Financial Institutions Retirement Fund) not later
than the first entry date coincident with or following the date of termination
of the WEST ESSEX defined benefit pension plan or cessation of benefits accruals
for future service under such WEST ESSEX plan, and with recognition of prior
WEST ESSEX service for purposes of eligibility to participate and vesting, but
not benefits accrual, under such Kearny plan. In the event of a consolidation of
any or all of such plans or in the event of termination of any WEST ESSEX
Employee Plan, WEST ESSEX employees who are participants in the WEST ESSEX
Employee Plans and who continue employment with Kearny ("Continuing Employees")
shall receive credit for service with WEST ESSEX Bank (for purposes of
eligibility and vesting determination but not for benefit accrual purposes)
under any existing Kearny benefit plan, or new Kearny benefit plan in which such
employees or their dependents would be eligible to enroll, subject to any pre-
existing conditions or other exclusions to which such persons were subject under
the WEST ESSEX Employee Plans. Such service shall also apply for purposes of
satisfying any waiting periods, actively-at-work requirements, and evidence of
insurability requirements. Continuing Employees who become covered under a
Kearny health plan shall be required to satisfy the deductible limitations of
the Kearny health plan for the plan year in which coverage commences, without
offset for deductibles satisfied under the WEST ESSEX health plan.
In the event of any termination or consolidation of any WEST ESSEX health
plan with any Kearny health plan, Kearny shall make available to Continuing
Employees and their dependents employer-provided health coverage on the same
basis as it provides such coverage to Kearny employees. In the event of any
termination, or consolidation of any WEST ESSEX health plan with any Kearny
health plan, any pre-existing condition, limitation or exclusion in the Kearny
health plan shall not apply to Continuing Employees or their covered dependents
who have satisfied such pre- existing condition exclusion waiting period under a
WEST ESSEX health plan with respect to such pre-existing condition on the Merger
Effective Date and who then change that coverage to Kearny's health plan at the
time such Continuing Employee is first given the option to enroll in such Kearny
health plan. In the event of a termination of or consolidation of any WEST ESSEX
health plan with any Kearny health plan, Continuing Employees will be required
to seek reimbursement of claims arising prior to the Merger Effective Date from
the WEST ESSEX health plan and shall not be entitled to seek reimbursement of
claims arising prior to the Merger Effective Date from the Kearny health plan.
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(b) It is the current intention of WEST ESSEX Bank and Kearny to retain
all current non- officer employees of WEST ESSEX Bank, with the exception of
those persons set forth in the WEST ESSEX Disclosure Schedule or the Kearny
Disclosure Schedule at Section 5.11(b). Except as provided in Section 5.11(i)
hereof, nothing contained in this Agreement shall be construed to grant a
contract of employment to any employee of WEST ESSEX who becomes an employee of
Kearny. Any non-management WEST ESSEX employee whose employment is terminated
involuntarily (other than for cause) within one year of the Merger Effective
Date shall receive severance benefits in accordance with the WEST ESSEX Bank
employee severance compensation plan set forth in the WEST ESSEX Disclosure
Schedule.
(c) At the Merger Effective Date, the West Essex Bank Employee Stock
Ownership Plan ("ESOP") shall be terminated on such terms and conditions as
contained in the ESOP (as of the date of this Agreement). As soon as practicable
after the receipt of a favorable determination letter from the IRS as to the tax
qualified status of the ESOP upon its termination under Section 401(a) of the
IRC (the "Final Determination Letter"), distributions of the benefits under the
ESOP shall be made to the ESOP Participants. From and after the date of this
Agreement, in anticipation of such termination and distribution, WEST ESSEX and
its representatives before the Merger Effective Date, and Kearny and its
representatives after the Merger Effective Date, shall use their best efforts to
apply for and to obtain such favorable Final Determination Letter from the IRS.
If WEST ESSEX and its representatives, before the Merger Effective Date, and
Kearny and its representatives, after the Merger Effective Date, reasonably
determine that the ESOP cannot obtain a favorable Final Determination Letter, or
that the amounts held therein cannot be so applied, allocated or distributed
without causing the ESOP to lose its tax-qualified status, WEST ESSEX before the
Merger Effective Date, and Kearny after the Merger Effective Date, shall take
such action as they may reasonably determine with respect to the distribution of
benefits to the ESOP Participants, provided that the assets of the ESOP shall be
held or paid only for the benefit of the ESOP Participants, as determined on the
Merger Effective Date, and provided further that in no event shall any portion
of the amounts held in the ESOP revert, directly or indirectly, to WEST ESSEX or
to Kearny or any affiliate thereof. At the time distribution of benefits is made
under the ESOP on or after the Merger Effective Date, at the election of the
ESOP Participant, the amount thereof that constitutes an "eligible rollover
distribution" (as defined in Section 402(f)(2)(A) of the IRC) may be rolled over
by such ESOP Participant to any qualified Kearny benefit plan that permits
rollover distributions or to any eligible individual retirement account.
(d) Immediately following the Merger Effective Date, Kearny will take such
steps as are necessary to elect Mr. Leopold Montanaro as a member of the Board
of the Bank in a class of directors who will stand for reelection approximately
three years following the Merger Effective Date.
(e) Prior to WEST ESSEX Bancorp or WEST ESSEX Bank making any payments
pursuant to any employment agreements, severance plans, non-qualified deferred
compensation plans or other arrangements, WEST ESSEX Bancorp or WEST ESSEX Bank
shall furnish Kearny with a certification by WEST ESSEX Bancorp or WEST ESSEX
Bank's tax accountant and related work papers that such payment will not result
in any payments from WEST ESSEX Bancorp or WEST ESSEX Bank to the recipient that
will exceed the amount that is tax deductible to WEST ESSEX Bancorp or WEST
ESSEX Bank under Sections 280G and 162(m) of the IRC. Prior to WEST
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ESSEX Bancorp or WEST ESSEX Bank making any payments pursuant to any employment
agreements, severance plans, non-qualified deferred compensation plans or other
arrangements, the chief financial officer of WEST ESSEX Bancorp and WEST ESSEX
Bank shall furnish Kearny with a certification that such payments are consistent
with the WEST ESSEX Disclosure Schedules Sections 2.06, 3.08, 3.12 and 3.19
furnished as of the date of the Agreement, and WEST ESSEX Bancorp and WEST ESSEX
Bank shall furnish Kearny with an acknowledgment and release agreement by each
individual to receive a payment in form and substance satisfactory to Kearny.
(f) Until the Merger Effective Date, WEST ESSEX shall be liable for all
obligations for continued health coverage pursuant to Section 4980B of the IRC
and Sections 601 through 609 of ERISA ("COBRA") with respect to each WEST ESSEX
Bank qualifying beneficiary (as defined in COBRA) who incurs a qualifying event
(as defined in COBRA) before the Merger Effective Date. Kearny shall be liable
for (i) all obligations for continued health coverage under COBRA with respect
to each WEST ESSEX Bank qualified beneficiary (as defined in COBRA) who incurs a
qualifying event (as defined in COBRA) from and after the Merger Effective Date,
and (ii) for continued health coverage under COBRA from and after the Merger
Effective Date for each WEST ESSEX Bank qualified beneficiary who incurs a
qualifying event before the Merger Effective Date.
(g) As of the Merger Effective Date, the WEST ESSEX Supplemental
Retirement Plans and Salary Income Continuation Agreements shall be terminated
and all payments thereunder shall be made thereafter, as set forth in WEST ESSEX
Disclosure Schedule 5.11(g) dated as of the date of the Agreement.
(h) As of the Merger Effective Date, Kearny shall, subject to the exercise
of its fiduciary duty, establish a WEST ESSEX advisory board (the "Advisory
Board"), to be appointed annually, comprised of the directors of the WEST ESSEX
Bank who will not otherwise be serving on the Board of the Bank. Subject to the
exercise of the fiduciary duty of the Kearny Board of Directors, such Advisory
Board will be maintained for at least three years. Members of the Advisory Board
will receive a fee for such services in an amount comparable to that paid for
their service as a director of WEST ESSEX Bank as set forth at WEST ESSEX
Disclosure Schedule 5.11(h). Such fees shall be payable quarterly in arrears.
(i) As of the Merger Effective Date, Kearny will offer to enter into an
employment agreement and/or consulting agreement with Mr. Leopold Montanaro in a
form similar to that detailed at WEST ESSEX Disclosure Schedule 5.11(i)(1) and
consulting agreements with each of Mr. Dennis Petrello and Charles Filippo in a
form similar to that detailed at WEST ESSEX Disclosure Schedule 5.11(i)(2) and
(3), respectively.
(j) As of the Merger Effective Date, Kearny will offer Mr. Craig Montanaro
employment as an officer of the Bank.
SECTION 5.12. DUTY TO ADVISE; DUTY TO UPDATE KEARNY DISCLOSURE SCHEDULE.
Kearny shall promptly advise WEST ESSEX of any change or event having a
Material Adverse Effect on it or which it believes would or would be reasonably
likely to cause or constitute a material breach of any of its representations,
warranties or covenants set forth herein. Kearny shall
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update the Kearny' Disclosure Schedule as promptly as practicable after the
occurrence of an event or fact which, if such event or fact had occurred prior
to the date of this Agreement, would have been disclosed in the Kearny
Disclosure Schedule. The delivery of such updated Schedules shall not relieve
Kearny from any breach or violation of this Agreement and shall not have any
effect for the purposes of determining the satisfaction of the condition set
forth in Section 6.01(c) hereof.
SECTION 5.13. TRANSACTION EXPENSES OF WEST ESSEX.
(a) For planning purposes, set forth at WEST ESSEX Disclosure Schedule
5.13(a) hereto, WEST ESSEX has provided Kearny with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by WEST ESSEX
in connection with this Agreement and the transactions contemplated thereunder
based on facts and circumstances then currently known, including the fees and
expenses of counsel, accountants, investment bankers and other professionals.
WEST ESSEX shall use its best efforts to maintain expenses within the budget,
provided that in the event the actual facts and circumstances differ from the
assumptions upon which the budget is based, then the budget shall be adjusted to
reasonably correspond to such change.
(b) Promptly after the execution of this Agreement, WEST ESSEX shall ask
all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements within thirty (30) days. WEST
ESSEX shall review these invoices and track such expenses against the budget
referenced above, and WEST ESSEX shall advise Kearny of such matters prior to
payment of such invoices.
(c) WEST ESSEX shall cause its professionals to render monthly invoices
within thirty (30) days after the end of each month. WEST ESSEX shall advise
Kearny monthly of such invoices for professional services, disbursements and
reimbursable expenses which WEST ESSEX has incurred in connection with this
Agreement prior to payment of such invoices, and WEST ESSEX shall track such
expenses against the budget referenced above.
(d) WEST ESSEX, in reasonable consultation with Kearny, shall make all
arrangements with respect to the printing and mailing of the Proxy Statement.
ARTICLE VI
CONDITIONS
SECTION 6.01. CONDITIONS TO OBLIGATIONS OF WEST ESSEX UNDER THIS
AGREEMENT.
The obligations of WEST ESSEX under this Agreement shall be subject to
satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by WEST ESSEX pursuant to Section 8.03 hereof:
(a) CORPORATE PROCEEDINGS. All action required to be taken by, or on the
part of Kearny to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated by this
Agreement, shall have been duly and validly taken by Kearny
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and WEST ESSEX Bancorp shall have received certified copies of the resolutions
evidencing such authorizations;
(b) COVENANTS. The obligations and covenants of Kearny required by this
Agreement to be performed by Kearny at or prior to the Closing Date shall have
been duly performed and complied with in all material respects;
(c) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Kearny in this Agreement which is qualified as to materiality
shall be true and correct, and each such representation or warranty that is not
so qualified shall be true and correct in all material respects, in each case as
of the date of this Agreement, and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date.
(d) APPROVALS OF REGULATORY AUTHORITIES. The Bank Merger, the MHC Merger
and the Mid-Tier Merger shall have received all required approvals of Regulatory
Authorities and all notice and waiting periods required thereunder shall have
expired or been terminated.
(e) NO INJUNCTION. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) OFFICER'S CERTIFICATE. Kearny shall have delivered to WEST ESSEX a
certificate, dated the Closing Date and signed, without personal liability, by
its chairman of the board or president, to the effect that the conditions set
forth in subsections (a) through (f) and (i) of this Section 6.01 have been
satisfied, to the best knowledge of the officer executing the same;
(g) OPINION OF KEARNY'S COUNSEL. WEST ESSEX shall have received an
opinion of Malizia Spidi & Fisch, PC, counsel to Kearny, dated the Closing Date,
to the effect set forth on Exhibit 6.1 attached hereto; and
(h) APPROVAL OF WEST ESSEX BANCORP'S STOCKHOLDERS AND WEST ESSEX MHC
MEMBERS. This Agreement and the transactions contemplated hereby shall have been
approved by:
(i) the stockholders of WEST ESSEX Bancorp by such vote as is
required under applicable laws of the United States and regulations and policy
of the Regulatory Authorities, WEST ESSEX Bancorp's charter and bylaws, and
under Nasdaq requirements applicable to it; and
(ii) to the extent required by the Regulatory Authorities, by the
members of WEST ESSEX MHC by such vote as is required.
(i) FUNDS DEPOSITED WITH THE EXCHANGE AGENT. On or prior to the Closing
Date, Corporation shall have deposited or caused to be deposited, in trust with
the Exchange Agent, an amount of cash equal to the aggregate Merger
Consideration that the WEST ESSEX Bancorp stockholders shall be entitled to
receive on the Merger Effective Date pursuant to Section 2.02 of this Agreement.
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SECTION 6.02. CONDITIONS TO THE OBLIGATIONS OF KEARNY UNDER THIS
AGREEMENT.
The obligations of Kearny hereunder shall be subject to satisfaction at or
prior to the Closing Date of each of the following conditions, unless waived by
Kearny pursuant to Section 8.03 hereof:
(a) CORPORATE PROCEEDINGS. All action required to be taken by, or on the
part of, WEST ESSEX MHC, WEST ESSEX Bancorp and WEST ESSEX Bank to authorize the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated by this Agreement, shall have been duly and
validly taken by WEST ESSEX MHC, WEST ESSEX Bancorp and WEST ESSEX Bank; and
Kearny shall have received certified copies of the resolutions evidencing such
authorizations;
(b) COVENANTS. The obligations and covenants of WEST ESSEX required by
this Agreement to be performed at or prior to the Closing Date shall have been
duly performed and complied with in all material respects;
(c) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of WEST ESSEX in this Agreement that is qualified as to materiality
shall be true and correct, and each such representation or warranty that is not
so qualified shall be true and correct in all material respects, in each case as
of the date of this Agreement, and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date.
(d) APPROVALS OF REGULATORY AUTHORITIES. The Merger and the formation of
any required interim savings entities required in connection therewith shall
have received all required approvals of Regulatory Authorities (without the
imposition of any conditions that would cause a Material Adverse Effect on
Kearny, excluding standard conditions that are normally imposed by the
Regulatory Authorities in merger transactions); and all notice and waiting
periods required thereunder shall have expired or been terminated.
(e) NO INJUNCTION. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) NO MATERIAL ADVERSE EFFECT. Except as set forth in the WEST ESSEX
Disclosure Schedule 3.07, as of the execution date of the Agreement, since
December 31, 2001, there shall not have occurred any Material Adverse Effect
with respect to WEST ESSEX Bancorp and WEST ESSEX Bank;
(g) OFFICER'S CERTIFICATE. WEST ESSEX MHC, WEST ESSEX Bancorp and WEST
ESSEX Bank shall have delivered to Kearny a certificate, dated the Closing Date
and signed, without personal liability, by the chairman of the board or
president of each, to the effect that the conditions set forth in subsections
(a) through (f) of this Section 6.02 have been satisfied, to the best knowledge
of the officer executing the same; and
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(h) OPINIONS OF COUNSEL. Kearny shall have received an opinion of Muldoon
Murphy and Faucette, LLP, counsel to WEST ESSEX Bancorp, WEST ESSEX Bank and
WEST ESSEX MHC, dated the Closing Date, to the effect set forth on Exhibit 6.2
attached hereto.
(i) TRANSACTION EXPENSES. Not later than two business days prior to the
Closing Date, WEST ESSEX shall provide Kearny with an accounting of all
transaction related expenses incurred by it through the Closing Date, including
a good faith estimate of such expenses incurred or to be incurred through the
Closing Date but as to which invoices have not yet been submitted. WEST ESSEX
shall detail any variance of such transaction expenses to the budget set forth
at WEST ESSEX Disclosure Schedule 5.13(a) as of the date of the Agreement.
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ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
SECTION 7.01. TERMINATION.
This Agreement may be terminated on or at any time prior to the Closing
Date:
(a) By the mutual written consent of the parties hereto;
(b) By either Kearny or WEST ESSEX or acting individually:
(i) if there shall have been a material breach of any
representation, warranty, covenant or other obligation of the other party and
the breach cannot be, or shall not have been, remedied within 30 days after
receipt by such other party of notice in writing specifying the nature of such
breach and requesting that it be remedied;
(ii) if the Closing Date shall not have occurred on or before July
31, 2003, unless the failure of such occurrence shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe its
obligations set forth in this Agreement required to be performed or observed by
such party on or before the Closing Date; provided, however, the parties shall
in good faith agree to extend such deadline for a period of an additional 120
days thereafter in the event that such parties determine that it is reasonably
likely that such Closing Date will in fact occur during such extension period.
(iii) if either party has been informed in writing by a Regulatory
Authority whose approval or consent has been requested that such approval or
consent is denied, or is granted subject to any material change in the terms of
the Agreement, unless the failure of such occurrence shall be due to the failure
of the party seeking to terminate this Agreement to perform or observe its
agreements set forth herein required to be performed or observed by such party
on or before the Closing Date;
(iv) if the approval of the stockholders of WEST ESSEX Bancorp and
any approval of the members of WEST ESSEX MHC required for the consummation of
the Merger shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of stockholders or members, as the case may
be, or at any adjournment or postponement thereof; or
(c) By Kearny if (i) as provided in Section 5.10(a)(vii), the Board of
Directors of WEST ESSEX MHC or WEST ESSEX Bancorp withdraws its recommendation
of this Agreement, fails to make such recommendation or modifies or qualifies
its recommendation in a manner adverse to Kearny, or (ii) in reliance on Section
5.06 of this Agreement, WEST ESSEX MHC or WEST ESSEX Bancorp enters into an
agreement to be acquired by, or merge or combine with, a third party in
connection with a Superior Proposal;
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(d) By WEST ESSEX Bancorp or WEST ESSEX MHC, upon two days' prior notice
to Kearny, if, as a result of a Superior Proposal, the Board of Directors of
WEST ESSEX Bancorp or WEST ESSEX MHC determines, in good faith and in
consultation with counsel, that its fiduciary duties require that such Superior
Proposal be accepted.
SECTION 7.02. EFFECT OF TERMINATION.
(a) Except as otherwise provided in this Agreement, if this Agreement is
terminated pursuant to Section 7.01 hereof, this Agreement shall forthwith
become void (other than Sections 5.02(a), 7.02 and Section 8.01 hereof, which
shall remain in full force and effect), and there shall be no further liability
on the part of Kearny or WEST ESSEX to the other, except that no party shall be
relieved or released from any liabilities or damages arising out of its willful
breach of any provision of this Agreement.
(b) As a condition of Kearny's willingness, and in order to induce Kearny
to enter into this Agreement and to reimburse Kearny for incurring the costs and
expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement, WEST ESSEX will make an aggregate
cash payment to Kearny of $4.0 million (the "Expense Fee") if Kearny has
terminated this Agreement pursuant to Section 7.01(c) or WEST ESSEX has
terminated this Agreement pursuant to Section 7.01(d), and in such event WEST
ESSEX shall have no further liability to Kearny. Any payment required under this
Section 7.02(b) shall be paid by WEST ESSEX to Kearny (by wire transfer of
immediately available funds to an account designated by Kearny) within five
business days after written demand by Kearny. Each of WEST ESSEX Bank, WEST
ESSEX Bancorp and WEST ESSEX MHC shall be joint and severally liable for any
payment required to be made by WEST ESSEX to Kearny pursuant to this Section
7.02(b).
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. EXPENSES.
(a) Except as provided herein, each party hereto shall bear and pay all
costs and expenses incurred by it in connection with the transactions
contemplated hereby, including fees and expenses of its own financial
consultants, accountants and counsel.
(b) In the event of any termination of this Agreement pursuant to Section
7.01(b)(i) hereof because of a breach of this Agreement by one of the parties,
in addition to any other damages and remedies that may be available to the
non-breaching party, the non-breaching party shall be entitled to payment of,
and the breaching party shall pay to the non-breaching party, all reasonable
out-of-pocket costs and expenses, including, without limitation, reasonable
legal, accounting and investment banking fees and expenses, incurred by the
non-breaching party in connection with entering into this Agreement and carrying
out of any and all acts contemplated hereunder; provided, however, that this
clause shall not be construed to relieve or release a breaching party from any
additional liabilities or damages arising out of its willful breach of any
provision of this Agreement.
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SECTION 8.02. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations, warranties and, except to the extent specifically
provided otherwise herein, agreements and covenants, other than those covenants
set forth in Sections 5.05, 5.11, and 7.02 which will survive the Merger, shall
terminate on the Closing Date.
SECTION 8.03. AMENDMENT, EXTENSION AND WAIVER.
Subject to applicable law, at any time prior to the consummation of the
transactions contemplated by this Agreement, the parties may (1) amend this
Agreement, (2) extend the time for the performance of any of the obligations or
other acts of either party hereto, (3) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (4) waive compliance with any of the agreements or
conditions contained in Articles V and VI hereof or otherwise. This Agreement
may not be amended except by an instrument in writing authorized by the
respective Boards of Directors and signed, by duly authorized officers, on
behalf of the parties hereto. Any agreement on the part of a party hereto to any
extension or waiver shall be valid only if set forth in an instrument in writing
signed by a duly authorized officer on behalf of such party, but such waiver or
failure to insist on strict compliance with such obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
SECTION 8.04. ENTIRE AGREEMENT.
Except as set forth in this Agreement, this Agreement, including the
documents and other writings referred to herein or delivered pursuant hereto,
contains the entire agreement and understanding of the parties with respect to
its subject matter. Except as set forth in this Agreement, this Agreement
supersedes all prior arrangements and understandings between the parties, both
written or oral with respect to its subject matter. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors; provided, however, that nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto and
their respective successors, any rights, remedies, obligations or liabilities
other than pursuant to Sections 2.02(a)(i), 2.03, and 5.05.
SECTION 8.05. NO ASSIGNMENT.
Neither party hereto may assign any of its rights or obligations hereunder
to any other person, without the prior written consent of the other party
hereto.
SECTION 8.06. NOTICES.
All notices or other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by prepaid registered or
certified mail (return receipt requested), or sent by telecopy, addressed as
follows:
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(a) If to Kearny to:
Kearny Federal Savings Bank
614 Kearny Avenue
Kearny, New Jersey 07032
Attn: John N. Hopkins
President and Chief Executive Officer
Fax: (201) 955-1311
with a copy to:
Malizia Spidi & Fisch, PC
1100 New York Avenue, N.W.
Suite 340 West
Washington, DC 20005
Attn: Samuel J. Malizia, Esq.
Richard Fisch, Esq.
Fax: (202) 434-4661
(b) If to WEST ESSEX to:
West Essex Bank
417 Bloomfield Avenue
Caldwell, NJ 07006-4980
Attn: Leopold W. Montanaro
President and Chief Executive Officer
Fax: (973) 220-6764
with a copy to:
Muldoon, Murphy & Faucette, LLP
5101 Wisconsin Avenue, NW
Washington, DC 20016
Attn: Lori Beresford, Esq.
Fax: (202)966-9409
SECTION 8.07. CAPTIONS.
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement.
SECTION 8.08. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
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SECTION 8.09. SEVERABILITY.
If any provision of this Agreement or the application thereof to any
person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law. If however, any provision of this
Agreement is held invalid by a court of competent jurisdiction, then the parties
hereto shall in good faith amend this Agreement to include an alternative
provision that accomplishes a result that is as substantially similar to the
result originally intended as possible.
SECTION 8.10. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
domestic internal law (including the law of conflicts of law) of the State of
New Jersey, except to the extent that Federal law shall be deemed to preempt
such State law.
SECTION 8.11. SPECIFIC PERFORMANCE.
The parties hereto agree that irreparable damage would occur in the event
that the provisions contained in this Agreement were not performed in accordance
with its specific terms or was otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
KEARNY FEDERAL SAVINGS BANK
By: /s/ John N. Hopkins
--------------------------------------
John N. Hopkins
President and Chief Executive Officer
KEARNY FINANCIAL CORP.
By: /s/ John N. Hopkins
--------------------------------------
John N. Hopkins
President and Chief Executive Officer
KEARNY MHC
By: /s/ John N. Hopkins
--------------------------------------
John N. Hopkins
President and Chief Executive Officer
WEST ESSEX BANCORP, INC.
By: /s/ Leopold W. Montanaro
--------------------------------------
Leopold W. Montanaro
President and Chief Executive Officer
WEST ESSEX BANK
By: /s/ Leopold W. Montanaro
--------------------------------------
Leopold W. Montanaro
President and Chief Executive Officer
WEST ESSEX BANCORP, M.H.C.
By: /s/ Leopold W. Montanaro
--------------------------------------
Leopold W. Montanaro
President and Chief Executive Officer