INDUCEMENT AGREEMENT
INDUCEMENT AGREEMENT, dated February 14, 1996, by and between Horace J.
DePodwin, solely in his capacity as trustee (the "Trustee") under the Trust
Agreement, dated as of November 9, 1992 (the "Trust Agreement"), by and among
Lehigh Savings Bank, S.L.A., a New Jersey chartered capital stock savings and
loan association (the "Association"), David Margolis (the "Shareholder"),
Mildred Margolis and the Office of Thrift Supervision ("OTS") and Center
Bancorp, Inc., a New Jersey corporation (the "Company").
W I T N E S S E T H:
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WHEREAS, the Trustee is the trustee under the Trust Agreement; and
WHEREAS, pursuant to the Trust Agreement, the Trustee is holding in trust
for the benefit of the Shareholder 392,489 shares (together with all other
shares of capital stock of the Association, if any, which the Trustee may hold
pursuant to the Trust Agreement as a result of any stock split, stock dividend,
reclassification, recapitalization or otherwise of the capital stock of the
Association, the "Trust Shares") of the Common Stock, par value $10 per share
(the "Common Stock"), of the Association; and
WHEREAS, the Association and the Company have negotiated the terms and
conditions of a proposed Agreement and Plan of Merger (the "Merger Agreement")
pursuant to which, among other things, a subsidiary of the Company will merge
with and into the Association and the shareholders of the Association, including
the Trustee on behalf of the Shareholder, will receive the Per Share
Consideration specified in the Merger Agreement for each outstanding share of
Common Stock (except in certain circumstances); and
WHEREAS, as a condition to entering into the Merger Agreement and
performing its obligations thereunder, the Company has required that the Trustee
make certain representations and warranties and agree to certain terms and
conditions as set forth herein; and
WHEREAS, in order to induce the Company to enter into the Merger Agreement
and perform its obligations thereunder, the Trustee has agreed to make the
representations and warranties and to agree to the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound, the parties hereto agree as follows:
ARTICLE I
VOTING OF TRUST SHARES; NO TRANSFERS
Section 1.1. Voting of Trust Shares. The Trustee hereby irrevocably agrees
to vote the Trust Shares in favor of the Merger, subject only to Section 1.3
hereof. In furtherance of the foregoing and not in limitation thereof, if deemed
reasonably necessary by either the Association or the Company, the Trustee shall
(i) cause the Trust Shares to be present in person or by proxy at any meeting of
the shareholders of the Association (including any adjournments or postponements
thereof) called to consider and vote upon the Merger and the transactions
contemplated by the Merger Agreement and shall vote the Trust Shares or cause
the Trust Shares to be voted in favor thereof at such meeting or (ii) execute
one or more written consents approving the Merger and the other transactions
contemplated by the Merger Agreement.
Section 1.2. Prohibition on Transfers; Restrictive Legend. (a) Subject to
Section 1.3, without the prior written consent of the Company, during the term
of this Agreement the Trustee shall not transfer, sell, assign, pledge,
hypothecate, give, create a security interest in or lien on, place in trust
(voting or otherwise), transfer by operation of law (other than by way of a
merger or consolidation of the Association), grant a proxy with respect to or in
any other way encumber or dispose of, directly or indirectly and whether or not
voluntarily (each, a "Transfer"), any of the Trust Shares and shall not vote the
Trust Shares on any matter in a manner that is inconsistent with the purposes of
this Agreement.
(b) The Trustee shall cause the Association not to reflect on its books any
Transfer of Trust Shares to any person except in accordance with this Agreement.
Promptly following the execution and delivery of this Agreement, the Trustee
shall exchange the certificates representing the Trust Shares for certificates
of like tenor which shall be stamped or endorsed with a legend in substantially
the following form:
TRANSFERS AND VOTING IN RESPECT OF THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF AN AGREEMENT DATED FEBRUARY 14,
1996 BY AND BETWEEN CENTER BANCORP, INC. AND HORACE J. DEPODWIN, AS TRUSTEE,, A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE ASSOCIATION
AND MAY BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE ASSOCIATION.
Section 1.3. OTS Approval. Notwithstanding anything to the contrary
contained in this Agreement, the provisions of Article I hereof shall be of no
further force and effect in the event that the OTS does not approve the Merger
and the other transactions contemplated by the Merger Agreement (including this
Agreement).
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ARTICLE II
Representations and Warranties of the Trustee
The Trustee hereby represents and warrants to the Company as follows:
Section 2.1. Capacity; Authorization. The Trustee is the trustee under the
Trust Agreement and as such has the authority and the capacity to execute and
deliver this Agreement and to perform his obligations hereunder. The Trustee is
under no impairment or other disability, legal, physical, mental or otherwise,
whether or not arising out of the Trust Agreement, that would preclude or limit
the ability of the Trustee to perform his obligations hereunder. The Trustee has
full power and authority under the Trust Agreement to execute and deliver this
Agreement and to perform his obligations hereunder, all of which have been duly
authorized by all requisite action. The Trustee has the power and authority to
bind the Shareholder to the terms hereof by his execution and delivery of this
Agreement. This Agreement as been duly authorized, executed and delivered by the
Trustee and constitutes a valid and binding agreement of the Trustee,
enforceable against the Trustee in accordance with its terms.
Section 2.2. Non-contravention. Neither the execution and delivery of this
Agreement by the Trustee nor the performance by the Trustee of his obligations
hereunder will (i) violate or result in a breach (with or without the lapse of
time, the giving of notice or both) of or constitute a default under (A) any
contract, agreement, commitment, indenture, mortgage, lease, pledge, note,
license, permit or other instrument or obligation or (B) any judgment, order,
decree, law, rule or regulation or other restriction of any governmental
authority, in each case to which the Trustee is a party or by which he or the
Trust Shares are bound or to which the Trust Shares are subject, or (iii) result
in the creation or imposition of any lien, claim, charge, mortgage, pledge,
security interest, equity, restriction or other encumbrance (collectively,
"Encumbrances") on the Trust Shares.
Section 2.3. No Consents. Other than the receipt of nonapproval of the OTS
pursuant to the Trust Agreement, no notice to, filing with, or authorization,
registration, consent or approval of any governmental authority or other person
is necessary for the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby by the Trustee.
Section 2.4. Trust Agreement; Status of Trustee. A true and complete copy
of the Trust Agreement, and any amendments, supplements and modifications
thereto, is attached hereto as Exhibit A. The Trust Agreement (as so amended,
modified or supplemented) remains in full force and effect. No breach or default
or event which, with the giving of notice, the lapse of time, or both would
constitute a breach or default under the Trust Agreement has occurred and is
continuing. Neither the Trustee nor, to the Trustee's best knowledge, the
Shareholder has taken any actions for the purpose or with the intent of (i)
further amending, modifying or supplementing the Trust Agreement, (ii)
Transferring the Trust Shares (except as contemplated by this Agreement and the
Merger Agreement), (iii) causing the Trustee to resign as trustee under the
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Trust Agreement, or (iv) removing or seeking the removal of the Trustee as
trustee under the Trust Agreement, and no such action is, to the Trustee's best
knowledge, contemplated.
Section 2.5. Ownership of the Trust Shares. The Trustee owns the Trust
Shares of record for the benefit of the Shareholder, free and clear of any
Encumbrances, other than Encumbrances created by the Trust Agreement. Other than
the Trust Agreement, there are no voting trust arrangements, shareholder
agreements or other agreements (i) granting any option, warrant or right of
first refusal with respect to the Trust Shares to any person, (ii) restricting
the right of the Trustee to sell the Trust Shares to the Company pursuant to the
Merger Agreement, or (iii) restricting any other right of the Trustee with
respect to the Trust Shares. Subject to the receipt of nonapproval of the OTS
pursuant to the Trust Agreement, the Trustee has the absolute and unrestricted
right, power and capacity to sell, assign and transfer the Trust Shares to the
Company pursuant to the terms of the Merger Agreement, free and clear of any
Encumbrances. Upon delivery to the Company of the Certificates representing the
Trust Shares at Closing in exchange for the Per Share Consideration to be paid
by the Company at the Closing, the Company will acquire good, valid and
marketable title to the Trust Shares, free and clear of any Encumbrances.
Section 2.6. Brokers. No person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from the
Trustee in connection with this Agreement or the Merger Agreement or any of the
transactions contemplated hereby or thereby.
Section 2.7. Full Disclosure. No representation or warranty made by the
Trustee in this Agreement or any certificate delivered, or to be delivered, by
or on behalf of the Trustee pursuant hereto contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
There is no fact or circumstance that the Trustee has not disclosed to the
Company in writing that the Trustee presently believes could reasonably be
expected to have a material adverse effect on the ability of the Trustee to
perform his obligations under this Agreement.
ARTICLE III
COVENANTS OF THE TRUSTEE
Section 3.1. Certain Affirmative Covenants of the Trustee. From and after
the date hereof until the earlier of the termination of the Merger Agreement or
the Effective Time, the Trustee shall (i) use his best efforts to take, or cause
to be taken, all action, and to do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement, including but not limited to, obtaining consents,
approvals and the receipt of nonapproval of the OTS and all other governmental
entities and third parties necessary to the consummation of the transactions
contemplated by this Agreement, (ii) provide the Company with true and complete
copies of all correspondence and memoranda between the Trustee and the OTS,
(iii) use his best efforts to include the Company or its designated
representative in all conversations between the Trustee and the OTS and (iv)
promptly inform the
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Company in writing of any material breach of or change in the representations
and warranties contained in Article II hereof.
Section 3.2. Certain Negative Covenants of the Trustee. From and after the
date hereof until the earlier of the termination of the Merger Agreement or the
Effective Time, the Trustee shall not and shall use his best efforts to cause
the Shareholder not to (i) enter into any contract, agreement or commitment or
take any other action which, if entered into or taken prior to the date of this
Agreement, would cause any representation or warranty of the Trustee to be
untrue, (ii) incur, create or suffer to exist any Encumbrance on the Trust
Shares, other than Encumbrances existing under the Trust Agreement as of the
date hereof and Encumbrances created hereby, (iii) amend, modify or supplement
the Trust Agreement or (iv) take or omit to be taken any action which could
reasonably be expected to delay, hinder or make impossible or illegal the
transactions contemplated by this Agreement and the Merger Agreement.
Section 3.3. No Acquisition Proposals. The Trustee shall not, directly or
indirectly, and shall instruct and otherwise use his best efforts to cause the
Shareholder and their respective agents, advisors and other representatives not
to, directly or indirectly, (i) encourage, solicit or initiate any proposals or
offers from any person relating to any acquisition or purchase of all or a
material amount of the assets of, or any securities of, or any merger,
consolidation or business combination with, the Association (such transactions
are referred to herein as "Acquisition Transactions") or (ii) participate in any
discussions or negotiations regarding, or furnish to any other person any
information with respect to, an Acquisition Transaction. The Trustee shall
promptly notify the Company orally and in writing of any proposal or offer
regarding an Acquisition Transaction, any inquiries with respect thereto and any
request for information relating thereto. Such written notification shall
include the identify of the entity making such inquiry or Acquisition
Transaction proposal or offer or request and such other information with respect
thereto as is reasonably necessary to apprise the Company of the material terms
of such Acquisition Transaction proposal or offer or request and all other
material information relating thereto.
Section 3.4. Affirmation of Representations and Warranties; Compliance With
Terms. At the Closing, the Trustee will deliver to the Company a certificate
certifying that the representation and warranties of the Trustee contained
herein are true and correct in all respects as of the Closing and that the
Trustee has duly performed or complied with all of the covenants, obligations
and conditions to be performed or complied with by him under the terms of this
Agreement on or prior to or at Closing.
Section 3.5. Delivery of Certificates. At the Closing, the Trustee shall
deliver to the Company the Certificates representing the Trust Shares properly
endorsed or otherwise in proper form for surrender, with all signatures
guaranteed.
Section 3.6. Execution of General Release. Prior to or at the Closing, the
Trustee shall deliver to the Company a general release, in form and substance
satisfactory to the Company, executed by each of the Trustee and the
Shareholder, in favor of the Association and certain related parties and
containing such other terms as the Company may reasonably require.
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Section 3.7. Further Assurances. In the event that at any time after
Closing any further action is necessary to carry out the purposes of this
Agreement, the Trustee shall, at the Company's cost, take all such action
without any further consideration therefor.
ARTICLE IV
TERMINATION
Section 4.1. Termination. This Agreement may be terminated as follows:
(a) by mutual consent of the parties hereto;
(b) by the Company if the Trustee shall breach in any material respect any
of his representations, warranties, covenants, obligations or agreements
contained in this Agreement; and
(c) by any party hereto in the event that the Merger Agreement is
terminated prior to Closing.
Section 4.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 4.1 hereof, all rights and obligations of the parties
hereunder shall terminate and no party shall have any liability to any other
party, except for obligations of the parties hereto in Sections 4.3 and 5.2,
which shall survive the termination of this Agreement, and except nothing herein
will relieve any party from liability for any breach of any representation,
warranty, covenant, obligation or agreement contained herein prior to such
termination.
Section 4.3. Limitation of Liability; Equitable Remedies. The Company
acknowledges that the Trustee has entered into this Agreement as trustee under
the Trust Agreement and not in his personal capacity. Accordingly, the Trustee
shall not be personally liable to the Company, or any of its affiliates for any
costs, damages, losses, liabilities or obligations (collectively, "Damages")
suffered by any of them as a result of a breach or violation by the Trustee of
the terms hereof, unless caused by the gross negligence or willful misconduct of
the Trustee. The Trustee acknowledges that any breach by the Trustee of the
terms hereof would result in immediate and irreparable harm to the Company for
which an adequate remedy would not be available at law. Accordingly, in the
event of any breach, or threatened breach, of the provisions of this Agreement,
the Company shall be entitled to an order of specific performance or other
injunctive relief in addition to any other rights and remedies to which the
Company may be entitled, whether at law or in equity, and the Trustee hereby
consents to the entry of an order providing such relief. The Company shall not
be required to post any bond or other security in connection with any such
action for specific performance or other injunctive relief. The provisions of
this Section 4.3 shall survive the expiration or termination of this Agreement.
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ARTICLE V
MISCELLANEOUS
Section 5.1. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by certified, registered or express air mail, postage prepaid,
and shall be deemed given when so delivered personally, or by facsimile, or if
mailed, five days after the date of mailing, as follows:
If to the Trustee: c/o Economic Studies, Inc.
One Gateway Center
Suite 420
Newark, New Jersey 07102-4082
Telephone: (201) 621-0180
Facsimile: (201) 621-0182
With a copy to: Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
Telephone: (201) 966-6300
Facsimile: (201) 966-1550
Attention: Joseph Lunin, Esq.
If to the Company: 2455 Morris Avenue
Union, New Jersey 07083
Telephone: (908) 688-9500
Facsimile: (908) 688-3043
Attention: Jack Davis
With a copy to: Lowenstein, Sandler, Kohl,
Fisher & Boylan
65 Livingston Avenue
Roseland, New Jersey 07068
Telephone: (201) 992-8700
Facsimile: (201) 992-5820
Attention: Peter H. Ehrenberg, Esq.
or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.
Section 5.2. Expenses. Regardless of whether the transactions provided for
in this Agreement are consummated, except as otherwise provided herein, each
party hereto shall pay his own expenses incident to this Agreement and the
transactions contemplated herein.
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Section 5.3. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the United States and, to the extent
not inconsistent therewith, the internal laws of the State of New Jersey,
without reference to the choice of law principles thereof.
Section 5.4. Assignment; Successors and Assigns; No Third Party Rights.
This Agreement may not be assigned by operation of law or otherwise, and any
attempted assignment shall be null and void; provided, however, that the
provisions of this sentence shall not prohibit the appointment of a successor
trustee under the Trust Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors, assigns and legal representatives (including, but not limited to,
any successor trustee under the Trust Agreement). This Agreement shall be for
the sole benefit of the parties to this Agreement and their respective heirs,
successors, assigns and legal representatives and is not intended, nor shall be
construed, to give any person, other than the parties hereto and their
respective heirs, successors, assigns and legal representatives, any legal or
equitable right, remedy or claim hereunder.
Section 5.5. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original agreement, but all of which together
shall constitute one and the same instrument.
Section 5.6. Titles and Headings. The titles and headings in this Agreement
are for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 5.7. Entire Agreement. This Agreement, including the Exhibits
attached hereto, constitutes the entire agreement among the parties with respect
to the matters covered hereby and supersedes all previous written, oral or
implied understandings among them with respect to such matters.
Section 5.8. Amendment and Modification. This Agreement may only be amended
or modified in writing signed by the party against whom enforcement of such
amendment or modification is sought.
Section 5.9. Waiver. Any of the terms or conditions of this Agreement may
be waived at any time by the party or parties entitled to the benefit thereof,
but only by a writing signed by the party or parties waiving such terms or
conditions.
Section 5.10. Severability. The invalidity of any portion hereof shall not
affect the validity, force or effect of the remaining portions hereof. If it is
ever held that any restriction hereunder is too broad to permit enforcement of
such restriction to his fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
Section 5.11. No Strict Construction. Each of the parties hereto
acknowledges that this Agreement has been prepared jointly by the parties
hereto, and shall not be strictly construed against any party.
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Section 5.12. Capitalized Terms. Capitalized terms used herein shall have
the respective meanings ascribed thereto in the Merger Agreement unless
otherwise defined herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
__________________________________
Horace J. DePodwin, as Trustee
CENTER BANCORP, INC.
By: ______________________________
Name:
Title:
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