[Central
Jersey logo]
MERGER
PROPOSED – YOUR VOTE IS VERY IMPORTANT
Dear
Shareholder:
The board
of directors of Central Jersey Bancorp has called a special meeting of
shareholders to be held at Branches Catering Hall, located at 123 Monmouth Road
(Route 71), West Long Branch, New Jersey, on
[ ],
August [ ], 2010 at 9:00 a.m., local time. The
purpose of the special meeting is to approve the Agreement and Plan of Merger,
dated May 25, 2010, by and among Central Jersey, Central Jersey Bank, N.A.,
Kearny Financial Corp. and Kearny Federal Savings Bank, pursuant to which
Central Jersey will merge with a wholly-owned subsidiary of Kearny and Central
Jersey Bank, N.A. will merge with and into Kearny Bank.
Under the
terms of the merger agreement, each shareholder of Central Jersey will receive
$7.50 in cash for each share of Central Jersey common stock held. The
consummation of the merger is subject to certain conditions, which include,
among others, the approval of the merger agreement by Central Jersey’s
shareholders and the receipt of all required regulatory approvals and the
expiration of all statutory waiting periods. A complete description
of the merger agreement is included in the enclosed proxy statement, and a copy
of the merger agreement is annexed to the proxy statement as Annex
A.
The
Central Jersey board of directors has approved the merger agreement and
determined that the merger is fair and in the best interests of Central Jersey’s
shareholders. Accordingly, the board has unanimously recommended that
Central Jersey’s shareholders vote in favor of the merger
agreement.
It is
important that your shares of Central Jersey common stock are represented at the
special meeting, whether or not you attend the special meeting in person and
regardless of the number of shares you own. To ensure that your
shares of common stock are represented, we urge you to complete, sign, date and
return your proxy card in the enclosed postage prepaid envelope. If
you attend the special meeting, you may vote in person even if you have
previously submitted a proxy. Your prompt attention is greatly
appreciated.
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Very
truly yours,
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/s/
James S. Vaccaro
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James
S. Vaccaro
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Chairman,
President and Chief Executive
Officer
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CENTRAL
JERSEY BANCORP
1903
Highway 35
Oakhurst,
New Jersey 07755
(732)
663-4000
_________________________________
NOTICE
OF SPECIAL MEETING OF SHAREHOLDERS
To
Be Held On August [ ], 2010
_________________________________
To the
Shareholders of
Central
Jersey Bancorp:
NOTICE IS
HEREBY GIVEN, that a special meeting of shareholders of Central Jersey Bancorp
will be held at Branches Catering Hall, located at 123 Monmouth Road (Route 71),
West Long Branch, New Jersey, on
[ ],
August [ ] at 9:00 a.m., local time, for the
following purposes:
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1.
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To
consider and vote upon a proposal to approve the Agreement and Plan of
Merger, dated May 25, 2010, by and among Central Jersey Bancorp, Central
Jersey Bank, N.A., Kearny Financial Corp. and Kearny Federal Savings
Bank;
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2.
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To
consider and vote upon a proposal to adjourn the special meeting to a
later date or dates, if necessary, to permit further solicitation of
proxies if there are not sufficient votes at the time of the special
meeting to approve the merger agreement;
and
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3.
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To
transact such other business as may properly come before the special
meeting, or any adjournment or postponement
thereof.
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Shareholders
of record at the close of business on
[ ], 2010
are entitled to notice of and to vote at the special meeting and at any
adjournment or postponement thereof. The enclosed proxy statement
describes the merger agreement in detail, and a copy of the merger agreement is
annexed as Annex A to the proxy statement and incorporated by reference
therein.
The
board of directors of Central Jersey unanimously recommends that Central
Jersey’s shareholders vote “FOR” the proposal to approve the merger agreement
and “FOR” the proposal to adjourn the special meeting, if necessary, to solicit
additional proxies to vote in favor of the merger agreement.
Your vote is very
important.
Your proxy is being solicited by the board of
directors of Central Jersey. The proposal to approve the
merger agreement must be approved by the affirmative vote of holders of a
majority of the outstanding shares of Central Jersey common stock voted at the
special meeting; provided, that a majority of the outstanding shares of Central
Jersey common stock entitled to vote at the special meeting is present, in
person or by proxy. Whether or not you expect to attend the special
meeting, please complete, sign and date the accompanying proxy card and return
it in the enclosed postage prepaid envelope. You may revoke your
proxy either by written notice to Central Jersey, by submitting a proxy card
dated as of a later date or in person at the special meeting.
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By
Order of the Board of Directors
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/s/
Robert S. Vuono
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Robert
S. Vuono
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Secretary
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YOU
ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING OF
SHAREHOLDERS. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE SPECIAL
MEETING, YOU ARE URGED TO SIGN AND DATE THE ACCOMPANYING PROXY CARD AND MAIL IT
AT ONCE IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATIONWILL BE APPRECIATED.
TABLE
OF CONTENTS
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TABLE
OF CONTENTS
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3
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QUESTIONS
AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING
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5
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SUMMARY
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8
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The
Companies
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8
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Special
Meeting of Central Jersey’s Shareholders; Required Vote
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8
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The
Merger and the Merger Agreement
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9
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What
Central Jersey’s Shareholders Will Receive in the Merger
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9
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Market
Prices
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9
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Recommendation
of Central Jersey’s Board of Directors
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9
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Central
Jersey’s Financial Advisor Believes that the Merger Consideration is Fair
to
Central Jersey’s Shareholders
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9
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Central
Jersey Preferred Stock and Warrant Conversion
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10
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Regulatory
Approvals
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10
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Conditions
to the Merger
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10
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Termination
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10
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Termination
Fee
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11
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Interests
of Officers and Directors in the Merger that are Different from
Yours
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11
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No
Dissenters’ Rights
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11
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Accounting
Treatment of the Merger
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11
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Tax
Consequences of the Merger
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11
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CAUTION
ABOUT FORWARD-LOOKING STATEMENTS
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13
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SPECIAL
MEETING OF CENTRAL JERSEY’S SHAREHOLDERS
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14
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Date,
Place, Time and Purpose
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14
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Who
Can Vote at the Meeting
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14
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Quorum;
Vote Required
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14
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Shares
Held by Central Jersey’s Officers and Directors
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14
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Voting
and Revocability of Proxies
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15
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Solicitation
of Proxies
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15
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DESCRIPTION
OF THE MERGER
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16
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General
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Background
of the Merger
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Central
Jersey’s Reasons for the Merger and the Recommendation of its Board of
Directors
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19
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Opinion
of Central Jersey’s Financial Advisor
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21
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Consideration
to be Received in the Merger
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26
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Central
Jersey Stock Options and Stock Appreciation Rights
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26
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Surrender
of Central Jersey Stock Certificates
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27
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Central
Jersey Preferred Shares and Warrant
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27
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No
Dissenters’ Rights
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27
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Accounting
Treatment
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27
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Tax
Consequences of the Merger
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27
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Regulatory
Matters Relating to the Merger
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28
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Interests
of Certain Persons in the Merger
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30
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Employee
Matters
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31
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Operations
of Central Jersey after the Merger
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32
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Time
of Completion
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32
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Conditions
to Completing the Merger
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32
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Conduct
of Business Before the Merger
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33
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Covenants
of Central Jersey and Kearny in the Merger Agreement
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36
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Representations
and Warranties Made by Central Jersey and Kearny
in the Merger
Agreement
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38
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Terminating
the Merger Agreement
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38
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Termination
Fee
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39
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Expenses
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39
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Changing
the Terms of the Merger Agreement
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39
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ADJOURNMENT
OF THE SPECIAL MEETING
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40
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MARKET
PRICES FOR CENTRAL JERSEY COMMON STOCK
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40
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PRINCIPAL
SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
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42
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SHAREHOLDERS
SHARING THE SAME ADDRESS
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44
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SHAREHOLDER
PROPOSALS
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45
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WHERE
YOU CAN FIND MORE INFORMATION
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45
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ANNEX
A – Agreement and Plan of Merger
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ANNEX
B – Opinion of Sandler O’Neill + Partners, L.P.
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QUESTIONS
AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING
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Q:
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What
am I being asked to vote on? What is the proposed
transaction?
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A:
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You
are being asked to vote on the approval of a merger agreement that
provides for the merger of Central Jersey with a wholly-owned subsidiary
of Kearny. A copy of the merger agreement is provided as Annex A to
this document. The Central Jersey board of directors has unanimously
determined that the proposed merger is in the best interests of Central
Jersey’s shareholders, has approved the merger agreement and recommends
that Central Jersey’s shareholders vote
“FOR”
the approval of
the merger agreement.
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Q:
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What
will Central Jersey’s shareholders be entitled to receive in the
merger?
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A:
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Under
the merger agreement, each share of Central Jersey’s common stock will be
exchanged for $7.50 in cash. See “
Description of the
Merger—Consideration to be Received in the Merger
” on
page ____.
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Q:
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What
should Central Jersey’s shareholders do with their stock
certificates?
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A:
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After
the merger is completed, Kearny’s transfer agent will send instructions on
how and where to surrender the Central Jersey stock certificates.
Please do not send Central Jersey stock certificates with the proxy
card.
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Q:
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What
are the tax consequences of the merger to Central Jersey’s
shareholders?
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A:
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In
general, the merger will be a taxable transaction for Central Jersey’s
shareholders. For U.S. federal income tax purposes, a Central
Jersey shareholder will generally recognize a gain or loss measured by the
difference, if any, between the cash received (before reduction for any
applicable withholding tax) in the merger and the shareholder’s tax basis
in his, her or its shares being cancelled in the merger.
You
should read “
Description
of the Merger—Tax Consequences of the Merger
” beginning on
page ____ for a more complete discussion of the United States federal
income tax consequences of the merger. Tax matters can be
complicated and the specific tax consequences of the merger to you will
depend on your particular tax situation.
You should consult your tax
advisor to determine the tax consequences of the merger to
you.
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Q:
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Are
Central Jersey shareholders entitled to dissenters’
rights?
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A:
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No.
New Jersey law provides that dissenters’ rights are not available to
shareholders of a New Jersey corporation who receive cash pursuant to a
merger.
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Q:
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Why
does Central Jersey want to merge?
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A:
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Central
Jersey believes that the proposed merger will provide Central Jersey’s
shareholders with substantial value for their shares of Central Jersey
common stock, particularly in today’s uncertain economic
environment. To review the reasons for the merger in more detail,
see “
Description of the
Merger—Central Jersey’s Reasons for the Merger and the Recommendation of
its Board of Directors
” on page
____.
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Q:
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What
vote is required to approve the merger
agreement?
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A:
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Holders
of a majority of the shares of Central Jersey common stock who cast a vote
at the Central Jersey special meeting must vote in favor of the proposal
to approve the merger agreement; provided, that a majority of the
outstanding shares of Central Jersey common stock entitled to vote at the
Central Jersey special meeting is present, in person or by proxy (the
“Quorum”).
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Q:
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When
and where is the Central Jersey special
meeting?
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A:
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The
special meeting of Central Jersey’s shareholders is scheduled to take
place at Branches Catering Hall, 123 Monmouth Road (Route 71), West
Long Branch, New Jersey, at 9:00 a.m., local time, on August
[ ], 2010.
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Q:
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Who
is entitled to vote at the Central Jersey special
meeting?
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A:
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Holders
of shares of Central Jersey common stock at the close of business on
[ ],
2010, which is the record date, are entitled to vote on the proposal to
approve the merger agreement. As of the record date,
[ ]
shares of Central Jersey common stock were outstanding and entitled to
vote.
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Q:
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If
I plan to attend the Central Jersey special meeting in person, should I
still return my proxy card?
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A:
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Yes. Whether
or not you plan to attend the Central Jersey special meeting, you should
complete and return the enclosed proxy card. The failure of a
Central Jersey shareholder to vote in person or by proxy will not count as
a vote “FOR” or “AGAINST” the proposal to approve the merger agreement,
and will not count towards the Quorum needed at the Central Jersey special
meeting.
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Q:
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How
can I vote my shares of Central Jersey common
stock?
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A:
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After
you have carefully read and considered the information contained in this
proxy statement, please complete, sign, date and mail your proxy card in
the enclosed return envelope as soon as possible. This will
enable your shares to be represented at the Central Jersey special
meeting. You may also vote in person at the Central Jersey
special meeting. If you sign, date and send in your proxy card, but
you do not indicate how you want to vote, your proxy will be voted in
favor of the proposal to approve the merger agreement. You may
change your vote or revoke your proxy before the Central Jersey special
meeting by filing a duly executed revocation of proxy with the Secretary
of Central Jersey, submitting a new proxy card with a later date, or
voting in person at the Central Jersey special
meeting.
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Q:
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If
my shares of Central Jersey common stock are held in “street name” by my
broker, will my broker automatically vote my shares for
me?
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A:
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No.
Your broker will not be able to vote your shares of Central Jersey common
stock on the proposal to approve the merger agreement unless you provide
instructions on how to vote. Please instruct your broker how to vote
your shares, following the directions that your broker provides. If
you do not provide instructions to your broker on the proposal to approve
the merger agreement, your shares will not be voted “FOR” or “AGAINST” the
proposal, but such shares will count towards the Quorum needed at the
Central Jersey special meeting if your broker submits a
proxy. Please check the voting form used by your broker to see
if it enables you to vote by telephone or via the
Internet.
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Q:
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When
is the merger expected to be
completed?
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A:
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We
will try to complete the merger as soon as possible. Before that
happens, the merger agreement must be approved by Central Jersey’s
shareholders, and we must obtain the necessary regulatory approvals and
wait for the expiration of any applicable waiting
periods. Assuming holders of at least a majority of the
outstanding shares of Central Jersey common stock are present at the
Central Jersey special meeting, in person or by proxy, and that a majority
of the outstanding shares of Central Jersey common stock voted at the
Central Jersey special meeting vote in favor of the proposal to approve
the merger agreement, and we obtain the other necessary approvals, we
intend to complete the merger in the fall of
2010.
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Q:
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Is
completion of the merger subject to any conditions besides shareholder
approval?
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A:
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Yes. The
transaction must receive the required regulatory approvals, and there are
other customary closing conditions that must be satisfied. To review
the conditions of the merger in more detail, see “
Description of the
Merger—Conditions to Completing the Merger
” on page
____.
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Q:
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Who
can answer my other questions?
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A:
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If
you have additional questions about the merger, or how to submit your
proxy or if you need additional copies of this proxy statement or the
enclosed proxy card, please contact:
Regan
& Associates, Inc.
505
Eighth Avenue, Suite 800
New
York, NY 10018
(212)
587-3005
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SUMMARY
This
summary highlights selected information in this proxy statement and may not
contain all of the information important to you. To understand the
merger more fully, you should read this entire document carefully, including the
documents attached to this proxy statement.
The
Companies
1903
Highway 35
Oakhurst,
New Jersey 07755
(732)
663-4000
Central
Jersey Bancorp, a New Jersey corporation, is a bank holding company
headquartered in Oakhurst, New Jersey that was incorporated on March 7,
2000 and became an active bank holding company on August 31, 2000.
Its primary business is operating its subsidiary, Central Jersey Bank, N.A.,
which offers a full range of retail and commercial banking services primarily to
customers located in Monmouth County and Ocean County, New
Jersey. Central Jersey’s common stock is listed on the NASDAQ Global
Market under the symbol “CJBK.” As of
[ ], 2010,
Central Jersey had total assets of $[ ]
million, total deposits of $[ ]
million and total shareholder’s equity of
$[ ] million.
Kearny
Financial Corp.
120
Passaic Avenue
Fairfield,
New Jersey 07004
(973)
244-4500
Kearny
Financial Corp., a federal corporation, is a savings and loan holding company
headquartered in Fairfield, New Jersey organized on March 30, 2001 for the
purpose of being the holding company of Kearny Federal Savings Bank, a
federally-chartered stock savings bank originally founded in
1884. Kearny’s primary business is the ownership and operation of
Kearny Bank, which is engaged in the business of attracting deposits and using
such deposits to originate or purchase loans for its portfolio and invest in
securities. Kearny Bank operates in Bergen, Essex, Hudson, Middlesex,
Morris, Ocean, Passaic and Union Counties in New Jersey. Kearny’s
common stock is listed on the NASDAQ Global Select Market under the symbol
“KRNY.” As of
[ ], 2010,
Kearny had total assets of $[ ] million,
total deposits of $[ ] million
and total shareholder’s equity of $[ ]
million.
Special
Meeting of Central Jersey’s Shareholders; Required Vote (Page __)
A special
meeting of Central Jersey’s shareholders is scheduled to be held at Branches
Catering Hall, 123 Monmouth Road (Route 71), West Long Branch, New Jersey,
at 9:00 a.m., local time, on August [ ],
2010. At the special meeting, Central Jersey’s shareholders will be
asked to vote on a proposal to approve the merger agreement by and among Central
Jersey, Central Jersey Bank, N.A., Kearny and Kearny Bank. Central
Jersey’s shareholders also will be asked to vote on a proposal to adjourn the
special meeting, if necessary, to permit further solicitation of proxies if
there are not sufficient votes at the time of the special meeting to approve the
merger agreement.
Only
Central Jersey shareholders of record as of the close of business on
[ ],
2010 are entitled to notice of, and to vote at, the special meeting and any
adjournments or postponements of the special meeting.
Approval
of the merger agreement requires the affirmative vote of holders of a majority
of the outstanding shares of Central Jersey common stock voted at the Central
Jersey special meeting; provided,
that a
majority of the outstanding shares of Central Jersey common stock entitled to
vote at the Central Jersey special meeting is present, in person or by
proxy. As of the record date, there were
[ ]
shares of Central Jersey common stock outstanding. The current directors
and executive officers of Central Jersey (and their affiliates), as a group,
beneficially owned [1,341,379] shares of Central Jersey common stock,
representing [ ]% of the outstanding shares
of Central Jersey common stock, as of the record date. This amount does
not include shares that may be acquired upon the exercise of stock
options. Each of the directors and executive officers of Central
Jersey has agreed to vote his shares in favor of the proposal to approve the
merger agreement at the Central Jersey special meeting.
The Merger and the Merger Agreement
(Page __)
Central
Jersey’s merger with a wholly-owned subsidiary of Kearny and the merger of
Central Jersey Bank, N.A. with and into Kearny Bank is governed by the merger
agreement and the attachments thereto. The merger agreement provides that,
if all of the conditions are satisfied or waived, Central Jersey will be merged
with a wholly-owned subsidiary of Kearny, with Central Jersey as the surviving
entity and a wholly-owned subsidiary of Kearny.
We encourage you to read the merger
agreement, which is included as Annex A to this proxy
statement.
What Central Jersey’s Shareholders Will
Receive in the Merger (Page __)
Under the
terms of the merger agreement, each share of Central Jersey common stock you own
will be converted into the right to receive $7.50 in cash.
Market
Prices (Page __)
The
following table shows the closing price per share of Central Jersey common stock
on May 25, 2010, which is the last day on which shares of Central Jersey
common stock traded preceding the public announcement of the proposed merger,
and on
[ ],
2010, the most recent practicable date prior to the mailing of this proxy
statement. See “
Market
Prices for Central Jersey Common Stock
” on page ____.
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Closing
Price of Central Jersey Common Stock
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May
25, 2010
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$3.08
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[ ],
2010
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$
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Recommendation
of Central Jersey’s Board of Directors (Page __)
The
Central Jersey board of directors has approved the merger agreement and the
proposed merger. The Central Jersey board believes that the merger
agreement, including the merger contemplated by the merger agreement, is fair
to, and in the best interests of, Central Jersey and its shareholders, and
therefore
unanimously
recommends that Central
Jersey’s shareholders vote “FOR” the proposal to approve the merger
agreement.
In reaching this decision, Central Jersey’s board of
directors considered many factors, some of which are described in the section of
this proxy statement captioned “
Description of the Merger—Central
Jersey’s Reasons for the Merger and the Recommendation of its Board of
Directors
” beginning on page ____.
Central Jersey’s Financial Advisor
Believes that the Merger Consideration is Fair to Central Jersey’s Shareholders
(Page __)
Central Jersey
’
s
Financial Advisor Believes that the Merger Consideration is Fair to Central
Jersey
’
s
Shareholders (Page __).
In
deciding to approve the merger, Central Jersey’s board of directors considered
the opinion of Sandler O’Neill + Partners, L.P. Sandler O’Neill,
which served as financial advisor to Central Jersey’s
board of
directors, delivered its opinion dated May 25, 2010, that the merger
consideration of $7.50 per share being offered by Kearny is fair to the holders
of Central Jersey common stock from a financial point of view. A copy of
this opinion is included as Annex B to this proxy statement. You should
read the opinion carefully to understand the procedures followed, assumptions
made, matters considered and limitations of the review conducted by Sandler
O’Neill. Central Jersey has agreed to pay Sandler O’Neill fees estimated
to total approximately $665,000 for its services in connection with the merger,
including the issuance of a fairness opinion. See “
Description of the Merger—Opinion of
Central Jersey’s Financial Advisor
” on page __.
Central
Jersey Preferred Stock and Warrant Conversion (Page __)
On
December 23, 2008, Central Jersey issued 11,300 shares of preferred stock
to the U.S. Department of the Treasury in return for $11.3 million in cash in
connection with the Capital Purchase Program established as part of the Troubled
Asset Relief Program (“TARP”) of the U.S. Department of the
Treasury. Central Jersey has agreed in the merger agreement to use
its best efforts to redeem the 11,300 shares of preferred stock immediately
before or contemporaneously with the closing of the merger.
In
addition, Central Jersey issued a warrant to the U.S. Department of the Treasury
giving them the right to purchase 268,621 shares of Central Jersey common stock
at $6.31 per share for up to 10 years. Under the merger agreement,
the warrant will be converted into the right to receive the product of the
positive difference between $7.50 and the warrant exercise price multiplied by
the number of shares subject to the warrant, or $319,659 ($7.50 - $6.31 x
268,621).
Regulatory
Approvals (Page __)
Under the
terms of the merger agreement, the merger cannot be completed unless it is first
approved by the Office of Thrift Supervision (“OTS”), and a waiver of Bank
Holding Company Act compliance is obtained from the Federal Reserve Bank of New
York. Kearny filed the required applications on or about June ___,
2010. As of the date of this document, the parties have not received any
approvals from those regulators. While Central Jersey does not know of any
reason why regulatory approval would not be granted in a timely manner, Central
Jersey cannot be certain when or if the parties will receive regulatory
approval.
Conditions
to the Merger (Page __)
The
completion of the merger is subject to the fulfillment of a number of
conditions, including:
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·
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the
approval of the merger agreement at the Central Jersey special meeting by
at least a majority of the votes cast; provided, that a majority of the
outstanding shares of Central Jersey common stock entitled to vote at the
Central Jersey special meeting is present, in person or by
proxy;
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·
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the
approval of the merger by the appropriate regulatory authorities;
and
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·
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the
continued accuracy of the representations and warranties made by Kearny
and Central Jersey in the merger
agreement.
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Termination
(Page __)
The
merger agreement may be terminated by the mutual consent of Kearny and Central
Jersey at any time prior to the completion of the merger. Additionally,
subject to conditions and circumstances described in the merger agreement,
either Kearny or Central Jersey may terminate the merger agreement if, among
other things, any of the following occur:
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·
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the
merger has not been consummated by March 31,
2011;
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Central
Jersey’s shareholders do not approve the merger agreement by the requisite
vote at the Central Jersey special
meeting;
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a
required regulatory approval is denied;
or
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there
is a material breach by one party of any representation, warranty,
covenant or agreement contained in the merger agreement, which cannot be
cured, or has not been cured within 30 days after the provision of written
notice to such party of such
breach.
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Kearny
may also terminate the merger agreement if Central Jersey fails to submit the
merger agreement to its shareholders or if the board of directors of Central
Jersey does not recommend approval of the merger in this proxy statement or
withdraws or revises its recommendation in a manner adverse to
Kearny.
Central
Jersey may also terminate the merger agreement if it is in receipt of a superior
proposal.
See
“
Description of the
Merger—Terminating the Merger Agreement
” on page __.
Termination Fee (Page __)
Under
certain circumstances described in the merger agreement, Kearny may demand from
Central Jersey a termination fee of up to $2,800,000 in connection with the
termination of the merger agreement. See “
Description of the
Merger—Termination Fee
” on page ____ for a list of the circumstances
under which the termination fee is payable.
Interests of Officers and Directors in
the Merger that are Different from Yours (Page __)
You
should be aware that some of Central Jersey’s directors and officers may have
interests in the merger that are different from, or in addition to, the
interests of Central Jersey shareholders. These
include: severance payments that certain officers will receive under
existing change of control agreements; payments for unexercised in the money
stock options; and provisions in the merger agreement relating to
indemnification of directors and officers and insurance for directors and
officers of Central Jersey for events occurring before the
merger. Central Jersey’s board of directors was aware of these
interests and took them into account when approving the merger. See “
Description of the Merger— Interests
of Certain Persons in the Merger”
on page ____.
No Dissenters’ Rights (Page
__)
Dissenter
rights are not available to Central Jersey’s shareholders in connection with the
proposed merger. See “
Description of the Merger—No
Dissenters’ Rights
” on page __.
Accounting
Treatment of the Merger (Page __)
The
merger will be accounted for as an acquisition transaction in accordance with
U.S. generally accepted accounting principles.
Tax
Consequences of the Merger (Page __)
In
general, the merger will be a taxable transaction for Central Jersey
shareholders. For U.S. federal income tax purposes, a Central Jersey
shareholder will generally recognize a gain or loss measured by the difference,
if any, between the cash received (before reduction for any applicable
withholding tax) in the merger and the shareholder’s tax basis in his, her or
its shares being cancelled in the merger. Gain or loss will be
determined separately for each block of shares owned (i.e., shares acquired at
the same cost in a single transaction).
Central Jersey’s shareholders are
strongly encouraged to consult their tax advisors for a full understanding of
the tax consequences of the merger.
CAUTION
ABOUT FORWARD-LOOKING STATEMENTS
Certain
statements contained in this document that are not historical facts may
constitute forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, and are intended to be covered by the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
The sections of this document which contain forward-looking statements include,
but are not limited to, “
Questions And Answers About the
Merger and the Special Meeting,
”
“Summary,
”
“
Description of the
Merger
—
Background of
the Merger,
” and “
Description of the Merger—Central
Jersey’s Reasons for the Merger and the Recommendation of its Board of
Directors.
” You can identify these statements from the use of the
words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,”
“estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and
similar expressions.
These
forward-looking statements are subject to significant risks, assumptions and
uncertainties, including among other things, changes in general economic and
business conditions.
You
should not place undue reliance on any forward-looking statements, which speak
only as of the dates on which they were made. Central Jersey is not
undertaking an obligation to update these forward-looking statements, even
though its situation may change in the future, except as required under federal
securities laws. Central Jersey qualifies all of its forward-looking
statements by these cautionary statements.
SPECIAL
MEETING OF CENTRAL JERSEY’S SHAREHOLDERS
Date, Place, Time and
Purpose
Central
Jersey’s board of directors is sending you this document to request that you
allow your shares of Central Jersey common stock to be represented at the
special meeting by the persons named in the enclosed proxy card. At the
special meeting, the Central Jersey board of directors will ask you to vote your
shares on a proposal to approve the merger agreement. You also will
be asked to vote your shares on a proposal to adjourn the special meeting if
necessary to permit further solicitation of proxies if there are not sufficient
votes at the time of the special meeting to approve the merger agreement.
The special meeting will be held at Branches Catering Hall, 123 Monmouth Road
(Route 71), West Long Branch, New Jersey, at 9:00 a.m., local time, on August
[ ], 2010.
Who Can Vote at the
Meeting
You are
entitled to vote if the records of Central Jersey showed that you held shares of
Central Jersey common stock as of the close of business on
[ ],
2010. As of the close of business on that date, a total of
[ ] shares of Central
Jersey common stock were outstanding. Each share of Central Jersey common
stock has one vote. If you are a beneficial owner of shares of Central
Jersey common stock held by a broker, bank or other nominee (
i.e.
, in “street name”) and
you want to vote your shares in person at the special meeting, you will have to
get a written proxy in your name from the broker, bank or other nominee who
holds your shares.
The
special meeting will conduct business only if a majority of the outstanding
shares of Central Jersey common stock entitled to vote is represented in person
or by proxy at the special meeting. If you return valid proxy instructions
or attend the special meeting in person, your shares will be counted for
purposes of determining whether there is a Quorum, even if you abstain from
voting. Broker non-votes also will be counted for purposes of determining
the existence of a Quorum. A broker non-vote occurs when a broker, bank or
other nominee holding shares of Central Jersey common stock for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received voting
instructions from the beneficial owner.
Approval
of the merger agreement will require the affirmative vote by holders of a
majority of the votes cast at the Central Jersey special meeting; provided that
a Quorum is established at the special meeting. Under New Jersey law,
any proxy submitted and containing an abstention or broker non-vote will not be
counted as a vote cast on any matter to which it relates.
Assuming
a Quorum is present at the special meeting, the affirmative vote of the majority
of votes cast is required to approve the proposal to adjourn the special meeting
if necessary to permit further solicitation of proxies on the proposal to
approve the merger agreement.
Shares Held by Central Jersey’s
Officers and Directors
As of
[ ],
2010, directors and executive officers of Central Jersey beneficially owned
1,311,830 shares of Central Jersey common stock, not including shares that may
be acquired upon the exercise of stock options. This equals
[ ]% of the outstanding shares of Central Jersey
common stock. As of the same date, Kearny and its subsidiaries and their
directors and executive officers owned no shares of Central Jersey common
stock.
Voting and Revocability of
Proxies
You may
vote in person at the special meeting or by proxy. To ensure your
representation at the special meeting, Central Jersey recommends that you vote
by proxy even if you plan to attend the special meeting. You can
always change your vote at the special meeting.
Central
Jersey’s shareholders whose shares are held in “street name” by their broker,
bank or other nominee must follow the instructions provided by their broker,
bank or other nominee to vote their shares. Your broker or bank may allow
you to deliver your voting instructions via the telephone or the
Internet.
Voting
instructions are included on your proxy form. If you properly
complete and timely submit your proxy, your shares of Central Jersey common
stock will be voted as you have directed. You may vote for, against,
or abstain with respect to the proposal to approve the merger agreement and the
proposal to adjourn the special meeting. If you are the record holder
of your shares of Central Jersey common stock and submit your proxy without
specifying a voting instruction, your shares of Central Jersey common stock will
be voted
“FOR”
the
proposal to approve the merger agreement and
“FOR”
the proposal to adjourn
the special meeting if necessary to permit further solicitation of proxies on
the proposal to approve the merger agreement. Central Jersey’s board of
directors recommends a vote
“FOR”
the proposal to approve
the merger agreement and
“FOR”
approval of the proposal to adjourn the special meeting if necessary to
permit further solicitation of proxies on the proposal to approve the merger
agreement.
You may
revoke your proxy before it is voted by:
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filing
with the Secretary of Central Jersey a duly executed revocation of
proxy;
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submitting
a new proxy with a later date; or
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voting
in person at the special meeting.
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Attendance
at the special meeting will not, in and of itself, constitute a revocation of a
proxy. All written notices of revocation and other communication with
respect to the revocation of proxies should be addressed to:
Central
Jersey Bancorp
1903
Highway 35
Oakhurst,
New Jersey 07755
Attn: Robert
S. Vuono, Secretary
If any
matters not described in this document are properly presented at the special
meeting, the persons named in the proxy card will use their own judgment to
determine how to vote your shares of Central Jersey common stock. Central
Jersey does not know of any other matters to be presented at the special
meeting.
Central
Jersey is paying for this proxy solicitation
.
In addition to
soliciting proxies by mail, Regan & Associates, Inc., a proxy solicitation
firm, will assist Central Jersey in soliciting proxies for the special
meeting. Central Jersey will pay approximately $6,000 for these services.
Central Jersey will, upon request, reimburse brokers, banks and other
nominees for their expenses in sending proxy materials to their customers who
are beneficial owners and obtaining their voting instructions.
Additionally, directors, officers and employees of Central Jersey may solicit
proxies personally and by telephone. None of these persons will
receive additional or special compensation for soliciting proxies.
DESCRIPTION
OF THE MERGER
The
following summary of the merger and merger agreement is qualified by reference
to the complete text of the merger agreement. A copy of the merger
agreement is annexed hereto as Annex A and is incorporated by
reference into this proxy statement. You should read the merger
agreement completely and carefully as it, rather than this description, is the
legal document that governs the merger.
The
merger agreement provides for the merger of Central Jersey with a wholly-owned
subsidiary of Kearny, with Central Jersey as the surviving entity and a
wholly-owned subsidiary of Kearny. Immediately following the merger of
Kearny’s wholly-owned subsidiary with Central Jersey, Central Jersey Bank, N.A.
will merge with and into Kearny Bank, with Kearny Bank as the surviving
entity.
At
various times in recent years, the board of directors of Central Jersey,
together with its senior management, has reviewed and discussed strategic
alternatives that might be available to Central Jersey, including from time to
time combining with a larger banking organization, in pursuing its objective of
enhancing shareholder value.
On May
26, 2009, Central Jersey and OceanFirst Financial Corp. entered into an
Agreement and Plan of Merger pursuant to which Central Jersey would merge with
and into OceanFirst and Central Jersey shareholders would receive 0.50 share of
OceanFirst common stock in exchange for each share of Central Jersey common
stock held by them. The shareholders of Central Jersey and the
stockholders of OceanFirst each approved the Agreement and Plan of Merger on
October 1, 2009. However, on December 17, 2009, Central Jersey and
OceanFirst mutually agreed to terminate the Agreement and Plan of Merger and
abandon the proposed merger when it became apparent that the required regulatory
approvals could not be obtained in time to complete the merger prior to the end
of the 2009 calendar year as contemplated in the Agreement and Plan of
Merger. Thereafter, representatives of Central Jersey and OceanFirst
met on several occasions to discuss the possibility of a re-negotiated
transaction. However, both parties agreed that a transaction between
the parties was not achievable at the present time.
Subsequent
to the termination of the Agreement and Plan of Merger with OceanFirst, members
of Central Jersey’s senior management began discussions with representatives of
Company A regarding a potential strategic equity investment by Company A in
Central Jersey. On March 2, 2010, James S. Vaccaro, Chairman,
President and Chief Executive Officer of Central Jersey and Anthony Giordano,
III, Senior Executive Vice President, Chief Financial Officer, Assistant
Treasurer and Secretary of Central Jersey, met with representatives of Company A
regarding a proposed transaction in which Company A would acquire a majority
interest in Central Jersey.
On March
11, 2010, representatives of Company A commenced a due diligence review of
Central Jersey at Central Jersey’s headquarters.
Also on
March 11, 2010, representatives of Company B expressed an interest in entering
into a merger of equals transaction with Central Jersey. According to
the proposed terms of the transaction, the shareholders of Central Jersey would
have received shares in the combined entity pursuant to a non-premium
merger.
Company A
continued its due diligence review of Central Jersey on March 13, 14 and 17,
2010. On March 24, 2010, Company A, together with several other
equity investors, sent a bullet point summary to Mr. Vaccaro of the terms of
Company A’s proposed strategic equity investment in Central Jersey, pursuant to
which Company A would pay a market value premium to acquire a majority interest
in Central Jersey. On March 25, 2010, Mr. Vaccaro, together with
Central Jersey board members Carmen
M. Penta
and Mark G. Solow, met with representatives of Company A to discuss the proposed
terms of the transaction. Messrs. Penta and Solow are independent
members of Central Jersey’s board who serve as the “Lead Directors” relative to
Central Jersey’s strategic initiatives. Company A submitted revised
proposals to Central Jersey on each of March 30, 2010 and April 20, 2010 based
on continued discussions between Mr. Vaccaro and the Lead Directors with
representatives of Company A and Company A’s internal discussions and
reviews.
Mr.
Vaccaro informed the full Central Jersey board of directors of his and the Lead
Directors discussions with Company A and the proposed terms at a meeting of the
board held on April 28, 2010. At that meeting, the board directed Mr.
Vaccaro to request Sandler O’Neill, Central Jersey’s financial advisor, to
survey the market by contacting certain companies that had previously expressed
an interest in entering into various strategic transactions with Central Jersey,
regarding potential views on current valuation of Central Jersey and whether any
such companies had any interest in a transaction with Central
Jersey. Mr. Vaccaro contacted Sandler O’Neill on the same date
regarding the board’s directive.
Pursuant
to Mr. Vaccaro’s instructions, over the next several days Sandler O’Neill
proceeded to survey the market by contacting several companies that had
previously expressed an interest in Central Jersey, to ascertain such companies’
current views on valuation of Central Jersey and their possible interest in a
transaction with Central Jersey. In response to its inquiries,
Sandler O’Neill received a written proposal to acquire Central Jersey from
Company C on May 11, 2010 and a verbal proposal to acquire Central Jersey from
Company D on May 12, 2010. The proposals submitted by Company C and
Company D each involved the payment of a market premium to Central Jersey’s
shareholders, and Company C’s proposal expressly provided for the purchase price
to be paid in cash and possibly equity.
In
addition, on May 11, 2010, Mr. John N. Hopkins, Chief Executive Officer of
Kearny, notified Mr. William Hickey of Sandler O’Neill that Kearny was
interested in acquiring Central Jersey for a per share cash price of
$7.50. Mr. Hickey contacted Mr. Vaccaro on that same date to provide
a report of the proposals received to acquire Central Jersey from Company C,
Company D and Kearny.
On May
14, 2010, Central Jersey’s board of directors held a special meeting to discuss
developments in Central Jersey’s strategic
initiatives. Representatives of Sandler O’Neill and Giordano,
Halleran & Ciesla, P.C., Central Jersey’s outside legal counsel, were also
present at the meeting, as well as Mr. Anthony Giordano, III, Senior Executive
Vice President, Chief Financial Officer, Treasurer and Assistant Secretary of
Central Jersey. Mr. Vaccaro provided a report on the status of the
proposal by Company A to make a significant equity investment in Central Jersey
and the proposal by Company B to enter into a merger of equals transaction with
Central Jersey, and also informed the board about the proposals to acquire
Central Jersey received by Sandler O’Neill from Company C, Company D and
Kearny. The board reviewed a written analysis of the aforementioned
proposals prepared by Sandler O’Neill. The representatives of Sandler
O’Neill reported that, pursuant to Mr. Vaccaro’s request, Sandler O’Neill had
contacted certain companies that had expressed an interest in entering into a
strategic transaction with Central Jersey recently and in the past, ascertained
whether such companies had an interest in a potential transaction with Central
Jersey, and discussed the basic terms of the proposals submitted by Company A,
Company B, Company C, Company D and Kearny. The representatives of
Sandler O’Neill explained that the cash offer of $7.50 per share offered by
Kearny constituted a market premium of 114.3% relative to the then-current
trading price of shares of Central Jersey’s common stock, and presented a net
present value analysis of Central Jersey, concluding, based on certain
assumptions, that the consideration offered by Kearny was significantly greater
than current and projected values of Central Jersey’s common
stock. The representatives of Sandler O’Neill advised the board that
the per share purchase price being offered by Kearny exceeded the per share
purchase price being offered by Company C and Company D. The
representatives of Sandler O’Neill also presented Sandler O’Neill’s private
equity analysis regarding Company A’s proposal with the board. The
board next discussed the proposal by Kearny with Sandler O’Neill and Giordano,
Halleran & Ciesla in greater detail, including the likelihood of, and
potential difficulty in, obtaining regulatory approval for the transaction, as
well as other
regulatory
considerations and the possible repayment of Central Jersey’s outstanding
obligations under TARP. At the conclusion of these discussions, by
unanimous vote, the board instructed Mr. Vaccaro and other members of Central
Jersey’s senior management, as well as the representatives of Sandler O’Neill
and Giordano, Halleran & Ciesla, to proceed with negotiations with
Kearny.
On May
17, 2010, Central Jersey received a letter of interest from Kearny for the
proposed acquisition of Central Jersey by Kearny, which generally provided for
Central Jersey to merge with a wholly-owned subsidiary of Kearny, with Central
Jersey as the surviving entity, and for Central Jersey Bank, N.A. to merge with
and into Kearny Bank. On May 18, 2010, Central Jersey received a
revised letter of interest from Kearny.
On May
20, 2010, Kearny commenced a due diligence review of Central Jersey at Central
Jersey’s headquarters. Kearny retained the firm of CEIS, Inc. to
perform a credit review of Central Jersey’s loan portfolio.
On May
21, 2010, Central Jersey’s board of directors held a meeting by telephone to
discuss the terms of the proposed merger with Kearny. Representatives
of Giordano, Halleran & Ciesla advised the board that Central Jersey had
received a revised letter of interest with respect to the proposal by Kearny to
acquire Central Jersey, and explained the pertinent terms of the proposed merger
and related transactions to the board, including the offered merger
consideration, the cash-out of outstanding stock options, the Central Jersey
director support agreements and non-competition covenants, the establishment of
a Central Jersey Community Advisory Board, and the termination fee of $2.8
million. Mr. Vaccaro also informed the board that Kearny had
commenced its due diligence review of Central Jersey as of May 20, and that
Kearny had retained CEIS to perform a credit review of Central Jersey’s loan
portfolio.
Also on
May 21, 2010, following the conclusion of the board meeting, Central Jersey and
Giordano, Halleran & Ciesla received a draft of the proposed merger
agreement to be entered into with Kearny from Kearny’s legal counsel, Malizia,
Spidi & Fisch, P.C. From
that date through
May 25, 2010, Giordano,
Halleran & Ciesla and Malizia, Spidi & Fisch engaged in numerous
telephone discussions and email correspondence regarding the merger agreement
between Central Jersey and Kearny and related issues.
In
addition, Kearny continued its due diligence review of Central Jersey at Central
Jersey’s headquarters on May 21 and 22, 2010, and concluded its review on
May 23, 2010.
At 5:00
p.m. on May 25, 2010, Central Jersey’s board of directors held a special
meeting and reviewed the terms and conditions of the proposed
merger. At the meeting, representatives of Giordano,
Halleran & Ciesla reviewed with the directors the fiduciary duties of
the members of the board and the proposed terms of the merger agreement,
including, among other items, termination events and termination
fees. The termination fee of $2.8 million was regarded by Central
Jersey’s board, upon consultation with its advisors, as a factor that would not
discourage a third party from making a proposal superior to that of Kearny if it
were so inclined. Representatives of Sandler O’Neill separately
reviewed with the board its financial analysis of the merger
consideration. Sandler O’Neill rendered to Central Jersey’s board of
directors its oral opinion, which was subsequently confirmed in writing, dated
May 25, 2010, to the effect that, as of such date, and based on and subject
to the various assumptions, qualifications and limitations set forth in such
opinion, the merger consideration was fair, from a financial point of view, to
the holders of Central Jersey common stock. Following consideration
of (1) the proposed merger agreement and the merger, including the facts
and circumstances regarding the alternatives available to Central Jersey and the
fact that the transaction would provide an immediate economic benefit to Central
Jersey’s shareholders, and (2) the opinion rendered by Sandler O’Neill,
Central Jersey’s board of directors determined that the merger agreement and the
transactions contemplated thereunder, including the merger, are advisable and
fair to, and in the best interests of Central Jersey and its
shareholders. Thereafter, Central Jersey’s board of directors
unanimously approved
the
merger agreement and the merger and resolved to recommend that Central Jersey’s
shareholders vote in favor of the adoption of the merger agreement.
Similarly,
at 4:00 p.m. on May 25, 2010, the Kearny board of directors held a special
meeting to review and discuss the terms and conditions of the proposed merger,
at which the Kearny board of directors approved the merger
agreement.
Over the
course of the evening on May 25, 2010, representatives of Malizia, Spidi
& Fisch and Giordano, Halleran & Ciesla finalized the merger
agreement and other related documents, and the merger agreement was executed by
Central Jersey and Kearny as of May 25, 2010.
On
May 25, 2010, after the closing of trading on the NASDAQ Global Market,
Central Jersey and Kearny issued a joint press release announcing the
transaction.
Central Jersey’s Reasons for the Merger
and the Recommendation of its Board of Directors
Central
Jersey’s board of directors carefully evaluated the merger agreement and the
transactions contemplated thereby. The board determined that the merger
agreement and the transactions contemplated thereunder, including the proposed
merger, are advisable and fair to, and in the best interest of, Central Jersey
and its shareholders. At a meeting held on May 25, 2010, Central
Jersey’s board of directors unanimously approved the merger agreement and the
transactions contemplated thereby, including the proposed merger and resolved to
recommend to the shareholders of Central Jersey that they vote for the adoption
of the merger agreement.
In
determining to make its recommendation to the shareholders, Central Jersey’s
board of directors consulted with Central Jersey’s senior management and its
financial advisor and outside legal counsel. The board considered a
number of factors and potential benefits and detriments of the merger to Central
Jersey and its shareholders. Central Jersey’s board of directors
believed that, taken as a whole, the following factors supported its decision to
approve the proposed merger:
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Consideration; Historical
Market Prices.
The cash consideration of $7.50 that
would be received by Central Jersey’s shareholders pursuant to the merger
for each share of Central Jersey common stock held by them represented a
significant premium over the market prices at which Central Jersey common
stock had previously traded, including an approximate premium as
follows:
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143.5%
over the closing price of Central Jersey common stock of $3.08 per share
on May 25, 2010; and
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114.3%
over the average closing price of Central Jersey common stock for one
month prior to May 25, 2010.
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Uncertainty over Future Common
Stock Market Price.
Central Jersey’s board of directors
considered Central Jersey’s business, financial condition, operating
results, competitive position and prospects, together with current
industry, economic and stock and credit market conditions. The
board considered Central Jersey’s business plan and the potential
execution risks associated with such plan and the effects of the economic
downturn on Central Jersey specifically, and the banking industry,
generally, as well as the uncertainty over new federal banking
legislation. The board also considered the risk that Central
Jersey’s shareholders selling shares of Central Jersey common stock in the
open market might receive less than the merger consideration, especially
in view of the volatility in the stock
market.
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Absence of Competing
Offers.
Central Jersey’s board of directors believed,
based upon consultation with its financial advisors, that it was unlikely
that any strategic purchaser would make a higher offer for Central Jersey
based upon current market
conditions. The
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board
also considered the fact that if a third party were to make an alternative
proposal to Central Jersey, Central Jersey would be able to consider an
unsolicited proposal after the execution of the merger agreement and to enter
into an agreement with respect to a superior proposal under certain conditions,
including the payment of a termination fee to Kearny. Central
Jersey’s board of directors, in consultation with Central Jersey’s financial and
legal advisors, believed that the termination fee payable by Central Jersey in
such circumstances was at a level consistent with or favorable to termination
fees payable in comparable merger transactions and that such fee would not
unduly impede the ability of third parties from making a superior bid to acquire
Central Jersey if such third parties were so inclined.
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Financial Advisor’s
Opinion.
The fact that Central Jersey’s board of
directors received an opinion, dated May 25, 2010, from Sandler
O’Neill as to the fairness, from a financial point of view and as of the
date of such opinion, of the merger consideration, as more fully described
under the section captioned “
Description of the
Merger—Opinion of Central Jersey’s Financial Advisor
” beginning on
page ____.
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Central
Jersey’s board of directors also considered certain potentially negative factors
in its review and evaluation of the merger, including the
following:
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Risks of
Non-Completion.
The possibility that the merger might
not be completed as a result of the failure of Central Jersey’s
shareholders to approve the merger agreement, failure to obtain regulatory
approval or otherwise, and the effect that a public announcement of
termination of the merger agreement could have on the trading price of
Central Jersey’s common stock and its operating results, particularly
because of the costs that would be incurred in connection with the
transaction.
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Possible Adverse Effect on
Competing Offers.
The risk that various provisions of
the merger agreement, including the requirement that Central Jersey must
pay to Kearny a break up fee up to $2.8 million if the merger agreement is
terminated under certain circumstances may discourage other parties
potentially interested in an acquisition of, or combination with, Central
Jersey from pursuing that
opportunity.
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Potential Disruption of
Central Jersey’s Business and Related Costs and
Expenses.
The potential disruption to Central Jersey’s
business that could result from the merger, the potential distraction of
the attention of Central Jersey’s management and potential attrition of
Central Jersey employees, together with the costs and expenses associated
with completing the merger.
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Central
Jersey’s board of directors determined that the potentially negative factors
associated with the proposed merger were outweighed by the potential benefits
that it expected the Central Jersey shareholders would achieve as a result of
the merger, including the belief of Central Jersey’s board of directors that the
proposed merger would help to maximize the immediate value of Central Jersey’s
shareholders’ shares and eliminate certain risks and uncertainties affecting the
future prospects of Central Jersey including the potential risks in executing
its business plan. Accordingly, Central Jersey’s board of directors
determined that the merger agreement and the transactions contemplated thereby,
including the merger, are advisable and fair to, and in the best interests of,
Central Jersey and its shareholders.
Further,
Central Jersey’s board of directors considered the interests that Central
Jersey’s directors and executive officers have with respect to the merger that
differ from, or are in addition to, their interests as shareholders of Central
Jersey generally, as described in the section captioned “
Description of the Merger—Interests
of Certain Persons in the Merger
” beginning on page ____.
Central
Jersey believes that the foregoing includes a discussion of all material factors
considered by Central Jersey’s board of directors in connection with the merger
agreement with Kearny. The board
did not
quantify or otherwise assign relative or specific weight or values to any of
these factors. Instead, Central Jersey’s board of directors based its
approval and recommendation on an overall analysis of all of the factors
considered. The individual directors may have assigned different
weight to different factors. After careful consideration of all of
this information, Central Jersey’s board of directors approved the merger
agreement and the merger, and recommended that Central Jersey shareholders adopt
the merger agreement.
The
foregoing explanation of Central Jersey’s reasons for the merger and other
information presented in this section is forward-looking in nature and,
therefore, should be read taking into account the factors described under the
section captioned “
Caution
About Forward-Looking Statements
” on page ____.
Opinion
of Central Jersey’s Financial Advisor
By letter
dated January 29, 2007, Central Jersey retained Sandler O’Neill to act as its
financial advisor in connection with a sale of Central
Jersey. Sandler O'Neill is a nationally recognized investment banking
firm whose principal business specialty is financial institutions. In
the ordinary course of its investment banking business, Sandler O’Neill is
regularly engaged in the valuation of financial institutions and their
securities in connection with mergers and acquisitions and other corporate
transactions.
Sandler
O'Neill acted as financial advisor to Central Jersey in connection with the
proposed transaction and participated in certain of the negotiations leading to
the execution of the merger agreement among Central Jersey, Central Jersey Bank,
N.A., Kearny and Kearny Bank. At the May 25, 2010 meeting at which
Central Jersey’s board considered and approved the merger agreement, subject to
satisfactory resolution of certain outstanding issues, Sandler O’Neill delivered
to the board its oral opinion, that, as of such date, the merger consideration
was fair to the holders of Central Jersey common stock from a financial point of
view. The full text of Sandler O’Neill’s opinion is annexed hereto as
Annex B. The opinion outlines the procedures followed, assumptions
made, matters considered and qualifications and limitations on the review
undertaken by Sandler O’Neill in rendering its opinion. The
description of the opinion set forth below is qualified in its entirety by
reference to the opinion. Central Jersey’s shareholders are urged to
read the entire opinion carefully in connection with their consideration of the
proposed merger.
Sandler
O’Neill’s opinion speaks only as of the date of its opinion. The
opinion was directed to Central Jersey’s board and is directed only to the
fairness of the merger consideration to Central Jersey’s shareholders from a
financial point of view. It does not address the underlying business
decision of Central Jersey to engage in the merger or any other aspect of the
merger and is not a recommendation to any Central Jersey shareholder as to how
such shareholder should vote at the special meeting with respect to the merger
or any other matter.
In
connection with rendering its May 25, 2010 opinion, Sandler O’Neill reviewed and
considered, among other things:
|
|
(1)
|
the
merger agreement;
|
|
|
(2)
|
certain
publicly available and other historical financial information of Central
Jersey that it deemed relevant;
|
|
|
(3)
|
certain
publicly available financial statements and other historical financial
information of Kearny that it deemed relevant in determining Kearny’s
financial capacity to undertake the
merger;
|
|
|
(4)
|
internal
financial projections for the calendar year ending December 31, 2010 as
prepared by and reviewed with senior management of Central Jersey and
estimated long-term
|
earnings
and growth rates for the calendar years ending December 31, 2011 through 2014 as
discussed with senior management of Central Jersey;
|
|
(5)
|
to
the extent publicly available, the financial terms of certain recent
business combinations in the commercial banking
industry;
|
|
|
(6)
|
the
current market environment generally and the banking environment in
particular; and
|
|
|
(7)
|
such
other information, financial studies, analyses and investigations and
financial, economic and market criteria as it considered
relevant.
|
Sandler
O’Neill also discussed with certain members of senior management of Central
Jersey the business, financial condition, results of operations and prospects of
Central Jersey.
In
performing its review, Sandler O’Neill relied upon the accuracy and completeness
of all of the financial and other information that was available to it from
public sources, that was provided to it by Central Jersey or its representatives
or that was otherwise reviewed by it, and assumed such accuracy and completeness
for purposes of rendering its opinion. Sandler O’Neill further relied
on the assurances of the management of each of Central Jersey and Kearny that
they were not aware of any facts or circumstances that would make any of such
information inaccurate or misleading. Sandler O’Neill was not asked
to undertake, and has not undertaken, an independent verification of any of such
information and Sandler O’Neill does not assume any responsibility or liability
for the accuracy or completeness thereof. Sandler O’Neill did not
make an independent evaluation or appraisal of the specific assets, the
collateral securing assets or the liabilities (contingent or otherwise) of
Central Jersey or Kearny or any of their subsidiaries, or the collectability of
any such assets, nor has Sandler O’Neill been furnished with any such
evaluations or appraisals. Sandler O’Neill did not make an
independent evaluation of the adequacy of the allowance for loan losses of
Central Jersey or Kearny nor has Sandler O’Neill reviewed any individual credit
files relating to Central Jersey or Kearny. Sandler O’Neill assumed,
with Central Jersey’s consent, that the respective allowances for loan losses
for both Central Jersey and Kearny were adequate to cover such losses and will
be adequate on a pro forma basis for the combined entity.
With
respect to the internal financial projections provided by senior management of
Central Jersey and the estimated earning and growth rates discussed with senior
management and used by Sandler O’Neill in its analyses, Central Jersey’s
management confirmed to Sandler O’Neill that they reflected the best currently
available estimates and judgments of management of the future financial
performance of Central Jersey, and Sandler O’Neill assumed that such performance
would be achieved. Sandler O’Neill expressed no opinion as to such
financial projections or the assumptions on which they were
based. Sandler O’Neill also assumed that there had been no material
change in Central Jersey’s and Kearny’s assets, financial condition, results of
operations, business or prospects since the date of the most recent financial
statements made available to Sandler O’Neill. Sandler O’Neill further
assumed in all respects material to Sandler O’Neill’s analysis that each of
Central Jersey and Kearny would remain as a going concern for all periods
relevant to Sandler O’Neill’s analyses, that all of the representations and
warranties contained in the merger agreement and all related agreements were
true and correct, that each party to the agreements will perform all of the
covenants required to be performed by such party under the agreements, that the
conditions precedent in the agreements will not be waived. Finally,
with Central Jersey’s consent, Sandler O’Neill relied upon the advice Central
Jersey received from its legal, accounting and tax advisors as to all legal,
accounting and tax matters relating to the merger and the other transactions
contemplated by the merger agreement.
Sandler
O’Neill’s opinion was necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to it as of, the
date of the opinion. Events occurring after the date of the opinion
could materially affect the opinion. Sandler O’Neill did not
undertake to update, revise, reaffirm or withdraw its opinion or otherwise
comment upon events occurring after the date of the opinion.
Sandler
O’Neill’s opinion is directed to the board of directors of Central Jersey in
connection with its consideration of the merger and does not constitute a
recommendation to any shareholder of Central Jersey as to how such shareholder
should vote at any meeting of shareholders called to consider and vote upon the
merger. Sandler O’Neill’s opinion is directed only to the fairness,
from a financial point of view, of the merger consideration to holders of
Central Jersey common stock and does not address the underlying business
decision of Central Jersey to engage in the merger, the relative merits of the
merger as compared to any other alternative business strategies that might exist
for Central Jersey or the effect of any other transaction in which Central
Jersey might engage. Sandler O’Neill’s opinion is not to be quoted or
referred to, in whole or in part, in a registration statement, prospectus, proxy
statement or in any other document, nor shall this opinion be used for any other
purpose, without Sandler O'Neill’s prior written consent. The opinion
was approved by Sandler O’Neill’s fairness opinion committee and does not
address the amount of compensation to be received in the merger by any Central
Jersey officer, director or employee.
Summary of
Proposal
.
Sandler O’Neill
reviewed the financial terms of the proposed transaction. Using $7.50
per share in cash, Sandler O’Neill calculated an aggregate transaction value of
$71.9 million. Based upon financial information as or for the three
month period ended March 31, 2010, Sandler O’Neill calculated the following
transaction ratios:
|
Transaction
Ratios
|
|
Transaction
value / Tangible book value per share
|
156%
|
|
Transaction
value / Stated book value per share
|
153%
|
|
Price
/ 2010 Est. EPS¹
|
22.1x
|
|
Core
Deposit Premium
|
7.52%
|
|
Market
Premium
|
130.8%
|
¹ 2010
EPS estimate as per Central Jersey management guidance
The
aggregate transaction value of approximately $71.9 million is based upon the
offer price per share of $7.50, 9,256,975 Central Jersey common shares
outstanding, and 1,023,442 options outstanding with a weighted average exercise
price of $5.05.
Comparable
Company Analysis.
Sandler O'Neill used
publicly available information to perform a comparison of selected financial and
market trading information for Central Jersey.
Sandler
O'Neill also used publicly available information to compare selected financial
and market trading information for Central Jersey and a group of financial
institutions selected by Sandler O’Neill. The Central Jersey peer
group consisted of publicly traded banks and thrifts in the mid-Atlantic region
with assets between $500 million and $700 million:
|
1st
Constitution Bancorp
|
Evans
Bancorp, Inc.
|
|
American
Bank Holdings, Inc.
|
Fidelity
D & D Bancorp, Inc.
|
|
BCB
Bancorp, Inc.
|
Honat
Bancorp, Inc.
|
|
BCSB
Bancorp, Inc.
|
Mid
Penn Bancorp, Inc.
|
|
CCFNB
Bancorp, Inc.
|
Norwood
Financial Corp.
|
|
Cecil
Bancorp, Inc.
|
Parke
Bancorp, Inc.
|
|
Comm
Bancorp, Inc.
|
Penns
Woods Bancorp, Inc.
|
|
Community
Partners Bancorp
|
Peoples
Financial Services Corp.
|
|
Dimeco,
Inc.
|
Solvay
Bank Corporation
|
|
DNB
Financial Corporation
|
Stewardship
Financial Corporation
|
The
analysis compared publicly available financial information for Central Jersey
and the mean and median financial and market trading data for the Central Jersey
peer group as of and for the period ended March 31, 2010. The table
below sets forth the data for Central Jersey and the median data for the Central
Jersey peer group as of and for the twelve-month period ended March 31, 2010,
with pricing data as of May 24, 2010 for the peer group.
|
Comparable
Company Analysis
|
|
|
|
Central
Jersey
|
Comparable
Group
Median
Result
|
|
Total
Assets
(in
millions)
|
|
$
|
571
|
|
|
$
|
610
|
|
|
Return
on Average Assets
|
|
|
(4.31
|
%)
|
|
|
0.54
|
%
|
|
Return
on Average Equity
|
|
NM
|
|
|
|
7.61
|
%
|
|
Net
Interest Margin
|
|
|
3.28
|
%
|
|
|
3.79
|
%
|
|
Tangible
Common Equity / Tangible Assets
|
|
|
9.94
|
%
|
|
|
7.94
|
%
|
|
Total
Risk Based Capital Ratio
|
|
|
14.3
|
%¹
|
|
|
14.1
|
%
|
|
Tier
1 Ratio
|
|
|
10.0
|
%¹
|
|
|
12.9
|
%
|
|
Loan
Loss Reserve / Gross Loans
|
|
|
2.51
|
%
|
|
|
1.61
|
%
|
|
Loan
Loss Reserve / Non-performing Assets
|
|
|
101.7
|
%
|
|
|
58.1
|
%
|
|
Non-performing
Assets / Assets
|
|
|
1.60
|
%
|
|
|
1.82
|
%
|
|
Net
Charge-Offs / Average Loans
|
|
|
0.36
|
%
|
|
|
0.27
|
%
|
|
Price
/ Tangible Book Value
|
|
|
66
|
%
|
|
|
93
|
%
|
|
Price
/ Last Twelve Months Earnings per Share
|
|
NM
|
|
|
|
13.9
|
x
|
|
Price
/ 52 Week High
|
|
|
60.4
|
%
|
|
|
84.5
|
%
|
|
2010
Estimated EPS
|
|
|
0.34
|
|
|
|
0.79
|
|
|
Price
/ 2010 Estimated EPS
|
|
|
10.3
|
|
|
|
11.0
|
|
¹Data
from bank subsidiary level
Net Present Value
Analysis.
Sandler O'Neill performed an analysis that estimated
the present value per common share of Central Jersey through December 31, 2014,
assuming that Central Jersey performed in accordance with the financial
projections for 2010 provided by management, and with the financial projections
for 2011 through 2014 as discussed with management. To approximate
the terminal value of Central Jersey common stock at December 31, 2014, Sandler
O'Neill applied price to last twelve months earnings multiples of 10.0x to 18.0x
and multiples of tangible book value ranging from 100% to 200%. The
dividend income streams and terminal values were then discounted to present
values using different discount rates ranging from 12.0% to 17.0% which were
selected to reflect different assumptions regarding desired rates of return of
holders of Central Jersey common stock. In addition, the terminal
value of Central Jersey common stock at December 31, 2014 was calculated using
the same range of price to last twelve months earnings multiples (10.0x – 18.0x)
applied to a range of discounts and premiums to Central Jersey management’s
budget projections. The range applied to the budgeted net income was
25% under budget to 25% over budget, using a discount rate of 15.64% for the
tabular analysis. As illustrated in the following tables, this
analysis indicated an imputed range of values per share for Central Jersey
common stock of $2.10 to $4.65 when applying the price/earnings multiples to the
matched budget, $3.28 to $8.08 when applying multiples of tangible book value to
the matched budget, and $1.66 to $4.99 when applying the price/earnings
multiples to the -25% / +25% budget range.
Common Stock Net Present
Values
Earnings
Per Share Multiples
|
Discount
Rate
|
10.0x
|
12.0x
|
14.0x
|
16.0x
|
18.0x
|
|
12.0%
|
2.58
|
3.10
|
3.62
|
4.13
|
4.65
|
|
13.0%
|
2.48
|
2.97
|
3.47
|
3.96
|
4.46
|
|
14.0%
|
2.37
|
2.85
|
3.32
|
3.80
|
4.27
|
|
15.0%
|
2.28
|
2.73
|
3.19
|
3.64
|
4.10
|
|
16.0%
|
2.19
|
2.62
|
3.06
|
3.50
|
3.93
|
|
17.0%
|
2.10
|
2.52
|
2.94
|
3.36
|
3.78
|
Tangible
Book Value Per Share Multiples
|
Discount
Rate
|
100%
|
125%
|
150%
|
175%
|
200%
|
|
12.0%
|
4.04
|
5.05
|
6.06
|
7.07
|
8.08
|
|
13.0%
|
3.87
|
4.84
|
5.81
|
6.77
|
7.74
|
|
14.0%
|
3.71
|
4.64
|
5.57
|
6.50
|
7.42
|
|
15.0%
|
3.56
|
4.45
|
5.34
|
6.23
|
7.12
|
|
16.0%
|
3.42
|
4.27
|
5.13
|
5.98
|
6.84
|
|
17.0%
|
3.28
|
4.10
|
4.92
|
5.74
|
6.56
|
Earnings
Per Share Multiples
|
Budget
Variance
|
10.0x
|
12.0x
|
14.0x
|
16.0x
|
18.0x
|
|
(25.0%)
|
1.66
|
2.00
|
2.33
|
2.66
|
3.00
|
|
(20.0%)
|
1.77
|
2.13
|
2.48
|
2.84
|
3.19
|
|
(15.0%)
|
1.89
|
2.26
|
2.64
|
3.02
|
3.39
|
|
(10.0%)
|
2.00
|
2.40
|
2.80
|
3.19
|
3.59
|
|
(5.0%)
|
2.11
|
2.53
|
2.95
|
3.37
|
3.79
|
|
0.0%
|
2.22
|
2.66
|
3.11
|
3.55
|
3.99
|
|
5.0%
|
2.33
|
2.80
|
3.26
|
3.73
|
4.19
|
|
10.0%
|
2.44
|
2.93
|
3.42
|
3.90
|
4.39
|
|
15.0%
|
2.55
|
3.06
|
3.57
|
4.08
|
4.59
|
|
20.0%
|
2.66
|
3.19
|
3.73
|
4.26
|
4.79
|
|
25.0%
|
2.77
|
3.33
|
3.88
|
4.44
|
4.99
|
In
connection with its analyses, Sandler O'Neill considered and discussed with
Central Jersey’s board how the present value analyses would be affected by
changes in the underlying assumptions, including variations with respect to net
income. Sandler O’Neill noted that the discounted dividend stream and
terminal value analysis is a widely used valuation methodology, but the results
of such methodology are highly dependent upon the numerous assumptions that must
be made, and the results thereof are not necessarily indicative of actual values
or future results.
Analysis of
Selected Merger Transactions
. Sandler O’Neill reviewed 10
merger transactions announced from September 1, 2008 through May 10, 2010
involving banks and thrifts in Pennsylvania, New Jersey and New York with
announced transaction values greater than $10 million. Sandler
O’Neill reviewed the following multiples: transaction price at
announcement to last twelve months’ earnings per share, transaction price to
next fiscal year estimated earnings per share, transaction price to stated
tangible book value, transaction price to deposits, transaction price to core
deposits, and transaction price to seller price two days before
announcement. As illustrated in the following table, Sandler O’Neill
compared the proposed merger multiples to the median multiples of comparable
transactions.
|
Comparable
Transaction Multiples
|
|
|
Kearny /
Central
Jersey
|
Median
Group
Multiple
|
|
Transaction
Price / Last Twelve Months Earnings Per Share
|
NM
|
15.3x
|
|
|
|
|
|
Transaction
Price / Estimated EPS
|
22.1x
|
13.9x
|
|
|
|
|
|
Transaction
Price / Tangible Book Value
|
156%
|
101%
|
|
|
|
|
|
Transaction
Price / Deposits
|
15.8%
|
6.6%
|
|
|
|
|
|
Tangible
Book Premium / Core Deposits
|
7.52%
|
1.25%
|
|
|
|
|
|
Transaction
Price / Seller Price 2 Days Before Announcement
|
130.8%
|
37.7%
|
|
|
|
|
Miscellaneous.
Sandler
O’Neill acted as Central Jersey’s financial advisor in connection with the
merger and will receive a fee for its services, a substantial portion of which
is contingent upon the consummation of the merger. Sandler O’Neill
will also receive a fee for rendering its opinion. Central Jersey has
agreed to indemnify Sandler O’Neill against certain liabilities arising out of
its engagement. In the ordinary course of its business as a
broker-dealer, Sandler O’Neill may purchase securities from and sell securities
to Central Jersey and Kearney and their respective
affiliates. Sandler O’Neill may also actively trade the debt and/or
equity securities of Central Jersey or Kearny or their affiliates for their own
accounts and for the accounts of its customers and, accordingly, may at any time
hold a long or short position in such securities.
Consideration
to be Received in the Merger
When the
merger becomes effective, each share of Central Jersey common stock issued and
outstanding immediately before the completion of the merger will be converted
into the right to receive $7.50 in cash.
Central Jersey Stock Options and Stock
Appreciation Rights
As of and
immediately prior to the effective time of the merger, each stock option and
stock appreciation right granted by Central Jersey under Central Jersey’s equity
incentive and stock option plans shall be canceled in exchange for, if
applicable, a cash payment equal to the positive difference between $7.50 and
the exercise or base price of such stock option or stock appreciation right,
multiplied by the number of shares that may be purchased pursuant to such stock
option or the number of shares for which rights were granted pursuant to such
stock appreciation right.
Surrender of Central Jersey Stock
Certificates
After the
completion of the merger, the exchange agent will mail to Central Jersey’s
shareholders a letter of transmittal, together with instructions for the
delivery of their Central Jersey common stock certificates for the merger
consideration. After the completion of the merger, there will be no
further transfers of Central Jersey common stock. Central Jersey stock
certificates presented for transfer after the completion of the merger will be
canceled for the merger consideration.
If a
Central Jersey shareholder’s stock certificates have been either lost, stolen or
destroyed, the Central Jersey shareholder will have to prove his, her or its
ownership of the lost, stolen or destroyed certificates and that such
certificates were lost, stolen or destroyed before the Central Jersey
shareholder will receive any consideration for the shares of Central Jersey
common stock represented by such stock certificates. A Central Jersey
shareholder whose stock certificates have been either lost, stolen or destroyed
also may have to provide security or indemnity to Kearny.
Central Jersey Preferred Shares and
Warrant
On
December 23, 2008, as part of the TARP Capital Purchase Program, Central
Jersey sold to the U.S. Department of the Treasury (1) 11,300 shares of its
preferred stock, and (2) a warrant to purchase up to 268,621 of Central
Jersey common stock at an exercise price of $6.31 per share. The
warrant has a term of 10 years so long as the preferred stock is
outstanding. Under the merger agreement, Central Jersey agreed to use
its best efforts to redeem the 11,300 shares of preferred stock immediately
before or contemporaneously with the closing of the merger. At the
effective time of the merger, the warrant issued by Central Jersey to the U.S.
Department of the Treasury will be converted into the right to receive the
product of the positive difference between $7.50 and the warrant exercise price
multiplied by the number of shares subject to the warrant, or $319,659 ($7.50 -
$6.31 x 268,621).
You will
not be entitled to dissenters’ rights in connection with the proposed
merger. New Jersey law provides that dissenters’ rights are not
available to shareholders who receive cash pursuant to a merger.
Accounting
Treatment
Kearny
will account for the merger under the acquisition method of accounting in
accordance with U.S. generally accepted accounting principles. Using
the acquisition method of accounting, the assets and liabilities of Central
Jersey will be recorded by Kearny at their respective fair values at the time of
the completion of the merger. The excess of Kearny’s purchase price
over the net fair value of the assets acquired and liabilities assumed will then
be allocated to identified intangible assets, with any remaining unallocated
cost recorded as goodwill. The value of the shares exchanged will be
valued at the acquisition date and all merger related costs will be expensed
when incurred.
Tax Consequences of the
Merger
General.
The following summary discusses the material anticipated U.S. federal income tax
consequences of the merger applicable to a holder of shares of Central Jersey
common stock who surrenders all of the shareholder’s common stock for a cash
payment equal to $7.50 multiplied by the number of shares of Central Jersey
common stock held. This discussion is based upon the Internal Revenue
Code of 1986, as amended, Treasury Regulations, judicial authorities, published
positions of the Internal Revenue Service (“IRS”), and other applicable
authorities, all as in effect on the date of this document and all of which are
subject to change or differing interpretations (possibly with retroactive
effect). This discussion is limited to U.S. residents and citizens who
hold their shares as capital assets for
U.S.
federal income tax purposes (generally, assets held for
investment). No attempt has been made to comment on all U.S. federal
income tax consequences of the merger and related transactions that may be
relevant to holders of shares of Central Jersey common stock. This
discussion also does not address all of the tax consequences that may be
relevant to a particular person or the tax consequences that may be relevant to
persons subject to special treatment under U.S. federal income tax laws
(including, among others, tax-exempt organizations, dealers in securities or
foreign currencies, banks, insurance companies, financial institutions or
persons who hold their shares of Central Jersey common stock as part of a hedge,
straddle, constructive sale or conversion transaction, persons whose functional
currency is not the U.S. dollar, holders that exercise dissenters’ rights,
persons that are, or hold their shares of Central Jersey common stock through,
partnerships or other pass-through entities, or persons who acquired their
shares of Central Jersey common stock through the exercise of an employee stock
option or otherwise as compensation). In addition, this discussion
does not address any aspects of state, local, non-U.S. taxation or U.S. federal
taxation other than income taxation. No ruling has been requested
from the IRS regarding the U.S. federal income tax consequences of the
merger. No assurance can be given that the IRS would not assert, or
that a court would not sustain, a position contrary to any of the tax
consequences set forth below.
Central
Jersey’s shareholders are urged to consult their tax advisors as to the U.S.
federal income tax consequences of the merger, as well as the effects of state,
local, non-U.S. tax laws and U.S. tax laws other than income tax
laws.
Receipt of Cash
in Exchange for Central Jersey Shares
.
The receipt of
cash for shares of Central Jersey common stock pursuant to the merger will be a
taxable transaction for U.S. federal income tax purposes. In general,
if you receive cash for your shares of Central Jersey common stock pursuant to
the merger, you will recognize capital gain or loss equal to the difference, if
any, between the cash received (before reduction for any applicable withholding
tax) and your tax basis in the shares cancelled in the merger. Gain
or loss will be determined separately for each block of your shares (i.e.,
shares acquired at the same cost in a single transaction). Such gain
or loss will be long-term capital gain or loss if your holding period for such
shares is more than one year at the time of the consummation of the
merger. The deductibility of capital losses is subject to
limitations.
Backup
Withholding.
In general, information returns will be filed
with the IRS in connection with payments to you pursuant to the merger, unless
you are an exempt recipient. You may be subject to backup withholding
at a 28% rate on the receipt of cash pursuant to the merger. In
general, backup withholding will only apply if you fail to furnish a correct
taxpayer identification number, or otherwise fail to comply with applicable
backup withholding rules and certification requirements. Backup
withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be allowable as a refund or credit against your
U.S. federal income tax liability, provided that you timely furnish the required
information to the IRS.
Tax Treatment of
the Entities.
No gain or loss will be recognized by Kearny or
Central Jersey as a result of the merger.
Regulatory Matters Relating to the
Merger
Consummation
of the merger and the bank merger are subject to receipt of certain regulatory
approvals.
Office of Thrift
Supervision
. Kearny intends to acquire Central Jersey by way
of a merger, whereby Central Jersey will merge with a wholly-owned subsidiary of
Kearny, with Central Jersey as the surviving company and a wholly-owned
subsidiary of Kearny, and by merging Central Jersey Bank, N.A. with Kearny
Bank. The merger of Central Jersey Bank, N.A. with and into Kearny
Bank is subject to the prior approval of the OTS under the Home Owners’ Loan
Act. Kearny Bank and Central Jersey Bank,
N.A. have
filed applications with the OTS to obtain prior approval of the merger of
Central Jersey Bank, N.A. with and into Kearny Bank. In reviewing
applications, the OTS considers:
·
the effect of the transaction upon
competition;
|
|
·
|
the
financial and managerial resources and future prospects of the merging and
resulting institutions;
|
|
|
·
|
the
capital levels of the surviving savings
institution;
|
|
|
·
|
the
performance of the applicants in helping to meet the credit needs of the
relevant communities, including low- and moderate-income neighborhoods;
and
|
|
|
·
|
the
convenience and needs of the community to be
served.
|
The OTS
will not approve a transaction:
|
|
·
|
that
would result in a monopoly or would be in furtherance of any combination,
conspiracy or attempt to monopolize the business of banking in any part of
the United States; or
|
|
|
·
|
whose
effect in any section of the United States may be to substantially lessen
competition, or tend to create a monopoly, or which in any other manner
would be in restraint of trade, unless the probable effects of the
transaction in meeting the convenience and needs of the community clearly
outweigh the anti-competitive effects of the
transaction.
|
Any
transaction approved by the OTS may not be completed until 30 days after the OTS
approval, during which time the U.S. Department of Justice may challenge such
transaction on antitrust grounds. With the approval of the OTS and
the U.S. Department of Justice, the waiting period may be reduced to 15
days.
Federal Reserve Bank of New
York.
Through the various Federal Reserve Banks headquartered
in districts across the country, the Federal Reserve Board serves as the primary
regulator of holding companies that own banks chartered with the Office of the
Comptroller of the Currency (“OCC”). Because the OCC granted Central
Jersey Bank, N.A. its charter, and because Central Jersey is the holding company
of Central Jersey Bank, N.A., the Federal Reserve Bank of New York is the
primary regulator of Central Jersey.
For the
brief time between the intended acquisition of Central Jersey by Kearny through
the merger of Central Jersey with Kearny’s wholly-owned subsidiary, and then the
intended subsequent merger of Central Jersey Bank, N.A. into Kearny Bank, Kearny
will be deemed by the Federal Reserve Board to be a bank holding
company. However, upon application by Kearny, it is anticipated that
the Federal Reserve Bank of New York will waive formal compliance by Kearny with
the laws, regulations and procedures governing changes in control of bank
holding companies, since those requirements will have no substantive
applicability to the transaction once the mergers are fully
consummated.
Status of Applications and
Notices
. Kearny and Central Jersey have filed all required
applications with applicable regulatory authorities in connection with the
merger of Central Jersey with Kearny’s wholly-owned subsidiary and the bank
merger. There can be no assurance that all requisite approvals will
be obtained, that such approvals will be received on a timely basis or that such
approvals will not impose any term, condition or restriction which either party
reasonably determines in good faith would materially or adversely affect the
economic or business benefits of the merger to such party, as to render
inadvisable in its reasonable good faith judgment the consummation of the
merger. If any such term, condition or restriction is imposed, either
Kearny or Central Jersey may elect not to consummate the merger. See “
Description of the Merger—Conditions
to Completing the Merger
” on page ____.
The
approval of any application merely implies the satisfaction of regulatory
criteria for approval, which does not include review of the acquisition from the
standpoint of the adequacy of the merger consideration to be received by Central
Jersey shareholders. Furthermore, regulatory approvals do not
constitute an endorsement or recommendation of the acquisition.
Interests of Certain Persons in the
Merger
Share
Ownership.
On the record date for the special meeting, all persons
who served as a director or executive officer of Central Jersey since January 1,
2009 beneficially owned, in the aggregate, [1,513,557] shares of Central Jersey
common stock (excluding shares that may be acquired upon the exercise of stock
options), representing approximately [ ]% of
the outstanding shares of Central Jersey common stock.
As
described below, certain of Central Jersey’s officers and directors have
interests in the merger that are in addition to, or different from, the
interests of Central Jersey’s shareholders generally. Central
Jersey’s board of directors was aware of these conflicts of interest and took
them into account when approving the merger.
Change of
Control/Termination Agreements.
Central Jersey has
entered into change of control agreements with the following
executives: James S. Vaccaro, Robert S. Vuono, Anthony Giordano, III,
Robert K. Wallace and Lisa A. Borghese. Under the agreements, upon an
executive’s termination of employment pursuant to a change of control, the
executive will be entitled to severance. Each of Mr. Vaccaro,
Mr. Vuono and Mr. Giordano is entitled to 30 months severance,
Mr. Wallace is entitled to 18 months severance and Ms. Borghese is
entitled to 12 months severance. The amount of severance payable to an
executive will be based upon his or her monthly salary in effect at the time of
the change of control, a percentage of the previous cash bonus payments made to
him or her and the cash equivalent of the monthly benefits provided to him or
her at the time of the change of control; provided, however, that the change of
control agreements for each of Mr. Vaccaro, Mr. Vuono and Mr. Giordano were
amended simultaneously with the execution of the merger agreement to provide
that no payment will be made to any of them which would be an “excess parachute
payment” under Section 280G of the Internal Revenue Code of 1986, as
amended. In the event that an executive is to receive severance, the
severance shall be payable in-full within 10 business days after the effective
date of the change of control or by December 31 of the year in which the
termination of employment occurred, whichever is earlier.
Equity-Based
Awards.
Pursuant to Central Jersey’s existing stock-based
plans, all unvested options to purchase shares of Central Jersey common stock
and stock appreciation rights will become vested and exercisable upon
consummation of the merger. The following table sets forth, as of
[ ], 2010, the number of unvested stock
options and stock appreciation rights which were held by the executive officers
of Central Jersey and all persons who have served as non-employee directors of
Central Jersey since January 1, 2009 as a group.
|
Name
|
Number
of Stock
Appreciation
Rights
|
Weighted
Average
Exercise
Price
|
Number
of
Unvested
Stock
Options
|
Weighted
Average
Exercise
Price
|
|
James
S. Vaccaro
|
-
|
n/a
|
-
|
n/a
|
|
Robert
S. Vuono
|
-
|
n/a
|
-
|
n/a
|
|
Anthony
Giordano, III
|
-
|
n/a
|
-
|
n/a
|
|
All
non-employee directors as a group
|
-
|
n/a
|
-
|
n/a
|
The
merger agreement provides that upon completion of the merger, each stock option
and stock appreciation right granted by Central Jersey under Central Jersey’s
equity incentive and stock option plans shall be cancelled for a cash payment
equal to the positive difference between $7.50 and the exercise or base price of
such stock option or stock appreciation right.
Continued
Director and Officer Liability Coverage.
For a period of six
years following the effective time of the merger, Kearny has agreed to indemnify
and hold harmless each person entitled to indemnification from Central Jersey
from all liability arising out of actions or omissions occurring at or prior to
the effective time of the merger (including, without limitation, transactions
contemplated by the merger) to the same extent and subject to the conditions set
forth in Central Jersey’s certificate of incorporation or by-laws, in each case
as in effect as of the date of the merger agreement. After the
effective time of the merger, directors, officers and employees of Central
Jersey, except for the indemnification rights in the previous sentence, shall
have indemnification rights having prospective application
only. These prospective indemnification rights shall consist of such
rights to which directors, officers and employees of Kearny and Kearny Bank
would be entitled under the charter and bylaws of Kearny or the particular
subsidiary for which they are serving as officers, directors or employees and
under such directors’ and officers’ liability insurance policy as Kearny may
then make available to officers, directors and employees of Kearny and its
subsidiaries. For a period of six years following the effective time
of the merger, Kearny has also agreed to use its best efforts to provide
coverage to the officers and directors of Central Jersey under the directors’
and officers’ liability insurance policy currently maintained by Central Jersey
or under a policy with comparable or better coverage; provided, however, that
Kearny shall not be obligated to make premium payments for such six year period
in respect of such policy (or coverage replacing such policy) which exceed, for
the portion related to Central Jersey’s directors and officers, 150% of the
annual premium payments on Central Jersey’s current policy, as in effect as of
the date of the merger agreement.
Non-competition
by Directors.
Each non-employee director of Central Jersey
will be paid the sum of $10,000 upon the consummation of the merger in exchange
for each such director’s agreement not to compete with Central Jersey or Kearny
for a period of one year following the merger.
Advisory
Board.
Each non-employee director of Central Jersey will be
invited to become a member of a Central Jersey Community Advisory Board for
Kearny Bank to be formed in connection with the merger. The Advisory Board will
stay in place for a minimum of two years after the consummation of the
merger. Each director who serves on the Advisory Board will be
compensated for such service at an annual rate of $8,000 during the first year
of service and $18,000 during the second year of service.
Employee
Matters
Nothing
in the merger agreement shall be construed as constituting an employment
agreement between Kearny, Kearny Bank or any of their affiliates and any officer
or employee of Central Jersey or any of its subsidiaries or an obligation on the
part of Kearny, Kearny Bank or any of their affiliates to employ any such
officers or employees.
In the
event that Kearny terminates any of Central Jersey’s health and welfare benefit
plans, programs, insurance and other policies, all employees of Central Jersey
or any of its subsidiaries who continue employment with Central Jersey, Kearny
or any subsidiary of Kearny following the effective time of the merger will
become eligible to participate in Kearny’s or Kearny Bank’s medical, dental,
health and disability plans without any gap or interruption in
coverage. With respect to each Kearny health plan, Kearny and Kearny
Bank shall cause each such plan to (1) waive any waiting period limitation
or evidence of insurability requirement under said plans, (2) waive any
pre-existing condition limitations under such plans to the extent such
conditions for such participant are covered under the applicable Central Jersey
health plan, and (3) credit under such plans any current plan year deductible,
co-
payment
and out-of-pocket expenses incurred by the employees and their covered
dependents during the portion of the plan year prior to such
participation.
Any
employee of Central Jersey (other than those employees who are a party to a
change of control agreement with Central Jersey) whose employment is terminated
by Central Jersey, Kearny or Kearny Bank, absent termination for cause, within
12 months of the effective date of the merger, shall receive severance benefits
in accordance with the policy and years of service information set forth in the
merger agreement.
Operations of Central Jersey after the
Merger
Kearny
will operate Central Jersey as a division of Kearny Bank for a period of at
least 18 months after the effective date of the merger.
Unless
the parties agree otherwise and unless the merger agreement has otherwise been
terminated, the closing of the merger will take place on the 10th business day
following the later of (1) the date on which all of the conditions to the
merger contained in the merger agreement are satisfied or waived and (2) the
date on which the shareholders of Central Jersey approve the merger agreement.
See “
Description of the
Merger—Conditions to Completing the Merger
” on page ____. The
parties may agree to extend the closing date to the 45
th
day
after the later of the foregoing events to occur solely for the purpose of
accomplishing the redemption of the Central Jersey preferred stock issued to the
U.S. Department of the Treasury under the TARP Capital Purchase
Program. On the closing date, Kearny will file a certificate of
merger with the State of New Jersey, Department of the Treasury merging Kearny’s
wholly-owned subsidiary with and into Central Jersey. The merger will
become effective at the time stated in the certificates of merger.
Kearny
and Central Jersey are working to complete the merger quickly. It is
currently expected that the merger will be completed in the fall of 2010.
However, because completion of the merger is subject to regulatory approvals and
other conditions, the parties cannot be certain of the actual
timing.
Conditions to Completing the
Merger
Kearny’s
and Central Jersey’s obligations to consummate the merger are conditioned on the
following:
|
|
·
|
approval
of the merger agreement by Central Jersey’s
shareholders;
|
|
|
·
|
receipt
of all required regulatory approvals and the expiration of all statutory
waiting periods;
|
|
|
·
|
there
shall be no actual or threatened causes of action, investigations or
proceedings (1) challenging the validity or legality of the merger
agreement or the consummation of the merger, or (2) seeking damages
in connection with the merger, or (3) seeking to restrain or
invalidate the merger; unless actual or threatened causes of action,
investigations or proceedings would not have a material adverse effect on
Kearny or Central Jersey, as the case may
be;
|
|
|
·
|
no
party to the merger being subject to any legal order, decree or injunction
that prohibits consummating any part of the transaction, and the absence
of any statute, rule or regulation that prohibits completion of any part
of the transaction; and
|
|
|
·
|
the
other party having performed in all material respects its obligations
under the merger agreement, the other party’s representations and
warranties being true and correct as
of
|
the
effective date of the merger and receipt of a certificate signed by the other
party’s chief executive officer to that effect.
Kearny’s
obligations to consummate the merger are also conditioned on the
following:
|
|
·
|
there
shall have been no determination by Kearny that any fact, event, or
condition exist or has occurred that would have a material adverse effect
on Central Jersey or the consummation of the merger or bank
merger;
|
|
|
·
|
receipt
by Central Jersey of all consents and approvals from third parties (other
than those required from regulatory authorities) required to complete the
merger, unless failure to obtain those consents or approvals would not
have a material adverse effect on the merger or Central Jersey after
completion of the merger;
|
|
|
·
|
there
shall be no action taken by an regulatory authority, which, in connection
with approval of the merger, imposes, in the judgment of Kearny, any
material adverse requirement upon Kearny or any Kearny subsidiary,
including, without limitation, any requirement that Kearny sell or dispose
of any significant amount of assets of Central Jersey, or any other Kearny
subsidiary;
|
|
|
·
|
if
required, Central Jersey shall use its best efforts to deliver executed
stock option and stock appreciation right cancellation agreements from all
holders;
|
|
|
·
|
Central
Jersey shall have delivered executed support agreements on the date of the
merger agreement from certain executive officers and all directors of
Central Jersey;
|
|
|
·
|
Central
Jersey’s nonperforming assets shall not exceed $20.0 million for the
period from March 31, 2010 through the effective date of the merger;
and
|
|
|
·
|
designated
officers of Central Jersey and Central Jersey Bank, N.A. shall have
executed an addendum to their respective change of control agreements as
of the date of the merger
agreement.
|
Central
Jersey cannot guarantee whether all of the conditions to the merger will be
satisfied or waived by the party permitted to do so.
Conduct of Business Before the
Merger
Central
Jersey has agreed that, until completion of the merger, it and its subsidiaries
will:
General
Business
|
|
·
|
conduct
its business in the usual, regular and ordinary course consistent with
past practice and prudent banking
principles;
|
|
|
·
|
use
its best efforts to maintain and preserve intact its business
organization, employees, goodwill with customers and advantageous business
relationships and retain the services of its officers and key
employees;
|
|
|
·
|
use
its best efforts to preserve the goodwill of its customers and others with
whom business relationships exist;
and
|
|
|
·
|
except
as required by law or regulation, take no action which would adversely
affect or delay the ability of the Kearny and Central Jersey to obtain any
consent from any regulatory authority or other approvals required for the
consummation of the transactions contemplated by the merger agreement or
to perform its respective covenants and agreements under the merger
agreement.
|
Central
Jersey has agreed that, until completion of the merger, unless required by law
or permitted by Kearny, neither it nor its subsidiaries will:
Indebtedness
|
|
·
|
incur
any material liabilities or material obligations (other than deposit
liabilities and short-term borrowings in the ordinary course of business),
whether directly or by way of guaranty, including any obligation for
borrowed money, or whether evidenced by any note, bond, debenture, or
similar instrument;
|
Capital
Stock
|
|
·
|
change
the number of shares of the authorized, issued or outstanding capital
stock of Central Jersey (except for the issuance of Central Jersey common
stock issued upon the exercise of outstanding stock options), including
any issuance, purchase, redemption, split, combination or reclassification
thereof;
|
|
|
·
|
issue
or grant any option, warrant, call, commitment, subscription, right or
agreement to purchase relating to the authorized or issued capital stock
of Central Jersey;
|
|
|
·
|
declare,
set aside or pay any dividend or other distribution with respect to the
outstanding capital stock of Central Jersey (other than the required
dividends on the shares of preferred stock issued to the U.S. Department
of the Treasury under TARP and on the trust preferred securities issued by
MCBK Capital Trust I, Central Jersey’s
subsidiary);
|
Acquisitions
and Dispositions
|
|
·
|
sell,
transfer, convey or otherwise dispose of any real property (including
“other real estate owned”) or interest
therein;
|
|
|
·
|
purchase
or otherwise acquire or sell or otherwise dispose of, any assets or incur
any liabilities otherwise than in the ordinary course of
business;
|
Investments
|
|
·
|
acquire
5% or more of the assets or equity securities of any person or
business or acquire direct or indirect control of any person or business
(except for foreclosures in the ordinary course of business and after
consultation with Kearny);
|
|
|
·
|
enter
into any futures contract, option, interest rate caps, interest rate
floors, interest rate exchange agreement or other agreement, or 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;
|
|
|
·
|
purchase
or sell or otherwise acquire any investment securities other than in the
ordinary course of business consistent with past practices and in
accordance with Central Jersey’s investment
policy;
|
Contracts
|
|
·
|
enter
into or extend any agreement, lease or license relating to real property
(other than capital expenditures permitted under the merger agreement),
personal property, data processing or bankcard functions that involves an
aggregate of $10,000 or more;
|
|
|
·
|
waive,
release, grant or transfer any material rights of value or modify or
change in any material respect any existing agreement or indebtedness to
which Central Jersey is a party, other than in the ordinary course of
business consistent with past
practice;
|
Loans
|
|
·
|
originate,
purchase, extend or grant any loan in principal amount (1) up to $500,000
without giving Kearny prompt notice thereof or (2) in excess of $500,000
without permitting Kearny to review such loan in
advance;
|
Employee
Matters
|
|
·
|
unless
previously disclosed by Central Jersey, pay any bonuses to any employee,
officer, director or other person;
|
|
|
·
|
unless
previously disclosed by Central Jersey, grant any general increase in
compensation or pay any bonuses to its employees as a class or to its
officers or employees except for salary increases made in the ordinary
course of business of not more than 5% in the aggregate of the previous
year’s aggregate payroll for all employees and upon notice to
Kearny;
|
|
|
·
|
enter
into any new, or amend in any respect any existing, employment,
consulting, non-competition or independent contractor agreement with any
person;
|
|
|
·
|
alter
the terms of any incentive bonus or commission
plan;
|
|
|
·
|
adopt
any new or materially amend any existing employee benefit plan except as
required by law;
|
|
|
·
|
grant
any increase in fees or other compensation or in other benefits to any of
its directors;
|
|
|
·
|
effect
any material change in retirement benefits to any class of employees or
officers, except as required by
law;
|
|
|
·
|
except
for the execution of the merger agreement and the consummation of the
merger, take any action that would give rise to a right of payment to any
individual under an employment agreement or an acceleration of the right
to payment to any individual under any employee benefit
plan;
|
|
|
·
|
terminate
any individual that is a party to an employment contract or change of
control agreement prior to the effective time of the merger, other than
for “cause” as defined in the applicable
agreement;
|
|
|
·
|
make
any written communication to directors, officers or employees of Central
Jersey pertaining to compensation or benefit matters affected by the
merger or the transactions contemplated by the merger agreement without
first providing Kearny with a copy or description of the intended
communication;
|
Litigation
|
|
·
|
commence
any cause of action or proceeding other than in accordance with past
practice or settle any action, claim, arbitration, complaint, criminal
prosecution, demand letter, governmental or other examination or
investigation, hearing, inquiry or other proceeding against it for
material money damages or material restrictions upon any of its
operations;
|
Governing
Documents
|
|
·
|
amend
its certificate of incorporation or
by-laws;
|
Deposits
|
|
·
|
increase
or decrease the rate of interest paid on time deposits or on certificates
of deposit, except in a manner and pursuant to policies consistent with
Central Jersey’s past practices;
|
Capital
Expenditures
|
|
·
|
other
than certain capital expenditures previously disclosed by Central Jersey
and expenditures necessary to maintain existing assets in good repair,
make any capital expenditures in excess of
$10,000;
|
Branches
|
|
·
|
except
as disclosed by Central Jersey, file any applications or make any contract
with respect to branching by Central Jersey or acquire or construct, or
enter into any agreement to acquire or construct, any interest in real
property;
|
Other
Agreements
|
|
·
|
form
any new subsidiary;
|
|
|
·
|
enter
into, renew, extend or modify any transaction (other than a deposit
transaction) with any affiliate other than pursuant to existing
policies;
|
|
|
·
|
make
any changes to its existing policies regarding credit, loan loss reserves,
loan charge-offs, investments, asset/liability management or other banking
policies except as required by changes in applicable law or U.S. generally
accepted accounting principles.
|
Covenants of Central Jersey and Kearny
in the Merger Agreement
Agreement Not to
Solicit Other Proposals
.
Central Jersey has
agreed that neither it nor its officers, directors, employees and
representatives will: (1) solicit, initiate, encourage or otherwise
facilitate any inquiries or the making of any acquisition proposal or offer by a
third party; (2) enter into, continue or otherwise participate in
discussions or negotiations regarding, an acquisition proposal; or (3) furnish
any non-public information or negotiate or enter into any agreement with respect
to an acquisition proposal. An acquisition proposal includes a proposal
for any of the following:
|
|
·
|
a
merger or consolidation, or any similar transaction of any company with
Central Jersey;
|
|
|
·
|
a
purchase, lease or other acquisition of all or substantially all of the
assets of Central Jersey;
|
|
|
·
|
a
purchase or other acquisition of beneficial ownership by any person or
group of securities representing 24.9% or more of the voting power of
Central Jersey; or
|
|
|
·
|
a
tender or exchange offer to acquire securities representing 24.9% or more
of the voting power of Central
Jersey.
|
Despite
the agreement of Central Jersey not to solicit other acquisition proposals,
prior to obtaining shareholder approval of the merger agreement with Kearny,
Central Jersey may generally negotiate or have discussions with, or provide
information to, a third party who makes an unsolicited, written, bona fide
acquisition proposal not solicited in violation of the merger agreement,
provided that Central Jersey’s board of directors:
|
|
·
|
after
consultation with and receipt of advice from outside legal counsel, in
good faith deems such action to be legally necessary for the proper
discharge of its fiduciary duties to Central Jersey’s shareholders under
applicable law; and
|
|
|
·
|
after
consultation with its outside legal counsel and its financial advisor, in
good faith reasonably determines that the transaction presented by such
unsolicited acquisition proposal, taking into account all legal, financial
and regulatory aspects of the proposal and the person making the proposal,
(1) is more favorable from a financial point of view than the transactions
contemplated by the merger agreement with Kearny and (2) is reasonably
capable of being completed, taking into account all financial, legal,
regulatory and other aspect of such proposal (referred to in this document
as a “superior proposal”).
|
If
Central Jersey receives a proposal or information request from a third party or
enters into negotiations with a third party regarding a superior proposal,
Central Jersey must immediately notify Kearny and provide Kearny with
information about the third party and its superior proposal and keep Kearny
fully informed in all material respects of the status and details of such
proposal.
Certain Other
Covenants.
The merger agreement also contains other agreements
relating to the conduct of Kearny and Central Jersey before consummation of the
merger, including the following:
|
|
·
|
each
party will give the other party full access during normal business hours
to its properties, and shall disclose or make available to the other party
and its representatives all books, papers and records relating to the
assets, stock, properties, operations, obligations and liabilities of such
party;
|
|
|
·
|
each
party shall cause to be prepared and filed all required applications and
filings with the regulatory authorities which are necessary or
contemplated for obtaining the consents of the regulatory authorities or
consummation of the merger;
|
|
|
·
|
each
party will use its best efforts to take all actions and do all things
necessary, proper or advisable under applicable laws and regulations, or
otherwise, to consummate the merger and the other transactions
contemplated by the merger
agreement;
|
|
|
·
|
Central
Jersey will invite a representative of Kearny to attend all regular and
special meetings of Central Jersey’s board of directors and committees
thereof. Central Jersey may request that the representative of
Kearny recuse himself or herself from any meeting (1) if the merger
or any other acquisition transaction is the subject of discussion or
(2) to preserve attorney-client privilege with respect to any
specific matter;
|
|
|
·
|
Central
Jersey will take all actions necessary to convene a meeting of its
shareholders to vote on the merger
agreement;
|
|
|
·
|
each
party shall have the right to review any filing made with, or written
material submitted to, any government agencies in connection with the
transactions contemplated by the merger
agreement;
|
|
|
·
|
each
party will furnish the other with all information concerning itself, its
subsidiaries, directors, trustees, officers, shareholders and depositors,
and such other matters as may be necessary or advisable in connection with
any statement or application made by or on behalf of either party to any
governmental body in connection with the transactions, applications or
filings contemplated by the merger
agreement;
|
|
|
·
|
each
party will promptly furnish the other party with copies of written
communications received by them or their respective subsidiaries from any
government body in respect of the
merger;
|
|
|
·
|
Central
Jersey and Kearny will consult with one another prior to issuing any press
release or other public disclosure related to the
merger;
|
|
|
·
|
Central
Jersey’s board of directors will recommend at the meeting of Central
Jersey’s shareholders that the shareholders vote to approve the merger
agreement and will use its reasonable best efforts to solicit shareholder
approval;
|
|
|
·
|
Central
Jersey and Kearny will cooperate in establishing a retention bonus plan of
up to $300,000 for certain employees of Central Jersey and Central Jersey
Bank, N.A. who remain employed at Central Jersey, Kearny or Kearny Bank
for a period of up to six months after the effective date of the
merger.
|
Representations
and Warranties Made by Central Jersey and Kearny in the Merger
Agreement
Central
Jersey and Kearny have made certain customary representations and warranties to
each other in the merger agreement relating to their respective
businesses. For information on these representations and warranties,
please refer to the merger agreement attached as Annex A. The
representations and warranties must be true in all material respects through the
completion of the merger. See “
Description of the Merger—Conditions
to Completing the Merger
” on page ___.
The
representations and warranties contained in the merger agreement were made only
for purposes of the merger agreement and are made as of specific dates, were
solely for the benefit of the parties to the merger agreement, and may be
subject to limitations agreed to by the contracting parties, including being
qualified by disclosures between the parties. These representations and
warranties may have been made for the purpose of allocating risk between the
parties to the merger agreement instead of establishing these matters as facts,
and may be subject to standards of materiality applicable to the contracting
parties that differ from those applicable to investors as statements of factual
information.
Terminating the Merger
Agreement
The
merger agreement may be terminated at any time before the effective time of the
merger, as follows:
|
|
·
|
by
the written mutual consent of Kearny and Central
Jersey;
|
|
|
·
|
by
either party, if the shareholders of Central Jersey fail to approve the
merger agreement;
|
|
|
·
|
by
either party, if a required regulatory approval, consent or waiver is
denied;
|
|
|
·
|
by
either party, if the merger is not consummated by March 31, 2011 or
other mutually agreed upon date, unless failure to complete the merger by
that time is due to a misrepresentation, breach of a warranty or failure
to fulfill a covenant by the party seeking to terminate the merger
agreement;
|
|
|
·
|
by
either party, if the other party materially breaches any covenant or
agreement contained in the merger agreement, or in the event of an
inaccuracy of any representation or warranty by the other party, in either
case that has not been cured within 30 days following written notice to
such party;
|
|
|
·
|
by
Kearny, if Central Jersey fails to hold its shareholder meeting to vote on
the merger within the time frame set in the merger
agreement;
|
|
|
·
|
by
Kearny, if the board of directors of Central Jersey does not recommend
approval of the merger to the Central Jersey shareholders or withdraws or
revises its recommendation in a manner adverse to Kearny;
or
|
|
|
·
|
by
Central Jersey prior the approval of the merger agreement by the
shareholders of Central Jersey, if Central Jersey receives a superior
proposal from a third party that, in the good faith determination of
Central Jersey’s board of directors, the board is
required
|
to accept
in order to comply with its fiduciary duties and Kearny does not make an offer
at least as favorable to Central Jersey within 3 days after notice.
The
merger agreement requires Central Jersey to pay Kearny a fee of $2,800,000 if
the merger agreement is terminated in certain
circumstances. Specifically, Central Jersey must pay the termination
fee if Kearny terminates the merger agreement as a result of Central Jersey’s
failure to hold a shareholder meeting to act upon the merger agreement, or if
Central Jersey’s board of directors fails to recommend approval of the merger or
upon the withdrawal, qualification or revision of its recommendation to approve
the merger. In addition, Central Jersey is also required to pay the
$2,800,000 termination fee if Central Jersey terminates the merger agreement
after having received a superior proposal that, in the good faith determination
of Central Jersey’s board of directors, the board is required to accept in order
to comply with its fiduciary duties.
In
addition, if the shareholders of Central Jersey fail to approve the merger after
a public announcement that another party would like to enter into a transaction
with Central Jersey, Central Jersey will be required to pay Kearny a fee of
$800,000, and if Central Jersey enters into a transaction with the other party
who announced an interest in Central Jersey before the vote on the
merger agreement within 15 months of the termination of the merger agreement,
Central Jersey will be required to pay an additional $2,000,000 to
Kearny.
Each of
Kearny and Central Jersey will pay its own costs and expenses incurred in
connection with the merger.
Changing the Terms of the Merger
Agreement
Before
the completion of the merger, Kearny and Central Jersey may agree to waive,
amend or modify any provision of the merger agreement.
ADJOURNMENT
OF THE SPECIAL MEETING
If there
are not sufficient votes to constitute a Quorum or to approve the merger
agreement at the time of the Central Jersey special meeting, the merger
agreement cannot be approved unless the Central Jersey special meeting is
adjourned to a later date or dates to permit further solicitation of
proxies. To allow proxies that have been received by Central Jersey at the
time of the special meeting to be voted for an adjournment, if deemed necessary,
Central Jersey has submitted the question of adjournment to its shareholders as
a separate matter for their consideration. The board of directors of
Central Jersey recommends that shareholders vote
“FOR”
the adjournment
proposal. If it is deemed necessary to adjourn the special meeting,
no notice of the adjourned meeting is required to be given to shareholders,
other than an announcement at the meeting of the place, date and time to which
the meeting is adjourned.
MARKET
PRICES FOR CENTRAL JERSEY COMMON STOCK
Effective
February 1, 2007, the common stock of Central Jersey commenced trading on the
NASDAQ Global Market under the ticker symbol “CJBK.” Prior thereto,
the common stock of Central Jersey traded on the NASDAQ Capital
Market.
The
following table sets forth, for the periods indicated, the high and low last
sale information for Central Jersey common stock, as reported on the NASDAQ
Global Market for the period commencing January 1, 2008 through July __,
2010. Please note that the information set forth below reflects
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions, and has been adjusted to reflect a 5% stock
dividend paid on July 1, 2008.
|
Year
Ending December 31, 2010
|
|
|
|
|
|
|
|
First
Quarter
|
|
$
|
3.50
|
|
|
$
|
2.74
|
|
|
Second
Quarter (through July __, 2010)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2009
|
|
|
|
|
|
|
|
First
Quarter
|
|
$
|
7.50
|
|
|
$
|
4.62
|
|
|
Second
Quarter
|
|
|
6.70
|
|
|
|
4.90
|
|
|
Third
Quarter
|
|
|
6.65
|
|
|
|
5.05
|
|
|
Fourth
Quarter
|
|
|
6.11
|
|
|
|
2.80
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2008
|
|
|
|
|
|
|
|
First
Quarter
|
|
$
|
8.38
|
|
|
$
|
7.35
|
|
|
Second
Quarter
|
|
|
8.74
|
|
|
|
7.66
|
|
|
Third
Quarter
|
|
|
8.00
|
|
|
|
6.62
|
|
|
Fourth
Quarter
|
|
|
7.44
|
|
|
|
5.40
|
|
|
|
|
|
|
|
|
|
|
|
The
closing sale prices of Central Jersey common stock on the NASDAQ Global Market
on May 25, 2010, which was the last trading day before the announcement of the
proposed merger, was $3.08. On ___________, 2010, which was the
latest practicable trading day before this proxy statement was printed, the
closing price for Central Jersey common stock on the NASDAQ Global Market was
$_______.
During
2009, Central Jersey declared and paid $505,000 in dividends due on the shares
of preferred stock issued by Central Jersey to the U.S. Department of the
Treasury as part of the TARP Capital Purchase Program. Central Jersey
Bank, N.A. declared and paid $320,000 in cash dividends to Central Jersey in
order to provide funding for the aforementioned dividend payment.
Central
Jersey has not paid any cash dividends on its common stock and does not
presently intend to declare or pay cash dividends on its common
stock. Our dividend policy is subject to certain regulatory
considerations and the discretion of our board of directors and depends upon a
number of factors, including operating results, financial condition and general
business conditions. Holders of common stock are entitled to receive
dividends as, if and when declared by our board of directors out of funds
legally available therefore, subject to the restrictions set forth under the
Federal Bank Holding Company Act. Subject to the provisions of TARP
described below, we may pay cash dividends without regulatory approval if net
income available to common shareholders fully funds the proposed dividends, and
the expected rate of earnings retention is consistent with Central Jersey’s
capital needs, asset quality and overall financial condition.
For so
long as any shares of preferred stock issued to the U.S. Department of the
Treasury are outstanding, Central Jersey is not permitted to declare or pay cash
dividends on its common stock unless all dividends on the shares of preferred
stock have been paid in-full. Further, unless the shares of preferred
stock are redeemed or fully transferred to third parties, Central Jersey is
prohibited from increasing its common stock dividends without prior approval of
the U.S. Department of the Treasury until December 23, 2011, which is the third
anniversary of the investment by the U.S. Department of the Treasury in Central
Jersey.
PRINCIPAL
SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The
following table sets forth information as of June 30, 2010, with respect to the
beneficial ownership (as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of Central Jersey common stock, by (1) each director of
Central Jersey, (2) each named executive officer, (3) each person or group of
persons known by Central Jersey to be the beneficial owner of greater than 5% of
Central Jersey’s outstanding common stock, and (4) all directors and executive
officers of Central Jersey as a group. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to
securities. Except as indicated by footnote, the persons named in the
table below have sole voting power and investment power with respect to the
shares of common stock shown as beneficially owned by them.
|
|
|
Beneficial
Ownership of
Central
Jersey’s Common Stock
|
|
|
Name of Beneficial
Owner (1)
|
|
|
|
|
|
|
|
James
G. Aaron, Esq. (3)(4)
|
|
|
257,186
|
|
|
|
2.74
|
%
|
|
Mark
R. Aikins, Esq. (3)(5)
|
|
|
122,437
|
|
|
|
1.30
|
%
|
|
John
A. Brockriede (3)(6)
|
|
|
496,813
|
|
|
|
5.30
|
%
|
|
George
S. Callas (3)(7)
|
|
|
196,458
|
|
|
|
2.09
|
%
|
|
Paul
A. Larson, Jr. (3)(8)
|
|
|
86,118
|
|
|
|
*
|
|
|
Carmen
M. Penta, C.P.A. (3)(9)
|
|
|
109,010
|
|
|
|
1.16
|
%
|
|
Mark
G. Solow (3)(10)
|
|
|
191,511
|
|
|
|
2.04
|
%
|
|
James
S. Vaccaro (3)(11)(12)
|
|
|
232,624
|
|
|
|
2.45
|
%
|
|
Robert
S. Vuono (3)(13)(14)
|
|
|
114,362
|
|
|
|
1.22
|
%
|
|
Anthony
Giordano, III (15)(16)
|
|
|
81,392
|
|
|
|
*
|
|
|
Linda
J. Brockriede (17)(18)
|
|
|
496,813
|
|
|
|
5.30
|
%
|
|
All
Directors and Executive Officers
as
a Group (10 persons) (4)(5)(6)(7)(8)(9)(10)(12)
(14)(16)
|
|
|
1,887,911
|
|
|
|
19.08
|
%
|
_______________________________________________
* Indicates
less than 1%.
|
(1)
|
All
directors and officers listed in this table maintain a mailing address at
1903 Highway 35, Oakhurst, New Jersey
07755.
|
|
(2)
|
In
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as
amended, a person is deemed to be the beneficial owner, for purposes of
this table, of any shares of Central Jersey common stock if he or she has
voting or investment power with respect to such
security. This
|
includes
shares (a) subject to options exercisable within 60 days, and (b)(1) owned by a
spouse, (2) owned by other immediate family members, or (3) held in trust or
held in retirement accounts or funds for the benefit of the named individuals,
over which shares the person named in the table may possess voting and/or
investment power.
|
(3)
|
Such
person currently serves as a director of Central
Jersey.
|
|
(4)
|
Includes
44,259 shares subject to currently exercisable stock options; 27,545
shares held in an Individual Retirement Account with Morgan Stanley for
the benefit of Mr. Aaron; and 18,336 shares registered in the name of Mr.
Aaron as trustee for the Trust Under the Will of Leslie B. Aaron, Mr.
Aaron’s father. Mr. Aaron disclaims any beneficial ownership of
the shares held in the aforementioned trust. Also includes
44,019 shares registered in the name of ERBA Co., Inc., in which Mr. Aaron
has an ownership interest and serves as vice president. Mr.
Aaron disclaims beneficial ownership of these securities except to the
extent of his ownership interest in ERBA Co., Inc. Also
includes 48,993 shares registered in the name of the Aaron Family Limited
Partnership, of which Mr. Aaron is a partner. Mr. Aaron
disclaims beneficial ownership of these securities except to the extent of
his partnership interest in the Aaron Family Limited
Partnership. Also includes 7,680 shares registered in the name
of the David Ritter Trust and 7,680 shares registered in the name of the
Randy Ritter Trust, of which Mr. Aaron is a trustee. Mr. Aaron
disclaims any beneficial ownership of the shares held in these
trusts. Also includes 22,544 shares held in trusts for the
benefit of Mr. Aaron’s family members of which Mr. Aaron’s wife is
trustee; 3,361 shares registered in the name of Mr. Aaron’s wife; and
9,653 shares held in an Individual Retirement Account with Morgan Stanley
for the benefit of Mr. Aaron’s wife. Mr. Aaron disclaims
beneficial ownership of the shares held in these trusts, the shares held
by his wife and the shares held for the benefit of his
wife.
|
|
(5)
|
Includes
44,259 shares subject to currently exercisable stock options; 77,117
shares held in a Simplified Employee Pension/Individual Retirement Account
by Merrill Lynch as custodian for the benefit of Mr. Aikins; and 1,061
shares held by Mr. Aikins for the benefit of his children under the
Uniform Transfers to Minors Act, as to which shares he disclaims any
beneficial interest.
|
|
(6)
|
Includes
25,422 shares subject to currently exercisable stock
options. Also includes 20,534 shares held in an Individual
Retirement Account and 3,899 shares held in a Simplified Employee Pension
Plan both by UBS as custodian for the benefit of Mr. Brockriede, and 3,202
shares held in an Individual Retirement Account by UBS for the benefit of
Mr. Brockriede’s wife. Mr. Brockriede disclaims beneficial
ownership of the shares held in the Individual Retirement Account for the
benefit of his wife. Includes 127,281 shares held by CJM
Management, L.L.C., of which Mr. Brockriede is an Administrative
Member. Mr. Brockriede disclaims beneficial ownership of these
shares except to the extent of his ownership interest in CJM Management,
L.L.C. Also includes 296,388 shares held jointly with Mr.
Brockriede’s wife through a broker, 2,488 shares held jointly with Mr.
Brockriede’s wife directly and 16,355 shares held in trusts for the
benefit of Mr. Brockriede’s family members of which Mr. Brockriede’s wife
is trustee. Mr. Brockriede disclaims beneficial ownership of
the shares held in these trusts.
|
|
(7)
|
Includes
50,690 shares subject to currently exercisable stock options and 6,748
shares held by Mr. Callas’ wife. Mr. Callas disclaims
beneficial ownership of the shares held by his
wife.
|
|
(8)
|
Includes
34,719 shares subject to currently exercisable stock
options. Also includes 8,437 shares held jointly with Mr.
Larson’s wife.
|
|
(9)
|
Includes
38,579 shares subject to currently exercisable stock options and 151
shares held jointly with Mr. Penta’s wife. Also includes 7,907
shares held by Mr. Penta’s wife as to which shares Mr. Penta disclaims
beneficial ownership.
|
|
(10)
|
Includes
44,259 shares subject to currently exercisable stock
options.
|
|
(11)
|
Mr.
Vaccaro is a named executive officer and serves as the Chairman of the
Board, President and Chief Executive Officer of Central
Jersey.
|
|
(12)
|
Includes
151,836 shares subject to currently exercisable stock options; 43,099
shares held by Citi, Smith Barney as custodian for the benefit of the
James S. Vaccaro Simplified Employee Pension; 11,461 shares held pursuant
to the 401(k) plan of Central Jersey Bank, N.A. for the benefit of Mr.
Vaccaro; and 1,349 shares held by Mr. Vaccaro’s daughter who resides with
him. Mr. Vaccaro disclaims any beneficial interest to the
shares held by his daughter.
|
|
(13)
|
Mr.
Vuono is a named executive officer and serves as Senior Executive Vice
President, Chief Operating Officer and Secretary of Central
Jersey.
|
|
(14)
|
Includes
56,961 shares subject to currently exercisable stock options and 13,077
shares held for the benefit of Mr. Vuono in an Individual Retirement
Account with Bank of America Investment Services, Inc. and 29,549 shares
held for the benefit of Mr. Vuono in an Individual Retirement Account with
UBS Financial Services, Inc.
|
|
(15)
|
Mr.
Giordano is a named executive officer and serves as Senior Executive Vice
President, Chief Financial Officer, Treasurer and Assistant Secretary of
Central Jersey.
|
|
(16)
|
Includes
55,548 shares subject to currently exercisable stock options; 2,652 shares
held by Charles Schwab & Co. in an Individual Retirement Account for
the benefit of Mr. Giordano; 2,756 shares held in a Simplified Employee
Pension by Charles Schwab & Co. for the benefit of Mr. Giordano’s
wife, as to which shares he disclaims any beneficial interest; 16,138
shares held pursuant to the 401(k) plan of Central Jersey Bank, N.A. for
the benefit of Mr. Giordano; 2,401 shares held by Charles Schwab & Co.
in an Individual Retirement Account for the benefit of Mr. Giordano’s
wife, as to which shares he disclaims any beneficial interest; 597 shares
held by Mr. Giordano as custodian for his son under the Uniform Transfers
to Minors Act, as to which shares he disclaims any beneficial interest;
and 1,300 shares held in Education IRAs for the benefit of Mr. Giordano’s
sons, as to which shares he disclaims any beneficial
interest.
|
|
(17)
|
Includes
296,388 shares held jointly with Mrs. Brockriede’s husband, John A.
Brockriede, through a broker; 2,488 shares held jointly with John A.
Brockriede directly; 1,244 shares held by John A. Brockriede directly;
16,355 shares held in trusts for the benefit of Mrs. Brockriede’s family
members of which Mrs. Brockriede is trustee; 25,422 shares subject to
currently exercisable stock options previously granted to John A.
Brockriede; 20,534 shares held in an Individual Retirement Account and
3,899 shares held in a Simplified Employee Pension Plan both by UBS as
custodian for the benefit of John A. Brockriede; 3,202 shares held in an
Individual Retirement Account by UBS for the benefit of Mrs. Brockriede;
and 127,281 shares held by CJM Management, L.L.C., of which John A.
Brockriede is an Administrative Member. Mrs. Brockriede
disclaims beneficial ownership to all of the aforementioned securities
with the exception of those held jointly with her husband and the
securities held in an Individual Retirement Account for her
benefit. Mrs. Brockriede maintains a mailing address at 450
Broadway, Long Branch, New Jersey
07740.
|
|
(18)
|
Mrs.
Brockriede maintains a mailing address at 450 Broadway, Long Branch, New
Jersey 07740.
|
SHAREHOLDERS
SHARING THE SAME ADDRESS
Central
Jersey has adopted a procedure called “householding,” which has been approved by
the Securities Exchange Commission. Under this procedure, Central
Jersey is delivering only one copy of this proxy statement to multiple
shareholders who share the same mailing address and have the same last name,
unless Central Jersey has received contrary instructions from an affected
shareholder. This procedure reduces Central Jersey’s printing costs,
mailing costs and fees. Shareholders who participate in householding
will continue to receive separate proxy cards.
Central
Jersey will deliver promptly upon written or oral request a separate copy of
this proxy statement to any shareholder at a shared address to which a single
copy of this document was delivered. To receive a separate copy of
this proxy statement, you may write to Mr. James S. Vaccaro, Chairman, President
and Chief Executive Officer, Central Jersey Bancorp, 1903 Highway 35, Oakhurst,
New Jersey 07755, or call (732) 663-4000.
SHAREHOLDER
PROPOSALS
If the
merger is completed, there will be no public shareholders of Central Jersey and
no public participation in any future meetings of Central Jersey’s
shareholders. However, if the merger is not completed, Central Jersey
will hold a 2011 annual meeting of its shareholders. In that event,
shareholder proposals for presentation at Central Jersey’s 2011 annual meeting
of shareholders must be received by Central Jersey at its principal executive
offices for inclusion in its proxy statement and form of proxy relating to that
meeting no later than December 31, 2010. Central Jersey’s by-laws
contain certain procedures which must be followed in connection with shareholder
proposals.
WHERE
YOU CAN FIND MORE INFORMATION
Central
Jersey files annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. You may read
and copy this information at the following location of the Securities and
Exchange Commission:
Public
Reference Room
Room
1580
100 F.
Street, N.E.
Washington,
D.C. 20549
Please
call the Securities and Exchange Commission at (800) 732-0330 for further
information on the public reference room. You may also obtain copies
of this information by mail from the Public Reference Section of the Securities
and Exchange Commission, Room 1580, 100 F Street. N.E., Washington, D.C. 20549,
at prescribed rates. Central Jersey’s public filings are also
available to the public from document retrieval services and the website
maintained by the Securities and Exchange Commission at
http://www.sec.gov. Central Jersey’s annual, quarterly and current
reports are not incorporated by reference in this proxy statement or delivered
with it, but are available, without exhibits, to any person, including any
beneficial owner of Central Jersey common stock, to whom this proxy statement is
delivered, without charge, upon request directed to Central Jersey at 1903
Highway 35, Oakhurst, New Jersey 07755, Attention: James S. Vaccaro,
Chairman, President and Chief Executive Officer, or by calling (732)
663-4000.
You
should reply only on the information contained in this proxy
statement. No persons have been authorized to give any information or
to make any representations other than those contained in this proxy
statement. No persons have been authorized to give any information or
to make any representations other than those contained, or incorporated by
reference, in this proxy statement and, if given or made, such information or
representations must be relied upon as having been authorized by Central Jersey
or any other person. Central Jersey has supplied all information
contained in this proxy statement relating to Central Jersey and its
affiliates. Kearny has supplied all information contained in this
proxy statement relating to Kearny and its affiliates.
Annex
A
AGREEMENT
AND PLAN OF MERGER
By
and Among
KEARNY
FINANCIAL CORP.,
KEARNY
FEDERAL SAVINGS BANK,
CENTRAL
JERSEY BANCORP
AND
CENTRAL
JERSEY BANK, NATIONAL ASSOCIATION
Dated
as of May 25, 2010
TABLE
OF CONTENTS
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ARTICLE
1
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THE
MERGER
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Section
1.1
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Consummation
of Merger; Closing Date
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Section
1.2
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Effect
of Merger
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Section
1.3
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Further
Assurances
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Section
1.4
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Directors
and Officers
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ARTICLE
2
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CONVERSION
OF CONSTITUENTS’ CAPITAL SHARES
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Section
2.1
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Manner
of Conversion of Central Jersey Shares
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Section
2.2
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Central
Jersey Stock Options and Stock Appreciation Rights
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Section
2.3
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Effectuating
Conversion
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Section
2.4
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Determination
of Alternative Structures
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Section
2.5
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Laws
of Escheat
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ARTICLE
3
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REPRESENTATIONS
AND WARRANTIES OF CENTRAL JERSEY
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Section
3.1
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Corporate
Organization
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Section
3.2
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Capitalization
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Section
3.3
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Financial
Statements; Filings
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Section
3.4
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Loan
Portfolio; Reserves
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Section
3.5
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Certain
Loans and Related Matters
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Section
3.6
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Authority;
No Violation
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Section
3.7
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Consents
and Approvals
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Section
3.8
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Broker’s
Fees
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Section
3.9
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Absence
of Certain Changes or Events
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Section
3.10
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Legal
Proceedings; Etc.
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Section
3.11
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Taxes
and Tax Returns
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Section
3.12
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Employee
Benefit Plans
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Section
3.13
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Title
and Related Matters
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Section
3.14
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Real
Estate
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Section
3.15
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Environmental
Matters
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Section
3.16
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Commitments
and Contracts
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Section
3.17
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Regulatory
Matters
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Section
3.18
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Registration
Obligations
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Section
3.19
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Antitakeover
Provisions
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Section
3.20
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Insurance
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Section
3.21
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Labor
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Section
3.22
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Compliance
with Laws
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Section
3.23
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Transactions
with Management
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Section
3.24
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Derivative
Contracts
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Section
3.25
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Deposits
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Section
3.26
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Controls
and Procedures
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Section
3.27
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SEC
Filings
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Section
3.28
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Proxy
Materials
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Section
3.29
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Deposit
Insurance
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Section
3.30
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Intellectual
Property
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Section
3.31
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Fairness
Option
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Section
3.32
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No
Trust Powers
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Section
3.33
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Indemnification
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Section
3.34
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Investment
Securities
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Section
3.35
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Untrue
Statements and Omissions
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ARTICLE
4
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REPRESENTATIONS
AND WARRANTIES OF KEARNY
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Section
4.1
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Organization
and Related Matters of Kearny
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Section
4.2
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Authorization
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Section
4.3
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Consents
and Approvals
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Section
4.4
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Proxy
Materials
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Section
4.5
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Regulatory
Matters
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Section
4.6
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Absence
of Certain Changes or Events
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Section
4.7
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Deposit
Insurance
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Section
4.8
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Access
to Funds
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Section
4.9
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Untrue
Statements and Omissions
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ARTICLE
5
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COVENANTS
AND AGREEMENTS
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Article
5.1
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Conduct
of the Business of the Parties
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Article
5.2
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Current
Information
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Article
5.3
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Access
to Properties; Personnel and Records, System Integration
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Article
5.4
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Proxy
Statement/Approval of Shareholders
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Article
5.5
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No
Other Bids
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Article
5.6
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Notice
of Deadlines
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Section
5.7
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Maintenance
of Properties; Certain Remediation and Capital
Improvements
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Section
5.8
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Environmental
Audits
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Section
5.9
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Title
Insurance
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Section
5.10
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Surveys
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Section
5.11
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Consents
to Assign and Use Leased Premises
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Section
5.12
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Compliance
Matters
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Section
5.13
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Conforming
Accounting and Reserve Policies
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Section
5.14
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Support
Agreements
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Section
5.15
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Disclosure
Controls
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Section
5.16
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Bank
Merger Agreement
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ARTICLE
6
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ADDITIONAL
COVENANTS AND AGREEMENTS
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Section
6.1
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Best
Efforts; Cooperation
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Section
6.2
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Regulatory
Matters
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Section
6.3
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Employment
and Employee Benefit Matters
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Section
6.4
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Indemnification
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Section
6.5
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Transaction
Expenses of Central Jersey
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Section
6.6
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Press
Releases
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Section
6.7
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Prior
Notice and Approval Before Payments to be Made
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Section
6.8
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Post
Merger Activities of Central Jersey Directors
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Section
6.9
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Notification
of Certain Matters
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Section
6.10
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Central
Jersey Division
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Section
6.11
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Community
Charitable Foundation
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Section
6.12
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Supplemental
Indenture
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Section
6.13
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Disclosure
Supplements
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Section
6.14
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Preferred
Stock Redemption
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ARTICLE
7
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MUTUAL
CONDITIONS TO CLOSING
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Section
7.1
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Shareholder
Approval
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Section
7.2
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Regulatory
Approvals
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Section
7.3
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Litigation
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ARTICLE
8
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CONDITIONS
TO THE OBLIGATIONS OF KEARNY
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Section
8.1
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Representations
and Warranties
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Section
8.2
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Performance
of Obligations
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Section
8.3
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Certificates
Representing Satisfaction of Conditions
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Section
8.4
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Absence
of Adverse Facts
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Section
8.5
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Consents
Under Agreements
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Section
8.6
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Material
Condition
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Section
8.7
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Certification
of Claims
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Section
8.8
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Environmental
Audit Results
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Section
8.9
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Support
Agreements
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Section
8.10
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Power
of Attorney
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Section
8.11
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Receipt
of Option Cancellation Agreements
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Section
8.12
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Addenda
to Employment and Change in Control Agreements
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Section
8.13
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Nonperforming
Assets
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ARTICLE
9
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CONDITIONS
TO OBLIGATIONS OF CENTRAL JERSEY
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Section
9.1
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Representations
and Warranties
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Section
9.2
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Performance
of Obligations
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Section
9.3
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Certificate
Representing Satisfaction of Conditions
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ARTICLE
10
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TERMINATION,
WAIVER AND AMENDMENT
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Section
10.1
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Termination
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Section
10.2
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Effect
of Termination; Termination Fee
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Section
10.3
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Amendments
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Section
10.4
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Waivers
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Section
10.5
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Non-Survival
of Representations, Warranties and Covenants
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ARTICLE
11
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MISCELLANEOUS
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Section
11.1
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Definitions
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Section
11.2
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Entire
Agreement
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Section
11.3
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Notices
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Section
11.4
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Severability
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Section
11.5
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Costs
and Expenses
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Section
11.6
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Captions
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Section
11.7
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Counterparts
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Section
11.8
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Persons
Bound; No Assignment
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Section
11.9
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Governing
Law
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Section
11.10
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Exhibits
and Schedules
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Section
11.11
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Waiver
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Section
11.12
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Construction
of Terms
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Section
11.13
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Specific
Performance
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Exhibits
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Exhibit
A
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Form
of Corporate Plan of Merger
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Exhibit
B
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Form
of Support Agreement
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Exhibit
C
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Form
of Addendum to Change of Control Agreements
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Exhibit
D
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Form
of Bank Plan of Merger
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Exhibit
E
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Form
of Option Cancellation and Release Agreement
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AGREEMENT
AND PLAN OF MERGER
By
and Among
KEARNY
FINANCIAL CORP.,
KEARNY
FEDERAL SAVINGS BANK,
CENTRAL
JERSEY BANCORP
AND
CENTRAL
JERSEY BANK, NATIONAL ASSOCIATION
This
AGREEMENT AND PLAN OF MERGER, dated as of the 25th day of May, 2010 (this
“Agreement”), by and among Kearny Financial Corp., a federal corporation
(“Kearny”), Kearny Federal Savings Bank, a federal savings bank (“Kearny Bank”),
Central Jersey Bancorp, a New Jersey corporation (“Central Jersey”) and Central
Jersey Bank, National Association, a national banking association (“Central
Jersey Bank”) (each, a “Party” and, collectively, the “Parties”).
WITNESSETH
THAT:
WHEREAS,
the Boards of Directors of Kearny and Central Jersey deem it in the best
interests of Kearny and Central Jersey, respectively, and of their respective
shareholders, that Kearny and Central Jersey enter into this Agreement pursuant
to which Kearny will acquire all of the issued and outstanding shares of capital
stock of Central Jersey through the merger of a wholly owned acquisition
subsidiary of Kearny with and into Central Jersey (the “Merger”);
WHEREAS,
Kearny owns all of the issued and outstanding capital stock of Kearny Bank and
Central Jersey owns all of the issued and outstanding capital stock of Central
Jersey Bank, and it is contemplated that, immediately following the Merger,
Central Jersey Bank will be merged with and into Kearny Bank with Kearny Bank as
the surviving entity (the “Bank Merger”);
WHEREAS,
concurrently with the execution of this Agreement, Kearny and Kearny Bank have
entered into an Addendum to the [Second] Amended and Restated Change of Control
Agreement in the form attached as Exhibit C hereto with certain of the officers
of Central Jersey Bank who are parties to [Second] Amended and Restated Change
of Control Agreements with Central Jersey as detailed herein;
WHEREAS,
as an inducement and condition to Kearny’s entering into this Agreement, each of
the directors of Central Jersey who has been nominated for election to the
Central Jersey Board of Directors at the Central Jersey annual meeting of
shareholders to be held on May 26, 2010 (the “Annual Meeting”) and each of the
executive officers of Central Jersey in their individual capacity have entered
into a Support Agreement in the form attached hereto as
Exhibit B.1
or B.2, as the case may be, with Kearny pursuant to which they have agreed to
take certain actions in support and cooperation of this transaction and the
surviving corporation.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants,
representations, warranties and agreements herein contained, the Parties agree
that all the outstanding shares of common stock of Central Jersey will be
acquired by Kearny through the merger of an acquisition subsidiary of Kearny
with and into Central Jersey and that the terms and conditions of the Merger,
the mode of carrying the Merger into effect, including the manner of converting
the shares of common stock of Central Jersey, par value $0.01 per share, into
cash, shall be as hereinafter set forth.
ARTICLE
1
THE
MERGER
Section
1.1
Consummation of Merger;
Closing Date
.
(a) On
the terms and subject to the conditions set forth in this Agreement, at the
Effective Time of the Merger, a corporation to be organized under the laws of
State of New Jersey as a wholly owned subsidiary of Kearny for the sole purpose
of facilitating the Merger (“Merger Sub”), shall be merged with and into Central
Jersey pursuant to the provisions of the New Jersey Business Corporation Act
(“NJBCA”) and the separate corporate existence of Merger Sub shall
cease. Central Jersey shall be the surviving corporation of the
Merger (sometimes hereinafter referred to as the “Surviving Corporation”) and
shall continue its corporate existence under the laws of the State of New Jersey
as a subsidiary of Kearny. The Merger shall be consummated pursuant
to the terms and conditions of this Agreement, which has been approved and
adopted by each of the Boards of Directors of Kearny, Kearny Bank, Central
Jersey and Central Jersey Bank, and of the Plan of Merger to be entered into by
and between Merger Sub and Central Jersey substantially in the form appended as
Exhibit A, which will be approved and adopted by the Boards of Directors of
Central Jersey and of Merger Sub and by Kearny as the sole shareholder of Merger
Sub.
(b) Subject
to the prior satisfaction or waiver of the conditions set forth in Articles 7, 8
and 9 hereof, the Merger shall become effective as of the date and time
specified in the Certificate of Merger to be filed with the New Jersey Office of
the State Treasurer pursuant to the NJBCA (such time is hereinafter referred to
as the “Effective Time of the Merger”). Subject to the terms and
conditions hereof, unless otherwise agreed upon by Kearny and Central Jersey,
the Effective Time of the Merger shall occur on the tenth (10th) business day
following the later to occur of (i) the effective date (including expiration of
any applicable waiting period) of the last required Consent (as defined herein)
of any Regulatory Authority (as defined herein) having authority over the
transactions contemplated under this Agreement and the satisfaction of all of
the other terms and conditions of this Agreement and (ii) the date on which the
shareholders of Central Jersey approve the transactions contemplated by this
Agreement, or such other time as the Parties may agree; provided, however, that
the Parties agree to extend the time on which the Effective Time of
the Merger shall occur to the forty-fifth (45
th
)
business day following the later to occur of the aforementioned events solely
for the purpose of accomplishing the redemption of the Central Jersey Preferred
Shares as contemplated in Section 6.14.
(c) The
closing of the Merger (the “Closing”) shall take place at the principal offices
of Kearny at 10:00 a.m. local time on the day that the Effective Time of the
Merger occurs, or such other date, time and place as the Parties hereto may
agree (the “Closing Date”). Subject to the provisions of this
Agreement, at the Closing there shall be delivered to each of the Parties hereto
the opinions, certificates and other documents and instruments required to be so
delivered pursuant to this Agreement.
Section
1.2
Effect of
Merger
. At the Effective Time of the Merger, Merger Sub shall
be merged with and into Central Jersey and the separate existence of Merger Sub
shall cease. The certificate of incorporation and bylaws of Central
Jersey, as in effect on the date hereof and as otherwise amended prior to the
Effective Time of the Merger, shall be the certificate of incorporation and
bylaws of the Surviving Corporation until further amended as provided therein
and in accordance with applicable law. The Surviving Corporation
shall have all the rights, privileges, immunities and powers and shall be
subject to all the duties and liabilities of a New Jersey corporation and shall
thereupon and thereafter possess all other privileges, immunities and franchises
of a private, as well as of a public nature, of each of the constituent
corporations. The Merger shall have the effects set forth in federal
law and the NJBCA. All property (real, personal and mixed) and all
debts on whatever account, including subscriptions to shares, and all chooses in
action, all and every other interest, of or belonging to or due to each of the
constituent corporations so merged shall be taken and deemed to be transferred
to and vested in the Surviving Corporation without further act or
deed. The title to any real estate, or any interest therein, vested
in any of the constituent corporations shall not revert or be in any way
impaired by reason of the Merger. The Surviving Corporation shall
thenceforth be responsible and liable for all the liabilities and obligations of
each of the constituent corporations so merged and any claim existing or action
or proceeding pending by or against either of the constituent corporations may
be prosecuted as if the Merger had not taken place or the Surviving Corporation
may be substituted in its place. Neither the rights of creditors nor
any liens upon the property of any constituent corporation shall be impaired by
the Merger.
Section
1.3
Further
Assurances
. If, at any time after the Effective Time of the
Merger, Kearny shall reasonably consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable to
(i) vest, perfect or confirm, of record or otherwise, in Kearny its right, title
or interest in, to or under any of the rights, properties or assets of Central
Jersey or Central Jersey Bank or (ii) otherwise carry out the purposes of this
Agreement, Central Jersey and its officers and directors shall be deemed to have
granted to Kearny an irrevocable power of attorney to execute and deliver, in
such official corporate capacities, all such deeds, assignments or assurances in
law or any other acts as are necessary or desirable to (a) vest, perfect or
confirm, of record or otherwise, in Kearny its right, title or interest in, to
or under any of the rights, properties or assets of Central Jersey or Central
Jersey Bank or (b) otherwise carry out the purposes of this Agreement, and the
officers and directors of Kearny are authorized in the name of Central Jersey or
otherwise to take any and all such action.
Section
1.4
Directors and
Officers
. Except as otherwise set forth herein, from and after
the Effective Time of the Merger, the directors of the Surviving Corporation and
officers of the Surviving Corporation shall be those persons serving as
directors and officers of Merger Sub immediately prior to the Effective Time of
the Merger.
ARTICLE
2
CONVERSION
OF CONSTITUENTS’ CAPITAL SHARES
Section
2.1
Manner of Conversion of
Central Jersey Shares
. Subject to the provisions hereof, as of
the Effective Time of the Merger and by virtue of the Merger and without any
further action on the part of Kearny, Central Jersey or the holder of any shares
of any of them, the shares of the constituent corporations shall be converted as
follows:
(a) Each
share of capital stock of Kearny outstanding immediately prior to the Effective
Time of the Merger shall, after the Effective Time of the Merger, remain
outstanding and unchanged.
(b) Each
share of capital stock of Merger Sub outstanding immediately prior to the
Effective Time of the Merger shall, after the Effective Time of the Merger, be
exchanged for one Central Jersey Share (as defined below).
(c) Each
share of common stock of Central Jersey, par value $0.01 per share (the “Central
Jersey Shares”) held by Central Jersey or by Kearny (or any of their
subsidiaries) other than such shares held in a fiduciary capacity or as a result
of debts previously contracted, shall be canceled and retired and no
consideration shall be paid or delivered in exchange therefor.
(d) Except
with regard to Central Jersey Shares excluded under Section 2.1(c) above, each
Central Jersey Share outstanding immediately prior to the Effective Time of the
Merger shall be converted into the right to receive a cash amount equal to $7.50
(the “Merger Consideration”).
(e) The
warrant for Central Jersey Shares issued to the United States Department of the
Treasury if outstanding immediately prior to the Effective Time shall be
converted into the right to receive the excess of the Merger Consideration over
the per share exercise price of the warrant multiplied by the number of Central
Jersey Shares that may be purchased pursuant to the warrant.
(f) Unless
redeemed prior to or contemporaneously with Closing, each share of Fixed Rate
Cumulative Perpetual Senior Preferred Stock Series A of Central Jersey
outstanding immediately prior to the Effective Time of the Merger shall, after
the Effective Time of the Merger, remain outstanding and unchanged.
Thereafter,
subject to Sections 2.5, each outstanding certificate representing a Central
Jersey Share shall represent solely the right to receive the Merger
Consideration.
Section
2.2
Central Jersey Stock Options
and Stock Appreciation Rights
. As of and immediately prior to
the Effective Time of the Merger, all rights with respect to Central Jersey
Shares issuable pursuant to the exercise of stock options and stock appreciation
rights (“Central Jersey Options”) granted by Central Jersey under the Central
Jersey Stock Option Plans set forth in Schedule 2.2 (the “Central Jersey Stock
Option Plans”), each of which are listed and described on Schedule 2.2 and which
remain outstanding at the Effective Time of the Merger and which
have not
yet been exercised, shall be cancelled by Central Jersey in exchange for a cash
payment equal to the positive difference, if any, between the Merger
Consideration and the option exercise price (the “Options
Consideration”). The cancellation of Central Jersey Options in
exchange for the Options Consideration described in this section shall be deemed
a release of any and all rights the holder had or may have had in respect of
such Central Jersey Options although Central Jersey will use its
reasonable best efforts to have each holder of any such Central Jersey Option
execute and deliver an Option Cancellation and Release Agreement in the form set
forth as Exhibit 2.2 hereto. Prior to the Effective Time of the
Merger, Central Jersey shall take or cause to be taken all actions required
under the Central Jersey Stock Option Plans to provide for the actions set forth
in this Section 2.2. Central Jersey shall cause the termination,
effective as of the Effective Time of the Merger, of all Central Jersey Stock
Option Plans.
Section
2.3
Effectuating
Conversion
. At the Effective Time of the Merger, Kearny will
deliver or cause to be delivered to a third-party agent to be appointed by
Kearny and reasonably acceptable to Central Jersey (the “Exchange Agent”) an
amount of cash equal to the aggregate Merger Consideration to be paid pursuant
to Section 2.1 hereof (the “Exchange Fund”). As promptly as
practicable after the Effective Time of the Merger, the Exchange Agent shall
send or cause to be sent to each former holder of record of Central Jersey
Shares transmittal materials (the “Letter of Transmittal”) for use in exchanging
their certificates formerly representing Central Jersey Shares for the Merger
Consideration provided for in this Agreement. The Letter of
Transmittal will contain instructions with respect to the surrender of
certificates representing Central Jersey Shares and the receipt of the Merger
Consideration contemplated by this Agreement and will require each holder of
Central Jersey Shares to transfer good and marketable title to such Central
Jersey Shares to Kearny, free and clear of all liens, claims and
encumbrances.
(a) At
the Effective Time of the Merger, the stock transfer books of Central Jersey
shall be closed as to holders of Central Jersey Shares immediately prior to the
Effective Time of the Merger, no transfer of Central Jersey Shares by any such
holder shall thereafter be made or recognized and each outstanding certificate
formerly representing Central Jersey Shares shall, without any action on the
part of any holder thereof, no longer represent Central Jersey
Shares. If, after the Effective Time of the Merger, certificates are
properly presented to the Exchange Agent, such certificates shall be exchanged
for the Merger Consideration.
(b) In
the event that any holder of record as of the Effective Time of the Merger of
Central Jersey Shares is unable to deliver the certificate which represents such
holder’s Central Jersey Shares, Kearny, in the absence of actual notice that any
Central Jersey Shares theretofore represented by any such certificate have been
acquired by a bona fide purchaser shall deliver to such holder the Merger
Consideration contemplated by this Agreement to which such holder is entitled in
accordance with the provisions of this Agreement upon the presentation of all of
the following:
(i) An
affidavit or other evidence to the reasonable satisfaction of Kearny that any
such certificate has been lost, wrongfully taken or destroyed;
(ii) Such
security or indemnity as may be reasonably requested by Kearny to indemnify and
hold Kearny harmless in respect of such stock certificate(s); and
(iii) Evidence
to the reasonable satisfaction of Kearny that such holder is the owner of
Central Jersey Shares theretofore represented by each certificate claimed by
such holder to be lost, wrongfully taken or destroyed and that such holder is
the person who would be entitled to present each such certificate for exchange
pursuant to this Agreement.
(c) If
the delivery of the Merger Consideration contemplated by this Agreement is to be
made to a person other than the person in whose name any certificate
representing Central Jersey Shares surrendered is registered, such certificate
so surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer), with the signature(s) appropriately guaranteed, and
otherwise in proper form for transfer, and the person requesting such delivery
shall pay any transfer or other taxes required by reason of the delivery to a
person other than the registered holder of such certificate surrendered or
establish to the reasonable satisfaction of Kearny that such tax has been paid
or is not applicable.
(d) Except
as provided herein, the consideration contemplated by this Agreement shall not
be paid to the holder of any unsurrendered certificate or certificates
representing Central Jersey Shares, and neither the Exchange Agent nor Kearny
shall be obligated to deliver any of the Merger Consideration contemplated by
this Agreement until such holder shall surrender the certificate or certificates
representing Central Jersey Shares as provided for by the
Agreement. Subject to applicable laws, following surrender of any
such certificate or certificates, there shall be paid to the holder of the
certificate or certificates formerly representing Central Jersey Shares, without
interest at the time of such surrender, the Merger Consideration.
(e) At
any time following six months after the Effective Time, Kearny shall be entitled
to require the Exchange Agent to deliver to it any portion of the Exchange Fund
which has not yet been disbursed to former holders of Central Jersey Shares, and
thereafter, such holders shall be entitled to look to Kearny (subject to
abandoned property and escheat laws) with respect to any amounts due upon
surrender of their certificates formerly representing Central Jersey
Shares.
(f) Kearny
or the Exchange Agent will be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement or the transactions
contemplated hereby to any holder of Central Jersey Shares, such amounts as
Kearny (or any Affiliate thereof) or the Exchange Agent is required to deduct
and withhold with respect to the making of such payment under the Code, or any
applicable provision of U.S. federal, state, local or non-U.S. Tax
law. To the extent that such amounts are properly withheld by Kearny
or the Exchange Agent, such withheld amounts will be treated for all purposes of
this Agreement as having been paid to the holder of the Central Jersey Shares in
respect of whom such deduction and withholding were made by Kearny or the
Exchange Agent.
Section
2.4
Determination of Alternative
Structures
. Central Jersey hereby agrees that Kearny may at
any time change the method of effecting the Merger; provided, however, that no
such changes shall (a) alter or change the amount or kind of the Merger
Consideration to be paid to holders of the Central Jersey Shares or the Options
Consideration to be paid to the holders of Central Jersey Options as provided
for in this Agreement, (b) materially impede or delay
consummation
of the transactions contemplated by this Agreement, or (c) adversely affect the
tax treatment of Central Jersey’s shareholders as a result of receiving the
Merger Consideration or the tax treatment of any Party pursuant to this
Agreement.
Section
2.5
Laws of
Escheat
. If any of the consideration due or other payments to
be paid or delivered to the holders of Central Jersey Shares is not paid or
delivered within the time period specified by any applicable laws concerning
abandoned property, escheat or similar laws, and if such failure to pay or
deliver such consideration occurs or arises out of the fact that such property
is not claimed by the proper owner thereof, Kearny or the Exchange Agent shall
be entitled to dispose of any such consideration or other payments in accordance
with applicable laws concerning abandoned property, escheat or similar
laws. Any other provision of this Agreement notwithstanding, none of
Central Jersey, Kearny, the Exchange Agent, nor any other Person acting on
behalf of any of them shall be liable to a holder of Central Jersey Shares for
any amount paid or property delivered in good faith to a public official
pursuant to and in accordance with any applicable abandoned property, escheat or
similar law.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF CENTRAL JERSEY
Central
Jersey and Central Jersey Bank hereby represent and warrant to Kearny and Kearny
Bank as follows as of the date hereof and as of all times up to and including
the Effective Time of the Merger (except as otherwise provided):
Section
3.1
Corporate
Organization
.
(a) Central
Jersey is a corporation duly organized, validly existing and in good standing
under the laws of the State of New Jersey. Central Jersey has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as such business is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets leased by it makes such licensing or qualification
necessary except where the failure to be so licensed or qualified (or steps
necessary to sure such failure) would not have a Material Adverse Effect on
Central Jersey. Central Jersey is duly registered as a bank holding
company pursuant to the Bank Holding Company Act of 1956, as
amended. True and correct copies of the Certificate of Incorporation
and the By-laws of Central Jersey, each as amended to the date hereof, have been
delivered to Kearny.
(b) Central
Jersey has in effect all federal, state, local and foreign governmental,
regulatory and other authorizations, permits and licenses necessary for it to
own or lease its properties and assets and to carry on its business as now
conducted, the absence of which, either individually or in the aggregate, would
have a Material Adverse Effect on Central Jersey.
(c) Central
Jersey Bank is a national banking association, duly organized, validly existing
and in good standing under the laws of the United States. Central
Jersey Bank has the corporate power and authority to own or lease all of its
properties and assets and to carry
on its
business as such business is now being conducted. True and correct
copies of the Articles of Association and the Bylaws of Central Jersey Bank,
each as amended to the date hereof, have been delivered to Kearny.
(d) The
respective minute books of Central Jersey and each subsidiary contain complete
and accurate records in all material respects of all meetings and other
corporate actions held or taken by its shareholders and Boards of Directors
(including all committees thereof).
(e) Each
direct and indirect subsidiary of Central Jersey (other than Central Jersey
Bank) is a corporation, limited liability company or partnership duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization. Each subsidiary has the corporate or
requisite power or authority to own or lease all of its properties and assets
and to carry on its business as such business is now being conducted, and is
duly licensed or qualified to do business in all such places where the nature of
the business being conducted by each subsidiary or the character or location of
the properties or assets owned or leased by each subsidiary makes such
qualification necessary, except where the failure to be so licensed or qualified
(or steps necessary to cure such failure) would not have a Material Adverse
Effect on Central Jersey. All of such subsidiaries and other entities
are in compliance with all applicable laws, rules and regulations relating to
direct investment in equity ownership interests. A true and correct
list of all direct and indirect subsidiaries of Central Jersey is attached
hereto as Schedule 3.1(e). Such schedule details the jurisdiction of
organization, type of entity, percentage ownership and a brief description of
the activities conducted by such subsidiary.
Section
3.2
Capitalization
.
(a) The
authorized capital stock of Central Jersey consists of 100,000,000 Central
Jersey Shares, of which 9,349,901 are issued and outstanding as of the date
hereof which 276,378 shares are held in the treasury of Central Jersey and
10,000,000 shares of preferred stock of which 11,300 shares of Fixed Rate
Cumulative Perpetual Senior Preferred Stock, Series A (the “Central Jersey
Preferred Shares “) are issued and outstanding. All of the issued and
outstanding Central Jersey Shares and Central Jersey Preferred Shares have been
duly authorized and validly issued and all such shares are fully paid and
nonassessable. As of the date hereof, there are no outstanding
options, warrants, commitments, or other rights or instruments to purchase or
acquire any shares of capital stock of Central Jersey, or any securities or
rights convertible into or exchangeable for shares of capital stock of Central
Jersey, except for options to purchase 900,586 Central Jersey Shares, 113,448
stock appreciation rights (each of which are described in more detail in
Schedule 2.2) and a warrant to purchase 268,621 Central Jersey Shares which is
held by the United States Department of the Treasury.
(b) Central
Jersey owns, directly, or indirectly, all of the capital stock of Central Jersey
Bank and the other Central Jersey subsidiaries, free and clear of any liens,
security interests, pledges, charges, encumbrances, agreements and restrictions
of any kind or nature. There are no subscriptions, options,
commitments, calls or other agreements outstanding with respect to the capital
stock of Central Jersey Bank or any other subsidiary. Except for the
Central Jersey subsidiaries, Central Jersey does not possess, directly or
indirectly, any material equity interest in any entity, except for equity
interests in Central Jersey Bank’s investment portfolio as set forth in Schedule
3.2(b).
Section
3.3
Financial Statements;
Filings
.
(a) Central
Jersey has previously delivered to Kearny copies of the audited consolidated
financial statements of Central Jersey as of and for the years ended December
31, 2009, December 31, 2008 and December 31, 2007 and the unaudited consolidated
financial statements for the quarter ended March 31, 2010, and Central Jersey
shall deliver to Kearny, as soon as practicable following the preparation of
additional financial statements for each subsequent calendar quarter (or other
reporting period) or year of Central Jersey, the additional financial statements
of Central Jersey as of and for such subsequent calendar quarter (or other
reporting period) or year (such financial statements, unless otherwise
indicated, being hereinafter referred to collectively as the “Financial
Statements of Central Jersey”).
(b) Central
Jersey Bank has previously delivered to Kearny copies of the Consolidated
Reports of Condition and Income (“Call Reports”) of Central Jersey Bank as of
and for each of the years ended December 31, 2009, December 31, 2008 and
December 31, 2007 and for the quarter ended March 31, 2010, and Central Jersey
Bank shall deliver to Kearny, as soon as practicable following the preparation
of additional Call Reports for each subsequent calendar quarter (or other
reporting period) or year, the Call Reports of Central Jersey Bank as of and for
such subsequent calendar quarter (or other reporting period) or year (such Call
Reports, unless otherwise indicated, being hereinafter referred to collectively
as the “Financial Regulatory Reports of Central Jersey Bank”).
(c) Each
of the Financial Statements of Central Jersey and each of the Financial
Regulatory Reports of Central Jersey Bank (including the related notes, where
applicable) have been or will be prepared in all material respects in accordance
with GAAP or regulatory accounting principles, whichever is applicable, which
principles have been or will be consistently applied by Central Jersey during
the periods involved, except as otherwise noted therein, and the books and
records of Central Jersey and Central Jersey Bank have been, are being, and will
be maintained in all material respects in accordance with applicable legal and
accounting requirements and reflect only actual transactions. Each of
the Financial Statements of Central Jersey and each of the Financial Regulatory
Reports of Central Jersey Bank (including the related notes, where applicable)
fairly presents or will fairly present the financial position of Central Jersey
or Central Jersey Bank, as applicable, as of the respective dates thereof and
fairly presents or will fairly present the results of operations of Central
Jersey or Central Jersey Bank, as applicable, for the respective periods therein
set forth.
(d) To
the extent not prohibited by law, Central Jersey has heretofore delivered or
made available, or caused to be delivered or made available, to Kearny all
material reports and filings made or required to be made by Central Jersey or
Central Jersey Bank with the Regulatory Authorities, and will from time to time
hereafter furnish to Kearny, upon filing or furnishing the same to the
Regulatory Authorities, all such material reports and filings made after the
date hereof with the Regulatory Authorities. As of the respective
dates of such reports and filings, all such reports and filings did not and
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(e) Except
as set forth in Schedule 3.3(e), since December 31, 2009, neither Central Jersey
nor any of its subsidiaries has incurred any obligation or liability (contingent
or otherwise) that has or might reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Central Jersey except obligations
and liabilities which are accrued or reserved against in the Financial
Statements of Central Jersey or the Financial Regulatory Reports of Central
Jersey Bank, or reflected in the notes thereto. Since December 31,
2009, neither Central Jersey nor any of its subsidiaries has incurred or paid
any obligation or liability which would be material to Central Jersey, except as
may have been incurred or paid in the ordinary course of business, consistent
with past practices.
Section
3.4
Loan Portfolio;
Reserves
. All evidences of indebtedness reflected as assets in
the Financial Statements of Central Jersey were (or will be, as the case may be)
as of such dates in all respects the binding obligations of the respective
obligors named therein in accordance with their respective terms, and were not
subject to any defenses, setoffs, or counterclaims, except as may be provided by
bankruptcy, insolvency or similar laws or by general principles of
equity. The allowances for possible loan losses shown on the
Financial Statements of Central Jersey and the Financial Regulatory Reports of
Central Jersey Bank were, and the allowance for possible loan losses to be shown
on the Financial Statements of Central Jersey and the Financial Regulatory
Reports of Central Jersey Bank as of any date subsequent to the execution of
this Agreement will be, as of such dates, adequate to provide for possible
losses, net of recoveries relating to loans previously charged off, in respect
of loans outstanding (including accrued interest receivable) of Central Jersey
and other extensions of credit (including letters of credit or commitments to
make loans or extend credit).
Section
3.5
Certain Loans and Related
Matters
. Except as set forth in Schedule 3.5, neither Central
Jersey nor any of its subsidiaries is a Party to any written or oral: (i) loan
agreement, note or borrowing arrangement under the terms of which the obligor is
sixty (60) days delinquent in payment of principal or interest or in default of
any other provision as of the date hereof; (ii) loan agreement, note or
borrowing arrangement which has been classified or, in the exercise of
reasonable diligence by Central Jersey or its subsidiaries or any Regulatory
Authority, should have been classified by any bank examiner (whether regulatory
or internal) as “substandard,” “doubtful,” “loss,” “other loans especially
mentioned,” “other assets especially mentioned,” “special mention,” “credit risk
assets,” “classified,” “criticized,” “watch list,” “concerned loans” or any
comparable classifications by such persons; (iii) loan agreement, note or
borrowing arrangement, including any loan guaranty, with any director or
executive officer of Central Jersey or any five percent (5%) shareholder of
Central Jersey, or any person, corporation or enterprise controlling, controlled
by or under common control with any of the foregoing; or (iv) loan agreement,
note or borrowing arrangement in violation of any law, regulation or rule
applicable to Central Jersey or its subsidiaries including, but not limited to,
those promulgated, interpreted or enforced by any Regulatory Authority, which
such violation would be reasonably expected to have a Material Adverse Effect on
Central Jersey.
Section
3.6
Authority; No
Violation
.
(a) Central
Jersey and Central Jersey Bank have full corporate power and authority to
execute and deliver this Agreement and, subject to the approval of the
shareholders of Central Jersey and to the receipt of the Consents of the
Regulatory Authorities, to consummate
the
transactions contemplated hereby. The Boards of Directors of Central
Jersey and Central Jersey Bank have duly and validly approved this Agreement and
the transactions contemplated hereby, have authorized the execution and delivery
of this Agreement, have directed that this Agreement and the transactions
contemplated hereby be submitted to Central Jersey’s shareholders for approval
at a meeting of such shareholders and, except for the adoption of such Agreement
by its shareholders and the execution and filing of the Certificate of Merger,
no other corporate proceeding on the part of Central Jersey or Central Jersey
Bank is necessary to consummate the transactions so
contemplated. This Agreement (assuming due authorization, execution
and delivery by Kearny and Kearny Bank), constitutes the valid and binding
obligation of Central Jersey and Central Jersey Bank, and is enforceable against
Central Jersey and Central Jersey Bank in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, receivership or similar laws affecting the
enforcement of creditors’ rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be
brought.
(b) Neither
the execution and delivery of this Agreement by Central Jersey or Central Jersey
Bank nor the consummation by Central Jersey or Central Jersey Bank of the
transactions contemplated hereby including the Bank Merger, nor compliance by
Central Jersey or Central Jersey Bank with any of the terms or provisions
hereof, will (i) violate any provision of the Certificate of Incorporation or
By-laws of Central Jersey or the Articles of Association and Bylaws of Central
Jersey Bank or any governing documents of any of their subsidiaries, (ii)
assuming that the Consents of the Regulatory Authorities and approvals referred
to herein are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Central
Jersey or Central Jersey Bank or any of their subsidiaries or 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 the creation of any lien,
security interest, charge or other encumbrance upon any of the respective
properties or assets of Central Jersey or Central Jersey Bank or any of their
subsidiaries under, any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, deed of trust, license, permit, lease,
agreement or other instrument or obligation to which Central Jersey, Central
Jersey Bank or any of their subsidiaries is a Party, or by which it or any of
their properties or assets may be bound or affected, except in the case of
clauses (ii) and (iii) as would not constitute a Material Adverse Effect on
Central Jersey.
(c) No
appraisal or dissenters’ rights shall be available to holders of Central Jersey
Shares in connection with the Merger.
Section
3.7
Consents and
Approvals
. Except for (i) the approval of the shareholders of
Central Jersey pursuant to the proxy statement of Central Jersey relating to the
meeting of the shareholders of Central Jersey at which the Merger is to be
considered (the “Proxy Statement”); (ii) the Consents of the Regulatory
Authorities; and (iii) as set forth in Schedule 3.7, no Consents of any person
are necessary in connection with the execution and delivery by Central Jersey
and Central Jersey Bank of this Agreement, and the consummation of the Merger
and the other transactions contemplated hereby.
Section
3.8
Broker’s
Fees
. Except for Sandler O’Neill & Partners, L.P.
(“Sandler”), whose engagement letter is set forth in Schedule 3.8, neither
Central Jersey nor any of its officers or directors, has employed any broker or
finder or incurred any liability for any broker’s fees, commissions or finder’s
fees in connection with any of the transactions contemplated by this
Agreement.
Section
3.9
Absence of Certain Changes
or Events
. Except as set forth in Schedule 3.9, since December
31, 2009, there has not been (a) any declaration, payment or setting aside of
any dividend or distribution (whether in cash, stock or property) in respect of
Central Jersey Shares or (b) any change or any event involving a prospective
change in the financial condition, results of operations, business or prospects
of Central Jersey, or a combination of any such change(s) and any such event(s),
which has had, or is reasonably likely to have, a Material Adverse Effect on
Central Jersey, including, without limitation, any change in the administration
or supervisory standing or rating of Central Jersey or Central Jersey Bank with
any Regulatory Authority, and no fact or condition exists as of the date hereof
which might reasonably be expected to cause any such event or change in the
future.
Section
3.10
Legal Proceedings;
Etc
.
(a) Neither
Central Jersey nor any of its subsidiaries is a party to any, and there are no
pending or, to the Knowledge of Central Jersey or any of its subsidiaries,
threatened, judicial, administrative, arbitral or other proceedings, claims,
actions, causes of action or governmental investigations against Central Jersey
or any of its subsidiaries challenging the validity of the transactions
contemplated by this Agreement and except as set forth in Schedule 3.10,
there is no proceeding, claim, action or governmental investigation pending or,
to the Knowledge of Central Jersey or any of its subsidiaries, threatened
against Central Jersey or any of its subsidiaries; no judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator is outstanding against Central Jersey or
any of its subsidiaries which has had, or is reasonably likely to have, a
Material Adverse Effect on Central Jersey; there is no default by Central Jersey
or any of its subsidiaries under any material contract or agreement to which any
of them is a party; and neither Central Jersey nor any of its subsidiaries is a
party to any agreement, order or memorandum in writing by or with any Regulatory
Authority restricting the operations of Central Jersey or any of its
subsidiaries, and neither Central Jersey nor any of its subsidiaries has been
advised by any Regulatory Authority that any such Regulatory Authority is
contemplating issuing or requesting the issuance of any such order or memorandum
in the future.
(b) There
are no actions, suits, claims, proceedings, investigations or assessments of any
kind pending or, to Central Jersey’s Knowledge, threatened against any of the
directors or officers of Central Jersey or any of its subsidiaries in their
capacities as such, and no director or officer of Central Jersey or any of its
subsidiaries currently is being indemnified or seeking to be indemnified by
Central Jersey or any of its subsidiaries pursuant to applicable law or their
governing documents.
Section
3.11
Taxes and Tax
Returns
.
(a) Central
Jersey has previously delivered or made available to Kearny copies of the
federal, state and local income tax returns of Central Jersey for the years
2007,
2008 and
2009 and all schedules and exhibits thereto, and Central Jersey has not received
any notice that any such returns have been examined by the Internal Revenue
Service or any other taxing authority. Central Jersey has duly filed
in correct form all federal, state and local information returns and tax returns
required to be filed by Central Jersey or any of its subsidiaries on or prior to
the date hereof, unless subject to a validly filed extension of time for filing
that has not yet expired and all such tax returns are true and complete in all
material respects, and Central Jersey has duly paid or made adequate provisions
for the payment of all taxes and other governmental charges relating to taxes
which are owed by Central Jersey or any of its subsidiaries to any federal,
state or local taxing authorities, whether or not reflected in such returns
(including, without limitation, those owed in respect of the properties, income,
business, capital stock, deposits, franchises, licenses, sales and payrolls of
Central Jersey or any of its subsidiaries), other than taxes and other charges
which (i) are not yet delinquent or are being contested in good faith or (ii)
have not been finally determined. The amounts set forth as
liabilities for taxes on the Financial Statements of Central Jersey and the
Financial Regulatory Reports of Central Jersey Bank are sufficient, in the
aggregate, for the payment of all unpaid federal, state and local taxes
(including any interest or penalties thereon), whether or not disputed, accrued
or applicable, for the periods then ended, and have been computed in accordance
with GAAP as consistently applied by Central Jersey during the periods
involved. Central Jersey is not responsible for the taxes of any
other person under Treasury Regulation 1.1502-6 or any similar provision of
federal, state or foreign law.
(b) No
federal, state or local administrative proceedings or court proceedings, and to
the knowledge of Central Jersey, no federal, state or local audits, examinations
or investigations are presently pending with regard to any taxes or tax returns
filed by or on behalf of Central Jersey or any of its
subsidiaries. Except as disclosed in Schedule 3.11(b), neither
Central Jersey nor any of its subsidiaries has executed an extension or waiver
of any statute of limitations on the assessment or collection of any federal,
state or local taxes due that is currently in effect, and deferred taxes of
Central Jersey, have been adequately provided for in the Financial Statements of
Central Jersey.
(c) Except
as set forth on Schedule 3.11 (c), neither Central Jersey nor any of its
subsidiaries has made any payment, is obligated to make any payment or is a
party to any contract, agreement or other arrangement that could obligate it to
make any payment that would exceed the amounts that are eligible to be a
deduction under Section 280G or 162(m) of the Code. Each of the
Change of Control Agreements entered into by Central Jersey or any of its
subsidiaries has been amended as may be necessary prior to the execution of this
Agreement to provide that in no event shall payments required in accordance with
each such agreement obligate any Party to make payments thereunder that would
constitute an “excess parachute payment” in accordance with Section 280G of the
Code and subject the recipient of such payments to the 20% tax detailed at
Section 4999 of the Code.
(d) There
has not been an ownership change, as defined in Section 382(g) of the Code, of
Central Jersey that occurred during or after any taxable period in which Central
Jersey incurred an operating loss that carries over to any taxable period ending
after the fiscal year of Central Jersey immediately preceding the date of this
Agreement.
(e) (i)
Proper and accurate amounts have been withheld by Central Jersey and its
subsidiaries from their employees and others for all prior periods in compliance
in all material respects with the tax withholding provisions of all applicable
federal, state and local laws and regulations, and proper due diligence steps
have been taken in connection with back-up withholding; (ii) federal, state and
local returns have been filed by Central Jersey and its subsidiaries for all
periods for which returns were due with respect to withholding, Social Security
and unemployment taxes or charges due to any federal, state or local taxing
authority; and (iii) the amounts shown on such returns to be due and payable
have been paid in full or adequate provision therefor have been included by
Central Jersey in the Financial Statements of Central Jersey.
(f) None
of Central Jersey, Central Jersey Bank or any Central Jersey subsidiary has
received any written notice that an audit or examination of any of its taxes or
tax returns is pending.
(g) None
of Central Jersey, Central Jersey Bank or any Central Jersey subsidiary is
required to include in income any adjustment pursuant to Section 481(a) of the
Code, no such adjustment has been proposed by the Internal Revenue Service and
no pending request for permission to change any accounting method has been
submitted by Central Jersey, Central Jersey Bank or any Central Jersey
subsidiary.
Section
3.12
Employee Benefit
Plans
.
(a) Neither
Central Jersey nor any of its subsidiaries maintains any “employee benefit
plan,” as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”), except as set forth on Schedule 3.12(a) (the
“Employee Benefit Plans”). Central Jersey has, with respect to each
such plan, delivered or made available to Kearny true and complete copies of:
(i) all plan texts and agreements and related trust agreements or annuity
contracts and any amendments thereto; (ii) all summary plan descriptions and
material employee communications; (iii) the Form 5500 filed in each of the most
recent three plan years (including all schedules thereto and the opinions of
independent accountants); (iv) the most recent actuarial valuation (if any); (v)
the most recent annual and periodic accounting of plan assets; (vi) if the plan
is intended to qualify under Section 401(a), the most recent determination
letter received from the Internal Revenue Service or opinion letter issued by
the Internal Revenue Service with respect to a prototype plan; and (vii) all
material communications with any governmental entity or agency (including,
without limitation, the Department of Labor, Internal Revenue Service and the
Pension Benefit Guaranty Corporation (“PBGC”)).
(b) Neither
Central Jersey nor any of its subsidiaries presently maintains, nor have any of
them previously maintained or participated in any Employee Benefit Plan which is
a “defined benefit plan” as such term is defined at Section 3(35) of
ERISA. Neither Central Jersey nor any of its subsidiaries (or any
pension plan maintained by any of them) has incurred any liability to the PBGC
or the Internal Revenue Service with respect to any pension plan qualified under
Section 401 of the Code, except liabilities to the PBGC pursuant to Section 4007
of ERISA, all of which have been fully paid. No reportable event
under Section 4043(b) of ERISA
(including
events waived by PBGC regulation) has occurred with respect to any such pension
plan.
(c) At
no time has Central Jersey or any of its ERISA Affiliates (as defined below)
ever maintained, established, sponsored, participated in or contributed to an
employee benefit plan subject to Title IV of ERISA. The term “ERISA
Affiliate” means a trade or business that is treated as a single employer with
Central Jersey within the meaning of Section 414(b), (c), (m) or (o) of the
Code.
(d) Neither
Central Jersey nor any of its subsidiaries has incurred any liability under
Section 4201 of ERISA for a complete or partial withdrawal from, or agreed to
participate in, any multi-employer plan as such term is defined in Section 3(37)
of ERISA.
(e) All
Employee Benefit Plans have been operated and administered in all material
respects in accordance with their terms and all applicable law and are in
material compliance with the applicable provisions of ERISA and the Code,
including, but not limited to, COBRA, HIPAA and any applicable, similar state
law and all requisite filings, disclosures and notices required by law have been
made or given. Neither Central Jersey nor any of its subsidiaries has
any material liability under any such plan that is not reflected in the
Financial Statements of Central Jersey or the Financial Regulatory Reports of
Central Jersey Bank. None of Central Jersey, any subsidiary of
Central Jersey, any Employee Benefit Plan or any employee, administrator or
agent thereof, is or has been in material violation of any applicable
transaction code set rules under HIPAA §§ 1172-1174 or the HIPAA privacy rules
under 45 CFR Part 160 and subparts A and E of Part 164. No penalties
have been imposed on Central Jersey, any Employee Benefit Plan, or any employee,
administrator or agent thereof, under HIPAA § 1176 or § 1177.
For
purposes of this Agreement, “COBRA” means the provision of Section 4980B of the
Code and the regulations thereunder, and Part 6 of Subtitle B of Title I of
ERISA and any regulations thereunder, and “HIPAA” means the provisions of the
Code and ERISA as enacted by the Health Insurance Portability and Accountability
Act of 1996.
(f) No
prohibited transaction (which shall mean any transaction prohibited by Section
406 of ERISA and not exempt under Section 408 of ERISA) has occurred with
respect to any Employee Benefit Plan which would result in the imposition,
directly or indirectly, of an excise tax under Section 4975 of the Code or a
civil penalty under Section 502(i) of ERISA; and no actions have occurred which
could result in the imposition of a penalty under any section or provision of
ERISA.
(g) No
Employee Benefit Plan which is a defined benefit pension plan has any “unfunded
current liability,” as that term is defined in Section 302(d)(8)(A) of ERISA,
and the present fair market value of the assets of any such plan exceeds the
plan’s “benefit liabilities,” as that term is defined in Section 4001(a)(16) of
ERISA, when determined under actuarial factors that would apply if the plan
terminated in accordance with all applicable legal requirements.
(h) Except
as set forth in Schedule 3.12(h), neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result
in any
payment or obligation (including, without limitation, severance, bonus, deferred
compensation, retirement, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any officer or employee of Central
Jersey or any of its subsidiaries under any Employee Benefit Plan or otherwise,
(ii) increase any benefits or obligations otherwise payable under any benefit
plan, (iii) result in any acceleration of the time of payment or vesting of any
such benefits or obligations, (iv) result in or have the potential to result in
a payment that will be deemed an “excess parachute payment” within the meaning
of such term under Section 280G of the Code becoming due, or (v) result in a
violation of Section 111 of the Emergency Economic Recovery Act of 2008
(“EESA”), as amended by the American Recovery and Reinvestment Act of 2009
(“ARRA”), and regulations adopted thereunder by the United States Department of
the Treasury (collectively, the “Section 111 Rules”).
(i) No
Employee Benefit Plan is a multiemployer plan as defined in Section 414(f) of
the Code or Section 3(37) or 4001(a)(3) of ERISA. Central Jersey has
never been a party to or participant in a multiemployer plan.
(j) There
are no actions, liens, suits or claims pending or, to the Knowledge of Central
Jersey or any of its subsidiaries, threatened (other than routine claims for
benefits) with respect to any Employee Benefit Plan or against the assets of any
Employee Benefit Plan. No assets of Central Jersey or any of its
subsidiaries are subject to any lien under Section 302(f) of ERISA or Section
412(n) of the Code.
(k) Each
Employee Benefit Plan which is intended to qualify under Section 401(a) or
403(a) of the Code has received a favorable determination letter from the IRS to
the effect that it so qualifies and its related trust is exempt from taxation
under Section 501(a) of the Code or a favorable opinion letter from the IRS with
respect to any Employee Benefit Plan that is set forth in a prototype or volume
submitter plan document. No event has occurred or circumstance exists
that will or could give rise to a disqualification or loss of tax-exempt status
of any such plan or trust.
(l) No
Employee Benefit Plan is a multiple employer plan within the meaning of Section
413(c) of the Code or Section 4063, 4064 or 4066 of ERISA. No
Employee Benefit Plan is a multiple employer welfare arrangement as defined in
Section 3(40) of ERISA.
(m) Each
employee pension benefit plan, as defined in Section 3(2) of ERISA, that is not
qualified under Section 401(a) or 403(a) of the Code is exempt from Part 2, 3
and 4 of Title I of ERISA as an unfunded plan that is maintained primarily for
the purpose of providing deferred compensation for a select group of management
or highly compensated employees, pursuant to Section 201(2), 301(a)(3) and
401(a)(1) of ERISA. No assets of Central Jersey or any of its
subsidiaries are allocated to or held in a grantor trust or “rabbi trust” or
similar funding vehicle.
(n) Except
as set forth on Schedule 3.12(n), no Employee Benefit Plan provides benefits to
any current or former employee of Central Jersey or any of its subsidiaries
(including predecessor entities) following the retirement or other termination
of service (other than coverage mandated by COBRA, the cost of which is fully
paid by the current or former employee or his or her dependents). Any
such plan may be amended or terminated at any time by unilateral action of
Central Jersey.
(o) With
respect to each Employee Benefit Plan, there are no funded benefit obligations
for which contributions have not been made or properly accrued and there are no
unfunded benefit obligations that have not been accounted for by reserves or
otherwise properly footnoted in accordance with GAAP as consistently applied by
Central Jersey on the Financial Statements of Central Jersey. All
contributions or premiums owed by Central Jersey or any subsidiary with respect
to Employee Benefit Plans under law, contract or otherwise, have been made in
full and on a timely basis.
(p) Except
as set forth on Schedule 3.12(p), there are no contracts, plans or arrangements
which provide for benefits to any current or former director or advisory
director of Central Jersey or any of its subsidiaries (including any predecessor
entities) following the retirement or other termination of
service. Any such plan may be amended or terminated at any time by
unilateral action of Central Jersey.
(q) None
of Central Jersey or any of its subsidiaries has made any payments nor are any
of the entities obligated to make any payments that would violate the provisions
of Section 409A of the Code and obligate the recipient of such payments to pay
the additional tax detailed at Section 409A(a)(1)(B) of the Code.
(r) Each
Employee Benefit Plan, other than any 401(k) plan, can be terminated or
otherwise discontinued after the Effective Time of the Merger in accordance with
its terms without liability to Kearny or any subsidiary (other than ordinary
administrative expenses typically incurred in a termination event).
(s)
No
Employee
Benefit
Plan has
received written notice that an IRS or U.S. Department of Labor examination is
pending with respect to such Employee Benefit Plan, and to the knowledge of
Central Jersey no Employee Benefit Plan is under any such examination and no
Employee Benefit Plan has been submitted to a voluntary IRS or U.S. Department
of Labor correction program.
Section
3.13
Title and Related
Matters
.
(a) Central
Jersey and its subsidiaries have good and marketable title, and as to owned real
property, have marketable title in fee simple absolute, to all assets and
properties, real or personal, tangible or intangible, reflected as owned on the
Financial Statements of Central Jersey or the Financial Regulatory Reports of
Central Jersey Bank or acquired subsequent thereto (except to the extent that
such assets and properties have been disposed of for fair value in the ordinary
course of business since December 31, 2009), free and clear of all liens,
encumbrances, mortgages, security interests, restrictions, pledges or claims,
except for (i) those liens, encumbrances, mortgages, security interests,
restrictions, pledges or claims reflected in the Financial Statements of Central
Jersey and the Financial Regulatory Reports of Central Jersey Bank or incurred
in the ordinary course of business after December 31, 2009, (ii) statutory liens
for amounts not yet delinquent or which are being contested in good faith, and
(iii) liens, encumbrances, mortgages, security interests, pledges, claims and
title imperfections that are not in the aggregate material to the financial
condition, results of operations, business or prospects of Central
Jersey.
(b) All
agreements pursuant to which Central Jersey or any of its subsidiaries leases,
subleases or licenses material real or material personal properties from others
are valid, binding and enforceable in accordance with their respective terms,
and there is not, under any of such leases or licenses, any existing default or
event of default, or any event which with notice or lapse of time, or both,
would constitute a default or force majeure, or provide the basis for any other
claim of excusable delay or nonperformance, except for defaults which
individually or in the aggregate would not have a Material Adverse Effect on
Central Jersey. Central Jersey or its subsidiaries has all right,
title and interest as a lessee under the terms of each lease or sublease, free
and clear of all liens, claims or encumbrances (other than the rights of the
lessor) as of the Effective Time of the Merger, and, except as set forth on
Schedule 3.13(b), Kearny shall have the right to assume each lease or sublease
pursuant to this Agreement and by operation of law.
(c) Except
as set forth in Schedule 3.13(c), (i) all of the buildings, structures and
fixtures owned, leased or subleased by Central Jersey and its subsidiaries are
in good operating condition and repair, subject only to ordinary wear and tear
and/or minor defects which do not interfere with the continued use thereof in
the conduct of normal operations, and (ii) all of the material personal
properties owned, leased or subleased by Central Jersey or its subsidiaries are
in good operating condition and repair, subject only to ordinary wear and tear
and/or minor defects which do not interfere with the continued use thereof in
the conduct of normal operations.
Section
3.14
Real
Estate
.
(a) Schedule
3.14(a) identifies each parcel of real estate or interest therein owned, leased
or subleased by Central Jersey or its subsidiaries or in which Central Jersey or
any of its subsidiaries has any ownership or leasehold interest.
(b) Schedule
3.14(b) lists or otherwise describes each and every written or oral lease or
sublease, together with the current name, address and telephone number of the
landlord or sublandlord and the landlord’s property manager (if any), under
which Central Jersey or any of its subsidiaries is the lessee of any real
property and which relates in any manner to the operation of the businesses of
Central Jersey or its subsidiaries.
(c) None
of Central Jersey or any of its subsidiaries has violated, or is currently in
violation of, any law, regulation or ordinance relating to the ownership or use
of the real estate and real estate interests described in Schedules 3.14(a) and
3.14(b) including, but not limited to any law, regulation or ordinance relating
to zoning, building, occupancy, environmental or comparable matter.
(d) As
to each parcel of real property owned or used by Central Jersey or any of its
subsidiaries, neither Central Jersey nor the subsidiary has received notice of
any pending or, to the Knowledge of Central Jersey or the subsidiary, threatened
condemnation proceedings, litigation proceedings or mechanic’s or materialmen’s
liens.
Section
3.15
Environmental
Matters
.
(a) Each
of Central Jersey, its subsidiaries, the Participation Facilities (as defined in
Section 11.1 of this Agreement), and, to the Knowledge of Central Jersey or any
of its
subsidiaries,
the Loan Properties (as defined in Section 11.1 of this Agreement) are, and have
been, in material compliance, and there are no present circumstances that would
prevent or interfere with the continuation of such material compliance with all
applicable Environmental Laws.
(b) There
is no litigation pending or, to the Knowledge of Central Jersey or any of its
subsidiaries, threatened before any court, governmental agency or board or other
forum in which Central Jersey, any of its subsidiaries or any Participation
Facility has been or, with respect to threatened litigation, may be, named as
defendant (i) for alleged noncompliance (including by any predecessor), with
respect to any Environmental Law (as defined below) or (ii) relating to the
release into the environment of any Hazardous Material (as defined below),
whether or not occurring at, on or involving a site owned, leased or operated by
Central Jersey, its subsidiaries or any Participation Facility.
(c) There
is no litigation pending or, to the Knowledge of Central Jersey or any of its
subsidiaries, threatened before any court, governmental agency or board or other
forum in which any Loan Property (or Central Jersey or any of its subsidiaries
in respect of such Loan Property) has been named as a defendant or potentially
responsible party (i) for alleged noncompliance (including by any predecessor)
with any Environmental Law or (ii) relating to the release into the environment
of any Hazardous Material, whether or not occurring at, on or involving a Loan
Property.
(d) To
the Knowledge of Central Jersey or any of its subsidiaries, there is no
reasonable basis for any litigation of a type described in Section 3.15(b) and
Section 3.15(c) of this Agreement.
(e) During
the period of (i) ownership or operation by Central Jersey or any of its
subsidiaries of any of its current properties, or (ii) participation by Central
Jersey or any of its subsidiaries in the management of any Participation
Facility, and to the Knowledge of Central Jersey and any of its subsidiaries,
during the period of holding by Central Jersey or any of its subsidiaries of a
security interest in any Loan Property, there have been no releases of Hazardous
Material in, on, under or affecting such properties.
(f) Prior
to the period of (i) ownership or operation by Central Jersey or any of its
subsidiaries of any of its current properties, (ii) participation by Central
Jersey or any of its subsidiaries in the management of any Participation
Facility, or (iii) holding by Central Jersey or any of its subsidiaries of a
security interest in any Loan Property, to the Knowledge of Central Jersey or
any of its subsidiaries, there were no releases of Hazardous Material in, on,
under or affecting any such property, Participation Facility or Loan
Property.
(g) There
are no underground storage tanks on, in or under any properties owned or
operated by Central Jersey or any of its subsidiaries or any Participation
Facility and, to the Knowledge of Central Jersey, no underground storage tanks
have been closed or removed from any properties owned or operated by Central
Jersey or any Participation Facility except in compliance with Environmental
Law.
Section
3.16
Commitments and
Contracts
.
(a) Except
as set forth in Schedule 3.16, neither Central Jersey nor any of its
subsidiaries is a party or subject to any of the following (whether written or
oral, express or implied):
(i) Any
employment, severance or consulting contract or understanding (including any
understandings or obligations with respect to severance or termination pay
liabilities or fringe benefits) with any present or former officer, director or
employee, including in any such person’s capacity as a consultant (other than
those which either are terminable at will without any further amount being
payable thereunder or as a result of such termination by Central Jersey or any
of its subsidiaries);
(ii) Any
labor contract or agreement with any labor union;
(iii) Any
contract covenants which limit the ability of Central Jersey or any of its
subsidiaries to compete in any line of business or which involve any restriction
of the geographical area in which Central Jersey or any of its subsidiaries may
carry on its businesses (other than as may be required by law or applicable
regulatory authorities);
(iv) Any
agreement which by its terms limits the payment of dividends by Central Jersey
or any of its subsidiaries;
(v) Any
lease or other agreements or contracts with annual payments aggregating $50,000
or more;
(vi) Any
instrument evidencing or related to borrowed money (other than as lender,
deposits, FHLB advances or securities sold under agreement to repurchase) or
that contain financial covenants or other restrictions (other than those
relating to the payment of principal and interest when due);
(vii) Any
contract not terminable without cause within 60 day’s notice or less without
penalty or that obligates Central Jersey for the payment of $50,000 annually
over its remaining term;
(viii) Any
other contract, agreement, commitment or understanding (whether or not oral)
that is material to the financial condition, results of operations or business
of Central Jersey or any of its subsidiaries, taken as a whole; and
(ix) Any
other contract or agreement which would be required to be disclosed in reports
filed by Central Jersey with the Securities and Exchange Commission (“SEC”), the
Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit
Insurance Corporation (“FDIC”) or the Office of Comptroller of the Currency (the
“OCC”).
Collectively,
those contracts or agreements listed on Schedule 3.16 are referred to herein as
the “Contracts”. True and correct copies of Contracts have been
provided to Kearny on or before the date hereof, as listed in the respective
disclosure schedules and are in full force and effect on the date
hereof.
(b) There
is not, under any Contract to which Central Jersey or any of its subsidiaries is
a party, any existing default or event of default, or any event which with
notice or lapse of time, or both, would constitute a default or force majeure,
or provide the basis for any other claim of excusable delay or
non-performance.
(c) Except
as set forth on Schedule 3.16(c), (i) neither the execution of this Agreement
nor the consummation of the transactions contemplated hereby will result in
termination of any of the Contracts or modify or accelerate any of the terms of
such Contracts; and (ii) no consents are required to be obtained and no notices
are required to be given in order for the Contracts to remain effective, without
any modification or acceleration of any of the terms thereof, following the
consummation of the transactions contemplated by this Agreement.
(d) Schedule
3.16(d) lists the deadlines for extensions or terminations of any material
leases, agreements or licenses (including specifically data processing
agreements) to which Central Jersey or any of its subsidiaries is a
party.
(e) To
the Knowledge of Central Jersey, there are no voting agreements, voting trusts
or other agreements among shareholders of Central Jersey.
Section
3.17
Regulatory
Matters
. Neither Central Jersey nor any of its subsidiaries
has taken or agreed to take any action or has any Knowledge of any fact or has
agreed to any circumstance that would materially impede or delay receipt of any
Consents of any Regulatory Authorities referred to in this Agreement including,
matters relating to the Community Reinvestment Act and protests
thereunder.
Section
3.18
Registration
Obligations
. Central Jersey is not under any obligation,
contingent or otherwise, which will survive the Merger to register any of its
securities under the Securities Act of 1933, as amended (the “Securities Act”)
or any state securities laws.
Section
3.19
Antitakeover
Provisions
. Neither Central Jersey nor Central Jersey Bank is
required to take any action to exempt Central Jersey, Central Jersey Bank, this
Agreement and the Merger from any provisions of an antitakeover nature contained
in their organizational documents, and the provisions of any federal or state
“antitakeover,” “fair price,” “moratorium,” “control share acquisition” or
similar laws or regulations. The vote required to approve this
Agreement is the affirmative vote of a majority of the votes cast by holders of
Central Jersey Shares.
Section
3.20
Insurance
. Central
Jersey and its subsidiaries are presently insured as set forth on Schedule 3.20,
and during each of the past three calendar years have been insured, for such
amounts against such risks as companies or institutions engaged in a similar
business would, in accordance with good business practice, customarily be
insured. The policies of fire, theft, liability and other insurance
maintained with respect to the assets or businesses of Central Jersey and its
subsidiaries provide adequate coverage against loss, and the fidelity bonds in
effect as to which Central Jersey or any of its subsidiaries is named an insured
are sufficient for their purpose. Such policies of insurance are
listed and described in Schedule 3.20.
Section
3.21
Labor
.
(a) No
work stoppage involving Central Jersey or any of its subsidiaries is pending as
of the date hereof or, to the Knowledge of Central Jersey or any of its
subsidiaries, threatened. Neither Central Jersey nor any of its
subsidiaries is involved in, or, to the Knowledge of Central Jersey or any of
its subsidiaries, threatened with or affected by, any proceeding asserting that
Central Jersey or any of its subsidiaries has committed an unfair labor practice
or any labor dispute, arbitration, lawsuit or administrative proceeding which
might reasonably be expected to have a Material Adverse Effect on Central
Jersey. No union represents or, to the Knowledge of Central Jersey or
its subsidiaries, claims to represent any employees of Central Jersey or any of
its subsidiaries, and, to the Knowledge of Central Jersey and its subsidiaries,
no labor union is attempting to organize employees of Central Jersey or any of
its subsidiaries.
(b) Central
Jersey has made available to Kearny a true and complete list of all employees of
Central Jersey and its subsidiaries as of the date hereof, together with the
employee position, title, salary and date of hire. Except as set
forth on Schedule 3.16(a) hereto, no employee of Central Jersey or any of its
subsidiaries has any contractual right to continued employment by Central Jersey
or any of its subsidiaries.
(c) Central
Jersey and its subsidiaries are in material compliance with all applicable laws
and regulations relating to employment or the workplace, including, without
limitation, provisions relating to wages, hours, collective bargaining, safety
and health, work authorization, equal employment opportunity, immigration and
the withholding of income taxes, unemployment compensation, workers
compensation, employee privacy and right to know and social security
contributions.
(d) Except
as set forth on Schedule 3.21(d) hereto, there has not been, there is not
presently pending or existing and, to the Knowledge of Central Jersey or any of
its subsidiaries, there is not threatened any proceeding against or
affecting Central Jersey or any of its subsidiaries relating to the alleged
violation of any Federal or State law or regulation pertaining to labor
relations or employment matters, including any charge or complaint filed by an
employee or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission or any comparable Federal or State governmental body or
regulatory agency, organizational activity, or other labor or employment dispute
against or affecting Central Jersey or any of its subsidiaries.
Section
3.22
Compliance with
Laws
. Central Jersey and its subsidiaries have materially
complied with all applicable federal, foreign, state and local laws, regulations
and orders, and is in material compliance with such laws, regulations and
orders. Except as disclosed in Schedule 3.22, none of Central Jersey
or any of its subsidiaries:
(a) is
in violation of any laws, orders or permits applicable to its business or the
employees or agents or representatives conducting its business (other than where
such violation will not, alone or in the aggregate, have a Material Adverse
Effect on Central Jersey),
(b) has
received a notification or communication from any agency or department of any
federal, state or local governmental authority or any Regulatory Authority or
the staff thereof (i) asserting that it is not in compliance with any laws or
orders which such governmental authority or Regulatory Authority enforces (other
than where such non-compliance
will not,
alone or in the aggregate, have a Material Adverse Effect on Central Jersey and
its subsidiaries), (ii) threatening to revoke any permit or license other than
licenses or permits the revocation of which will not, alone or in the aggregate,
have a Material Adverse Effect on Central Jersey, (iii) requiring it to enter
into any cease and desist order, formal agreement, commitment or memorandum of
understanding, or to adopt any resolutions or similar undertakings, or (iv)
directing, restricting or limiting, or purporting to direct, restrict or limit
in any material manner, its operations, including, without limitation, any
restrictions on the payment of dividends, or that in any manner relates to such
entity’s capital adequacy, credit policies, management or business (other than
regulatory restrictions generally applicable to national banks or their holding
companies or restrictions applicable to participants in the TARP Capital
Purchase Program);
(c) is
aware of, has been advised of, or has any reason to believe that any facts or
circumstances exist, which would cause it: (i) to be deemed to be
operating in violation in any material respect of the federal Bank Secrecy Act,
as amended, and its implementing regulations (31 C.F.R. Part 103), the USA
PATRIOT Act of 2001, Public Law 107-56 (the “USA PATRIOT Act”), and the
regulations promulgated thereunder, any order issued with respect to anti-money
laundering by the U.S. Department of the Treasury’s Office of Foreign Assets
Control, or any other applicable anti-money laundering statute, rule or
regulation; or (ii) to be deemed not to be in satisfactory compliance in any
material respect with the applicable privacy of customer information
requirements contained in any federal and state privacy laws and regulations,
including without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999
and regulations promulgated thereunder, as well as the provisions of the
information security program adopted by Central Jersey pursuant to 12 C.F.R.
Part 30, Appendix B. Furthermore, the Board of Directors of Central
Jersey has adopted and Central Jersey has implemented an anti-money laundering
program that contains adequate and appropriate customer identification
verification procedures that materially comply with Section 326 of the USA
PATRIOT Act and such anti-money laundering program meets the requirements in all
material respects of Section 352 of the USA PATRIOT Act and the regulations
thereunder; or
(d) has
any “covered transactions” between Central Jersey Bank and an “affiliate” within
the meaning of Sections 23A and 23B of the Federal Reserve Act and the
regulations thereunder that are not in compliance with such
provisions.
Section
3.23
Transactions with
Management
. Except for (a) deposits, all of which are on terms
and conditions comparable to those made available to other customers of Central
Jersey at the time such deposits were entered into, (b) the loans listed on
Schedule 3.5 or arm’s length loans to employees entered into in the ordinary
course of business, (c) compensation arrangements or obligations under employee
benefit plans of Central Jersey or any of its subsidiaries set forth in Schedule
3.12, (d) any loans or deposit agreements entered into in the ordinary course
with customers of Central Jersey or Central Jersey Bank and (e) amounts paid for
services which have been disclosed in Central Jersey’s filings with the SEC,
there are no contracts with or commitments to directors, officers or employees
involving the expenditure of more than $10,000 as to any one individual,
including, with respect to any business directly or indirectly controlled by any
such person, or $10,000 for all such contracts for commitments in the aggregate
for all such individuals.
Section
3.24
Derivative
Contracts
. None of Central Jersey or any of its subsidiaries
is a party to or has agreed to enter into an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial contract or
agreement, or any other contract or agreement not included in Financial
Statements of Central Jersey which is a financial derivative contract (including
various combinations thereof) (“Derivative Contracts”), except for those
Derivative Contracts set forth in Schedule 3.24.
Section
3.25
Deposits
. None
of the deposits of Central Jersey Bank are “brokered” deposits as such term is
defined in the Rules and Regulations of the FDIC or are subject to any
encumbrance, legal restraint or other legal process (other than garnishments,
pledges, set off rights, escrow limitations and similar actions taken in the
ordinary course of business), and no portion of such deposits represents a
deposit of any affiliate of Central Jersey’s.
Section
3.26
Controls and
Procedures
.
(a) Central
Jersey and its subsidiaries have devised and maintained systems of internal
accounting control sufficient to provide reasonable assurances that: (i) all
material transactions are executed in accordance with general or specific
authorization of the Board of Directors and the duly authorized executive
officers of Central Jersey and its subsidiaries; (ii) all material transactions
are recorded as necessary to permit the preparation of financial statements in
conformity with GAAP or any other criteria applicable to such financial
statements, and to maintain proper accountability for items therein; (iii)
access to the material properties and assets of Central Jersey and its
subsidiaries is permitted only in accordance with general or specific
authorization of the Board of Directors and the duly authorized executive
officers of Central Jersey and its subsidiaries; and (iv) the recorded
accountability for items is compared with the actual levels at reasonable
intervals and appropriate actions taken with respect to any
differences.
(b) Central
Jersey has in place “disclosure controls and procedures” as defined in Rules
13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) to allow Central Jersey’s management to make timely decisions
regarding required disclosures and to make the certifications of the Chief
Executive Officer and Chief Financial Officer of Central Jersey required under
the Exchange Act.
(c) Central
Jersey has designed and maintains a system of internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange Act) sufficient to
provide reasonable assurance concerning the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with GAAP as consistently applied by Central Jersey, including reasonable
assurance (i) that transactions are executed in accordance with management’s
general or specific authorizations and recorded as necessary to permit
preparation of financial statements in conformity with GAAP as consistently
applied by Central Jersey and to maintain asset accountability, (ii) access to
assets is permitted only in accordance with management’s general or specific
authorizations, and (iii) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any difference.
(d) No
personal loan or other extension of credit by Central Jersey or any Central
Jersey subsidiary to any of its or their executive officers or directors has
been made or
modified
(other than as permitted by Section 13 of the Exchange Act and Section 402 of
the Sarbanes-Oxley Act).
(e) Since
January 1, 2006, (i) neither Central Jersey nor any of Central Jersey’s
subsidiaries nor, to the Knowledge of Central Jersey, any director, officer,
employee, auditor, accountant or representative of Central Jersey or any of
Central Jersey subsidiaries has received any written complaint, allegation,
assertion, or claim that Central Jersey or any Central Jersey subsidiary has
engaged in improper or illegal accounting or auditing practices or maintains
improper or inadequate internal accounting controls and (ii) no attorney
representing Central Jersey or any Central Jersey subsidiary, whether or not
employed by Central Jersey or any Central Jersey subsidiary, has reported
evidence of a material violation of U.S. federal or state securities laws, a
material breach of fiduciary duty or similar material violation by Central
Jersey, any of Central Jersey’s subsidiaries or any of their respective
officers, directors, employees or agents to any officer of Central Jersey, the
Board of Directors of Central Jersey or any member or committee
thereof.
Section
3.27
SEC
Filings
Central Jersey has filed all forms, reports and
documents required to be filed by Central Jersey with the SEC since January 1,
2007 (collectively, the Central Jersey SEC Reports”). The Central
Jersey SEC Reports (i) at the time they were filed, complied in all material
respects with the applicable requirements of the Securities Act, and the
Exchange Act, as the case may be, (ii) did not at the time they were filed (or
if amended or superseded by filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such Central Jersey SEC
Reports or necessary in order to make statements in the Central Jersey SEC
Reports, in light of the circumstances under which they were made, not
misleading.
Section
3.28
Proxy
Materials
. None of the information relating to Central Jersey
to be included in the Proxy Statement which is to be mailed to the shareholders
of Central Jersey in connection with the solicitation of their approval of this
Agreement will, at the time such Proxy Statement is mailed or at the time of the
meeting of shareholders to which such Proxy Statement relates, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make a statement therein not false or
misleading.
Section
3.29
Deposit
Insurance
. The deposit accounts of Central Jersey Bank are
insured by the FDIC in accordance with the provisions of the Federal Deposit
Insurance Act (the “Act”). Central Jersey has paid all regular
premiums, required prepayments of premiums and special assessments and filed all
reports required under the Act.
Section
3.30
Intellectual
Property
. Schedule 3.30 sets forth all (i) trademarks,
tradenames, service marks or other trade rights, whether or not registered, and
all pending applications for any such registrations, (ii) copyrights,
copyrightable materials or pending applications therefore, (iii) trade secrets,
(iv) inventions, discoveries, designs and drawings, (v) computer software, and
(vi) patents and patent applications owned, licensed or otherwise used by
Central Jersey and any of its subsidiaries (collectively the “Intellectual
Property Rights”). Neither Central Jersey nor any of its subsidiaries
has granted to any Person any license, option or other rights to use in any
manner any of the Intellectual Property Rights, whether requiring the payment of
royalties or not. The Intellectual Property Rights will not cease to
be the rights of
Central
Jersey, or its successor, or be impaired by reason of performance of this
Agreement or the consummation of the transactions contemplated
hereby. No other Person (i) has notified Central Jersey or any of its
subsidiaries that such Person claims any ownership or right of use of the
Intellectual Property Rights or, (ii) to the Knowledge of Central Jersey or any
of its subsidiaries, is infringing upon any Intellectual Property Rights of
Central Jersey or any of its subsidiaries. To the Knowledge of
Central Jersey and its subsidiaries, the use of the Intellectual Property Rights
does not conflict with, infringe upon or otherwise violate the valid rights of
any Person. No written notice has been received and not fully
resolved and no action has been instituted or, to the Knowledge of Central
Jersey and its subsidiaries, threatened against Central Jersey or any of its
subsidiaries alleging that the use of the Intellectual Property Rights infringes
upon or otherwise violates the rights of any Person.
Section
3.31
Fairness
Opinion
. Prior to the execution of this Agreement, Central
Jersey has received an opinion from Sandler to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the Merger
Consideration is fair to the shareholders of Central Jersey from a financial
point of view (the “Fairness Opinion”). Such opinion has not been
amended or rescinded as of the date of this Agreement.
Section
3.32
No Trust
Powers
. Neither
Central Jersey nor any of its subsidiaries exercise trust powers or acts as a
fiduciary, trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor with respect to assets held other than acting
as a trustee or custodian with respect to IRA accounts related to insured
deposits or as trustee or custodian for other insured deposits
held.
Section
3.33
Indemnification
. Except
as set forth in Schedule 3.33 and except as provided in its indemnification
agreement with Sandler, or the Certificate of Incorporation and By-laws of
Central Jersey, Central Jersey is not a party to any indemnification agreement
with any of its present or future directors, officers, employees, agents or
other persons who serve or served in any other capacity with any other
enterprise at the request of Central Jersey (a “Covered Person”), and, except as
set forth in Schedule 3.33, to Central Jersey’s Knowledge, there are no claims
for which any Covered Person would be entitled to indemnification under the
Certificate of Incorporation and By-laws of Central Jersey, or under the
governing documents of any of Central Jersey’s subsidiaries, applicable law,
regulation or any indemnification agreement.
Section
3.34
Investment
Securities
. Except as set forth on Schedule 3.34, no
investment security or mortgage backed security held by Central Jersey or any of
its subsidiaries, were it held as a loan, would be classified as “substandard,”
“doubtful,” “loss,” “other assets especially mentioned,” “special mention,”
“credit risk assets,” or any comparable classifications.
Section
3.35
Untrue Statements and
Omissions
. No representation or warranty contained in Article
3 of this Agreement or in the Schedules contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF KEARNY
Kearny
and Kearny Bank hereby represent and warrant to Central Jersey and Central
Jersey Bank as follows as of the date hereof and as of all times up to and
including the Effective Time of the Merger (except as otherwise
provided):
Section
4.1
Organization and Related
Matters of Kearny
.
(a) Kearny
is a corporation duly organized, validly existing and in good standing under
federal law. Kearny has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as now
conducted and Kearny is licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by Kearny, or the
character or location of the properties and assets owned or leased by Kearny
makes such licensing or qualification necessary, except where the failure to be
so licensed or qualified (or steps necessary to cure such failure) would not
have a Material Adverse Effect on Kearny. Kearny is duly registered
as a savings and loan holding company under the savings and loan holding company
provisions of the Home Owners’ Loan Act, as amended. True and correct
copies of the Charter of Kearny and the Bylaws of Kearny, each as amended to the
date hereof, have been made available to Central Jersey.
(b) Kearny
Bank is a federal savings bank, duly organized, validly existing and in good
standing under the laws of the United States. Kearny Bank has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as such business is now being
conducted. All of the issued and outstanding shares of capital stock
of Kearny Bank are owned by Kearny free and clear of all liens and encumbrances
and adverse claims thereto. True and correct copies of the Charter
and the Bylaws of Kearny Bank, each as amended to the date hereof, have been
delivered to Central Jersey.
(c) Each
direct and indirect subsidiary of Kearny (other than Kearny Bank) is a
corporation, limited liability company or partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each subsidiary has the corporate or requisite
power and authority to own or lease all of its properties and assets and to
carry on its business as such business is now being conducted, and is duly
licensed or qualified to do business in all such places where the nature of the
business being conducted by each subsidiary or the character or location of the
properties and assets owned or leased by each subsidiary make such qualification
necessary, except where the failure to be so licensed or qualified (or steps
necessary to cure such failure) would not have a Material Adverse Effect on
Kearny.
(d) Kearny
has in effect all federal, state, local and foreign governmental, regulatory and
other authorizations, permits and licenses necessary for it to own or lease its
properties and assets and to carry on its business as now conducted, the absence
of which, either individually or in the aggregate, would have a Material Adverse
Effect on Kearny.
Section
4.2
Authorization
. The
execution, delivery, and performance of this Agreement, and the consummation of
the transactions contemplated hereby and in any related
agreements,
have been duly authorized by the Boards of Directors of Kearny and Kearny Bank,
and no other corporate or other proceedings on the part of Kearny and Kearny
Bank are or will be necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement is the valid and binding
obligation of Kearny and Kearny Bank enforceable against them in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be
brought. Neither the execution, delivery or performance of this
Agreement by Kearny or Kearny Bank nor the consummation of the transactions
contemplated hereby will (i) violate any provision of the respective charter
documents of Kearny or Kearny Bank or, (ii) assuming that any necessary Consents
are duly obtained, (A) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination of,
accelerate the performance required by or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of Kearny or Kearny Bank under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
permit, lease, agreement or other instrument or obligation to which Kearny or
Kearny Bank is a party, or by which Kearny or Kearny Bank or any of their
subsidiaries or any of its properties or assets may be bound or affected, (B)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Kearny or Kearny Bank or any of its
subsidiaries or any of their material properties or assets, except for (X) such
conflicts, breaches or defaults as are set forth in Schedule 4.2; and (Y) with
respect to (B) above, such as individually or in the aggregate will not have a
Material Adverse Effect on Kearny.
Section
4.3
Consents and
Approvals
. Except for (i) the Consents of the Regulatory
Authorities; (ii) approval of this Agreement by the shareholders of Central
Jersey; and (iii) as disclosed in Schedule 4.3, no consents or approvals by, or
filings or registrations with, any third party or any public body, agency or
authority are necessary in connection with the execution and delivery by Kearny
and Kearny Bank of this Agreement, and the consummation of the Merger and the
other transactions contemplated hereby.
Section
4.4
Proxy
Materials
. None of the information relating solely to Kearny
or any of its subsidiaries to be included or incorporated by reference in the
Proxy Statement which is to be mailed to the shareholders of Central Jersey in
connection with the solicitation of their approval of this Agreement will, at
the time such Proxy Statement is mailed or at the time of the meeting of
shareholders of Central Jersey to which such Proxy Statement relates, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary in order to make a statement therein not false or misleading.
Section
4.5
Regulatory
Matters
. Kearny has not agreed to take any action, has no
knowledge of any fact and has not agreed to any circumstance that would
materially impede or delay receipt of any Consent from any Regulatory Authority
referred to in this Agreement including matters relating to the Community
Reinvestment Act.
Section
4.6
Absence of Certain Changes
or Events
. Since December 31, 2009, there has not been any
change or any event which has had, or is reasonably likely to have, a
Material
Adverse
Effect on Kearny, or a combination of such changes or events which has had, or
is reasonably likely to have, a Material Adverse Effect on Kearny and no fact or
condition exists as of the date hereof which might reasonably be expected to
cause any such change or event in the future.
Section
4.7
Deposit
Insurance
. The deposit accounts of Kearny Bank are insured by
the FDIC in accordance with the provisions of the Act. Kearny Bank
has paid all regular premiums, required prepayments and special assessments and
filed all reports required under the Act.
Section
4.8
Access to
Funds
.
Kearny has, and on
the Closing Date will have, access to all funds necessary to consummate the
Merger and pay the aggregate Merger Consideration.
Section
4.9
Untrue Statements and
Omissions
. No representation or warranty contained in Article
4 of this Agreement or in the Schedules of Kearny or Kearny Bank contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE
5
COVENANTS
AND AGREEMENTS
Section
5.1
Conduct of the Business of
the Parties
.
(a) During
the period from the date of this Agreement to the Effective Time of the Merger,
Central Jersey shall, and shall cause its subsidiaries to, (i) conduct its
business in the usual, regular and ordinary course consistent with past practice
and prudent banking principles, (ii) use its best efforts to maintain and
preserve intact its business organization, employees, goodwill with customers
and advantageous business relationships and retain the services of its officers
and key employees, (iii) use its best efforts to preserve for itself and Kearny
the goodwill of the customers of Central Jersey and its subsidiaries and others
with whom business relationships exist, and (iv) except as required by law or
regulation, take no action which would adversely affect or delay the ability of
Central Jersey or Kearny to obtain any Consent from any Regulatory Authority or
other approvals required for the consummation of the transactions contemplated
hereby or to perform its covenants and agreements under this
Agreement.
(b) During
the period from the date of this Agreement to the Effective Time of the Merger,
except as required by law or regulation, neither Central Jersey nor any of its
subsidiaries shall, without the prior written consent of Kearny which shall not
be unreasonably withheld:
(i) change,
delete or add any provision of or to the Certificate of Incorporation or Bylaws
or other governing documents of any such entity;
(ii) except
for the issuance of Central Jersey Shares upon the exercise of Central Jersey
Options prior to the Effective Time of the Merger, change the
number
of shares
of its authorized, issued or outstanding capital stock, including any issuance,
purchase, redemption, split, combination or reclassification thereof, or issue
or grant any option, warrant, call, commitment, subscription, right or agreement
to purchase relating to its capital stock, or declare, set aside or pay any
dividend or other distribution with respect to its outstanding capital stock
other than the required dividends on the Central Jersey Preferred Shares and on
the trust preferred securities issued by MCBK Capital Trust I;
(iii) incur
any material liabilities or material obligations (other than deposit liabilities
and short-term borrowings in the ordinary course of business), whether directly
or by way of guaranty, including any obligation for borrowed money, or whether
evidenced by any note, bond, debenture, or similar instrument;
(iv) except
as set forth in Schedule 5.1(b)(iv), make any capital expenditures individually
in excess of $10,000 other than expenditures necessary to maintain existing
assets in good repair;
(v) sell,
transfer, convey or otherwise dispose of any real property (including “other
real estate owned”) or interest therein;
(vi) except
as set forth in Schedule 5.1(b)(vi), pay any bonuses to any employee, officer,
director or other person; enter into any new, or amend in any respect any
existing, employment, consulting, non-competition or independent contractor
agreement with any person; alter the terms of any existing incentive bonus or
commission plan; adopt any new or amend in any material respect any existing
employee benefit plan except as may be required by law; grant any general
increase in compensation or pay any bonuses to its employees as a class or to
its officers or employees except for salary increases made in the ordinary
course and of not more than five percent (5%) in the aggregate of the previous
year’s aggregate payroll for all employees and following not less than three
business days prior notice to Kearny; grant any increase in fees or other
compensation or in other benefits to any of its directors; or effect any change
in any material respect in retirement benefits to any class of employees or
officers, except as required by law;
(vii) other
than asset forth in Schedule 5.1(b)(vii), enter into or extend any agreement,
lease or license relating to real property, personal property, data processing
or bankcard functions that involves an aggregate of $10,000 or
more;
(viii) acquire
or agree to acquire five percent (5%) or more of the assets or equity securities
of any Person or acquire direct or indirect control of any Person other than in
connection with foreclosures in the ordinary course of business; provided
however, Central Jersey shall consult with Kearny with respect to any such
foreclosures;
(ix) originate,
purchase, extend or grant any loan in principal amount up to $500,000 without
giving Kearny prompt notice of such loans as soon as administratively feasible
or originate, purchase, extend or grant any loan in principal amount in excess
of $500,000 without permitting a designated representative of Kearny the
opportunity to view such loan in advance or attend the loan committee meeting
at
which
such extension of credit will be considered and the opportunity to discuss such
proposed extension of credit with the loan committee;
(x)
file any applications or make any contract with
respect to branching by Central Jersey Bank (whether de novo, purchase, sale or
relocation) or acquire or construct, or enter into any agreement to acquire or
construct, any interest in real property;
(xi)
form any new subsidiary;
(xii)
increase or decrease the rate of interest paid on time deposits or
on certificates of deposit, except in a manner and pursuant to policies
consistent with past practices;
(xiii) take
any action that is intended or may reasonably be expected to result in any of
the conditions to the Merger set forth in Article 7 or Article 8 not being
satisfied;
(xiv) purchase
or sell or otherwise acquire any investment securities other than in the
ordinary course of business consistent with past practices and in accordance
with Central Jersey’s investment policy;
(xv) commence
any cause of action or proceeding other than in accordance with past practice or
settle any action, claim, arbitration, complaint, criminal prosecution, demand
letter, governmental or other examination or investigation, hearing, inquiry or
other proceeding against it for material money damages or material restrictions
upon any of their operations;
(xvi) waive,
release, grant or transfer any material rights of value or modify or change in
any material respect any existing agreement or indebtedness to which it is a
party, other than in the ordinary course of business, consistent with past
practice;
(xvii) enter
into, renew, extend or modify any other transaction (other than a deposit
transaction) with any Affiliate other than pursuant to existing
policies;
(xviii) enter
into any futures contract, option, interest rate caps, interest rate floors,
interest rate exchange agreement or other agreement, or 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;
(xix) except
for the execution of this Agreement, and actions taken or which will be taken in
accordance with this Agreement and performance thereunder, take any action that
would give rise to a right of payment to any individual under any employment
agreement (other than salary earned for prior service);
(xx)
make any change in policies in existence on the date of this
Agreement with regard to: the extension of credit, or the establishment of
reserves with
respect
to the possible loss thereon or the charge off of losses incurred thereon;
investments; 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 by a Regulatory Authority or changes in GAAP, as advised by
Central Jersey’s independent public accountants;
(xxi)
except for the execution of this Agreement, and the
transactions contemplated therein, take any action that would give rise to an
acceleration of the right to payment to any individual under any Employee
Benefit Plan;
(xxii)
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;
(xxiii) foreclose
upon or take a deed or title to any commercial real estate without first
conducting a Phase I environmental assessment of the property or if such
assessment indicates the presence of Hazardous Material or an underground
storage tank;
(xxiv) make
any written communications to the directors, officers or employees of Central
Jersey, Central Jersey Bank or any Central Jersey subsidiary pertaining to
compensation or benefit matters that are affected by the transactions
contemplated by this Agreement without first providing Kearny with a copy or
description of the intended communication, which Kearny shall promptly review
and comment on, and Kearny and Central Jersey shall cooperate in providing any
such mutually agreeable communication; or
(xxv) terminate
any individual that is a party to an employment contract or change of control
agreement prior to the Effective Time of the Merger other than termination for
“cause” as such term is defined in the applicable agreement.
Section
5.2
Current
Information
.
(a)
Central
Jersey
. During the period from the date of this Agreement to
the Effective Time of the Merger or the time of termination or abandonment of
this Agreement, Central Jersey will cause one or more of its designated
representatives to confer on a regular and frequent basis with representatives
of Kearny and to report the general status of the ongoing operations of Central
Jersey. Central Jersey will promptly notify Kearny of any material
change in the normal course of business or the operations or the properties of
Central Jersey, any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated) affecting Central
Jersey, the institution or the threat of material litigation, claims, threats or
causes of action involving Central Jersey, and will keep Kearny fully informed
of such events. Central Jersey will furnish to Kearny, promptly after
the preparation and/or receipt by Central Jersey thereof, copies of its
unaudited monthly and quarterly periodic financial statements and Call Reports
for the applicable periods then ended, and such financial statements and Call
Reports shall, upon delivery to Kearny, be treated, for purposes of Section 3.3
hereof, as among the Financial Statements of Central Jersey and the Financial
Regulatory Reports of Central Jersey Bank, as applicable.
(b)
Kearny
. Kearny
will promptly notify Central Jersey of any material change in the normal course
of business or the operations or properties of Kearny, any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) affecting Kearny, the institution or threat of
material litigation, claims, threats or causes of action involving Kearny and
will keep Central Jersey fully informed of such events.
Section
5.3
Access to Properties;
Personnel and Records; Systems Integration
.
(a) During
the period from the date of this Agreement to the Effective Time of the Merger
or the time of termination or abandonment of this Agreement, each Party and its
subsidiaries, if any, shall permit the other Party or its agents full access,
during normal business hours, to its properties, and shall disclose and make
available (together with the right to copy) to the other Party and to its
internal auditors, loan review officers, attorneys, accountants and other
representatives, all books, papers and records relating to the assets, stock,
properties, operations, obligations and liabilities of such Party, including all
books of account (including the general ledger), tax records, minute books of
directors’ and shareholders’ meetings, organizational documents, bylaws,
contracts and agreements, filings with any regulatory agency, examination
reports, correspondence with regulatory or taxing authorities, documents
relating to assets, titles, abstracts, appraisals, consultant’s reports, plans
affecting employees, securities transfer records and shareholder lists, and any
other assets, business activities or prospects in which the other Party may have
a reasonable interest, and each Party shall use their reasonable best efforts to
provide to the other Party and its representatives access to the work papers of
such Party. During the period from the date of this Agreement to the
Effective Time of the Merger or the time of termination or abandonment of this
Agreement, Central Jersey shall provide to Kearny with as much notice as
possible of all special and regular meetings of the Central Jersey Board of
Directors and committees thereof and Central Jersey will invite a Kearny
representative to attend all such meetings and provide Kearny with a copy of the
board packages in advance of such meetings and a copy of the minutes of such
meetings promptly thereafter; provided, however, that any such Kearny
representative shall, at the request of the Central Jersey Board of Directors or
any committee thereof, as the case may be, recuse himself or herself from any
such meeting in the event that this Agreement or any Acquisition Transaction is
the subject of discussion or if counsel to Central Jersey advises that such
recusal is required to preserve the attorney-client privilege with respect to
any specific matter. Central Jersey shall provide information not
less than weekly regarding the business activities and operations of Central
Jersey and all Parties will establish procedures for coordinating and monitoring
of transition activities. No Party shall be required to provide
access to or to disclose information where such access or disclosure would
contravene any law, rule, regulation, order or judgment or would violate any
confidentiality agreement entered into by Central Jersey prior to the date
hereof; provided that each Party shall cooperate with the other Party in seeking
to obtain Consents from appropriate Parties under whose rights or authority
access is otherwise restricted. The foregoing rights granted shall
not, whether or not and regardless of the extent to which the same are
exercised, affect the representations and warranties made in this
Agreement.
(b) All
information furnished by the Parties hereto pursuant to this Agreement, whether
furnished before or after the date of this Agreement, shall be treated as the
sole property of the Party providing such information until the consummation of
the Merger
contemplated
hereby and, if such transaction shall not occur, the Party receiving the
information shall return to the Party which furnished such information, all
documents or other materials containing, reflecting or referring to such
information, shall use its best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. The obligation to keep such
information confidential shall continue for two (2) years from the date the
proposed transactions are abandoned but shall not apply to (i) any information
which (A) the Party receiving the information was already in possession of prior
to disclosure thereof by the Party furnishing the information, (B) was then
available to the public, or (C) became available to the public through no fault
of the Party receiving the information; or (ii) disclosures pursuant to a legal
requirement or in accordance with an order of a court of competent jurisdiction
or regulatory agency; provided, however, the Party which is the subject of any
such legal requirement or order shall use its best efforts to give the other
Party at least ten (10) business days prior notice thereof. Each
Party hereto acknowledges and agrees that a breach of any of their respective
obligations under this Section 5.3 would cause the other irreparable harm for
which there is no adequate remedy at law, and that, accordingly, each is
entitled to injunctive and other equitable relief for the enforcement thereof in
addition to damages or any other relief available at law. Without the
consent of the other Party, neither Party shall use information furnished to
such Party other than for the purposes of the transactions contemplated
hereby.
(c) From
and after the date hereof, Central Jersey shall, and shall cause its directors,
officers and employees to, and shall make all reasonable efforts to cause
Central Jersey’s data processing service providers to, cooperate and assist
Kearny in connection with an electronic and systematic conversion of all
applicable data regarding Central Jersey to Kearny Bank’s system of electronic
data processing. In furtherance of, and not in limitation of, the
foregoing, Central Jersey shall make reasonable arrangements during normal
business hours to permit personnel and representatives of Kearny Bank to train
Central Jersey’s employees in Kearny Bank’s system of electronic data processing
as may be deemed necessary by Kearny. Central Jersey shall permit Kearny to
train the Central Jersey employees during the one-month period before the
anticipated Effective Time of the Merger with regard to Kearny’s operations,
policies and procedures at Kearny’s sole cost and expense. This
training may take place at either Central Jersey’s branch offices or at Kearny’s
corporate headquarters at such times to be determined in cooperation with
Central Jersey and shall be conducted in a manner so as to not interfere with
the business operations of Central Jersey.
Section
5.4
Proxy Statement/Approval of
Shareholders
.
(a) Central
Jersey shall prepare the Proxy Statement and shall permit Kearny to review and
comment on such Proxy Statement prior to its filing with the SEC, such filing to
occur within 45 days of the date of this Agreement. Central Jersey
shall inform Kearny of any and all comments it receives from the SEC on the
preliminary Proxy Statement and shall permit Kearny to review and comment on any
revised versions prior to filing with the SEC and the final Proxy Statement
prior to mailing to its shareholders.
(b) Central
Jersey will take all steps necessary under applicable laws to call, give notice
of, convene and hold a meeting of its shareholders at such time as may be
mutually agreed to by the Parties for the purpose of approving this Agreement
and the transactions
contemplated
hereby and for such other purposes consistent with the complete performance of
this Agreement as may be necessary or desirable (the “Central Jersey
Shareholders’ Meeting”), at such time as may be mutually agreed to by the
parties (but in no event later than 60 days after the clearance of the Proxy
Statement by the SEC). The Board of Directors of Central Jersey will
recommend to its shareholders the approval of this Agreement and the
transactions contemplated hereby and Central Jersey will use its best efforts to
obtain the necessary approvals by its shareholders of this Agreement and the
transactions contemplated hereby.
Section
5.5
No Other
Bids
. Except with respect to this Agreement and the
transactions contemplated hereby, neither Central Jersey nor any “Affiliate” (as
defined herein) thereof, nor any investment banker, attorney, accountant or
other representative (collectively, “representative”) retained by Central Jersey
shall directly or indirectly (i) initiate, solicit, encourage or otherwise
facilitate any inquiries or the making of any proposal or offer that
constitutes, or may reasonably be expected to lead to, any “Acquisition
Transaction” (as defined below) by any other party or (ii) enter into, continue
or otherwise participate in any discussions or negotiations regarding or furnish
any information with respect to, or otherwise cooperate in any way with, any
Acquisition Transaction. Neither Central Jersey nor any Affiliate or
representative thereof shall furnish any non-public information that it is not
legally obligated to furnish or negotiate or enter into any agreement or
contract with respect to any Acquisition Transaction, and shall direct and use
its reasonable efforts to cause its affiliates or representatives not to engage
in any of the foregoing. Central Jersey shall promptly notify Kearny
orally and in writing in the event that it receives any inquiry or proposal
relating to any such Acquisition Transaction. Central Jersey shall
immediately cease and cause to be terminated as of the date of this Agreement
any existing activities, discussions or negotiations with any other parties
conducted heretofore with respect to any of the
foregoing. Notwithstanding the foregoing provisions of this Section
5.5, in the event that, prior to obtaining shareholder approval of the Merger,
Central Jersey receives an unsolicited
bona fide
written proposal
for an Acquisition Transaction not solicited in violation of this Agreement, and
the Central Jersey Board concludes in good faith (after consultation with its
outside counsel and financial advisor) (i) it is legally necessary for the
proper discharge of its fiduciary duties to respond to such Acquisition
Transaction and (ii) such Acquisition Transaction constitutes a “superior
proposal” (as defined below), Central Jersey may furnish or cause to be
furnished confidential information or data to the third party making such
proposal and participate in negotiations or discussions, provided that prior to
providing (or causing to be provided) any confidential information or data
permitted to be provided pursuant to this sentence, Central Jersey shall have
entered into a confidentiality agreement with such third party on terms no less
restrictive to Central Jersey than the confidentiality agreement with Kearny,
and provided further that Central Jersey also shall provide to Kearny a copy of
any such confidential information or data that it is providing to any third
party pursuant to this Section 5.5 to the extent not previously provided or made
available to Kearny. Central Jersey shall promptly advise Kearny
orally and in writing of any Acquisition Transaction, the material terms and
conditions of any such Acquisition Transaction (including any changes thereto)
and the identity of the person making any such Acquisition Transaction. Central
Jersey shall (i) keep Kearny fully informed in all material respects of the
status and details (including any change to the terms thereof) of any
Acquisition Transaction, (ii) provide to Kearny as soon as practicable
after receipt or delivery thereof copies of all correspondence and other written
material sent or provided to Central Jersey or any Central Jersey subsidiary
from any person that describes any of the terms or conditions of any Acquisition
Transaction
(including
any draft acquisition agreement) and (iii) keep Kearny fully informed in
all material respects of the status and details of any determination by Central
Jersey’s Board of Directors with respect to any such Acquisition
Transaction.
The term
“Acquisition Transaction” shall, with respect to Central Jersey, mean any
proposal for any of the following: (a) a merger or consolidation, or any similar
transaction (other than the Merger) of any company with Central Jersey, (b) a
purchase, lease or other acquisition of all or substantially all the assets of
Central Jersey, (c) a purchase or other acquisition of “beneficial ownership” by
any “person” or “group” (as such terms are defined in Section 13(d)(3) of the
Exchange Act) (including by way of merger, consolidation, share exchange, or
otherwise) which would cause such person or group to become the beneficial owner
of securities representing 24.9% or more of the voting power of Central Jersey,
or (d) a tender or exchange offer to acquire securities representing 24.9% or
more of the voting power of Central Jersey. “Superior proposal” means an
Acquisition Transaction which the Board of Directors of Central Jersey
reasonably determines (after consultation with a financial advisor of nationally
recognized reputation) to be (i) more favorable to the shareholders of
Central Jersey from a financial point of view than the Merger (taking into
account all the terms and conditions of such proposal and this Agreement
(including any changes to the financial terms of this Agreement proposed by
Kearny in response to such offer or otherwise)) and (ii) reasonably capable
of being completed, taking into account all financial, legal, regulatory and
other aspects of such proposal.
Section
5.6
Notice of
Deadlines
. Schedule 3.16(d) lists the deadlines for extensions
or terminations of any material leases, agreements or licenses (including
specifically real property leases and data processing agreements) to which
Central Jersey is a Party.
Section
5.7
Maintenance of Properties;
Certain Remediation and Capital Improvements
. Central Jersey
will use commercially reasonable efforts to maintain its respective properties
and assets in satisfactory condition and repair for the purposes for which they
are intended, ordinary wear and tear excepted.
Section
5.8
Environmental
Audits
. Upon the written request of Kearny, which request
shall occur within forty (40) days of the date hereof, Central Jersey will, at
Kearny’s expense, with respect to each parcel of real property that Central
Jersey owns, procure and deliver to Kearny, an environmental audit, which audit
shall be reasonably acceptable to and shall be conducted by a firm reasonably
acceptable to Kearny.
Section
5.9
Title
Insurance
. Upon the written request of Kearny, which request
shall occur within forty (40) days of the date hereof, Central Jersey will, at
Kearny’s expense, with respect to each parcel of real property that Central
Jersey owns, procure and deliver to Kearny, at least forty (40) days prior to
the Effective Time of the Merger, a commitment to issue owner’s title insurance
in such amounts and by such insurance company reasonably acceptable to Kearny,
which policy shall be free of all material exceptions to Kearny’s reasonable
satisfaction.
Section
5.10
Surveys
. Upon
the written request of Kearny, which request shall occur within forty (40) days
of the date hereof, with respect to each parcel of real property as to which a
title insurance policy is to be procured pursuant to Section 5.9, Central
Jersey, at Kearny’s expense, will procure and deliver to Kearny at least thirty
(30) days prior to the Effective Time of the Merger, a survey of such real
property, which survey shall be reasonably acceptable to and
shall be
prepared by a licensed surveyor reasonably acceptable to Kearny, disclosing the
locations of all improvements, easements, sidewalks, roadways, utility lines and
other matters customarily shown on such surveys and showing access affirmatively
to public streets and roads and providing the legal description of the property
in a form suitable for recording and insuring the title thereof (the
“Survey”). The Survey shall not disclose any survey defect or
encroachment from or onto such real property that has not been cured or insured
prior to the Effective Time of the Merger.
Section
5.11
Consents to Assign and Use
Leased Premises
. With respect to the leases disclosed in
Schedule 3.14(b), Central Jersey will obtain all Consents necessary to transfer
and assign all right, title and interest of Central Jersey to Kearny Bank and to
permit the use and operation of the leased premises by Kearny Bank as of the
Closing.
Section
5.12
Compliance
Matters
. Prior to the Effective Time of the Merger, Central
Jersey shall take, or cause to be taken, all steps reasonably requested by
Kearny to cure any deficiencies in regulatory compliance by Central Jersey or
its subsidiaries; provided, however, neither Kearny nor Kearny Bank shall be
responsible for discovering, nor shall Kearny have any liability resulting from,
such deficiencies or attempts to cure them.
Section
5.13
Conforming Accounting and
Reserve Policies
. Upon written confirmation from Kearny that
all conditions to closing set forth in Articles 8 and 9 have been satisfied or
waived, at the request of Kearny, Central Jersey shall immediately prior to
Closing establish and take such reserves and accruals as Kearny reasonably shall
request to conform Central Jersey’s loan, accrual, reserve and other accounting
policies to the policies of Kearny Bank.
Section
5.14
Support
Agreements
. Central Jersey shall deliver to Kearny as of the
date of the Agreement, a Support Agreement in form and substance as set forth at
Exhibit B, executed by each director and executive officer (including the CEO,
CFO and COO) of Central Jersey.
Section
5.15
Disclosure
Controls
.
(a) Between
the date of this Agreement and the Effective Time, (i) Central Jersey shall
maintain disclosure controls and procedures that are effective to ensure that
material information relating to Central Jersey and Central Jersey’s
subsidiaries is made known to the President and Chief Executive Officer and
Chief Financial Officer of Central Jersey to permit Central Jersey to record,
process, summarize and report financial data in a timely and accurate manner;
(ii) such officers shall promptly disclose to Central Jersey’s auditors and
audit committee any significant deficiencies in the design or operation of
internal controls which could adversely affect Central Jersey’s ability to
record, process, summarize and report financial data, any material weaknesses
identified in internal controls, and any fraud, whether or not material, that
involves management or other employees who have a significant role in Central
Jersey’s internal controls; and (iii) Central Jersey shall take appropriate
corrective actions to address any such significant deficiencies or material
weaknesses identified in the internal controls.
(b) Between
the date of this Agreement and the Effective Time, Central Jersey shall, upon
reasonable notice during normal business hours, permit Kearny (a) to meet with
the officers of Central Jersey and any Central Jersey subsidiary responsible for
the financial statements of Central Jersey and each Central Jersey subsidiary
and the internal control over
financial
reporting of Central Jersey and each Central Jersey subsidiary to discuss such
matters as Kearny may deem reasonably necessary or appropriate concerning
Kearny’s obligations under Sections 302 and 906 of the Sarbanes-Oxley Act; and
(b) to meet with officers of Central Jersey and any Central Jersey subsidiary to
discuss the integration of appropriate disclosure controls and procedures and
internal control over financial reporting relating to Central Jersey and each
Central Jersey subsidiary’s operations with the controls and procedures and
internal control over financial reporting of Kearny for purposes of assisting
Kearny in compliance with the applicable provisions of the Sarbanes-Oxley Act
following the Effective Time. Central Jersey shall, and shall cause
its and each Central Jersey subsidiary’s respective employees and accountants
to, fully cooperate with Kearny in the preparation, documentation, review,
testing and all other actions Kearny deems reasonably necessary to satisfy the
internal control certification requirements of Section 404 of the Sarbanes-Oxley
Act.
Section
5.16
Bank Merger
Agreement
. Prior to the Effective Time, Kearny Bank and Central Jersey
Bank shall have executed and delivered the Bank Merger Agreement substantially
in the form annexed hereto as Exhibit D.
ARTICLE
6
ADDITIONAL
COVENANTS AND AGREEMENTS
Section
6.1
Best Efforts;
Cooperation
. Subject to the terms and conditions herein
provided, each of the Parties hereto agrees to use its best efforts promptly to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
otherwise, including attempting to obtain all necessary Consents, to consummate
and make effective, as soon as practicable, the transactions contemplated by
this Agreement.
Section
6.2
Regulatory
Matters
.
(a) As
promptly as practicable following the execution and delivery of this Agreement,
but in no event more than forty-five (45) days from the date hereof, Kearny and
Central Jersey shall cause to be prepared and filed all required applications
and filings with the Regulatory Authorities which are necessary or contemplated
for the obtaining of the Consents of the Regulatory Authorities or consummation
of the Merger. Such applications and filings shall be in such form as
may be prescribed by the respective government agencies and shall contain such
information as they may require. The Parties hereto will cooperate
with each other and use their best efforts to prepare and execute all necessary
documentation, to effect all necessary or contemplated filings and to obtain all
necessary or contemplated permits, consents, approvals, rulings and
authorizations of government agencies and third parties which are necessary or
contemplated to consummate the transactions contemplated by this Agreement,
including, without limitation, those required or contemplated from the
Regulatory Authorities, and the shareholders of Central Jersey. Each
of the Parties shall have the right to review any filing made with, or written
material submitted to, any government agencies in connection with the
transactions contemplated by this Agreement.
(b) Each
Party hereto will furnish the other Party with all information concerning
itself, its subsidiaries, directors, trustees, officers, shareholders and
depositors, as applicable, and such other matters as may be necessary or
advisable in connection with any statement or application made by or on behalf
of any such Party to any governmental body in connection with the transactions,
applications or filings contemplated by this Agreement. The Parties
hereto will promptly furnish each other with copies of written communications
received by them or their respective subsidiaries, if any, from, or delivered by
any of the foregoing to, any governmental body in respect of the transactions
contemplated hereby.
Section
6.3
Employment and Employee
Benefits Matters
.
(a) The
Parties acknowledge that nothing in this Agreement shall be construed as
constituting an employment agreement between Kearny or any of its affiliates and
any officer or employee of Central Jersey or an obligation on the part of Kearny
or any of its affiliates to employ any such officers or employees.
(b) Kearny
will honor the Change of Control Agreements of Central Jersey set forth at
Schedule 6.3(b), subject to the terms of the Addenda to the Change of Control
Severance Agreement entered into between Kearny and Kearny Bank and certain
officers of Central Jersey Bank, the form of which is attached as Exhibit
C. Such Schedule 6.3(b) includes a calculation of the severance
payment amount giving effect to such Addenda and supporting data as detailed in
such Change of Control Agreements calculated as of the date of this Agreement
and to be updated in advance of the Effective Time.
(c) Kearny
shall merge the Central Jersey 401K plan into its 401K plan as soon as
administratively feasible after the Effective Time.
(d) After
the Merger, Kearny shall continue, except to the extent not consistent with law,
Central Jersey’s health and welfare benefit plans, programs, insurance and other
policies until such time as Kearny elects to take alternative
action. Central Jersey will assist Kearny before the Effective Time
in reviewing such benefit plans and programs and will take such actions that may
be requested by Kearny with respect to such plans to take effect not sooner than
the Effective Time, unless otherwise consented to by Central
Jersey. In the event Kearny elects to terminate any of Central
Jersey’s health and welfare benefit plans, programs, insurance and other
policies, Central Jersey and Central Jersey Bank employees that continue as
employees of Central Jersey, Kearny or Kearny Bank after the Effective Time
(“Continuing Employees”) will become eligible to participate in the medical,
dental, health and disability plans maintained by Kearny or Kearny
Bank. Kearny or Kearny Bank, as applicable, shall cause each such
plan that shall be implemented as a replacement plan to such Central Jersey plan
that is terminating to (i) waive any preexisting condition limitations to the
extent such conditions for such participant are covered under the applicable
Central Jersey medical, health, dental or disability plans, (ii) credit under
such plans any current plan year deductible, co-payment and out-of-pocket
expenses incurred by the employees and their covered dependents during the
portion of the plan year prior to such participation and (iii) waive any waiting
period limitation or evidence of insurability requirement which would otherwise
be applicable to such employee on or after the plan enrollment date, unless such
employee had not yet satisfied any similar
limitation
or requirement under the analogous Central Jersey Employee Benefit Plan prior to
the enrollment date.
(e) Until
the Effective Time, Central Jersey shall be liable for all obligations for
continued health coverage pursuant to Section 4980B of the Code and Sections 601
through 609 of ERISA (“COBRA”) with respect to each Central Jersey or Central
Jersey Bank qualifying beneficiary (as defined in COBRA) who incurs a qualifying
event (as defined in COBRA) before the Effective Time. Kearny shall
be liable for (i) all obligations for continued health coverage under COBRA with
respect to each Central Jersey or Central Jersey Bank qualified beneficiary (as
defined in COBRA) who incurs a qualifying event (as defined in COBRA) from and
after the Effective Time, and (ii) for continued health coverage under COBRA
from and after the Effective Time for each Central Jersey or Central Jersey Bank
qualified beneficiary who incurs a qualifying event before the Effective
Time.
(f) Employees
of Central Jersey (other than those who are parties to a Change of Control
agreement with Central Jersey) and of Central Jersey Bank as of the date of the
Agreement who remain employed by Central Jersey or Central Jersey Bank as of the
Effective Time and whose employment is terminated by Central Jersey, Kearny or
Kearny Bank (absent termination for cause as determined by the employer) within
twelve months after the Effective Time shall receive severance pay equal to two
weeks of base weekly pay for each completed year of employment service
commencing with any such employee’s most recent hire date with Central Jersey or
any of its subsidiaries or any Person acquired by Central Jersey or any of its
subsidiaries and ending with such employee’s termination date with Central
Jersey, Kearny or Kearny Bank, with a minimum severance payment to an individual
equal to four weeks of base pay and a maximum payment equal to 24 weeks of base
pay. Such severance pay will be made at regular payroll
intervals. Such severance payments will be in lieu of any severance
pay plans that may be in effect at Central Jersey prior to the Effective
Time. If termination of any such employee’s employment occurs after
the first anniversary of the Effective Time, then such employee shall be
entitled to receive the severance pay under any severance pay plans that may be
in effect at such time at Kearny or Kearny Bank, provided, that any such
employee shall receive credit under any such plan for such employee’s service
prior to the Effective Time to Central Jersey, any of its subsidiaries, and any
Person acquired by Central Jersey or any of its subsidiaries.
(g) Kearny
and Central Jersey will cooperate in establishing a retention bonus plan for
certain employees of Central Jersey and Central Jersey Bank who remain employed
at Central Jersey, Kearny or Kearny Bank for a period of up to six months after
the Effective Time. Prior to the Effective Time, Central Jersey
and Kearny shall mutually agree as to the proposed recipients of any
retention bonuses, the amounts of any bonuses to be received by such recipients
and the timing of such payments; provided, however, the aggregate retention
bonus pool shall not exceed $300,000 and such bonuses shall be paid not later
than six months after the Effective Time to those recipients who remain employed
by Central Jersey, Kearny or Kearny Bank for the requisite time determined by
mutual agreement of Central Jersey and Kearny.
(h) Continuing
Employees shall be eligible to participate in the Kearny Employee Stock
Ownership Plan not later than January 1, 2012 and such employees shall receive
credit for prior employment service with Central Jersey or any of its
subsidiaries and any Person
acquired
by Central Jersey or any of its subsidiaries for purposes of vesting service
with respect to such plan.
Section
6.4
Indemnification
.
(a) For
a period of six (6) years after the Effective Time of the Merger, Kearny shall
indemnify, defend and hold harmless each person entitled to indemnification from
Central Jersey (each an “Indemnified Party”) against all liability arising out
of actions or omissions occurring at or prior to the Effective Time of the
Merger (including, without limitation, transactions contemplated by this
Agreement) to the fullest extent which Central Jersey would have been permitted
under any applicable law and its Certificate of Incorporation and By-laws (and
Kearny shall also advance expenses, including, but not limited to, fees and
disbursements of legal counsel as incurred).
(b) After
the Effective Time of the Merger, directors, officers and employees of Central
Jersey, except for the indemnification rights provided for in this Section 6.4
above, shall have indemnification rights having prospective application
only. These prospective indemnification rights shall consist of such
rights to which directors, officers and employees of Kearny and its subsidiaries
would be entitled under the Charter and Bylaws of Kearny or the particular
subsidiary for which they are serving as officers, directors or employees and
under such directors’ and officers’ liability insurance policy as Kearny may
then make available to officers, directors and employees of Kearny and its
subsidiaries.
(c) Kearny
shall use its best efforts (and Central Jersey shall cooperate prior to the
Effective Time of the Merger) to maintain in effect for a period of six (6)
years after the Effective Time of the Merger Central Jersey’s existing
directors’ and officers’ liability insurance policy (provided that Kearny may
substitute therefor (i) policies with comparable coverage and amounts containing
terms and conditions which are substantially no less advantageous or (ii)with
the consent of Central Jersey (given prior to the Effective Time of the Merger)
any other policy with respect to claims arising from facts or events which
occurred prior to the Effective Time of the Merger and covering persons who are
currently covered by such insurance; provided, that Kearny shall not be
obligated to make premium payments for such six (6) year period in respect of
such policy (or coverage replacing such policy) which exceed, for the portion
related to Central Jersey’s directors and officers, 150% of the annual premium
payments on Central Jersey’s current policy, as in effect as of the date of this
Agreement (the “Maximum Amount”). If the amount of premium that is
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, Kearny shall use its reasonable efforts to maintain the most
advantageous policies of director’s and officer’s liability insurance obtainable
for a premium equal to the Maximum Amount.
Section
6.5
Transaction Expenses of
Central Jersey
.
(a) Schedule
6.5(a) contains Central Jersey’s estimated budget of transaction-related
expenses reasonably anticipated to be payable by Central Jersey in connection
with this Agreement and the transactions contemplated thereunder, including any
payments to be made in accordance with any employment agreements or bonus
arrangements between any officer and Central Jersey to be made before or after
the Effective Time of the Merger, based on facts and circumstances then
currently known, the fees and expenses of counsel, accountants,
investment
bankers
and other professionals. Central Jersey shall use its best efforts to
maintain expenses within the budget.
(b) Promptly
after the execution of this Agreement, Central Jersey 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. Central
Jersey shall review these invoices and track such expenses against the budget
referenced above, and Central Jersey shall advise Kearny of such matters prior
to payment of such invoices.
(c) Central
Jersey shall cause its professionals to render monthly invoices within thirty
(30) days after the end of each month. Central Jersey shall advise
Kearny monthly of such invoices for professional services, disbursements and
reimbursable expenses which Central Jersey has incurred in connection with this
Agreement prior to payment of such invoices, and Central Jersey shall track such
expenses against the budget referenced above.
(d) Not
later than two business days prior to the Closing Date, Central Jersey 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 or payments have not been made. Central
Jersey shall detail any variance of such transaction expenses to the budget set
forth at Central Jersey Schedule 6.5(a) as of the date of the
Agreement.
Section
6.6
Press
Releases
. Kearny and Central Jersey agree that they will not
issue any press release or other public disclosure related to this Agreement or
the transactions contemplated hereby, without first consulting with the other
Party as to the form and substance of such disclosures which may relate to the
transactions contemplated by this Agreement, provided, however, that nothing
contained herein shall prohibit either Party, following notification to the
other Party, from making any disclosure which is required by law or
regulation.
Section
6.7
Prior Notice and Approval
Before Payments To Be Made
. No payments shall be made by
Central Jersey to any director, officer or employee in accordance with any
agreement, contract, plan or arrangement (including, but not limited to any
employment agreement, severance arrangement, stock option, deferred compensation
plan, bonus, vacation or leave plan or other compensation or benefits program),
including payments upon the termination of such agreement, contract, plan or
arrangement or upon the termination of employment or service of such recipient
with Central Jersey, except to the extent that such intended payments (i) have
been set forth in the Central Jersey Schedules furnished to Kearny at the date
of this Agreement, (ii) are with prior written notice to Kearny of such intended
payment, (iii) are made contemporaneous with the delivery of a written
acknowledgement and release executed by the recipient and Central Jersey
satisfactory to Kearny in form and substance, and (iv) are with the consent of
Kearny. Prior to Central Jersey making any such payments to any
officer or director, Central Jersey, with the assistance of its tax accountants,
shall determine that no such payments, if made, shall constitute an “excess
parachute payment” in accordance with Section 280G of the Code and that such
payment shall not exceed the deductibility limitations at Section 162(m)
of
the Code,
and Central Jersey shall furnish Kearny with a detailed schedule related to such
determination prior to making any such payments.
Section
6.8
Post Merger Activities of
Central Jersey Directors
. Each non-employee member of the
Board of Directors of Central Jersey as of the date of this Agreement shall be
paid the sum of $10,000 as of the Effective Time of the Merger as consideration
for the agreement not to compete for a period of one year after the Effective
Time of the Merger, as set forth at Section 4 of the Support Agreement
referenced as Exhibit B hereto and executed and delivered in accordance with
Section 5.14 herein. In addition, each individual who was formerly
serving as a non-employee director on the Board of Directors of Central Jersey
immediately prior to the date of this Agreement will be invited to become a
member of the newly formed Central Jersey Community Advisory Board for Kearny
Bank (the “Advisory Board”). Kearny and Kearny Bank covenant and
agree that the Advisory Board shall stay in place for a minimum of two years
from the Effective Time of the Merger. Each director accepting such
appointment to the Advisory Board will be compensated for such active service at
an annual rate of $8,000 during the first year following the Effective Time of
the Merger to be paid quarterly in arrears based upon attendance of not less
than one meeting of such Advisory Board during each three calendar month period,
and such Advisory Directors shall agree not to compete with the business of
Kearny and Kearny Bank while serving as an Advisory Director and a period of one
year thereafter. Such Advisory Directors shall be paid at the annual
rate of $18,000 per annum during the second year of service on such Advisory
Board.
Section
6.9
Notification of Certain
Matters
. Each Party shall give prompt notice to the others of
(a) any event, condition, change, occurrence, act or omission which causes any
of its representations hereunder to cease to be true in all material respects
(or, with respect to any such representation which is qualified as to
materiality, causes such representation to cease to be true in all respects);
and (b) any event, condition, change, occurrence, act or omission which
individually or in the aggregate has, or which, so far as reasonably can be
foreseen at the time of its occurrence, is reasonably likely to have, a Material
Adverse Effect on such Party. Each of Central Jersey and Kearny shall give
prompt notice to the other Party of any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
Section
6.10
Central
Jersey
Division
. Kearny will operate Central Jersey Bank after the
Effective Time as the Central Jersey Bank, a division of Kearny Federal Savings
Bank, for a period of not less than eighteen months.
Section
6.11
Community
Charitable
Foundation
. Upon the Effective Time, Kearny will take such
actions as may be necessary to add the communities served by Central Jersey Bank
to the target charitable community designation region served by the The Kearny
Federal Savings Charitable Foundation.
Section
6.12
Supplemental
Indenture
. Prior to the Effective Time of the Merger, Central
Jersey shall take all actions necessary to enter into a supplemental indenture
with the Trustee of the Indenture dated March 25, 2004 for Central Jersey’s
variable rate junior subordinated deferrable interest debentures to evidence the
succession of Kearny as of the
Effective
Time of the Merger. The form of the supplemental indenture shall be
reasonably acceptable to Kearny.
Section
6.13
Disclosure
Supplements
. From time to time prior to the Effective Time of
the Merger, each Party will promptly supplement or amend their respective
Schedules delivered in connection herewith with respect to any matter hereafter
arising that, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such Schedules or that
is necessary to correct any information in such Schedules that has been rendered
materially inaccurate thereby. No supplement or amendment to such
Schedules shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Articles 8 and 9 and shall be for informational
purposes only.
Section
6.14
Preferred Stock
Redemption
. Central Jersey shall use its best efforts to
redeem all of the 11,300 outstanding shares of Central Jersey Preferred Shares
issued by Central Jersey to the United States Department of the Treasury under
the United States Department of the Treasury’s Troubled Assets Relief Program
Capital Purchase Program (the “TARP Obligations”) and satisfy all obligations
related thereto immediately before or contemporaneously with
Closing. Accordingly, Central Jersey shall use its best efforts, in
coordination with Kearny, to obtain all necessary approvals and non-objections
of Regulatory Authorities and any counter party and third party consents
necessary for the foregoing. Kearny shall advance the funds to
Central Jersey for redemption of the Central Jersey Preferred Shares immediately
before or contemporaneously with Closing to enable Central Jersey to effectuate
the redemptions.
ARTICLE
7
MUTUAL
CONDITIONS TO CLOSING
The
obligations of Kearny, on the one hand, and Central Jersey, on the other hand,
to consummate the transactions provided for herein shall be subject to the
satisfaction of the following conditions, unless waived as hereinafter provided
for:
Section
7.1
Shareholder
Approval
. The Merger shall have been approved by the requisite
vote of the shareholders of Central Jersey.
Section
7.2
Regulatory
Approvals
. All necessary Consents of the Regulatory
Authorities shall have been obtained and all notice and waiting periods required
by law to pass after receipt of such Consents shall have passed, and all
conditions to consummation of the Merger set forth in such Consents shall have
been satisfied.
Section
7.3
Litigation
. There
shall be no actual or threatened causes of action, investigations or proceedings
(i) challenging the validity or legality of this Agreement or the consummation
of the transactions contemplated by this Agreement, or (ii) seeking damages in
connection with the transactions contemplated by this Agreement, or (iii)
seeking to restrain or invalidate the transactions contemplated by this
Agreement, which, in the case of (i) through (iii), and in the reasonable
judgment of either Kearny or Central
Jersey,
based upon advice of counsel, would have a Material Adverse Effect with respect
to the interests of Kearny or Central Jersey, as the case may be. No
judgment, order, injunction or decree (whether temporary, preliminary or
permanent) issued by any court or agency of competent jurisdiction or other
legal restraints or prohibition preventing the consummation of Merger or any of
the other transactions contemplated by this Agreement shall be in
effect. No statute, rule, regulation, order, injunction or decree
(whether temporary, preliminary or permanent) shall have been enacted, entered,
promulgated or enforced by any Regulatory Authority that prohibits, restricts,
or makes illegal the consummation of the Merger.
ARTICLE
8
CONDITIONS
TO THE OBLIGATIONS OF KEARNY
The
obligation of Kearny to consummate the Merger is subject to the fulfillment of
each of the following conditions, unless waived as hereinafter provided
for:
Section
8.1
Representations and
Warranties
. The representations and warranties of Central
Jersey and Central Jersey Bank contained in this Agreement or in any certificate
or document delivered pursuant to the provisions hereof will be true and
correct, in all material respects (or where any statement in a representation or
warranty expressly contains a standard of materiality, such statement shall be
true and correct in all respects taking into consideration the standard of
materiality contained therein), as of the Effective Time of the Merger (as
though made on and as of the Effective Time of the Merger), except to the extent
such representations and warranties are by their express provisions made as of a
specified date and except for changes therein contemplated by this
Agreement.
Section
8.2
Performance of
Obligations
. Central Jersey and Central Jersey Bank shall have
performed all covenants, obligations and agreements required to be performed by
it in all material respects under this Agreement prior to the Effective Time of
the Merger.
Section
8.3
Certificate Representing
Satisfaction of Conditions
. Central Jersey shall have
delivered to Kearny a certificate of the Chief Executive Officer of Central
Jersey dated as of the Closing Date as to the satisfaction of the matters
described in Section 8.1 and Section 8.2 hereof, and such certificate shall be
deemed to constitute additional representations, warranties, covenants, and
agreements of Central Jersey under Article 3 of this Agreement.
Section
8.4
Absence of Adverse
Facts
. There shall have been no determination by Kearny that
any fact, event or condition exists or has occurred that, in the judgment of
Kearny, would have a Material Adverse Effect on, or which may be foreseen to
have a Material Adverse Effect on, Central Jersey or the consummation of the
transactions contemplated by this Agreement.
Section
8.5
Consents Under
Agreements
. Central Jersey shall have obtained the consent or
approval of each Person (other than the Consents of the Regulatory Authorities)
whose consent or approval shall be required in order to permit the succession by
the Surviving Corporation to any obligation, right or interest of Central Jersey
under any loan or credit agreement, note, mortgage, indenture, lease, license,
or other agreement or instrument, except those for which failure to obtain such
consents and approvals would not in the opinion of
Kearny,
individually or in the aggregate, have a Material Adverse Effect on the
Surviving Corporation or upon the consummation of the transactions contemplated
by this Agreement.
Section
8.6
Material
Condition
. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger by any Regulatory Authority which, in connection with
the grant of any Consent by any Regulatory Authority, imposes, in the judgment
of Kearny, any material adverse requirement upon Kearny or any Kearny
subsidiary, including, without limitation, any requirement that Kearny sell or
dispose of any significant amount of the assets of Central Jersey, or any other
Kearny subsidiary.
Section
8.7
Certification of
Claims
. Central Jersey shall have delivered a certificate to
Kearny that other than as set forth in such certificate, Central Jersey is not
aware of any pending or threatened claim under the directors and officers
insurance policy or the fidelity bond coverage of Central Jersey.
Section
8.8
Environmental
Audit
Results
. The results of any environmental audit conducted by
Kearny pursuant to Section 5.8 hereof shall not indicate a circumstance or
condition that could in the judgment of Kearny result in a Material Adverse
Effect.
Section
8.9
Support
Agreements
. Each Director of Central Jersey who has been
nominated for election at the Annual Meeting and each Executive Officer of
Central Jersey shall have executed the Support Agreement as set forth in Exhibit
B.1 or B.2, as the case may be, as of the date of this Agreement.
Section
8.10
Power of
Attorney
. Each Executive Officer of Central Jersey and each of
its subsidiaries shall have executed written powers of attorney in their
capacities as officers of Central Jersey and/or its subsidiaries in favor of
Kearny in form and substance satisfactory to Kearny so as to permit Kearny to
take any and all such actions after the Effective Time of the Merger in order to
effect the assumption by Kearny or Kearny Bank of the rights and obligations of
Central Jersey and its subsidiaries under any contract to which Central Jersey
or its subsidiaries is a party. Such powers of attorney shall survive
the Effective Time of the Merger.
Section
8.11
Receipt of Option
Cancellation Agreements
. If required, Central Jersey shall use
its best efforts to deliver executed Option and Stock Appreciation Right
Cancellation Agreements from all holders of Central Jersey Options at or prior
to the Effective Time of the Merger.
Section
8.12
Addenda to Employment and
Change in Control Agreements
.
Designated officers of Central Jersey
and Central Jersey Bank (James S. Vaccaro, Robert S. Vuono, and Anthony
Giordano)
shall have executed as of the date of this Agreement an
Addendum to their respective Employment or Change in Control Agreements in the
form attached as Exhibit C hereto.
Section
8.13
Nonperforming
Assets
. Central Jersey’s Nonperforming Assets, as defined in
Section 11.1, shall not exceed $20.0 million for the period from
March 31, 2010 through the Closing Date.
ARTICLE
9
CONDITIONS
TO OBLIGATIONS OF CENTRAL JERSEY
The
obligation of Central Jersey to consummate the Merger as contemplated herein is
subject to each of the following conditions, unless waived as hereinafter
provided for:
Section
9.1
Representations and
Warranties
. The representations and warranties of Kearny and
Kearny Bank contained in this Agreement or in any certificate or document
delivered pursuant to the provisions hereof will be true and correct, in all
material respects (or where any statement in a representation or warranty
expressly contains a standard of materiality, such statement shall be true and
correct in all respects taking into consideration the standard of materiality
contained therein), as of the Effective Time of the Merger (as though made on
and as of the Effective Time of the Merger), except to the extent such
representations and warranties are by their express provisions made as of a
specified date and except for changes therein contemplated by this
Agreement.
Section
9.2
Performance of
Obligations
. Kearny and Kearny Bank shall have performed in
all material respects all covenants, obligations and agreements required to be
performed by them and under this Agreement prior to the Effective Time of the
Merger.
Section
9.3
Certificate Representing
Satisfaction of Conditions
. Kearny shall have delivered to
Central Jersey a certificate dated as of the Effective Time of the Merger as to
the satisfaction of the matters described in Section 9.1 and Section 9.2 hereof,
and such certificate shall be deemed to constitute additional representations,
warranties, covenants, and agreements of Kearny under Article 4 of this
Agreement.
ARTICLE
10
TERMINATION,
WAIVER AND AMENDMENT
Section
10.1
Termination
.
This
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time of the Merger:
(a) by
the mutual consent in writing of the Board of Directors of Kearny and Central
Jersey; or
(b) by
the Board of Directors of Kearny or Central Jersey if the Merger shall not have
occurred on or prior to March 31, 2011, provided that the failure to consummate
the Merger on or before such date is not caused by any breach of any of the
representations, warranties, covenants or other agreements contained herein by
the Party electing to terminate pursuant to this Section 10.1(b);
(c) by
the Board of Directors of Kearny or Central Jersey (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
8.1 of this Agreement in the case of Central Jersey and Section 9.1 of this
Agreement in the case of Kearny or in breach of any
covenant
or agreement contained in this Agreement) in the event of an inaccuracy of any
representation or warranty of the other Party contained in this Agreement which
cannot be or has not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such inaccuracy and which inaccuracy
would provide the terminating Party the ability to refuse to consummate the
Merger under the applicable standard set forth in Section 8.1 of this Agreement
in the case of Central Jersey and Section 9.1 of this Agreement in the case of
Kearny; or
(d) by
the Board of Directors of Kearny or Central Jersey (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
8.1 of this Agreement in the case of Central Jersey and Section 9.1 of this
Agreement in the case of Kearny or in breach of any covenant or other agreement
contained in this Agreement) in the event of a material breach by the other
Party of any covenant or agreement contained in this Agreement which cannot be
or has not been cured within thirty (30) days after the giving of written notice
to the breaching Party of such breach; or
(e) by
the Board of Directors of Kearny or Central Jersey in the event (i) any Consent
of any Regulatory Authority required for consummation of the Merger and the
other transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal, or (ii) the shareholders of
Central Jersey fail to vote their approval of this Agreement and the Merger and
the transactions contemplated hereby as required by applicable law at Central
Jersey’s shareholders’ meeting where the transactions were presented to such
shareholders for approval and voted upon; or
(f) by
the Board of Directors of Kearny or Central Jersey (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
8.1 of this Agreement in this case of Central Jersey and Section 9.1 of this
Agreement in the case of Kearny or in breach of any covenant or agreement
contained in this Agreement) upon delivery of written notice of termination at
the time that it is determined that any of the conditions precedent to the
obligations of such Party to consummate the Merger (other than as contemplated
by Section 10.1(e) of this Agreement) cannot be satisfied or fulfilled by the
date specified in Section 10.1(b) of this Agreement; or
(g) by
the Board of Directors of Kearny, (a) if Central Jersey fails to hold its
shareholder meeting to vote on the Agreement within the time frame set forth in
Section 5.4 hereof, or (b) if Central Jersey’s Board of Directors either (i)
fails to recommend, or fails to continue its recommendation, that the
shareholders of Central Jersey vote in favor of the adoption of this Agreement,
or (ii) modifies, withdraws or changes in any manner adverse to Kearny its
recommendation that the shareholders of Central Jersey vote in favor of the
adoption of this Agreement.
(h) By
the Board of Directors of Central Jersey prior to obtaining shareholder approval
of the Merger, in the event that, after it has received a superior proposal in
compliance with Section 5.5 hereof and otherwise complied with its obligations
under Section 5.5, the Board
makes the
determination in good faith based on the advice of legal counsel that such
action of accepting such superior proposal is required in order for the Board to
comply with its fiduciary duties under applicable law, and, provided that
Central Jersey is not in breach of the provisions of this Agreement, including,
but not limited to Section 5.5 hereof, in the exercise of its fiduciary duty, to
terminate this Agreement and accept a superior proposal (as defined in Section
5.5) provided, however, that this Agreement may be terminated by Central Jersey
pursuant to this Section 10.1(h) only after the third calendar day following
Kearny’s receipt of written notice from Central Jersey advising Kearny that
Central Jersey is prepared to enter into an acquisition agreement with respect
to a superior proposal, and only if, during such three-calendar day period,
Kearny does not, in its sole discretion, make an offer to Central Jersey that
Kearny’s Board of Directors determines in good faith, after consultation with
its financial and legal advisors, is at least as favorable as the superior
proposal.
Section
10.2
Effect of Termination;
Termination Fee
.
(a) In
the event of the termination and abandonment of this Agreement pursuant to
Section 10.1, the Agreement shall terminate and have no effect, except as
otherwise provided herein and except that the provisions of this Section 10.2,
Section 10.5 and Article 11 of this Agreement shall survive any such termination
and abandonment.
(b) If,
after the date of this Agreement, Kearny terminates this Agreement in accordance
with Section 10.1(g) or Central Jersey terminates this Agreement pursuant to
Section 10.1(h), Central Jersey shall be obligated to pay Kearny a fee of $2.8
million as an agreed-upon termination fee in immediately available funds within
one (1) business day of such notice of termination (the “Termination
Fee”). In addition, if, after a proposal for an Acquisition
Transaction has been publicly announced by any person or entity, Kearny
terminates this Agreement pursuant to Section 10.1(e)(ii), Central Jersey shall
be obligated to pay Kearny a fee of $800,000 in immediately available funds
within one business day of such notice of termination as reimbursement for its
time and expenses associated with negotiating this Agreement, and if an
Acquisition Transaction is consummated or a definitive agreement is entered into
by Central Jersey relating to an Acquisition Transaction, in either case, within
15 months of the termination of this Agreement pursuant to Section 10.1(e)(ii),
Central Jersey shall be obligated to pay Kearny the Termination Fee, less any
amounts previously paid at the time this Agreement was terminated.
(c) Central
Jersey and Kearny agree that the Termination Fee is fair and reasonable in the
circumstances. If a court of competent jurisdiction shall
nonetheless, by a final, nonappealable judgment, determine that the amount of
any such Termination Fee exceeds the maximum amount permitted by law, then the
amount of such Termination Fee shall be reduced to the maximum amount permitted
by law in the circumstances, as determined by such court of competent
jurisdiction.
Section
10.3
Amendments
. To
the extent permitted by law, this Agreement may be amended by a subsequent
writing signed by each of Kearny, Kearny Bank, Central Jersey and Central Jersey
Bank.
Section
10.4
Waivers
. Subject
to Section 11.11 hereof, prior to or at the Effective Time of the Merger,
Kearny, on the one hand, and Central Jersey, on the other hand, shall have
the
right to
waive any default in the performance of any term of this Agreement by the other,
to waive or extend the time for the compliance or fulfillment by the other of
any and all of the other’s obligations under this Agreement and to waive any or
all of the conditions to its obligations under this Agreement, except any
condition, which, if not satisfied, would result in the violation of any law or
any applicable governmental regulation.
Section
10.5
Non-Survival of
Representations, Warranties and Covenants
. The
representations, warranties, covenants or agreements in this Agreement or in any
instrument delivered by Kearny or Central Jersey shall not survive the Effective
Time of Merger, except that Section 5.3(b), Section 6.4 and Section 10.2 shall
survive the Effective Time of the Merger, and any representation, warranty or
agreement in any agreement, contract, report, opinion, undertaking or other
document or instrument delivered hereunder in whole or in part by any person
other than Kearny, Central Jersey (or directors and officers thereof in their
capacities as such) shall survive the Effective Time of Merger; provided that no
representation or warranty of Kearny or Central Jersey contained herein shall be
deemed to be terminated or extinguished so as to deprive Kearny, on the one
hand, and Central Jersey, on the other hand, of any defense at law or in equity
which any of them otherwise would have to any claim against them by any person,
including, without limitation, any shareholder or former shareholder of either
Party. No representation or warranty in this Agreement shall be
affected or deemed waived by reason of the fact that Kearny or Central Jersey
and/or its representatives knew or should have known that any such
representation or warranty was, is, might be or might have been inaccurate in
any respect.
ARTICLE
11
MISCELLANEOUS
Section
11.1
Definitions
. Except
as otherwise provided herein, the capitalized terms set forth below (in their
singular and plural forms as applicable) shall have the following
meanings:
“Affiliate”
of a person shall mean (i) any other person directly or indirectly through one
or more intermediaries controlling, controlled by or under common control of
such person, (ii) any officer, director, partner, employer or direct or indirect
beneficial owner of any 10% or greater equity or voting interest of such person
or (iii) any other persons for which a person described in clause (ii) acts in
any such capacity.
“Consent”
shall mean a consent, approval or authorization, waiver, clearance, exemption or
similar affirmation by any person pursuant to any lease, contract, permit, law,
regulation or order.
“Code”
shall mean the Internal Revenue Code of 1986, as amended.
“Environmental
Law” means any applicable federal, state or local law, statute, ordinance, rule,
regulation, code, license, permit, authorization, approval, consent, order,
judgment, decree or injunction relating to (i) the protection, preservation or
restoration of the environment (including, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, surface soil, subsurface
soil, plant and animal life or any other natural
resource),
and/or (ii) the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of any substance
presently listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, whether by type or by
substance as a component.
“GAAP”
means generally accepted accounting principles in the United States as in effect
from time to time.
“Hazardous
Material” means any pollutant, contaminant, or hazardous substance within the
meaning of the Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. § 9601 et seq., or any similar federal, state or local
law. Hazardous Material shall include, but not be limited to, (i) any
hazardous substance, hazardous material, hazardous waste, regulated substance,
or toxic substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum, petroleum
products, or oil (and specifically shall include asbestos requiring abatement,
removal, or encapsulation pursuant to the requirements of governmental
authorities and any polychlorinated biphenyls).
“Knowledge”
as used with respect to a Person (including references to such Person being
aware of a particular matter) shall mean those facts that are known by the
executive officers and directors of such Person and includes any facts, matters
or circumstances set forth in any written notice from any bank regulatory
agencies or any other material written notice received by that
Person. For purposes of this definition, an executive officer or
director will be deemed to have Knowledge of a particular fact or other matter
only if such executive officer or director has actual knowledge of a particular
fact or other matter, without independent investigation.
“Loan
Property” means any property owned by Central Jersey or any of its subsidiaries,
or in which Central Jersey or any of its subsidiaries holds a security interest,
and, where required by the context, includes the owner or operator of such
property, but only with respect to such property.
“Material
Adverse Effect,” with respect to any Party, shall mean any event, change or
occurrence which, together with any other event, change or occurrence, has a
material adverse impact on (i) the financial position, business or results of
operation, financial performance or prospects of such Party and their respective
subsidiaries, if any, taken as a whole, or (ii) the ability of such Party to
perform its obligations under this Agreement or to consummate the Merger and the
other transactions contemplated by this Agreement; provided, however, that
“Material Adverse Effect” shall not be deemed to include changes, effects,
events, occurrences or state of facts relating to (iii) the undertaking and
performance or observance of the obligations contemplated by this Agreement or
necessary to consummate the transactions contemplated hereby, (iv) the effect of
incurring and paying reasonable expenses in connection with negotiating,
entering into, performing and consummating the transactions contemplated by this
Agreement, (v) changes in applicable laws or the interpretation thereof after
the date hereof and the taking of action in compliance therewith, (vi) changes
in GAAP or the interpretation thereof after the date hereof, (vii) changes in
interest rates, and (viii) any action taken at the request of Kearny or Kearny
Bank.
“Nonperforming
Assets” means the sum of (i) loans in nonaccrual status, as defined in the
Federal Financial Institutions Examination Council Instructions for Preparation
of Consolidated Reports of Condition and Income (“Call Report Instructions”),
(ii) other real estate owned, as defined in the Call Report Instructions, (iii)
troubled debt restructurings, as defined in the Call Report Instructions and
(iv) if net charge-offs, as defined in the Call Report Instructions, exceed the
change in consolidated net income from the period between March 31, 2010 through
Closing, the difference between the net charge-offs and the change in
consolidated net income from the period between March 31, 2010 through
Closing.
“Participation
Facility” means any facility in which Central Jersey or any subsidiary has
engaged in Participation in the Management of such facility, and, where required
by the context, includes the owner or operator of such facility, but only with
respect to such facility.
“Participation
in the Management” of a facility has the meaning set forth in 40
C.F.R. § 300.1100(c).
“Regulatory
Authorities” shall mean, collectively, the Federal Trade Commission, the United
States Department of Justice, the FRB, the OTS, the OCC, and all state
regulatory agencies having jurisdiction over the Parties, the Financial
Institution Regulatory Authority, all national securities exchanges and the
SEC.
Section
11.2
Entire
Agreement
. This Agreement and the documents referred to herein
contain the entire agreement among Kearny, Kearny Bank, Central Jersey and
Central Jersey Bank with respect to the transactions contemplated hereunder and
this Agreement supersedes all prior arrangements or understandings with respect
thereto, whether written or oral. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the Parties hereto
and their respective successors. Except as expressly set forth in
Section 6.4 of this Agreement, nothing in this Agreement, expressed or implied,
is intended to confer upon any person, firm, corporation or entity, other than
the Parties hereto and their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
Section
11.3
Notices
. All
notices or other communications which are required or permitted hereunder shall
be in writing and sufficient if delivered personally, sent by a nationally
recognized overnight delivery service or sent by first class or registered or
certified mail, postage prepaid, telegram or telex or other facsimile
transmission addressed as follows:
If to
Central Jersey:
Central
Jersey Bank
1903
Highway 35
Oakhurst,
New Jersey 07755
Attention: James
S. Vaccaro, Chairman, President and Chief Executive Officer
Facsimile
No.: (732) 663-4000
With a
copy to:
Giordano
Halleran & Ciesla, P.C.
125 Half
Mile Road, Suite 300
Red Bank,
New Jersey 07701
Attn:
Paul T. Colella, Esq.
Facsimile
No. (732) 224-6599
If to
Kearny, then to:
Kearny
Financial Corp.
120
Passaic Avenue
Fairfield,
New Jersey 07004
Attention: John
N. Hopkins, Chief Executive Officer
Facsimile
No.: (973) 439-6914
With a
copy to:
Malizia
Spidi & Fisch, PC
901 New
York Avenue, NW
Suite 210
East
Washington,
DC 20001
Attention: Richard
Fisch, Esq.
Facsimile
No.: (202) 434-4661
Or After
June 14, 2010 Use the Following Address:
Malizia
Spidi & Fisch, PC
1227
25
th
Street, NW, Suite 200 West
Washington,
DC 20036
All such
notices or other communications shall be deemed to have been delivered (i) upon
receipt when delivery is made by hand, (ii) on the business day after being
deposited with a nationally recognized overnight delivery service, (iii) on the
third (3rd) business day after deposit in the United States mail when delivery
is made by first class, registered or certified mail, and (iv) upon transmission
when made by telegram, telex or other facsimile transmission if evidenced by a
sender transmission completed confirmation.
Section
11.4
Severability
. If
any term, provision, covenant or restriction contained in this Agreement is held
by a court of competent jurisdiction or other competent authority to be invalid,
void or unenforceable or against public or regulatory policy, the remainder of
the terms, provisions, covenants and restrictions contained in this Agreement
shall remain in full force and effect and in no way shall be affected, impaired
or invalidated, if, but only if, pursuant to suchremaining terms, provisions,
covenants and restrictions the Merger may be consummated in substantially the
same manner as set forth in this Agreement as of the later of the date this
Agreement was executed or last amended.
Section
11.5
Costs and
Expenses
. Except as otherwise set forth herein, expenses
incurred by Central Jersey on the one hand and Kearny on the other hand, in
connection with or related to the authorization, preparation and execution of
this Agreement, the solicitation of
shareholder
approval and all other matters related to the closing of the transactions
contemplated hereby, including all fees and expenses of agents, representatives,
counsel and accountants employed by either such Party or its affiliates, shall
be borne solely and entirely by the Party which has incurred same.
Section
11.6
Captions
. The
captions as to contents of particular articles, sections or paragraphs contained
in this Agreement and the table of contents hereto are inserted only for
convenience and are in no way to be construed as part of this Agreement or as a
limitation on the scope of the particular articles, sections or paragraphs to
which they refer.
Section
11.7
Counterparts
. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document with the same force and effect as though all Parties had executed the
same document.
Section
11.8
Persons Bound; No
Assignment
. This Agreement shall be binding upon and shall
inure to the benefit of the Parties hereto and their respective successors,
distributees, and assigns, but notwithstanding the foregoing, this Agreement may
not be assigned by any Party hereto unless the prior written consent of the
other Parties is first obtained (other than by Kearny to a subsidiary of Kearny;
provided that Kearny remains primarily liable for all of its obligations under
the Agreement.
Section
11.9
Governing
Law
. This Agreement is made and shall be governed by and
construed in accordance with the laws of the State of New Jersey (without
respect to its conflicts of laws principles) except to the extent federal law
may apply.
Section
11.10
Exhibits and
Schedules
. Each of the exhibits and schedules attached hereto
is an integral part of this Agreement and shall be applicable as if set forth in
full at the point in the Agreement where reference to it is made.
Section
11.11
Waiver
. The
waiver by any Party of the performance of any agreement, covenant, condition or
warranty contained herein shall not invalidate this Agreement, nor shall it be
considered a waiver of any other agreement, covenant, condition or warranty
contained in this Agreement. A waiver by any Party of the time for
performing any act shall not be deemed a waiver of the time for performing any
other act or an act required to be performed at a later time. The
exercise of any remedy provided by law, equity or otherwise and the provisions
in this Agreement for any remedy shall not exclude any other remedy unless it is
expressly excluded. The waiver of any provision of this Agreement
must be signed by the Party or Parties against whom enforcement of the waiver is
sought. This Agreement and any exhibit, memorandum or schedule hereto
or delivered in connection herewith may be amended only by a writing signed on
behalf of each Party hereto.
Section
11.12
Construction of
Terms
. Whenever used in this Agreement, the singular number
shall include the plural and the plural the singular. Pronouns of one
gender shall include all genders. Accounting terms used and not
otherwise defined in this Agreement have the meanings determined by, and all
calculations with respect to accounting or financial matters unless otherwise
provided for herein, shall be computed in accordance with generally accepted
accounting principles, consistently applied. References herein to
articles, sections, paragraphs,
subparagraphs
or the like shall refer to the corresponding articles, sections, paragraphs,
subparagraphs or the like of this Agreement. The words “hereof”,
“herein”, and terms of similar import shall refer to this entire
Agreement. Unless the context clearly requires otherwise, the use of
the terms “including”, “included”, “such as”, or terms of similar meaning, shall
not be construed to imply the exclusion of any other particular
elements. The recitals hereto constitute an integral part of this
Agreement.
Section
11.13
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.
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
and delivered, and their respective seals hereunto affixed, by their officers
thereunto duly authorized, and have caused this Agreement to be dated as of the
date and year first above written.
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SEAL]
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KEARNY
FINANCIAL CORP.
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By:
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/s/
John N. Hopkins
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Name: John
N. Hopkins
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ATTEST:
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Title: Chief
Executive Officer
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/s/
Craig L. Montanaro for Sharon Jones
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Name: Sharon
Jones
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Its
Secretary
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[CORPORATE
SEAL]
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KEARNY
FEDERAL SAVINGS BANK
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By:
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/s/
John N. Hopkins
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Name: John
N. Hopkins
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ATTEST:
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Title: Chief
Executive Officer
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/s/
Craig L. Montanaro for Sharon Jones
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Name: Sharon
Jones
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Its
Secretary
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[CORPORATE
SEAL]
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CENTRAL
JERSEY BANCORP
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By:
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/s/
James S. Vaccaro
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Name: James
S. Vaccaro
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ATTEST:
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Title: Chairman,
President and Chief
Executive
Officer
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/s/
Robert S. Vuono
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Name: Robert
S. Vuono
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Its
Secretary
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[CORPORATE
SEAL]
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CENTRAL
JERSEY BANK,
NATIONAL
ASSOCIATION
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By:
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/s/
James S. Vaccaro
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Name: James
S. Vaccaro
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ATTEST:
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Title: Chairman,
President and Chief
Executive
Officer
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/s/
Robert S. Vuono
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Name: Robert
S. Vuono
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Its
Secretary
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INDEX OF EXHIBITS AND
SCHEDULES
Exhibits
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Exhibit
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Description
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A
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Form
of Corporate Plan of Merger
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B
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Form
of Support Agreement
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C
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Form
of Addendum to Change of Control Agreements
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D
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Form
of Bank Plan of Merger
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E
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Form
of Option Cancellation and Release
Agreement
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Central
Jersey Schedules
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Schedule
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Description
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2.2
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Central
Jersey Stock Options and Stock Appreciation Rights
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3.1(e)
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Subsidiaries
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3.2(b)
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Central
Jersey Investment PortfolioA
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3.3(e)
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Obligations
and Liabilities
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3.5
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Certain
Loans and Related Matters
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3.7
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Consents
and Approvals
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3.8
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Engagement
Letter of Sandler O’Neill & Partners
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3.9
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Absence
of Certain Changes or Events
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3.10
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Legal
Proceedings
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3.11(b)
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Tax
Extensions
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3.11(c)
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Certain
Payments
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3.12(a)
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Employee
Benefit Plans
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3.12(h)
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Excess
Parachute Payments
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3.12(n)
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Retirement
or Termination Payments
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3.12(p)
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Payments
to Directors
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3.13(b)
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Assumption
of Leases
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3.13(c)
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Condition
of Property
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3.14(a)
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Real
Property
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3.14(b)
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Leases
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3.16(a)
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Commitments
and Contracts
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3.16(c)
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Service
Contracts
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3.16(d)
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Deadlines
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3.20
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Insurance
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3.21(d)
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Labor
Claims
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3.22
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Compliance
with Laws
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3.24
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Derivative
Contracts
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3.30
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Intellectual
Property
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3.33
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Indemnification
Agreements
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3.34
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Investment
Securities
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5.1(b)
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Permitted
Payments
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6.3(b)
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Change
of Control Agreements
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6.5(a)
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Estimated
Transaction Related Expenses
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Kearny
Schedules
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Schedule
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Description
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4.2
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Conflicts,
Breaches and Defaults
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4.3
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Consents
and Approvals
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All
exhibits and schedules have been omitted. Upon the request of the
Securities and Exchange Commission, Central Jersey Bancorp agrees to furnish
copies of the exhibits and schedules listed above.
Annex
B
May 25,
2010
Board of
Directors
Central
Jersey Bancorp
627
Second Avenue
Long
Branch, NJ 07740
Ladies
and Gentlemen:
Central
Jersey Bancorp (“Central Jersey”), Central Jersey Bank, National Association
(“Central Jersey Bank”), Kearny Financial Corp., (“Kearny”) and Kearny Federal
Savings Bank (“Bank”) have entered into an Agreement and Plan of Merger, dated
as of May 25, 2010 (the “Agreement”), pursuant to which a wholly owned
subsidiary of Kearny (“MergerSub”) will be merged with and into Central Jersey
(the “Merger”). Under the terms of the Agreement, upon consummation
of the Merger, each share of Central Jersey common stock, issued and outstanding
immediately prior to the Merger (the “Central Jersey Common Stock”), other than
certain shares specified in the Agreement, will be converted into the right to
receive cash in the amount of $7.50 per share (the “Merger Consideration”),
without interest, in cash and subject to certain adjustments as specified in the
Agreement. Capitalized terms used herein without definition shall
have the meanings given to such term in the Agreement. You have
requested our opinion as to the fairness, from a financial point of view, of the
Merger Consideration to the holders of Central Jersey Common
Stock.
Sandler
O’Neill & Partners, L.P., as part of its investment banking business, is
regularly engaged in the valuation of financial institutions and their
securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed,
among other things: (i) the Agreement; (ii) certain publicly available and other
historical financial information of Central Jersey that we deemed relevant;
(iii) certain publicly available financial statements and other historical
financial information of Kearny that we deemed relevant in determining Kearny’s
financial capacity to undertake the Merger; (iv) internal financial projections
for the calendar year ending December 31, 2010 as prepared by and reviewed with
senior management of Central Jersey and estimated long-term earnings and growth
rates for the calendar years ending December 31, 2011 through 2014 as discussed
with senior management of Central Jersey; (v) to the extent publicly available,
the financial terms of certain recent business combinations in the commercial
banking industry; (vi) the current market environment generally and the banking
environment in particular; and (vii) such other information, financial studies,
analyses and investigations and financial, economic and market criteria as we
considered relevant. We also discussed with certain members of senior management
of Central Jersey the business, financial condition, results of operations and
prospects of Central Jersey.
In
performing our review, we have relied upon the accuracy and completeness of all
of the financial and other information that was available to us from public
sources, that was provided to us by Central Jersey or their respective
representatives or that was otherwise reviewed by us and have assumed such
accuracy and completeness for purposes of rendering this opinion. We
have further relied on the assurances of management of Central Jersey and Kearny
that they are not aware of any facts or circumstances that would make any of
such information inaccurate or misleading. We have not been asked to
and have not undertaken an independent verification of any of such information
and we do not assume any responsibility or liability for the accuracy or
completeness thereof. We did not make an independent evaluation or
appraisal of the specific assets, the collateral securing assets or the
liabilities (contingent or otherwise) of Central Jersey and Kearny or any of
their subsidiaries, or the collectibility of any such assets, nor have we been
furnished with any such evaluations or appraisals. We did not make an
independent evaluation of the adequacy of the allowance for loan losses of
Central Jersey and Kearny nor have we reviewed any individual credit files
relating to Central Jersey and Kearny. We have assumed, with your
consent, that the respective allowances for loan losses for both
Central Jersey and Kearny are adequate to cover such losses and will be adequate
on a pro forma basis for the combined entity.
With
respect to the internal financial projections as provided by senior management
of Central Jersey and the estimated earning and growth rates discussed with
senior management and used by Sandler O’Neill in its analyses, Central Jersey’s
management confirmed to us that they reflected the best currently available
estimates and judgments of management of the future financial performance of
Central Jersey and we assumed that such performances would be
achieved. We express no opinion as to such financial projections or
the assumptions on which they are based. We have also assumed that
there has been no material change in Central Jersey’s and Kearny’s assets,
financial condition, results of operations, business or prospects since the date
of the most recent financial statements made available to us. We have
assumed in all respects material to our analysis that Central Jersey and Kearny
would remain as going concerns for all periods relevant to our analyses, that
all of the representations and warranties contained in the Agreement and all
related agreements are true and correct, that each party to the agreements will
perform all of the covenants required to be performed by such party under the
agreements and that the conditions precedent in the agreements are not
waived. Finally, with your consent, we have relied upon the advice
Central Jersey has received from its legal, accounting and tax advisors as to
all legal, accounting and tax matters relating to the Merger and the other
transactions contemplated by the Agreement.
Our
opinion is necessarily based on financial, economic, market and other conditions
as in effect on, and the information made available to us as of, the date
hereof. Events occurring after the date hereof could materially
affect this opinion. We have not undertaken to update, revise,
reaffirm or withdraw this opinion or otherwise comment upon events occurring
after the date hereof.
We have
acted as Central Jersey’s financial advisor in connection with the Merger and
will receive a fee for our services, a substantial portion of which is
contingent upon consummation of the Merger. We will also receive a
fee for rendering this opinion. Central Jersey has also agreed to
indemnify us against certain liabilities arising out of our
engagement. In the ordinary course of our business as a
broker-dealer, we may purchase securities from and sell securities to Central
Jersey and Kearny and their respective affiliates.
Our
opinion is directed to the Board of Directors of Central Jersey in connection
with its consideration of the Merger and does not constitute a recommendation to
any shareholder of Central Jersey as to how such shareholder should
vote at any meeting of shareholders called to consider and vote upon the
Merger. Our opinion is directed only to the fairness, from a
financial point of view, of the Merger Consideration to holders of Central
Jersey’s Common Stock and does not address the underlying business decision of
Central Jersey to engage in the Merger, the relative merits of the Merger as
compared to any other alternative business strategies that might exist for
Central Jersey or the effect of any other transaction in which Central Jersey
might engage. Our opinion is not to be quoted or referred to, in
whole or in part, in a registration statement, prospectus, proxy statement or in
any other document, nor shall this opinion be used for any other purposes,
without Sandler O'Neill’s prior written consent. This Opinion has
been approved by Sandler O’Neill’s fairness opinion committee and does not
address the amount of compensation to be received in the Merger by any Central
Jersey officer, director or employee.
Based
upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Merger Consideration is fair to the holders of Central Jersey Common
Stock from a financial point of view.
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Very
truly yours,
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/s/
Sandler O’Neill & Partners, L.P.
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Sandler
O’Neill & Partners,
L.P.
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CENTRAL
JERSEY BANCORP
1903
Highway 35
Oakhurst,
New Jersey 07755
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints James S. Vaccaro and Robert S. Vuono, or any of
them, with full power of substitution in each, to act as proxy for the
undersigned and to vote all shares of common stock of Central Jersey Bancorp
which the undersigned is entitled to vote at the Special Meeting of Shareholders
of Central Jersey Bancorp (the “Special Meeting”) to be held at [Place of
Special Meeting] on [Date of Special Meeting] at [9:00 a.m.], local time, or any
adjournment or postponement thereof, on the following matters:
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1.
Approval and
adoption of the Agreement and Plan of Merger, dated as of May 25, 2010, by
and among Central Jersey Bancorp, Central Jersey Bank, N.A., Kearny
Financial Corp. and Kearny Federal Savings
Bank.
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o
FOR
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AGAINST
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ABSTAIN
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2.
Approval and
adoption of a proposal to adjourn the Special Meeting to a later date or
dates, if necessary, to permit further solicitation of proxies if there
are not sufficient votes at the time of the Special Meeting to approve the
Agreement and Plan of Merger, dated as of May 25, 2010, by and among
Central Jersey Bancorp, Central Jersey Bank, N.A., Kearny Financial Corp.
and Kearny Federal Savings
Bank.
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o
FOR
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AGAINST
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ABSTAIN
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3.
Transaction of such other business as may be properly presented at
the Special Meeting and any adjournments or postponements of the Special
Meeting.
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THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR IF NO DIRECTION IS
INDICATED, WILL BE VOTED “FOR” PROPOSAL NUMBERS 1 AND 2.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE LISTED
PROPOSALS.
Please
sign exactly as name appears below. If there are two or more owners, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
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,
2010
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(Signature)
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(Signature,
if held jointly)
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YOUR
VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.