UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE 14A
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE
ACT OF 1934
Filed by
the Registrant
ý
Filed by
a Party other than the Registrant
¨
Check the
appropriate box:
¨
Preliminary
Proxy Statement
¨
Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive
Proxy Statement
¨
Definitive
Additional Materials
¨
Soliciting
Material Pursuant to §240.14a-12
STERLING
BANKS, INC.
(Name of
Registrant as Specified In Its Charter)
N/A
(Name of
Person(s) Filing Proxy Statement, if other than Registrant)
Payment
of Filing Fee (Check the appropriate box):
¨
No
fee required.
¨
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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ý
Fee
paid previously with preliminary materials.
¨
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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(4) Date
Filed:
3100
Route 38
Mount
Laurel, New Jersey 08054
April 26,
2010
Fellow
Sterling Stockholders:
The board
of directors of Sterling Banks, Inc. (“Sterling”) has approved a merger
providing for the acquisition of Sterling by Roma Financial Corporation
(“Roma”). If the merger is completed, you will receive $2.52 in cash,
subject to possible adjustment as described herein, without interest and less
any required withholding taxes, for each share of Sterling common stock that you
own.
You will
be asked at a special meeting of our stockholders to vote to adopt the merger
agreement. The time, date and place of the special meeting to
consider and vote upon the adoption of the merger agreement are as
follows:
5:00
p.m., Eastern Time, June 8, 2010
Sterling
Banks’ headquarters
3100
Route 38
Mount
Laurel, New Jersey
The proxy
statement attached to this letter provides you with information about the
proposed merger and the special meeting of stockholders. We encourage
you to read the entire proxy statement carefully. You may also obtain
more information about Sterling from documents we have filed with the Securities
and Exchange Commission.
The board
of directors of Sterling has approved the merger agreement and determined that
the merger is in the best interests of Sterling and our
stockholders.
The
board of directors recommends that you vote “FOR” the adoption of the merger
agreement.
Your vote
is important. Accordingly, whether or not you plan to attend the
special meeting of stockholders, we request that you promptly complete, sign and
date the enclosed proxy card or voting instruction card and return it in the
envelope provided, or that you vote your shares by telephone or the Internet
using the instructions on the enclosed proxy or voting instruction card (if
those options are available to you).
Submitting
your proxy will not prevent you from voting your shares in person if you
subsequently choose to attend the special meeting.
Thank you
for your cooperation and continued support.
Very
truly yours,
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Very
truly yours,
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A.
Theodore Eckenhoff
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Robert H.
King
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Chairman
of the Board
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President
and Chief Executive Officer
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This
proxy statement is dated April 26, 2010 and is first being mailed to
stockholders on or about April 28, 2010.
Sterling
Banks, Inc.
3100
Route 38
Mount
Laurel, New Jersey 08054
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
TO
BE HELD June 8, 2010
DATE
AND TIME
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June
8, 2010 at 5:00 p.m., Eastern Time
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PLACE
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Sterling
Banks’ headquarters, 3100 Route 38,
Mount Laurel, New
Jersey
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ITEMS
OF BUSINESS
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(1)
To consider and vote upon a proposal to approve the Agreement and Plan of
Merger, dated as of March 17, 2010, among Sterling Banks, Inc.,
Sterling Bank, Roma Financial Corporation, and Roma Bank, as it may be
amended from time to time, pursuant to which, upon the merger becoming
effective, each outstanding share of common stock, par value $2.00 per
share, of Sterling (other than shares to be cancelled in accordance with
the merger agreement) will be converted into the right to receive $2.52 in
cash, subject to possible adjustment as described herein; and
(2)
To approve an adjournment of the special meeting, if necessary or
appropriate, to solicit additional proxies for adoption of the merger
agreement.
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RECORD
DATE
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Stockholders
of record at the close of business on April 23, 2010 are entitled to
notice of and to vote at the special meeting and at any adjournment or
postponement of the special meeting.
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APPRAISAL
RIGHTS
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Stockholders
of Sterling do not have the right to seek appraisal of the fair value of
their shares.
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PROXY
VOTING
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It
is important that your shares be represented and voted at the special
meeting. You can vote your shares by completing and returning
the enclosed proxy card or voting instruction card. Most
stockholders can also vote their shares by telephone or over the
Internet. If Internet or telephone voting is available to you,
voting instructions are printed on the proxy card or voting instruction
card sent to you. You can revoke a proxy at any time prior to
its exercise at the meeting by following the instructions in the
accompanying proxy statement.
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R.
Scott Horner
Corporate
Secretary
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April 26,
2010
STERLING
BANKS, INC.
PROXY
STATEMENT
SPECIAL
MEETING OF STOCKHOLDERS
We are
providing this proxy statement and accompanying proxy card or voting instruction
card to you in connection with the solicitation by the board of directors of
Sterling Banks, Inc. of proxies to be voted at a special meeting of stockholders
and at any postponement or adjournment of the special meeting. In
this proxy statement, “Sterling,” “we,” “us,” and “our” refer to Sterling Banks,
Inc.
TABLE OF
CONTENTS
Page
QUESTIONS
AND ANSWERS ABOUT VOTING PROCEDURES FOR THE SPECIAL
MEETING
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SUMMARY
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CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
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RISK
FACTORS RELATING TO THE MERGER
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THE
SPECIAL MEETING
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Time
and Place of the Special Meeting
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Matters
to be Considered
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Record
Date and Quorum
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Required
Vote
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Proxies;
Revocation
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Attending
the Meeting
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Voting
via the Internet or by Telephone
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Solicitation
of Proxies
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THE
PARTIES TO THE MERGER
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Sterling
Banks, Inc.
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Roma
Financial Corporation
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Roma
Financial Acquisition Subsidiary, Inc.
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THE
MERGER
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Background
of the Merger
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Reasons
for the Merger
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Recommendation
of Our Board of Directors
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Opinion
of Our Financial Advisor
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Interests
of Our Directors and Executive Officers in the Merger
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Material
United States Federal Income Tax Consequences
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Source
of Funds; Capital
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Regulatory
Approvals
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THE
MERGER AGREEMENT
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Structure
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Effective
Time and Closing
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Treatment
of Stock and Options
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Exchange
and Payment Procedures
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Representations
and Warranties
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Conduct
of Business Pending the Merger
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Stockholders'
Meeting and Duty to Recommend
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No
Solicitation of Transactions
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Employee
Benefits
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Additional
Agreements
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Agreement
to Use Reasonable Best Efforts
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Conditions
to the Merger
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Termination
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Effect
of Termination
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Termination
Fee
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Amendment,
Waiver and Extension of the Merger Agreement
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Fees
and Expenses
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APPRAISAL
RIGHTS
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MARKET
PRICE AND DIVIDENDS OF THE STERLING COMMON STOCK
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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MULTIPLE
STOCKHOLDERS SHARING ONE ADDRESS
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SUBMISSION
OF STOCKHOLDER PROPOSALS
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WHERE
YOU CAN FIND ADDITIONAL INFORMATION
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Annex A Agreement
and Plan of Merger
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Annex B Opinion
of Griffin Financial Group, LLC
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QUESTIONS
AND
ANSWERS ABOUT VOTING PROCEDURES
FOR THE SPECIAL MEETING
Q:
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What
do I need to do now?
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A:
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After
carefully reading this proxy statement, including its annexes, we urge you
to respond by voting your shares through one of the following
means:
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·
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by mail
, by completing,
signing, dating and mailing each proxy card or voting instruction card and
returning it in the envelope
provided;
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·
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via telephone
, using
the toll-free number listed on each proxy card (if you are a registered
stockholder, meaning that you hold your stock in your name) or voting
instruction card (if your shares are held in “street name,” meaning that
your shares are held in the name of a broker, bank or other nominee, and
your bank, broker or nominee makes telephone voting available);
or
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·
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via the Internet
, at
the address provided on each proxy card (if you are a registered
stockholder) or voting instruction card (if your shares are held in
“street name” and your bank, broker or nominee makes Internet voting
available).
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Q:
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If
my shares are held in “street name” by my broker, will my broker vote my
shares for me?
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A:
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Yes,
but only if you provide instructions to your broker on how to
vote. You should instruct your broker how to vote your shares
using the instructions provided by your
broker.
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A:
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If
you fail to vote, it will have no effect except for determining whether a
quorum is present at the meeting. If you submit your proxy but
fail to indicate how you want to vote on the merger, your proxy will be
counted as a vote in favor of the merger. If you submit your
proxy and indicate that you are abstaining from voting, your proxy will
have no effect except for determining whether a quorum is
present.
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A:
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Yes. You
can change your vote at any time before your proxy is voted at the special
meeting. If you are a registered stockholder, you may revoke
your proxy by notifying our Corporate Secretary in writing or by
submitting a new proxy by mail, telephone or the Internet, in each case,
dated after the date of the proxy being revoked. In addition,
your proxy may be revoked by attending the special meeting and voting in
person (you must vote in person; simply attending the special meeting will
not cause your proxy to be
revoked).
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If
you hold your shares in “street name” and you have instructed a broker,
bank or nominee to vote your shares, the above-described options for
changing your vote do not apply, and instead you must follow the
instructions received from your broker, bank or nominee to change your
vote.
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Q:
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What
does it mean if I get more than one proxy card or voting instruction
card?
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A:
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If
your shares are registered differently and are in more than one account,
you will receive more than one card. Please complete and return
all of the proxy cards and voting instruction cards you receive (or submit
your proxy by telephone or the Internet, if available to you) to ensure
that all of your shares are voted.
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Q:
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What
will I receive in the merger in exchange for my shares of Sterling common
stock?
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A:
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Upon
completion of the merger, you will receive $2.52 in cash for each share of
Sterling common stock that you own, subject to possible adjustment as
described herein.
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Q:
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Should
I send in my stock certificates
now?
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A:
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No. Shortly
after the merger is completed, you will receive a letter of transmittal
with instructions informing you how to send in your stock certificates to
the exchange agent in order to receive the merger
consideration. You should use the letter of transmittal to
exchange stock certificates for the merger consideration to which you
become entitled as a result of completion of the merger. Please
do not send any stock certificates with your
proxy.
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Q:
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Who
can help answer my other questions?
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A:
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If
you have more questions about the merger, need assistance in voting your
shares or need additional copies of this proxy statement or the enclosed
proxy card, you should contact Sterling Bank at
(856) 273-5900. If your broker holds your shares, you
should also call your broker for additional
information.
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SUMMARY
The
following summary highlights selected information from this proxy statement and
may not contain all of the information that may be important to
you. Accordingly, we encourage you to read carefully this entire
proxy statement, its annexes and the documents referred to in this proxy
statement. Each item in this summary includes a page reference
directing you to a more complete description of that item.
The
Merger; Consideration to be Received by Sterling Stockholders
(Page 34)
Subject
to the terms and conditions of the merger agreement, and in accordance with
New Jersey law, at the completion of the merger, Roma Financial Acquisition
Subsidiary, Inc., which we refer to as “Merger Sub”, will merge with and into
Sterling, which will become a wholly owned subsidiary of Roma Financial
Corporation. Roma intends to merge Sterling Bank with and into Roma
Bank, with Roma Bank as the survivor, immediately following completion of the
merger.
If the
merger is completed, you will receive $2.52 in cash, without interest and less
any required withholding taxes, for each share of Sterling common stock that you
own. The amount per share that you will receive is subject to
adjustment downward in the event that Sterling’s tangible common equity at March
31, 2010 is less than $13,400,000. At March 31, 2010, Sterling’s
tangible common equity was approximately $14,200,000. Accordingly,
Sterling’s management considers any required adjustment to be
unlikely. See “The Merger Agreement—Treatment of Stock and
Options.” The merger agreement can also be terminated by Roma if
certain events occur. See “The Merger Agreement — Conditions to the
Merger”; and “— Termination” for a description of the circumstances under which
the merger agreement can be terminated.
Recommendation
of Our Board of Directors (Page 23)
After
careful consideration, our board of directors has determined that the merger
agreement and the transactions contemplated by the merger agreement are
advisable, fair to and in the best interests of Sterling and our stockholders
and recommends that our stockholders vote “FOR” the adoption of the merger
agreement.
Opinion
of Our Financial Advisor (Page 23 and Annex B)
Griffin
Financial Group LLC, which we refer to as Griffin, delivered its opinion to the
Sterling board of directors that, as of the date of its opinion and based upon
and subject to assumptions made, matters considered and qualifications set forth
in the opinion, the merger consideration of $2.52 in cash per share to be
received by our stockholders pursuant to the merger (as if it closed on that
date) was fair, from a financial point of view, to those
stockholders.
The
opinion of Griffin is addressed to our board of directors, is directed only to
the consideration to be paid in the merger (as if it closed on that date) and
does not constitute a recommendation as to how any of our stockholders should
vote with respect to the merger agreement. The full text of the
written opinion of Griffin, dated March 17, 2010, which sets forth the
procedures followed, limitations on the review undertaken, matters considered
and assumptions made in connection with the opinion, is attached as Annex B to
this proxy statement. We recommend that you read the opinion
carefully in its entirety.
Treatment
of Stock Options (Page 35)
The
merger agreement provides that all outstanding stock options issued under our
stock option plans, whether or not vested, will be cancelled in connection with
the completion of the merger. Because the exercise price for each of
the outstanding stock options is greater than $2.52 per share, no consideration
will be paid in connection with the cancellation of such stock
options.
Interests
of Our Directors and Executive Officers in the Merger
(Page 27)
Sterling’s
executive officers and directors may have economic interests in the merger that
are different from, or in addition to, their interests as Sterling
stockholders. These interests include rights of executive officers
under employment and change in control agreements with Sterling and rights of
directors and officers to continued indemnification and insurance coverage by
Roma after the merger for acts or omissions occurring before the
merger.
Robert H.
King, President and Chief Executive Officer of Sterling, has an employment
agreement dated as of January 25, 2006, and amended December 26, 2007, with
Sterling Bank that entitles him to receive approximately $664,000 (paid in 36
monthly installments) in the event that he is terminated without “cause” or if
he elects to terminate his employment for any reason after a change in control
such as the merger. One of the conditions to Roma’s proposal to enter
into a merger agreement with Sterling was that Mr. King enter into an amendment
to his employment agreement. As an accommodation to Sterling and
Roma, Mr. King entered into an addendum to his employment agreement that becomes
effective upon the completion of the merger. The total of the
severance payments that Mr. King may receive under the addendum is less
than the cash severance amounts he would have received under his current
employment agreement if his employment had been terminated by Roma without cause
or by Mr. King for good reason after the merger.
Under the
addendum to his employment agreement, Mr. King will be employed by Roma and
will receive a lump sum payment equal to approximately $221,580 in exchange for
his agreement to not compete with Roma for a period of one year following his
termination of employment. In addition, if Mr. King’s employment
is terminated by Roma without cause before the second anniversary of the
completion of the merger, or if Mr. King voluntarily elects to terminate
his employment after the date that is six months after the completion of the
merger, but prior to the second anniversary of the completion of the merger, he
is entitled to receive a lump sum payment equal to approximately
$221,580. If Mr. King is still employed by Roma as of the second
anniversary of the completion of the merger, he will receive a lump sum payment
equal to approximately $221,580.
Certain
of Sterling’s executive officers are parties to change in control agreements
with Sterling. Under such agreements, these officers are entitled to
receive lump sum payments if their employment is terminated without cause after
the merger or, with regard to certain officers, if they voluntarily terminate
their employment after the merger.
The
Sterling board of directors was aware of these interests and considered them in
its decision to approve the merger agreement.
Material
United States Federal Income Tax Consequences (Page 30)
If you
are a U.S. holder of our common stock, the merger will be a taxable transaction
to you. For U.S. federal income tax purposes, your receipt of cash in
exchange for your shares of Sterling common stock generally will cause you to
recognize a gain or loss measured by the difference, if any, between the cash
you receive in the merger and your adjusted tax basis in your
shares. If you are a non-U.S. holder of our common stock, the merger
will generally not be a taxable transaction to you under U.S. federal income tax
laws unless you have certain connections to the United States. You
should consult your own tax advisor for a full understanding of the tax
consequences to you of the merger.
Regulatory
Approvals (Page 32)
Completion
of the transactions contemplated by the merger agreement is subject to receipt
of approval from the Office of Thrift Supervision. Sterling has been
advised that Roma has completed the filing of all of the required applications
and notices with regulatory authorities. Although Sterling does not
know of any reason why the necessary regulatory approvals will not be obtained
in a timely manner, there can be no assurance that these approvals will be
obtained in a timely manner or at all. Roma has the right to
terminate the merger agreement and elect not to complete the merger if any
regulatory approval imposes, in the good faith judgment of Roma, any material
adverse requirement on Roma or any Roma subsidiary.
Procedure
for Receiving Merger Consideration (Page 35)
As soon
as practicable after the effective time of the merger, an exchange agent will
mail a letter of transmittal and instructions to you and the other Sterling
stockholders. The letter of transmittal and instructions will tell
you how to surrender your shares in exchange for the merger
consideration. You should not return your stock certificates with the
enclosed proxy card or voting instruction card, and you should not forward your
stock certificates to the exchange agent without a letter of
transmittal.
No
Solicitation of Transactions (Page 40)
The
merger agreement restricts our ability to solicit or engage in discussions or
negotiations with a third party regarding specified business combination
transactions involving Sterling and our subsidiaries. However, our
board of directors may respond to an unsolicited bona fide proposal from a third
party for an alternative business combination transaction that our board
concludes constitutes a superior proposal (as defined in the merger
agreement). In addition, in certain circumstances, we may terminate
the merger agreement and enter into an agreement with respect to a superior
proposal after satisfying the requirements of the merger agreement, including
paying the termination fee referred to under “Termination Fee”
below.
Conditions
to Closing (Page 43)
The
respective obligations of Sterling and Roma to complete the merger are
conditioned upon the satisfaction or waiver of certain conditions, including the
following:
·
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the
approval of the merger and the merger agreement by our
stockholders;
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the
receipt of required regulatory approvals and the expiration of all
statutory waiting periods;
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the
absence of any law or order prohibiting or making illegal the completion
of the merger; and
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the
absence of any pending or threatened litigation challenging the merger,
seeking damages in connection with the merger, or seeking to restrain or
invalidate the merger, if, in the reasonable judgment of either Roma or
Sterling, based on the advice of counsel, such litigation would have a
material adverse effect with respect to Roma or
Sterling.
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Each of
Sterling’s and Roma’s obligation to complete the merger is also subject to the
satisfaction or waiver of several other conditions, including:
·
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material
performance by the other party of its covenants under the merger
agreement; and
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·
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the
accuracy of the other party’s representations and warranties, except to
the extent the failure of those representations and warranties to be
accurate would not have a material adverse
effect.
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Roma’s
obligation to complete the merger is also subject to other conditions,
including:
·
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Sterling
shall have obtained the consent or approval of each third party under any
agreement to which Sterling is a party unless failure to obtain such
consent or approval would not have a material adverse effect on the
surviving corporation;
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·
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Sterling’s
board of directors shall have taken all action necessary to cancel or
terminate all of the outstanding options to purchase capital stock of
Sterling;
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·
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Sterling
shall have delivered to Roma the audited financial statements of Sterling
for the year ended December 31, 2009, together with an unqualified opinion
of Sterling’s independent certified public
accountant;
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·
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the
estimated cost to remediate any environmental problems on real estate
owned by Sterling does not exceed $500,000;
and
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·
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any
approval required to be obtained from any bank regulatory authority does
not impose, in the good faith judgment of Roma, any material adverse
requirement on Roma or any Roma
subsidiary.
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Termination
of the Merger Agreement (Page 44)
Sterling
and Roma may agree in writing to terminate the merger agreement at any time
without completing the merger, even after the stockholders of Sterling have
voted to adopt the merger agreement. The merger agreement may also be
terminated at any time prior to the effective time of the merger in other
specified circumstances, including:
·
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by
either Roma or Sterling if:
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·
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the
merger is not completed by December 31, 2010 (other than because of a
breach by the party seeking
termination);
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·
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a
governmental entity issues a final non-appealable order enjoining or
prohibiting the merger;
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·
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a
governmental entity that must grant a regulatory approval that is a
condition to the merger denies the approval and the denial becomes final
and non-appealable;
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·
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our
stockholders fail to adopt the merger agreement at the special meeting or
any postponement or adjournment of the special meeting;
or
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·
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the
other party breaches the merger agreement in a manner that would entitle
the party seeking to terminate the merger agreement not to complete the
merger and the party seeking to terminate is not then in material breach
of the merger agreement, subject to the right of the breaching party to
cure the breach within 30 days after written notice of the breach is given
to the breaching party;
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·
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our
board of directors has failed to recommend the merger to our stockholders
or has withdrawn, modified or changed in a manner adverse to Roma its
recommendation of the merger;
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·
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we
fail to hold the special meeting of stockholders by August 31,
2010;
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·
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our
nonperforming assets (as defined in the merger agreement) exceed
$30,000,000 for the period from January 1, 2010 through the closing
date or our tangible common equity capital is less than $9,900,000 on the
closing date; or
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·
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any
approval required to be obtained from a bank regulatory authority imposes,
in the good faith judgment of Roma, any material adverse requirement on
Roma or any Roma subsidiary;
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·
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by
Sterling in order to accept a superior proposal, if we comply with the
provisions of the merger agreement relating to such proposal, including by
paying the termination fee described
below.
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Termination
Fee (Page 46)
In
connection with the termination of the merger agreement in certain circumstances
that are not likely to occur absent a competing acquisition proposal for
Sterling, we would be required to pay Roma a termination fee of
$745,000.
The
Special Meeting
Time,
Place and Date (Page 14)
The
special meeting will be held on June 8, 2010, starting at 5:00 p.m.,
Eastern Time, at Sterling Banks’ headquarters, 3100 Route 38, Mount Laurel, New
Jersey.
Matters
to be Considered (Page 14)
You will
be asked to consider and vote upon proposals for:
·
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approval
of the merger and the merger agreement;
and
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·
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adjournment
of the special meeting, if necessary or appropriate, to solicit additional
proxies.
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Record
Date and Quorum (Page 14)
You are
entitled to vote at the special meeting if you owned shares of Sterling common
stock at the close of business on April 23, 2010, the record date for the
special meeting. You will have one vote for each share of Sterling
common stock that you owned on the record date. As of the record
date, there were 5,843,362 shares of our common stock outstanding and entitled
to vote.
Required
Vote (Page 14)
For us to
complete the merger, at least a majority of the votes cast at the meeting must
be voted “FOR” the adoption of the merger agreement. Directors and
executive officers of Sterling owning a total of 363,721 shares have agreed to
vote all shares owned by them in favor of the merger and the merger
agreement.
The
Parties to the Merger (Page 16)
Sterling Banks,
Inc.
3100
Route 38
Mount
Laurel, New Jersey 08054
(856) 273-5900
Sterling,
a New Jersey corporation, is the parent bank holding company for Sterling Bank,
which commenced operations in December 1990. Sterling became the
holding company for Sterling Bank in 2007. As of March 31, 2010,
Sterling Bank operated 10 banking offices located in the New Jersey counties of
Burlington and Camden. At December 31, 2009, Sterling had
$369.8 million in assets, deposits of $330.7 million and
$17.0 million of total stockholders’ equity.
Roma Financial
Corporation
2300
Route 33
Robbinsville,
New Jersey 08691
(609) 223-8300
Roma, a
federal mutual holding company subsidiary, is the holding company for Roma Bank,
a federal savings bank. At December 31, 2009, Roma and its
subsidiaries had total consolidated assets of $1.3 billion, deposits of
$1.0 billion and stockholders’ equity of
$216.2 million. The primary operating entity of Roma is Roma
Bank. Roma Bank’s primary business consists of attracting deposits
from its network of 14 banking offices, and originating one-to-four family
residential mortgage loans, multi-family and commercial mortgage loans,
construction loans and consumer loans, including home equity loans and lines of
credit in the communities served by those offices. Those offices are
located in Burlington, Mercer and Ocean Counties in New Jersey.
Roma Financial Acquisition
Subsidiary, Inc.
c/o Roma
Financial Corporation
2300
Route 33
Robbinsville,
New Jersey 08691
(609) 223
- 8300
Merger
Sub is a New Jersey corporation and a wholly-owned subsidiary of
Roma. Merger Sub was formed solely for the purpose of entering into
the merger agreement and completing the transactions contemplated by the merger
agreement. It has not conducted any activities to date other than
activities incidental to its formation and in connection with the transactions
contemplated by the merger agreement.
Market
Price of Sterling Stock (Page 47)
Our
common stock is quoted on the NASDAQ Capital Market under the symbol
“STBK”. On March 17, 2010, which was the last trading day prior
to published news reports regarding the possible acquisition of Sterling, our
common stock closed at $1.53 per share. On April 23, 2010, which
was the last trading day before the date of this proxy statement, our common
stock closed at $2.39 per share.
Rights
of Appraisal (Page 47)
Under New
Jersey law, stockholders who receive solely cash in exchange for their shares in
connection with a merger have no right to elect to receive the appraised value
of their shares as an alternative to the merger
consideration. Accordingly, you will have no appraisal rights in
connection with the merger.
CAUTIONARY
STATEMENT
CONCERNING FORWARD-LOOKING INFORMATION
This
proxy statement, and the documents to which we refer you in this proxy
statement, contain forward-looking statements intended to be covered by the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include
financial projections and their underlying assumptions, other information
concerning possible or assumed future results of operations of Sterling, the
expected completion and timing of the merger and other information relating to
the merger. There are forward-looking statements throughout this
proxy statement, including, among others, under the headings “Summary,” “Risk
Factors Relating to the Merger,” “The Merger,” “The Merger – Opinion of Our
Financial Advisor” and in statements containing the words “believes,” “plans,”
“expects,” “anticipates,” “intends,” “estimates” or other similar
expressions. You should be aware that forward-looking statements
involve known and unknown risks and uncertainties. These
forward-looking statements reflect management’s current expectations and
forecasts, and we cannot assure you that the actual results or developments we
anticipate will be realized, or even if realized, that they will have the
expected effects on the business or operations of Sterling. In
addition to other factors and matters discussed in this document or discussed
and identified in other public filings we make with the Securities and Exchange
Commission, we believe the following risks could cause actual results to differ
materially from those discussed in the forward-looking statements:
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difficulties
in obtaining required stockholder and regulatory approvals of the
merger;
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diversion
of management time on merger-related
issues;
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·
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increases
in competitive pressure among financial institutions or from non-financial
institutions;
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·
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changes
in the interest rate environment;
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·
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changes
in deposit flows, loan demand, real estate values, nonperforming assets,
and regulatory requirements regarding loan loss reserves and regulatory
capital levels;
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·
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changes
in accounting principles, policies or
guidelines;
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·
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changes
in regulatory positions, expectations, and requirements for banks
generally or for Sterling or Roma
specifically;
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·
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legislative
or regulatory changes;
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·
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litigation
or other adversarial proceedings relating to the
merger;
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·
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changes
in general economic conditions or conditions in securities markets or the
banking industry;
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·
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a
materially adverse change in the financial condition of Sterling or
Roma;
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·
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difficulties
related to the completion of the merger;
and
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other
economic, competitive, governmental, regulatory, geopolitical and
technological factors affecting capital, operations, pricing and
services.
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You are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this document or the date of any document to which
we refer you. All subsequent written and oral forward-looking
statements concerning the merger or other matters addressed in this document and
attributable to Sterling or any person acting on its behalf are expressly
qualified in their entirety by the cautionary statements contained or referred
to in this section. Except to the extent required by applicable law
or regulation, Sterling undertakes no obligation to republish revised
forward-looking statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events.
RISK
FACTORS RELATING
TO THE MERGER
In
addition to the other information included in this proxy statement or referred
to in this document, you should consider carefully the risk factors described
below in deciding how to vote. You should keep these risk factors in
mind when you read forward-looking statements in this proxy
statement.
If
the merger is not completed, Sterling will continue to be subject to the written
agreement that it entered into with the Federal Reserve Bank of Philadelphia and
the New Jersey Department of Banking and Insurance.
Sterling
entered into a written agreement with the Federal Reserve Bank of Philadelphia
and the New Jersey Department of Banking and Insurance relating to the conduct
of its business and addressing various matters, including credit underwriting
standards, reserve levels for nonperforming loans, regulatory capital levels and
earnings, as well as management concerns which resulted from these credit,
capital and earnings concerns. If the merger is not completed, these
factors may limit the conduct of Sterling’s business and may result in a
reduction of earnings of Sterling. This in turn may prolong Sterling
Bank’s inability to pay dividends to Sterling without regulatory approval,
eliminating Sterling’s ability to pay distributions on its trust preferred
securities and dividends on its common stock. Further, the actions
that Sterling may be required to take to comply with the written agreement may
include obtaining additional capital. No assurance can be given
that Sterling would be successful in raising additional capital, or if the
additional capital can be obtained that it would be on terms favorable to
Sterling and not detrimental to the interests of Sterling’s
stockholders.
The
need for regulatory approval may delay the date of completion of the merger or
may diminish the benefits of the merger.
Roma is
required to obtain approval of the merger from the Office of Thrift Supervision
prior to completing the merger. Satisfying any requirements of the
Office of Thrift Supervision may delay the date of completion of the
merger. If Sterling is required to increase its reserve for loan
losses, its nonperforming assets increase, or it continues to incur losses as a
result of such delay, Roma may have the right to terminate the merger agreement
under certain provisions of the merger agreement. See “The Merger
Agreement—Termination.”
In
addition, it is possible that, among other things, conditions to the approval of
the merger by the Office of Thrift Supervision may diminish the benefits of the
merger to Roma. Roma has the right to terminate the merger agreement
in the event that a government agency, as part of its approval, imposes any
condition or requirement, excluding standard conditions that are normally
imposed by regulatory authorities in bank merger transactions, that would, in
the good faith judgment of Roma, impose a material adverse requirement on Roma
or any Roma subsidiary.
If
the performance of our loan portfolio continues to deteriorate, our
nonperforming assets will increase and we will need to increase our reserve for
loan losses, which may give Roma the right to terminate the merger agreement and
elect not to complete the merger.
If our
loan portfolio continues to deteriorate, our nonperforming assets will increase
and we will need to increase our reserve for loan losses. Roma has
the right to terminate the merger agreement if our nonperforming assets for the
period from January 1, 2010 through the closing date exceeds
$30,000,000. In addition, if we are required to increase our reserve
for loan losses, it will increase our losses and decrease our stockholders’
equity and tangible common equity. If our tangible common equity is
less than $9,900,000 at the closing date, Roma has the right to terminate the
merger agreement and elect not to complete the merger. See “The
Merger Agreement—Termination.”
The
merger may distract management from their other responsibilities.
The
merger could cause the management of Sterling to focus its time and energies on
matters relating to the merger that would otherwise be directed to the business
and operations of Sterling. Any such distraction on the part of
Sterling’s management, if significant, could affect its ability to service
existing business and develop new business and adversely affect the business and
earnings of Sterling if the merger is not consummated.
If
the merger is not completed, Sterling will have incurred substantial expenses
without its stockholders realizing the expected benefits.
Sterling
has incurred substantial expenses in connection with the transactions described
in this proxy statement. If the merger is not completed, Sterling
expects to incur approximately $300,000 in merger-related expenses, exclusive of
any termination fee. These expenses would likely have an adverse
impact on the earnings of Sterling. No assurance can be given that
the merger will be completed.
The
termination fee and the restrictions on solicitation contained in the merger
agreement may discourage other companies from trying to acquire
Sterling.
Until
completion or termination of the merger, Sterling is prohibited from soliciting,
initiating, encouraging, or with some exceptions, considering any inquiries or
proposals that may lead to a proposal or offer for a merger or other business
combination transaction with any person other than Roma. In addition,
Sterling has agreed to pay a termination fee of $745,000 to Roma under certain
specified circumstances. See “Merger Agreement—Termination
Fee”. These provisions could discourage other companies from trying
to acquire Sterling even though those other companies might be willing to offer
greater value to Sterling stockholders than Roma has agreed to pay in the
merger. Absent the successful completion of a business combination
with another company, the payment of the termination fee would have a material
adverse effect on the financial condition of Sterling.
THE
SPECIAL MEETING
Time
and Place of the Special Meeting
This
proxy statement is being furnished to our stockholders as part of the
solicitation of proxies by our board of directors for use at the special meeting
to be held on June 8, 2010, starting at 5:00 p.m., Eastern Time, at
Sterling Banks’ headquarters, 3100 Route 38, Mount Laurel, New Jersey or at any
postponement or adjournment of the special meeting. This proxy
statement and the enclosed form of proxy are first being mailed to our
stockholders on or about April 28, 2010.
Matters
to be Considered
At the
special meeting, our stockholders will be asked to consider and vote upon the
following proposals:
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approval
of the merger and the merger agreement;
and
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approval
of the adjournment of the special meeting, if necessary or appropriate, to
solicit additional proxies.
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Record
Date and Quorum
The
holders of record of Sterling common stock as of the close of business on
April 23, 2010, the record date for the special meeting, are entitled to
receive notice of, and to vote at, the special meeting. On the record
date, there were 5,843,362 shares of our common stock outstanding and
entitled to vote.
The
holders of a majority of the outstanding shares of our common stock on the
record date represented in person or by proxy will constitute a quorum for
purposes of the special meeting. A quorum is necessary to hold the
special meeting. Any shares of common stock held in treasury by
Sterling or owned by any of our subsidiaries for their own account are not
considered to be outstanding for purposes of determining a
quorum. Abstentions and properly executed broker non-votes, if any,
will be treated as shares that are present and entitled to vote at the special
meeting for purposes of determining whether a quorum exists. Once a
share is represented at the special meeting, it will be counted for the purpose
of determining a quorum at the special meeting and any postponement or
adjournment of the special meeting. However, if a new record date is
set for the adjourned special meeting, then a new quorum will have to be
established.
Required
Vote
Completion
of the merger requires the adoption of the merger agreement by the affirmative
vote of the holders of a majority of the Sterling common stock voted at the
special meeting, provided that a quorum exists. The affirmative vote
of a majority of the shares of Sterling common stock represented at the special
meeting and entitled to vote is required to adjourn or postpone the
meeting. Each outstanding share of Sterling common stock on the
record date entitles the holder to one vote at the special meeting.
If your
shares are held in “street name” by your broker, bank or other nominee you
should instruct your broker, bank or other nominee how to vote your shares using
the instructions provided by your broker, bank or other nominee. If
you have not received these voting instructions or require further information
regarding these voting instructions, contact your broker, bank or other nominee
and he or she can give you directions on how to vote your
shares. Under the rules of the New York Stock Exchange, brokers who
hold shares in “street name” for customers may not exercise their voting
discretion with respect to the approval of non-routine matters such as the
merger proposal and thus, absent specific instructions from the beneficial owner
of the shares, brokers are not empowered to vote the shares with respect to the
adoption of the merger agreement (i.e., “broker non-votes”). Shares
of Sterling common stock held by persons attending the special meeting but not
voting, or shares for which we have received proxies with respect to which
holders have abstained from voting, will be considered
abstentions. Abstentions and properly executed broker non-votes, if
any, will be treated as shares that are present and entitled to vote at the
special meeting for purposes of determining whether a quorum
exists.
We
currently expect that all of our executive officers and all but one of our
directors will vote all of their shares of common stock “FOR” the adoption of
the merger agreement and “FOR” any postponement or adjournment of the special
meeting to solicit additional proxies. With the exception of Director
Sandmeyer, all such individuals have signed a Support Agreement that
contractually requires them to vote their shares in such manner. As
of April 23, 2010, directors and executive officers of Sterling owning a
total of 363,721 shares have agreed to vote all shares owned by them in favor of
the merger and the merger agreement.
Proxies
; Revocation
If you
are a stockholder of record and submit a proxy by telephone or the Internet or
by returning a signed proxy card by mail, your shares will be voted at the
special meeting as you indicate on your proxy card or by such other
method. If no instructions are indicated on your proxy card or by
such other method, your shares of Sterling common stock will be voted “FOR” the
adoption of the merger agreement and “FOR” any postponement or adjournment of
the special meeting to solicit additional proxies.
You may
revoke your proxy at any time before the vote is taken at the special
meeting. To revoke your proxy, you must do one of the
following: advise our Corporate Secretary in writing prior to the
voting of the proxy; submit, by telephone, the Internet or mail, a proxy dated
after the date of the proxy you wish to revoke; or attend the special meeting
and vote your shares in person. Attendance at the special meeting
will not by itself constitute revocation of a proxy.
If you
have instructed your broker, bank or other nominee to vote your shares, the
options for revoking your proxy described in the paragraph above do not
apply, and instead you must follow the directions provided by your broker, bank
or other nominee to change those instructions.
Written
notices of revocation and other communications regarding the revocation of your
proxy should be addressed to:
Sterling
Banks, Inc.
3100
Route 38
Mount
Laurel, New Jersey 08054
Attention:
R. Scott Horner
Corporate Secretary
Sterling
does not expect that any matter other than the adoption of the merger agreement
and adjournment, if necessary, will be brought before the special
meeting. If, however, such a matter is properly presented at the
special meeting or any adjournment or postponement of the special meeting, the
persons appointed as proxies will have discretionary authority to vote the
shares represented by duly executed proxies in accordance with their discretion
and judgment.
Attending
the Meeting
If you
hold your shares of Sterling common stock in street name and you want to vote
those shares in person at the Sterling special meeting, you will have to get a
written proxy in your name from the broker, bank or other nominee who holds your
shares.
Voting
via the Internet or by Telephone
Stockholders
of record and many stockholders who hold their shares through a broker, bank or
other nominee will have the option to submit their proxies or voting
instructions via the Internet or by telephone. There are separate
arrangements for using the Internet and telephone to submit your proxy depending
on whether you are a stockholder of record or your shares are held in “street
name”. If your shares are held in “street name,” you should check the
voting instruction card provided by your broker, bank or other nominee to see
which options are available and the procedures to be followed.
In
addition to submitting the enclosed proxy card by mail, Sterling stockholders of
record may submit their proxies:
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via
the Internet by visiting a website established for that purpose at
www.votestock.com and following the instructions;
or
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by
telephone by calling, toll-free, 1-866-578-5350 on a touch-tone phone and
following the recorded
instructions.
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Solicitation
of Proxies
Sterling
will pay the cost of this proxy solicitation. In addition to
soliciting proxies by mail, directors, officers and employees of Sterling may
solicit proxies personally and by telephone, facsimile or other electronic means
of communication. These persons will not receive additional or
special compensation for such solicitation services. Sterling 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. Sterling has retained Stock
Trans, a Broadridge company, to assist it in the solicitation of proxies for the
special meeting and will pay Stock Trans a fee of approximately $4,000, plus
reimbursement of out-of-pocket expenses and other customary costs.
THE
PARTIES TO THE
MERGER
Sterling
Banks, Inc.
Sterling
is a New Jersey corporation and the parent bank holding company of Sterling
Bank, which is a full-service, community-oriented financial institution
headquartered in Mount Laurel, New Jersey. Sterling Bank’s principal
business is gathering deposits from customers within its market area and
investing those deposits along with borrowed funds primarily in commercial real
estate and business loans, single-family residential loans, consumer loans,
mortgage related securities, investment securities and interest-bearing bank
balances.
Sterling
has sought to set itself apart from its many competitors by tailoring its
products and services to meet the diverse needs of its customers, by emphasizing
customer service and convenience and by being actively involved in community
affairs in the neighborhoods and communities it serves. As of
December 31, 2009, Sterling Bank operated 10 banking offices located in the
New Jersey counties of Burlington and Camden. At December 31,
2009, Sterling had $369.8 million in assets, deposits of $330.7 million and
$17.0 million of total stockholders’ equity.
Sterling
Bank’s deposits are insured by the Federal Deposit Insurance Corporation
(“FDIC”) to the maximum extent permitted by law. Sterling Bank is
subject to examination and regulation by the FDIC, which is Sterling Bank’s
primary federal regulator, and the New Jersey Department of Banking and
Insurance, which is Sterling Bank’s chartering authority and its primary state
regulator. Sterling Bank also is subject to reserve requirements
established by the Board of Governors of the Federal Reserve System (“Federal
Reserve”) and is a member of the Federal Home Loan Bank (“FHLB”) of New York,
which is one of the 12 regional banks comprising the FHLB
system. Sterling is subject to examination and regulation by the
Federal Reserve as a registered bank holding company.
Sterling
is incorporated in the state of New Jersey with its principal executive offices
at 3100 Route 38, Mount Laurel, New Jersey 08054, and its telephone number is
(856) 273-5900.
For more
information on Sterling, see “Where You Can Find Additional Information” on page
50.
Roma
Financial Corporation
Roma is
the subsidiary of Roma Financial Corporation, MHC, a federal mutual holding
corporation and the parent savings and loan holding company of Roma Bank, a
$1.3 billion financial institution with 14 banking offices located in
Burlington, Mercer and Ocean Counties in New Jersey. At
December 31, 2009, Roma and its subsidiaries had total consolidated assets
of $1.3 billion, deposits of $1.0 billion and stockholders’ equity of
$216.2 million. Roma’s primary business consists of attracting
deposits from its network of community banking offices, and originating
one-to-four family residential mortgage loans, multi-family and commercial
mortgage loans, construction loans and consumer loans, including home equity
loans and lines of credit in the communities served by those
offices.
Roma Bank
was formed in 1920. Roma was incorporated in January 2005 for
the purpose of acquiring all of the capital stock of Roma Bank. Roma
is a federal MHC subsidiary holding company, 73% of the stock of which is held
by Roma Financial Corporation, MHC, a federal mutual holding
corporation. Its principal executive offices are located at 2300
Route 33, Robbinsville, New Jersey 08691, and its telephone number is (609)
223-8300.
Roma
Financial Acquisition Subsidiary, Inc.
Merger
Sub is a New Jersey corporation and a wholly owned subsidiary of
Roma. Merger Sub’s principal executive offices are located at c/o
Roma Financial Corporation, 2300 Route 33, Robbinsville, New Jersey 08691, and
its telephone number is (609) 223-8300. Merger Sub was organized
solely for the purpose of entering into the merger agreement and completing the
transactions contemplated by the merger agreement. It has not
conducted any activities to date other than activities incidental to its
formation and in connection with the transactions contemplated by the merger
agreement. Under the terms of the merger agreement, Merger Sub will
merge with and into Sterling. Sterling will survive the merger as a
wholly owned subsidiary of Roma, and Merger Sub will cease to exist at the
effective time of the merger.
THE
MERGER
Background
of the Merger
As a
result of continuing deteriorating economic conditions in the geographic markets
Sterling serves, increasing nonperforming assets in its spot construction loan
portfolio, deteriorating earnings and capital, and regulatory pressure, early in
the second quarter of 2009, the management and board of directors of Sterling
retained Griffin Financial Group LLC to serve as its financial advisor and
to assist Sterling in either attracting capital or arranging a merger with an
acceptable partner.
By the
end of the second quarter of 2009, due to the deteriorating asset quality of
Sterling’s spot construction loan portfolio and regulatory pressure to increase
reserves, Sterling’s total risk-based capital position had dropped from “well
capitalized” to “adequately capitalized.” As a result of this
deterioration, Sterling became subject to even greater regulatory scrutiny, was
prohibited from accepting brokered deposits, its insurance premiums with the
FDIC increased and Sterling was precluded from paying interest on its trust
preferred securities. Throughout the remainder of 2009, Sterling
continued to face a difficult economic environment, markedly increasing
nonperforming assets, and increasingly intense regulatory pressure to increase
reserves, all of which contributed significantly to its worsening capital
position. Again as a result of continued deterioration in the asset
quality of Sterling’s loan portfolio and regulatory pressure, Sterling restated
financial information set forth in its call reports filed with its regulators
and quarterly reports on Form 10-Q filed with the SEC to reflect increases
in its provision and allowance for loan losses and the impairment of certain
other assets.
On
July 28, 2009, Sterling entered into a written agreement with the Federal
Reserve Bank of Philadelphia and the New Jersey Department of Banking and
Insurance. The written agreement covers credit, reserve levels,
capital and earnings and management concerns which resulted from these credit,
capital and earnings concerns. Since then, Sterling’s management has
had continuing ongoing discussions with the Federal Reserve about these
concerns.
During
the second and early third quarter of 2009, Griffin contacted a limited number
of investor groups, specialty lenders with excess capital and certain large, in
and out of market banks who had theretofore expressed an interest in
Sterling. Beginning in the early fourth quarter of 2009, senior
management of Sterling instructed Griffin to broaden its process significantly
and contact other banks, private-equity investors, specialty lenders and other
potential investors or partners with excess capital regarding a possible
transaction designed to improve Sterling’s capital position or merge with
it. Griffin identified and contacted 31 banks in Pennsylvania,
New Jersey, Delaware and New York, most of whom possessed the size, asset
quality, reserve coverage and capital to invest in, or absorb Sterling via
merger, notwithstanding its continuing asset quality issues. Griffin
also identified and contacted (i) over 30 private equity funds and
distressed debt hedge funds who own or who have expressed interest in owning or
investing in a bank, (ii) two specialty lenders with excess capital,
and (iii) at least a half dozen other private potential
investors. Sixteen of these banks and other potential investors
expressed initial interest in an investment in or merger with Sterling, entered
into non-disclosure agreements and received confidential information from
Sterling. Sterling’s management met with and/or made presentations to
five of these sixteen potential investors. From these sources
Sterling received two written indications of interest, both from other banks,
both of whom have a substantial presence in New Jersey. In
management’s judgment, with which Griffin concurs, the lack of additional
interest in Sterling was due not only to Sterling’s asset quality and capital
issues, but also to the stand alone and pro forma asset quality and capital
issues faced by potential acquirers compounded by the uncertain state of the
national and regional economies and the U.S. capital markets.
During
December 2009 and January 2010 these two bidders performed extensive
due diligence reviews of Sterling, its management, operations, assets,
liabilities and asset quality, with special emphasis on its construction loan
portfolio.
After
completion of its due diligence reviews, and numerous discussions with
management and Griffin, one of the bidders, without explanation, declined to
participate further in the process and the remaining bidder – Roma
Financial Corporation, transmitted a second indication of interest dated
February 16, 2010 to Sterling’s board refining and confirming its initial
interest and proposing additional and different terms. On
February 16, 2010, Griffin provided Sterling’s Board with a process update
informing the Board of the withdrawal of one of the bidders. Griffin
also provided the board with a summary of Roma’s February indication of
interest and detailed financial and other information with respect to Roma with
emphasis on its strong balance sheet and capital. At the conclusion
of that board meeting, the board, by a vote of nine to two, directed management
and Griffin to proceed with the negotiation of a definitive agreement and to
finalize all details regarding a potential merger with Roma on the terms set
forth in Roma’s indication of interest or better and to continue the process by
re-approaching certain other potential bidders. The two directors who
voted no did so based on the premise that Sterling could continue as a going
concern, “weather the storm” and remain independent despite its asset quality
and capital issues and regulatory pressure.
Between
February 16, 2010, and March 16, 2010, representatives of Roma and
Sterling negotiated final economic and other terms, and together with their
respective counsel, negotiated draft merger and related
agreements. Representatives of Sterling also pursued other potential
indications of interest. The draft merger agreement was transmitted
via e-mail to the CEO of Sterling on Saturday, March 13, 2010, who
subsequently distributed the agreement, in draft form to Sterling’s directors
for review, and on March 17, 2010, both Sterling’s and Roma’s board met to
review the transaction and the agreements. At the Sterling board
meeting, representatives of Griffin reported on the status of the process and
informed the board of the lack of additional interest at that
time. Griffin then made a presentation to the board with respect to
the Roma proposal which included, among other things, a discussion of the
matters described under “Opinion of Our Financial Advisor.” At the
conclusion of Griffin’s presentation, Griffin delivered to Sterling’s board of
directors its oral opinion, subsequently confirmed in writing, that as of that
date and based upon and subject to the factors and assumptions stated in the
opinion and outlined for the board, the $2.52 cash consideration to be received
in respect of each share of Sterling’s common stock in the Roma merger was, as
of such date, fair to Sterling’s common stockholders from a financial point of
view. Griffin noted the existence of the provisions in the agreement
which give Roma the right to reduce the aggregate price, dollar for dollar, and
to terminate the transaction if Sterling’s nonperforming assets increase to a
certain level or its tangible book value drops to a certain level and that
Griffin’s fairness opinion assumes that the final cash price paid from Roma to
Sterling stockholders would be the initial price considered without regard to
subsequent events or adjustments to that price. The board of
directors of Sterling and counsel then reviewed the merger agreement and related
documents on a paragraph by paragraph basis. Following this review,
questions and answers and extensive discussions centered on
the other factors
described under “— Reasons for the Merger; Recommendation of Sterling’s
Board.”
All of the
members of the Sterling board present (9 of 11) voted unanimously to approve the
merger and the merger agreement. Neither of the two directors who
voted against proceeding with a sale at the prior meeting were present for the
vote at the March 17, 2010 meeting. All of Sterling’s directors
except one signed the standard Support Agreement, agreeing to vote all shares
owned by such director in favor of the merger. One director signed a
support agreement providing that he will not initiate or participate in a proxy
contest or litigation contesting or make any public comments regarding the
transaction.
On
March 17, 2010, the Roma board approved the transaction and merger
agreement. The transaction was announced on March 18,
2010.
AFTER
CAREFUL CONSIDERATION, STERLING’S BOARD OF DIRECTORS DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT WERE
ADVISABLE AND IN THE BEST INTERESTS OF STERLING AND ITS STOCKHOLDERS AND ALL
DIRECTORS PRESENT AND VOTING AT THE MARCH 17, 2010 MEETING UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT, INCLUDING THE MERGER. ACCORDINGLY, STERLING’S BOARD
RECOMMENDS THAT STERLING’S STOCKHOLDERS VOTE “FOR” ADOPTION OF THE MERGER
AGREEMENT AT THE STERLING SPECIAL MEETING SCHEDULED FOR JUNE 8,
2010.
Reasons
for the Merger
In
reaching its decision to approve the merger, Sterling’s board of directors, with
advice from its financial and legal advisors, considered a number of factors,
including the following:
·
|
The
form of consideration payable by Roma – cash – it believed was preferable
to stock in light of the difficulties facing the banking industry and the
related uncertainty associated with the present valuation of equity based
consideration payable by banks in connection with merger and acquisition
transactions.
|
·
|
The
$14.7 million valuation and $2.52 payable for each share of Sterling
and the fact that this price represents a 104% premium to tangible book
value per share at 12/31/09 (based on preliminary financial information)
and a 40% premium to the one-day closing sale price of Sterling common
stock of $1.80 on March 16, 2010, the day prior to the last trading
day before the announced signing of the merger agreement, a 90.9% premium
to the closing sale price of Sterling common stock of $1.32 as of
February 17, 2010, and a 66% premium to the one-month average closing
sale price of Sterling common stock of $1.51 as of March 16,
2010.
|
·
|
The
limited number of other strategic alternatives available to Sterling,
including remaining independent in the face of economic, capital market,
asset quality, earnings and regulatory
challenges.
|
·
|
The
execution of a broad Support Agreement by the board and management by
which each such member, except one, agreed to vote in favor of the
adoption and approval of the merger agreement and the merger and to
recommend and support the merger.
|
·
|
The
fact that TARP funding was not available to Sterling and the assessment of
Sterling’s management and advisors that Sterling would be highly unlikely
to receive any meaningful kind of government assistance or funding now or
in the foreseeable future.
|
·
|
The
likelihood of more severe regulatory action in the absence of a
transaction and the negative consequences of such action to Sterling’s
stockholders, depositors, employees and other
stakeholders.
|
·
|
The
current and prospective challenging economic and regulatory conditions and
risks associated with the banking industry generally, including the
volatile valuations of certain classes of financial assets, including
construction and development and commercial real estate
loans. The board also considered the effect these factors could
have on Sterling’s viability especially in light of its asset quality
issues and depleting capital, if these environmental conditions did not
improve.
|
·
|
The
impact on Sterling’s stockholders, depositors, employees and other
stakeholders if Sterling experiences a loss of liquidity or otherwise
fails or is forced into an FDIC
receivership.
|
·
|
Current
conditions in the financial markets, Sterling’s current stock price and
the improbability of a bank with Sterling’s risk profile and size and
scale successfully accessing the capital markets in the immediate
future.
|
·
|
Sterling’s
current stock price was less than the merger consideration of $2.52 per
share, and the potential that it may drop much more if Sterling remains
independent.
|
·
|
Roma’s
financial condition, asset quality, earnings and capital. In
reviewing these factors, Sterling’s board concluded that Roma’s capital
and prospects should result in the combined company having superior
capital and prospects compared to Sterling’s capital and prospects on a
stand-alone basis which would benefit Sterling’s employees, depositors,
customers and other stakeholders.
|
·
|
The
fact that many holders of Sterling’s common stock will realize a loss on
their investment but that some would realize a
premium.
|
·
|
The
transaction would likely trigger recognition of taxable losses for some
and gains for other holders of Sterling common
stock.
|
·
|
The
fact that because the merger agreement is not subject to approval by
Roma’s stockholders the risk that the merger may not be completed is less
than it otherwise would be.
|
·
|
The
fact that because of Roma’s strong regulatory capital the risk that the
merger will not be completed is less that it otherwise might
be.
|
·
|
The
likelihood that both Roma and Sterling would receive the necessary
regulatory approvals to complete the transactions contemplated in the
merger agreement, including the completion of the merger in a timely
fashion.
|
·
|
The
anticipated time of completion of the merger – in the third quarter of
2010.
|
·
|
The
reputation and business practices of Roma and its
management.
|
·
|
The
proposed treatment by Roma under the merger agreement of Sterling’s
employees and management.
|
·
|
The
presentation, analysis and oral opinion of Griffin, (which subsequently
was confirmed in writing) to the effect that the $2.52 per share
price payable by Roma was fair, from a financial point of view, to
Sterling’s stockholders, subject to the caveats expressed in the opinion
and in the meeting.
|
Sterling’s
board of directors also recognized the following in connection with its decision
to adopt the merger agreement and approve the merger.
·
|
The
fact that the price per share payable by Roma is less than the cost basis
of many Sterling stockholders.
|
·
|
The
fact that the consideration received by Sterling stockholders could be
adjusted downward dollar for dollar if Sterling’s tangible common equity
drops from $14.2 million at December 31, 2009 to below
$13.4 million as of the end of the month preceding the mailing of
this proxy statement, pursuant to the terms of the merger agreement, and
the fact that Roma has the right to terminate the merger agreement if
Sterling’s nonperforming assets exceed $30 million at the closing
date or tangible common equity is less than $9.9 million on the
closing date.
|
·
|
Other
circumstances under which Roma might have a right to terminate the merger
agreement.
|
·
|
The
fact that the merger agreement obligates Sterling to pay to Roma a
termination fee of $745,000 if Sterling is unable to obtain stockholder
approval for the transaction by August 31, 2010 and an alternative
transaction is completed within
18 months.
|
·
|
That
certain provisions of the merger agreement limit Sterling’s ability to
solicit or respond to proposals for alternative
transactions.
|
·
|
That
pursuant to the merger agreement, Sterling must generally conduct its
business in the ordinary course and Sterling is subject to a variety of
other restrictions on its ability to conduct its business prior to the
completion of the merger or termination of the merger
agreement.
|
·
|
The
fact that Sterling will cease to exist as an independent, publicly traded
company at the closing.
|
·
|
The
potential for diversion of management and employee attention, and for
employee attrition, during the period prior to the completion of the
merger and the potential effect on Sterling’s business and relations with
depositors, loan customers, service providers and other stakeholders,
whether or not the merger is
consummated.
|
Sterling’s
board concluded that the anticipated benefits of the merger outweigh the
preceding considerations.
The
considerations set forth above are not intended to be exhaustive, but include
material factors considered by the Sterling board of directors in approving the
merger and the merger agreement. Although each member of Sterling’s
board individually considered these and other factors, the board did not
collectively assign any specific or relative weights to the factors considered
and did not make any determination with respect to any individual
factor. The board collectively made its determination with respect to
the merger and the merger agreement based on the conclusion reached by its
members - - in light of the factors that each of them considered appropriate - -
that the merger is in the best interests of Sterling and its
stockholders.
During
its consideration of the merger and the merger agreement described above,
Sterling’s board of directors was also aware that some of its directors and
executive officers may have interests in the merger which could be different
from, or in addition to, those of its stockholders generally, as described under
“The Merger—Interests of Sterling Directors and Officers in the
Merger.”
After
taking into account all of the factors set forth above, as well as others, the
board of directors determined that the potential benefits of the merger outweigh
the potential risks and that the merger agreement and the transactions
contemplated by the merger agreement are advisable and fair and in the best
interests of Sterling and its stockholders. The board of directors
has approved the merger agreement and the merger and recommends that you vote to
adopt the merger agreement at the special meeting.
Recommendation
of Our Board of Directors
After
careful consideration, our board of directors:
·
|
has
determined that the merger, the merger agreement and the transactions
contemplated by the merger agreement are advisable, fair to and in the
best interests of Sterling and its
stockholders;
|
·
|
has
approved the merger agreement; and
|
·
|
recommends
that Sterling’s stockholders vote “FOR” the adoption of the merger
agreement.
|
Opinion
of Our Financial Advisor
Sterling
engaged Griffin to act as its financial advisor in connection with the
transaction and to provide its opinion with respect to the fairness, from a
financial point of view, to Sterling’s stockholders of the consideration offered
to such stockholders in the proposed transaction under the circumstances
applicable to Sterling as of the date of the opinion.
On
March 17, 2010, Griffin provided its oral opinion to the Sterling board of
directors that, based upon and subject to the factors and assumptions stated in
that opinion and in its written opinion, from a financial point of view, the
consideration offered to Sterling’s stockholders, $2.52 per share in cash, was
fair to such stockholders under the facts and circumstances applicable to
Sterling as of the date thereof. Griffin subsequently confirmed the
oral opinion by delivery of its written opinion dated March 17,
2010.
The full
text of Griffin’s March 17, 2010 opinion is attached as Annex B to
this document. The opinion outlines the procedures followed,
assumptions made, matters considered and qualifications and limitations on the
review undertaken by Griffin in providing its opinion. The
description of the opinion set forth below is a summary of the material terms of
the opinion. Sterling stockholders are urged to read the entire
opinion carefully in connection with their consideration of the proposed
transaction.
The
Griffin opinion was provided for the use and benefit of the Sterling board of
directors in connection with its consideration of the proposed
transaction. The opinion is not intended to be and does not
constitute a recommendation to any shareholder of Sterling as to how such
shareholder should vote with respect to the transaction or any related
matter. Griffin was not requested to opine as to, and its opinion
does not in any manner address, Sterling’s underlying business decision to
proceed with or effect the proposed transaction. In addition, Griffin
expressed no opinion on, and its opinion did not in any manner address, the
fairness of the amount or the nature of any compensation to any officers,
directors, or employees of Sterling payable by reason of the
transaction.
In
arriving at its opinion dated March 17, 2009, Griffin (i) reviewed a
draft of the merger agreement; (ii) reviewed and discussed with management
certain publicly available business and financial information concerning
Sterling and the banking, economic and regulatory environments in which it
operates; (iii) reviewed and discussed with management preliminary
financial information as of December 31, 2009 and for the period then
ended; (iv) reviewed and discussed with Sterling management matters
relating to Sterling’s liquidity, pre-provision net income, asset quality,
reserve levels and capital adequacy; (v) compared the proposed financial
terms of the transaction with the publicly available financial terms of certain
transactions involving companies in time frames which Griffin deemed relevant;
(vi) compared the current financial condition and operating performance of
Sterling with publicly available information relating to certain companies
Griffin deemed relevant, with emphasis on pre-provision net income, asset
quality, reserve levels and capital adequacy; (vii) reviewed and compared
the current and historical market prices of Sterling common stock with certain
publicly traded securities of other companies Griffin deemed comparable;
(viii) considered the status of Sterling’s agreement with the Federal
Reserve Bank of Philadelphia and the New Jersey Department of Banking and
Insurance and other issues pertaining to regulatory matters and Sterling’s
regulatory status; (ix) took into account the breadth and results of the process
it conducted to identify an investor in, or a buyer for, Sterling; and
(x) performed such other financial studies and analyses and considered such
other information as Griffin considered appropriate for the purposes of its
opinion.
In
addition, Griffin had discussions with certain members and/or representatives of
the management of Sterling and Roma with respect to certain aspects of the
transaction, and the past and current business operations of Sterling, the
financial condition and future prospects and operations of Sterling, the effects
of the transaction on the financial condition of Roma on a pro forma
consolidated basis, and certain other matters Griffin believed necessary or
appropriate to its inquiry. Griffin notes that in the course of such
discussions, it was advised by management that Sterling has been negatively
affected in a significant manner by, and continues to have considerable exposure
to, risks related to its recent operating performance, credit profile and
reserve levels, as well as regulatory issues relating thereto, including the
impact thereof on Sterling’s capital and the potential impact on Sterling’s
liquidity, especially in light of general economic and real estate related
trends in the markets in which it operates. Management informed
Griffin that these developments have resulted in, among others, the agreement
with the Federal Reserve Bank of Philadelphia and the New Jersey Department of
Banking and Insurance referenced above which required Sterling to improve
operating performance and increase reserves and liquidity, and precluded
Sterling from paying dividends on its common stock or distributing interest and
principal on its trust preferred securities.
In
arriving at its opinion, Griffin assumed and relied upon the accuracy and
completeness of the financial and other information used by Griffin without any
independent verification of such information, including specifically preliminary
financial data provided to it by Sterling as of December 31,
2009. Griffin understood from management of Sterling that such
management was not aware of any facts or circumstances that would make such
information inaccurate or misleading. Griffin did not review
individual credit files of Sterling, and did not conduct any valuation or
appraisal of any of Sterling’s assets or liabilities (including any derivative
or off-balance sheet liabilities), nor did Griffin evaluate the solvency of
Sterling or Sterling Bank under any state or federal laws relating to
bankruptcy, insolvency or receiverships or similar matters. In
relying on financial information provided to Griffin by Sterling or derived
therefrom, Griffin has assumed that such information was reasonably prepared
based on assumptions reflecting the best currently available estimates and
judgments by management. With Sterling’s consent, Griffin’s review of
Roma and its ability to complete the transaction was limited to
publicly-available information and a discussion with the representatives of Roma
regarding its financial performance, financial condition, asset quality, capital
levels, and reserve levels. Griffin’s opinion necessarily was based
upon market, economic, financial and other circumstances and conditions as they
existed on, and could be evaluated as of March 17, 2010, and therefore,
assumed that Sterling’s nonperforming assets would not increase or its tangible
book value would not decrease to a point which would permit Roma to reduce the
transaction consideration, terminate the transaction or decline to close the
transaction. Griffin assumed no responsibility for updating or
revising its opinion based on events or circumstances occurring after the date
of the opinion.
Griffin
noted also that it had been advised by management that management believed that
continued pre-provision losses and the potential necessity of increasing
reserves to cover anticipated asset quality issues over the near term could
impair the ability of Sterling to operate in the normal course, and could also
lead to further and more severe regulatory actions that could materially
adversely impact Sterling’s continued ability to operate. Further,
Sterling management and Griffin concurred that there were no other strategic
initiatives to create capital for Sterling which were likely to be successful in
the short term which would be of a magnitude sufficient to address the
operating, asset quality, capital, liquidity and regulatory challenges which
Sterling faces.
Griffin
expressed no opinion as to the prices at which shares of Sterling common stock
would trade at any time following the announcement of the proposed
transaction.
In
connection with its oral opinion provided at the meeting of the Sterling board
of directors held on March 17, 2010, and subsequently confirmed in writing,
Griffin discussed certain financial analyses of the proposed merger with the
Sterling board of directors.
The
following is a summary of the material valuation, situational, financial and
comparative analyses delivered to the Sterling board of directors by Griffin in
connection with its opinion. Certain of the summaries of financial
analyses include information presented in tabular format. In order to
fully understand the financial analyses performed by Griffin, the table must be
read together with the accompanying text. The table alone does not
constitute a complete description of Griffin’s financial analyses, including the
methodology and assumptions underlying the analyses, and if viewed in isolation
could create a misleading or incomplete view of the financial analyses performed
by Griffin.
Sterling Historical Stock Price
Analysis.
Griffin reviewed the current and one-month average
trading prices of Sterling common stock, noting that the $2.52 price per share
offered by Roma represented a 40% premium over the March 16, 2010 closing
price of $1.80 per share, and a 66% premium over the one-month average price per
share of $1.51.
Sterling Situational
Analysis.
Griffin noted that Sterling faced a difficult
economic, credit, and regulatory environment that negatively impacted and
severely limited its prospects. Griffin noted specifically the
absence of pre-provision earnings and the low levels of Sterling’s reserves and
capital available to cover existing and likely future losses in its loan
portfolios in a very difficult economy. The valuation implicit in the
pricing of $2.52 per share compared favorably to comparable company and
comparable transaction metrics announced in 2009 and in 2010 through
March 17, 2010, particularly in light of perceived comparative asset
quality, reserve level and capital metrics. Griffin noted that a
discounted dividend analysis was not meaningful given Sterling’s recent earnings
experience and overall financial condition.
Selected Comparable Companies
Analysis
. Griffin analyzed the public market statistics of
certain comparable companies and examined various trading statistics and
information. In choosing companies comparable to Sterling to analyze,
Griffin selected banks and thrifts with operations in and around the
Philadelphia area. The banks and thrifts included: 1st Colonial
Bancorp, Inc., Elmer Bancorp, Inc., Hopewell Valley Community Bank, New
Millennium Bank, Polonia Bancorp (MHC), SE Financial Corp.,
N.J.M. Bank, FSB, Newfield National Bank, GCF Bank, Continental Bank,
Grand Bank, National Association, and Haddon Savings Bank.
Griffin
selected these companies because their asset size and geographic locations are
reasonably similar to those of Sterling. None of the comparable
companies identified above is identical to Sterling. A complete
analysis involves complex considerations and judgments concerning differences in
financial and operating characteristics of the comparable companies and other
factors that could affect attributes of such comparable
companies. Mathematical analysis (such as determining the mean and
median) is not by itself a meaningful method of using the selected comparable
companies’ data.
As part
of its analysis, Griffin reviewed publicly available data, including the
multiple of market price per share to tangible book value per
share.
In
addition, based on preliminary financial information, Griffin compared certain
balance sheet ratios of Sterling at December 31, 2009, certain
profitability ratios of Sterling for the quarter ended December 31, 2009
and certain credit quality ratios of Sterling at and for the quarter ended
December 31, 2009, to the mean and median of those ratios for the selected
comparable companies.
The
following reflects certain of the analyses performed:
|
|
|
MRQ
|
MRQ
|
MRQ
|
MRQ
|
MRQ
|
MRQ
|
LTM
|
LTM
|
LTM
|
LTM
|
|
|
|
Asset
Quality
|
Capital
Adequacy
|
Performance
|
|
|
|
|
|
|
Loans
|
|
|
|
|
|
|
Cost
of
|
|
Total
|
Total
|
NPLs/
|
Reserves/
|
30-89
PD/
|
Tier
1
|
TCE/
|
Leverage
|
Net
Interest
|
Efficiency
|
Int.
Bear.
|
|
Assets
|
Equity
|
Loans
|
NPAs
+ 90
|
Loans
|
Ratio
|
TA
|
Ratio
|
Margin
|
ROAA
|
Ratio
|
Liab.
|
Company
Name
|
($000)
|
($000)
|
(%)
|
(%)
|
(%)
|
(%)
|
(%)
|
(%)
|
(%)
|
(%)
|
(%)
|
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEC
Registrants
|
|
|
|
|
|
|
|
|
|
|
|
|
1st
Colonial Bancorp, Inc.
|
276,645
|
22,828
|
1.90
|
57.53
|
0.15
|
10.87
|
8.25
|
7.53
|
3.17
|
0.20
|
76.01
|
3.09
|
Elmer
Bancorp, Inc.
|
220,973
|
19,433
|
0.74
|
60.23
|
1.39
|
11.14
|
8.79
|
8.83
|
4.45
|
0.73
|
70.56
|
1.80
|
Hopewell
Valley Community Bank
|
314,297
|
24,771
|
0.32
|
254.88
|
0.63
|
10.80
|
7.60
|
8.00
|
3.50
|
0.26
|
79.94
|
2.36
|
New
Millennium Bank
|
249,694
|
21,890
|
5.63
|
27.98
|
3.04
|
11.97
|
8.77
|
8.27
|
4.05
|
(0.49)
|
93.81
|
2.79
|
Polonia
Bancorp (MHC)
|
220,599
|
23,505
|
1.44
|
41.84
|
NA
|
18.33
|
10.77
|
NA
|
2.75
|
0.03
|
97.51
|
2.93
|
Non-SEC
Registrants
|
|
|
|
|
|
|
|
|
|
|
|
|
SE
Financial Corp.
|
307,519
|
24,740
|
1.71
|
36.12
|
NA
|
14.21
|
8.03
|
NA
|
3.01
|
0.29
|
72.00
|
NA
|
N.J.M.
Bank, FSB
|
570,726
|
45,696
|
0.89
|
NA
|
0.14
|
20.76
|
7.96
|
7.94
|
1.63
|
0.41
|
73.01
|
2.42
|
Newfield
National Bank
|
517,799
|
41,367
|
0.64
|
76.53
|
0.19
|
12.16
|
7.90
|
7.99
|
3.82
|
0.60
|
70.02
|
1.19
|
GCF
Bank
|
348,331
|
26,782
|
1.37
|
NA
|
0.61
|
9.27
|
7.69
|
7.76
|
3.27
|
(0.12)
|
109.04
|
1.99
|
Continental
Bank
|
492,396
|
41,465
|
3.31
|
NA
|
0.78
|
12.36
|
8.38
|
8.38
|
3.30
|
0.19
|
83.59
|
2.01
|
Grand
Bank, National Association
|
346,141
|
29,770
|
4.68
|
24.92
|
0.09
|
11.40
|
8.60
|
8.62
|
3.85
|
0.66
|
72.53
|
2.15
|
Haddon
Savings Bank
|
306,138
|
28,278
|
0.49
|
56.97
|
0.32
|
24.76
|
9.24
|
9.46
|
1.95
|
0.21
|
82.94
|
2.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STBK
Peer Mean
|
347,605
|
29,210
|
1.93
|
70.78
|
0.73
|
14.00
|
8.50
|
8.28
|
3.23
|
0.25
|
81.75
|
2.27
|
STBK
Peer Median
|
310,908
|
25,777
|
1.41
|
56.97
|
0.47
|
12.07
|
8.32
|
8.14
|
3.29
|
0.24
|
77.98
|
2.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sterling
Banks, Inc.
|
368,952
|
16,170
|
6.44
|
43.09
|
2.34
|
7.09
|
3.89
|
5.31
|
3.14
|
(2.68)
|
114.02
|
1.90
|
Griffin
compared certain metrics of certain transactions announced in 2009 and 2010 to
the metrics implicit in the Roma offer, including acquisitions in Pennsylvania
and New Jersey of First Chester County Corporation, First Keystone Financial,
Inc. and Harleysville National Corporation. Included in the analyses
were ratios for the transaction price to tangible book value, the transaction
price premium over the most recent one-month trading price and other metrics for
these transactions. The results of these analyses are summarized
below:
|
|
|
|
Price/
|
Franchise
|
1
Mo.
|
Seller's
|
|
Buyer
|
Seller
|
Deal
|
Tang.
|
Premium/
|
Prem./
|
NPAs+90/
|
Reserves/
|
TCE/
|
|
Assets
|
Assets
|
Value
|
Book
|
Core
Dep.
|
Market
|
Assets
|
NPAs+90
|
TA
|
Deal
|
($000)
|
($000)
|
($M)
|
(%)
|
(%)
|
(%)
|
(%)
|
(%)
|
(%)
|
|
|
|
|
|
|
|
|
|
|
Mean
|
4,055,485
|
2,492,751
|
112.5
|
101.6
|
(0.1)
|
33.5
|
1.81
|
80.39
|
5.24
|
Median
|
1,378,936
|
1,306,681
|
64.8
|
99.9
|
(0.1)
|
27.7
|
1.72
|
85.97
|
5.50
|
|
|
|
|
|
|
|
|
|
|
Sterling/Roma
|
1,266,499
|
368,952
|
14.9
|
103.8
|
0.4
|
66.4
|
6.24
|
43.09
|
3.87
|
Additionally,
Griffin compared certain metrics in publicly reported local and national
transactions. The results of these analyses are summarized below:
2009
-2010 M&A Deals
|
|
Sterlng
/Roma
|
PA
& NJ
|
National
|
Number
of deals
|
1
|
7
|
148
|
Average
deal size ($ millions)
|
14.9
|
96.1
|
20.6
|
Average
premium to market (%)
|
66.9
|
43.5
|
62.9
|
Average
price/tangible book (%)
|
103.8
|
96.1
|
112.5
|
Median
franchise premium/core deposits (%)
|
0.4
|
(1.0)
|
2.0
|
For these
analyses, Griffin used information obtained from SNL Financial and publicly
available financial information, with draft Sterling financial data as of
December 31, 2009 and stock market data for the one-month ended
March 16, 2010.
In
preparing its opinion, Griffin assumed and relied upon the accuracy and
completeness of all information supplied or otherwise made available to Griffin,
or that was discussed with or reviewed by or for Griffin, or that was publicly
available. Griffin did not assume any responsibility for
independently verifying this information or undertake an independent evaluation
or appraisal of the assets or liabilities of Sterling, and Griffin was not
furnished with any such evaluation or appraisal. Griffin did not
evaluate the solvency or fair value of Sterling under any state or federal laws
relating to bankruptcy, insolvency or similar matters. In addition,
Griffin did not assume any obligation to conduct, and Griffin did not conduct,
any physical inspection of the properties or facilities of
Sterling. With respect to the financial forecast information
furnished to or discussed with Griffin by Sterling, Griffin assumed that all
such information was reasonably prepared and reflects the best currently
available estimates and judgments of the senior management of Sterling as to the
future financial and operating performance of Sterling.
Griffin’s
opinion was based upon market, economic and other conditions as they existed and
could be evaluated on, and on the information made available to Griffin as of,
the date of its opinion.
The
Sterling board of directors selected Griffin as its financial advisor because of
its reputation as a nationally recognized investment banking and advisory firm
specializing in the banking sector and because Griffin is familiar with Sterling
and its business. As part of its investment banking and financial
advisory business, Griffin is continually engaged in the valuation of banks and
their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes.
Griffin
is acting as financial advisor to Sterling in connection with the merger and
will receive a fee from Sterling, a significant portion of which is contingent
upon the consummation of the merger. Griffin received
$37,500 retainer from Sterling upon the engagement of Griffin and will
receive $400,000 upon consummation of the merger. Sterling also
agreed to indemnify Griffin and its affiliates from and against certain
liabilities and expenses, which may include certain liabilities under federal
securities laws, in connection with its engagement and to reimburse Griffin for
its reasonable out-of-pocket expenses incurred in connection with its
engagement, including the reasonable fees of its legal counsel.
Stevens
& Lee has acted as special counsel to Sterling in connection with the merger
agreement and the merger. Griffin and Stevens & Lee are
affiliated. From time to time during the two years preceding the date
Griffin’s engagement by Sterling, Stevens & Lee has provided legal services
to Sterling and Sterling Bank. During such two year period, Stevens
& Lee has received $45,122 in legal fees from Sterling and Sterling Bank for
such services.
Interests
of Our Directors and Executive Officers in the
Merger
In
considering the recommendation of our board of directors with respect to the
merger, you should be aware that some of our directors and executive officers
have interests in the merger that are different from, or in addition to, the
interests of our stockholders generally. These interests, to the
extent material, are described below. Our board of directors was
aware of these interests and considered them, among other matters, in approving
the merger agreement and the merger.
Current Sterling Change in Control
Agreements.
Several of Sterling’s executive officers are
parties to change in control severance agreements with Sterling.
Sterling
is a party to change in control severance agreements with Messrs. Herninko,
Horner, Braun, and Ricciuti and Mss. Valentino-Congdon, Johnson, and
Baum. These agreements provide for a term of employment following a
“change in control” (as defined in the agreements) of 24 months, in the case of
Mr. Herninko, Mr. Horner, and Ms. Valentino-Congdon, 16 months,
in the case of Mr. Braun and Ms. Johnson, and 6 months, in the case of
Mr. Ricciuti and Ms. Baum (each, a “term of
employment”). During such term of employment, the executives will be
provided with salary and benefits at least as favorable as those received prior
to the change in control.
With
respect to Mr. Herninko, Mr. Horner, or Ms. Valentino-Congdon,
the agreements provide that if, within 30 days following a “change in control,”
Sterling terminates their employment for any reason other than for “cause” (as
such terms are defined in the agreements) or they elect to terminate their
employment for any reason, they will be entitled to receive a lump sum cash
payment equal to two times their salary and the value of Sterling’s annual
reimbursement limit for club dues and automobile expenses and continuation of
their normal welfare benefits for two years. In the event that
Sterling terminates the employment of Mr. Herninko, Mr. Horner, or
Ms. Valentino-Congdon other than for “cause,” “disability,” “retirement,”
or death, or these executives terminate their employment for “good reason” (as
such terms are defined in the agreements) during the final 23 months of their
term of employment, they will be entitled to receive their current salary as of
the date of termination payable in equal monthly installments for the duration
of the term of employment, as well as a continuation of normal welfare benefits
and certain fringe benefits, such as club dues and automobile
expenses.
With
respect to Mr. Braun and Ms. Johnson, the agreements provide that if,
within 30 days following a “change in control,” Sterling terminates their
employment for any reason other than for “cause” (as such terms are defined in
the agreements) or they elect to terminate their employment for any reason, they
will be entitled to receive a lump sum cash payment equal to one and one-third
times their salary and continuation of their normal welfare benefits for 16
months. In the event that Sterling terminates the employment of
Mr. Braun and Ms. Johnson other than for “cause,” “disability,”
“retirement,” or death or these executives terminate their employment for “good
reason” (as such terms are defined in the agreements) during the final 15 months
of their term of employment, they will be entitled to receive their current
salary as of the date of termination payable in equal monthly installments for
the duration of the term of employment, as well as a continuation of normal
welfare benefits and certain fringe benefits, such as club dues and automobile
expenses.
With
respect to Mr. Ricciuti and Ms. Baum, the agreements provide that in
the event that Sterling terminates their employment for any reason other than
for “cause,” “disability,” “retirement,” or death (as such terms are defined in
the agreements) during the term of employment, they will be entitled to receive
their current salary as of the date of termination payable in equal monthly
installments for the duration of the term of employment, as well as a
continuation of normal welfare benefits.
In the
event any payment under the change in control severance agreements would trigger
a reduction in tax deductions under Section 280G of the Internal Revenue Code
(the “Code”), the amount of such payment shall be reduced to the maximum amount
that can be paid without triggering the reduction in tax
deductions.
As a
condition to the receipt of any post-termination payments under the agreements,
the executives are required to execute a release agreement, which, among other
things, releases Sterling from any claim arising out of their employment with
Sterling, and prohibits them from disparaging Sterling.
On
March 17, 2010, each of Messrs. Herninko, Horner, and Braun, and
Mss. Valentino-Congdon and Johnson entered into an addendum to the
change in control severance agreement with Roma and Roma Bank. The
addendum generally provides that if any of the executives delivers a notice of
resignation (for good reason or otherwise) to Roma within 60 days of the
completion of the merger, such notice will specify a date of termination that is
between 60 and 90 days after the completion of the merger. In all
other respects, the agreements remain unchanged.
Sterling Employment Agreement with
Robert H. King.
Robert H. King, the
current Chief Executive Officer and President of Sterling, is currently a party
to an employment agreement with Sterling Bank, dated January 25, 2006, as
amended December 26, 2007. One of the conditions to Roma’s
proposal to enter into a merger agreement with Sterling was that Mr. King enter
into an addendum to his employment agreement. As an accommodation to
Sterling and Roma, Mr. King entered into an addendum to his employment
agreement, dated as of March 17, 2010, that becomes effective upon the
completion of the merger and will supersede his current employment agreement
with Sterling Bank.
The total
of the severance payments that Mr. King may receive under the addendum is
less than the cash severance amounts he would have received under his current
employment agreement if his employment had been terminated by Roma without cause
or by Mr. King for good reason after the merger.
The
addendum provides for a term of employment commencing upon completion of the
merger and continuing for a one-year period thereafter, unless sooner terminated
by either party in accordance with the terms of the addendum. During
the term of his employment, Mr. King will serve as a senior officer of Roma
Bank. Under the addendum, upon completion of the merger,
Mr. King will receive a lump sum cash payment equal to approximately
$221,580 in exchange for his agreement not to compete with Roma for a period of
one year following his termination of employment.
The
addendum also provides that if Mr. King’s employment is terminated by Roma
without cause before the second anniversary of the completion of the merger, or
if Mr. King voluntarily elects to terminate his employment after the date
that is six months after the completion of the merger, but prior to the second
anniversary of the completion of the merger, he is entitled to receive a lump
sum payment equal to approximately $221,580. In addition, if
Mr. King is still employed by Roma as of the second anniversary of the
completion of the merger, he will receive a lump sum payment equal to
approximately $221,580.
In the
event any payment to Mr. King under the addendum would trigger a reduction
in tax deductions under Section 280G of the Code, the amount of such payment
shall be reduced to the maximum amount that can be paid without triggering the
reduction in tax deductions.
The
addendum also contains provisions restricting Mr. King’s right to solicit
any employees or customers of Sterling or Sterling Bank during his period of
employment with Sterling and Roma and for the one-year period
thereafter.
Stock Options.
The
merger agreement provides that all outstanding stock options issued under our
stock option plans, including all options granted to our executive officers and
directors, will be cancelled in connection with the completion of the
merger. Because the exercise price of each outstanding option exceeds
$2.52 per share, no consideration will be paid to the holders of stock options
upon their cancellation.
Indemnification and
Insurance.
Roma has agreed to indemnify and hold harmless all
officers and directors of Sterling and Sterling Bank in their capacities as such
against all liabilities to the fullest extent such persons would be entitled to
such indemnification under applicable law.
The
merger agreement provides that Roma will obtain and fully pay, up to a dollar
limit specified in the merger agreement, for “tail” insurance policies with a
claims period of three years after completion of the merger.
Material
United States Federal Income Tax
Consequences
The
following is a general discussion of certain material U.S. federal income tax
consequences of the merger to holders of our common stock. We base
this summary on the provisions of the Internal Revenue Code, applicable current
and proposed U.S. Treasury Regulations, judicial authority and
administrative rulings and practice, all of which are subject to change,
possibly on a retroactive basis.
For
purposes of this discussion, we use the term “U.S. holder” to mean:
·
|
an
individual citizen or resident of the U.S. for U.S. federal income tax
purposes;
|
·
|
a
corporation, or other entity taxable as a corporation for U.S. federal
income tax purposes, created or organized in or under the laws of the U.S.
or any state or the District of
Columbia;
|
·
|
a
trust if it (1) is subject to the primary supervision of a court
within the U.S. and one or more U.S. persons have the authority to control
all substantial decisions of the trust or (2) has a valid election in
effect under applicable U.S. Treasury Regulations to be treated as a U.S.
person; or
|
·
|
an
estate the income of which is subject to U.S. federal income tax
regardless of its source.
|
A
“non-U.S. holder” is a person (other than a partnership) that is not a U.S.
holder.
This
discussion assumes that a holder holds the shares of our common stock as a
capital asset within the meaning of Section 1221 of the Code (generally,
property held for investment). This discussion does not address all
aspects of U.S. federal income tax that may be relevant to you as a U.S. holder
in light of your particular circumstances, or that may apply to a U.S. holder
that is subject to special treatment under the U.S. federal income tax laws
(including, for example, insurance companies, dealers in securities or foreign
currencies, traders in securities who elect the mark-to-market method of
accounting for their securities, stockholders subject to the alternative minimum
tax, persons that have a functional currency other than the U.S. dollar,
tax-exempt organizations, financial institutions, mutual funds, partnerships or
other pass through entities for U.S. federal income tax purposes, controlled
foreign corporations, passive foreign investment companies, certain expatriates,
corporations that accumulate earnings to avoid U.S. federal income tax,
stockholders who hold shares of our common stock as part of a hedge, straddle,
constructive sale or conversion transaction, or stockholders who acquired their
shares of our common stock through the exercise of employee stock options or
other compensation arrangements). In addition, the discussion does
not address any tax considerations under state, local or foreign laws or U.S.
federal laws other than those pertaining to the U.S. federal income tax that may
apply to holders.
The determination of the actual tax
consequences of the merger will depend on your specific situation. We
urge you to consult your own tax advisors to determine the particular tax
consequences of the receipt of cash in exchange for our common stock pursuant to
the merger on your particular circumstances, including the application and
effect of the alternative minimum tax and any state, local or foreign income and
other tax laws and changes in those laws.
The U.S.
federal income tax consequences of the merger to a partner in an entity or
arrangement treated as a partnership for U.S. federal income tax purposes that
holds our stock will generally depend on the status of the partners and the
activities of the partnership. If you are a partner of a partnership
holding our common stock, you should consult your tax advisors.
U.S. Holders
The
receipt of cash in the merger by U.S. holders of our common stock generally will
be a taxable transaction for U.S. federal income tax purposes. In
general, for U.S. federal income tax purposes, a U.S. holder of our common stock
will recognize gain or loss equal to the difference between:
·
|
the
amount of cash received in exchange for the common stock;
and
|
·
|
the
U.S. holder’s adjusted tax basis in the common
stock.
|
If the
holding period in our common stock surrendered in the merger is greater than one
year as of the date of the merger, the gain or loss will be long-term capital
gain or loss. The deductibility of a capital loss recognized on the
exchange is subject to limitations under the Code. If a U.S. holder
acquired different blocks of our common stock at different times and different
prices, that holder must determine its adjusted tax basis and holding period
separately with respect to each block of our common stock. Gain or
loss and holding period will be determined separately for each block of stock,
i.e., shares acquired at the same cost in a single transaction, exchanged in the
merger.
Under the
Code, a U.S. holder of our common stock may be subject, under certain
circumstances, to information reporting on the cash received in the merger
unless that U.S. holder is a corporation or other exempt
recipient. Backup withholding will also apply (currently at a rate of
28%) with respect to the amount of cash received, unless a U.S. holder provides
proof of an applicable exemption or a correct taxpayer identification number,
and otherwise complies with the applicable requirements of the backup
withholding rules. Backup withholding is not an additional tax and
any amounts withheld under the backup withholding rules may be refunded or
credited against a U.S. holder’s U.S. federal income tax liability, if any,
provided that such U.S. holder furnishes the required information to the
Internal Revenue Service in a timely manner.
Non-U.S. Holders
The
following discussion addresses the rules governing United States federal income
taxation of the receipt of cash in the merger by our non-U.S.
holders. These rules are complex, and no attempt is made herein to
provide more than a brief summary of such rules. Accordingly, the
discussion does not address all aspects of United States federal income taxation
that may be relevant to a non-U.S. holder in light of its particular
circumstances and does not address any state, local or foreign tax
consequences. We urge non-U.S. holders to consult their tax advisors
to determine the impact of United States federal, state, local and foreign
income tax laws on the receipt of cash in the merger, including any reporting
requirements.
Any gain
realized on the receipt of cash in the merger by a non-U.S. holder generally
will not be subject to United States federal income tax unless:
·
|
the
gain is effectively connected with a trade or business of the non-U.S.
holder in the United States (and, if required by an applicable income tax
treaty, is attributable to a United States permanent establishment of the
non-U.S. holder);
|
·
|
the
non-U.S. holder is an individual who is present in the United States for
183 days or more in the taxable year of that disposition, and certain
other conditions are met; or
|
·
|
we
are or have been a “United States real property holding corporation” for
U.S. federal income tax purposes and the non-U.S. holder owned more than
5% of Sterling common stock at any time during the five years preceding
the merger.
|
An
individual non-U.S. holder described in the first bullet point immediately above
will be subject to tax on the net gain derived from the merger under regular
graduated U.S. federal income tax rates. An individual non-U.S.
holder described in the second bullet point immediately above will be subject to
a flat 30% tax on the gain derived from the merger, which may be offset by U.S.
source capital losses, even though the individual is not considered a resident
of the United States. If a non-U.S. holder that is a foreign
corporation falls under the first bullet point immediately above, it will be
subject to tax on its net gain in the same manner as if it were a United States
person as defined under the Code and, in addition, may be subject to the branch
profits tax equal to 30% of its effectively connected earnings and profits or at
such lower rate as may be specified by an applicable income tax
treaty.
We
believe we are not, have not been and do not anticipate becoming a “United
States real property holding corporation” for U.S. federal income tax
purposes.
Information
reporting and, depending on the circumstances, backup withholding will apply to
the cash received in the merger, unless the beneficial owner certifies under
penalty of perjury that it is a non-U.S. holder (and the payor does not have
actual knowledge or reason to know that the beneficial owner is a United States
person as defined under the Code) or such owner otherwise establishes an
exemption. Backup withholding is not an additional tax and any
amounts withheld under the backup withholding rules may be refunded or credited
against a non-U.S. holder’s U.S. federal income tax liability, if any, provided
that such non-U.S. holder furnishes the required information to the Internal
Revenue Service in a timely manner.
Source
of Funds; Capital
Roma’s
obligation to complete the merger is not conditioned upon Roma obtaining
financing. We anticipate that approximately $14.7 million will be
required to pay the aggregate merger consideration to our
stockholders. Roma has informed us that it expects to fund the cash
requirements for the merger from available cash. Roma had tangible
common equity of approximately $215.0 million at December 31, 2009,
which was approximately 15.75% of its total assets. This ranks it
very high when compared to other bank and thrift institutions of its size both
nationally and in its region. Its tangible common equity should be
more than adequate to support the merger and to permit Roma to pay the merger
consideration.
Regulatory
Approvals
Roma and
Sterling have agreed to use reasonable best efforts to obtain the regulatory
approvals required to complete the merger.
Office of Thrift
Supervision.
The merger is subject to the approval of the
Office of the Thrift Supervision under the Home Owners’ Loan Act of 1933, as
amended, and the related Office of Thrift Supervision regulations. A
savings and loan holding company is prohibited under the Home Owners’ Loan Act
from acquiring, directly or indirectly, another bank holding company or a bank
without the prior written approval of the Office of Thrift
Supervision. In evaluating applications by holding companies to
acquire banks, the Office of Thrift Supervision must consider the financial and
managerial resources and future prospects of the holding company and institution
involved, the convenience and needs of the community and competitive
factors. The Office of Thrift Supervision may not approve any
proposed acquisition if it will result in a monopoly or otherwise be
anti-competitive. The Community Reinvestment Act of 1977, as amended,
requires that the Office of Thrift Supervision, in deciding whether to approve
the merger, assess the record of performance of Roma Bank in meeting the credit
needs of the communities it serves, including low and moderate income
neighborhoods. As part of the review process under the Community
Reinvestment Act, it is not unusual for the Office of Thrift Supervision to
receive protests and other adverse comments from community groups and
others. Roma Bank, Roma’s primary depository institution subsidiary,
currently maintains a Community Reinvestment Act rating of “satisfactory” from
its primary regulator and Sterling Bank, Sterling’s primary depository
institution subsidiary, currently maintains a Community Reinvestment Act rating
of “satisfactory” from its primary regulator.
The
merger agreement also contemplates that as soon as practicable following the
effective time of the merger, Sterling’s wholly-owned banking subsidiary,
Sterling Bank, will merge with and into Roma’s wholly-owned depository
institution, Roma Bank, which is referred to as the bank merger. The
bank merger is not a condition to the merger. The bank merger is
subject to the approval of the Office of Thrift Supervision under the Bank
Merger Act.
The
regulations of the Office of Thrift Supervision require publication of notice
of, and an opportunity for public comment with respect to, the foregoing
applications and authorize the Office of Thrift Supervision to conduct a meeting
if the Office of Thrift Supervision finds that written submissions are
insufficient to address facts or issues raised in an application, or otherwise
determines that a meeting will benefit the Office of Thrift Supervision’s
decision-making process in connection with the application. Any such
meeting or comments provided by third parties could prolong the period during
which the foregoing applications are subject to review by the Office of Thrift
Supervision.
Roma has
filed its applications and related notices seeking the requisite Office of
Thrift Supervision approvals. Roma and Sterling cannot be certain
that Office of Thrift Supervision approvals will be granted and, if granted, of
the date of these approvals or as to what conditions, if any, may be imposed in
connection with the grant of these approvals. Roma has the right to
terminate the merger agreement if the Office of Thrift Supervision imposes
conditions to its approval that are, in the good faith judgment of Roma,
materially adverse to Roma or any Roma subsidiary.
Antitrust Laws.
At
any time before the merger and the bank merger are completed, the Antitrust
Division of the United States Department of Justice or the United States Federal
Trade Commission could take action under the antitrust laws as either deems
necessary or desirable in the public interest, including seeking to enjoin the
merger or the bank merger or seeking divestiture of assets of Roma or Sterling
or their respective subsidiaries. Private parties also may seek to
take legal action under the antitrust laws under some
circumstances. Based upon a review of available information relating
to the businesses in which the companies are engaged, Roma and Sterling believe
that the completion of the merger and the bank merger will not violate U.S.
antitrust laws and will not require divestiture of any
assets. However, Roma and Sterling can give no assurance that a
challenge to the merger on antitrust grounds will not be made, or, if such a
challenge is made, that Roma and Sterling will prevail.
Except as
noted above and the filing of a certificate of merger in New Jersey at or before
the effective date of the merger, we are not aware of any other significant
governmental approvals that are required for completion of the merger or the
bank merger. If any other approval or action is required, it is
presently contemplated that Roma and Sterling would seek to obtain such
approval. There can be no assurance that any other approvals, if
required, will be obtained.
The
approval of any application merely implies the satisfaction of regulatory
criteria for approval, which do not include review of the merger from the
standpoint of the adequacy of the consideration to be received by Sterling
stockholders. Further, regulatory approvals do not constitute an
endorsement or recommendation of the merger.
THE
MERGER AGREEMENT
The
following is a summary of certain material provisions of the merger agreement, a
copy of which is attached to this proxy statement as Annex A, and which we
incorporate by reference into this document. This summary does not
purport to be complete and may not contain all of the information about the
merger agreement that is important to you. We encourage you to read
carefully the merger agreement in its entirety.
The
merger agreement contains representations and warranties made by and to the
parties to the merger agreement. The assertions embodied in those
representations and warranties were made for purposes of the merger agreement
and are subject to qualifications and limitations agreed to by the respective
parties in connection with negotiating the terms of the merger
agreement. In addition, certain representations and warranties were
made as of a specified date, may be qualified by certain additional disclosure
in disclosure schedules, may be subject to a contractual standard of materiality
different from what might be viewed as material to stockholders, or may have
been used for the purpose of allocating risk between the respective parties
rather than establishing matters as facts. For the foregoing reasons,
you should not rely on the representations and warranties as statements of
factual information at the time they were made or otherwise. Roma and
Sterling have agreed to update the schedules to the merger agreement through the
closing date to reflect any matter arising after the date of the merger
agreement to correct any information in the schedules that would otherwise be
materially inaccurate.
Structure
Subject
to the terms and conditions of the merger agreement, and in accordance with New
Jersey law, at the completion of the merger, Merger Sub, a New Jersey
corporation that is a direct and wholly owned subsidiary of Roma, will merge
with and into Sterling. Sterling will be the surviving company in the
merger and will continue to exist after the merger as a wholly owned subsidiary
of Roma. All of Sterling’s and Merger Sub’s properties, assets,
rights, privileges, immunities, powers and franchises, and all of their debts,
liabilities and duties, will become those of the surviving
corporation. As soon as practicable following completion of the
merger, Sterling’s wholly owned depository institution, Sterling Bank, will
merge with and into Roma’s wholly owned depository institution, Roma Bank, and
the separate corporate existence of Sterling Bank will terminate.
The
merger agreement provides that the parties may change the structure of the
merger. However, no such change may change the amount or kind of
merger consideration to be delivered to Sterling stockholders, adversely affect
the anticipated tax consequences to Sterling stockholders in the merger, or
materially impede or delay the completion of the merger.
Effective
Time and Closing
The
merger will be completed and become effective when Sterling and Merger Sub file
a certificate of merger with the Secretary of State of the state of New
Jersey. However, the parties to the merger agreement may agree to a
later time for completion of the merger and specify that time in the certificate
of merger in accordance with New Jersey law. Each of Sterling and
Roma has the right to terminate the merger agreement if the merger is not
effective on or before December 31, 2010.
Treatment
of Stock and Options
Common
Stock
At the
effective time of the merger or immediately thereafter, each share of Sterling
common stock issued and outstanding immediately prior to the effective time of
the merger will automatically be cancelled, will cease to exist, and will be
converted into the right to receive $2.52 in cash, other than shares of Sterling
common stock owned by Roma, any subsidiary of Roma (including Merger Sub),
Sterling or any subsidiary of Sterling immediately prior to the effective time
of the merger (other than shares held in a fiduciary capacity or shares held to
satisfy previous debts), which shares will be cancelled without conversion or
consideration.
The cash
consideration to be paid for each share of Sterling common stock is subject to
adjustment downward in the event that Sterling’s tangible common equity at March
31, 2010 is less than $13,400,000. In that event, the total
consideration to be paid by Roma in the merger would be reduced,
dollar-for-dollar, by the amount that Sterling’s tangible common equity at March
31, 2010 is less than $13,400,000. The adjustment to the amount per
share received by Sterling’s stockholders would be equal to the reduction in the
total consideration to be paid by Roma, divided by the number of shares of
Sterling common stock outstanding at the effective date of the
merger. At March 31, 2010, Sterling’s tangible common equity was
approximately $14,200,000. Accordingly, Sterling’s management
considers any required adjustment to be unlikely.
After the
effective time of the merger, each of our outstanding stock certificates
representing shares of common stock converted in the merger will represent only
the right to receive the merger consideration without any interest and less any
required withholding taxes. The merger consideration paid upon
surrender of each certificate will be paid in full satisfaction of all rights
pertaining to the shares of our common stock represented by that
certificate.
Stock
Options
At the
effective time of the merger, each outstanding option to acquire Sterling common
stock, whether or not vested, will be cancelled without consideration because
the exercise price per share of common stock subject to each outstanding option
exceeds $2.52 per share.
Exchange
and Payment Procedures
At or
prior to the effective time of the merger, Roma will deposit an amount of cash
sufficient to pay the merger consideration to each holder of shares of Sterling
common stock with an exchange agent reasonably acceptable to
Sterling. As promptly as practical after the effective time, the
exchange agent will mail a letter of transmittal and instructions to you and the
other Sterling stockholders. The letter of transmittal and
instructions will tell you how to surrender Sterling common stock certificates
in exchange for the merger consideration.
You
should not return Sterling stock certificates with the enclosed proxy card, and
you should not forward Sterling stock certificates to the exchange agent without
a letter of transmittal.
You will
not be entitled to receive the merger consideration until you surrender your
Sterling stock certificate or certificates to the exchange agent, together with
a duly completed and executed letter of transmittal. The merger
consideration may be paid to a person other than the person in whose name the
corresponding certificate is registered if the certificate is properly endorsed
or is otherwise in the proper form for transfer. In addition, the
person who surrenders the certificate must either pay any transfer or other
applicable taxes or establish to the satisfaction of the surviving corporation
that those taxes have been paid or are not applicable.
No
interest will be paid or will accrue on the cash payable upon surrender of the
certificates. Roma or the exchange agent will be entitled to deduct
and withhold, and pay to the appropriate taxing authorities, any applicable
taxes from the merger consideration. Any sum which is withheld and
paid to a taxing authority by the exchange agent will be deemed to have been
paid to the person with regard to whom it is withheld.
None of
the exchange agent, Sterling or Roma will be liable to any person for any cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. Any portion of the merger consideration
deposited with the exchange agent that remains undistributed to the holders of
certificates evidencing shares of our common stock for twelve months after the
effective time of the merger, will be delivered, upon demand, to
Roma. Holders of certificates who have not surrendered their
certificates prior to the delivery of those funds to Roma may only look to Roma
for the payment of the merger consideration. Any portion of the
merger consideration that remains unclaimed may escheat to or become property of
a governmental authority.
If you
have lost a certificate, or if it has been stolen or destroyed, then before you
will be entitled to receive the merger consideration, you will have to comply
with the replacement requirements, including, if required by Roma, the posting
of a bond in a customary amount sufficient to protect Roma against any claim
that may be made against it with respect to that certificate.
Representations
and Warranties
You
should be aware that the representations and warranties described below, which
were made by Sterling to Roma in the merger agreement, may be subject to
important limitations and qualifications agreed to by Roma, may not be accurate
as of the date they were made and do not purport to be accurate as of the date
of this proxy statement. See “Where You Can Find Additional
Information” on page 50.
We make
various representations and warranties in the merger agreement that are subject,
in some cases, to specified exceptions and qualifications. Our
representations and warranties relate to, among other things:
·
|
our
and our subsidiaries’ proper organization, good standing and qualification
to do business;
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·
|
our
capitalization, including in particular the number of shares of our common
stock and outstanding stock
options;
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·
|
our
financial statements and bank regulatory
filings;
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·
|
our
corporate power and authority to enter into the merger agreement and to
complete the transactions contemplated by the merger
agreement;
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·
|
the
absence of violations of or conflicts with our and our subsidiaries’
governing documents, applicable law or certain agreements as a result of
entering into the merger agreement and completing the
merger;
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·
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the
required consents and approvals of governmental entities in connection
with the transactions contemplated by the merger
agreement;
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·
|
our
SEC filings since December 31, 2007, including the financial
statements contained in those
filings;
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·
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the
absence of undisclosed liabilities;
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·
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the
absence of undisclosed broker’s
fees;
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·
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the
absence of a “material adverse effect” and certain other changes or events
related to us or our subsidiaries since December 31,
2008;
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·
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legal
proceedings and governmental
orders;
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·
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taxes,
environmental matters and material
contracts;
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·
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employment
and labor matters affecting us or our subsidiaries, including matters
relating to our and our subsidiaries’ employee benefit
plans;
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·
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compliance
with applicable legal requirements;
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·
|
absence
of agreements with regulatory agencies restricting the conduct of our
business;
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·
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accuracy
of this proxy statement;
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·
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our
real property, both owned and
leased;
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·
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our
and our subsidiaries’ insurance
policies;
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·
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the
receipt by us of a fairness opinion from
Griffin;
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·
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our
intellectual property;
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·
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our
deposits, our loan portfolio and related allowance for loan losses, and
our investment portfolio;
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·
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transactions
with affiliates;
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·
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the
inapplicability of anti-takeover statutes to the
merger;
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·
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interest
rate risk management instruments;
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·
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compliance
with generally accepted accounting principles and maintenance of internal
control of accounting and disclosure
matters;
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·
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compliance
with the Community Reinvestment Act;
and
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·
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the
absence of trust and other fiduciary powers and
operations.
|
Certain
of the representations and warranties made by Sterling are qualified as to
“materiality” or “material adverse effect.” For purposes of the merger
agreement, “material adverse effect” means with respect to Sterling, a material
adverse effect on the financial position, business or results of
operations, financial performance or prospects of Sterling and its subsidiaries
taken as a whole, or a material adverse effect on Sterling’s ability to complete
the merger. In determining whether a material adverse effect has
occurred, however, there will be excluded any effect on Sterling the cause of
which is:
·
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changes
in laws, rules or regulations of general applicability or published
interpretations by courts or governmental authorities or in generally
accepted accounting principles, which are applicable to financial
institutions or their holding companies
generally;
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·
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any
action or omission of Sterling or any of its subsidiaries taken with the
prior written consent of Roma;
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·
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changes
in the economy or financial markets in general, including changes in
market interest rates generally;
and
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·
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reasonable
expenses incurred in connection with the
merger.
|
The
merger agreement also contains various representations and warranties made by
Roma and its subsidiaries that are subject, in some cases, to specified
exceptions and qualifications. The representations and warranties
relate to, among other things:
·
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their
organization, valid existence and good
standing;
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·
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their
corporate or other power and authority to enter into the merger agreement
and to complete the transactions contemplated by the merger
agreement;
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·
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the
absence of any violation of or conflict with their governing documents or
applicable law as a result of entering into the merger agreement and
completing the merger;
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·
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the
required consents and approvals of governmental entities in connection
with the transactions contemplated by the merger
agreement;
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·
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the
accuracy of information supplied for inclusion in this proxy statement;
and
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·
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the
availability of funds to complete the
merger.
|
The
representations and warranties of each of the parties to the merger agreement
will expire upon the effective time of the merger.
Conduct
of Business Pending the Merger
Under the
merger agreement, we have agreed that, subject to certain exceptions or unless
Roma gives its prior written consent, between March 17, 2010, and the
completion of the merger:
·
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we
and our subsidiaries will conduct business in the ordinary course of
business consistent with past practice and prudent banking
principles;
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·
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except
as may be required by law, take no action that would adversely affect or
delay the ability to obtain approval of the merger from any bank
regulatory authority;
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·
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we
will use our best efforts to preserve intact our business organization,
employees, good will with customers, and advantageous business
relationships and retain our officers and key employees;
and
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·
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take
no action that results in or would reasonably be expected to result in a
material adverse effect on
Sterling.
|
We have
also agreed that during the same time period, and again subject to certain
exceptions or unless Roma gives its prior written consent, we and our
subsidiaries will not:
·
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adjust,
split, combine or reclassify any of our capital stock or grant any right
to acquire shares of our capital
stock;
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·
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repurchase,
redeem or otherwise acquire any of our capital
stock;
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·
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make,
declare or pay any dividends or other distributions on any shares of our
capital stock;
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·
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issue
shares of our capital stock except for shares of Sterling common stock
issued pursuant to the exercise of Sterling stock options in existence as
of the date of the merger
agreement;
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·
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enter
into any new material line of
business;
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·
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with
certain exceptions, sell, transfer, mortgage, encumber or otherwise
dispose of any material assets or
properties;
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·
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with
one exception, sell or transfer any real
property;
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·
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subject
to specified exceptions, pay any bonus or increase compensation or fringe
benefits; establish, amend, adopt, or enter into any employee, consulting
or other agreement or any benefit or compensation plan or agreement or
benefit plan; or grant any severance or termination
pay;
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·
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make
capital expenditures in excess of $5,000 in the aggregate, except as
necessary to maintain existing assets in good
repair;
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·
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subject
to specified exceptions, enter into or extend any agreement requiring
payments by Sterling in excess of
$5,000;
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·
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originate,
purchase, extend or grant any loan with a principal amount in excess or
$400,000 or any construction loan, automobile loan or any manufactured
housing loan in any amount;
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·
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file
any application or enter into any contract with respect to any Sterling
Bank branch or any interest in real property, except in connection with
foreclosure proceedings;
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·
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form
any new subsidiary;
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·
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increase
or decrease the rate of interest paid on time deposits or certificates of
deposit, except in a manner and pursuant to policies consistent with past
practices;
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·
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incur
any indebtedness, or guarantee or endorse or otherwise become responsible
for the obligations of another person, except for borrowings incurred in
the ordinary course of business with maturities of six months or
less;
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·
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amend
our certificate of incorporation or
bylaws;
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·
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change
our policies with regard to the extension of credit, the establishment of
reserves for loan losses or the charge off of loans, investments,
asset/liability management, or other material banking
policies;
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·
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subject
to specified exceptions, purchase or sell any investment
securities;
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·
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commence
any cause or action or proceeding other than in accordance with past
practice or settle any claim, demand, or governmental or other examination
or investigation other proceeding against Sterling or any subsidiary for
material money damages or restrictions upon our
operations;
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·
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waive,
or release any material right, or materially modify or amend any contract
other than in the ordinary course of business and consistent with past
practices;
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·
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enter
into derivative contracts or similar
agreement;
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·
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foreclose
on or accept 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;
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·
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take
any action which would reasonably be expected to result in the conditions
to the merger not being satisfied or in a required regulatory approval not
being obtained (or being materially delayed);
or
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·
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agree
to, or make any commitment to, take any of the foregoing
actions.
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Stockholders’
Meeting and Duty to Recommend
We have
agreed to call a meeting of our stockholders as promptly as reasonably
practicable for the purpose of obtaining stockholder adoption of the merger
agreement and to take all lawful action to solicit the adoption of the merger
agreement by our stockholders. Our board of directors has agreed to
recommend the adoption of the merger agreement by our stockholders.
No
Solicitation of Transactions
We have
agreed that we and our subsidiaries will not and will not authorize our
respective directors, officers, employees and representatives to, directly or
indirectly:
·
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initiate,
solicit, encourage or take any action designed to or that could be
reasonably expected to facilitate any inquiries or the making of any
acquisition proposal;
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·
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engage
in any negotiations or discussions concerning, or provide confidential
information or data to, any person relating to an acquisition proposal or
otherwise cooperate with an acquisition
proposal;
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·
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approve
or recommend, or propose publicly to approve or recommend, any acquisition
proposal; or
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·
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approve
or recommend, or propose to approve or recommend, or execute or enter
into, any letter of intent or other agreement related to any acquisition
proposal or publicly propose or agree to do any of the
foregoing.
|
An
“acquisition proposal” is any proposal or offer to effect a merger,
reorganization, share exchange, business combination or similar transaction or
any purchase or sale of substantially all of the assets of Sterling and its
subsidiaries, or that, if completed, would result in any person or the person’s
stockholders beneficially owning 15% or more of the total voting power of
Sterling, or a tender or exchange offer to acquire securities representing 15%
or more of the total voting power of Sterling.
In spite
of the foregoing, prior to adoption of the merger agreement by our stockholders,
we or our board of directors are permitted, in response to an unsolicited
acquisition proposal, to provide confidential information and data or to engage
in discussions or negotiations with a third party in connection with the
unsolicited bona fide acquisition proposal, and approve or recommend any
acquisition proposal, if our board of directors determines in its good faith
judgment, after consultation with its legal counsel and financial advisor, that
the applicable acquisition proposal constitutes a “superior
proposal.”
For
purposes of the merger agreement, “superior proposal” means any bona fide
written acquisition proposal which our board of directors concludes in good
faith, after consultation with its financial advisors and legal advisors, taking
into account all legal, financial, regulatory and other aspects of the proposal
and the person making the proposal (including any termination fees, expense
reimbursement provisions, the conditions to completion and likelihood of
completion), is more favorable to the stockholders of Sterling, from a financial
point of view, than the merger and is reasonably capable of being
completed.
Furthermore,
if, at any time prior to the adoption of the merger agreement by our
stockholders, our board of directors determines in its good faith judgment,
after consultation with its financial advisors and outside legal counsel, that
an acquisition proposal that did not result from a material breach of the
provisions described in the previous paragraphs is a superior proposal, we may
terminate the merger agreement, but only if:
·
|
we
give Roma at least 72 hours prior written notice of our intention to
accept the superior proposal and the material terms and conditions of the
superior proposal;
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·
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during
this 72-hour period, we negotiate with Roma to determine if improvements
can be made to the merger agreement such that the competing acquisition
proposal is no longer a superior proposal;
and
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·
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in
case we terminate the merger agreement, we concurrently pay to Roma the
$745,000 termination fee referred to under “- Termination” and
“- Termination Fee” below.
|
We have
also agreed:
·
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to
terminate immediately any discussions or negotiations regarding
acquisition proposals that were being conducted before the merger
agreement was signed;
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·
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to
notify Roma promptly of our receipt of an acquisition proposal, including
the material terms of the acquisition proposal;
and
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·
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to
keep Roma reasonably apprised of any material developments related to any
acquisition proposal and of the status and material terms and conditions
of the proposal.
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Employee
Benefits
Roma has
agreed that, with respect to the employees of Sterling and its subsidiaries at
the effective time of the merger, it will, among other things:
·
|
give
those employees full credit for purposes of eligibility and benefit
entitlements (but not benefits accrued under defined benefit plans) under
any employee benefit plans or arrangements maintained by Roma, for such
employee’s service with Sterling or any subsidiary of Sterling to the same
extent recognized by Sterling and its subsidiaries, except that no service
will be recognized to the extent such recognition would result in the
duplication of benefits;
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·
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merge
the Sterling 401(k) plan into the Roma 401(k) plan as soon as
administratively feasible after the merger and grant Sterling employees
with credit for all prior service with Sterling for purposes of
eligibility to participate and receive employer contributions under the
Roma 401(k) plan and to enter any Roma 401(k) plan in accordance with its
terms as soon as administratively feasible after the
merger;
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·
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continue
Sterling’s health and welfare benefits plans, insurance and other policies
until such time as Roma elects to take alternative action, and if Roma
elects to terminate any of such plans, Sterling employees will become
eligible to participate in the medical, dental, health or disability plan
maintained by Roma or Roma Bank;
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·
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waive
all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable
to those employees (to the extent the employee has satisfied any similar
limitation or requirement under the Sterling plans) under any employee
benefit plan maintained by Roma that is a welfare benefit plan that those
employees may be eligible to participate in after the effective
time;
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·
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provide
those employees, except those officers with employment or change in
control agreements, whose employment is terminated (excluding termination
for cause as determined by the employer) within six months after the
merger with two weeks of severance pay for each year of service (subject
to a maximum of 26 weeks of severance pay) with Sterling;
and
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·
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permit
Sterling employees to participate in the Roma Employee Stock Ownership
Plan, provided that Sterling employees shall not receive credit for prior
service with Sterling for purposes of eligibility to participate and
vesting service, and Sterling employees shall be eligible to participate
in Roma’s defined benefit pension plan, provided that Sterling employees
shall not receive credit for prior service with Sterling for purposes of
eligibility to participate and vesting service, or for purposes of benefit
accrual purposes.
|
Additional
Agreements
Bank
Merger
It is
expected that promptly following the effective time Sterling Bank will be merged
with and into Roma Bank.
Roma
Board
Following
completion of the merger, Roma and Roma Bank will each appoint one member of
Sterling’s board of directors to the board of directors of Roma. Roma
may select such Sterling director in its sole discretion.
Agreement
to Use Reasonable Best Efforts
Sterling
and Roma have agreed to use their reasonable best efforts in good faith to take,
or cause to be taken, all actions and to do, or cause to be done, all actions
necessary, proper or advisable to comply with all legal requirements with
respect to the merger, to complete the merger and the other transactions
contemplated by the merger agreement and to obtain any governmental and
third-party approvals required in connection with the merger.
Conditions
to the Merger
The
obligations of the parties to complete the merger are subject to the
satisfaction or waiver of the following mutual conditions:
·
|
Stockholder
Approval.
The adoption of the merger agreement by our
stockholders.
|
·
|
No Law or
Orders.
No order, injunction or decree having been
issued by any governmental entity or other legal restraint preventing
completion of the merger and no statute, rule, regulation, order,
injunction or decree having been entered by any governmental entity which
prohibits or makes illegal the completion of the
merger.
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·
|
Litigation.
No
litigation is pending or threatened that challenges the merger, seeks
damages in connection with the merger, or seeks to restrain or invalidate
the merger that, in the reasonable judgment of either Roma or Sterling,
based on the advice of counsel, would have a material adverse effect with
respect to Roma or Sterling.
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·
|
Regulatory
Approvals.
All regulatory approvals required for the
completion of the merger having been obtained and remaining in full force
and effect and statutory waiting periods having expired. See
“The Merger — Regulatory Approvals”
above.
|
The
obligations of Roma and Merger Sub, on the one hand, and us, on the other hand,
to complete the merger are subject to the satisfaction or waiver of additional
conditions, including the following:
·
|
Representations and
Warranties.
The accuracy of the other party’s
representations and warranties, in each case, subject to the materiality
standard contained in the merger
agreement.
|
·
|
Compliance with
Covenants.
The performance, in all material respects, by
the other party of its covenants and agreements in the merger
agreement.
|
The
obligation of Roma to complete the merger is subject to the satisfaction or
waiver of additional conditions, including the following:
·
|
Consents of Third
Parties
. Sterling shall have obtained the consent or
approval of each third party under any agreement to which Sterling is a
party unless failure to obtain such consent or approval would not have a
material adverse effect on the surviving
corporation;
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·
|
Cancellation of Stock
Options
. Sterling’s board of directors shall have taken
all action necessary to cancel or terminate all of the outstanding options
to purchase capital stock of
Sterling;
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·
|
Delivery of Audited Financial
Statements
. Sterling shall have delivered to Roma the
audited financial statements of Sterling for the year ended December 31,
2009, together with an unqualified opinion of Sterling’s independent
certified public accountant;
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·
|
Environmental Remediation
Expense
. The estimated cost to remediate any
environmental problems on real estate owned by Sterling does not exceed
$500,000;
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·
|
No Conditions to Regulatory
Approval
. Any approval obtained from any bank regulatory
authority that is necessary to complete the merger does not impose, in the
good faith judgment of Roma, any material adverse requirement on Roma or
any Roma subsidiary;
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·
|
Minimum
Equity.
Sterling’s tangible common equity capital as of
the closing date, taking into account all transaction costs and accounting
adjustments (excluding adjustments pursuant to Statement of Financial
Accounting Standards No. 141R) that will be recorded by Sterling as of the
Closing Date, shall be not less than $9,900,000;
and
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·
|
Nonperforming
Assets.
Sterling’s nonperforming assets, as defined in
the merger agreement, shall not exceed $30,000,000 for the period from
January 1, 2010 through the closing
date.
|
Termination
The
merger agreement may be terminated and the merger may be abandoned at any time
prior to the effective time of the merger, whether before or after stockholder
approval has been obtained, as follows:
·
|
by
mutual written consent of the
parties;
|
·
|
by
either Roma or Sterling, if:
|
·
|
the
merger is not completed by December 31, 2010, however, neither Roma
nor Sterling may terminate the merger agreement for this reason if its
failure to perform its covenants in the merger agreement or has resulted
in the failure of the merger to occur on or before that
date;
|
·
|
there
is a breach by the non-terminating party of any of its representations or
warranties that cannot be cannot or has not been cured within 30 days
following written notice of such breach and which breach, when taken
together with all other breaches, would have a material adverse effect (as
defined in the merger agreement) on the non-terminating party (provided
that the terminating party is not in breach of any of its representations
and warranties to the same extent);
|
·
|
there
is a breach by the non-terminating party of any of its covenants or
agreements that cannot be cannot or has not been cured within 30 days
following written notice of such breach (provided that the terminating
party is not in breach of any of its representations and warranties to the
same extent);
|
·
|
any
governmental entity which must grant a requisite regulatory approval
denies approval of the merger and the denial has become final and
non-appealable;
|
·
|
our
stockholders do not adopt the merger agreement at the special meeting or
any postponement or adjournment of the special
meeting;
|
·
|
if
the terminating party determines that any of the conditions to that
party’s obligation to consummate the merger cannot be satisfied or
fulfilled by the required date;
|
·
|
any
governmental entity has issued a final non-appealable order enjoining or
otherwise prohibiting the merger; however, neither Roma nor Sterling may
terminate the merger agreement for this reason if its failure to perform
its covenants in the merger agreement has resulted in the order enjoying
or prohibiting the merger; or
|
·
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if
the terminating party is not in breach of the merger agreement and there
is a material breach by the non-terminating party of any of its
representations, warranties, covenants or agreements in the merger
agreement, such that the closing conditions would not be satisfied and
which breaches cannot be cured or has not been cured prior to 30 days
following written notice, in the case of all other breaches of
representations or covenants, and, in the case of a breach of a
representation or warranty, such breach or all such breaches taken
together would have a material adverse effect (as defined in the merger
agreement) upon the non-terminating
party;
|
By Roma,
if
·
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certain
conditions are not satisfied, including (i) our nonperforming assets (as
defined in the merger agreement) for the period from January 1, 2010
to the closing date exceed $30,000,000, (ii) our tangible common equity
(as determined pursuant to the merger agreement) is less than $9,900,000
on the closing date, or (iii) the estimated cost to remediate
any environmental problems on real estate owned by Sterling exceeds
$500,000;
|
·
|
our
board of directors has failed to recommend the merger to our stockholders
or withdrawn, modified or changed in a manner adverse to Roma its
recommendation of the merger;
|
·
|
if
we have failed to and hold a meeting of Sterling stockholders to vote on
the merger by August 31, 2010;
or
|
·
|
any
approval required to be obtained from any bank regulatory authority
imposes, in the good faith judgment of Roma, any material adverse
requirement on Roma or any Roma
subsidiary;
|
By
Sterling, if
·
|
we
receive a superior proposal, but only after we have complied with the
conditions described under the caption “No Solicitation of Transactions”
above.
|
Effect
of Termination
In the
event the merger agreement is terminated as described above, the merger
agreement will become void and neither Roma nor Sterling will have any liability
under the merger agreement, except that:
·
|
both
Roma and Sterling will remain liable for any willful breach of the merger
agreement; and
|
·
|
designated
provisions of the merger agreement, including the payment of fees and
expenses, the confidential treatment of information, and, if applicable,
the termination fee described below, will survive the
termination.
|
Termination
Fee
The
merger agreement provides that we will be required to pay a termination fee of
$745,000 to Roma if:
·
|
The
merger agreement is terminated by Roma due to a failure of Sterling to
hold the special meeting by August 31, 2010 or if the Sterling board
fails to recommend that Sterling stockholders vote in favor of the merger
or modifies, withdraws or changes its recommendation in any manner adverse
to Roma;
|
·
|
if
Sterling terminates the merger agreement after it has received a superior
proposal and Sterling has given Roma 72 hours prior notice, if Sterling or
any of its subsidiaries enters into a definitive agreement with respect
to, or completes, a business combination;
or
|
·
|
if
Sterling or Roma terminates the merger agreement because the merger is not
approved by the stockholders of Sterling at the special meeting and within
18 months following any such termination, Sterling enters into a
definitive agreement with respect to, or completes a business
combination.
|
A
“business combination” is any merger, reorganization, share exchange, business
combination or similar transaction of any company with Sterling, or any
purchase, lease or other acquisition of all or substantially all of the assets
of Sterling, the acquisition by any person or group of securities representing
15% or more of the voting power of Sterling, or a tender or exchange offer to
acquire 15% or more of the voting power of Sterling.
Amendment
, Waiver and Extension of the Merger
Agreement
Amendment
Roma and
Sterling may amend the merger agreement by action taken or authorized by their
respective boards of directors. However, after the adoption of the
merger agreement by the Sterling stockholders, no amendment may be made that
requires the approval of the stockholders of Sterling unless the required
approval is obtained.
Extension;
Waiver
At any
time prior to the completion of the merger, Roma and Sterling, to the extent
legally allowed, may:
·
|
extend
the time for performance of any of the obligations or other acts of the
other party under the merger
agreement;
|
·
|
waive
any inaccuracies in the other party’s representations and warranties
contained in the merger agreement;
and
|
·
|
waive
the other party’s compliance with any of the agreements or conditions
contained in the merger agreement.
|
Fees
and Expenses
In
general, except with respect to the termination fee described under “—
Termination Fee,” all costs and expenses incurred in connection with the merger
agreement will be paid by the party incurring the expense.
APPRAISAL
RIGHTS
Under
Section 14A:11-1 of the New Jersey Business Corporation Act, stockholders who
receive solely cash in exchange for their shares in connection with a merger
have no right to elect to receive the appraised value of their shares instead of
the cash consideration provided in the merger agreement. Accordingly,
you will have no appraisal rights in connection with the merger.
MARKET
PRICE AND
DIVIDENDS OF THE STERLING COMMON STOCK
Our
common stock is quoted on the NASDAQ Capital Market under the symbol
“STBK”. The following table sets forth the high and low reported
sales prices per share of our common stock on the NASDAQ Capital Market and the
quarterly cash dividends declared per share of Sterling common stock for the
periods indicated.
Market
Information
|
|
|
|
|
|
Price
Range of
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
Year Ended December 31, 2008
|
|
|
|
|
|
|
|
|
|
1st
Quarter
|
|
$
|
7.25
|
|
|
$
|
4.75
|
|
|
$
|
0
|
|
2nd
Quarter
|
|
|
5.54
|
|
|
|
2.90
|
|
|
|
0
|
|
3rd
Quarter
|
|
|
5.50
|
|
|
|
2.49
|
|
|
|
0
|
|
4th
Quarter
|
|
|
3.50
|
|
|
|
.88
|
|
|
|
0
|
|
Fiscal
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
1st
Quarter
|
|
$
|
1.63
|
|
|
$
|
.50
|
|
|
$
|
0
|
|
2nd
Quarter
|
|
|
3.39
|
|
|
|
.70
|
|
|
|
0
|
|
3rd
Quarter
|
|
|
1.80
|
|
|
|
1.08
|
|
|
|
0
|
|
4th
Quarter
|
|
|
1.52
|
|
|
|
.42
|
|
|
|
0
|
|
Fiscal
Year Ending December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
1st
Quarter
|
|
$
|
2.52
|
|
|
$
|
.46
|
|
|
$
|
0
|
|
2nd
Quarter (through April 23, 2010)
|
|
|
2.40
|
|
|
|
2.31
|
|
|
|
0
|
|
The
closing sale price of our common stock on the NASDAQ Capital Market on
March 17, 2010, which was the last trading day prior to published news
reports regarding the possible acquisition of Sterling, was $1.53 per
share. On April 23, 2010, the last trading day before the date
of this proxy statement, the closing price for Sterling common stock on the
NASDAQ Capital Market was $2.39. You are encouraged to obtain current
market quotations for Sterling common stock in connection with voting your
shares.
As of
April 23, 2010, the last trading day before the date of this proxy
statement, there were 492 record holders of Sterling common stock.
SECURITY
OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial
Ownership of Common Stock
The
following table sets forth information as to the common stock beneficially owned
as of April 23, 2010 by (i) each of our directors, (ii) our Chief
Executive Officer and the other five executive officers named below,
(iii) all of our directors and executive officers as a group and each
person or entity, including any “group” as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), who was known to us to be the beneficial owner of 5% or
more of our outstanding common stock.
Name
of Beneficial Owner or
Number
of Persons in Group
|
|
Amount
and Nature of Beneficial Ownership as of April 23,
2010(1)
|
|
|
Percent
of Common Stock(1)
|
|
|
|
|
|
|
|
|
Jeffrey
P. Orleans (2)
|
|
|
387,017
|
|
|
|
6.62
|
%
|
One
Greenwood Square
|
|
|
|
|
|
|
|
|
3333
Street Road
Bensalem,
PA 19020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wellington
Management
Company,
LLP (3)
|
|
|
308,843
|
|
|
|
5.29
|
%
|
75
State Street
|
|
|
|
|
|
|
|
|
Boston,
MA 02109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S.
David Brandt, Esq. (4)
|
|
|
27,846
|
|
|
|
*
|
|
Jeffrey
Dubrow (5)
|
|
|
22,132
|
|
|
|
*
|
|
A.
Theodore Eckenhoff (6)
|
|
|
84,361
|
|
|
|
1.44
|
%
|
R.
Scott Horner (7)
|
|
|
70,828
|
|
|
|
1.21
|
%
|
James
L. Kaltenbach, M.D. (8)
|
|
|
39,033
|
|
|
|
*
|
|
Robert
H. King (9)
|
|
|
132,049
|
|
|
|
2.26
|
%
|
G.
Edward Koenig (10)
|
|
|
21,102
|
|
|
|
*
|
|
John
J. Maley, Jr. CPA (11)
|
|
|
17,877
|
|
|
|
*
|
|
Ronald
P. Sandmeyer (12)
|
|
|
133,692
|
|
|
|
2.29
|
%
|
Jeffrey
P. Taylor (13)
|
|
|
126,361
|
|
|
|
2.16
|
%
|
James
W. Yoh, Ph.D (14)
|
|
|
11,645
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
Other
Senior Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dale
F. Braun (15)
|
|
|
28,506
|
|
|
|
*
|
|
John
Herninko (16)
|
|
|
33,673
|
|
|
|
*
|
|
Kimberly
A. Johnson (17)
|
|
|
29,654
|
|
|
|
*
|
|
Theresa
S. Valentino-Congdon (18)
|
|
|
30,733
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
All
directors and executive officers as a
group
(15 persons)
|
|
|
809,492
|
|
|
|
13.85
|
%
|
________________________________________
* Represents
less than 1% of the outstanding shares of Common Stock.
(1)
|
The
number and percentage of shares beneficially owned by the persons set
forth above is determined under rules under Section 13 of the
Exchange Act, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules,
an individual is considered to beneficially own any shares of common stock
if he or she directly or indirectly has or shares: (i) voting power,
which includes the power to vote or to direct the voting of the shares or
(ii) investment power, which includes the power to dispose or direct
the disposition of the shares. Unless otherwise indicated, an
individual has sole voting power and sole investment power with respect to
the indicated shares.
|
(2)
|
Based
solely on information provided to us by the named beneficial owner,
Jeffrey P. Orleans. Mr. Orleans owns 342,424
shares directly and has voting and investment power over, and 44,593
shares owned by Orleans Investment Land Associates, L.P. a limited
partnership of which Mr. Orleans owns 100% of the corporate general
partner. Mr. Orleans is the Chairman and Chief Executive
Officer of Orleans Homebuilders,
Inc.
|
(3)
|
Based
solely on a Schedule 13G, dated December 31, 2007, filed by
Wellington Management Company, LLP, a registered investment
adviser. Wellington Management has sole voting power with
respect to 224,685 shares and sole dispositive power with respect to
308,843 shares.
|
(4)
|
Includes
4,253 shares held by Mr. Brandt’s wife, 2,779 shares held by
Mr. Brandt in an Individual Retirement Account and an option to
purchase 3,509 shares.
|
(5)
|
Includes
810 shares held by Mr. Dubrow as custodian for his child, 1,528
shares held in an Individual Retirement Account and an option to purchase
3,509 shares.
|
(6)
|
Includes
7,450 shares held by Mr. Eckenhoff’s wife, 8,138 shares held in an
Individual Retirement Account, and an option to purchase 3,509
shares.
|
(7)
|
Includes
29,359 shares held jointly with Mr. Horner’s wife, 13,219 shares held
in an Individual Retirement Account and an option to purchase 28,250
shares.
|
(8)
|
Includes
34,810 shares held in an Individual Retirement Account, 714 shares held by
Dr. Kaltenbach’s wife, and an option to purchase 3,509
shares.
|
(9)
|
Includes
44,426 shares held jointly with Mr. King’s wife and an option to
purchase 87,373 shares.
|
(10)
|
Includes
13,216 shares held by Mr. Koenig’s wife and 2,857 shares held in an
Individual Retirement Account and an option to purchase 710
shares.
|
(11)
|
Includes
1,786 shares held jointly with Mr. Maley’s wife and an option to
purchase 710 shares.
|
(12)
|
Includes
32,632 shares held by Mr. Sandmeyer’s wife as custodian for their
grandchildren, 43,417 shares held jointly with his wife and an option to
purchase 3,509 shares.
|
(13)
|
Includes
51,634 shares held by Mr. Taylor’s wife, 363 shares held by
Mr. Taylor’s wife as custodian for their son, 11,637 shares held in
an Individual Retirement Account, and an option to purchase 3,509
shares.
|
(14)
|
Includes
an option to purchase 3,005 shares.
|
(15)
|
Includes
7,167 shares held jointly with Mr. Braun’s wife and an option to
purchase 21,339 shares.
|
(16)
|
Includes
4,047 shares held jointly with Mr. Herninko’s wife, 1,326 shares held
in an Individual Retirement Account and an option to purchase 28,300
shares.
|
(17)
|
Includes
8,415 shares held jointly with Ms. Johnson’s husband and an option to
purchase 21,339 shares.
|
(18)
|
Includes
740 shares held as custodian for Ms. Valentino-Congdon’s son and an
option to purchase 25,978 shares.
|
MULTIPLE
STOCKHOLDERS
SHARING ONE ADDRESS
In
accordance with Rule 14a-3(e)(1) under the Exchange Act, one proxy
statement will be delivered to two or more stockholders who share an address,
unless Sterling has received contrary instructions from one or more of the
stockholders. Sterling will deliver promptly upon written or oral
request a separate copy of the proxy statement to a stockholder at a shared
address to which a single copy of the proxy statement was
delivered. Requests for additional copies of the proxy statement, and
requests that in the future separate proxy statements be sent to stockholders
who share an address, should be directed to Sterling Banks, Inc., 3100 Route 38,
Mount Laurel, New Jersey 08054, Attention: Investor Relations,
telephone: (856) 273-5900. In addition, stockholders
who share a single address but receive multiple copies of the proxy statement
may request that in the future they receive a single copy by contacting Sterling
at the address and phone number set forth in the prior sentence.
SUBMISSION
OF
STOCKHOLDER PROPOSALS
If the
merger is not completed, you will continue to be entitled to attend and
participate in our stockholder meetings and we will hold a 2010 annual meeting
of stockholders, in which case stockholder proposals will be eligible for
consideration for inclusion in the proxy statement and form of proxy for our
2010 annual meeting of stockholders. In the event that we must hold
an annual meeting of stockholders, we will publicly announce and disclose the
date of such meeting and deadline for submission of stockholder proposals for
such meeting.
WHERE
YOU CAN FIND
ADDITIONAL INFORMATION
Sterling
files annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, proxy
statements or other information that we file with the SEC at the following
location of the SEC:
Public
Reference Room
100 F
Street, N.E.
Washington,
D.C. 20549
Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. You may also obtain copies of this information by mail from
the Public Reference Section of the SEC, 100 F Street, N.E., Washington,
D.C. 20549, at prescribed rates. Our SEC filings are also
available to the public from document retrieval services and the Internet
website maintained by the SEC at www.sec.gov.
Any
person, including any beneficial owner, to whom this proxy statement is
delivered may request copies of reports, proxy statements or other information
concerning us, without charge, by written or telephonic request directed to us
at Sterling Banks, Inc., 3100 Route 38, Mount Laurel, New Jersey 08054,
Attention: Investor Relations. If you would like to
request documents, please do so by May 31, 2010, in order to receive them
before the special meeting.
No
persons have been authorized to give any information or to make any
representations other than those contained in this proxy statement and, if given
or made, the information or representations must not be relied upon as having
been authorized by us or any other person. This proxy statement is
dated April 26, 2010. You should not assume that the information
contained in this proxy statement is accurate as of any date other than that
date, and the mailing of this proxy statement to stockholders shall not create
any implication to the contrary.
ANNEX
A
AGREEMENT
AND PLAN OF MERGER
By
and Among
ROMA
FINANCIAL CORPORATION,
ROMA
BANK,
STERLING
BANKS, INC.
and
STERLING
BANK
Dated
as of March 17, 2010
TABLE
OF CONTENTS
ARTICLE
1 – THE MERGER
|
2
|
Section
1.1
|
Consummation
of Merger; Closing Date
|
2
|
Section
1.2
|
Effective
Time of the Merger
|
2
|
Section
1.3
|
Effect
of Merger
|
2
|
Section
1.4
|
Further
Assurances
|
3
|
ARTICLE
2 – CONVERSION OF CONSTITUENTS’ CAPITAL SHARES
|
4
|
Section
2.1
|
Manner
of Conversion of Sterling Shares
|
4
|
Section
2.2
|
Effectuating
Conversion of Sterling Shares
|
4
|
Section
2.3
|
Sterling
Stock Options
|
6
|
Section
2.4
|
Determination
of Alternative Structures
|
6
|
Section
2.5
|
Laws
of Escheat
|
6
|
Section
2.6
|
Adjustment
to Merger Consideration
|
6
|
ARTICLE
3 – REPRESENTATIONS AND WARRANTIES OF STERLING
|
7
|
Section
3.1
|
Corporate
Organization
|
7
|
Section
3.2
|
Capitalization
|
8
|
Section
3.3
|
Financial
Statements; Filings
|
9
|
Section
3.4
|
Loan
Portfolio; Reserves
|
10
|
Section
3.5
|
Certain
Loans and Related Matters
|
10
|
Section
3.6
|
Authority;
No Violation
|
11
|
Section
3.7
|
Consents
and Approvals
|
12
|
Section
3.8
|
Broker’s
Fees
|
12
|
Section
3.9
|
Absence
of Certain Changes or Events
|
12
|
Section
3.10
|
Legal
Proceedings; Etc.
|
12
|
Section
3.11
|
Taxes
and Tax Returns
|
12
|
Section
3.12
|
Employee
Benefit Plans
|
14
|
Section
3.13
|
Title
and Related Matters
|
17
|
Section
3.14
|
Real
Estate
|
17
|
Section
3.15
|
Environmental
Matters
|
18
|
Section
3.16
|
Commitments
and Contracts
|
19
|
Section
3.17
|
Regulatory
Matters
|
21
|
Section
3.18
|
Antitakeover
Provisions
|
21
|
Section
3.19
|
Insurance
|
21
|
Section
3.20
|
Labor
|
21
|
Section
3.21
|
Compliance
with Laws
|
22
|
Section
3.22
|
Transactions
with Management
|
23
|
Section
3.23
|
Derivative
Contracts
|
23
|
Section
3.24
|
Deposits
|
24
|
Section
3.25
|
Accounting
Controls; Disclosure Controls
|
24
|
Section
3.26
|
SEC
Filings
|
25
|
Section
3.27
|
Proxy
Materials
|
25
|
Section
3.28
|
Deposit
Insurance
|
25
|
Section
3.29
|
Intellectual
Property
|
25
|
Section
3.30
|
Untrue
Statements and Omissions
|
26
|
Section
3.31
|
Fairness
Opinion
|
26
|
Section
3.32
|
No
Trust Powers
|
26
|
Section
3.33
|
Registration
Obligations
|
26
|
Section
3.34
|
Investment
Securities
|
26
|
ARTICLE
4 – REPRESENTATIONS AND WARRANTIES OF ROMA
|
26
|
Section
4.1
|
Organization
and Related Matters of Roma
|
26
|
Section
4.2
|
Authorization
|
27
|
Section
4.3
|
Consents
and Approvals
|
27
|
Section
4.4
|
Proxy
Materials
|
27
|
Section
4.5
|
Regulatory
Matters
|
28
|
Section
4.6
|
Access
to Funds
|
28
|
Section
4.7
|
Untrue
Statements and Omissions
|
28
|
ARTICLE
5 – COVENANTS AND AGREEMENTS
|
28
|
Section
5.1
|
Conduct
of the Business of Sterling and Sterling Bank
|
28
|
Section
5.2
|
Current
Information
|
32
|
Section
5.3
|
Access
to Properties; Personnel and Records; Systems Integration
|
32
|
Section
5.4
|
Approval
of Shareholders
|
34
|
Section
5.5
|
No
Other Bids
|
34
|
Section
5.6
|
Maintenance
of Properties; Certain Remediation and Capital
Improvements
|
35
|
Section
5.7
|
Environmental
Audits
|
35
|
Section
5.8
|
Title
Insurance
|
36
|
Section
5.9
|
Surveys
|
36
|
Section
5.10
|
Consents
to Assign and Use Leased Premises
|
36
|
Section
5.11
|
Compliance
Matters
|
36
|
Section
5.12
|
Support
Agreements
|
36
|
Section
5.13
|
Disclosure
Controls
|
36
|
ARTICLE
6 – ADDITIONAL COVENANTS AND AGREEMENTS
|
37
|
Section
6.1
|
Best
Efforts, Cooperation
|
37
|
Section
6.2
|
Regulatory
Matters
|
37
|
Section
6.3
|
Employment
and Employee Benefit Matters
|
38
|
Section
6.4
|
Indemnification
|
39
|
Section
6.5
|
Transaction
Expenses of Sterling
|
40
|
Section
6.6
|
Press
Releases
|
41
|
Section
6.7
|
Prior
Notice and Approval Before Payments To Be Made
|
41
|
Section
6.8
|
Boards
of Directors of Roma and Roma Bank
|
42
|
Section
6.9
|
Supplemental
Indenture
|
42
|
Section
6.10
|
Notification
of Certain Matters
|
42
|
ARTICLE
7 – MUTUAL CONDITIONS TO CLOSING
|
42
|
Section
7.1
|
Shareholder
Approval
|
42
|
Section
7.2
|
Regulatory
Approvals
|
42
|
Section
7.3
|
Litigation
|
42
|
Section
7.4
|
Disclosure
Supplements
|
43
|
ARTICLE
8 – CONDITIONS TO THE OBLIGATIONS OF ROMA
|
43
|
Section
8.1
|
Representations
and Warranties
|
43
|
Section
8.2
|
Performance
of Obligations
|
43
|
Section
8.3
|
Certificate
Representing Satisfaction of Conditions
|
43
|
Section
8.4
|
Consents
Under Agreements
|
44
|
Section
8.5
|
Material
Condition
|
44
|
Section
8.6
|
Certification
of Claims
|
44
|
Section
8.7
|
Audited
Financial Statements
|
44
|
Section
8.8
|
Minimum
Tangible Equity
|
44
|
Section
8.9
|
Nonperforming
Assets
|
44
|
Section
8.10
|
Environmental
Audit Results
|
44
|
Section
8.11
|
Option
Cancellation Agreements
|
44
|
Section
8.12
|
Support
Agreements
|
45
|
Section
8.13
|
Addenda
to Change in Control Severance Agreements
|
45
|
ARTICLE
9 – CONDITIONS TO OBLIGATIONS OF STERLING
|
45
|
Section
9.1
|
Representations
and Warranties
|
45
|
Section
9.2
|
Performance
of Obligations
|
45
|
Section
9.3
|
Certificate
Representing Satisfaction of Conditions
|
45
|
ARTICLE
10 – TERMINATION, WAIVER AND AMENDMENT
|
46
|
Section
10.1
|
Termination
|
46
|
Section
10.2
|
Effect
of Termination; Termination Fee
|
47
|
Section
10.3
|
Amendments
|
48
|
Section
10.4
|
Waivers
|
48
|
Section
10.5
|
Non-Survival
of Representations, Warranties and Covenants
|
48
|
ARTICLE
11 – MISCELLANEOUS
|
49
|
Section
11.1
|
Definitions
|
49
|
Section
11.2
|
Entire
Agreement
|
51
|
Section
11.3
|
Notices
|
51
|
Section
11.4
|
Severability
|
52
|
Section
11.5
|
Costs
and Expenses
|
53
|
Section
11.6
|
Captions
|
53
|
Section
11.7
|
Counterparts
|
53
|
Section
11.8
|
Persons
Bound; No Assignment
|
53
|
Section
11.9
|
Governing
Law
|
53
|
Section
11.10
|
Exhibits
and Schedules
|
53
|
Section
11.11
|
Waiver
|
53
|
Section
11.12
|
Specific
Performance
|
53
|
Section
11.13
|
Construction
of Terms
|
54
|
Exhibits
Exhibit
A
|
Plan
of Merger
|
Exhibit
B
|
Forms
of Support Agreement
|
Exhibit
C
|
Form
of Addendum to Change in Control Severance Agreements
|
Exhibit
D
|
Form
of Addendum to Employment Agreement
|
Exhibit
E
|
Form
of Option Cancellation and Release
Agreement
|
By
and Among
ROMA
FINANCIAL CORPORATION
ROMA
BANK
STERLING
BANKS, INC.
and
STERLING
BANK
This
AGREEMENT AND PLAN OF MERGER, dated as of the 17
th
day
of March, 2010 (this “Agreement”), by and among Roma Financial Corporation, a
federal MHC subsidiary holding company (“Roma”), Roma Bank, a federal savings
bank (“Roma Bank”), Sterling Banks, Inc., a New Jersey corporation (“Sterling”),
and Sterling Bank, a New Jersey-chartered commercial bank (“Sterling Bank”)
(collectively, the “Parties”).
WITNESSETH
THAT:
WHEREAS,
the Boards of Directors of each of Roma and Sterling deem it in the best
interests of Roma and Sterling, respectively, and of their respective
shareholders, that Roma and Sterling enter into an agreement pursuant to which
Roma will acquire all of the issued and outstanding shares of capital stock of
Sterling through the merger of a wholly owned acquisition subsidiary of Roma
with and into Sterling (the “Merger”);
WHEREAS,
Roma intends that, immediately following the Merger, Sterling will be merged
with and into Roma, with Roma as the surviving corporation, and Sterling Bank
will be merged with and into Roma Bank, with Roma Bank as the surviving
institution;
WHEREAS,
as an inducement and condition to Roma’s entering into this Agreement, each of
the directors and executive officers of Sterling and Sterling Bank in their
individual capacity have entered into Support Agreements in the form attached as
Exhibit B hereto with Roma pursuant to which they have agreed to take certain
actions in support and cooperation of the Merger and the surviving corporation;
and
WHEREAS,
concurrently with the execution of this Agreement, Roma and Roma Bank have
entered into an Addendum to the Change in Control Severance Agreement in
the form attached as Exhibit C hereto with certain of the officers of Sterling
and Sterling Bank who are parties to Change in Control Severance Agreements with
Sterling and Sterling Bank;
NOW,
THEREFORE, in consideration of the mutual covenants, representations, warranties
and agreements herein contained, the Parties agree that all of the outstanding
shares of common stock of Sterling will be acquired by Roma through the merger
of an acquisition subsidiary of Roma with and into Sterling 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 Sterling into
cash, shall be as hereinafter set forth.
ARTCLE
1
THE
MERGER
Section
1.1
Consummation of Merger;
Closing Date
.
On the
terms and subject to the conditions set forth in this Agreement, at the
Effective Time of the Merger, Roma Financial Acquisition Subsidiary, Inc., a
corporation to be organized under the laws of State of New Jersey as a wholly
owned subsidiary of Roma for the sole purpose of facilitating the Merger
(“Merger Sub”), shall be merged with and into Sterling pursuant to the
provisions of the New Jersey Business Corporation Act (“NJBCA”) and the separate
corporate existence of Merger Sub shall cease. Sterling 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 Roma. 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 Roma,
Roma Bank, Sterling and Sterling Bank, and of the Plan of Merger to be entered
into by and between Merger Sub and Sterling substantially in the form appended
as Exhibit A, which will be approved and adopted by the Boards of Directors of
Sterling and of Merger Sub and by Roma as the sole shareholder of Merger
Sub.
Section
1.2
Effective Time of the
Merger
. (a) 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 in writing by Roma and Sterling, 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
Sterling approve the transactions contemplated by this Agreement, or at such
other time as the Parties may agree.
(b) The
closing of the Merger (the “Closing”) shall take place at the principal offices
of Roma 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 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 certificates
and other documents and instruments required to be so delivered pursuant to this
Agreement.
Section
1.3
Effect of
Merger
. (a) At the Effective Time of the Merger, Merger
Sub shall be merged with and into Sterling and the separate corporate existence
of Merger Sub shall cease. Sterling shall be the Surviving
Corporation in the Merger, and the name of the Surviving Corporation shall be as
set forth in Sterling’s Certificate of Incorporation as in effect immediately
before the Effective Time.
(b) At
the Effective Time of the Merger, each issued and outstanding Sterling Share
immediately prior thereto shall, by virtue of the Merger, be canceled and
converted into the right to receive the Merger Consideration, as defined in
Section 2.1 of this Agreement.
(c) The
Certificate of Incorporation and Bylaws of Sterling, each as in effect
immediately prior to the Effective Time of the Merger, shall be the Certificate
of Incorporation and Bylaws, respectively, of the Surviving
Corporation.
(d) The
directors and officers of Merger Sub immediately prior to the Effective Time of
the Merger shall be the directors and officers of Sterling as the Surviving
Corporation.
(e) 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
1.4
Further
Assurances
. If, at any time after the Effective Time of the
Merger, Roma 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 Roma its right, title
or interest in, to or under any of the rights, properties or assets of Sterling
or Sterling Bank or (ii) otherwise carry out the purposes of this Agreement,
Sterling and its officers and directors shall be deemed to have granted to Roma
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 Roma its right, title or interest in, to or under any of
the rights, properties or assets of Sterling or Sterling Bank or (b) otherwise
carry out the purposes of this Agreement, and the officers
and directors of Roma are authorized in the name of Sterling or
otherwise to take any and all such action.
ARTICLE
2
CONVERSION
OF CONSTITUENTS’ CAPITAL SHARES
Section
2.1
Manner of Conversion of
Sterling 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 Roma, Roma Bank, Sterling, Sterling Bank, Merger Sub 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 Merger Sub outstanding immediately prior to the
Effective Time of the Merger shall, after the Effective Time of the Merger, be
exchanged for one Sterling Share (as defined below).
(b) Each
share of common stock of Sterling, par value $2.00 per share (the “Sterling
Shares”), held by Sterling or by Roma (or any of their subsidiaries), except
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.
(c) Except
with regard to Sterling Shares excluded under Section 2.1(b) above and subject
to adjustment as set forth in Section 2.6 hereof, each Sterling Share
outstanding immediately prior to the Effective Time of the Merger shall be
converted into the right to receive a cash amount equal to $2.52 (the “Merger
Consideration”).
Thereafter,
subject to Section 2.5, each outstanding certificate representing a Sterling
Share shall represent solely the right to receive the Merger
Consideration.
Section
2.2
Effectuating Conversion of
Sterling Shares
. (a) At the Effective Time of the
Merger, Roma will deliver or cause to be delivered to a third-party agent to be
appointed by Roma and reasonably acceptable to Sterling (the “Exchange Agent”)
an amount of cash equal to the aggregate Merger Consideration to be paid
pursuant to Section 2.1. 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 Sterling Shares transmittal materials (the
“Letter of Transmittal”) for use in exchanging their certificates that formerly
represented Sterling Shares for the consideration provided for in this
Agreement. The Letter of Transmittal will contain instructions with
respect to the surrender of certificates representing Sterling Shares and the
receipt of the consideration contemplated by this Agreement and will require
each holder of Sterling Shares to transfer good and marketable title to such
Sterling Shares to Roma, free and clear of all liens, claims and
encumbrances.
(b) At
the Effective Time of the Merger, the stock transfer books of Sterling shall be
closed as to holders of Sterling Shares immediately prior to the Effective Time
of the Merger and no transfer of Sterling Shares by any such holder shall
thereafter be made or recognized and each outstanding certificate formerly
representing Sterling Shares shall, without any action on the part of any holder
thereof, no longer represent Sterling 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.
(c) In
the event that any holder of record as of the Effective Time of the Merger of
Sterling Shares is unable to deliver the certificate that represents such
holder’s Sterling Shares, the Exchange Agent, in the absence of actual notice
that any Sterling Shares theretofore represented by any such certificate have
been acquired by a bona fide purchaser shall deliver to such holder the Merger
Consideration upon the presentation of all of the following:
|
(i)
|
An
affidavit or other evidence to the satisfaction of the Exchange Agent or
Roma that any such certificate has been lost, wrongfully taken or
destroyed;
|
|
(ii)
|
Such
security or indemnity as may be reasonably requested by the Exchange Agent
or Roma to indemnify and hold it harmless in respect of such stock
certificate(s); and
|
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(iii)
|
Evidence
to the reasonable satisfaction of the Exchange Agent or Roma that such
holder is the owner of Sterling 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.
|
(d) If
the delivery of the consideration contemplated by this Agreement is to be made
to a person other than the person in whose name any certificate representing
Sterling 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 or expenses 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 the Exchange Agent or Roma that such tax or expenses
have been paid or are not applicable.
(e) Except
as provided in Sections 2.2(c) and (d), the consideration contemplated by this
Agreement shall not be paid to the holder of any unsurrendered certificate or
certificates representing Sterling Shares, and neither the Exchange Agent nor
Roma shall be obligated to deliver any of the consideration contemplated by this
Agreement until such holder shall surrender the certificate or certificates
representing Sterling 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 Sterling Shares, without
interest at the time of such surrender, the Merger Consideration.
(f) Roma
or the Exchange Agent will be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement or the transactions
contemplated hereby to any holder of Sterling Shares, such amounts as Roma (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 Roma 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 Sterling Shares in respect of whom such
deduction and withholding were made by Roma or the Exchange Agent.
Section
2.3
Sterling Stock
Options
. As of and immediately prior to the Effective Time of
the Merger, all rights with respect to Sterling Shares issuable pursuant to the
exercise of stock options (“Sterling Options”) granted by Sterling under the
Sterling Stock Option Plans set forth in Sterling Schedule 2.3 (the “Sterling
Stock Option Plans”), each of which is listed and described on Sterling Schedule
2.3, that are outstanding at the Effective Time of the Merger and that have not
yet been exercised, shall be canceled with no consideration because the Merger
Consideration is less than the option exercise price. Sterling shall
take such action as is necessary under the Sterling Stock Option Plans to cancel
all outstanding Sterling Options as of the Effective Time of the Merger, or
solely with respect to the 2008 Director Stock Option Plan and the 2008 Employee
Stock Option Plan, (the “2008 Plans”), terminate such Sterling Options issued
thereunder, making them redeemable by Sterling at or immediately after the
Effective Time of the Merger, in each case with no consideration paid to the
holders of such Sterling Options. If Sterling fails to take such
action, or such action requires the consent of any option holder, the holders of
Sterling Options shall have executed and delivered an Option Cancellation and
Release Agreement in the form set forth as Exhibit E hereto.
Section
2.4
Determination of Alternative
Structures
. Sterling hereby agrees that Roma and Roma Bank may
at any time change the method of effecting the combination; provided, however,
that no such changes shall (i) alter or change the amount or kind of the Merger
Consideration, (ii) materially impede or delay consummation of the transactions
contemplated by this Agreement, or (iii) adversely affect the tax treatment of
Sterling’s shareholders as a result of receiving the Merger Consideration or the
tax treatment of either 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 Sterling 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, Roma 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
Sterling, Sterling Bank, Roma, Roma Bank, the Exchange Agent, nor any other
Person acting on behalf of any of them shall be liable to a holder of Sterling
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.
Section
2.6
Adjustment to Merger
Consideration
. In the event Sterling’s consolidated tangible
common equity capital as of the last day of the month immediately preceding the
month in which Sterling mails the proxy statement relating to the meeting of the
shareholders of Sterling at which the Merger is to be considered (the “Proxy
Statement”), calculated in accordance with GAAP but without giving effect to
severance costs and costs to terminate existing contracts resulting from the
transactions contemplated by this Agreement as set forth on Sterling Schedule
2.6 to the extent such expenses have been expensed during the period between
December 31, 2009 and the month-end prior to mailing of the Proxy Statement
(“Actual Tangible Equity”), is less than $13,400,000 (“Required Tangible
Equity”), the Merger Consideration shall be reduced by a dollar amount equal to
the amount by which the Required Tangible Equity amount exceeds the Actual
Tangible Equity divided by the number of Sterling Shares outstanding immediately
prior to the Effective Time of the Merger. In the event of any such
reduction in the Merger Consideration, the term “Merger Consideration” herein
shall be deemed to refer to such reduced dollar amount.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF STERLING AND STERLING BANK
Sterling
and Sterling Bank hereby represent and warrant to Roma and Roma 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) Sterling
is a corporation duly organized, validly existing and in good standing under the
laws of the State of New Jersey. Sterling 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 cure
such failure) would not have a Material Adverse Effect on Sterling on a
consolidated basis. Sterling 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 Bylaws of Sterling, each as amended to the date hereof, have been
delivered to Roma.
(b) Sterling
Bank is a commercial bank duly organized, validly existing and in good standing
under the laws of the State of New Jersey. Sterling Bank has the
corporate power and authority to own or lease all of its respective properties
and assets and to carry on its business as such business is now being
conducted. True and correct copies of the Certificate of
Incorporation and the Bylaws of Sterling Bank, each as amended to the date
hereof, have been delivered to Roma.
(c) Each
direct and indirect Subsidiary of Sterling (other than Sterling Bank, a
“Sterling Subsidiary”) is a corporation, limited liability company, partnership,
trust or other business entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization. Each Sterling 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 Sterling Subsidiary or the character or location of the
properties or assets owned or leased by each Sterling 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 Sterling on a consolidated basis. A true and correct list
of all direct and indirect Sterling Subsidiaries is attached hereto as Sterling
Schedule 3.1(c). Such schedule details the jurisdiction of
organization, type of entity, percentage ownership and a brief description of
all material activities conducted by such Sterling Subsidiary.
(d) Each
of Sterling, Sterling Bank and each Sterling Subsidiary has in effect all
material federal, state, local and foreign governmental, regulatory, securities
brokerage 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.
(e) The
respective minute books of Sterling, Sterling Bank and each Sterling Subsidiary
contain complete and accurate records in all material respects of all meetings
and other corporate actions held or taken by their respective shareholders and
Boards of Directors (including all committees thereof).
(f) Sterling
Bank is a member in good standing of the Federal Home Loan Bank of New
York.
Section
3.2
Capitalization
. (a) The
authorized capital stock of Sterling consists of 25,000,000 Sterling Shares, of
which 5,843,362 are issued and outstanding as of the date hereof (and of which
none are held in the treasury of Sterling), and 10,000,000 shares of preferred
stock with no par value, none of which are issued and outstanding as of the date
hereof. All of the issued and outstanding Sterling Shares have been
duly authorized, validly issued and all such shares are fully paid and
nonassessable. To the Knowledge of Sterling, except for the Support
Agreements, there are no agreements or understandings with respect to the voting
or disposition of any such shares. 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 Sterling, or any securities
or rights convertible into or exchangeable for shares of capital stock of
Sterling, except for Sterling Options for the purchase of an aggregate of
566,638 Sterling Shares, which are described in Sterling Schedule 2.3, including
the name of the optionee, date of grant, expiration date and exercise
price. No bonds, debentures, notes or other indebtedness having the
right to vote on any matters on which shareholders of Sterling may vote are
issued or outstanding.
(b) Except
for trust preferred securities issued by Sterling Banks Capital Trust I,
Sterling owns, directly, or indirectly, all of the capital stock of Sterling
Bank and the Sterling Subsidiaries, free and clear of any liens, security
interests, pledges, charges, encumbrances, agreements and restrictions of any
kind or nature. All of the outstanding shares of capital stock of
Sterling Bank and of each Sterling Subsidiary have been duly authorized and are
validly issued, fully paid and nonassessable. There are no
subscriptions, options, commitments, calls or other agreements outstanding with
respect to the capital stock of Sterling Bank or any Sterling
Subsidiary. Except for Sterling Bank and the Sterling Subsidiaries,
Sterling does not possess, directly or indirectly, any material equity interest
in any entity.
(c) To
Sterling’s Knowledge, except as set forth in Sterling Schedule 3.2(c), no Person
or “group” (as that term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)) is the beneficial owner (as
defined in Section 13(d) of the Exchange Act) of 5% or more of the outstanding
Sterling Shares.
Section
3.3
Financial Statements;
Filings
.
(a) Sterling
has previously delivered to Roma copies of the audited financial statements of
Sterling as of and for the years ended December 31, 2008 and December 31, 2007
and unaudited financial statements for the quarters ended March 31, 2009, June
30, 2009 and September 30, 2009, and Sterling shall deliver to Roma, as soon as
practicable following the preparation of additional financial statements for
each subsequent calendar quarter or year of Sterling, the additional financial
statements of Sterling 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 Sterling”).
(b) Sterling
Bank has previously delivered to Roma copies of its Consolidated Reports of
Condition and Income (“Call Reports”) as of and for each of the years ended
December 31, 2009, December 31, 2008 and December 31, 2007, and Sterling Bank
shall deliver to Roma, as soon as practicable following the preparation of
additional Call Reports for each subsequent calendar quarter or year, its Call
Reports 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
Sterling Bank”).
(c) Except
as set forth on Sterling Schedule 3.3, each of the Financial Statements of
Sterling and each of the Financial Regulatory Reports of Sterling 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 during the periods involved, except as otherwise noted
therein, and the books and records of Sterling and Sterling 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. Except as set forth on Sterling Schedule 3.3, each of
the Financial Statements of Sterling and each of the Financial Regulatory
Reports of Sterling Bank (including the related notes, where applicable) fairly
present or will fairly present the financial position of Sterling or Sterling
Bank, as applicable, as of the respective dates thereof and fairly present or
will fairly present the results of operations of Sterling or Sterling Bank, as
applicable, for the respective periods therein set forth.
(d) Sterling
has heretofore delivered or made available, or caused to be delivered or made
available, to Roma all reports and filings made or required to be made by
Sterling or Sterling Bank with the Regulatory Authorities since January 1, 2007,
and will from time to time hereafter furnish to Roma, simultaneously with the
filing of the same with the Regulatory Authorities, all such reports and filings
made after the date hereof with the Regulatory Authorities, including all
reports and filings made under the Written Agreement dated as of July 28, 2009
by and among Sterling, Sterling Bank, the Board of Governors of the Federal
Reserve System (the “FRB”) and the New Jersey Department of Banking and
Insurance (the “NJDOBI”). Except as set forth on Sterling Schedule
3.3, 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) Since
December 31, 2008, none of Sterling, Sterling Bank or any Sterling Subsidiary
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 Sterling on a consolidated basis except obligations
and liabilities that are accrued or reserved against in (i) the Financial
Statements of Sterling, or reflected in the notes thereto, as such Financial
Statements of Sterling have been amended, restated or superseded by an amendment
to a Form 10-Q or 10-K of Sterling prior to the date of this
Agreement or (ii) the Financial Regulatory Reports of Sterling Bank, or
reflected in the notes thereto, as such Financial Regulatory Reports of Sterling
Bank have been amended, restated or superseded by an amended Call Report of
Sterling Bank prior to the date of this Agreement. Since December 31,
2008, none of Sterling, Sterling Bank or any Sterling Subsidiary has incurred or
paid any obligation or liability that would be material to Sterling and its
subsidiaries on a consolidated basis, 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 Sterling 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. Except as set forth on Sterling Schedule 3.4, the allowances
for possible loan losses shown on the Financial Statements of Sterling and the
Financial Regulatory Reports of Sterling Bank as of December 31, 2009 were, and
the allowance for possible loan losses to be shown on the Financial Statements
of Sterling and the Financial Regulatory Reports of Sterling 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 Sterling Bank 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 Sterling Schedule 3.5, as of
February 28, 2010, none of Sterling, Sterling Bank or any Sterling Subsidiary 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, to the Knowledge of Sterling and
Sterling Bank, in default of any other material provision; (ii) loan agreement,
note or borrowing arrangement that has been classified or, in the exercise of
reasonable diligence by Sterling, Sterling Bank, a Sterling Subsidiary 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 that is on nonaccrual status; (iv) loan agreement,
note or borrowing arrangement, including any loan guaranty, with (y) any
director or executive officer of Sterling, Sterling Bank or any Sterling
Subsidiary or any person, corporation or enterprise controlling, controlled by
or under common control with any of the foregoing or (z) or any five percent
(5%) shareholder of Sterling or, to the Knowledge of Sterling and Sterling Bank,
any person, corporation or enterprise controlling, controlled by or under common
control with such shareholder; or (v) loan agreement, note or borrowing
arrangement in violation of any law, regulation or rule applicable to Sterling,
Sterling Bank or any Sterling Subsidiary 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
Sterling. To the Knowledge of Sterling, as of the date of this
Agreement, there are no additional items that would be included on Sterling
Schedule 3.5 if such Schedule 3.5 was prepared as of the date of this
Agreement rather than as of February 28, 2010.
Section
3.6
Authority; No
Violation
.
(a) Sterling
and Sterling Bank have full corporate power and authority to execute and deliver
this Agreement and, subject to the approval of the shareholders of Sterling and
the receipt of the Consents of the Regulatory Authorities, to consummate the
transactions contemplated hereby. The Boards of Directors of Sterling
and Sterling 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 Sterling’s shareholders for approval at a
meeting of such shareholders and, except for the adoption of such Agreement by
Sterling’s shareholders, no other corporate proceeding on the part of Sterling
or Sterling Bank is necessary to consummate the transactions so
contemplated. This Agreement (assuming due authorization, execution
and delivery by Roma and Roma Bank), constitutes a valid and binding obligation
of Sterling and Sterling Bank, and, subject to approval by the shareholders of
Sterling and receipt of the Consents of the Regulatory Authorities, will be
enforceable against Sterling and Sterling 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) None
of (x) the execution and delivery of this Agreement by Sterling or Sterling
Bank, (y) the consummation by Sterling or Sterling Bank of the transactions
contemplated hereby, or (z) compliance by Sterling, Sterling Bank or any
Sterling Subsidiary with any of the terms or provisions hereof, will (i) violate
any provision of the Certificate of Incorporation or Bylaws of Sterling or
Sterling Bank or the organizational documents of any Sterling Subsidiary, (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 Sterling,
Sterling Bank, a Sterling Subsidiary or any of their properties or assets, or
(iii) except as disclosed in Sterling Schedule 3.6(b), violate, conflict with,
result in a breach of any provisions of, constitute a default (or an event that,
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 Sterling, Sterling Bank or any Sterling
Subsidiary 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 Sterling, Sterling Bank or any Sterling
Subsidiary is a party, or by which it or any of their properties or assets may
be bound or affected.
Section
3.7
Consents and
Approvals
. Except for (i) the approval of the shareholders of
Sterling at a meeting of shareholders called for such purpose pursuant to the
Proxy Statement, (ii) the Consents of the Regulatory Authorities, and (iii) as
set forth in Sterling Schedule 3.7, no Consents of any person are necessary in
connection with the execution and delivery by Sterling and Sterling Bank of this
Agreement, and the consummation of the Merger and the other transactions
contemplated hereby.
Section
3.8
Broker’s
Fees
. Except for Griffin Financial Group LLC (“Griffin”),
whose engagement letter is set forth in Sterling Schedule 3.8, none of Sterling,
Sterling Bank or 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 Sterling Schedule 3.9, since
December 31, 2008, 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 Sterling Shares or (b) any change or any event involving a
prospective change in the financial condition of Sterling and its subsidiaries,
or a combination of any such change(s) and any such event(s) that has had, or is
reasonably likely to have, a Material Adverse Effect on the financial condition
of Sterling and its subsidiaries, including, without limitation any change in
the administration or supervisory standing or rating of Sterling or Sterling
Bank with any Regulatory Authority, and, except as set forth on Sterling
Schedule 3.9, 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
. None of Sterling, Sterling Bank or any Sterling
Subsidiary is a party to any, and there are no pending or, to the Knowledge of
Sterling or Sterling Bank, any threatened, judicial, administrative, arbitral or
other proceedings, claims (whether asserted or unasserted), actions, causes of
action or governmental investigations against Sterling, Sterling Bank or any
Sterling Subsidiary challenging the validity of the transactions contemplated by
this Agreement. Except as set forth in Sterling Schedule 3.10, as of
the date hereof, there is no proceeding, claim, action or governmental
investigation pending, or to the Knowledge of Sterling and Sterling Bank
threatened, against Sterling, Sterling Bank or any Sterling Subsidiary and no
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator is outstanding
against Sterling, Sterling Bank or any Sterling Subsidiary. As of the
date hereof, there is no default by Sterling, Sterling Bank or any Sterling
Subsidiary under any material contract or agreement to which such entity is a
party; and, except as set forth in Sterling Schedule 3.10, none of Sterling,
Sterling Bank or any Sterling Subsidiary is a party to any agreement, order or
memorandum in writing by or with any Regulatory Authority restricting their
respective operations, and none of Sterling, Sterling Bank or any Sterling
Subsidiary 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.
Section
3.11
Taxes and Tax
Returns
.
(a) Sterling
has previously delivered or made available to Roma copies of the federal, state
and local income tax returns of Sterling, Sterling Bank and the Sterling
Subsidiaries (hereinafter Sterling, Sterling Bank and the Sterling Subsidiaries
are sometimes referred to collectively as the “Sterling Group”) for the years
2008, 2007 and 2006 and all schedules and exhibits thereto, and none
of Sterling, Sterling Bank or any Sterling Subsidiary has received
any written notice that such returns have been examined by the Internal Revenue
Service or any other taxing authority. Sterling, Sterling Bank and
the Sterling Subsidiaries have duly filed (taking into account any valid
extensions of time for filing) and, with respect to tax returns due (taking into
account any valid extensions of time for filing) between the date hereof and the
Effective Time of the Merger, will timely file (taking into account any valid
extensions of time for filing) in correct form all federal, state and local
information returns and tax returns required to be filed by Sterling, Sterling
Bank or any Sterling Subsidiary, and Sterling, Sterling Bank and each Sterling
Subsidiary have duly paid or made adequate provisions for the payment of all
taxes and other governmental charges relating to taxes that are due and owing by
Sterling, Sterling Bank or any Sterling Subsidiary to any federal, state or
local taxing authorities, whether or not reflected in such returns (including,
without limitation, those due and owing in respect of the properties, income,
business, capital stock, deposits, franchises, licenses, sales and payrolls of
Sterling, Sterling Bank or any Sterling Subsidiary), other than taxes and other
charges that (i) are being contested in good faith or (ii) have not been finally
determined. All taxes not yet due and payable by, or with respect to
the income, assets, properties, activities or operations of, the Sterling Group,
(i) did not, as of December 31, 2009, exceed the reserve for such tax
liabilities (excluding deferred taxes established to reflect timing differences
between book and tax income) set forth on the face of the Financial Statements
of Sterling, and (ii) do not exceed that reserve as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice in
filing tax returns relating to such taxes. None of Sterling, Sterling
Bank or any Sterling Subsidiary has ever been a member of any consolidated,
combined or unitary group of corporations (other than a group of which Sterling
was the parent) for which it could be liable for taxes of any other person
pursuant to Treasury Regulations Section 1.1502-6 (or any similar provision of
state, local or foreign tax law).
(b) None
of Sterling, Sterling Bank or any Sterling Subsidiary has granted any waiver of
any statute of limitations with respect to, or any extension of a period for the
assessment of, any taxes, or is subject to a power of attorney with respect to
any tax matters that would have continuing effect after the Closing
Date.
(c) Except
as set forth on Sterling Schedule 3.11(c), none of Sterling, Sterling Bank or
any Sterling Subsidiary 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 be exceed the amounts that are
eligible to be a deduction under Section 280G or 162(m) of the
Code. The Employment Agreement
entered into by Sterling
Bank with Robert H. King has been amended as necessary prior to the execution of
this Agreement, effective as of the Effective Time of the Merger, as set forth
in the Addendum to Employment Agreement attached as Exhibit D.
(d) The
amount of Sterling’s taxable income for the period ended December 31, 2009, that
was eligible to be offset by “pre-change losses” was not subject to the “Section
382 limitation” within the meaning of and as provided in Section 382(a) of the
Code.
(e) (i)
Proper and accurate amounts have been withheld by Sterling, Sterling Bank and
the Sterling 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 Sterling, Sterling Bank and
the Sterling Subsidiaries for all prior 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 has been included by Sterling in the Financial Statements of
Sterling.
(f) None
of Sterling, Sterling Bank or any Sterling Subsidiary has received any written
notice that an audit or examination of any of its taxes or tax returns is
pending.
(g) None
of Sterling, Sterling Bank or any Sterling 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 Sterling,
Sterling Bank or any Sterling Subsidiary.
Section
3.12
Employee Benefit
Plans
.
(a) None
of Sterling, Sterling Bank or any Sterling Subsidiary maintains any “employee
benefit plan,” as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”) or any other benefit plan or program
maintained for employees or directors of Sterling, Sterling Bank or any Sterling
Subsidiary, except as described in Sterling Schedule 3.12(a) (the “Employee
Benefit Plans”). Sterling has, with respect to each such plan,
delivered to Roma 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) of the Code, 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) No
Employee Benefit Plan is a “defined benefit plan” as such term is defined at
Section 3(35) of ERISA. None of Sterling, Sterling Bank or any
Sterling Subsidiary (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) None
of Sterling, Sterling Bank or any Sterling Subsidiary 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.
(d) All
Employee Benefit Plans have been operated and administered in all material
respects in accordance with their terms and all applicable law, including but
not limited to, ERISA, the Code, COBRA, HIPAA and any applicable, similar state
law and all requisite filings, disclosures and notices required by law have been
made or given. None of Sterling, Sterling Bank or any Sterling
Subsidiary has any material liability under any such plan that is not reflected
in the Financial Statements of Sterling or the Financial Regulatory Reports of
Sterling Bank. None of Sterling, Sterling Bank, any Sterling
Subsidiary, 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 Sterling, Sterling Bank, any Sterling Subsidiary, 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.
(e) 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 that 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 that
could result in the imposition of a penalty under any section or provision of
ERISA.
(f) Except
as set forth in Sterling Schedule 3.12(f), neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
directly or indirectly (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 Sterling, Sterling Bank or any Sterling
Subsidiary 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; or (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.
(g) 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. None of Sterling,
Sterling Bank or any Sterling Subsidiary has ever been a party to or participant
in a multiemployer plan.
(h) There
are no actions, liens, suits or claims pending or, to the Knowledge of Sterling
or Sterling Bank, 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 Sterling, Sterling Bank or the Sterling
Subsidiaries are subject to any lien under Section 302(f) of ERISA or Section
412(n) of the Code.
(i) Each
Employee Benefit Plan that is intended to qualify under Section 401(a) or 403(a)
of the Code so qualifies and its related trust is exempt from taxation under
Section 501(a) of the Code. To the Knowledge of Sterling and Sterling
Bank, 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.
(j) 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.
(k) 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. Except as set forth on Sterling Schedule 3.12(f),
no assets of Sterling, Sterling Bank or any Sterling Subsidiary are allocated to
or held in a grantor trust or “rabbi trust” or similar funding
vehicle.
(l) Except
as set forth on Sterling Schedule 3.12(l), (i) none of Sterling, Sterling Bank
or any Sterling Subsidiary is presently providing for or is obligated under any
contract or arrangement or otherwise to provide for retiree or other
post-service pension, medical, disability, life insurance or other compensation
or benefits to any current or former employee, officer, director of Sterling or
any other person, and (ii) no Employee Benefit Plan provides benefits to any
current or former employee of Sterling, Sterling Bank or any Sterling Subsidiary
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 Sterling, Sterling Bank or a
Sterling Subsidiary as applicable.
(m) 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 on the Financial Statements
of Sterling.
(n) Except
as set forth in Sterling Schedule 3.12(n), none of Sterling, Sterling Bank or
any Sterling Subsidiary (i) has, to the Knowledge of Sterling, taken any
action, or has failed to take any action, that has resulted or could result in
the interest and tax penalties specified in Section 409A of the Code being
owed by any employee, former employee, director, former director or beneficiary
or (ii) has agreed to reimburse or indemnify any employee, former employee,
director, former director or beneficiary for any of the interest and tax
penalties specified in Section 409A of the Code that may be currently due
or triggered in the future.
Section
3.13
Title and Related
Matters
.
(a) Sterling,
Sterling Bank and the Sterling Subsidiaries have good 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 Sterling or the Financial Regulatory Reports of Sterling
Bank or acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of for fair value, collected or written off in the
ordinary course of business since September 30, 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
Sterling and the Financial Regulatory Reports of Sterling Bank or incurred in
the ordinary course of business after September 30, 2009, (ii) statutory liens
for amounts not yet delinquent or that 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 Sterling and its
subsidiaries on a consolidated basis.
(b) All
agreements pursuant to which Sterling, Sterling Bank or any Sterling Subsidiary
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 that 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 that
individually or in the aggregate would not have a Material Adverse Effect
on Sterling and its subsidiaries on a consolidated
basis. Sterling, Sterling Bank and the Sterling Subsidiaries have 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), and as of the Effective Time of the Merger, and, except as set
forth in Sterling Schedule 3.13(b), Roma or one of its subsidiaries shall have
the right to assume each lease or sublease pursuant to this Agreement and by
operation of law.
(c) All
of the buildings, structures and fixtures owned, leased or subleased by
Sterling, Sterling Bank or any Sterling Subsidiary are in good operating
condition and repair, subject only to ordinary wear and tear and/or minor
defects that do not interfere with the continued use thereof in the conduct of
normal operations. All of the material personal properties owned,
leased or subleased by Sterling, Sterling Bank or any Sterling Subsidiary are in
good operating condition and repair, subject only to ordinary wear and tear
and/or minor defects that do not interfere with the continued use thereof in the
conduct of normal operations.
Section
3.14
Real
Estate
.
(a) Sterling
Schedule 3.14(a) identifies each parcel of real estate or interest therein
owned, leased or subleased by Sterling, Sterling Bank or any Sterling Subsidiary
or in which Sterling, Sterling Bank or any Sterling Subsidiary has any ownership
or leasehold interest. True and correct copies of all such leases
have been previously provided to Roma and all such agreements are in full force
and effect on the date hereof. Except as set forth on Sterling
Schedule 3.14(a), there are no pending agreements to sell any of the parcels of
real estate, or interests therein, owned by Sterling, Sterling Bank or any
Sterling Subsidiary,
(b) Sterling
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 Sterling, Sterling Bank or any Sterling Subsidiary is the lessee of
any real property and that relates in any manner to the operation of the
businesses of Sterling, Sterling Bank or any Sterling
Subsidiary. Sterling Schedule 3.14(b) also lists any such lease that
requires the consent of the lessor or its agent resulting from the Merger by
virtue of the terms of such lease, identifying the section of such lease that
contains such restriction or prohibition.
(c) Sterling,
Sterling Bank and each Sterling Subsidiary are in compliance in all material
respects with each law, regulation or ordinance relating to the ownership or use
of the real estate and real estate interests described in Sterling 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 Sterling, Sterling Bank or any
Sterling Subsidiary, none of Sterling, Sterling Bank or any Sterling Subsidiary
has received notice of any pending, and to the Knowledge of Sterling and
Sterling Bank there are no threatened, condemnation proceedings, litigation
proceedings or mechanic’s or materialmen’s liens.
Section
3.15
Environmental
Matters
.
(a) Except
as set forth in Sterling Schedule 3.15(a), each of Sterling, Sterling Bank or
any Sterling Subsidiary and, to the Knowledge of Sterling, the Participation
Facilities (as defined below) and the Loan Properties (as defined below), are in
material compliance, and there are no present circumstances that would
reasonably be expected to prevent or interfere with the continuation of such
material compliance with all applicable Environmental Laws (as defined in
Section 11.1).
(b) There
is no litigation pending or, to the Knowledge of Sterling or Sterling Bank,
threatened before any court, governmental agency or board or other forum in
which Sterling, Sterling Bank, any Sterling Subsidiary, 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 or (ii) relating to the release into the
environment of any Hazardous Material (as defined in Section 11.1), whether or
not occurring at, on or involving a site owned, leased or operated by Sterling,
Sterling Bank, any Sterling Subsidiary or any Participation Facility for which
Sterling, Sterling Bank or any Sterling Subsidiary would have any
liability.
(c) There
is no pending, or to the Knowledge of Sterling and Sterling Bank or any Sterling
Subsidiary, any threatened litigation naming Sterling, Sterling Bank or any
Sterling Subsidiary as a defendant or potentially responsible party, and, to the
Knowledge of Sterling, Sterling Bank or any Sterling Subsidiary, there is no
litigation pending or threatened before any court, governmental agency or board
or other forum in which any 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 for which Sterling, Sterling Bank or any Sterling
Subsidiary would have any liability.
(d) To
the Knowledge of Sterling or Sterling Bank, 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 for which Sterling, Sterling Bank or any Sterling Subsidiary would
have any liability.
(e) During
the period of (i) ownership or operation by Sterling, Sterling Bank or any
Sterling Subsidiary of any of its current properties, (ii) participation by
Sterling, Sterling Bank or any Sterling Subsidiary in the management of any
Participation Facility, or (iii) holding by Sterling, Sterling Bank or any
Sterling Subsidiary of a security interest in any Loan Property, there has been
no contamination by or releases of Hazardous Material in, on, under or affecting
such properties for which Sterling, Sterling Bank or any Sterling Subsidiary
would have any liability.
(f) Prior
to the period of (i) ownership or operation by Sterling, Sterling Bank or any
Sterling Subsidiary of any of its current properties, (ii) participation by
Sterling, Sterling Bank or any Sterling Subsidiary in the management of any
Participation Facility, or (iii) holding by Sterling, Sterling Bank or any
Sterling Subsidiary of a security interest in any Loan Property, to the
Knowledge of Sterling or Sterling Bank, there were no contamination by or
releases of Hazardous Material or oil in, on, under or materially affecting any
such property, Participation Facility or Loan Property that have not been
remediated in accordance with all applicable Environmental Laws for which
Sterling, Sterling Bank or any Sterling Subsidiary would have any
liability.
(g) There
are no underground storage tanks on, in or under any properties owned or
operated by Sterling, Sterling Bank, any Sterling Subsidiary or, to the
Knowledge of Sterling and Sterling Bank, any Participation Facility and no
underground storage tanks have been closed or removed from any properties owned
or operated by Sterling, Sterling Bank, any Sterling Subsidiary or, to the
Knowledge of Sterling and Sterling Bank, any Participation Facility except in
material compliance with Environmental Law.
Section
3.16
Commitments and
Contracts
.
(a) Except
for this Agreement and as set forth in Sterling Schedule 3.16(a), none of
Sterling, Sterling Bank or any Sterling Subsidiary is a party or subject to any
of the following (whether written or oral, express or implied):
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(i)
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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 Sterling, Sterling Bank or a Sterling
Subsidiary);
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(ii)
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Any
labor contract or agreement with any labor
union;
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(iii)
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Any
contract covenants that limit the ability of Sterling, Sterling Bank or
any Sterling Subsidiary to compete in any line of business or that involve
any restriction of the geographical area in which Sterling, Sterling Bank
or any Sterling Subsidiary may carry on its businesses (other than as may
be required by law or applicable regulatory
authorities);
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(iv)
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Any
lease (other than real estate leases described on Sterling Schedule
3.14(b)) or other agreements or contracts with annual payments aggregating
$50,000 or more;
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(v)
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Any
instrument evidencing or related to borrowed money in respect of which
Sterling, Sterling Bank or any Sterling Subsidiary is obligated to any
party, other than deposits, Federal Home Loan Bank (“FHLB”) advances or
securities sold under agreement to
repurchase;
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(vi)
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Any
contract not terminable without cause within 60 day’s notice or less
without penalty or that obligates Sterling,
Sterling
Bank or any Sterling Subsidiary for the payment of more than $10,000
annually (collectively, “Contracts”) over its remaining term;
or
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(vii)
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Any
other contract or agreement that would be required to be disclosed in
reports filed by Sterling with the Securities and Exchange Commission
(“SEC”) or Sterling Bank with the NJDOBI, the FRB or the Federal Deposit
Insurance Corporation (“FDIC”) and that has not been so
disclosed.
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(b) Except
as set forth in Sterling Schedule 3.16(b), there is not, under any agreement,
lease, license or contract not terminable without cause within 60 days’ notice
or less without penalty or that obligates Sterling, Sterling Bank or any
Sterling Subsidiary for the payment of $10,000 annually or over its remaining
term to which Sterling, Sterling Bank a Sterling Subsidiary is a party, any
existing default or event of default, or any event that, 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 Sterling 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 Contracts or modification or acceleration of 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) Sterling
Schedule 3.16(d) lists the deadlines for extensions or terminations of any
licenses or Contracts (including specifically real property leases and data
processing agreements) to which Sterling, Sterling Bank or any Sterling
Subsidiary is a party.
Section
3.17
Regulatory
Matters
. None of Sterling, Sterling Bank or any Sterling
Subsidiary has taken or agreed to take any action, and neither Sterling nor
Sterling Bank 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 or the Bank Secrecy Act.
Section
3.18
Antitakeover
Provisions
. Sterling and Sterling Bank have taken all actions
required to exempt Sterling, Sterling Bank, this Agreement and the Merger from
any provisions of an antitakeover nature contained in the organizational
documents of Sterling or Sterling Bank and the provisions of any federal or
state “antitakeover,” “fair price,” “moratorium,” “control share acquisition” or
similar laws or regulations.
Section
3.19
Insurance
. Sterling,
Sterling Bank and the Sterling Subsidiaries are presently insured as set forth
on Sterling Schedule 3.19, 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 Sterling,
Sterling Bank and the Sterling Subsidiaries provide adequate coverage against
loss, and the fidelity bonds in effect as to which Sterling is named an insured
are sufficient for their purpose. Such policies of insurance are
listed and described in Sterling Schedule 3.19. None of Sterling,
Sterling Bank or any Sterling Subsidiary has received any notice from any
insurance carrier that (i) such insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. Except as
disclosed in Sterling Schedule 3.19, there are no material claims pending under
such policies of insurance and no notices have been given by Sterling, Sterling
Bank or any Sterling Subsidiary under such policies. Within the last
three years each of Sterling, Sterling Bank and the Sterling Subsidiaries have
received each type of insurance coverage for which it has applied and during
such period has not been denied indemnification for any material claims
submitted under any of its insurance policies.
Section
3.20
Labor
.
(a) No
work stoppage involving Sterling, Sterling Bank or any Sterling Subsidiary is
pending as of the date hereof or, to the Knowledge of Sterling or Sterling Bank,
threatened. None of Sterling, Sterling Bank or any Sterling
Subsidiary is involved in, or, to the Knowledge of Sterling or Sterling Bank,
threatened with or affected by, any proceeding asserting that Sterling, Sterling
Bank or any Sterling Subsidiary has committed an unfair labor practice or any
labor dispute, arbitration, lawsuit or administrative proceeding that might
reasonably be expected to have a Material Adverse Effect on Sterling and its
subsidiaries on a consolidated basis. No union represents or, to the
Knowledge of Sterling or Sterling Bank, claims to represent any employees of
Sterling, Sterling Bank or any Sterling Subsidiary, and, to the Knowledge of
Sterling or Sterling Bank, no labor union is attempting to organize employees of
Sterling, Sterling Bank or any Sterling Subsidiary.
(b) Sterling
has made available to Roma a true and complete list of all employees of
Sterling, Sterling Bank and each Sterling Subsidiary as of the date hereof,
together with the employee position, title, salary and date of
hire. Except as set forth on Sterling Schedule 3.16(a) hereto, no
employee of Sterling, Sterling Bank any Sterling Subsidiary has any contractual
right to continued employment by such entity.
(c) Sterling,
Sterling Bank and each Sterling Subsidiary 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 Sterling Schedule 3.20(d) hereto, there has not been, there is
not presently pending or existing and, to the Knowledge of Sterling or any of
its subsidiaries, there is not threatened any proceeding against or affecting
Sterling, Sterling Bank or any Sterling Subsidiary relating to the alleged
violation of any legal requirement 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 governmental body, organizational activity, or other labor or
employment dispute against or affecting Sterling, Sterling Bank or any Sterling
Subsidiary.
Section
3.21
Compliance with
Laws
. Except for any noncompliance that has been cured prior
to the date hereof or as disclosed in Sterling Schedule 3.21, Sterling, Sterling
Bank and each Sterling Subsidiary have materially complied with all applicable
federal, foreign, state and local laws, rules, ordinances, judgments,
regulations and orders applicable to them, their properties, assets, deposits,
business, conduct of business and relationship with their employees, including,
without limitation, the Sarbanes-Oxley Act of 2002, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”), the Bank Secrecy Act,
the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act of 1977, the Home Mortgage Disclosure Act, and all other
applicable fair lending laws and other laws relating to discriminatory business
practices and none of Sterling, Sterling Bank or any Sterling Subsidiary has
received any written notice to the contrary that is currently
outstanding. Except as disclosed in Sterling Schedule 3.21, none of
Sterling, Sterling Bank or any Sterling Subsidiary:
(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 Sterling and its subsidiaries on a consolidated basis);
(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 that 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 Sterling and its subsidiaries on a consolidated
basis), (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 Sterling and its subsidiaries on a consolidated
basis, (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 all similarly situated bank holding companies and their
subsidiary banks); or
(c) is
aware of, has been advised of, or has any reason to believe that any facts or
circumstances exist that 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, 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 Sterling Bank pursuant to Appendix B
to 12 C.F.R. Part 364. Furthermore, the Board of Directors of
Sterling Bank has adopted and Sterling and Sterling Bank have 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.
Section
3.22
Transactions with
Management
. Except for (a) deposits, all of which are on terms
and conditions comparable to those made available to other customers of Sterling
Bank at the time such deposits were entered into, (b) the loans listed on
Sterling 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 Sterling, Sterling Bank or a Sterling Subsidiary set
forth in Sterling Schedule 3.12(a), (d) any loans or deposit agreements entered
into in the ordinary course with customers of Sterling Bank, and (e) items set
forth on Sterling Schedule 3.22, 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 any such individuals No loan or
credit accommodation to any Affiliate of Sterling, Sterling Bank or any Sterling
Subsidiary is presently in default or, during the three-year period prior to the
date of this Agreement, has been in default or has been restructured, modified
or extended (with respect to extensions, not in the ordinary course of business)
except for rate modifications pursuant to its loan modification policy that is
applicable to all Persons. Sterling Bank has not been notified that
principal and interest with respect to any such loan or other credit
accommodation will not be paid when due or that the loan grade classification
accorded such loan or credit accommodation by Sterling Bank is
inappropriate.
Section
3.23
Derivative
Contracts
. Except as set forth on Sterling Schedule 3.23, none
of Sterling, Sterling Bank or any Sterling Subsidiary 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 Sterling
that is a financial derivative contract (including various combinations
thereof).
Section
3.24
Deposits
. Except
as set forth on Sterling Schedule 3.24, none of the deposits of Sterling 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, except as
set forth on Sterling Schedule 3.24, no portion of such deposits represents a
deposit of any Affiliate of Sterling, Sterling Bank or any Sterling
Subsidiary.
Section
3.25
Accounting Controls;
Disclosure Controls
.
(a) Sterling,
Sterling Bank and the Sterling 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 Boards of Directors and the duly authorized
executive officers of Sterling, Sterling Bank and the Sterling Subsidiaries;
(ii) all material transactions are recorded as necessary to permit the
preparation of financial statements in conformity with GAAP consistently applied
with respect to institutions such as Sterling, Sterling Bank and the Sterling
Subsidiaries 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 Sterling, Sterling Bank and the Sterling
Subsidiaries is permitted only in accordance with general or specific
authorization of the Boards of Directors and the duly authorized executive
officers of Sterling, Sterling Bank and the Sterling 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) Sterling
has in place “disclosure controls and procedures” as defined in Rules 13a-15(e)
and 15d-15(e) of the Exchange Act to allow Sterling’s management to make timely
decisions regarding required disclosures and to make the certifications of the
Chief Executive Officer and Chief Financial Officer of Sterling required under
the Exchange Act.
(c) None
of the records, systems, controls, data or information of Sterling, Sterling
Bank or any Sterling Subsidiary are recorded, stored, maintained, operated or
otherwise wholly or partly dependent on or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
that (including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of it or its subsidiaries or accountants
except as would not reasonably by expected to have a materially adverse effect
on the system of internal accounting controls described in the next
sentence. Sterling 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, including reasonable assurance
that (i) 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 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 Sterling Bank or any Sterling
Subsidiary to any of the executive officers or directors of Sterling, Sterling
Bank or any Sterling Subsidiary has been made or modified in violation of
Section 13 of the Exchange Act and Section 402 of the Sarbanes-Oxley
Act.
(e) Since
January 1, 2009, (i) none of Sterling, Sterling Bank or any Sterling Subsidiary
nor any director, officer or employee, or, to the Knowledge of Sterling,
Sterling Bank or any Sterling Subsidiary, any auditor, accountant or
representative of Sterling, Sterling Bank or any Sterling Subsidiary has
received any written complaint, allegation, assertion, or claim that such entity
has engaged in improper or illegal accounting or auditing practices or maintains
improper or inadequate internal accounting controls and (ii) to the Knowledge of
Sterling, Sterling Bank or any Sterling Subsidiary, no attorney representing
Sterling, Sterling Bank or any Sterling Subsidiary, whether or not employed by
Sterling or Sterling Bank, 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 Sterling, Sterling Bank, any Sterling Subsidiary or any of
their respective officers, directors, employees or agents to any officer of
Sterling, Sterling Bank, any Sterling Subsidiary, their Boards of Directors or
any member or committee thereof.
Section
3.26
SEC
Filings
. Except as set forth in Sterling Schedule 3.26,
Sterling has timely filed all forms, reports and documents required to be filed
by Sterling with the SEC since December 31, 2007 (collectively, the “Sterling
SEC Reports”). The Sterling SEC Reports (i) at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then the date of such filing), complied in all material respects with
the applicable requirements of the Securities Act of 1933, as amended (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
Sterling SEC Reports or necessary in order to make statements in the Sterling
SEC Reports, in light of the circumstances under which they were made, not
misleading.
Section
3.27
Proxy
Materials
. None of the information relating to Sterling,
Sterling Bank or the Sterling Subsidiaries to be included in the Proxy Statement
that is to be mailed to the shareholders of Sterling 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 materially false or misleading.
Section
3.28
Deposit
Insurance
. The deposit accounts of Sterling Bank are insured
by the FDIC in accordance with the provisions of the Federal Deposit Insurance
Act (the “FDI Act”); Sterling Bank has paid all regular premiums, required
prepayments of premiums and special assessments and filed all reports required
under the FDI Act.
Section
3.29
Intellectual
Property
. Except as set forth in Sterling Schedule 3.29,
Sterling, Sterling Bank and each Sterling Subsidiary own or possess valid and
binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, servicemarks, trademarks, computer
software and other intellectual property used in its businesses; none of
Sterling, Sterling Bank or any Sterling Subsidiary has received any notice of
conflict with respect thereto that asserts the right of others.
Section
3.30
Untrue Statements and
Omissions
. No representation or warranty contained in Article
3 of this Agreement or in the Sterling 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.
Section
3.31
Fairness
Opinion
. Prior to the execution of this Agreement, Sterling
has received a written opinion from Griffin, a true and complete copy of which
will be delivered to Roma promptly after the date of this Agreement, 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 Sterling
from a financial point of view. Such opinion has not been amended or
rescinded as of the date of this Agreement.
Section
3.32
No Trust
Powers
. None
of Sterling, Sterling Bank or any Sterling Subsidiary exercises 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
Registration
Obligations
. Sterling is not under any obligation, contingent
or otherwise, that will survive the Merger to register any of its securities
under the Securities Act or any state securities laws.
Section
3.34
Investment
Securities
. Except as set forth on Sterling Schedule 3.34, no
investment security or mortgage-backed security held by Sterling, Sterling Bank
or any Sterling Subsidiary, were it to be held as a loan, would be classified 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
classification.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF ROMA
Roma and
Roma Bank hereby represent and warrant to Sterling and Sterling 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 Roma
.
(a) Roma
is a corporation duly organized, validly existing and in good standing under the
laws of the United States of America. Roma 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, or as proposed to be conducted pursuant to this
Agreement, and Roma is licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by Roma, or the character or
location of the properties and assets owned or leased by Roma 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 Roma on a consolidated basis. Roma is duly
registered as a savings and loan holding company under the Home Owners’ Loan Act
of 1933, as amended. True and correct copies of the Charter and the
Bylaws of Roma, each as amended to the date hereof, have been made available to
Sterling.
(b) Roma
Bank is a federal savings bank, duly organized and validly existing under the
laws of the United States of America. Roma 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 Charter and the Bylaws of Roma Bank, each as amended
to the date hereof, have been made available to Sterling.
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 Roma and Roma Bank, and no other
corporate or other proceedings on the part of Roma and Roma Bank are or will be
necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement is the valid and binding obligation of Roma
and Roma 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 nor the consummation of the
transactions contemplated hereby will (i) violate any provision of the
respective charter documents of Roma or Roma Bank or, (ii) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Roma or any of its material properties or assets, except for (X)
such conflicts, breaches or defaults as are set forth in Roma Schedule 4.2; and
(Y) with respect to (ii) above, such as individually or in the aggregate will
not have a Material Adverse Effect on Roma on a consolidated basis.
Section
4.3
Consents and
Approvals
. Except for (i) the Consents of the Regulatory
Authorities; (ii) the approval of this Agreement by the shareholders of
Sterling; and (iii) as disclosed in Roma 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 Roma
and Roma Bank of this Agreement, and the consummation of the Merger and the
other transactions contemplated hereby. Neither Roma or Roma Bank is
a party to any, and there are no pending or, to the Knowledge of Roma or Roma
Bank, any threatened, judicial, administrative, arbitral or other proceedings,
claims (whether asserted or unasserted), actions, causes of action or
governmental investigations against Roma or Roma Bank challenging the validity
of the transactions contemplated by this Agreement.
Section
4.4
Proxy
Materials
. None of the information relating solely to Roma or
any Subsidiary to be included or incorporated by reference in the Proxy
Statement that is to be mailed to the shareholders of Sterling 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
Sterling 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 materially misleading.
Section
4.5
Regulatory
Matters
. Roma 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 or the Bank Secrecy Act.
Section
4.6
Access to
Funds
. Roma has, and on the Closing Date will have, access to
all funds necessary to consummate the Merger and pay the aggregate Merger
Consideration.
Section
4.7
Untrue Statements and
Omissions
. No representation or warranty contained in Article
4 of this Agreement or in the Roma 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
5
COVENANTS
AND AGREEMENTS
Section
5.1
Conduct of the Business of
Sterling and Sterling Bank
.
(a) During
the period from the date of this Agreement to the Effective Time of the Merger,
each of Sterling and Sterling Bank shall, and shall cause each Sterling
Subsidiary 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 for Sterling and Roma its
business organization, employees, goodwill with customers and advantageous
business relationships and retain the services of its officers and key
employees, (iii) except as required by law or regulation, take no action that
would adversely affect or delay the ability of any of the Parties 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, and (iv) take no action that results in or
that would reasonably be expected to result in a Material Adverse Effect on
Sterling.
(b) During
the period from the date of this Agreement to the Effective Time of the Merger,
except as required by law or regulation, none of Sterling, Sterling Bank or any
Sterling Subsidiary shall, without the prior written consent of Roma or as set
forth in this Agreement:
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(i)
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change,
delete or add any provision of or to its Certificate of Incorporation or
Bylaws or other governing documents of any such
entity;
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(ii)
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except
for the issuance of Sterling Shares upon the exercise of any outstanding
Sterling Options, 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 the authorized or issued capital stock, declare, set
aside or pay any dividend or other
distributions;
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(iii)
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with
respect to borrowings, incur any liabilities or material obligations
(other than deposit liabilities and short-term borrowings (including FHLB
borrowings and correspondent bank borrowings) with maturities of six
months or less 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;
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(iv)
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make
any capital expenditures individually in excess of $5,000 other than
expenditures necessary to maintain existing assets in good
repair;
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(v)
|
except
as set forth on Sterling Schedule 3.14(a), sell, transfer, convey or
otherwise dispose of any real property (including “other real estate
owned”) or interest therein;
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(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 except
for the Option Cancellation and Release Agreements; 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 or as may be necessary to cancel the Sterling Options;
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 two and
one-half percent (2.5%) of the individual’s base salary and not prior to
the one year anniversary of such prior year salary increase and following
not less than three business days prior notice to Roma; grant any increase
in salary, fees or other compensation or in other benefits to any of its
directors or officers; or effect any change in any material respect in
retirement benefits to any class of directors, officers or employees,
except as required by law;
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(vii)
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except
as set forth on Sterling Schedule 5.1(b), enter into or extend any
agreement requiring payments by Sterling in excess of $5,000, including
but not limited to any lease or license relating to real property,
personal property, data processing or bankcard functions, other than in
connection with capital expenditures permitted under Section 5.1(b)(iv)
and sales and dispositions permitted under Section
5.1(b)(v);
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(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, Sterling shall consult with Roma with
respect to any such foreclosures;
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(ix)
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originate,
purchase, extend or grant (a) any loan, including modifications to any
loans existing on the date hereof, in principal amount in excess of
$400,000 or (b) any construction loan, automobile loan or manufactured
housing loan in any amount;
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(x)
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file
any applications or make any contract with respect to branching by
Sterling 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 other than in
connection with foreclosing
proceedings;
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(xi)
|
form
any new Subsidiary;
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(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
Sterling Bank’s past practices;
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(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 and 8 not being
satisfied;
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(xiv)
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purchase
or sell or otherwise acquire any investment securities other than U.S.
Treasury securities, U.S. Government agency securities or mortgage-backed
securities guaranteed by an agency of the U.S. Government, in each case
purchased in the ordinary course of business consistent with past
practices and in accordance with Sterling’s investment
policy;
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(xv)
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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 restrictions upon any of their
operations;
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(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;
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(xvii)
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enter
into, renew, extend or modify any other transaction (other than a deposit
transaction) with any Affiliate other than pursuant to existing
policies;
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(xviii)
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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;
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(xix)
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except
for the execution of this Agreement, and actions taken or that 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);
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(xx)
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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 Sterling’s independent public
accountants;
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(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;
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(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 or otherwise permitted under this
Agreement;
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(xxiii)
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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;
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(xxiv)
|
make
any written communications to the directors, officers or employees of
Sterling, Sterling Bank or any Sterling Subsidiary pertaining to
compensation or benefit matters that are affected by the transactions
contemplated by this Agreement without first providing Roma with a copy or
description of the intended communication, which Roma shall promptly
review and comment on, and Roma and Sterling shall cooperate in providing
any such mutually agreeable
communication;
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(xxv)
|
issue
any broadly distributed communication of a general nature to customers
without the prior approval of Roma (which shall not be unreasonably
withheld), except as required by law or for communications in the ordinary
course of business consistent with past practice that do not relate to the
Merger or other transactions contemplated hereby;
or
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(xxvi)
|
agree
to do any of the foregoing.
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Section
5.2
Current
Information
. 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, Sterling will cause one or more of its designated
representatives to confer on a regular and frequent basis with representatives
of Roma and to report the general status of the ongoing operations of Sterling,
Sterling Bank and the Sterling Subsidiaries. Sterling will promptly
notify Roma of any material change in the normal course of business or the
operations or the properties of Sterling, any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) affecting Sterling, Sterling Bank, the Sterling Subsidiaries or
the threat of litigation, claims, threats or causes of action involving
Sterling, and will keep Roma fully informed of such events. Sterling
will furnish to Roma, promptly after the preparation and/or receipt by Sterling
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 Roma, be treated,
for purposes of Section 3.3 hereof, as among the Financial Statements of
Sterling or the Financial Regulatory Reports of Sterling Bank, as
applicable.
Section
5.3
Access to Properties;
Personnel and Records; Systems Integration
.
(a) For
so long as this Agreement shall remain in effect, Sterling, Sterling Bank and
the Sterling Subsidiaries shall permit Roma or its agents upon reasonable notice
reasonable access, during normal business hours, to their properties, and shall
disclose and make available (together with the right to copy) to Roma 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 Sterling, Sterling Bank
and the Sterling Subsidiaries, including all books of account (including the
general ledger), tax records, minute books of directors’ and shareholders’
meetings (other than minutes that discuss this Agreement or any of the
transactions contemplated by this Agreement), organizational documents, bylaws,
contracts and agreements, filings with any regulatory agency, 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 Roma may have a reasonable interest,
and Sterling and Sterling Bank shall use their reasonable best efforts to
provide to Roma and its representatives access to the work papers of Sterling’s
accountants. During the period from the date of this Agreement to the
Effective Time of the Merger or the time of termination of this Agreement,
Sterling shall provide to Roma with as much notice as reasonably possible of all
special and regular meetings of the Sterling and Sterling Bank Boards of
Directors and committees thereof and of all meetings of officers of Sterling,
and Sterling will invite a Roma representative to attend all meetings of
Sterling Bank’s Asset/Liability Committee, Audit Committee and Loan Committee
except those related to this Agreement or any of the transactions contemplated
by this Agreement and provide Roma with a copy of the board and committee
packages in advance of such meetings and a copy of the minutes of such meetings
promptly thereafter except those board and committee packages and minutes
relating to this Agreement or the transactions contemplated by this
Agreement. Sterling shall provide information not less than weekly
regarding the business activities and operations of Sterling Bank and all
parties will establish procedures for coordination and monitoring of transition
activities. Notwithstanding the foregoing, Sterling shall not 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 Sterling 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 that 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 that (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 that 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, Sterling and Sterling Bank shall, and shall cause
their directors, officers and employees to, and shall make all reasonable
efforts to cause Sterling’s data processing service providers to, cooperate and
assist Roma in connection with an electronic and systematic conversion of all
applicable data regarding Sterling to Roma Bank’s system of electronic data
processing provided that in no event shall such electronic and systematic
conversion take place prior to the Effective Time of the Merger. In
furtherance of, and not in limitation of, the foregoing, Sterling shall make
reasonable arrangements during normal business hours to permit personnel and
representatives of Roma Bank to train Sterling Bank’s employees in Roma Bank’s
system of electronic data processing. Sterling shall permit Roma to
train Sterling Bank’s employees during the 60-day period before the anticipated
Effective Time of the Merger (with certain key employees designated by Roma to
be made available for training during the 90-day period before the anticipated
Effective Time of the Merger) with regard to Roma’s operations, policies and
procedures at Roma’s sole cost and expense. This training may take
place at the branch offices of Sterling Bank or Roma Bank at such times to be
determined in cooperation with Sterling and shall be conducted in a manner so as
to not interfere with the business operations of the Sterling Bank branch
offices.
Section
5.4
Approval of
Shareholders
. Sterling shall prepare the Proxy Statement and
shall permit Roma to review and comment on such Proxy Statement prior to its
filing with the SEC, such filing to occur within 30 days after the date of this
Agreement. Sterling shall also inform Roma of any and all comments it
receives from the SEC on the preliminary Proxy Statement and shall permit Roma
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. Sterling will take all steps necessary under applicable
laws to call, give notice of, convene and hold a meeting of its shareholders 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 (“Sterling Shareholders Meeting”), at
such time as may be mutually agreed to by the Parties (but in no event later
than 45 days after the date of clearance of such Proxy
Statement). The Board of Directors of Sterling will recommend to its
shareholders the approval of this Agreement and the transactions contemplated
hereby, and Sterling will use its reasonable 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 or as otherwise permitted by this Section 5.5,
neither Sterling nor any Affiliate (as defined herein) thereof, nor any
investment banker, attorney, accountant or other representative (collectively,
“representatives”) retained by Sterling shall directly or indirectly (i)
initiate, solicit, encourage or otherwise take any action designed to or could
reasonably be expected to facilitate any inquiries or the making of any proposal
or offer that constitutes, or may reasonably be expected to lead to, any
“Acquisition Proposal” (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 Proposal. Neither Sterling 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 Proposal, and shall direct and use its
reasonable efforts to cause its Affiliates or representatives not to engage in
any of the foregoing. Sterling shall promptly notify Roma orally and
in writing in the event that it receives any inquiry or proposal relating to any
such transaction. Sterling 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, Sterling receives an unsolicited
bona fide
written Acquisition
Proposal not solicited in violation of this Agreement, and the Sterling Board of
Directors concludes in good faith (after consultation with its outside legal
counsel and financial advisor) (i) it is legally necessary for the proper
discharge of its fiduciary duties for the Board to respond to such Acquisition
Proposal and (ii) such Acquisition Proposal constitutes a “Superior Proposal”
(as defined below), Sterling 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, Sterling shall have entered into a confidentiality agreement
with such third party on terms no less restrictive to Sterling than the
confidentiality agreement with Roma, and provided further that Sterling also
shall provide to Roma 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 Roma. Sterling shall
promptly advise Roma orally and in writing of any Acquisition Proposal, the
material terms and conditions of any such Acquisition Proposal (including any
changes thereto) and the identity of the person making any such Acquisition
Proposal. Sterling shall (i) keep Roma fully informed in all material
respects of the status and details (including any change to the terms thereof)
of any Acquisition Proposal, (ii) provide to Roma as soon as practicable after
receipt or delivery thereof copies of all correspondence and other written
material sent or provided to Sterling or Sterling Bank from any person that
describes any of the terms or conditions of any Acquisition Proposal (including
any draft acquisition agreement) and (iii) keep Roma fully informed in all
material respects of the status and details of any determination by Sterling’s
Board of Directors with respect to any such Acquisition Proposal.
The term
“Acquisition Proposal” shall, with respect to Sterling, mean any proposal or
offer for any of the following: (a) a merger or consolidation, or any similar
transaction (other than the Merger) of any company with Sterling, (b) a
purchase, lease or other acquisition of all or substantially all the assets of
Sterling, (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) that would cause such person or group to become the beneficial owner
of securities representing 15% or more of the voting power of Sterling, or (d) a
tender or exchange offer to acquire securities representing 15% or more of the
voting power of Sterling. “Superior Proposal” means an Acquisition Proposal that
the Board of Directors of Sterling reasonably determines (after consultation
with Griffin Financial Group, LLC or another financial advisor of nationally
recognized reputation) to be (i) more favorable to the shareholders of
Sterling 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 Roma 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
Maintenance of Properties;
Certain Remediation and Capital Improvements
. Sterling,
Sterling Bank and the Sterling Subsidiaries will maintain their properties and
assets in satisfactory condition and repair for the purposes for which they are
intended, ordinary wear and tear excepted.
Section
5.7
Environmental
Audits
. Upon the written request of Roma, which request shall
occur within thirty (30) days of the date hereof, Sterling will permit Roma, at
Roma’s expense, with respect to each parcel of real property owned by Sterling
or Sterling Bank, to procure an environmental audit.
Section
5.8
Title
Insurance
. Upon the written request of Roma, which request
shall occur within thirty (30) days of the date hereof, Sterling will permit
Roma, at Roma’s expense, with respect to each parcel of real property owned by
Sterling or Sterling Bank, to obtain a commitment to issue owner’s title
insurance in such amounts and by such insurance company reasonably acceptable to
Roma.
Section
5.9
Surveys
. Upon
the written request of Roma, which request shall occur within thirty (30) 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 5.8, Sterling will
permit Roma, at Roma’s expense, to obtain a survey of such real property, which
survey shall be reasonably acceptable to and shall be prepared by a licensed
surveyor reasonably acceptable to Roma, 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”).
Section
5.10
Consents to Assign and Use
Leased Premises
. With respect to the leases disclosed in
Sterling Schedule 3.14(b), Sterling will use its reasonable best efforts to
obtain all Consents necessary or appropriate to transfer and assign all right,
title and interest of Sterling and Sterling Bank to Roma Bank and to permit the
use and operation of the leased premises by Roma Bank as of the
Closing.
Section
5.11
Compliance
Matters
. Prior to the Effective Time of the Merger, Sterling
shall take, or cause to be taken, all steps reasonably requested by Roma to cure
any deficiencies in regulatory compliance by Sterling or Sterling Bank;
provided, however, neither Roma nor Roma Bank shall be responsible for
discovering, nor shall Roma have any liability resulting from, such deficiencies
or attempts to cure them.
Section
5.12
Support
Agreements
. Sterling shall deliver to Roma, 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 each executive officer (including the President
and Chief Executive Officer, the Chief Financial Officer and each Executive Vice
President) of Sterling and Sterling Bank.
Section
5.13
Disclosure
Controls
.
(a) Between
the date of this Agreement and the Effective Time of the Merger, Sterling shall
maintain disclosure controls and procedures that are effective to ensure that
material information relating to Sterling, Sterling Bank and the Sterling
Subsidiaries is made known to the President and Chief Executive Officer and
Chief Financial Officer of Sterling to permit Sterling to record, process,
summarize and report financial data in a timely and accurate manner; (ii) such
officers shall promptly disclose to Sterling’s auditors and audit committee any
significant deficiencies in the design or operation of internal controls that
could adversely affect Sterling’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 Sterling’s internal controls; and (iii)
Sterling 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 of the Merger, Sterling shall,
upon reasonable notice during normal business hours, permit Roma (a) to meet
with the officers of Sterling and Sterling Bank responsible for the Financial
Statements of Sterling and Sterling Bank and the internal control over financial
reporting of Sterling and Sterling Bank to discuss such matters as Roma may deem
reasonably necessary or appropriate concerning Roma’s obligations under Sections
302 and 906 of the Sarbanes-Oxley Act; and (b) to meet with officers of Sterling
and Sterling Bank to discuss the integration of appropriate disclosure controls
and procedures and internal control over financial reporting relating to
Sterling’s and Sterling Bank’s operations with the controls and procedures and
internal control over financial reporting of Roma for purposes of assisting Roma
in compliance with the applicable provisions of the Sarbanes-Oxley Act following
the Effective Time of the Merger. Sterling shall, and shall cause its
and Sterling Bank’s respective employees and accountants to, fully cooperate
with Roma in the preparation, documentation, review, testing and all other
actions Roma deems reasonably necessary to satisfy the internal control
certification requirements of Section 404 of the Sarbanes-Oxley
Act.
ARTICLE
6
ADDITIONAL
COVENANTS AND AGREEMENTS
Section
6.1
Best Efforts;
Cooperation
. Subject to the terms and conditions of this
Agreement, each of the Parties hereto agrees to use its reasonable best efforts
in good faith 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, so as permit consummation of the Merger as promptly as practicable and
otherwise to enable consummation of the transactions contemplated by this
Agreement, including the satisfaction of the conditions set forth in Article 7
hereof, and furthermore agrees to cooperate fully with the other Party to that
end.
Section
6.2
Regulatory
Matters
.
(a) As
promptly as practicable following the execution and delivery of this Agreement,
but in no event more than 45 days from the date hereof, Roma and Sterling shall
cause to be prepared and filed all required applications and filings with the
Regulatory Authorities that 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 that 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 Sterling. 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 Roma or any of its Affiliates and
any officer or employee of Sterling or an obligation on the part of Roma or any
of its Affiliates to employ any such officers or employees.
(b) Roma
will honor the Change in Control Agreements of Sterling as set forth at Sterling
Schedule 6.3(b), subject to the terms of the Addenda to the Change in Control
Severance Agreement entered into between Roma, Roma Bank and certain officers of
Sterling Bank, the form of which is attached as Exhibit C. Roma will
also honor the Employment Agreement between Sterling Bank and Robert King, as
amended by the Addendum to Employment Agreement attached as Exhibit
D. Sterling Schedule 6.3(b) includes a calculation of all potential
payments and supporting data as detailed in the Employment Agreement and the
Change in Control Agreements calculated as of the date of this Agreement and to
be updated in advance of the Closing Date.
(c) Roma
shall merge the Sterling 401(k) plan into its 401(k) plan as soon as
administratively feasible after the Effective Time of the
Merger. Sterling employees who continue as employees of Roma Bank
after the Effective Time of the Merger (“Continuing Employees”) shall receive,
for purposes of eligibility to participate and receive employer contributions
under any Roma Bank 401(k) plan, credit for all service with Sterling, Sterling
Bank, or any Sterling Subsidiary and shall enter any Roma Bank 401(k) plan in
accordance with its terms as soon as administratively feasible following the
Effective Time of the Merger.
(d) After
the Merger, Roma shall continue, except to the extent not consistent with law,
Sterling’s health and welfare benefit plans, programs, insurance and other
policies until such time as Roma elects to take alternative
action. Sterling will assist Roma before the Effective Time of the
Merger in reviewing such benefit plans and programs and will take such actions
that may be requested by Roma with respect to such plans to take effect not
sooner than the Effective Time, unless consented by Sterling. In the
event Roma elects to terminate any of Sterling’s health and welfare benefit
plans, programs, insurance and other policies, Continuing Employees will become
eligible to participate in the medical, dental, health or disability plan
maintained by Roma or Roma Bank. Roma or Roma Bank, as applicable,
shall cause each such plan that shall be implemented as a replacement plan to
such Sterling plan that is terminating to (i) waive any preexisting condition
limitations to the extent such conditions for such participant are covered under
the applicable Sterling medical, health, dental or disability plans and (ii)
waive any waiting period limitation or evidence of insurability requirement that
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 Sterling Employee Benefit Plan prior to the
enrollment date.
(e) Until
the Effective Time of the Merger, Sterling 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 Sterling qualifying
beneficiary (as defined in COBRA) who incurs a qualifying event (as defined in
COBRA) before the Effective Time of the Merger. Roma shall be liable
for (i) all obligations for continued health coverage under COBRA with respect
to each Sterling qualified beneficiary (as defined in COBRA) who incurs a
qualifying event (as defined in COBRA) from and after the Effective Time of the
Merger, and (ii) for continued health coverage under COBRA from and after the
Effective Time of the Merger for each Sterling qualified beneficiary who incurs
a qualifying event before the Effective Time of the Merger.
(f) Employees
of Sterling (other than the Named Officers, as such term defined in Section
11.1) as of the date of the Agreement who remain employed by Sterling as of the
Effective Time of the Merger and whose employment is terminated by Sterling or
Roma Bank (absent termination for cause as determined by the employer) within
six (6) months after the Effective Time shall receive severance pay equal to two
(2) weeks of base weekly pay for each year of employment service completed with
Sterling prior to the Effective Time, with a minimum severance payment to an
individual equal to four (4) weeks of base pay and a maximum payment equal to 26
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 Sterling prior to the Effective Time of the
Merger.
(g) Continuing
Employees shall be eligible to participate in the Roma Employee Stock Ownership
Plan, provided that such employees shall not receive credit for prior employment
service with Sterling for purposes of eligibility to participate and vesting
service with respect to such plan.
Continuing Employees
shall be eligible to participate in Roma’s Defined Benefit Pension Plan (or any
substitute plan), provided that such employees shall not receive credit for
prior employment service with Sterling for purposes of eligibility to
participate and vesting service, nor for purposes of benefit accrual purposes,
with respect to such plan.
Section
6.4
Indemnification
.
(a) For
a period of six (6) years after the Effective Time of the Merger, Roma shall
indemnify, defend and hold harmless the directors and officers of Sterling and
Sterling Bank (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 that Sterling or Sterling Bank would have been permitted
under any applicable law. Roma shall pay expenses, including
reasonable attorney’s fees, as they are incurred and in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by applicable state or federal law upon receipt of an
undertaking to repay such advance payments if he or she shall be adjudicated or
determined not to be entitled to indemnification.
(b) After
the Effective Time of the Merger, directors, officers and employees of Sterling,
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 Roma and its subsidiaries
would be entitled under the Charter and Bylaws of Roma or the particular
subsidiary for which they are serving as officers, directors or employees and
under such directors’ and officers’ liability insurance policy as Roma may then
make available to officers, directors and employees of Roma and its
subsidiaries.
(c) Roma
shall (and Sterling shall cooperate prior to the Effective Time of the Merger)
maintain in effect for a period of three (3) years after the Effective Time of
the Merger Sterling’s existing directors’ and officers’ liability insurance
policy; provided that Roma may substitute therefor (i) policies with comparable
coverage and amounts containing terms and conditions that are substantially no
less advantageous or (ii) with the consent of Sterling (given prior to the
Effective Time of the Merger) any other policy with respect to claims arising
from facts or events that occurred prior to the Effective Time of the Merger and
covering persons who are currently covered by such insurance; and provided
further that Roma shall not be obligated to make premium payments applicable to
such three (3) year period in respect of such policy (or coverage replacing such
policy) that exceed, for the portion related to Sterling’s directors and
officers, 135% of the annual premium payments on Sterling’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, Roma 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.
(d) If
Roma, Roma Bank or any of their successors and assigns shall consolidate with or
merge into any other person and shall not be the continuing or surviving person
of such consolidation or merger (including without limitation the merger of
Sterling into Roma contemplated hereby), or shall transfer all or substantially
all of its assets to any person, then, in each case, proper provisions shall be
made so that the successors and assigns of Roma and Roma Bank shall assume the
obligations set forth in this Section 6.4.
(e) The
provisions of this Section 6.4 are intended for the benefit of, and shall
be enforceable by each Indemnified Party, and each Indemnified Party’s heirs and
representatives.
Section
6.5
Transaction Expenses of
Sterling
.
(a) Sterling
Schedule 6.5(a) contains Sterling’s estimated budget of transaction-related
expenses reasonably anticipated to be payable by Sterling in connection with
this Agreement and the transactions contemplated thereunder through the Closing
Date, including any payments to be made in accordance with any employment
agreements, change in control agreements, non-compete agreements or bonus
arrangements between any officer and Sterling to be made before or after the
Effective Time of the Merger, based on facts and circumstances then currently
known, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. Sterling shall use its best efforts
to maintain expenses within the budget.
(b) Promptly
after the execution of this Agreement, Sterling shall ask all of its attorneys
and other professionals to render current and correct invoices for all unbilled
time and disbursements within 30 days, except for any success fees due upon
completion or termination of the Merger, all of which are detailed, including
the amount and circumstances under which they will be due, on Sterling Schedule
6.5(b). Sterling shall review these invoices and track such expenses
against the budget referenced above, and Sterling shall advise Roma of such
matters prior to payment of such invoices.
(c) Sterling
shall ask its professionals to render monthly invoices within thirty (30) days
after the end of each month. Sterling shall advise Roma monthly of
such invoices for professional services, disbursements and reimbursable expenses
that Sterling has incurred in connection with this Agreement prior to payment of
such invoices, and Sterling shall track such expenses against the budget
referenced above.
(d) Sterling,
in reasonable consultation with Roma, shall make all arrangements with respect
to the printing and mailing of the Proxy Statement, the expenses of which shall
be the responsibility of Sterling.
(e) Not
later than two (2) business days prior to the Closing Date, Sterling shall
provide Roma 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. Sterling
shall detail any variance of such transaction expenses to the budget set forth
at Sterling Schedule 6.5(a) as of the date of the Agreement.
Section
6.6
Press
Releases
. Roma and Sterling 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 that 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 that is required by law or
regulation.
Section
6.7
Prior Notice and Approval
Before Payments To Be Made
. No payments shall be made by
Sterling 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, non-compete agreements, deferred
compensation plan, bonus, vacation or leave plan or other compensation or
benefits program), which payments arise upon the termination of such
agreement, contract, plan or arrangement or upon the termination of employment
or service of such recipient with Sterling, except to the extent that such
intended payments (i) have been set forth in the Sterling Schedules furnished to
Roma at the date of this Agreement, (ii) with prior written notice to Roma of
such intended payment, and (iii) delivery of a written acknowledgement and
release executed by the recipient and Sterling reasonably satisfactory to Roma
in form and substance. Prior to Sterling making any such payments to
any officer or director, Sterling, 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 Sterling
shall furnish Roma with a detailed schedule related to such determination prior
to making any such payments.
Section
6.8
Boards of Directors of Roma
and Roma Bank
. Roma will appoint to the Board of Directors of
Roma and Roma Bank one individual who currently serves on the Board of Directors
of Sterling and who is acceptable to Roma in its sole and absolute
discretion.
Section
6.9
Supplemental
Indenture
. Prior to the Effective Time of the Merger, Sterling
shall take all actions necessary to enter into a supplemental indenture with the
Trustee of the Indenture dated May 1, 2007 for Sterling’s variable rate junior
subordinated deferrable interest debentures to evidence the succession of Roma
as of the Effective Time of the Merger. The form of the supplemental
indenture shall be reasonably acceptable to Roma, and Roma agrees to accept the
covenants, agreements and obligations of Sterling under such
Indenture.
Section
6.10
Notification of Certain
Matters
. Each party shall give prompt notice to the others of
(a) any event, condition, change, occurrence, act or omission that causes any of
its representations hereunder to cease to be true in all material respects (or,
with respect to any such representation that 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 that individually or in
the aggregate has, or that, 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 Sterling and Roma 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.
ARTICLE
7
MUTUAL
CONDITIONS TO CLOSING
The
obligations of Roma, on the one hand, and Sterling, on the other hand, to
consummate the transactions provided for herein shall be subject to the
satisfaction of the following conditions, unless waived in writing as
hereinafter provided for:
Section
7.1
Shareholder
Approval
. The Merger shall have been approved by the requisite
vote of the shareholders of Sterling.
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, that, in the case of (i) through (iii), and in the reasonable
judgment of either Roma or Sterling, based upon advice of counsel, would have a
Material Adverse Effect with respect to Roma or Sterling, 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 the 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.
Section
7.4.
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.
ARTICLE
8
CONDITIONS
TO THE OBLIGATIONS OF ROMA
The
obligation of Roma to consummate the Merger is subject to the satisfaction of
each of the following conditions, unless waived as hereinafter provided
for:
Section
8.1
Representations and
Warranties
. The representations and warranties of Sterling and
Sterling 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. For purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct unless the failure of such
representations and warranties to be true and correct, either individually or in
the aggregate and without giving effect to any qualification as to materiality
or Material Adverse Effect set forth in such representations and warranties,
will have or is reasonably likely to have a Material Adverse Effect on Sterling
and its subsidiaries taken as a whole. Notwithstanding the immediately preceding
sentence, the representations and warranties contained in Section 3.2 shall be
deemed untrue and incorrect if not true and correct except to an immaterial
(relative to Section 3.2 taken as a whole) extent.
Section
8.2
Performance of
Obligations
. Sterling and Sterling Bank shall have performed
in all material respects all covenants, obligations and agreements required to
be performed by it under this Agreement prior to the Effective Time of the
Merger.
Section
8.3
Certificate Representing
Satisfaction of Conditions
. Sterling shall have delivered to
Roma a certificate of the Chief Executive Officer of Sterling dated as of the
Closing Date and without personal liability as to the satisfaction of the
matters described in Sections 8.1 8.2, 8.8 and 8.9 hereof, and such certificate
shall be deemed to constitute additional representations, warranties, covenants,
and agreements of Sterling under Article 3 of this Agreement.
Section
8.4
Consents Under
Agreements
. Sterling 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 Sterling 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, 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
8.5
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, other than standard
conditions that are normally imposed by Regulatory Authorities in bank merger
transactions, that, in connection with the grant of any Consent by any
Regulatory Authority, imposes, in the good faith judgment of Roma, any material
adverse requirement upon Roma or any Roma subsidiary, including, without
limitation, any requirement that Roma sell or dispose of any significant amount
of the assets of Sterling or any other Roma subsidiary.
Section
8.6
Certification of
Claims
. Sterling shall have delivered a certificate to Roma
that, other than as set forth in such certificate, Sterling is not aware of any
pending or threatened claim under the directors and officers insurance policy or
the fidelity bond coverage of Sterling.
Section
8.7
Audited Financial
Statements
. Roma shall have received audited financial
statements of Sterling as of and for the year ended December 31, 2009 prepared
by McGladrey & Pullen, LLP, together with McGladrey's unqualified opinion on
such financial statements.
Section
8.8
Minimum Tangible
Equity
. Sterling’s tangible common equity capital as of the
Closing Date, taking into account all transaction costs and accounting
adjustments (excluding adjustments pursuant to Statement of Financial Accounting
Standards No. 141R) that will be recorded by Sterling as of the Closing Date,
shall be not less than $9,900,000.
Section
8.9
Nonperforming
Assets
. Sterling’s Nonperforming Assets, as defined in Section
11.1, shall not exceed $30,000,000 for the period from January 1, 2010 through
the Closing Date.
Section
8.10
Environmental Audit
Results
. The results of any environmental audit conducted by
Roma pursuant to Section 5.7 hereof shall not indicate circumstances
or conditions that require remediation with an estimated cost in excess of
$500,000 for all such properties.
Section
8.11
Option Cancellation
Agreements
. If the Board of Directors of Sterling has not
taken all action necessary to cause the Sterling Options to be terminated and
canceled at or prior to the Effective Time of the Merger or, in the case of the
2008 Plans, terminated and redeemable at or immediately after the Effective Time
of the Merger for no consideration or, if such Board of Directors action
requires the consent of any option holder, each holder of a Sterling Option
shall have executed and delivered an Option Cancellation and Release Agreement
in the form attached as Exhibit E.
Section
8.12
Support
Agreements
. Each director and executive officer of Sterling
shall have executed a Support Agreement in the form attached as Exhibit B as of
the date of this Agreement
.
Section
8.13
Addenda to Change in Control
Severance Agreements
. Designated officers of
Sterling and Sterling Bank (R. Scott Horner, John Herninko, Sherri
Valentino-Congdon, Dale F. Braun, Jr. and Kimberly Johnson) shall have executed
an Addendum to the Change in Control Severance Agreement with Roma and Roma Bank
in the form attached as Exhibit C as of the date of this Agreement.
ARTICLE
9
CONDITIONS
TO OBLIGATIONS OF STERLING
The
obligation of Sterling to consummate the Merger as contemplated herein is
subject to the satisfaction of each of the following conditions, unless waived
as hereinafter provided for:
Section
9.1
Representations and
Warranties
. The representations and warranties of Roma
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. For
purposes of this paragraph, such representations and warranties shall be deemed
to be true and correct unless the failure of such representations and warranties
to be true and correct, either individually or in the aggregate and without
giving effect to any qualification as to materiality or Material Adverse Effect
set forth in such representations and warranties, will have or is reasonably
likely to have a Material Adverse Effect on Roma and its subsidiaries taken as a
whole.
Section
9.2
Performance of
Obligations
. Roma and Roma Bank shall have performed in all
material respects all covenants, obligations and agreements required to be
performed by them under this Agreement prior to the Effective Time of the
Merger.
Section
9.3
Certificate Representing
Satisfaction of Conditions
. Roma shall have delivered to
Sterling a certificate of the Chief Executive Officer of Roma dated as of the
Effective Time of the Merger and without personal liability 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 Roma 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 Boards of Directors of Roma and
Sterling;
(b) by
the Board of Directors of Roma or Sterling if the Merger shall not have occurred
on or prior to December 31, 2010, 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 Roma or Sterling (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 Sterling and Section 9.1 in the case of Roma 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 that 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 Sterling and Section 9.1 of this Agreement in the
case of Roma;
(d) by
the Board of Directors of Roma or Sterling (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 Sterling and Section 9.1 in the case of Roma 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 that cannot be or has not been cured within thirty
(30) days after the giving of written notice to the breaching party of such
breach;
(e) by
the Board of Directors of Roma or Sterling in the event (1) 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 (2) the shareholders of Sterling
fail to vote their approval of this Agreement and the Merger and the
transactions contemplated hereby as required by applicable law at Sterling’s
shareholders’ meeting where the transactions were presented to such shareholders
for approval and voted upon;
(f) by
the Board of Directors of Roma or Sterling (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 Sterling and Section 9.1 in the case of Roma 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;
(g) by
the Board of Directors of Roma, (i) if Sterling fails to hold its shareholder
meeting to vote on the Agreement by August 31, 2010 or (ii) if Sterling’s Board
of Directors either (A) fails to recommend, or fails to continue its
recommendation, that the shareholders of Sterling vote in favor of the adoption
of this Agreement or (B) modifies, withdraws or changes in any manner adverse to
Roma its recommendation that the shareholders of Sterling vote in favor of the
adoption of this Agreement;
(h) by
the Board of Directors of Roma, (i) if Sterling’s Nonperforming Assets exceed
$30,000,000 for the period from January 1, 2010 through the Closing Date, or
(ii) if Sterling’s tangible common equity capital is less than $9,900,000 on the
Closing Date; or
(i) By
the Board of Directors of Sterling, if, after it has received a Superior
Proposal in compliance with Section 5.5 and otherwise complied with all of its
obligations under Section 5.5, Sterling or any of its subsidiaries enters into a
definitive agreement with respect to, or consummates a transaction
which is the subject of, an Acquisition Proposal; provided, however, that this
Agreement may only be terminated in accordance with this Section 10.1(i) and a
new definitive agreement entered into by Sterling with a third party (A) not
earlier than 72 hours following written notice to Roma advising Roma that the
Board of Directors of Sterling is prepared to accept such Superior Proposal and
(B) after payment, in immediately available funds of the Termination Fee (as
defined below).
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) In
the event of termination of this Agreement pursuant to Section 10.1, except as
provided in Section 10.2(c), whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses. In the event of a termination of this Agreement because of
a willful breach of any representation, warranty, covenant or agreement
contained in this Agreement, the breaching party shall remain liable for any and
all damages, costs and expenses, including all reasonable attorneys’ fees,
sustained or incurred by the non-breaching party as a result thereof or in
connection therewith or with respect to the enforcement of its rights
hereunder.
(c) If,
after the date of this Agreement, (i) Roma terminates this Agreement in
accordance with Section 10.1(g) or (ii) Sterling terminates this Agreement in
accordance with Section 10.1(i), then immediately upon the occurrence of the
events specified in Section 10.2(c)(i) or Section 10.2(c)(ii) and in addition to
any other rights and remedies of Roma, Sterling shall pay Roma a cash amount of
$745,000 as an agreed-upon termination fee (the “Termination
Fee”). If, after, the date of this Agreement, Sterling or Roma
terminates this Agreement in accordance with Section 10.1(e)(2) (a “Trigger
Event”) and an Acquisition Transaction, as defined below, involving Sterling is
consummated or a definitive agreement is entered into by Sterling relating to an
Acquisition Transaction, in either case within 18 months following a Trigger
Event (a “Subsequent Trigger Event”), then, upon such Subsequent Trigger Event,
in addition to any other rights and remedies of Roma, Sterling shall pay Roma
the Termination Fee. If payment of the Termination Fee is made, then
Roma will not have any other rights or claims against Sterling or its
subsidiaries, or their respective officers and directors, under this Agreement,
it being agreed that the acceptance of the Termination Fee under Section 10.2(c)
will constitute the sole and exclusive remedy of Roma against Sterling, Sterling
Bank, or their respective officers and directors. For purposes of
this Section 10.2(c), “Acquisition Transaction” means any of the following: (w)
a merger or consolidation, or any similar transaction (other than the Merger) of
any company with Sterling; (x) a purchase, lease or other acquisition of all or
substantially all the assets of Sterling; (y) 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) that would cause such person or
group to become the beneficial owner of securities representing 15% or more of
the voting power of Sterling; or (z) a tender or exchange offer to acquire
securities representing 15% or more of the voting power of
Sterling.
(d) Sterling
and Roma 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 Roma, Roma Bank, Sterling and Sterling
Bank.
Section
10.4
Waivers
. Subject
to Section 11.11 hereof, prior to or at the Effective Time of the Merger, Roma,
on the one hand, and Sterling, 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,
that, 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 Roma
or Sterling shall not survive the Effective Time of Merger, except that Section
5.3(b), Section 6.3 and Section 6.4 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 Roma, Sterling (or
directors and officers thereof in their capacities as such) shall not survive
the Effective Time of Merger; provided that no representation or warranty of
Roma, Roma Bank, Sterling or Sterling Bank contained herein shall be deemed to
be terminated or extinguished so as to deprive Roma, on the one hand, or
Sterling, on the other hand, of any defense at law or in equity which either 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 Roma or Sterling 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 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.
“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, or
reasonably should have been known, by the officers and directors of such Person
and its subsidiaries 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.
“Loan
Property” means any property owned by Sterling or Sterling Bank, or in which
Sterling or Sterling Bank 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 that, 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 (i) the economy or financial
markets in general including changes in market interest rates generally, (ii)
actions and omissions of a party hereto (or any of its subsidiaries) taken with
the prior written consent of the other party as permitted by this Agreement,
(iii) the effect of incurring and paying reasonable expenses in connection with
negotiating, entering into, performing and consummating the transactions
contemplated by this Agreement, (iv) changes in applicable laws or the
interpretation thereof generally affecting financial institutions and their
holding companies after the date hereof, and (v) changes in GAAP or the
interpretation thereof generally affecting financial institutions and their
holding companies after the date hereof.
“Named
Officers” means Robert H. King, R. Scott Horner, John Herninko, Sherri
Valentino-Congdon, Dale F. Braun, Jr., Kimberly Johnson, Nicholas Ricciuti and
Letitia Baum.
“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 and
(iii) troubled debt restructurings, as defined in the Call Report
Instructions.
“Participation
Facility” means any facility in which Sterling or Sterling Bank 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 42 USC §9601(20)
(E) and (F).
“Regulatory
Authorities” shall mean, collectively, the United States Department of Justice,
the FRB, the FDIC, the Office of Thrift Supervision, and all state regulatory
agencies having jurisdiction over the Parties (including the New Jersey
Department of Banking and Insurance), the Financial Institution Regulatory
Authority and the SEC.
“Roma
Schedules” shall mean the disclosure schedules, dated as of the date of this
Agreement and delivered to Sterling by Roma prior to execution of this
Agreement.
“Sterling
Schedules” shall mean the disclosure schedules, dated as of the date of this
Agreement and delivered to Roma by Sterling prior to execution of this
Agreement.
“Subsidiary”
means any corporation, financial institution, joint venture, partnership,
limited liability company, trust or other business entity: (i) 25% or more of
any outstanding class of whose voting interests is directly or indirectly owned
by the relevant Person, or is held by it with power to vote; (ii) the election
of a majority of whose directors, trustees, general partners or comparable
governing body is controlled in any manner by the relevant Person; or (iii) with
respect to the management or policies of which the relevant Person has the
power, directly or indirectly, to exercise a controlling
influence. Subsidiary shall include an indirect Subsidiary of the
relevant Person that is controlled in any manner specified above through one or
more corporations or financial institutions that are themselves
Subsidiaries.
Section
11.2
Entire
Agreement
. This Agreement and the documents referred to herein
contain the entire agreement between Roma and Sterling 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, requests or other communications that are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
first class or registered or certified United States mail, postage prepaid, sent
by a nationally recognized overnight delivery service, or facsimile transmission
addressed as follows:
If to
Sterling or Sterling Bank:
Sterling
Banks, Inc.
3100
Route 38
Mount
Laurel, NJ 08054
Attention: Robert
H. King, President and Chief Executive Officer
Facsimile
No.:
With a
copy to:
Stevens
& Lee
1415
Marlton Pike East, Suite 506
Cherry
Hill, NJ 08034-2210
Attention: Edward
C. Hogan, Esq.
Facsimile
No.: (610) 371-7387
With a
copy to:
Griffin
Financial Group, LLC
607
Washington Street
Reading,
PA 19603
Attention: Joseph
M. Harenza
Facsimile
No. (610) 371-8500
If to
Roma or Roma Bank, then to:
Roma
Financial Corporation
2300
Route 33
Robbinsville,
NJ 08691
Attention: Peter
A. Inverso, President and Chief Executive Officer
Facsimile
No.: (609) 223-8303
With a
copy to:
Malizia
Spidi & Fisch, PC
901 New
York Avenue, NW, Suite 210 East
Washington,
DC 20001
Attention: Samuel
J. Malizia, Esq.
Daniel H. Burd, Esq.
Facsimile
No.: (202) 434-4661
With a
copy to:
FinPro,
Inc.
20 Church
Street
Liberty
Corner, NJ 07938
Attention: Dennis
Gibney
Facsimile
No.: (908) 604-5951
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 (3
rd
)
business day after deposit in the United States mail when delivery is made by
first class, registered or certified mail, and (iv) on the business day after
transmission when made by 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 such remaining 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 set forth in Section 10.2, expenses
incurred by Sterling on the one hand and Roma 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 that 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 Roma to a subsidiary of Roma or
Roma Bank).
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
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 were 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 hereof 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.
Section
11.13
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 GAAP, 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.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in
counterparts 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.
[CORPORATE
SEAL]
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ROMA
FINANCIAL CORPORATION
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By:
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/s/Peter A. Inverso
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Peter
A. Inverso
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President
and Chief Executive Officer
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ATTEST:
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/s/Margaret T. Norton
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Its
Secretary
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[CORPORATE
SEAL]
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ROMA
BANK
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By:
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/s/Peter A. Inverso
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Peter
A. Inverso
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President
and Chief Executive Officer
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ATTEST:
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/s/Margaret T. Norton
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Its
Secretary
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[CORPORATE
SEAL]
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STERLING
BANKS, INC.
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By:
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/s/Robert H. King
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Robert
H. King
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President
and Chief Executive Officer
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ATTEST:
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/s/R. Scott Horner
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Its
Secretary
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[CORPORATE
SEAL]
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STERLING
BANK
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By:
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/s/Robert H. King
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Robert
H. King
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President
and Chief Executive Officer
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ATTEST:
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/s/R. Scott Horner
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Its
Secretary
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March 17,
2010
The Board
of Directors
Sterling
Banks, Inc.
3100
Route 38
Mount
Laurel, NJ 08054
Members
of the Board of Directors:
You have
requested our opinion as to the fairness, from a financial point of view, to the
holders of common stock, par value $2.00 per share (the “Company Common
Stock”), of Sterling Banks, Inc. and Sterling Bank (the “Company”) of the
consideration (as defined below) in the proposed merger (the “Transaction”) of
the Company with Roma Financial Corporation and Roma Bank (the
“Acquirer”). Pursuant to the Agreement and Plan of Merger, dated as
of March 17, 2010 (the “Agreement”), by and between the Company and the
Acquirer, the Company will be merged with and into the Acquirer, and each
outstanding share of Company Common Stock, other than shares of Company Common
Stock held in treasury or owned by the Acquirer and its affiliates, will be
converted into the right to receive a cash amount equal to $2.52 (the “Merger
Consideration”). None of the 605,175 shares of Company Common Stock
issuable upon exercise of outstanding employee options are in the money and are
contractually required to be cancelled at closing.
In
arriving at our opinion, we have (i) reviewed a draft of the Agreement;
(ii) reviewed and discussed with the Company certain publicly available
business and financial information concerning the Company and the banking
economic and regulatory environments in which it operates; (iii) reviewed
and discussed with management of the Company preliminary financial information
as of December 31, 2009 and for the periods then ended; (iv) reviewed
and discussed with the Company matters relating to the Company’s liquidity,
pre-provision net income, asset quality, reserve levels and capital adequacy;
(v) compared the proposed financial terms of the Transaction with the
publicly available financial terms of certain transactions involving companies
and time frames we deemed relevant; (vi) compared the financial condition
and operating performance of the Company with publicly available information
concerning certain other companies we deemed relevant, with emphasis on
pre-provision net income, asset quality, reserve levels and capital adequacy,
(vii) reviewed and compared the current and historical market prices of the
Company Common Stock with certain publicly traded securities of such other
companies we deemed comparable; (viii) considered the status of the
Company’s agreement with the Federal Reserve Bank of Philadelphia and the New
Jersey Department of Banking and Insurance and other issues pertaining to
regulatory status matters and Sterling’s regulatory status; (ix) took into
account the breadth and results of the process it conducted to identify an
investor in, or a buyer for, Sterling; and (ix) performed such other financial
studies and analyses and considered such other information as we deemed
appropriate for the purposes of this opinion.
In
addition, we have held discussions with certain members of the management of the
Company and the Acquirer with respect to certain aspects of the Transaction, and
the past and current business operations of the Company, the financial condition
and future prospects and operations of the Company, the effects of the
Transaction on the financial condition and future prospects of the Acquirer on a
pro forma consolidated basis, and certain other matters we believed necessary or
appropriate to our inquiry. In the course of such discussions, we
have been advised by members of the management of the Company that the Company
has been negatively affected in a significant manner by, and continues to have
considerable exposure to, risks related to its recent operating performance,
credit profile and reserve levels, as well as the regulatory issues relating
thereto, including the impact thereof on the Company’s capital and the potential
impact on liquidity, especially in light of general economic and real estate
related trends in the markets in which it operates. Management has
informed us that these developments have resulted in, among others, continued
credit losses and the previously announced agreement with the Federal Reserve
Bank of Philadelphia and the New Jersey Department of Banking and Insurance
requiring the Company to improve operating performance and increase reserves and
liquidity and precluding the Company from paying dividends on Common Stock or
distributing interest and principal on trust preferred securities.
Members
of the Company’s management have also advised us of their belief that continued
pre-provision losses and the potential necessity of increasing reserves to cover
anticipated asset quality issues over the near term could substantially impair
the ability of the Company to operate in the normal course, and could also lead
to further and more severe regulatory actions that could materially adversely
impact the Company’s continued ability to operate. Management has
further advised us that the Company, with our assistance, has not been able to,
and does not have significant prospects to successfully complete, in the near
term, other strategic initiatives to raise capital to protect against future
losses.
In
providing our opinion, we have relied upon and assumed the accuracy and
completeness of all information that was publicly available or was furnished to
or discussed with us by the Company and the Acquirer or otherwise reviewed by or
for us, and we have not independently verified (nor have we assumed
responsibility or liability for independently verifying) any such information or
its accuracy or completeness. We have not reviewed individual credit
files of the Company, nor have we conducted or been provided with any valuation
or appraisal of any assets or liabilities (including any derivative or
off-balance sheet liabilities) of the Company, nor have we evaluated the
solvency of the Company under any state or federal laws relating to bankruptcy,
insolvency or similar matters. In relying on financial analyses
provided to us by the Company or derived therefrom, we have assumed that they
have been reasonably prepared based on assumptions reflecting the best currently
available estimates and judgments by management. With your consent,
our review of the Acquirer and its ability to complete the Transaction was
limited to publicly-available information and a discussion with the management
of the Acquirer regarding the past and current business operations, financial
condition and future prospects of the Acquirer.
We
express no view as to any analyses, forecasts, estimates, or the assumptions on
which they were based. We have also assumed that the representations
and warranties made by the Company and the Acquirer in the Agreement and the
related agreements are and will be true and correct in all respects material to
our analysis, that the covenants and agreements contained therein will be
performed in all respects material to our analysis and that Non-Performing
Assets will not increase or that Tangible Book Value will not decrease to levels
which will give the Acquirer the ability to reduce the merger consideration,
terminate the merger agreement or decline to close under the Merger
Agreement. We are not legal, regulatory or tax experts and have
relied on the assessments made by advisors to the Company with respect to such
issues. We have further assumed that all material governmental,
regulatory or other consents and approvals necessary for the completion of the
Transaction will be obtained without any adverse effect on the Company or the
Acquirer or on the contemplated benefits of the Transaction. Our
opinion assumes, with your consent, that the Merger Consideration will be $2.52
for each outstanding share of Company Common Stock, other than shares of Company
Common Stock held in treasury or owned by the Acquirer and its
affiliates.
Our
opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to us as of, the date
hereof. It should be understood that subsequent developments may
affect this opinion and that we do not have any obligation to update, revise, or
reaffirm this opinion. Our opinion is limited to the fairness, from a
financial point of view, to the holders of the Company Common Stock of the
Merger Consideration and we express no opinion as to the fairness of the
Transaction to creditors or other constituencies of the Company or as to the
underlying decision by the Company to engage in the
Transaction. Furthermore, we express no opinion with respect to the
amount or nature of any compensation to any officers, directors, or employees
of the Company payable by reason of the Transaction.
We have
acted as financial advisor to the Company with respect to the proposed
Transaction and will receive a fee from the Company for our services, a
substantial portion of which will become payable only if the proposed
Transaction is completed. In addition, the Company has agreed to
indemnify us for certain liabilities arising out of our
engagement. During the two years preceding the date of this letter,
we and certain of our affiliates have had investment banking or other
professional relationships with the Company and the Acquirer, respectively, for
which we and such affiliates have received customary
compensation. Such services during such period have included acting
as financial advisor to the Company continuing through the date
hereof.
On the
basis of and subject to the foregoing, it is our opinion that, as of the date
hereof, the Merger Consideration in the proposed Transaction is fair, from a
financial point of view, to the holders of the Company Common
Stock.
The
issuance of this opinion has been approved by a fairness opinion committee of
Griffin Financial Group, LLC. This letter is provided to the Board of
Directors of the Company in connection with and for the purposes of its
evaluation of the Transaction and may not be relied upon by any other person for
any other reason. This opinion does not constitute a recommendation
to any shareholder of the Company as to how such shareholder should vote with
respect to the Transaction or any other matter. This opinion may not
be disclosed, referred to, or communicated (in whole or in part) to any third
party for any purpose whatsoever except with our prior written
approval. This opinion may, however, be reproduced in any proxy
statement mailed to stockholders of the Company provided that the opinion is
reproduced in such document in its entirety, and such document includes a
summary of the opinion and related analysis in a form prepared or approved by us
(such approval not to be unreasonably withheld), but may not otherwise be
disclosed publicly in any manner without our prior written
approval.
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Very
truly yours,
/s/
GRIFFIN FINANCIAL GROUP, LLC
GRIFFIN
FINANCIAL GROUP LLC
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PROXY
STERLING
BANKS, INC.
3100
Route 38
Mount
Laurel, NJ 08054
SPECIAL
MEETING OF STOCKHOLDERS
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned, being a stockholder of Sterling Banks, Inc. (the “Company”) as of
April 23, 2010, hereby authorizes and appoints A. Theodore Eckenhoff
and Jeffrey Taylor, or any of their successors, as proxies, with full powers of
substitution, to represent the undersigned at the Special Meeting of
Stockholders to be held at the Company’s headquarters, 3100 Route 38, Mount
Laurel, New Jersey, and with all the powers the undersigned would possess if
personally present, on June 8, 2010 at 5:00 p.m., Eastern Time, and at any
adjournment of such meeting, and thereat to act with respect to all votes that
the undersigned would be entitled to cast, if personally present, as set forth
on the reverse hereof. The undersigned hereby revokes any proxies
heretofore given and ratifies and confirms all that each of such proxyholders,
or any substitute or substitutes, shall lawfully do or cause to be done by
reason thereof, upon the matters referred to in the Notice of Special Meeting
and Proxy Statement for such meeting.
IF
YOU VOTE BY TELEPHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY
FORM.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE PROPOSALS.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE
IN
BLUE OR BLACK INK AS SHOWN HERE
x
1. Proposal
to approve and adopt the Agreement and Plan of Merger, dated as of March 17,
2010, among Roma Financial Corporation, Roma Bank, Sterling Banks, Inc. and
Sterling Bank, as it may be amended from time to time.
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For
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Against
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Abstain
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□
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□
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□
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2. Proposal
to adjourn the special meeting, if necessary or appropriate, to solicit
additional proxies if there are insufficient votes at the time of the meeting to
approve and adopt the Agreement and Plan of Merger described in
Proposal 1.
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For
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Against
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Abstain
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□
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□
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□
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This
proxy is solicited on behalf of the Board of Directors of the Company for use at
the Special Meeting of Stockholders to be held on June 8, 2010 and at
any adjournment thereof.
In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting and at any adjournment or postponement
thereof.
Shares of
the Company’s common stock will be voted as specified. If returned,
but not otherwise specified, the shares represented by this proxy shall be voted
FOR the approval and adoption of the Agreement and Plan of Merger and FOR
Proposal 2 to adjourn or postpone the Special Meeting, if necessary, and
otherwise at the discretion of the proxyholders. You
may revoke this proxy card at any time prior to the time it is voted at the
Special Meeting. In their discretion, the proxyholders are authorized to vote on
such other business as may properly come before the Special
Meeting.
The
undersigned hereby acknowledges receipt of Notice of the Special Meeting and the
accompanying Proxy Statement prior to signing this proxy.
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF EXECUTED BUT NO
DIRECTION IS GIVEN, WILL BE VOTED “FOR” EACH OF THE PROPOSALS LISTED
ABOVE.
Please
check this box if you plan to attend the Special Meeting.
o
This
proxy may be revoked at any time prior to the special meeting by written notice
to the Company or may be withdrawn and you may vote in person should you attend
the special meeting.
To change
the address on your account, please check the box at right and indicate your new
address in the address space below. Please note that changes to
the registered name(s) on the account may not be submitted via this
method
o
____________________________________
Signature
of Stockholder
____________________________________
Signature
of Stockholder
Date:__________________
Note: Please
sign exactly as your name or names appear on this proxy. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name
by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
Please
Date, Sign and Return TODAY in the Enclosed Envelope.
No
Postage Required if Mailed in the United States.
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VOTE BY INTERNET
:
Log-on
to
www.votestock.com
Enter
your control number printed to the left
Vote
your proxy by checking the appropriate boxes
Click
on “Accept Vote”
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YOUR
PROXY CONTROL NUMBER
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VOTE BY TELEPHONE
: After you
call the phone number below, you will be asked to enter the control number
printed to the left. You will need to respond to only a few
simple prompts. You vote will be confirmed and cast as
directed.
Call
toll-free in the U.S. or Canada at
1-866-578-5350
on a touch-tone
telephone
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VOTE BY MAIL
: If you do not
wish to vote over the Internet or by telephone, please complete, sign,
date and return the accompanying proxy card in the pre-paid envelope
provided.
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You
may vote by Internet or telephone 24 hours a day, 7 days a
week. Internet and telephone voting is available through 11:59 p.m.,
prevailing time, on
June
7, 2010.
Your
Internet or telephone vote authorizes the named proxies to vote in the
same manner as if you marked, signed and returned your proxy
card.
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