HuntingdonValley, Pa.-based Polonia BancorpInc. and Philadelphia-based Prudential Bancorp Inc. entered into a memorandum of understandingwith regard to two lawsuits against the two institutions' .
Thememorandum of understanding was entered into Oct. 6, done solely to avoid thecosts of protracted litigation and any potential delay of the pendingtransaction. Inaddition, Polonia and Prudential have agreed to file supplemental disclosuresrelated to the deal with the SEC, which will also be made publicly available toshareholders. Polonia has also agreed to waive the prohibition in thenondisclosure agreements it entered into with potential interested parties,under certain conditions.
Also inrelation to the memorandum of understanding, Prudential has agreed to waive themerger agreement provision that prohibits Polonia from waiving the foregoingrestriction contained in the nondisclosure agreements. Finally, the partieshave agreed to provide each other with customary mutual releases concerning theclaims related to the merger agreement and the pending deal, including theinitiation and the prosecution of any litigation, subject to approval of theCircuit Court.
Theputative shareholder derivative and class action lawsuit was filed July 21,naming the two companies, along with Polonia directors as defendants. A secondclass action suit was filed Aug. 29. The suits claimed that fiduciary dutieswere breached when the Polonia-Prudential deal was struck. In addition, thesuits claimed that the merger agreement had preclusive deal protection termsand that the disclosure regarding the pending deal contained in the proxystatement and prospectus was materially deficient.