AGREEMENT OF MERGER dated as of July 27, 2011 by and among EAGLE BANCORP, INC. ALLIANCE BANKSHARES CORPORATION and ALLIANCE BANK CORPORATION
Exhibit 2.1
dated as of July 27, 2011
by and among
EAGLE BANCORP, INC.
ALLIANCE BANKSHARES CORPORATION
and
ALLIANCE BANK CORPORATION
TABLE OF CONTENTS
Page | ||||
ARTICLE I — THE MERGER |
||||
1.1 Merger |
1 | |||
1.2 Name |
1 | |||
1.3 Articles of Incorporation; Bylaws |
2 | |||
1.4 Board of Directors; Officers |
2 | |||
1.5 Effect of the Merger |
2 | |||
1.6 Closing; Effective Time |
2 | |||
1.7 Bank Merger |
2 | |||
1.8 Alternative Acquisition |
3 | |||
ARTICLE II — CONSIDERATION AND CONVERSION OF SHARES |
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2.1 Conversion of Shares |
3 | |||
2.2 Treatment of Alliance Options |
6 | |||
2.3 Exchange Procedures |
6 | |||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF EAGLE |
||||
3.1 Organization and Authority |
8 | |||
3.2 Capitalization of Eagle |
8 | |||
3.3 Authorization |
9 | |||
3.4 Eagle SEC Reports |
10 | |||
3.5 Eagle Financial Statements |
11 | |||
3.6 Books of Account; Corporate Records |
11 | |||
3.7 Regulatory Reports |
11 | |||
3.8 Eagle Subsidiaries |
12 | |||
3.9 Absence of Material Adverse Changes |
12 | |||
3.10 Litigation and Other Proceedings |
12 | |||
3.11 Proxy Statement, Etc |
13 | |||
3.12 Tax and Regulatory Treatment |
13 | |||
3.13 Taxes |
13 | |||
3.14 Loans |
14 | |||
3.15 Absence of Undisclosed Liabilities |
15 | |||
3.16 Xxxxxxxx-Xxxxx Act |
15 | |||
3.17 Compliance with Laws |
15 | |||
3.18 Consents |
16 | |||
3.19 Fairness Opinion |
16 | |||
3.20 Environmental Matters |
16 | |||
3.21 Brokers and Finders |
17 | |||
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF ALLIANCE AND ALLIANCE BANK |
||||
4.1 Organization and Authority |
17 | |||
4.2 Alliance Subsidiaries |
17 |
i
Page | ||||
4.3 Capitalization of Alliance and Alliance Bank |
18 | |||
4.4 Authorization |
19 | |||
4.5 Alliance SEC Reports |
20 | |||
4.6 Alliance Financial Statements |
21 | |||
4.7 Books of Account; Corporate Records |
21 | |||
4.8 Alliance Reports |
22 | |||
4.9 Absence of Certain Changes |
22 | |||
4.10 Insurance |
22 | |||
4.11 Properties, Leases and Other Agreements |
23 | |||
4.12 Taxes |
23 | |||
4.13 Fiduciary Activities |
25 | |||
4.14 Intangible Property |
25 | |||
4.15 Employee Relations |
25 | |||
4.16 ERISA Plans |
26 | |||
4.17 Contracts; Consents |
28 | |||
4.18 Related Party Transactions |
29 | |||
4.19 Loans |
29 | |||
4.20 Deposits |
30 | |||
4.21 Environmental Matters |
30 | |||
4.22 Litigation and Other Proceedings |
31 | |||
4.23 Absence of Undisclosed Liabilities |
31 | |||
4.24 Compliance with Laws |
31 | |||
4.25 Proxy Statement, Etc |
32 | |||
4.26 Anti-Takeover Provisions |
32 | |||
4.27 Derivative Instruments |
32 | |||
4.28 Tax and Regulatory Treatment |
32 | |||
4.29 SBLF |
33 | |||
4.30 Fairness Opinion |
33 | |||
4.31 Brokers and Finders |
33 | |||
ARTICLE V — CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME |
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5.1 Forbearance by Alliance and Alliance Bank |
33 | |||
5.2 Conduct of Business by Alliance |
36 | |||
5.3 Approval of Alliance Shareholders |
37 | |||
5.4 Conduct of Business by Eagle |
38 | |||
ARTICLE VI — ADDITIONAL AGREEMENTS |
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6.1 Access and Information |
39 | |||
6.2 Registration Statement; Applications; Cooperation |
39 | |||
6.3 Notice of Actual or Threatened Breach |
40 | |||
6.4 Current Information |
41 | |||
6.5 Expenses |
41 | |||
6.6 Filing with the SDAT and SCC |
41 | |||
6.7 Miscellaneous Agreements and Consents |
41 | |||
6.8 Press Releases and Public Disclosures |
41 | |||
6.9 Bank Employees |
42 | |||
6.10 D&O Indemnification |
43 |
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Page | ||||
6.11 Acquisition Proposals |
44 | |||
6.12 Trust Preferred Securities |
46 | |||
6.13 No Purchases or Sales of Eagle Common Stock During
Market Value Determination Period |
46 | |||
6.14 Nasdaq Listing |
46 | |||
6.15 Alliance Options |
46 | |||
6.16 Disclosure |
47 | |||
ARTICLE VII — CONDITIONS |
||||
7.1 Conditions to Each Party’s Obligation to Effect the Merger |
47 | |||
7.2 Conditions to Obligation of Eagle to Effect the Merger |
48 | |||
7.3 Conditions to Obligation of Alliance and Alliance Bank to Effect the Merger |
51 | |||
ARTICLE VIII — TERMINATION, AMENDMENT AND WAIVER |
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8.1 Termination |
52 | |||
8.2 Effect of Termination |
53 | |||
8.3 Amendment |
56 | |||
8.4 Waiver |
56 | |||
ARTICLE IX — GENERAL PROVISIONS |
||||
9.1 Investigation; Survival of Agreements |
56 | |||
9.2 Notices |
56 | |||
9.3 Material Adverse Change |
57 | |||
9.4 “Knowledge” and “Belief” |
58 | |||
9.5 Severability |
58 | |||
9.6 Headings. |
58 | |||
9.7 Attorneys’ Fees |
58 | |||
9.8 Schedules and Exhibits |
58 | |||
9.9 Miscellaneous. |
58 |
iii
This Agreement of Merger (the “Agreement”), made as of this 27th day of July, 2011,
by and among Eagle Bancorp, Inc. (“Eagle”), a corporation organized and existing under the laws of
the State of Maryland; Alliance Bankshares Corporation (“Alliance”), a corporation organized and
existing under the laws of the Commonwealth of Virginia; and Alliance Bank Corporation, a Virginia
chartered commercial bank and a wholly-owned subsidiary of Alliance (“Alliance Bank”).
WHEREAS, the respective Boards of Directors of Eagle and Alliance deem it advisable and in the
best interests of their respective shareholders that Eagle acquire Alliance and Alliance Bank
through the merger of Alliance with and into Eagle, on the terms, and subject to the conditions,
set forth in this Agreement; and
WHEREAS, the respective Boards of Directors of Eagle and Alliance have each approved the
merger of Alliance with and into Eagle, upon the terms, and subject to the conditions, hereinafter
set forth, including the Plan of Merger in substantially the form attached as Exhibit A hereto (the
“Plan of Merger”);
WHEREAS, concurrently with the execution and delivery of this Agreement, EagleBank, a Maryland
chartered commercial bank and a wholly-owned subsidiary of Eagle (“EagleBank”) and Alliance Bank
have entered into an Agreement of Merger (the “Bank Merger Agreement”), pursuant to which Alliance
Bank shall merge with and into EagleBank (the “Bank Merger”) with EagleBank as the surviving bank
in the Bank Merger, and the Bank Merger shall be consummated as promptly as practicable following
consummation of the Merger (hereinafter defined);
WHEREAS it is intended that the Merger and the Bank Merger each will qualify as a
reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the “Code”), and that this Merger Agreement and the Bank Merger Agreement each constitute
a plan of reorganization; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
hereafter set forth, and other good and valuable consideration the receipt and sufficiency of which
is hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
1.1. Merger. Subject to the terms and conditions hereafter set forth, Alliance shall be merged
with and into Eagle (the “Merger”) with Eagle being the surviving corporation (the “Surviving
Corporation”), in accordance with the Plan of Merger and the applicable provisions of the Maryland
General Corporation Law (the “MGCL”) and the Virginia Stock Corporation Act (the “VSCA”).
1.2. Name. The name of the Surviving Corporation shall be “Eagle Bancorp, Inc.”
1.3. Articles of Incorporation; Bylaws. (a) The Articles of Incorporation of Eagle in effect
at the Effective Time (defined in Section 1.6(b)) shall be the Articles of Incorporation of the
Surviving Corporation.
(b) The Bylaws of Eagle in effect at the Effective Time shall be the Bylaws of the Surviving
Corporation.
1.4. Board of Directors; Officers. (a) From and after the Effective Time, the directors and
officers of Eagle at the Effective Time shall serve as the directors and officers of the Surviving
Corporation until their successors are duly appointed or elected.
(b) From and after the Effective Time, the Board of Directors of EagleBank at the Effective
Time, together with one member of the Board of Directors of Alliance Bank as of the Effective Time
designated by Alliance Bank, subject to approval by the Nominating Committee of Eagle’s Board of
Directors, shall serve as the directors of EagleBank as the successor institution until their
successors are duly elected and qualified.
1.5. Effect of the Merger. At the Effective Time, the separate corporate existence of Alliance
shall cease and Eagle as the Surviving Corporation shall succeed to and possess all of the
properties, rights, powers, privileges, franchises, patents, trademarks, licenses, registrations,
and other assets of every kind and description of Alliance, and shall be subject to, and be
responsible for, all debts, liabilities, and obligations of Alliance, all without further act or
deed, in accordance with the applicable provisions of the MGCL and VSCA.
1.6. Closing; Effective Time. (a) The closing of the Merger (the “Closing”) shall occur at the
principal offices of Eagle, or at such other place designated by the parties in writing, at a time
and on a date specified in writing by the parties, which date shall be on the earliest practicable
business day, but not more than 30 days, after the receipt of all requisite approvals and
authorizations of regulatory and governmental authorities, the expiration of all applicable waiting
periods and the satisfaction or waiver of all conditions hereto. The date at which the Closing
occurs is occasionally referred to herein as the “Closing Date.”
(b) The Merger shall become effective at the latest of (i) the filing of appropriate articles of
merger with the Maryland State Department of Assessments and Taxation (the “SDAT”); (ii) the filing
of appropriate articles of merger with the Virginia State Corporation Commission (the “SCC”); and
(iii) the time set forth in said articles of merger (the “Effective Time”). Except as otherwise
agreed in writing, the Effective Time shall be on the Closing Date.
1.7. Bank Merger. As promptly as practicable following the Effective Time, Alliance Bank shall
be merged with and into EagleBank, with EagleBank surviving, pursuant to, and subject to the terms
and conditions of, the Bank Merger Agreement to be substantially in the form attached hereto as
Exhibit B. Notwithstanding the foregoing, Eagle reserves the right, in its sole discretion, to
effect an alternate transaction between Alliance Bank and EagleBank, and Alliance and Alliance Bank
agree to execute or cause to be executed such agreements and other documents necessary for Eagle to
effect such other transaction as it may determine, in its sole discretion, involving EagleBank and
Alliance Bank, provided, however, that Eagle agrees not to make any changes with respect to any
transaction between EagleBank and Alliance Bank that will: (a) vary the form or amount of
consideration paid to Alliance shareholders pursuant to Section 2.1 hereof or the
2
treatment of Alliance Options (as defined in Section 2.2) pursuant to Section 2.2 hereof; or (b)
adversely affect the treatment of the Merger as a reorganization under Section 368(a) of the Code.
1.8. Alternative Acquisition Structure. Notwithstanding any provision in this Agreement to the
contrary, Eagle shall be permitted, in its sole and absolute discretion, to restructure the method
by which Eagle accomplishes the acquisition of Alliance as contemplated by this Agreement,
including, without limitation, by providing for the merger of Alliance with and into a subsidiary
of Eagle provided, however, that Eagle agrees not to make any changes with respect to the
acquisition of Alliance that will: (a) vary the form or amount of consideration paid to Alliance
shareholders pursuant to Section 2.1 hereof or the treatment of Alliance Options pursuant to
Section 2.2 hereof; (b) require Alliance to resolicit shareholder approval of the Merger; or (c)
adversely affect the treatment of the Merger as a reorganization under Section 368(a) of the Code.
Alliance and Alliance Bank agree to execute or cause to be executed any amendments, agreements or
further documentation reasonably required to effect such alternate structure.
ARTICLE II
CONSIDERATION AND CONVERSION OF SHARES
2.1. Conversion of Shares. (a) At the Effective Time, each of the outstanding shares of common
stock, $4.00 par value per share, of Alliance (“Alliance Common Stock”) (excluding shares of
Alliance Common Stock held by any Alliance Subsidiary (other than in a fiduciary capacity)) or by
Eagle or any Eagle Subsidiary (other than in a fiduciary capacity), shall automatically, and
without further action, be converted into and exchangeable for the right to receive 0.4317 (the
“Conversion Ratio”) shares of common stock, $0.01 par value per share, of Eagle (“Eagle Common
Stock”), subject to adjustment in accordance with the provisions of Section 2.1(b) (the “Stock
Consideration”). The Stock Consideration, together with cash in lieu of fractional shares as
provided in Section 2.1(d), are referred to herein collectively as the “Merger Consideration.”
(b) The Conversion Ratio shall be subject to increase or decrease in an amount determined by:
(i) | dividing the aggregate amount of the adjustment items (each an “Adjustment Item” and collectively the “Adjustment Items”) set forth in Section 2(c) by the number of shares of Alliance Common Stock outstanding on the Closing Date; |
(ii) | multiplying the result of the calculation in (i) (rounded to four decimal places) by 0.64; |
(iii) | multiplying the result of the calculation in (ii) (rounded to four decimal places) by 1.25; |
(iv) | dividing the result of the calculation in (iii) (rounded to four decimal places) by 13.69; |
(v) | dividing 500,000 by the number of shares of Alliance Common Stock outstanding on the Closing Date; and dividing the result of such calculation by 13.69; and |
(vi) | adding the result from the calculations in (iv) and (v) to the Conversion Ratio to arrive at the “Adjusted Conversion Ratio.” |
(c) The Adjustment Items are:
3
(i) | an adjustment with respect to Alliance’s securities portfolio equal to the difference between the pre-tax net unrealized loss at March 31, 2011, and the pre-tax net unrealized gain or loss as of the end of the calendar month immediately preceding the month in which the Closing occurs, which shall be determined based upon a firm bid to purchase the portfolio, with a decrease (increase) in net unrealized loss constituting a positive (negative) adjustment; and the net amount of gains or losses realized upon the sale of securities subsequent to October 31, 2011 and prior to the Effective Time. For purposes of clarity, reference in this subsection to Alliance’s securities portfolio shall refer to all securities, whether categorized as held-to maturity, available-for sale, or trading, whether or not fair value accounting has been elected for any security, but shall exclude all restricted stock. In calculating the adjustment pursuant to this subparagraph (i), there shall not be included any amount of unrealized gain or loss which has been reflected in the consolidated earnings or loss adjustment under subparagraph (ii). |
(ii) | the net amount of pre-tax consolidated earnings (or losses) of Alliance for the period beginning on April 1, 2011 and ending on October 31, 2011, excluding (a) any additional provision for loan losses with respect to any Loan (as defined in Section 3.14) reflected on the consolidated balance sheet of Alliance at March 31, 2011 and (b) any additional charges or writedown with respect to any other real estate owned (“OREO”) reflected as OREO on the consolidated balance sheet of Alliance at March 31, 2011; provided, however, if as of the end of the calendar month immediately preceding the month in which the Closing occurs, Alliance’s gross Loans exceed the level of gross Loans as of March 31, 2011, then the net earnings or losses shall reflect an appropriate provision for loan losses for those Loans in excess of the March 31, 2011 levels. For purposes hereof, “gross Loans” shall mean Loans before deduction of the allowance for loan losses. |
(iii) | a negative adjustment equal to the aggregate amount paid or payable by Alliance or Alliance Bank pursuant to any employment agreements, consulting agreements, change in control agreements, individual severance agreements or similar agreements as a result of the transactions contemplated by this Agreement and related personnel decisions (which such agreements are set forth in Section 2(c)(iii) of the Alliance Disclosure Schedule (as defined in Article IV hereof)); |
(iv) | a negative adjustment equal to the cost of termination (or paying out the term) of all Alliance data processing agreements (as set forth in Section 2(c)(iv) of the Alliance Disclosure Schedule) and deconversion of Alliance’s systems; |
(v) | a negative adjustment equal to the amount, if any, by which the expected amount to be collected on the notes payable to Alliance as contingent payment for the sale of Alliance Insurance Agency, Inc. pursuant to the Stock Purchase Agreement dated as of December 29, 2009 between Alliance and Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx (the “AIA Agreement”) is less than the carrying value of such notes as of March 31, 2011; |
(vi) | a negative adjustment equal to one and one-half percent (1.50%) of the amount, if any, by which the average level of Alliance Bank’s title company, escrow and attorney trust account deposits (“Title Deposits”) for the last calendar month immediately preceding the month in which the Closing Date occurs is exceeded by the average level of Title Deposits for the month of March 2011, as set forth in Section 2(c)(vi) of the Alliance Disclosure Schedule; |
(vii) | a negative adjustment equal to one and one-half percent (1.50%) of the amount, if any, by which the average level of Title Deposits of each title company, attorney, |
4
law firm or other customer providing Title Deposits (“Title Customers”), for the last calendar month immediately preceding the month in which the Closing Date occurs, taking into consideration all accounts containing Title Deposits established or maintained by such Title Customer, is exceeded by the average level of Title Deposits of such Title Customer for the month of March 2011; provided, however, that the adjustment called for by this subparagraph (vii) shall only be made with respect to Title Customers whose average balance of Title Deposits for March 2011 was at least $10,000; and where the amount of the decline in such Title Customer’s Title Deposits is at least 60% of such Title Customer’s average Title Deposits for March 2011; |
(viii) | a positive adjustment equal to one and one-half percent (1.50%) of the amount of the average balance of Title Deposits for the last calendar month immediately preceding the month in which the Closing Date occurs of any Title Customer who was not (x) a Title Customer at March 31, 2011 or (y) an affiliate of a Title Customer at March 31, 2011, provided such average balance is at least $10,000; |
(ix) | a negative adjustment equal to the amount required to terminate, or the amount by which the lease expense required to be paid by Eagle exceeds the amount of sublease income expected to be received by Eagle (based upon subleases in place as of the Closing Date), for the leases and, as applicable, during the periods set forth on Section 2(c)(ix) of the Alliance Disclosure Schedule; together with the amount of any costs, expenses, fees (including, but not limited to, legal and brokerage fees), penalties, liabilities, payments, write-offs or acceleration of capitalized assets or expenses, or other amounts incurred, expendable, accruable or payable in connection with the termination of such leases, the sublease of the premises subject to such leases, other disposition of such leases or carrying of such leases; and |
(x) | a negative adjustment equal to the amount, if any, required to terminate the non-competition provisions of the AIA Agreement. |
(d) No fractional shares of Eagle Common Stock will be issued in connection with the exchange
contemplated by the Merger, and holders of Alliance Common Stock entitled to fractional shares
shall be paid cash in lieu of such fractional shares, without interest, on the basis of the Market
Value of a Share of Eagle Common Stock, with any fraction of a cent being rounded to the nearest
cent (with one-half cent being rounded upward). The “Market Value of a Share of Eagle Common Stock”
shall be equal to the average of the per share closing price for Eagle Common Stock for the 5
trading days immediately preceding the date which is 2 business days before the Closing Date (the
“Market Value Determination Period”), as reported on the Nasdaq Stock Market (“Nasdaq”), calculated
to four decimals. In the event that there shall be no trade on any trading day within the foregoing
period, or if Nasdaq shall fail to report a closing price on any such day, the closing price for
such day shall be equal to the average of the closing bid price and the closing asked price as
reported by Nasdaq on that day.
(e) The Adjusted Conversion Ratio shall be proportionately adjusted for dividends on Eagle Common
Stock payable in shares of Eagle Common Stock or any combination or subdivision of the Eagle Common
Stock the record date for which is after the date hereof but prior to the Effective Time.
(f) All shares of Alliance Common Stock held by any Alliance Subsidiary (other than in a fiduciary
capacity), by Eagle or any Eagle Subsidiary (other than in a fiduciary capacity), shall be
5
cancelled and shall not be converted as provided in Section 2.1(a). Any such shares held by any
Alliance Subsidiary shall not be considered outstanding.
(g) Each share of Eagle Common Stock outstanding immediately prior to the Effective Time shall be
unchanged, and shall continue to represent an issued and outstanding share of Eagle Common Stock.
(h) The pre-tax consolidated earnings (or losses) of Alliance for the period April 1, 2011 through
October 31, 2011 required by Section 2.1(c)(ii) hereof shall be determined based, to the extent
practicable, upon the Quarterly Reports on Form 10-Q of Alliance for each calendar quarter, and for
each period of less than a full calendar quarter shall be based upon internally generated month end
reports, prepared by Alliance, on a basis consistent with accounting principles generally accepted
in the United States (“GAAP”), and subject to Eagle’s comment and review, and which shall have been
reviewed by Alliance’s independent registered public accounting firm in the same manner as it would
review a Quarterly Report on Form 10-Q.
2.2. Treatment of Alliance Options. At the Effective Time, each option (the “Alliance
Options”), whether vested or unvested, issued and outstanding immediately prior to the Effective
Time under the Alliance 1999 Stock Option Plan, as amended and restated (the “Alliance 1999 Plan”),
and the Alliance 2007 Incentive Stock Plan (the “Alliance 2007 Plan” and together with the Alliance
1999 Plan, the “Alliance Stock Plans”) shall be converted into and become options to purchase Eagle
Common Stock. Eagle shall assume each Alliance Option in accordance with the terms and conditions
of the Alliance Stock Plan pursuant to which it was issued, the agreements evidencing grants
thereunder and any other agreements between Alliance and an optionee regarding Alliance Options
(but taking into account any changes thereto, including any acceleration thereof, provided for in
the relevant Alliance Stock Plan to which such options were issued, the agreements evidencing
grants thereunder and any other agreements between Alliance and an optionee regarding Alliance
Options by reason of the Merger); provided, however, that from and after the Effective Time, each
such Alliance Option shall be exercisable solely for Eagle Common Stock; the number of shares of
Eagle Common Stock which may be acquired pursuant to such Alliance Option shall be the number of
shares of Alliance Common Stock subject to such Alliance Option multiplied by the Adjusted
Conversion Ratio, rounded down to the nearest whole share; and the exercise price per share shall
be equal to the exercise price per share of Alliance Common Stock divided by the Adjusted
Conversion Ratio, rounded up to the nearest cent. With respect to each Alliance Option which is an
incentive stock option, it is intended that the foregoing assumption and adjustment shall be
effected in a manner consistent with the requirements of Section 424 of the Code.
2.3. Exchange Procedures. (a) Eagle shall appoint its transfer agent, Computershare Investor
Services, or, with the written consent of Alliance, which shall not be unreasonably withheld,
another agent independent of and unaffiliated with Eagle or Alliance (the “Exchange Agent”), for
the purpose of exchanging certificates representing Alliance Common Stock for the Merger
Consideration. At or prior to the Effective Time, Eagle shall deposit, or cause to be deposited,
with the Exchange Agent, for the benefit of the holders of Alliance Common Stock, for exchange in
accordance with this Article II, or shall duly authorize and direct issuance by the Exchange Agent
in accordance with this Section of, (i) certificates representing the shares of Eagle Common Stock,
or evidences of uncertificated shares of Eagle Common Stock, that constitute the Stock
Consideration; and (ii) an amount of cash necessary to satisfy the cash in lieu portion of the
Merger Consideration.
6
(b) As promptly as practicable, but in no event more than 10 business days, after the Effective
Time, Eagle shall send, or shall cause the Exchange Agent to send, to each holder of record of
Alliance Common Stock immediately prior to the Effective Time, a letter of transmittal and
instructions (which shall specify that the delivery shall be effected, and risk of loss and title
shall pass, only upon proper delivery of the certificates to the Exchange Agent) for use in the
exchange of such shares of Alliance Common Stock for the Merger Consideration into which such
shares shall have been converted. As promptly as possible after receipt of the Exchange Agent
notice, each former shareholder of Alliance shall surrender his or her certificates to the Exchange
Agent; provided, that if any former shareholder of Alliance shall be unable to surrender his
Alliance Common Stock certificates due to loss or mutilation thereof, he or she may make a
constructive surrender by following the procedures customarily followed in the replacement of lost
or mutilated certificates, including the posting of appropriate bond. Upon actual or constructive
surrender of Alliance Common Stock certificates from a former Alliance shareholder, the Exchange
Agent shall issue such shareholder, in exchange therefor, one or more certificates representing the
number of whole shares of Eagle Common Stock into which such holder’s shares of Alliance Common
Stock have been converted, or at the election of Eagle, a statement reflecting the issuance of
uncertificated shares, together with a check in the amount of any cash in lieu of fractional shares
of Eagle Common Stock.
(c) Eagle shall have the right to make rules, not inconsistent with the terms of this Agreement,
governing the validity and effectiveness of letters of transmittal.
(d) All Alliance Common Stock certificates must be surrendered to the Exchange Agent within twelve
months of the Effective Time. In the event that any former shareholder of Alliance shall not have
properly surrendered his or her certificates within such period, the shares of Eagle Common Stock
that would otherwise have been issued to such shareholder may, at the option of Eagle, be sold and
the net proceeds of such sale, together with any cash in respect of fractional shares and any
previously accrued dividends, shall be held by Eagle for such shareholder’s benefit in a
non-interest bearing deposit account at EagleBank or another depository institution, the deposits
of which are insured by the Federal Deposit Insurance Corporation (the “FDIC”), chosen by Eagle in
its discretion, and the sole right of such shareholder shall be the right to receive any
certificates for Eagle Common Stock which have not been so sold, and to collect cash in such
account, without interest. Subject to all applicable laws of escheat, such amounts shall be paid to
such former shareholder of Alliance, without interest, upon proper surrender of his or her Alliance
Common Stock certificates.
(e) All dollar amounts payable to any shareholder as a result of the payment of cash in lieu of
fractional shares pursuant to Section 2.1(d) will be rounded to the nearest cent (with one-half
cent being rounded upward), based on the aggregate amount payable for all shares registered in such
shareholder’s name.
(f) Following the Effective Time, certificates which formerly represented shares of Alliance Common
Stock which are to be converted into the Stock Consideration shall be deemed for all purposes to
represent the number of whole shares of Eagle Common Stock into which they have been converted,
except that until exchanged in accordance with the provisions of this Section 2.3, the holders of
such shares shall not be entitled to receive dividends or other distributions or payments in
respect of Eagle Common Stock.
7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EAGLE
Except as set forth in the disclosure schedule delivered by Eagle to Alliance and Alliance
Bank prior to the date hereof (the “Eagle Disclosure Schedule”), Eagle represents and warrants to
Alliance and Alliance Bank as follows:
3.1. Organization and Authority. Eagle is a corporation duly organized, validly existing and
in good standing under the laws of the State of Maryland, is a registered bank holding company
under the Bank Holding Company Act of 1956, as amended (the “BHCA”) and has the corporate power and
authority to own its properties and assets and to carry on its business, and the business of its
subsidiaries, as now being conducted and to enter into and carry out its obligations under this
Agreement. Eagle is qualified to do business as a foreign corporation in each jurisdiction where
such qualification is necessary, except where the failure to obtain such qualification would not
have a material adverse effect on the business, operations, assets, financial condition, prospects
or results of operations, of Eagle and the Eagle Subsidiaries (as defined in Section 3.8), taken as
a whole. Eagle has all necessary governmental authorizations to own or lease its properties and
assets, and carry on its business as now being conducted, with the exception of those
authorizations which the failure to obtain would not have a material adverse effect on the
business, operations, assets, financial condition, prospects or result of operations of Eagle and
the Eagle Subsidiaries, taken as a whole.
3.2. Capitalization of Eagle. (a) As of the date hereof, the authorized capital stock of Eagle
consists of 50,000,000 shares of common stock, par value $0.01 per share, of which 19,850,769
shares are issued and outstanding, and 1,000,000 shares of undesignated preferred stock, $0.01 par
value per share, of which 56,600 shares, designated Senior Non-Cumulative Perpetual Preferred
Stock, Series B (the “Series B Preferred Stock”), are outstanding. Additionally, an aggregate of
2,327,572 shares of Eagle Common Stock are reserved for issuance pursuant to Eagle’s 1998 Stock
Option Plan, Eagle’s 2006 Stock Plan, the Fidelity and Trust Financial Corporation (“F&T”) 2004
Long-Term Incentive Plan, the F&T 2005 Long-Term Incentive Plan, and Eagle’s 2011 Employee Stock
Purchase Plan (the “Eagle Stock Plans”), including unvested shares of restricted stock.
Additionally, 376,754 shares of Eagle Common Stock are reserved for issuance in connection with the
Eagle Dividend Reinvestment Plan (“DRI Plan”), and 385,434 shares of Eagle Common Stock are
reserved for issuance pursuant to the warrant (the “Warrant”) issued to the United States
Department of the Treasury (the “Treasury”) As of the date hereof, there are no other shares of
capital stock or other equity securities of Eagle outstanding and no other outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for, shares of capital stock or other
equity security of Eagle, or contracts, commitments, understandings, or arrangements by which Eagle
was or may become bound to issue additional shares of its capital stock or other equity security or
options, warrants, scrip, rights to purchase or acquire, or securities or rights convertible into
or exchangeable for, any additional shares of its capital stock or other equity security.
(b) All of the outstanding shares of Eagle Common Stock are duly authorized and validly issued
shares of Eagle Common Stock, and are fully paid and nonassessable under the MGCL. When issued in
accordance with the provisions of this Agreement, all of the shares of Eagle Common Stock to be
issued as Merger Consideration in exchange for shares of Alliance Common Stock will be duly
authorized and validly issued shares of Eagle Common Stock and will be fully paid and
8
nonassessable under the MGCL. No shares of Eagle Common Stock have been, and none of the shares of
Eagle Common Stock to be issued in exchange for shares of Alliance Common Stock will be, issued in
violation of the preemptive or preferential rights of any holder of Eagle capital stock. Eagle has
reserved a sufficient number of shares of Eagle Common Stock for the purpose of issuing shares of
Eagle Common Stock in accordance with the provisions of Article II hereof. All of the outstanding
shares of Eagle Common Stock have been issued pursuant to an effective registration statement under
the Securities Act, and pursuant to effective registrations or qualifications under applicable
state securities or blue sky laws, or pursuant to applicable exemptions from such registration or
qualification.
3.3. Authorization. (a) The execution, delivery and performance of this Agreement by Eagle and
the consummation of the transactions contemplated hereby have been duly authorized by the Board of
Directors of Eagle, and no other corporate proceedings on the part of Eagle are necessary to
authorize this Agreement and the transactions contemplated hereby. Subject to the approvals of
government agencies having regulatory authority over Eagle or the Merger as may be required by
statute or regulation, this Agreement is the valid and binding obligation of Eagle, enforceable
against it in accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization or moratorium or other similar laws or equitable principles affecting
creditors’ rights generally and subject to general equitable principles which may limit the
enforcement of certain remedies.
(b) Neither the execution, delivery and performance of this Agreement by Eagle, nor the
consummation of the transactions contemplated hereby, nor compliance by Eagle with any of the
provisions of this Agreement, will (i) violate, conflict with, or result in a breach of any
provisions of, or constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration or the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of Eagle under any of
the terms, conditions or provisions of: (x) the Articles of Incorporation or Association or Bylaws
(or similar organizational and governing documents) of Eagle, or (y) any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to
which Eagle is a party or by which it may be bound, or to which Eagle or any of its properties or
assets may be subject, or (ii) subject to compliance with the statutes and regulations referred to
in the next paragraph, violate any judgment, ruling, order, writ, injunction, decree, statute, rule
or regulation applicable to Eagle or any of its properties or assets.
(c) Other than in connection or in compliance with the applicable provisions of the MGCL, the VSCA,
the Maryland Financial Institutions Code (the “MFIC”), Title 6.2 of the Code of Virginia (the
“VFIC”), the Securities Act of 1933, as amended, and the rules and regulations thereunder (the
“Securities Act”), the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the “Exchange Act”), the securities or blue sky laws of the various states and
consents, authorizations, approvals or exemptions required under the BHCA or the Federal Deposit
Insurance Act (the “FDIA”) or any applicable federal or state banking statute (including those
relating to mortgage banking, brokerage or lending activities), no notice to, filing with,
authorization of, exemption by, or consent or approval of, any public body or authority is
necessary for the consummation by Eagle of the transactions contemplated by this Agreement.
(d) Eagle has no reason to believe that any required regulatory consent or approval will not be
received or will be received with conditions or restrictions which Alliance or Alliance Bank would
9
deem unduly burdensome, or which would have an adverse impact on its capacity to consummate the
transactions contemplated hereby.
3.4. Eagle SEC Reports. (a) Eagle has made available to Alliance (i) its Annual Reports on
Form 10-K for its fiscal years ended December 31, 2010 and 2009, (ii) its Quarterly Report on Form
10-Q for its fiscal quarter ended Xxxxx 00, 0000, (xxx) its proxy or information statements
relating to meetings of Eagle’s shareholders since December 31, 2009, and (iv) all of its other
reports, statements, schedules and registration statements filed with or furnished to the United
States Securities and Exchange Commission (the “SEC”) since December 31, 2009 (collectively, the
“Eagle SEC Reports”), each in the form filed with the SEC. As of its date of filing with or
furnishing to the SEC, each Eagle SEC Report, in each case as amended or supplemented, as
applicable, complied in all material respects with the Exchange Act or Securities Act, as the case
may be, and did not contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which the statement was made. Eagle has timely filed all Eagle SEC
Reports and other documents required to be filed by it under the Securities Act and the Exchange
Act since December 31, 2009.
(b) Eagle has established and maintains disclosure controls and procedures (as defined in Rule
13a-15(e) under the Exchange Act). Such disclosure controls and procedures are designed to ensure
that information required to be disclosed by Eagle, including with respect to its consolidated
subsidiaries, in the reports that it files under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified and (ii) made known to Eagle’s principal
executive officer and its principal financial officer, or persons performing similar functions, by
others within those entities. Such disclosure controls and procedures are effective for the
purposes for which they were established, including timely alerting Eagle’s principal executive
officer and principal financial officer, or persons performing similar functions, to material
information to be included in the Eagle SEC Reports under the Exchange Act.
(c) Eagle has established and maintains a system of internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Such internal control over
financial reporting is effective to provide reasonable assurance regarding the reliability of
Eagle’s financial reporting and the preparation of Eagle’s financial statements for external
purposes in accordance with GAAP. Eagle has no knowledge of (i) any significant deficiencies or
material weaknesses in the design or operation of its internal control over financial reporting
which are reasonably likely to adversely affect its ability to record, process, summarize and
report financial information or (ii) any fraud, whether or not material, that involves management
or other employees who have a role in Eagle’s internal control over financial reporting. Eagle is
not aware of any change in its internal control over financial reporting that has occurred since
December 31, 2010 that has materially affected, or is reasonably likely to materially affect,
Eagle’s internal control over financial reporting.
(d) Since December 31, 2008 (i) Eagle has not received or otherwise had or obtained knowledge of
any material complaint, allegation, assertion or claim, written or oral, regarding the accounting
or auditing practices, or internal procedures or accounting controls, methodologies or methods of
Eagle or any Eagle Subsidiary, including but not limited to any complaint, allegation, assertion or
claim that Eagle or any Eagle Subsidiary has engaged in any questionable accounting or auditing
practice, or regarding any violation of the securities laws; and (ii) no attorney representing
Eagle or any Eagle Subsidiary has reported to their respective
10
Boards of Directors, committee thereof, any member thereof or any executive officer, evidence of a
material violation of the securities or banking laws, breach of fiduciary duty or similar violation
by Eagle or any Eagle Subsidiary or any of their respective officers, directors, employees or
agents.
3.5. Eagle Financial Statements. The (i) audited consolidated balance sheets of Eagle as of
December 31, 2010 and 2009 and the related audited consolidated statements of operations, changes
in shareholders’ equity, and cash flows for the three years ended December 31, 2010 included in
Eagle’s Annual Report on Form 10-K for the year ended December 31, 2010, and (ii) unaudited
consolidated balance sheets of Eagle as of March 31, 2011 and March 31, 2010 and the related
unaudited consolidated statements of operations, changes in shareholders’ equity, and cash flows
for the three months ended March 31, 2011 and March 31, 2010, included in Eagle’s Quarterly Report
on Form 10-Q for the period ended March 31, 2011, have been prepared in accordance with GAAP
applied on a consistent basis, and present fairly, in all material respects, its financial position
and its consolidated results of operations, changes in shareholders’ equity and cash flows. The
audited consolidated balance sheets of Eagle as of future dates and the related audited
consolidated statements of operations, changes in shareholders’ equity and cash flows for the
periods then ended, which may be provided by Eagle to Alliance subsequent to the date hereof, will
be prepared in accordance with GAAP applied on a consistent basis, and will present fairly, in all
material respects, its consolidated financial position as of such dates and its consolidated
results of operations, changes in shareholders’ equity and cash flows for such periods. The
unaudited interim financial statements which may be provided to Alliance subsequent to the date
hereof will be prepared in accordance with GAAP applied on a consistent basis, and will present
fairly, in all material respects, the consolidated financial position of Eagle at the dates and the
consolidated results of operations, changes in shareholders’ equity and cash flows of Eagle for the
periods stated therein. Together, the audited and unaudited consolidated financial statements
referred to in this Section 3.5 are referred to as the “Eagle Consolidated Financial Statements.”
3.6 Books of Account; Corporate Records. The books of account of Eagle and EagleBank are
maintained in compliance in all material respects with all applicable legal and accounting
requirements. Not in limitation of the foregoing, the books and records of account of EagleBank
contain sufficient information, in reasonably accessible form and format, to enable it to conduct
business in the ordinary course with respect to the assets and liabilities of EagleBank, including
but not limited to information which would enable it to make any required filings under the Bank
Secrecy Act and regulations promulgated thereunder. The minute books of Eagle and EagleBank
accurately disclose all material corporate actions of their respective shareholders and Board of
Directors and of all committees thereof.
3.7. Regulatory Reports. (a) As of March 31, 2011, Eagle and EagleBank had filed, since that
date have filed, and subsequent to the date hereof will file, all reports, registrations and
statements, if any, together with any amendments required to be made with respect thereto, that
were and are required to be filed with (i) the SEC, (ii) the Board of Governors of the Federal
Reserve Board (the “Federal Reserve Board”), (iii) the FDIC, (iv) the SDAT, and (v) the Maryland
Department of Financial Regulation (the “DFR”) (all such reports and statements are collectively
referred to herein as the “Eagle Reports”). As of their respective dates, the Eagle Reports
complied and will comply in all material respects with all the statutes, rules and regulations
enforced or promulgated by the regulatory authority with which they were filed and did not and will
not contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or
11
necessary in order to make the statements therein, in light of the circumstances under which they
are made, not misleading.
(b) Each registration statement, prospectus, offering circular, private placement memorandum or
other securities offering document used by Eagle in connection with the sale of Eagle Common Stock,
and all other sales documentation relating thereto, did not contain any untrue or misleading
statement of a material fact, and did not omit to state a material fact necessary in order to make
the statements contained therein, in light of the circumstances in which they were made, not
misleading.
3.8. Eagle Subsidiaries. Eagle directly or indirectly owns all the shares of the outstanding
capital stock of EagleBank and all of the capital stock or other equity interests of each entity
disclosed as a subsidiary in Exhibit 21 to Eagle’s Quarterly Report on Form 10-Q for the period
ended March 31, 2011. EagleBank together with all other Eagle and EagleBank subsidiaries are
referred to on occasion as “Eagle Subsidiaries” and each individually as an “Eagle Subsidiary.”
Neither Eagle nor EagleBank has any other subsidiaries. No equity securities of any Eagle
Subsidiary are or may become required to be issued by reason of any options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever, relative to, or
concerning securities or rights convertible into, or exchangeable for, shares of any class of
capital stock or other equity security of any Eagle Subsidiary, and there are no other contracts,
commitments, understandings or arrangements by which any Eagle Subsidiary is bound to issue, or
Eagle is bound to cause any Eagle Subsidiary to issue, additional shares of its capital stock or
other equity security or options, warrants, scrip, rights to purchase or acquire, or securities or
rights convertible into or exchangeable for, any additional shares of its capital stock or other
equity security. All of the shares of capital stock of each Eagle Subsidiary so owned by Eagle are
fully paid and non-assessable and are owned by it free and clear of any claim, lien, encumbrance or
agreement with respect thereto. EagleBank is a commercial bank duly organized, validly existing and
in good standing under the laws of the State of Maryland and has the corporate power and authority
and all necessary federal, state, local and foreign authorizations to own or lease its properties
and assets and to carry on its business as it is now being conducted. The deposits of EagleBank are
insured to the applicable legal limits by the Deposit Insurance Fund of the FDIC.
3.9. Absence of Material Adverse Changes. Except for events or circumstances disclosed in the
Eagle SEC Reports, since December 31, 2010, there has not been any change in the nature of the
business, results of operations, assets, financial condition, method of accounting or accounting
practice, or manner or conduct of the business of Eagle and the Eagle Subsidiaries that has had, or
may reasonably be expected to have, individually or in the aggregate, a material adverse effect on
the business, operations, assets, financial condition, prospects or results of operations of Eagle
and the Eagle Subsidiaries, taken as a whole, or on the ability of Eagle to consummate the
transactions contemplated hereby. Nothing herein contained shall be deemed to admit or give rise to
any implication that any events disclosed in the Eagle SEC Reports have had, or may be reasonably
expected to have, a material adverse effect on the business, operations, assets, financial
condition, prospects or results of operations of Eagle and the Eagle Subsidiaries, taken as a
whole, or on the ability of Eagle to consummate the transactions contemplated hereby.
3.10. Litigation and Other Proceedings. Neither Eagle nor any Eagle Subsidiary is a party
to any pending, or, to the knowledge of Eagle, threatened claim, action, suit, investigation or
proceeding or subject to any order, judgment or decree, except for matters which, in the aggregate,
cannot reasonably be anticipated to have a material adverse effect on the capacity of Eagle to
consummate the transactions contemplated hereby or the financial condition, prospects, results of
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operations, business, or properties of Eagle or any Eagle Subsidiaries, taken as a whole, and,
to the knowledge of Eagle, there is no basis for any of the foregoing.
3.11. Proxy Statement, Etc. None of the information supplied or to be supplied by and relating
to, Eagle, for inclusion, or included, in (i) the Proxy Statement (as defined in Section 5.3 below)
to be mailed to the shareholders of Alliance in connection with the Alliance Shareholder Meeting
(as defined in Section 5.3 below), (ii) the Registration Statement (as defined in Section 6.2) and
(iii) any other documents to be filed with any regulatory agency in connection with the
transactions contemplated hereby will, at the respective times such information is supplied or such
documents are filed or mailed, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein, in light of the
circumstances in which they are made, not misleading. All documents which Eagle is responsible for
filing with any regulatory agency in connection with the transactions contemplated hereby will
comply as to form in all material respects with the provisions of applicable law.
3.12. Tax and Regulatory Treatment. Neither Eagle nor any Eagle Subsidiary has taken or agreed
to take any action, or has knowledge of any fact or circumstance, that would prevent the Merger
from qualifying as a “reorganization” under Section 368(a) of the Code. Eagle has no reason to
believe that any required regulatory consent or approval will not be received or will be received
with conditions or restrictions which Eagle would deem unduly burdensome, or which would have an
adverse impact on its capacity to consummate the transactions contemplated hereby.
3.13. Taxes. (a) Eagle and the Eagle Subsidiaries have duly filed, or will file, all federal,
state, local and foreign tax returns (“Eagle Returns”) required by applicable law to be filed on or
before the Effective Time (all such Eagle Returns being accurate and complete in all material
respects), and have paid or have set up adequate reserves or accruals for the payment of all taxes
required to be paid in respect of the periods covered by such Eagle Returns, and will pay, or where
payment is not yet due, will set up adequate reserves or accruals adequate in all material respects
for the payment of all taxes for any subsequent periods ending on or prior to the Effective Time or
any portion of a subsequent period which includes the Effective Time and ends subsequent thereto.
Eagle reasonably believes that neither it nor any Eagle Subsidiary has or will have any material
liability for any such taxes in excess of the amounts so paid or reserved or accruals so
established. Eagle and the Eagle Subsidiaries are not delinquent in the payment of any material
tax, assessment or governmental charge and have not requested any extension of time within which to
file any tax returns in respect of any fiscal year which have not since been filed.
(b) No material deficiencies for any tax, assessment or governmental charge have been assessed
(tentatively or definitively) or, to Eagle’s knowledge, proposed or asserted against Eagle or any
Eagle Subsidiary which have not been settled and paid and, as of the date of this Agreement, no
requests for waivers of the time to assess any tax, or waivers of the statutory period of
limitation, are pending or have been granted, and Eagle and the Eagle Subsidiaries do not have in
effect any currently effective power of attorney or authorization to any person to represent it in
connection with any taxes. No issue has been raised with Eagle by any federal, state, local or
foreign taxing authority in connection with an audit or examination of the Eagle Returns, or the
business or properties of Eagle and the Eagle Subsidiaries which has not been settled, resolved and
fully satisfied. No claim has ever been made by any taxing authority in a
13
jurisdiction where Eagle and each Eagle Subsidiary does not file tax returns that Eagle or any
Eagle Subsidiary is or may be subject to taxation by that jurisdiction.
(c) Eagle and each Eagle Subsidiary has paid (or has had paid on its behalf) or has withheld
and remitted to the appropriate taxing authority all material taxes due and payable, or, where
payment is not yet due, has established (or has had established on its behalf and for its sole
benefit and recourse) in accordance with GAAP an adequate accrual for all taxes through the end of
the last period for which Eagle and the Eagle Subsidiaries ordinarily record items on their
respective books. Eagle and each Eagle Subsidiary have withheld or collected from each payment made
to its employees the amount of all taxes (including but not limited to federal income taxes,
Federal Insurance Contributions Act (“FICA”) taxes and federal unemployment taxes) required to be
withheld or collected therefrom, and have paid the same to the proper tax officers or authorized
depositories.
(d) Neither Eagle nor any current Eagle Subsidiary has any liability for the taxes of any
other person (including any former subsidiary of Eagle or EagleBank), other than Eagle or
EagleBank, under 26 CFR 1.1502-6 (or similar provision of federal, state or local law) as a
successor, transferee, by contract or otherwise, with respect to tax years ending after December
31, 2005.
3.14. Loans. (a) Each of the loans, including loans held for sale (“Loans”) of EagleBank: (i)
is evidenced by notes, agreements or other evidences of indebtedness which are true, genuine and
what they purport to be; (ii) to the extent secured, has been secured by valid liens or security
interests which have been perfected; and (iii) represents the legal, valid and binding obligation
of the borrowers named therein, enforceable in accordance with its terms (including the validity,
perfection and enforceability of any lien, security interest or other encumbrance relating to such
Loan), except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’
rights generally, and subject to general principles of equity which may limit the enforcement of
certain remedies.
(b) Each Loan of EagleBank was made in material compliance with the provisions of applicable law
and regulation, including but not limited to the Real Estate Settlement Practices Act (“RESPA”),
the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair
Debt Collection Practices Act, and the regulations promulgated thereunder.
(c) No default (including any event or circumstance which with the passage of time or the giving of
notice or both would constitute a default) in respect of any material provision (including any
default in payment) of any Loan of EagleBank exists, and Eagle and EagleBank have no knowledge of
any borrower’s inability to repay any of such Loans when due, whether or not such borrower is
currently in default, except as reflected on Eagle’s classified asset schedule.
(d) Neither Eagle nor any Eagle Subsidiary has any liability or obligation, and, to Eagle’s
knowledge, no events have occurred and no threats have been made which would require Eagle or any
Eagle Subsidiary, to repurchase or reacquire any Loan, or purchase collateral in respect of any
Loan, which was held for sale and which has previously been sold in the ordinary course of Eagle’s
mortgage origination/brokerage business (whether or not such loan has subsequently been reacquired
by Eagle or any Eagle Subsidiary) since December 31, 2005 (“Eagle Sold Loans”), or to
14
make any payment on any Eagle Sold Loan, or to make any payment to, reimburse, indemnify or hold
harmless, or otherwise assume liability with respect to any loss, liability or expense incurred by,
the purchaser (or subsequent purchaser or acquiror) of any Eagle Sold Loan in respect of such Eagle
Sold Loan, or is otherwise subject to any liability or recourse in respect of any Eagle Sold Loan.
Neither Eagle nor any Eagle Subsidiary has any liability to any borrower as a result of the manner
in which an Eagle Sold Loan was originated. Section 3.14(d) of the Eagle Disclosure Schedule sets
forth detail with respect to any exceptions hereto, including but not limited to the nature and
extent of the liability, any limits (in time or dollar amount) on such liability, the basis of such
liability, the instrument under which such potential liability arises, the nature and amount of
Eagle Sold Loans resulting in such liability and the identity of the party to whom Eagle or Eagle
Bank may have such liability.
(e) No Eagle Sold Loan was originated in violation of the representations and warranties of Eagle
contained or incorporated by reference in any contract or agreement pursuant to which such Eagle
Sold Loan was sold or assigned, including but not limited to any representation or warranty
regarding the absence of fraud, misstatement of a material fact, omission of a material fact or a
fact necessary to make the information provided not misleading, regarding the Eagle Sold Loan, the
loan collateral, the borrower or the credit-worthiness of borrower, and any representation or
warranty of Eagle regarding the absence of any fact, circumstance or condition which would cause,
or would reasonably be expected to cause, the purchaser of the Eagle Sold Loan, any subsequent
purchaser, securitizer or guarantor of such Eagle Sold Loan (including but not limited to the
Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation
(“FHLMC”), the Government National Mortgage Association (“GNMA”), the Federal Housing
Administration (“FHA”) or the Department of Veteran Affairs (the “VA”) to regard such Eagle Sold
Loan as unacceptable as an investment, ineligible for insurance, or which would otherwise cause
them to consider the value or marketability of such Eagle Sold Loan to be materially adversely
affected.
(f) Neither Eagle nor any Eagle Subsidiary currently services any Loan, including any Eagle Sold
Loan, not currently held in portfolio, for any third party. The servicing and collection practices
of Eagle and each Eagle Subsidiary with respect to Eagle Sold Loans materially complied with
applicable laws, and was in accordance with the terms and conditions of the agreements pursuant to
which such Eagle Sold Loans were sold, whether such servicing was conducted by Eagle, an Eagle
Subsidiary, their respective affiliates, a third party or a servicing agent of any of the
foregoing.
3.15. Absence of Undisclosed Liabilities. Except as (i) reflected, noted and/or adequately
reserved against in the Eagle Consolidated Financial Statements as of December 31, 2010, and (ii)
incurred since December 31, 2010 in the ordinary course of business consistent with past practice,
Eagle and the Eagle Subsidiaries have no material liabilities (whether accrued, absolute,
contingent or otherwise) which were required to be reflected, noted or reserved against in the
balance sheet included therein under GAAP.
3.16. Xxxxxxxx-Xxxxx Act. Eagle is in material compliance with the provisions, including
Section 404, of the Xxxxxxxx-Xxxxx Act of 2002, and the certifications included in the Eagle SEC
Reports are, as of the date on which they were made, accurate.
3.17. Compliance with Laws. (a) Eagle and the Eagle Subsidiaries have all permits, licenses,
certificates of authority, orders and approvals of, and have made all filings, applications
15
and registrations with, federal, state, local or foreign governmental or regulatory bodies that are
required in order to permit them to carry on their business as presently conducted and the absence
of which would have a material adverse effect on such business; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect, and, to the knowledge
of Eagle, no suspension or cancellation of any of them is threatened; and all such filings,
applications and registrations are current. Eagle and the Eagle Subsidiaries are in compliance in
all material respects with all applicable federal, state and local statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Bank Secrecy Act, the
USA Patriot Act, RESPA, the Flood Disaster Protection Act, and all other applicable fair lending
laws and other laws relating to discriminatory business practices, anti-money laundering, foreign
corrupt practices, suspicious activity reporting and similar matters, other than instances of
non-compliance which, individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on the business, operations, assets, financial condition, prospects or
results of operations of Eagle and the Eagle Subsidiaries, taken as a whole. Eagle is in
compliance with all applicable listing standards of the NASDAQ Stock Market. Neither Eagle nor any
Eagle Subsidiary is in default under any order, license, regulation or demand of any federal,
state, local or other governmental agency or with respect to any order, writ, injunction or decree
of any court, other than instances of default which, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the business, operations, assets,
financial condition, prospects or results of operations of Eagle and the Eagle Subsidiaries, taken
as a whole.
(b) Except for statutory or regulatory restrictions of general application, no federal, state,
local or other governmental authority has placed any restrictions on the business of Eagle or any
of the Eagle Subsidiaries which reasonably could be expected to have a material adverse effect on
the business of Eagle and Eagle Subsidiaries taken as a whole. Neither Eagle nor any Eagle
Subsidiary is a party or subject to any order, decree, written agreement, memorandum of
understanding or similar arrangement with, or a commitment letter, supervisory letter or similar
submission or application to, or extraordinary supervisory letter from, any such governmental
authority and neither Eagle nor any Eagle Subsidiary has been advised that any such governmental
authority is contemplating issuing or requesting (or is considering the appropriateness of issuing
or requesting) any such order, decree, written agreement, memorandum of understanding, commitment
letter, supervisory letter or similar arrangement or submission or application.
3.18 Consents. Except for the approval by the requisite vote of holders of Alliance Common
Stock, the governmental approvals referred to in Section 3.3 and as set forth in Section 3.18 to
the Eagle Disclosure Schedule, no consent, permission, acquiescence, approval, or authorization of
or by any third party is required to permit Eagle to consummate the transactions contemplated
hereby.
3.19. Fairness Opinion. Eagle has received, on or prior to the date hereof, the written
opinion of Sandler X’Xxxxx & Partners, L.P. to the effect that the Merger is fair to the
shareholders of Eagle from a financial point of view.
3.20 Environmental Matters. No environmental contaminant, pollutant, petroleum product, toxic
or hazardous waste or similar or like substance being or having been generated, used,
16
stored, processed, disposed of, discharged at, or being or having been otherwise present, in
violation of any local, state, or federal environmental statute, regulation, rule or ordinance, at
any real estate now or previously owned or acquired (including without limitation any real estate
acquired by means of foreclosure, transfer in lieu of foreclosure or by exercise of any other
creditor’s right) or leased by Eagle or any Eagle Subsidiary, or any real estate which is pledged
or stands as collateral security for any Loan or other extension of credit by Eagle or any Eagle
Subsidiary, where such violation would reasonably be expected to have a material adverse effect on
the value of the property to Eagle. Neither Eagle nor any Eagle Subsidiary has received written
notice of, nor to the knowledge of Eagle or any Eagle Subsidiary has Eagle or any Eagle
Subsidiary received an overt threat of, any legal, administrative, arbitral or other proceeding,
claim, action, cause of action or governmental proceeding or investigation of any nature
whatsoever, seeking to impose, or that could result in the imposition, on Eagle or any Eagle
Subsidiary of any liability arising under any local, state, or federal environmental statute,
regulation, rule or ordinance, and neither Eagle nor any Eagle Subsidiary is subject to any
agreement, order, judgment, decree or memorandum of any court, governmental authority, regulatory
agency or third party imposing any such liability.
3.21. Brokers and Finders. Except for the fee set forth in Section 3.21 of the Eagle
Disclosure Schedule payable to Sandler X’Xxxxx & Partners, L.P., neither Eagle, nor any of its
officers, directors, employees or shareholders, has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no
broker or finder has acted, directly or indirectly, for Eagle, in connection with this Agreement or
the transactions contemplated hereby
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALLIANCE AND ALLIANCE BANK
Except as set forth in the disclosure schedule delivered by Alliance and Alliance Bank to
Eagle prior to the date hereof (the “Alliance Disclosure Schedule”), Alliance and Alliance Bank
represent and warrant to Eagle as follows:
4.1. Organization and Authority. Alliance is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Virginia. Alliance is a registered bank
holding company under the BHCA, and has the corporate power and authority to own its properties and
assets and to carry on its business, and the business of the Alliance Subsidiaries (as defined in
Section 4.2), as now being conducted and to enter into and carry out its obligations under this
Agreement. Alliance is qualified to do business as a foreign corporation in each jurisdiction where
such qualification is necessary, except where the failure to obtain such qualification would not
have a material adverse effect on the business, operations, assets, financial condition, prospects
or results of operations, of Alliance and the Alliance Subsidiaries, taken as a whole. Alliance has
all necessary governmental authorizations to own or lease its properties and assets, and carry on
its business as now being conducted, with the exception of those authorizations which the failure
to obtain would not have a material adverse effect on the business, operations, assets, financial
condition, prospects or result of operations of Alliance and the Alliance Subsidiaries, taken as a
whole.
4.2. Alliance Subsidiaries. (a) Alliance directly owns all outstanding shares of the capital
stock of Alliance Bank, and all of the outstanding common securities of Alliance Virginia Capital
Trust I (“AVCT”). Alliance (other than Alliance Bank and AVCT) and Alliance Bank (do not have
17
any subsidiaries, including financial subsidiaries, and do not own any capital stock or other
equity interests in any entity (including, without limitation, active or inactive corporations,
partnerships, joint ventures, trusts and limited liability companies). Alliance Bank and AVCT are
referred to on occasion as “Alliance Subsidiaries” and each individually as an “Alliance
Subsidiary.” No equity securities of Alliance Bank or any other Alliance Subsidiary are or may
become required to be issued by reason of any options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever, relative to, or concerning securities or rights
convertible into, or exchangeable for, shares of any class of capital stock or other equity
security of any Alliance Subsidiary, and there are no other contracts, commitments, understandings
or arrangements by which any Alliance Subsidiary is bound to issue, or Alliance is bound to cause
any Alliance Subsidiary to issue, additional shares of its capital stock or other equity security
or options, warrants, scrip, rights to purchase or acquire, or securities or rights convertible
into or exchangeable for, any additional shares of its capital stock or other equity security. Each
Alliance Subsidiary, including its jurisdiction of organization, ownership, and nature of business
is set forth in Section 4.2 of the Alliance Disclosure Schedule.
(b) All of the shares of capital stock or other equity interests of each Alliance Subsidiary so
owned by Alliance are fully paid and non-assessable and are owned by it free and clear of any
claim, lien, encumbrance or agreement with respect thereto. Alliance Bank is a commercial bank duly
organized, validly existing and in good standing under the laws of the Commonwealth of Virginia,
and has the corporate power and authority and all necessary federal, state, local and foreign
authorizations to own or lease its properties and assets and to carry on its business as it is now
being conducted. The deposits of Alliance Bank are insured to the applicable legal limits by the
Deposit Insurance Fund of the FDIC. Each other Alliance Subsidiary is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization, and has the power
and authority and all necessary material federal, state, local and foreign authorizations to own or
lease its properties and assets and to carry on its business as it is now being conducted.
4.3. Capitalization of Alliance and Alliance Bank. (a) As of the date hereof, the authorized
capital stock of Alliance consists of 15,000,000 shares of Alliance Common Stock, par value $4.00
per share, of which 5,108,969 shares are issued and outstanding. As of the date hereof, there are
outstanding Alliance Options to purchase 392,833.75 shares of Alliance Common Stock pursuant to the
Alliance Stock Plans. Section 4.3 of the Alliance Disclosure Schedule describes each outstanding
Alliance Option, including the holder, grant date, exercise price, expiration date, number of
shares subject to the Alliance Options and designation as an incentive or nonincentive option. Each
Alliance Option has an exercise price per share equal to at least 100% of the fair market value of
the Alliance Common Stock as of the date of grant. No award other than incentive stock options or
nonincentive stock options have been issued under the Alliance Stock Plans. As of the date hereof,
there are no other shares of capital stock or other equity securities of Alliance outstanding and
no other outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or exchangeable for,
shares of capital stock or other equity security of Alliance, or contracts, commitments,
understandings, or arrangements by which Alliance was or may become bound to issue additional
shares of its capital stock or other equity security or options, warrants, scrip, rights to
purchase or acquire, or securities or rights convertible into or exchangeable for, any additional
shares of its capital stock or other equity security.
All of the outstanding shares of Alliance Common Stock are duly authorized and validly issued,
and are fully paid and nonassessable under the VSCA. No shares of Alliance Common Stock
18
have been issued in violation of the preemptive or preferential rights of any holder of Alliance
capital stock. All of the outstanding shares of Alliance Common Stock have been issued pursuant to
an effective registration statement under the Securities Act, and pursuant to effective
registrations or qualifications under applicable state securities or blue sky laws, or pursuant to
applicable exemptions from such registration or qualification.
(b) As of the date hereof, the authorized capital stock of Alliance Bank consists of 5,000,000
shares of common stock, $4.00 par value, (“Alliance Bank Common Stock”) of which 835,063 shares are
issued and outstanding. There are no other shares of capital stock or other equity securities of
Alliance Bank outstanding and no other outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of capital stock or other equity securities of
Alliance Bank, or contracts, commitments, understandings, or arrangements by which Alliance Bank
was or may become bound to issue additional shares of its capital stock or other equity security or
options, warrants, scrip or rights to purchase or acquire, or securities or rights convertible into
or exchangeable for, any additional shares of its capital stock or other equity security.
4.4. Authorization. (a) The execution, delivery and performance of this Agreement by Alliance
and Alliance Bank and the consummation of the transactions contemplated hereby have been duly
authorized by the Boards of Directors of Alliance and Alliance Bank, respectively, and by Alliance
as sole shareholder of Alliance Bank, and except for the approval by the shareholders of Alliance,
no other corporate proceedings on the part of Alliance or Alliance Bank are necessary to authorize
this Agreement and the transactions contemplated hereby. Subject to shareholder approval and the
approvals of government agencies having regulatory authority over Alliance, Alliance Bank or the
Merger as may be required by statute or regulation, this Agreement is the valid and binding
obligation of Alliance and Alliance Bank enforceable against them in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization or moratorium or
other similar laws or equitable principles affecting creditors’ rights generally and subject to
general equitable principles which may limit the enforcement of certain remedies.
(b) Neither the execution, delivery and performance of this Agreement by Alliance and Alliance
Bank, nor the consummation of the transactions contemplated hereby, nor compliance by Alliance and
Alliance Bank with any of the provisions of this Agreement, will (i) violate, conflict with, or
result in a breach of any provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or acceleration or the
creation of any lien, security interest, charge or encumbrance upon any of the properties or assets
of Alliance or any Alliance Subsidiary under any of the terms, conditions or provisions of: (x) its
Articles of Incorporation or Association or Bylaws or similar organizational or governing document,
or (y) any material note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Alliance or any Alliance Subsidiary is a party or may be
bound, or to which Alliance or any Alliance Subsidiary or any of the properties or assets of
Alliance or any Alliance Subsidiary may be subject; or (ii) subject to compliance with the statutes
and regulations referred to in Section 4.4(c), violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Alliance or any Alliance Subsidiary
or any of their respective properties or assets.
(c) Other than in connection or in compliance with the applicable provisions of the MGCL, the VSCA,
the MFIC, the VFIC, the Securities Act, the Exchange Act, the securities or blue sky laws of
19
the various states and consents, authorizations, approvals or exemptions required under the BHCA or
the FDIA or any applicable federal or state banking statute (including those relating to mortgage
banking, brokerage or lending activities), no notice to, filing with, authorization of, exemption
by, or consent or approval of, any public body or authority is necessary for the consummation by
Alliance and Alliance Bank of the transactions contemplated by this Agreement.
(d) Alliance and Alliance Bank have no reason to believe that any required regulatory consent or
approval will not be received or will be received with conditions or restrictions which Eagle would
deem unduly burdensome, or which would have an adverse impact on their capacity to consummate the
transactions contemplated hereby.
4.5. Alliance SEC Reports. (a) Alliance has made available to Eagle: (i) its Annual Reports on
Form 10-K for its fiscal years ended December 31, 2010 and 2009; (ii) its Quarterly Report on Form
10-Q for its fiscal quarter ended March 31, 2011; (iii) its proxy or information statements
relating to meetings of Alliance’s shareholders since December 31, 2009; and (iv) all of its other
reports, statements, schedules and registration statements filed with or furnished to the SEC since
December 31, 2009 (collectively, the “Alliance SEC Reports”), each in the form filed with the SEC.
As of its date of filing with or furnishing to the SEC, each Alliance SEC Report, in each case as
amended or supplemented, as applicable, complied in all material respects with the Exchange Act or
Securities Act, as the case may be, and did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which the statement was made. Alliance has
timely filed all Alliance SEC Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act since December 31, 2009.
(b) Alliance has established and maintains disclosure controls and procedures (as defined in Rule
13a-15(e) under the Exchange Act). Such disclosure controls and procedures are designed to ensure
that information required to be disclosed by Alliance, including with respect to its consolidated
subsidiaries, in the reports that it files under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified and (ii) made known to Alliance’s
principal executive officer and its principal financial officer, or persons performing similar
functions, by others within those entities. Such disclosure controls and procedures are effective
for the purposes for which they were established, including timely alerting Alliance’s principal
executive officer and principal financial officer, or persons performing similar functions, to
material information to be included in the Alliance SEC Reports under the Exchange Act.
(c) Alliance has established and maintains a system of internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Such internal control over
financial reporting is effective to provide reasonable assurance regarding the reliability of
Alliance’s financial reporting and the preparation of Alliance’s financial statements for external
purposes in accordance with GAAP. Alliance has no knowledge of (i) any significant deficiencies or
material weaknesses in the design or operation of its internal control over financial reporting
which are reasonably likely to adversely affect its ability to record, process, summarize and
report financial information or (ii) any fraud, whether or not material, that involves management
or other employees who have a role in Alliance’s internal control over financial reporting.
Alliance is not aware of any change in its internal control over financial reporting that has
occurred since December 31, 2010 that has materially affected, or is reasonably likely to
materially affect, Alliance’s internal control over financial reporting.
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(d) Since December 31, 2008, (i) neither Alliance nor any Alliance Subsidiary has received or
otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim,
written or oral, regarding the accounting or auditing practices, or internal procedures or
accounting controls, methodologies or methods of Alliance or any Alliance Subsidiary, including but
not limited to any complaint, allegation, assertion or claim that Alliance or any Alliance
Subsidiary has engaged in any questionable accounting or auditing practice, or regarding any
violation of the securities laws; and (ii) no attorney representing Alliance or any Alliance
Subsidiary has reported to their respective Boards of Directors, committee thereof, any member
thereof or any executive officer, evidence of a material violation of the securities or banking
laws, breach of fiduciary duty or similar violation by Alliance or any Alliance Subsidiary or any
of their respective officers, directors, employees or agents.
4.6. Alliance Financial Statements. (a) The (i) audited consolidated balance sheets of
Alliance as of December 31, 2010 and 2009 and the related audited consolidated statements of
operations, changes in shareholders’ equity, and cash flows for the three years ended December 31,
2010 included in Alliance’s Annual Report on Form 10-K for the year ended December 31, 2010; and
(ii) unaudited consolidated balance sheets of Alliance as of March 31, 2011 and March 31, 2010 and
the related unaudited consolidated statements of operations, changes in shareholders’ equity and
cash flows for the three months ended March 31, 2011 and March 31, 2010, included in Alliance’s
Quarterly Report on Form 10-Q for the period ended March 31, 2011, have been prepared in accordance
with GAAP applied on a consistent basis, and present fairly, in all material respects, its
financial position and its consolidated results of operations, changes in shareholders’ equity and
cash flows. The audited consolidated balance sheets of Alliance as of future dates and the related
audited consolidated statements of operations, changes in shareholders’ equity and cash flows for
the periods then ended, which may be provided by Alliance to Eagle subsequent to the date hereof,
will be prepared in accordance with GAAP applied on a consistent basis, and will present fairly, in
all material respects, its consolidated financial position as of such dates and its consolidated
results of operations, changes in shareholders’ equity and cash flows for such periods. The
unaudited interim financial statements which may be provided to Eagle subsequent to the date hereof
will be prepared in accordance with GAAP applied on a consistent basis, and will present fairly, in
all material respects, the consolidated financial position of Alliance at the dates, and the
consolidated results of operations, changes in shareholders’ equity and cash flows of Alliance for
the periods stated therein. Together, the audited and unaudited consolidated financial statements
referred to in this Section 4.5 are referred to as the “Alliance Consolidated Financial
Statements.”
(b) Without limitation of the foregoing, the allowances for loan losses and the reserves for
representations and warranties reflected in the statements of financial condition included in the
Alliance Consolidated Financial Statements were calculated in accordance with GAAP; Alliance and
Alliance Bank believe that such allowances and reserves were, as of such dates, adequate to absorb
all reasonably anticipated losses in the loan portfolio of Alliance and Alliance Bank, and recourse
obligations in respect of Alliance Sold Loans (as defined in Section 4.18) in light of the size and
characteristics of such portfolios, economic conditions, borrower capacity and other pertinent
factors, and no facts have subsequently come to the knowledge of Alliance or Alliance Bank which
would cause it to restate in any material way the amount of the allowance for loan losses or
reserve for representations and warranties as of any such date.
4.7. Books of Account; Corporate Records. The books of account of Alliance and Alliance Bank
are maintained in compliance in all material respects with all applicable legal and accounting
requirements. Not in limitation of the foregoing, the books and records of account of
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Alliance Bank contain sufficient information, in reasonably accessible form and format, to enable
it to conduct business in the ordinary course with respect to the assets and liabilities of
Alliance Bank, including but not limited to information which would enable it to make any required
filings under the Bank Secrecy Act and regulations promulgated thereunder. The minute books of
Alliance and Alliance Bank accurately disclose all material corporate actions of their respective
shareholders and Board of Directors and of all committees thereof.
4.8. Alliance Reports. (a) As of March 31, 2011, Alliance and Alliance Bank had filed, since
that date have filed, and subsequent to the date hereof will file, all reports, registrations and
statements, if any, together with any amendments required to be made with respect thereto, that
were and are required to be filed with: (i) the Federal Reserve Board; (ii) the FDIC; (iii) the
SEC; and (iv) the SCC (all such reports and statements are collectively referred to herein as the
“Alliance Reports”). As of their respective dates, the Alliance Reports complied and will comply in
all material respects with all the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed and did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
are made, not misleading.
(b) Each registration statement, prospectus, offering circular, private placement memorandum or
other securities offering document used by Alliance in connection with the sale of Alliance Common
Stock, and all other sales documentation relating thereto, did not contain any untrue or misleading
statement of a material fact, and did not omit to state a material fact necessary in order to make
the statements contained therein, in light of the circumstances in which they were made, not
misleading.
4.9 Absence of Certain Changes. Except for events or circumstances disclosed in the Alliance
SEC Reports, since December 31, 2010, there has not been any change, in the nature of the business,
results of operations, assets, financial condition, method of accounting or accounting practice, or
manner of conducting the business of Alliance or the Alliance Subsidiaries, that has had, or may
reasonably be expected to have, individually or in the aggregate, a material adverse effect on the
business, operations, assets, financial condition, prospects or results of operations of Alliance
and the Alliance Subsidiaries taken as a whole, or on the ability of Alliance and Alliance Bank to
consummate the transactions contemplated hereby. Nothing herein contained shall be deemed to admit
or give rise to any implication that any events disclosed in the Alliance SEC Reports have had, or
may be reasonably expected to have, a material adverse effect on the business, operations, assets,
financial condition, prospects or results of operations of Alliance and the Alliance Subsidiaries,
taken as a whole, or on the ability of Alliance or Alliance Bank to consummate the transactions
contemplated hereby.
4.10. Insurance. All policies of insurance maintained by Alliance or any Alliance Subsidiary,
including the identity of the carrier, type of coverage, policy limits, expiration, and claims made
within the past five (5) years, are set forth in Section 4.10 of the Alliance Disclosure Schedule.
All such policies are in full force and effect and no notices of cancellation have been received in
connection therewith. Such policies are in accordance with customary and reasonable practice in the
banking industry in respect of amounts, types and risks insured, for the business in which Alliance
and the Alliance Subsidiaries are engaged, and, except as would cause a material adverse effect on
the business, operations, assets, financial condition, prospects or results of operations of
Alliance and the Alliance Subsidiaries taken as a whole, or on the ability of Alliance
22
and Alliance Bank to consummate the transactions contemplated hereby, are sufficient for compliance
with all legal requirements and all agreements to which Alliance or any Alliance Subsidiary is a
party. Neither Alliance nor any Alliance Subsidiary is in default with respect to any such policy
which defaults, taken as a whole, are material to Alliance and the Alliance Subsidiaries, taken as
a whole.
4.11. Properties, Leases and Other Agreements. Except as may be reflected in the Alliance
Consolidated Financial Statements, except for any lien for current taxes not yet delinquent, and
except for imperfections of title, encumbrances and easements, if any, as are not material in
character, amount or extent and do not materially detract from the value, or interfere with the
present or proposed use of, such properties or assets, Alliance and Alliance Bank have good title,
free and clear of any liens, claims, charges, options or other encumbrances, to all of the personal
and real property reflected in the consolidated balance sheet of Alliance as of December 31, 2010,
and all personal and real property acquired since such date, except such personal and real property
as has been disposed of for fair value in the ordinary course of business. All leases pursuant to
which Alliance or any Alliance Subsidiary, as lessee, leases real property, are valid and effective
in accordance with their respective terms, and there is not, under any of such real property
leases, any existing default by Alliance or any Alliance Subsidiary or any event which with notice
or lapse of time or both would constitute a default by Alliance or any Alliance Subsidiary. All
leases pursuant to which Alliance or any Alliance Subsidiary, as sublessor, leases real property,
are valid and effective in accordance with their respective terms, and there is not, under any of
such real property leases, any existing default by Alliance or any Alliance Subsidiary, or to
Alliance’s knowledge, any sublessee thereunder, or any event which with notice or lapse of time or
both would constitute a default by Alliance or any Alliance Subsidiary or to Alliance’s knowledge,
any sublessee thereunder. There are no leases pursuant to which Alliance or any Alliance Subsidiary
leases personal property. Section 4.11 of the Alliance Disclosure Schedule sets forth a complete
list and brief description of all real estate owned or leased by Alliance or any Alliance
Subsidiary (including real estate acquired by means of foreclosure, transfer in lieu of foreclosure
or by exercise of any creditor’s right), all real estate subleases where Alliance or any Alliance
Subsidiary is sublessor, and all personal property having a value in excess of $50,000 owned or
leased by Alliance or any Alliance Subsidiary. Each item of real estate described in Section 4.11
of the Alliance Disclosure Schedule is in good repair and insurable at market rates; no notice of
violation of zoning laws, building or fire codes or other statutes, ordinances or regulations
relating to the use or operation by Alliance or any Alliance Subsidiary of such property has been
received by Alliance or any Alliance Subsidiary, and Alliance has no knowledge of any such
violation; and there are no condemnation or similar proceedings pending or, to Alliance’s
knowledge, threatened against any such property or any portion thereof.
4.12. Taxes. (a) Alliance and each Alliance Subsidiary have duly filed, or will file, all
federal, state, local and foreign tax returns (“Alliance Returns”) required by applicable law to be
filed on or before the Effective Time (all such Alliance Returns being accurate and complete in all
material respects), and have paid or have set up adequate reserves or accruals for the payment of
all taxes required to be paid in respect of the periods covered by such Alliance Returns, and will
pay, or where payment is not yet due, will set up adequate reserves or accruals adequate in all
material respects for the payment of all taxes for any subsequent periods ending on or prior to the
Effective Time or any portion of a subsequent period which includes the Effective Time and ends
subsequent thereto. Alliance reasonably believes that neither it nor any Alliance Subsidiary has or
will have any material liability for any such taxes in excess of the amounts so paid or reserved or
accruals so established. Alliance and the Alliance Subsidiaries are not delinquent in the payment
of any material
23
tax, assessment or governmental charge and have not requested any extension of time within
which to file any tax returns in respect of any fiscal year which have not since been filed.
(b) No material deficiencies for any tax, assessment or governmental charge have been assessed
(tentatively or definitively), or to Alliance’s knowledge, proposed or asserted, against Alliance
or any Alliance Subsidiary which have not been settled and paid and, as of the date of this
Agreement, no requests for waivers of the time to assess any tax, or waivers of the statutory
period of limitation, are pending or have been granted, and Alliance and the Alliance Subsidiaries
do not have in effect any currently effective power of attorney or authorization to any person to
represent it in connection with any taxes. No issue has been raised with Alliance or any Alliance
Subsidiary by any federal, state, local or foreign taxing authority in connection with an audit or
examination of the Alliance Returns, or the business or properties of Alliance and the Alliance
Subsidiaries which has not been settled, resolved and fully satisfied. No claim has ever been made
by any taxing authority in a jurisdiction where Alliance and each Alliance Subsidiary does not file
tax returns that Alliance or any Alliance Subsidiary is or may be subject to taxation by that
jurisdiction.
(c) Alliance and each Alliance Subsidiary has paid (or has had paid on its behalf) or has withheld
and remitted to the appropriate taxing authority all material taxes due and payable, or, where
payment is not yet due, has established (or has had established on its behalf and for its sole
benefit and recourse) in accordance with GAAP an adequate accrual for all taxes through the end of
the last period for which Alliance and the Alliance Subsidiaries ordinarily record items on their
respective books.
(d) Neither Alliance nor any Alliance Subsidiary has been included in any “consolidated,” “unitary”
or “combined” Tax Return provided for under Applicable Law with respect to Taxes for any Taxable
period for which the statute of limitations has not expired (other than a group of which Alliance
and each Alliance Subsidiary are the only members).
(e) Alliance and each Alliance Subsidiary have withheld or collected from each payment made to its
employees the amount of all taxes (including but not limited to federal income taxes, FICA taxes
and federal unemployment taxes) required to be withheld or collected therefrom, and have paid the
same to the proper tax officers or authorized depositories.
(f) The income and franchise tax returns of Alliance and the Alliance Subsidiaries through the tax
year ended December 31, 2006 have been examined and closed or are tax returns with respect to which
the applicable period for assessment under applicable law, after giving effect to extensions or
waivers, has expired.
(g) Neither Alliance nor any current Alliance Subsidiary has any liability for the taxes of any
other person (including any former subsidiary of Alliance or Alliance Bank), other than Alliance or
Alliance Bank, under Treasury Regulation Section 1.1502-6 (or similar provision of federal, state
or local law) as a successor, transferee, by contract or otherwise, and neither Alliance nor any
Alliance Subsidiary is a party to or bound by any tax sharing or allocation agreements.
(h) Neither Alliance nor any Alliance Subsidiary will be required to include any material item of
income in, or exclude any material item of deduction from, taxable income for any taxable period
(or portion thereof) ending after the Effective Time as a result of any of the following that
occurred or exists on or prior to the Effective Time: (a) a “closing agreement” as described in
Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S.
24
income Tax law) executed prior to the Effective Time, (b) an installment sale or open transaction
disposition made on or prior to the Effective Time, (c) a prepaid amount received on or prior to
the Effective Time, (d) an intercompany item under Treasury Regulation Section 1.1502-13 or an
excess loss account under Treasury Regulation Section 1.1502-19, or (e) change in the accounting
method of Alliance or any Alliance Subsidiary pursuant to Section 481 of the Code or any similar
provision of the Code or the corresponding tax laws of any nation, state or locality.
(i) During the 5 year period ending on the date hereof, neither Alliance nor any Alliance
Subsidiary was a distributing corporation or a controlled corporation in a transaction intended to
be governed by Section 355 of the Code.
(j) Neither Alliance nor any Alliance Subsidiary has participated in any “listed transaction”
within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
(k) Neither Alliance nor any Alliance Subsidiary is or has been a United States real property
holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
(l) Neither the Alliance nor any Alliance Subsidiary has requested, received or executed with any
taxing authority any ruling or binding agreement which could have a material adverse effect in a
post-Closing period on the business, operations, assets, financial condition, prospects or results
of operations of Alliance and the Alliance Subsidiaries taken as a whole, or on the ability of
Alliance and Alliance Bank to consummate the transactions contemplated hereby.
4.13. Fiduciary Activities. Neither Alliance nor any Alliance Subsidiary is directly or
indirectly engaged in any fiduciary or custodial activities.
4.14. Intangible Property. Alliance and Alliance Bank own or possess the right, free of the
claims of any third party, to use all material trademarks, service marks, trade names, copyrights,
patents, and licenses currently used by them in the conduct of their respective businesses, each of
which is described in Section 4.14 of the Alliance Disclosure Schedule. No material product or
service offered and no material trademark, service xxxx, trade name, copyright, patent, and license
or similar right used by Alliance or Alliance Bank infringed or infringes any rights of any other
person, and, as of the date hereof, neither Alliance nor Alliance Bank has received written or oral
notice of any claim of such infringement. Alliance and Alliance Bank are not, and as a result of
the execution and delivery of this Agreement or the performance of their obligations hereunder and
under the Bank Merger Agreement they will not be, in violation of any material licenses,
sublicenses and other agreements as to which the Alliance or Alliance Bank is a party and pursuant
to which Alliance or Alliance Bank is authorized to use any third-party patents, trademarks,
service marks, and copyrights, which violation would reasonably be expected to have a material
adverse effect on the business, operations, assets, financial condition, prospects or results of
operations, of Alliance and the Alliance Subsidiaries, taken as a whole.
4.15. Employee Relations. (a) As of the date hereof, Alliance and Alliance Bank are in all
material respects in compliance with all federal and state laws, regulations, and orders respecting
employment and employment practices (including Title 7 of the Civil Rights Act of 1964), terms and
conditions of employment, and wages and hours, and neither of them is engaged in any unfair labor
practice, and there are no pending, or, to the knowledge of Alliance and Alliance Bank, threatened
actions, suits or proceedings, administrative, arbitral, civil, criminal or otherwise, seeking
25
to impose on Alliance or Alliance Bank, any penalty, or to recover any damages from Alliance or
Alliance Bank or any person to whom they may be obligated to provide indemnification or defense, as
a result of the violation or alleged violation of any of such employment related laws, regulations
or orders, and, to the knowledge of Alliance and Alliance Bank, there is no basis for any of the
foregoing. As of the date hereof, no dispute exists between Alliance or Alliance Bank and any of
their respective employees or employee groups regarding employee organization, wages, hours, or
conditions of employment which would materially interfere with the business or operations of
Alliance or Alliance Bank. Section 4.15(a) to the Alliance Disclosure Schedule sets forth a
description of all pending or to the extent of Alliance’s and Alliance Bank’s knowledge thereof,
threatened, claims by or disputes of employees against Alliance or any Alliance Subsidiary (other
than routine benefit claims made in the ordinary course), or by Alliance or any Alliance Subsidiary
against any employee. As of the date hereof, there are no labor or collective bargaining
agreements (written or oral) binding upon Alliance or Alliance Bank or to which Alliance or
Alliance Bank is a party, and, except as set forth in Section 4.15(b) of the Alliance Disclosure
Schedule, no employment, severance, change in control or consulting agreements binding upon
Alliance or Alliance Bank, or to which Alliance or Alliance Bank is a party. As of the date hereof,
Alliance and Alliance Bank are not aware of any attempts to organize a collective bargaining unit
to represent any of their respective employee groups.
(b) (i) Section 4.15(b) of the Alliance Disclosure Schedule sets forth each employment contract,
deferred compensation, non-competition, bonus, stock option, profit sharing, pension, supplemental
income, retirement, change in control, severance, bonus, incentive and insurance agreement,
arrangement or plan, and any other fringe benefit arrangement applicable to, any current and former
employee and director of Alliance or Alliance Bank (the “Alliance Benefit Plans”). Each Alliance
Benefit Plan has been administered, maintained and operated in material accordance with its terms
and has complied in all material respects with applicable law.
(ii) No agreement, plan or arrangement disclosed or required to be disclosed in Section
4.15(b) of the Alliance Disclosure Schedule would, as a result of this Agreement, the Merger, the
Bank Merger Agreement or Bank Merger require Alliance, any Alliance Subsidiary, Eagle or any Eagle
Subsidiary to make any payment in an amount which would constitute an “excess parachute payment”
under Section 280G of the Code that will result in the imposition of any tax under Section 4999 of
the Code, the nondeductibility of any portion of such payment, or require any “gross up” payment.
(c) Each Alliance Benefit Plan that constitutes a “nonqualified deferred compensation plan” or
provides for the payment of “nonqualified deferred compensation” within the meaning of Section 409A
of the Code and the regulations and administrative guidance promulgated thereunder (“Section
409A”), complies as to form, and has been operated in material compliance, with Section 409A. The
execution, delivery and/or consummation of this Agreement, the Bank Merger Agreement, the Merger,
the Bank Merger and the transactions contemplated thereby, and the payment or acceleration of the
amounts set forth under each Alliance Benefit Plan, shall not result in the payment to any person
of any amounts which would violate Section 409A.
4.16. ERISA Plans. (a) Section 4.16(a) of the Alliance Disclosure Schedule sets forth a
complete list of the Alliance Benefit Plans and any benefit plans of an Affiliate (as defined in
Section 4.16(h)) that are “employee pension benefit plans” within the meaning of Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and that are “employee
welfare benefits plans” within the meaning of Section 3(1) of ERISA, maintained for the
26
benefit of the employees or former employees, including any beneficiaries thereof, and
directors or former directors of Alliance and any Alliance Subsidiary (the “Alliance ERISA Plans”).
Alliance has delivered to Eagle a true and correct copy of each Alliance ERISA Plan and to the
extent applicable: (i) any related trust agreement or other funding instrument; (ii) the most
recent determination letter or opinion letter, if applicable; (iii) any summary plan description;
(iv) for the 3 most recent years the Form 5500 (annual reports) and attached schedules; and (v) for
each of the Alliance ERISA Plans that is a “top hat” plan, a copy of the filing with the U.S.
Department of Labor. Other than as set forth in Section 4.16(a) of the Alliance Disclosure
Schedule, neither Alliance nor any Alliance Subsidiary maintains any plans of the type described in
this Section 4.16(a).
(b) All Alliance ERISA Plans have been maintained, funded and administered in compliance, in all
material respects with all applicable provisions of ERISA, the Code, and all other federal, state,
or local laws. The assets of Alliance and the Alliance Subsidiaries are not subject to any liens
under ERISA or the Code with respect to any Alliance ERISA Plan and no event has occurred, or, to
Alliance’s knowledge, no condition exists, which could reasonably be expected to subject Alliance
or any Alliance Subsidiary or their respective assets to a future liability, obligation, or lien
arising out of any Alliance ERISA Plan. Any Alliance ERISA Plan that is subject to Title IV of
ERISA or that is a multiemployer plan within the meaning of Section 3(37) of ERISA has satisfied
the applicable minimum funding standards under Section 302 of ERISA.
(c) All contributions due on or prior to the date hereof to any Alliance ERISA Plan have been paid
or provided for in accordance with its terms, ERISA and all other applicable federal and state
statutes and regulations. All contributions, payments, fees or expenses relating to each such
Alliance ERISA Plans that were deducted by Alliance or any Alliance Subsidiary for income tax
purposes were properly deductible in the year claimed.
(d) There are no legal actions, claims (other than routine benefit claims made in the ordinary
course), government proceedings or government inquiries, pending or threatened, with respect to any
such Alliance ERISA Plans, and Alliance and the Alliance Subsidiaries have no knowledge of any fact
which could reasonably be expected to give rise to any such legal action, claim, government
proceeding or government inquiry. Neither Alliance, Alliance Bank, nor to the knowledge of
Alliance, any other person or entity who or which is a “party in interest” (as defined in Section
3(14) of ERISA) or “disqualified person” (as defined in Section 4975(e)(2) of the Code) has acted
or failed to act with respect to any such Alliance ERISA Plans in any manner which constitutes: (1)
a breach of fiduciary responsibility under ERISA; (2) a prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code; or (3) any other material violation of ERISA or the Code.
Neither Alliance nor Alliance Bank is obligated to indemnify, reimburse, or contribute to the
liabilities or expenses of any person or entity who may have committed or been involved in any such
fiduciary breach, prohibited transaction, or material violation of ERISA or the Code.
(e) Each Alliance ERISA Plan that was intended to constitute a qualified plan under Section 401(a)
of the Code has, at all times, been qualified, in form and operation, under Section 401(a) of the
Code (including the adoption of all necessary amendments to maintain such qualification) and has
received a favorable determination letter from the Internal Revenue Service that such Alliance
ERISA Plan is a qualified plan under Section 401(a) of the Code; any related trust is and has, at
all times, been exempt from income tax, and nothing has occurred, or failed to occur, which could
reasonably be expected to adversely affect the qualification or status of any such plan. Neither
Alliance, Alliance Bank, nor any Affiliate, as defined in Section 4.16(i) hereof, has ever
maintained
27
or contributed, or has any obligation to contribute, to (i) a “multiemployer plan” (as defined in
Section 3(37) of ERISA) or (ii) a plan subject to Title IV of ERISA. All returns, reports,
statements, notices, declarations or documents relating to an Alliance ERISA Plan that are required
by law to be filed with or furnished to any federal, state, or local governmental agency have been
timely filed.
(f) Any Alliance ERISA Plan that is a group health plan (as defined in Section 5000(b)(1) of the
Code) has complied in all material respects with the requirements of Sections 601 through 607 of
ERISA and Section 4980B of the Code and all other applicable federal, state, and local laws
relating to continuation coverage (collectively “COBRA”), and no such plan provides benefits to
former employees or their beneficiaries except to the extent required under COBRA. None of the
Alliance ERISA Plans is or has been funded by a “voluntary employee’s beneficiary association”
within the meaning of Section 501(c)(9) of the Code, a “welfare benefit fund” within the meaning of
Section 419 of the Code, a “qualified asset account” within the meaning of Section 419A of the
Code, or a “multiple employer welfare arrangement” within the meaning of Section 3(40) of ERISA.
(g) Each Alliance ERISA Plan can be amended, modified, or terminated without participant consent
and without additional liability accruing to Alliance or Alliance Bank after the date of such plan
termination. For this purpose, liabilities accrued on or before the date of the Alliance ERISA Plan
termination shall be limited to the following: (1) in the case of an employee benefit pension plan
(within the meaning of Section 3(2) of ERISA), the participant’s “accrued benefit,” as defined in
Section 3(23) of ERISA; and (2) in the case of an “employee welfare benefit plan” (within the
meaning of Section 3(1) of ERISA), claims for expenses, costs, or services (including, but not
limited to, medical and other health care services) actually performed or incurred before the date
of such plan termination. Any prior amendment, modification, or termination of an Alliance ERISA
Plan has been made in accordance with the terms of the plan and applicable law.
(h) No contributions to any of Alliance ERISA Plan has been made in such amounts as would violate
any applicable deduction limit under Section 404 of the Code. No reportable event within the
meaning of Section 4043 of ERISA has occurred for any Alliance ERISA Plan to which Section 4043 of
ERISA applies, or will occur in connection with the transaction contemplated by this Agreement.
(i) For purposes of this Section 4.16, the term “Affiliate” means an entity included in the group
of entities consisting of Alliance or Alliance Bank and all other entities that are treated as part
of the same controlled group under Section 414(b), (c), (m) or (o) of the Code.
4.17. Contracts; Consents. (a) Neither Alliance nor Alliance Bank is a party to, and no
property or assets of Alliance or Alliance Bank is subject to any contract, agreement, commitment,
lease, sublease, license, arrangement, understanding or instrument (other than Loans) calling for
payments in excess of $75,000 over the term of the contract or in any year (“Material Contract”).
Each such Material Contract is valid and in full force and effect, and Alliance and Alliance Bank,
and to the knowledge of Alliance and Alliance Bank, all other parties thereto have in all material
respects performed all obligations thereunder required to be performed to date, and are not in
material default. Each Material Contract, and each lease or sublease of real property reflected in
Section 4.11 to the Alliance Disclosure Schedule, is assumable and assignable without consent of
the other party thereto and does not contain any provision increasing or accelerating payments
otherwise due, or changing or modifying the provisions or terms of such Material Contract or lease
as a result of this Agreement or the transactions contemplated hereby.
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(b) Except for the approval by the requisite vote of holders of Alliance Common Stock, the
governmental approvals referred to in Section 4.4 and as set forth in Section 4.17 to the Alliance
Disclosure Schedule, no consent, permission, acquiescence, approval, or authorization of or by any
third party is required to permit Alliance and Alliance Bank to consummate the transactions
contemplated hereby, and for Eagle and the Eagle Subsidiaries to have full use and enjoyment of
each asset of Alliance and the Alliance Subsidiaries.
4.18. Related Party Transactions. Neither Alliance nor any Alliance Subsidiary has any
contract, extension of credit, business arrangement, depository relationship, or other relationship
(written or oral) with (i) any present director or executive officer of Alliance or any Alliance
Subsidiary; (ii) any shareholder of Alliance owning 5% or more of the Alliance Common Stock; or
(iii) any Reg O affiliate of the foregoing, except as disclosed in Section 4.18 to the Alliance
Disclosure Schedule. Each extension of credit disclosed in Section 4.18 to the Alliance Disclosure
Schedule has been made in the ordinary course of business, and on substantially the same terms,
including interest rate and collateral, as those prevailing at the time for comparable arms-length
transactions, and does not involve more than the normal risk of collectability or present other
unfavorable features.
4.19. Loans. (a) Each of the Loans of Alliance Bank: (i) is evidenced by notes, agreements or
other evidences of indebtedness which are true, genuine and what they purport to be; (ii) to the
extent secured, has been secured by valid liens or security interests which have been perfected;
and (iii) represents the legal, valid and binding obligation of the borrowers named therein,
enforceable in accordance with its terms (including the validity, perfection and enforceability of
any lien, security interest or other encumbrance relating to such Loan), except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors’ rights generally, and subject to general
principles of equity which may limit the enforcement of certain remedies.
(b) Each Loan of Alliance Bank was made in material compliance with the provisions of applicable
law and regulation, including but not limited to the RESPA, the Truth in Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and
the regulations promulgated thereunder.
(c) No default (including any event or circumstance which with the passage of time or the giving of
notice or both would constitute a default) in respect of any material provision (including any
default in payment) of any Loan of Alliance Bank exists, and Alliance and Alliance Bank have no
knowledge of any borrower’s inability to repay any of such loans when due, whether or not such
borrower is currently in default, except as reflected on Alliance’s classified asset schedule.
(d) Neither Alliance nor any Alliance Subsidiary is a party to any oral loan or oral extension of
credit.
(e) Neither Alliance nor any Alliance Subsidiary has any liability or obligation, and to Alliance’s
knowledge, no party has alleged that Alliance or any Alliance Subsidiary has any liability or
obligation, to repurchase or reacquire any Loan, or purchase collateral in respect of any Loan,
which was held for sale and which has previously been sold in the ordinary course of Alliance’s
discontinued mortgage origination/brokerage business (whether or not such loan has subsequently
been reacquired by Alliance or any Alliance Subsidiary) since December 31, 2005 (“Alliance Sold
29
Loans”), or to make any payment on any Alliance Sold Loan, or to make any payment to, reimburse,
indemnify or hold harmless, or otherwise assume liability with respect to any loss, liability or
expense incurred by, the purchaser (or subsequent purchaser or acquiror) of any Alliance Sold Loan
in respect of such Alliance Sold Loan, or is otherwise subject to any liability or recourse in
respect of any Alliance Sold Loan. Neither Alliance nor any Alliance Subsidiary has any liability
to any borrower as a result of the manner in which an Alliance Sold Loan was originated. Section
4.19(e) of the Alliance Disclosure Schedule sets forth detail with respect to any exceptions
hereto, including but not limited to the nature and extent of the liability, any limits (in time or
dollar amount) on such liability, the basis of such liability, the instrument under which such
potential liability arises, the nature and amount of Alliance Sold Loans resulting in such
liability and the identity of the party to whom Alliance or Alliance Bank may have such liability.
(f) No Alliance Sold Loan was originated in violation of the representations and warranties of
Alliance or Alliance Bank contained or incorporated by reference in any contract or agreement
pursuant to which such Alliance Sold Loan was sold or assigned, including but not limited to any
representation or warranty regarding the absence of fraud, misstatement of a material fact,
omission of a material fact or a fact necessary to make the information provided not misleading,
regarding the Alliance Sold Loan, the loan collateral, the borrower or the credit-worthiness of
borrower, and any representation or warranty of Alliance or Alliance Bank regarding the absence of
any fact, circumstance or condition which would cause, or would reasonably be expected to cause,
the purchaser of the Alliance Sold Loan, any subsequent purchaser, securitizer or guarantor of such
Alliance Sold Loan (including but not limited to FNMA, FHLMC, GNMA, FHA or the VA) to regard such
Alliance Sold Loan as unacceptable as an investment, ineligible for insurance, or which would
otherwise cause them to consider the value or marketability of such Alliance Sold Loan to be
materially adversely affected.
(g) Neither Alliance nor any Alliance Subsidiary currently services any Loan, including any
Alliance Sold Loan, not currently held in portfolio, for any third party. The servicing and
collection practices of Alliance and each Alliance Subsidiary with respect to Alliance Sold Loans
materially complied with applicable laws, and was in material accordance with the terms and
conditions of the agreements pursuant to which such Alliance Sold Loans were sold, whether such
servicing was conducted by Alliance, a Alliance Subsidiary, their respective affiliates, a third
party or a servicing agent of any of the foregoing.
4.20. Deposits. None of the deposits of Alliance Bank are “brokered” deposits as such term is
defined in the rules and regulations of the FDIC or are subject to any lien, encumbrance, legal
restraint or other legal process (other than garnishments, pledges, set off rights, escrow
limitations and similar actions taken in the ordinary course of business), and no portion of such
deposits represents a deposit of any affiliate of Alliance or Alliance Bank.
4.21. Environmental Matters. No environmental contaminant, pollutant, petroleum product,
toxic or hazardous waste or similar or like substance being or having been generated, used, stored,
processed, disposed of, discharged at, or being or having been otherwise present, in violation of
any local, state, or federal environmental statute, regulation, rule or ordinance, at any real
estate now or previously owned or acquired (including without limitation any real estate acquired
by means of foreclosure, transfer in lieu of foreclosure or by exercise of any other creditor’s
right) or leased by Alliance or any Alliance Subsidiary, or any real estate which is pledged or
stands as collateral security for any Loan or other extension of credit by Alliance or any Alliance
Subsidiary, where such violation would reasonably be expected to have a material adverse effect on
the value of
30
the property to Alliance. Neither Alliance nor any Alliance Subsidiary has received written notice
of, nor to the knowledge of Alliance or any Alliance Subsidiary has Alliance or any
Alliance Subsidiary received an overt threat of, any legal, administrative, arbitral or other
proceeding, claim, action, cause of action or governmental proceeding or investigation of any
nature whatsoever, seeking to impose, or that could result in the imposition, on Alliance or any
Alliance Subsidiary of any liability arising under any local, state, or federal environmental
statute, regulation, rule or ordinance, and neither Alliance nor any Alliance Subsidiary is subject
to any agreement, order, judgment, decree or memorandum of any court, governmental authority,
regulatory agency or third party imposing any such liability.
4.22. Litigation and Other Proceedings. Neither Alliance nor any Alliance Subsidiary is a
party to any pending, or, to the knowledge of Alliance or the Alliance Subsidiaries, threatened
claim, action, suit, investigation or proceeding or subject to any order, judgment or decree,
except for matters which, in the aggregate, cannot reasonably be anticipated to have a material
adverse effect on the ability of Alliance or Alliance Bank to consummate the transactions
contemplated hereby or the financial condition, prospects, results of operations, business or
properties of Alliance and the Alliance Subsidiaries taken as a whole, and, there is no basis for
any of the foregoing. Section 4.22 of the Alliance Disclosure Schedule sets forth a complete and
accurate list of all pending actions, suits, investigations or proceedings to which Alliance or any
Alliance Subsidiary is a party or which relate to any portion of their respective assets, and
threatened actions, suits, investigation or proceedings of which Alliance or any Alliance
Subsidiary have knowledge, to which Alliance or any Alliance Subsidiary believes one or more of
them may become a party or which relate to any portion of their respective assets. Neither Alliance
nor any Alliance Subsidiary have any knowledge of any pending or threatened action, suit or
proceeding which presents a claim to prohibit, restrict or restrain the transactions contemplated
hereby.
4.23. Absence of Undisclosed Liabilities. Except as (i) reflected, noted and/or adequately
reserved against in the Alliance Consolidated Financial Statements as of December 31, 2010, and
(ii) incurred since December 31, 2010 in the ordinary course of business consistent with past
practice, Alliance and the Alliance Subsidiaries have no material liabilities (whether accrued,
absolute, contingent or otherwise) which were required to be reflected, noted or reserved against
in the balance sheet included therein under GAAP.
4.24. Compliance with Laws. (a) Alliance and the Alliance Subsidiaries have all permits,
licenses, certificates of authority, orders and approvals of, and have made all filings,
applications and registrations with, federal, state, local or foreign governmental or regulatory
bodies that are required in order to permit them to carry on their business as presently conducted
and the absence of which would have a material adverse effect on such business; all such permits,
licenses, certificates of authority, orders and approvals are in full force and effect, and, to the
knowledge of Alliance and the Alliance Subsidiaries, no suspension or cancellation of any of them
is threatened; and all such filings, applications and registrations are current. Alliance and the
Alliance Subsidiaries are in compliance in all material respects with all applicable federal, state
and local statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage
Disclosure Act, the Bank Secrecy Act, the USA Patriot Act, RESPA, the Flood Disaster Protection
Act, and all other applicable fair lending laws and other laws relating to discriminatory business
practices, anti-money laundering, foreign corrupt practices, suspicious activity reporting and
similar matters, other than instances of non-compliance which, individually or in the aggregate,
would not reasonably be
31
expected to have a material adverse effect on the business, operations, assets, financial
condition, prospects or results of operations of Alliance and the Alliance Subsidiaries, taken as a
whole. Neither Alliance nor any Alliance Subsidiary is in default under any order, license,
regulation or demand of any federal, state, local or other governmental agency or with respect to
any order, writ, injunction or decree of any court, other than instances of default which,
individually or in the aggregate, would not reasonably be expected to have a material adverse
effect on the business, operations, assets, financial condition, prospects or results of operations
of Alliance and the Alliance Subsidiaries, taken as a whole.
(b) Except for statutory or regulatory restrictions of general application, no federal, state,
local or other governmental authority has placed any restrictions on the business of Alliance or
any of the Alliance Subsidiaries which reasonably could be expected to have a material adverse
effect on the business of Alliance and the Alliance Subsidiaries taken as a whole. Neither Alliance
nor any Alliance Subsidiary is a party or subject to any order, decree, written agreement,
memorandum of understanding or similar arrangement with, or a commitment letter, supervisory letter
or similar submission or application to, or extraordinary supervisory letter from, any such
governmental authority and neither Alliance nor any Alliance Subsidiary has been advised that any
such governmental authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, written agreement, memorandum of
understanding, commitment letter, supervisory letter or similar arrangement or submission or
application.
4.25. Proxy Statement, Etc. None of the information supplied or to be supplied by and relating
to Alliance or Alliance Bank for inclusion, or included, in (i) the Proxy Statement; (ii) the
Registration Statement; or (iii) any other documents to be filed with any regulatory agency in
connection with the transactions contemplated hereby will, at the respective times such information
is supplied or such documents are filed or mailed, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances in which they are made, not misleading. All documents which
Alliance or Alliance Bank is responsible for filing with any regulatory agency in connection with
the transactions contemplated hereby will comply as to form in all material respects with the
provisions of applicable law.
4.26. Anti-Takeover Provisions. Alliance, Alliance Bank and each other Alliance Subsidiary has
taken all actions required to exempt such company, this Agreement, the Merger and the Bank Merger,
and the transactions contemplated hereby and by the Bank Merger Agreement, from any provisions of
an antitakeover nature contained in their organizational documents or the provisions of any federal
or state “antitakeover,” “fair price,” “moratorium,” “affiliate transaction”, “control share
acquisition” or similar laws or regulations (“Takeover Laws”), including but not limited to Article
14 and Article 15 of the VSCA.
4.27. Derivative Instruments. Neither Alliance nor any Alliance Subsidiary is party to any
interest rate swaps, caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for the account of Alliance, or for the
account of one or more of the Alliance Subsidiaries or their customers.
4.28. Tax and Regulatory Treatment. Neither Alliance nor any Alliance Subsidiary has taken or
agreed to take any action, or has knowledge of any fact or circumstance, that would prevent the
Merger from qualifying as a “reorganization” under Section 368(a)of the Code.
32
Alliance and Alliance Bank have no reason to believe that any required regulatory consent or
approval will not be received or will be received with conditions or restrictions which Eagle would
deem unduly burdensome, or which would have an adverse impact on their capacity to consummate the
transactions contemplated hereby.
4.29. SBLF. As of the date hereof, Alliance does not have an outstanding application to
participate in the SBLF.
4.30. Fairness Opinion. Alliance has received, on or prior to the date hereof, the written
opinion of Xxxxxxxxx & Company LLC to the effect that the Merger is fair to the shareholders of
Alliance from a financial point of view.
4.31. Brokers and Finders. Except for the fee set forth in Section 4.31 of the Alliance
Disclosure Schedule payable to Xxxxxxxxx & Company LLC, neither Alliance nor any Alliance
Subsidiary, nor any of their officers, directors, employees, or shareholders has employed any
broker or finder or incurred any liability for any financial advisory fees, brokerage fees,
commissions or finder’s fees, which Alliance or any Alliance Subsidiary has any obligation to pay,
or to indemnify or reimburse any person for, and no broker or finder has acted, directly or
indirectly, for Alliance or any Alliance Subsidiary, in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE V
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME
5.1 Forbearance by Alliance and Alliance Bank. From the date hereof until the Effective Time,
Alliance and Alliance Bank covenant and agree that, without the prior written consent of Eagle,
each will not do, or agree or commit to do, or permit any Alliance Subsidiary to do or agree or
commit to do, any of the following:
(a) (i) except as in the ordinary course of business consistent with past practice, enter into or
assume any Material Contract, make any material commitment, incur any material liabilities or
material obligations, whether directly or by way of guaranty, including any obligation for borrowed
money whether or not evidenced by a note, bond, debenture or similar instrument, acquire or dispose
of any material property or asset, or subject any of Alliance’s or Alliance Bank’s assets or
properties to any lien, claim, charge or encumbrances whatsoever;
(ii) engage in any transaction not in the ordinary course of business;
(b) grant any increase in compensation to its employees or officers or directors, or pay any bonus,
or effect any increase in retirement benefits to any class of employees or its officers (unless any
such change shall be required by applicable law);
(c) declare, set aside or pay any dividend or other distribution on any class of its capital stock,
whether payable in cash, stock or other property;
(d) redeem, purchase or otherwise acquire any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital stock; merge into any
other corporation or bank or permit any other corporation or bank to merge into it, or consolidate
with any
33
other corporation or bank; liquidate, sell or dispose of any assets or acquire any assets,
otherwise than in the ordinary course of its business consistent with past practice or as expressly
required by this Agreement;
(e) open, close or relocate any office, branch or banking facility, or acquire, establish or divest
any banking or nonbanking facility, or file an application with any federal or other regulatory
agency with respect to any of the foregoing;
(f) issue any shares of its capital stock except in connection with the exercise of Alliance
Options properly granted prior to the date hereof; issue or grant, or extend or modify the terms of
any option, warrant, or other right to acquire Alliance Common Stock;
(g) issue any new or replacement certificate for any shares of Alliance Common Stock purported to
have been lost stolen or destroyed, except upon receipt of appropriate affidavits of loss and
purchase by the shareholder of an indemnity bond from a third party insurer regularly engaged in
the issuance of such bonds;
(h) amend its Articles or Certificate of Incorporation or Association or Bylaws, or similar charter
documents;
(i) effect any capital reclassification, stock dividend, stock split, consolidation of shares or
similar change in capitalization;
(j) take, cause or permit the occurrence of any change or event which would render any of its
representations and warranties contained herein untrue in any material respect;
(k) (i) enter into any related party transaction of the type contemplated by Section 4.18 hereof,
except for transactions relating to deposit relationships or the extension of credit in the
ordinary course of business, on substantially the same terms, including interest rate and
collateral, as those prevailing at the time for comparable transactions with unaffiliated parties,
and which do not present more than the normal risk of collectability or other unfavorable features,
and in respect of which disclosure has been made to Eagle prior to disbursement;
(ii) cancel without payment in full, or modify in any material respect any contract relating
to, any loan or other obligation receivable from any 5% stockholder, director or officer of
Alliance or any Alliance Subsidiary, or any member of the immediate family of the foregoing, or any
related interest of any of the foregoing;
(l) solicit, encourage, or authorize any person, including but not limited to directors, officers,
shareholders, or employees, to solicit from, or engage in communications (as defined in Section
6.11) with, any third party, or facilitate inquiries or the making of proposals relating to any
Acquisition Proposal (as defined in Section 6.11); or except as provided in Section 6.11, provide
any such third party with information or assistance or negotiate or conduct any discussions with
any such third party to facilitate such inquiries or to obtain an Acquisition Proposal, or continue
any such activities in progress on the date hereof;
(m) knowingly take any action which would: (i) adversely affect the ability to obtain the necessary
approvals of governmental authorities required for the transactions contemplated hereby; (ii)
adversely affect the status of the transactions contemplated hereby as a reorganization for
34
purposes of Section 368(a)of the Code; or (iii) adversely affect the ability to perform the
covenants and agreements under the Agreement;
(n) enter into any new line of business, or change its lending, investment, asset/liability
management, risk management, deposit pricing, or other material banking or operating policies and
procedures in any material manner;
(o) adopt, enter into or amend any employment, consulting, change in control, severance or other
compensatory agreement, arrangement or policy with or with respect to any officer, employee or
director;
(p) (i) make or renew any loan or other extension of credit to any person (including, in the case
of an individual, his or her immediate family) that (directly or indirectly through a related
interest or otherwise) owes, or would as a result of such loan or extension of credit or renewal
owe, Alliance or any Alliance Subsidiary more than an aggregate of one and one-half million dollars
($1,500,000) in the case of secured commercial real estate loans made in conformity with Alliance
Bank’s loan policy as in effect on the date hereof, and one million dollars ($1,000,000) in respect
of other loans, provided however, that Alliance and the Alliance Subsidiaries shall not make any
new loan which would be placed on the watch list, or increase the amount of credit available to any
person or entity that has an existing loan with Alliance or any Alliance Subsidiary that is on the
watch list;
(ii) make any loan or other extension of credit which would require approval under Regulation
O, other than renewals of loans on the books as of the date hereof;
(q) accept or renew any brokered deposits, or accept or renew any time deposits or certificates of
deposit at a rate in excess of the rate for comparable products shown in Eagle’s most recently
published rate sheet, plus 25 basis points;
(r) purchase or otherwise acquire any investment securities for its own account having an average
remaining life to maturity greater than six months, or any asset-backed security;
(s) make any capital expenditures individually in excess of $20,000, or in the aggregate in excess
of $50,000;
(t) make any material change in any accounting methods or systems of internal accounting controls,
except as may be appropriate to conform to changes in regulatory accounting requirements or GAAP;
(u) (i) originate or make any residential mortgage loan for the purposes of sale into the secondary
market;
(ii) originate or make any residential mortgage loan or HELOC loan for its own portfolio,
provided that nothing in the Section 5.1(u)(ii) shall prohibit originating or making (1)
residential construction loans; or (2) loans to borrowers acquiring residential properties for
short term investment and resale; in each case where such loan is secured by a first lien in the
residential property being financed;
(v) foreclose upon or take a deed or title to any commercial real estate or residential real estate
without first conducting a Phase I environmental inspection of the property and confirming
35
that such Phase I does not indicate the presence of any environmental contaminant, pollutant,
petroleum product, toxic or hazardous waste or similar or like substance;
(w) settle any material litigation without prior notice to Eagle;
(x) sell or otherwise dispose of any OREO property having a carrying value of $400,000 or more
without prior consultation with Eagle; or
(y) grant any waiver of the time to assess any tax or waiver of the statutory period of limitation
with respect to any tax except where necessary to avoid the assessment of any tax it disputes in
good faith; or grant any person a power of attorney or authorization to represent it in connection
with any taxes, other than powers of attorney which terminate as of the Effective Time.
5.2 Conduct of Business by Alliance. From the date hereof until the Effective Time, Alliance
and Alliance Bank covenant and agree that, except as otherwise consented to by Eagle in writing, it
shall, and Alliance shall cause Alliance Bank and each other Alliance Subsidiary to:
(a) carry on its business, and maintain its books of account and other corporate records, in the
ordinary course consistent with past practice and applicable legal and regulatory requirements;
(b) to the extent consistent with prudent business judgment, use all reasonable efforts to preserve
its present business organization in all material respects, to retain the services of its officers
and employees, and maintain customer and other business relationships in all material respects,
including relations with the Title Customers;
(c) maintain all of the structures, equipment, and other real and personal property of Alliance and
the Alliance Subsidiaries in good repair, order and condition, ordinary wear and tear and
unavoidable casualty excepted;
(d) use all reasonable efforts to preserve or collect all material claims or causes of action of
Alliance and the Alliance Subsidiaries, to enforce all Loan agreements, realize upon collateral and
pursue Loan guarantees;
(e) keep in full force and effect all insurance coverage maintained by Alliance or the Alliance
Subsidiaries;
(f) perform in all material respects all obligations under all Material Contracts and leases of
real property, except where it will not have a material adverse affect on Alliance’s or such
Alliance Subsidiary’s rights under such Material Contract or lease, or on the financial condition,
prospects or operations of Alliance and the Alliance Subsidiaries, taken as a whole;
(g) comply in all material respects with all statutes, laws, regulations, rules, ordinances,
orders, decrees, consent agreements, examination reports and other federal, state and local
governmental or regulatory directives applicable to Alliance and the Alliance Subsidiaries and the
conduct of their respective businesses;
(h) at all times maintain the allowance for loan losses and the reserve for representations and
warranties at levels which are adequate, respectively, to absorb reasonably anticipated losses in
the
36
loan portfolio and recourse obligations in respect of Alliance Sold Loans, in accordance with GAAP
and regulatory requirements, after taking charge-offs required in accordance with GAAP and
regulatory requirements; and at all times make adequate provisions for loan losses in respect of
loans originated subsequent to March 31, 2011;
(i) at all times promptly take and recognize appropriate charge-offs required in accordance with
GAAP and regulatory requirements;
(j) promptly following receipt, and prior to taking any action in respect thereof, advise Eagle of
any request to repurchase or reacquire any Alliance Sold Loan, or to make any payment in respect of
any Alliance Sold Loan, or to indemnify any person in respect of an Alliance Sold Loan;
(k) terminate, on or before the Closing Date, the Alliance ERISA Plan known as the “Alliance Bank
Corporation 401(k) Plan” (the “Alliance 401(k) Plan”), a defined contribution plan, described in
Section 401(k) of the Code;
(l) cooperate fully with Eagle to make Alliance and Alliance Bank employees available at reasonable
times for training prior to Closing, provided that such cooperation does not materially interfere
with their duties with Alliance and Alliance Bank;
(m) make appropriate staff of Alliance and Alliance Bank available to assist in the systems and
operations conversion, provided that such cooperation does not materially interfere with their
duties with Alliance and Alliance Bank;
(n) not later than immediately prior to Closing establish and take, such charge-offs, reserves, and
accruals as Eagle may reasonably request to conform Alliance’s and Alliance Subsidiaries’ loan,
accrual, reserve and other accounting policies to those of Eagle; and effect such sales of
investment securities as Eagle may reasonably request. Notwithstanding anything to the contrary
contained herein, no action taken in response to Eagle’s request under this Section 5.2(n) shall
result in any Adjustment Item or adjustment to the Conversion Ratio under Section 2.1(b), provided
that nothing in this sentence shall negate any Adjustment Item or adjustment to the Conversion
Ratio which may result from or be required as a result of any action, forbearance, charge or
provision which Alliance or Alliance Bank is required to take, engage in or effect pursuant to any
other provision of this Agreement; and
(o) use its best efforts to enter into agreements with each of the landlords and/or sublessees of
the leased real properties set forth in Schedule 2(c)(ix) hereto, relating to the termination,
disposition, or other resolution of such leases and subleases, as appropriate in order to permit
the final determination of the Adjustment Item set forth in Section 2(c)(ix) hereof. Alliance and
Alliance Bank agree that discussions and negotiations with respect to such agreements shall be
conducted in cooperation and consultation with Eagle.
5.3 Approval of Alliance Shareholders. Subject to the effectiveness of the Registration
Statement , Alliance shall cause a meeting of its shareholders (the “Alliance Shareholder Meeting”)
to be convened as soon as reasonably possible, but no later than 55 days after the effectiveness of
the Registration Statement, for the purpose of considering the approval of the Merger and adoption
of this Agreement. Alliance shall cause to be distributed to each shareholder of record of Alliance
(according to the transfer records of Alliance as of the record date for the Alliance Shareholder
Meeting), such material required by applicable statutes and regulations including but not limited
to a
37
copy of the joint Prospectus/Proxy Statement (the “Proxy Statement”) to be prepared by Eagle with
the assistance of Alliance in connection with the Merger and to be included in the Registration
Statement. The Proxy Statement shall be mailed by Alliance on the date (the “Mailing Date”) at
least 20 business days prior to the date of the Alliance Shareholder Meeting. Except as
contemplated by Section 6.11, the Board of Directors of Alliance shall recommend to its
shareholders that they vote the shares held by them to approve the Merger and to adopt this
Agreement and the Plan of Merger, and Alliance shall use its best efforts in good faith to obtain
its shareholders’ approval of the Merger, this Agreement and the Plan of Merger in accordance with
Virginia law.
5.4. Conduct of Business by Eagle. From the date hereof until the Effective Time, Eagle
covenants and agrees that, except as otherwise consented to by Alliance and Alliance Bank in
writing, it shall, and Eagle shall cause EagleBank and each Eagle Subsidiary to:
(a) use its best efforts to: (i) preserve its business organization intact in all material
respects; (ii) maintain good relationships with its employees; (iii) conduct its business in the
ordinary course, consistent with past practice; and (iv) preserve for itself the goodwill of its
and its subsidiaries’ customer and other business relationships.
(b) not knowingly take any action which would: (i) adversely affect the ability to obtain the
necessary approvals of governmental authorities required for the transactions contemplated hereby;
(ii) adversely affect the status of the transactions contemplated hereby as a reorganization for
purposes of Section 368(a)of the Code; or (iii) adversely affect the ability to perform the
covenants and agreements under the Agreement, provided, however, that nothing contained herein
shall prohibit Eagle from repurchasing the Warrant from Treasury.
(c) not (i) amend, repeal or modify any provision of its Articles of Incorporation or bylaws in a
manner which would adversely affect Alliance, Alliance shareholders or the transactions
contemplated by this Agreement; or (ii) make or pay any extraordinary one-time dividend or
distribution on shares of Eagle Common Stock, other than any distribution or dividend payable in
shares of Eagle Common Stock which would result in the adjustment of the Conversion Ratio pursuant
to Section 2.1(e) hereof.
(d) comply in all material respects with all statutes, laws, regulations, rules, ordinances,
orders, decrees, consent agreements, examination reports and other federal, state and local
governmental or regulatory directives applicable to Eagle and the Eagle Subsidiaries and the
conduct of their respective businesses.
(e) at all times maintain the allowance for loan losses and the reserve for representations
and warranties at levels which are adequate, respectively, to absorb reasonably anticipated losses
in the loan portfolio and recourse obligations in respect of Eagle Sold Loans, in accordance with
GAAP and regulatory requirements, after taking charge-offs required in accordance with GAAP and
regulatory requirements.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Access and Information. Alliance and Alliance Bank shall afford to Eagle, and to Eagle’s
accountants, counsel, financial advisors and other representatives, reasonable access during normal
business hours of Alliance and Alliance Bank, during the period prior to the Effective Time, to all
of its properties, books, contracts, commitments and records and, during such a period, shall
furnish promptly to Eagle: (a) a copy of each report, schedule and other document filed or received
by it during such period with or from (i) the SEC; (ii) the SCC; (iii) the Federal Reserve Board;
or (iv) the FDIC; and (b) all other information concerning its business, assets, properties and
personnel as Eagle may reasonably request. Eagle and its accountants, counsel, financial advisors
and other representatives will request permission for all such access reasonably in advance, and
all such access will be conducted in a manner designed to minimize disruption to the normal
business operations and employee or customer relations of Alliance and Alliance Bank. Eagle shall
cause all information obtained by it or its representatives from Alliance and Alliance Bank
pursuant to this Agreement or in connection with the negotiation thereof, including, without
limitation, the schedules hereto, to be treated as confidential and shall not use, nor knowingly
permit others to use, any such information for any purpose other than in connection with the
transactions contemplated hereby, unless such information becomes generally available to the public
or is required to be disclosed pursuant to the order of a court of competent jurisdiction or
otherwise in accordance with applicable law, and in the event of the termination of this Agreement
shall promptly return all documents (including copies thereof) obtained hereunder from Alliance and
Alliance Bank, and shall destroy all copies of any analyses, compilations, notes, studies or other
documents prepared from any such material for their use.
(b) Eagle agrees that, upon reasonable notice and subject to applicable laws relating to the
exchange of information, it shall afford Alliance and its authorized representatives access (during
normal business hours) to Eagle’s personnel, books and records as Alliance may reasonably request.
Alliance and Alliance Bank agree that they shall cause all information obtained by them or their
representatives from Eagle or EagleBank pursuant to this Agreement or in connection with the
negotiation thereof, including, without limitation, the schedules hereto, to be treated as
confidential and shall not use, nor knowingly permit others to use, any such information for any
purpose other than in connection with the transactions contemplated hereby, unless such information
becomes generally available to the public or is required to be disclosed pursuant to the order of a
court of competent jurisdiction or otherwise in accordance with applicable law, and in the event of
the termination of this Agreement shall promptly return all documents (including copies thereof)
obtained hereunder from Eagle or EagleBank, and shall destroy all copies of any analyses,
compilations, notes, studies or other documents prepared from any such material for their use.
6.2 Registration Statement; Applications; Cooperation. (a) Registration Statement. (i) Subject
to the receipt of necessary information regarding Alliance required to be included therein, Eagle
shall prepare and file with the SEC a registration statement (the “Registration Statement”) with
the SEC on Form S-4 under the Securities Act, containing the Proxy Statement to be used in
connection with the Alliance Shareholder Meeting, as promptly as practicable, and shall use its
best efforts to cause the Registration Statement to be declared effective by the SEC as promptly as
practicable.
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(ii) The parties hereto agree, that at the time the Registration Statement becomes effective
and at the Mailing Date of the Proxy Statement, the Registration Statement will comply as to form
in all material respects with the applicable provisions of the Securities Act, and the Registration
Statement, at the time it becomes effective, and the Proxy Statement, in either case as amended or
supplemented by any amendment or supplement filed with the SEC, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading; provided,
however, that information as of a later date included therein shall be deemed to modify information
of an earlier date, and with respect to either party, the foregoing statement shall not apply to
statements in or omissions from the Registration Statement or Proxy Statement made in reliance upon
and in conformity with information furnished by the other party for use in the Registration
Statement or Proxy Statement. After becoming aware of any statement or omission which renders the
statement set forth in the preceding sentence not true or correct, Eagle will promptly amend,
supplement or revise such material in order to make the statement in the preceding sentence true
and correct at all times up to and including the Effective Time. Eagle shall promptly take any
action required to be taken under foreign or state securities or blue sky laws in connection with
the issuance of Eagle Common Stock in the Merger.
(iii) Alliance agrees that it shall, and shall cause its employees, agents, representatives,
and advisors to, cooperate with Eagle in the preparation and filing of the Registration Statement,
including, but not in limitation, by providing on a prompt basis information requested by Eagle for
inclusion in the Registration Statement, and by providing comments on drafts on a timely basis.
Alliance, and its legal, financial and accounting advisors, shall have the right to review and
comment upon the Registration Statement. Each of Eagle and Alliance agrees to use its reasonable
best efforts to cause the Registration Statement to be declared effective under the Securities Act
as promptly as reasonably practicable after the filing thereof.
(b) As promptly as practicable after the furnishing by Alliance and Alliance Bank of all
information regarding them required to be reflected therein, Eagle shall file: (i) the applications
and notices with the Federal Reserve Board, the DFR, the SCC and any other regulatory agency having
authority over the Merger, the Bank Merger and the transactions contemplated hereby, required by
applicable law and regulation for the consummation of the transactions contemplated by this
Agreement, and (ii) any other applications for regulatory or other approvals deemed necessary or
appropriate by Eagle. Alliance, and its legal, financial and accounting advisors, shall have the
right to review and comment upon the applications prior to their filing. To the extent available,
Eagle shall request expedited treatment of such applications, and shall take reasonable steps to
pursue approval of the applications. Alliance and Alliance Bank agree that they shall, and shall
cause their employees, agents, representatives, and advisors to, cooperate with Eagle in the
preparation and filing of the regulatory applications, including, but not in limitation, by
providing on a prompt basis information requested by Eagle or its advisors for inclusion in such
documents, and by providing comments on drafts of such documents on a timely basis.
6.3 Notice of Actual or Threatened Breach. Each party will promptly give written notice to the
other parties upon becoming aware of any impending or threatened occurrence of any event or the
failure of any event to occur which might cause or constitute a breach of any of the
representations, warranties or covenants made by such party in this Agreement, any other changes or
inaccuracies in any data previously given or made available to the other parties, or which might
threaten consummation of the transaction contemplated hereby.
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6.4 Current Information. (a) During the period from the date of this Agreement to the
Effective Time, Alliance and Alliance Bank will: (i) cause one or more of its representatives to
confer on a regular and frequent basis with representatives of Eagle to report its financial
condition and the general status of its ongoing operations; (ii) promptly notify Eagle of any
material change in the normal course of its business or in the operation of its properties and of
any governmental complaints, investigations or hearings (or communications indicating that the same
may be contemplated), or the institution or the threat of material litigation involving them, and
(iii) keep Eagle fully informed with respect to such events.
(b) During the period from the date of this Agreement to the Effective Time, Eagle will (i) cause
one or more of its representatives to confer on a regular basis with representatives of Alliance
and Alliance Bank to report its financial condition and its ongoing operations; (ii) promptly
notify Alliance and Alliance Bank of any material change in the normal course of its business or in
the operation of its properties and any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the institution or the threat of
material litigation involving them, (iii) promptly provide to Alliance and Alliance Bank copies of
all regulatory applications required to be filed by Eagle under this Agreement and related
correspondence to and from the applicable regulatory authorities and (iv) keep Alliance and
Alliance Bank fully informed with respect to such events.
6.5 Expenses. Each party hereto shall pay its own expenses incident to preparing for, entering
into and carrying out this Agreement and to the consummation of the Merger and the transactions
contemplated hereby. Alliance agrees that the aggregate expenses of Alliance, including all fees
and expenses of legal counsel, accountants, and financial or other advisors (including Xxxxxxxxx &
Company LLC), shall not exceed customary amounts (according to the respective industry standard),
and shall report in writing to Eagle, upon request made from time to time, the amount of such fees
and expenses.
6.6 Filing with the SDAT and SCC. Eagle and Alliance shall execute and deliver and use their
best efforts to file appropriate Articles of Merger with the SDAT and the SCC at the earliest
practicable date after satisfaction or waiver of the conditions set forth in Article VII hereof.
6.7 Miscellaneous Agreements and Consents. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, using reasonable efforts to lift or rescind any
injunction or restraining order or other order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby. Eagle, or Alliance and Alliance Bank, as the case
may be, will use their respective best efforts to obtain consents of all third parties and
governmental bodies necessary or desirable for the consummation of the transactions contemplated by
this Agreement.
6.8 Press Releases and Public Disclosures. Eagle and Alliance will consult with each other and
jointly approve the form, substance and timing of any press release, disclosures to shareholders,
staff, customers, and the public at large on matters related to this Agreement or any of the
transactions contemplated hereby. Notwithstanding the foregoing, Eagle and Alliance agree that
Eagle and Alliance shall, promptly following the execution hereof, issue a joint press release
announcing the execution of the Agreement and the proposed Merger, and further agree that Eagle and
Alliance shall each be entitled to issue separate press releases announcing the execution of the
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Agreement and the proposed Merger, a copy of which release will be provided to the other party
prior to issuance, and that each of Eagle and Alliance shall file a Current Report on Form 8-K, in
accordance with the Exchange Act, following execution hereof, which such filing shall include
copies of this Agreement, and such other agreements contemplated hereby as such party may deem
appropriate.
6.9 Bank Employees. (a) At and following the Effective Time, Eagle shall honor, and Eagle
shall be obligated to perform, in accordance with their terms, the contractual rights of current
and former employees of Alliance and Alliance Bank existing as of the Effective Time, including any
severance, employment or “change in control” agreements of Alliance set forth in Section 4.15(b) of
the Alliance Disclosure Schedule, in each case as the same may be modified or terminated in
accordance with the applicable terms thereof. The severance, change in control, termination or
similar payments which are payable pursuant to such agreements, plans or policies of Alliance
(which have been quantified in reasonable detail as of the date hereof) are set forth in Section
4.15(b) of the Alliance Disclosure Schedule.
(b) Subject to the terms of employment agreements in effect as of the date hereof and which have
been disclosed to Eagle on the Alliance Disclosure Schedule, and subject to Eagle’s determination,
in their discretion, to offer continued employment to non-executive officer or executive officer
employees of Alliance Bank on a case by case basis, Eagle shall have no obligation to continue the
employment of any Alliance or Alliance Bank employee after the Effective Time. Eagle agrees that
each Alliance or Alliance Bank employee who is not under an employment contract, and who is not the
beneficiary of an individual, termination, change in control, severance or similar arrangement or
agreement, and who is involuntarily terminated without cause within 90 days following the Effective
Time shall receive a severance payment of one week of pay for every full year of service to
Alliance or Alliance Bank, with a minimum of two weeks pay.
(c) All former employees of Alliance and Alliance Bank who become employees of Eagle or any Eagle
Subsidiary upon consummation of the transactions contemplated hereby (“Continuing Employees”) will
be eligible to participate in Eagle’s employee benefit plans on the same basis as similarly
situated Eagle employees and will receive credit for prior years of service in determining
eligibility and vesting (but not benefit accruals). In the case of any such benefit plan under
which benefits are provided through insurance, Eagle’s agreement to credit prior service is subject
to the consent of the applicable insurer, which Eagle shall use reasonable efforts to obtain.
(d) Eagle shall use its reasonable efforts to cause medical, dental or health plans of Eagle or any
of Eagle Subsidiaries, to (i) provide full credit under such plans for any deductibles, co-payment
and out-of-pocket expenses incurred by Continuing Employees and their beneficiaries during the
portion of the calendar year prior to such participation; and (ii) waive any waiting period
limitation or evidence of insurability requirement which would otherwise be applicable to such
Continuing Employees on or after the Effective Time to the extent such Continuing Employee had
satisfied any similar limitation or requirement under an analogous plan of Alliance’s prior to the
Effective Time.
(e) Eagle and Alliance acknowledge that it may be appropriate or convenient to provide certain
employees of Alliance and Alliance Subsidiaries who will not be retained as employees of Eagle or
the Eagle Subsidiaries with an incentive, in the form of a “retention” or “pay to stay” bonus, to
remain in the employ of Alliance, Eagle or their respective Subsidiaries until Closing, until the
42
completion of a systems conversion, or some other transition period following Closing. Eagle shall
consult with Alliance with respect to the identification of such employees, and the amount of any
such bonus. Eagle agrees that to the extent paid or accrued by Alliance or Alliance Bank, that no
such payment made or agreed to prior to Closing shall be considered in calculating the Adjustment
Items.
(f) Prior to the Effective Time, Alliance shall terminate the Alliance 401(k) Plan, and one hundred
percent vest all benefits provided thereunder. As soon as administratively practicable following
the Effective Time and in accordance with ERISA and the Code, Eagle shall cause the assets of the
Alliance 401(k) Plan to be distributed to the participants in the Alliance 401(k) Plan and shall
take all other actions necessary and proper in order to implement the termination of the Alliance
401(k) Plan and related trust. As soon as administratively practicable following the Effective
Time, Eagle shall take such action as is reasonably necessary to enable the Continuing Employees
who participate in the Alliance 401(k) Plan (the “Hired Participants”) to transfer to the 401(k)
plan established or maintained by Eagle or an Eagle Subsidiary via direct rollover cash and
promissory notes held in the account of the electing Hired Participants under the Alliance 401(k)
Plan.
6.10 D&O Indemnification. (a) From and after the Effective Time, and through the through the
three year anniversary of the Effective Time, Eagle shall indemnify and hold harmless the current
and former officers, employees, directors and agents of Alliance and the Alliance Subsidiaries
(each an “Indemnified Person”) against any costs or expenses (including reasonable attorneys’
fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of any act or omission or other matters existing or occurring at or
prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time,
arising in whole or in part out of or pertaining to the fact that he or she was a director,
officer, employee, fiduciary or agent of Alliance, Alliance Bank or any Alliance Subsidiary or is
or was serving at the request of Alliance as a director, officer, employee, fiduciary or agent of
another corporation, partnership, joint venture, trust or other enterprise, including without
limitation matters related to the negotiation, execution and performance of this Agreement or
consummation of the Merger, to the fullest extent which such Indemnified Parties would be entitled
under the Alliance Articles of Incorporation and Bylaws, to the same extent and on the same
conditions as such person is entitled to indemnification pursuant to applicable law and Alliance’s
Articles of Incorporation or Bylaws, and/or any agreement, arrangement or understanding between
Alliance and such Indemnified Person, as in effect on the date of this Agreement and which been
disclosed in Section 6.10 to the Alliance Disclosure Schedule, to the extent legally permitted to
do so.
(b) Any Indemnified Person wishing to claim indemnification under this Section 6.10 hereof, upon
learning of any such claim, action, suit, proceeding or investigation, shall promptly notify Eagle,
but the failure to so notify shall not relieve Eagle of any liability it may have to such
Indemnified Person if such failure does not actually prejudice Eagle. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or after the Effective
Time), (i) Eagle shall have the right to assume the defense thereof and Eagle shall not be liable
to such Indemnified Persons for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Persons in connection with the defense thereof, except
that if Eagle elects not to assume such defense or counsel for the Indemnified Persons advises that
there are issues which raise conflicts of interest between Eagle and the Indemnified
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Persons, the Indemnified Persons may retain counsel which is reasonably satisfactory to Eagle, and
Eagle shall pay, promptly as statements therefore are received, the reasonable fees and expenses of
such counsel for the Indemnified Persons (which may not exceed one firm in any jurisdiction), (ii)
the Indemnified Persons will cooperate in the defense of any such matter, (iii) Eagle shall not be
liable for any settlement effected without its prior written consent (which consent shall not be
unreasonably withheld) and (iv) Eagle shall have no obligation hereunder to the extent that a
federal or state banking agency or a court of competent jurisdiction shall determine that
indemnification of an Indemnified Person in the manner contemplated hereby is prohibited by
applicable laws and regulations.
(c) For three years after the Effective Time, there shall be maintained in force (either through
the purchase by Alliance and Alliance Bank of tail coverage of Alliance’s existing officers’ and
directors’ liability insurance policy, under Eagle’s existing policy, or another policy), officers’
and directors’ liability insurance in respect of acts or omissions occurring prior to the Effective
Time covering each such Indemnified Person covered by the Alliance’s and Alliance Bank’s officers’
and directors’ liability insurance policy as of the Effective Time, on terms with respect to
coverage and amount no less favorable than those of such policy in effect on the date hereof. The
cost of such coverage for the full three year period (whether paid by Eagle or by Alliance or
Alliance Bank shall not exceed 300% of the amount paid by Alliance in its last full fiscal year for
one year’s coverage, which amount is set forth in Section 6.10 of the Alliance Disclosure Schedule.
In the event that the cost of such coverage exceeds such amount, then the available amount shall be
used to purchase coverage for the longest available period. Section 6.10 of the Alliance Disclosure
Schedule sets forth each contract, agreement, plan, resolution, charter provision, bylaw provision
or other arrangement or understanding pursuant to which Alliance or any Alliance Subsidiary has or
may have any obligation to indemnify any director, officer, employee or agent.
(d) If Eagle or any of its successors or assigns shall consolidate with or merge into any other
entity and shall not be the continuing or surviving entity of such consolidation or merger or shall
transfer all or substantially all of its assets to any other entity, then and in each case, proper
provision shall be made so that the successors and assigns of Eagle or the surviving company shall
assume the obligations set forth in this Section 6.10 hereof prior to or simultaneously with the
consummation of such transaction.
6.11 Acquisition Proposals. (a) Notwithstanding anything contained in Sections 5.1(a)(ii) and
5.1(l) to the contrary, in the event that Alliance or any Alliance Subsidiary shall receive, prior
to the Closing, an Unsolicited Acquisition Proposal (as hereinafter defined) which, in the good
faith determination of the Board of Directors of Alliance, the fiduciary duty of the directors
under Virginia law requires that the Board of Directors consider, negotiate or communicate, or
provide information with respect to (collectively “communications”), because such Unsolicited
Acquisition Proposal is more favorable from a financial point of view to the shareholders of
Alliance than the Merger, which such determination shall be made after receiving the advice of
counsel to Alliance regarding the requirements of the fiduciary duty of the directors under
Virginia law and the advice of Alliance’s financial advisor that the Unsolicited Acquisition
Proposal is more favorable to Alliance’s shareholders from a financial point of view than the
Merger, then Alliance shall be entitled to engage in such communications.
(b) In the event that the Board of Directors of Alliance:
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(i) approves entering into an agreement for any Unsolicited Acquisition Proposal, or Alliance
and/or Alliance Bank consummate any such Unsolicited Acquisition Proposal, then this Agreement
shall terminate as of the date of such approval or consummation, and Alliance and Alliance Bank
shall be liable for the amount specified in Section 8.2(b).
(ii) while any unrejected Unsolicited Acquisition Proposal exists, (1) recommends any
Unsolicited Acquisition Proposal to the shareholders of Alliance; (2) shall fail to recommend the
Merger to the shareholders of Alliance in accordance with this Agreement; (3) withdraws or
adversely modifies its recommendation of the Merger to shareholders of Alliance; or (4) subsequent
to the Communications End Date as defined in Section 6.11(b)(iii), fails upon request of Eagle to
reconfirm its recommendation of the Merger to shareholders of Alliance; then this Agreement shall
terminate as of the date of such event set forth in (1), (2), (3) or (4), and Alliance and Alliance
Bank shall be liable for the amount specified in Sections 8.2(b).
(iii) shall make the determination described in Section 6.11(a) resulting in Alliance engaging
in communications with respect to any Unsolicited Acquisition Proposal, and such communications
shall extend until the earlier of: (i) 45 days from the date on which Alliance provided notice of
such Unsolicited Acquisition Proposal to Eagle; and (ii) the day which is the day immediately prior
to the date set forth in Section 8.1(b) (the “Communications End Date”), and Alliance shall not
have (x) rejected such Unsolicited Acquisition Proposal, and (y) advised Eagle orally and in
writing of such rejection, by noon on the Communications End Date, then Eagle shall have the right
to terminate this Agreement, effective immediately, upon notice to Alliance, and Alliance and
Alliance Bank shall be liable for the amount specified in Section 8.2(b).
It is expressly understood and acknowledged that the sole remedy available to Eagle for
termination pursuant to this Section 6.11 shall be the amount payable under Section 8.2(b).
(c) For purposes of this Section 6.11:
(i) An “Acquisition Proposal” shall mean any inquiry, offer or proposal, other than the Merger
or the Bank Merger, received by Alliance or any Alliance Subsidiary from any person or entity other
than Eagle or an affiliate of Eagle (including deemed receipt as a result of the public
announcement of such proposal by the proponent) regarding: (1) any merger, consolidation,
reorganization, business combination, share purchase or exchange, purchase and assumption or
similar transaction involving Alliance or Alliance Bank; or (2) any sale, lease, transfer, pledge,
encumbrance or other disposition, directly or indirectly, of all, or any substantial portion of,
the assets of Alliance or Alliance Bank.
(ii) An “Unsolicited Acquisition Proposal” shall mean any Acquisition Proposal received
without violation of the provisions of Section 5.1(l) hereof. Any Acquisition Proposal received by
Alliance or any Alliance Subsidiary from any person or entity previously contacted by Alliance or
any Alliance Subsidiary (or by any person or entity acting or purporting to act on behalf of
Alliance or any Alliance Subsidiary, including but not limited to representatives of Xxxxxxxxx &
Company LLC) prior to the date hereof, but not contacted after the date hereof in violation of
Section 5.1(l) shall be deemed an Unsolicited Acquisition Proposal. Any Acquisition Proposal
received as a result of a violation of Section 5.1(l) shall not be deemed an Unsolicited
Acquisition Proposal.
45
(d) Alliance and Alliance Bank shall promptly, and in any event no more than 24 hours after receipt
and prior to engaging in communications with the party making the Unsolicited Acquisition Proposal,
advise Eagle of, and communicate to Eagle the terms of, and provide Eagle with a copy of, any such
Acquisition Proposal or inquiry with respect to an Acquisition Proposal addressed to Alliance or
Alliance Bank or of which Alliance, Alliance Bank or their respective executive officers or
directors has actual knowledge. Alliance’s and Alliance Bank’s Board of Directors shall use its
best efforts to cause its officers, directors, employees, agents and representatives to comply with
the requirements of this Section and Section 5.1(l).
6.12. Trust Preferred Securities. Eagle acknowledges that AVCT holds subordinated debentures
issued by Alliance and has issued preferred securities which are intended to be “qualified trust
preferred securities” as defined in applicable regulatory capital guidelines, or which are eligible
for such treatment as grandfathered trust preferred securities. Eagle agrees that at the Effective
Time, it shall expressly assume all of Alliance’s obligations under the indentures relating to such
subordinated debentures (including, without limitation, being substituted for Alliance) and execute
any and all documents, instruments and agreements, including any supplemental indentures,
guarantees, or declarations of trust required by said indentures, the subordinated debentures or
the trust preferred securities issued by AVCT, or as may reasonably be requested by the trustees
thereunder, and thereafter shall perform all of Alliance’s obligations with respect to the
subordinated debentures and the trust preferred securities issued by AVCT (the “Trust Preferred
Assumption”).
6.13. No Purchases or Sales of Eagle Common Stock During Market Value Determination Period.
Except for purchases of shares of Eagle Common Stock by Eagle in connection with Eagle’s DRI Plan,
and the reacquisition of shares of Eagle Common Stock in connection with the tender of shares of
Eagle Common Stock in payment of the exercise price of options or withholding obligations under the
Eagle Stock Plans, neither Eagle, Alliance, any Eagle Subsidiary, any Alliance Subsidiary, nor any
executive officer or director of either Eagle, Alliance, any Eagle Subsidiary, any Alliance
Subsidiary, nor any shareholder who shall be deemed an “affiliate” of Eagle or Alliance (as that
term is used for purposes of Rule 144 promulgated under the Securities Act) shall purchase or sell
on Nasdaq, or submit a bid to purchase or an offer to sell on Nasdaq, directly or indirectly, any
shares of Eagle Common Stock or any options, warrants, rights or other securities convertible into
or exchangeable for shares of Eagle Common Stock during the Market Value Determination Period.
6.14. Nasdaq Listing. Eagle shall use its best efforts to cause the shares of Eagle Common
Stock to be issued in connection with the Merger to be approved for quotation on Nasdaq, subject to
official notice of issuance.
6.15. Alliance Options. As soon as reasonably practicable after the Effective Time, Eagle
shall deliver to holders of Alliance Options which have been converted into options to acquire
Eagle Common Stock in accordance with the provisions of Section 2.2 hereof, a notice setting forth
a statement of the modified terms thereof. Promptly after the Effective Time, Eagle shall file, to
the extent available, one or more registration statements on Form S-8, with respect to the shares
of Eagle Common Stock subject to such options held by any employee of Alliance or any Alliance
Subsidiary (as such term is defined in General Instruction A to form S-8), and shall use its best
efforts to maintain the effectiveness of such registration statement or statements for so long as
such options remain outstanding.
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(b) Eagle’s Board of Directors, or a committee of “non-employee directors” thereof (as such term is
defined for purposes of Rule 16b-3(d) under the Exchange Act), will, before the Effective Time,
adopt a resolution providing that the receipt by the Alliance insiders of Eagle Common Stock in
exchange for shares of Alliance Common Stock, and of options to purchase shares of Eagle Common
Stock upon conversion of Alliance Options, in each case pursuant to the transactions contemplated
hereby, are approved by the Eagle Board of Directors by such committee thereof, and are intended to
be exempt from liability pursuant to Section 16(b) under the Exchange Act, such that any such
receipt will be so exempt.
6.16. Disclosure. The Alliance Disclosure Schedule and the Eagle Disclosure Schedule called
for by this Agreement shall be updated as of the Closing Date for comparative and information
purposes. Disclosure of an item for the first time on such updated schedules shall not be
considered in determining the truth or accuracy of any representation or warranty.
ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party’s Obligation to Effect the Merger. The respective obligations of
each party to effect the Merger shall be subject to the fulfillment or waiver at or prior to the
Effective Time of each of the following conditions:
(a) Alliance Shareholder Approval. The Merger, the Agreement and the Plan of Merger shall have been
approved by the requisite vote of the shareholders of Alliance.
(b) Tax Opinion. There shall have been delivered to Eagle an opinion of Xxxxxx Xxxxx LLP and
Alliance shall have received an opinion of Xxxxxxxx Xxxxxxx LLP each reasonably acceptable in form
and substance to the recipient thereof, dated as of the Closing Date, substantially to the effect
that for federal income tax purposes, each of the Merger and the Bank Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code and no gain or loss will be
recognized by the shareholders of Alliance upon receipt of the Eagle Common Stock in exchange for
their shares of Alliance Common Stock (except with respect to cash received in lieu of fractional
shares). In rendering such opinions, the law firms may require and rely upon customary
representations contained in certificates of officers of Eagle, Alliance and their respective
subsidiaries.
(c) Regulatory Approvals. Eagle shall have received approval of the Merger and Bank Merger
contemplated by this Agreement from the Federal Reserve, the DFR, the SCC and any other federal or
state regulatory agencies whose approval is required for consummation of such transactions
(including those relating to mortgage banking, brokerage or lending activities), and all notice and
waiting periods after the granting of any such approval shall have expired.
(d) Registration Statement. The Registration Statement shall have been declared effective and
shall remain effective through the Effective Time, and no stop order suspending the effectiveness
of the Registration Statement shall have been initiated or threatened. In addition, all state
securities and blue sky permits and approvals required to carry out the transactions contemplated
hereby shall have been obtained.
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(e) Nasdaq Listing. The shares of Eagle Common Stock to be issued in connection with the
Merger shall have been approved for listing, upon notice of issuance, on Nasdaq.
(f) Trust Preferred Assumption. Eagle shall have executed and delivered, subject to the
effectiveness of the Merger, all supplemental and amended documents required to be executed by
Eagle to effect the Trust Preferred Assumption.
7.2. Conditions to Obligation of Eagle to Effect the Merger. The obligation of Eagle to effect
the Merger shall be subject to the fulfillment or waiver at or prior to the Effective Time of the
following additional conditions:
(a) Representations and Warranties; Corporate Proceedings. Each representation and warranty of
Alliance and Alliance Bank set forth in Article IV hereof shall be true and correct in all material
respects (except those representations and warranties which are qualified by a materiality
standard, which shall be true and correct in all respects) as of the date of this Agreement and as
of the Effective Time (other than those limited to a specified date, which shall speak only as to
such date), and Eagle shall have received a certificate of the President of Alliance and Alliance
Bank to that effect. All action required to have been taken by, or on the part of, Alliance or
Alliance Bank to authorize the execution, delivery and performance of this Agreement and the
Merger, respectively, shall have been duly and validly taken, and Eagle shall have received
certified copies of the resolutions evidencing such authorizations.
(b) Performance of Obligations. Alliance and Alliance Bank shall each have in all material respects
performed all obligations required to be performed by it under this Agreement prior to the
Effective Time, and Eagle shall have received a certificate of the President of Alliance and
Alliance Bank to that effect.
(c) Permits, Authorizations, Etc. Alliance and Alliance Bank shall have obtained any and all
material permits, authorizations, consents, waivers, clearances or approvals required to be
obtained by them for the lawful consummation of the Merger and Bank Merger in accordance with
applicable law and without violation of any Material Contract.
(d) No Material Adverse Change. There shall not have been, since the date hereof, any material
adverse change in the business, operation, assets, liabilities, financial condition, prospects or
results of operations of Alliance and the Alliance Subsidiaries, taken as a whole.
(e) Regulatory Approvals. . Eagle shall have received approval of the Merger and Bank Merger
contemplated by this Agreement from the Federal Reserve, the DFR, the SCC and any other federal or
state regulatory agencies whose approval is required for consummation of such transaction, without
the imposition of any condition or conditions that, in the good faith reasonable judgment of Eagle,
would have a material adverse effect on the value of the Merger to Eagle (excluding conditions that
are ordinarily imposed in connection with transactions of the type contemplated by this Agreement),
and all notice and waiting periods after the granting of any such approval shall have expired.
Eagle shall have received confirmation from the Federal Reserve that Eagle may, following the Trust
Preferred Assumption, continue to include the assumed trust preferred securities as Tier 1 capital
of Eagle.
(f) No Injunction. No injunction, restraining order, stop order or other order or action of any
federal or state court or agency in the United States which prohibits, restricts or makes illegal
the
48
consummation of the transactions contemplated hereby, shall be in effect, and no action, suit
or other proceeding seeking such shall have been instituted or threatened, and no statute, rule or
regulation shall have been enacted, issued or promulgated, by any state or federal government or
government agency, which prohibits, restricts or makes illegal the consummation of the transactions
contemplated hereby.
(g) Litigation. At the Effective Time, there shall not be pending or to the knowledge of Alliance,
Alliance Bank or Eagle, threatened against Alliance or Alliance Bank or the officers, directors or
employees thereof in their capacity as such, any suit, action or proceeding (including antitrust
actions) which, if successful, would, in the reasonable judgment of Eagle, have a material adverse
effect on the financial condition, operations, business or prospects of Alliance, Alliance Bank or
the Surviving Company.
(h) Support Agreement. At least 75% of the directors of Alliance and Alliance Bank in office as of
the date of execution of this Agreement, or if greater, 8 of such directors, shall have,
concurrently with the execution of this Agreement, entered into a Support Agreement in
substantially the form attached hereto as Exhibit C.
(i) 280G Issues. Eagle shall be reasonably satisfied, either through mutually agreeable pre-Closing
amendments or otherwise, that Alliance shall have taken any and all reasonably necessary steps such
that the Merger will not trigger any “excess parachute payment” (as defined in Section 280G of the
Code) under any employment, severance or change in control agreement, benefit plans, or similar
arrangements between Alliance or any Alliance Subsidiary and any officers, directors, or employees
thereof that will result in the imposition of any tax under Section 4999 of the Code, the
nondeductibility of any portion of such payment, or require any “gross up” payment.
(j) Tax Certificate. Alliance shall have delivered to Eagle a certification dated not more than 30
days prior to the Effective Time, and signed by Alliance to the effect that Alliance is not, nor
has it been within five years of the date of the certification, a “United States real property
holding corporation” as defined in Section 897 of the Code.
(k) Brokers and Finders Fees. Alliance and Alliance Bank shall have paid in full, at or prior to
Closing, all amounts owing in respect of the payments contemplated in Section 4.31 hereof.
(l) Third Party Consents and Agreements. (i) Alliance and the Alliance Subsidiaries shall have
obtained all third party consents under any material agreement, contract, note, license, permit or
other document by which Alliance and Alliance Bank is bound or to which any of their respective
properties is subject required for the consummation of the transactions contemplated hereby, except
such consents which, individually or in the aggregate do not result in a material adverse effect on
the business, operations, assets, financial condition, assets, prospects or results of operations
of Alliance, taken as a whole. Alliance and Alliance Bank shall have obtained the consent of the
landlord under each real property lease described in Section 4.11 of the Alliance Disclosure
Schedule to the succession of Eagle or EagleBank thereunder.
(ii) Alliance and/or Alliance Bank shall have entered into the agreements described in
Section 5.2(o).
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(m) Fairness Opinion. Eagle shall have received from Sandler X’Xxxxx & Partners, L.P., an updated
fairness opinion dated as of a date not later than date of the effectiveness of the Registration
Statement, to the effect that the Merger is fair to the shareholders of Eagle from a financial
point of view.
(n) Non-compete Agreements. At least 75% of the directors of Alliance and Alliance Bank in office
as of the date of execution of this Agreement, or if greater, 8 of such directors, shall have,
concurrently with the execution of this Agreement, entered into a Non-compete Agreement in
substantially the form attached hereto as Exhibit D.
(o) Non-solicitation & Non-disparagement Agreements. Each of the directors of Alliance and
Alliance Bank in office as of the date of execution of this Agreement shall have, concurrently with
the execution of this Agreement, entered into a Non-solicitation and Non-disparagement Agreement in
substantially the form attached hereto as Exhibit E.
(p) AIA Non-Compete. Alliance, Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx shall have executed and
delivered an amendment to the AIA Agreement, in form and substance satisfactory to Eagle,
terminating the noncompete provisions of the AIA Agreement.
(q) Accountants’ Letter. Eagle shall have received from Xxxxx, Hyde & Xxxxxxx, P.C., independent
registered public accountants to Alliance, a letter dated the Closing Date, with respect to certain
financial information regarding Alliance, which shall be substantially in the following form:
(i) they are independent public accountants with respect to Alliance;
(ii) in their opinion the audited financial statements of Alliance examined by them and
included in the Proxy Statement furnished to shareholders of Alliance, or subsequently
provided to Eagle and/or the shareholders of Alliance, comply as to form in all material
respects with the requirements applicable thereto;
(iii) at the request of Alliance they have carried out procedures to a specified date
not more than 5 business days prior to the Effective Time as follows: (1) read the unaudited
financial statements of Alliance for the period from the date of the most recent audited
financial statements of Alliance through the last day of the most recent calendar month
ended prior to such specified date not more than 5 days prior to the Effective Time; (2)
read the minutes of the meetings of the shareholders and of the Board of Directors (and all
committees thereof) of Alliance from the date of the most recently audited financial
statements to a date not more than 5 days prior to the Effective Time, and (3) consulted
with certain officers and employees of Alliance responsible for financial and accounting
matters as to whether there has been any change in Alliance stock or long-term debt, or any
decrease in consolidated net assets or in the total or per-share amounts of net income of
Alliance, and, based on such procedures and except as disclosed in such letter, nothing has
come to their attention which would cause them to believe that:
(A) the financial statements referred to in (1) above do not fairly
present the financial position of Alliance and the results of its operations
and changes in its financial position at the dates and for the periods
referred to
therein and are not presented in conformity with GAAP applied on a basis
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consistent in all material respects with that of the most recent audited
consolidated statements of Alliance, except as expressly required by this
Agreement or noted in such letter;
(B) as of said date not more than 5 business days prior to the
Effective Time, there was any (x) change in the Alliance stock or long-term
debt of Alliance or (y) decreases in consolidated net assets of Alliance, in
each case as compared with the amounts shown in the balance sheet of
Alliance at the date of the most recent audited financial statements, or for
the period from the date of the most recent financial statements to said
date not more than 5 business days prior to the Effective Time, there were
any decreases, as compared with the corresponding portion of the preceding
fiscal year, in the total or per share amounts of income before
extraordinary items or net income, other than, in each case, as set forth in
such letter.
The parties hereto acknowledge and agree that the foregoing letter is not, and the contents
shall not be governed as a, “comfort letter” as that term is used for purposes of Statement of
Financial Accounting Standards No. 72, but is an agreed upon procedures letter.
7.3 Conditions to Obligation of Alliance and Alliance Bank to Effect the Merger. The
obligation of Alliance and Alliance Bank to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Effective Time of the following additional conditions:
(a) Representations and Warranties; Corporate Proceedings. Each representation and warranty of
Eagle set forth in Article III hereof shall be true and correct in all material respects (except
those representations and warranties which are qualified by a materiality standard, which shall be
true and correct in all respects ) as of the date of this Agreement and as of the Effective Time as
though made at and as of the Effective Time (other than those limited to a specified date, which
shall speak only as to such date), and Alliance and Alliance Bank shall have received a certificate
of the Chief Executive Officer of Eagle to that effect. All corporate action required to have been
taken by, or on the part of, Eagle to authorize the execution, delivery and performance of this
Agreement and the Merger, respectively, shall have been duly and validly taken, and Alliance and
Alliance Bank shall have received certified copies of the resolutions evidencing such
authorizations.
(b) Performance of Obligations. Eagle shall have in all material respects performed all obligations
required to be performed by it under this Agreement prior to the Effective Time, and Alliance and
Alliance Bank shall have received a certificate of the Chief Executive Officer of Eagle to that
effect.
(c) Permits, Authorizations, Etc. Eagle shall have obtained any and all material permits,
authorizations, consents, waivers, clearances or approvals required to be obtained by it for the
lawful consummation of the Merger and Bank Merger in accordance with applicable law.
(d) No Material Adverse Change. There shall not have been, since the date hereof, any material
adverse change in the business, operation, assets, liabilities, financial condition, prospects or
results of operations of Eagle and the Eagle Subsidiaries, taken as a whole.
(e) No Injunction. No injunction, restraining order, stop order or other order or action of any
federal or state court or agency in the United States which prohibits, restricts or makes illegal
the
51
consummation of the transactions contemplated hereby, shall be in effect, and no action, suit
or other proceeding seeking such shall have been instituted or threatened, and no statute, rule or
regulation shall have been enacted, issued or promulgated, by any state or federal government or
government agency, which prohibits, restricts or makes illegal the consummation of the transactions
contemplated hereby.
(f) Fairness Opinion. Alliance shall have received from Xxxxxxxxx & Company LLC, an updated
fairness opinion dated as of a date not later than the date of the effectiveness of the
Registration Statement, to the effect that the Merger is fair to the shareholders of Alliance from
a financial point of view.
(g) Merger Consideration. Eagle shall have deposited with the Exchange Agent, or authorized and
directed the Exchange Agent to issue, the Merger Consideration to be paid to holder of Alliance
Common Stock in accordance with the provisions of Article II hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to the Effective Time:
(a) by mutual consent of all parties hereto;
(b) by either Eagle or Alliance and Alliance Bank, at any time after April 30, 2012, if the Merger
shall not theretofore have been consummated, unless: (i) the failure of the Closing to occur by
such date shall be due to the failure of the party seeking to terminate this Agreement to perform
or observe the covenants or agreements of such party set forth herein or; (ii) the date reflected
in this Section 8.1(b) shall be extended in writing by all of the parties hereto, provided, however
that if Alliance or Alliance Bank engages in communications in violation of Section 5.1(l) at any
time after the date hereof, Alliance and Alliance Bank shall not be entitled to terminate this
Agreement pursuant to provisions of Section 8.1(b);
(c) (i) by Alliance and Alliance Bank, in the event of the material breach by Eagle of any
representation, warranty, covenant or agreement contained herein if such breach has not been, or
cannot be, cured within 30 days of delivery of written notice of breach, or (ii) by Eagle, in the
event of the material breach by Alliance or Alliance Bank of any representation, warranty, covenant
or agreement contained herein if such breach has not been, or cannot be, cured within of 30 days of
delivery of written notice of breach, provided that no cure period shall be available for a breach
involving the provisions of Section 5.1(l);
(d) by either Alliance and Alliance Bank or Eagle if any governmental or regulatory approval
required for consummation of the Merger and the transactions contemplated hereby shall have been
denied by final, non-appealable order, or any such denial shall not have been appealed within the
time available for such appeal;
(e) by either Alliance and Alliance Bank or Eagle, in the event that any of the conditions
precedent to the obligation of such party to consummate the Merger cannot be satisfied or fulfilled
by the date specified in 8.1(b) of this Agreement, provided that the terminating party(ies) shall
not
52
be in material breach of a representation, warranty or covenant of this Agreement at the time
of termination pursuant to this Section 8.1(e);
(f) by either Alliance and Alliance Bank or Eagle, in the event that the Merger, the Agreement and
the Plan of Merger are not approved by the requisite vote of the shareholders of Alliance at the
Alliance Shareholder Meeting;
(g) by either Alliance and Alliance Bank or Eagle, in accordance with the provisions of Section
6.11(b); or
(h) (i) subject to the provisions of Section 8.2(f), by Alliance and Alliance Bank if:
(1) the Average Closing Price shall be less than the product of 0.80 and the Starting Price;
and
(2) the Eagle Ratio is less than the Index Ratio minus 0.20.
(ii) For purposes of this Section 8.1(h) and Section 8.2(f), the following terms shall have
the meanings indicated below:
(1) “Average Closing Price” means the average of the last reported sale prices per share of
Eagle Stock as reported on the Nasdaq for the 5 consecutive trading days immediately preceding the
Determination Date. In the event that there shall be no trade on any trading day within the
foregoing period, or if Nasdaq shall fail to report a closing price on any such day, the closing
price for such day shall be equal to the average of the closing bid price and the closing asked
price as reported by Nasdaq on that day.
(2) “Determination Date” means the seventh day immediately prior to the scheduled Closing
Date, or if such day is not a trading day, the trading day immediately preceding such day.
(3) “Eagle Ratio” means the result obtained by dividing the Average Closing Price by the
Starting Price;
(4) “Index Price” means, on a given date, the closing price of the Nasdaq Bank Index, or if
such index is not available such substitute or similar index which substantially replicates the
Nasdaq Bank Index.
(5) “Index Ratio” means the number obtained by dividing the Index Price on the Determination
Date by the Starting Index Price.
(6) “Starting Index Price” means 1739.58.
(7) “Starting Price” means $14.16.
8.2. Effect of Termination. (a) In the event of termination of this Agreement by either
Alliance and Alliance Bank or Eagle as provided in Section 8.1 above, this Agreement shall
forthwith become void and there shall be no liability on the part of either Alliance and Alliance
Bank or Eagle or their respective officers or directors, except that: (i) the provisions of this
Section
53
8.2, the provisions regarding the confidentiality and return or destruction of documents of
Section 6.1, and the provisions of Section 6.5 shall survive any such termination and abandonment;
and (ii) a termination pursuant to Section 8.1 shall not relieve the breaching party from liability
or action being taken in law or in equity by the non breaching party for any fraud, for any willful
misconduct or breach of a material provision of this Agreement giving rise to such termination,
except where Eagle has received the payment provided by Section 8.2(b) or Section 8.2(c).
(b) Notwithstanding anything to the contrary contained herein, in the event of termination of this
Agreement (i) by either Alliance and Alliance Bank or Eagle pursuant to Section 8.1(g); or (ii) by
Eagle pursuant to Section 8.1(c) and such material breach occurred as a result of a breach of
Section 5.1(l), Alliance and Alliance Bank shall, within 3 business days of such termination pay to
Eagle, by wire transfer of immediately available funds, the sum of $1,350,000.
(c) Notwithstanding anything to the contrary contained herein, if this Agreement shall have been
terminated pursuant to Section 8.1(b) or Section 8.1(f), and prior to such termination the
provisions of Section 5.1(l) shall have been breached (whether or not such breach shall have
resulted in the failure to obtain shareholder approval), or in the case of termination pursuant to
Section 8.1(b), where Alliance has engaged in communications with respect to an Unsolicited
Acquisition Proposal through the Communications End Date, Alliance and Alliance Bank shall, within
3 business days of such termination as provided in this Section 8.2(c) pay to Eagle, by wire
transfer of immediately available funds, the sum of $1,350,000.
(d) Notwithstanding anything to the contrary contained herein, if this Agreement shall have been
terminated pursuant to Section 8.1(b) or Section 8.1(f), and if (i) prior to such termination, an
Acquisition Proposal shall have been publicly proposed (other than by Eagle or any Eagle
Subsidiary) or any person or entity other than Eagle or any Eagle Subsidiary has publicly announced
its intention to make an Acquisition Proposal, or such Acquisition Proposal or intention has
otherwise become widely known to Alliance’s shareholders and (ii) within 12 months following the
date of such termination: (A) Alliance or Alliance Bank merges with or into, or is acquired,
directly or indirectly, by merger or otherwise by, any person or entity other than Eagle or any
Eagle Subsidiary; (B) any person or entity other than Eagle or any Eagle Subsidiary, directly or
indirectly, acquires more than 50% of the total assets of Alliance and the Alliance Subsidiaries,
taken as a whole; (C) any person or entity other than Eagle any Eagle Subsidiary, directly or
indirectly, acquires more than 50% of the outstanding shares of Alliance Common Stock; or (D)
Alliance adopts or implements a plan of liquidation, recapitalization or share repurchase relating
to more than 50% of the outstanding shares of Alliance Common Stock or an extraordinary dividend
relating to more than 50% of such outstanding shares or 50% of the assets of Alliance and the
Alliance Subsidiaries, taken as a whole (or in any of clauses (A) through (D) Alliance or any
Alliance Subsidiary shall have entered into a definitive agreement providing for such action),
Alliance and Alliance Bank shall, within 3 business days of occurrence of any event described in
Section 8.2(d)(ii) pay to Eagle, by wire transfer of immediately available funds, the sum of
$1,350,000.
(e) Alliance and Alliance Bank agree that they shall cause the acquiror in respect of any
Acquisition Proposal to expressly assume the obligation of Alliance and Alliance Bank to make such
payment to the extent such payment obligation has not been previously satisfied. Notwithstanding
anything to the contrary contained herein, the obligations of Alliance and Alliance Bank to make
such payments and to cause such assumption shall survive the termination of this Agreement and
shall be binding upon Alliance and Alliance Bank and any successor or assign of
54
Alliance or Alliance Bank, whether by merger, consolidation, share purchase or exchange, asset
purchase, or otherwise.
(f) If Alliance elects to exercise its termination right pursuant to Section 8.1(h), it shall give
written notice of such election to Eagle within one day of the Determination Date. During the five
business day period (the “Decision Period”) commencing with its receipt of such notice, Eagle may
elect to pay, as additional Merger Consideration, to each holder of shares of Alliance Common
Stock, additional shares of Eagle Common Stock having a value, based on the Average Closing Price,
and/or cash, in an amount per share of Alliance Common Stock equal to the Top-Up Amount.
The “Top-Up Amount” shall be the number obtained by multiplying (A) the Average Closing Price
by (B) the excess of the Imputed Conversion Ratio over the Adjusted Conversion Ratio, as adjusted.
The “Imputed Conversion Ratio” shall equal the lesser of:
(i) the number obtained by dividing (1) the product of the Starting Price multiplied by the
Adjusted Conversion Ratio multiplied by 0.80 by (2) the Average Closing Price; and
(ii) the number obtained by dividing (1) the product of the Index Ratio and the Adjusted
Conversion Ratio by (2) the Eagle Ratio.
If Eagle makes such election within the Decision Period, it shall give prompt written notice
to the Alliance of such election and the Top-Up Amount, whereupon the Alliance shall have no right
to terminate the Agreement pursuant to Section 8.1(h) and this Agreement shall remain in full force
and effect in accordance with its terms.
If, during the period between the date of this Agreement and the Determination Date, any
change in the outstanding shares of capital stock of Eagle shall occur, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or readjustment of shares,
or any stock dividend thereon with a record date during such period, the “Starting Price” shall be
appropriately adjusted to account for such change for the purposes of Section 8.1(h).
(g) Eagle, Alliance and Alliance Bank acknowledge that the business and assets of Alliance and
Alliance Bank, and the combination of Eagle and Alliance, are unique and that, if the parties fail
to consummate the transactions contemplated by this Agreement, the parties may have no adequate
remedy at law. Eagle, Alliance and Alliance Bank shall each be entitled, in addition to the rights
provided by this Section 8.2 and its other remedies at law, to specific performance of this
Agreement if another party shall, without cause, refuse to consummate the transactions contemplated
by this Agreement.
(h) If the sums are paid to Eagle under Section 8.2(b) or Section 8.2(c), those amounts shall be
the sole remedy available to Eagle in the event of any such termination of this Agreement.
(i) Eagle, Alliance and Alliance Bank acknowledge and agree that the agreements contained in
Section 6.11(b), Section 8.2(b), Section 8.2(c) and Section 8.2(d) are integral parts of the
transactions contemplated by this Agreement, that without such agreements the parties would not
have entered into this Agreement and that such amounts do not constitute a penalty. If Alliance and
Alliance Bank (or any successor thereto) fails to pay Eagle the amounts due under such sections
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within the time periods specified therein, Alliance and Alliance Bank (and any successor thereto)
shall pay the costs and expenses (including reasonable legal fees and expenses) incurred by Eagle
in connection with any action in which the it prevails, including the filing of any lawsuit, taken
to collect payment of such amounts, together with interest on the amount of any such unpaid amounts
at the maximum interest rate payable on judgments pursuant to applicable Maryland law, calculated
on a daily basis from the date such amounts were required to be paid until the date of actual
payment.
8.3. Amendment. This Agreement may be amended by the parties hereto, by action taken by or on
behalf of their respective Boards of Directors, at any time before or after approval of the Merger
by the shareholders of Alliance; provided, however, that after such approvals no such amendment
shall reduce the value of or change the form of the consideration to be delivered to each of
Alliance’s shareholders as contemplated by the Agreement, unless such amendment is subject to the
obtaining of the approval of the amendment by the shareholders of Alliance and such approval is
obtained. This Agreement may not be amended except by an instrument in writing signed on behalf of
each of the parties hereto which expressly states its intention to amend this Agreement.
8.4 Waiver. At any time prior to the Effective Time, the parties hereto, by action taken or
authorized by their respective Boards of Directors, may, to the extent legally allowed: (a) extend
the time for the performance of any of the obligations or other acts of the other parties hereto;
(b) waive any inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto; and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but
such extension or waiver or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
ARTICLE IX
GENERAL PROVISIONS
9.1 Investigation; Survival of Agreements. No investigation by the parties hereto made
heretofore or hereafter shall affect the representations and warranties of the parties which are
contained herein and each such representation and warranty shall survive such investigation. Except
for those covenants and agreements expressly to be carried out after the Effective Time, the
agreements, representations, warranties and covenants in this Agreement or in any instrument
delivered pursuant to this Agreement shall not survive the Effective Time.
9.2 Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly received (i) on the date given if delivered prior to 5:00 PM on a business
day, personally or by confirmed telecopier or email, in each case with a hard copy sent by
registered or certified first class mail, personally or by commercial overnight delivery service;
(ii) on the date received if sent by commercial overnight delivery service; (iii) on the fifth
calendar day after depositing in the mail, if mailed by registered or certified mail (return
receipt requested), to the
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parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Eagle or Holdings:
Xxxxxx X. Xxxx, Chief Executive Officer
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
E-mail: xxxxx@xxxxxxxxxxxxx.xxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
E-mail: xxxxx@xxxxxxxxxxxxx.xxx
Copy to:
Xxxx X. Xxxxxx, Esq.
BuckleySandler LLP
0000 00xx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
E-Mail: xxxxxxx@xxxxxxxxxxxxxx.xxx
Xxxx X. Xxxxxx, Esq.
BuckleySandler LLP
0000 00xx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
E-Mail: xxxxxxx@xxxxxxxxxxxxxx.xxx
(b) if to Alliance or Alliance Bank:
Xxxxxxx X. Xxxxx, Xx., President & Chief Executive Officer
Alliance Bankshares Corporation
00000 Xxxxxx Xxxx Xxxxx
Xxxxx 000 Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
E-mail: xxxxxx@xxxxxxxxxxxxxx.xxx
Alliance Bankshares Corporation
00000 Xxxxxx Xxxx Xxxxx
Xxxxx 000 Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
E-mail: xxxxxx@xxxxxxxxxxxxxx.xxx
Copy to:
Xxxxx X. Xxxx III
Xxxxxxxx Xxxxxxx LLP
Xxxxxxxx Xxxxxxx Building
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax (000) 000-0000
E-mail: xxxx.xxxx@xxxxxxxxxxxxxxx.xxx
Xxxxxxxx Xxxxxxx LLP
Xxxxxxxx Xxxxxxx Building
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax (000) 000-0000
E-mail: xxxx.xxxx@xxxxxxxxxxxxxxx.xxx
9.3 Material Adverse Change. Notwithstanding anything to the contrary contained herein, the
term “material adverse change” or “material adverse effect” or words of similar import, shall not
include the impact of: (i) changes, after the date hereof, in laws of general applicability or
interpretations thereof by courts or governmental authorities but only to the extent the effect on
such person and its subsidiaries, taken as a whole, is not materially worse than the effect on
similarly situated banks and their holding companies; (ii) changes, after the date hereof, in
generally accepted accounting principles or regulatory principles generally applicable to banks but
only to the extent the effect on such person and its subsidiaries, taken as a whole, is not
materially worse than the effect on similarly situated banks and their holding companies; (iii)
57
changes, after the date hereof, resulting from expenses (such as customary legal, accounting and
investment advisor fees) incurred in connection with this Agreement; (iv) changes, after the date
hereof, resulting from, acts of terrorism or war, but only to the extent the effect on such person
and its subsidiaries, taken as a whole, is not materially worse than the effect on similarly
situated banks and their holding companies; (v) changes, after the date hereof, resulting from
payments of any amounts due, or the provision of any benefits to, any officer or employee under
employment, change in control or severance agreements in effect as of the date hereof and disclosed
in Section 6.9 of the Alliance Disclosure Schedule; or (vi) actions and omissions of Eagle or
Alliance and Alliance Bank taken at the request of, or with the prior written consent, of the other
party hereto in contemplation of the transactions contemplated hereby.
9.4 “Knowledge” and “Belief.” The term “knowledge” or “belief,” when used with respect to
Alliance, Alliance Bank or any Alliance Subsidiary, means the conscious knowledge or belief, after
due inquiry, of Xxxxxxx X. Xxxxx, Xx., Xxxx X. Xxxxxxx, Xxxxxx X. Xxxx, Xxxxx X. Xxxxxxxx and Xxxxx
Xxxxxx. The term “knowledge” or “belief,” when used with respect to Eagle or EagleBank, means the
conscious knowledge or belief, after due inquiry, of Xxxxxx X. Xxxx, Xxxxxxx X. Xxxxx, Xxxxx X.
Xxxxxxxx and Xxxxx X. Xxxx.
9.5. Severability. Except to the extent that application of this Section 9.5 hereof would have
a material adverse effect on Eagle or Alliance and their respective Subsidiaries taken as a whole,
any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable. In all such cases, the
parties shall use their reasonable best efforts to substitute a valid, legal and enforceable
provision which, insofar as practicable, implements the original purposes and intents of this
Agreement.
9.6. Headings. The headings of the Articles and Sections of this Agreement are for convenience
of reference only and shall not be deemed to be a part of this Agreement.. When a reference is made
in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. Whenever the words “include,”
“includes” or ‘‘including’’ are used in this Agreement, they shall be deemed to be followed by the
words “without limitation.”
9.7. Attorneys’ Fees. In any action or proceeding brought to enforce any provision of this
Agreement, or where any provision hereof is validly asserted as a defense, the successful party
shall be entitled to recover reasonable attorneys’ fees in addition to any other remedy.
9.8. Schedules and Exhibits. All schedules and exhibits referred to herein are intended to be
and hereby are specifically made a part of this Agreement. The parties acknowledge and agree that
the inclusion of an item in a Disclosure Schedule as an exception to a representation shall not be
deemed an admission by a party that such item was required to be disclosed therein.
9.9. Miscellaneous. This Agreement (including schedules, exhibits, documents and instruments
referred to herein)
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(a) together with all disclosure letters, schedules, exhibits, documents and instruments attached
hereto or required to be delivered herewith, or at or prior to Closing, constitutes the entire
agreement and supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof;
(b) is not intended to confer upon any person not a party hereto any rights or remedies hereunder;
(c) shall not be assigned by operation of law or otherwise;
(d) shall be governed in all respects by the laws of the State of Maryland without regard to the
choice of laws provisions thereof; and
(e) may be executed in two or more counterparts which together shall constitute a single agreement.
[Signatures appear on following page]
59
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their
respective officers thereunto duly authorized and their respective corporate seals to be affixed
hereto, all as of the date first written above.
ATTEST: [SEAL] | EAGLE BANCORP, INC. | |||||
/s/ Xxxx X. Xxxxxxx | By: | /s/ Xxxxxx X. Xxxx | ||||
Name: | Xxxx X. Xxxxxxx | Name: | Xxxxxx X. Xxxx | |||
Title: | Secretary | Title: | Chief Executive Officer | |||
ATTEST: [SEAL] | ALLIANCE BANKSHARES CORPORATION | |||||
/s/ Xxxxxx X. Xxxxxxx, Xx. | By: | /s/ Xxxxxxx X. Xxxxx, Xx. | ||||
Name: | Xxxxxx X. Xxxxxxx, Xx. | Name: | Xxxxxxx X. Xxxxx, Xx. | |||
Title: | Secretary | Title: | President & Chief Executive Officer | |||
ATTEST: [SEAL] | ALLIANCE BANK CORPORATION | |||||
/s/ Xxxxxx X. Xxxxxxx, Xx. | By: | /s/ Xxxxxxx X. Xxxxx, Xx. | ||||
Name: | Xxxxxx X. Xxxxxxx, Xx. | Name: | Xxxxxxx X. Xxxxx, Xx. | |||
Title: | Secretary | Title: | President & Chief Executive Officer |
[Signature Page to Agreement of Merger]