EXHIBIT 2.2
AGREEMENT AND PLAN OF ACQUISITION
By and Between
MONMOUTH COMMUNITY BANCORP
and
XXXXXXX COMMUNITY BANK
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TABLE OF CONTENTS
PAGE
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ARTICLE I. THE COMBINATION..................................................................................2
Section 1.01. The Combination...........................................................................2
Section 1.02. Effective Time............................................................................4
Section 1.03. Exchange of Xxxxxxx Capital Stock.........................................................4
Section 1.04. Bancorp Capital Stock.....................................................................5
Section 1.05. Xxxxxxx Stock Options.....................................................................5
Section 1.06. Certificate of Incorporation and By-laws of Bancorp.......................................6
Section 1.07. Certificate of Incorporation and By-laws of Xxxxxxx.......................................6
Section 1.08. Tax Consequences..........................................................................6
Section 1.09. Stock Split...............................................................................6
Section 1.10. Board Composition and Structure; Officers.................................................7
ARTICLE II. EXCHANGE OF SHARES..............................................................................8
Section 2.01. Bancorp to Make Shares Available..........................................................8
Section 2.02. Exchange of Shares........................................................................8
Section 2.03. Dissenting Xxxxxxx Shares................................................................10
Section 2.04. Dissenting Bancorp Shares................................................................11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF XXXXXXX.....................................................11
Section 3.01. Corporate Organization...................................................................11
Section 3.02. Capitalization...........................................................................12
Section 3.03. Authority; No Violation..................................................................13
Section 3.04. Consents and Approvals...................................................................14
Section 3.05. Reports..................................................................................15
Section 3.06. Financial Statements.....................................................................16
Section 3.07. Broker's Fees; Financial Advisor's Fees..................................................16
Section 3.08. Absence of Certain Changes or Events.....................................................16
Section 3.09. Loan Portfolio...........................................................................17
Section 3.10. Legal Proceedings; Agreements with Regulatory Agencies...................................17
Section 3.11. Taxes and Tax Returns....................................................................18
Section 3.12. Employee Benefit Plans...................................................................19
Section 3.13. Title and Related Matters................................................................21
Section 3.14. Real Estate..............................................................................22
Section 3.15. Environmental Matters....................................................................22
Section 3.16. Commitments and Contracts................................................................24
Section 3.17. Regulatory, Accounting and Tax Matters...................................................25
Section 3.18. Registration Obligations.................................................................25
Section 3.19. Antitakeover Provisions..................................................................25
Section 3.20. Insurance................................................................................25
Section 3.21. Labor....................................................................................26
Section 3.22. Compliance with Applicable Laws..........................................................26
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Section 3.23. Transactions with Management.............................................................28
Section 3.24. Interest Rate Risk Management Instruments................................................28
Section 3.25. Deposits.................................................................................28
Section 3.26. Accounting Controls; Disclosure Controls.................................................28
Section 3.27. Xxxxxxx Information......................................................................29
Section 3.28. Deposit Insurance........................................................................29
Section 3.29. Intellectual Property....................................................................29
Section 3.30. Untrue Statements and Omissions..........................................................29
Section 3.31. Reorganization...........................................................................30
Section 3.32. Fairness Opinion.........................................................................30
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BANCORP......................................................30
Section 4.01. Corporate Organization...................................................................30
Section 4.02. Capitalization...........................................................................31
Section 4.03. Authority; No Violation..................................................................32
Section 4.04. Consents and Approvals...................................................................33
Section 4.05. Reports..................................................................................33
Section 4.06. Financial Statements.....................................................................34
Section 4.07. Broker's Fees; Financial Advisor's Fees..................................................35
Section 4.08. Absence of Certain Changes or Events.....................................................35
Section 4.09. Loan Portfolio...........................................................................36
Section 4.10. Legal Proceedings; Agreements with Regulatory Agencies...................................36
Section 4.11. Taxes and Tax Returns....................................................................37
Section 4.12. Employee Benefit Plans...................................................................38
Section 4.13. Title and Related Matters................................................................40
Section 4.14. Real Estate..............................................................................40
Section 4.15. Environmental Matters....................................................................41
Section 4.16. Commitments and Contracts................................................................42
Section 4.17. Regulatory, Accounting and Tax Matters...................................................43
Section 4.18. Registration Obligations.................................................................43
Section 4.19. Antitakeover Provisions..................................................................43
Section 4.20. Insurance................................................................................44
Section 4.21. Labor....................................................................................44
Section 4.22. Compliance with Applicable Laws..........................................................45
Section 4.23. Transactions with Management.............................................................46
Section 4.24. Interest Rate Risk Management Instruments................................................46
Section 4.25. Deposits.................................................................................46
Section 4.26. Accounting Controls; Disclosure Controls.................................................46
Section 4.27. Bancorp Information......................................................................47
Section 4.28. Deposit Insurance........................................................................47
Section 4.29. Intellectual Property....................................................................47
Section 4.30. Untrue Statements and Omissions..........................................................47
Section 4.31. Reorganization...........................................................................47
Section 4.32. Fairness Opinion.........................................................................48
ARTICLE V. COVENANTS AND AGREEMENTS........................................................................48
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Section 5.01. Conduct of the Business Prior to the Effective Time......................................48
Section 5.02. Xxxxxxx Forbearances.....................................................................48
Section 5.03. Bancorp Forbearances.....................................................................49
ARTICLE VI. ADDITIONAL COVENANTS AND AGREEMENTS............................................................49
Section 6.01. Best Efforts; Cooperation................................................................49
Section 6.02. Regulatory Matters.......................................................................49
Section 6.03. Employment and Employee Benefits Matters.................................................50
Section 6.04. Indemnification..........................................................................51
Section 6.05. Registration Statement...................................................................52
Section 6.06. Section 16 Matters.......................................................................52
Section 6.07. Affiliate and Voting Agreements..........................................................52
Section 6.08. No Other Bids............................................................................52
Section 6.09. Transaction Expenses of Xxxxxxx..........................................................53
Section 6.10. Press Releases...........................................................................54
Section 6.11. Prior Notice and Approval Before Payment to be Made......................................54
Section 6.12. NASDAQ SmallCap Market Listing...........................................................55
Section 6.13. Current Information on Bancorp...........................................................55
Section 6.14. Current Information on Xxxxxxx...........................................................55
Section 6.15. Access to Information....................................................................56
Section 6.16. Access to Properties; Personnel and Records; Systems Integration.........................56
Section 6.17. Confidentiality of Information...........................................................58
Section 6.18. Notice of Deadlines......................................................................58
Section 6.19. Maintenance of Properties; Certain Remediation and Capital
Improvements.............................................................................58
Section 6.20. Compliance Matters.......................................................................58
Section 6.21. Approval of Stockholders and Shareholders................................................59
Section 6.22. Registration of Bancorp Common Stock related to Assumed Options..........................59
Section 6.23. Notification of Certain Matters..........................................................59
ARTICLE VII. CONDITIONS PRECEDENT..........................................................................60
Section 7.01. Conditions to Each Party's Obligation to Effect the Combination..........................60
Section 7.02. Conditions to Obligations of Bancorp.....................................................61
Section 7.03. Conditions to Obligations of Xxxxxxx.....................................................63
ARTICLE VIII. TERMINATION, WAIVER AND AMENDMENT............................................................64
Section 8.01. Termination..............................................................................64
Section 8.02. Effective of Termination; Termination Fee................................................66
Section 8.03. Amendments...............................................................................67
Section 8.04. Waivers..................................................................................67
Section 8.05. Non-Survival of Representations, Warranties and Covenants................................67
ARTICLE IX. MISCELLANEOUS..................................................................................67
Section 9.01. Closing..................................................................................67
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Section 9.02. Standard.................................................................................68
Section 9.03. Entire Agreement.........................................................................68
Section 9.04. Notices..................................................................................68
Section 9.05. Severability.............................................................................69
Section 9.06. Costs and Expenses.......................................................................69
Section 9.07. Captions.................................................................................70
Section 9.08. Counterparts.............................................................................70
Section 9.09. Persons Bound; No Assignment; No Third-Party Beneficiaries...............................70
Section 9.10. Governing Law............................................................................70
Section 9.11. Recitals, Exhibits and Schedules.........................................................70
Section 9.12. Waiver...................................................................................70
Section 9.13. Construction of Terms....................................................................71
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INDEX OF DEFINED TERMS
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Definition Section
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Acquisition Transaction 8.01(h)
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Affiliate 3.25
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Agreement introductory paragraph
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Xxxxxxx introductory paragraph
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Xxxxxxx Certificate(s) 1.03(b)
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Xxxxxxx Common Stock 1.03(a)
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Xxxxxxx Contract 3.16(a)
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Xxxxxxx Employee Benefit Plan(s) 3.12(a)
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Xxxxxxx Financial Statements 3.06(a)
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Xxxxxxx Loan Property /Properties 3.15(a)
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Xxxxxxx Participation Facility /Facilities 3.15(a)
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Xxxxxxx Regulatory Agreement 3.10(b)
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Xxxxxxx Regulatory Reports 3.05(b)
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Xxxxxxx Service Contracts 3.16(d)
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Xxxxxxx Stock Option/Stock Options 1.05(a)
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Xxxxxxx Stock Option Plans 1.05(a)
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Xxxxxxx Subsidiary /Subsidiaries 3.01(b)
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Assumed Stock Option(s) 1.05(a)
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Bancorp introductory paragraph
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Bancorp Common Stock 1.03(a)
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Bancorp Contract 4.16(a)
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Bancorp Employee Benefit Plan(s) 4.12(a)
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Bancorp Financial Statements 4.6(a)
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Bancorp Loan Property /Properties 4.15(a)
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Bancorp Participation Facility /Facilities 4.15(a)
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Bancorp Regulatory Agreement 4.10(b)
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Bancorp Regulatory Reports 4.05(b)
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Bancorp Service Contacts 4.16(d)
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Bancorp Stock Option/Stock Options 4.02(a)
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Definition Section
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Bancorp Stock Option Plan(s) 4.02(a)
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Bancorp Subsidiary /Subsidiaries 4.01(c)
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Bank Merger fourth recital paragraph
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Bank Secrecy Act 3.22(d)
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Banking Act 2.03(a)
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COBRA 3.12(e)
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Closing 9.01
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Closing Date 9.01
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Code 3.11(c)
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Combination first recital paragraph
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Combination Consideration 1.01(e)
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Community Reinvestment Act 3.17
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Condition 3.08(a)
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Consent 1.02
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Dissenting Xxxxxxx Shares 2.03(a)
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Dissenting Bancorp Shares 2.04(a)
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Effective Time 1.02
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Environmental Law 3.15(b)
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Exchange Act 3.26(b)
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Exchange Agent 2.01
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Exchange Fund 2.01
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Exchange Ratio 1.03(a)
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ERISA 3.12(a)
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FDIC 1.02
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FRB 1.02
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Form S-4 3.04
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GAAP 3.06(b)
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Governmental Entity/Entities 3.01(a)
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HIPAA 3.12(e)
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Hazardous Material(s) 3.15(b)
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Definition Section
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Indemnified Party 6.04(a)
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Injunction 7.01(f)
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Joint Proxy Statement 3.04
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Lien/Liens 3.02(b)
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Material Adverse Effect 3.01(a)
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Maximum Amount 6.04(b)
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MCBNA second recital paragraph
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NASD 1.02
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NJBCA 2.04
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OCC 1.02
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PBGC 3.12(a)
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Party /Parties introductory paragraph
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Person 3.11(a)
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Regulatory Authority /Authorities 1.02
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Representative 6.08(a)
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Requisite Regulatory Approvals 1.02
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SEC 1.02
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SRO 3.04
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Section 16 6.06
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Securities Act 1.05(b)
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Stock Split 1.09
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Subsidiary/Subsidiaries 3.01(a)
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Tax/Taxes 1.01(e)
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Takeover Proposal 6.08(a)
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Termination Fee 8.02
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USA PATRIOT Act 3.22(d)
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INDEX OF SCHEDULES
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The Combination Representations and Warranties of Bancorp
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Schedule 1.10(a) Bancorp Board Composition Schedule 4.02(a) Stock Options
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Schedule 1.10(b) Xxxxxxx and MCBNA Boards Schedule 4.02(b) Subsidiaries
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Schedule 1.10(c) Executive Officers Schedule 4.08 Absence of Changes or Events
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Representations and Warranties of Xxxxxxx Schedule 4.09 Loan Portfolio
-----------------------------------------
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Schedule 3.02(a) Stock Options Schedule 4.10 Legal Proceedings
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Schedule 3.02(b) Subsidiaries Schedule 4.11 Tax Information
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Schedule 3.08 Absence of Changes or Events Schedule 4.12(a) Employee Benefit Plans
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Schedule 3.09 Loan Portfolio Schedule 4.12(b) Defined Benefit Plans
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Schedule 3.10 Legal Proceedings Schedule 4.12(g) Payments or Obligations
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Schedule 3.11 Tax Information Schedule 4.12(l) Grantor or "Rabbi" Trusts
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Schedule 3.12(a) Employee Benefit Plans Schedule 4.12(m) Retirement Benefits
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Schedule 3.12(b) Defined Benefit Plans Schedule 4.13(c) Buildings and Structures
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Schedule 3.12(h) Payments or Obligations Schedule 4.14(a) Real Estate
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Schedule 3.12(m) Grantor or "Rabbi" Trusts Schedule 4.14(b) Leases
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Schedule 3.12(n) Retirement Benefits Schedule 4.16(a) Material Contracts
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Schedule 3.13(c) Buildings and Structures Schedule 4.16(c) Certain Other Contracts
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Schedule 3.14(a) Real Estate Schedule 4.16(d) Effect on Contracts and Consents
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Schedule 3.14(b) Leases Schedule 4.18 Registration Obligations
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Schedule 3.16(a) Material Contracts Schedule 4.20 Insurance
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Schedule 3.16(c) Certain Other Contracts Schedule 4.21(b) Benefit or Compensation Plans
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Schedule 3.16(d) Effect on Contracts and Consents Schedule 4.21(d) Labor Relations
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Schedule 3.18 Registration Obligations Schedule 4.22 Compliance with Applicable Laws
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Schedule 3.20 Insurance Schedule 4.23 Transactions with Management
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Schedule 3.21(b) Benefit or Compensation Plans Schedule 4.25 Deposits
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Schedule 3.21(d) Labor Relations Additional Covenants and Agreements
-----------------------------------
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Schedule 3.22 Compliance with Applicable Laws Schedule 6.18(a) Notice of Deadlines (Xxxxxxx)
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Schedule 3.23 Transactions with Management Schedule 6.18(b) Notice of Deadlines (Bancorp)
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Schedule 3.25 Deposits
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INDEX OF EXHIBITS
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Exhibit Number A Voting Agreements
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Exhibit Number B Affiliate Agreements
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Exhibit Number C Opinion of Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.C.
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Exhibit Number D Opinion of Xxxxxx Xxxxxx & Xxxxxxxx, LLC
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AGREEMENT AND PLAN OF ACQUISITION
By and Between
MONMOUTH COMMUNITY BANCORP
and
XXXXXXX COMMUNITY BANK
----------
This AGREEMENT AND PLAN OF ACQUISITION, dated as of the 30th day of June,
2004 (this "Agreement"), is by and between Monmouth Community Bancorp, a bank
holding company incorporated and organized under the laws of the State of New
Jersey ("Bancorp"), and Xxxxxxx Community Bank, a commercial bank organized
under the laws of the State of New Jersey ("Xxxxxxx"). Bancorp and Xxxxxxx are
sometimes collectively referred to herein as the "Parties," and individually
referred to herein as a "Party."
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Bancorp and Xxxxxxx have determined
that it is in the best interests of their respective entities and shareholders
and stockholders, as the case may be, to combine "as equals" by consummating the
strategic business combination transaction provided for in this Agreement (the
"Combination"), in which Bancorp will, on the terms and subject to the
conditions set forth in this Agreement, acquire all of the outstanding capital
stock of Xxxxxxx;
WHEREAS, the Parties desire and intend that Bancorp will change its name
to "Central Jersey Bancorp" contemporaneous with the consummation of the
Combination, and that Monmouth Community Bank, National Association, a national
association organized under the laws of the United States of America and
wholly-owned subsidiary of Bancorp ("MCBNA"), similarly will change its name to
"Central Jersey Bank, National Association" shortly after the consummation of
the Combination;
WHEREAS, MCBNA shall make the requisite filing(s) to change its name to
"Central Jersey Bank, National Association," as soon as practicable after the
date of this Agreement;
1
WHEREAS, subsequent to the consummation of the Combination, Xxxxxxx will
merge with and into "Central Jersey Bank, National Association," subject to
applicable regulatory approval (the "Bank Merger");
WHEREAS, for federal income tax purposes, it is intended that the
Combination shall qualify as a "reorganization" under the provisions of Section
368(a) of the Code (as defined herein), and this Agreement is intended to be and
is adopted as a "plan of reorganization" for purposes of Sections 354 and 361 of
the Code;
WHEREAS, the Parties desire to make certain representations, warranties
and agreements in connection with the Combination and also to prescribe certain
conditions to the Combination; and
WHEREAS, as an inducement and condition to each Party entering into this
Agreement, each Party shall use its best efforts to cause each of its directors
and executive officers to enter into Voting Agreements with Xxxxxxx and Bancorp
attached hereto as Exhibit A, pursuant to which such directors and executive
officers will agree to vote their Xxxxxxx Common Stock and Bancorp Common Stock
(as such terms are defined herein), as the case may be, in favor of approval of
this Agreement, the Combination and the other transactions contemplated hereby
(it being the intention of each Party to have a signed Voting Agreement from
each director and executive officer of Bancorp and Xxxxxxx at the time this
Agreement is entered into by the Parties).
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations, warranties and agreements contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the Parties agree
as follows:
ARTICLE I.
THE COMBINATION
Section 1.01. The Combination.
(a) Parties to the Combination - Subject to the terms and conditions of
this Agreement, at the Effective Time (as defined below), Bancorp shall acquire
all of the outstanding capital stock of Xxxxxxx, a commercial bank organized
under the laws of the State of New Jersey. The principal offices of Bancorp, the
acquiring corporation, are located at 000 Xxxxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxxxx
00000. The principal offices of Xxxxxxx, the participating bank, are located at
0000 Xxxxxxx 00, Xxx Xxxx, Xxx Xxxxxx 00000.
2
(b) Board of Directors of Bancorp - The name and address of each of the
current members of Bancorp's Board of Directors are set forth below:
Xxxxx X. Xxxxx, Esq. Xxxx X. XxXxxx
00 Xxxxx Xxxxx 000 Xxxxxxx Xxxxxx
Xxxx Xxxx Xxxxxx, XX 00000 Xxxxxx, XX 00000
Xxxx X. Xxxxxx, Esq. Xxxxxx X. Xxxxxx, Xx.
00 Xxxxx Xxxx Xxxxxx 000 Xxxx Xxxx
Xxxxxx, XX 00000 Xxxxxxx, XX 00000
Xxxxxxxx X. Xxxxxxxxx, C.P.A. Xxxxxx X. Xxxxx, C.P.A.
00 Xxxx Xxxxx Xxxx 0 XxXxxx Xxxxx
Xxxxxx, XX 00000 Xxxx Xxxx Xxxxxx, XX 00000
Xxxx X. Xxxxxxxxxx Xxxx X. Xxxxx
0 Xxx Xxxxx Xxxxxx 00 Xxxx Xxxxx
Xxxx Xxxxxx, XX 00000 Xxx Xxxx, XX 00000
Xxxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxx
000 Xxxxxxxxxx Xxxxxx 000 X. Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 Xxxx Xxxxxxxxxx, XX 00000
(c) Board of Directors of Xxxxxxx - The name and address of each of the
current members of Xxxxxxx'x Board of Directors are set forth below:
Xxxxxx X. Xxxxxxxxx, Xx. M. Xxxxxx Xxxxxx
000 Xxxx Xxxxxx 0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxx Xxx. Xxxxxxx X. Xxxxxx
000 Xxxxxx Xxxx 000 Xxxxxxxxxxx Xxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Xxxx X. Xxxxxxx Xxxx X. Xxxxxx, Xx.
000 Xxxxxxx Xxxxx 0000 Xxxxxxx Xxxx
Xxxx Xxxxx, XX 00000 Xxxx, XX 00000
Xxxxxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
000 Xxxxxxxx Xxxxxx 0000 Xxxxxx Xxxxx Xxxxx
Xxx Xxxx, XX 00000 Xxxx, XX 00000
Xxxxx X. Xxxxx
00 Xxx Xxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
3
(d) Monmouth Community Bank, N.A. - Monmouth Community Bank, National
Association, is currently the only banking subsidiary of Bancorp. Bancorp owns
one hundred percent (100%) of the outstanding capital stock of MCBNA. There is
currently 100 shares of common stock, par value $5.00 per share, of MCBNA
outstanding.
(e) Change in Structure of Combination - The Parties may at any time
change the method of effecting the Combination, if and to the extent requested
by either Party and consented to by the other Party (such consent not to be
unreasonably withheld); provided, however, that no such change shall (i) alter
or change the amount or kind of consideration to be issued to holders of the
capital stock of Xxxxxxx as provided for in this Agreement (the "Combination
Consideration"), (ii) adversely affect the treatment of Xxxxxxx'x stockholders
as a result of receiving the Combination Consideration or the treatment of
either Party pursuant to this Agreement relative to any Tax or Taxes (which term
shall mean, as used herein, (A) all federal, state and local income taxes,
excise taxes and taxes with respect to gross receipts, gross income, ad valorem,
profits, gains, property, capital, sales, transfer, use, payroll, employment,
severance, withholding, duties, intangibles, franchise, backup withholding, and
other taxes, charges, levies or like assessments together with all penalties and
additions to tax and interest thereon and (B) any liability for Taxes described
in clause (A), or (iii) materially impede or delay the consummation of the
transactions contemplated by this Agreement.
Section 1.02. Effective Time.
The effective time of the Combination shall occur (a) on the fifth (5th )
business day following the latest to occur of (i) the effective date (including
expiration of any applicable waiting period) of the last required consent,
approval or authorization, waiver, clearance, exemption or similar affirmation
(each a "Consent" and collectively, the "Consents") of any applicable regulatory
authority having authority over the transactions contemplated under this
Agreement, including, without limitation, the Federal Trade Commission, the
United States Department of Justice, the Board of Governors of the Federal
Reserve System ("FRB"), the Federal Deposit Insurance Corporation ("FDIC"), the
Office of the Comptroller of the Currency ("OCC"), the New Jersey Department of
Banking and Insurance, the National Association of Securities Dealers, Inc.
("NASD"), and the Securities and Exchange Commission ("SEC") (collectively, the
"Regulatory Authorities" and each a "Regulatory Authority") (such Consents and
the expiration of all such waiting periods being referred to as the "Requisite
Regulatory Approvals"), (ii) the date on which the stockholders of Xxxxxxx and
the shareholders of Bancorp shall approve the transactions contemplated by this
Agreement, and (iii) the obtainment of the last Consent of any Person (as
hereinafter defined) pursuant to any lease, contract or other arrangement or
waiver of such Consent by the Parties hereto, or (b) such other day and at such
other time as the Parties may agree (the "Effective Time").
Section 1.03. Exchange of Xxxxxxx Capital Stock.
At the Effective Time, by virtue of the Combination and without any
further action on the part of Bancorp, Xxxxxxx or the holders of any shares of
the securities described below:
(a) Each holder of a share of the common stock, par value $3.33333 per
share, of Xxxxxxx issued and outstanding immediately prior to the Effective Time
("Xxxxxxx Common
4
Stock") shall cease to have any rights as a stockholder of Xxxxxxx. Except for
Dissenting Xxxxxxx Shares (as hereinafter defined) and shares of Xxxxxxx Common
Stock held in treasury by Xxxxxxx, each share of Xxxxxxx Common Stock shall be
exchanged (the "Exchange Ratio") for the right to receive one (1) share of the
common stock, par value $0.01 per share, of Bancorp ("Bancorp Common Stock").
The Exchange Ratio will be one-for-one, and, therefore, no fractional shares
will result upon the consummation of the Combination. In order to effectuate a
one-for-one Exchange Ratio, Bancorp shall implement the Stock Split described in
Section 1.09.
(b) All of the shares of Xxxxxxx Common Stock exchanged for the right to
receive Bancorp Common Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist as of
the Effective Time, and each certificate previously representing any such shares
of Xxxxxxx Common Stock (each an "Xxxxxxx Certificate" and collectively, the
"Xxxxxxx Certificates") shall thereafter represent only the right to receive (i)
a certificate representing the number of whole shares of Bancorp Common Stock
that a holder of Xxxxxxx Common Stock is entitled to receive for such shares of
Xxxxxxx Common Stock as a result of the Combination and (ii) cash in lieu of
fractional shares into which the shares of Xxxxxxx Common Stock represented by
such certificate have been converted pursuant to this 1.03 and Section 2.02(e).
Xxxxxxx Certificates previously representing shares of Xxxxxxx Common Stock
shall be exchanged for certificates representing whole shares of Bancorp Common
Stock and cash in lieu of fractional shares of Bancorp Common Stock issued in
consideration therefor upon the surrender of such Xxxxxxx Certificates in
accordance with Section 2.02, without any interest thereon.
(c) Notwithstanding anything in this Agreement to the contrary, at the
Effective Time, all shares of Xxxxxxx Common Stock that are held in treasury or
owned by Xxxxxxx shall be cancelled and shall cease to exist, and no stock of
Bancorp or other consideration shall be delivered in exchange therefor.
Section 1.04. Bancorp Capital Stock.
At and after the Effective Time, each share of Bancorp Common Stock issued
and outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall not be affected by the Combination. It is hereby
understood by the Parties that the Stock Split shall have been effected prior to
the Effective Time.
Section 1.05. Xxxxxxx Stock Options.
(a) Effective as of the Effective Time, each outstanding option to
purchase shares of Xxxxxxx Common Stock (each an "Xxxxxxx Stock Option" and
collectively, the "Xxxxxxx Stock Options") granted by Xxxxxxx under the Xxxxxxx
Stock Option Plans set forth in Schedule 3.02(a) (the "Xxxxxxx Stock Option
Plans"), each of which is listed and described on Schedule 3.02(a), shall be
assumed by Bancorp and shall be converted into an option to purchase a number of
shares of Bancorp Common Stock (rounded to the nearest whole share)
(collectively, the "Assumed Stock Options" and individually an "Assumed Stock
Option") equal to (i) the number of shares of Xxxxxxx Common Stock subject to
such Xxxxxxx Stock Option immediately prior to the Effective Time multiplied by
(ii) the Exchange Ratio, and the per share exercise price for Bancorp Common
Stock issuable upon the exercise of such Assumed Stock Option shall be
5
equal to (A) the exercise price per share of Xxxxxxx Common Stock at which such
Xxxxxxx Stock Option was exercisable immediately prior to the Effective Time
divided by (B) the Exchange Ratio (rounded to the nearest whole cent); provided,
however, that in the case of any Xxxxxxx Stock Option to which Section 421 of
the Code applies by reason of its qualification under Section 422 of the Code,
the conversion formula shall be adjusted, if necessary, to comply with Section
424(a) of the Code. Except as otherwise provided herein, the Assumed Stock
Options shall be subject to the same terms and conditions (including expiration
date, vesting and exercise provisions) as were applicable to the corresponding
Xxxxxxx Stock Options immediately prior to the Effective Time (but taking into
account any changes thereto, including the acceleration thereof, provided for in
the Xxxxxxx Stock Option Plans or in any award agreement thereunder by reason of
this Agreement or the transactions contemplated hereby); provided, however, that
thereafter references to Xxxxxxx shall be deemed to be references to Bancorp.
(b) Bancorp has taken all corporate actions necessary to reserve for
issuance a sufficient number of shares of Bancorp Common Stock upon the exercise
of the Assumed Stock Options. On or as soon as practicable following the Closing
Date, Bancorp shall file a registration statement on an appropriate form or a
post-effective amendment to a previously filed registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
issuance of (or settlement in cash in respect of) the shares of Bancorp Common
Stock subject to the Assumed Stock Options, and shall use its reasonable efforts
to maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus contained therein) for so long as such Assumed
Stock Options remain outstanding.
Section 1.06. Certificate of Incorporation and By-laws of Bancorp.
At the Effective Time, the Certificate of Incorporation and By-laws of
Bancorp, amended for the purpose of changing the name of Bancorp to "Central
Jersey Bancorp," shall be the Certificate of Incorporation and By-laws of
Bancorp until thereafter amended in accordance with applicable law.
Section 1.07. Certificate of Incorporation and By-laws of Xxxxxxx.
At the Effective Time, the Certificate of Incorporation and By-laws of
Xxxxxxx shall be amended, if necessary, to give effect to the terms and
conditions of this Agreement and the Combination contemplated hereby.
Section 1.08. Tax Consequences.
It is intended that the Combination shall constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and that this Agreement shall
constitute a "plan of reorganization" for purposes of Sections 354 and 361 of
the Code.
Section 1.09. Stock Split.
As soon as is practicable after the execution of this Agreement by the
Parties, Bancorp shall effect a 6 for 5 stock split (the "Stock Split"). It is
estimated that there shall be approximately 1,860,876 shares of Bancorp Common
Stock outstanding immediately after the Stock Split is placed into effect.
6
Section 1.10. Board Composition and Structure; Officers.
As of the Effective Time:
(a) The Board of Directors of Bancorp shall be comprised of the twelve
(12) directors listed on Schedule 1.10(a).
(b) The Board of Directors of each of Xxxxxxx and MCBNA shall be comprised
of the nineteen (19) directors listed on Schedule 1.10(b); provided, however,
that it is the intention of the Parties for the size of the Board of Directors
of "Central Jersey Bank, National Association" will be reduced to eighteen
directors by December 31, 2005 and, assuming no change in the composition of
such Board of Directors prior to such reduction, the Board of Directors of
"Central Jersey Bank, National Association" immediately after such reduction
will have an equal number of representatives from the pre-Combination Xxxxxxx
and the pre-Combination Bancorp.
(c) The executive officers of Bancorp, Xxxxxxx and MCBNA shall be those
persons listed on Schedule 1.10(c).
(d) Each committee of Bancorp, Xxxxxxx and MCBNA shall have an equal
number of representatives from Xxxxxxx and Bancorp at least through December 31,
2005.
Through December 31, 2005, the chairperson of the Personnel Committee,
Compensation Committee, Advertisement Committee, Investment Committee,
Nominating Committee and ALCO Committee of any of Bancorp, Xxxxxxx or MCBNA will
be a representative of Xxxxxxx and the chairperson of the Executive Committee,
Expansion Committee, Ethics Committee, Loan Committee and Audit Committee of any
of Bancorp, Xxxxxxx and MCBNA will be a representative of Bancorp.
(e) The Executive Committee of Bancorp shall have an equal number of
representatives from Xxxxxxx and Bancorp at least through December 31, 2005. The
members of the Executive Committee of Bancorp shall serve as the members of the
Boards of Directors of MCB Investment Company and Xxxxxxx Investment
Corporation, Inc.. The officers of MCBNA and Xxxxxxx initially shall serve as
the officers of MCB Investment Company and Xxxxxxx Investment Corporation, Inc.
(f) (i) the Chairman of the Board of Bancorp, Xxxxxxx and MCBNA, (ii) the
Vice-Chairman of the Board of Bancorp, Xxxxxxx and MCBNA, and (iii) the
President and Chief Executive Officer of Bancorp, Xxxxxxx and MCBNA, each of
whom is listed on Schedule 1.10(a)(iii), will serve in such capacity for at
least two (2) years following the Closing Date; provided, however, that such
person can continue to serve in such capacity and, with respect to the Chairman
of the Board of Bancorp and Vice-Chairman of the Board of Bancorp, such persons
are nominated and then elected by the shareholders of Bancorp to serve on the
Board of Directors of Bancorp for such period. It is hereby understood and
agreed to by the Parties that the Parties will take all reasonable and
appropriate action to ensure that each of the Chairman of the Board of Bancorp,
the Vice-Chairman of the Board of Bancorp and the President and Chief Executive
Officer of Bancorp set forth on Schedule 1.10(a)(iii) serves in such capacity
for at least two (2) years following the Closing Date.
7
After the Effective Time, each director and executive officer of Bancorp,
Xxxxxxx and MCBNA shall hold office in accordance with the respective By-laws of
Bancorp, Xxxxxxx and MCBNA, as such By-laws may be amended from time to time.
ARTICLE II.
EXCHANGE OF SHARES
Section 2.01. Bancorp to Make Shares Available.
At or prior to the Effective Time, Bancorp shall deposit, or shall cause
to be deposited, with a bank or trust company reasonably acceptable to each of
Xxxxxxx and Bancorp (the "Exchange Agent"), for the benefit of the holders of
Xxxxxxx Certificates, certificates representing the shares of Bancorp Common
Stock, and cash in lieu of any fractional shares (such cash and certificates for
shares of Bancorp Common Stock, together with any dividends or distributions
with respect thereto, being referred to as the "Exchange Fund"), to be issued
pursuant to Section 1.03 and paid pursuant to Section 2.02 in exchange for
outstanding shares of Xxxxxxx Common Stock, except for Dissenting Xxxxxxx
Shares.
Section 2.02. Exchange of Shares.
(a) As soon as practicable after the Effective Time, the Exchange Agent
shall mail to each holder of record of one or more Xxxxxxx Certificates a letter
of transmittal in customary form as reasonably agreed to by the Parties (which
shall specify, among other things, that delivery shall be effected, and risk of
loss and title to the Xxxxxxx Certificates shall pass, only upon delivery of the
Xxxxxxx Certificates to the Exchange Agent) and instructions for surrendering
the Xxxxxxx Certificates in exchange for certificates representing the shares of
Bancorp Common Stock and any cash in lieu of fractional shares into which the
shares of Xxxxxxx Common Stock represented by such Xxxxxxx Certificate or
Xxxxxxx Certificates shall have been exchanged pursuant to this Agreement. Upon
proper surrender of a Xxxxxxx Certificate or Xxxxxxx Certificates to the
Exchange Agent for exchange and cancellation, together with such properly
completed letter of transmittal, duly executed, the holder of such Xxxxxxx
Certificate or Xxxxxxx Certificates shall be entitled to receive in exchange
therefor, as applicable, (i) a certificate representing the number of whole
shares of Bancorp Common Stock to which such holder of Xxxxxxx Common Stock
shall have become entitled pursuant to the provisions of Article I, (ii) a check
representing the amount of any cash in lieu of fractional shares which such
holder has the right to receive in respect of the Xxxxxxx Certificate or Xxxxxxx
Certificates surrendered pursuant to the provisions of this Article II, and
(iii) a check representing the amount of any dividends or distributions then
payable pursuant to Sections 2.02(b)(i), and the Xxxxxxx Certificate or Xxxxxxx
Certificates so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on any cash in lieu of fractional shares or on any unpaid
dividends and distributions payable to holders of Xxxxxxx Certificates.
(b) No dividends or other distributions declared with respect to Bancorp
Common Stock shall be paid to the holder of any unsurrendered Xxxxxxx
Certificate until the holder thereof shall surrender such Xxxxxxx Certificate in
accordance with this Article II. After the surrender of a Xxxxxxx Certificate in
accordance with this Article II, the record holder thereof shall be entitled
8
to receive (i) the amount of dividends or other distributions payable on Bancorp
Common Stock with a record date after the Effective Time theretofore paid,
without any interest thereon, with respect to the whole shares of Bancorp Common
Stock represented by such Xxxxxxx Certificate, and (ii) at the appropriate
payment date, the amount of dividends or other distributions payable on Bancorp
Common Stock with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender, with respect to shares of Bancorp
Common Stock exchanged for the shares of Xxxxxxx Common Stock represented by
such Xxxxxxx Certificate.
(c) If any certificate representing shares of Bancorp Common Stock is to
be issued in a name other than that in which the Xxxxxxx Certificate or Xxxxxxx
Certificates surrendered in exchange therefor is or are registered, it shall be
a condition to the issuance thereof that the Xxxxxxx Certificate or Xxxxxxx
Certificates so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) for transfer, and that the person requesting
such exchange shall pay to the Exchange Agent in advance of any transfer any
Taxes required by reason of the issuance of a certificate representing shares of
Bancorp Common Stock in any name other than that of the registered holder of the
Xxxxxxx Certificate or Xxxxxxx Certificates surrendered, or required for any
other reason, or shall establish to the satisfaction of the Exchange Agent that
such Tax has been paid or is not payable.
(d) After the Effective Time, the stock transfer books of Xxxxxxx shall be
closed as to holders of Xxxxxxx Common Stock immediately prior to the Effective
Time and no transfer of Xxxxxxx Common Stock by any such holder shall thereafter
be made or recognized other than to settle transfers of Xxxxxxx Common Stock
that occurred prior to the Effective Time and to effect the transfer of all
outstanding shares of Xxxxxxx Common Stock, except for Dissenting Xxxxxxx
Shares, to Bancorp. If, after the Effective Time, Xxxxxxx Certificates are
properly presented for transfer to the Exchange Agent, the shares of Xxxxxxx
Common Stock represented by such certificates (other than Xxxxxxx Dissenting
Shares) shall be cancelled and exchanged for the certificates representing
shares of Bancorp Common Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained in this Agreement,
no certificates or scrip representing fractional shares of Bancorp Common Stock
shall be issued upon the surrender of Xxxxxxx Certificates for exchange, no
dividend or distribution with respect to Bancorp Common Stock shall be payable
on or with respect to any fractional share, and such fractional share interests
shall not entitle the owner thereof to vote or to any other rights of a
shareholder of Bancorp. In lieu of the issuance of any such fractional share,
each holder of Xxxxxxx Common Stock exchanged pursuant to the Combination who
would otherwise have been entitled to receive a fraction of a share of Bancorp
Common Stock (after taking into account all Xxxxxxx Certificates delivered by
such holder), shall receive in lieu thereof and amount in cash (rounded to the
nearest cent, without interest) equal to such fractional part (rounded to the
nearest thousandth) of such Bancorp share, multiplied by the market value of one
share of Bancorp Common Stock determined at the Effective Time. The market value
of a share of Bancorp Common Stock at the Effective Time shall be the average of
the last sale price for the five (5) trading days prior to the Effective Time of
such Bancorp Common Stock, as reported by the NASDAQ SmallCap Market, ending on
the last business day preceding the Effective Time.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Xxxxxxx as of the first anniversary of the Effective Time shall
be delivered to Bancorp. Any
9
former stockholders of Xxxxxxx who have not theretofore complied with this
Article II shall thereafter look only to Bancorp for delivery of the shares of
Bancorp Common Stock, payment of the cash in lieu of any fractional shares and
any unpaid dividends and distributions on the Bancorp Common Stock deliverable
in respect of each share of Xxxxxxx Common Stock that such stockholder formerly
held as determined pursuant to this Agreement, in each case, without interest
thereon. Notwithstanding the foregoing, none of Bancorp, Xxxxxxx, the Exchange
Agent or any other Person shall be liable to any former holder of shares of
Xxxxxxx Common Stock for any amount delivered in good faith to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(g) In the event that any Xxxxxxx Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Xxxxxxx Certificate to be lost, stolen or destroyed and, if
reasonably required by Bancorp, the posting by such Person of a bond in such
amount as Bancorp may determine is reasonably necessary as indemnity against any
claim that may be made against it with respect to such Xxxxxxx Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed Xxxxxxx
Certificate the shares of Bancorp Common Stock and any cash in lieu of
fractional shares deliverable in respect thereof pursuant to this Agreement.
Section 2.03. Dissenting Xxxxxxx Shares.
(a) Any holders of Xxxxxxx Common Stock who dissent from the Combination
shall be entitled to payment for their shares ("Dissenting Xxxxxxx Shares") only
to the extent permitted by and in accordance with the provisions of The New
Jersey Banking Act of 1948, as amended (the "Banking Act"); provided, however,
that if, in accordance with the Banking Act, any Dissenting Xxxxxxx Shares shall
forfeit such right to payment for the Dissenting Xxxxxxx Shares, such shares
shall thereupon be deemed to have become exchangeable for, as of the Effective
Time, the right to receive the Combination Consideration without interest from
Bancorp for such shares. Holders of Dissenting Xxxxxxx Shares shall not, after
the Effective Time, be entitled to vote for any purpose or receive any dividends
or other distributions and shall be entitled only to such rights as are afforded
in respect of Dissenting Xxxxxxx Shares pursuant to the Banking Act.
(b) Xxxxxxx shall give Bancorp prompt notice of any written objections to
the Combination and any written demands for the payment of the fair value of any
shares of Xxxxxxx Common Stock under the Banking Act, withdrawals of such
demands, and any other instruments served pursuant to the Banking Act and
received by Xxxxxxx. Xxxxxxx shall not voluntarily make any payment with respect
to any demands for payment for Dissenting Xxxxxxx Shares and shall not, except
with prior written consent of Bancorp, settle or offer to settle any such
demands. Notwithstanding the foregoing, Xxxxxxx shall make all payments to its
stockholders with regard to the exercise of dissenter's rights.
10
Section 2.04. Dissenting Bancorp Shares.
(a) Any holders of Bancorp Common Stock who dissent from the Combination
shall be entitled to payment for such shares ("Dissenting Bancorp Shares") only
to the extent permitted by and in accordance with the provisions of the New
Jersey Business Corporation Act ("NJBCA"); provided, however, that if, in
accordance with the NJBCA, any holder of Dissenting Bancorp Shares shall forfeit
such right to payment of the fair value of such shares, such shares shall
continue to remain outstanding after the Effective Time. Holders of Dissenting
Bancorp Shares shall not, after the Effective Time, be entitled to vote for any
purpose or receive any dividends or other distributions and shall be entitled
only to such rights as are afforded in respect of Dissenting Bancorp Shares
pursuant to the NJBCA.
(b) Bancorp shall give Xxxxxxx prompt notice of any written objections to
the Combination and any written demands for the payment of the fair value of any
shares of Bancorp Common Stock under the NJBCA, withdrawals of such demands, and
any other instruments served pursuant to the NJBCA and received by Bancorp.
Bancorp shall not voluntarily make any payment with respect to any demands for
payment for Dissenting Bancorp Shares and shall not, except with prior written
consent of Xxxxxxx, settle or offer to settle any such demands.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Except as disclosed in a disclosure Schedule of Xxxxxxx attached hereto,
Xxxxxxx hereby represents and warrants to Bancorp as follows as of the date
hereof and as of all times up to and including the Effective Time (except as
otherwise expressly provided below or where the context otherwise expressly
indicates, for the purposes of the representations and warranties made in this
Article III and the other provisions of this Agreement, the term "Xxxxxxx" shall
mean Xxxxxxx and each Xxxxxxx Subsidiary (as hereinafter defined)):
Section 3.01. Corporate Organization.
(a) Xxxxxxx is a commercial bank duly organized, validly existing and in
good standing under the laws of the State of New Jersey. Xxxxxxx (i) has all
requisite corporate power and authority to own or lease all of its properties
and assets and to carry on its business as such business is now being conducted;
(ii) is duly licensed or qualified to do business in all such places where the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it make such qualification necessary;
and (iii) has in effect all federal, state and local governmental, regulatory
and other authorizations, permits and licenses necessary to own or lease its
properties and assets and to carry on its business as now conducted, except in
each of clauses (ii) and (iii) as would not be reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect (defined below) on
Xxxxxxx. True, correct and complete copies of the Certificate of Incorporation
and the By-laws of Xxxxxxx, each as amended to the date hereof, have been
delivered to Bancorp.
For purposes of this Agreement, the term "Material Adverse Effect," with
respect to any Party, shall mean any event, change or occurrence which, together
with any other event, change
11
or occurrence, has a material adverse impact on (i) the financial position,
business or results of operation or financial performance of such Party and its
Subsidiaries (as defined below), taken as a whole, or (ii) the ability of such
Party to perform its obligations under this Agreement or to consummate the
Combination and the other transactions contemplated by this Agreement; provided,
however, that with respect to clause (i), "Material Adverse Effect" shall not be
deemed to include the effects of (A) changes, after the date hereof, in GAAP (as
hereinafter defined) or regulatory accounting requirements applicable to banks
and their holding companies generally, (B) changes, after the date hereof, in
laws, rules or regulations of general applicability or interpretations thereof
by courts, administrative agencies, commissions or other governmental
authorities or instrumentalities (collectively, the "Governmental Entities" and
individually a "Governmental Entity"), (C) actions or omissions of a Party taken
with the prior written consent of the other or required hereunder, (D) changes,
after the date hereof, in general economic or market conditions affecting banks
or their holding companies generally, or (E) public disclosure of the
transactions contemplated hereby.
For purposes of this Agreement, the term "Subsidiary" of a Party shall
mean a bank, corporation, partnership, limited liability company or other
organization, whether incorporated or unincorporated, in which the Party owns,
directly or indirectly, five percent (5%) of more of the outstanding equity or
ownership interests thereof or is consolidated with the Party for financial
reporting purposes under GAAP (collectively, the "Subsidiaries").
(b) Each Subsidiary of Xxxxxxx (each an "Xxxxxxx Subsidiary" and
collectively, the "Xxxxxxx Subsidiaries") is duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization. Each Xxxxxxx Subsidiary (i) has all requisite corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as such business is now being conducted; (ii) is duly licensed or
qualified to do business in all such places where the nature of the business
being conducted by the Xxxxxxx Subsidiary or the character or location of the
properties and assets owned or leased by the Xxxxxxx Subsidiary make such
qualification necessary; and (iii) has in effect all federal, state and local
governmental, regulatory and other authorizations, permits and licenses
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted, except in each of clauses (ii) and (iii) as would not
be reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect on Xxxxxxx. True, correct and complete copies of the
incorporation or organizational documents, by-laws, and operating or partnership
agreements, as applicable, of the Xxxxxxx Subsidiaries, as amended to the date
hereof, have been delivered to Bancorp.
(c) The minute books of Xxxxxxx and each Xxxxxxx Subsidiary contain
complete and accurate records in all material respects of all meetings and other
corporate actions held or taken by their respective stockholders and Boards of
Directors (including all committees thereof).
Section 3.02. Capitalization.
(a) The authorized capital stock of Xxxxxxx consists of 7,500,000 shares
of common stock, par value $3.33333 per share, of which 1,971,361 shares as of
the date hereof are issued and outstanding (none of which is held in the
treasury of Xxxxxxx). As of the date hereof, none of the Xxxxxxx Common Stock
was reserved for issuance, except for 388,375 shares of Xxxxxxx
12
Common Stock reserved for issuance upon the exercise of Xxxxxxx Stock Options.
Except for the Xxxxxxx Stock Options, there are no outstanding options,
warrants, commitments or other rights or instruments to purchase or acquire any
shares of capital stock of Xxxxxxx, or any securities or rights convertible into
or exchangeable for shares of capital stock of Xxxxxxx. All of the issued and
outstanding shares of Xxxxxxx Common Stock have been duly authorized and validly
issued and all such shares are fully paid, nonassessable and free of preemptive
rights (except as the same may be afforded by applicable law). As of the date of
this Agreement, except pursuant to this Agreement and the Xxxxxxx Stock Option
Plans, Xxxxxxx does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Xxxxxxx capital stock or any other
securities representing the right to purchase or otherwise receive any shares of
Xxxxxxx capital stock. Xxxxxxx has furnished Bancorp with a list of the
aggregate number of Xxxxxxx Stock Options outstanding under the Xxxxxxx Stock
Option Plans (identified on Schedule 3.02(a)) as of March 31, 2004 and the
exercise price for such stock options. Since March 31, 2004 through the date
hereof, Xxxxxxx has not issued or awarded any options or other grants or awards
under the Xxxxxxx Stock Option Plans.
(b) Schedule 3.02(b) lists all Xxxxxxx Subsidiaries and indicates for each
Xxxxxxx Subsidiary as of the date of this Agreement its jurisdiction of
organization and the jurisdiction(s) wherein it is qualified to do business.
Except as set forth on Schedule 3.02(b), all of the issued and outstanding
shares of capital stock or other equity ownership interests of the Xxxxxxx
Subsidiaries are owned by Xxxxxxx or another Xxxxxxx Subsidiary, free and clear
of any liens, pledges, charges and security interests or similar encumbrances
(each a "Lien" and collectively, "Liens") and adverse claims thereto, and all of
such shares or equity ownership interests are duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights and restrictions
(other than those imposed by applicable federal and state securities laws). Each
Xxxxxxx Subsidiary does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of the Xxxxxxx Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of the Xxxxxxx Subsidiary. There are no
agreements or understandings with respect to the voting or disposition of any
shares of capital stock or other equity interests of any Xxxxxxx Subsidiary.
Xxxxxxx'x ownership interests in the Xxxxxxx Subsidiaries are in compliance with
all applicable laws, rules and regulations relating to direct investment in
equity ownership interests. No Xxxxxxx Subsidiary is an "insured depository
institution" as defined in the Federal Deposit Insurance Act, as amended, and
the applicable regulations thereunder.
Section 3.03. Authority; No Violation.
(a) Xxxxxxx has full corporate power and authority to execute and deliver
this Agreement and, subject to the approval of the stockholders of Xxxxxxx and
the receipt of the Consents of the Regulatory Authorities, to consummate the
transactions contemplated hereby. The Board of Directors of Xxxxxxx has
determined that this Agreement and the transactions contemplated hereby are in
the best interests of Xxxxxxx and its stockholders and has directed that this
Agreement and the transactions contemplated by this Agreement be submitted to
Xxxxxxx'x stockholders for adoption at a duly held meeting of such stockholders
and, except for the approval of this Agreement and the transactions contemplated
by this Agreement by the
13
affirmative vote of the holders of two-thirds of the outstanding shares of
Xxxxxxx Common Stock entitled to vote at such meeting, no other corporate
proceedings on the part of Xxxxxxx are necessary to approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Xxxxxxx and (assuming due authorization,
execution and delivery by Bancorp and subject to any review and approval of any
Regulatory Authority) constitutes a valid and binding obligation of Xxxxxxx,
enforceable against Xxxxxxx in accordance with its terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally, and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Xxxxxxx, the
consummation by Xxxxxxx of the transactions contemplated hereby, nor compliance
by Xxxxxxx with any of the terms or provisions hereof, will (i) violate any
provision of the Certificate of Incorporation or By-laws of Xxxxxxx, or the
Certificate of Incorporation, By-laws or any other formation document of any
Xxxxxxx Subsidiary, (ii) assuming that the Consents of the Regulatory
Authorities and approvals referred to herein are duly obtained, (A) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Xxxxxxx or its properties or assets, (B) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in creation of any Lien upon any of the respective properties or assets
of Xxxxxxx under any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Xxxxxxx is a party
or by which it or any of its properties or assets may be bound or affected,
except for such violations, conflicts, breaches or defaults that are not
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect on Xxxxxxx.
Section 3.04. Consents and Approvals.
(a) Except for (i) the filings required to be made with the SEC,
including, without limitation, a registration statement on Form S-4 (the "Form
S-4") and, as part thereof, a proxy statement relating to the meeting(s) of
Xxxxxxx'x stockholders and Bancorp's shareholders to be held in connection with
this Agreement and the transactions contemplated herein (the "Joint Proxy
Statement") and any similar filings which may be required by the FDIC, (ii) a
declaration of effectiveness of the Form S-4 by the SEC, (iii) any Consents,
authorizations, approvals, filings or exemptions required under the applicable
provisions of federal and state securities laws relating to the regulation of
broker-dealers, investment advisers or transfer agents, federal commodities laws
relating to the regulation of futures commission merchants and the rules and
regulations thereunder, the rules and regulations of any applicable industry
self-regulatory organization ("SRO"), the rules of the NASDAQ SmallCap Market
and OTC Bulletin Board, and consumer finance, mortgage banking and other similar
laws, (iv) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Bancorp Common Stock pursuant to this Agreement, (v)
the approval by the OCC, the FDIC and the New Jersey State Department of Banking
and Insurance of this Agreement, (vi) the approval by the Boards of Directors of
Bancorp and Xxxxxxx and the requisite vote of the stockholders of Xxxxxxx and
the shareholders of
14
Bancorp, and (vii) filings, if any, required on behalf of Bancorp with NASDAQ,
no corporate action or Consents of, approvals of or filings or registrations
with any Regulatory Authority or Governmental Entity is or are necessary in
connection with (A) the execution and delivery by Xxxxxxx of this Agreement and
(B) the consummation by Xxxxxxx of the Combination and the other transactions
contemplated by this Agreement.
Section 3.05. Reports.
(a) Xxxxxxx has timely filed all reports, registrations and statements,
together with any amendments required to be made with respect thereto, that it
was required to file since January 1, 2000, with all applicable Regulatory
Authorities, and all other reports and statements required to be filed by it
since January 1, 2000, and has paid all fees and assessments due and payable in
connection therewith, except where the failure to file such report, registration
or statement or to pay such fees and assessments is not reasonably likely to
have, either individually or in the aggregate, a Material Adverse Effect on
Xxxxxxx. Except for normal examinations conducted by a Regulatory Authority in
the ordinary course of the business of Xxxxxxx, no Regulatory Authority has
initiated or has pending any proceeding or, to the knowledge of Xxxxxxx,
investigation into the business or operations of Xxxxxxx since January 1, 2000,
except where such proceedings or investigation is not reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect on Xxxxxxx.
There (i) is no unresolved violation, criticism, or exception by any Regulatory
Authority with respect to any report or statement relating to any examinations
or inspections of Xxxxxxx, and (ii) has been no formal or informal inquiries by,
or disagreements or disputes with, any Regulatory Authority with respect to the
business, operations, policies or procedures of Xxxxxxx since January 1, 2000,
that are reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect on Xxxxxxx.
(b) Xxxxxxx has previously delivered to Bancorp copies of the call reports
of Xxxxxxx as of and for each of the years ended December 31, 2003, December 31,
2002 and December 31, 2001, and call reports for the quarter ended March 31,
2004, and Xxxxxxx shall deliver to Bancorp, as soon as practicable following the
preparation of additional call reports for each subsequent calendar quarter (or
other reporting period) or year, the call reports of Xxxxxxx as of and for such
subsequent calendar quarter (or other reporting period) or year (such call
reports, unless otherwise indicated, being hereinafter referred to collectively
as the "Xxxxxxx Regulatory Reports"). To the extent not prohibited by law,
Xxxxxxx has heretofore delivered or made available, or caused to be delivered or
made available, to Bancorp all reports and filings made or required to be made
by Xxxxxxx with the Regulatory Authorities, and will from time to time hereafter
furnish to Bancorp, upon filing or furnishing the same to the Regulatory
Authorities, all such reports and filings made after the date hereof with the
Regulatory Authorities. As of the respective dates of such reports and filings,
all such reports and filings did not and shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the Xxxxxxx
Regulatory Reports has been or will be prepared in all material respects in
accordance with regulatory accounting principles, as applicable, which
principles have been or will be consistently applied during the periods
involved, except as otherwise noted therein. Each of the Xxxxxxx Regulatory
Reports fairly presents or will fairly present the financial position of Xxxxxxx
as of the respective dates thereof
15
and fairly presents or will fairly present the results of operations of Xxxxxxx
for the respective periods therein set forth.
Section 3.06. Financial Statements.
(a) Xxxxxxx has previously delivered to Bancorp copies of the audited
consolidated financial statements of Xxxxxxx as of and for the years ended
December 31, 2003, December 31, 2002 and December 31, 2001, and unaudited
consolidated financial statements for the quarter ended March 31, 2004, and
Xxxxxxx shall deliver to Bancorp, as soon as practicable following the
preparation of additional financial statements for each subsequent calendar
quarter (or other reporting period) or year of Xxxxxxx, the additional
consolidated financial statements of Xxxxxxx as of and for such subsequent
calendar quarter (or other reporting period) or year (such financial statements,
unless otherwise indicated, being hereinafter referred to collectively as the
"Xxxxxxx Financial Statements").
(b) Each of the Xxxxxxx Financial Statements (including the related notes)
have been or will be prepared in all material respects in accordance with
Generally Accepted Accounting Principles of the United States of America
("GAAP"), which principles have been or will be consistently applied during the
periods involved, except as otherwise noted therein, and the books and records
of Xxxxxxx have been, are being, and will be maintained in all material respects
in accordance with applicable legal and accounting requirements and reflect only
actual transactions. Each of the Xxxxxxx Financial Statements (including the
related notes) fairly presents or will fairly present the financial position of
Xxxxxxx on a consolidated basis, as of the respective dates thereof and fairly
presents or will fairly present the results of operations of Xxxxxxx on a
consolidated basis for the respective periods therein set forth.
(c) Except for those liabilities that are reflected or reserved against on
the consolidated balanced sheet of Xxxxxxx dated March 31, 2004 and for
liabilities incurred in the ordinary course of business consistent with past
practice since such date, Xxxxxxx has not incurred any liability of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether due
or to become due) that has had or is reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on Xxxxxxx.
Section 3.07. Broker's Fees; Financial Advisor's Fees.
Neither Xxxxxxx nor any of its officers or directors has employed any
broker or finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with the Combination or related transactions
contemplated by this Agreement. However, Xxxxxxx has retained Xxxxxx Xxxxxxxxxx
Xxxxx LLC to provide financial advisory services and render a fairness opinion
with respect to the Combination and is obligated to pay the fees and expenses
for such services.
Section 3.08. Absence of Certain Changes or Events.
(a) Except as set forth in Schedule 3.08, since December 31, 2003, Xxxxxxx
has not incurred any obligation or liability (contingent or otherwise) that has
or might reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Xxxxxxx, except obligations and liabilities (i) which
are accrued or reserved against in the Xxxxxxx Financial
16
Statements or the Xxxxxxx Regulatory Reports, or reflected in the notes thereto,
or (ii) which were incurred after December 31, 2003, in the ordinary course of
business consistent with past practices. Since December 31, 2003, Xxxxxxx has
not incurred or paid any obligation or liability which would be material to the
business, assets, operations, financial condition or results of the operations
("Condition") of Xxxxxxx, except as may have been incurred or paid in the
ordinary course of business, consistent with past practices.
(b) Since December 31, 2003, there has not been (i) any declaration,
payment or setting aside of any dividend or distribution (whether in cash, stock
or property) in respect of Xxxxxxx Common Stock, other than the stock dividend
declared on June 11, 2004, or (ii) any change or any event involving a
prospective change in the Condition of Xxxxxxx, or a combination of any such
change(s) and any such event(s) which has had, or is reasonably likely to have,
a Material Adverse Effect on Xxxxxxx, including, without limitation, any change
in the administration or supervisory standing or rating of Xxxxxxx with any
Regulatory Authority, and no fact or condition exists as of the date hereof
which might reasonably be expected to cause any such event or change in the
future.
(c) Since December 31, 2003, no event or events have occurred that have
had or are reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect on Xxxxxxx.
(d) Since December 31, 2003 through and including the date of this
Agreement, Xxxxxxx has carried on its business in all material respects in the
ordinary course.
Section 3.09. Loan Portfolio.
Except as set forth in Schedule 3.09, all evidences of indebtedness in
original principal amount in excess of $500,000 reflected as assets in the
Xxxxxxx Financial Statements and the Xxxxxxx Regulatory Reports as of March 31,
2004, were as of such date in all respects the binding obligations of the
respective obligors named therein in accordance with their respective terms, and
were not subject to any defenses, setoffs, or counterclaims, except as may be
provided by bankruptcy, insolvency or similar laws or by general principles of
equity.
Section 3.10. Legal Proceedings; Agreements with Regulatory
Agencies.
(a) Except as set forth in Schedule 3.10, Xxxxxxx is not a party to any,
and there are no pending or, to the knowledge of Xxxxxxx, threatened, judicial,
administrative, arbitral or other proceedings, claims, actions, causes of action
or governmental or regulatory investigations against Xxxxxxx challenging the
validity of the transactions contemplated by this Agreement. There is no
proceeding, claim, action or governmental or regulatory investigation against
Xxxxxxx, no judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding or, to the knowledge of Xxxxxxx, threatened against Xxxxxxx which
has had, or is reasonably likely to have, a Material Adverse Effect on Xxxxxxx.
Xxxxxxx is not a party to any agreement, order or memorandum in writing by or
with any Regulatory Authority restricting the operations of Xxxxxxx, and no
Regulatory Authority has advised Xxxxxxx that such Regulatory Authority is
contemplating issuing or requesting the issuance of any such order or memorandum
in the future.
17
(b) Xxxxxxx (i) is not subject to any cease-and-desist or other order or
enforcement action issued by, (ii) is not a party to any written agreement,
consent agreement or memorandum of understanding with, (iii) is not a party to
any commitment letter or similar undertaking with, (iv) is not subject to any
order or directive by, (v) has not been ordered to pay any civil money penalty
by, (vi) has not been since January 1, 2000, a recipient of any supervisory
letter from, or (vii) since January 1, 2000, has not adopted any policies,
procedures or board resolutions at the request or suggestion of, any Regulatory
Agency or other Governmental Entity, that currently restricts in any material
respect the conduct of its business or that in any material manner relates to
its capital adequacy, its ability to pay dividends, its credit or risk
management policies, its management or its business, other than those of general
application that apply to similarly-situated financial institutions or their
subsidiaries (each item in this sentence, whether or not disclosed in Schedule
3.10, an "Xxxxxxx Regulatory Agreement"), nor has Xxxxxxx been advised since
January 1, 2000 by any Regulatory Agency or Governmental Entity that it is
considering issuing, initiating, ordering or requesting any such Xxxxxxx
Regulatory Agreement.
Section 3.11. Taxes and Tax Returns.
(a) Xxxxxxx has previously delivered or made available to Bancorp copies
of the federal, state and local income Tax returns of Xxxxxxx for the years
2003, 2002 and 2001 and all schedules and exhibits thereto, and such returns
have not been examined by the Internal Revenue Service or any other Taxing
authority. Except as reflected in Schedule 3.11, Xxxxxxx has duly filed in
correct form all federal, state and local information returns and Tax returns
required to be filed on or prior to the date hereof, and Xxxxxxx has duly paid
or made adequate provisions for the payment of all Taxes and other governmental
charges which are owed by Xxxxxxx to, or claimed to be due from it by, any
federal, state or local taxing authorities, whether or not reflected in such
returns, other than Taxes and other charges which (i) are not yet delinquent or
are being contested in good faith, or (ii) have not been finally determined and
have adequately been reserved against. The amounts set forth as liabilities for
Taxes on the Xxxxxxx Financial Statements and the Xxxxxxx Regulatory Reports are
sufficient, in the aggregate, for the payment of all unpaid federal, state and
local Taxes (including any interest or penalties thereon), whether or not
disputed, accrued or applicable, for the periods then ended, and have been
computed in accordance with GAAP. Xxxxxxx is not responsible for the Taxes of
any other individual, sole proprietorship, partnership, joint venture, limited
liability entity, trust, unincorporated organization, association, corporation,
institution, entity, or government (including any division, agency or department
thereof), and, as applicable, the successors, heirs and assigns of each (each a
"Person") under Treasury Regulation 1.1502-6 or any similar provision of
federal, state or foreign law.
(b) Except as disclosed in Schedule 3.11, Xxxxxxx has not executed an
extension or waiver of any statute of limitations on the assessment or
collection of any federal, state or local Tax due that is currently in effect,
and all deferred Taxes of Xxxxxxx, have been adequately provided for in the
Xxxxxxx Financial Statements.
(c) There are no material disputes pending, or claims asserted, for Taxes
or assessments upon Xxxxxxx for which Xxxxxxx does not have adequate reserves.
Xxxxxxx is not a party to and is not bound by any Tax sharing, allocation or
indemnification agreement or arrangement (other than such an agreement or
arrangement exclusively between or among
18
Xxxxxxx and any of the Xxxxxxx Subsidiaries). No disallowance of a deduction
under Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code"),
for employee remuneration of any amount paid or payable by Xxxxxxx under any
contract, plan, program or arrangement or understanding would be reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Xxxxxxx.
(d) There has not been an ownership change, as defined in Section 382(g)
of the Code, of Xxxxxxx that occurred during or after any taxable period in
which Xxxxxxx incurred an operating loss that carries over to any taxable period
ending after the fiscal year of Xxxxxxx immediately preceding the date of this
Agreement.
(e) (i) Proper and accurate amounts have been withheld by Xxxxxxx from its
employees and others for all prior periods in compliance in all material
respects with the Tax withholding provisions of all applicable federal, state
and local laws and regulations, and proper due diligence steps have been taken
in connection with back-up withholding; (ii) federal, state and local Tax
returns have been filed by Xxxxxxx for all periods for which returns were due
with respect to withholding, Social Security and unemployment Taxes or charges
due to any federal, state or local taxing authority; and (iii) the amounts shown
on such returns to be due and payable have been paid in full or adequate
provisions therefor have been included by Xxxxxxx in the Xxxxxxx Financial
Statements.
Section 3.12. Employee Benefit Plans.
(a) Xxxxxxx does not have or maintain any "employee benefit plan," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), except as described in Schedule 3.12(a) (collectively the
"Xxxxxxx Employee Benefit Plans" and individually an "Xxxxxxx Employee Benefit
Plan"). Xxxxxxx has, with respect to each Xxxxxxx Employee Benefit Plan,
delivered or made available to Bancorp true and complete copies of: (i) all plan
texts and agreements and related trust agreements or annuity contracts and any
amendments thereto; (ii) all summary plan descriptions and material employee
communications; (iii) the Form 5500 filed in each of the most recent actuarial
valuation (if any); (iv) the most recent annual and periodic accounting of plan
assets; (v) if the Xxxxxxx Employee Benefit Plan is intended to qualify under
Section 401(a) or 403(a) of the Code, the most recent determination letter
received from the Internal Revenue Service; and (vi) all material communications
with any Governmental Entity (including, without limitation, the Department of
Labor, Internal Revenue Service and the Pension Benefit Guaranty Corporation
("PBGC")).
(b) Except as described in Schedule 3.12(b), no Xxxxxxx Employee Benefit
Plan is a defined benefit plan. None of Xxxxxxx nor any pension plan maintained
by it has incurred any liability to the PBGC or the Internal Revenue Service
with respect to any pension plan qualified under Section 401 of the Code, except
liabilities to the PBGC pursuant to Section 4007 of ERISA, all of which have
been fully paid. No reportable event under Section 4043(b) of ERISA (including
events waived by PBGC regulation) has occurred with respect to any such pension
plan.
19
(c) Xxxxxxx has not incurred any liability under Section 4201 of ERISA for
a complete or partial withdrawal from, or agreed to participate in, any
multi-employer plan, as such term is defined in Section 3(37) of ERISA.
(d) All Xxxxxxx Employee Benefit Plans comply with the provisions of ERISA
and the Code that are applicable, or intended to be applicable, including, but
not limited to, COBRA (as defined below), HIPAA (as defined below) and any
applicable similar state law. Xxxxxxx has no material liability under any
Xxxxxxx Employee Benefit Plan that is not reflected in the Xxxxxxx Financial
Statements or the Xxxxxxx Regulatory Reports. Neither Xxxxxxx, any Xxxxxxx
Employee Benefit Plan or any employee, administrator or agent thereof, is or has
been in violation of the transaction code set rules under HIPAA ss.ss.1172-1174
or the HIPAA privacy rules under 45 CFR Part 160 and subparts A and E of Part
165. No penalties have been imposed on Xxxxxxx, any Xxxxxxx Employee Benefit
Plan, or any employee, administrator or agent thereof, under HIPAA ss.1176 or
ss.1177.
(e) For purposes of this Agreement, "COBRA" means the provision of Section
4980B of the Code and the regulations thereunder, and Part 6 of the Subtitle B
of Title I of ERISA and any regulations thereunder, and "HIPAA" means the
provisions of the Code and ERISA as enacted by the Health Insurance Portability
and Accountability Act of 1996.
(f) No prohibited transaction (which shall mean any transaction prohibited
by Section 406 of ERISA and not exempt under Section 408 of ERISA) has occurred
with respect to any Xxxxxxx Employee Benefit Plan which would result in the
imposition, directly or indirectly, of an excise Tax under Section 4975 of the
Code or a civil penalty under Section 502(i) of ERISA; and no actions have
occurred which could result in the imposition of a penalty under any section or
provision of ERISA.
(g) No Xxxxxxx Employee Benefit Plan which is a defined benefit pension
plan has any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan exceeds the plan's "benefit liabilities," as that term is defined in
Section 4001(a)(16) of ERISA, when determined under actuarial factors that would
apply if the plan terminated in accordance with all applicable legal
requirements.
(h) Except as described in Schedule 3.12(h), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment or obligation (including, without
limitation, severance, bonus, deferred compensation, retirement, unemployment
compensation, golden parachute or otherwise) becoming due to any director or any
officer or employee of Xxxxxxx under any Xxxxxxx Employee Benefit Plan or
otherwise, (ii) increase any benefits or obligations otherwise payable under any
Xxxxxxx Employee Benefit Plan, or (iii) result in any acceleration of the time
of payment or vesting of any such benefits or obligations.
(i) No Xxxxxxx Employee Benefit Plan is a multiemployer plan as defined in
Section 414(f) of the Code or Section 3(37) or 4001(a)(3) of ERISA. Xxxxxxx has
never been a party to or participant in a multiemployer plan.
20
(j) There are no actions liens, suits or claims pending or threatened
(other than routine claims for benefits) with respect to any Xxxxxxx Employee
Benefit Plan or against the assets of any Xxxxxxx Employee Benefit Plan. No
assets of Xxxxxxx are subject to any Lien under Section 302(f) of ERISA or
Section 12(n) of the Code.
(k) Each Xxxxxxx Employee Benefit Plan which is intended to qualify under
Section 401(a) or 403(a) of the Code so qualifies and its related trust is
exempt from taxation under Section 501(a) of the Code. No event has occurred or
circumstance exists that will or could give rise to a disqualification or loss
of tax-exempt status of any such plan or trust.
(l) No Xxxxxxx Employee Benefit Plan is a multiple employer plan within
the meaning of Section 413(c) of the Code or Section 4063, 4064, or 4066 of
ERISA. No Xxxxxxx Employee Benefit Plan is a multiple employer welfare
arrangement as defined in Section 3(40) of ERISA.
(m) Each Xxxxxxx Employee Benefit Plan that is an employee pension benefit
plan as defined in Section 3(2) of ERISA, and not qualified under Section 401(a)
or 403(a) of the Code, is exempt from Part 2, 3 and 4 of Title I of ERISA as an
unfunded plan that is maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly-compensation employees,
pursuant to Section 201(2), 301(a)(3) and 401(a)(1) of ERISA. Except as
disclosed on Schedule 3.12(m), no assets of Xxxxxxx are allocated to or held in
a grantor trust or "rabbi trust" or similar funding vehicle.
(n) Except as set forth on Schedule 3.12(n), no Xxxxxxx Employee Benefit
Plan provides benefits to any current or former employee of Xxxxxxx following
the retirement or other termination of service (other than coverage mandated by
COBRA, the cost of which is fully paid by the current or former employee or his
or her dependents). Any such Xxxxxxx Employee Benefit Plan may be amended or
terminated at any time by unilateral action of Xxxxxxx.
(o) With respect to each Xxxxxxx Employee Benefit Plan, there are no
funded benefit obligations for which contributions have not been made or
properly accrued and there are no unfunded benefit obligations that have not
been accounted for by reserves or otherwise properly footnoted in accordance
with GAAP on the Xxxxxxx Financial Statements.
Section 3.13. Title and Related Matters.
(a) Xxxxxxx has good title, and as to owned real property, has good and
marketable title in fee simple absolute, to all assets and properties, real or
personal, tangible or intangible, reflected as owned by or leased or subleased
by or carried under its name on the Xxxxxxx Financial Statements or the Xxxxxxx
Regulatory Reports or acquired subsequent thereto (except to the extent that
such assets and properties have been disposed of for fair value in the ordinary
course of business since December 31, 2003), free and clear of all Liens, except
for (i) those Liens reflected in the Xxxxxxx Financial Statements and the
Xxxxxxx Regulatory Reports, (ii) statutory Liens for amounts not yet delinquent
or which are being contested in good faith, and (iii) Liens that are not in the
aggregate material to the Condition of Xxxxxxx.
(b) All agreements pursuant to which Xxxxxxx leases, subleases or licenses
material real or material personal properties from others are valid, binding and
enforceable in accordance with their respective terms, and there is not, under
any of such leases or licenses, any existing
21
default or event of default, or any event which, with notice or lapse of time,
or both, would constitute a default or force majeure, or provide the basis for
any other claim of excusable delay or nonperformance, except for defaults which,
individually or in the aggregate, would not have a Material Adverse Effect on
Xxxxxxx. Xxxxxxx shall have all right, title and interest as a lessee under the
terms of each lease or sublease, free and clear of all Liens, claims or
encumbrances (other than the rights of the lessor) as of the Effective Time.
(c) Except as set forth in Schedule 3.13(c), (i) all of the buildings,
structures and fixtures owned, leased or subleased by Xxxxxxx are in good
operating condition and repair, subject only to ordinary wear and tear and/or
minor defects which do not interfere with the continued use thereof in the
conduct of normal operations, and (ii) all of the material personal properties
owned, leased or subleased by Xxxxxxx are in good operating condition and
repair, subject only to ordinary wear and tear and/or minor defects which do not
interfere with the continued use thereof in the conduct of normal operations.
Section 3.14. Real Estate.
(a) Schedule 3.14(a) identifies each parcel of real estate or interest
therein owned, leased or subleased by Xxxxxxx or in which Xxxxxxx has any
ownership or leasehold interest.
(b) Schedule 3.14(b) lists or otherwise describes each and every written
or oral lease or sublease, together with the current name and address of the
landlord or sublandlord and the landlord's property manager (if any), under
which Xxxxxxx is the lessee of any real property and which related in any manner
to the operation of the business of Xxxxxxx.
(c) Xxxxxxx has not violated, and is not currently in violation of, any
law, regulation or ordinance relating to the ownership or use of the real estate
and real estate interests described in Schedule 3.14(a) and Schedule 3.14(b)
including, but not limited to, any law, regulation or ordinance relating to
zoning, building, occupancy, environmental or comparable matter.
(d) As to each parcel of real property owned or used by Xxxxxxx, there are
no pending or, to the knowledge of Xxxxxxx, threatened condemnation proceedings,
litigation proceedings or mechanic's or materialmen's Liens.
Section 3.15. Environmental Matters.
(a) Each of Xxxxxxx, the Xxxxxxx Participation Facilities (as defined
below), and the Xxxxxxx Loan Properties (as defined below) are, and have been,
in material compliance, and there are no present circumstances that would
prevent or interfere with the continuation of such material compliance, with all
applicable federal, state and local laws, including common law, rules,
regulations and ordinances, and with all applicable decrees, orders and
contractual obligations, relating to pollution or the protection of the
environment or the discharge of, or exposure to, Hazardous Materials (as defined
below) in the environment or workplace.
As used herein, the term "Xxxxxxx Participation Facility" shall mean any
facility in which Xxxxxxx has engaged in Participation in the Management (as
defined in 40 C.F.R. ss.300.1100(c)) of such facility, and, where required by
the context, includes the owner or operator of such facility, but only with
respect to such facility (collectively, the "Xxxxxxx Participation Facilities").
22
As used herein, the term "Xxxxxxx Loan Property" shall mean any property
owned by Xxxxxxx or in which Xxxxxxx holds a security interest, and, where
required by the context, includes the owner or operator of such property, but
only with respect to such property (collectively, the "Xxxxxxx Loan
Properties").
(b) There is no litigation pending or, to the knowledge of Xxxxxxx,
threatened before any Governmental Entity in which Xxxxxxx or any Xxxxxxx
Participation Facility has been or, with respect to threatened litigation, may
be, named as defendant (i) for alleged noncompliance (including by any
predecessor) with respect to any Environmental Law (as defined below) or (ii)
relating to the release into the environment of any Hazardous Material, whether
or not occurring at, on or involving a site owned, leased or operated by Xxxxxxx
or any Xxxxxxx Participation Facility.
As used herein, the term "Environmental Law" means any applicable federal,
state or local law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree or injunction relating
to (i) the protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water, groundwater,
drinking water supply, surface soil, subsurface soil, plant and animal life or
any other natural resource), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of any substance presently listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether
by type or by substance as a component.
As used herein, the term "Hazardous Material" means any pollutant,
contaminant, or hazardous substance within the meaning of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et
seq., or any similar federal, state or local law. Hazardous Material shall
include, but not be limited to, (i) any hazardous substance, hazardous material,
hazardous waste, regulated substance, or toxic substance (as those terms are
defined by any applicable Environmental Laws), and (ii) any chemicals,
pollutants, contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and any
polychlorinated biphenyls) (collectively, "Hazardous Materials").
(c) There is no litigation pending or, to the knowledge of Xxxxxxx,
threatened before any Governmental Entity in which any Xxxxxxx Loan Property (or
Xxxxxxx in respect of such Xxxxxxx Loan Property) has been or, with respect to
threatened litigation, may be, named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on or involving an Xxxxxxx Loan
Property.
(d) To the knowledge of Xxxxxxx, there is no reasonable basis for any
litigation of a type described in Section 3.15(b) and Section 3.15(c) of this
Agreement.
(e) During the period of (i) ownership or operation by Xxxxxxx of any of
its current properties, (ii) Participation by Xxxxxxx in the Management of any
Xxxxxxx Participation Facility, or (iii) holding by Xxxxxxx of a security
interest in any Xxxxxxx Loan Property, there have been no releases of Hazardous
Material in, on, under or affecting such properties.
23
(f) Prior to the period of (i) ownership or operation by Xxxxxxx of any of
its current properties, (ii) Participation by Xxxxxxx in the Management of any
Xxxxxxx Participation Facility, or (iii) holding by Xxxxxxx of a security
interest in any Xxxxxxx Loan Property, to the knowledge of Xxxxxxx, there were
no releases of Hazardous Material or oil in, on, under or affecting any such
property, Xxxxxxx Participation Facility or Xxxxxxx Loan Property.
Section 3.16. Commitments and Contracts.
(a) Except as set forth in Schedule 3.16(a), Xxxxxxx is not a party to or
bound by any contract, arrangement, commitment or understanding (whether written
or oral) (i) that is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been disclosed to Bancorp, (ii) that would materially
restrict the conduct of any material line of business of Xxxxxxx upon
consummation of the Combination, (iii) with or to a labor union or guild
(including any collective bargaining agreement), or (iv) any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the execution of this Agreement, the occurrence of any
stockholder approval or the consummation of any of the transactions contemplated
by this Agreement, or the value of any of the benefits of which will be
calculated on the basis of or affected by any of the transactions contemplated
by this Agreement. Each contract, arrangement, commitment or understanding of
the type described in this Section 3.16(a), whether or not set forth in a
Schedule attached hereto, is referred to as an "Xxxxxxx Contract," and Xxxxxxx
does not know of, and has received no notice of, any violation of the above by
any of the other parties thereto that is reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on Xxxxxxx.
(b) With such exceptions that are not reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on Xxxxxxx, (i) each
Xxxxxxx Contract is valid and binding on Xxxxxxx, and is in full force and
effect, (ii) Xxxxxxx has in all material respects performed all obligations
required to be performed by it to date under each Xxxxxxx Contract, and (iii) no
event or condition exists that constitutes or, after notice or lapse of time or
both, will constitute, a material default on the part of Xxxxxxx, or constitute
a force majeure, or provide the basis for any other claim of excusable delay or
non-performance under such Xxxxxxx Contract.
(c) Except as set forth in Schedule 3.16(c), Xxxxxxx is not a party or
subject to any of the following (whether written or oral, express or implied):
(i) Any employment contract or understanding (including any
understandings or obligations with respect to severance or
termination pay liabilities or fringe benefits) with any
present or former officer, director, employee, including in
any such Person's capacity as a consultant (other than those
which are terminable at will without any further amount being
payable thereunder);
(ii) Any labor contract or agreement with any labor union;
(iii) Any contract or agreement which limits the ability of Xxxxxxx
to compete in any line of business or which involves any
restriction of the geographical
24
area in which Xxxxxxx may carry on its business (other than as
may be required by law or applicable regulatory authorities);
(iv) Any lease (other than real estate leases described on Schedule
3.14) or other agreements or contracts with annual payments
aggregating $50,000 or more; or
(v) Any other contract or agreement which would be required to be
disclosed in reports filed by Xxxxxxx with the New Jersey
Department of Banking and Insurance or the FDIC and which has
not been so disclosed.
(d) Except as set forth on Schedule 3.16(d), (i) neither the execution of
this Agreement nor the consummation of the transactions contemplated hereby will
result in termination of any of the material service contracts (including
leases, agreements or licenses) to which Xxxxxxx is a party ("Xxxxxxx Service
Contracts"), or modification or acceleration of any of the terms of such Xxxxxxx
Service Contracts; and (ii) no Consents are required to be obtained and no
notices are required to be given in order for the Xxxxxxx Service Contracts to
remain effective, without any modification or acceleration of any of the terms
thereof, following the consummation of the transactions contemplated by this
Agreement.
Section 3.17. Regulatory, Accounting and Tax Matters.
Xxxxxxx has not taken or agreed to take any action and has no knowledge of
any fact nor has it agreed to any circumstance that would (a) materially impede
or delay receipt of any Consent of any Regulatory Authorities required to
consummate the transactions contemplated by this Agreement, including matters
relating to the Community Reinvestment Act, 12 X.X.X.xx. 2901 (the "Community
Reinvestment Act") and protests thereunder; or (b) prevent the transactions
contemplated by this Agreement from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code.
Section 3.18. Registration Obligations.
Except with respect to obligations set forth on Schedule 3.18, Xxxxxxx is
not under any obligation, contingent or otherwise, which will survive the
Combination to register any of its securities under the Securities Act or any
state securities laws.
Section 3.19. Antitakeover Provisions.
Xxxxxxx has taken all actions required to exempt Xxxxxxx, this Agreement,
and the Combination from any provisions of an antitakeover nature contained in
its organizational documents and the provisions of any federal or state
"antitakeover," "fair price," "moratorium," "control share acquisition" or
similar laws or regulations.
Section 3.20. Insurance.
Xxxxxxx is presently insured as set forth on Schedule 3.20, and during
each of the past three calendar years has been insured, for such amounts against
such risks as companies or institutions engaged in a similar business would, in
accordance with good business practice,
25
customarily be insured. To the knowledge of Xxxxxxx, the policies of fire,
theft, liability and other insurance maintained with respect to the assets or
businesses of Xxxxxxx provide adequate coverage against loss, and the fidelity
bonds in effect as to which Xxxxxxx is named an insured are sufficient for their
purpose.
Section 3.21. Labor.
(a) No work stoppage involving Xxxxxxx is pending as of the date hereof
nor, to the knowledge of Xxxxxxx, threatened. Xxxxxxx is not involved in, or, to
the knowledge of Xxxxxxx, threatened with or affected by, any proceeding
asserting that Xxxxxxx has committed an unfair labor practice, or any labor
dispute, arbitration, lawsuit or administrative proceeding which might
reasonably be expected to have a Material Adverse Effect on Xxxxxxx. No union
represents or claims to represent any employees of Xxxxxxx, and, to the
knowledge of Xxxxxxx, no labor union is attempting to organize employees of
Xxxxxxx.
(b) Xxxxxxx has made available to Bancorp a true and complete list of all
employees of Xxxxxxx as of the date hereof, together with the employee position,
title, salary and date of hire. Schedule 3.21(b) sets forth a true and complete
list of each benefit or compensation plan, arrangement or agreement, and any
material bonus, incentive, deferred compensation, vacation, stock purchase,
stock option, severance, employment, change of control or fringe benefit plan,
program or agreement that is maintained, or contributed to, for the benefit of
current or former directors or employees of Xxxxxxx or with respect to which
Xxxxxxx may, directly or indirectly, have any liability, as of the date of this
Agreement. Except as set forth on Schedule 3.21(b), the consummation of the
transactions contemplated hereby will not cause Xxxxxxx to incur or suffer any
liability relating to, or obligation to pay, severance, termination or other
payments to any person or entity. Except as set forth on Schedule 3.21(b)
hereto, no employee of Xxxxxxx has any contractual right to continued employment
by Xxxxxxx.
(c) Xxxxxxx is in compliance with all applicable law and regulations
relating to employment or the workplace, including, without limitation,
provisions relating to wages, hours, collective bargaining, safety and health,
work authorization, equal employment opportunity, immigration and the
withholding of Taxes, unemployment compensation, workers compensation, employee
privacy and right-to-know and social security contributions.
(d) Except as set forth on Schedule 3.21(d) hereto, there has not been,
there is not presently pending or existing and there is not threatened any
proceeding against or affecting Xxxxxxx relating to the alleged violation of any
legal requirement pertaining to labor relations or employment matters, including
any charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission or any comparable
governmental body.
Section 3.22. Compliance with Applicable Laws.
Xxxxxxx has conducted its business in accordance with all applicable
federal, state and local laws, regulations and orders, and is in material
compliance with such laws, regulations and orders. Except as disclosed in
Schedule 3.22:
26
(a) Xxxxxxx is not in violation of any laws, orders or permits applicable
to its business or the employees or agents or representatives conducting its
business (other than where such violation will not, alone or in the aggregate,
have a Material Adverse Effect on Xxxxxxx).
(b) Xxxxxxx has not received a notification or communication from any
Governmental Entity or any Regulatory Authority or the staff thereof (i)
asserting that Xxxxxxx is not in compliance with any laws or orders which such
Governmental Entity or Regulatory Authority enforces (other than where such
noncompliance will not, alone or in the aggregate, have a Material Adverse
Effect on Xxxxxxx), (ii) threatening to revoke any permit or license (other than
licenses or permits the revocation of which will not, alone or in the aggregate,
have a Material Adverse Effect on Xxxxxxx), (iii) requiring Xxxxxxx to enter
into any cease and desist order, formal agreement, commitment or memorandum of
understanding, or to adopt any resolutions or similar undertakings, or (iv)
directing, restricting or limiting, or purporting to direct, restrict or limit
in any material manner, the operations of Xxxxxxx, including, without
limitation, any restrictions on the payment of dividends, or that in any manner
relates to such entity's capital adequacy, credit policies, management or
business.
(c) Except as is not reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect on Xxxxxxx, Xxxxxxx has properly
administered all accounts for which it acts as a fiduciary, including accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents, applicable state and federal law and regulation and common
law. None of Xxxxxxx, or any director, officer or employee of Xxxxxxx, has
committed any breach of trust or fiduciary duty with respect to any such
fiduciary account that is reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect on Xxxxxxx, and the accountings for
each such fiduciary account are true and correct and accurately reflect the
assets of such fiduciary account.
(d) Xxxxxxx is not aware of, has not been advised of, or has no reason to
believe that any facts or circumstances exist, which would cause Xxxxxxx (i) to
be deemed to be operating in violation in any material respect of the federal
Bank Secrecy Act, as amended, and its implementing regulations (31 C.F.R. Part
103) (the "Bank Secrecy Act"), the USA PATRIOT Act of 2001, Public Law 107-56
(the "USA PATRIOT Act"), and all regulations promulgated thereunder, any order
issued with respect to anti-money laundering by the U.S. Department of the
Treasury's Office of Foreign Assets Control, or any other applicable anti-money
laundering statue, rule or regulation; or (ii) to be deemed not to be in
satisfactory compliance in any material respect with the applicable privacy of
customer information requirements contained in any federal and state privacy
laws and regulations, including, without limitation, Title V of the
Xxxxx-Xxxxx-Xxxxxx Act of 1999 and the regulations promulgated thereunder, as
well as the provisions of the information security program adopted by Xxxxxxx
pursuant to 12 C.F.R. Part 570. Furthermore, the Board of Directors of Xxxxxxx
has adopted and Xxxxxxx has implemented an anti-money laundering program that
contains adequate and appropriate customer identification verification
procedures that comply with Section 326 of the USA PATRIOT Act and such
anti-money laundering program meets the requirements in all material respects of
Section 352 of the USA PATRIOT Act and the regulations thereunder.
27
Section 3.23. Transactions with Management.
Except for (a) deposits, all of which are on terms and conditions
comparable to those made available to other customers of Xxxxxxx at the time
such deposits were entered into, (b) arm's length loans to employees entered
into in the ordinary course of business, (c) the agreements listed on Schedule
3.16, (d) obligations under the Xxxxxxx Employee Benefit Plans set forth in
Schedule 3.12, and (e) the items described on Schedule 3.23 and any loans or
deposit agreements entered into in the ordinary course with customers of
Xxxxxxx, there are no contracts with or commitments to directors, officers or
employees involving the expenditure of more than $5,000 as to any one
individual, including, with respect to any business directly or indirectly
controlled by any such Person, or $5,000 for all such contracts for commitments
in the aggregate for all such individuals.
Section 3.24. Interest Rate Risk Management Instruments.
Except as would not be reasonably likely to have, either individually or
in the aggregate, a Material Adverse Effect on Xxxxxxx, (a) all interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of Xxxxxxx or for
the account of a customer of Xxxxxxx, were entered into in the ordinary course
of business consistent with past practice and in accordance with prudent banking
practice and applicable rules, regulations and policies of any applicable
Regulatory Authority and with counterparties believed to be financially
responsible at the time and are legal, valid and binding obligations of Xxxxxxx
enforceable against it in accordance with their terms (except as may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
the rights of creditors generally and the availability of equitable remedies),
and are in full force and effect, and (b) to Xxxxxxx'x knowledge, there are no
breaches, violations or defaults or allegations or assertions of such by any
party thereunder.
Section 3.25. Deposits.
None of the deposits of Xxxxxxx are "brokered" deposits as such term is
defined in the rules and regulations of the FDIC or are subject to any
encumbrance, legal restraint or other legal process (other than garnishments,
pledges, setoff 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 (as defined below) of Xxxxxxx, except as set forth in
Schedule 3.25.
As used in this Agreement, an "Affiliate" of a Person shall mean (i) any
other Person, directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with such Person, (ii) any
officer, director, partner, employer or direct or indirect beneficial owner of
ten percent (10%) or greater equity or voting interest of such Person, or (iii)
any other Persons for which a Person described in clause (ii) acts in any such
capacity.
Section 3.26. Accounting Controls; Disclosure Controls.
(a) Xxxxxxx has devised and maintained systems of internal accounting
control sufficient to provide reasonable assurances that: (i) all material
transactions are executed in accordance with general or specific authorization
of the Board of Directors and the duly authorized executive officers of Xxxxxxx;
(ii) all material transactions are recorded as necessary to
28
permit the preparation of financial statements in conformity with GAAP
consistently applied with respect to institutions such as Xxxxxxx or any other
criteria applicable to such financial statements, and to maintain proper
accountability for items therein; (iii) access to the material properties and
assets of Xxxxxxx is permitted only in accordance with general or specific
authorization of the Board of Directors and the duly authorized executive
officers of Xxxxxxx; and (iv) the recorded accountability for items is compared
with the actual levels at reasonable intervals and appropriate actions taken
with respect to any differences.
(b) To the extent required, Xxxxxxx has in place "disclosure controls and
procedures" as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to allow Xxxxxxx'x
management to make timely decisions regarding required disclosures and to make
the certifications of the Chief Executive Officer and Chief Financial Officer of
Xxxxxxx required under the Exchange Act.
Section 3.27. Xxxxxxx Information.
None of the information relating to Xxxxxxx to be included in the Form
S-4, in the Joint Proxy Statement which is to be mailed to the stockholders of
Xxxxxxx and the shareholders of Bancorp in connection with the solicitation of
their approval of this Agreement, or in any other document filed with any other
Regulatory Authority in connection with the transactions contemplated by this
Agreement, will be false or misleading with respect to any material fact, or
omit to state any material fact necessary in order to make a statement therein
not false or misleading. The portions of the Joint Proxy Statement that relate
to Xxxxxxx will comply in all material respects with the provisions of the
Exchange Act, and the rules and regulations thereunder, and the rules,
requirements and approvals of the FDIC.
Section 3.28. Deposit Insurance.
The deposit accounts of Xxxxxxx are insured by the FDIC in accordance with
the provisions of the Federal Deposit Insurance Act; Xxxxxxx has paid all
regular premiums and special assessments and filed all reports required under
the Federal Deposit Insurance Act.
Section 3.29. Intellectual Property.
Xxxxxxx owns or possesses valid and binding licenses and other rights to
use all patents, copyrights, trade secrets, trade names, servicemarks,
trademarks, computer software and other intellectual property used in its
business, if any, Xxxxxxx has not received any notice of conflict with respect
thereto that asserts the right of others.
Section 3.30. Untrue Statements and Omissions.
No representation or warranty contained in Article III of this Agreement
or in the Schedules attached hereto with respect to information concerning
Xxxxxxx contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
29
Section 3.31. Reorganization.
As of the date of this Agreement, Xxxxxxx is not aware of any fact or
circumstance that could reasonably be expected to prevent the Combination from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code.
Section 3.32. Fairness Opinion.
Prior to the execution of this Agreement, Xxxxxxx received an opinion from
Xxxxxx Xxxxxxxxxx Xxxxx LLC to the effect that as of the date thereof and based
upon and subject to the matters set forth therein, the Combination Consideration
is fair to the stockholders of Xxxxxxx from a financial point of view. Such
opinion has not been amended or rescinded as of the date of this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BANCORP
Except as disclosed in a disclosure Schedule of Bancorp attached hereto,
Bancorp hereby represents and warrants to Xxxxxxx as follows as of the date
hereof and as of all times up to and including the Effective Time (except as
otherwise expressly provided below or where the context otherwise expressly
indicates, for the purposes of the representations and warranties made in this
Article IV and the other provisions of this Agreement, the term "Bancorp" shall
mean Bancorp and each Bancorp Subsidiary (as hereinafter defined)):
Section 4.01. Corporate Organization.
(a) Bancorp is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey. Bancorp (i) has all
requisite corporate power and authority to own or lease all of its properties
and assets and to carry on its business as such business is now being conducted;
(ii) is duly licensed or qualified to do business in all such places where the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it make such qualification necessary;
and (iii) has in effect all federal, state and local governmental, regulatory
and other authorizations, permits and licenses necessary to own or lease its
properties and assets and to carry on its business as now conducted, except in
each of clauses (i) through (iii) as would not be reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect on Bancorp.
True, correct and complete copies of the Certificate of Incorporation and the
By-laws of Bancorp, each as amended to the date hereof, have been delivered to
Xxxxxxx.
(b) MCBNA is a national association duly organized, validly existing and
in good standing under the laws of the United States of America. MCBNA: (i) has
all requisite corporate power and authority to own or lease all of its
properties and assets and to carry on its business as such business is now being
conducted; (ii) is duly licensed or qualified to do business in all such places
where the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it make such qualification
necessary; and (iii) has in effect all federal, state and local governmental,
regulatory and other authorizations, permits and licenses necessary to own or
lease its properties and assets and to carry on its business as now
30
conducted, except in each of clauses (i) through (iii) as would not be
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect on MCBNA. True, correct and complete copies of the Articles of
Association and the By-laws of MCBNA, each as amended to the date hereof, have
been delivered to Xxxxxxx.
(c) Each other Subsidiary of Bancorp (each a "Bancorp Subsidiary" and
together with MCBNA, the "Bancorp Subsidiaries") is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each Bancorp Subsidiary: (i) has all requisite
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as such business is now being conducted; (ii) is
duly licensed or qualified to do business in all such places where the nature of
the business being conducted by the Bancorp Subsidiary or the character or
location of the properties and assets owned or leased by the Bancorp Subsidiary
make such qualification necessary; and (iii) has in effect all federal, state
and local governmental, regulatory and other authorizations, permits and
licenses necessary for it to own or lease its properties and assets and to carry
on its business as now conducted, except in each of clauses (i) through (iii) as
would not be reasonably likely to have, either individually or in the aggregate,
a Material Adverse Effect on Bancorp. True, correct and complete copies of the
incorporation or organizational documents, By-laws, and operating or partnership
agreements, as applicable, of the Bancorp Subsidiaries, as amended to the date
hereof, have been delivered to Xxxxxxx.
(d) The minute books of Bancorp, MCBNA and each other Bancorp Subsidiary
contain complete and accurate records in all material respects of all meetings
and other corporate actions held or taken by their respective shareholders and
Boards of Directors (including all committees thereof).
Section 4.02. Capitalization.
(a) The authorized capital stock of Bancorp consists of 100,000,000 shares
of common stock, par value $0.01 per share, of which 1,550,730 shares as of the
date hereof are issued and outstanding (none of which is held in the treasury of
Bancorp). As of the date hereof, none of the Bancorp Common Stock was reserved
for issuance, except for 607,610 shares of Bancorp Common Stock reserved for
issuance upon the exercise of Bancorp Stock Options (as defined below). Except
for the Bancorp Stock Options, there are no outstanding options, warrants,
commitments or other rights or instruments to purchase or acquire any shares of
capital stock of Bancorp, or any securities or rights convertible into or
exchangeable for shares of capital stock of Bancorp. All of the issued and
outstanding shares of Bancorp Common Stock have been duly authorized and validly
issued and all such shares are fully paid, nonassessable and free of preemptive
rights (except as the same may be afforded by applicable law). As of the date of
this Agreement, except pursuant to this Agreement and the Bancorp Stock Option
Plans (as defined below), Bancorp does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Bancorp
capital stock or any other securities representing the right to purchase or
otherwise receive any shares of Bancorp capital stock. Bancorp has furnished
Xxxxxxx with a list of the aggregate number of Bancorp stock options (each a
"Bancorp Stock Option" and collectively, the "Bancorp Stock Options")
outstanding under the Bancorp Stock Option Plans (identified on Schedule
4.02(a)) (the "Bancorp Stock Option Plans") as of March
31
31, 2004 and the exercise price for such stock options. Since March 31, 2004
through the date hereof, Bancorp has not issued or awarded any options or other
grants or awards under the Bancorp Stock Option Plans.
(b) Schedule 4.02(b) lists all Bancorp Subsidiaries and indicates for each
Bancorp Subsidiary as of the date of this Agreement its jurisdiction of
organization and the jurisdiction(s) wherein it is qualified to do business.
Except as set forth on Schedule 4.02(b), all of the issued and outstanding
shares of capital stock or other equity ownership interests of the Bancorp
Subsidiaries are owned by Bancorp or another Bancorp Subsidiary, free and clear
of any Liens and adverse claims thereto, and all of such shares or equity
ownership interests are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights and restrictions (other than those
imposed by applicable federal and state securities laws). Each Bancorp
Subsidiary does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of capital stock or any other equity
security of the Bancorp Subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of the Bancorp Subsidiary. There are no agreements or understandings
with respect to the voting or disposition of any shares of capital stock or
other equity interests of any Bancorp Subsidiary. Bancorp's ownership interests
in the Bancorp Subsidiaries are in compliance with all applicable laws, rules
and regulations relating to direct investment in equity ownership interests.
MCBNA is the only Bancorp Subsidiary that is an "insured depository institution"
as defined in the Federal Deposit Insurance Act, as amended, and the applicable
regulations thereunder.
Section 4.03. Authority; No Violation.
(a) Bancorp has full corporate power and authority to execute and deliver
this Agreement and, subject to the approval of the shareholders of Bancorp and
the receipt of the Consents of the Regulatory Authorities, to consummate the
transactions contemplated hereby. The Boards of Directors of Bancorp has
determined that this Agreement and the transactions contemplated hereby are in
the best interests of Bancorp and its shareholders and has directed that this
Agreement and the transactions contemplated by this Agreement be submitted to
Bancorp's shareholders for adoption at a duly held meeting of such shareholders
and, except for the approval of this Agreement and the transactions contemplated
by this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of Bancorp Common Stock entitled to vote at such meeting, no
other corporate proceedings on the part of Bancorp are necessary to approve this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Bancorp and (assuming due
authorization, execution and delivery by Xxxxxxx and subject to any review and
approval of any Regulatory Authority) constitutes a valid and binding obligation
of Bancorp, enforceable against Bancorp in accordance with its terms (except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally, and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement by Bancorp, the
consummation by Bancorp of the transactions contemplated hereby, nor compliance
by Bancorp
32
with any of the terms or provisions hereof, will (i) violate any provision of
the Certificate of Incorporation or By-laws of Bancorp, or the Certificate of
Incorporation, By-laws or any other formation document of any Bancorp
Subsidiary, (ii) assuming that the Consents of the Regulatory Authorities and
approvals referred to herein are duly obtained, (A) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Bancorp or its properties or assets, (B) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in creation of any Lien upon any of the respective properties or assets
of Bancorp under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Bancorp is a party or by which it or any of
its properties or assets may be bound or affected, except for such violations,
conflicts, breaches or defaults that are not reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on Bancorp.
Section 4.04. Consents and Approvals.
Except for (i) the filings required to be made with the SEC, including,
without limitation, the Form S-4 and Joint Proxy Statement and any similar
filings which may be required by the FDIC, (ii) a declaration of effectiveness
of the Form S-4 by the SEC, (iii) any Consents, authorizations, approvals,
filings or exemptions required under the applicable provisions of federal and
state securities laws relating to the regulation of broker-dealers, investment
advisers or transfer agents, federal commodities laws relating to the regulation
of futures commission merchants and the rules and regulations thereunder, the
rules and regulations of any applicable industry SRO, the rules of the NASDAQ
SmallCap Market and OTC Bulletin Board, and consumer finance, mortgage banking
and other similar laws, (iv) such filings and approvals as are required to be
made or obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of the shares of Bancorp Common Stock pursuant to
this Agreement, (v) the approval by the OCC, the FDIC and the New Jersey State
Department of Banking and Insurance of this Agreement, (vi) the approval by the
Boards of Directors of Bancorp and Xxxxxxx and the requisite vote of the
shareholders of Bancorp and stockholders of Xxxxxxx, and (vii) filings, if any,
required on behalf of Xxxxxxx, no corporate action or Consents of, approvals of
or filings or registrations with any Regulatory Authority or Governmental Entity
is or are necessary in connection with (A) the execution and delivery by Bancorp
of this Agreement and (B) the consummation by Bancorp of the Combination and the
other transactions contemplated by this Agreement.
Section 4.05. Reports.
(a) Bancorp has timely filed all reports, registrations and statements,
together with any amendments required to be made with respect thereto, that it
was required to file since January 1, 2000, with all applicable Regulatory
Authorities, and all other reports and statements required to be filed by it
since January 1, 2000, and has paid all fees and assessments due and payable in
connection therewith, except where the failure to file such report, registration
or statement or to pay such fees and assessments is not reasonably likely to
have, either individually or in the aggregate, a Material Adverse Effect on
Bancorp. Except for normal examinations
33
conducted by a Regulatory Authority in the ordinary course of the business of
Bancorp, no Regulatory Authority has initiated or has pending any proceeding or,
to the knowledge of Bancorp, investigation into the business or operations of
Bancorp since January 1, 2000, except where such proceedings or investigation is
not reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect on Bancorp. There (i) is no unresolved violation,
criticism, or exception by any Regulatory Authority with respect to any report
or statement relating to any examinations or inspections of Bancorp and (ii) has
been no formal or informal inquiries by, or disagreements or disputes with, any
Regulatory Authority with respect to the business, operations, policies or
procedures of Bancorp since January 1, 2000, that are reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect on Bancorp.
(b) Bancorp has previously delivered to Xxxxxxx copies of the call reports
of MCBNA as of and for each of the years ended December 31, 2003, December 31,
2002 and December 31, 2001, and call reports for the quarter ended March 31,
2004, and Bancorp shall deliver to Xxxxxxx, as soon as practicable following the
preparation of additional call reports for each subsequent calendar quarter (or
other reporting period) or year, the call reports of MCBNA as of and for such
subsequent calendar quarter (or other reporting period) or year (such call
reports, unless otherwise indicated, being hereinafter referred to collectively
as the "Bancorp Regulatory Reports"). To the extent not prohibited by law,
Bancorp has heretofore delivered or made available, or caused to be delivered or
made available, to Xxxxxxx all reports and filings made or required to be made
by Bancorp with the Regulatory Authorities, and will from time to time hereafter
furnish to Xxxxxxx, upon filing or furnishing the same to the Regulatory
Authorities, all such reports and filings made after the date hereof with the
Regulatory Authorities. As of the respective dates of such reports and filings,
all such reports and filings did not and shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the Bancorp
Regulatory Reports has been or will be prepared in all material respects in
accordance with regulatory accounting principles, as applicable, which
principles have been or will be consistently applied during the periods
involved, except as otherwise noted therein. Each of the Bancorp Regulatory
Reports fairly presents or will fairly present the financial position of Bancorp
as of the respective dates thereof and fairly presents or will fairly present
the results of operations of Bancorp for the respective periods therein set
forth.
Section 4.06. Financial Statements.
(a) Bancorp has previously delivered to Xxxxxxx copies of the audited
consolidated financial statements of Bancorp as of and for the years ended
December 31, 2003, December 31, 2002 and December 31, 2001, and unaudited
consolidated financial statements for the quarter ended March 31, 2004, and
Bancorp shall deliver to Xxxxxxx, as soon as practicable following the
preparation of additional financial statements for each subsequent calendar
quarter (or other reporting period) or year of Bancorp, the additional
consolidated financial statements of Bancorp as of and for such subsequent
calendar quarter (or other reporting period) or year (such financial statements,
unless otherwise indicated, being hereinafter referred to collectively as the
"Bancorp Financial Statements").
34
(b) Each of the Bancorp Financial Statements (including the related notes)
has been or will be prepared in all material respects in accordance with GAAP,
which principles have been or will be consistently applied during the periods
involved, except as otherwise noted therein, and the books and records of
Bancorp have been, are being, and will be maintained in all material respects in
accordance with applicable legal and accounting requirements and reflect only
actual transactions. Each of the Bancorp Financial Statements (including the
related notes) fairly presents or will fairly present the financial position of
Bancorp on a consolidated basis, as of the respective dates thereof and fairly
presents or will fairly present the results of operations of Bancorp on a
consolidated basis for the respective periods therein set forth.
(c) Except for those liabilities that are reflected or reserved against on
the consolidated balanced sheet of Bancorp dated March 31, 2004 and for
liabilities incurred in the ordinary course of business consistent with past
practice since such date, Bancorp has not incurred any liability of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether due
or to become due) that has had or is reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on Bancorp.
Section 4.07. Broker's Fees; Financial Advisor's Fees.
Neither Bancorp nor any of its officers or directors has employed any
broker or finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with the Combination or related transactions
contemplated by this Agreement. However, Bancorp has retained Sandler, X'Xxxxx &
Partners, L.L.P. to provide financial advisory services and render a fairness
opinion with respect to the Combination and is obligated to pay the fees and
expenses for such services.
Section 4.08. Absence of Certain Changes or Events.
(a) Except as set forth in Schedule 4.08, since December 31, 2003, Bancorp
has not incurred any obligation or liability (contingent or otherwise) that has
or might reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Bancorp, except obligations and liabilities (i) which
are accrued or reserved against in the Bancorp Financial Statements or the
Bancorp Regulatory Reports, or reflected in the notes thereto, or (ii) which
were incurred after December 31, 2003, in the ordinary course of business
consistent with past practices. Since December 31, 2003, Bancorp has not
incurred or paid any obligation or liability which would be material to the
Condition of Bancorp, except as may have been incurred or paid in the ordinary
course of business, consistent with past practices.
(b) Since December 31, 2003, there has not been (i) any declaration,
payment or setting aside of any dividend or distribution (whether in cash, stock
or property) in respect of Bancorp Common Stock or (ii) any change or any event
involving a prospective change in the Condition of Bancorp, or a combination of
any such change(s) and any such event(s) which has had, or is reasonably likely
to have, a Material Adverse Effect on Bancorp, including, without limitation,
any change in the administration or supervisory standing or rating of Bancorp
with any Regulatory Authority, and no fact or condition exists as of the date
hereof which might reasonably be expected to cause any such event or change in
the future.
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(c) Since December 31, 2003, no event or events have occurred that have
had or are reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect on Bancorp.
(d) Since December 31, 2003 through and including the date of this
Agreement, Bancorp has carried on its business in all material respects in the
ordinary course.
Section 4.09. Loan Portfolio.
Except as set forth in Schedule 4.09, all evidences of indebtedness in
original principal amount in excess of $500,000 reflected as assets in the
Bancorp Financial Statements and the Bancorp Regulatory Reports as of March 31,
2004, were as of such date in all respects the binding obligations of the
respective obligors named therein in accordance with their respective terms, and
were not subject to any defenses, setoffs, or counterclaims, except as may be
provided by bankruptcy, insolvency or similar laws or by general principles of
equity.
Section 4.10. Legal Proceedings; Agreements with Regulatory
Agencies.
(a) Except as set forth in Schedule 4.10, Bancorp is not a party to any,
and there are no pending or, to the knowledge of Bancorp, threatened, judicial,
administrative, arbitral or other proceedings, claims, actions, causes of action
or governmental or regulatory investigations against Bancorp challenging the
validity of the transactions contemplated by this Agreement. There is no
proceeding, claim, action or governmental or regulatory investigation against
Bancorp, no judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding or, to the knowledge of Bancorp, threatened against Bancorp which
has had, or is reasonably likely to have, a Material Adverse Effect on Bancorp.
Bancorp is not a party to any agreement, order or memorandum in writing by or
with any Regulatory Authority restricting the operations of Bancorp, and no
Regulatory Authority has advised Bancorp that such Regulatory Authority is
contemplating issuing or requesting the issuance of any such order or memorandum
in the future.
(b) Bancorp (i) is not subject to any cease-and-desist or other order or
enforcement action issued by, (ii) is a party to any written agreement, consent
agreement or memorandum of understanding with, (iii) is not a party to any
commitment letter or similar undertaking with, (iv) is not subject to any order
or directive by, (v) has not been ordered to pay any civil money penalty by,
(vi) since January 1, 2000, has not been a recipient of any supervisory letter
from, or since January 1, 2000, has not adopted any policies, procedures or
board resolutions at the request or suggestion of, any Regulatory Agency or
other Governmental Entity that currently restricts in any material respect the
conduct of its business or that in any material manner relates to its capital
adequacy, its ability to pay dividends, its credit or risk management policies,
its management or its business, other than those of general application that
apply to similarly-situated financial institutions or their subsidiaries (each
item in this sentence, whether or not disclosed in Schedule 4.10, a "Bancorp
Regulatory Agreement"), nor has Bancorp been advised since January 1, 2000 by
any Regulatory Agency or Governmental Entity that it is considering issuing,
initiating, ordering or requesting any such Bancorp Regulatory Agreement.
36
Section 4.11. Taxes and Tax Returns.
(a) Bancorp has previously delivered or made available to Xxxxxxx copies
of the federal, state and local income Tax returns of Bancorp for the years
2003, 2002 and 2001 and all schedules and exhibits thereto, and such returns
have not been examined by the Internal Revenue Service or any other taxing
authority. Except as reflected in Schedule 4.11, Bancorp has duly filed in
correct form all federal, state and local information returns and Tax returns
required to be filed on or prior to the date hereof, and Bancorp has duly paid
or made adequate provisions for the payment of all Taxes and other governmental
charges which are owed by Bancorp to, or claimed to be due from it by, any
federal, state or local taxing authorities, whether or not reflected in such
returns, other than Taxes and other charges which (i) are not yet delinquent or
are being contested in good faith, or (ii) have not been finally determined and
have adequately been reserved against. The amounts set forth as liabilities for
Taxes on the Bancorp Financial Statements and the Bancorp Regulatory Reports are
sufficient, in the aggregate, for the payment of all unpaid federal, state and
local Taxes (including any interest or penalties thereon), whether or not
disputed, accrued or applicable, for the periods then ended, and have been
computed in accordance with GAAP. Bancorp is not responsible for the Taxes of
any other Person, under Treasury Regulation 1.1502-6 or any similar provision of
federal, state or foreign law.
(b) Except as disclosed in Schedule 4.11, Bancorp has not executed an
extension or waiver of any statute of limitations on the assessment or
collection of any federal, state or local Taxes due that is currently in effect,
and all deferred Taxes of Bancorp, have been adequately provided for in the
Bancorp Financial Statements.
(c) There are no material disputes pending, or claims asserted, for Taxes
or assessments upon Bancorp for which Bancorp does not have adequate reserves.
Bancorp is not a party to and is not bound by any Tax sharing, allocation or
indemnification agreement or arrangement (other than such an agreement or
arrangement exclusively between or among Bancorp and any of the Bancorp
Subsidiaries). No disallowance of a deduction under Section 162(m) of the Code
for employee remuneration of any amount paid or payable by Bancorp under any
contract, plan, program or arrangement or understanding would be reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Bancorp.
(d) There has not been an ownership change, as defined in Section 482(g)
of the Code, of Bancorp that occurred during or after any taxable period in
which Bancorp incurred an operating loss that carries over to any taxable period
ending after the fiscal year of Bancorp immediately preceding the date of this
Agreement.
(e) (i) Proper and accurate amounts have been withheld by Bancorp from its
employees and others for all prior periods in compliance in all material
respects with the Tax withholding provisions of all applicable federal, state
and local laws and regulations, and proper due diligence steps have been taken
in connection with back-up withholding; (ii) federal, state and local Tax
returns have been filed by Bancorp for all periods for which returns were due
with respect to withholding, Social Security and unemployment Taxes or charges
due to any federal, state or local taxing authority; and (iii) the amounts shown
on such returns to be due and payable have been paid in full or adequate
provisions therefor have been included by Bancorp in the Bancorp Financial
Statements.
37
Section 4.12. Employee Benefit Plans.
(a) Bancorp does not have nor maintains any "employee benefit plan," as
defined in Section 3(3) of ERISA, except as described in Schedule 4.12(a)
(collectively, the "Bancorp Employee Benefit Plans" and individually, a "Bancorp
Employee Benefit Plan"). Bancorp has, with respect to each Bancorp Employee
Benefit Plan, delivered or made available to Xxxxxxx true and complete copies
of: (i) all plan texts and agreements and related trust agreements or annuity
contracts and any amendments thereto; (ii) all summary plan descriptions and
material employee communications; (iii) the Form 5500 filed in each of the most
recent actuarial valuation (if any); (iv) the most recent annual and periodic
accounting of plan assets; (v) if the Bancorp Employee Benefit Plan is intended
to qualify under Section 401(a) or 404(a) of the Code, the most recent
determination letter received from the Internal Revenue Service; and (vi) all
material communications with any Governmental Entity (including, without
limitation, the Department of Labor, Internal Revenue Service and the PBGC).
(b) Except as described in Schedule 4.12(b), no Bancorp Employee Benefit
Plan is a defined benefit plan. None of Bancorp nor any pension plan maintained
by it has incurred any liability to the PBGC or the Internal Revenue Service
with respect to any pension plan qualified under Section 401 of the Code, except
liabilities to the PBGC pursuant to Section 4007 of ERISA, all of which have
been fully paid. No reportable event under Section 4043(b) of ERISA (including
events waived by PBGC regulation) has occurred with respect to any such pension
plan.
(c) Bancorp has not incurred any liability under Section 4201 of ERISA for
a complete or partial withdrawal from, or agreed to participate in, any
multi-employer plan, as such term is defined in Section 3(37) of ERISA.
(d) All Bancorp Employee Benefit Plans comply with the applicable
provisions of ERISA and the Code that are applicable, or intended to be
applicable, including, but not limited to, COBRA, HIPAA and any applicable
similar state law. Bancorp has no material liability under any Bancorp Employee
Benefit Plan that is not reflected in the Bancorp Financial Statements or the
Bancorp Regulatory Reports. Neither Bancorp, any Bancorp Employee Benefit Plan
or any employee, administrator or agent thereof, is or has been in violation of
the transaction code set rules under HIPAA ss.ss.1172-1174 or the HIPAA privacy
rules under 45 CFR Part 160 and subparts A and E of Part 165. No penalties have
been imposed on Bancorp, any Bancorp Employee Benefit Plan, or any employee,
administrator or agent thereof, under HIPAA ss.1176 or ss.1177.
(e) No prohibited transaction (which shall mean any transaction prohibited
by Section 406 of ERISA and not exempt under Section 408 of ERISA) has occurred
with respect to any Bancorp Employee Benefit Plan which would result in the
imposition, directly or indirectly, of an excise Tax under Section 4975 of the
Code or a civil penalty under Section 502(i) of ERISA; and no actions have
occurred which could result in the imposition of a penalty under any section or
provision of ERISA.
(f) No Bancorp Employee Benefit Plan which is a defined benefit pension
plan has any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and
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the present fair market value of the assets of any such plan exceeds the plan's
"benefit liabilities," as that term is defined in Section 4001(a)(16) of ERISA,
when determined under actuarial factors that would apply if the plan terminated
in accordance with all applicable legal requirements.
(g) Except as described in Schedule 4.12(g), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment or obligation (including, without
limitation, severance, bonus, deferred compensation, retirement, unemployment
compensation, golden parachute or otherwise) becoming due to any director or any
officer or employee of Bancorp under any Bancorp Employee Benefit Plan or
otherwise, (ii) increase any benefits or obligations otherwise payable under any
benefit plan, or (iii) result in any acceleration of the time of payment or
vesting of any such benefits or obligations.
(h) No Bancorp Employee Benefit Plan is a multiemployer plan as defined in
Section 414(f) of the Code or Section 3(37) or 4001(a)(3) of ERISA. Bancorp has
never been a party to or participant in a multiemployer plan.
(i) There are no actions liens, suits or claims pending or threatened
(other than routine claims for benefits) with respect to any Bancorp Employee
Benefit Plan or against the assets of any Bancorp Employee Benefit Plan. No
assets of Bancorp are subject to any Lien under Section 302(f) of ERISA or
Section 12(n) of the Code.
(j) Each Bancorp Employee Benefit Plan which is intended to qualify under
Section 401(a) or 403(a) of the Code so qualifies and its related trust is
exempt from taxation under Section 501(a) of the Code. No event has occurred or
circumstance exists that will or could give rise to a disqualification or loss
of tax-exempt status of any such plan or trust.
(k) No Bancorp Employee Benefit Plan is a multiple employer plan within
the meaning of Section 413(c) of the Code or Section 4063, 4064, or 4066 of
ERISA. No Bancorp Employee Benefit Plan is a multiple employer welfare
arrangement as defined in Section 3(40) of ERISA.
(l) Each Bancorp Employee Benefit Plan that is an employee pension benefit
plan as defined in Section 3(2) of ERISA, and not qualified under Section 401(a)
or 403(a) of the Code, is exempt from Part 2, 3 and 4 of Title I of ERISA as an
unfunded plan that is maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensation employees,
pursuant to Section 201(2), 301(a)(3) and 401(a)(1) of ERISA. Except as
disclosed on Schedule 4.12(l), no assets of Bancorp are allocated to or held in
a grantor trust or "rabbi trust" or similar funding vehicle.
(m) Except as set forth on Schedule 4.12(m), no Bancorp Employee Benefit
Plan provides benefits to any current or former employee of Bancorp following
the retirement or other termination of service (other than coverage mandated by
COBRA, the cost of which is fully paid by the current or former employee or his
or her dependents). Any such Bancorp Employee Benefit Plan may be amended or
terminated at any time by unilateral action of Bancorp.
39
(n) With respect to each Bancorp Employee Benefit Plan, there are no
funded benefit obligations for which contributions have not been made or
properly accrued and there are no unfunded benefit obligations that have not
been accounted for by reserves or otherwise properly footnoted in accordance
with GAAP on the Bancorp Financial Statements.
Section 4.13. Title and Related Matters.
(a) Bancorp has good title, and as to owned real property, has good and
marketable title in fee simple absolute, to all assets and properties, real or
personal, tangible or intangible, reflected as owned by or leased or subleased
by or carried under its name on the Bancorp Financial Statements or the Bancorp
Regulatory Reports or acquired subsequent thereto (except to the extent that
such assets and properties have been disposed of for fair value in the ordinary
course of business since December 31, 2003), free and clear of all Liens, except
for (i) those Liens reflected in the Bancorp Financial Statements and the
Bancorp Regulatory Reports, (ii) statutory Liens for amounts not yet delinquent
or which are being contested in good faith, and (iii) Liens that are not in the
aggregate material to the Condition of Bancorp.
(b) All agreements pursuant to which Bancorp leases, subleases or licenses
material real or material personal properties from others are valid, binding and
enforceable in accordance with their respective terms, and there is not, under
any of such leases or licenses, any existing default or event of default, or any
event which with notice or lapse of time, or both, would constitute a default or
force majeure, or provide the basis for any other claim of excusable delay or
nonperformance, except for defaults which, individually or in the aggregate,
would not have a Material Adverse Effect on Bancorp. Bancorp shall have all
right, title and interest as a lessee under the terms of each lease or sublease,
free and clear of all Liens, claims or encumbrances (other than the rights of
the lessor) as of the Effective Time.
(c) Except as set forth in Schedule 4.13(c), (i) all of the buildings,
structures and fixtures owned, leased or subleased by Bancorp are in good
operating condition and repair, subject only to ordinary wear and tear and/or
minor defects which do not interfere with the continued use thereof in the
conduct of normal operations, and (ii) all of the material personal properties
owned, leased or subleased by Bancorp are in good operating condition and
repair, subject only to ordinary wear and tear and/or minor defects which do not
interfere with the continued use thereof in the conduct of normal operations.
Section 4.14. Real Estate.
(a) Schedule 4.14(a) identifies each parcel of real estate or interest
therein owned, leased or subleased by Bancorp or in which Bancorp has any
ownership or leasehold interest.
(b) Schedule 4.14(b) lists or otherwise describes each and every written
or oral lease or sublease, together with the current name and address of the
landlord or sublandlord and the landlord's property manager (if any), under
which Bancorp is the lessee of any real property and which related in any manner
to the operation of the business of Bancorp.
(c) Bancorp has not violated, and is not currently in violation of, any
law, regulation or ordinance relating to the ownership or use of the real estate
and real estate interests described
40
in Schedule 4.14(a) and Schedule 4.14(b) including, but not limited to, any law,
regulation or ordinance relating to zoning, building, occupancy, environmental
or comparable matter.
(d) As to each parcel of real property owned or used by Bancorp, there are
no pending or, to the knowledge of Bancorp, threatened condemnation proceedings,
litigation proceedings or mechanic's or materialmen's Liens.
Section 4.15. Environmental Matters.
(a) Each of Bancorp, the Bancorp Participation Facilities (as defined
below), and the Bancorp Loan Properties (as defined below) are, and have been,
in material compliance, and there are no present circumstances that would
prevent or interfere with the continuation of such material compliance, with all
applicable federal, state and local laws, including common law, rules,
regulations and ordinances, and with all applicable decrees, orders and
contractual obligations, relating to pollution or the protection of the
environment or the discharge of, or exposure to, Hazardous Materials in the
environment or workplace.
As used herein, the term "Bancorp Participation Facility" shall mean any
facility in which Bancorp has engaged in Participation in the Management (as
defined in 40 C.F.R. ss.300.1100(c)) of such facility, and, where required by
the context, includes the owner or operator of such facility, but only with
respect to such facility (collectively, the "Bancorp Participation Facilities").
As used herein, the term "Bancorp Loan Property" shall mean any property
owned by Bancorp or in which Bancorp holds a security interest, and, where
required by the context, includes the owner or operator of such property, but
only with respect to such property (collectively, the "Bancorp Loan
Properties").
(b) There is no litigation pending or, to the knowledge of Bancorp,
threatened before any Governmental Entity in which Bancorp or any Participation
Facility has been or, with respect to threatened litigation, may be, named as
defendant (i) for alleged noncompliance (including by any predecessor) with
respect to any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on or
involving a site owned, leased or operated by Bancorp or any Bancorp
Participation Facility.
(c) There is no litigation pending or, to the knowledge of Bancorp,
threatened before any Governmental Entity in which any Bancorp Loan Property (or
Bancorp in respect of such Bancorp Loan Property) has been or, with respect to
threatened litigation, may be, named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on or involving a Bancorp Loan
Property.
(d) To the knowledge of Bancorp, there is no reasonable basis for any
litigation of a type described in Section 4.15(b) and Section 4.15(c) of this
Agreement.
(e) During the period of (i) ownership or operation by Bancorp of any of
its current properties, (ii) Participation by Bancorp in the Management of any
Bancorp Participation
41
Facility, or (iii) holding by Bancorp of a security interest in any Bancorp Loan
Property, there have been no releases of Hazardous Material in, on under or
affecting such properties.
(f) Prior to the period of (i) ownership or operation by Bancorp of any of
its current properties, (ii) Participation by Bancorp in the Management of any
Bancorp Participation Facility, or (iii) holding by Bancorp of a security
interest in any Bancorp Loan Property, to the knowledge of Bancorp, there were
no releases of Hazardous Material or oil in, on, under or affecting any such
property, Bancorp Participation Facility or Bancorp Loan Property.
Section 4.16. Commitments and Contracts.
(a) Except as set forth in Schedule 4.16(a), Bancorp is not a party to or
bound by any contract, arrangement, commitment or understanding (whether written
or oral) (i) that is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been disclosed to Xxxxxxx, (ii) that would materially
restrict the conduct of any material line of business of Bancorp upon
consummation of the Combination, (iii) with or to a labor union or guild
(including any collective bargaining agreement) or (iv) any of the benefits of
which will be increased, or the vesting of the benefits of which will be
automatically accelerated, by the execution of this Agreement, the occurrence of
any shareholder approval or the consummation of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of or affected by any of the transactions
contemplated by this Agreement. Each contract, arrangement, commitment or
understanding of the type described in this Section 4.16(a), whether or not set
forth in a Schedule attached hereto, is referred to as a "Bancorp Contract," and
Bancorp does not know of, and has received no notice of, any violation of the
above by any of the other parties thereto that is reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect on Bancorp.
(b) With such exceptions that are not reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on Bancorp, (i) each
Bancorp Contract is valid and binding on Bancorp, and is in full force and
effect, (ii) Bancorp has in all material respects performed all obligations
required to be performed by it to date under each Bancorp Contract, and (iii) no
event or condition exists that constitutes or, after notice or lapse of time or
both, will constitute, a material default on the part of Bancorp, or constitute
a force majeure, or provide the basis for any other claim of excusable delay or
non-performance under such Bancorp Contract.
(c) Except as set forth in Schedule 4.16(c), Bancorp is not a party or
subject to any of the following (whether written or oral, express or implied):
(i) Any employment contract or understanding (including any
understandings or obligations with respect to severance or
termination pay liabilities or fringe benefits) with any
present or former officer, director, employee, including in
any such Person's capacity as a consultant (other than those
which are terminable at will without any further amount being
payable thereunder);
(ii) Any labor contract or agreement with any labor union;
42
(iii) Any contract or agreement which limits the ability of Bancorp
to compete in any line of business or which involves any
restriction of the geographical area in which Bancorp may
carry on its business (other than as may be required by law or
applicable regulatory authorities);
(iv) Any lease (other than real estate leases described on Schedule
4.14) or other agreements or contracts with annual payments
aggregating $50,000 or more; or
(v) Any other contract or agreement which would be required to be
disclosed in reports filed by Bancorp with the Federal Reserve
Bank of New York, the OCC or the FDIC and which has not been
so disclosed.
(d) Except as set forth on Schedule 4.16(d), (i) neither the execution of
this Agreement nor the consummation of the transactions contemplated hereby will
result in termination of any of the material service contracts (including
leases, agreements or licenses) to which Bancorp is a party ("Bancorp Service
Contracts"), or modification or acceleration of any of the terms of such Bancorp
Service Contracts; and (ii) no Consents are required to be obtained and no
notices are required to be given in order for the Bancorp Service Contracts to
remain effective, without any modification or acceleration of any of the terms
thereof, following the consummation of the transactions contemplated by this
Agreement.
Section 4.17. Regulatory, Accounting and Tax Matters.
Bancorp has not taken or agreed to take any action and has no knowledge of
any fact and has not agreed to any circumstance that would (a) materially impede
or delay receipt of any Consent of any Regulatory Authorities required to
consummate the transactions contemplated by this Agreement, including matters
relating to the Community Reinvestment Act and protests thereunder; or (b)
prevent the transactions contemplated by this Agreement from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
Section 4.18. Registration Obligations.
Except with respect to obligations set forth herein as to Xxxxxxx Stock
Options or set forth on Schedule 4.18, Bancorp is not under any obligation,
contingent otherwise, which will survive the Combination to register any of its
securities under the Securities Act or any state securities laws.
Section 4.19. Antitakeover Provisions.
Bancorp has taken all actions required to exempt Bancorp, this Agreement
and the Combination from any provisions of an antitakeover nature contained in
their organizational documents and the provisions of any federal or state
"antitakeover," "fair price," "moratorium," "control share acquisition" or
similar laws or regulations.
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Section 4.20. Insurance.
Bancorp is presently insured as set forth on Schedule 4.20, and during
each of the past three calendar years has been insured, for such amounts against
such risks as companies or institutions engaged in a similar business would, in
accordance with good business practice, customarily be insured. To the knowledge
of Bancorp, the policies of fire, theft, liability and other insurance
maintained with respect to the assets or businesses of Bancorp provide adequate
coverage against loss, and the fidelity bonds in effect as to which Bancorp is
named an insured are sufficient for their purpose.
Section 4.21. Labor.
(a) No work stoppage involving Bancorp is pending as of the date hereof
nor to the knowledge of Bancorp, threatened. Bancorp is not involved in, or, to
the knowledge of Bancorp, threatened with or affected by, any proceeding
asserting that Bancorp has committed an unfair labor practice or any labor
dispute, arbitration, lawsuit or administrative proceeding which might
reasonably be expected to have a Material Adverse Effect on Bancorp. No union
represents or claims to represent any employees of Bancorp, and, to the
knowledge of Bancorp, no labor union is attempting to organize employees of
Bancorp.
(b) Bancorp has made available to Xxxxxxx a true and complete list of all
employees of Bancorp as of the date hereof, together with the employee position,
title, salary and date of hire. Schedule 4.21 sets forth a true and complete
list of each benefit or compensation plan, arrangement or agreement, and any
material bonus, incentive, deferred compensation, vacation, stock purchase,
stock option, severance, employment, change of control or fringe benefit plan,
program or agreement that is maintained, or contributed to, for the benefit of
current or former directors or employees of Bancorp or with respect to which
Bancorp may, directly or indirectly, have any liability, as of the date of this
Agreement. Except as set forth on Schedule 4.21, the consummation of the
transactions contemplated hereby will not cause Bancorp to incur or suffer any
liability relating to, or obligation to pay, severance, termination or other
payments to any person or entity. Except as set forth on Schedule 4.21 hereto,
no employee of Bancorp has any contractual right to continued employment by
Bancorp.
(c) Bancorp is in compliance with all applicable law and regulations
relating to employment or the workplace, including, without limitation,
provisions relating to wages, hours, collective bargaining, safety and health,
work authorization, equal employment opportunity, immigration and the
withholding of income taxes, unemployment compensation, workers compensation,
employee privacy and right-to-know and social security contributions.
(d) Except as set forth on Schedule 4.21 hereto, there has not been, there
is not presently pending or existing and there is not threatened any proceeding
against or affecting Bancorp relating to the alleged violation of any legal
requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission or any comparable
governmental body.
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Section 4.22. Compliance with Applicable Laws.
Bancorp has conducted its business in accordance with all applicable
federal, state and local laws, regulations and orders, and is in material
compliance with such laws, regulations and orders. Except as disclosed in
Schedule 4.22:
(a) Bancorp is not in violation of any laws, orders or permits applicable
to its business or the employees or agents or representatives conducting its
business (other than where such violation will not, alone or in the aggregate,
have a Material Adverse Effect on Bancorp).
(b) Bancorp has not received a notification or communication from any
Governmental Entity or any Regulatory Authority or the staff thereof (i)
asserting that Bancorp is not in compliance with any laws or orders which such
Governmental Entity or Regulatory Authority enforces (other than where such
noncompliance will not, alone or in the aggregate, have a Material Adverse
Effect on Bancorp), (ii) threatening to revoke any permit or license (other than
licenses or permits the revocation of which will not, alone or in the aggregate,
have a Material Adverse Effect on Bancorp), (iii) requiring Bancorp to enter
into any cease and desist order, formal agreement, commitment or memorandum of
understanding, or to adopt any resolutions or similar undertakings, or (iv)
directing, restricting or limiting, or purporting to direct, restrict or limit
in any material manner, the operations of Bancorp, including, without
limitation, any restrictions on the payment of dividends, or that in any manner
relates to such entity's capital adequacy, credit policies, management or
business.
(c) Except as is not reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect on Bancorp, Bancorp has properly
administered all accounts for which it acts as a fiduciary, including accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents, applicable state and federal law and regulation and common
law. None of Bancorp, or any director, officer or employee of Bancorp, has
committed any breach of trust or fiduciary duty with respect to any such
fiduciary account that is reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect on Bancorp, and the accountings for
each such fiduciary account are true and correct and accurately reflect the
assets of such fiduciary account.
(d) Bancorp is not aware of, has not been advised of, or has no reason to
believe that any facts or circumstances exist, which would cause Bancorp (i) to
be deemed to be operating in violation in any material respect of the Bank
Secrecy Act, the USA PATRIOT Act, and all regulations promulgated thereunder,
any order issued with respect to anti-money laundering by the U.S. Department of
the Treasury's Office of Foreign Assets Control, or any other applicable
anti-money laundering statue, rule or regulation; or (ii) to be deemed not to be
in satisfactory compliance in any material respect with the applicable privacy
of customer information requirements contained in any federal and state privacy
laws and regulations, including, without limitation, Title V of the
Xxxxx-Xxxxx-Xxxxxx Act of 1999 and the regulations promulgated thereunder, as
well as the provisions of the information security program adopted by MCBNA
pursuant to 12 C.F.R. Part 570. Furthermore, the Board of Directors of MCBNA has
adopted and MCBNA has implemented an anti-money laundering program that contains
adequate and appropriate customer identification verification procedures that
comply with Section 326 of the
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USA PATRIOT Act and such anti-money laundering program meets the requirements in
all material respects of Section 352 of the USA PATRIOT Act and the regulations
thereunder.
Section 4.23. Transactions with Management.
Except for (a) deposits, all of which are on terms and conditions
comparable to those made available to other customers of MCBNA at the time such
deposits were entered into, (b) arm's length loans to employees entered into in
the ordinary course of business, (c) the agreements listed on Schedule 4.16, (d)
obligations under employee benefit plans of Bancorp set forth in Schedule 4.12,
and (e) the items described on Schedule 4.23 and any loans or deposit agreements
entered into in the ordinary course with customers of MCBNA, there are no
contracts with or commitments to directors, officers or employees involving the
expenditure of more than $5,000 as to any one individual, including, with
respect to any business directly or indirectly controlled by any such Person, or
$5,000 for all such contracts for commitments in the aggregate for all such
individuals.
Section 4.24. Interest Rate Risk Management Instruments.
Except as would not be reasonably likely to have, either individually or
in the aggregate, a Material Adverse Effect on Bancorp, (a) all interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of Bancorp or for
the account of a customer of Bancorp, were entered into in the ordinary course
of business consistent with past practice and in accordance with prudent banking
practice and applicable rules, regulations and policies of any applicable
Regulatory Authority and with counterparties believed to be financially
responsible at the time and are legal, valid and binding obligations of Bancorp
enforceable against it in accordance with their terms (except as may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
the rights of creditors generally and the availability of equitable remedies),
and are in full force and effect, and (b) to Bancorp's knowledge, there are no
breaches, violations or defaults or allegations or assertions of such by any
party thereunder.
Section 4.25. Deposits.
None of the deposits of MCBNA are "brokered" deposits as such term is
defined in the regulations of the FDIC or are subject to any encumbrance, legal
restraint or other legal process (other than garnishments, pledges, setoff
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 Bancorp's except as set forth in Schedule 4.25.
Section 4.26. Accounting Controls; Disclosure Controls.
(a) Bancorp has devised and maintained systems of internal accounting
control sufficient to provide reasonable assurances that: (i) all material
transactions are executed in accordance with general or specific authorization
of the Board of Directors and the duly authorized executive officers of Bancorp;
(ii) all material transactions are recorded as necessary to permit the
preparation of financial statements in conformity with GAAP consistently applied
with respect to institutions such as Bancorp or any other criteria applicable to
such financial statements, and to maintain proper accountability for items
therein; (iii) access to the material
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properties and assets of Bancorp permitted only in accordance with general or
specific authorization of the Board of Directors and the duly authorized
executive officers of Bancorp; and (iv) the recorded accountability for items is
compared with the actual levels at reasonable intervals and appropriate actions
taken with respect to any differences.
(b) To the extent required, Bancorp has in place "disclosure controls and
procedures" as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act to
allow Bancorp's management to make timely decisions regarding required
disclosures and to make the certifications of the Chief Executive Officer and
Chief Financial Officer of Bancorp required under the Exchange Act.
Section 4.27. Bancorp Information.
None of the information relating to Bancorp to be included in the Form
S-4, in the Joint Proxy Statement which is to be mailed to the shareholders of
Bancorp and the stockholders of Xxxxxxx in connection with the solicitation of
their approval of this Agreement, or in any other document filed with any other
Regulatory Authority in connection with the transactions contemplated by this
Agreement, will be false or misleading with respect to any material fact, or
omit to state any material fact necessary in order to make a statement therein
not false or misleading. The portions of the Joint Proxy Statement that relate
to Bancorp will comply in all material respects with the provisions of the
Exchange Act, and the rules and regulations thereunder, and the rules,
requirements and approvals of the FDIC.
Section 4.28. Deposit Insurance.
The deposit accounts of MCBNA are insured by the FDIC in accordance with
the provisions of the Federal Deposit Insurance Act; MCBNA has paid all regular
premiums and special assessments and filed all reports required under the
Federal Deposit Insurance Act.
Section 4.29. Intellectual Property.
Bancorp owns or possesses valid and binding licenses and other rights to
use all patents, copyrights, trade secrets, trade names, servicemarks,
trademarks, computer software and other intellectual property used in its
business, if any; Bancorp has not received any notice of conflict with respect
thereto that asserts the right of others.
Section 4.30. Untrue Statements and Omissions.
No representation or warranty contained in Article IV of this Agreement or
in the Schedules attached hereto with respect to information concerning Bancorp
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Section 4.31. Reorganization.
As of the date of this Agreement, Bancorp is not aware of any fact or
circumstance that could reasonably be expected to prevent the Combination from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code.
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Section 4.32. Fairness Opinion.
Prior to the execution of this Agreement, Bancorp received an opinion from
Sandler X'Xxxxx & Partners, L.L.P. to the effect that as of the date thereof and
based upon and subject to the matters set forth therein, the Exchange Ratio is
fair to the shareholders of Bancorp from a financial point of view. Such opinion
has not been amended or rescinded as of the date of this Agreement.
ARTICLE V.
COVENANTS AND AGREEMENTS
Section 5.01. Conduct of the Business Prior to the Effective Time.
During the period from the date of this Agreement to the Effective Time,
except as expressly contemplated or permitted by this Agreement (including the
Schedules attached hereto), each of Xxxxxxx and Bancorp shall, and shall cause
each of their respective Subsidiaries to, (i) conduct its business in the
ordinary course in all material respects consistent with past practice and,
where applicable, prudent banking principles, (ii) use reasonable best efforts
to maintain and preserve intact its business organization, employees, goodwill
with customers and advantageous business relationships and retain the service of
its key officers and key employees, (iii) except as required by law or
regulation, take no action that would adversely affect or materially delay the
ability of either Xxxxxxx or Bancorp to obtain any Consent from any Regulatory
Authority or Governmental Entity required for the consummation of the
transactions contemplated hereby or to perform its covenants and agreements
under this Agreement.
Section 5.02. Xxxxxxx Forbearances.
During the period from the date of this Agreement to the Effective Time,
except as expressly contemplated or permitted by this Agreement, Xxxxxxx shall
not, and shall not permit any of the Xxxxxxx Subsidiaries to, without the prior
written consent of Xxxxxxx (which consent shall not be unreasonably withheld),
(a) amend, repeal or otherwise modify any provision of its Certificate of
Incorporation, By-laws or other formation documents, except as otherwise
contemplated hereby; (b) knowingly take any action or knowingly fail to take any
action, which action or failure to act is reasonably likely to prevent the
Combination from qualifying as a "reorganization" within the meaning of Section
368(a) of the Code; (c) take any action that would materially impede or delay
the ability of the Parties to obtain any necessary approvals of any Regulatory
Agency or Governmental Entity required for the transactions contemplated by this
Agreement; (d) take any action that is intended or is reasonably likely to
result in any of its representations or warranties set forth in Article III of
this Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Combination set
forth in Article VII not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable law; (e)
take any action that would materially impede or delay the ability of the Parties
to obtain any necessary Consents of any Regulatory Agency or Governmental Entity
required for the transactions contemplated by this Agreement; or (f) agree to
take, make any commitments to take, or adopt any resolutions of its Board of
Directors in support of, any of the actions prohibited by this Section 5.03.
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Section 5.03. Bancorp Forbearances.
During the period from the date of this Agreement to the Effective Time,
except as expressly contemplated or permitted by this Agreement, Bancorp shall
not, and shall not permit any of the Bancorp Subsidiaries to, without the prior
written consent of Xxxxxxx (which consent shall not be unreasonably withheld),
(a) amend, repeal or otherwise modify any provision of its Certificate of
Incorporation, By-laws or other formation documents, except as otherwise
contemplated hereby; (b) knowingly take any action or knowingly fail to take any
action, which action or failure to act is reasonably likely to prevent the
Combination from qualifying as a "reorganization" within the meaning of Section
368(a) of the Code; (c) take any action that would materially impede or delay
the ability of the Parties to obtain any necessary approvals of any Regulatory
Agency or Governmental Entity required for the transactions contemplated by this
Agreement; (d) take any action that is intended or is reasonably likely to
result in any of its representations or warranties set forth in Article IV of
this Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Combination set
forth in Article VII not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable law; (e)
take any action that would materially impede or delay the ability of the Parties
to obtain any necessary Consents of any Regulatory Agency or Governmental Entity
required for the transactions contemplated by this Agreement; or (f) agree to
take, make any commitments to take, or adopt any resolutions of its Board of
Directors in support of, any of the actions prohibited by this Section 5.03.
ARTICLE VI.
ADDITIONAL COVENANTS AND AGREEMENTS
Section 6.01. Best Efforts; Cooperation.
Subject to the terms and conditions herein provided, each of the Parties
hereto agrees to use its best efforts promptly to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations, or otherwise, including
attempting to obtain all necessary Consents, to consummate and make effective,
as soon as practicable, the transactions contemplated by this Agreement.
Section 6.02. Regulatory Matters.
(a) Bancorp and Xxxxxxx shall use their best efforts to cause to be
prepared and filed within forty-five (45) days from the date hereof all required
applications and filings with the Regulatory Authorities which are necessary for
the obtaining of the necessary Consents of the Regulatory Authorities for the
consummation of the transactions contemplated herein. Such applications and
filings shall be in such form as may be prescribed by the respective Regulatory
Authorities and shall contain such information as they may require. The Parties
hereto will cooperate with each other and use their best efforts to prepare and
execute all documentation, to effect all filings and to obtain all permits,
Consents, approvals, rulings and authorizations of the Regulatory Authorities
and third parties which are necessary to consummate the transactions
contemplated herein. Each of the Parties shall have the right to review and
approve in advance,
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which approval shall not be unreasonably withheld, any filing made with, or
written material submitted to, any Regulatory Authority in connection with the
transactions contemplated herein.
(b) Each Party hereto will furnish the other Party with all information
concerning itself, its Subsidiaries, directors, trustees, officers, shareholders
or stockholders and depositors, as applicable, and such other matters as may be
necessary or advisable in connection with any statement or application made by
or on behalf of any such Party to any governmental body in connection with the
transactions, applications or filings contemplated herein. Upon request, the
Parties hereto will promptly furnish each other with copies of written
communications received by them or their respective Subsidiaries from, or
delivered by any of the foregoing to, any Governmental Entity or Regulatory
Authority in respect of the transactions contemplated hereby.
(c) Each of Xxxxxxx and Bancorp shall, and shall cause its Subsidiaries
to, use their reasonable best efforts (i) to take, or cause to be taken, all
actions necessary, proper or advisable to comply promptly with all legal
requirements that may be imposed on such Party or its Subsidiaries with respect
to the Combination and, subject to the conditions set forth in Article VII, to
consummate the transactions contemplated herein, and (ii) to obtain (and to
cooperate with the other Party to obtain) any material consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or Regulatory
Authority and any other third party that is required to be obtained by Xxxxxxx
or Bancorp or any of their respective Subsidiaries in connection with the
Combination and the other transactions contemplated herein.
(d) Each of Xxxxxxx and Bancorp shall promptly advise the other upon
receiving any communication from any Governmental Entity or Regulatory
Authority, Consent of which is required for consummation of the transactions
contemplated by this Agreement, that causes such Party to believe that there is
a reasonable likelihood that any requisite Consent will not be obtained or that
the receipt of any such Consent may be materially delayed.
Section 6.03. Employment and Employee Benefits Matters.
(a) The Parties acknowledge that nothing in this Agreement shall be
construed as (i) constituting an employment agreement between Bancorp or any of
its Affiliates and any officer or employee of Xxxxxxx or any of the Xxxxxxx
Subsidiaries or an obligation on the part of Bancorp or any of its Affiliates to
employ any such officers or employees, and (ii) constituting an employment
agreement between Xxxxxxx or any of its Affiliates and any officer or employee
of Bancorp or any of the Bancorp Subsidiaries or an obligation on the part of
Xxxxxxx or any of its Affiliates to employ any such officers or employees.
(b) Xxxxxxx and Bancorp shall honor and assume the liabilities arising out
of Xxxxxxx'x employees' rights in respect of accrued paid time off and time
accrued for illness bank and give each employee credit therefor and recognize
the tenure of each employee while an employee of Xxxxxxx prior to the Closing
Date for purposes of determining benefits available to employees under Xxxxxxx'x
or Bancorp's employee benefit plans subsequent to the Closing Date (which will
include a waiver of pre-existing condition exclusions for employees and their
dependents and recognition of or credit for all deductibles paid by such
employees during the current period while in the employ of Xxxxxxx). Without
limiting the foregoing, Xxxxxxx and Bancorp shall provide credit for
eligibility, benefit accrual and vesting for all such employees' periods of
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service with Xxxxxxx for purposes of any of Xxxxxxx'x or Bancorp's employee
benefit plans subsequent to the Closing Date, including all qualified and
non-qualified retirement or saving programs, vacation, sick leave, holiday and
severance benefits. Nothing contained herein shall be construed to or shall
create any right to continued employment on the part of any employee of Xxxxxxx
or alter the "at will" status of any employee of Xxxxxxx. After the Closing,
Bancorp intends to form a joint committee with equal representatives of Xxxxxxx
and Bancorp in order to solicit recommendations to management concerning the
types of benefits that may be offered to employees of both companies consistent
with the types of benefits offered in the industry or marketplace. Until such
time as Xxxxxxx and Bancorp implement their joint employee benefit plans, the
existing employee benefit plans of each respective Party shall remain in effect.
(c) Subsequent to the Closing Date, Xxxxxxx shall continue to comply with
the coverage obligations (within the meaning of code Section 4980B and Part 6 of
Subtitle B of Title 1 of ERISA) in respect of any former employee of Xxxxxxx who
is eligible to receive continuation coverage.
Section 6.04. Indemnification.
(a) For a period of six (6) years after the Effective Time, Bancorp shall
indemnify, defend and hold harmless each Person entitled to indemnification from
Xxxxxxx (each an "Indemnified Party") against all liability arising out of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, transactions contemplated by this Agreement) to the same
extent and subject to the conditions set forth in Xxxxxxx'x Certificate of
Incorporation or By-laws, in each case as in effect as of the date hereof.
(b) Bancorp shall use its best efforts (and Xxxxxxx shall cooperate prior
to the Effective Time) to maintain in effect for a period of six (6) years after
the Effective Time Xxxxxxx'x existing directors' and officers' liability
insurance policy (provided the Bancorp may substitute therefor (i) policies with
comparable coverage and amounts containing terms and conditions which are
substantially no less advantageous or (ii) with the consent of Xxxxxxx (given
prior to the Effective Time) any other policy with respect to claims arising
from facts or events which occurred prior to the Effective Time and covering
persons who are currently covered by such insurance; provided, however, that
Bancorp shall not be obligated to make premium payments for such six (6) year
period in respect of such policy (or coverage replacing such policy) which
exceed, for the portion related to Xxxxxxx'x directors and officers, 150% of the
annual premium payments on Xxxxxxx'x current policy, as in effect as of the date
of this Agreement (the "Maximum Amount"). If the amount of premium that is
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, Bancorp shall use its reasonable efforts to maintain the most
advantageous policies of directors' and officers' liability insurance obtainable
for a premium equal to the Maximum Amount.
(c) If Bancorp or any of its successors or assigns shall consolidate with
or merge into any other person and shall not be continuing or surviving person
of such consolidation or merger, or shall transfer all or substantially all of
its assets to any person, then, and in each case, proper provision shall be made
so that the successors and assigns of Bancorp shall assume the obligations set
forth in this Section 6.04.
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Section 6.05. Registration Statement.
Bancorp shall use its best efforts to cause the Form S-4 to be filed with
the SEC within the forty-five (45) days of the date hereof and shall use its
best efforts to cause such Form S-4 to be declared effective under the
Securities Act, which Form S-4, at the time it becomes effective, and at the
Effective Time, shall in all material respects conform to the requirements of
the Securities Act and the general rules and regulations of the SEC promulgated
thereunder. The Form S-4 shall include the form of Joint Proxy Statement for the
meeting(s) of Bancorp's shareholders and Xxxxxxx'x stockholders to be held for
the purpose of having such shareholders and stockholders vote upon the approval
of this Agreement. Xxxxxxx will furnish to Bancorp the information required to
be included in the Form S-4 with respect to its business and affairs before it
is filed with the SEC and again before any amendments are filed. Bancorp shall
take all actions required to qualify or obtain exemptions from such
qualifications for the Bancorp Common Stock to be issued in connection with the
transactions contemplated by this Agreement under applicable "Blue Sky" laws, as
appropriate. Bancorp and Xxxxxxx also shall submit the Joint Proxy Statement
and, if required, the Form S-4 to the FDIC for review and approval
Section 6.06. Section 16 Matters.
Prior to the Effective Time, the Boards of Directors of Xxxxxxx and
Bancorp (or appropriate committees thereof) shall adopt (if necessary) a
resolution consistent with the interpretive guidance of the SEC so that the
disposition by any officer or director of Xxxxxxx, who is a covered Person of
Xxxxxxx for purposes of Section 16 under the Exchange Act (together with the
rules and regulations promulgated thereunder, "Section 16"), of Xxxxxxx Common
Stock or Xxxxxxx Stock Options pursuant to this Agreement and the Combination
shall be an exempt transaction for purposes of Section 16.
Section 6.07. Affiliate and Voting Agreements.
Xxxxxxx shall use its best efforts to cause each director, executive
officer and other person who is an "affiliate" (for purposes of Rule 145 under
the Securities Act) of Xxxxxxx to deliver to Bancorp contemporaneously with the
execution of this Agreement,, an Affiliate Agreement in form and substance as
set forth at Exhibit B. In addition, each of Xxxxxxx and Bancorp shall use its
best efforts to cause each of its directors and executive officers to deliver to
Bancorp and Xxxxxxx contemporaneously with the execution of this Agreement a
Voting Agreement in form and substance as set forth at Exhibit A, pursuant to
which such director and/or executive officer will agree to vote their shares of
Xxxxxxx Common Stock or Bancorp Common Stock, as the case may be, in favor of
this Agreement and the transactions contemplated hereby. It being understood by
the Parties, that in the event any Person required to deliver an Affiliate
Agreement or Voting Agreement contemporaneously with the execution hereof does
not deliver such agreement, each Party will use its best efforts to cause such
Person to do so within ten (10) days of the date of this Agreement.
Section 6.08. No Other Bids.
(a) Except with respect to this Agreement and the transactions
contemplated hereby, neither Xxxxxxx nor Bancorp, nor any investment banker,
attorney, accountant or other
52
representative (collectively, "representative") retained by Xxxxxxx or Bancorp
shall directly or indirectly initiate, solicit, encourage or otherwise
facilitate any inquiries or the making of any proposal or offer that
constitutes, or may reasonably be expected to lead to, any "takeover proposal"
(as defined below) by any other party. Except to the extent necessary to comply
with the fiduciary duties of Xxxxxxx'x Board of Directors or Bancorp's Board of
Directors, as the case may be, as advised in writing by counsel to such Board of
Directors, neither Xxxxxxx nor Bancorp or a representative thereof shall furnish
any non-public information that it is not legally obligated to furnish or
negotiate or enter into any agreement or contract with respect to any takeover
proposal, and shall direct and use its reasonable efforts to cause its
representatives not to engage in any of the foregoing, but Xxxxxxx or Bancorp
may communicate information about such a takeover proposal to its stockholders
or shareholders, as the case may be, if and to the extent it is required to do
so in order to comply with its legal obligations as advised in writing by
counsel. Xxxxxxx shall promptly notify Bancorp and Bancorp shall promptly notify
Xxxxxxx, orally and in writing, in the event that it receives any inquiry or
proposal relating to any such transaction. Xxxxxxx and Bancorp shall immediately
cease and cause to be terminated as of the date of this Agreement any existing
activities, discussions or negotiations with any other parties conducted
heretofore with respect to any of the foregoing. As used in this Section 6.08,
"takeover proposal" shall mean (i) any proposal for a merger or other business
combination involving Xxxxxxx or any Xxxxxxx Subsidiary or for the acquisition
of a significant equity interest in Xxxxxxx or any Xxxxxxx Subsidiary or for the
acquisition of a significant portion of the assets or liabilities of Xxxxxxx or
any Xxxxxxx Subsidiary, or (ii) any proposal for a merger or other business
combination involving Bancorp or any Bancorp Subsidiary or for the acquisition
of a significant equity interest in Bancorp or any Bancorp Subsidiary or for the
acquisition of a significant portion of the assets or liabilities of Bancorp or
any Bancorp Subsidiary.
(b) Xxxxxxx and Bancorp shall ensure that their representatives are aware
of the restrictions described in this Section 6.08 as reasonably necessary to
avoid violations thereof. It is understood that any violation of the
restrictions set forth in this Section 6.08 by any representative of Xxxxxxx or
Bancorp, at the direction of or with the consent of Xxxxxxx or Bancorp, as the
case may be, shall be deemed to be a breach of this Section 6.08 by Xxxxxxx or
Bancorp, as the case may be.
Section 6.09. Transaction Expenses of Xxxxxxx.
(a) (i) For planning purposes, Xxxxxxx will provide Bancorp with its
estimated budget of transaction-related expenses reasonably anticipated to be
payable by Xxxxxxx in connection with this Agreement and the transactions
contemplated hereby based on facts and circumstances then currently known,
including the fees and expenses of counsel, accountants, investment bankers and
other professionals. Xxxxxxx shall use its best efforts to maintain expenses
within the budget, provided that in the event the actual facts and circumstances
differ from the assumptions upon which the budget is based, then the budget
shall be adjusted to reasonably correspond to such change.
(ii) For planning purposes, Bancorp will provide Xxxxxxx with its
estimated budget of transaction-related expenses reasonably anticipated to be
payable by Bancorp in connection with this Agreement and the transactions
contemplated hereby based on facts and circumstances then currently known,
including the fees and expenses of counsel, accountants,
53
investment bankers and other professionals. Bancorp shall use its best efforts
to maintain expenses within the budget, provided that in the event the actual
facts and circumstances differ from the assumptions upon which the budget is
based, then the budget shall be adjusted to reasonably correspond to such
change.
(b) Bancorp and Xxxxxxx shall agree on all arrangements with respect to
the printing and mailing of the Joint Proxy Statement. Each Party shall be
responsible for their proportionate expenses with respect to the printing of the
Joint Proxy Statement.
(c) (i) Not later then two (2) business days prior to the Closing Date,
Xxxxxxx shall provide Bancorp with an accounting of all transaction related
expenses incurred by it through the Closing Date, including a good faith
estimate of such expenses incurred or to be incurred through the Closing Date
but as to which invoices have not yet been submitted. Xxxxxxx shall detail any
variance of such transaction expenses to the budget provided pursuant to Section
6.09(a)(i).
(ii) Not later then two (2) business days prior to the Closing Date,
Bancorp shall provide Xxxxxxx with an accounting of all transaction related
expenses incurred by it through the Closing Date, including a good faith
estimate of such expenses incurred or to be incurred through the Closing Date
but as to which invoices have not yet been submitted. Bancorp shall detail any
variance of such transaction expenses to the budget provided pursuant to Section
6.09(a)(ii).
Section 6.10. Press Releases.
Bancorp and Xxxxxxx agree that they will not issue any press release or
other public disclosure related to this Agreement or the transactions
contemplated hereby, without first consulting with the other Party as to the
timing, form and substance of such disclosures which may relate to the
transactions contemplated by this Agreement, provided, however, that nothing
contained herein shall prohibit either Party, following notification to the
other Party, from making any disclosure which is required by applicable law or
regulation.
Section 6.11. Prior Notice and Approval Before Payment to be Made.
(a) (i) No payments shall be made by Xxxxxxx or any Xxxxxxx Subsidiary to
any director, officer or employee in accordance with any agreement, contract,
plan or arrangement (including, but not limited to, any employment agreement,
severance arrangement, stock option, deferred compensation plan, vacation or
leave plan or other compensation or benefits program), upon the termination of
such agreement, contract, plan or arrangement or upon the termination of
employment or service of such recipient with Xxxxxxx or an Xxxxxxx Subsidiary,
except to the extent that such intended payments (i) have been set forth in the
Schedules hereto, (ii) with prior written notice to Bancorp of such intended
payment, (iii) delivery of a written acknowledgement and release executed by the
recipient and Xxxxxxx or the Xxxxxxx Subsidiary satisfactory to Bancorp in form
and substance, and (iv) the written consent of Bancorp.
(ii) No payments shall be made by Bancorp or any Bancorp Subsidiary
to any director, officer or employee in accordance with any agreement, contract,
plan or arrangement (including, but not limited to, any employment agreement,
severance arrangement, stock option, deferred compensation plan, vacation or
leave plan or other compensation or benefits program), upon the termination of
such agreement, contract, plan or arrangement or upon the termination of
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employment or service of such recipient with Bancorp or an Bancorp Subsidiary,
except to the extent that such intended payments (i) have been set forth in the
Schedules hereto, (ii) with prior written notice to Xxxxxxx of such intended
payment, (iii) delivery of a written acknowledgement and release executed by the
recipient and Bancorp or the Bancorp Subsidiary satisfactory to Xxxxxxx in form
and substance, and (iv) the written consent of Xxxxxxx.
(b) (i) Prior to the Effective Time, Xxxxxxx, with the assistance of its
tax accountants, shall determine if any payments made or to be made by Xxxxxxx
or any of the Xxxxxxx Subsidiaries shall constitute an "excess parachute
payment" in accordance with Section 280G of the Code, shall furnish Bancorp with
a schedule of any non-deductible payments in accordance with Section 280G of the
Code, and take such steps as are necessary so that the IRS Forms 1099 and W-2
and related forms shall properly report the non-deductible status of any such
payments.
(ii) Prior to the Effective Time, Bancorp, with the assistance of
its tax accountants, shall determine if any payments made or to be made by
Bancorp or any of the Bancorp Subsidiaries shall constitute an "excess parachute
payment" in accordance with Section 280G of the Code, shall furnish Xxxxxxx with
a schedule of any non-deductible payments in accordance with Section 280G of the
Code, and take such steps as are necessary so that the IRS Forms 1099 and W-2
and related forms shall properly report the non-deductible status of any such
payments.
Section 6.12. NASDAQ SmallCap Market Listing.
Bancorp shall use its reasonable best efforts to cause the Bancorp Common
Stock to be issued in the Combination to be approved for listing on the NASDAQ
SmallCap Market, subject to official notice of issuance, as of the Effective
Time. It being understood by Bancorp that the listing of the Bancorp Common
Stock to be issued in the Combination is a condition precedent to Closing.
Section 6.13. Current Information on Bancorp.
During the period from the date of this Agreement to the Effective Time or
the time of termination or abandonment of this Agreement, Bancorp will cause one
or more of its designated representatives to confer on a regular and frequent
basis with representatives of Xxxxxxx and to report the general status of the
ongoing operations of Bancorp. Bancorp will promptly notify Xxxxxxx of any
material change in the normal course of business or the operations or the
properties of Bancorp or any Bancorp Subsidiary, any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) affecting Bancorp or a Bancorp Subsidiary, the institution or the
threat of material litigation, claims, threats or causes of action involving
Bancorp or any Bancorp Subsidiary, and will keep Xxxxxxx fully informed of such
events.
Section 6.14. Current Information on Xxxxxxx.
During the period from the date of this Agreement to the Effective Time or
the time of termination or abandonment of this Agreement, Xxxxxxx will cause one
or more of its designated representatives to confer on a regular and frequent
basis with representatives of Bancorp and to report the general status of the
ongoing operations of Xxxxxxx. Xxxxxxx will promptly notify
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Bancorp of any material change in the normal course of business or the
operations or the properties of Xxxxxxx or any Xxxxxxx Subsidiary, any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) affecting Xxxxxxx or any Xxxxxxx
Subsidiary, the institution or the threat of material litigation, claims,
threats or causes of action involving Xxxxxxx or any Xxxxxxx Subsidiary, and
will keep Bancorp fully informed of such events.
Section 6.15. Access to Information.
Upon reasonable notice and subject to applicable laws relating to the
exchange of information, each of Xxxxxxx and Bancorp shall, and shall cause each
of its Subsidiaries to, afford to the officers, employees accountants, counsel
and other representative of the other, reasonable access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records, and, during such period, each Party
shall, and shall cause its Subsidiaries to, make available to the other Party
(i) a copy of each report, schedule, registration statement and other document
filed or received by it during such period pursuant to the requirements of
federal securities laws or federal or state banking laws (other than reports or
documents that such Party is not permitted to disclose under applicable law) and
(ii) all other information concerning its business, properties and personnel as
the other may reasonably request. Neither Xxxxxxx nor Bancorp nor any of their
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would jeopardize the attorney-client privilege
of such Party or its Subsidiaries or contravene any law, rule, regulation,
order, judgment, decree, fiduciary duty or binding agreement entered into prior
to the date of this Agreement. The Parties shall make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
Section 6.16. Access to Properties; Personnel and Records; Systems
Integration.
(a) (i) For so long as this Agreement shall remain in effect, Xxxxxxx and
the Xxxxxxx Subsidiaries shall permit Bancorp or its agents full access; during
normal business hours, to the properties of Xxxxxxx and the Xxxxxxx
Subsidiaries, and shall disclose and make available (together with the right to
copy) to Bancorp and to its internal auditors, loan review officers, attorneys,
accountants and other representatives, all books, papers and records relating to
the assets, stock, properties, operations, obligations and liabilities of
Xxxxxxx or the Xxxxxxx Subsidiaries, including all books of account (including
the general ledger), Tax records, minute books of directors' and stockholders'
meetings, organizational documents, By-laws, contracts and agreements, filings
with any regulatory agency, examination reports, correspondence with regulatory
or taxing authorities, documents relating to assets, titles, abstracts,
appraisals, consultant's reports, plans affecting employees, securities transfer
records and stockholder lists, and any other assets, business activities or
prospects in which Bancorp may have a reasonable interest, and Xxxxxxx and the
Xxxxxxx Subsidiaries shall use their reasonable best efforts to provide Bancorp
and its representatives access to the work papers of Xxxxxxx'x accountants.
Xxxxxxx and the Xxxxxxx Subsidiaries shall not be required to provide access to
or to disclose information where such access or disclosure would violate or
prejudice the rights of any customer, would contravene any law, rule,
regulation, order or judgment or would violate any confidentiality agreement;
provided, however, that Xxxxxxx and the Xxxxxxx Subsidiaries shall cooperate
with
56
Bancorp in seeking to obtain Consents from appropriate parties under whose
rights or authority access is otherwise restricted. The foregoing rights granted
to Bancorp shall not, whether or not and regardless of the extent to which the
same are exercised, affect the representations and warranties made in this
Agreement by Xxxxxxx.
(ii) For so long as this Agreement shall remain in effect, Bancorp
and the Bancorp Subsidiaries shall permit Xxxxxxx or its agents full access;
during normal business hours, to the properties of Bancorp and the Bancorp
Subsidiaries, and shall disclose and make available (together with the right to
copy) to Xxxxxxx and to its internal auditors, loan review officers, attorneys,
accountants and other representatives, all books, papers and records relating to
the assets, stock, properties, operations, obligations and liabilities of
Bancorp or the Bancorp Subsidiaries, including all books of account (including
the general ledger), Tax records, minute books of directors' and shareholders'
meetings, organizational documents, By-laws, contracts and agreements, filings
with any regulatory agency, examination reports, correspondence with regulatory
or taxing authorities, documents relating to assets, titles, abstracts,
appraisals, consultant's reports, plans affecting employees, securities transfer
records and shareholder lists, and any other assets, business activities or
prospects in which Xxxxxxx may have a reasonable interest, and Bancorp and the
Bancorp Subsidiaries shall use their reasonable best efforts to provide Xxxxxxx
and its representatives access to the work papers of Bancorp's accountants.
Bancorp and the Bancorp Subsidiaries shall not be required to provide access to
or to disclose information where such access or disclosure would violate or
prejudice the rights of any customer, would contravene any law, rule,
regulation, order or judgment or would violate any confidentiality agreement;
provided, however, that Bancorp and the Bancorp Subsidiaries shall cooperate
with Xxxxxxx in seeking to obtain Consents from appropriate parties under whose
rights or authority access is otherwise restricted. The foregoing rights granted
to Xxxxxxx shall not, whether or not and regardless of the extent to which the
same are exercised, affect the representations and warranties made in this
Agreement by Bancorp.
(b) (i) From and after the date hereof, Xxxxxxx shall cause its directors,
officers and employees to, and shall make all reasonable efforts to cause
Xxxxxxx'x data processing service providers to, cooperate and assist Bancorp in
connection with an electronic and systematic conversion of all applicable data
regarding Xxxxxxx to an agreed upon system by Xxxxxxx and MCBNA of electronic
data processing.
(ii) From and after the date hereof, Bancorp shall cause its
directors, officers and employees to, and shall make all reasonable efforts to
cause Bancorp's data processing service providers to, cooperate and assist
Xxxxxxx in connection with an electronic and systematic conversion of all
applicable data regarding Bancorp to an agreed upon system by Xxxxxxx and MCBNA
of electronic data processing.
(c) No investigation by either of the Parties or their respective
representative, under this Section 6.16 or any other provision of this
Agreement, shall affect the representations and warranties of the other set
forth in this Agreement.
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Section 6.17. Confidentiality of Information.
All information furnished by the Parties hereto pursuant to this Agreement
shall be treated as the sole property of the Party providing such information
until the consummation of the Combination contemplated hereby and, if such
transaction shall not occur, the Party receiving the information shall return to
the Party which furnished such information, all documents or other materials
containing, reflecting or referring to such information, shall use its best
efforts to keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or other commercial
purposes. The obligation to keep such information confidential shall continue
indefinitely but shall not apply to (a) any information which (i) the Party
receiving the information was already in possession of prior to disclosure
thereof by the Party furnishing the information, (ii) was then available to the
public, or (iii) became available to the public through no fault of the Party
receiving the information; or (b) disclosures pursuant to a legal requirement or
in accordance with an order of a court of competent jurisdiction or regulatory
agency; provided, however, the Party which is the subject of any such legal
requirement or order shall use its best efforts to give the other Party at least
ten (10) business days' prior notice thereof. Each Party hereto acknowledges and
agrees that a breach of any of its obligations under this Section 6.17 would
cause the other Party irreparable harm for which there is no adequate remedy at
law, and that, accordingly, each Party is entitled to injunctive and other
equitable relief for the enforcement thereof in addition to damages or any other
relief available at law. Without the consent of the other Party, neither Party
shall not use information furnished to such Party other than for the purposes of
the transactions contemplated hereby.
Section 6.18. Notice of Deadlines.
(a) Schedule 6.18(a) lists the deadlines for extensions or terminations
occurring in 2004 of any material leases, agreements or licenses (including
specifically real property leases and data processing agreements) to which
Xxxxxxx or any Xxxxxxx Subsidiary is a party.
(b) Schedule 6.18(b) lists the deadlines for extensions or terminations
occurring in 2004 of any material leases, agreements or licenses (including
specifically real property leases and data processing agreements) to which
Bancorp or any Bancorp Subsidiary is a party.
Section 6.19. Maintenance of Properties; Certain Remediation and
Capital Improvements.
Xxxxxxx and the Xxxxxxx Subsidiaries will maintain their respective
properties and assets in satisfactory condition and repair for the purposes for
which they are intended, ordinary wear and tear excepted. Bancorp and the
Bancorp Subsidiaries will maintain their respective properties and assets in
satisfactory condition and repair for the purposes for which they are intended,
ordinary wear and tear excepted.
Section 6.20. Compliance Matters.
Prior to the Effective Time of the Combination, each Party shall take, or
cause to be taken, all steps reasonably requested by the other Party to cure any
deficiencies in regulatory compliance by such Party or any of its Subsidiaries;
provided, however, neither Party shall be
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responsible for discovering or have any obligation to disclose the existence of
such defects to the other Party nor shall it have any liability resulting from
such deficiencies or attempts to cure them.
Section 6.21. Approval of Stockholders and Shareholders.
Bancorp and Xxxxxxx will take all steps necessary under applicable laws to
call, give notice of, convene and hold one or more meetings of their respective
shareholders and stockholders at such time(s) as may be mutually agreed to by
the Parties for the purpose of approving this Agreement and the transactions
contemplated hereby and for such other purposes consistent with the complete
performance of this Agreement as may be necessary or desirable. The Board of
Directors of Xxxxxxx will recommend to its stockholders and the Board of
Directors of Bancorp will recommend to its shareholders the approval of this
Agreement and the transactions contemplated hereby and Bancorp and Xxxxxxx will
use their reasonable best efforts to obtain the necessary approvals by their
respective shareholders and stockholders of this Agreement and the transactions
contemplated hereby.
Section 6.22. Registration of Bancorp Common Stock related to
Assumed Options.
As soon as practicable after the Effective Time, Bancorp shall register
pursuant to a registration statement on Form S-8, the shares of Bancorp Common
Stock subject to issuance upon the exercise of Xxxxxxx Stock Options exchanged
in accordance with Section 1.05.
Section 6.23. Notification of Certain Matters.
Each Party shall give prompt notice to the other of (a) any event,
condition, change, occurrence, act or omission which causes any of its
representations hereunder to cease to be true in all material respects (or, with
respect to any such representation which is qualified as to materiality, causes
such representation to cease to be true in all respects); and (b) any event,
condition, change, occurrence, act or omission which individually or in the
aggregate has, or which, so far as reasonably can be foreseen at the time of its
occurrence, is reasonably likely to have, a Material Adverse Effect on such
Party. Each of Xxxxxxx and Bancorp shall give prompt notice to the other Party
of any notice or other communication from any third party alleging that the
Consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement. No such notification shall affect
the representations, warranties, covenants or agreements of the Parties (or
remedies with respect thereto) or the conditions to the obligations of the
Parties under this Agreement. A failure to comply with this Section 6.23 shall
not constitute the failure of any condition set forth in Article VII to be
satisfied unless the underlying Material Adverse Effect of such failure would
result in the failure of a condition set forth in Article VII to be satisfied.
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ARTICLE VII.
CONDITIONS PRECEDENT
Section 7.01. Conditions to Each Party's Obligation to Effect the
Combination.
The respective obligations of the Parties to effect the Combination shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder and Stockholder Approval.
This Agreement shall have been approved and adopted by the requisite
affirmative vote of the holders of Xxxxxxx Common Stock entitled to vote thereon
and by the requisite affirmative vote of the holders of Bancorp Common Stock
entitled to vote thereon.
(b) NASDAQ SmallCap Listing.
The shares of Bancorp Common Stock to be issued to the holders of Xxxxxxx
Common Stock upon consummation of the Combination shall have been authorized for
listing on the NASDAQ SmallCap Market, subject to official notice of issuance.
(c) Regulatory Approvals.
All Requisite Regulatory Approvals and other Consents required to
consummate the transactions contemplated by this Agreement, including the
Combination, shall have been obtained and shall remain in full force and effect,
and all statutory waiting periods in respect thereof shall have expired.
(d) Form S-4.
The Form S-4 shall have become effective under the Securities Act and no
stop order suspending the effectiveness of the Form S-4 shall have been issued
and no proceedings for that purpose shall have been initiated or threatened by
the SEC or FDIC. Bancorp shall have received all state securities laws, or "Blue
Sky" permits or other authorizations, or confirmations as to the availability of
exemptions from registration requirements, as may be necessary to issue the
Bancorp Common Stock pursuant to the terms of this Agreement.
(e) Stock Split.
The Stock Split contemplated by Section 1.09 shall have been effectuated
as provided therein.
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(f) No Injunctions or Restraints; Illegality.
No order, injunction or decree issued by any Governmental Entity of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Combination or any of the other transactions
contemplated by this Agreement shall be in effect. No statute rule, regulation,
order, Injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity that prohibits or makes illegal the
consummation of the Combination.
(g) Name Change of Bancorp to Central Jersey Bancorp.
Bancorp's Certificate of Incorporation will be amended to change Bancorp's
name to "Central Jersey Bancorp."
(h) Application for Name Change of MCBNA to "Central Jersey Bank, National
Association."
Subject to the rules and regulations of the OCC and any other applicable
Regulatory Authority, MCBNA shall have filed with the OCC and such other
applicable Regulatory Authority such documentation a is necessary and required
to change its name to "Central Jersey Bank, National Association," or such other
name agreed to by the Parties, after the Closing Date but before the Bank
Merger. It is understood that such filings will be made as soon as practicable
after the execution of this Agreement.
(i) The Bank Merger.
Subject to the rules and regulations of the OCC and any other applicable
Regulatory Authority, the Parties will take all actions that may be taken before
the Closing Date to effectuate the Bank Merger after the Closing Date.
Section 7.02. Conditions to Obligations of Bancorp.
The obligation of Bancorp to consummate the Combination is also subject to
the satisfaction by Xxxxxxx, or waiver by Bancorp, at or prior to the Effective
Time, of the following conditions:
(a) Representations and Warranties.
The representations and warranties of Xxxxxxx set forth in this Agreement
and in any certificate or document delivered pursuant hereto shall be true and
correct in all material respects as of the date of this Agreement and as of all
times up to and including the Effective Time as though made on and as of the
Effective Time, except that representations and warranties are by their express
provisions made as of a specified date shall be true and correct as of such
date. Bancorp shall have received a certificate signed on behalf of Xxxxxxx by
the Chief Executive Officer or the Chief Financial Officer of Xxxxxxx to the
foregoing effect.
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(b) Performance of Obligations of Xxxxxxx.
Xxxxxxx shall have performed in all material respects all covenants,
obligations and agreements required to be performed by it under this Agreement
at or prior to the Closing Date. Bancorp shall have received a certificate
signed on behalf of Xxxxxxx by the Chief Executive Officer or the Chief
Financial Officer of Xxxxxxx to such effect.
(c) Opinion of Counsel.
Bancorp shall have received an opinion of counsel from Xxxxxx Xxxxxx &
Xxxxxxxx, LLC, counsel to Xxxxxxx, satisfactory to Bancorp and its counsel,
dated as of the Effective Time, to the effect set forth in Exhibit C hereof.
(d) Consents Under Agreements.
Xxxxxxx shall have obtained the Consent or approval of each Person (other
than the Consents of the Regulatory Authorities) whose Consent or approval shall
be required under any loan or credit agreement, note, mortgage, indenture,
lease, license, or other agreement or instrument relating to Xxxxxxx, except
those for which failure to obtain such Consents and approvals would not in the
opinion of Bancorp, individually or in the aggregate, have a Material Adverse
Effect on Xxxxxxx or upon the consummation of the transactions contemplated by
this Agreement.
(e) Material Condition.
There shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Combination by any
Regulatory Authority which, in connection with the grant of any Consent by any
Regulatory Authority, imposes, in the judgment of Bancorp, any material adverse
requirement upon Bancorp or any of the Bancorp Subsidiaries, including, without
limitation, any requirement that Bancorp sell or dispose of any significant
amount of the assets of Bancorp.
(f) Certification of Claims.
Xxxxxxx shall have delivered a certificate to Bancorp that Xxxxxxx is not
aware of any pending or threatened claim under the directors and officers
insurance policy or the fidelity bond coverage of Xxxxxxx.
(g) Dissenting Shares.
No more than 2% of the issued and outstanding shares of Xxxxxxx Common
Stock shall be Dissenting Xxxxxxx Shares (as defined in Section 2.03) and no
more than 2% of the issued and outstanding shares of Bancorp Common Stock shall
be Dissenting Bancorp Shares (as defined in Section 2.04).
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(h) Affiliate Agreements.
The Affiliate Agreement delivered by each director and executive officer
of Xxxxxxx in connection with the execution of this Agreement, shall remain in
full force and effect.
Section 7.03. Conditions to Obligations of Xxxxxxx.
The obligation of Xxxxxxx to consummate the Combination is also subject to
the satisfaction by Bancorp, or waiver by Xxxxxxx, at or prior to the Effective
Time, of the following conditions:
(a) Representations and Warranties.
The representations and warranties of Bancorp set forth in this Agreement
and in any certificate or document delivered pursuant hereto shall be true and
correct in all material respects as of the date of this Agreement and as of all
times up to and including the Effective Time as though made on and as of the
Effective Time, except that representations and warranties are by their express
provisions made as of a specified date shall be true and correct as of such
date. Xxxxxxx shall have received a certificate signed on behalf of Bancorp by
the Chief Executive Officer or the Chief Financial Officer of Bancorp to the
foregoing effect.
(b) Performance of Obligations of Bancorp.
Bancorp shall have performed in all material respects all covenants,
obligations and agreements required to be performed by it under this Agreement
at or prior to the Closing Date. Xxxxxxx shall have received a certificate
signed on behalf of Bancorp by the Chief Executive Officer or the Chief
Financial Officer of Bancorp to such effect.
(c) Opinions of Counsel.
Xxxxxxx shall have received an opinion of counsel from Xxxxxxxx, Xxxxxxxx
& Xxxxxx, P.C., counsel to Bancorp, satisfactory to Xxxxxxx and its counsel,
dated as of the Effective Time, to the effect set forth in Exhibit D hereof. In
addition, Xxxxxxx shall have received an opinion of counsel from Xxxxxxxx,
Xxxxxxxx & Xxxxxx, P.C., counsel to Bancorp, satisfactory to Xxxxxxx and its
counsel, that the exchange of the shares of Bancorp Common Stock for the shares
of Xxxxxxx Common Stock as a result of the Combination shall be a Tax free
exchange.
(d) Consents Under Agreements.
Bancorp shall have obtained the Consent or approval of each Person (other
than the Consents of the Regulatory Authorities) whose Consent or approval shall
be required under any loan or credit agreement, note, mortgage, indenture,
lease, license, or other agreement or instrument relating to Bancorp, except
those for which failure to obtain such Consents and approvals would not in the
opinion of Xxxxxxx, individually or in the aggregate, have a Material Adverse
Effect on Bancorp or upon the consummation of the transactions contemplated by
this Agreement.
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(e) Material Condition.
There shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Combination by any
Regulatory Authority which, in connection with the grant of any Consent by any
Regulatory Authority, imposes, in the judgment of Xxxxxxx, any material adverse
requirement upon Xxxxxxx or any of the Xxxxxxx Subsidiaries, including, without
limitation, any requirement that Xxxxxxx sell or dispose of any significant
amount of the assets of Xxxxxxx.
(f) Certification of Claims.
Bancorp shall have delivered a certificate to Xxxxxxx that Bancorp is not
aware of any pending or threatened claim under the directors and officers
insurance policy or the fidelity bond coverage of Bancorp.
(g) Dissenting Shares.
No more than 2% of the issued and outstanding shares of Xxxxxxx Common
Stock shall be Dissenting Xxxxxxx Shares (as defined in Section 2.03) and no
more than 2% of the issued and outstanding shares of Bancorp Common Stock shall
be Dissenting Bancorp Shares (as defined in Section 2.04).
ARTICLE VIII.
TERMINATION, WAIVER AND AMENDMENT
Section 8.01. Termination.
This Agreement may be terminated and the Combination abandoned at any time
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the Combination by the stockholders of Xxxxxxx or
the shareholders of Bancorp:
(a) by the mutual consent in writing of the Board of Directors of Bancorp
and the Board of Directors Xxxxxxx, if the Board of Directors of each so
determines by a vote of a majority of the members of its respective entire Board
of Directors; or
(b) by the Board of Directors of Bancorp or the Board of Directors Xxxxxxx
if the Combination shall not have occurred on or prior to December 31, 2004;
provided, however, that the failure to consummate the Combination on or before
such date is not caused by any breach of any of the representations, warranties,
covenants or other agreements contained herein by the Party electing to
terminate pursuant to this Section 8.01(b); or
(c) by the Board of Directors of Bancorp or the Board of Directors Xxxxxxx
(provided that the terminating Party is not then in breach of any representation
or warranty contained in this Agreement under the applicable standard set forth
in Section 9.02 of this Agreement or in breach of any covenant or agreement
contained in this Agreement) in the event of an inaccuracy of any representation
or warranty of the other Party contained in this Agreement which cannot be or
has not been cured within thirty (30) days after the giving of written notice to
the breaching Party of
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such inaccuracy and which inaccuracy would provide the terminating Party the
ability to refuse to consummate the Combination under the applicable standard
set forth in Section 9.02 of this Agreement; or
(d) by the Board of Directors of Bancorp or the Board of Directors of
Xxxxxxx (provided that the terminating Party is not then in breach of any
representation or warranty contained in this Agreement under the applicable
standard set forth in Section 9.02 of this Agreement or in breach of any
covenant or agreement contained in this Agreement) in the event of a material
breach by the other Party of any covenant or agreement contained in this
Agreement which cannot be or has not been cured within thirty (30) days after
the giving of written notice to the breaching Party of such breach; or
(e) by the Board of Directors of Bancorp or the Board of Directors of
Xxxxxxx in the event (i) any Consent of any Regulatory Authority required for
consummation of the Combination and the other transactions contemplated hereby
shall have been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit for appeal,
or (ii) the stockholders of Xxxxxxx or the shareholders of Bancorp fail to vote
their approval of this Agreement and the Combination and the transactions
contemplated hereby as required by applicable law at their respective meetings
where the transactions were presented to such stockholders or shareholders for
approval and voted upon; or
(f) by the Board of Directors of Bancorp, (i) if Xxxxxxx fails to hold its
stockholder meeting to vote on the Agreement within sixty (60) days of the Form
S-4 being declared effective by the SEC, except in the event such delay is
caused by the FDIC or other Regulatory Authority and provided Xxxxxxx has been
provided adequate notice of such declaration from Bancorp or its counsel, or
(ii) if Xxxxxxx'x Board of Directors either (A) fails to recommend, or fails to
continue its recommendation, that the stockholders of Xxxxxxx vote in favor of
the adoption of this Agreement, or (B) modifies, withdraws or changes in any
manner adverse to Bancorp its recommendation that the stockholders of Xxxxxxx
vote in favor of the adoption of this Agreement; or
(g) by the Board of Directors of Xxxxxxx, (i) if Bancorp fails to hold its
shareholder meeting to vote on the Agreement within sixty (60) days of the Form
S-4 being declared effective by the SEC, except in the event such delay is
caused by the FDIC or other Regulatory Authority, or (ii) if Bancorp's Board of
Directors either (A) fails to recommend, or fails to continue its
recommendation, that the shareholders of Bancorp vote in favor of the adoption
of this Agreement, or (B) modifies, withdraws or changes in any manner adverse
to Xxxxxxx its recommendation that the shareholders of Bancorp vote in favor of
the adoption of this Agreement; or
(h) (i) by the Board of Directors of Xxxxxxx, in the event the Board of
Directors, after receipt of the written legal opinion from counsel detailing
that such action of accepting such Acquisition Transaction (as defined below)
and terminating this Agreement is required in order for the Board of Directors
to comply with its fiduciary duties under applicable laws of the State of New
Jersey; or
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(ii) by the Board of Directors of Bancorp, in the event the Board of
Directors, after receipt of the written legal opinion from counsel detailing
that such action of accepting such Acquisition Transaction and terminating this
Agreement is required in order for the Board of Directors to comply with its
fiduciary duties under applicable laws of the State of New Jersey.
"Acquisition Transaction" shall, (i) with respect to Xxxxxxx, mean any of
the following: (a) a merger or consolidation, or any similar transaction (other
than the Combination) of any company with either Xxxxxxx or an Xxxxxxx
Subsidiary, (b) a purchase, lease or other acquisition of all or substantially
all the assets of Xxxxxxx, (c) a purchase or other acquisition of "beneficial
ownership" by any "person" or "group" (as such terms are defined in Section
13(d)(3) of the Exchange Act) (including by way of merger, consolidation, share
exchange, or otherwise) which would cause such person or group to become the
beneficial owner of securities representing twenty-five percent (25%) or more of
the voting power of Xxxxxxx, or (d) a tender or exchange offer to acquire
securities representing twenty-five percent (25%) or more of the voting power of
Xxxxxxx, and (ii) with respect to Bancorp, mean any of the following: (a) a
merger or consolidation, or any similar transaction (other than the Combination)
of any company with either Bancorp or a Bancorp Subsidiary, (b) a purchase,
lease or other acquisition of all or substantially all the assets of Bancorp,
(c) a purchase or other acquisition of "beneficial ownership" by any "person" or
"group" (as such terms are defined in Section 13(d)(3) of the Exchange Act)
(including by way of merger, consolidation, share exchange, or otherwise) which
would cause such person or group to become the beneficial owner of securities
representing twenty-five percent (25%) or more of the voting power of Bancorp,
or (d) a tender or exchange offer to acquire securities representing twenty-five
percent (25%) or more of the voting power of Bancorp.
Section 8.02. Effective of Termination; Termination Fee.
In the event of the termination and abandonment of this Agreement pursuant
to Section 8.01 of this Agreement, this Agreement shall terminate and have no
effect, except as otherwise provided herein and except that the provisions of
Section 6.17, Section 9.06 and this Section 8.02 shall survive any such
termination and abandonment.
If, after the date of this Agreement, Xxxxxxx terminates this Agreement in
accordance with Section 8.01(h)(i), then immediately upon any such termination
and in addition to any other rights and remedies of Bancorp, Xxxxxxx shall pay
Bancorp a cash amount of $1,500,000 as an agreed-upon termination fee plus
reimbursement to Bancorp for its expenses incurred in negotiation and pursuit of
this Agreement and the transactions contemplated hereunder, including, but not
limited to, fees and expenses of its attorneys, investment advisors, accountants
and related professionals and costs associated with such transaction
(collectively, the "Termination Fee").
If, after the date of this Agreement, Bancorp terminates this Agreement in
accordance with Section 8.01(h)(ii), then immediately upon any such termination
and in addition to any other rights and remedies of Xxxxxxx, Bancorp shall pay
Xxxxxxx the Termination Fee.
Xxxxxxx and Bancorp agree that the Termination Fee is fair and reasonable
in the circumstances. If a court of competent jurisdiction shall nonetheless, by
a final, nonappealable
66
judgment, determine that the amount of any such Termination Fee exceeds the
maximum amount permitted by law, then the amount of such Termination Fee shall
be reduced to the maximum amount permitted by law in the circumstances, as
determined by such court of competent jurisdiction.
Section 8.03. Amendments.
To the extent permitted by law, this Agreement may be amended by a
subsequent writing signed by each of Bancorp and Xxxxxxx.
Section 8.04. Waivers.
Prior to or at the Effective Time of the Combination, Bancorp, on the one
hand, and Xxxxxxx, on the other hand, shall have the right to waive any default
in the performance of any term of this Agreement by the other, to waive or
extend the time for the compliance or fulfillment by the other of any and all of
the other's obligations under this Agreement and to waive any or all of the
conditions to its obligations under this Agreement, except any condition, which,
if not satisfied, would result in the violation of any law or any applicable
governmental regulation.
Section 8.05. Non-Survival of Representations, Warranties and
Covenants.
The representations, warranties, covenants or agreements in this Agreement
or in any instrument delivered by Bancorp or Xxxxxxx shall not survive the
Effective Time, except for those set forth in Sections 1.10, 6.03, 6.04 and
6.17, and any representation, warranty or agreement in any agreement, contract,
report, opinion, undertaking or other document or instrument delivered hereunder
in whole or in part by any Person other than Bancorp or Xxxxxxx (or directors
and officers thereof in their capacities as such) shall survive the Effective
Time; provided, however, that no representation or warranty of Bancorp or
Xxxxxxx contained herein shall be deemed to be terminated or extinguished so as
to deprive Bancorp, on the one hand, and Xxxxxxx, on the other hand, of any
defense at law or in equity which any of them otherwise would have to any claim
against them by any Person, including, without limitation, any shareholder or
former shareholder of either Party. No representation or warranty in this
Agreement shall be affected or deemed waived by reason of the fact that Bancorp
or Xxxxxxx and/or its representatives knew or should have known that any such
representation or warranty was, is, might be or might have been inaccurate in
any respect.
ARTICLE IX.
MISCELLANEOUS
Section 9.01. Closing.
On the terms and subject to conditions set forth in this Agreement, the
closing of the Combination (the "Closing") shall take place at 10:00 a.m. on a
date and at a place to be specified by the Parties, which date shall be no later
than five (5) business days after the satisfaction or waiver (subject to
applicable law) of the latest to occur of the conditions set forth
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in Article VII (other than those conditions that by their nature are to be
satisfied or waived at the Closing), unless extended by mutual agreement of the
Parties (the "Closing Date").
Section 9.02. Standard.
No representation or warranty of Xxxxxxx contained in Article III or of
Bancorp contained in Article IV shall be deemed untrue or incorrect for any
purpose under this Agreement, and no Party hereto shall be deemed to have
breached a representation or warranty for any purpose under this Agreement, in
any case as a consequence of the existence or absence of any fact, circumstance
or event unless such fact, circumstance or event, individually or when taken
together with all other facts, circumstances or events inconsistent with any
representations or warranties contained in Article III, in the case of Xxxxxxx,
or Article IV, in the case of Bancorp, has had or would be reasonably likely to
have a Material Adverse Effect with respect to Xxxxxxx or Bancorp, respectively
(disregarding for purposes of this Section 9.02 any materiality or Material
Adverse Effect qualification contained in any representations or warranties).
Section 9.03. Entire Agreement.
This Agreement, the Confidentiality Agreement dated as of May 4, 2004
between the Parties and the documents referred to herein contain the entire
agreement among Bancorp and Xxxxxxx with respect to the transactions
contemplated hereunder and this Agreement supersedes all prior arrangements or
understandings with respect thereto, whether written or oral, except for the
terms of the Confidentiality Agreement.
Section 9.04. Notices.
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally, sent by
commercial overnight courier with written verification of receipt, mailed by
first class or registered or certified mail, postage prepaid, or sent by
telegram or telex or other facsimile transmission (with confirmation of receipt)
addressed as follows:
If to Xxxxxxx:
Xxxxxxx Community Bank
0000 Xxxxxxx 00
Xxx Xxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxx, Chairman
Xxxx X. Xxxxxxx, President and CEO
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With a copy to:
Xxxxxx Xxxxxx & Xxxxxxxx, LLC
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Bancorp:
Monmouth Community Bancorp
000 Xxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Chairman and CEO
With a copy to:
Xxxxxxxx, Xxxxxxxx & Xxxxxx, PC
000 Xxxx Xxxx Xxxx
X.X. Xxx 000 Xxxxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
All such notices or other communications shall be deemed to have been
delivered (i) upon receipt when delivery is made by hand or by overnight
courier, (ii) on the third (3rd) business day after deposit in the United States
mail when delivery is made by first class, registered or certified mail, and
(iii) upon transmission when made by telegram, telex or other facsimile
transmission if evidenced by a sender transmission completed confirmation.
Section 9.05. Severability.
If any term, provision, covenant or restriction contained in this
Agreement is held by a court of competent jurisdiction or other competent
authority to be invalid, void or unenforceable or against public or regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and in no way
shall be affected, impaired or invalidated, if, but only if, pursuant to such
remaining terms, provisions, covenants and restrictions the Combination may be
consummated in substantially the same manner as set forth in this Agreement as
of the later of the date this Agreement was executed or last amended.
Section 9.06. Costs and Expenses.
Expenses incurred by Xxxxxxx on the one hand and Bancorp on the other
hand, in connection with or related to the authorization, preparation and
execution of this Agreement, the solicitation of stockholder or shareholder
approval and all other matters related to the Closing of the transactions
contemplated hereby, including all fees and expenses of agents, representatives,
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counsel and accountants employed by either such Party or its Affiliates, shall
be shared equally by the Parties in the event of a termination of this Agreement
for any reason other than those set forth in Section 8.02.
Section 9.07. Captions.
The captions as to contents of particular articles, sections or paragraphs
contained in this Agreement and the table of contents hereto are inserted only
for convenience and are in no way to be construed as part of this Agreement or
as a limitation on the scope of the particular articles, sections or paragraphs
to which they refer.
Section 9.08. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document with the same force and effect as though all Parties
had executed the same document.
Section 9.09. Persons Bound; No Assignment; No Third-Party
Beneficiaries.
This Agreement shall be binding upon and shall inure to the benefit of the
Parties hereto and their respective successors and assigns, but notwithstanding
the foregoing, this Agreement may not be assigned by any Party hereto, by
operation of law or otherwise, unless the prior written consent of the other
Party is first obtained. Except as specifically provided herein, this Agreement
(including the documents and instruments referred to in this Agreement) is not
intended to and does not confer upon any Person other than the Parties hereto
any rights or remedies under this Agreement.
Section 9.10. Governing Law.
This Agreement is made and shall be governed by and construed in
accordance with the laws of the State of New Jersey (without respect to its
conflicts of laws principles) except to the extent federal law may apply.
Section 9.11. Recitals, Exhibits and Schedules.
Each of the recitals set forth on the introductory pages of this Agreement
and each of the Exhibits and Schedules attached hereto is an integral part of
this Agreement and shall be applicable as if set forth in full.
Section 9.12. Waiver.
The waiver by any Party of the performance of any agreement, covenant,
condition or warranty contained herein shall not invalidate this Agreement, nor
shall it be considered a waiver of any other agreement, covenant, condition or
warranty contained in this Agreement. A waiver by either Party of the time for
performing any act shall not be deemed a waiver of the time for performing any
other act or an act required to be performed at a later time. The exercise of
any remedy provided by law, equity or otherwise and the provisions in this
Agreement for any remedy shall not exclude any other remedy unless it is
expressly excluded. The waiver of any
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provision of this Agreement must be signed by the Party or Parties against whom
enforcement of the waiver is sought. This Agreement and any Exhibit, memorandum
or Schedule hereto or delivered in connection herewith may be amended only by a
writing signed on behalf of each Party hereto.
Section 9.13. Construction of Terms.
Whenever used in this Agreement, the singular number shall include the
plural and the plural the singular. Pronouns of one gender shall include all
genders. Accounting terms used and not otherwise defined in this Agreement shall
have the meanings determined by, and all calculations with respect to accounting
or financial matters unless otherwise provided for herein, shall be computed in
accordance with GAAP, consistently applied. References herein to articles,
sections, paragraphs, subparagraphs or the like shall refer to the corresponding
articles, sections, paragraphs, subparagraphs or the like of this Agreement. The
words "hereof," "herein," and terms of similar import shall refer to this entire
Agreement. Unless the context clearly requires otherwise, the use of the terms,
"including," "included," "such as," or terms of similar meaning, shall not be
construed to imply the exclusion of any other particular elements.
Section 9.14. Representations and Warranties.
Each Party has the authority to make the representations and warranties
made by the Party on behalf of any Subsidiary thereof.
IN WITNESS WHEREOF, Xxxxxxx and Bancorp have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
ATTEST: XXXXXXX COMMUNITY BANK
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxx
------------------- ------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chief Executive Officer
ATTEST: MONMOUTH COMMUNITY BANCORP
/s/ Xxxxxxx Xxxxxxxx, III By: /s/ Xxxxx X. Xxxxxxx
------------------------- ------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman and Chief Executive Officer
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