Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
INTERCHANGE FINANCIAL SERVICES CORPORATION
SADDLE BROOK, NEW JERSEY
AND
BRIDGE VIEW BANCORP
ENGLEWOOD CLIFFS, NEW JERSEY
Dated as of November 18, 2002
TABLE OF CONTENTS
ARTICLE I ACQUISITION OF BVB BY INTERCHANGE...........................................................2
Section 1.01 Merger of BVB with and into Interchange................................................2
Section 1.02 Effective Date and Effective Time......................................................2
Section 1.03 Effects of the Merger..................................................................2
Section 1.04 Certificate of Incorporation and Bylaws................................................2
Section 1.05 Directors and Officers.................................................................3
Section 1.06 Conversion of Securities...............................................................3
Section 1.07 Election Procedures....................................................................5
Section 1.08 Exchange Procedures; Surrender of Certificates.........................................8
Section 1.09 Treatment of BVB Stock Options........................................................10
Section 1.10 Tax Consequences......................................................................10
Section 1.11 Voting Agreement and Irrevocable Proxy................................................10
ARTICLE II THE CLOSING AND THE CLOSING DATE...........................................................11
Section 2.01 Time and Place of the Closing and Closing Date........................................11
Section 2.02 Actions to be Taken at the Closing by BVB.............................................11
Section 2.03 Actions to be Taken at the Closing by Interchange.....................................13
Section 2.04 Further Assurances....................................................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BVB......................................................14
Section 3.01 Organization and Authority............................................................14
Section 3.02 Subsidiaries..........................................................................15
Section 3.03 Capitalization of BVB.................................................................15
Section 3.04 Execution and Delivery; No Violation..................................................16
Section 3.05 Consents and Approvals................................................................17
Section 3.06 Financial Statements..................................................................17
Section 3.07 No Adverse Change.....................................................................18
Section 3.08 Absence of Certain Changes or Events..................................................18
Section 3.09 Litigation............................................................................20
Section 3.10 Taxes and Tax Returns.................................................................20
Section 3.11 Undisclosed Liabilities...............................................................22
Section 3.12 Title to Assets.......................................................................22
Section 3.13 Condition of Assets...................................................................22
Section 3.14 Contracts.............................................................................23
Section 3.15 Investments...........................................................................23
Section 3.16 Interest Rate Risk Management Instruments.............................................24
Section 3.17 Loans.................................................................................24
Section 3.18 Evidences of Indebtedness.............................................................24
Section 3.19 Proprietary Rights....................................................................25
Section 3.20 Deposit Summary.......................................................................25
Section 3.21 Transactions with Certain Persons and Entities........................................25
Section 3.22 Guaranties............................................................................25
Section 3.23 Insurance.............................................................................26
Section 3.24 Compliance with Laws, Permits and Instruments.........................................26
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Section 3.25 Absence of Certain Business Practices.................................................26
Section 3.26 Environmental Compliance..............................................................27
Section 3.27 Regulatory Compliance.................................................................27
Section 3.28 Community Reinvestment Act............................................................28
Section 3.29 Fair Housing Act, Home Mortgage Disclosure Act and Equal Credit Opportunity Act.......28
Section 3.30 Usury Laws and Other Consumer Compliance Laws.........................................28
Section 3.31 Bank Secrecy Act, Foreign Corrupt Practices Act and U.S.A. Patriot Act................28
Section 3.32 Fiduciary Responsibilities............................................................29
Section 3.33 Registration Statement; Joint Proxy Statement/Prospectus..............................29
Section 3.34 BVB Statements and Reports............................................................29
Section 3.35 Books and Records.....................................................................29
Section 3.36 Employee Relationships................................................................30
Section 3.37 Employee Benefit Plans................................................................30
Section 3.38 Completion of Transaction.............................................................32
Section 3.39 Representations Not Misleading........................................................32
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INTERCHANGE..............................................32
Section 4.01 Organization and Authority............................................................32
Section 4.02 Capitalization of Interchange.........................................................33
Section 4.03 Execution and Delivery; No Violation..................................................33
Section 4.04 Financial Statements..................................................................34
Section 4.05 No Adverse Change.....................................................................34
Section 4.06 Absence of Certain Changes or Events..................................................35
Section 4.07 Litigation............................................................................36
Section 4.08 Taxes.................................................................................36
Section 4.09 Undisclosed Liabilities...............................................................37
Section 4.10 Insurance.............................................................................37
Section 4.11 Compliance with Laws, Permits and Instruments.........................................38
Section 4.12 Absence of Certain Business Practices.................................................38
Section 4.13 Consents and Approvals................................................................38
Section 4.14 Environmental Compliance..............................................................38
Section 4.15 Regulatory Compliance.................................................................39
Section 4.16 Community Reinvestment Act............................................................39
Section 4.17 Fair Housing Act, Home Mortgage Disclosure Act and Equal Credit Opportunity Act.......40
Section 4.18 Usury Laws and Other Consumer Compliance Laws.........................................40
Section 4.19 Bank Secrecy Act, Foreign Corrupt Practices Act and U.S.A. Patriot Act................40
Section 4.20 Registration Statement; Joint Proxy Statement/Prospectus..............................40
Section 4.21 Interchange Statements and Reports....................................................41
Section 4.22 Books and Records.....................................................................41
Section 4.23 Employee Benefit Plans................................................................41
Section 4.24 Completion of Transaction.............................................................43
Section 4.25 Representations Not Misleading........................................................43
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ARTICLE V COVENANTS OF BVB...........................................................................43
Section 5.01 Best Efforts..........................................................................43
Section 5.02 BVB Shareholders' Meeting.............................................................43
Section 5.03 Information Furnished by BVB..........................................................44
Section 5.04 Affirmative Covenants.................................................................44
Section 5.05 Negative Covenants....................................................................46
Section 5.06 Access; Pre-Closing Investigation.....................................................48
Section 5.07 Invitations to and Attendance at Directors' and Committee Meetings....................48
Section 5.08 Additional Financial Statements.......................................................49
Section 5.09 Untrue Representations................................................................49
Section 5.10 Litigation and Claims.................................................................49
Section 5.11 Notice of Material Adverse Changes....................................................49
Section 5.12 No Negotiation with Others............................................................49
Section 5.13 Consents and Approvals................................................................50
Section 5.14 Environmental Investigation; Right to Terminate Agreement.............................50
Section 5.15 Restrictions on Resales...............................................................51
Section 5.16 Shareholder Lists.....................................................................51
Section 5.17 Employee Plans........................................................................51
Section 5.18 Employee Health and Welfare Plans.....................................................52
Section 5.19 BVB Stock Option Plans and BVB Stock Options..........................................52
Section 5.20 Voting Agreement......................................................................52
Section 5.21 Non-Compete Agreements................................................................52
Section 5.22 Accruals and Reserves.................................................................52
Section 5.23 280G Payments.........................................................................52
Section 5.24 Dividends.............................................................................53
Section 5.25 Disclosure Schedules..................................................................53
ARTICLE VI COVENANTS OF INTERCHANGE...................................................................53
Section 6.01 Best Efforts..........................................................................53
Section 6.02 Interchange Shareholders' Meeting.....................................................53
Section 6.03 Regulatory Approvals and Registration Statement.......................................54
Section 6.04 Information for Applications and Statements...........................................55
Section 6.05 Prohibited Acts of Interchange........................................................55
Section 6.06 Access; Pre-Closing Investigation.....................................................55
Section 6.07 Untrue Representations................................................................56
Section 6.08 Litigation and Claims.................................................................56
Section 6.09 Notice of Material Adverse Changes....................................................56
Section 6.10 Consents and Approvals................................................................56
Section 6.11 Employee Matters......................................................................56
Section 6.12 Conduct of Business in the Ordinary Course............................................57
Section 6.13 Disclosure Schedules..................................................................57
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BVB.............................................57
Section 7.01 Representations and Warranties........................................................57
Section 7.02 Performance of Interchange Obligations................................................57
Section 7.03 Shareholder Approvals.................................................................57
Section 7.04 Government and Other Approvals........................................................58
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Section 7.05 No Litigation.........................................................................58
Section 7.06 Delivery of Closing Documents.........................................................58
Section 7.07 Registration Statement................................................................58
Section 7.08 Nasdaq Listing........................................................................59
Section 7.09 Federal Tax Opinion...................................................................59
Section 7.10 No Material Adverse Change............................................................59
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF INTERCHANGE.....................................59
Section 8.01 Representations and Warranties........................................................59
Section 8.02 Performance of BVB Obligations........................................................59
Section 8.03 Shareholder Approvals.................................................................59
Section 8.04 Government and Other Approvals........................................................59
Section 8.05 No Litigation.........................................................................60
Section 8.06 Delivery of Closing Documents.........................................................60
Section 8.07 Receipt of Shareholder Letters........................................................60
Section 8.08 Registration Statement................................................................60
Section 8.09 Nasdaq Listing........................................................................60
Section 8.10 Federal Tax Opinion...................................................................60
Section 8.11 Accounting Treatment..................................................................62
Section 8.12 No Material Adverse Change............................................................62
Section 8.13 Termination and/or Integration of Employee Plans......................................62
ARTICLE IX TERMINATION AND ABANDONMENT................................................................62
Section 9.01 Expenses..............................................................................62
Section 9.02 Right of Termination..................................................................63
Section 9.03 Notice of Termination.................................................................66
Section 9.04 Effect of Termination.................................................................66
ARTICLE X CONFIDENTIAL INFORMATION...................................................................66
Section 10.01 Definition of "Recipient," "Disclosing Party" and "Representative"....................66
Section 10.02 Definition of "Subject Information"...................................................67
Section 10.03 Confidentiality.......................................................................67
Section 10.04 Securities Law Concerns...............................................................67
Section 10.05 Return of Subject Information.........................................................68
Section 10.06 Specific Performance/Injunctive Relief................................................68
ARTICLE XI SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ADDITIONAL REMEDIES............................68
Section 11.01 Survival of Representations and Warranties............................................68
Section 11.02 Additional Remedies...................................................................68
ARTICLE XII MISCELLANEOUS..............................................................................69
Section 12.01 Brokerage Fees and Commissions........................................................69
Section 12.02 Expenses..............................................................................69
Section 12.03 Entire Agreement......................................................................69
Section 12.04 Further Cooperation...................................................................69
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Section 12.05 Severability..........................................................................70
Section 12.06 Notices...............................................................................70
Section 12.07 Governing Law.........................................................................71
Section 12.08 Multiple Counterparts.................................................................71
Section 12.09 Certain Definitions...................................................................72
Section 12.10 Specific Performance..................................................................73
Section 12.11 Attorneys' Fees and Costs.............................................................73
Section 12.12 Interpretation........................................................................73
Section 12.13 No Third Party Beneficiaries..........................................................74
Section 12.14 Assignment............................................................................74
Section 12.15 Public Disclosure.....................................................................74
Section 12.16 Extension; Waiver.....................................................................74
Section 12.17 Amendments............................................................................75
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EXHIBITS
Exhibit A - Form of Voting Agreement and Irrevocable Proxy
Exhibit B - Form of Shareholder Letter
Exhibit C - Persons to Deliver Non-Compete Agreements
Exhibit D - Form of Non-Compete Agreement
Exhibit E - Index Group
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of the 18th day of November, 2002, by and between INTERCHANGE FINANCIAL
SERVICES CORPORATION, a New Jersey corporation and registered bank holding
company under the Bank Holding Company Act of 1956, as amended (the "BHCA"),
with its principal offices in Saddle Brook, New Jersey ("Interchange"), and
BRIDGE VIEW BANCORP, a New Jersey corporation and registered bank holding
company under the BHCA with its principal offices in Englewood Cliffs, New
Jersey ("BVB").
WITNESSETH:
WHEREAS, Interchange is a corporation duly organized and existing under the
laws of the State of New Jersey; and
WHEREAS, BVB is a corporation duly organized and existing under the laws of
the State of New Jersey; and
WHEREAS, this Agreement provides for the merger of BVB with and into
Interchange (the "Merger"); and
WHEREAS, as a result of the Merger, (i) all of the issued and outstanding
shares of voting common stock, no par value per share, of BVB (the "BVB Stock")
(other than fractional share interests which will be cashed out and as otherwise
set forth herein) shall be converted into and exchanged for cash and/or shares
of voting common stock, no par value per share, of Interchange (the "Interchange
Stock") in the manner provided for in this Agreement, and (ii) all of the issued
and outstanding shares of Interchange Stock shall continue to be issued and
outstanding shares of capital stock of Interchange as the surviving corporation
in the Merger; and
WHEREAS, the board of directors of Interchange (the "Interchange Board")
and the board of directors of BVB (the "BVB Board") have each approved this
Agreement and the proposed transactions substantially on the terms and
conditions set forth in this Agreement and the schedules and exhibits hereto and
have authorized the execution hereof; and
WHEREAS, Interchange and BVB believe that the Merger, as provided for and
subject to the terms and conditions set forth in this Agreement and all
exhibits, schedules and supplements hereto, is in the best interests of
Interchange, BVB and their respective shareholders; and
WHEREAS, the Merger is intended to qualify as a tax-free reorganization
within the meaning of the provisions of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code"); and
WHEREAS, Interchange and BVB desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
execution and delivery of this Agreement and certain additional agreements
related to the transactions contemplated thereby.
1
NOW, THEREFORE, for and in consideration of the foregoing and of the mutual
representations, warranties, covenants and agreements contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and subject to the conditions set
forth herein, the parties hereto, intending to be bound hereby, undertake,
promise, covenant and agree with each other as follows:
ARTICLE I
ACQUISITION OF BVB BY INTERCHANGE
Section 1.01 Merger of BVB with and into Interchange. Subject to the terms
and conditions of this Agreement, BVB shall be merged with and into Interchange
on the Effective Date (as defined in Section 1.02) in accordance with the
provisions of Section 14A:10-1 of the New Jersey Business Corporation Act (the
"NJBCA") and the separate corporate existence of BVB shall cease. Interchange
shall be the surviving corporation in the Merger (sometimes referred to herein
as the "Surviving Corporation") and shall continue its corporate existence under
the laws of the State of New Jersey.
Section 1.02 Effective Date and Effective Time. Subject to the terms and
conditions of this Agreement, upon the filing with the Secretary of State of the
State of New Jersey (the "NJSOS") of a duly executed Certificate of Merger, the
Merger shall become effective. The Certificate of Merger shall include this
Agreement. The date on which the Merger is effective shall be referred to herein
as the "Effective Date", which the parties shall use their best efforts to cause
to occur on the Closing Date (as defined in Section 2.01), and the effective
time of the Merger shall be referred to herein as the "Effective Time".
Section 1.03 Effects of the Merger. The Merger shall have the effects
provided by this Agreement and as set forth in Section 14A:10-6 of the NJBCA.
The Surviving Corporation shall (i) be deemed to be a continuation in entity and
identity of each of BVB and Interchange, (ii) possess all the rights,
privileges, powers, immunities, purposes and franchises, both public and
private, of each of BVB and Interchange, (iii) be subject to all the
liabilities, obligations, duties and relations of each merging party, and (iv)
without the necessity of any conveyance, assignment or transfer, become the
owner of all of the assets of every kind and character formerly belonging to BVB
and Interchange. At the Effective Time, all rights, title and interests to all
real property and personal property, tangible and intangible, of every kind and
description belonging to each of Interchange and BVB shall be vested in the
Surviving Corporation without further act or deed, and the title to any real
estate, or any interest therein, vested in either Interchange or BVB shall not
revert or be in any way impaired by reason of such Merger. The Surviving
Corporation shall be liable for all the obligations and liabilities of
Interchange and BVB, and any claim existing or action or proceeding pending by
or against either Interchange or BVB may be enforced as if such Merger had not
taken place. Neither the rights of creditors nor any liens upon, or security
interests in, the property of either Interchange or BVB shall be impaired by
such Merger.
Section 1.04 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation and Bylaws, respectively, of Interchange in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation and Bylaws
of the Surviving Corporation following the Merger until otherwise amended or
repealed in accordance with applicable law.
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Section 1.05 Directors and Officers. At the Effective Time, the directors
and officers of Interchange immediately prior to the Effective Time shall be the
directors and officers, respectively, of the Surviving Corporation following the
Merger; provided, however, that the following three (3) representatives of the
BVB Board shall be appointed to the board of directors of the Surviving
Corporation at a meeting of such board next following the Effective Date: Xxxxxx
X. Xxxxxxxxx, Xx., Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxxxx. In addition, the
following six (6) representatives of BVB shall be appointed to the board of
directors of Interchange Bank at a meeting of such board next following the
Effective Date: Xxxxxx X. Xxxxxxxxx, Xx., Xxxxx X. Xxxxxxx, Xxxx Xxxxxxx,
Xxxxxxxx X. X'Xxxxxx, Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxxxx. Subject to the
foregoing, such directors and officers shall hold office in accordance with the
respective Bylaws of the Surviving Corporation and Interchange Bank and
applicable law.
Section 1.06 Conversion of Securities. At the Effective Time by virtue of
the Merger and without any further action on the part of Interchange, BVB or any
holder of the following securities:
A. Each share of Interchange Stock that is issued and outstanding
immediately prior to the Effective Time shall remain an issued and outstanding
share of common stock of the Surviving Corporation as of the Effective Time and
shall not be affected by the Merger. References to Interchange Stock in this
Agreement as of and after the Effective Time shall be deemed to mean the common
stock of the Surviving Corporation.
B. Subject to the other provisions of this Article II, each share of BVB
Stock that is issued and outstanding immediately prior to the Effective Time,
shall cease to be outstanding and shall be converted into and become the right
to receive, at the election of the holder thereof as provided in Section 1.07
hereof, either:
(i) a number of shares of Interchange Stock equal to the Exchange Ratio
(the "Per Share Stock Amount");
(ii) cash in the amount of the Per Share Cash Amount; or
(iii) a combination of Interchange Stock and cash in the amounts as
determined in accordance with Section 1.07.
provided, however that (a) the aggregate amount of cash exchangeable for
shares of BVB Stock in the Merger shall not exceed the Total Cash Amount, and
(b) the aggregate number of shares of Interchange Stock that shall be issued in
the Merger shall not exceed the Total Stock Amount.
C. For purposes of this Agreement the following definitions shall apply:
(i) "Total Cash Amount" means $33,528,472 less the aggregate dollar amount
of cash paid to the holders of BVB Stock Options (as defined in
Section 3.03.B) pursuant to Section 1.09.
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(ii) "Total Stock Amount" means 2,949,719 shares of Interchange Stock.
(iii) "Merger Consideration" means the sum of the Total Cash Amount and the
Total Stock Amount.
(iv) "Exchange Ratio" means the number determined by dividing (a) the Per
Share Value by (b) the Interchange Measurement Price.
(v) "Aggregate Merger Consideration Value" means the sum of (a) the Total
Cash Amount, and (b) the Interchange Measurement Price multiplied by
the Total Stock Amount.
(vi) "Per Share Value" means the value of a share of BVB Stock determined
by dividing (a) the Aggregate Merger Consideration Value by (b) the
aggregate number of shares of BVB Stock outstanding as of the
Effective Time.
(vii) "Per Share Cash Amount" means the amount of cash equal to the Per
Share Value.
(viii) "Interchange Measurement Price" means the average of the closing bid
and ask price for a share of Interchange Stock as reported by the
Nasdaq National Market ("Nasdaq") during the Valuation Period.
(ix) "Valuation Period" means the period of twenty (20) consecutive trading
days ending on the Election Deadline (as defined in Section 1.07)
D. Notwithstanding any other provision of this Agreement, no fractional
shares of Interchange Stock shall be issued in the Merger and, in lieu thereof,
holders of shares of BVB Stock who would otherwise be entitled to a fractional
share interest (after taking into account all shares of BVB Stock held by such
holder) shall be paid an amount in cash (without interest) equal to the product
of such fractional share interest and the average of the closing bid and asked
price of a share of Interchange Stock as reported by Nasdaq on the business day
immediately preceding the Effective Date. No such holder shall be entitled to
dividends, voting rights or any other rights in respect of any fractional share.
E. If, between the date hereof and the Effective Date, the outstanding
shares of shares of BVB Stock or Interchange Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities as a result of a reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other similar change in
capitalization (a "Share Adjustment"), then the Per Share Value, the Exchange
Ratio, the Per Share Cash Amount, the Per Share Stock Amount and Total Stock
Amount shall be appropriately and proportionately adjusted so that the
shareholders of BVB shall be entitled to receive the Merger Consideration in
such proportion as they would have received pursuant to such Share Adjustment
had the record date therefor been immediately following the Effective Date.
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F. As of the Effective Time, all shares of BVB Stock converted into the
Merger Consideration pursuant to this Section 1.06 shall no longer be
outstanding and shall automatically be cancelled and retired, and all rights
with respect thereto shall cease to exist, and each holder of BVB Stock shall
cease to have any rights thereto, except the right to receive, upon surrender of
the certificate(s) representing any such shares of BVB Stock in accordance with
Section 1.08 hereof, his or her pro rata share of the Merger Consideration
pursuant to this Section 1.06.
G. At the Effective Time, the stock transfer books of BVB shall be closed,
and no transfer of BVB Stock theretofore outstanding shall thereafter be made.
H. Any shares of BVB Stock that are owned by BVB (including treasury
shares) or Interchange (other than shares held in a fiduciary capacity or shares
held in satisfaction of a debt previously contracted) shall automatically be
canceled and retired and all rights with respect thereto shall cease to exist,
and no consideration shall be delivered in exchange therefor.
Section 1.07 Election Procedures.
A. Election forms and other appropriate and customary transmittal materials
(which shall specify that delivery shall be effected, and risk of loss and title
to the certificates theretofore representing shares of BVB Stock
("Certificates") shall pass, only upon proper delivery of such Certificates to
an exchange agent designated by Interchange (the "Exchange Agent")) in such form
as Interchange and BVB shall mutually agree ("Election Forms") shall be mailed
30 days prior to the anticipated Effective Date or on such other earlier date as
BVB and Interchange shall mutually agree ("Mailing Date") to each holder of
record of BVB Stock as of five business days prior to the Mailing Date
("Election Form Record Date").
B. Each Election Form shall permit the holder (or the beneficial owner
through appropriate and customary documentation and instructions), subject to
the allocation procedures of this Section 1.07, either (i) to elect to receive
only Interchange Stock with respect to such holder's BVB Stock ("Stock Election
Shares"); (ii) to elect to receive only cash with respect to such holder's BVB
Stock ("Cash Election Shares"); (iii) to elect to receive a combination of
Interchange Stock and cash with respect to such holder's BVB Stock rounded, in
each case, to the nearest whole share ("Mixed Election Shares"); or (iv) to
indicate that such holder makes no election ("No Election Shares"). Subject to
the allocation procedures of this Section 1.07, the Mixed Election Shares shall
be divided by the Exchange Agent into such portion (to be as closely as possible
to 60% in the aggregate) with respect to which the holder will receive
Interchange Stock (the "Mixed Stock Shares") and such portion (to be
approximately 40% in the aggregate) with respect to which the holder will
receive cash (the "Mixed Cash Shares") for the purposes of allocating the total
consideration as specified below, it being the intention that, to the fullest
extent possible, subject to all applicable constraints, all Mixed Election
Shares shall receive the consideration with respect to which a Mixed election
has been made without regard to the pro rata selection process set forth below.
Any BVB Stock with respect to which the holder (or the beneficial owner, as the
case may be) shall not have submitted to the Exchange Agent an effective,
properly completed Election Form on or before 5:00 p.m., Eastern time, on the
25th day following the Mailing Date (or such other time and date as Interchange
and BVB may mutually agree) (the "Election Deadline") shall also be deemed to be
"No Election Shares."
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C. Interchange shall make available up to two separate Election Forms, or
such additional Election Forms as Interchange in its sole discretion may permit,
to all persons who become holders (or beneficial owners) of BVB Stock between
the Election Form Record Date and close of business on the business day prior to
the Election Deadline, and BVB shall provide to the Exchange Agent all
information reasonably necessary for it to perform as specified herein. BVB
acknowledges that no deadlines for mailing Election Forms contained elsewhere in
this Agreement shall be applicable to such shareholders and that the election
requests of such shareholders need not be honored.
D. Any such election shall have been properly made only if the Exchange
Agent shall have actually received a properly completed Election Form by the
Election Deadline. An Election Form shall be deemed properly completed only if
accompanied by one or more Certificates (or customary affidavits and
indemnification regarding the loss or destruction of such Certificates or the
guaranteed delivery of such Certificates) representing all shares of BVB Stock
covered by such Election Form, together with duly executed transmittal materials
included in the Election Form. Any Election Form may be revoked or changed by
the person submitting such Election Form at or prior to the Election Deadline.
Following the Election Deadline, an Election Form may not be revoked or changed
by the person submitting such Election Form. In the event an Election Form is
revoked prior to the Election Deadline, the shares of BVB Stock represented by
such Election Form shall become No Election Shares and Interchange shall cause
the Certificates to be promptly returned without charge to the person submitting
the Election Form upon written request to that effect from the person who
submitted the Election Form. Subject to the terms of this Agreement and of the
Election Form, the Exchange Agent shall have the sole discretion to determine
whether any election, revocation or change has been properly or timely made and
to disregard immaterial defects in the Election Forms, and any decisions of the
Exchange Agent regarding such matters shall be binding and conclusive. Neither
Interchange nor the Exchange Agent shall be under any obligation to notify any
person of any defect in an Election Form.
E. Within five business days after the Election Deadline, unless the
Effective Time has not yet occurred, in which case as soon thereafter as
practicable, Interchange shall cause the Exchange Agent to effect the allocation
among the holders of BVB Stock of rights to receive Interchange Stock or cash in
the Merger in accordance with the Election Forms as follows:
(i) Stock Elections Plus the Mixed Stock Shares Less Than The Total Stock
Amount. If the number of shares of Interchange Stock that would be issued upon
conversion into Interchange Stock of the Stock Election Shares and Mixed Stock
Shares is less than the Total Stock Amount, then:
a. all Mixed Stock Shares and Stock Election Shares shall be converted
into the right to receive the Per Share Stock Amount,
b. the Exchange Agent shall then select first from among the No Election
Shares, then (if necessary) shares held by the shareholders subject to
1.07.C, and then (if necessary) from among the Cash Election Shares,
by a pro rata selection process (as described below), a sufficient
number of shares ("Stock Designated Shares") such that the number of
shares of Interchange Stock that will be issued in the Merger equals
as closely as practicable the Total Stock Amount, and all Stock
Designated Shares shall be converted into the right to receive the Per
Share Stock Amount, and
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c. the Cash Election Shares, the No Election Shares and the shares held
by shareholders subject to 1.07.C which are not Stock Designated
Shares and all Mixed Cash Shares shall be converted into the right to
receive the Per Share Cash Amount.
(ii) Stock Elections and the Mixed Stock Shares More Than The Total Stock
Amount. If the number of shares of Interchange Stock that would be issued upon
the conversion into Interchange Stock of the Stock Election Shares and Mixed
Stock Shares is greater than the Total Stock Amount, then:
a. all Mixed Cash Shares, Cash Election Shares and No Election Shares
shall be converted into the right to receive the Per Share Cash
Amount,
b. the Exchange Agent shall then select first from among the shares held
by the shareholders subject to 1.07.C, and then (if necessary) from
among the Stock Election Shares, by a pro rata selection process (as
described below) a sufficient number of shares ("Cash Designated
Shares") such that the number of shares of Interchange Stock that will
be issued in the Merger equals as closely as practicable the Total
Stock Amount, and all Cash Designated Shares shall be converted into
the right to receive the Per Share Cash Amount, and
c. the Stock Election Shares and the shares held by shareholders, subject
to 1.07.C which are not Cash Designated Shares and all Mixed Stock
Shares shall be converted into the right to receive the Per Share
Stock Amount.
(iii) Stock Elections and Mixed Stock Shares Equal to the Total Stock
Amount. If the number of shares of Interchange Stock that would be issued upon
conversion into Interchange Stock of the Stock Election Shares and Mixed Stock
Shares is equal or, in Interchange's sole discretion, nearly equal to the Total
Stock Amount, then subparagraphs (i) and (ii) above and subparagraphs (iv) and
(v) below shall not apply and all Stock Election Shares and Mixed Stock Shares
shall be converted into the right to receive the Per Share Stock Amount and all
Cash Election Shares, Mixed Cash Shares and No Election Shares shall be
converted into the right to receive the Per Share Cash Amount.
(iv) Stock Elections, Mixed Stock Shares and No Elections Equal to Total
Stock Amount. If the number of shares of Interchange Stock that would be issued
upon the conversion into Interchange Stock of the Stock Election Shares, Mixed
Stock Shares and No Election Shares would equal or, in Interchange's sole
discretion, nearly equal the Total Stock Amount, then subparagraphs (i), (ii)
and (iii) above and subparagraph (v) below shall not apply and all Cash Election
Shares and Mixed Cash Shares shall be converted into the right to receive the
Per Share Cash Amount and all Stock Election Shares, Mixed Stock Shares and No
Election Shares shall be converted into the right to receive the Per Share Stock
Amount.
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(v) Mixed Stock Shares More Than Total Stock Amount. If the number of
shares of Interchange Stock that would be issued upon the conversion into
Interchange Stock of the Mixed Stock Shares is greater than the Total Stock
Amount, then;
a. all Mixed Cash Shares, Cash Election Shares, No Election Shares and
Stock Election Shares shall be converted into the right to receive the
Per Share Cash Amount,
b. the Exchange Agent shall select first from among the shares held by
the shareholders subject to 1.07.C, and then (if necessary) from among
the Mixed Stock Shares by a pro rata selection process (as described
below) a sufficient number of shares ("Mixed Designated Shares") such
that the number of shares of Interchange Stock that will be issued in
the Merger equals as closely as practicable the Total Stock Amount,
and all Mixed Designated Shares shall be converted into the right to
receive the Per Share Cash Amount, and
c. the Mixed Stock Shares and the shares held by shareholders subject to
1.07.C that are not Mixed Designated Shares shall be converted into
the right to receive the Per Share Stock Amount.
The pro rata selection process to be used by the Exchange Agent shall
consist of such equitable pro ration processes as shall be mutually determined
by Interchange and BVB.
F. Notwithstanding any other provision of this Agreement to the contrary,
if the tax opinion referred to in Section 8.10 cannot be rendered because the
counsel charged with providing such opinion reasonably determines that the
Merger may not satisfy the continuity of interest requirements applicable to
reorganizations under Section 368(a) of the Code, Interchange shall reduce the
Total Cash Amount by the minimum amount necessary to enable such tax opinion to
be rendered, and shall correspondingly increase the Total Stock Amount by
issuing additional shares of Interchange Stock based on the Interchange
Measurement Price so that the Aggregate Merger Consideration Value remains
unchanged.
Section 1.08 Exchange Procedures; Surrender of Certificates.
A. Each previous holder of a Certificate that has surrendered such
Certificate together with duly executed transmittal materials included in the
Election Form to Interchange or, at the election of Interchange, the Exchange
Agent, pursuant to Section 1.07 will, upon acceptance thereof by Interchange or
the Exchange Agent, be entitled to a certificate or certificates representing
the number of full shares of Interchange Stock and/or cash into which the
Certificate so surrendered shall have been converted pursuant to this Agreement
and any distribution theretofore declared and not yet paid with respect to such
shares of Interchange Stock, without interest.
8
B. Interchange or, at the election of Interchange, the Exchange Agent shall
accept Certificates upon compliance with such reasonable terms and conditions as
Interchange or the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with customary exchange practices. Certificates shall be
appropriately endorsed or accompanied by such instruments of transfer as
Interchange or the Exchange Agent may reasonably require.
C. Each outstanding Certificate shall, until duly surrendered to
Interchange or the Exchange Agent, be deemed to evidence ownership of the
consideration into which the stock previously represented by such Certificate
shall have been converted pursuant to this Agreement.
D. After the Effective Time, holders of Certificates shall cease to have
rights with respect to the stock previously represented by such Certificates,
and their sole rights shall be to exchange such Certificates for the
consideration provided for in this Agreement. After the Effective Time, there
shall be no further transfer on the records of BVB of Certificates, and if such
Certificates are presented to BVB for transfer, they shall be cancelled against
delivery of the consideration provided therefor in this Agreement. Interchange
shall not be obligated to deliver the consideration to which any former holder
of BVB Stock is entitled as a result of the Merger until such holder surrenders
the Certificates as provided herein.
E. Certificates surrendered for exchange by any person constituting an
"affiliate" of BVB for purposes of Rule 145 of the Securities Act of 1933, as
amended (together with the rules and regulations thereunder, the "Securities
Act"), shall not be exchanged for certificates representing Interchange Stock
until Interchange has received a written agreement from such person in the form
attached as Exhibit B.
F. Interchange and the Exchange Agent shall be entitled to rely upon the
stock transfer books of BVB to establish the identity of those persons entitled
to receive consideration specified in this Agreement, which books shall be
conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any Certificate, Interchange and the Exchange
Agent shall be entitled to deposit any consideration represented thereby in
escrow with an independent third party and thereafter be relieved with respect
to any claims thereto.
G. In the event that any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Exchange Agent, the posting by such person of a bond in such amount as the
Exchange Agent may determine is necessary as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
shall deliver, in exchange for such lost, stolen or destroyed Certificate, the
consideration provided for in this Agreement.
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H. If any certificate representing shares of Interchange Stock is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of Interchange Stock in any name other than
that of the registered holder of the Certificate 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.
I. Notwithstanding the foregoing, neither the Exchange Agent nor any other
party to this Agreement shall be liable to any holder of any Certificates for
any amount delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat or similar laws.
J. No dividends or other distributions of any kind which are declared
payable to the shareholders of record of Interchange after the Effective Time
shall be paid to persons entitled to receive such certificates for Interchange
Stock until such persons surrender their Certificates. Upon surrender of such
Certificates, the holder thereof shall be paid, without interest, any dividends
or other distributions with respect to the Interchange Stock as to which the
record date and payment date occurred on or after the Effective Date and before
the date of surrender, subject to Section 1.08.I hereof.
Section 1.09 Treatment of BVB Stock Options. Each outstanding BVB Stock
Option which has not already become fully vested and exercisable shall become
fully vested and exercisable immediately prior to the Effective Time. Unless
exercised prior to the Effective Time, each BVB Stock Option shall terminate
immediately prior to the Effective Time, and each holder of such terminated BVB
Stock Option shall be entitled to receive from BVB, in lieu of each share of BVB
Stock that would otherwise have been issuable upon exercise thereof, an amount
in cash equal to the excess, if any, between (i) the value of the consideration
that a holder of such BVB Stock Option would have received upon exercise of the
BVB Stock Option (as determined by Interchange in consultation with BVB, which
determination, absent manifest error, shall be binding); (ii) the exercise price
of such BVB Stock Option. Any payments pursuant to this Section 1.09 shall take
place only after the satisfaction or fulfillment or waiver of (iii) the
covenants contained in Section 5.19 and (iv) the conditions to Closing contained
in Articles VII and VIII. BVB shall collect in cash (and timely pay) all
applicable withholding and payroll taxes with respect to such options, awards
and stock appreciation rights, and shall comply with all payroll reporting
requirements with respect thereto.
Section 1.10 Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code, and
that this Agreement shall constitute a "plan of reorganization" for the purpose
of Section 368 of the Code.
Section 1.11 Voting Agreement and Irrevocable Proxy. As a condition to the
execution of this Agreement, each member of the BVB Board is executing and
delivering to Interchange a Voting Agreement and Irrevocable Proxy in
substantially the form attached hereto as Exhibit A.
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ARTICLE II
THE CLOSING AND THE CLOSING DATE
Section 2.01 Time and Place of the Closing and Closing Date.
A. On a date mutually agreeable to Interchange and BVB, which is not less
than 10 business days nor more than 45 calendar days after the latter of (i) the
receipt of all necessary regulatory approvals (including the expiration of any
mandatory waiting periods) or (ii) the receipt of all necessary shareholder
approvals, unless extended by mutual agreement of the parties ("Closing Date"),
a meeting (the "Closing") will take place at which the parties to this Agreement
will exchange certificates, opinions, letters and other documents in order to
determine whether all of the conditions set forth in Articles VII and VIII of
this Agreement have been satisfied or waived or whether any condition exists
that would permit a party to this Agreement to terminate this Agreement. If no
such condition then exists, or if no party elects to exercise any right it may
have to terminate this Agreement, then and thereupon the appropriate parties
shall execute such documents and instruments as may be necessary or appropriate
in order to effect the transactions contemplated by this Agreement.
B. The Closing shall take place at the offices of Interchange, Park 00
Xxxx/Xxxxx Xxx, Xxxxxx Xxxxx, Xxx Xxxxxx at 10:00 a.m., local time, on the
Closing Date, or at such other time or place to which the parties may mutually
agree.
Section 2.02 Actions to be Taken at the Closing by BVB. At the Closing, BVB
shall execute and acknowledge, or cause to be executed and acknowledged (as
appropriate) and deliver to Interchange, such documents and certificates
necessary or appropriate to carry out the terms and provisions of this
Agreement, including without limitation, the following (all of such actions
constituting conditions precedent to Interchange's obligations to close
hereunder):
A. True, correct and complete copies of the Certificate of Incorporation of
BVB and all amendments thereto, duly certified as of a recent date by the NJSOS;
B. True, correct and complete copies of the Certificate of Incorporation of
Bridge View Bank (the "Bank") and all amendments thereto, duly certified as of a
recent date by the New Jersey Department of Banking and Insurance (the
"NJDOBI");
C. True, correct and complete copies of the Certificate of Incorporation of
each BVB Subsidiary (other than the Bank) and all amendments thereto, duly
certified as of a recent date by the Secretary of State of the state of
incorporation for each respective Subsidiary;
D. A Standing Certificate issued by the NJSOS as of a recent date
reflecting the existence of BVB under the laws of the State of New Jersey;
E. A Franchise Tax Certificate, dated as of a recent date, issued by the
New Jersey Department of Revenue duly certifying as to the good standing of BVB
in New Jersey;
F. A letter, dated as of a recent date, from the Federal Reserve Bank of
New York, to the effect that BVB is a registered bank holding company under the
BHCA;
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G. A Certificate of Status issued by the NJDOBI as of a recent date
reflecting the authority of Bank to transact the business of banking under the
laws of the State of New Jersey;
H. A certificate, dated as of a recent date, issued by the Federal Deposit
Insurance Corporation (the "FDIC"), duly certifying that the deposits of the
Bank are insured by the FDIC pursuant to the Federal Deposit Insurance Act;
I. A certificate, dated as of the Closing Date, duly executed by the
Secretary of BVB, acting solely in his or her capacity as an officer of BVB,
pursuant to which BVB shall certify (i) the due adoption by the BVB Board of
corporate resolutions attached to such certificate authorizing the execution and
delivery of this Agreement and any other agreements and documents contemplated
hereby, and the taking of all actions contemplated hereby and thereby; (ii) the
due adoption by the shareholders of BVB authorizing the transactions and the
execution and delivery of this Agreement and any other agreements and documents
contemplated hereby and the taking of all actions contemplated hereby and
thereby; (iii) the incumbency and true signatures of those officers of BVB duly
authorized to act on its behalf in connection with the transactions contemplated
by this Agreement and to execute and deliver this Agreement and any other
agreements and documents contemplated hereby and the taking of all actions
contemplated hereby and thereby on behalf of BVB; (iv) that the copy of the
bylaws of BVB attached to such certificate is true and correct and such bylaws
have not been amended except as reflected in such copy; and (v) a true and
correct list of the shareholders of BVB as of the Closing Date;
J. A certificate duly executed by the President of BVB, acting solely in
his or her capacity as an officer of BVB, dated as of the Closing Date, pursuant
to which BVB shall certify that (i) all of the representations and warranties
made in Article III of this Agreement are true and correct in all material
respects on and as of the date of such certificate as if made on such date, (ii)
there has been no Material Adverse Change since September 30, 2002, and (iii)
BVB has performed and complied in all material respects with all of its
obligations and agreements required to be performed on or before the Closing
Date under this Agreement;
K. Evidence reasonably satisfactory to Interchange that, as of the
Effective Time, all Employee Plans (as defined in Section 3.37) required by
Interchange to be terminated prior to the Closing have been terminated in
accordance with the terms of such Employee Plans, the Code, the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all other
applicable laws and regulations and that all affected participants have been
notified of such terminations;
L. All consents and approvals required to be obtained by BVB from third
parties to consummate the transactions contemplated by this Agreement;
M. Signed Non-Compete Agreements from those persons identified on Exhibit C
attached hereto and in substantially the form attached hereto as Exhibit D; and
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N. All other documents required to be delivered to Interchange by BVB under
the provisions of this Agreement and all other documents, certificates and
instruments as are reasonably requested by Interchange or its counsel.
Section 2.03 Actions to be Taken at the Closing by Interchange. At the
Closing, Interchange shall execute and acknowledge (where appropriate) and
deliver to BVB, such documents and certificates necessary to carry out the terms
and provisions of this Agreement, including without limitation, the following
(all of such actions constituting conditions precedent to BVB's obligations to
close hereunder):
A. True, correct and complete copies of the Certificate of Incorporation of
Interchange and all amendments thereto, duly certified as of a recent date by
the NJSOS;
B. True, correct and complete copies of the Certificate of Incorporation of
Interchange Bank and all amendments thereto, duly certified as of a recent date
by the NJDOBI;
C. A Standing Certificate issued by the NJSOS as of a recent date
reflecting the existence of Interchange under the laws of the State of New
Jersey;
D. A Franchise Tax Certificate, dated as of a recent date, issued by the
New Jersey Department of Revenue duly certifying as to the good standing of
Interchange in New Jersey;
E. A letter, dated as of a recent date, from the Federal Reserve Bank of
New York, to the effect that BVB is a registered bank holding company under the
BHCA;
F. A Certificate of Status issued by the NJDOBI as of a recent date
reflecting the authority of Bank to transact the business of banking under the
laws of the State of New Jersey;
G. A certificate, dated as of a recent date, issued by the FDIC, duly
certifying that the deposits of Interchange Bank are insured by the FDIC
pursuant to the Federal Deposit Insurance Act;
H. A certificate, dated as of the Closing Date, executed by the Secretary
of Interchange, acting solely in his or her capacity as an officer of
Interchange, pursuant to which Interchange shall certify (i) the due adoption by
the Board of Directors of Interchange (the "Interchange Board") of corporate
resolutions attached to such certificate authorizing the execution and delivery
of this Agreement and the other agreements and documents contemplated hereby and
the taking of all actions contemplated hereby and thereby; (ii) the incumbency
and true signatures of those officers of Interchange duly authorized to act on
its behalf in connection with the transactions contemplated by this Agreement
and to execute and deliver this Agreement and other agreements and documents
contemplated hereby, and the taking of all actions contemplated hereby and
thereby on behalf of Interchange; and (iii) that the copy of the bylaws of
Interchange attached to such certificate is true and correct and such bylaws
have not been amended except as reflected in such copy;
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I. A certificate, dated as of the Closing Date, executed by the President
of Interchange, acting solely in his capacity as an officer of Interchange
pursuant to which Interchange shall certify that (i) all of the representations
and warranties of Interchange made in Article IV of this Agreement are true and
correct in all material respects on and as of the date of such certificate as if
made on such date, and (ii) Interchange has performed and complied in all
material respects with all of its obligations and agreements required to be
performed on or before the Closing Date under this Agreement;
J. All consents and approvals required to be obtained by Interchange from
third parties to consummate the transactions contemplated by this Agreement;
K. All other documents required to be delivered to BVB by Interchange under
the provisions of this Agreement.
Section 2.04 Further Assurances. At any time and from time to time after
the Closing, at the reasonable request of any party to this Agreement and
without further consideration, any party so requested will execute and deliver
such other instruments and take such other action as the requesting party may
reasonably deem necessary or desirable in order to effectuate the transactions
contemplated hereby. In the event that, at any time after the Closing any
further commercially reasonable action is necessary or desirable to carry out
the purposes of this Agreement, each party hereto shall take or cause to be
taken all such commercially reasonable actions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BVB
BVB hereby makes the following representations and warranties to
Interchange as of the date hereof and as of the Closing Date.
Section 3.01 Organization and Authority.
A. BVB is a New Jersey corporation duly organized, validly existing under
the laws of the State of New Jersey, and in good standing under all laws, rules
and regulations applicable to corporations located in the State of New Jersey.
BVB is a bank holding company registered under the BHCA. BVB has all requisite
corporate power and authority (including all licenses, franchises, permits and
other governmental authorizations as are legally required) to carry on its
business as now being conducted, to own, lease and operate its properties and
assets, including, but not limited to, as now owned, leased or operated, and to
enter into and carry out its obligations under this Agreement. True and complete
copies of the Certificate of Incorporation and Bylaws of BVB, as amended to
date, certified by the Corporate Secretary of BVB, have been delivered to
Interchange. The nature of the business of BVB does not require it to be
qualified to do business in any jurisdiction other than the State of New Jersey.
BVB does not, directly or indirectly, engage in any activity that is prohibited
by the Board of Governors of the Federal Reserve System (the "Federal Reserve").
14
B. The Bank is a New Jersey banking corporation duly organized, validly
existing under the laws of the State of New Jersey, and is in good standing
under all laws, rules and regulations applicable to banking corporations located
in of the State of New Jersey. The Bank has all requisite corporate power and
authority (including all licenses, franchises, permits and other governmental
authorizations as are legally required) to carry on its business as now being
conducted, to own, lease and operate its properties and assets, including, but
not limited to, as now owned, leased or operated. The Bank does not conduct any
trust business. True and complete copies of the Certificate of Incorporation and
Bylaws of the Bank, as amended to date, certified by the Secretary or Cashier of
the Bank, have been delivered to Interchange. The deposits of the Bank are
insured by the Bank Insurance Fund of the FDIC to the full extent permissible by
law. The Bank does not, directly or indirectly, engage in any activity that is
prohibited by the State of New Jersey, the FDIC or the Federal Reserve.
Section 3.02 Subsidiaries.
A. Schedule 3.02 sets forth a complete list of each Subsidiary of BVB
(individually, a "BVB Subsidiary" and collectively, the "BVB Subsidiaries"),
including Bridge View Bank (the "Bank"). Except as set forth on Schedule 3.02,
BVB does not, directly or indirectly, own or control any Affiliate. Except as
disclosed on Schedule 3.02, neither BVB nor any BVB Subsidiary has any equity
interest, direct or indirect, in any other bank or corporation or in any
partnership, joint venture or other business enterprise or entity, except as
acquired through settlement of indebtedness, foreclosure, the exercise of
creditors' remedies or in a fiduciary capacity, and the business carried on by
BVB and the BVB Subsidiaries has not been conducted through any other direct or
indirect Subsidiary or Affiliate of BVB or the Bank. No such equity investment
identified in Schedule 3.02 is prohibited by the Federal Reserve, the FDIC or
the State of New Jersey.
B. All of the issued and outstanding shares of each BVB Subsidiary are
owned, either directly or indirectly through another BVB Subsidiary, by BVB free
and clear of all liens, encumbrances, rights of first refusal, options or other
restrictions of any nature whatsoever, and all such shares are duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights of any person. There are no options, warrants or rights outstanding to
acquire any capital stock of any BVB Subsidiary, and no person or entity has any
other right to purchase or acquire any unissued shares of stock of any BVB
Subsidiary, nor does any such BVB Subsidiary have any obligation of any nature
with respect to its unissued shares of stock..
C. The nature of the business of the BVB Subsidiaries does not require any
of them to be qualified to do business in any jurisdiction other than the State
of New Jersey.
Section 3.03 Capitalization of BVB.
A. The entire authorized capital stock of BVB consists solely of 10,000,000
shares of voting common stock, no par value per share (previously defined as the
"BVB Stock"), of which, as of the date hereof, 3,550,809 shares are issued and
outstanding, and 594,749 additional shares of which have been reserved for
issuance to holders of outstanding BVB Stock Options. All of the outstanding
shares of capital stock of BVB are duly authorized, validly issued, fully paid
and nonassessable, and have not been issued in violation of the preemptive
rights of any person. Such shares of BVB Stock have been issued in full
compliance with applicable law. There are no restrictions applicable to the
payment of dividends on the shares of the BVB Stock, except pursuant to
applicable laws and regulations, and all dividends declared prior to the date of
this Agreement on such capital stock have been paid.
15
B. Schedule 3.03(b) contains a list of each stock option plan maintained by
BVB (the "BVB Stock Option Plans"), including (i) the number of outstanding
options with respect to each BVB Stock Option Plan (the "BVB Stock Options"),
(ii) the exercise price per share with respect to each BVB Stock Option, (iii) a
list of all option holders with respect to each BVB Stock Option Plan, and (iv)
the number of vested and unvested BVB Stock Options with respect to each such
option holder in each BVB Stock Option Plan. All BVB Stock Options were issued
and, upon issuance in accordance with the terms of the outstanding option
agreements, the shares of BVB Stock shall be issued in compliance with all
applicable securities laws.
C. Except as set forth in paragraphs A and B above or as disclosed on
Schedule 3.03(c), there are no (i) other outstanding equity securities of any
kind or character, including but not limited to preferred stock, or (ii)
outstanding subscriptions, contracts, options, convertible securities,
preemptive rights, warrants, calls or other agreements or commitments of any
kind issued or granted by, binding upon or otherwise obligating BVB to issue,
sell or otherwise dispose of, or to purchase, redeem or otherwise acquire, any
shares of capital stock of BVB. There are no outstanding contractual obligations
of BVB to vote or dispose of any shares of the capital stock of BVB.
D. Except for the agreements called for by Section 1.11 hereof and as
disclosed in Schedule 3.03(d), there are no agreements between or among any of
the shareholders of BVB relating to a right of first refusal with respect to the
purchase or sale by any such shareholder of capital stock of BVB or any voting
agreement or voting trust with respect to shares of capital stock of BVB.
Section 3.04 Execution and Delivery; No Violation.
A. BVB has full corporate power and authority to execute and deliver this
Agreement and, subject to the receipt of the approval of its shareholders and
receipt of regulatory approvals, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the BVB
Board. The BVB Board has directed that this Agreement and the transactions
contemplated hereby be submitted to its shareholders for approval at a special
meeting and, except for the adoption of this Agreement by the requisite
affirmative vote of the outstanding BVB Stock entitled to vote thereon, no other
corporate proceedings on the part of BVB and no other shareholder votes are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered to Interchange. Assuming due authorization, execution and delivery by
Interchange, this Agreement constitutes the valid and binding obligation of BVB,
enforceable against BVB in accordance with their respective terms and
conditions, except as enforceability may be limited by bankruptcy,
conservatorship, insolvency, moratorium, reorganization, receivership or similar
laws and judicial decisions affecting the rights of creditors generally and by
general principles of equity (whether applied in a proceeding at law or in
equity).
16
B. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance by BVB with
any of the terms or provisions hereof or thereof (provided the required
regulatory and shareholder approvals are obtained) will (i) violate any
provision of the charters, articles, certificates or bylaws of BVB or any BVB
Subsidiary; (ii) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to BVB, the BVB
Subsidiaries or any of their respective Properties or assets; (iii) 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 the lapse of
time, or both, would constitute a default) under, result in the termination or
cancellation under, accelerate the performance required by or rights or
obligations under, or result in the creation of any lien, claim, charge, option,
encumbrance, mortgage, pledge or security interest of any kind or nature
("Lien") upon any of the respective Properties or assets of BVB under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement, contract or other instrument or obligation
to which BVB is a party, or by which it or any of its Properties assets or
business activities may be bound or affected.
Section 3.05 Consents and Approvals. The BVB Board (at a meeting duly
called and held) has resolved, subject to its fiduciary duties to the
shareholders of BVB, to recommend to its shareholders the approval and adoption
of the Merger and this Agreement. Except for shareholder and regulatory approval
and except as disclosed in Schedule 3.05, no approval, consent, order or
authorization of, or registration, declaration or filing with, any governmental
authority or other third party is required on the part of BVB in connection with
the execution, delivery or performance of this Agreement or the agreements
contemplated hereby, or the consummation by BVB of the transactions contemplated
hereby, including, but not limited to, the Merger.
Section 3.06 Financial Statements.
A. BVB has furnished to Interchange true and complete copies of the audited
consolidated financial statements of BVB for the years ended December 31, 1999
through December 31, 2001, and the unaudited consolidated financial statements
for the three- and nine-month periods ended September 30, 2002 (collectively,
the "BVB Financial Statements"). Except as disclosed in Schedule 3.06(a), the
BVB Financial Statements (including, in each case, any related notes), were
prepared in accordance with GAAP, applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such BVB Financial
Statements) and fairly presented the financial position of BVB at the dates and
for the periods indicated. Except as disclosed in Schedule 3.06(a), the BVB
Financial Statements do not contain any items of special or nonrecurring income
or any other income not earned in the ordinary course of business except as
expressly specified therein.
B. BVB has furnished Interchange with a true and complete copies of the
Reports of Condition and Income as of March 31, 2002, June 30, 2002, and
September 30, 2002 for the Bank (the "Bank Call Reports"). Except as disclosed
in Schedule 3.06(b), each of the Bank Call Reports fairly presents, in all
material respects, the financial position of the Bank and the results of its
operations at the dates and for the periods indicated in conformity with the
instructions for the preparation of the Call Report Instructions. Except as
disclosed in Schedule 3.06(b), the Bank Call Reports do not contain any items of
special or nonrecurring income or any other income not earned in the ordinary
course of business except as expressly specified therein. The Bank has
calculated its allowance for loan losses in accordance with GAAP and, to the
extent applicable, regulatory accounting principles ("RAP") as applied to state
non-member banks and in accordance with all applicable rules and regulations. To
the knowledge of BVB, the allowance for loan losses account for the Bank is, and
as of the Closing Date should be, adequate in all material respects to provide
for all losses, net of recoveries relating to loans previously charged off, on
all outstanding loans of the Bank.
17
Section 3.07 No Adverse Change. Except as disclosed in the representations
and warranties made in this Article III and the Schedules hereto, there has not
been any Material Adverse Change since September 30, 2002, nor has any event or
condition occurred that has resulted in, or has a reasonable possibility of
resulting in the future, in a Material Adverse Change.
Section 3.08 Absence of Certain Changes or Events. Except as disclosed on
Schedule 3.08, BVB, including the BVB Subsidiaries, has, since September 30,
2002, conducted its business only in the ordinary course and has not, other than
in the ordinary course of business and consistent with past practices and safe
and sound banking practices:
A. Incurred any obligation or liability, whether absolute, accrued,
contingent or otherwise, whether due or to become due (except deposits taken and
federal funds purchased and current liabilities for trade or business
obligations), which, individually or in the aggregate, result in a Material
Adverse Change;
B. Discharged or satisfied any Lien or paid any obligation or liability,
whether absolute or contingent, due or to become due;
C. Declared or made any payment of dividends or other distribution to its
shareholders, or purchased, retired or redeemed, or obligated itself to
purchase, retire or redeem, any of its shares of capital stock or other
securities;
D. Issued, reserved for issuance, granted, sold or authorized the issuance
of any shares of its capital stock or other securities or subscriptions,
options, warrants, calls, rights or commitments of any kind relating to the
issuance thereof;
E. Acquired any capital stock or other equity securities or acquired any
ownership interest in any bank, corporation, partnership or other entity (except
(i) through settlement of indebtedness, foreclosure, or the exercise of
creditors' remedies or (ii) in a fiduciary capacity, the ownership of which does
not expose it to any liability from the business, operations or liabilities of
such person);
F. Mortgaged, pledged or subjected to Lien or restriction any of its
Property, business or assets, tangible or intangible except (i) as described in
Schedule 3.08, (ii) statutory liens not yet delinquent, (iii) consensual
landlord liens, (iv) minor defects and irregularities in title and encumbrances
that do not materially impair the use thereof for the purpose for which they are
held, (v) pledges of assets to secure public funds deposits, and (vi) those
assets and Properties disposed of for fair value since the dates of the BVB
Financial Statements and the Bank Call Reports;
18
G. Sold, transferred, leased to others or otherwise disposed of any of its
assets or canceled or compromised any debt or claim, or waived or released any
right or claim;
H. Terminated, canceled or surrendered, or received any notice of or threat
of termination or cancellation of any contract, lease or other agreement or
suffered any damage, destruction or loss which, individually or in the
aggregate, would constitute a Material Adverse Change;
I. Disposed of, permitted to lapse, transferred or granted any rights
under, or entered into any settlement regarding the breach or infringement of,
any United States or foreign license or Proprietary Right or modified any
existing rights with respect thereto;
J. Made any change in the rate of compensation, commission, bonus, vesting
or other direct or indirect remuneration payable, paid or agreed or orally
promised to pay, conditionally or otherwise, any bonus, extra compensation,
pension or severance or vacation pay, to or for the benefit of any of their
shareholders, directors, officers, employees or agents, or entered into any
employment or consulting contract or other agreement with any director, officer
or employee or adopted, amended or terminated any pension, employee welfare,
retirement, stock purchase, stock option, stock appreciation rights,
termination, severance, income protection, golden parachute, savings or
profit-sharing plan (including trust agreements and insurance contracts
embodying such plans), any deferred compensation, or collective bargaining
agreement, any group insurance contract or any other incentive, welfare or
employee benefit plan or agreement maintained by BVB or the Bank for the benefit
of its directors, employees or former employees, except (i) periodic increases
consistent with past practices, and (ii) as specifically permitted by this
Agreement;
K. Except for improvements or betterments relating to any of the Properties
or assets of BVB or the BVB Subsidiaries, made any capital expenditures or
capital additions or betterments in excess of an aggregate of $25,000;
L. Instituted, had instituted against them, settled or agreed to settle any
litigation, action or proceeding before any court or governmental body relating
to their property other than routine collection suits instituted by them to
collect amounts owed or suits in which the amount in controversy is less than
$10,000;
M. Suffered any change, event or condition that, individually or in the
aggregate, has caused or may result in a Material Adverse Change or any Material
Adverse Change in earnings or costs or relations with their employees (exclusive
of the termination of any employees in accordance with their existing policies
and procedures), agents, depositors, loan customers, correspondent banks or
suppliers;
N. Except for the transactions contemplated by this Agreement or as
otherwise permitted hereunder, entered into any transaction, or entered into,
modified or amended any contract or commitment;
O. Entered into or given any promise, assurance or guarantee of the
payment, discharge or fulfillment of any undertaking or promise made by any
person, firm or corporation;
19
P. Sold, or knowingly disposed of, or otherwise divested of the ownership,
possession, custody or control, of any corporate books or records of any nature
that, in accordance with sound business practice, normally are retained for a
period of time after their use, creation or receipt, except at the end of the
normal retention period;
Q. Made any, or acquiesced with any, change in any accounting methods,
principles or material practices except as required by GAAP or RAP;
R. Sold (provided, however, that payment at maturity is not deemed a sale)
any Investment Securities or purchased any Investment Securities, other than
U.S. Treasury securities with a maturity of two (2) years or less;
S. Made, renewed, extended the maturity of, or altered any of the material
terms of any loan to any single borrower and his related interests in excess of
the principal amount of $250,000; or
T. Entered into any agreement or made any commitment whether in writing or
otherwise to take any of the types of action described in subsections A through
S above.
Section 3.09 Litigation.
A. Except as disclosed in Schedule 3.09, neither BVB nor any BVB Subsidiary
is a party to any, and there are no pending or, to the knowledge of BVB,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against BVB
or any BVB Subsidiary which are reasonably likely, individually or in the
aggregate, to result in a Material Adverse Effect as to BVB, nor, to the
knowledge of BVB, is there any basis for any proceeding, claim or any action
against BVB or any BVB Subsidiary that would be reasonably likely, individually
or in the aggregate, to result in a Material Adverse Effect as to BVB. There is
no injunction, order, judgment or decree imposed upon BVB or any BVB Subsidiary
or the assets or Property of BVB or the BVB Subsidiaries that has resulted in,
or is reasonably likely to result in, a Material Adverse Effect as to BVB.
B. No legal action, suit or proceeding or judicial, administrative or
governmental investigation is pending or, to the best knowledge of BVB,
threatened against BVB that questions or might question the validity of this
Agreement or the agreements contemplated hereby or any actions taken or to be
taken by BVB pursuant hereto or thereto or seeks to enjoin or otherwise restrain
the transactions contemplated hereby or thereby.
Section 3.10 Taxes and Tax Returns.
A. BVB has duly and timely filed or caused to be filed all federal, state,
foreign and local tax returns and reports required to be filed by it or any BVB
Subsidiary on or prior to the date of this Agreement (all such returns and
reports being accurate and complete in all material respects) and has duly paid
or caused to be paid on its behalf all taxes that are due and payable, other
than taxes that are being contested in good faith and are adequately reserved
against or provided for (in accordance with GAAP) on the BVB Financial
Statements. Except as disclosed on Schedule 3.10, as of the date hereof, neither
BVB nor any BVB Subsidiary has any liability for taxes in excess of the amount
reserved or provided for in the BVB Financial Statements (but excluding, for
this purpose only, any liability reflected thereon for deferred taxes to reflect
timing differences between tax and financial accounting methods).
20
B. Neither BVB nor any BVB Subsidiary will be required to include any item
of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result
of: (i) intercompany transactions or excess loss accounts described in Treasury
Regulations under Section 1502 of the Code (or any corresponding or similar
provision of state, local or foreign income tax law); (ii) installment sale or
open transaction disposition made on or prior to the Closing Date; or (iii)
prepaid amount received on or prior to the Closing Date.
C. Neither BVB nor any BVB Subsidiary has filed a consent pursuant to the
collapsible corporation provisions of Section 341(f) of the Code (or any
corresponding provision of state, local or foreign income tax law).
D. Neither BVB nor any BVB Subsidiary has ever been an "S Corporation"
within the meaning of Section 1361 of the Code.
E. Neither BVB nor any BVB Subsidiary is a party to any safe harbor lease
within the meaning of Section 168(f)(8) of the Code, as in effect prior to the
amendment by the Tax Equity and Fiscal Responsibility Act of 1982.
F. Neither BVB nor any BVB Subsidiary has entered into any compensatory
agreements with respect to the performance of services which payment thereunder
would result in a nondeductible expense to BVB or any BVB Subsidiary pursuant to
Section 162(m) of the Code.
G. Neither BVB nor any BVB Subsidiary has distributed stock of another
entity, or had had its stock distributed by another entity, in a transaction
that was purported or intended to be governed in whole or in part by Section 355
or Section 361 of the Code.
H. Neither BVB nor any BVB Subsidiary is a party to or bound by any tax
allocation or sharing agreement. Neither BVB nor any BVB Subsidiary: (i) has
been a member of an affiliated group filing a consolidated federal income tax
return (other than a group the common parent of which was BVB) or (ii) has any
liability for the taxes of any other person or entity (other than any of BVB or
any BVB Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
I. There are no disputes pending with respect to, or claims or assessments
asserted in writing for, any material amount of taxes upon BVB or any BVB
Subsidiary, nor has BVB or any BVB Subsidiary given or been requested in writing
to give any currently effective waivers extending the statutory period of
limitation applicable to any tax return for any period.
J. Proper and accurate amounts have been withheld by BVB and the BVB
Subsidiaries from their employees, independent contractors, creditors,
stockholders or other third parties for all periods in compliance with the tax
withholding provisions of any applicable law.
21
K. Since December 31, 1996, BVB has not been required to include in income
any material adjustment pursuant to Section 481 of the Code by reason of a
voluntary change in accounting method initiated by BVB, and the Internal Revenue
Service ("IRS") has not initiated or proposed any such material adjustment or
change in accounting method (including any method for determining reserves for
bad debts maintained by BVB).
L. Since December 31, 1991, the federal income tax return of BVB has not
been audited or examined and no such audit is currently pending or threatened
against BVB.
M. As used in this Agreement, the terms "tax" and "taxes" mean all federal,
state, local and foreign income, excise, gross receipts, gross income, ad
valorem, profits, gains, property, capital, sales, transfer, use, value-added,
stamp, documentation, 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.
N. As used in this Agreement, the term "tax return" means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
O. BVB has delivered to Interchange correct and complete copies of all
federal income tax returns filed with the IRS, examination reports, and
statements of deficiencies assessed against or agreed to by BVB since December
31, 1998.
Section 3.11 Undisclosed Liabilities. Neither BVB nor any BVB Subsidiary
has any material liability or obligation, accrued, absolute, contingent or
otherwise and whether due or to become due (including, without limitation,
unfunded obligations under any Employee Plan or liabilities for federal, state
or local taxes or assessments) that are not reflected in or disclosed in the BVB
Financial Statements or the Bank Call Reports, except (i) those liabilities and
expenses incurred in the ordinary course of business and consistent with past
business practices since the date of BVB Financial Statements or the Bank Call
Reports, respectively or (ii) as disclosed on Schedule 3.11.
Section 3.12 Title to Assets. Each of BVB and the BVB Subsidiaries has good
and marketable title to, or valid leasehold interests in, all their respective
Properties and assets. All such assets and Properties, other than assets and
Properties in which BVB or the BVB Subsidiaries has a leasehold interest, are
free and clear of all Liens (other than Liens for current taxes not yet due and
payable). True and complete copies of all existing deeds, surveys, leases and
title insurance policies for all real property owned or leased by BVB or the BVB
Subsidiaries, including all other real estate, and all mortgages, deeds of
trust, security agreements and other documents describing encumbrances to which
such property is subject, have been provided to Interchange.
Section 3.13 Condition of Assets. Except as set forth on Schedule 3.13, all
tangible assets, including furniture, fixtures and equipment, used by BVB and
the BVB Subsidiaries are in good operating condition, ordinary wear and tear
excepted, and conform with all material ordinances, regulations, zoning and
other laws, whether federal, state or local. BVB and the BVB Subsidiaries own
all of the assets and Properties necessary to carry on its business in the
manner in which it is presently conducted. The premises or equipment of BVB and
the BVB Subsidiaries are not in need of maintenance or repairs other than
ordinary routine maintenance and repairs that are not material in nature or
cost.
22
Section 3.14 Contracts. Schedule 3.14 sets forth an accurate and complete
description of all leases, subleases, licenses, contracts and agreements to
which BVB or the BVB Subsidiaries is a party or by which BVB or the BVB
Subsidiaries is bound that obligate or may obligate BVB or the BVB Subsidiaries
in the aggregate for an amount in excess of $50,000 over the entire term of any
such agreement or related contracts of a similar nature that in the aggregate
obligate or may obligate BVB or the BVB Subsidiaries for an amount in excess of
$50,000 over the entire term of such related contracts (the "Contracts"). BVB
has delivered to Interchange true and correct copies of all Contracts. For the
purposes of this Agreement, the Contracts shall be deemed not to include loans
made by, repurchase agreements made by, bankers acceptances of or deposits by
BVB or the Bank, but does include unfunded loan commitments and letters of
credit issued by BVB or the Bank where the borrowers' total direct and indirect
indebtedness to BVB or the Bank is in excess of $250,000. Except as set forth in
Schedule 3.14, no participations or loans have been sold that have buy back,
recourse or guaranty provisions that create contingent or direct liabilities of
BVB or the Bank. Each such lease or agreement is in full force and effect and
constitutes the legal, valid and binding obligation of the respective parties
thereto enforceable in accordance with its terms except as enforceability may be
limited by bankruptcy, conservatorship, insolvency, moratorium, reorganization,
receivership or similar laws and judicial decisions affecting the rights of
creditors generally and by general principles of equity (whether applied in a
proceeding at law or equity). BVB and the BVB Subsidiaries have complied in all
material respects with the terms of all leases to which it is a party, and all
such leases are in full force and effect. Neither BVB nor any of the BVB
Subsidiaries has received any notice of material default or any notice of
material noncompliance, including, without limitation, noncompliance with any
applicable Federal, state or local obligation as lessee that it has not fully
performed, or is aware of any expenditure required under the provisions of any
such lease for any purpose other than payment. For each lease in which BVB or a
BVB Subsidiary is named as lessee, such party is the owner and holder of all the
leasehold estates or other rights and interest purported to be granted by such
instruments, in each case free and clear of any security interests, claims,
liens (including tax liens), forfeitures, mortgages, pledges, penalties,
encumbrances, assignments or charges whatsoever except as established by the
lease or applicable law. BVB and the BVB Subsidiaries enjoy peaceful and
undisturbed possession under all leases under which it is currently operating.
Except as set forth in Schedule 3.14, neither BVB nor any of the BVB
Subsidiaries has any employment contracts (whether written or oral) or any
change in control agreements (whether written or oral) with any of its
respective officers or other employees.
Section 3.15 Investments. Schedule 3.15 contains a complete list, as of
December 31, 2001 and as of October 31, 2002, of all securities, including
municipal bonds, owned by BVB and the BVB Subsidiaries (the "Securities
Portfolio"). All securities in the Securities Portfolio are owned by BVB or the
BVB Subsidiaries, as the case may be, (i) of record, and (ii) beneficially, free
and clear of all mortgages, liens, pledges and encumbrances, except as disclosed
in Schedule 3.15.
23
Section 3.16 Interest Rate Risk Management Instruments. All interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of BVB or any of
the BVB Subsidiaries or for the account of a customer of BVB or any of the BVB
Subsidiaries, were entered into in the ordinary course of business and, to BVB's
knowledge, in accordance with prudent banking practice and applicable rules,
regulations and policies of any regulatory authority and with counterparties
believed to be financially responsible at the time and are legal, valid and
binding obligations of BVB or the BVB Subsidiaries enforceable 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. BVB and the BVB Subsidiaries have duly performed in all material
respects all of its material obligations thereunder to the extent that such
obligations to perform have accrued; and, to BVB's knowledge, there are no
material breaches, violations or defaults or allegations or assertions of such
by any party thereunder.
Section 3.17 Loans. Schedule 3.17 contains a true and complete list, as of
December 31, 2001 and as of October 31, 2002, of all loans (individually, a
"Loan", and collectively, the "Loans") of BVB and the BVB Subsidiaries, showing
for each such Loan the outstanding principal balance due, before reduction for
any discount. All currently outstanding Loans, including any current extensions
of any Loan, were solicited, originated and currently exist in material
compliance with all applicable requirements of federal and state law and
regulations promulgated thereunder. The Loans are adequately documented and each
note evidencing a Loan or credit agreement or security instrument related to a
Loan constitutes a valid and binding obligation of the obligor thereunder,
enforceable in accordance with the terms thereof, except where (a)
enforceability may be limited by bankruptcy, conservatorship, insolvency,
moratorium, reorganization, receivership or similar laws and judicial decisions
affecting the rights of creditors generally and by general principles of equity
(whether applied in a proceeding at law or in equity), or (b) the failure
thereof, individually or in the aggregate, would not have a Material Adverse
Effect. For the purposes of this Section 3.17, the phrase "enforceable in
accordance with the terms thereof" does not mean that the borrower has the
financial ability to pay a Loan or that any collateral is sufficient to result
in payment of the Loan secured thereby. There are no oral modifications or
amendments or additional agreements related to the Loans that are not reflected
in the records of BVB or the BVB Subsidiaries, and no claim of defense as to the
enforcement of any Loan has been asserted, and neither BVB nor the BVB
Subsidiaries are aware of any acts or omissions that would give rise to any
claim or right of rescission, set off, counterclaim or defense, except where
such claim would not have a Material Adverse Effect.
Section 3.18 Evidences of Indebtedness. All evidences of indebtedness and
leases that are reflected as assets of BVB or the BVB Subsidiaries are legal,
valid and binding obligations of the respective obligors thereof, enforceable in
accordance with their respective terms (except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors generally and the availability of injunctive relief, specific
performance and other equitable remedies) and are not subject to any known or
threatened defenses, offsets or counterclaims that may be asserted against BVB
or the BVB Subsidiaries or the present holder thereof; provided, however, that
the foregoing sentence shall not be deemed to be a representation or warranty of
collectibility of any of the assets. The credit files of the Bank contain all
material information (excluding general, local or national industry, economic or
similar conditions) known to BVB that is required to evaluate in accordance with
generally prevailing practices in the banking industry the collectibility of the
loan portfolio of the Bank (including loans that will be outstanding if any of
them advances funds they are obligated to advance). The Bank has disclosed all
of the substandard, doubtful, loss, nonperforming or problem loans on the
internal watch list of the Bank or which have been adversely classified by the
FDIC or the State of New Jersey, a copy of which as of October 31, 2002, has
been provided to Interchange.
24
Section 3.19 Proprietary Rights. Except as set forth on Schedule 3.19,
neither BVB nor any of the BVB Subsidiaries owns or requires the use of any
patent, patent application, patent right, invention, process, trademark (whether
registered or unregistered), trademark application, trademark right, trade name,
service name, service xxxx, copyright or any trade secret ("Proprietary Rights")
for the business or operations of the BVB or the BVB Subsidiaries. To the
knowledge of BVB, neither BVB nor any of the BVB Subsidiaries has received
within the past three years any express or implied notice of infringement of or
conflict with, the rights of others with respect to the use of Proprietary
Rights.
Section 3.20 Deposit Summary. Schedule 3.20 contains a summary of the
amounts and types of the deposits held by the Bank as of December 31, 2001 and
as of October 31, 2002 and the weighted average interest rates being paid
thereon as of such date (the "Deposit Summary"). The Deposit Summary and other
data and information provided by BVB, relating to assets, liabilities and
business of the Bank is true, complete and correct in all material respects as
of the date thereof.
Section 3.21 Transactions with Certain Persons and Entities. Except as
disclosed in Schedule 3.21, neither BVB nor any of the BVB Subsidiaries owes any
amount to (excluding deposit liabilities), or has any loan, contract, lease,
commitment or other obligation from or to any of the present or former directors
or officers (other than compensation for current services not yet due and
payable and reimbursement of expenses arising in the ordinary course of
business) of BVB or the BVB Subsidiaries, and none of such persons owes any
amount to BVB or any of the BVB Subsidiaries. Except as set forth on Schedule
3.21, neither BVB nor any of the BVB Subsidiaries use any asset owned by any
shareholder or any present or former director or officer of BVB or any BVB
Subsidiary in its operations, nor do any of such persons own real property that
is adjacent to property on which BVB's or the BVB Subsidiaries' facilities are
located. Except as set forth on Schedule 3.21, there are no agreements,
instruments, commitments, extensions of credit, tax sharing or allocation
agreements or other contractual agreements of any kind between or among BVB or
the BVB Subsidiaries, whether on their own behalf or in their capacity as
trustee or custodian for the funds of any Employee Plan or any of their
Affiliates.
Section 3.22 Guaranties. None of the obligations or liabilities of BVB or
any of the BVB Subsidiaries is guaranteed by any other person, firm or
corporation, nor, except in the ordinary course of business, according to
prudent business practices and in compliance with applicable law, has BVB or any
of the BVB Subsidiaries guaranteed the obligations or liabilities of any other
person, firm or corporation.
25
Section 3.23 Insurance. Schedule 3.23 contains an accurate and complete
list and brief description of all policies of insurance, including fidelity and
bond insurance, of BVB and the BVB Subsidiaries. Except as set forth on Schedule
3.23, all such policies (i) are sufficient for compliance by BVB and the BVB
Subsidiaries with all requirements of law and all agreements to which BVB or any
BVB Subsidiary is a party, (ii) are valid, outstanding and enforceable, except
as enforceability may be limited by bankruptcy, conservatorship, insolvency,
moratorium, reorganization, receivership, or similar laws and judicial decisions
affecting the rights of creditors generally and by general principles of equity
(whether applied in a proceeding at law or equity), (iii) will not in any
significant respect be affected by, and will not terminate or lapse by reason
of, the transactions contemplated by this Agreement, and (iv) are presently in
full force and effect, no notice has been received of the cancellation, or
threatened or proposed cancellation, of any such policy and there are no unpaid
premiums due thereon. Neither BVB nor any BVB Subsidiary is in default with
respect to the provisions of any such policy or has failed to give any notice or
present any claim thereunder in a due and timely fashion. Each material Property
of BVB and the BVB Subsidiaries is insured for the benefit of BVB or the BVB
Subsidiaries in amounts deemed adequate by management of BVB against risks
customarily insured against. Except as set forth on Schedule 3.23, there have
been no claims under any fidelity bonds of BVB or the BVB Subsidiaries within
the last three (3) years, and BVB is not aware of any facts that would form the
basis of a claim under such bonds.
Section 3.24 Compliance with Laws, Permits and Instruments.
A. Except as disclosed in Schedule 3.24(a), BVB and the BVB Subsidiaries
and their respective employees and agents hold all licenses, registrations,
franchises, permits and authorizations necessary for the lawful conduct of BVB's
business and are not in violation of any applicable law, statute, order, rule,
regulation, policy and/or guideline of any court, administrative agency,
commission or other governmental or regulatory authority or instrumentality.
B. Except as disclosed in Schedule 3.24(b), BVB has in all material
respects performed and abided by all obligations required to be performed by it
to the date hereof, and has complied with, and is in compliance with, and is not
in default (or with the giving of notice or the passage of time will be in
default) under, or in violation of, (i) any provision of the Certificate of
Incorporation or Bylaws of BVB or any BVB Subsidiary, (ii) any material
provision of any mortgage, indenture, lease, contract, agreement or other
instrument applicable to BVB or the BVB Subsidiaries, or their respective
assets, operations, properties or businesses now conducted or heretofore
conducted or (iii) any permit, concession, grant, franchise, license,
authorization, judgment, writ, injunction, order, decree or award of any court,
arbitrator or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality applicable to BVB or the
BVB Subsidiaries or their respective assets, operations, properties or
businesses now conducted or heretofore conducted.
Section 3.25 Absence of Certain Business Practices. Neither BVB, the BVB
Subsidiaries nor any of their respective officers, employees or agents, nor any
other person acting on their behalf, has, directly or indirectly, within the
past five (5) years, given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee or other person who is or may be in a
position to help or hinder the business of BVB or the BVB Subsidiaries (or
assist BVB or the BVB Subsidiaries in connection with any actual or proposed
transaction) that (i) might subject BVB or any of the BVB Subsidiaries to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have resulted in a Material
Adverse Change, or (iii) if not continued in the future might result in a
Material Adverse Change or might subject BVB or any of the BVB Subsidiaries to
suit or penalty in any private or governmental litigation or proceeding.
26
Section 3.26 Environmental Compliance.
A. There are no legal, administrative, arbitral or other proceedings,
claims or actions or any private environmental investigations or remediation
activities or governmental investigations of any nature that would be reasonably
likely to result in the imposition, on BVB or any of the BVB Subsidiaries, of
any liability or obligation arising under any Environmental Laws, pending or
threatened against BVB or any of the BVB Subsidiaries. To the knowledge of BVB,
there is no reasonable basis for any such proceeding, claim, action or
investigation that would impose any such liability or obligation. Neither BVB
nor any of the BVB Subsidiaries is subject to any agreement, order, judgment or
decree by or with any court, governmental authority, regulatory agency or third
party imposing any liability or obligation with respect to the foregoing.
B. BVB and the BVB Subsidiaries and all of their Properties and operations
are in material compliance with all Environmental Laws. BVB is not aware of or
has received notice of, any past, present, or future conditions, events,
activities, practices or incidents that may interfere with or prevent the
compliance of BVB or the BVB Subsidiaries with all Environmental Laws.
C. BVB and the BVB Subsidiaries have obtained all material permits,
licenses and authorizations that are required under all Environmental Laws.
D. To the knowledge of BVB, except for cleaning and office supplies of the
type and in the quantity customarily used in BVB's business, no Hazardous
Materials exist on, about or within any of BVB's or the BVB Subsidiaries'
Properties, nor have any Hazardous Materials previously existed on, about or
within or been used, generated, stored, transported, disposed of, on or released
from any of such Properties. The use that BVB and the BVB Subsidiaries make and
intend to make of their Properties will not result in the use, generation,
storage, transportation, accumulation, disposal or release of any Hazardous
Material on, in or from any of such Properties.
Section 3.27 Regulatory Compliance.
A. Except as set forth on Schedule 3.27, neither BVB nor any of the BVB
Subsidiaries is subject to any cease-and-desist or other order or enforcement
action issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or has been
ordered to pay any civil penalty by, or is a recipient of a supervisory letter
from, or has adopted any board resolutions at the request or suggestion of any
Regulatory Agency or other Governmental Entity that restricts the conduct of its
business or that relates to its capital adequacy, its ability to pay dividends,
its credit or risk management policies, its management or its business.
27
B. All reports, records, registrations, statements, notices and other
documents or information required to be filed by BVB and the BVB Subsidiaries
with any Regulatory Agency have been duly and timely filed and all information
and data contained in such reports, records or other documents are substantially
true, accurate, correct and complete.
Section 3.28 Community Reinvestment Act. The Bank is in material compliance
with the Community Reinvestment Act (12 U.S.C. ss. 2901 et seq.) and all
regulations promulgated thereunder, and BVB has supplied Interchange with copies
of the Bank's current CRA Statement, all support papers therefor, all letters
and written comments received by the Bank since January 1, 1998 pertaining
thereto and any responses by the Bank to such comments. The Bank has a rating of
"satisfactory" as of its most recent CRA compliance examination and knows of no
reason why it would not receive a rating of "satisfactory" or better pursuant to
its next CRA compliance examination or why the FDIC or any other governmental
entity may seek to restrain, delay or prohibit the transactions contemplated
hereby as a result of any act or omission of the Bank under the CRA.
Section 3.29 Fair Housing Act, Home Mortgage Disclosure Act and Equal
Credit Opportunity Act. The Bank is in material compliance with the Fair Housing
Act (42 U.S.C. ss. 3601 et seq.), the Home Mortgage Disclosure Act (12 U.S.C.
ss. 2801 et seq.) and the Equal Credit Opportunity Act (15 U.S.C. ss. 1691 et
seq.) and all regulations promulgated thereunder. The Bank has not received any
notices of any violation of said acts or any of the regulations promulgated
thereunder, and the Bank has no notice of, or knowledge of, any threatened
administrative inquiry, proceeding or investigation with respect to the Bank's
compliance with such acts.
Section 3.30 Usury Laws and Other Consumer Compliance Laws. All loans of
BVB and the BVB Subsidiaries have been made substantially in accordance with all
applicable statutes and regulatory requirements at the time of such loan or any
renewal thereof, including without limitation, the New Jersey usury statutes as
they are currently interpreted, Regulation Z (12 C.F.R. ss. 226 et seq.) issued
by the Federal Reserve, the Federal Consumer Credit Protection Act (15 U.S.C.
ss. 1601 et seq.) and all statutes and regulations governing the operation of
banks chartered under the laws of the State of New Jersey. Each loan on the
books of BVB and the BVB Subsidiaries was made in the ordinary course of
business.
Section 3.31 Bank Secrecy Act, Foreign Corrupt Practices Act and U.S.A.
Patriot Act. The Bank is in material compliance with the Bank Secrecy Act (12
U.S.C. xx.xx. 1730(d) and 1829(b)), the United States Foreign Corrupt Practices
Act and the International Money Laundering Abatement and Anti-Terrorist
Financing Act, otherwise known as the U.S.A. Patriot Act and all regulations
promulgated thereunder, and the Bank has properly certified all foreign deposit
accounts and has made all necessary tax withholdings on all of its deposit
accounts; furthermore, the Bank has timely and properly filed and maintained all
requisite Currency Transaction Reports and other related forms, including, but
not limited to, any requisite Custom Reports required by any agency of the
United States Treasury Department, including but not limited to the IRS.
28
Section 3.32 Fiduciary Responsibilities. BVB and the BVB Subsidiaries have
performed in all material respects all of its duties as a trustee, custodian,
guardian or as an escrow agent in a manner that complies in all material
respects with all applicable laws, regulations, orders, agreements, instruments
and common law standards, where the failure to so perform would result in a
Material Adverse Change or have a Material Adverse Effect on the transactions
contemplated by this Agreement, and BVB has no reason to be aware of any basis
for the same.
Section 3.33 Registration Statement; Joint Proxy Statement/Prospectus. None
of the information supplied or to be supplied by BVB, the BVB Subsidiaries or
any of their respective directors, officers, employees or agents for inclusion
or in the Registration Statement (as defined in Section 5.02) or the Joint Proxy
Statement/Prospectus (as defined in Section 5.02) will, at the date the Joint
Proxy Statement/Prospectus is mailed to the shareholders of Interchange and BVB
and, as the Registration Statement and Joint Proxy Statement/Prospectus may be
amended or supplemented, at the time of the Interchange Meeting (as defined in
Section 6.02) and the BVB Meeting (as defined in Section 5.02), contain any
untrue statement of a material fact or omit to state any material fact with
respect to BVB or the BVB Subsidiaries necessary in order to make the statements
therein with respect to BVB or the BVB Subsidiaries, in light of the
circumstances under which they are made, not misleading or necessary to correct
any statement in any earlier communication with respect to the solicitation of
any proxy for the Interchange Meeting or the BVB Meeting. All documents that BVB
and the BVB Subsidiaries are responsible for filing with any regulatory or
governmental agency in connection with the Merger will comply with respect to
BVB and the BVB Subsidiaries in all material respects with the provisions of
applicable law.
Section 3.34 BVB Statements and Reports. BVB has previously made available
to Interchange an accurate and complete copy of each (a) registration statement,
offering circular, prospectus, report, schedule and definitive proxy statement
filed since January 1, 1998 with the Securities and Exchange Commission (the
"S.E.C.") pursuant to the Securities Act, or the Securities Exchange Act of
1934, as amended (together with the rules and regulations thereunder, the
"Exchange Act"), and prior to the date hereof (the "BVB Reports"), and (b)
communication mailed by BVB to its shareholders since January 1, 1998 and prior
to the date hereof. No such BVB Report contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date shall be deemed to modify information as of an earlier date.
Since January 1, 1998, BVB has timely filed all BVB Reports and other documents
required to be filed by is under the Securities Act and the Exchange Act, and,
as of their respective dates, all BVB Reports complied in all material respects
with the published rules and regulations of the S.E.C. with respect thereto.
Section 3.35 Books and Records. The minute books, stock certificate books
and stock transfer ledgers of BVB and the BVB Subsidiaries have been kept
accurately in the ordinary course of business and are complete and correct in
all material respects. The transactions entered therein represent bona fide
transactions, and there have been no material transactions involving the
business of BVB and the BVB Subsidiaries that properly should have been set
forth therein and that have not been accurately so set forth.
29
Section 3.36 Employee Relationships. BVB and the BVB Subsidiaries have
complied in all material respects with all applicable material laws relating to
its relationships with its employees, and BVB believes that the relationships
between BVB or any of the BVB Subsidiaries and their respective employees is
good. To the knowledge of BVB, no key executive officer or manager of any of the
operations operated by BVB or any of the BVB Subsidiaries or any group of
employees of BVB or any of the BVB Subsidiaries has or have any present plans to
terminate their employment with BVB or any of the BVB Subsidiaries.
Section 3.37 Employee Benefit Plans.
A. Set forth on Schedule 3.37(a) is a complete and correct list of all
"employee benefit plans" (as defined in Section 3(3) of ERISA), all fringe
benefit plans as defined in Section 6039D of the Code and, without limitation,
all bonus, incentive, compensation, deferred compensation, profit sharing, stock
option, stock appreciation right, stock bonus, stock purchase, employee stock
ownership, savings, severance, supplemental unemployment, layoff, salary
continuation, retirement, pension, health, life insurance, disability, group
insurance, vacation, holiday, sick leave, fringe benefit or welfare plan, or any
other similar plan, agreement, policy or understanding (whether written or oral,
qualified or nonqualified, currently effective or terminated), and any trust,
escrow or other agreement related thereto, which (i) is currently or has been at
any time within the last sixty (60) months, maintained or contributed to by BVB
or any of the BVB Subsidiaries, or with respect to which BVB or any of the BVB
Subsidiaries has any liability, or (ii) provides benefits, or describes policies
or procedures applicable to any director, officer, employee, service provider,
former director, former officer or former employee of BVB or any of the BVB
Subsidiaries, or the dependents of any thereof, regardless of whether funded or
unfunded (herein collectively the "Employee Plans" and each individually an
"Employee Plan"). BVB has delivered or made available to Interchange true,
accurate and complete copies of the documents comprising each Employee Plan and
any related trust agreements, summaries, employee booklets or handbooks, annuity
contracts, insurance policies or any other funding instruments ("Funding
Arrangements"), any contracts with independent contractors (without limitation,
actuaries investment managers, etc.) that relate to any Employee Plan, the Form
5500 filed in each of the three (3) most recent plan years with respect to each
Employee Plan, and related schedules and opinions, and such other documents,
records or other materials related thereto reasonably requested by Interchange.
B. No Employee Plan is a defined benefit plan within the meaning of Section
3(35) of ERISA nor, without limitation, either a "multiple employer plan," or
"multi-employer plan" (as either such term is defined in ERISA), nor has there
been any such plan in existence since 1974. There have been no prohibited
transactions (described under Section 406 of ERISA or Section 4975(c) of the
Code), breaches of fiduciary duty or any other breaches or violations of any law
applicable to the Employee Plans that would subject Interchange or BVB to any
taxes, penalties or other liabilities. Each Employee Plan that is represented to
be qualified under Section 401(a) of the Code has a current favorable
determination letter, does not have any amendments for which the remedial
amendment period under Code Section 401(b) (with extensions) has expired, and
has been operated in compliance with applicable law, and in accordance with its
terms, and, except as disclosed on Schedule 3.37(b), all reports, descriptions
and filings required by the Code, ERISA or any government agency with respect to
each Employee Plan have been timely and completely filed or distributed. Each
Employee Plan has been operated in compliance with applicable law or in
accordance with its terms and any related trust is exempt from federal income
tax under Section 501(a) of the Code. There are no pending claims, lawsuits or
actions relating to any Employee Plan (other than ordinary course claims for
benefits) and, to the knowledge of BVB, none are threatened. No written or oral
representations have been made to any employee or former employee of BVB or any
of the BVB Subsidiaries promising or guaranteeing any employer payment or
funding for the continuation of medical, dental, life or disability coverage for
such person, their dependent, or any beneficiary for any period of time beyond
the end of the current plan year or beyond termination of employment. Compliance
with FAS 106 will not create any material change to the BVB Financial
Statements. Except as disclosed on Schedule 3.37(b), neither the Merger, nor
subsequent events where consequences result solely as a result of both
occurrence of the subsequent event and the occurrence of the Merger, will not
accelerate the time of payment or vesting, or increase the amount, of
compensation due to any employee, officer, former employee or former officer of
BVB or any of the BVB Subsidiaries. Except as disclosed on Schedule 3.37(b),
there are no contracts or arrangements providing for payments that will be
nondeductible or subject to excise tax under Code Sections 4999 or 280G, nor
will Interchange be required to "gross up" or otherwise compensate any person
because of the limits contained in such Code sections. There are no surrender
charges, penalties, or other costs or fees that would be imposed by any person
against BVB, any of the BVB Subsidiaries, an Employee Plan, or any other person,
including without limitation, an Employee Plan participant or beneficiary as a
result of the consummation of the transactions contemplated by this Agreement
with respect to any insurance, annuity or investment contracts or other similar
investment held by any Employee Plan.
30
C. Each Employee Plan which is a "group health plan" (as defined in the
Code and ERISA) has been operated to the Closing such that failures to operate
such Employee Plan in full compliance with Part 6 of Subtitle B of Title 1 of
ERISA and Sections 4980B and 4980D of the Code would not subject BVB or any of
the BVB Subsidiaries to liability.
D. Except as described in Schedule 3.37(d), BVB and the BVB Subsidiaries
are completely insured by one or more insurance company(ies) for all health,
dental, life disability or similar claims relating to an Employee Plan. No event
has occurred or circumstances exist that could reasonably be expected to result
in a material increase in premium costs of Employee Plans.
E. All Employee Plan documents, annual reports or returns, audited or
unaudited financial statements, actuarial valuations, summary annual reports,
and summary plan descriptions issued with respect to the Employee Plans are
correct, complete, and current in all material respects, have been timely filed,
and there have been no changes in the information set forth therein.
F. All contributions (including, without limitations, all employer
contributions, employee salary reduction contributions and all premiums or other
payments (other than claims)) that are due to have been paid to or with respect
to each Employee Plan and all contributions (other than claims) for any period
ending on or before the Effective Time that are not yet due have been paid to
each such Employee Plan.
31
Section 3.38 Completion of Transaction. BVB has no knowledge of any fact or
circumstances relating to or affecting BVB and the BVB Subsidiaries that it
reasonably believes would prevent BVB from fulfilling its material obligations
under this Agreement and completing the transactions contemplated hereby or that
would, without the incurrence of undue expense or time, prevent Interchange from
obtaining all necessary regulatory approvals of the transaction contemplated by
this Agreement.
Section 3.39 Representations Not Misleading. To the knowledge of BVB, all
material facts relating to the business operations, Properties, assets,
liabilities (contingent or otherwise) and financial condition of BVB and the BVB
Subsidiaries has been disclosed to Interchange in or in connection with this
Agreement. No representation or warranty by BVB contained in this Agreement, nor
any written statement, exhibit or schedule furnished to Interchange by BVB under
and pursuant to, or in anticipation of this Agreement, contains or will contain
on the Closing Date any untrue statement of a material fact or omits or will
omit to state a material fact necessary to make the statements contained herein
or therein, in light of the circumstances under which it was or will be made,
not misleading and such representations and warranties would continue to be true
and correct following disclosure to any governmental authority having
jurisdiction over BVB, the BVB Subsidiaries or their respective Properties of
the facts and circumstances upon which they were based. Except as disclosed
herein, there is no matter that will have a Material Adverse Effect on BVB or
BVB's ability to perform the transactions contemplated by this Agreement or the
other agreements contemplated hereby, or to the knowledge of BVB, will in the
future result in a Material Adverse Change. No information material to the
Merger, and that is necessary to make the representations and warranties herein
contained not misleading, has been withheld by BVB.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INTERCHANGE
Interchange hereby makes the following representations and warranties to
BVB as of the date hereof and as of the Closing Date.
Section 4.01 Organization and Authority.
A. Interchange is a New Jersey corporation duly organized, validly existing
under the laws of the State of New Jersey, and in good standing under all laws,
rules and regulations applicable to corporations located in the State of New
Jersey. Interchange is a bank holding company registered under the BHCA.
Interchange has all requisite corporate power and authority (including all
licenses, franchises, permits and other governmental authorizations as are
legally required) to carry on its business as now being conducted, to own, lease
and operate its properties and assets, including, but not limited to, as now
owned, leased or operated, and to enter into and carry out its obligations under
this Agreement. The nature of the business of Interchange does not require it to
be qualified to do business in any jurisdiction other than the State of New
Jersey. Interchange does not, directly or indirectly, engage in any activity
that is prohibited by the Federal Reserve.
32
B. Interchange Bank is a New Jersey banking corporation duly organized,
validly existing under the laws of the State of New Jersey, and is in good
standing under all laws, rules and regulations applicable to banking
corporations located in of the State of New Jersey. Interchange Bank has all
requisite corporate power and authority (including all licenses, franchises,
permits and other governmental authorizations as are legally required) necessary
to carry on its business as now being conducted in all material respects, to
own, lease and operate its properties and assets, including, but not limited to,
as now owned, leased or operated. True and complete copies of the Certificate of
Incorporation and Bylaws of Interchange Bank, as amended to date, certified by
the Secretary or Cashier of the Bank, have been delivered to BVB. The deposits
of Interchange Bank are insured by the Bank Insurance Fund of the FDIC to the
full extent permissible by law. Interchange Bank does not, directly or
indirectly, engage in any activity that is prohibited by the State of New
Jersey, the FDIC or the Federal Reserve.
Section 4.02 Capitalization of Interchange. The entire authorized capital
stock of Interchange consists solely of 22,500,000 shares of voting common
stock, no par value per share (previously defined as the "Interchange Stock"),
9,817,958 shares of which are issued and outstanding, and 869,732 additional
shares of which have been reserved for issuance to holders of outstanding
options to acquire shares of Interchange Stock. All of the outstanding shares of
capital stock of Interchange are duly authorized, validly issued, fully paid and
nonassessable, and have not been issued in violation of the preemptive rights of
any person and have been issued in compliance with applicable securities laws.
There are no restrictions applicable to the payment of dividends on the shares
of the capital stock of Interchange, except pursuant to applicable laws and
regulations, and all dividends declared prior to the date of this Agreement on
such capital stock have been paid.
Section 4.03 Execution and Delivery; No Violation.
A. Interchange has full corporate power and authority to execute and
deliver this Agreement and, subject to the receipt of the approval of its
shareholders and receipt of regulatory approvals, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Interchange Board. The Interchange Board has directed that the
issuance of shares of Interchange Stock pursuant to the terms of this Agreement
be submitted to its shareholders for approval at a special meeting and, except
for the approval of the issuance of such additional shares by the requisite
affirmative vote of the outstanding Interchange Stock entitled to vote thereon,
no other corporate proceedings on the part of Interchange and no other
shareholder votes are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered to BVB. Assuming due authorization, execution and
delivery by BVB, this Agreement constitutes the valid and binding obligation of
Interchange, enforceable against Interchange in accordance with its terms and
conditions, except as enforceability may be limited by bankruptcy,
conservatorship, insolvency, moratorium, reorganization, receivership or similar
laws and judicial decisions affecting the rights of creditors generally and by
general principles of equity (whether applied in a proceeding at law or in
equity).
33
B. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance
by Interchange with any of the terms or provisions hereof (provided
the required regulatory and shareholder approvals are obtained) will
(i) violate any provision of the articles or bylaws of Interchange;
(ii) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Interchange or any of
its properties or assets; (iii) 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 the lapse of
time, or both, would constitute a default) under, result in the
termination or cancellation under, accelerate the performance required
by or rights or obligations under, or result in the creation of any
Lien upon any of the properties or assets of Interchange under, any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement, contract or other
instrument or obligation to which Interchange is a party, or by which
any of its properties, assets or business activities may be bound or
affected.
Section 4.04 Financial Statements.
A. Interchange has furnished to BVB true and complete copies of the audited
consolidated financial statements of Interchange for the years ended December
31, 1999 through December 31, 2001, and the unaudited consolidated financial
statements for the three- and nine-month periods ended September 30, 2002
(collectively, the "Interchange Financial Statements"). Except as disclosed in
Schedule 4.04(a), each of the Interchange Financial Statements (including, in
each case, any related notes), were prepared in accordance with GAAP, applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes to such Interchange Financial Statements) and fairly presented the
financial position of Interchange at the dates and for the periods indicated.
Except as disclosed in Schedule 4.04(a), the Interchange Financial Statements do
not contain any items of special or nonrecurring income or any other income not
earned in the ordinary course of business except as expressly specified therein.
B. Interchange has furnished BVB with a true and complete copies of the
Reports of Condition and Income as of March 31, 2002, June 30, 2002 and
September 30, 2002 for Interchange Bank (the "Interchange Call Reports"). Except
as disclosed in Schedule 4.04(b), each of the Interchange Call Reports fairly
presents, in all material respects, the financial position of Interchange Bank
and the results of its operations at the dates and for the periods indicated in
conformity with the instructions for the preparation of the Call Report
Instructions. Except as disclosed in Schedule 4.04(b), the Interchange Call
Reports do not contain any items of special or nonrecurring income or any other
income not earned in the ordinary course of business except as expressly
specified therein. Interchange Bank has calculated its allowance for loan losses
in accordance with GAAP and, to the extent applicable, RAP as applied to state
non-member banks and in accordance with all applicable rules and regulations. To
the best knowledge of Interchange, the allowance for loan losses account for
Interchange Bank is, and as of the Closing Date should be, adequate in all
material respects to provide for all losses, net of recoveries relating to loans
previously charged off, on all outstanding loans of Interchange Bank.
Section 4.05 No Adverse Change. Except as disclosed in the representations
and warranties made in this Article IV and the Schedules hereto, there has not
been any Material Adverse Change since September 30, 2002, nor has any event or
condition occurred that has resulted in, or has a reasonable possibility of
resulting in the future, in a Material Adverse Change.
34
Section 4.06 Absence of Certain Changes or Events. Except as disclosed on
Schedule 4.06, Interchange has, since September 30, 2002, conducted its business
only in the ordinary course and has not, other than in the ordinary course of
business and consistent with past practices:
A. Incurred any obligation or liability, whether absolute, accrued,
contingent or otherwise, whether due or to become due, except deposits taken and
federal funds purchased and current liabilities for trade or business
obligations, none of which, individually or in the aggregate, result in a
Material Adverse Change;
B. Declared or made any payment of dividends or other distribution to its
shareholders, or purchased, retired or redeemed, or obligated itself to
purchase, retire or redeem, any of its shares of capital stock or other
securities;
C. Except for transactions contemplated by this Agreement, issued, reserved
for issuance, granted, sold or authorized the issuance of any shares of its
capital stock or other securities or subscriptions, options, warrants, calls,
rights or commitments of any kind relating to the issuance thereof;
D. Acquired any capital stock or other equity securities or acquired any
ownership interest in any bank, corporation, partnership or other entity (except
(i) through settlement of indebtedness, foreclosure, or the exercise of
creditors' remedies or (ii) in a fiduciary capacity, the ownership of which does
not expose it to any liability from the business, operations or liabilities of
such person);
E. Terminated, canceled or surrendered, or received any notice of or threat
of termination or cancellation of any contract, lease or other agreement or
suffered any damage, destruction or loss which, individually or in the
aggregate, would constitute a Material Adverse Change;
F. Suffered any change, event or condition that, individually or in the
aggregate, has caused or may result in a Material Adverse Change or any Material
Adverse Change in earnings or costs or relations with their employees (exclusive
of the termination of any employees in accordance with their existing policies
and procedures), agents, depositors, loan customers, correspondent banks or
suppliers;
G. Sold, or knowingly disposed of, or otherwise divested of the ownership,
possession, custody or control, of any corporate books or records of any nature
that, in accordance with sound business practice, normally are retained for a
period of time after their use, creation or receipt, except at the end of the
normal retention period;
H. Made any, or acquiesced with any, change in any accounting methods,
principles or material practices except as required by GAAP or RAP;
I. Entered into any agreement or made any commitment whether in writing or
otherwise to take any of the types of action described in subsections A through
H above.
35
Section 4.07 Litigation.
A. Except as disclosed in Schedule 4.07, neither Interchange nor any
Interchange Subsidiary is a party to any, and there are no pending or, to the
knowledge of Interchange, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against Interchange or any Interchange Subsidiary which are reasonably
likely, individually or in the aggregate, to result in a Material Adverse Effect
as to Interchange, nor, to the knowledge of Interchange, is there any basis for
any proceeding, claim or any action against Interchange or any Interchange
Subsidiary that would be reasonably likely, individually or in the aggregate, to
result in a Material Adverse Effect as to Interchange. There is no injunction,
order, judgment or decree imposed upon Interchange or any Interchange Subsidiary
or the assets or Property of Interchange or the Interchange Subsidiaries that
has resulted in, or is reasonably likely to result in, a Material Adverse Effect
as to Interchange.
B. No legal action, suit or proceeding or judicial, administrative or
governmental investigation is pending or, to the best knowledge of Interchange,
threatened against Interchange that questions or might question the validity of
this Agreement or the agreements contemplated hereby or any actions taken or to
be taken by Interchange pursuant hereto or thereto or seeks to enjoin or
otherwise restrain the transactions contemplated hereby or thereby.
Section 4.08 Taxes.
A. Except as disclosed on Schedule 4.08, Interchange has duly and timely
filed or caused to be filed all federal, state, foreign and local tax returns
and reports required to be filed by it on or prior to the date of this Agreement
(all such returns and reports being accurate and complete in all material
respects) and has duly paid or caused to be paid on its behalf all taxes that
are due and payable, other than taxes that are being contested in good faith and
are adequately reserved against or provided for (in accordance with GAAP) on the
Interchange Financial Statements. Except as disclosed on Schedule 4.08, as of
the date hereof, Interchange has no liability for taxes in excess of the amount
reserved or provided for in the Interchange Financial Statements (but excluding,
for this purpose only, any liability reflected thereon for deferred taxes to
reflect timing differences between tax and financial accounting methods).
B. There are no disputes pending with respect to, or claims or assessments
asserted in writing for, any material amount of taxes upon Interchange, nor has
Interchange given or been requested in writing to give any currently effective
waivers extending the statutory period of limitation applicable to any tax
return for any period.
C. Proper and accurate amounts have been withheld by Interchange from its
employees, independent contractors, creditors, stockholders or other third
parties for all periods in compliance with the tax withholding provisions of any
applicable law.
D. Since December 31, 1991, the federal income tax return of Interchange
has not been audited or examined and no such audit is currently pending or
threatened against Interchange.
36
E. As used in this Agreement, the terms "tax" and "taxes" mean all federal,
state, local and foreign income, excise, gross receipts, gross income, ad
valorem, profits, gains, property, capital, sales, transfer, use, value-added,
stamp, documentation, 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.
F. Interchange has delivered to BVB correct and complete copies of all
federal income tax returns filed with the IRS, examination reports, and
statements of deficiencies assessed against or agreed to by Interchange since
December 31, 1998.
G. Interchange is not and has never been an "S Corporation" within the
meaning of Section 1361 of the Code.
Section 4.09 Undisclosed Liabilities. Interchange has no material liability
or obligation, accrued, absolute, contingent or otherwise and whether due or to
become due (including, without limitation, unfunded obligations under any
employee benefit plan maintained by Interchange or any Interchange Subsidiary or
liabilities for federal, state or local taxes or assessments) that are not
reflected in or disclosed in the Interchange Financial Statements or the
Interchange Call Reports, except (i) those liabilities and expenses incurred in
the ordinary course of business and consistent with past business practices
since the date of Interchange Financial Statements or the Interchange Call
Reports, respectively or (ii) as disclosed on Schedule 4.09.
Section 4.10 Insurance. Schedule 4.10 contains an accurate and complete
list and brief description of all policies of insurance, including fidelity and
bond insurance, of Interchange and the Interchange Subsidiaries. Except as set
forth on Schedule 4.10, all such policies (i) are sufficient in all material
respects for compliance by Interchange and the Interchange Subsidiaries with all
requirements of law and all agreements to which Interchange or any Interchange
Subsidiary is a party, (ii) are valid, outstanding and enforceable, except as
enforceability may be limited by bankruptcy, conservatorship, insolvency,
moratorium, reorganization, receivership, or similar laws and judicial decisions
affecting the rights of creditors generally and by general principles of equity
(whether applied in a proceeding at law or equity), (iii) will not in any
significant respect be affected by, and will not terminate or lapse by reason
of, the transactions contemplated by this Agreement, and (iv) are presently in
full force and effect, no notice has been received of the cancellation, or
threatened or proposed cancellation, of any such policy and there are no unpaid
premiums due thereon. Neither Interchange nor any Interchange Subsidiary is in
default with respect to the provisions of any such policy or has failed to give
any notice or present any claim thereunder in a due and timely fashion. Each
material Property of Interchange and the Interchange Subsidiaries is insured for
the benefit of Interchange or the Interchange Subsidiaries in amounts deemed
adequate by management of Interchange against risks customarily insured against.
Except as set forth on Schedule 4.10, there have been no claims under any
fidelity bonds of Interchange or the Interchange Subsidiaries within the last
three (3) years, and Interchange is not aware of any facts that would form the
basis of a claim under such bonds.
37
Section 4.11 Compliance with Laws, Permits and Instruments.
A. Except as disclosed in Schedule 4.11(a), Interchange holds all licenses,
registrations, franchises, permits and authorizations necessary for the lawful
conduct of its business and is not in violation of any applicable law, statute,
order, rule, regulation, policy and/or guideline of any court, administrative
agency, commission or other governmental or regulatory authority or
instrumentality.
B. Except as disclosed in Schedule 4.11(b), Interchange has in all material
respects performed and abided by all obligations required to be performed by it
to the date hereof, and has complied with, and is in compliance with, and is not
in default (or with the giving of notice or the passage of time will be in
default) under, or in violation of, (i) any provision of the Certificate of
Incorporation or Bylaws of Interchange or any Interchange Subsidiary, (ii) any
material provision of any mortgage, indenture, lease, contract, agreement or
other instrument applicable to Interchange or the Interchange Subsidiaries, or
their respective assets, operations, properties or businesses now conducted or
heretofore conducted or (iii) any permit, concession, grant, franchise, license,
authorization, judgment, writ, injunction, order, decree or award of any court,
arbitrator or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality applicable in any material
respect to Interchange or the Interchange Subsidiaries or their respective
assets, operations, properties or businesses now conducted or heretofore
conducted.
Section 4.12 Absence of Certain Business Practices. Neither Interchange,
the Interchange Subsidiaries nor any of their respective officers, employees or
agents, nor any other person acting on their behalf, has, directly or
indirectly, within the past five (5) years, given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other person
who is or may be in a position to help or hinder the business of Interchange or
the Interchange Subsidiaries (or assist Interchange or the Interchange
Subsidiaries in connection with any actual or proposed transaction) that (i)
might subject Interchange or any of the Interchange Subsidiaries to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, might have resulted in a Material Adverse Change, or
(iii) if not continued in the future might result in a Material Adverse Change
or might subject Interchange or any of the Interchange Subsidiaries to suit or
penalty in any private or governmental litigation or proceeding.
Section 4.13 Consents and Approvals. Except as disclosed in Schedule 4.13,
no approval, consent, order or authorization of, or registration, declaration or
filing with, any governmental authority or other third party is required on the
part of Interchange in connection with the execution, delivery or performance of
this Agreement or the agreements contemplated hereby, or the consummation by
Interchange of the transactions contemplated hereby or thereby.
Section 4.14 Environmental Compliance.
A. There are no legal, administrative, arbitral or other proceedings,
claims or actions or any private environmental investigations or remediation
activities or governmental investigations of any nature that would be reasonably
likely to result in the imposition, on Interchange or any of the Interchange
Subsidiaries, of any liability or obligation arising under any Environmental
Laws, pending or threatened against Interchange or any of the Interchange
Subsidiaries. To the knowledge of Interchange, there is no reasonable basis for
any such proceeding, claim, action or investigation that would impose any such
liability or obligation. Neither Interchange nor any of the Interchange
Subsidiaries is subject to any agreement, order, judgment or decree by or with
any court, governmental authority, regulatory agency or third party imposing any
liability or obligation with respect to the foregoing.
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B. Interchange and the Interchange Subsidiaries and all of their Properties
and operations are in material compliance with all Environmental Laws.
Interchange is not aware of or has received notice of, any past, present, or
future conditions, events, activities, practices or incidents that may interfere
with or prevent the compliance of Interchange or the Interchange Subsidiaries
with all Environmental Laws.
C. Interchange and the Interchange Subsidiaries have obtained all material
permits, licenses and authorizations that are required under all Environmental
Laws.
D. To the knowledge of Interchange, except for cleaning and office supplies
of the type and in the quantity customarily used in Interchange's business,
Hazardous Materials exist on, about or within any of Interchange's or the
Interchange Subsidiaries' Properties, nor have any Hazardous Materials
previously existed on, about or within or been used, generated, stored,
transported, disposed of, on or released from any of such Properties. The use
that Interchange and the Interchange Subsidiaries make and intend to make of
their Properties will not result in the use, generation, storage,
transportation, accumulation, disposal or release of any Hazardous Material on,
in or from any of such Properties.
Section 4.15 Regulatory Compliance.
A. Except as set forth on Schedule 4.15, neither Interchange nor
Interchange Bank is subject to any cease-and-desist or other order or
enforcement action issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by, or
has been ordered to pay any civil penalty by, or is a recipient of a supervisory
letter from, or has adopted any board resolutions at the request or suggestion
of any Regulatory Agency or other Governmental Entity that restricts the conduct
of its business or that relates to its capital adequacy, its ability to pay
dividends, its credit or risk management policies, its management or its
business.
B. All reports, records, registrations, statements, notices and other
documents or information required to be filed by Interchange and Interchange
Bank with any Regulatory Agency have been duly and timely filed and all
information and data contained in such reports, records or other documents are
substantially true, accurate, correct and complete.
Section 4.16 Community Reinvestment Act. Interchange Bank is in material
compliance with the Community Reinvestment Act (12 U.S.C. ss. 2901 et seq.) and
all regulations promulgated thereunder, and Interchange has supplied BVB with
copies of Interchange Bank's current CRA Statement, all support papers therefor,
all letters and written comments received by Interchange Bank since January 1,
1998 pertaining thereto and any responses by Interchange Bank to such comments.
Interchange Bank has a rating of "satisfactory" as of its most recent CRA
compliance examination and knows of no reason why it would not receive a rating
of "satisfactory" or better pursuant to its next CRA compliance examination or
why the FDIC or any other governmental entity may seek to restrain, delay or
prohibit the transactions contemplated hereby as a result of any act or omission
of Interchange Bank under the CRA.
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Section 4.17 Fair Housing Act, Home Mortgage Disclosure Act and Equal
Credit Opportunity Act. Interchange Bank is in material compliance with the Fair
Housing Act (42 U.S.C. ss. 3601 et seq.), the Home Mortgage Disclosure Act (12
U.S.C. ss. 2801 et seq.) and the Equal Credit Opportunity Act (15 U.S.C. ss.
1691 et seq.) and all regulations promulgated thereunder. Interchange Bank has
not received any notices of any violation of said acts or any of the regulations
promulgated thereunder, and Interchange Bank has no notice of, or knowledge of,
any threatened administrative inquiry, proceeding or investigation with respect
to Interchange Bank's compliance with such acts.
Section 4.18 Usury Laws and Other Consumer Compliance Laws. All loans of
Interchange and the Interchange Subsidiaries have been made substantially in
accordance with all applicable statutes and regulatory requirements at the time
of such loan or any renewal thereof, including without limitation, the New
Jersey usury statutes as they are currently interpreted, Regulation Z (12 C.F.R.
ss. 226 et seq.) issued by the Federal Reserve, the Federal Consumer Credit
Protection Act (15 U.S.C. ss. 1601 et seq.) and all statutes and regulations
governing the operation of banks chartered under the laws of the State of New
Jersey. Each loan on the books of Interchange and the Interchange Subsidiaries
was made in the ordinary course of business.
Section 4.19 Bank Secrecy Act, Foreign Corrupt Practices Act and U.S.A.
Patriot Act. Interchange Bank is in material compliance with the Bank Secrecy
Act (12 U.S.C. xx.xx. 1730(d) and 1829(b)), the United States Foreign Corrupt
Practices Act and the International Money Laundering Abatement and
Anti-Terrorist Financing Act, otherwise known as the U.S.A. Patriot Act and all
regulations promulgated thereunder, and Interchange Bank has properly certified
all foreign deposit accounts and has made all necessary tax withholdings on all
of its deposit accounts; furthermore, Interchange Bank has timely and properly
filed and maintained all requisite Currency Transaction Reports and other
related forms, including, but not limited to, any requisite Custom Reports
required by any agency of the United States Treasury Department, including but
not limited to the IRS.
Section 4.20 Registration Statement; Joint Proxy Statement/Prospectus. None
of the information supplied or to be supplied by Interchange or any of its
directors, officers, employees or agents for inclusion or in the Joint Proxy
Statement/Prospectus will, at the date the Joint Proxy Statement/Prospectus is
mailed to the shareholders of Interchange and BVB and, as the Joint Proxy
Statement/Prospectus may be amended or supplemented, at the time of the
Interchange Meeting or the BVB Meeting, contain any untrue statement of a
material fact or omit to state any material fact with respect to Interchange
necessary in order to make the statements therein with respect to Interchange,
in light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Interchange Meeting and the BVB Meeting.
All documents that Interchange is responsible for filing with any regulatory or
governmental agency in connection with the Merger will comply with respect to
Interchange in all material respects with the provisions of applicable law.
40
Section 4.21 Interchange Statements and Reports. Interchange has previously
made available to BVB an accurate and complete copy of each (a) registration
statement, offering circular, prospectus, report, schedule and definitive proxy
statement filed since January 1, 1998 with the S.E.C. pursuant to the Securities
Act or the Exchange Act, and prior to the date hereof (the "Interchange
Reports"), and (b) communication mailed by Interchange to its shareholders since
January 1, 1998 and prior to the date hereof. No such Interchange Report
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1998, Interchange has timely
filed all Interchange Reports and other documents required to be filed by is
under the Securities Act and the Exchange Act, and, as of their respective
dates, all Interchange Reports complied in all material respects with the
published rules and regulations of the S.E.C. with respect thereto.
Section 4.22 Books and Records. The minute books, stock certificate books
and stock transfer ledgers of Interchange have been kept accurately in the
ordinary course of business and are complete and correct in all material
respects. The transactions entered therein represent bona fide transactions, and
there have been no material transactions involving the business of Interchange
that properly should have been set forth therein and that have not been
accurately so set forth.
Section 4.23 Employee Benefit Plans.
A. Set forth on Schedule 4.23(a) is a complete and correct list of all
"employee benefit plans" (as defined in Section 3(3) of ERISA), all fringe
benefit plans as defined in Section 6039D of the Code and, without limitation,
all bonus, incentive, compensation, deferred compensation, profit sharing, stock
option, stock appreciation right, stock bonus, stock purchase, employee stock
ownership, savings, severance, supplemental unemployment, layoff, salary
continuation, retirement, pension, health, life insurance, disability, group
insurance, vacation, holiday, sick leave, fringe benefit or welfare plan, or any
other similar plan, agreement, policy or understanding (whether written or oral,
qualified or nonqualified, currently effective or terminated), and any trust,
escrow or other agreement related thereto, which (i) is currently or has been at
any time within the last sixty (60) months, maintained or contributed to by
Interchange or any of the Interchange Subsidiaries, or with respect to which
Interchange or any of the Interchange Subsidiaries has any material liability,
or (ii) provides benefits, or describes policies or procedures applicable to any
director, officer, employee, service provider, former director, former officer
or former employee of Interchange or any of the Interchange Subsidiaries, or the
dependents of any thereof, regardless of whether funded or unfunded (herein
collectively the "Employee Plans" and each individually an "Employee Plan").
Interchange has delivered or made available to Interchange true, accurate and
complete copies of the documents comprising each Employee Plan and any related
trust agreements, summaries, employee booklets or handbooks, annuity contracts,
insurance policies or any other funding instruments ("Funding Arrangements"),
any contracts with independent contractors (without limitation, actuaries
investment managers, etc.) that relate to any Employee Plan, the Form 5500 filed
in each of the three (3) most recent plan years with respect to each Employee
Plan, and related schedules and opinions, and such other documents, records or
other materials related thereto reasonably requested by Interchange.
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B. No Employee Plan is a defined benefit plan within the meaning of Section
3(35) of ERISA nor, without limitation, either a "multiple employer plan," or
"multi-employer plan" (as either such term is defined in ERISA), nor has there
been any such plan in existence since 1974. There have been no prohibited
transactions (described under Section 406 of ERISA or Section 4975(c) of the
Code), breaches of fiduciary duty or any other breaches or violations of any law
applicable to the Employee Plans that would subject Interchange to any material
taxes, penalties or other liabilities. Each Employee Plan that is represented to
be qualified under Section 401(a) of the Code has a current favorable
determination letter, does not have any amendments for which the remedial
amendment period under Code Section 401(b) (with extensions) has expired, and
has been operated in all material respects in compliance with applicable law,
and in accordance with its terms, and, except as disclosed on Schedule 4.23(b),
all reports, descriptions and filings required by the Code, ERISA or any
government agency with respect to each Employee Plan have been timely and
completely filed or distributed in all material respects. Each Employee Plan has
been operated in compliance with applicable law or in accordance with its terms
and any related trust is exempt from federal income tax under Section 501(a) of
the Code. There are no pending claims, lawsuits or actions of a material nature
relating to any Employee Plan (other than ordinary course claims for benefits)
and, to the knowledge of Interchange, none are threatened. No written or oral
representations have been made to any employee or former employee of Interchange
or any of the Interchange Subsidiaries promising or guaranteeing any employer
payment or funding for the continuation of medical, dental, life or disability
coverage for such person, their dependent, or any beneficiary for any period of
time beyond the end of the current plan year or beyond termination of
employment. Compliance with FAS 106 will not create any material change to the
Interchange Financial Statements.
C. Except as described in Schedule 4.23(d), Interchange and the Interchange
Subsidiaries are completely insured by one or more insurance company(ies) for
all health, dental, life disability or similar claims relating to an Employee
Plan. No event has occurred or circumstances exist that could reasonably be
expected to result in a material increase in premium costs of Employee Plans.
D. All Employee Plan documents, annual reports or returns, audited or
unaudited financial statements, actuarial valuations, summary annual reports,
and summary plan descriptions issued with respect to the Employee Plans are
correct, complete, and current in all material respects, have been timely filed,
and there have been no changes in the information set forth therein.
E. All contributions (including, without limitations, all employer
contributions, employee salary reduction contributions and all premiums or other
payments (other than claims)) that are due to have been paid to or with respect
to each Employee Plan and all contributions (other than claims) for any period
ending on or before the Effective Time that are not yet due have been paid to
each such Employee Plan.
42
Section 4.24 Completion of Transaction. Interchange has no knowledge of any
fact or circumstances relating to or affecting Interchange and the Interchange
Subsidiaries that it reasonably believes would prevent Interchange from
fulfilling its material obligations under this Agreement and completing the
transactions contemplated hereby or that would, without the incurrence of undue
expense or time, prevent Interchange from obtaining all necessary regulatory
approvals of the transaction contemplated by this Agreement.
Section 4.25 Representations Not Misleading. No representation or warranty
by Interchange contained in this Agreement, or any written statement, exhibit or
schedule furnished to BVB by Interchange under and pursuant to, or in
anticipation of this Agreement, contains or will contain on the Closing Date any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances under which it was or will be made, not misleading and such
representations and warranties would continue to be true and correct following
disclosure to any governmental authority having jurisdiction over Interchange of
the facts and circumstances upon which they were based. Except as disclosed
herein, there is no matter that will have a Material Adverse Effect on
Interchange or Interchange's ability to perform the transactions contemplated by
this Agreement or the other agreements contemplated hereby, or to the knowledge
of Interchange, will in the future result in a Material Adverse Change. No
information material to the Merger, and that is necessary to make the
representations and warranties herein contained not misleading, has been
withheld by Interchange.
ARTICLE V
COVENANTS OF BVB
BVB hereby makes the covenants set forth in this Article V to Interchange
as follows:
Section 5.01 Best Efforts. BVB shall use its best efforts to perform and
fulfill all conditions and obligations on its part to be performed or fulfilled
under this Agreement and to cause the consummation of the transactions
contemplated hereby in accordance with the terms and conditions of this
Agreement.
Section 5.02 BVB Shareholders' Meeting. BVB, acting through the BVB Board
shall:
A. Duly call, give notice of, convene and hold, on a date mutually selected
by BVB and Interchange, a meeting of its shareholders (the "BVB Meeting") as
soon as practicable for the purpose of approving and adopting this Agreement and
the transactions contemplated hereby, including the Merger, as required by the
NJBCA;
B. Not impose a requirement that the holders of more than the minimum
required percentage (as set forth in BVB's current Certificate of Incorporation,
current Bylaws or pursuant to provisions of the NJBCA requiring the lowest
percentage vote) of the BVB Stock entitled to vote on this Agreement, approve
the Merger and this Agreement;
C. Cooperate and assist Interchange in (i) preparing a Registration
Statement on Form S-4 relating to the shares of Interchange Stock to be issued
to the shareholders of BVB as part of the Merger Consideration (the
"Registration Statement") and a joint proxy statement of Interchange and BVB and
prospectus of Interchange, including letter to shareholders, notice of special
meeting and form of proxy, to be sent to the shareholders of Interchange and BVB
in connection with the Merger (collectively, the "Joint Proxy
Statement/Prospectus") and (ii) filing the Registration Statement and the Joint
Proxy Statement/Prospectus (forming a part of the Registration Statement) with
the S.E.C., including furnishing to Interchange all information concerning BVB
that Interchange may reasonably request in connection with preparation of such
Registration Statement and Joint Proxy Statement/Prospectus;
43
D. Subject to the fiduciary duties of the BVB Board to the shareholders of
BVB, (i) include in the Joint Proxy Statement/Prospectus the recommendation of
the BVB Board that the shareholders of BVB vote in favor of the approval and
adoption of the Merger and this Agreement and the transactions contemplated
hereby, (ii) use its best efforts to obtain such shareholder approval of the
Merger and this Agreement, and (iii) perform such other acts as may reasonably
be requested by Interchange to ensure that such shareholder approval of the
Merger and this Agreement is obtained; and
E. Cause the Joint Proxy Statement/Prospectus to be mailed to the
shareholders of BVB as soon as practicable following the effectiveness of the
Registration Statement.
Section 5.03 Information Furnished by BVB. BVB shall promptly, and in any
event within ten (10) business days following receipt of a written request from
Interchange, furnish or cause to be furnished to Interchange all information
concerning BVB, including but not limited to financial statements, required for
inclusion in any statement or application made or filed by Interchange to any
governmental body in connection with the transactions contemplated by this
Agreement (including the Registration Statement and the Joint Proxy
Statement/Prospectus) or in connection with any unrelated transactions during
the pendency of this Agreement. BVB represents and warrants that all information
so furnished shall be true and correct in all material respects and shall not
omit any material fact required to be stated therein or necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading. BVB shall otherwise fully cooperate with Interchange in the filing
of any applications or other documents necessary to consummate the transactions
contemplated by this Agreement.
Section 5.04 Affirmative Covenants. Except as otherwise permitted in
writing by Interchange or required by this Agreement, from the date hereof until
the Effective Time, BVB shall and shall cause the BVB Subsidiaries to:
A. Maintain its corporate existence in good standing;
B. Maintain the general character of its business and conduct its business
in its ordinary and usual manner;
C. Extend credit only in accordance with existing lending policies;
D. Use all reasonable efforts to preserve its business organization intact;
to retain the services of its present employees, officers, directors and agents;
to retain its present customers, depositors, suppliers and correspondent banks;
and to preserve its goodwill and the goodwill of its suppliers, customers and
others having business relationships with it;
44
E. Use all reasonable efforts to obtain any approvals or consents required
to maintain all existing contracts, leases and documents relating to or
affecting its assets, Properties and business;
F. Maintain all offices, machinery, equipment, materials, supplies,
inventories, vehicles and other Properties owned, leased or used by it (whether
under its control or the control of others), in good operating repair and
condition, ordinary wear and tear excepted;
G. Maintain and keep in full force and effect, in all material respects,
presently existing insurance coverage and give all notices and present all
claims under all insurance policies in due and timely fashion;
H. Comply in all material respects with all laws, regulations, ordinances,
codes, orders, licenses and permits applicable to the properties and operations
of BVB, the non-compliance with which could be expected to have a Material
Adverse Effect on BVB;
I. Permit Interchange and its representatives to examine its books, records
and Properties and to interview officers, employees and agents at all reasonable
times when it is open for business;
J. Timely file all tax returns required to be filed by it and promptly pay
all taxes, assessments, governmental charges, duties, penalties, interest and
fines that become due and payable, except those being contested in good faith by
appropriate proceedings;
K. Withhold from each payment made to each of its employees the amount of
all taxes (including, but not limited to, federal income taxes, FICA taxes and
state and local income and wage taxes) required to be withheld therefrom and pay
the same to the proper tax receiving officers;
L. Continue to follow and implement policies, procedures and practices
regarding the identification, monitoring, classification and treatment of all
assets in substantially the same manner as it has in the past;
M. Account for all transactions in accordance with GAAP (unless otherwise
instructed by RAP, in which instance account for such transaction in accordance
with RAP) and maintain the allowance for loan losses account for BVB in an
adequate amount to provide for all losses, net of recoveries relating to loans
previously charged off, on all outstanding loans of BVB, but in no event shall
BVB's allowance for loan losses account be less than 0.95% of its total loans
outstanding;
N. Promptly charge-off all loans past due 90 days or more, and charge-off
all loans reasonably anticipated to be 90 days or more past due as of the
Closing Date.
O. Pay (or establish adequate reserves for) all costs, expenses and other
charges to be incurred by BVB associated with the cancellation of any Contracts
to be cancelled as a result of the Merger (including without limitation the cost
of termination of its existing data processing agreement).
45
P. Pay (or establish adequate reserves for) all costs, expenses and other
charges to be incurred by BVB associated with the Merger.
Section 5.05 Negative Covenants. Except as otherwise contemplated or
required by this Agreement, from the date hereof until the Effective Time, BVB
shall not and shall cause the BVB Subsidiaries not to, without the prior written
consent of Interchange:
A. Amend or otherwise change its Articles of Incorporation, Articles of
Association, charter, or Bylaws;
B. Issue, sell or authorize the issue or sale, or grant any options or make
other agreements with respect to the issuance or sale or conversion of, any
shares of its capital stock, phantom shares or other share equivalents, or any
other of its securities;
C. Authorize or incur any long-term debt (other than deposit liabilities);
D. Mortgage, pledge or subject to Lien or restriction any of its Property,
business or assets, tangible or intangible except in the ordinary course of
business and consistent with normal banking practices;
E. Enter into any material agreement, contract or commitment in excess of
$25,000, except for banking transactions in the ordinary course of business and
in accordance with policies and procedures in effect on the date hereof;
F. Make any investments, except investments made by BVB in the ordinary
course of business, of Treasury securities with maximum maturities not more than
two years and in denominations of not more than $1,000,000;
G. Introduce any new material method of management or operation;
H. Other than actions required by this Agreement, take any action that
could reasonably be anticipated to result in a Material Adverse Change;
I. Take or fail to take any action that would cause or permit the
representations and warranties made in Article III hereof to be inaccurate at
the time of the Closing or preclude BVB from making such representations and
warranties at the time of the Closing;
J. Cause or allow the loss of insurance coverage, unless replaced with
coverage which is substantially similar (in amount and insurer) to that now in
effect;
K. Incur any obligation or liability, whether absolute or contingent,
except in the ordinary course of business and consistent with normal banking
practices;
L. Discharge or satisfy any Lien or pay any obligation or liability,
whether absolute or contingent, due or to become due, except in the ordinary
course of business consistent with normal banking practices;
46
M. Issue, reserve for issuance, grant, sell or authorize the issuance of
any shares of its capital stock or other securities or subscriptions, options,
warrants, calls, rights or commitments of any kind relating to the issuance
thereto;
N. Redeem, retire, purchase or otherwise acquire, directly or indirectly,
any of the capital stock of BVB, or obligate itself to purchase, retire or
redeem, any of its shares of capital stock;
O. Except as provided in Section 5.24, declare, make, set aside or pay any
dividend or other distribution with respect to its capital stock;
P. Sell, transfer, lease to others or otherwise dispose of any of its
assets or Properties or cancel or compromise any debt or claim, or waive or
release any right or claim;
Q. Enter into any transaction other than in the ordinary course of
business;
R. Except in the ordinary course of the business and consistent with past
practices, enter into or give any promise, assurance or guarantee of the
payment, discharge or fulfillment of any undertaking or promise made by any
other person, firm or corporation;
S. Sell or knowingly dispose of, or otherwise divest itself of the
ownership, possession, custody or control, of any corporate books or records of
any nature that, in accordance with sound business practice, normally are
retained for a period of time after their use, creation or receipt, except at
the end of the normal retention period;
T. Increase the compensation of any officers, directors, employees of BVB
or the BVB Subsidiaries, except increases pursuant to existing compensation
plans or regular reviews and which increases as are consistent with past
practices, provided that no such increase shall be more than four percent (4%)
with respect to any individual officer, director or employee and provided
further that any increases, either singularly or in the aggregate, shall be
consistent with BVB's 2003 budget, a copy of which has been made available to
Interchange;
U. Engage in any transaction with any Affiliate or create any liability
owed to such persons other than in the form of loans, deposits, wages, salaries
and reimbursement of expenses created in the ordinary course of business and
consistent with past practices;
V. Acquire any capital stock or other equity securities or acquire any
equity or ownership interest in any bank, corporation, partnership or other
entity, except (i) through settlement of indebtedness, foreclosure, or the
exercise of creditors' remedies or (ii) in a fiduciary capacity, the ownership
of which does not expose it to any liability from the business, operations or
liabilities of such person;
W. Terminate, cancel or surrender any contract, lease or other agreement
that, individually or in the aggregate, would constitute a Material Adverse
Change;
X. Dispose of, permit to lapse, transfer or grant any rights under, or
breach or infringe upon, any United States or foreign license or Proprietary
Right or modify any existing rights with respect thereto, except in the ordinary
course of business and consistent with past practices and safe and sound banking
principles;
47
Y. Make any capital expenditures, capital additions or betterments in
excess of an aggregate of $10,000;
Z. Unless otherwise approved in writing by Interchange, hire or employ any
person with an annual salary equal to or greater than $25,000;
AA. Sell (provided, however, that payment at maturity or prepayment is not
deemed a sale) any Investment Security or purchase any Investment Security
(other than U.S. Treasuries with a maturity of less than one year);
BB. Other than loans fully secured by certificates of deposit or liquid,
readily marketable collateral, make or alter any of the material terms of any
loan to any single borrower and his related interests in excess of the principal
amount of $250,000, or renew or extend the maturity of any loan to any single
borrower and his related interests in excess of the principal amount of $250,000
or that would increase the aggregate credit outstanding to any such borrower or
his related interests by more than $250,000, without the prior consent of
Interchange; or
CC. Make, or renew or extend the maturity of, or alter any of the material
terms of any classified loan.
Section 5.06 Access; Pre-Closing Investigation. Subject to the provisions
of Article X, BVB shall afford the officers, directors, employees, attorneys,
accountants, investment bankers and authorized representatives of Interchange
full access during normal business hours during the period prior to the
Effective Time or the termination of this Agreement to all of the Properties,
books, contracts, commitments, personnel and records of BVB, permit Interchange
to make such inspections (including without limitation with regard to such
Properties physical inspection of the surface and subsurface thereof and any
structure thereon) as they may require, and furnish to Interchange during such
period all such information concerning BVB and its affairs as Interchange may
reasonably request, so that Interchange may have full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of BVB,
including, without limitation, access sufficient to verify the value of the
assets and the liabilities of BVB and the satisfaction of the conditions
precedent to Interchange's obligations described in Article VIII of this
Agreement. BVB agrees at any time, and from time to time, to furnish to
Interchange as soon as practicable, any additional information that Interchange
may reasonably request. No investigation by Interchange, or its representatives
shall affect the representations and warranties set forth herein.
Section 5.07 Invitations to and Attendance at Directors' and Committee
Meetings. BVB shall give notice to two (2) designees of Interchange (which
designees shall be reasonably acceptable to BVB), and shall invite such persons
to attend all regular and special meetings of the BVB Board and all regular and
special meetings of any senior management committee (including, but not limited
to, the executive committee and the loan and discount committee of BVB) of BVB;
provided, however, that Interchange's designees shall not have the right to
attend any portion of any meeting at which the advisability of the transactions
contemplated hereby is to be considered, or at which information to be disclosed
is of a nature such that, in the reasonable opinion of the body holding the
meeting following consultation with counsel, attendance of Interchange's
designees would be inappropriate based on restrictions imposed by applicable
antitrust, competition or similar laws or regulations. If the Merger is finally
disapproved by any appropriate regulatory authority or if this Agreement is
terminated pursuant to its terms, Interchange's designees will no longer be
entitled to notice of and permission to attend such meetings.
48
Section 5.08 Additional Financial Statements. BVB shall promptly furnish
Interchange with true and complete copies of (i) Exchange Act reports and Call
Reports for the Bank as filed with the S.E.C. and Regulatory Authorities between
the date of this Agreement and the Effective Date, (ii) monthly directors'
reports of BVB, and (iii) unaudited month-end financial statements of BVB.
Section 5.09 Untrue Representations. BVB shall promptly notify Interchange
in writing if BVB becomes aware of any fact or condition that makes untrue, or
shows to have been untrue, in any material respect, any schedule or any other
information furnished to Interchange or any representation or warranty made in
or pursuant to this Agreement or that results in BVB's failure to comply with
any covenant, condition or agreement contained in this Agreement.
Section 5.10 Litigation and Claims. BVB shall promptly notify Interchange
in writing of any litigation, or of any claim, controversy or contingent
liability that might be expected to become the subject of litigation, against
BVB or any BVB Subsidiary or affecting any of their respective Properties, if
such litigation or potential litigation is reasonably likely, in the event of an
unfavorable outcome, to result in a Material Adverse Change, and BVB shall
promptly notify Interchange of any legal action, suit or proceeding or judicial,
administrative or governmental investigation, pending or, to the knowledge of
BVB, threatened against BVB or any BVB Subsidiary that questions or might
question the validity of this Agreement or the agreements contemplated hereby,
or any actions taken or to be taken by BVB pursuant hereto or seeks to enjoin or
otherwise restrain the transactions contemplated hereby or thereby.
Section 5.11 Notice of Material Adverse Changes. BVB shall promptly notify
Interchange in writing if any change or development shall have occurred or been
threatened (or any development shall have occurred or been threatened involving
a prospective change) in the business, financial condition, operations or
prospects of BVB that has resulted in or may reasonably be expected to result in
a Material Adverse Change or that would adversely affect, prevent or delay the
obtaining of any regulatory approval for the consummation of the transactions
contemplated by this Agreement. Notwithstanding the disclosure to Interchange of
any such changes, BVB shall not be relieved of any liability to Interchange
pursuant to this Agreement for, nor shall the providing of such information by
BVB to Interchange be deemed a waiver by Interchange of, the breach of any
representation or warranty of BVB contained in this Agreement.
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Section 5.12 No Negotiation with Others. Except to the extent required in
order for the BVB Board to fulfill its fiduciary duties to shareholders of BVB
as determined by the written advice of counsel, neither BVB nor any of its
Subsidiaries, Affiliates, employees, directors, officers, financial advisors or
agents shall, directly or indirectly, (i) solicit, encourage, initiate or
participate in any negotiations or discussions with any third party with respect
to any offer or proposal to merge with or acquire BVB or any BVB Subsidiary or
all or substantially all the business of BVB or any BVB Subsidiary whether by
merger, acquisition, tender offer, exchange offer, purchase of stock, options,
warrants or assets or otherwise; (ii) disclose to any third party any
information concerning the business, Properties, books or records of BVB or any
BVB Subsidiary, except in the ordinary course of business for purposes other
than an acquisition or as compelled by law; or (iii) cooperate with any third
party to make any proposal to merge with or acquire all or any part of the
capital stock or assets of BVB or any BVB Subsidiary other than non-essential or
excess assets. Promptly upon receipt of any unsolicited offer, BVB will
communicate to Interchange the terms of any proposal or request for information
and the identity of the parties involved.
Section 5.13 Consents and Approvals. BVB (i) shall take all necessary
corporate and other action and use its best efforts to obtain at the earliest
practicable time all approvals of regulatory authorities, consents and other
approvals required of BVB to carry out the transactions contemplated by this
Agreement and (ii) will cooperate with Interchange and Interchange Bank to
obtain all such approvals and consents required of Interchange and Interchange
Bank.
Section 5.14 Environmental Investigation; Right to Terminate Agreement.
A. Interchange and its consultants, agents and representatives, at the sole
cost and expense of Interchange, shall have the right to the same extent that
BVB has the right, but not the obligation or responsibility, to inspect any
Property, including, without limitation, conducting asbestos surveys and
sampling, environmental assessments and investigation, and other environmental
surveys and analyses including soil, water, asbestos, septic system and ground
sampling ("Environmental Inspections") at any time on or prior to twenty (20)
days after the date of this Agreement. If, as a result of any such Environmental
Inspection, further investigation ("Secondary Investigation") including, without
limitation, test borings, soil, water, septic system and other sampling is
deemed desirable by Interchange, Interchange shall (i) notify BVB of any
Property for which it intends to conduct such a Secondary Investigation and the
reasons for the Secondary Investigation, and (ii) at the sole cost and expense
of Interchange, commence the Secondary Investigation, on or prior to forty-five
(45) days after the date of this Agreement. Interchange shall give reasonable
notice to BVB of the Secondary Investigation, and BVB may place reasonable time
and place restrictions on the Secondary Investigation.
B. Interchange shall not have any liability or responsibility of any nature
whatsoever for the results, conclusions or other findings related to any
Environmental Inspection, Secondary Investigation or other environmental survey.
If this Agreement is terminated, except as otherwise required by law, reports to
any governmental authority of the results of any Environmental Inspection,
Secondary Investigation or other environmental survey shall not be made by
Interchange. Interchange shall make no such report prior to Closing unless
required to do so by law, and in such case will give BVB reasonable notice of
Interchange's intentions.
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C. Interchange shall have the right to terminate this Agreement if (i) the
factual substance of any warranty or representation set forth in Section 3.26 is
not materially true and accurate; (ii) the results of such Environmental
Inspection, Secondary Investigation or other environmental survey are
disapproved by Interchange because the Environmental Inspection, Secondary
Investigation or other environmental survey identifies material violations or
potential violations of Environmental Laws; (iii) BVB refuses to allow
Interchange to conduct an Environmental Inspection or Secondary Investigation in
a manner that Interchange reasonably considers necessary; (iv) the Environmental
Inspection, Secondary Investigation or other environmental survey identifies any
past or present event, condition or circumstance that would or potentially would
require remedial or cleanup action or result in a Material Adverse Change; (v)
the Environmental Inspection, Secondary Investigation or other environmental
survey identifies the presence of any underground or above ground storage tank
in, on or under any Property that is not shown to be in compliance with all
Environmental Laws applicable to the tank either now or at a future time
certain, or that has had a release of petroleum or some other Hazardous Material
that has not been cleaned up to the satisfaction of the relevant governmental
authority or any other party with a legal right to compel cleanup; or (vi) the
Environmental Inspection, Secondary Investigation or other environmental survey
identifies the presence of any asbestos-containing material in, on or under any
Property, the removal of which would result in a Material Adverse Change.
D. BVB agrees to make available to Interchange and its consultants, agents
and representatives all documents and other material relating to environmental
conditions of any Property including, without limitation, the results of other
environmental inspections and surveys. BVB also agrees that all engineers and
consultants who prepared or furnished such reports may discuss such reports and
information with Interchange and shall be entitled to certify the same in favor
of Interchange and its consultants, agents and representatives and make all
other data available to Interchange and its consultants, agents and
representatives.
Section 5.15 Restrictions on Resales. At least twenty (20) days prior to
the Closing Date, BVB shall deliver to Interchange a list identifying each
person who may reasonably be deemed an "affiliate" of BVB within the meaning of
such term as used in Rule 145 under the Securities Act. BVB shall obtain and
deliver to Interchange, not less than ten (10) days prior to the Closing Date,
the signed agreement, in the form of Exhibit B hereto (the "Shareholder
Letter"), of each "affiliate" of BVB, and of any person who may become an
"affiliate" of BVB after the date of this Agreement, regarding compliance with
the provisions of such Rule 145.
Section 5.16 Shareholder Lists. After the date of this Agreement, BVB shall
from time to time make available to Interchange, upon its request, a list of the
shareholders of BVB and its addresses, a list showing all transfers of the BVB
Stock and such other information as Interchange may reasonably request regarding
both the ownership and prior transfers of the BVB Stock.
Section 5.17 Employee Plans. BVB agrees the Employee Plans including,
without limitation, the Bridge View Bank 401(k) Plan, and the Bridge View
Bancorp Directors' Retirement Plan, may be terminated and accrued benefits paid
in accordance with the provisions of such plan, frozen, modified or merged into
similar employee benefit plans maintained by Interchange or any Interchange
Subsidiary, including, without limitation, the Interchange State Bank Capital
Investment Plan, on or after the Effective Date, as determined by Interchange in
its sole discretion, subject to compliance with applicable law.
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Section 5.18 Employee Health and Welfare Plans. Without limitation, BVB
agrees that BVB's employee welfare benefit plans, as defined in Section 3(1) of
ERISA, may be terminated, modified or merged into Interchange's welfare benefit
plans on or after the Effective Date, as determined by Interchange in its sole
discretion, subject to compliance with applicable law so long as any such action
preserves the rights of participants in such plans through the Effective Time.
Section 5.19 BVB Stock Option Plans and BVB Stock Options. BVB shall take
such action as is necessary under the BVB Stock Option Plans to (i) terminate
such Stock Option Plans as of immediately prior to the Effective Date, (ii)
cancel, effective as of immediately prior to the Effective Date, all BVB Stock
Options, awards and stock appreciation rights granted under such BVB Stock
Option Plans that are unexercised as of immediately prior to the Effective Date,
and (iii) enter into a written agreement with each holder of an outstanding BVB
Stock Option evidencing and acknowledging termination of the BVB Stock Option
Plans and cancellation of all unexercised BVB Stock Options held by such option
holder as of immediately prior to the Effective Date, providing for payment of
all unexercised BVB Stock Options in the manner set forth in Section 1.09, and
releasing BVB, the Bank, their respective boards of directors, agents,
attorneys, stockholders, successors and assigns (including Interchange,
Interchange Bank, their respective boards of directors, agents, attorneys and
stockholders) from any and all obligations to such holder under any grant
agreement regarding the BVB Stock Options.
Section 5.20 Voting Agreement. Simultaneously with the execution of this
Agreement, BVB and each of the directors of BVB shall execute and deliver to
Interchange the Voting Agreement and Irrevocable Proxy in the form of Exhibit A
attached hereto, and BVB acknowledges that pursuant to such agreement the
directors of BVB have agreed that they will vote the shares of the BVB Stock
owned by them in favor of this Agreement and the transactions contemplated
hereby, subject to required regulatory approvals.
Section 5.21 Non-Compete Agreements. Prior to the Closing Date, BVB shall
use its best efforts to cause each of the persons identified on Exhibit C to
enter into an agreement not to compete with Interchange to be dated as of the
Closing Date and to become effective on the Effective Date (each a "Non-Compete
Agreement"). The form of the Non-Compete Agreement is attached as Exhibit D
hereto.
Section 5.22 Accruals and Reserves. BVB shall establish such additional
accruals and reserves as may be necessary (i) to conform BVB's accounting and
credit loss reserve practices and methods to those of Interchange, consistent
with Interchange's plans with respect to the conduct of BVB's business following
the Merger and (ii) to the extent permitted by GAAP, to provide for the costs
and expenses relating to the consummation by BVB of the Merger and the other
transactions contemplated by this Agreement. BVB's representations, warranties,
and covenants contained in this Agreement shall not be deemed to be untrue or
breached in any respect for any purpose as a consequence of any modifications or
changes undertaken solely on account of this Section 5.22.
52
Section 5.23 280G Payments. BVB shall amend (as described herein) any
agreement(s) or understanding(s) providing for the payment, grant of any right
or provision of any benefit to an employee of BVB as a result of or in
connection with the Merger (including, without limitation, any payment in
connection with a change in control agreement or in consideration of
cancellation of outstanding BVB Stock Options) which would cause the limitations
of Section 280G of the Code with respect to tax deductibility to be exceeded
("Excess 280G Agreements"). The amendment to any such Excess 280G Agreements
shall provide for a reduction in the aggregate amount of all payments under such
Excess 280G Agreements with respect to any individual employee to a level that
will not exceed the limitations of Section 280G of the Code with respect to tax
deductibility.
Section 5.24 Dividends. BVB shall not declare, set aside or pay any
dividend in respect of the BVB Stock or make any other distribution to
shareholders (including, without limitation, any stock dividend, dividends in
kind or other distribution), whether in cash, stock or other property, after the
date of this Agreement, except that BVB may declare and pay its regular
quarterly dividend on the BVB Stock not to exceed $0.10 per share at
approximately the same time during each quarter which it has historically
declared and paid such dividend; provided, however, that BVB and Interchange
shall cooperate with each other to coordinate the record and payment dates of
their respective dividends for the quarter in which the Effective Date occurs
such that the holders of BVB Stock shall receive a quarterly dividend from
either BVB or Interchange, but not from both with respect to such quarter.
Section 5.25 Disclosure Schedules. At least ten (10) days prior to the
Closing, BVB agrees to provide Interchange with supplemental disclosure
Schedules to be delivered by BVB pursuant to this Agreement reflecting any
material changes thereto between the date of this Agreement and the Closing
Date.
ARTICLE VI
COVENANTS OF INTERCHANGE
Interchange hereby make the covenants set forth in this Article VI to BVB
as follows:
Section 6.01 Best Efforts. Interchange shall use its best efforts to
perform and fulfill all conditions and obligations on its part to be performed
or fulfilled under this Agreement and to cause the consummation of the
transactions contemplated hereby in accordance with the terms and conditions of
this Agreement.
Section 6.02 Interchange Shareholders' Meeting. Interchange, acting through
the Interchange Board of directors, shall:
A. Duly call, give notice of, convene and hold, on a date mutually selected
by BVB and Interchange, a meeting of its shareholders (the "Interchange
Meeting") as soon as practicable for the purpose of obtaining the shareholder
approval of the issuance of the Interchange Stock pursuant to the terms of this
Agreement;
B. Not impose a requirement that the holders of more than the minimum
required percentage (as set forth in Interchange's current Certificate of
Incorporation, current Bylaws or pursuant to provisions of the NJBCA requiring
the lowest percentage vote) of the Interchange Stock entitled to vote to approve
of the issuance of Interchange Stock pursuant to the terms of this Agreement;
53
C. Subject to its fiduciary duties of the Interchange Board to the
shareholders of Interchange, (i) include in the Joint Proxy Statement/Prospectus
the recommendation of the Interchange Board that the shareholders of Interchange
vote in favor of the approval of the issuance of the Interchange Stock in
connection with the transactions contemplated by this Agreement, (ii) use its
best efforts to obtain such shareholder approval of the issuance of the
Interchange Stock pursuant to the terms of this Agreement, and (iii) perform
such other acts as may reasonably be requested by BVB to ensure such shareholder
approval of the issuance of Interchange Stock; and
D. Cause the Joint Proxy Statement/Prospectus to be mailed to the
shareholders of Interchange as soon as practicable following the effectiveness
of the Registration Statement.
Section 6.03 Regulatory Approvals and Registration Statement.
A. Interchange, with the cooperation of BVB, shall promptly file or cause
to be filed applications for all regulatory approvals required to be obtained by
Interchange in connection with this Agreement and the transactions contemplated
hereby, including but not limited to the necessary applications for the prior
approval of the Merger by the Federal Reserve, the NJDOBI and the FDIC.
Interchange shall use its best efforts to obtain all such regulatory approvals
and any other approvals from third parties at the earliest practicable time.
B. Interchange shall reserve and make available for issuance in connection
with the Merger and in accordance with the terms of this Agreement, the
Interchange Stock for the Merger Consideration and shall, with the cooperation
of BVB, file with the S.E.C. the Registration Statement, which Registration
Statement will contain the Proxy Statement/Prospectus, and Interchange shall use
its best efforts to cause the Registration Statement to become effective. At the
time the Registration Statement becomes effective, the Registration Statement
shall comply in all material respects with the provisions of the Securities Act
and the published rules and regulations thereunder, 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 not false or
misleading, and at the time of mailing thereof to the shareholders of BVB, at
the time of the BVB Shareholders' Meeting and on the Effective Date, the Proxy
Statement/Prospectus included as part of the Registration Statement, as amended
or supplemented by any amendment or supplement, shall not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not false or misleading.
C. Interchange shall timely file all documents required to obtain all
necessary Blue Sky permits and approvals, if any, required to carry out the
transactions contemplated by this Agreement, shall pay all expenses incident
thereto and shall use its best efforts to obtain such permits and approvals on a
timely basis.
D. Interchange shall promptly and properly prepare and file (i) any
application required to list on Nasdaq the shares of Interchange Stock to be
issued pursuant to the Merger, and (ii) any filings required under the Exchange
Act, relating to the Merger and the transactions contemplated herein.
54
E. Interchange shall keep BVB reasonably informed as to the status of such
applications and filings, and Interchange shall promptly furnish BVB and its
counsel with copies of all such regulatory filings and all correspondence for
which confidential treatment has not been requested.
F. Interchange shall not take any action at any time after the Effective
Date which would cause the Merger not to qualify as a reorganization within the
meaning of Section 368 of the Code.
Section 6.04 Information for Applications and Statements. Interchange shall
promptly, but in no event later than ten (10) business days after receipt of a
written request by BVB, furnish to BVB all information, data and documents
concerning Interchange, including, but not limited to, financial statements,
required for inclusion in any application or statement to be made by BVB to, or
filed by BVB with, any governmental body in connection with the transactions
contemplated by this Agreement, or in connection with any other transactions
during the pendency of this Agreement, and Interchange represents and warrants
that all information so furnished for such statements and applications shall be
true and correct in all material respects and shall not omit any material fact
required to be stated therein or necessary to make the statements made, in light
of the circumstances under which they were made, not misleading. Interchange
shall otherwise fully cooperate with BVB in the filing of any applications or
other documents necessary to consummate the transactions contemplated by this
Agreement.
Section 6.05 Prohibited Acts of Interchange. Prior to the Closing,
Interchange and, as applicable, the Interchange Subsidiaries shall not, without
the prior written consent of BVB:
A. Take any action that would reasonably be anticipated to result in a
Material Adverse Change with respect to Interchange;
B. Take or fail to take any action that would cause or permit the
representations and warranties made in Article IV hereof to be inaccurate at the
time of the Closing or preclude Interchange from making such representations and
warranties at the time of the Closing;
C. Make any, or acquiesce with any, change in any accounting methods,
principles or material practices, except as required by changes in GAAP as
concurred in by Interchange's independent auditors.
Section 6.06 Access; Pre-Closing Investigation. Subject to the provisions
of Article X, Interchange shall afford the officers, directors, employees,
attorneys, accountants, investment bankers and authorized representatives of BVB
full access during normal business hours during the period prior to the
Effective Time or the termination of this Agreement to all of the Properties,
books, contracts, commitments, personnel and records of Interchange, permit BVB
to make such inspections (including without limitation with regard to such
Properties physical inspection of the surface and subsurface thereof and any
structure thereon) as they may require, and furnish to BVB during such period
all such information concerning Interchange and its affairs as BVB may
reasonably request, so that BVB may have full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of
Interchange, including, without limitation, access sufficient to verify the
value of the assets and the liabilities of Interchange and the satisfaction of
the conditions precedent to BVB's obligations described in Article VIII of this
Agreement. Interchange agrees at any time, and from time to time, to furnish to
BVB as soon as practicable, any additional information that BVB may reasonably
request. No investigation by BVB or its representatives shall affect the
representations and warranties set forth herein.
55
Section 6.07 Untrue Representations. Interchange shall promptly notify BVB
in writing if Interchange becomes aware of any fact or condition that makes
untrue, or shows to have been untrue, in any material respect, any schedule or
any other information furnished to BVB or any representation or warranty made in
or pursuant to this Agreement or that results in Interchange's failure to comply
with any covenant, condition or agreement contained in this Agreement.
Section 6.08 Litigation and Claims. Interchange shall promptly notify BVB
of any legal action, suit or proceeding or judicial, administrative or
governmental investigation, pending or, to the knowledge of Interchange,
threatened against Interchange that questions or might question the validity of
this Agreement or the agreements contemplated hereby, or any actions taken or to
be taken by Interchange pursuant hereto or seeks to enjoin or otherwise restrain
the transactions contemplated hereby or thereby.
Section 6.09 Notice of Material Adverse Changes. Interchange shall promptly
notify BVB in writing if any change or development shall have occurred or, to
the best knowledge of Interchange, been threatened (or any development shall
have occurred or been threatened involving a prospective change) in the
business, financial condition, operations or prospects of Interchange that has
resulted in or may reasonably be expected to result in a Material Adverse Change
with respect to Interchange or that would adversely affect, prevent or delay the
obtaining of any regulatory approval for the consummation of the transactions
contemplated by this Agreement.
Section 6.10 Consents and Approvals. Interchange shall use its best efforts
to obtain all consents and approvals from third parties necessary to consummate
the transactions contemplated by this Agreement at the earliest practicable
time.
Section 6.11 Employee Matters. Interchange shall, with respect to each
employee of BVB or any BVB Subsidiary at the Effective Time who continues in
employment with Interchange or its Subsidiaries (each a "Continued Employee"),
provide the benefits described in this Section 6.11. Subject to the right of
subsequent amendment, modification or termination in the sole discretion of
Interchange, each Continued Employee shall be entitled, as an employee of
Interchange or its Subsidiaries, to participate in the employee benefit plans of
Interchange as set forth in Schedule 6.11 hereto in effect as of the date of
this Agreement, if such Continued Employee shall be eligible and, if required,
selected for participation therein under the terms thereof. All such
participation shall be subject to such terms of such plans as may be in effect
from time to time and this Section 6.11 is not intended to give any Continued
Employee any rights or privileges superior to those of other similarly situated
employees of Interchange or its Subsidiaries. The provisions of this Section
6.11 shall not be deemed or construed so as to provide duplication of similar
benefits but, subject to that qualification, Interchange shall, for purposes of
vesting and any age or period of service requirements for commencement of
participation with respect to any employee benefit plans in which a Continued
Employee may participate (excluding the Interchange Bank non-contributory
defined benefit pension plan), credit each Continued Employee with his or her
term of service with BVB or any BVB Subsidiary.
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Section 6.12 Conduct of Business in the Ordinary Course. Except as
specifically provided for in this Agreement, Interchange shall conduct its
business in the ordinary course as heretofore conducted. For purposes of this
Section 6.12, the ordinary course of business shall consist of the banking and
related business as presently conducted by Interchange and the Interchange
Subsidiaries, and engaging in acquisitions and assisting in the management of
its Subsidiaries.
Section 6.13 Disclosure Schedules. At least ten (10) days prior to the
Closing, Interchange agrees to provide BVB with supplemental disclosure
Schedules to be delivered by Interchange pursuant to this Agreement reflecting
any material changes thereto between the date of this Agreement and the Closing
Date.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BVB
All obligations of BVB under this Agreement are subject to the fulfillment
(or, if legally permissible, waiver by BVB), prior to or at the Closing, of each
of the following conditions:
Section 7.01 Representations and Warranties. All representations and
warranties made by Interchange in this Agreement or in any document or schedule
delivered to BVB in connection with this Agreement shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects as of the Closing with the same force and effect as if such
representations and warranties were made at and as of the Closing, except with
respect to those representations and warranties specifically made as of an
earlier date (in which case such representations and warranties shall be true
and correct in all material respects as of such earlier date).
Section 7.02 Performance of Interchange Obligations. Interchange shall
have, or shall have caused to be, performed or observed in all material respects
all agreements, terms, covenants and conditions required by this Agreement to be
performed or observed by Interchange at or prior to the Closing.
Section 7.03 Shareholder Approvals.
A. The holders of at least the minimum required percentage of BVB Stock
entitled to vote on this Agreement and the Merger shall have approved this
Agreement and the Merger.
B. The holders of at least the minimum required percentage of Interchange
Stock entitled to vote on the issuance of shares of Interchange Stock comprising
the Total Stock Consideration shall have approved the issuance of such
additional shares.
57
Section 7.04 Government and Other Approvals. Interchange and BVB shall have
received approvals, acquiescence or consents, all on terms and conditions
acceptable to Interchange, of the transactions contemplated by this Agreement
from all necessary governmental agencies and authorities and other third
parties, including, but not limited to, the S.E.C., the Federal Reserve, the
FDIC and the New Jersey Department of Banking, and all applicable waiting
periods shall have expired, and Interchange and BVB shall have received the
approvals and consents of all third parties required to consummate this
Agreement and any other agreement contemplated hereby and the transactions
contemplated hereby. Such approvals and consents shall not have imposed, in the
reasonable judgment of Interchange, any material requirement upon Interchange,
including, without limitation, any requirement that Interchange sell or dispose
of any significant amount of its assets. Such approvals and the transactions
contemplated hereby shall not have been contested or threatened to be contested
by any federal or state governmental authority or by any other third party by
formal proceedings. It is understood that, if such contest is brought by formal
proceedings, Interchange may, but shall not be obligated to, answer and defend
such contest or otherwise pursue this transaction over such objection.
Section 7.05 No Litigation. No action shall have been taken, and no
statute, rule, regulation or order shall have been promulgated, enacted,
entered, enforced or deemed applicable to this Agreement, the Merger, or the
transactions contemplated hereby by any federal, state or foreign government or
governmental authority or by any court, domestic or foreign, including the entry
of a preliminary or permanent injunction, that would (i) make this Agreement or
any other agreement contemplated hereby, or the transactions contemplated hereby
illegal, invalid or unenforceable, (ii) require the divestiture of a material
portion of the assets of BVB or any of its Subsidiaries, (iii) impose material
limits on the ability of any party to this Agreement to consummate the Agreement
or any other agreement contemplated hereby, or the transactions contemplated
hereby, (iv) otherwise result in a Material Adverse Change, or (v) if this
Agreement or any other agreement contemplated hereby, or the transactions
contemplated hereby are consummated, subject Interchange or subject any officer,
director, shareholder or employee of Interchange to criminal or civil liability.
No action or proceeding before any court or governmental authority, domestic or
foreign, by any government or governmental authority or by any other person,
domestic or foreign, shall be threatened, instituted or pending that would
reasonably be expected to result in any of the consequences referred to in
clauses (i) through (v) above.
Section 7.06 Delivery of Closing Documents. BVB shall have received all
documents required to be received from Interchange on or prior to the Closing
Date as set forth in Section 2.03 hereof, all in form and substance reasonably
satisfactory to BVB.
Section 7.07 Registration Statement. The Registration Statement, including
any amendments or supplements thereto, shall be effective under the Securities
Act and no stop order suspending the effectiveness of the Registration Statement
shall be in effect or proceedings for purpose pending before or threatened by
the S.E.C. All state securities permits or approvals required by applicable
state securities laws to consummate the transactions contemplated by this
Agreement shall have been received and remain in effect.
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Section 7.08 Nasdaq Listing. The shares of Interchange Stock to be issued
in the Merger shall have been approved for listing on the Nasdaq.
Section 7.09 Federal Tax Opinion. BVB shall have received a copy of the Tax
Opinion (as defined in Section 8.10).
Section 7.10 No Material Adverse Change. There shall have been no Material
Adverse Change with respect to Interchange since September 30, 2002.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF INTERCHANGE
All obligations of Interchange under this Agreement are subject to the
fulfillment (or, if legally permissible, waiver by Interchange), prior to or at
the Closing, of each of the following conditions:
Section 8.01 Representations and Warranties. All representations and
warranties made by BVB in this Agreement or in any schedule delivered to
Interchange pursuant hereto shall have been true and correct when made and shall
be true and correct in all material respects as of the Closing Date with the
same force and effect as if such representations and warranties were made at and
as of the Closing Date, except with respect to those representations and
warranties specifically made as of an earlier date (in which case such
representations and warranties shall be true in all material respects as of such
earlier date).
Section 8.02 Performance of BVB Obligations. BVB shall have performed or
complied in all material respects with all agreements, terms, covenants and
conditions required by this Agreement to be performed or complied with by BVB
prior to or at the Closing.
Section 8.03 Shareholder Approvals.
A. The holders of at least the minimum required percentage of BVB Stock
entitled to vote on the Agreement and the Merger shall have approved this
Agreement and the Merger.
B. The holders of at least the minimum required percentage of Interchange
Stock entitled to vote on the issuance of the shares of Interchange Stock
comprising the Total Stock Consideration shall have approved the issuance of
such additional shares.
Section 8.04 Government and Other Approvals. Interchange and BVB shall have
received approvals, acquiescence or consents, all on terms and conditions
acceptable to Interchange, of the transactions contemplated by this Agreement
from all necessary governmental agencies and authorities and other third
parties, including, but not limited to, the S.E.C., the Federal Reserve, the
FDIC and the New Jersey Department of Banking, and all applicable waiting
periods shall have expired, and Interchange and BVB shall have received the
approvals and consents of all third parties required to consummate this
Agreement and any other agreement contemplated hereby, and the transactions
contemplated hereby. Such approvals and consents shall not have imposed, in the
sole judgment of Interchange, any material requirement upon Interchange,
including, without limitation, any requirement that Interchange sell or dispose
of any significant amount of its assets. Such approvals and the transactions
contemplated hereby shall not have been contested or threatened to be contested
by any federal or state governmental authority or by any other third party by
formal proceedings. It is understood that, if such contest is brought by formal
proceedings, Interchange may, but shall not be obligated to, answer and defend
such contest or otherwise pursue this transaction over such objection.
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Section 8.05 No Litigation. No action shall have been taken, and no
statute, rule, regulation or order shall have been promulgated, enacted,
entered, enforced or deemed applicable to this Agreement, the Merger, or the
transactions contemplated hereby by any federal, state or foreign government or
governmental authority or by any court, domestic or foreign, including the entry
of a preliminary or permanent injunction, that would (i) make this Agreement or
any other agreement contemplated hereby, or the transactions contemplated hereby
illegal, invalid or unenforceable, (ii) require the divestiture of a material
portion of the assets of BVB or any of its Subsidiaries, (iii) impose material
limits on the ability of any party to this Agreement to consummate the Agreement
or any other agreement contemplated hereby, or the transactions contemplated
hereby, (iv) otherwise result in a Material Adverse Change, or (v) if this
Agreement or any other agreement contemplated hereby, or the transactions
contemplated hereby are consummated, subject Interchange or subject any officer,
director, shareholder or employee of Interchange to criminal or civil liability.
No action or proceeding before any court or governmental authority, domestic or
foreign, by any government or governmental authority or by any other person,
domestic or foreign, shall be threatened, instituted or pending that would
reasonably be expected to result in any of the consequences referred to in
clauses (i) through (v) above.
Section 8.06 Delivery of Closing Documents. Interchange shall have received
all documents required to be received from BVB on or prior to the Closing Date
as set forth in Section 2.02 hereof, all in form and substance reasonably
satisfactory to Interchange.
Section 8.07 Receipt of Shareholder Letters. Interchange shall have
received from BVB the signed Shareholder Letters, in the form attached hereto as
Exhibit B, of each person who may reasonably be deemed an "affiliate" of BVB
within the meaning of such term as used in Rule 145 under the Securities Act.
Section 8.08 Registration Statement. The Registration Statement, including
any amendments or supplements thereto, shall be effective under the Securities
Act and no stop order suspending the effectiveness of the Registration Statement
shall be in effect or proceedings for purpose pending before or threatened by
the S.E.C. All state securities permits or approvals required by applicable
state securities laws to consummate the transactions contemplated by this
Agreement shall have been received and remain in effect.
Section 8.09 Nasdaq Listing. The shares of Interchange Stock to be issued
in the Merger shall have been approved for listing on the Nasdaq.
Section 8.10 Federal Tax Opinion. Interchange shall have received an
opinion (the "Tax Opinion") of its counsel, Jenkens & Xxxxxxxxx, P.C.,
substantially to the effect that, if the Merger is consummated in accordance
with the terms set forth in this Agreement:
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A. the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368 of the Code;
B. no gain or loss will be recognized for federal income tax purposes by
the holders of shares of BVB Stock who exchange their BVB Stock solely for
Interchange Stock in the Merger (except for cash received in lieu of fractional
shares);
C. the tax basis of the shares of Interchange Stock received by the holders
of BVB Stock who exchange all of their BVB Stock solely for Interchange Stock in
the Merger will be the same as the tax basis of the shares of BVB Stock
surrendered in exchange therefor, reduced by any amount allocable to a
fractional share interest of Interchange Stock for which cash is received;
D. the holding period of the shares of Interchange Stock received by such
shareholders of BVB Stock pursuant to the Merger will include the period during
which the BVB Stock surrendered therefor was held, provided such shares of BVB
Stock were held as capital assets in the hands of the shareholder as of the
Effective Time;
E. with respect to a shareholder of BVB Stock who receives solely cash in
exchange for all of such shareholder's shares of BVB Stock pursuant to the
Merger (a) such shareholder generally will recognize gain or loss equal to the
difference between the amount of cash received and the shareholder's aggregate
tax basis for such shares or BVB Stock, (b) the nature of the gain or loss
recognized will be capital gain or loss if the shares of BVB Stock exchanged
were held as a capital asset, and (c) if, however, any such shareholder of BVB
constructively owns shares of BVB Stock that are exchanged for shares of
Interchange Stock in the Merger or owns shares of Interchange Stock actually or
constructively after the Merger, the attribution to the shareholder of stock
owned by a related party may prevent the transaction from qualifying for capital
gain tax rates and instead result in any gain being treated as the distribution
of a dividend, which is taxed at ordinary income rates; and
F. with respect to a shareholder of BVB who receives a combination of cash
and Interchange Stock in exchange for all of such shareholder's shares of BVB
Stock pursuant to the Merger (a) such shareholder generally will recognize gain,
but not loss, to the extent of the lesser of: (1) the excess, if any, of (A) the
sum of the aggregate fair market value of the Interchange Stock received
(including any fractional share of Interchange Stock deemed to be received and
exchanged for cash) and the amount of cash received (excluding any cash received
in lieu of a fractional share of Interchange Stock) over (B) the shareholder's
aggregate tax basis in the shares of BVB Stock exchanged in the Merger; and (2)
the amount of cash received by such shareholder, (b) the tax basis in the
Interchange Stock received pursuant to the Merger will equal such shareholder's
aggregate tax basis in the shares of BVB Stock being exchanged, reduced by any
amount allocable to a fractional share interest of Interchange Stock for which
cash is received and by the amount of any cash consideration received, and
increased by the amount of taxable gain, if any, recognized by such shareholder
in the Merger (including any portion of such gain that is treated as a
dividend), (c) the holding period of the Interchange Stock received in the
Merger will include the holding period for which shareholders of BVB Stock held
their BVB Stock provided that such BVB Stock was held as a capital asset.
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The federal income tax consequences of the Merger to a shareholder of BVB
generally will depend on whether the shareholder receives cash, Interchange
Stock or a combination thereof in exchange for the shareholder's shares of BVB
Stock. In rendering such opinion, such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Interchange, BVB and others.
Section 8.11 Accounting Treatment. All accounting and tax treatment,
entries and adjustments in connection with the transactions contemplated by this
Agreement and the other agreements contemplated hereby (and not an accounting
matter solely relating to Interchange's operations apart from the Merger) shall
be reasonably satisfactory to Interchange (such condition shall be deemed not to
be satisfied by any adjustment that shall reduce any capital ratio of
Interchange to less than 50 basis points above "well capitalized" levels as
defined in 12 C.F.R. Section 225.2(r)), Interchange shall not have received
notification from any proper regulatory authority that Interchange's accounting
and tax treatment, entries and adjustments used in connection with the Merger
are improper, and Interchange shall not have been required by any such
regulatory authority to make any accounting or tax adjustments that would
constitute a Material Adverse Change.
Section 8.12 No Material Adverse Change. There shall have been no Material
Adverse Change in BVB since September 30, 2002.
Section 8.13 Termination and/or Integration of Employee Plans. Interchange
shall have received evidence reasonably satisfactory to Interchange that, as of
the Effective Time, all Employee Plans (other than such plans Interchange elects
not to terminate) have been terminated and/or properly positioned to be
integrated into the existing plans of Interchange or one of its Subsidiaries in
accordance with the terms of such Employee Plans, the Code, ERISA and all other
applicable laws and regulations on a basis satisfactory to Interchange in its
sole discretion and that, to the extent Interchange deems necessary or
appropriate, affected participants have been notified of such terminations
and/or integrations.
ARTICLE IX
TERMINATION AND ABANDONMENT
Section 9.01 Expenses. Each of the parties hereto shall bear its respective
costs and expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement; provided, however, in the event
that:
A. this Agreement is terminated by Interchange because (i) the Merger
Agreement is not approved by the required vote of shareholders at the BVB
Shareholders' Meeting, and (ii) either (a) the BVB Board (subject to compliance
with its fiduciary duties as advised by counsel) shall have failed to have used
its best efforts to obtain shareholder approval or (b) BVB shall have entered
into an agreement to effect a Third Party Transaction (as defined in Section
9.02.J herein) within twelve (12) months from the date of this Agreement, BVB
shall pay to Interchange within ten (10) business days after such termination
(y) a termination fee of $2,700,000, and (z) all documented fees and expenses of
Interchange related to this Agreement and the transactions contemplated hereby
(which fees and expenses, as communicated to BVB by Interchange within five (5)
business days after termination, shall not exceed $250,000);
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B. this Agreement is terminated by BVB because of a Third Party Transaction
(as defined in Section 9.02.J herein), BVB shall pay to Interchange within ten
(10) business days after such termination (y) a termination fee of $2,700,000,
and (z) all documented fees and expenses of Interchange related to this
Agreement and the transactions contemplated hereby (which fees and expenses, as
communicated to BVB by Interchange within five (5) business days after
termination, shall not exceed $250,000); or
C. this Agreement is terminated by BVB because (i) the issuance of shares
of Interchange Stock pursuant to the terms of this Agreement is not approved by
the required vote of shareholders at the Interchange Meeting, and (ii) either
(a) the Interchange Board (subject to compliance with its fiduciary duties as
advised by counsel) shall have failed to have used its best efforts to obtain
shareholder approval or (b) Interchange shall have entered into an agreement to
effect a Third Party Transaction (as defined in Section 9.02.J herein; provided,
however, that for purposes of this Section 9.01.C, any reference to "BVB" in
such definition shall be deemed to be a reference to "Interchange", and any
reference to "Interchange" in such definition shall be deemed to be a reference
to "BVB") within twelve (12) months from the date of this Agreement, Interchange
shall pay to BVB, within ten (10) business days after such termination, a
termination fee of $1,000,000.
The parties hereto acknowledge that the agreements contained in this
Section 9.01 are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, neither Interchange nor BVB would
enter into this Agreement.
Section 9.02 Right of Termination. Subject to any payments as provided in
Section 9.01, this Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Effective Time, whether before or after
approval by the shareholders of BVB as follows, and in no other manner:
A. By mutual written agreement of BVB and Interchange, duly authorized by
their respective boards of directors.
B. By either BVB or Interchange (provided that the terminating party is not
in material breach of any representation, warranty, covenant or other agreement
contained herein) if the conditions precedent to such parties' obligations to
close specified in Articles VII and VIII, respectively, shall not have been
satisfied on or before June 30, 2003, or such later date as may be mutually
agreed to by Interchange and BVB.
C. By either BVB or Interchange if (i) any of the transactions contemplated
by this Agreement or any other agreement contemplated hereby, are disapproved by
any regulatory authority whose approval is required to consummate such
transactions, or (ii) any court of competent jurisdiction in the United States
or other United States (federal or state) governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining,
invalidating or otherwise prohibiting the Agreement or any other agreement
contemplated hereby, or the transactions contemplated hereby and such order,
decree, ruling or other action shall have been final and nonappealable.
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D. By Interchange if any application for regulatory or governmental
approval necessary to consummate the Merger and the other transactions
contemplated hereby shall have been denied or withdrawn at the request or
recommendation of the applicable regulatory agency or governmental authority or
if any such application is approved with commitments, conditions or
understandings, whether contained in an approval letter or otherwise, which, in
the reasonable determination of Interchange, materially impairs the value of BVB
and the BVB Subsidiaries, taken as a whole, to Interchange or which alters the
economics of the transactions contemplated by this Agreement, including without
limitation, the Merger.
E. By Interchange if there shall have been any Material Adverse Change with
respect to BVB.
F. By BVB if there shall have been any Material Adverse Change with respect
to Interchange.
G. By Interchange, if BVB shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement or any other agreement contemplated
hereby, and such failure shall not have been cured within a period of thirty
(30) calendar days after notice from Interchange.
H. By BVB, if Interchange shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, and such failure shall not have been
cured within a period of thirty (30) calendar days after notice from BVB.
I. by Interchange or BVB, if this Agreement and the Merger is not approved
by the required vote of shareholders of BVB, or if the issuance of additional
shares of Interchange Stock is not approved by the required votes of
shareholders of Interchange;
J. by BVB, by written notice to Interchange, if (i) a proposal for a Third
Party Transaction (as defined below) involving BVB has been made or received and
the Board of Directors of BVB determines, in the exercise of its good faith
judgment (based on written advice of independent legal counsel) that such
termination is required in order for BVB's Board of Directors to comply with its
fiduciary duties to BVB's shareholders, or (ii) following receipt by BVB of a
proposal for a Third Party Transaction, the Board of Directors of BVB shall have
altered its determination to recommend that the shareholders of BVB approve this
Agreement and/or the Merger or shall have failed to proceed to hold the BVB
Shareholders' Meeting to approve this Agreement and/or the Merger, in either
case of which BVB shall give Interchange prompt written notice of its election
to terminate this Agreement pursuant to this Section 9.02.J.
For purposes of this Section 9.02.J, a "Third Party Transaction" shall
include (i) any successful tender offer for more than 50% of the outstanding
shares of BVB, ii) any merger or consolidation of BVB with or into any entity
other than Interchange or an affiliate of Interchange, (iii) any sale of all or
substantially all of the assets of BVB, (iv) any reorganization of BVB or other
transaction that results or when completed would result in a disposition of
substantially all of the assets of BVB, or (v) the issuance, sale or disposition
of securities representing 50% or more of the common stock of BVB;
64
K. By BVB, if both (i) the Interchange Measurement Price during the
Valuation Period shall be less than $13.64 (which number shall be appropriately
adjusted to give effect to any Share Adjustment relative to shares of
Interchange Stock), and (ii) the number obtained by dividing the Interchange
Average Price by the Interchange Initial Price (as defined below) is less than
the number obtained by dividing the Final Index Price (as defined below) by the
Initial Index Price (as defined below) and subtracting .20 from such quotient;
subject, however, to the following four sentences. If BVB elects to exercise its
right of termination pursuant to this Section 9.02.K, it shall give written
notice to Interchange on the fourth (4th) business day prior to the Closing
Date. Not later than the second (2nd) business day prior to the Closing Date,
Interchange shall have the option to increase the Aggregate Merger Consideration
Value to be received by the holders of BVB Stock hereunder (either by increasing
the Total Cash Consideration, the Total Stock Consideration or both) by an
amount equal to the product of (a) $13.64 minus the Interchange Measurement
Price and (b) the Total Stock Amount. For purposes of such right, additional
shares of Interchange Stock shall be valued at the Interchange Measurement
Price. If Interchange elects to exercise this option, it shall give prompt
written notice to BVB of such election and the revised Merger Consideration,
whereupon no termination shall have occurred pursuant to this Section 9.02.K and
this Agreement shall remain in effect in accordance with its terms (except as
the Merger Consideration shall have been so modified).
For purposes of this Section 9.02.K:
(i) "Index Group" shall mean all of those companies listed on Exhibit E,
the common stock of which is publicly traded and as to which there is
no pending publicly announced proposal at any time during the period
of twenty (20) trading days ending at the end of the fifth trading day
immediately preceding the Closing Date for such company to be acquired
or to acquire another company in exchange for its stock where, in such
later case, such company to be acquired would be a "significant
subsidiary" of such acquiring company (as such term is defined in
Section 1-02(w) of Regulation S-X of the Securities Act. In the event
that any such company or companies are so removed from the Index
Group, the weights attributed to the remaining companies shall be
adjusted accordingly.
(ii) "Interchange Initial Price" shall be the average of the closing bid
and asked price of a share of Interchange Common on the date of this
Agreement.
(iii) "Initial Index Price" shall mean the weighted average (weighted in
accordance with the percentages listed on Exhibit E) of the per share
closing prices of the common stock of the companies comprising the
Index Group, as reported on the consolidated transactions reporting
system for the market or exchange on which such common stock is
publicly traded, on the date of this Agreement.
(iv) "Final Price" of any company belonging to the Index Group shall mean
the average of the daily closing sale prices of a share of common
stock of such company, as reported in the consolidated transaction
reporting system for the market or exchange on which such common stock
is principally traded, during the period of twenty (20) trading days
ending on the fifth (5th) business day prior to the Closing Date.
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(v) "Final Index Price" shall mean the weighted average (weighted in
accordance with the percentages listed on Exhibit E) the Final Prices
for all of the companies comprising the Index Group.
L. By BVB, if the Interchange Measurement Price during the Valuation Period
shall be less than $11.94 (which number shall be appropriately adjusted to give
effect to any Share Adjustment relative to shares of Interchange Stock);
subject, however, to the following four sentences. If BVB elects to exercise its
right of termination pursuant to this Section 9.02.L, it shall give written
notice to Interchange on the fourth (4th) business day prior to the Closing
Date. Not later than the second (2nd) business day prior to the Closing Date,
Interchange shall have the option to increase the Aggregate Merger Consideration
Value to be received by the holders of BVB Stock hereunder (either by increasing
the Total Cash Consideration, the Total Stock Consideration or both) by an
amount equal to the product of (a) $11.94 minus the Interchange Measurement
Price and (b) the Total Stock Amount. For purposes of such right, additional
shares of Interchange Stock shall be valued at the Interchange Measurement
Price. If Interchange elects to exercise this option, it shall give prompt
written notice to BVB of such election and the revised Merger Consideration,
whereupon no termination shall have occurred pursuant to this Section 9.02.L and
this Agreement shall remain in effect in accordance with its terms (except as
the Merger Consideration shall have been so modified).
M. By Interchange in accordance with the provisions of Section 5.14.
Section 9.03 Notice of Termination. The power of termination provided for
by Section 9.02 hereof may be exercised only by a notice given in writing, as
provided in Section 12.06 of this Agreement.
Section 9.04 Effect of Termination. Without limiting any other relief to
which either party hereto may be entitled for breach of this Agreement, in the
event of termination of this Agreement pursuant to this Article IX, no party to
this Agreement shall have any liability or further obligation hereunder to the
other party hereto, except (i) for liability of BVB pursuant to Section 9.01
hereof, (ii) that Article X, Article XI, Section 9.04 and Section 12.02 shall
survive any termination of the Agreement, and (iii) notwithstanding anything to
the contrary herein, termination will not relieve a breaching party from
liability for any willful and material breach of any provision of this
Agreement.
ARTICLE X
CONFIDENTIAL INFORMATION
Section 10.01 Definition of "Recipient," "Disclosing Party" and
"Representative". For purposes of this Article X, the term "Recipient" shall
mean the party receiving the Subject Information (as such term is defined in
Section 10.02 hereof) and the term "Disclosing Party" shall mean the party
furnishing the Subject Information. The terms "Recipient" or "Disclosing Party",
as used herein, include: (i) all persons and entities related to or affiliated
in any way with the Recipient or the Disclosing Party, as the case may be, and
(ii) any person or entity controlling, controlled by or under common control
with the Recipient or the Disclosing Party, as the case may be. The term
"Representative" as used herein, shall include all directors, officers,
shareholders, employees, representatives, advisors, attorneys, accountants and
agents of any of the foregoing. The term "person" as used in this Article X
shall be broadly interpreted to include, without limitation, any corporation,
company, group, partnership, governmental agency or individual.
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Section 10.02 Definition of "Subject Information". For purposes of this
Article X, the term "Subject Information" shall mean all information furnished
to the Recipient or its Representatives (whether prepared by the Disclosing
Party, its Representatives or otherwise and whether or not identified as being
non public, confidential or proprietary) by or on behalf of the Disclosing Party
or its Representatives relating to or involving the business, operations or
affairs of the Disclosing Party or otherwise in possession of the Disclosing
Party. The term "Subject Information" shall not include information that (i) was
already in the Recipient's possession at the time it was first furnished to
Recipient by or on behalf of Disclosing Party, provided that such information is
not known by the Recipient to be subject to another confidentiality agreement
with or other obligation of secrecy to the Disclosing Party, its Subsidiaries or
another party, or (ii) becomes generally available to the public other than as a
result of a disclosure by the Recipient or its Representatives, or (iii) becomes
available to the Recipient on a non-confidential basis from a source other than
the Disclosing Party, its Representative or otherwise, provided that such source
is not known by the Recipient to be bound by a confidentiality agreement with or
other obligation of secrecy to the Disclosing Party, its Representative or
another party.
Section 10.03 Confidentiality. Each Recipient hereby agrees that the
Subject Information will be used solely for the purpose of reviewing and
evaluating the transactions contemplated by this Agreement and any other
agreement contemplated hereby, and that the Subject Information will be kept
confidential by the Recipient and the Recipient's Representatives; provided,
however, that (i) any of such Subject Information may be disclosed to the
Recipient's Representatives (including, but not limited to, the Recipient's
accountants, attorneys and investment bankers) who need to know such information
for the purpose of evaluating any such possible transaction between the
Disclosing Party and the Recipient (it being understood that such
Representatives shall be informed by the Recipient of the confidential nature of
such information and that the Recipient shall direct and cause such persons to
treat such information confidentially); (ii) any of such Subject Information may
be disclosed by a Recipient who has been ordered by a court to do so or is
required by law to do so; and (iii) any disclosure of such Subject Information
may be made to which the Disclosing Party consents in writing prior to any such
disclosure by Recipient.
Section 10.04 Securities Law Concerns. Each Recipient hereby acknowledges
that the Recipient is aware, and the Recipient will advise the Recipient's
Representatives who are informed as to the matters that are the subject of this
Agreement, that the United States securities laws prohibit any person who has
received material, non-public information from an issuer of securities from
purchasing or selling securities of such issuer or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.
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Section 10.05 Return of Subject Information. In the event of termination of
this Agreement, for any reason, the Recipient shall promptly return to the
Disclosing Party all written material containing or reflecting any of the
Subject Information other than information contained in any application, notice
or other document filed with any governmental agency and not returned to the
Recipient by such governmental agency. In making any such filing, the Recipient
will request confidential treatment of such Subject Information included in any
application, notice or other document filed with any governmental agency.
Section 10.06 Specific Performance/Injunctive Relief. Each Recipient
acknowledges that the Subject Information constitutes valuable, special and
unique property of the Disclosing Party critical to its business and that any
breach of Article X of this Agreement by it will give rise to irreparable injury
to the Disclosing Party that is not compensable in damages. Accordingly, each
Recipient agrees that the Disclosing Party shall be entitled to obtain specific
performance and/or injunctive relief against the breach or threatened breach of
Article X of this Agreement by the Recipient or its Representatives. Each
Recipient further agrees to waive, and use its reasonable efforts to cause its
Representatives to waive, any requirement for the securing or posting of any
bond in connection with such remedies. Such remedies shall not be deemed the
exclusive remedies for a breach of Article X of this Agreement, but shall be in
addition to all other remedies available at law or in equity to the Disclosing
Party.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ADDITIONAL
REMEDIES
Section 11.01 Survival of Representations and Warranties. The parties
hereto agree that all of their respective representations and warranties
contained in this Agreement shall not survive Closing.
Section 11.02 Additional Remedies. Nothing contained in this Article XI
shall limit or otherwise affect the remedies available to Interchange, or its
officers, directors or agents with respect to any claim or cause of action
arising out of the willful misconduct, fraud or gross negligence of BVB or any
shareholder, employee or agent of BVB. Nothing contained in this Article XI
shall limit or otherwise affect the remedies available to BVB, or its officers,
directors, shareholders or agents with respect to any claim or cause of action
arising out of the willful misconduct, fraud or gross negligence of Interchange
or any shareholder, employee or agent of Interchange.
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ARTICLE XII
MISCELLANEOUS
Section 12.01 Brokerage Fees and Commissions.
A. Interchange hereby represents to BVB that, except as set forth on
Schedule 12.01(a), no agent, representative or broker has represented
Interchange in connection with the transactions described in this Agreement. BVB
shall have no responsibility or liability for any fees, expenses or commissions
payable to any agent, representative or broker of Interchange, and Interchange
hereby agrees to indemnify and hold BVB harmless for any amounts owed to any
agent, representative or broker of Interchange.
B. BVB hereby represents to Interchange that, except as set forth on
Schedule 12.01(b), no agent, representative or broker has represented BVB, its
directors and officers, or, to the knowledge of BVB, any of the shareholders of
BVB in connection with the transactions described in this Agreement. Interchange
shall have no responsibility or liability for any fees, expenses or commissions
payable to any agent, representative or broker of BVB or any shareholder of BVB,
and BVB agrees to indemnify and hold Interchange harmless for any amounts owed
to any agent, representative or broker of BVB or any shareholder of BVB.
Section 12.02 Expenses. Except as otherwise specifically provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expense.
Section 12.03 Entire Agreement. This Agreement (including the documents and
instruments referred to herein), and the other agreements, documents, schedules
and instruments executed and delivered by the parties to each other at the
Closing constitute the full understanding of the parties, a complete allocation
of risks between them and a complete and exclusive statement of the terms and
conditions of their agreement relating to the subject matter hereof and
supersede any and all prior agreements, whether written or oral, that may exist
between the parties with respect thereto. Except as otherwise specifically
provided in this Agreement, no conditions, usage of trade, course of dealing or
performance, understanding or agreement purporting to modify, vary, explain or
supplement the terms or conditions of this Agreement shall be binding unless
hereafter or contemporaneously herewith made in writing and signed by the party
to be bound, and no modification shall be effected by the acknowledgment or
acceptance of documents containing terms or conditions at variance with or in
addition to those set forth in this Agreement.
Section 12.04 Further Cooperation. The parties agree that they will, at any
time and from time to time after the Closing, upon request by the other and
without further consideration, do, perform, execute, acknowledge and deliver all
such further acts, deeds, assignments, assumptions, transfers, conveyances,
powers of attorney, certificates and assurances as may be reasonably required in
order to fully consummate the transactions contemplated hereby in accordance
with this Agreement or to carry out and perform any undertaking made by the
parties hereunder.
69
Section 12.05 Severability. If any term or other provision of this
Agreement is held to be illegal, invalid or unenforceable by any present or
future rule of law or public policy, then: (i) such term or provision shall be
fully severable and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision were not a part hereof; (ii) the
remaining conditions and provisions of this Agreement shall remain in full force
and effect and shall not be affected by such illegal, invalid or unenforceable
provision or by its severance from this Agreement; and (iii) there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and still
be legal, valid and enforceable. If any provision of this Agreement is so broad
as to be unenforceable, the provision shall be interpreted to be only as broad
as is enforceable.
Section 12.06 Notices. Any and all payments (other than payments at the
Closing), notices, requests, instructions and other communications required or
permitted to be given under this Agreement after the date hereof by any party
hereto to any other party may be delivered personally or by nationally
recognized overnight courier service or sent by mail or (except in the case of
payments) by telex or facsimile transmission, at the respective addresses or
transmission numbers set forth below and shall be effective (i) in the case of
personal delivery, telex or facsimile transmission, when received; (ii) in the
case of mail, upon the earlier of actual receipt or three (3) business days
after deposit in the United States Postal Service, first class certified or
registered mail, postage prepaid, return receipt requested; and (iii) in the
case of nationally-recognized overnight courier service, one (1) business day
after delivery to such courier service together with all appropriate fees or
charges and instructions for such overnight delivery. The parties may change
their respective addresses and transmission numbers by written notice to all
other parties, sent as provided in this Section. All communications must be in
writing and addressed as follows:
If to BVB:
Bridge View Bancorp
000 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000
Telecopy No: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxxxxx
President and Chief Executive Officer
with a copy to:
Xxxxx Xxxxxx, Esq.
Xxxxxxx Xxxxxx, Esq.
Bourne, Xxxx & Xxxxxx, P.C.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Telecopy No: (000) 000-0000
70
and:
Xxxx X. Xxxxxxxx, Esq.
Schepisi & XxXxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000
Telecopy No: (000) 000-0000
If to Interchange:
Interchange Financial Services Corporation
Park 00 Xxxx/Xxxxx Xxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Telecopy No: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
with a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxx X. Xxxxxx, Esq.
Jenkens & Xxxxxxxxx, a Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telecopy No: (000) 000-0000
Section 12.07 Governing Law.
A. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW JERSEY (INCLUDING THOSE LAWS RELATING TO CHOICE OF
LAW) APPLYING TO CONTRACTS ENTERED INTO AND TO BE PERFORMED WITHIN THE STATE OF
NEW JERSEY, WITHOUT REGARD FOR THE PROVISIONS THEREOF REGARDING CHOICE OF LAW.
B. VENUE FOR ANY CAUSE OF ACTION ARISING FROM THIS AGREEMENT SHALL LIE IN
BERGEN COUNTY, NEW JERSEY.
Section 12.08 Multiple Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart. A telecopy of
facsimile transmission of a signed counterpart of this Agreement shall be
sufficient to bind the party or parties whose signature(s) appear thereon.
71
Section 12.09 Certain Definitions.
A. "Affiliate" means, with respect to any person, any person that, directly
or indirectly, controls, is controlled by, or is under common control with, such
person in question. For the purposes of this definition, "control" (including,
with correlative meaning, the terms "controlled by" and "under common control
with") as used with respect to any person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person, whether through the ownership of voting securities
or by contract or otherwise.
B. "Environmental Laws" mean all federal, state and local laws,
regulations, statutes, ordinances, codes, rules, decisions, orders or decrees
relating or pertaining to the public health and safety or the environment, or
otherwise governing the generation, use, handling, collection, treatment,
storage, transportation, recovery, recycling, removal, discharge or disposal of
Hazardous Materials, including, without limitation, (i) the Solid Waste Disposal
Act, 42 U.S.C. 6901 et seq., as amended ("SWDA," also known as "RCRA" for a
subsequent amending act), (ii) the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.9601 et seq., as amended
("CERCLA"), (iii) the Clean Water Act, 33 U.S.C. ss. 251 et seq., as amended
("CWA"), (iv) the Clean Air Act, 42 U.S.C. ss. 7401 et seq., as amended ("CAA"),
(v) the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., as amended
("TSCA"), (vi) the Emergency Planning and Community Right to Know Act, 15 U.S.C.
ss. 2601 et seq., as amended ("EPCRKA"), and (vii) the Occupational Safety and
Health Act, 29 U.S.C. ss. 651 et seq., as amended.
C. "Governmental Entity" means any court, administrative agency or
commission or other governmental or regulatory authority or instrumentality.
D. "Hazardous Material" means, without limitation, (i) any "hazardous
wastes" as defined under RCRA, (ii) any "hazardous substances" as defined under
CERCLA, (iii) any toxic pollutants as defined under CWA, (iv) any hazardous air
pollutants as defined under CAA, (v) any hazardous chemicals as defined under
TSCA, (vi) any hazardous substances or extremely hazardous substances as defined
under EPCRKA, (vii) asbestos, (viii) polychlorinated biphenyls, (ix) underground
storage tanks, whether empty, filled or partially filled with any substance, (x)
any substance the presence of which on the property in question is prohibited
under any Environmental Law, and (xi) any other substance which under any
Environmental Law requires special handling or notification of or reporting to
any federal, state or local governmental entity in its generation, use,
handling, collection, treatment, storage, re-cycling, treatment, transportation,
recovery, removal, discharge or disposal.
E. "Investment Securities" means all securities held by BVB and reflected
as an asset of BVB in accordance with GAAP.
F. "Material Adverse Change" means any material adverse change in the
financial condition, assets, Properties, key employees, liabilities (absolute,
accrued, contingent or otherwise), reserves, business or results of operations
or prospects of BVB or Interchange, as applicable, and their respective
Subsidiaries taken as a whole, and, in the case of BVB, specifically includes,
without limitation, any change that reduces the tangible shareholders' equity of
BVB below $28,000,000; provided, however, that no action taken by BVB solely in
order to comply with the requirements of Section 5.22(i) hereof and no payment
pursuant to Section 1.09 hereof relative to the cancellation of outstanding BVB
Stock Options shall be deemed to result in a Material Adverse Change.
72
G. "Material Adverse Effect" means any effect that (i) is, or would
reasonably be likely to be, material and adverse to the business, operations,
financial condition or results of operations or prospects of BVB or Interchange,
as applicable, and their respective Subsidiaries taken as a whole, or (ii) does,
or would reasonably likely to, prevent such party from consummating the Merger
and the other transactions contemplated hereby.
H. The term "Property" or "Properties" shall include all real property
owned or leased, including, but not limited to, properties that have been
foreclosed on as well as their respective premises and all improvements and
fixtures thereon.
I. "Regulatory Agency" means (i) any self-regulatory organization, (ii) the
Federal Reserve, (iii) the NJDOBI, (iv) the FDIC, or (v) any other federal or
state governmental or regulatory agency or authority having or claiming
jurisdiction over a party to this Agreement or the transactions contemplated
hereby.
J. "Subsidiary" means, when used with reference to an entity, any
corporation, partnership or limited liability company, twenty percent (20%) of
the outstanding voting securities of which are owned directly or indirectly by
such entity or any partnership, joint venture or other enterprise in which any
entity has, directly or indirectly, any equity interest.
Section 12.10 Specific Performance. Each of the parties hereto acknowledges
that the other party would be irreparably damaged and would not have an adequate
remedy at law for money damages in the event that any of the covenants contained
in this Agreement were not performed in accordance with its terms or otherwise
were materially breached. Each of the parties hereto therefore agrees that,
without the necessity of proving actual damages or posting bond or other
security, the other party shall be entitled to temporary and/or permanent
injunction or injunctions to prevent breaches of such performance and to
specific enforcement of such covenants in addition to any other remedy to which
they may be entitled, at law or in equity.
Section 12.11 Attorneys' Fees and Costs. In the event attorneys' fees or
other costs are incurred to secure performance of any of the obligations herein
provided for, or to establish damages for the breach thereof, or to obtain any
other appropriate relief, whether by way of prosecution or defense, the
prevailing party shall be entitled to recover reasonable attorneys' fees and
costs incurred therein.
Section 12.12 Interpretation. When a reference is made in this Agreement to
an Article, Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision in this Agreement. Each
use herein of the masculine, neuter or feminine gender shall be deemed to
include the other genders. Each use herein of the plural shall include the
singular and vice versa, in each case as the context requires or as is otherwise
appropriate. The word "or" is used in the inclusive sense. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References to a person
are also to its permitted successors or assigns.
73
Section 12.13 No Third Party Beneficiaries. This Agreement (including the
documents and instruments referred to herein) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 12.14 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned, in whole or in
part, by operation of law or otherwise by either of the parties hereto without
the prior written consent of the other party. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding two sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 12.15 Public Disclosure. Except as otherwise required by applicable
law or regulation, neither BVB nor Interchange shall, nor shall either permit
any of its Subsidiaries to, issue or cause the publication of any press release
or other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement without
the consent of the other party, which consent shall not be unreasonably withheld
or delayed.
Section 12.16 Extension; Waiver. At any time prior to the Closing Date, the
parties hereto, by action taken or authorized by their respective boards of
directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document, certificate or writing delivered pursuant hereto or
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party in the manner provided in Section 12.06 hereof, but such extension
or waiver or failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No party to this Agreement
shall by any act (except by a written instrument given pursuant to Section 12.06
hereof) be deemed to have waived any right or remedy hereunder or to have
acquiesced in any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising any right, power or privilege hereunder
by any party hereto shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver of any party of any right or remedy on any one occasion shall not be
construed as a bar to any right or remedy that such party would otherwise have
on any future occasion or to any right or remedy that any other party may have
hereunder.
74
Section 12.17 Amendments. To the extent permitted by applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective boards of directors, at any time before or after approval of
this Agreement by the shareholders; provided, however, that after the approval
of this Agreement by the shareholders, there shall not be, without the further
approval of the shareholders, any amendment of this Agreement that decreases the
consideration to be paid for the BVB Stock as set forth in Section 1.06 or that
materially and adversely affects the rights of the shareholders hereunder. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
[Signature Page Follows]
75
[Signature Page To Agreement and Plan of Merger]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
Interchange: INTERCHANGE FINANCIAL SERVICES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx,
President and Chief Executive Officer
BVB: BRIDGE VIEW BANCORP
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
76
EXHIBIT A
FORM OF VOTING AGREEMENT AND IRREVOCABLE PROXY
FORM OF VOTING AGREEMENT AND IRREVOCABLE PROXY
This VOTING AGREEMENT AND IRREVOCABLE PROXY (this "Agreement") dated as of
November 18, 2002, is executed by and among Bridge View Bancorp, a New Jersey
corporation located in Englewood Cliffs, New Jersey ("BVB"), Interchange
Financial Services Corporation, a New Jersey corporation located in Saddle Brook
New Jersey ("Interchange"), Xxxxxxx X. Xxxxxx ("Xxxxxx"), as a proxy, Xxxxxx X.
Xxxxxxxx ("Xxxxxxxx"), as a substitute proxy, and certain other shareholders of
BVB set forth on the signature page hereto (together with Xxxxxxxx, referred to
herein individually as a "Shareholder" and collectively as the "Shareholders").
WHEREAS, Interchange and BVB have executed that certain Agreement and Plan
of Merger, dated as of November 18, 2002 (the "Reorganization Agreement"),
providing for the merger of BVB with and into Interchange (the "Merger"). Terms
with their initial letter capitalized and not otherwise defined herein shall
have the meanings given to them in the Merger Agreement;
WHEREAS, Sections 1.11 and 5.20 of the Merger Agreement require that BVB
deliver to Interchange the irrevocable proxies of the Shareholders as a
condition of, and simultaneously with, execution of the Merger Agreement; and
WHEREAS, Interchange is relying on the irrevocable proxies in incurring
expenses in reviewing BVB's business, in preparing information to be distributed
to BVB's shareholders in accordance with Section 5.02 of the Merger Agreement
("Shareholder Information"), in proceeding with the filing of applications for
regulatory approvals, and in undertaking other actions necessary for the
consummation of the Merger.
NOW, THEREFORE, for and in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Interchange, BVB and the Shareholders undertake, promise, covenant
and agree with each other as follows:
1. As of the date hereof, the Shareholders beneficially own, and own of
record, that number of shares of common stock, no par value per share, of BVB
(the "BVB Stock") set forth below their names on the signature pages hereto (all
such shares and any shares hereafter acquired by the Shareholders prior to the
termination of this Agreement being referred to herein as the "Shares"). The
Shareholders have the full legal capacity and authority to execute, deliver and
perform this Agreement in accordance with its terms. The Shareholders hereby
agree to vote at the shareholders' meeting referred to in Section 5.02 of the
Merger Agreement (the "BVB Meeting") such Shareholder's Shares and to direct the
vote of all such Shares or to give written consent as to all such Shareholder's
Shares to an action in lieu of the BVB Meeting in favor of approval of the
Merger Agreement and all of the transactions contemplated by the Merger
Agreement, including the Merger.
A-1
2. If BVB conducts a meeting of, solicits written consents from, or
otherwise seeks a vote of its shareholders with respect to any Acquisition
Transaction (as that term is defined below) or any other matter which may
contradict any provision of this Agreement or the Merger Agreement or may
prevent Interchange or BVB from consummating the Merger, then the Shareholders
shall vote the shares in the manner most favorable to consummation of the Merger
and the transactions contemplated by the Merger Agreement.
"Acquisition Transaction" shall, with respect to BVB, mean any of the
following: (i) a merger or consolidation, or any similar transaction (other than
the Merger) of any company or entity with BVB or any BVB Subsidiary, (ii) a
purchase, lease or other acquisition of all or substantially all the assets of
BVB or any BVB Subsidiary, (iii) 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 Securities Exchange Act of 1934) (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 25% or more of
the voting power of BVB or any BVB Subsidiary after the date of this Agreement,
(iv) a tender or exchange offer to acquire securities representing 25% or more
of the voting power of BVB or any BVB Subsidiary, (v) a public proxy or consent
solicitation made to stockholders of BVB seeking proxies in opposition to any
proposal relating to any of the transactions contemplated by this Agreement, or
(vi) the making of a bona fide offer or proposal to the BVB Board or
shareholders of BVB, to engage in one or more of the transactions referenced in
clauses (i) through (v) above.
3. In order to better effect the provisions of Sections 1, 2 and 5 of this
Agreement, each Shareholder hereby revokes any previously executed proxies and
hereby constitutes and appoints Xxxxxx, with full power of substitution, his or
her true and lawful proxy and attorney-in-fact (the "Proxy Holder") to vote at
the BVB Meeting or to give written consent to an action in lieu of the BVB
Meeting as to, all of such Shareholder's Shares in favor of the approval of the
Merger Agreement and the transactions contemplated by the Merger Agreement,
including the Merger, with such modifications to the Merger Agreement as the
parties thereto may make; provided, however, that this proxy shall not apply
with respect to any vote on the Merger Agreement or the Merger if the Merger
Agreement is modified so as to reduce the amount of consideration to be received
by the Shareholders or the tax consequences of the receipt thereof under the
Merger Agreement in its present form.
4. Xxxxxx, by his execution below, hereby appoints Xxxxxxxx as substitute
proxy to act as the Proxy Holder under this Agreement; provided, however, that
such appointment of Xxxxxxxx as Proxy Holder is subject to revocation by Xxxxxx
at any time upon notice to BVB. Xxxxxxxx, by his execution below as substitute
Proxy Holder, agrees to vote all of the Shareholders' Shares at the BVB Meeting
or to give written consent to an action in lieu of the BVB Meeting, in favor of
the approval of the Merger Agreement and the transactions contemplated by the
Merger Agreement, including the Merger, with such modifications to the Merger
Agreement as the parties may make; provided, however, that this proxy shall not
apply with respect to any vote on the Merger Agreement or the Merger if the
Merger Agreement is modified so as to reduce the amount of consideration to be
received by the Shareholders or the tax consequences of the receipt thereof
under the Merger Agreement in its present form.
A-2
5. Each Shareholder hereby covenants and agrees that, until this Agreement
is terminated in accordance with its terms, each Shareholder will not, and will
not agree to, directly or indirectly, without the prior written consent of
Interchange, (i) sell, assign, transfer or dispose of any of such Shareholder's
Shares, (ii) hypothecate such shares under terms that would prevent the voting
thereof, or (iii) deposit such Shares into a voting trust or enter into a voting
agreement or arrangement with respect to such Shares or grant any proxy with
respect thereto except as herein provided, or (iii) enter into any contract,
option or other arrangement or undertaking with respect to the direct or
indirect sale, assignment, transfer or other disposition of any of the Shares,
in connection with a transaction pursuant to which twenty-five percent (25%) or
more of the voting power of BVB Stock is, or control of BVB otherwise is,
transferred to a person or entity other than a party to this Agreement.
Notwithstanding any of the foregoing, any Shareholder may make such gifts
of such Shareholder's Shares as such Shareholder may choose to make so long as
the recipient of such Shareholder's Shares executes and delivers an amendment to
this Agreement whereby such recipient becomes bound by the terms of this
Agreement.
6. This proxy shall be limited strictly to the power to vote the Shares
with respect to the Merger in the manner set forth in Sections 2 and 3, and
shall not extend to any other matters.
7. The Shareholders acknowledge that Interchange is relying on this
Agreement in incurring expenses in reviewing BVB's business, in preparing the
Shareholder Information, in proceeding with the filing of applications for
regulatory approvals, and in undertaking other actions necessary for the
consummation of the Merger and that THE PROXY GRANTED HEREBY IS COUPLED WITH AN
INTEREST AND IS IRREVOCABLE TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW,
INCLUDING SECTION 14A:5-19(3) OF THE NEW JERSEY BUSINESS CORPORATION ACT. The
Shareholders and BVB acknowledge that the performance of this Agreement is
intended to benefit Interchange.
8. This Agreement and the irrevocable proxy granted pursuant hereto shall
continue in effect until the earlier to occur of (i) the termination of the
Merger Agreement, as it may be amended or extended from time to time, or (ii)
the consummation of the transactions contemplated by the Merger Agreement.
9. The vote of the Proxy Holder shall control in any conflict between his
vote of the Shares and a vote by the Shareholders of the Shares, and BVB agrees
to recognize the vote of the Proxy Holder instead of the vote of the
Shareholders in the event the Shareholders do not vote in favor of the approval
of the Merger Agreement and the Merger as set forth in Section 1 hereof.
10. Each certificate representing any of the Shares shall bear the
following endorsement, noted conspicuously thereon:
The shares of stock represented by this certificate are subject to the
terms of a Voting Agreement and Irrevocable Proxy dated November 18, 2002, a
copy of which is on file in the principal office of BVB.
11. This Agreement may not be modified, amended, altered or supplemented
with respect to a particular Shareholder except upon the execution and delivery
of a written agreement executed by Interchange, BVB and such Shareholder.
A-3
12. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. A telecopy or facsimile transmission of
a signed counterpart of this Agreement shall be sufficient to bind the party or
parties whose signature(s) appear thereon.
13. This Agreement, together with the Merger Agreement and the agreements
contemplated thereby, embody the entire agreement and understanding of the
parties hereto in respect to the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings among the parties with
respect to such subject matter contained herein.
14. All notices, requests, demands and other communications required or
permitted hereby shall be in writing and shall be deemed to have been duly given
if delivered by hand or mail, certified or registered mail (return receipt
requested) with postage prepaid to the addresses of the parties hereto set forth
on below their signature on the signature pages hereof or to such other address
as any party may have furnished to the others in writing in accordance herewith.
15. THIS AGREEMENT AND THE RELATIONS AMONG THE PARTIES HERETO ARISING FROM
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW JERSEY.
[Signature Page Follows]
A-4
[Signature Page to Form of Voting Agreement and Irrevocable Proxy]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
above written.
INTERCHANGE FINANCIAL SERVICES CORPORATION,
a New Jersey Corporation
By:
-------------------------------------------
Xxxxxxx X. Xxxxxx, President and CEO
By:
-------------------------------------------
Xxxxxxxx Xxxxxxxxxx, Secretary
Address for Interchange:
Interchange Financial Services Corporation
Park 80 West/Plaza II
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
BRIDGE VIEW BANCORP,
a New Jersey Corporation
By:
-------------------------------------------
Xxxxxx X. Xxxxxxxx, President and CEO
By:
-------------------------------------------
Xxxxxxx Xxxxxx, Secretary
Address for BVB:
Bridge View Bancorp
000 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000
A-5
PROXY HOLDER:
-------------------------------------------
Xxxxxxx X. Xxxxxx
Address for Proxy Holder:
Interchange Financial Services Corporation
Park 80 West/Plaza II
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
SUBSTITUTE PROXY HOLDER:
-------------------------------------------
Xxxxxx X. Xxxxxxxx
Address for Substitute Proxy Holder:
Bridge View Bancorp
000 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000
SHAREHOLDERS:
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Number of Shares Owned:_____________
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx, Xx.
Number of Shares Owned:_____________
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Number of Shares Owned:_____________
-------------------------------------------
Name: Xxxx Xxxxxxx
Number of Shares Owned:_____________
A-6
-------------------------------------------
Name: Xxxxxxxx X. X'Xxxxxx, Xx.
Number of Shares Owned:_____________
-------------------------------------------
Name: Xxxxxx X. Xxxxxx
Number of Shares Owned:_____________
-------------------------------------------
Name: Xxxx X. Xxxxxxxx
Number of Shares Owned:_____________
A-7
EXHIBIT B
FORM OF SHAREHOLDER LETTER
FORM OF SHAREHOLDER LETTER
Interchange Financial Services Corporation
Park 80 West/Plaza II
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Secretary
Gentlemen:
I have been advised that I might be considered to be an "affiliate," as
that term is defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule
145") promulgated by the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act") of Bridge
View Bancorp, a New Jersey corporation ("BVB").
Pursuant to an Agreement and Plan of Merger, dated as of November 18, 2002
(the "Merger Agreement") between BVB and Interchange Financial Services
Corporation, a New Jersey corporation ("Interchange"), it is contemplated that
BVB will merge with and into Interchange (the "Merger") and as a result, I will
receive, if I so elect, in exchange for each share of Common Stock, no par value
per share, of BVB ("BVB Stock") owned by me immediately prior to the Effective
Time of the Merger (as defined in the Reorganization Agreement), a number of
shares of Common Stock, no par value per share, of Interchange ("Interchange
Stock"), as more specifically set forth in the Merger Agreement.
I hereby agree as follows:
I will not offer to sell, transfer or otherwise dispose of any of the
shares of Interchange Stock issued to me pursuant to the Merger (the "Stock")
except (a) in compliance with the applicable provisions of Rule 145, (b) in a
transaction that is otherwise exempt from the registration requirements of the
Securities Act, or (c) in an offering registered under the Securities Act.
I consent to the endorsement of the certificates representing the Stock
issued to me pursuant to the Merger with a restrictive legend which will read
substantially as follows:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933, as amended (the "Act"), applies, and may be sold or
otherwise transferred only in compliance with the limitations of
such Rule 145, or upon receipt by Interchange Financial Services
Corporation of an opinion of counsel reasonably satisfactory to
it that some other exemption from registration under the Act is
available, or pursuant to a registration statement under the
Act."
B-1
Interchange's transfer agent shall be given an appropriate stop transfer
order and shall not be required to register any attempted transfer of the shares
of the Stock, unless the transfer has been effected in compliance with the terms
of this letter agreement.
It is understood and agreed that this letter agreement shall terminate and
be of no further force and effect and the restrictive legend set forth above
shall be removed by delivery of substitute certificates without such legend, and
the related stop transfer restrictions shall be lifted forthwith, if (i) any
such shares of Stock shall have been registered under the Securities Act for
sale, transfer or other disposition by me or on my behalf and are sold,
transferred or otherwise disposed of, or (ii) any such shares of Stock are sold
in accordance with the provisions of paragraphs (c), (e), (f) and (g) of Rule
144 promulgated under the Securities Act, or (iii) I am not at the time of such
disposition an affiliate of Interchange and have been the beneficial owner of
the Stock for at least one year (or such other period as may be prescribed by
the Securities Act) and Interchange has filed with the Commission all of the
reports it is required to file under the Securities Exchange Act of 1934, as
amended, during the preceding twelve months, or (iv) I am not and have not been
for at least three months an affiliate of Interchange and have been the
beneficial owner of the Stock for at least two years (or such other period as
may be prescribed by the Securities Act, and the rules and regulations
promulgated thereunder), or (v) Interchange shall have received an opinion of
counsel acceptable to Interchange to the effect that the stock transfer
restrictions and the legend are not required.
I have carefully read this letter agreement and the Merger Agreement and
have discussed their requirements and other applicable limitations upon my
ability to offer to sell, transfer or otherwise dispose of shares of the Stock,
to the extent I felt necessary, with my counsel or counsel for BVB.
Sincerely,
--------------------------------
B-2
EXHIBIT C
PERSONS TO DELIVER NON-COMPETE AGREEMENTS
Xxxxxx X. Xxxxxxxxx, Xx.
Xxxxx X. Xxxxxxx
Xxxx Xxxxxxx
Xxxxxxxx X. X'Xxxxxx
Xxxxxx X. Xxxxxx
Xxxx X. Xxxxxxxx
EXHIBIT D
FORM OF NON-COMPETE AGREEMENT
FORM OF NON-COMPETE AGREEMENT
This NON-COMPETE AGREEMENT (the "Agreement") is made and entered into as of
the ____day of _________________ 2003, by and between Interchange Financial
Services Corporation, a New Jersey corporation ("Interchange"), and
_________________, an individual resident of the State of New Jersey ("Seller").
WITNESSETH:
WHEREAS, the Seller is a shareholder of Bridge View Bancorp ("BVB") and an
[officer/director] of BVB and/or one or more of its subsidiaries, including
Bridge View Bank (the "Bank"); and
WHEREAS, Interchange and BVB are parties to that certain Agreement and Plan
of Merger, dated November 18, 2002 (the "Merger Agreement"), pursuant to which
BVB will be merged with and into Interchange (the "Merger"), and Interchange
will acquire all of the capital stock of BVB in exchange for cash and shares of
the common stock of Interchange (the "Merger Consideration"); and
WHEREAS, pursuant to the terms of the Merger Agreement, all shareholders of
BVB, including Seller, will exchange 100% of the shares of capital stock of BVB
owned by them at the effective date of the Merger for the Merger Consideration;
and
WHEREAS, BVB owns 100% of the issued and outstanding capital stock of the
Bank; and
WHEREAS, Interchange will continue to carry on the business presently
conducted by BVB and the Bank; and
WHEREAS, as a condition to consummation of the transactions contemplated by
the Merger Agreement, Interchange and Seller are required to enter into this
Agreement (terms with their initial letter capitalized and not otherwise defined
herein shall have the meanings assigned to them in the Merger Agreement).
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and intending to be legally bound hereby, the parties agree as
follows:
1. Non-compete Covenants. For and in consideration of (i) consummation of
the Merger and the other transactions contemplated by the Merger Agreement, (ii)
the payment by Interchange to Seller of the Merger Consideration set forth in
the Merger Agreement, (iii) execution of this Agreement by Interchange, (iv) the
appointment of Seller to the Board of Directors of Interchange or Interchange
Bank pursuant to which Seller shall receive an annual retainer and access to
proprietary information regarding Interchange or Interchange Bank, Seller agrees
that, during the term of this Agreement as set forth in Section 2 hereof, Seller
shall not, directly or indirectly, individually or as an employee, partner,
officer, director or shareholder or in any other capacity whatsoever:
D-1
A. Solicit the banking business of any current customers of the Bank;
B. Within Bergen County, New Jersey:
(i) acquire, charter, operate or enter into any franchise or other
operating agreement with any financial institution,
(ii) serve as an officer, director, agent or seller to any financial
institution, or
(iii) establish or operate a branch or other office of a financial
institution.
C. Recruit, hire, assist others in recruiting or hiring, discuss employment
with, or refer others concerning employment, any person who is, or within the
preceding twelve (12) months was, an employee of either BVB or the Bank.
If any court of competent jurisdiction should determine that any term or
terms of this covenant is too broad in terms of time, geographic area, lines of
commerce or otherwise, such court shall reform such term or terms in order that
such term or terms comply with applicable law, and shall enforce such reformed
term or terms to the maximum extent permissible under applicable law.
2. Term and Termination.
A. The term of the Agreement shall commence on the Effective Date of the
Merger Agreement, and shall terminate and all obligations hereunder shall cease,
except for liabilities or claims that shall have arisen or accrued in connection
with such termination, on the earlier to occur of:
(i) two (2) years after the Seller ceases to be a director of Interchange
or Interchange Bank;
(ii) five (5) years after the date hereof;
(iii) upon the removal of Seller from the Board of Directors of Interchange
or Interchange Bank without cause; or
(iv) upon the effective date of a change in control of Interchange.
B. The failure by any party to this Agreement on any occasion to exercise
its right to terminate this Agreement as provided herein shall not be deemed to
be a waiver of such party's right to terminate this Agreement in respect to that
breach (provided it shall be continuing) or of any subsequent breach.
3. Specific Performance/Injunctive Relief. Seller acknowledges that
performance of the terms of this Agreement constitutes valuable, special and
unique property of Interchange critical to its business and that any breach of
this Agreement by him will give rise to irreparable injury to Interchange that
is not compensable in money damages. Accordingly, Seller agrees that Interchange
shall be entitled to obtain specific performance and/or injunctive relief
against the breach or threatened breach of this Agreement by Seller. Seller
further agrees to waive any requirement for the securing or posting of any bond
or the proof of any actual damages in connection with such remedies. Such
remedies shall not be exclusive and shall be in addition to any other remedy
that Interchange may have at law or in equity.
D-2
4. Deductions. Interchange shall not deduct from Seller's consideration any
Federal, state and local income taxes, social security taxes or other amounts as
Interchange would be required to deduct under applicable laws and governmental
regulations if such payments were made to its employees.
5. Reasonableness of Restrictions. Seller has carefully read and considered
the provisions of this Agreement and, having done so, agrees that the
restrictions set forth in this Agreement contain reasonable limitations as to
time, geographical area, scope of activity to be restrained, and do not impose a
greater restraint than is necessary to compensate Interchange for the
consideration paid to the Seller pursuant to the Merger Agreement and to protect
the goodwill or other legitimate business interests of Interchange.
6. Extension of Term of Restrictive Covenant. If Seller violates any
restrictive covenant contained in Section 1, or if an action to enforce a
restrictive covenant contained in Section 1 is pending in a court of competent
jurisdiction, then the term of such restrictive covenant will be extended by
adding to it the number of days that Seller's violation continues and the number
of days during which such court action is pending. If there are both a violation
and a pending court action, then the number of days that each continues will be
added to the term of such restrictive covenant, but days on which both continue
will be counted only once.
7. Disparagement of Interchange. Seller agrees, without limitation, not to
disparage or otherwise malign Interchange's, including its subsidiaries, or the
Bank's business or banking reputation.
8. Successors and Assigns. This Agreement shall be binding upon the parties
and their heirs, legal representatives, successors and assigns. Interchange may
assign its interest in this Agreement, and all covenants, conditions and
provisions hereunder shall inure to the benefit of and be enforceable by its
assignee or successor-in-interest. The rights and obligations of Seller under
this Agreement are personal to him, and no such rights, benefits or obligations
shall be assignable, except that his personal representatives and heirs may
enforce the obligations of Interchange hereunder.
9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY (INCLUDING THOSE LAWS RELATING
TO CHOICE OF LAW) APPLYING TO CONTRACTS ENTERED INTO AND TO BE PERFORMED WITHIN
THE STATE OF NEW JERSEY, WITHOUT REGARD FOR THE PROVISIONS THEREOF REGARDING
CHOICE OF LAW.
D-3
10. Legal Construction. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, any provision shall be fully severable, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed and enforced as if such invalid,
illegal or unenforceable provision had never been contained herein, and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as a part of this
Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be valid and enforceable.
11. Notice. Unless otherwise provided herein, any and all payments,
notices, requests, instructions and other communications required or permitted
to be given under this Agreement after the date hereof by any party hereto to
any other party may be delivered personally or by nationally recognized
overnight courier service or sent by mail or (except in the case of payments) by
telex or facsimile transmission, at the respective addresses or transmission
numbers set forth below and shall be effective (a) in the case of personal
delivery, telex or facsimile transmission, when received; (b) in the case of
mail, upon the earlier of actual receipt or five (5) business days after deposit
in the United States Postal Service, first class certified or registered mail,
postage prepaid, return receipt requested; and (c) in the case of
nationally-recognized overnight courier service, one (1) business day after
delivery to such courier service together with all appropriate fees or charges
and instructions for such overnight delivery. The parties may change their
respective addresses and transmission numbers by written notice to all other
parties, sent as provided in this Section 11. All communications must be in
writing and addressed as follows:
IF TO SELLER:
_________________________
_________________________
_________________________
_________________________
_________________________
IF TO COMPANY:
Interchange Financial Services Corporation
Park 00 Xxxx/Xxxxx XX
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
12. Remedies. If Seller breaches or threatens to breach any term or
provision contained herein, Interchange will be entitled to seek and obtain a
temporary restraining order, a temporary injunction, and a permanent injunction
to enjoin and prohibit Seller from violating the terms and provisions of this
Agreement. Interchange's right to seek and obtain such relief will not be
construed to prevent Interchange from pursuing, either concurrently or
conjunctively, any other legal or equitable remedies available by contract, law,
or otherwise for such breach or threatened breach, nor to preclude Interchange
from seeking to recover damages from Seller.
D-4
13. No Delay, Waiver, Etc. No delay on the part of the parties hereto in
exercising any power or right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any power or right hereunder preclude
other or further exercise thereof or the exercise of any other power or right.
14. Modification. No amendment hereof shall be effective unless contained
in a written instrument signed by the parties hereto.
15. Headings. The descriptive headings of the several sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
[Signatures Follow]
D-5
[Signature Page to Form of Non-Compete Agreement]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
"Seller"
-------------------------------------
INTERCHANGE FINANCIAL SERVICES CORPORATION,
a New Jersey corporation
-----------------------------------------------
Xxxxxxx X. Xxxxxx, President and Chief Executive Officer
D-6
EXHIBIT E
INDEX GROUP
Institution Weighting
Harleysville National Corporation 9.34%
U.S.B. Holding Co., Inc. 6.52%
Sterling Financial Corporation 8.53%
Financial Institutions, Inc. 6.16%
Xxxxxxxx Trustco, Inc. 6.60%
Community Banks, Inc. 5.22%
Sterling Bancorp 5.33%
Suffolk Bancorp 7.64%
Arrow Financial Corporation 4.79%
State Bancorp, Inc. 3.06%
Lakeland Bancorp, Incorporated 5.41%
Omega Financial Corporation 6.05%
Royal Bancshares of Pennsylvania 4.15%
PennRock Financial Services 4.00%
Columbia Bancorp 3.01%
Patriot Bank Corp. 1.83%
First United Corporation 2.08%
Peapack-Gladstone Financial 4.70%
First of Long Island Corp. 2.83%
Sun Bancorp, Inc. 2.75%
