TRANSACTION AGREEMENT dated as of October 13, 2008 between SOVEREIGN BANCORP, INC., and BANCO SANTANDER, S.A.
Exhibit
6
TRANSACTION
AGREEMENT
dated as
of
October
13, 2008
between
SOVEREIGN
BANCORP, INC.,
and
TABLE
OF CONTENTS
Page
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ARTICLE 1
Definitions
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Section 1.01.
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Definitions
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2
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Section 1.02.
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Other Definitional and Interpretative
Provisions
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12
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ARTICLE 2
[Left Blank
Intentionally]
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ARTICLE 3
The Reincorporation
Merger
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Section 3.01.
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The Reincorporation Merger
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13
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Section 3.02.
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Effective Time
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13
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Section 3.03.
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Effect Of Reincorporation
Merger
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13
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Section 3.04.
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Conversion Of Shares
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13
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Section 3.05.
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Options; Restricted Stock
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15
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Section 3.06.
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ESPP
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15
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Section 3.07.
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Articles of Incorporation
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15
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Section 3.08.
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Bylaws
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16
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Section 3.09.
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Board of Directors;
Management
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16
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Section 3.10.
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Tax Consequences
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16
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ARTICLE 4
The Share Exchange
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Section 4.01.
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The Share Exchange
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16
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Section 4.02.
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Exchange Effective Time
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16
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Section 4.03.
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Effects of the Share
Exchange
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17
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Section 4.04.
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Exchange Of Company Virginia Sub Common
Stock
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18
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Section 4.05.
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Parent Capital Stock
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19
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ARTICLE 5
Exchange Of Shares
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Section 5.01.
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Deposit of Consideration
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19
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Section 5.02.
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Exchange Of Shares
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19
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Section 5.03.
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Withholding Rights
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22
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i
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ARTICLE 6
Representations and Warranties of the
Company
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Section 6.01.
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Corporate Existence and
Power
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23
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Section 6.02.
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Corporate Authorization
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23
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Section 6.03.
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Governmental Authorization
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24
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Section 6.04.
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Non-contravention
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25
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Section 6.05.
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Capitalization
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25
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Section 6.06.
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Subsidiaries
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27
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Section 6.07.
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Company Virginia Sub
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28
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Section 6.08.
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SEC Filings and the Xxxxxxxx-Xxxxx
Act
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29
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Section 6.09.
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Financial Statements
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31
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Section 6.10.
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Disclosure Documents
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31
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Section 6.11.
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Absence of Certain Changes
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32
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Section 6.12.
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No Undisclosed Material
Liabilities
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32
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Section 6.13.
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Compliance with Laws and Court
Orders
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32
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Section 6.14.
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Litigation
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33
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Section 6.15.
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Properties
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33
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Section 6.16.
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Intellectual Property
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34
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Section 6.17.
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Taxes
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34
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Section 6.18.
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Employees and Employee Benefits
Plans
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36
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Section 6.19.
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Environmental Matters
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38
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Section 6.20.
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Material Contracts
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39
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Section 6.21.
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Insurance
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40
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Section 6.22.
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Reports; Regulatory Matters
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40
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Section 6.23.
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Agreements With Regulatory
Authorities
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41
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Section 6.24.
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Investment Securities
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41
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Section 6.25.
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Derivative Instruments
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41
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Section 6.26.
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Finders’ Fees
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42
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Section 6.27.
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Opinion of Financial
Advisor
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42
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Section 6.28.
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Antitakeover Statutes and Rights
Agreement
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42
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Section 6.29.
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Allowance For Losses
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43
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Section 6.30.
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Related Party Transactions
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43
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Section 6.31.
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Loans
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43
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Section 6.32.
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Anti-money Laundering and Customer Information
Security
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44
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Section 6.33.
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Credit Card Accounts
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44
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Section 6.34.
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No Reliance
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44
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ARTICLE 7
Representations and Warranties of
Parent
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Section 7.01.
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Corporate Existence and
Power
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45
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Section 7.02.
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Capitalization
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45
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Section 7.03.
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Corporate Authorization
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46
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ii
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Section 7.04.
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Governmental Authorization
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46
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Section 7.05.
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Non-contravention
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47
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Section 7.06.
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Disclosure Documents
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48
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Section 7.07.
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Financial Statements
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49
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Section 7.08.
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Finders’ Fees
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50
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Section 7.09.
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No Reliance
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50
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Section 7.10.
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SEC Filings and the Xxxxxxxx-Xxxxx
Act
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50
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Section 7.11.
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Litigation
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51
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ARTICLE 8
Covenants of the Company
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Section 8.01.
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Conduct of the Company
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51
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Section 8.02.
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Access to Information
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54
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Section 8.03.
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No Solicitation; Change of
Recommendation
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55
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Section 8.04.
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[Left Intentionally Blank].
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58
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Section 8.05.
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Litigation
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58
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Section 8.06.
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Company Virginia Sub Shareholder
Vote
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59
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Section 8.07.
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Joinder Agreement
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59
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Section 8.08.
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Structure of the
Transaction
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59
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ARTICLE 9
Covenants of Parent
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Section 9.01.
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Director and Officer
Liability
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59
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Section 9.02.
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Employee Matters
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61
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Section 9.03.
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Santander
Shares
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62
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ARTICLE 10
Covenants of Parent and the
Company
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Section 10.01.
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Regulatory Matters
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62
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Section 10.02.
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Stockholder Meetings
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65
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Section 10.03.
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Public Announcements
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66
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Section 10.04.
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Further Assurances
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66
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Section 10.05.
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Notices of Certain Events
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66
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Section 10.06.
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Takeover Statutes
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66
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Section 10.07.
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Exemption From Liability Under Section
16(b)
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67
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Section 10.08.
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Incentive Bonus Program
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67
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ARTICLE 11
Conditions to the Reincorporation Merger and the
Share Exchange
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Section 11.01.
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Conditions to the Obligations of Each
Party
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67
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iii
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Section 11.02.
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Conditions to Obligations of
Parent
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68
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Section 11.03.
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Condition to Obligations of the
Company
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69
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ARTICLE 12
Termination
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Section 12.01.
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Termination
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70
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Section 12.02.
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Effect of Termination
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72
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ARTICLE 13
Miscellaneous
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Section 13.01.
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Notices
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72
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Section 13.02.
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Survival
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73
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Section 13.03.
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Amendments and Waivers
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73
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Section 13.04.
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Expenses
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74
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Section 13.05.
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Investment Agreement
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75
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Section 13.06.
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Disclosure Schedule
References
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75
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Section 13.07.
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Binding Effect; Benefit;
Assignment
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76
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Section 13.08.
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Governing Law
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76
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Section 13.09.
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Jurisdiction
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76
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Section 13.10.
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WAIVER OF JURY TRIAL
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77
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Section 13.11.
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Counterparts; Effectiveness
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77
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Section 13.12.
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Entire Agreement
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77
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Section 13.13.
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Severability
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77
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Section 13.14.
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Specific Performance
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77
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iv
TRANSACTION
AGREEMENT
TRANSACTION
AGREEMENT (this “Agreement”) dated as of
October 13, 2008, between Sovereign Bancorp, Inc., a Pennsylvania corporation
(the “Company”), and
Banco Santander, S.A., a Spanish sociedad anónima (“Parent”).
WHEREAS,
prior to the Reincorporation Effective Time, the Company shall form a new wholly
owned subsidiary (“Company
Virginia Sub”) as a Virginia corporation under and in accordance with the
Virginia Stock Corporation Act (the “VSCA”), and the Company shall
cause Company Virginia Sub to, and Company Virginia Sub shall, sign a joinder
agreement to this Agreement and be bound hereunder prior to the Reincorporation
Effective Time;
WHEREAS,
the Executive Committee of Parent and the Board of Directors of the Company (the
“Company Board”) have
approved, and the Board of Directors of Company Virginia Sub (the “Company Virginia Sub Board”)
shall approve, the strategic business combination transactions provided for
herein (the “Transaction”) whereby (1) the
Company will merge with and into Company Virginia Sub, with Company Virginia Sub
surviving such merger (the “Reincorporation Merger”), and
(2) immediately following the Reincorporation Merger, Company Virginia Sub, as
the surviving corporation in the Reincorporation Merger, will become a wholly
owned subsidiary of Parent pursuant to a statutory share exchange (the “Share Exchange”) in accordance
with the VSCA;
WHEREAS,
it is the intent of the parties hereto that, for U.S. federal income tax
purposes, the Reincorporation Merger shall constitute a “reorganization” within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the “Code”), and that
this Agreement shall constitute a “plan of reorganization” in respect of the
Reincorporation Merger for the purposes of Sections 354 and 361 of the
Code;
WHEREAS,
as an inducement to and condition to Parent’s willingness to enter into this
Agreement, certain shareholders of the Company are entering into a Voting
Agreement simultaneously with the execution of this Agreement substantially in
the form attached hereto as Exhibit A (the “Voting Agreement”) whereby,
among other things, such shareholders have agreed, upon the terms and subject to
the conditions set forth therein, to vote the shares in favor of the Transaction
to take or refrain from taking certain actions as set forth in the Voting
Agreement to consummate the Reincorporation Merger and the Share
Exchange;
WHEREAS,
the parties desire to make certain representations, warranties and agreements in
connection with the Transaction and also to prescribe certain conditions to the
Transaction.
NOW,
THEREFORE, in consideration of the mutual covenants, representations, warranties
and agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE
1
Definitions
Section
1.01 . Definitions. (a) As used
herein, the following terms have the following meanings:
“100% Acquisition Proposal”
means any Acquisition Proposal, whether payable in cash, securities or a
combination thereof, by any Person or group to acquire beneficial ownership of
100% of the equity securities (including those issuable pursuant to Convertible
Rights) of the Company (other than the Company Series C Stock) that are not
already Beneficially Owned by such Person or group.
“1933 Act” means the Securities
Act of 1933.
“1934 Act” means the Securities
Exchange Act of 1934.
“Acquisition Proposal” means,
other than the transactions contemplated by this Agreement, any Third-Party
offer, proposal or inquiry relating to, or any Third-Party indication of
interest in, (i) any acquisition or purchase, direct or indirect, of 25% or more
of the consolidated assets of the Company and its Subsidiaries, or any
acquisition, purchase or assumption, direct or indirect, of 25% or more of the
Consolidated Deposits whether with or without the assistance (and regardless of
whether such is contingent or guaranteed) of any Governmental Authority or any
acquisition, purchase or assumption, directly or indirectly, of 25% or more of
any class of equity or voting securities of the Company or any of its
Subsidiaries whose assets, individually or in the aggregate, constitute 25% or
more of the consolidated assets of the Company, (ii) any tender offer (including
a self-tender offer) or exchange offer that, if consummated, would result in any
Third Party beneficially owning 25% or more of any class of equity or voting
securities of the Company or any of its Subsidiaries whose assets, individually
or in the aggregate, constitute 25% or more of the consolidated assets of the
Company, (iii) a merger, consolidation, share exchange, business combination,
2
sale of
substantially all the assets, reorganization, recapitalization, liquidation,
dissolution or other similar transaction involving the Company or any of its
Subsidiaries whose assets, individually or in the aggregate, constitute 25% or
more of the consolidated assets or Consolidated Deposits of the Company or (iv)
any other transaction the consummation of which could reasonably be expected to
impede, interfere with, prevent or materially delay the Transaction (including
the Reincorporation Merger and Share Exchange) or that could reasonably be
expected to dilute materially the benefits to Parent of the transactions
contemplated hereby.
“Affiliate” means, with respect
to any Person, any other Person directly or indirectly controlling, controlled
by or under common control with such Person.
“Affiliates of Parent” means
those individuals designated by Parent to serve on the Company Board pursuant to
the Investment Agreement.
“Applicable Law” means, with
respect to any Person, any foreign, federal, state or local law (statutory,
common or otherwise), constitution, treaty, convention, ordinance, code, rule,
regulation, order, injunction, judgment, decree, ruling or other similar
requirement enacted, adopted, promulgated or applied by a Governmental Authority
that is binding upon or applicable to such Person, as amended unless expressly
specified otherwise.
“Bank” means Sovereign
Bank.
“Bank Board of Directors” means
the Board of Directors of the Bank.
“BHC Act” means the Bank
Holding Company Act of 1956, as amended.
“Business Day” means a day
other than Saturday, Sunday or other day on which commercial banks in New York,
New York or Madrid, Spain are authorized or required by Applicable Law to
close.
“Charter” means the Amended and
Restated Articles of Incorporation of the Company as amended from time to time
in accordance with the terms thereof and Applicable Law.
“Company Balance Sheet” means
the consolidated balance sheet of the Company as of December 31, 2007 and the
footnotes thereto set forth in the Company 10-K.
“Company Bylaws” means the
bylaws of the Company as amended from time to time in accordance with the terms
thereof and Applicable Law.
“Company Balance Sheet Date”
means December 31, 2007.
3
“Company Disclosure
Schedule” means the disclosure schedule dated the date hereof
regarding this Agreement that has been provided by the Company to
Parent.
“Company Material Adverse
Effect” means a material adverse effect on (i) the condition (financial
or otherwise), business, assets or results of operations of the Company and its
Subsidiaries, taken as a whole, excluding any effect to the extent resulting
from (1) changes in GAAP or regulatory accounting requirements, (2) changes
in laws, rules or regulations of general applicability to companies in the
industries in which the Company and its Subsidiaries operate, (3) changes
in global, national or regional political conditions or general economic or
market conditions (including changes in prevailing interest rates, currency
exchange rates, and price levels or trading volumes in the United States or
foreign securities markets) affecting other companies in the industries in which
the Company and its Subsidiaries operate, (4) failure to meet earnings
projections, but not any of the underlying causes for such failure, (5) the
impact of the Transaction on relationships with customers or employees solely to
the extent the Company demonstrates such impact to have so resulted from such
disclosure or consummation, (6) the public disclosure of this Agreement or the
transactions contemplated hereby or the consummation of the transactions
contemplated hereby solely to the extent the Company demonstrates such effect to
have so resulted from such disclosure or consummation, (7) any outbreak or
escalation of hostilities, declared or undeclared acts of war or terrorism, (8)
actions or omissions taken with the prior written consent of Parent or expressly
required by this Agreement, or (9) adverse credit events resulting in
deterioration in the credit markets generally or in respect of the customers of
the Company and including changes to any previously correctly applied asset
marks resulting therefrom; provided that in each case
listed in clauses (2), (3), (7) and (9) above, only to the extent such changes
or events do not have a materially disproportionate effect on the Company and
its Subsidiaries, taken as a whole, compared to other companies engaged in the
same industry as the Company and its Subsidiaries, or (ii) the Company’s or
Company Virginia Sub’s ability to consummate the transactions contemplated by
this Agreement.
“Company Qualifying SEC Report”
means (a) the Company 10-K and (b) the Company SEC Documents filed on or after
the date of filing of the Company 10-K that are filed with the SEC on the SEC’s
XXXXX system at least one Business Day prior to the date of this
Agreement.
“Company 10-K” means the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2007.
“Consolidated Deposits” means
all deposits (as defined in 12 U.S.C. § 1813(1)) that are held by the Bank or
any of its Affiliates, including demand
4
deposits,
commercial deposits with interest, savings accounts, money market deposit
accounts, mutual fund and reserve fund sweep accounts, negotiable order of
withdrawal accounts, certificates of deposit and business investment accounts,
in each case, including any such deposits received by the Company or any of its
Subsidiaries from and after the date hereof.
“Convertible Rights” means
warrants, options, rights, convertible securities and any other securities or
instruments that obligate an entity to issue capital stock, including the PIERS
Instruments and any options, stock appreciation rights or restricted stock
granted under the Employee Plans.
“Defensive Measure” means (i)
any provision of the Charter or Company Bylaws the purpose or effect of which
is, in whole or in part, to defer, delay or make more costly or burdensome, the
consummation of an Acquisition Proposal involving the Company, including
Articles 8, 11, 15, 16 and 17 of the Charter and Sections 4.03, 4.04, 10.01 and
11.01 of the Company Bylaws, (ii) any shareholder rights plan or “poison pill”
including the Rights Agreement, (iii) any employment or severance agreement and
any Employee Plan that provides for enhanced benefits to officers, directors or
employees of the Company or any of its Subsidiaries or any acceleration of any
such benefits in connection with the consummation of an Acquisition Proposal
involving the Company or any of its Subsidiaries, including the Employee
Agreements and the Employee Plans, (iv) any contract or agreement to which the
Company is a party that imposes on the Company or any of its Subsidiaries a
material cost, or deprives the Company or any of its Subsidiaries of a material
asset or benefit, in either case, in connection with the consummation of an
Acquisition Proposal involving the Company or any of its Subsidiaries, (v) any
standstill or similar agreement to which the Company or any of its Subsidiaries
is a party and which imposes restrictions, limitations or prohibitions on any
Person’s ability to directly or indirectly, by itself or as a member of a group,
purchase or make an offer to purchase, or publicly announce its intention to
purchase or make an offer to purchase, any Company Securities or any Company
Subsidiary Securities, or otherwise seek to control or influence the management
or direction of the business of the Company or any of its Subsidiaries, (vi) any
Applicable Law, the effect of which is to (A) provide special rights, including
economic and voting rights, in connection with the consummation of an
Acquisition Proposal involving the Company or any of its Subsidiaries or (B)
limit, impair, or otherwise adversely affect the ability of Parent to exercise
full control (voting or otherwise) over the Company or any of its Subsidiaries,
their respective boards of directors or the Shares and (vii) any act by the
Board, the Company or any of its Subsidiaries that is intended to have or has
any of the effects described in clauses (i) through (v) above.
“Employee Plan” means any (i)
“employee benefit plan,” as defined in Section 3(3) of ERISA, (ii) employment,
severance, change of control, or similar
5
agreement,
contract, plan, arrangement or policy or (iii) other plan or arrangement
(written or oral) providing for compensation, bonuses, profit-sharing, stock
option, restricted stock or other stock related rights or other forms of
incentive or deferred compensation, vacation benefits, insurance (including any
self-insured arrangements), health or medical benefits, employee assistance
program, disability or sick leave benefits, workers’ compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits), in each case, which is (x) maintained, administered or contributed to
by the Company or any ERISA Affiliate and covers any employee or former
employee, director or independent contractor of the Company or any of its
Subsidiaries or (y) with respect to which the Company or any of its Subsidiaries
has any liability.
“Environmental Laws” means any
Applicable Laws or any agreement with any Governmental Authority or other third
party, relating to human health and safety, the environment or to Hazardous
Substances.
“Environmental Permits” means all permits,
licenses, franchises, certificates, approvals and other similar authorizations
of Governmental Authorities relating to or required by Environmental Laws and
affecting, or relating to, the business of the Company or any of its
Subsidiaries as currently conducted.
“ERISA” means the Employee
Retirement Income Security Act of 1974.
“ERISA Affiliate” of any entity
means any other entity that, together with such entity, would be treated as a
single employer under Section 414 of the Code.
“Exchange Ratio” means
0.2924.
“FDIA” means the Federal
Deposit Insurance Act, as amended.
“FDIC” means the Federal
Deposit Insurance Corporation.
“Federal Reserve Board” means
the Board of Governors of the Federal Reserve System.
“GAAP” means generally accepted
accounting principles in the United States.
“Governmental Authority” means
any transnational, domestic or foreign federal, state or local, governmental,
regulatory or administrative authority, department, court, agency or official,
including any political subdivision thereof.
6
“Hazardous Substance” means any
pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable,
corrosive, reactive or otherwise hazardous substance, waste or material, or any
substance, waste or material having any constituent elements displaying any of
the foregoing characteristics, including any substance, waste or material
regulated under any Environmental Law.
“HOLA” means the Home Owners’
Loan Act of 1933, as amended.
“Intellectual Property” means
(i) trademarks, service marks, brand names, certification marks, trade dress,
domain names and other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application, (ii) inventions and
discoveries, whether patentable or not, in any jurisdiction, patents,
applications for patents (including divisions, continuations, continuations in
part and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction, (iii) Trade Secrets, (iv) writings and other
works, whether copyrightable or not, in any jurisdiction, and any and all
copyright rights, whether registered or not, and registrations or applications
for registration of copyrights in any jurisdiction, and any renewals or
extensions thereof, (v) moral rights, database rights, design rights, industrial
property rights, publicity rights and privacy rights and (vi) any similar
intellectual property or proprietary rights.
“Investment Agreement” means
that certain Investment Agreement by and between Parent and the Company, dated
as of October 24, 2005, as amended from time to time.
“IT Assets” means computers,
computer software, firmware, middleware, servers, workstations, routers, hubs,
switches, data communications lines and all other information technology
equipment, and all associated documentation owned by the Company or its
Subsidiaries or licensed or leased by the Company or its Subsidiaries pursuant
to written agreement (excluding any public networks).
“Knowledge” of or “known” to of any Person that
is not an individual means the actual knowledge of such Person’s officers after
reasonable inquiry.
“Lien” means, with respect to
any property or asset, any mortgage, lien, pledge, charge, security interest,
encumbrance or other adverse claim of any kind in respect of such property or
asset. For purposes of this Agreement, a Person shall be deemed to
own subject to a Lien, any property or asset that it has acquired or holds
subject to the interest of a vendor or lessor under any
7
conditional
sale agreement, capital lease or other title retention agreement relating to
such property or asset.
“NYSE” means the New York Stock
Exchange.
“OTS” means the Office of
Thrift Supervision.
“Parent Board” means the Board
of Directors of Parent or, as the case may be, any Committee or Director of
Parent to whom the Board of Directors has delegated sufficient authority to take
the relevant action required of the Board of Directors.
“Parent Disclosure Schedule”
means the disclosure schedule dated the date hereof regarding this Agreement
that has been provided by Parent to the Company.
“Parent Material Adverse
Effect” means a material adverse effect on (i) the condition (financial
or otherwise), business, assets or results of operations of Parent and its
Subsidiaries, taken as a whole, excluding any effect to the extent resulting
from (1) changes in IFRS or regulatory accounting requirements, (2) changes
in laws, rules or regulations of general applicability to companies in the
industries in which Parent and its Subsidiaries operate, (3) changes in
global, national or regional political conditions or general economic or market
conditions (including changes in prevailing interest rates, currency exchange
rates, and price levels or trading volumes in United States or foreign
securities markets) affecting other companies in the industries in which Parent
and its Subsidiaries operate, (4) failure to meet earnings projections, but not
any of the underlying causes for such failure, (5) the impact of the Transaction
on relationships with customers or employees solely to the extent Parent
demonstrates such impact to have so resulted from such disclosure or
consummation, (6) the public disclosure of this Agreement or the transactions
contemplated hereby or the consummation of the transactions contemplated hereby
solely to the extent Parent demonstrates such effect to have so resulted from
such disclosure or consummation, (7) any outbreak or escalation of hostilities,
declared or undeclared acts of war or terrorism, (8) actions or omissions taken
with the prior written consent of the Company or expressly required by this
Agreement, or (9) adverse credit events resulting in deterioration in the credit
markets generally or in respect of the customers of Parent and including changes
to any previously correctly applied asset marks resulting therefrom); provided that, in each case
listed in clauses (2), (3), (7) and (9) above, only to the extent such changes
or events do not have a materially disproportionate effect on Parent and its
Subsidiaries, taken as a whole compared to other companies engaged in the same
industry as Parent and its Subsidiaries, or (ii) Parent’s ability to consummate
the transactions contemplated by this Agreement.
8
“Parent Qualifying SEC Report”
means (a) the Parent’s Annual Report on Form 20-F for the fiscal year ended
December 31, 2007 and (b) the Parent SEC Documents filed on or after the date of
filing of such Form 20-F that are filed with the SEC on the SEC’s XXXXX system
at least one Business Day prior to the date of this Agreement.
“Pennsylvania Law” means the
Pennsylvania Business Corporation Law.
“Person” means an individual,
corporation, partnership, limited liability company, association, trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
“PIERS Instruments” means the
Contingent Convertible Trust Preferred Income Equity Redeemable Securities
issued by Sovereign Capital Trust IV.
“Requisite Board Approval”
means the approval of at least 80% of the members of the Company Board, which
approval shall constitute the unanimous approval of all of the members of the
Company Board who are not Affiliates of Parent.
“Rights Agreement” means the
Second Amended and Restated Rights Agreement dated as of January 19, 2005, as
amended on October 25, 2005, as further amended on June 29, 2007, between the
Company and Mellon Investor Services LLC, a New Jersey Limited Liability
Company, as Rights Agent.
“Xxxxxxxx-Xxxxx Act” means the
Xxxxxxxx-Xxxxx Act of 2002.
“SEC” means the Securities and
Exchange Commission.
“Shares” means shares of
Company Common Stock.
“Subsidiary” means, at any time
with respect to any Person, any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at such time
directly or indirectly owned by such Person.
“Third Party” means any Person
other than Parent and its Affiliates.
“Trade Secrets” means trade
secrets and confidential information and rights in any jurisdiction to limit the
use or disclosure thereof by any Person.
“WARN Act” means the Worker
Adjustment and Retraining Notification Act.
9
(b) Each of
the following terms is defined in the Section set forth opposite such
term:
|
Term
|
Section
|
|
Adverse
Recommendation Change
|
|
|
Agreement
|
Preamble
|
|
Board
Reports
|
|
|
Capital
Increase
|
|
|
Closing
|
|
|
Closing
Date
|
|
|
Code
|
Preamble
|
|
Commercial
Registry
|
|
|
Company
|
Preamble
|
|
Company
Board
|
Preamble
|
|
Company
Board Recommendation
|
|
|
Company
Committee
|
|
|
Company
Common Certificate
|
|
|
Company
Common Stock
|
|
|
Company
Disclosure Documents
|
|
|
Company
Employees
|
|
|
Company
Requisite Regulatory Approvals
|
|
|
Company
SEC Documents
|
|
|
Company
Securities
|
|
|
Company
Series C Certificate
|
|
|
Company
Series C Stock
|
|
|
Company
Stock Option
|
|
|
Company
Shareholder Approval
|
|
|
Company
Subsidiary Securities
|
|
|
Company
Virginia Exchange Certificate
|
|
|
Company
Virginia Sub
|
Preamble
|
|
Company
Virginia Sub Articles
|
|
|
Company
Virginia Sub Board
|
Preamble
|
|
Company
Virginia Sub ByLaws
|
|
|
Company
Virginia Sub Certificates
|
|
|
Company
Virginia Sub Common Stock
|
|
|
Company
Virginia Sub Series C Stock
|
|
|
Confidentiality
Agreement
|
|
|
Continuing
Employees
|
|
|
Credit
Committee Representative
|
|
|
Deed
of Capital Increase
|
|
|
Depositary
|
|
|
Depositary
Agreement
|
|
|
Derivative
Transactions
|
|
|
End
Date
|
10
|
Equity
Plans
|
|
|
ESPP
|
|
|
Exchange
Agent
|
|
|
Exchange
Effective Time
|
|
|
Exchange
Fund
|
|
|
FINRA
|
|
|
Indemnified
Person
|
|
|
Lease
|
|
|
Letter
of Transmittal
|
|
|
Material
Contract
|
|
|
Materially
Burdensome Regulatory Condition
|
|
|
NSEC
|
|
|
Parent
|
Preamble
|
|
Parent
ADSs
|
|
|
Parent
Bylaws
|
|
|
Parent
Ordinary Shares
|
|
|
Parent
Representative
|
|
|
Parent
Requisite Regulatory Approvals
|
|
|
Parent
SEC Documents
|
|
|
Parent
Shareholder Approval
|
|
|
Permits
|
|
|
Prospectus
|
|
|
Proxy
Statement
|
|
|
Regulatory
Agencies
|
|
|
Regulatory
Agreement
|
|
|
Reincorporation
Effective Time
|
|
|
Reincorporation
Merger
|
Preamble
|
|
Reports
|
|
|
Representatives
|
|
|
SCL
|
|
|
Share
Consideration
|
|
|
Share
Exchange
|
Preamble
|
|
Subsidiaries
|
|
|
Superior
Proposal
|
|
|
Surviving
Corporation
|
|
|
Takeover
Statutes
|
|
|
Tax
|
|
|
Taxing
Authority
|
|
|
Tax
Return
|
|
|
Tax
Sharing Agreements
|
|
|
Transaction
|
Preamble
|
|
Transfer
Agent
|
|
|
Voting
Agreement
|
Preamble
|
11
|
Voting
Debt
|
|
|
VSCA
|
Preamble
|
|
Termination
Fee
|
|
|
USA
Patriot Act
|
Section
1.02. Other Definitional and
Interpretative Provisions. The words “hereof”, “herein” and
“hereunder” and words of like import used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. References to Articles, Sections, Exhibits, Annexes and
Schedules are to Articles, Sections, Exhibits, Annexes and Schedules of this
Agreement unless otherwise specified. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a part
of this Agreement. Any capitalized terms used in any Exhibit, Annex
or Schedule but not otherwise defined therein, shall have the meaning as defined
in this Agreement. Any singular term in this Agreement shall be
deemed to include the plural, and any plural term the
singular. Whenever the words “include”, “includes” or “including” are
used in this Agreement, they shall be deemed to be followed by the words
“without limitation”, whether or not they are in fact followed by those words or
words of like import. “Writing”, “written” and comparable terms refer
to printing, typing and other means of reproducing words (including electronic
media) in a visible form. References to any statute shall be deemed
to refer to such statute as amended from time to time and to any rules or
regulations promulgated thereunder. References to any agreement or
contract are to that agreement or contract as amended, modified or supplemented
from time to time in accordance with the terms hereof and thereof; provided that, with respect
to any agreement or contract listed on any schedules hereto, all such
amendments, modifications or supplements must also be listed in the appropriate
schedule. References to any Person include the successors and
permitted assigns of that Person. References from or through any date
mean, unless otherwise specified, from and including or through and including,
respectively. References to “law”, “laws” or to a particular statute
or law shall be deemed also to include any and all Applicable Law.
12
ARTICLE
2
[Left Blank
Intentionally]
The
Reincorporation Merger
Section
3.01. The
Reincorporation Merger. (a) Subject to the terms and
conditions of this Agreement, in accordance with Pennsylvania Law and the VSCA,
at the Reincorporation Effective Time, the Company shall merge with and into
Company Virginia Sub. Company Virginia Sub shall be the surviving
corporation (the “Surviving
Corporation”) in the Reincorporation Merger and shall continue its
corporate existence under the laws of the Commonwealth of Virginia. Upon
consummation of the Reincorporation Merger, the separate corporate existence of
the Company shall terminate.
(b) Subject to
the terms and conditions of this Agreement, the closing of the Reincorporation
Merger and the Share Exchange (the “Closing”) will take place at
10:00 a.m. on a date and at a place to be specified by the parties, which shall
be no later than three Business Days after the satisfaction (or, to the extent
permitted by law or regulation, waiver by all parties) of the conditions set
forth in Article 11 (other than those conditions
that by their nature can only be satisfied at the Closing), or at such other
place, time and date as shall be agreed in writing between Parent and the
Company. The date on which the Closing occurs is referred to in this
Agreement as the “Closing
Date”.
Section
3.02. Effective
Time. The Reincorporation Merger shall become effective in
accordance with a Plan of Merger (which Plan of Merger shall be prepared by
Parent promptly following the date of this Agreement and shall be consistent
with this Agreement, the Pennsylvania Law and the VSCA and reasonably
satisfactory to the Company) on the Closing Date at the time that is specified
in the certificate of merger relating to the Reincorporation Merger issued by
the Virginia State Corporation Commission and upon the filing of articles of
merger and all other filings or recordings required by Pennsylvania Law with the
Department of State of the Commonwealth of Pennsylvania (the “Reincorporation Effective
Time”).
Section
3.03. Effect Of
Reincorporation Merger. At and after the Reincorporation
Effective Time, the Reincorporation Merger shall have the effects set forth in
Pennsylvania Law and the VSCA.
Section
3.04. Conversion
Of Shares.
13
(a) At the
Reincorporation Effective Time, by virtue of the Reincorporation Merger and
without any action on the part of the Company, Company Virginia Sub or any
holder of common stock, no par value, of the Company (the “Company Common Stock”), (i)
each share of Company Common Stock issued and outstanding immediately prior to
the Reincorporation Effective Time (other than shares held in treasury) shall be
converted into one share of common stock, no par value per share, of Company
Virginia Sub (the “Company
Virginia Sub Common Stock”), (ii) each share of Company Common Stock held
in the treasury of the Company immediately prior to the Reincorporation
Effective Time shall be cancelled and (iii) each share of Company Virginia Sub
Common Stock issued and outstanding immediately prior to the Reincorporation
Effective Time shall be cancelled.
(b) All of the
shares of Company Common Stock converted into shares of Company Virginia Sub
Common Stock pursuant to Section 3.04(a) shall no
longer be outstanding and shall automatically be canceled and shall cease to
exist as of the Reincorporation Effective Time, and each certificate previously
representing any such shares (“Company Common Certificate”)
shall thereafter represent, without the requirement of any exchange thereof,
that number of shares of Company Virginia Sub Common Stock into which such
shares of Company Common Stock represented by such Company Common Certificate
have been converted pursuant to Section 3.04(a)
(such certificates following the Reincorporation Merger, the “Company Virginia Sub
Certificates”).
(c) At the
Reincorporation Effective Time, by virtue of the Reincorporation Merger and
without any action on the part of the Company, Company Virginia Sub or any
holder of Series C Preferred Stock, no par value per share, of the Company (the
“Company Series C
Stock”), (i) each share of Company Series C Stock issued and outstanding
immediately prior to the Reincorporation Effective Time (other than shares held
in treasury and shares for which the holder thereof has perfected its
dissenter’s rights pursuant to Pennsylvania Law) shall be converted into one
share of Series C Preferred Stock, no par value per share, of Company Virginia
Sub (the “Company Virginia Sub
Series C Stock”), and (ii) each share of Company Series C Stock held in
the treasury of the Company immediately prior to the Reincorporation Effective
Time shall be cancelled.
(d) All of the
shares of Company Series C Stock converted into shares of Company Virginia Sub
Series C Stock pursuant to Section 3.04(c) shall no longer be outstanding and
shall automatically be canceled and shall cease to exist as of the
Reincorporation Effective Time, and each certificate previously representing any
such shares (“Company Series C
Certificate”) shall thereafter represent, without the requirement of any
exchange thereof, that number of shares of Company Virginia Sub Series C Stock
into which such shares of Company
14
Series C
Stock represented by such Company Series C Certificate have been converted
pursuant to Section 3.04(c).
(b) At
the Reincorporation Effective Time, each then-outstanding share of restricted
stock granted under the Equity Plans (“Company Restricted Stock”)
shall become vested and shall be treated in the same manner as other shares of
Company Common Stock hereunder.
Section
3.06. ESPP. Prior
to the Reincorporation Effective Time, the Company shall take all requisite
actions pursuant to the terms of the Company Employee Stock Purchase Plan (the
“ESPP”) to (i) preclude
the commencement of any new subscription or option period after the date hereof
and (ii) effective as of the Reincorporation Effective Time, terminate the ESPP
and distribute to each participant in the ESPP the dollar amount, if any, in
such participant’s account under the ESPP.
Section
3.07. Articles of
Incorporation. Subject to the terms and conditions of this
Agreement, at the Reincorporation Effective Time, the Articles of Incorporation
of Company Virginia Sub (the “Company Virginia Sub
Articles”) in effect immediately prior to the Reincorporation Merger
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended in accordance with Applicable Law (it being understood and
agreed that the Company Virginia Sub Articles shall be substantially consistent
with the form of articles of incorporation attached hereto as Exhibit B hereto
with such changes as are proposed by Parent and not reasonably objected to by
Company; which in any event shall be consistent with the provisions of Section 9.01 hereof). The Company Virginia
Sub Articles shall, in any event, provide that authorization of a share exchange
pursuant to Section 13.1-718 of the VSCA shall require the
15
approval
of a majority of all of the votes entitled to be cast on such matter by holders
of Company Virginia Sub Common Stock.
Section
3.08. Bylaws. Subject to the terms
and conditions of this Agreement, at the Reincorporation Effective Time, the
Bylaws of Company Virginia Sub (the “Company Virginia Sub Bylaws”)
in effect immediately prior to the Reincorporation Merger shall be the Bylaws of
the Surviving Corporation until thereafter amended in accordance with Applicable
Law (it being understood and agreed that the Company Virginia Sub Bylaws shall
be substantially consistent with the form of bylaws attached hereto as Exhibit
C, with such changes as are proposed by Parent and not reasonably objected to by
Company; which in any event shall be consistent with the provisions of Section 9.01 hereof).
Section
3.09. Board of Directors;
Management. The directors and officers of Company immediately
prior to the Reincorporation Effective Time shall be the directors and officers
of Company Virginia Sub immediately after the Reincorporation Effective Time,
each to hold office in accordance with the Company Virginia Sub Articles and
Bylaws until their respective successors are duly elected or qualified.
Section
3.10. Tax
Consequences. It is intended that the Reincorporation Merger
shall constitute a “reorganization” within the meaning of Section 368(a) of the
Code and that this Agreement shall constitute a “plan of reorganization” in
respect of the Reincorporation Merger for the purposes of Sections 354 and 361
of the Code.
ARTICLE
4
Section
4.01. The Share
Exchange. Subject to the terms and conditions of this
Agreement, in accordance with the VSCA and the Spanish Corporation Law of 1989
(Texto Refundido de xx Xxx de
Sociedades Anónimas aprobado por el Real Decreto Legislativo 1564/1989),
as amended (the “SCL”),
at the Exchange Effective Time, pursuant to the provisions of Section 13.1-721
of the VSCA, Company Virginia Sub shall become a subsidiary of Parent through
the exchange of each outstanding share of Company Virginia Sub Common Stock for
the Share Consideration.
Section
4.02. Exchange Effective
Time. The Share Exchange shall become effective, immediately
following the Reincorporation Effective Time, in accordance with the Plan of
Share Exchange (which Plan of Share Exchange shall be prepared by Parent
promptly following the date of this Agreement and shall be consistent with this
Agreement and the VSCA and reasonably satisfactory to the
16
Company)
on the Closing Date at the time (the “Exchange Effective Time”) that
is specified in the certificate of share exchange relating to the Share Exchange
issued by the Virginia State Corporation Commission with respect to the Plan of
Share Exchange, at which time, by virtue of the Share Exchange and as set forth
in the Plan of Share Exchange and the VSCA, Parent shall automatically become
the holder and owner of one hundred percent of the outstanding shares of Company
Virginia Sub Common Stock, with the former holders of such outstanding shares
being only entitled to receive the Share Consideration as provided for in Section 4.04. The Transfer Agent, for the
benefit of Parent, shall receive from Company Virginia Sub at the Exchange
Effective Time the Company Virginia Exchange Certificate representing Parent’s
ownership of all such outstanding shares of Company Virginia Sub Common Stock in
exchange for the Share Consideration being issued pursuant to Section 4.04. As used in this Agreement,
“Company Virginia Exchange
Certificate” shall mean the certificate representing the shares of
Company Virginia Sub Common Stock being received by Parent pursuant to the terms
hereof, which shares shall represent one hundred percent of the outstanding
shares of Company Virginia Sub Common Stock.
17
System
(Iberclear), the
Spanish Stock Exchanges and to the NSEC, for
the new shares to be listed and registered in the name of the Depositary, for
the account of Company Virginia Sub Common Stock holders, and to any required
stock exchanges for the admission authorization of Parent Ordinary Shares to be
listed.
Section
4.04. Exchange Of Company
Virginia Sub Common Stock. At the Exchange Effective Time, by
virtue of the Share Exchange and without any further action on the part of
Parent, Company Virginia Sub or any holder of Company Virginia Sub Common
Stock:
(a) All shares
of Company Virginia Sub Common Stock that are owned by Parent, Company Virginia
Sub or any of their respective direct or indirect wholly-owned Subsidiaries
immediately prior to the Exchange Effective Time (other than shares of Company
Virginia Sub Common Stock held in trust accounts, managed accounts and the like,
or otherwise held in a fiduciary or agency capacity, that are beneficially owned
by third parties and other than shares of Company Virginia Sub Common Stock
held, directly or indirectly, by Parent, or Company Virginia Sub or any of their
respective direct or indirect wholly-owned Subsidiaries in respect of a debt
previously contracted) shall be cancelled and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(b) Subject to
Section 4.04(d), at the Exchange Effective Time, by
virtue of the Share Exchange and without any action on the part of Parent,
Company Virginia Sub or any holder of Company Virginia Sub Common Stock, each
share of Company Virginia Sub Common Stock (except as set forth in Section 4.04(a)) shall be exchanged for the right to
receive from Parent the number of ordinary shares of Parent, of
50 euro-cents nominal value each (the “Parent Ordinary Shares”) as is
equal to the Exchange Ratio (the “Share
Consideration”).
(c) The Parent
Ordinary Shares to be issued in exchange for the shares of Company Virginia Sub
Common Stock exchanged hereunder shall be registered in the name of the
Depositary by the Spanish Settlement and Clearing System and then delivered (x)
in the form of receipts representing American depositary shares representing
Parent Ordinary Shares (“Parent
ADSs”), and such Parent ADSs shall be issued in accordance with the
Depositary Agreement, dated as of June 1, 1987 (as amended), by and between
Parent, JPMorgan Chase Bank, N.A., as depositary, and the holders of Parent ADSs
(as such agreement may be amended to deposit the Parent Ordinary Shares being
issued pursuant hereto and to deliver the Parent ADSs being delivered hereto) or
a depositary agreement to be entered into after the date of this Agreement in
form and substance not reasonably objected to by Company (the “Depositary Agreement”) or (y)
if and to the extent elected by any holder in the manner provided in
Section
18
5.02(b),
in the form of Parent Ordinary Shares, in account entry form, rather than Parent
ADSs, but subject to Parent’s discretion, after consultation with the
Depositary, to invalidate such election, in which case all Parent Ordinary
Shares delivered hereto shall be in the form of Parent ADSs.
(d) If,
between the date of this Agreement and the Exchange Effective Time, Parent
undergoes a reorganization, recapitalization, reclassification, issues a stock
dividend, or effects a stock split or reverse stock split, or other similar
change in capitalization, an appropriate and proportionate adjustment shall be
made to the Share Consideration.
Section
4.05. Parent Capital
Stock. At and after the Exchange Effective Time, each Parent
Ordinary Share and Parent ADS issued and outstanding immediately prior to the
Closing Date shall remain issued and outstanding and shall not be affected by
the Share Exchange.
ARTICLE
5
Exchange
Of Shares
Section
5.01. Deposit of
Consideration. Promptly following the Exchange Effective Time,
Parent shall provide (i) to JPMorgan Chase Bank, N.A. (the “Depositary”) the Parent
Ordinary Shares being issued in the form of Parent ADSs and the Depositary shall
deposit with the Exchange Agent, for the benefit of holders of Company Virginia
Sub Common Stock, for exchange in accordance with this Article 5, receipts representing such Parent ADSs, and
(ii) to the Exchange Agent, the Parent Ordinary Shares (A) being issued in
account entry form and (B) being sold by the Exchange Agent pursuant to the
procedure described in Section 5.02(i) (the “Exchange Fund”) and Parent
shall instruct the Exchange Agent to timely exchange the Share Consideration and
pay such cash in lieu of fractional shares, in accordance with this
Agreement.
Section
5.02. Exchange Of
Shares. (a) Promptly after the Exchange Effective
Time, the Exchange Agent shall mail to each holder of record of Company Virginia
Sub Certificate(s) (which, after the Exchange Effective Date, shall represent
only the right to receive the Share Consideration and any cash in respect of
fractional shares) (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to Company Virginia Sub
Certificate(s) shall pass, only upon delivery of Company Virginia Sub
Certificate(s) (or affidavits of loss in lieu of such Company Virginia Sub
Certificate(s))) (the “Letter
of Transmittal”) to the Exchange Agent and shall be substantially in such
form and have such other provisions as shall be prescribed by the Exchange Agent
Agreement and (ii) instructions for use in surrendering Company Virginia Sub
Certificate(s) in exchange for the Share Consideration and
19
any cash
in lieu of fractional Parent Ordinary Shares to be paid in consideration
therefor upon surrender of such Company Virginia Sub Certificate
.. The Letter of Transmittal shall also contain instructions for
electing to effect the surrender of Company Virginia Sub Certificates in
exchange for Parent Ordinary Shares in account entry form in lieu of Parent
ADSs, provided that
Parent may, at its own discretion, after consultation with the Depositary,
invalidate such election.
(b) Upon
proper surrender of a Company Virginia Sub Certificate or Company Virginia Sub
Certificates for exchange and cancellation to the Exchange Agent, together with
such properly completed Letter of Transmittal, duly executed, the holder of such
Company Virginia Sub Certificate or Company Virginia Sub Certificates shall be
entitled to receive in exchange therefor, as applicable, (i) a receipt
representing that number of whole Parent ADSs or Parent Ordinary Shares in
account entry form to which such holder of Company Virginia Sub Common Stock
shall have become entitled pursuant to the provisions of Article 4 and (ii) a check representing the amount of
any cash in lieu of fractional shares that such holder has the right to receive
in respect of the Company Virginia Sub Certificate or Company Virginia Sub
Certificates surrendered pursuant to the provisions of this Article 5. No interest will be paid or
accrued on any cash in lieu of fractional shares or on any unpaid dividends and
distributions payable to holders of Company Virginia Sub
Certificates.
(c) No
dividends or other distributions with respect to Parent Ordinary Shares in
account entry form or receipts representing Parent ADSs shall be paid to the
holder of any unsurrendered Company Virginia Sub Certificate with respect to the
Parent Ordinary Shares in account entry form or receipts representing Parent
ADSs represented thereby, in each case unless and until the surrender of such
Company Virginia Sub Certificate in accordance with this Article 5. Subject to the effect of
applicable abandoned property, escheat or similar laws, following surrender of
any such Company Virginia Sub Certificate in accordance with this Article 5, the record holder thereof shall be entitled
to receive, without interest, (i) the amount of dividends or other
distributions with a record date after the Exchange Effective Time theretofore
payable with respect to the whole Parent Ordinary Shares in account entry form
or receipts representing Parent ADSs represented by such Company Virginia Sub
Certificate and not paid and/or (ii) at the appropriate payment date, the amount
of dividends or other distributions payable with respect to Parent Ordinary
Shares in account entry form or receipts representing Parent ADSs represented by
such Company Virginia Sub Certificate with a record date after the Exchange
Effective Time (but before such surrender date) and with a payment date
subsequent to the issuance of the Parent Ordinary Shares in account entry form
or receipts representing Parent ADSs issuable with respect to such Company
Virginia Sub Certificate.
20
(d) If any
receipt representing Parent ADSs or Parent Ordinary Shares in account entry form
are to be issued in a name other than that in which the Company Virginia Sub
Certificate or Company Virginia Sub Certificates surrendered in exchange
therefor is or are registered, it shall be a condition of the issuance thereof
that the Company Virginia Sub Certificate or Company Virginia Sub Certificates
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 receipt
representing Parent ADSs or Parent Ordinary Shares in account entry form in any
name other than that of the registered holder of the Company Virginia Sub
Certificate or Company Virginia Sub Certificates surrendered, or required for
any other reason, or shall establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(e) After the
Exchange Effective Time, there shall be no transfers on the stock transfer books
of Company Virginia Sub of the shares of Company Virginia Sub Common Stock that
were issued and outstanding immediately prior to the Exchange Effective
Time. If, after the Exchange Effective Time, Company Virginia Sub
Certificates are presented for transfer to the Exchange Agent, they shall be
cancelled and exchanged for receipts representing Parent ADSs or Parent Ordinary
Shares in account entry form as provided in this Article 5.
(f) Notwithstanding
anything to the contrary contained in this Agreement, no certificates or scrip
representing fractional Parent Ordinary Shares in account entry form or receipts
representing fractional Parent ADSs shall be issued upon the surrender of
Company Virginia Sub Certificates for exchange, no dividend or distribution with
respect to Parent Ordinary Shares in account entry form or receipts representing
Parent ADSs shall be payable on or with respect to any fractional share, and
such fractional share interests shall not entitle the owner thereof to vote or
to any other rights of a holder of Parent Ordinary Shares in account entry form
or receipts representing Parent ADSs. In lieu of the issuance of any
such fractional share, Parent shall deliver to the Exchange Agent the Parent
Ordinary Shares being sold by the Exchange Agent pursuant to the procedure
described in Section 5.02(i).
(g) The
Exchange Agent shall sell any Parent ADSs delivered to it by the Depositary and
any non-cash portion of the Exchange Fund that remains unclaimed by the
stockholders of Company Virginia Sub on the date falling 18 months after the
Exchange Effective Time and shall return the proceeds of such sale and any other
cash held in the Exchange Fund at such time to Company Virginia
Sub. Any former shareholders of Company Virginia Sub who have not
theretofore complied with this Article 5 shall
thereafter look only to Company Virginia Sub with respect to the Share
Consideration, any consideration in lieu of
21
any
fractional shares and any unpaid dividends and distributions on the Parent
Ordinary Shares in account entry form or receipts representing Parent ADSs
deliverable in respect of each share of Company Virginia Sub Common Stock such
shareholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of
Parent, Company Virginia Sub, the Exchange Agent or any other person shall be
liable to any former holder of shares of Company Virginia Sub Common Stock for
any amount delivered in good faith to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(h) In the
event any Company Virginia Sub Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Company Virginia Sub Certificate to be lost, stolen or destroyed and, if
reasonably required by Parent or the Exchange Agent, the posting by such person
of a bond in such amount as Parent may determine is reasonably necessary as
indemnity against any claim that may be made against it with respect to such
Company Virginia Sub Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Company Virginia Sub Certificate the Share
Consideration and any cash in lieu of fractional shares deliverable in respect
thereof pursuant to this Agreement.
(i) The
Exchange Agent shall aggregate all fractional interests in Parent Ordinary
Shares and sell all such shares, in one or more transactions executed on one or
more stock exchanges through one or more brokers nominated by Parent with the
proceeds of such sale being remitted to the Exchange Agent as soon as
practicable thereafter. The Exchange Agent shall deliver the cash
proceeds of any such sales to former holders of shares of Company Virginia Sub
Common Stock in lieu of their fractional interest in Parent Ordinary Shares or
Parent ADSs. The
proceeds to any holder of shares of Company Virginia Sub Common Stock sold by
the Exchange Agent pursuant to this Section 5.02(i)
shall be the proceeds before any costs associated with any such sale, and any
costs incurred in connection with any such sale (including any commissions,
currency exchange fees, transfer taxes and other transaction costs) shall be
borne by Parent. For the avoidance of doubt, any reference in this
Agreement to Parent providing to the Exchange Agent any funds in lieu of
fractional shares shall refer exclusively to the procedure described in this Section 5.02(i), through which cash is generated
through the sale by the Exchange Agent of Parent Ordinary Shares, and through
which no cash is provided or funded by Parent at any
time.
Section
5.03. Withholding
Rights. Notwithstanding anything to the contrary contained
herein, Parent shall be entitled to deduct and withhold from the consideration
otherwise payable to any Person pursuant to this Agreement such amounts as it is
required to deduct and withhold with respect to the making of such payment under
any provision of Tax law. If Parent so withholds amounts,
22
such
amounts shall be treated for all purposes of this Agreement as having been paid
to the Person in respect of which Parent made such deduction and
withholding.
ARTICLE
6
Representations
and Warranties of the Company
Subject to
Section 13.06, except as (a) disclosed in any
Company Qualifying SEC Report (other than (i) any information that is contained
in the “Risk Factors” section of such Company Qualifying SEC Reports, except to
the extent such information consists of factual historical statements, and (ii)
any forward-looking statements, or other statements that are similarly
predictive or forward-looking in nature, contained in such Company Qualifying
SEC Reports) if the relevance of such disclosure as an exception to one or more
of the following representations and warranties is reasonably apparent, or (b)
set forth on the Company Disclosure Schedule, the Company represents and
warrants to Parent that:
Section
6.01. Corporate Existence and
Power. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania. The Company is a savings and loan holding company duly
registered under the HOLA. The Company has all corporate powers and
has, and has had at all relevant times, all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those governmental licenses,
authorizations, permits, consents and approvals the absence of which would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. The Company has
heretofore made available to Parent true and complete copies of the Charter and
Company Bylaws as currently in effect.
Section
6.02. Corporate
Authorization. (a) The Company has full corporate power and
authority to execute and deliver this Agreement and to consummate the
Transaction and the other transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the Transaction
and the other transactions contemplated hereby have been duly, validly and
approved by the Company Board by Requisite Board Approval. Promptly
following the organization of Company Virginia Sub, the Company, as the sole
shareholder of Company Virginia Sub, will approve the Reincorporation
23
Merger,
the Share Exchange and waive any right to dissent from the Share Exchange for
all purposes of Section 13.1-729 et seq. of the VSCA such that the provisions of
such sections will not apply to this Agreement, the Transaction or any of the
other transactions contemplated hereby and Section 13.1-725 et seq. and
13.1-728.1 et seq. will not apply thereto. Except for the affirmative
vote of the holders of not less than a majority of the outstanding Company
Common Stock voting on the Reincorporation Merger, voting together as a single
class to approve the Reincorporation Merger (the “Company Shareholder
Approval”), no other corporate proceedings on the part of the Company are
necessary to approve this Agreement or to consummate the Transaction or the
other transactions contemplated hereby or thereby. This Agreement has
been duly and validly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms (subject, in the case of enforceability, to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other laws affecting creditors’ rights generally and general principles of
equity or by applicable conservatorship or receivership provisions of the
FDIA).
(b) At a
meeting duly called and held, the Company Board has by the Requisite Board
Approval (i) determined that this Agreement and the transactions contemplated
hereby, including the Transaction, the Reincorporation Merger and the Share
Exchange, are advisable and in the best interests of the Company and its
shareholders and has directed that this Agreement be submitted to the Company’s
shareholders for approval and adoption, (ii) recommended that such shareholders
adopt and approve this Agreement and the Transaction, at a duly held meeting of
such shareholders (such recommendation, the “Company Board
Recommendation”), (iii) adopted a resolution to the foregoing effect, and
(iv) taken all other actions necessary to exempt the Reincorporation Merger, the
Share Exchange, the Voting Agreement, this Agreement and the transactions
contemplated by each of the foregoing from (A) any Defensive Measure (to the
extent any such action necessary for such exemption can be taken by Company
Board action) or (B) any “fair price”, “moratorium”, “control share
acquisition”, “interested stockholder”, “business combination” or other similar
statute or regulation promulgated by a Governmental Authority (including
Sections 2538 and 2541 through 2588 of Pennsylvania Law and Sections 13.1-725 et
seq. and 13.1-728 et seq. of the VSCA) (collectively, “Takeover
Statutes”).
Section
6.03. Governmental
Authorization. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any Governmental Authority on the part of the Company or its
Subsidiaries, other than (i) the filing of articles of merger with respect to
the Reincorporation Merger with the Department of State of the Commonwealth of
Pennsylvania, the filing of the articles of merger and articles of share
exchange
24
and other
appropriate merger and share exchange documents required by the VSCA, the
issuance by the Virginia State Corporation Commission of the certificate of
merger and certificate of share exchange pursuant to the VSCA with the Virginia
State Corporation Commission, and other appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
(ii) the filing with the SEC of the proxy statement (the “Proxy Statement”) in
definitive form relating to the special meeting of the Company’s shareholders to
be held in connection with this Agreement and the Transaction and the other
transactions contemplated hereby and the filing and declaration of effectiveness
of the F-4 in which the Proxy Statement will be included as a prospectus of
Parent, (iii) compliance with any applicable requirements of the 1933 Act, the
1934 Act and any other applicable state or federal securities laws, (iv) the
filing of an application with the Federal Reserve Board under Section 4 of the
BHC Act, a notice with the OTS under the HOLA and the approval of such
application and notice, (v) filings of applications and notices with, and
receipt of approvals or nonobjections from, the Financial Industry Regulatory
Authority (“FINRA”), and
(vi) any actions or filings the absence of which would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section
6.04. Non-contravention. The
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (i)
contravene, conflict with, or result in any violation or breach of any provision
of the Charter, Company Bylaws or similar governing documents of any of its
Subsidiaries, (ii) assuming compliance with the matters referred to in Section 6.03, contravene, conflict with, or result in a
violation or breach of any provision of any Applicable Law, (iii) assuming
compliance with the matters referred to in Section
6.03, require any consent or other action by any Person under, constitute a
default, or an event that, with or without notice or lapse of time or both,
would constitute a default, under, or cause or permit the termination,
cancellation, acceleration or other change of any right or obligation or the
loss of any benefit to which the Company or any of its Subsidiaries is entitled
under any provision of any agreement or other instrument binding upon the
Company or any of its Subsidiaries or any license, franchise, permit,
certificate, approval or other similar authorization affecting, or relating in
any way to, the assets or business of the Company and its Subsidiaries or (iv)
result in the creation or imposition of any Lien on any asset of the Company or
any of its Subsidiaries, with only such exceptions, in the case of each of
clauses (ii) through (iv), as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
25
Junior
Participating Preferred Stock and (y) 8,000 shares of preferred stock are
classified as Series C Preferred Stock. As of October 10, 2008, there
were outstanding 662,641,448 Shares (of which an aggregate of 5,378,814 are
Company Restricted Shares), no shares of Series A Junior Participating Preferred
Stock, 8,000 shares of Series C Preferred Stock and employee stock options to
purchase an aggregate of 8,314,464 Shares (of which options to purchase an
aggregate of 6,026,495 Shares were exercisable). In addition, there
are outstanding stock appreciation rights with respect to 700,000 Shares and
restricted stock units with respect to 180,955 Shares. All
outstanding shares of capital stock of the Company have been, and all shares
that may be issued pursuant to any employee stock option or other compensation
plan or arrangement will be, when issued in accordance with the respective terms
thereof, duly authorized and validly issued, fully paid and nonassessable and
free of preemptive rights. No Subsidiary or Affiliate of the Company
owns any shares of capital stock of the Company. Section 6.05(a) of the Company Disclosure Schedule
contains a complete and correct list of (A) each outstanding Company Stock
Option, including the holder, date of grant, exercise price, vesting schedule
and number of Shares subject thereto, and (B) each outstanding Company
Restricted Share, including the holder, date of grant and number vested. None of
the Company’s preferred stock, Company Securities (other than the Shares) or
Company Subsidiary Securities have any voting, consent or approval rights with
respect to the Transaction.
(b) There are
outstanding no bonds, debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which shareholders of the Company
may vote. Except as set forth in this Section
6.05 and for changes since October 10, 2008 resulting from the exercise of
Company Stock Options outstanding on such date, there are no issued, reserved
for issuance or outstanding (i) shares of capital stock of or voting securities
of the Company, (ii) securities of the Company convertible into or exchangeable
for shares of capital stock or voting securities of the Company, (iii) warrants,
calls, options or other rights to acquire from the Company, or other obligation
of the Company to issue, any capital stock or voting securities of the Company
or (iv) restricted shares, stock appreciation rights, performance units,
contingent value rights, “phantom” stock or similar securities or rights that
are derivative of, or provide economic benefits based, directly or indirectly,
on the value or price of, any capital stock or voting securities of the Company
(the items in clauses (i) though (iv) being referred to collectively as the
“Company
Securities”). There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any of the Company Securities. Except for the Investment Agreement,
neither the Company nor any of its Subsidiaries is a party to any voting
agreement with respect to the voting of any Company Securities.
26
(b) All of the
outstanding capital stock of, or other voting securities or ownership interests
in, each Subsidiary of the Company is owned by the Company, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities or ownership
interests). There are no issued, reserved for issuance or outstanding
(i) securities of the Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock of or other voting securities of or
ownership interests in any Subsidiary of the Company, (ii) warrants, calls,
options or other rights to acquire from the Company or any of its Subsidiaries,
or other obligations of the Company or any of its Subsidiaries to issue, any
capital stock of or other voting securities or ownership interests in, or any
securities convertible into or exchangeable for any capital stock or other
voting securities of or ownership interests in, any Subsidiary of the Company or
(iii) restricted shares, stock appreciation rights, performance units,
contingent value rights, “phantom” stock or similar securities or rights that
are derivative of, or provide economic benefits based, directly or indirectly,
on the value or price of, any capital stock of, or other voting securities of or
ownership interests in, any Subsidiary of the Company (the items in clauses (i)
through (iii) being referred to collectively as the “Company Subsidiary
Securities”). There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any of the Company Subsidiary Securities. Except for the capital
stock or other equity or voting interests of its Subsidiaries, the Company does
not own, directly or indirectly, any capital stock or other equity or voting
interests in any Person.
(c) The Bank
is a federal savings bank, duly organized and validly existing under the laws of
the United States of America. The Bank is a member in good standing
of the Federal Home Loan Bank of Pittsburgh. The Bank has all corporate powers
and has, and has had at all relevant times, all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
27
business
as now conducted, except for those governmental licenses, authorizations,
permits, consents and approvals the absence of which would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. The deposits of the Bank are insured by the FDIC to the fullest extent
permitted in the FDIA, and all premiums and assessments required to be paid in
connection therewith have been paid when due.
(d) The
authorized capital stock of the Bank consists of (i) 15,000,000 shares of common
stock, $1.00 par value, of which 1,000 shares are outstanding, and (ii)
7,500,000 shares of preferred stock, no par value, of which no shares are
outstanding, validly issued, fully paid, nonassessable, free of preemptive
rights, all of which are owned by the Company free and clear of any
Liens.
Section
6.07. Company Virginia
Sub. (a) Following the date of its incorporation, Company
Virginia Sub will not engage in any activities other than in connection with or
contemplated by the joinder agreement to this Agreement or this Agreement.
Company Virginia Sub will have full corporate power and authority to execute and
deliver the joinder agreement to this Agreement and to consummate the
Transaction and the other transactions contemplated hereby and
thereby. The execution and delivery of the joinder agreement to this
Agreement and the consummation of the Transaction and the other transactions
contemplated hereby and thereby will be duly, validly and unanimously approved
by the Company as the sole shareholder of the Company Virginia
Sub. The joinder agreement to this Agreement will be duly and validly
executed and delivered by Company Virginia Sub and (assuming due authorization,
execution and delivery by Parent of the joinder agreement to this Agreement)
will constitute a valid and binding obligation of Company Virginia Sub,
enforceable against Company Virginia Sub in accordance with its terms (except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and subject to general
principles of equity). The Company as the sole shareholder of Company
Virginia Sub will unanimously approve this Agreement, the joinder agreement to
this Agreement, the Transaction and the other transactions contemplated hereby
and thereby as required to render inapplicable to this Agreement, the
Transaction and the other transactions contemplated hereby all restrictions set
forth in any Takeover Statutes of the Commonwealth of Virginia.
(b) Neither
the execution and delivery of the joinder agreement to this Agreement by Company
Virginia Sub nor the consummation by Company Virginia Sub of the Transaction or
the other transactions contemplated hereby or thereby, nor compliance by Company
Virginia Sub with any of the terms or provisions of the joinder agreement to
this Agreement and this Agreement, will (i) violate any provision of the Company
Virginia Sub Articles or the Company Virginia Sub Bylaws or (ii) assuming that
the consents, approvals and filings
28
referred
to in Section 6.07(c) are duly obtained and/or
made, (A) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or Injunction applicable to Company Virginia Sub, any of its
Subsidiaries or any of their respective properties or assets or (B) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Company Virginia Sub or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Company Virginia Sub or any of its Subsidiaries is a party or by which any of
them or any of their respective properties or assets is bound.
(c) Except for
(i) the filing of articles of merger with respect to the Reincorporation Merger
with the Department of State of the Commonwealth of Pennsylvania, the filing of
the articles of merger and articles of share exchange and other appropriate
merger and share exchange documents required by the VSCA with the Virginia State
Corporation Commission, the issuance by the Virginia State Corporation
Commission of the certificate of merger and certificate of share exchange
pursuant to the VSCA, and other appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
(ii) compliance with any applicable requirements of the 1933 Act, the 1934 Act
and any other applicable state or federal securities laws, (iii) the filing of
an application with the Federal Reserve Board under Section 4 of the BHC Act and
the approval of such application, (iv) filings of applications and notices with,
and receipt of approvals or nonobjections from FINRA, (v) a notice with the OTS
under the HOLA and the approval of such notice, (vi) the Company Shareholder
Approval, and (vii) such filings and approvals as are required to be made or
obtained under the securities or “Blue Sky” laws of various states in connection
with the issuance of the Parent Ordinary Shares and Parent ADSs pursuant to this
Agreement and approval of listing of such Parent Ordinary Shares and Parent ADSs
on the NYSE, no consents or approvals of or filings or registrations with any
Governmental Authority, are necessary in connection with the consummation by
Company Virginia Sub of the Transaction and the other transactions contemplated
by this Agreement. No consents or approvals of or filings or
registrations with any Governmental Authority are necessary in connection with
the execution and delivery by Company Virginia Sub of the joinder agreement to
this Agreement.
29
2007
(collectively, together with any exhibits and schedules thereto and other
information incorporated therein, the “Company SEC
Documents”). As of its filing date (and as of the date of any
amendment), each Company SEC Document complied, and each Company SEC Document
filed subsequent to the date hereof will comply, as to form in all material
respects with the applicable requirements of the 1933 Act and the 1934 Act, as
the case may be. As of its filing date (or, if amended or superseded
by a filing prior to the date hereof, on the date of such filing), each Company
SEC Document filed pursuant to the 1934 Act did not, and each Company SEC
Document filed subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each Company SEC Document
that is a registration statement, as amended or supplemented, if applicable,
filed pursuant to the 1933 Act, as of the date such registration statement or
amendment became effective, did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(b) The
Company has implemented and maintains disclosure controls and procedures (as
defined in Rule 13a-15 under the 0000 Xxx) designed to ensure that material
information relating to the Company, including its consolidated Subsidiaries, is
made known to the Company’s principal executive officer and its principal
financial officer by others within those entities, particularly during the
periods in which the periodic reports required under the 1934 Act are being
prepared. Such disclosure controls and procedures are effective in
timely alerting the Company’s principal executive officer and principal
financial officer to material information required to be included in the
Company’s periodic and current reports required under the 1934
Act. For purposes of this Agreement, “principal executive officer”
and “principal financial officer” shall have the meanings given to such terms in
the Xxxxxxxx-Xxxxx Act.
(c) The
Company has established and maintained a system of internal controls over
financial reporting (as defined in Rule 13a-15 under the 0000 Xxx) sufficient to
provide reasonable assurance regarding the reliability of the Company’s
financial reporting and the preparation of Company financial statements for
external purposes in accordance with GAAP. The Company has disclosed,
based on its most recent evaluation of internal controls prior to the date
hereof, to the Company’s auditors and audit committee (i) any significant
deficiencies and material weaknesses in the design or operation of internal
controls which are reasonably likely to adversely affect the Company’s ability
to record, process, summarize and report financial information and (ii) any
fraud, whether or not material, that involves management or other employees who
have a significant role in internal controls.
30
(d) There are
no outstanding loans or other extensions of credit made by the Company or any of
its Subsidiaries to any executive officer (as defined in Rule 3b-7 under the
0000 Xxx) or director of the Company. The Company has not, since the
enactment of the Xxxxxxxx-Xxxxx Act, taken any action prohibited by Section 402
of the Xxxxxxxx-Xxxxx Act.
(e) The
Company has complied in all material respects with the applicable listing and
corporate governance rules and regulations of the NYSE.
(f) Each of
the principal executive officer and principal financial officer of the Company
(or each former principal executive officer and principal financial officer of
the Company, as applicable) have made all certifications required by Rule 13a-14
and 15d-14 under the 1934 Act and Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act
and any related rules and regulations promulgated by the SEC and the NYSE, and
the statements contained in any such certifications are complete and
correct.
Section
6.10. Disclosure
Documents. (a) Each document required to be filed by the
Company with the SEC or required to be distributed or otherwise disseminated to
the Company’s shareholders in connection with the transactions contemplated by
this Agreement (the “Company
Disclosure Documents”), including the Schedule 13E-3, and the Proxy
Statement to be filed with the SEC in connection with the Transaction and the
other transactions contemplated hereby, and any amendments or supplements
thereto, when filed, distributed or disseminated, as applicable, will comply as
to form in all material respects with the applicable requirements of the 1934
Act.
(b) (i) The
Proxy Statement, as supplemented or amended, if applicable, at the time such
Proxy Statement or any amendment or supplement thereto is first mailed to
shareholders of the Company and at the time such shareholders vote on adoption
of this Agreement, and (ii) any Company Disclosure Document (other than the
Proxy Statement), at the time of the filing of such Company Disclosure Document
or any supplement or amendment thereto and at the time of any distribution or
dissemination thereof, will not contain any untrue statement of a
31
material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties contained in
this Section 6.10(b) will not apply to statements or
omissions included in the Company Disclosure Documents based upon information
furnished to the Company in writing by Parent or its Representatives
specifically for use therein.
(c) The
information relating to the Company and its Subsidiaries (including Company
Virginia Sub) that is provided by the Company or its representatives for
inclusion in the F-4, the Schedule 13E-3, the Prospectus, any Company Disclosure
Document or in any other document filed with any other Regulatory Agency or
Governmental Authority in connection with the transactions contemplated by this
Agreement, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading.
Section
6.12. No Undisclosed Material
Liabilities. There are no liabilities or obligations of the
Company or any of its Subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances that could reasonably be
expected to result in such a liability, other than (a) liabilities or
obligations disclosed and provided for in the Company Balance Sheet or in the
notes thereto, (b) liabilities or obligations incurred in the ordinary course of
business consistent with past practices since the Company Balance Sheet Date and
(c) liabilities and obligations that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
Section
6.13. Compliance with Laws and Court
Orders. (a) The Company and each of its Subsidiaries is and
has been in compliance with, and to the Knowledge of the Company is not under
investigation with respect to and has not been threatened to be charged with or
given notice of any violation of, any Applicable Law, except, in each case, for
failures to comply or violations that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
32
(b) The
Company and each of its Subsidiaries have all material governmental licenses,
permits, certificates, approvals and authorizations (“Permits”) necessary for the
conduct of their business and the use of their properties and assets, as
presently conducted and used, and neither the Company nor any of its
Subsidiaries has received written notice from any Governmental Authority that
any Permit is subject to any adverse action, or to the Knowledge of the Company,
has any notice or adverse action been threatened, except where the failure to
have any such Permit or the receipt of such notice would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section
6.14. Litigation. There
is no action, suit, investigation or proceeding pending against, or, to the
Knowledge of the Company, threatened against or affecting, the Company, any of
its Subsidiaries, any Employee Plan, or any of their respective properties
before (or, in the case of threatened actions, suits, investigations or
proceedings, would be before) or by any Governmental Authority or arbitrator
that would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section
6.15. Properties.
Except as would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect, the Company and its
Subsidiaries have good and valid title to, or valid leasehold interests in, all
its property and assets reflected in the Company Balance Sheet or acquired after
December 31, 2007. None of such property or assets is subject to any
Lien, except (a) Liens disclosed on the Company Balance Sheet or the notes
thereto, (b) Liens for taxes not yet due, payable or being contested in good
faith, (c) Liens that that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect or would not
reasonably be expected to materially detract from the value or materially
interfere with any present or intended use of such property or assets or (d)
easements, zoning restrictions, rights-of-way and similar encumbrances on real
property imposed by law or arising in the ordinary course of business that do
not secure any monetary obligations and do not materially interfere with the
ordinary conduct of business of the Company or any of its
Subsidiaries. Except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (i) each
lease, sublease or license (each, a “Lease”) under which the
Company or any of its Subsidiaries leases, subleases or licenses any real
property is valid and in full force and effect and (ii) neither the Company nor
any of its Subsidiaries, nor to the Knowledge of the Company, any other party to
a Lease, has violated any provision of, or taken or failed to take any act
which, with or without notice, lapse of time, or both, would constitute a
default under the provisions of such Lease and, to the Knowledge of the Company,
neither the Company nor any of its Subsidiaries has received notice that it has
breached, violated or defaulted under any Lease.
33
Section
6.16. Intellectual
Property. Except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect: (i) the
Company and each of its Subsidiaries owns, or is licensed to use (in each case,
free and clear of any Liens), all Intellectual Property used in or necessary for
the conduct of its business as currently conducted; (ii) neither the Company nor
any of its Subsidiaries has infringed, misappropriated or otherwise violated the
Intellectual Property rights of any Person; (iii) to the Knowledge of the
Company, no Person has challenged, infringed, misappropriated or otherwise
violated any Intellectual Property right owned by and/or licensed to the Company
or its Subsidiaries; (iv) neither the Company nor any of its Subsidiaries has
received any written notice or otherwise has Knowledge of any pending claim,
action, suit, order or proceeding with respect to any Intellectual Property used
by the Company or any of its Subsidiaries or alleging that the any services
provided, processes used or products manufactured, used, imported, offered for
sale or sold by the Company or any of its Subsidiaries infringes,
misappropriates or otherwise violates any Intellectual Property rights of any
Person; (v) the consummation of the transactions contemplated by this Agreement
will not alter, encumber, impair or extinguish any Intellectual Property right
of the Company or any of its Subsidiaries or impair the right of Parent to
develop, use, sell, license or dispose of, or to bring any action for the
infringement of, any Intellectual Property right of the Company or any of its
Subsidiaries; and (vi) the Company and its Subsidiaries have implemented
reasonable backup and disaster recovery technology consistent with industry
practices.
Section
6.17. Taxes.
(a) All
material Tax Returns required by Applicable Law to be filed with any Taxing
Authority by, or on behalf of, the Company or any of its Subsidiaries have been
filed when due in accordance with all Applicable Law, and all such material Tax
Returns are true and complete in all material respects.
(b) The
Company and each of its Subsidiaries has paid (or has had paid on its behalf) or
has withheld and remitted to the appropriate Taxing Authority all Taxes due and
payable, or, where payment is not yet due, has established (or has had
established on its behalf and for its sole benefit and recourse) in accordance
with GAAP an adequate accrual for all material Taxes through the end of the last
period for which the Company and its Subsidiaries ordinarily record items on
their respective books.
(c) The income
and franchise Tax Returns of the Company and its Subsidiaries through the Tax
year ended December 31, 2002 have been examined and closed or are Tax Returns
with respect to which the applicable period for assessment under Applicable Law,
after giving effect to extensions or waivers, has expired.
34
(d) There is
no claim, audit, action, suit, proceeding or investigation now pending or, to
the Company’s Knowledge, threatened against or with respect to the Company or
its Subsidiaries in respect of any Tax.
(e) During the
two-year period ending on the date hereof, neither the Company nor any of its
Subsidiaries was a distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the Code.
(f) The
Company and each of its Subsidiaries has properly withheld and timely paid over
to the applicable Taxing Authority all material taxes that it is required to
withhold from amounts paid to any employee, partner, independent contractor,
creditor, shareholder or other person.
(g) There are
no Liens for material Taxes on any of the assets of the Company or any of its
Subsidiaries other than Liens for Taxes not yet due or Taxes being contested in
good faith in appropriate proceedings and for which adequate accruals and
reserves have been established in accordance with GAAP.
(h) Neither
the Company nor any of its Subsidiaries is, or has been, a party to any Tax
Sharing Agreement (other than an agreement exclusively among the Company and/or
its Subsidiaries) pursuant to which it will have any obligation to make any
payments in respect of Taxes after the Exchange Effective Time.
(i) Neither
the Company nor any of its Subsidiaries has participated in a “listed
transaction” within the meaning of Treasury Regulation Section
1.6011-4(b)(2).
(j) “Tax” means (i) any tax,
governmental fee or other like assessment or charge of any kind whatsoever
(including withholding on amounts paid to or by any Person), together with any
interest, penalty, addition to tax or additional amount imposed by any
Governmental Authority (a “Taxing Authority”) responsible
for the imposition of any such tax (domestic or foreign), and any liability for
any of the foregoing as transferee, (ii) in the case of the Company or any of
its Subsidiaries, liability for the payment of any amount of the type described
in clause (i) as a result of being or having been before the Exchange Effective
Time a member of an affiliated, consolidated, combined or unitary group, or a
party to any agreement or arrangement, as a result of which liability of the
Company or any of its Subsidiaries to a Taxing Authority is determined or taken
into account with reference to the activities of any other Person, and (iii)
liability of the Company or any of its Subsidiaries for the payment of any
amount as a result of being party to any Tax Sharing Agreement or with respect
to the payment of any amount imposed on any person of the type described in (i)
or (ii) as a result of any existing express or implied agreement or arrangement
(including an indemnification agreement or arrangement). “Tax Return” means any report,
35
return,
document, declaration or other information or filing required to be supplied to
any Taxing Authority with respect to Taxes, including information returns, any
documents with respect to or accompanying payments of estimated Taxes, or with
respect to or accompanying requests for the extension of time in which to file
any such report, return, document, declaration or other
information. “Tax
Sharing Agreements” means all existing agreements or arrangements
(whether or not written) binding the Company or any of its Subsidiaries that
provide for the allocation, apportionment, sharing or assignment of any Tax
liability or benefit, or the transfer or assignment of income, revenues,
receipts, or gains for the purpose of determining any Person’s Tax liability
(excluding any indemnification agreement or arrangement pertaining to the sale
or lease of assets or subsidiaries, and any agreement allocating income, gains,
deductions or losses of an entity in which the Company or any Subsidiary is
treated as a partner for tax purposes).
Section
6.18. Employees and Employee Benefits
Plans. (a) Section 6.18(a) of the
Company Disclosure Schedule contains a correct and complete list identifying
each Employee Plan. A copy of each Employee Plan (and, if applicable,
any related trust or funding agreements or insurance policies) and all
amendments thereto have been made available to Parent together with, if
applicable, the most recent annual report (Form 5500) and actuarial report
prepared in connection with such Employee Plan or trust.
(b) Except as
would not be reasonably expected to have, individually or in the aggregate, a
Company Material Adverse Effect, (i) no “reportable event,” within the meaning
of Section 4043 of ERISA, other than a “reportable event” which would not
reasonably be expected to give rise to any material liability for the Company or
any of its Subsidiaries, and no event described in Section 4062 or 4063 of
ERISA, has occurred in connection with any Employee Plan and (ii) either
the Company nor any ERISA Affiliate of the Company has engaged in, or is a
successor or parent corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA or has incurred, or reasonably
expects to incur, (x) any liability under Title IV of ERISA arising in
connection with the termination of, or a complete or partial withdrawal from,
any Employee Plan covered or previously covered by Title IV of ERISA or (y) any
liability under Section 4971 of the Code that in either case could become a
liability of the Company or any of its Subsidiaries or Parent or any of its
ERISA Affiliates after the Exchange Effective Time.
(c) With
respect to each Employee Plan subject to Section 412 of the Code: (i) no
“accumulated funding deficiency” has been incurred, (ii) neither Parent nor the
Company nor any of their respective Subsidiaries is reasonably expected to be
required to post security under ERISA with respect to the funding any such
Employee Plan and (iii) the Pension Benefit Guaranty Corporation has
36
not
instituted or threatened to institute proceedings for the termination of any
such Employee Plan.
(d) Neither
the Company nor any of its ERISA Affiliates nor any predecessor thereof
contributes to (or has any obligation to contribute to), or has in the past six
years contributed to (or had any obligation to contribute to), any multiemployer
plan, as defined in Section 3(37) of ERISA.
(e) Each
Employee Plan which is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter, or has pending or has time
remaining in which to file an application for such determination, from the
Internal Revenue Service, and the Company is not aware of any reason why any
such determination letter should be revoked or not be reissued. The Company has
made available to Parent copies of the most recent Internal Revenue Service
determination letter with respect to each such Employee Plan. Each Employee Plan
has been maintained in substantial compliance with its terms and with the
requirements prescribed by any and all Applicable Laws, including ERISA and the
Code, which are applicable to such Employee Plan.
(f) The
consummation of the transactions contemplated by this Agreement will not (either
alone or together with any other event) entitle any current or former employee,
director or independent contractor of the Company or any of its Subsidiaries to
severance pay or accelerate the time of payment or vesting or trigger any
payment of funding (through a grantor trust or otherwise) of compensation or
benefits under or increase the amount payable or trigger any other material
obligation, requirement or restriction pursuant to any Employee
Plan. There is no contract, plan or arrangement (written or
otherwise) covering any employee or former employee of the Company or any of its
Subsidiaries that, individually or collectively, would entitle such employee or
former employee to any material payment or benefit as a result of the
transactions contemplated hereby that would not be deductible pursuant to the
terms of Section 280G of the Code.
(g) No
officer, employee, director or consultant of the Company or any of its
Subsidiaries is entitled to receive any tax gross-up, indemnity or similar
payment from the Company or any of its Subsidiaries as a result of the
imposition of any income tax or excise tax under Section 409A of the
Code.
(h) Neither
the Company nor any of its Subsidiaries has any liability in respect of any
post-retirement health, medical or life insurance benefits for retired, former
or current employees of the Company or its Subsidiaries except as required to
avoid excise tax under Section 4980B of the Code.
37
(i) Except as
required by Applicable Law, there has been no amendment to, written
interpretation of or announcement (whether or not written) by the Company or any
of its Affiliates relating to, or change in employee participation or coverage
under, any employee benefit plan which would increase materially the expense of
maintaining such employee benefit plan above the level of the expense incurred
in respect thereof for the fiscal year ended as of the Company Balance Sheet
Date.
(j) All
material contributions and payments accrued under each Employee Plan, determined
in accordance with prior funding and accrual practices, have been discharged and
paid on or prior to the date hereof, or to the extent not paid, have been
reflected as a liability on the Company Balance Sheet in accordance with
GAAP.
(k) Neither
the Company nor any of its Subsidiaries is party to any effective or pending
collective bargaining agreement or similar labor agreement covering employees or
former employees of the Company or any of its Subsidiaries. Except as would not
be reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect, the Company and its Subsidiaries have substantially
complied with all Applicable Laws relating to labor and employment, including
those relating to wages, hours, collective bargaining, unemployment
compensation, worker’s compensation, equal employment opportunity, age and
disability discrimination, immigration control, employee classification,
information privacy and security, payment and withholding of taxes and
continuation coverage with respect to group health plans. Each employee,
director and independent contractor of the Company and its Subsidiaries is
principally employed or engaged in the United States.
(l) Since the
Company Balance Sheet Date, neither the Company nor any of its Subsidiaries has
effectuated or announced (i) a “plant closing” (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of the Company or any of its
Subsidiaries, (ii) a “mass layoff” (as defined in the WARN Act) or (iii) such
other transaction, layoff, reduction in force or employment terminations
sufficient in number to trigger application of any similar Applicable
Law.
38
any
Environmental Laws; (ii) the Company and its Subsidiaries have all Environmental
Permits necessary for their operations to comply with all applicable
Environmental Laws and are in compliance with the terms of such permits; and
(iii) the operations of the Company and its Subsidiaries are in compliance with
the terms of applicable Environmental Laws.
(b) Neither
the Company nor any of its Subsidiaries owns, leases or operates any real
property or conducts any operations in New Jersey or Connecticut such that the
consummation of the transactions contemplated hereby would require material
filings to be made or material actions to be taken pursuant to the New Jersey
Industrial Site Recovery Act or the “Connecticut Property Transfer Law”
(Sections 22a 134 through 22 134e of the Connecticut General
Statutes).
(c) For
purposes of this Section 6.19, the terms “Company” and “Subsidiaries” shall include
any entity that is, in whole or in part, a predecessor of the Company or any of
its Subsidiaries.
Section
6.20. Material
Contracts. (a) Neither the Company nor any of its Subsidiaries
is a party to or bound by any contract, arrangement, lease, commitment or
understanding (whether written or oral) (i) that is a “material contract” (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the Company SEC Reports filed prior to the date
hereof, (ii) that contains (A) any non-competition or exclusive dealing
agreement, or any other agreement or obligation which purports to limit or
restrict in any respect the ability of the Company, the Surviving Corporation or
any of their Subsidiaries or their businesses or, following consummation of the
Transaction and the other transactions contemplated hereby, Parent or its
Affiliates, to solicit customers or the manner in which, or the localities in
which, all or any portion of the business of the Company or its Subsidiaries or,
following consummation of the transactions contemplated by this Agreement,
Parent or its Affiliates, is or would be conducted or (B) any agreement that
grants any right of first refusal or right of first offer or similar right or
that limits or purports to limit the ability of the Company or any of its
Subsidiaries or, following consummation of the Transaction, Parent or its
Affiliates, to own or operate any assets or business, (iii) containing a “most
favored nation” clause or other similar term providing preferential pricing or
treatment to a party (other than the Company or its Subsidiaries) that is
material to the Company or its Subsidiaries, (iv) between the Company or any of
its Subsidiaries, on the one hand, and any Affiliate, director or officer (or,
to the Company’s Knowledge, any of their respective Affiliates), on the other
hand, other than (A) contracts between the Company and any of its Subsidiaries,
(B) contracts among Subsidiaries of the Company and (C) contracts with Parent or
its Affiliates or (v) that, upon the execution, delivery or
39
performance
by the Company of this Agreement or the consummation of any of the transactions
contemplated hereby, requires any consent or other action by any Person under,
constitutes a default, or an event that, with or without notice or lapse of time
or both, would constitute a default, under, or causes or permits the
termination, cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which the Company or any of its
Subsidiaries is entitled and that is material to the business of the Company and
its Subsidiaries, taken as a whole. Each contract, arrangement,
commitment or understanding of the type described in this Section, whether or
not set forth in the Company Disclosure Schedule, is referred to as a “Material
Contract”.
(b) Except for
breaches, violations or defaults which would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (i) each of
the Material Contracts is valid and in full force and effect and (ii) neither
the Company nor any of its Subsidiaries, nor to the Company’s Knowledge any
other party to a Material Contract, has violated any provision of, or taken or
failed to take any action which, with or without notice, lapse of time, or both,
would constitute a default under the provisions of such Material Contract, and
neither the Company nor any of its Subsidiaries has received notice that it has
breached, violated or defaulted under any Material Contract.
Section
6.21. Insurance. The
Company and its Subsidiaries have in full force and effect the insurance
coverage with respect to their business.
Section
6.22. Reports; Regulatory
Matters. The Company and its Subsidiaries have filed all
reports, forms, correspondence, registrations and statements, together with any
amendments required to be made with respect thereto (“Reports”), that they were
required to file since January 1, 2006 with (i) any domestic securities,
broker-dealer, investment adviser, and insurance agency self-regulatory
organization, (ii) the Federal Reserve Board, (iii) the OTS, (iv) the FDIC and
(v) any other federal or state governmental or regulatory agency or authority
with supervisory responsibility over the operations of the Company and its
Subsidiaries (the agencies and authorities identified in clauses (i) through
(v), inclusive, are, collectively, the “Regulatory Agencies”), and all
other reports and statements required to be filed by them since January 1, 2006,
including any report or statement required to be filed pursuant to the laws,
rules or regulations of the United States, any state, or any Regulatory Agency
and have paid all fees and assessments due and payable in connection therewith,
except where the failure to file such report, registration or statement or to
pay such fees and assessments would not reasonably be expected to, individually
or in the aggregate, have a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is subject to the jurisdiction of a
non-U.S. Governmental Authority. Any such Report and any statement
regarding the Company or any of
40
its
Subsidiaries made in any Report filed with or otherwise submitted to any
Regulatory Agency complied in all material respects with relevant legal
requirements, including as to content. Except for normal examinations
conducted by a Regulatory Agency in the ordinary course of the business of the
Companies and its Subsidiaries, there are no material pending proceedings
before, or, to the Knowledge of the Company, material investigations by, any
Regulatory Agency into the business or operations of the Company or any of its
Subsidiaries. Except as have been previously disclosed to the Company
Board, there are no unresolved violations, criticisms, or exceptions by any
Regulatory Agency with respect to any report or statement relating to any
examinations of the Company or any of its Subsidiaries, except for any such
violations, criticisms or exceptions are not, individually or in the aggregate,
material.
Section
6.23. Agreements With
Regulatory Authorities. Except as is not material, neither the
Company nor any of its 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 since January 1, 2006 has been ordered to pay any civil penalty
by, or is a recipient of any supervisory letter from, or has outstanding any
board resolutions adopted 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 (each, whether or not
set forth in the Company Disclosure Schedule, a “Regulatory Agreement”), nor
has the Company nor any of its Subsidiaries been advised since January 1, 2006
by any Regulatory Agency or other Governmental Entity that it is considering
issuing or requiring any such Regulatory Agreement.
Section
6.24. Investment
Securities. Except as would not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect, (i)
the Company and its Subsidiaries each has good and marketable title to all
securities held by it (except securities sold under repurchase agreements or
held in any fiduciary or agency capacity) free and clear of any Lien, except to
the extent such securities are pledged in the ordinary course of business to
secure obligations of the Company or its Subsidiaries and except for such
defects in title or Liens that would not be material to the Company and its
Subsidiaries taken as a whole and (ii) such securities are valued on the books
of the Company and its Subsidiaries in accordance with GAAP.
Section
6.25. Derivative
Instruments. Except as would not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect, (i)
all Derivative Transactions (as herein defined) were entered into in the
ordinary course of business consistent with past practice and in accordance with
41
prudent
banking practices and applicable rules, regulations and policies of any
Regulatory Agency and other policies, practices and procedures employed by the
Company and its Subsidiaries and with counterparties believed at the time to be
financially responsible and are legal, valid and binding obligations of the
Company or one of its Subsidiaries enforceable against it in accordance with
their terms (except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies), and are in full force and effect, (ii)
the Company and its Subsidiaries have duly performed their obligations under the
Derivative Transactions to the extent required, and (iii) to the Knowledge of
the Company, there are no breaches, violations or defaults or allegations or
assertions of such by any party thereunder. As used herein, “Derivative Transactions” means
any swap transaction, option, warrant, forward purchase or sale transaction,
futures transaction, cap transaction, floor transaction or collar transaction
relating to one or more currencies, commodities, bonds, equity securities,
loans, interest rates, prices, values, or other financial or non-financial
assets, credit-related events or conditions or any indexes, or any other similar
transaction or combination of any of these transactions, including
collateralized any debt or equity instruments evidencing or embedding any such
types of transactions, and any related credit support, collateral or other
similar arrangements related to such transactions.
Section
6.26. Finders’
Fees. Except for the financial advisors set forth in the
Company Disclosure Schedules, a copy of whose engagement agreements have been
provided to Parent, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of the
Company or any of its Subsidiaries who might be entitled to any fee or
commission from the Company or any of its Affiliates in connection with the
transactions contemplated by this Agreement.
Section
6.27. Opinion of Financial
Advisor. The Company has received the opinion of Barclays,
financial advisor to the Company, to the effect that, as of the date of this
Agreement, the Exchange Ratio is fair to the shareholders of the
Company (other than Parent and its Affiliates) from a financial point of view
under the circumstances applicable to the Company as of the date
hereof.
Section
6.28. Antitakeover Statutes and Rights
Agreement. (a) The Company has taken all action necessary to
exempt the Voting Agreement, this Agreement, the Transaction and the other
transactions contemplated by each of the foregoing from any Takeover Statute,
and, accordingly, no Takeover Statute applies or purports to apply to
any such transactions.
(b) The
Company has taken all action necessary to render the provisions of Articles 11
and 16 of the Charter inapplicable to, or otherwise consistent with the Voting
Agreement, this Agreement, the Transaction and the other transactions
42
contemplated
by each of the foregoing, and unable to prevent Parent from exercising its
rights under this Agreement or the Voting Agreement or making it more difficult
to obtain the approval of the Company Board or the shareholders of the Company
than it would be in the absence of such provision.
(c) The
Company has taken all action necessary to render the rights issued pursuant to
the terms of the Rights Agreement inapplicable to the Voting Agreement, this
Agreement, the Transaction and the other transactions contemplated by each of
the foregoing.
(d) The
Company has taken all actions necessary so that, to the extent such actions are
within the Company’s or the Company Board’s powers, any other Defensive Measures
are rendered inapplicable to, or are otherwise consistent with, and do not
prevent Parent from exercising its rights under, the Voting Agreement, this
Agreement, the Transaction and the other transactions contemplated by each of
the foregoing.
Section
6.29. Allowance For
Losses. The allowance for loan losses reflected, and to be
reflected, in the Reports each has been, and will be, established in compliance
with the requirements of all applicable regulatory criteria, and the allowance
for loan losses shown, and to be shown, on the balance sheets contained in the
Company Qualifying SEC Reports have been, and will be, established in compliance
with the applicable requirements of GAAP.
Section
6.30. Related Party
Transactions. Except as disclosed in the Company SEC Documents
or in the footnotes to the Company Qualifying SEC Reports, the Company is not a
party to any material transaction (including any loan or other credit
accommodation, but excluding deposits in the ordinary course of business) with
any Affiliate of the Company (except (i) a Subsidiary of the Company or (ii)
Parent and its Subsidiaries). All such transactions (a) were made in
the ordinary course of business, (b) were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other Persons, and (c) did not involve more than
the normal risk of collectibility or present other risks or unfavorable
features. No loan or credit accommodation to any Affiliate of the
Company is presently in default or, during the three-year period prior to the
date of this Agreement, has been in default or has been restructured, modified
or extended. Neither the Company nor the Bank has been notified that
principal and interest with respect to any such loan or other credit
accommodation will not be paid when due or that the loan grade classification
accorded such loan or credit accommodation by the Bank is
inappropriate.
Section
6.31. Loans. Except
as would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, each
43
loan
reflected as an asset in the Company Qualifying SEC Reports (a) was originated,
underwritten, approved, documented and periodically approved in all material
respects in accordance with prudent lending standards generally accepted in the
banking business and, to the Knowledge of the Company, after appropriate
inquiry, did not deviate in any material respect from the Company’s policies and
procedures, and (b) is the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditors’ rights and to general equity principles
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to the affecting creditors’ rights or by general equity
principles). Each extension of credit made by the Bank to an
“insider” (as such term is defined in the Federal Reserve Board’s Regulation O)
of the Bank or the Company complies with the Federal Reserve Board’s Regulation
O, as made applicable to the Bank by 12 C.F.R. § 563.43.
Section
6.32. Anti-money Laundering
and Customer Information Security. Neither the Company nor the
Bank is aware of, has been advised of, or has reason to believe that any facts
or circumstances exist, which would cause the Bank (a) to be deemed to be
operating in violation in any respect of the federal Bank Secrecy Act, as
amended, and its implementing regulations (31 C.F.R. Part 103), the USA Patriot
Act of 2001, Public Law 107-56 (the “USA Patriot Act”), and the
regulations promulgated thereunder, any order issued with respect to anti-money
laundering by the U.S. Department of the Treasury’s Office of Foreign Assets
Control, or any other applicable anti-money laundering statute, rule or
regulation, or (b) to be deemed not to be in satisfactory compliance in any
respect with the applicable privacy of customer information requirements
contained in any federal and state privacy laws and regulations, including,
without limitation, in Title V of the Xxxxx-Xxxxx-Xxxxxx Act of 1999 and
regulations promulgated thereunder, as well as the provisions of the information
security program adopted by the Bank pursuant to 12 C.F.R. Part
364. The Bank Board of Directors has adopted and implemented an
anti-money laundering program that contains adequate and appropriate customer
identification certification procedures that has not been deemed ineffective in
any material respects by any Regulatory Agency and that meets the requirements
in all material respects of Section 352 of the USA Patriot Act and the
regulations thereunder.
Section
6.33. Credit Card
Accounts. Neither the Company nor any of its Subsidiaries
originates, maintains or administers credit card accounts.
Section
6.34. No
Reliance. Notwithstanding anything contained in this Agreement
to the contrary, the Company acknowledges and agrees that (a) neither
Parent nor any Person on behalf of Parent is making any representations or
44
warranties
whatsoever, express or implied, beyond those expressly made by Parent in Article 7 and (b) the Company has not been
induced by, or relied upon, any representations, warranties or statements
(written or oral), whether express or implied, made by any Person, that are not
expressly set forth in Article 7 of this
Agreement. Without limiting the generality of the foregoing, the
Company acknowledges that no representations or warranties are made with respect
to any projections, forecasts, estimates, budgets or information as to prospects
with respect to Parent and its Subsidiaries that may have been made available to
the Company or any of its Representatives.
ARTICLE
7
Subject to
Section 13.06, except as (a) disclosed in any
Parent Qualifying SEC Report (other than (i) any information that is contained
in the “Risk Factors” section of such Parent Qualifying SEC Reports, except to
the extent such information consists of factual historical statements, and (ii)
any forward-looking statements, or other statements that are similarly
predictive or forward-looking in nature, contained in such Parent Qualifying SEC
Reports) if the relevance of such disclosure as an exception to one or more of
the following representations and warranties is reasonably apparent, or (b) set
forth in the Parent Disclosure Schedule, Parent represents and warrants to the
Company that:
Section
7.02. Capitalization. As
of the date hereof, the issued share capital of Parent is €3,197,623,761.50,
represented by 6,395,247,523 shares of capital stock, each of 50 euro-cents
nominal value, fully subscribed and paid up. All outstanding shares
of the capital stock of Parent (and all of the shares to be delivered as Share
Consideration) have been, and all shares that may be issued pursuant to any
employee stock option or other compensation plan or arrangement will be prior to
issuance in accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and nonassessable and not subject to any
45
preemptive
rights arising out of Spanish law, the Parent Bylaws or any contract binding
upon Parent, with no personal liability attaching to the ownership thereof. As
the date of this Agreement, there are no bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
Parent shareholders may vote (“Voting Debt”) other than
October 2007 €7 billion Valores mandatorily convertible into Parent Ordinary
Shares. As of the date of this Agreement, except pursuant to this
Agreement, Parent does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, rights, commitments or agreements of
any character calling for the issuance of Parent Ordinary Shares, Voting Debt or
any other equity securities of Parent or any securities representing the right
to have any Parent Ordinary Shares issued, Voting Debt or any other equity
securities of Parent issued except Parent Ordinary Shares that may be issued
pursuant to (i) customary resolutions passed by the Parent’s shareholders
meeting under sections 153.1.a) and 153.1.b) of SCL which are currently
outstanding for total nominal value of, respectively, €1,563,574,144.5 and
€375,000,000, (ii) pursuant to share option schemes of Parent or any of its
Subsidiaries, or (iii) due to the Parent Ordinary Shares issued following the
conversion of securities convertible into Parent Ordinary Shares which were
outstanding as at the date of this Agreement (including the October 2007 €7
billion Valores mandatorily convertible into Parent Ordinary
Shares).
46
meeting of
the Company’s shareholders to be held in connection with this Agreement and the
Transaction and the other transactions contemplated hereby and the filings of
the Schedule 13E-3 and the filing and declaration of effectiveness of the F-4 in
which the Proxy Statement will be included as a prospectus of Parent, (4) the
filing of articles of merger and articles of share exchange and other
appropriate merger and share exchange documents required by the VSCA, the
issuance by the Virginia State Corporation Commission of the certificate of
merger and certificate of share exchange pursuant to the VSCA, and other
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, and the filing of articles of merger with
respect to the Reincorporation Merger with the Department of State of the
Commonwealth of Pennsylvania, (5) such filings and approvals as are required to
be made or obtained under the securities or “Blue Sky” laws of various states
and other jurisdictions in connection with the issuance of the Parent Ordinary
Shares pursuant to this Agreement and approval of listing of such Parent
Ordinary Shares and Parent ADSs on the NYSE, (6) the registration with and
verification by the NSEC of a prospectus (folleto) relating to the Share
Exchange (the “Prospectus”) and all other
necessary filings with the Spanish Stock Exchanges, and with all other stock
exchanges in which Parent Ordinary Shares are listed, which are necessary for
admission to listing of Parent Ordinary Shares, (7) the filing of the Deed of
execution of the Capital Increase against contribution in kind, the filing of
the necessary auditors’ report and the filing of the necessary report of the
expert designated by the Commercial Registry relating to the fair value of the
assets acquired by Parent in the Transaction, (8) required approvals of the Bank
of Spain and the Spanish Direccion General de Seguros, (9) filings of
applications and notices with, and receipt of approvals or nonobjections from
the FINRA and (10) any actions or filings the absence of which would not be
reasonably expected to have, individually or in the aggregate, a Parent Material
Adverse Effect.
47
the
holders of a majority of the Parent Ordinary Shares present in person or
represented by proxy at a duly constituted meeting of holders of Parent Ordinary
Shares at which meeting, if on first call, a quorum of at least one-half of the
issued share capital is present or represented by proxy or, if on second call, a
quorum of at least one-quarter of the issued share capital is present or
represented by proxy (provided, however, if, on second call, less than one-half
of the issued share capital is present or represented by proxy, the matters
being voted upon must be adopted by at least two-thirds of the share capital
present or represented at such meeting) (“Parent Shareholder
Approval”). No other corporate proceedings on the part of
Parent are necessary to approve this Agreement and to consummate the
transactions contemplated hereby other than the resolution of the Parent Board
executing the Capital Increase, which resolution shall be adopted following
receipt of the Parent Shareholder Approval in accordance with the provisions
hereof and of the necessary report of the expert designated by the Commercial
Registry relating to the fair market value of the assets to be accepted by
Parent in the Share Exchange and once the other actions stated in this Agreement
to be taken prior to such resolution have been taken.
(b) The
execution, delivery and performance by Parent of this Agreement and the
consummation of the Transaction and the other transactions contemplated hereby
do not and will not (i) contravene, conflict with, or result in a violation or
breach of any provision of the organizational documents of Parent or any Parent
Subsidiaries, (ii) assuming compliance with the matters referred to in Section 7.04 and Section
7.05(a), contravene, conflict with, or result in any violation or breach of
any provision of any Applicable Law, (iii) assuming compliance with the matters
referred to in Section 7.04 and Section 7.05(a), require any consent or other action
by any Person under, constitute a default, or an event that, with or without
notice or lapse of time or both, would constitute a default, under, or cause or
permit the termination, cancellation, acceleration or other change of any right
or obligation or the loss of any benefit to which Parent or any Parent
Subsidiary is entitled under any provision of any agreement or other instrument
binding upon Parent or any of its Subsidiaries or (iv) result in the creation or
imposition of any Lien on any asset of the Parent or any of its Subsidiaries,
with only with such exceptions as, in the case of clauses (ii) through (iv),
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
48
amendment
or supplement thereto is first mailed to shareholders of the Company and at the
time such shareholders vote on adoption of this Agreement, and (ii) in the case
of any Company Disclosure Document other than the Proxy Statement, at the time
of the filing of such Company Disclosure Document or any supplement or amendment
thereto and at the time of any distribution or dissemination
thereof. Each document required to be filed by the Parent with the
SEC or required to be distributed or otherwise disseminated in the U.S. to the
Parent’s shareholders in connection with the transactions contemplated by this
Agreement and any amendments or supplements thereto, when filed, distributed or
disseminated, as applicable, will comply as to form in all material respects
with the applicable requirements of the 0000 Xxx.
(b) The
Schedule 13E-3, when filed and distributed or disseminated, will comply as to
form in all material respects with the applicable requirements of the 1934 Act
and, at the time of such filing will not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading; provided that this
representation and warranty will not apply to statements or omissions included
in the Schedule 13E-3 based upon information furnished to Parent by the Company
or any of its Representatives specifically for use therein.
(c) The
information supplied by Parent for inclusion or incorporation by reference in
the F-4 will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading
provided that this representation and warranty will not apply to
statements or omissions included in the F-4 based upon information furnished to
Parent by the Company or any of its Representatives specifically for use
therein. The F-4 will comply as to form in all material respects with
the provisions of the 1933 Act.
Section
7.07. Financial
Statements. The financial statements of Parent and its
Subsidiaries included (or incorporated by reference) in the Parent SEC Documents
(including the related notes, where applicable, and including any preliminary
financial results for the quarter ended September 30, 2008 furnished to the SEC
on Form 6-K) (and the 2008 20-F, when filed, will) (i) fairly present in all
material respects the consolidated results of operations, cash flows and
consolidated financial position of Parent and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth
(subject in the case of unaudited statements to recurring year-end audit
adjustments normal in nature and amount) and (ii) have been prepared in
accordance with EU-IFRS (applied as required by the Bank of Spain under circular
4/2004) consistently applied during the periods involved, except, in each case,
as indicated in such statements or in
49
the notes
thereto, and, to the extent required by the 1933 Act or the 1934 Act, reconciled
to GAAP as noted therein during the periods involved.
Section
7.08. Finders’
Fees. Except for Xxxxxxx Xxxxx, X.X. Xxxxxx Securities Inc.,
Lazard and Xxxxxxx Xxxxx, whose fees and expenses will be paid by Parent, there
is no investment banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of Parent who might be entitled to
any fee or commission in connection with the transactions contemplated by this
Agreement.
Section
7.09. No
Reliance. Notwithstanding anything contained in this Agreement
to the contrary, Parent acknowledges and agrees that (a) neither the
Company nor any Person on behalf of the Company is making any representations or
warranties whatsoever, express or implied, beyond those expressly made by the
Company in Article 6 and (b) Parent has not been induced by, or relied
upon, any representations, warranties or statements (written or oral), whether
express or implied, made by any Person, that are not expressly set forth in
Article 6 of this Agreement. Without limiting the generality of
the foregoing, Parent acknowledges that no representations or warranties are
made with respect to any projections, forecasts, estimates, budgets or
information as to prospects with respect to the Company and its Subsidiaries
that may have been made available to Parent or any of its
representatives.
Section
7.10. SEC Filings and the
Xxxxxxxx-Xxxxx Act. (a) The Parent has filed with or furnished
to the SEC, all reports, schedules, forms, statements, prospectuses,
registration statements and other documents required to be filed or furnished by
the Parent since January 1, 2007 (collectively, together with any exhibits and
schedules thereto and other information incorporated therein, the “Parent SEC
Documents”). As of its filing date (and as of the date of any
amendment), each Parent SEC Document complied, as to form in all material
respects with the applicable requirements of the 1933 Act and the 1934 Act, as
the case may be. As of its filing date (or, if amended or superseded
by a filing prior to the date hereof, on the date of such filing), each Parent
SEC Document filed pursuant to the 1934 Act did not, and each Parent SEC
Document filed subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
(b) Based on
its evaluation of the effectiveness of the design and operation of Parent’s
disclosure controls and procedures (as defined in Rule 13a-15(f) under the 1934
Act), Parent concluded that, as of December 31, 2007, such disclosure
controls and procedures were effective in ensuring that information that
50
is
required to be disclosed pursuant to the 1934 Act was recorded and reported
within the time periods specified in the SEC’s rules and
regulations.
(c) Based on
Parent’s evaluation of the effectiveness of its internal control over financial
reporting as defined in Rule 13a-15(f) of the 1934 Act as of December 31, 2007,
Parent believes that as of such date, its internal control over financial
reporting was effective.
(d) The Parent
has complied in all material respects with the applicable listing and corporate
governance rules and regulations of the NYSE.
(e) Since
January 1, 2007, each of the principal executive officer and principal financial
officer of the Parent (or each former principal executive officer and principal
financial officer of the Parent, as applicable) have made all certifications
required by Rule 13a-14 and 15d-14 under the 1934 Act and Sections 302 and 906
of the Xxxxxxxx-Xxxxx Act and any related rules and regulations promulgated by
the SEC and the NYSE, and the statements contained in any such certifications
are complete and correct.
Section
7.11. Litigation. There
is no action, suit, investigation or proceeding pending or, to the Knowledge of
the Parent, threatened against or affecting, the Parent, or any of its
Subsidiaries, or any of their respective properties before (or, in the case of
threatened actions, suits, investigations or proceedings, that would be before)
or by any Governmental Authority or arbitrator or a Spanish governmental
authority or abitrator, that would reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect.
ARTICLE
8
Covenants
of the Company
The
Company agrees that:
Section
8.01. Conduct of the
Company. From the date hereof until the Exchange Effective
Time, the Company shall, and shall cause each of its Subsidiaries to, conduct
its business in the ordinary course consistent with past practice and use its
reasonable best efforts to (i) preserve intact its present business
organization, (ii) maintain in effect all Permits, (iii) keep available the
services of its directors, officers, employees and (iv) maintain satisfactory
relationships with its customers, lenders, suppliers and others having
significant business relationships with it. Without limiting the
generality of the foregoing, except as expressly contemplated by this Agreement
or as set forth in Section 8.01
51
of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any of
its Subsidiaries to:
(a) amend its
articles of incorporation, bylaws or other similar organizational documents
(whether by merger, consolidation or otherwise);
(b) (i) split,
combine or reclassify any shares of capital stock, (ii) declare, set aside or
pay any dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of capital stock or (iii) redeem, repurchase
or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any
Company Securities or any Company Subsidiary Securities;
(c) (i) issue,
deliver or sell, or authorize the issuance, delivery or sale of, any shares of
any Company Securities or Company Subsidiary Securities, other than the issuance
of (A) any shares of the Company Stock upon the exercise of Company Stock
Options that are outstanding on the date of this Agreement in accordance with
the terms of those Company Stock Options on the date of this Agreement and (B)
any Company Subsidiary Securities to the Company or any other Subsidiary of the
Company or (ii) amend any term of any Company Security or any Company Subsidiary
Security (in each case, whether by merger, consolidation or
otherwise);
(d) incur any
capital expenditures or any obligations or liabilities in respect thereof,
except for (i) capital expenditures commitments outstanding on the date of this
Agreement and (ii) individual capital expenditure items inferior to
$250,000;
(e) acquire
(by merger, consolidation, acquisition of stock or assets or otherwise),
directly or indirectly, any assets, securities, properties, interests or
businesses, other than assets acquired in order to maintain and operate the
business of the Company and its Subsidiaries in the ordinary course of business
of the Company and its Subsidiaries in a manner that is consistent with past
practice;
(f) (i) sell,
lease or otherwise transfer, or create or incur any Lien on, the Company’s or
its Subsidiaries’ assets, securities, properties, interests or businesses, other
than in the ordinary course of business consistent with past practice or (ii)
permit to lapse any material Intellectual Property owned by the Company or any
of its Subsidiaries;
(g) make any
loans or advances other than in the ordinary course of business consistent with
past practice;
(h) make any
investments other than in (i) United States Treasury bonds, (ii) debt securities
issued or guaranteed by an agency of the United States
52
Government,
and (iii) debt securities issued by the Federal National Mortgage Association
(FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC), in each case with
a final maturity of less than 2 years from the date of any such investment,
;
(i) create,
incur, assume, or otherwise be liable with respect to any indebtedness for
borrowed money or guarantees thereof, other than in the ordinary course of
business and in amounts and on terms consistent with past
practices;
(j) (i) enter
into any contract, agreement, arrangement or understanding that would constitute
a Material Contract if it had been entered into as of the date hereof or (ii)
terminate, amend or modify in any material respect, any Material Contract or
otherwise waive, release or assign any material rights, claims or benefits of
the Company or any of its Subsidiaries;
(k) (i) with
respect to any current or former director, officer, employee or independent
contractor of the Company or any of its Subsidiaries, (A) grant or increase any
severance or termination pay to (or amend any existing severance or termination
arrangement with), (B) enter into any employment, consultancy, deferred
compensation, severance, change in control, retention, transaction bonus or
incentive, retirement or other similar agreement or arrangement (or amend any
such existing agreement or arrangement) or (C) except for increases in the
ordinary course consistent with past practice with respect to any employee of
the Company or any of its Subsidiaries whose annual base salary does not exceed
$150,000, increase compensation, bonus or other benefits payable to such
employee, or (ii) establish, adopt or amend (except as required by Applicable
Law) any collective bargaining, bonus, profit-sharing, thrift, pension,
retirement, deferred compensation, equity-based compensation or other benefit
plan or arrangement covering any director, officer, employee or independent
contractor of the Company or any of its Subsidiaries; provided that, the Company
shall be permitted, prior to the Exchange Effective Time, to pay short-term
incentive bonuses to employees on the same basis as provided in Section 9.02(d) hereof.
(l) change the
Company’s methods of accounting, except as required by concurrent changes in
GAAP or in Regulation S-X of the 1934 Act, as agreed to by its independent
public accountants;
(m) (i)
settle, or offer or propose to settle, (A) any material litigation,
investigation, arbitration, proceeding or other claim involving or against the
Company or any of its Subsidiaries, (B) any shareholder litigation or dispute
against the Company or any of its officers or directors or (C) any litigation,
arbitration, proceeding or dispute that relates to the transactions contemplated
hereby or (ii) enter into any consent order or decree;
53
(n) make or
change any material Tax election, change any annual Tax accounting period, adopt
or change any method of material Tax accounting, materially amend any Tax
Returns or file claims for material Tax refunds, enter into any material closing
agreement, settle any material Tax claim, audit or assessment, or surrender any
right to claim a material Tax refund, offset or other reduction in Tax
liability;
(o) materially
restructure or materially change its investment securities portfolio or its gap
position except in the ordinary course of business consistent with past practice
(and in consultation with Parent), through purchases, sales or otherwise, or the
manner in which the portfolio is classified or reported;
(p) enter into
any new line of business, exit any existing line of business, or materially
change its lending, investment, underwriting, risk and asset liability
management and other banking and operating policies, except as required by
Applicable Law;
(q) participate
in the Troubled Asset Relief Program administered by the United States
Department of the Treasury pursuant to the Emergency Economic Stabilization Act
of 2008 or in any plan, order or proposal of, or offer by, any Governmental
Authority that would result in the issuance by the Company or any of its
Subsidiaries of any capital stock, voting or non-voting securities (including
warrants and debt securities), or Company Securities to a Governmental Authority
or any other party or that would otherwise interfere with the ability of Parent
to, directly or indirectly, control one hundred percent of the voting power of
the Company and its Subsidiaries and one hundred percent of the outstanding
shares of Company Virginia Sub Common Stock following the Closing Date;
or
Section
8.02. Access to
Information. (a) From the date hereof until the Exchange
Effective Time and subject to Applicable Law and the Confidentiality Agreement
dated as of October 10, 2008 between the Company and Parent (the “Confidentiality Agreement”),
the Company shall (i) give Parent and its officers, directors, employees,
investment bankers, attorneys, accountants, consultants or other agents or
advisors (“Representatives”) full access
to the offices, properties, books and records of the Company and its
Subsidiaries, (ii) furnish to Parent and its Representatives such financial and
operating data and other information as such Persons may reasonably request and
(iii) instruct the Representatives of the Company and its Subsidiaries to
cooperate with Parent in its investigation of the Company and its
Subsidiaries. Any investigation pursuant to this Section shall be
conducted in such manner as not to interfere unreasonably with the conduct of
the business of the Company and its Subsidiaries. No
54
information
or knowledge obtained by Parent in any investigation pursuant to this Section
shall affect or be deemed to modify any representation or warranty made by the
Company hereunder.
(b) From the
date hereof until the Exchange Effective Time, Parent shall be entitled to
appoint a representative of Parent (each, a “Parent Representative”) to
each of the Bank’s Credit Committee, the Bank’s Assets and Liabilities
Committee, and each other committee of the Bank functioning at the operational
level and with a mandate covering the areas of operations addressed in clauses
(d), (e), (f), (g), (h), (i), (j), (k), (o) and (p) in Section 8.01 above (each,
a “Company
Committee”). Each such Parent Representative shall be readily
available for meetings of the applicable Company Committee. The
Company shall furnish or cause to be furnished to each Parent Representative
written notice at least two Business Days prior to each meeting of the
applicable Company Committee of such meeting. Each Parent
Representative shall be entitled to (i) attend every meeting of the applicable
Company Committee, whether in person or telephonically, (ii) call meetings of
the applicable Company Committee, and (iii) object to any decision of the
applicable Committee, which decision shall thereafter require the approval of
the Chief Executive Officer or the Interim Chief Executive Officer of the
Company before being adopted or executed. Parent’s rights under this
Section 8.02(b) shall be in addition to, and not in
limitation of, any of its rights under Section
8.01.
Section
8.03. No
Solicitation; Change of
Recommendation. (a) General
Prohibitions. From and after the date of this Agreement until
the earlier of the Exchange Effective Time and the termination of this Agreement
in accordance with its terms, neither the Company nor any of its Subsidiaries
shall, nor shall the Company or any of its Subsidiaries authorize or permit any
of its or their Representatives to, directly or indirectly, (i) solicit,
initiate, or take any action to facilitate or encourage the submission of any
Acquisition Proposal by a Third Party or otherwise initiate any process that is
intended to, or is reasonably likely to lead to the making of an Acquisition
Proposal by any Third Party, (ii) enter into or participate in any discussion or
negotiations with, furnish any information relating to the Company or any of its
Subsidiaries or afford any access to the business, properties, assets, books or
records of the Company or any of its Subsidiaries to, otherwise cooperate in any
way with, or knowingly assist, participate in, facilitate or encourage in any
manner any effort by any Third Party that is seeking to make, or has made, an
Acquisition Proposal, (iii) fail to make, withdraw or modify in a manner adverse
to Parent the Company Board Recommendation (or recommend an Acquisition Proposal
made by a Third Party or take any action or make any statement inconsistent with
the Company Board Recommendation) (any of the foregoing in this clause (iii), an “Adverse Recommendation
Change”), (iv) grant to any Third Party any waiver under, or any release
from, any standstill or similar agreement concerning or relating to,
55
any
Defensive Measure or redeem, modify, repeal or otherwise diminish any Defensive
Measure other than for the benefit of Parent and its Affiliates or permit to
expire, fail to renew or otherwise fail to maintain in effect any Defensive
Measure, (v) exempt any transaction (except the transactions contemplated by
this Agreement) or Person (other then Parent or its Affiliates) from any
Takeover Statute, (vi) enter into any agreement in principle, letter of intent,
term sheet, merger agreement, purchase agreement, option agreement or other
similar instrument relating to an Acquisition Proposal or (vii) agree or commit
to take any of the actions described in this Section
8.03(a). It is agreed that any violation of the restrictions on
the Company set forth in this Section by any Representative of the Company or
any of its Subsidiaries shall be a breach of this Section by the
Company.
(b) Exceptions. Notwithstanding
Section 8.03(a), at any time prior to the
Reincorporation Effective Time,:
(i) following
receipt of an unsolicited bona
fide Acquisition Proposal that the Company Board determines in good
faith, after consultation with financial and legal advisors, constitutes or is
reasonably likely to result in, a Superior Proposal, the Company, directly or
indirectly through advisors, agents or other Representatives, may furnish
nonpublic information to, or enter into discussions with, any Third Party in
connection with such Acquisition Proposal by such Third Party if and only to the
extent that (A) the Company is not then in breach of its obligations under this
Section 8.03 and (B) prior to furnishing such
nonpublic information to, or entering into discussions or negotiations with,
such Third Party, the Company Board receives from such Third Party an executed
confidentiality agreement containing confidentiality and stand still provisions
that are not less restrictive on such Third Party than the Confidentiality
Agreement; provided
that all such information (to the extent that such information has not been
previously provided or made available to Parent) is provided or made available
to Parent, as the case may be, prior to or substantially concurrently with the
time it is provided or made available to such Third Party); and
(ii) the
Company Board may make an Adverse Recommendation Change, but only following
receipt of a Superior Proposal;
provided that, in each case
referred to in the foregoing clauses (i) and (ii) the Company Board may take
such action only if the Company Board determines in good faith, after
consultation with outside legal counsel, that such action is required by its
fiduciary duties under Pennsylvania Law, and, provided, further, that,
solely in the case of the foregoing clause (ii),
56
the Board
may not make such Adverse Recommendation Change unless (A) the Company promptly
notifies Parent in writing at least ten Business Days before taking such action
of its intention to do so, attaching (if such Adverse Recommendation Change is
in response to a receipt of a Superior Proposal) the most current version of the
proposed agreement under which such Superior Proposal is proposed to be
consummated and the identity of the Third Party making the Acquisition Proposal,
and (B) Parent does not propose, within 10 days after its receipt of such
written notification, proposed modifications to this Agreement or the terms of
the Transaction or otherwise provide information to the Company that in the
aggregate result in the transactions contemplated hereunder being at least as
favorable to the stockholders of the Company (other than Parent) as such
Superior Proposal (or description thereof).
In
addition, nothing contained herein shall prevent the Company Board from
complying with Rule 14e-2(a) under the 1934 Act with regard to an Acquisition
Proposal, so long as any action taken or statement made to so comply is
consistent with this Section 8.03 (provided that any such action
taken or statement made that relates to an Acquisition Proposal shall be deemed
to be an Adverse Recommendation Change unless the Company Board reaffirms the
Company Recommendation in such statement or in connection with such
action).
(c) Required
Notices. The Company Board shall not take any of the actions
referred to in Section 8.03(b) unless the Company
shall have delivered to Parent a prior written notice advising Parent that it
intends to take such action. In addition, the Company shall notify
Parent promptly (but in no event later than 24 hours) after receipt by the
Company (or any of its Representatives) of any Acquisition Proposal, any
indication that a Third Party is considering making an Acquisition Proposal or
any request for information relating to the Company or any of its Subsidiaries
or for access to the business, properties, assets, books or records of the
Company or any of its Subsidiaries by any Third Party that may be considering
making, or has made, an Acquisition Proposal. The Company shall
provide such notice orally and in writing and shall identify the Third Party
making, and the terms and conditions of, any such Acquisition Proposal,
indication or request, and shall promptly (but in no event later than 24 hours
after receipt) provide to Parent copies of all correspondence and written
materials sent or provided to the Company or any of its Subsidiaries that
describe any terms or conditions of any Acquisition Proposal (as well as written
summaries of any oral communications addressing such matters). After
the notification provided for in the preceding sentence, the Company shall
thereafter provide Parent, as promptly as practicable, with oral and written
notice setting forth all such information as is reasonably necessary to keep
Parent informed in all material respects of the status and details (including
material amendments or proposed material amendments) of any such Acquisition
Proposal, request or inquiry and shall promptly provide to
57
Parent a
copy of all written materials subsequently provided in connection with such
Acquisition Proposal, request or inquiry. Any material amendment to
any Acquisition Proposal will be deemed to be a new Acquisition Proposal for
purposes of the Company’s compliance with this Section
8.03(c).
(d) Definition of Superior
Proposal. For purposes of this Agreement, “Superior Proposal” means a
bona fide, unsolicited
written 100% Acquisition Proposal on terms that the Company Board determines in
good faith, after considering the advice of a financial advisor of nationally
recognized reputation and outside legal counsel and taking into account all
terms and conditions of the Acquisition Proposal, including, the value offered
to the Company’s shareholders, any break-up fees, expense reimbursement
provisions and conditions to consummation, any financing or capital provided or
to be provided by such Third Party and the certainty that the Acquisition
Proposal will be consummated, are more favorable than the Reincorporation Merger
and the Share Exchange to the constituencies and Persons the Company Board is
required to consider under the Charter and permitted to consider under
Applicable Law, in each case in the exercise of its fiduciary
duties.
(e) Obligation to Terminate
Existing Discussions, Etc. The Company shall, and shall cause
its Subsidiaries and its and their Representatives to, cease immediately and
cause to be terminated any and all existing activities, discussions or
negotiations, if any, with any Third Party and its Representatives conducted
prior to the date hereof with respect to any Acquisition
Proposal. The Company shall promptly request that each Third Party,
if any, that has executed a confidentiality agreement within the 24-month period
prior to the date hereof in connection with its consideration of any Acquisition
Proposal return or destroy all confidential information heretofore furnished to
such Person by or on behalf of the Company or any of its Subsidiaries (and all
analyses and other materials prepared by or on behalf of such Person that
contains, reflects or analyzes that information), and the Company shall provide
to Parent all certifications of such return or destruction from such other
Persons as promptly as practicable after receipt thereof. The Company
shall use its reasonable best efforts to secure all such certifications as
promptly as practicable. If any such Person fails to provide any
required certification within the time period allotted in the relevant
confidentiality agreement (or if no such period is specified, then within a
reasonable time period after the date hereof), then the Company shall use its
reasonable best efforts to secure its rights and ensure the performance of such
other party’s obligations thereunder as promptly as practicable.
Section
8.04. [Left Intentionally
Blank].
Section
8.05. Litigation. Without
otherwise limiting or altering any rights that Parent or its Affiliates may
have, the Company shall give Parent the
58
opportunity
to participate at Parent’s expense in the defense or settlement of any actual or
threatened litigation against the Company and/or its directors relating to this
Agreement, the Transaction or the other transactions contemplated hereunder,
including the Reincorporation Merger or the Share Exchange, and shall not agree
to any such settlement without Parent’s written consent.
Section
8.06. Company Virginia Sub
Shareholder Vote. Promptly following the organization of
Company Virginia Sub, the Company, as the sole shareholder of Company Virginia
Sub, will approve the Reincorporation Merger and the Share Exchange and waive
any right to dissent from the Reincorporation Merger and the Share Exchange for
all purposes of Section 13.1-729 et seq. of the VSCA such that the provisions of
such sections will not apply to this Agreement, the Transaction or any of the
other transactions contemplated hereby and Section 13.1-725 et seq. and Section
13.1-728.1 et seq. will not apply thereto.
Section
8.07. Joinder
Agreement. Promptly following the date hereof, the Company
shall form Company Virginia Sub as a Virginia corporation under and in
accordance with the VSCA, and the Company shall cause Company Virginia Sub to,
and Company Virginia Sub shall, sign a joinder agreement to this Agreement and
be bound hereunder.
Section
8.08. Structure of the
Transaction. Parent may at any time change the method of
effecting the Transaction if and to the extent requested by Parent and consented
to by the Company (such consent not to be unreasonably withheld); provided, however, that no
such change shall (i) alter or change the amount or kind of the Share
Consideration provided for in this Agreement, (ii) adversely affect the Tax
treatment of the Transaction with respect to the Company’s or Company Virginia
Sub’s stockholders or (iii) materially impede or delay, or make less likely, the
consummation of the Transaction.
ARTICLE
9
Covenants
of Parent
Parent
agrees that:
Section
9.01. Director and Officer
Liability. Parent shall cause the Surviving Corporation, and
the Surviving Corporation hereby agrees, to do the following:
(a) For six
years after the Exchange Effective Time, the Surviving Corporation shall, to the
fullest extent permitted by Applicable Law, indemnify, defend and hold harmless,
and provide advancement of expenses to, each person who is now or has been at
any time prior to the date hereof or who becomes prior
59
to the
Exchange Effective Time, an officer or a director of the Company or any of its
Subsidiaries, including Company Virginia Sub (each, an “Indemnified Person”) against
all losses, claims, damages, costs, expenses, liabilities or judgments or
amounts that are paid in settlement of or in connection with any claim, action,
suit, proceeding or investigation based in whole or in part on, or arising in
whole or in part out of the fact that such person is or was a director or
officer of the Company or any of its Subsidiaries, and pertaining to any matter
existing or occurring, or any acts or omissions occurring, at or prior to the
Exchange Effective Time, whether asserted or claimed prior to, or at or after,
the Exchange Effective Time to the same extent such persons are indemnified or
have the right to advancement of expenses as of the date of this Agreement by
the Company pursuant to the Charter, the Company Bylaws and indemnification
agreements listed on Section 9.01(a) of the Company
Disclosure Schedules, if any, in existence on the date hereof with any directors
and officers of the Company and its Subsidiaries.
(b) Parent
shall cause the Surviving Corporation to continue in full force and effect for a
period of six years from the Exchange Effective Time the provisions in existence
in the Charter and bylaws in effect on the date of this Agreement regarding
elimination of liability of directors, indemnification of officers, directors
and employees and advancement of expenses.
(c) For six
years after the Exchange Effective Time, the Surviving Corporation shall provide
officers’ and directors’ liability insurance in respect of acts or omissions
occurring prior to the Exchange Effective Time covering each Indemnified Person
currently covered by the Company’s officers’ and directors’ liability insurance
policy on terms with respect to coverage and amount no less favorable than those
of such policy in effect on the date hereof (provided, that the Company
may elect to purchase a six-year prepaid “tail policy” on terms and conditions
reasonably acceptable to Parent providing substantially equivalent benefits to
the Indemnified Persons) (in each case, to the extent commercially available);
provided that, in
satisfying its obligation under this Section 9.01(c),
the Surviving Corporation shall not be obligated to pay in the aggregate in
excess of 300% of the amount per annum the Company paid in its last full fiscal
year, which amount is set forth in Section 9.01(c)
of the Company Disclosure Schedule; and provided further that, if the
aggregate premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the greatest coverage
available, with respect to matters occurring prior to the Exchange Effective
Time, for a cost not exceeding such amount.
(d) If Parent,
the Surviving Corporation or any of its successors or assigns (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii)
transfers or conveys all or substantially all of its properties and assets to
any
60
Person,
then, and in each such case, to the extent necessary, proper provision shall be
made so that the successors and assigns of Parent or the Surviving Corporation,
as the case may be, shall assume the obligations set forth in this Section 9.01.
(e) The rights
of each Indemnified Person under this Section 9.01
shall be in addition to any rights such Person may have under the Charter or
bylaws of the Company or any of its Subsidiaries, under Pennsylvania Law or any
other Applicable Law or under any agreement of any Indemnified Person with the
Company or any of its Subsidiaries. These rights shall survive
consummation of the Share Exchange and are intended to benefit, and shall be
enforceable by, each Indemnified Person.
Section
9.02. Employee
Matters. (a) For a period of one year following the Exchange
Effective Time, Parent shall provide to all employees of the Company or any of
its Subsidiaries as of the Exchange Effective Time who continue employment with
the Surviving Corporation or any of its Affiliates (“Continuing Employees”) base
salary or base wages and benefits (other than equity-based compensation) that
are in the aggregate substantially comparable to such salary or wages and
benefits provided by the Company and its Subsidiaries as in effect immediately
prior to the Exchange Effective Time.
(b) With
respect to any “employee benefit plan,” as defined in Section 3(3) of
ERISA, maintained by Parent or any of its Subsidiaries, including the Surviving
Corporation, in which any Continuing Employee becomes a participant, such
Continuing Employee shall receive full credit (for purposes of eligibility to
participate, vesting, and benefit level with respect to vacation entitlement,
severance benefits and other paid time off) for service with the Company or any
of its Subsidiaries (or predecessor employers to the extent the Company provides
such past service credit) to the same extent that such service was recognized as
of the Effective Date under a comparable plan of the Company and its
Subsidiaries in which the Continuing Employee participated.
(c) Parent
shall waive, or cause to be waived, any pre-existing condition limitations,
exclusions, actively-at-work requirements and waiting periods under any welfare
benefit plan maintained by Parent or any of its Subsidiaries in which the
Continuing Employees (and their eligible dependents) will be eligible to
participate from and after the Exchange Effective Time, except to the extent
that such pre-existing condition limitations, exclusions, actively-at-work
requirements and waiting periods would not have been satisfied or waived under
the comparable plan of the Company and its Subsidiaries in which the Continuing
Employee participated. If a Continuing Employee commences
participation in any health benefit plan of Parent or any of its Subsidiaries
after the commencement of a calendar year, to the extent commercially
practicable, Parent shall cause such plan to recognize the dollar amount of all
co-payments,
61
deductibles
and similar expenses incurred by such Continuing Employee (and his or her
eligible dependents) during such calendar year for purposes of satisfying such
calendar year’s deductible and co-payment limitations under the relevant welfare
benefit plans in which such Continuing Employee (and dependents) commences
participation.
(d) Following
the Exchange Effective Time, Parent shall, cause the Surviving Corporation or
any of its Affiliates to pay, in the ordinary course of business consistent with
prior practice, to all employees of the Company and its Subsidiaries
who participated in the short - term incentive bonus
plans of the Company and/or its Subsidiaries in 2008 (“Company Employees”) all short
term bonuses for the 2008 calendar year, with the amounts of such bonuses
determined at the target level established for each Company Employee (with all
corporate performance goals for 2008 deemed satisfied at the target
levels).
(e) The
parties hereto agree that, with respect to any Employee Plan providing for
payments or benefits upon or following the occurrence of a “change in control”
(as defined in the applicable Employee Plan), the Transaction shall be deemed to
constitute a Buyer Acquisition Transaction (as defined in the Investment
Agreement) as contemplated in Sections 8.06, 8.07 and 8.08 and/or Section 8.10
of the Investment Agreement.
(f) Nothing in
this Section 9.02 shall (i) be treated as an
amendment of, or undertaking to amend, any benefit plan, (ii) prohibit Parent or
any of its Subsidiaries, including the Surviving Corporation, from amending any
employee benefit plan or (iii) confer any rights or benefits on any person other
than the parties to this Agreement.
Section
9.03. Santander
Shares. Parent hereby agrees to vote or exercise its right to
consent with respect to all Shares beneficially owned as of the date prior to
the date of this Agreement by it at the time of any vote or action by written
consent to approve and adopt this Agreement, the Reincorporation Merger and the
Transaction at any meeting and at any adjournment thereof at which this
Agreement and other related transactions in favor of, or consent to, the
approval thereof.
ARTICLE
10
Covenants
of Parent and the Company
The
parties hereto agree that:
Section
10.01. Regulatory
Matters. (a) Parent and the Company shall promptly prepare,
and Parent shall promptly file with the SEC, the F-4, in which
62
the Proxy
Statement will be included as a prospectus. Parent and the Company
shall file with the SEC a Rule 13e-3 Transaction Statement on Schedule 13E-3
with respect to the Transaction which shall be filed as a part of the Proxy
Statement. Parent and the Company shall each use its reasonable best
efforts to have the F-4 declared effective under the 1933 Act as promptly as
practicable after such filing, and the Company shall thereafter file with the
SEC and mail or deliver the Proxy Statement to its
shareholders. Parent shall also use its reasonable best efforts to
obtain all necessary state securities law or “Blue Sky” permits and approvals
required to carry out the transactions contemplated by this Agreement, and the
Company shall furnish all information concerning the Company and the holders of
Company Common Stock as may be reasonably requested in connection with any such
action.
(b) (i) The
Parent Board shall, with the reasonable assistance of the Company, prepare
reports (Informe del consejo
de administracion) to be made available to the holders of Parent Ordinary
Shares in accordance with Applicable Law (the “Board Reports”) in connection
with the meeting of holders of Parent Ordinary Shares contemplated by Section 10.02 of this Agreement containing information
required by the SCL, and (ii) Parent shall prepare and arrange to have
registered with and verified by the NSEC a Prospectus and (iii) Parent shall use
its reasonable best efforts to obtain (A) the necessary report of the auditor
designated by the Commercial Registry relating to the abolishment of the
preemptive rights of holders of Parent Ordinary Shares and (B) report of the
expert designated by the commercial Registry relating to the fair value of the
assets acquired by Parent in the Share Exchange.. Parent will use its reasonable
best efforts to cause the Prospectus to receive the required registration with
and verification of the NSEC as promptly as reasonably practicable following the
date on which the Parent Extraordinary General Meeting contemplated by Section 10.02(b) is held, and to cause the definitive
Prospectus to be made available to the holders of Parent Ordinary Shares in
accordance with Applicable Law as promptly as reasonably practicable following
the date on which the Parent Extraordinary General Meeting contemplated by Section 10.02(b) is held.
(c) Subject to
the terms of this Agreement, the parties shall cooperate with each other and use
their respective reasonable best efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable the Parent Requisite Regulatory
Approvals and the Company Requisite Regulatory Approvals and all other permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities that are necessary or advisable to consummate the Transaction and
the other transactions contemplated by this Agreement, and to comply with the
terms and conditions of all such permits, consents, approvals and authorizations
of all such third parties, Regulatory Agencies or Governmental
Authorities. The Company and Parent shall have the right to review in
advance,
63
and, to
the extent practicable, each will consult the other on, in each case subject to
Applicable Laws relating to the confidentiality of information, all the
information relating to the Company on one hand, or Parent, on the other, as the
case may be, and any of their respective Subsidiaries, which appear in any
filing made with, or written materials submitted to, any third party or any
Governmental Authority in connection with the Transaction and the other
transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties shall act reasonably and as promptly as
practicable. The parties shall consult with each other with respect
to the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party will keep the
other apprised of the status of matters relating to completion of the
transactions contemplated by this Agreement. Notwithstanding the
foregoing, nothing contained herein shall be deemed to require Parent or the
Company to take any action, or commit to take any action, or agree to any
condition or restriction, in connection with obtaining the foregoing permits,
consents, approvals and authorizations of Governmental Authorities, that would
reasonably be expected to have a material adverse effect (measured on a scale
relative to the Company) on any of Parent, the Company or the Surviving
Corporation (a “Materially
Burdensome Regulatory Condition”). In addition, the Company
and Parent agree to cooperate and use their reasonable best efforts to assist
each other in preparing and filing such petitions and filings, and in obtaining
such permits, consents, approvals and authorizations of third parties and
Governmental Authorities, that may be necessary or advisable to effect any
mergers and/or consolidations of Subsidiaries of the Company and Parent
following consummation of the Transaction.
(d) If at any
time prior to the Exchange Effective Time any information relating to the
Company or Parent, or any of their respective Affiliates, officers or directors,
should be discovered by the Company or Parent which should be set forth in an
amendment or supplement to any of the Proxy Statement, Schedule 13E-3 or the
F-4, so that any of such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly notify
the other party hereto and, to the extent required by law, rules or regulations,
an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and disseminated to the Company
shareholders.
(e) Each of
Parent and the Company shall promptly advise the other upon receiving any
communication from any Regulatory Agency or Governmental Authority consent or
approval of which is required for consummation of the transactions contemplated
by this Agreement that causes
64
such party
to believe (i) that there is a reasonable likelihood that any Parent Requisite
Regulatory Approval or any Company Requisite Regulatory Approval, respectively,
will not be obtained, (ii) that the receipt of any such approval may be
materially delayed, or (iii) that any such regulatory approval may be subject to
a Materially Burdensome Regulatory Condition.
(f) The
Company shall cooperate with such reasonable requests as may be made by Parent
with respect to any post-Closing reorganization of Parent’s and the Company’s
Subsidiaries, including filing prior to the Closing such applications with
Regulatory Agencies or Governmental Authorities as may be necessary or desirable
in connection with any such reorganization.
(g) Prior to
the Exchange Effective Time, Parent shall cause the Parent Ordinary Shares and
Parent ADSs that will be issued in the Share Exchange to be approved for listing
on the NYSE, such listing to be subject to (and only become effective on)
official notice of issuance.
(b) Following
receipt of the necessary report of the auditor designated by the Commercial
Registry relating to the abolishment of the preemptive rights of holders of
Parent Ordinary Shares, Parent shall call and hold a meeting of the holders of
Parent Ordinary Shares to be held for the purpose of obtaining the Parent
Shareholder Approval. Parent shall use its reasonable best efforts to
obtain from the holders of Parent Ordinary Shares the Parent Shareholder
Approval.
65
Section
10.04. Further
Assurances. At and after the Exchange Effective Time, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or Company
Virginia Sub, any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of the Company or Company Virginia Sub, any
other actions and things to vest, perfect or confirm of record or otherwise in
the Surviving Corporation any and all right, title and interest in, to and under
any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Reincorporation Merger and the Share Exchange.
Section
10.05. Notices of Certain
Events. Each of the
Company and Parent shall promptly notify the other of:
(a) any notice
or other communication from any Person alleging that the consent of such Person
is or may be required in connection with the transactions contemplated by this
Agreement;
(b) any notice
or other communication from any Governmental Authority in connection with the
transactions contemplated by this Agreement; and
(c) any
actions, suits, claims, investigations or proceedings commenced or, to its
Knowledge, threatened against, relating to or involving or otherwise affecting
the Company or any of its Subsidiaries or Parent or any of its Subsidiaries that
relate to the consummation of the transactions contemplated by this
Agreement;
provided that the delivery of
any notice pursuant to this Section 10.05 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving that notice.
Section
10.06. Takeover
Statutes. If any Takeover Statute or Defensive Measure shall
become applicable to the transactions contemplated hereby, each of
66
the
Company, Parent and Company Virginia Sub and the respective members of their
boards of directors shall, to the extent permitted by Applicable Law, grant such
approvals and take such actions as are necessary so that the transactions
contemplated by this Agreement or the Voting Agreement may be consummated as
promptly as practicable on the terms contemplated herein and otherwise act to
eliminate or minimize the effects of such Takeover Statute on the transactions
contemplated hereby. Any Adverse Recommendation Change shall not
change the approval of the Company Board for purposes eliminating the
application of any Takeover Statue or Defensive Measure to this Agreement and
the transactions contemplated hereby.
Section
10.07. Exemption From
Liability Under Section 16(b). Prior to the Exchange Effective
Time, Parent and the Company shall each take all such steps as may be necessary
or appropriate to cause any disposition of shares of Company Common Stock or
conversion of any derivative securities in respect of such shares of Company
Common Stock in connection with the consummation of the transactions
contemplated by this Agreement to be exempt under Rule 16b-3 promulgated under
the 1934 Act.
Section
10.08. Incentive Bonus
Program. Promptly following the date hereof, Parent and the
Company agree to hold discussions in good faith with a view to agreeing upon the
terms of a retention bonus program covering selected employees of the Company
and its Subsidiaries. To the extent agreed, such retention bonus
program shall be adopted and communicated to employees as promptly as
practicable following the date hereof, and shall have terms and conditions
(including payment dates and amounts) that are substantially consistent with
market practice and that shall be mutually agreed by Parent and the
Company.
ARTICLE
11
Conditions
to the Reincorporation Merger and the Share Exchange
(a) Each of
the Company Shareholder Approval and the Parent Shareholder Approval shall have
been obtained;
(b) No
Applicable Law shall prohibit the consummation of the Reincorporation Merger or
the Share Exchange;
(c) [Left blank
intentionally]
67
(d) The F-4
shall have become effective under the 1933 Act and no stop order suspending the
effectiveness of the F-4 shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC;
(e) The
Prospectus shall have been verified by, and registered with, the
NSEC;
(f) The
necessary auditors’ report and the report of the expert designated by the
Commercial Registry relating to the fair value of the assets acquired by Parent
in the Share Exchange shall have been issued;
(g) The
Capital Increase shall be granted before a Spanish public notary;
and
(h) The Parent
ADSs to be issued upon consummation of the Transaction shall have been approved
for listing on the NYSE, subject to official notice of issuance.
Section
11.02. Conditions to
Obligations of Parent. The obligation of Parent to effect the
Transaction is also subject to the satisfaction, or waiver by Parent, at or
prior to the Exchange Effective Time, of the following conditions:
(a) (i) (A)
The representations and warranties of the Company contained in any of Sections
6.01, 6.02, 6.03, 6.04, 6.05 or 6.26 shall be
true and correct in all material respects at and as of the Exchange Effective
Time as if made at and as of such time (other than such representation and
warranty that by their terms address matters only as of another specified time,
which shall be true and correct in all material respects only as of such time),
disregarding all Company Material Adverse Effect qualifications contained
therein, and (B) the other representations and warranties of the Company
contained in the Agreement (disregarding all materiality and Company Material
Adverse Effect qualifications contained therein) shall be true and correct at
and as of the Exchange Effective Time as if made at and as of such time (other
than representations and warranties that by their terms address matters only as
of another specified time, which shall be true and correct only as of such
time), except, in the case of clause (B) only, for such matters as have not had
and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect; (ii) the Company shall have performed in all
material respects all of its obligations hereunder required to be performed by
it at or prior to the Exchange Effective Time; and (iii) Parent shall have
received a certificate signed by an executive officer of the Company to the
foregoing effect;
(b) (A)
Neither the Company nor the Bank shall have become insolvent, or made an
assignment for the benefit of creditors, or failed generally to pay its
68
debts as
they become due, or become the subject of the appointment of, or taking
possession by, any conservator, custodian, trustee, receiver or liquidator of
any or of all or a substantial part of its properties, businesses or assets and
(B) no order shall have been issued or plan made or effected by any Governmental
Authority that would result in the issuance of any capital stock, voting
securities or Company Securities to a Governmental Authority or would otherwise
interfere with the ability of Parent to, directly or indirectly, control one
hundred percent of the voting power of the Company and its Subsidiaries and one
hundred percent of the Company Virginia Sub Common Stock following the Exchange
Effective Time;
(c) Since the
date of the Agreement, there shall not have occurred any effect, change,
circumstances, conditions or developments that, individually or in the
aggregate, would reasonably be expected to have a Company Material Adverse
Effect; and
(d) Without
duplication of any conditions set forth in Section
11.01, all regulatory approvals set forth in Section
7.04 required to consummate the transactions contemplated by this Agreement,
including the Transaction, shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall have
expired (all such approvals and the expiration of all such waiting periods being
referred as the “Parent
Requisite Regulatory Approvals”), and no such regulatory approval shall
have resulted in the imposition of any Materially Burdensome Regulatory
Condition.
Section
11.03. Condition to
Obligations of the Company. The obligation of the Company to
effect the Transaction is also subject to the satisfaction, or waiver by the
Company, at or prior to the Exchange Effective Time, of the following
conditions:
(a) (i) (A)
The representations and warranties of Parent contained in any of Sections 7.01 7.02 7.03 7.04 and 7.05 of the Agreement shall be true and correct in all
material respects at and as of the Exchange Effective Time as if made at and as
of such time (other than such representation and warranty that by their terms
address matters only as of another specified time, which shall be true and
correct in all material respects only as of such time) and (B) the other
representations and warranties of Parent contained in the Agreement
(disregarding all materiality and Parent Material Adverse Effect qualifications
contained therein) shall be true and correct at and as of the Exchange Effective
Time as if made at and as of such time (other than representations and
warranties that by their terms address matters only as of another specified
time, which shall be true and correct only as of such time), except, in the case
of clause (B) only, for such matters as have not had and would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect; (ii) the
69
Company
shall have performed in all material respects all of its obligations hereunder
required to be performed by it at or prior to the Exchange Effective Time; and
(iii) the Company shall have received a certificate signed by an executive
officer of Parent to the foregoing effect; and
(b) Without
duplication of any conditions set forth in Section
11.01, all regulatory approvals set forth in Section
6.03 required to consummate the transactions contemplated by this Agreement,
including the Transaction, shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall have
expired (all such approvals and the expiration of all such waiting periods being
referred as the “Company
Requisite Regulatory Approvals”).
ARTICLE
12
Termination
Section
12.01. Termination. This
Agreement may be terminated at any time prior to the Reincorporation Effective
Time, whether before or after approval of the matters presented in connection
with the Transaction by the stockholders of the Company or
Parent:
(a) by mutual
written agreement of the Company and Parent;
(b) by either
the Company or Parent if:
(i) the
Closing Date shall not have occurred on or before June 30, 2009 (the “End Date”); provided that the right to
terminate this Agreement pursuant to this Section
12.01(b)(i) shall not be available to any party whose breach of any
provision of this Agreement results in the failure of the Reincorporation Merger
to be consummated on or before such time;
(ii) there
shall be any Applicable Law that (A) makes the consummation of the
Reincorporation Merger and/or the Share Exchange illegal or otherwise prohibited
or (B) enjoins the Company, Parent or Company Virginia Sub from consummating the
Reincorporation Merger and/or the Share Exchange and such injunction shall have
become final and nonappealable;
(iii) if the
Company Shareholder Approval is not obtained at the annual or special meeting of
Company shareholders called for the purpose of obtaining such Company
Shareholder Approval or at any adjournment or postponement thereof;
or
70
(iv) if the
Parent Shareholder Approval is not obtained at the Annual General Meeting or
Extraordinary General Meeting of Parent called for the purpose of obtaining such
Parent Shareholder Approval or at any adjournment or postponement
thereof;
(c) by Parent
if, prior to the Reincorporation Effective Time:
(i) (A) an
Adverse Recommendation Change shall have occurred or the Company Board have
approved, or determined to recommend to the Company shareholders that they
approve, an Acquisition Proposal other than the Reincorporation Merger or the
Share Exchange, (B) the Company Board shall have failed to publicly confirm the
Company Board Recommendation within five Business Days of a written request by
Parent that it do so, or (C) the Board shall have failed to include and maintain
until the Closing the Company Board Recommendation in the Proxy
Statement;
(ii) there
shall have been a breach of Section 8.03;
or
(iii) the
Company shall have breached or failed to perform any of its representations,
warranties, covenants or agreements contained in this Agreement, which breach or
failure to perform (A) would give rise to the failure of any of the conditions
set forth in Sections 11.01 or 11.02 and (B) is either incurable or, if curable, is
not cured by the Company by the earlier of (x) 30 days following receipt by the
Company of written notice of such breach or failure and (y) the End Date;
provided that, at the time of the delivery of such written notice, Parent shall
not be in material breach of its obligations under this Agreement.
(d) by the
Company if, prior to the Reincorporation Effective Time, Parent shall have
breached or failed to perform any of its representations, warranties, covenants
or agreements contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of any of the conditions set forth in
Sections 11.01 or 11.03 and (B) is either incurable or, if curable, is
not cured by Parent by the earlier of (x) 30 days following receipt by Parent of
written notice of such breach or failure and (y) the End Date; provided that, at
the time of the delivery of such written notice, the Company shall not be in
material breach of its obligations under this Agreement.
The party
desiring to terminate this Agreement pursuant to this Section 12.01 (other than pursuant to Section
12.01(a)) shall give notice of such termination to the other
party.
71
Section
12.02. Effect of Termination. If this
Agreement is terminated pursuant to Section
12.01, this Agreement shall become void and of no effect without liability
of any party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party hereto, except that Section 12.01, Section 12.02
and Article 13 shall survive termination of this
Agreement and remain in full force and effect; provided that, if such
termination shall result from the intentional (a) failure of either party to
fulfill a condition to the performance of the obligations of the other party or
(b) failure of either party to perform a covenant hereof, such party shall be
fully liable for any and all liabilities and damages incurred or suffered by the
other party as a result of such failure.
ARTICLE
13
Section
13.01. Notices. All
notices, requests and other communications to any party hereunder shall be in
writing (including facsimile transmission) and shall be given,
if to
Parent, to:
Ciudad
Grupo Santander
Xxxx. xx
Xxxxxxxxx, x/x
00000
Xxxxxxxx xxx Xxxxx
Xxxxx
Attention:
Xxxxxxx Xxxxxxxx, General Secretary
Facsimile
No.: 00-00-000-0000
with a
copy to:
Xxxxx Xxxx
& Xxxxxxxx
000
Xxxxxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxx
Xxxxxx
Xxxxxxx
Facsimile
No.: (000) 000-0000
72
if to the
Company or Company Virginia Sub, to:
Sovereign
Bancorp, Inc.
00 Xxxxx
Xxxxxx
Xxxxx
Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attention:
CEO
Facsimile
No.: (000) 000-0000
with a
copy to:
Milbank,
Tweed, Xxxxxx & XxXxxx, LLP
0 Xxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxx
Facsimile
No. (000) 000-0000
or to such
other address or facsimile number as such party may hereafter specify for the
purpose by notice under this Section 13.01 to the
other parties hereto. All such notices, requests and other
communications shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5 p.m. on a Business Day in the place of
receipt. Otherwise, any such notice, request or communication shall
be deemed not to have been received on the next succeeding Business Day in the
place of receipt.
Section
13.02. Survival. The
representations, warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Exchange Effective Time, except the agreements set forth in Section 9.01.
Section
13.03. Amendments and
Waivers. (a) Any provision of this Agreement
may be amended or waived prior to the Exchange Effective Time if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or, in the case of a waiver, by each
party against whom the waiver is to be effective; provided that after the
Company Shareholder Approval, there shall be made no amendment that by law
requires further approval by shareholders of the Company without the further
approval of such shareholders.
(b) No failure
or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
73
be
cumulative and not exclusive of any rights or remedies provided by Applicable
Law.
Section
13.04. Expenses. (a)
General. Except as otherwise provided in this Section 13.04, all costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense.
(b) Termination
Fee.
(i) If (A)
this Agreement is terminated by Parent pursuant to Section 12.01(c)(i) or Section
12.01(c)(iii), (B) prior to such termination, an Acquisition Proposal shall
have been publicly announced or otherwise communicated to the Company Board or
the Company’s shareholders (provided for the purposes of
this clause, each reference to “25%” in the definition of “Acquisition Proposal”
shall be deemed to be a reference to “50%”), and (C) within twelve months of the
date of such termination, the Company or any of its Subsidiaries enters into a
definitive agreement with respect to, or consummates, an Acquisition Proposal,
or
(ii) if this
Agreement is terminated by Parent pursuant to Section
12.01(c)(ii); provided that the breach
giving rise to such termination shall have been intentional,
then, in
each case listed in clauses (i) and (ii) above, the Company shall pay to Parent
in immediately available funds $95 million minus all amounts reimbursed
by the Company pursuant to Section 13.04(c) (the
“Termination Fee”),
within one Business Day after such termination.
(c) Reimbursement. Upon
any termination by Parent of this Agreement pursuant to Sections 12.01(c)(i),
(c)(ii) or (c)(iii) the Company shall reimburse Parent no later than two
Business Days after submission of reasonable documentation thereof, for 100% of
their reasonable out-of-pocket fees and expenses (including reasonable fees and
expenses of their counsel) actually incurred by any of them in connection with
this Agreement and the transactions contemplated hereby (including, for the sake
of clarity, those incurred in connection with the negotiation and consideration
thereof and the due diligence investigation of the Company and its
Subsidiaries).
(d) Other Costs and
Expenses. The Company acknowledges that the agreements
contained in this Section 13.04 are an integral
part of the transactions contemplated by this Agreement and that, without these
agreements, Parent would not enter into this Agreement. Accordingly,
if the Company fails promptly to pay any amount due to Parent pursuant to this
Section 13.04, it shall also pay any costs and
expenses incurred by Parent in connection with a legal action to enforce
74
this
Agreement that results in a judgment against the Company for such amount,
together with interest on the amount of any unpaid fee and/or expense at the
publicly announced prime rate of Citibank, N.A. from the date that fee was
required to be paid to, but excluding, the payment date.
(e) Exclusive
Remedy. Any payment by any party under this Section 13.04 shall be the sole and exclusive remedy
of the other such party and its Subsidiaries for monetary damages against the
other such party and any of its Subsidiaries and their respective
Representatives with respect to the termination or breach giving rise to that
payment. For the avoidance of doubt, any payment to be made by any
party under this Section 13.04 shall be payable
only once to such other party with respect to this Section 13.04 and not in duplication even though such
payment may be payable under one or more provisions hereof.
Section
13.05. Investment
Agreement. (a) The Investment Agreement shall continue in full
force and effect except that for the period commencing on the date hereof and
ending on the date of the termination of this Agreement, the following
provisions shall not be operative: Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.06,
8.07, 8.08, 8.09, 8.10, 8.13, 9.01, 9.02, 9.03, 9.04, 12.01, 12.02, 13.04,
13.10, 13.14, and 13.15. In addition, to the extent any provision of
the Investment Agreement conflicts or is inconsistent with any provision of this
Agreement, this Agreement shall control. All such sections referred
to in the first sentence shall become operative again according to their terms
immediately upon the termination of this Agreement for any reason and the
Investment Agreement in its entirety shall continue in full force and effect
upon and after any termination of this Agreement for any reason provided that until the
termination of the Agreement Period (as defined in the Voting Agreement) Parent
shall have no obligation under Section 814(a) of the Investment
Agreement.
(b) The
Investment Agreement in its entirety shall terminate only upon the Exchange
Effective Time, and such termination shall be without liability of either party
thereto (or any shareholder, director, officer, employee, agent, consultant, or
representative of such party) to the other party thereto, and Parent and the
Company shall have no obligations thereunder (including, without limitation,
under Article 9 thereof), except with respect to breaches thereof preceding the
Exchange Effective Time, taking into account the immediately preceding
sentence.
Section
13.06. Disclosure Schedule
References. The parties hereto agree that any reference in a
particular Section of either the Company Disclosure Schedule or the Parent
Disclosure Schedule shall only be deemed to be an exception to (or, as
applicable, a disclosure for purposes of) (i) the representations and warranties
(or covenants, as applicable) of the relevant party that are contained in the
corresponding Section of this Agreement and (ii) any other
75
representations
and warranties of such party that is contained in this Agreement, but only if
the relevance of that reference as an exception to (or a disclosure for purposes
of) such representations and warranties would be readily apparent to a
reasonable person who has read that reference and such representations and
warranties, without any independent knowledge on the part of the reader
regarding the matter(s) so disclosed.
Section
13.07. Binding Effect; Benefit;
Assignment. (a) The provisions of this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Except as provided in Section 9.01 only, no provision of this Agreement is
intended to confer any rights, benefits, remedies, obligations or liabilities
hereunder upon any Person other than the parties hereto and their respective
successors and assigns.
(b) No party
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the prior written consent of each other party
hereto, except that Parent may transfer or assign its rights and obligations
under this Agreement, in whole or from time to time in part, to one or more of
its Affiliates at any time; provided that such transfer
or assignment shall not relieve Parent of its obligations under this Agreement
or prejudice the rights of stockholders to receive payment for Shares exchanged
for pursuant to the Share Exchange.
Section
13.08. Governing
Law. This Agreement shall be governed by and construed in
accordance with the law of the Commonwealth of Pennsylvania, without regard to
the conflicts of law rules of such state.
Section
13.09. Jurisdiction. The parties
hereto agree that any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby shall be brought in the United
States District Court for the Southern District of New York or any New York
State court sitting in New York City, so long as one of such courts shall have
subject matter jurisdiction over such suit, action or proceeding, and that any
cause of action arising out of this Agreement shall be deemed to have arisen
from a transaction of business in the State of New York, and each of the parties
hereby irrevocably consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees
that service of process on
76
such party
as provided in Section 13.01 shall be deemed
effective service of process on such party.
Section
13.10. WAIVER OF
JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section
13.11. Counterparts;
Effectiveness. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received a counterpart
hereof signed by all of the other parties hereto. Until and unless
each party has received a counterpart hereof signed by the other party hereto,
this Agreement shall have no effect and no party shall have any right or
obligation hereunder (whether by virtue of any other oral or written agreement
or other communication).
Section
13.13. Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other Governmental Authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such a determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
Section
13.14. Specific Performance. The parties
hereto agree that irreparable damage would occur if any provision of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement or to enforce specifically the performance of the terms and
provisions hereof in any federal court located in the United States District
Court for the Southern District
77
of New
York or any New York State court sitting in New York City, in addition to any
other remedy to which they are entitled at law or in equity.
[The
remainder of this page has been intentionally left blank; the next
page
is the signature page.]
78
IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the date set forth on the cover page
of this Agreement.
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SOVEREIGN
BANCORP, INC.
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By:
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Name:
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Title:
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By:
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Name:
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Title:
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79
Exhibit
A
SHAREHOLDER
AGREEMENT dated as of October 13, 2008 (the “Agreement”) between Banco
Santander S.A., a Spanish sociedad anónima (“Parent”), and each of the
individuals or entities listed on a signature page hereto (each, a “Shareholder”).
WHEREAS,
in order to induce Parent to enter into the Transaction Agreement, dated as of
the date hereof (the “Transaction Agreement”), with
Sovereign Bancorp, Inc., a Pennsylvania corporation (the “Company”), Parent has
requested the Shareholders, and each Shareholder has agreed, to enter into this
Agreement with respect to all shares of common stock, no par value per share, of
the Company that such Shareholder beneficially owns (the “Shares”).
NOW,
THEREFORE, the parties hereto agree as follows:
ARTICLE
1
VOTING AGREEMENT
Section
1.01. Voting Agreement.
Shareholder hereby agrees to vote (or cause to be voted) or exercise its right
to consent (or cause its right to consent to be exercised) with respect to all
Shares beneficially owned by such Shareholder that such Shareholder is entitled
to vote at the time of any vote or action by written consent to approve and
adopt the Transaction Agreement, the Reincorporation Merger, the Share Exchange
and all agreements related to the Reincorporation Merger and the Share Exchange
(collectively, the “Transactions”), at any meeting
and at any adjournment thereof, at which such Transaction Agreement and other
related agreements (or any amended version thereof) are submitted for the
consideration and vote of the shareholders of the Company. Shareholder hereby
agrees that it will not vote any Shares in favor of, or consent to, and will
vote against and not consent to, the approval of any (i) Acquisition Proposal,
(ii) reorganization, recapitalization, liquidation or winding-up of the Company
or any other extraordinary transaction involving the Company, or (iii) corporate
action the consummation of which would in any respect frustrate the purposes, or
prevent or delay, hinder, interfere with or adversely affect in any respect the
consummation, of the transactions contemplated by the Transaction
Agreement.
Section
1.02 Irrevocable
Proxy. Shareholder hereby revokes any and all previous
proxies granted with respect to the Shares. By entering into this
Agreement,
to the maximum extent permitted by applicable law, Shareholder hereby grants a
proxy appointing Parent as Shareholder’s attorney-in-fact and proxy, with full
power of substitution, for and in the Shareholder’s name, to vote, express
consent or dissent, or otherwise to utilize such voting power in
the
manner
contemplated by Section 1.01 above as Parent or its proxy or substitute shall,
in Parent’s sole discretion, deem proper with respect to the Shares. The proxy
granted by Shareholder pursuant to this Article 1 is irrevocable, is coupled
with an interest and is granted in consideration of Parent entering into this
Agreement and the Transaction Agreement and incurring certain related fees and
expenses. The proxy granted by Shareholder shall be revoked upon the earlier of
the termination of this Agreement in accordance with its terms and the Record
Date.
ARTICLE
2
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholder
represents and warrants to Parent (it being expressly understood that the
representations and warranties contained in this Agreement shall be made only as
of the date hereof):
Section
2.01. Corporation
Authorization. If such Shareholder is not an individual, the execution,
delivery and performance by such Shareholder of this Agreement and the
consummation by such Shareholder of the transactions contemplated hereby are
within the corporate, limited liability company, partnership or trust powers of
such Shareholder and have been duly authorized by all necessary action. This
Agreement constitutes a valid and binding Agreement of such Shareholder. If such
Shareholder is married and the Shares set forth on the signature page hereto
opposite such Shareholder’s name constitute community property under applicable
laws, this Agreement has been duly authorized, executed and delivered by, and
constitutes the valid and binding agreement of, such Shareholder’s spouse. If
this Agreement is being executed in a representative or fiduciary capacity, the
Person signing this Agreement has full power and authority to enter into and
perform this Agreement.
Section
2.02.
Non-Contravention. The execution, delivery and performance by such
Shareholder of this agreement and the consummation of the transactions
contemplated hereby do not and will not (i) if such Shareholder is not an
individual, violate the certificate of incorporation or bylaws of or similar
organizational documents of such Shareholder, (ii) violate any applicable law,
rule, regulation, judgment, injunction, order or decree, (iii) require any
consent or other action by any Person under, constitute a default under, or give
rise to any right of termination, cancellation or acceleration or to a loss of
any benefit to which such Shareholder is entitled under any provision of any
agreement or other instrument binding on such Shareholder or (iv) result in the
imposition of any Lien on any asset of such Shareholder.
Section
2.03. Ownership of
Shares. Such Shareholder is the beneficial owner of the Shares, free and
clear of any Lien and any other limitation or
restriction
(including any restriction on the right to vote or otherwise dispose of the
Shares). None of the Shares is subject to any voting trust, proxy or other
agreement or arrangement with respect to the voting of such Shares, except as
contemplated by this Agreement.
Section
2.04. Reliance. Such
Shareholder understands and acknowledges that Parent is entering into the
Transaction Agreement in reliance upon such Shareholder’s execution, delivery
and performance of this Agreement.
Section
2.05. Total Shares.
Except for the Shares set forth on the signature page hereto, as of the date of
this Agreement such Shareholder does not beneficially own any (i) shares of
capital stock or voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) options or other rights to acquire from the
Company any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company.
Section
2.06. Finder’s Fees. No
investment banker, broker, finder or other intermediary is entitled to a fee or
commission from Parent or the Company in respect of this Agreement by reason of
any arrangement or agreement made by such Shareholder.
ARTICLE
3
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent
represents and warrants to Shareholder:
Section
3.01. Corporation
Authorization. The execution, delivery and performance by Parent of this
Agreement and the consummation by Parent of the transactions contemplated hereby
are within the corporate (or similar) powers of Parent and have been duly
authorized by all necessary corporate (or similar) action. This Agreement
constitutes a valid and binding agreement of Parent.
ARTICLE
4
COVENANTS OF SHAREHOLDER
Shareholder
hereby covenants and agrees that:
Section
4.01. No Transfer of, Proxies
for, or Encumbrances on, Shares. (a) Except pursuant to the terms of this
Agreement or as required by the Investment Arrangements, no Shareholder shall
(nor permit any person under such Shareholder’s control to), without the prior
written consent of Parent,
directly
or indirectly, (i) grant any proxies or enter into any voting trust or other
agreement or arrangement with respect to the voting of any Shares or (ii) sell
(including short sell), assign, transfer, encumber or otherwise dispose of, or
enter into any contract (including any hedging or derivative agreement or other
similar agreement), option or other arrangement (including any profit sharing
arrangement) or understanding with respect to the direct or indirect sale
(including short sale), assignment, transfer, encumbrance or other disposition
of, any Shares, in each case on or prior to the earlier of the Record Date and
June 30, 2009 (the “Sale
Release Date”). After the Sale Release Date, no such sale, assignment,
transfer, encumbrance, disposition, entering into of any contract, option or
other arrangement or understanding with respect to the direct or indirect sale,
assignment, transfer, encumbrance or other disposition of any Shares shall be
made by any Shareholder other than in (i) open market sales not exceeding in any
one trading day 20% of the Company’s average daily volume for the previous 30
trading days, or (ii) privately negotiated sales, provided that the transferee
immediately following any such transaction would not, together with such
transferee’s Affiliates, beneficially own in the aggregate 2% or more of the
Company’s outstanding voting securities. For purposes hereof, the term “Record Date” shall mean the first
record date established by the board of directors of the Company (with the
approval and consent of at least one director designated by Parent) for the
meeting of the Company’s shareholders contemplated by Section 10.2 of the
Transaction Agreement (the “Record Date”).
(b) For the
avoidance of doubt, Parent hereby agrees and confirms that following the Sale
Release Date, Shareholder may take any action referenced in clause (ii) of
Section 4.01(a) with respect to any or all of the Shares, and that upon and to
the extent of such sale, assignment, transfer, encumbrance, or other disposition
such Shares shall no longer be subject to the terms of this Agreement, except to
the extent expressly agreed by the Person to whom the Shares are sold, assigned,
transferred or disposed of or for whose benefit the encumbrance
arises.
Section
4.02. Other Offers.
Subject to Section 5.01, Shareholder shall not, directly or indirectly, (i) take
any action to solicit or initiate any Acquisition Proposal or (ii) engage in
negotiations with, or disclose any nonpublic information relating to the Company
or any of its Subsidiaries or afford access to the properties, books or records
of, or relating to, the Company or any of its Subsidiaries to, any Person that
may be considering making, or has made, an Acquisition Proposal or has agreed,
or may be considering whether to agree, to endorse an Acquisition Proposal.
Shareholder will promptly notify Parent after receipt of an Acquisition Proposal
or any indication that any Person is considering making an Acquisition Proposal
or any request for nonpublic information relating to the Company or any of its
Subsidiaries or for access to the properties, books or records of, or relating
to, the Company or any of its Subsidiaries by any Person that may be considering
making, or has made, an Acquisition Proposal and will
keep
Parent fully informed of the status and details of any such Acquisition
Proposal, indication or request.
Section
4.03 Appraisal Rights.
Shareholder agrees not to exercise any rights to demand appraisal of any Shares
which may arise with respect to any of the transactions contemplated by the
Transaction Agreement.
ARTICLE
5
MISCELLANEOUS
Section
5.01. Action in Shareholder
Capacity Only. The parties acknowledge that this Agreement is entered
into by Shareholder solely in his or her capacity as the beneficial owner of the
Shares beneficially owned by him or her, and nothing in this Agreement shall in
any way restrict or limit any action taken or to be taken (or failure to act) by
such Shareholder in any capacity as a director or officer of the Company and the
taking of any actions (or failure to act) in his or her capacity as an officer
or director of the Company will not be deemed to constitute a breach of this
Agreement, regardless of the circumstances related thereto.
Section
5.02 Documentation and
Information. Shareholder consents to and authorizes the publication and
disclosure by Parent of Shareholder’s identity and holding of Shares, the nature
of such Shareholder’s commitments, arrangements and understandings under this
Agreement (including, for the avoidance of doubt, the disclosure of this
Agreement) and any other information that is required to be disclosed by
Applicable Law in any press release, the Company Proxy Statement (including all
schedules and documents filed with the SEC), or any other disclosure document or
registration statement in connection with the Reincorporation Merger, the Share
Exchange and any transactions contemplated by the Transaction Agreement;
provided that Shareholder is provided with a reasonable opportunity to review
and comment on any such disclosure. Shareholder agrees to promptly notify Parent
of any required corrections with respect to any information supplied by
Shareholder specifically for use in any such disclosure document, if and to the
extent that Shareholder has knowledge that any such information shall have
become false or misleading in any material respect.
Section
5.03. Other Definitional and
Interpretative Provisions. Unless specified otherwise, in this Agreement
the obligations of any party consisting of more than one person are joint and
several. The words “hereof”, “herein” and “hereunder” and words of like import
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof. References to Articles and
Sections
are to Articles and Sections of this Agreement unless otherwise specified. Any
singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular. Whenever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”, whether or not they are in fact followed by
those words or words of like import. “Writing”, “written” and comparable terms
refer to printing, typing and other means of reproducing words (including
electronic media) in a visible form. References to any agreement or contract are
to that agreement or contract as amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof.
Section
5.04. Amendments. Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement or in the case of a waiver, by the party against
whom the waiver is to be effective.
Section
5.05 Termination. (a)
Subject to paragraph (b) of this Section 5.05, this Agreement shall terminate
upon the earlier of:
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(i)
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the
Exchange Effective Time;
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(ii)
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the
mutual consent Parent and Shareholder; and
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(iii)
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the
termination of the Transaction Agreement pursuant to its
terms.
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In
addition, as noted in Section 4.01 hereof, except as expressly stated therein, a
transferee of Shares or other counterparty to a transaction contemplated
thereby, the terms of this Agreement shall not apply to any Shares that are
sold, assigned, transferred, encumbered or disposed of following the Sale
Release Date in accordance with Section 4.01.
(b) Upon
termination of this Agreement, the rights and obligations of all the parties
will terminate and become void without further action by any party except for
the provisions of this Article V, which will survive such termination, and any
provision of this Agreement which by its terms survives such
termination.
Section
5.06. Expenses. All
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.
Section
5.07. Successors and Assigns;
Third Party Beneficiaries. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto, except that
Parent
may
transfer or assign its rights and obligations to any controlled Affiliate of
Parent. For the avoidance of doubt, any sale, assignment, transfer, encumbrance
or disposition of Shares permitted by Section 4.01 shall not be regarded as an
assignment of this Agreement and no purchaser, assignee, transferee, pledge or
recipient of such Shares shall be regarded as a successor of Shareholder under
this Agreement or have any responsibility or be subject to any liability under
this Agreement. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than the parties hereto and their respective
successors and assigns any rights or remedies under or by reason of this
Agreement.
Section
5.08. Governing Law.
This Agreement shall be construed in accordance with and governed by the laws of
the Commonwealth of Pennsylvania, without regard to principles of conflicts of
law.
Section
5.09. Consent To Jurisdiction;
Jury Trial. (a) The parties hereto agree that any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the transactions contemplated
hereby shall be brought in the United States District Court for the Southern
District of New York or any New York State court sitting in New York City, so
long as one of such courts shall have subject matter jurisdiction over such
suit, action or proceeding, and that any cause of action arising out of this
Agreement shall be deemed to have arisen from a transaction of business in the
State of New York, and each of the parties hereby irrevocably consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. Process in any such suit, action or proceeding
may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court..
(b) EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section
5.10. Counterparts;
Effectiveness. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by all of the other parties hereto. Until and unless each party
has received a counterpart hereof signed by the other party hereto, this
Agreement shall have no effect and no party shall have any right or
obligation
hereunder (whether by virtue of any other oral or written agreement or other
communication).
Section
5.11. Severability. If
any term, provision or covenant of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions and covenants of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
Section
5.12. Specific
Performance. The parties hereto agree that irreparable damage would occur
in the event any provision of this Agreement is not performed in accordance with
the terms hereof and that the parties shall be entitled to specific performance
of the terms hereof in addition to any other remedy to which they are entitled
at law or in equity.
Section
5.13. No Ownership
Interest. Nothing contained in this Agreement shall be deemed to vest in
Parent any direct or indirect ownership interest or incidence of ownership of or
with respect to any Shares. Except as otherwise provided in this Agreement, all
rights, ownership and economic benefits relating to the Shares shall remain
vested in and belong to the Shareholder.
Section
5.14 Capitalized Terms; Other
Terms.
(a) Capitalized
terms used but not defined herein shall have the respective meanings set forth
in the Transaction Agreement.
(b) For
purposes of this Agreement, a person shall be deemed to “beneficially own” any
securities of which such person is considered to be a “beneficial owner” under Rule
13d-3 under the Exchange Act.
[Next page
is a signature page.]
IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
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BANCO
SANTANDER S.A.
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By:
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Name:
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Title:
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_______________
Shares
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By:
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Name:
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Title:
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SHAREHOLDER
AGREEMENT dated as of October 13, 2008 (the “Agreement”) between Banco
Santander S.A., a Spanish sociedad anónima (“Parent”), and each of the
individuals or entities listed on a signature page hereto (each, a “Shareholder”).
WHEREAS,
in order to induce Parent to enter into the Transaction Agreement, dated as of
the date hereof (the “Transaction Agreement”), with
Sovereign Bancorp, Inc., a Pennsylvania corporation (the “Company”), Parent has
requested the Shareholders, and each Shareholder has agreed, to enter into this
Agreement with respect to all shares of common stock, no par value per share, of
the Company that such Shareholder beneficially owns (the “Shares”).
NOW,
THEREFORE, the parties hereto agree as follows:
ARTICLE
1
VOTING AGREEMENT
Section
1.01. Voting
Agreement. Shareholder hereby agrees to vote (or cause to be voted) or
exercise its right to consent (or cause its right to consent to be exercised)
with respect to all Shares beneficially owned by such Shareholder that such
Shareholder is entitled to vote at the time of any vote or action by written
consent to approve and adopt the Transaction Agreement, the Reincorporation
Merger, the Share Exchange and all agreements related to the Reincorporation
Merger and the Share Exchange (collectively, the “Transactions”), at any meeting
and at any adjournment thereof, at which such Transaction Agreement and other
related agreements (or any amended version thereof) are submitted for the
consideration and vote of the shareholders of the Company. Shareholder hereby
agrees that it will not vote any Shares in favor of, or consent to, and will
vote against and not consent to, the approval of any (i) Acquisition Proposal,
(ii) reorganization, recapitalization, liquidation or winding-up of the Company
or any other extraordinary transaction involving the Company, or (iii) corporate
action the consummation of which would in any respect frustrate the purposes, or
prevent or delay, hinder, interfere with or adversely affect in any respect the
consummation, of the transactions contemplated by the Transaction
Agreement.
Section
1.02 Irrevocable
Proxy. Shareholder hereby revokes any and all previous proxies granted
with respect to the Shares. By entering into this Agreement, to the maximum
extent permitted by applicable law, Shareholder hereby grants a proxy appointing
Parent as Shareholder’s attorney-in-fact and proxy, with full power of
substitution, for and in the Shareholder’s name, to vote, express consent or
dissent, or otherwise to utilize such voting power in the
manner
contemplated by Section 1.01 above as Parent or its proxy or substitute shall,
in Parent’s sole discretion, deem proper with respect to the Shares. The proxy
granted by Shareholder pursuant to this Article 1 is irrevocable, is coupled
with an interest and is granted in consideration of Parent entering into this
Agreement and the Transaction Agreement and incurring certain related fees and
expenses. The proxy granted by Shareholder shall be revoked upon the earlier of
the termination of this Agreement in accordance with its terms and the Record
Date.
ARTICLE
2
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholder
represents and warrants to Parent (it being expressly understood that the
representations and warranties contained in this Agreement shall be made only as
of the date hereof):
Section
2.01. Corporation
Authorization. If such Shareholder is not an individual, the execution,
delivery and performance by such Shareholder of this Agreement and the
consummation by such Shareholder of the transactions contemplated hereby are
within the corporate, limited liability company, partnership or trust powers of
such Shareholder and have been duly authorized by all necessary action. This
Agreement constitutes a valid and binding Agreement of such Shareholder. If such
Shareholder is married and the Shares set forth on the signature page hereto
opposite such Shareholder’s name constitute community property under applicable
laws, this Agreement has been duly authorized, executed and delivered by, and
constitutes the valid and binding agreement of, such Shareholder’s spouse. If
this Agreement is being executed in a representative or fiduciary capacity, the
Person signing this Agreement has full power and authority to enter into and
perform this Agreement.
Section
2.02. Non-Contravention.
The execution, delivery and performance by such Shareholder of this agreement
and the consummation of the transactions contemplated hereby do not and will not
(i) if such Shareholder is not an individual, violate the certificate of
incorporation or bylaws of or similar organizational documents of such
Shareholder, (ii) violate any applicable law, rule, regulation, judgment,
injunction, order or decree, (iii) require any consent or other action by any
Person under, constitute a default under, or give rise to any right of
termination, cancellation or acceleration or to a loss of any benefit to which
such Shareholder is entitled under any provision of any agreement or other
instrument binding on such Shareholder or (iv) result in the imposition of any
Lien on any asset of such Shareholder.
Section
2.03. Ownership of
Shares. Such Shareholder is the beneficial owner of the Shares, free and
clear of any Lien and any other limitation or
restriction
(including any restriction on the right to vote or otherwise dispose of the
Shares). None of the Shares is subject to any voting trust, proxy or other
agreement or arrangement with respect to the voting of such Shares, except as
contemplated by this Agreement.
Section
2.04. Reliance. Such
Shareholder understands and acknowledges that Parent is entering into the
Transaction Agreement in reliance upon such Shareholder’s execution, delivery
and performance of this Agreement.
Section
2.05. Total
Shares. Except for the Shares set forth on the signature page hereto, as
of the date of this Agreement such Shareholder does not beneficially own any (i)
shares of capital stock or voting securities of the Company, (ii) securities of
the Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company or (iii) options or other rights to acquire
from the Company any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of the
Company.
Section
2.06. Finder’s
Fees. No investment banker, broker, finder or other intermediary is
entitled to a fee or commission from Parent or the Company in respect of this
Agreement by reason of any arrangement or agreement made by such
Shareholder.
ARTICLE
3
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent
represents and warrants to Shareholder:
Section
3.01. Corporation
Authorization. The execution, delivery and performance by Parent of this
Agreement and the consummation by Parent of the transactions contemplated hereby
are within the corporate (or similar) powers of Parent and have been duly
authorized by all necessary corporate (or similar) action. This Agreement
constitutes a valid and binding agreement of Parent.
ARTICLE
4
COVENANTS OF SHAREHOLDER
Shareholder
hereby covenants and agrees that:
Section
4.01. No Transfer
of, Proxies for, or Encumbrances on, Shares. (a) Except pursuant to the
terms of this Agreement or as required by the Investment Arrangements, no
Shareholder shall (nor permit any person under such Shareholder’s control to),
without the prior written consent of Parent,
directly
or indirectly, (i) grant any proxies or enter into any voting trust or other
agreement or arrangement with respect to the voting of any Shares or (ii) sell
(including short sell), assign, transfer, encumber or otherwise dispose of, or
enter into any contract (including any hedging or derivative agreement or other
similar agreement), option or other arrangement (including any profit sharing
arrangement) or understanding with respect to the direct or indirect sale
(including short sale), assignment, transfer, encumbrance or other disposition
of, any Shares, in each case on or prior to the earlier of the Record Date and
June 30, 2009 (the “Sale
Release Date”). After the Sale Release Date, no such sale, assignment,
transfer, encumbrance, disposition, entering into of any contract, option or
other arrangement or understanding with respect to the direct or indirect sale,
assignment, transfer, encumbrance or other disposition of any Shares shall be
made by any Shareholder other than in (i) open market sales not exceeding in any
one trading day 20% of the Company’s average daily volume for the previous 30
trading days, or (ii) privately negotiated sales, provided that the transferee
immediately following any such transaction would not, together with such
transferee’s Affiliates, beneficially own in the aggregate 2% or more of the
Company’s outstanding voting securities. For purposes hereof, the term “Record Date” shall mean the first
record date established by the board of directors of the Company (with the
approval and consent of at least one director designated by Parent) for the
meeting of the Company’s shareholders contemplated by Section 10.2 of
the Transaction Agreement (the “Record Date”).
(b) For
the avoidance of doubt, Parent hereby agrees and confirms that following the
Sale Release Date, Shareholder may take any action referenced in clause (ii) of
Section 4.01(a) with respect to any or all of the Shares, and that upon and to
the extent of such sale, assignment, transfer, encumbrance, or other disposition
such Shares shall no longer be subject to the terms of this Agreement, except to
the extent expressly agreed by the Person to whom the Shares are sold, assigned,
transferred or disposed of or for whose benefit the encumbrance
arises.
Section
4.02. Other Offers.
Subject to Section 5.01, Shareholder shall not, directly or indirectly, (i) take
any action to solicit or initiate any Acquisition Proposal or (ii) engage in
negotiations with, or disclose any nonpublic information relating to the Company
or any of its Subsidiaries or afford access to the properties, books or records
of, or relating to, the Company or any of its Subsidiaries to, any Person that
may be considering making, or has made, an Acquisition Proposal or has agreed,
or may be considering whether to agree, to endorse an Acquisition Proposal.
Shareholder will promptly notify Parent after receipt of an Acquisition Proposal
or any indication that any Person is considering making an Acquisition Proposal
or any request for nonpublic information relating to the Company or any of its
Subsidiaries or for access to the properties, books or records of, or relating
to, the Company or any of its Subsidiaries by any Person that may be considering
making, or has made, an Acquisition Proposal and will
keep
Parent fully informed of the status and details of any such Acquisition
Proposal, indication or request.
Section
4.03 Appraisal Rights.
Shareholder agrees not to exercise any rights to demand appraisal of any Shares
which may arise with respect to any of the transactions contemplated by the
Transaction Agreement.
ARTICLE
5
MISCELLANEOUS
Section
5.01. Action in
Shareholder Capacity Only. The parties acknowledge that this Agreement is
entered into by Shareholder solely in his or her capacity as the beneficial
owner of the Shares beneficially owned by him or her, and nothing in this
Agreement shall in any way restrict or limit any action taken or to be taken (or
failure to act) by such Shareholder in any capacity as a director or officer of
the Company and the taking of any actions (or failure to act) in his or her
capacity as an officer or director of the Company will not be deemed to
constitute a breach of this Agreement, regardless of the circumstances related
thereto.
Section
5.02 Documentation
and Information. Shareholder consents to and authorizes the publication
and disclosure by Parent of Shareholder’s identity and holding of Shares, the
nature of such Shareholder’s commitments, arrangements and understandings under
this Agreement (including, for the avoidance of doubt, the disclosure of this
Agreement) and any other information that is required to be disclosed by
Applicable Law in any press release, the Company Proxy Statement (including all
schedules and documents filed with the SEC), or any other disclosure document or
registration statement in connection with the Reincorporation Merger, the Share
Exchange and any transactions contemplated by the Transaction Agreement;
provided that Shareholder is provided with a reasonable opportunity to review
and comment on any such disclosure. Shareholder agrees to promptly notify Parent
of any required corrections with respect to any information supplied by
Shareholder specifically for use in any such disclosure document, if and to the
extent that Shareholder has knowledge that any such information shall have
become false or misleading in any material respect.
Section
5.03. Other
Definitional and Interpretative Provisions. Unless specified otherwise,
in this Agreement the obligations of any party consisting of more than one
person are joint and several. The words “hereof”, “herein” and “hereunder” and
words of like import used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. The captions herein
are included for convenience of reference only and shall be ignored in the
construction or interpretation hereof. References to Articles and
Sections
are to Articles and Sections of this Agreement unless otherwise specified. Any
singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular. Whenever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”, whether or not they are in fact followed by
those words or words of like import. “Writing”, “written” and comparable terms
refer to printing, typing and other means of reproducing words (including
electronic media) in a visible form. References to any agreement or contract are
to that agreement or contract as amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof.
Section
5.04. Amendments. Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement or in the case of a waiver, by the party against
whom the waiver is to be effective.
Section
5.05 Termination. (a) Subject to
paragraph (b) of this Section 5.05, this Agreement shall terminate upon the
earlier of:
(i)
the
Exchange Effective Time;
(ii)
the
mutual consent Parent and Shareholder; and
(iii)
the
termination of the Transaction Agreement pursuant to its
terms.
In
addition, as noted in Section 4.01 hereof, except as expressly stated therein, a
transferee of Shares or other counterparty to a transaction contemplated
thereby, the terms of this Agreement shall not apply to any Shares that are
sold, assigned, transferred, encumbered or disposed of following the Sale
Release Date in accordance with Section 4.01.
(b) Upon
termination of this Agreement, the rights and obligations of all the parties
will terminate and become void without further action by any party except for
the provisions of this Article V, which will survive such termination, and any
provision of this Agreement which by its terms survives such
termination.
Section
5.06. Expenses. All
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.
Section
5.07. Successors
and Assigns; Third Party Beneficiaries. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto, except that
Parent
may
transfer or assign its rights and obligations to any controlled Affiliate of
Parent. For the avoidance of doubt, any sale, assignment, transfer, encumbrance
or disposition of Shares permitted by Section 4.01 shall not be regarded as an
assignment of this Agreement and no purchaser, assignee, transferee, pledge or
recipient of such Shares shall be regarded as a successor of Shareholder under
this Agreement or have any responsibility or be subject to any liability under
this Agreement. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than the parties hereto and their respective
successors and assigns any rights or remedies under or by reason of this
Agreement.
Section
5.08. Governing Law.
This Agreement shall be construed in accordance with and governed by the laws of
the Commonwealth of Pennsylvania, without regard to principles of conflicts of
law.
Section
5.09. Consent To
Jurisdiction; Jury Trial. (a) The parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in the United States District Court for the
Southern District of New York or any New York State court sitting in New York
City, so long as one of such courts shall have subject matter jurisdiction over
such suit, action or proceeding, and that any cause of action arising out of
this Agreement shall be deemed to have arisen from a transaction of business in
the State of New York, and each of the parties hereby irrevocably consents to
the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding in any such
court or that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court..
(b) EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section
5.10. Counterparts;
Effectiveness. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by all of the other parties hereto. Until and unless each party
has received a counterpart hereof signed by the other party hereto, this
Agreement shall have no effect and no party shall have any right or
obligation
hereunder (whether by virtue of any other oral or written agreement or other
communication).
Section
5.11. Severability. If
any term, provision or covenant of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions and covenants of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
Section
5.12. Specific
Performance. The parties hereto agree that irreparable damage would occur
in the event any provision of this Agreement is not performed in accordance with
the terms hereof and that the parties shall be entitled to specific performance
of the terms hereof in addition to any other remedy to which they are entitled
at law or in equity.
Section
5.13. No Ownership
Interest. Nothing contained in this Agreement shall be deemed to vest in
Parent any direct or indirect ownership interest or incidence of ownership of or
with respect to any Shares. Except as otherwise provided in this Agreement, all
rights, ownership and economic benefits relating to the Shares shall remain
vested in and belong to the Shareholder.
Section
5.14 Capitalized
Terms; Other Terms.
(a) Capitalized
terms used but not defined herein shall have the respective meanings set forth
in the Transaction Agreement.
(b) For
purposes of this Agreement, a person shall be deemed to “beneficially own” any
securities of which such person is considered to be a “beneficial owner” under Rule
13d-3 under the Exchange Act.
[Next page
is a signature page.]
IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
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BANCO
SANTANDER S.A.
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By:
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Name:
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Title:
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_____________________
Shares
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By:
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Name:
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Title:
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Exhibit
B
ARTICLES
OF INCORPORATION
OF
[___________________________]
ARTICLE
I
The name
of the Corporation is [_____________________________].
ARTICLE
II
The
purpose for which the Corporation is formed is to transact any or all lawful
business, not required to be specifically stated in these Articles, for which
corporations may be incorporated under the Virginia Stock Corporation Act, as
amended from time to time (the “VSCA”).
ARTICLE
III
The total
number of shares of capital stock which the Corporation shall have authority to
issue is [________________] shares, of which [________________] shares shall be
shares of Preferred Stock, [without] par value [$___] per share (“Preferred
Stock”), and [__________________] shares shall be shares of common stock,
[without] par value [$___] per share (“Common Stock”).
A
description of the respective classes of stock and a statement of the
designations, preferences, voting powers (or special, preferential or no voting
power), relative, participating, optional or other special rights and privileges
and the qualifications, limitations and restrictions of the Preferred Stock and
Common Stock are as follows:
PART
A
PREFERRED
STOCK
1. Issuance in
Series. The Preferred Stock may be issued in one or more
series at such time or times and for such consideration as the Board of
Directors of the Corporation may determine. Each series shall be so
designated as to distinguish the shares thereof from the shares of all other
series and classes. Except as otherwise required by law or provided
in these Articles of Incorporation, different series of Preferred Stock shall
not be construed to constitute separate voting groups for the purpose of voting
by separate voting groups.
The Board
of Directors is expressly authorized to provide for the issuance of all or any
shares of the undesignated Preferred Stock in one or more series, each with such
designations, preferences, voting powers (or special, preferential or no voting
powers), relative, participating, optional or other special rights and
privileges and such qualifications, limitations or restrictions thereof as shall
be stated in the articles of amendment adopted by the Board of Directors to
create such series. The authority of the Board of Directors with
respect to each such series shall include, without limitation of the foregoing,
the right to provide that the shares of each such
series may
be: (i) subject to redemption at such time or times and at such price or prices;
(ii) entitled to receive dividends (which may be cumulative or noncumulative) at
such rates, on such conditions, and at such times, and payable in preference to,
or in such relation to, the dividends payable on any other class or classes or
any other series; (iii) entitled to such rights upon the dissolution of, or upon
any distribution of the assets of, the Corporation; (iv) convertible into, or
exchangeable for, shares of any other class or classes of stock, or of any other
series of the same or any other class or classes of the Corporation at such
price or prices or at such rates of exchange and with such adjustments, if any;
(v) entitled to the benefit of such limitations, if any, on the issuance of
additional shares of such series or shares of any other series of Preferred
Stock; or (vi) entitled to such other preferences, powers, qualifications,
rights and privileges, all as the Board of Directors may deem advisable and as
are not inconsistent with law and the provisions of these Articles of
Incorporation.
2. Series C Non-Cumulative
Perpetual Preferred Stock. There is hereby established a
series of the Corporation’s authorized Preferred Stock, to be designated as the
“Series C Non-Cumulative Perpetual Preferred Stock” The designation
and number, and relative rights, preferences and limitations of the Series C
Non-Cumulative Perpetual Preferred Stock, insofar as not already fixed by any
other provision of the Articles of Incorporation, shall be as
follows:
Section
1. Designation. The
designation of the series of preferred stock shall be Series C Non-Cumulative
Perpetual Preferred Stock (“Series C Preferred Stock”). Each share of
Series C Preferred Stock shall be identical in all respects to each other share
of Series C Preferred Stock. Series C Preferred Stock will rank equally with
Parity Stock (as hereinafter defined), if any, and will rank senior to Junior
Stock (as hereinafter defined) with respect to the payment of dividends and the
distribution of assets in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation.
Section
2. Par Value; Number of
Shares. Shares of the Series C Preferred Stock shall have no
par value. The number of authorized shares of Series C Preferred
Stock shall be 8,000. Such number may from time to time be increased
(but not in excess of the total number of authorized shares of preferred stock)
or decreased (but not below the number of shares of Series C Preferred Stock
then outstanding) by further resolution duly adopted by the Board of Directors
or any duly authorized committee of the Board of Directors and by filing an
amendment to these Articles of Incorporation pursuant to Section 13.1-639 of the
VSCA, stating that such increase or reduction, as the case may be, has been so
authorized. The Corporation shall have the authority to issue
fractional shares of Series C Preferred Stock.
Section
3. Definitions. As
used herein with respect to Series C Preferred Stock:
“Business
Day” means each Monday, Tuesday, Wednesday, Thursday or Friday on which banking
institutions are not required or permitted by law, regulation or executive order
to close in New York, New York or Philadelphia, Pennsylvania.
“Depositary
Company” shall have the meaning set forth in Section 6(d) hereof.
2
“Dividend
Payment Date” shall have the meaning set forth in Section 4(a)
hereof.
“Dividend
Period” shall have the meaning set forth in Section 4(a) hereof.
“DTC”
means The Depositary Trust Company, together with its successors and
assigns.
“Junior
Stock” means the Corporation’s common stock and any other class or series of
stock of the Corporation hereafter authorized over which Series C Preferred
Stock has preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
“Parity
Stock” means any other class or series of stock of the Corporation that ranks
equally with the Series C Preferred Stock in the payment of dividends and in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
“Preferred
Directors” shall have the meaning set forth in Section 7 hereof.
“Series C
Preferred Stock” shall have the meaning set forth in Section 1
hereof.
Section 4.
Dividends.
(a) Rate. Holders of
Series C Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors or any duly authorized committee of the Board of
Directors, but only out of assets legally available therefor, non-cumulative
cash dividends on the liquidation preference of $25,000 per share of Series C
Preferred Stock, and no more, payable quarterly in arrears on each February 15,
May 15, August 15 and November 15, commencing on August 15, 2006; provided,
however, if any such day is not a Business Day, then payment of any dividend
otherwise payable on that date will be made on the next succeeding day that is a
Business Day (without any interest or other payment in respect of such delay)
(each such day on which dividends are payable is referred to herein as a
“Dividend Payment Date”). A “Dividend Period” is the period from and
including a Dividend Payment Date to but excluding the next Dividend Payment
Date, except that the initial Dividend Period will commence on and include the
original issue date of the Series C Preferred Stock. Dividends on
each share of Series C Preferred Stock will accrue, on a non-cumulative basis,
on the liquidation preference of $25,000 per share at an annual rate of
7.30%. Dividends, if declared by the Board of Directors or a duly
authorized committee of the Board of Directors, will be payable to holders of
record of Series C Preferred Stock as they appear on our books on the applicable
record date, which shall be the first day of the calendar month during which the
dividend payment date falls, or such other record date fixed by the Board of
Directors or a duly authorized committee of the Board of Directors from time to
time, which shall not be more than 60 nor less than 10 days prior to such
dividend payment date. Dividends payable on the Series C Preferred
Stock will be computed on the basis of a 360-day year consisting of twelve
30-day months.
3
(b) Non-Cumulative
Dividends. Dividends on shares of Series C Preferred Stock
shall be non-cumulative. To the extent that any dividends on the
shares of Series C Preferred Stock with respect to any Dividend Period are not
declared and paid, in full or otherwise, on or before such Dividend Payment
Date, then such unpaid dividends shall not cumulate and shall cease to accrue
and be payable, and the Corporation shall have no obligation to pay, and the
holders of Series C Preferred Stock shall have no right to receive, dividends
accrued for such Dividend Period on or after the Dividend Payment Date for such
Dividend Period or interest with respect to such dividends, whether or not
dividends are declared for any subsequent Dividend Period with respect to Series
C Preferred Stock, Parity Stock, Junior Stock or any other class or series of
authorized capital stock of the Corporation.
(c) Priority of
Dividends. So long as any share of Series C Preferred Stock
remains outstanding, (i) no dividend or other distribution shall be declared or
paid or set aside for payment and no distribution shall be declared or made or
set aside for payment on any Junior Stock, other than a dividend payable solely
in Junior Stock, (ii) no shares of Junior Stock shall be repurchased, redeemed
or otherwise acquired for consideration by the Corporation, directly or
indirectly (other than as a result of a reclassification of Junior Stock for or
into Junior Stock, or the exchange or conversion of one share of Junior Stock
for or into another share of Junior Stock, or other than through the use of the
proceeds of a substantially contemporaneous sale of other shares of Junior
Stock), nor shall any monies be paid to or made available for a sinking fund for
the redemption of any such securities by the Corporation and (iii) no shares of
Parity Stock shall be repurchased, redeemed or otherwise acquired for
consideration by the Corporation otherwise than pursuant to pro rata offers to
purchase all, or a pro rata portion, of the Series C Preferred Stock and such
Parity Stock except by conversion into or exchange for Junior Stock, during a
Dividend Period, unless, in each case, the full dividends for the then-current
Dividend Period on all outstanding shares of Series C Preferred Stock have been
declared and paid or declared and a sum sufficient for the payment thereof has
been set aside. When dividends are not paid in full upon the shares
of Series C Preferred Stock and any Parity Stock, all dividends declared upon
shares of Series C Preferred Stock and any Parity Stock shall be declared on a
proportional basis so that the amount of dividends declared per share will bear
to each other the same ratio that accrued dividends for the then-current
Dividend Period per share on Series C Preferred Stock, and accrued dividends,
including any accumulations on Parity Stock, bear to each other. No
interest will be payable in respect of any dividend payment on shares of Series
C Preferred Stock that may be in arrears. Subject to the foregoing,
and not otherwise, such dividends (payable in cash, stock or otherwise) as may
be determined by the Board of Directors or any duly authorized committee of the
Board of Directors may be declared and paid on any Junior Stock from time to
time out of any assets legally available therefor, and the shares of Series C
Preferred Stock shall not be entitled to participate in any such
dividend.
Section
5. Liquidation
Rights.
(a) Liquidation. In
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Corporation, holders of Series C Preferred Stock shall be
entitled, out of assets legally available therefor, before any distribution or
payment out
4
of the
assets of the Corporation may be made to or set aside for the holders of any
Junior Stock and subject to the rights of the holders of any class or series of
securities ranking senior to Series C Preferred Stock upon liquidation, and the
rights of the Corporation’s depositors and other creditors, to receive a
liquidating distribution in the amount of the liquidation preference of $25,000
per share, plus any authorized, declared and unpaid dividends, without
accumulation of any undeclared dividends, to the date of
liquidation. The holders of Series C Preferred Stock shall not be
entitled to any further payments in the event of any such voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation other than what is expressly provided for in this Section
5.
(b) Partial
Payment. If the assets of the Corporation are not sufficient
to pay in full the liquidation preference plus any authorized, declared and
unpaid dividends to all holders of Series C Preferred Stock and all holders of
any Parity Stock, the amounts paid to the holders of Series C Preferred Stock
and to the holders of all Parity Stock shall be pro rata in accordance with the
respective aggregate liquidation preferences plus any authorized, declared and
unpaid dividends of Series C Preferred Stock and all such Parity
Stock.
(c) Residual
Distributions. If the liquidation preference plus any
authorized, declared and unpaid dividends has been paid in full to all holders
of Series C Preferred Stock and all holders of any Parity Stock, the holders of
Junior Stock shall be entitled to receive all remaining assets of the
Corporation according to their respective rights and preferences.
(d) Merger, Consolidation and Sale of
Assets Not Liquidation. For purposes of this Section 5, the
sale, lease, exchange or other transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of the property and assets
of the Corporation shall not be deemed a voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation, nor shall the
merger, consolidation or any other business combination transaction of the
Corporation into or with any other corporation or person or the merger,
consolidation or any other business combination transaction of any other
corporation or person into or with the Corporation, including a merger or
consolidation in which holders of Series C Preferred Stock receive cash,
securities or other property for their shares, be deemed to be a voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Corporation.
Section
6. Redemption.
(a) Optional
Redemption. The Corporation, at the option of the Board of
Directors or any duly authorized committee of the Board of Directors, subject to
the prior approval of the Office of Thrift Supervision (or any successor bank
regulatory agency having jurisdiction over the Corporation) if then required,
may redeem, in whole or in part, the shares of Series C Preferred Stock at the
time outstanding, at any time on or after May 15, 2011, upon notice given as
provided in Section 6(b) below. The redemption price for shares of
Series C Preferred Stock shall be $25,000 per share plus dividends that have
been declared but not paid. The holders of Series C Preferred Stock
shall not have the right to require or cause the Corporation to repurchase or
redeem the Series C Preferred Stock.
5
(b) Notice of
Redemption. Notice of every redemption of shares of Series C
Preferred Stock shall be mailed by first class mail, postage prepaid, addressed
to the holders of record of such shares to be redeemed at their respective last
addresses appearing on the stock register of the Corporation. Such
mailing shall be at least 30 days and not more than 60 days before the date
fixed for redemption. Notwithstanding the foregoing, if the Series C
Preferred Stock is held in book-entry form through DTC, the Corporation may give
such notice in any manner permitted by DTC. Any notice mailed as
provided in this Section 6(b) shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice, but failure duly to give
such notice by mail, or any defect in such notice or in the mailing thereof, to
any holder of shares of Series C Preferred Stock designated for redemption shall
not affect the validity of the proceedings for the redemption of any other
shares of Series C Preferred Stock. Each notice shall state (i) the
redemption date; (ii) the number of shares of Series C Preferred Stock to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed by such holder; (iii) the
redemption price; (iv) the place or places where the certificates for such
shares are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on the redemption
date.
(c) Partial
Redemption. In case of any redemption of only part of the
shares of Series C Preferred Stock at the time outstanding, the shares of Series
C Preferred Stock to be redeemed shall be selected either pro rata from the
holders of record of Series C Preferred Stock in proportion to the number of
Series C Preferred Stock held by such holders or in such other manner as the
Board of Directors or any duly authorized committee of the Board of Directors
may determine to be fair and equitable. Subject to the provisions of
this Section 6, the Board of Directors or any duly authorized committee of the
Board of Directors shall have full power and authority to prescribe the terms
and conditions upon which shares of Series C Preferred Stock shall be redeemed
from time to time.
(d) Effectiveness of
Redemption. If notice of redemption has been duly given and if
on or before the redemption date specified in the notice all funds necessary for
the redemption have been set aside by the Corporation, separate and apart from
its other assets, in trust for the pro rata benefit of the holders of the shares
called for redemption, so as to be and continue to be available therefor, or
deposited by the Corporation with a bank or trust company selected by the Board
of Directors or any duly authorized committee of the Board of Directors (the
“Depositary Company”) in trust for the pro rata benefit of the holders of the
shares called for redemption, then, notwithstanding that any certificate for any
share so called for redemption has not been surrendered for cancellation, on and
after the redemption date all shares so called for redemption shall cease to be
outstanding, all dividends with respect to such shares shall cease to accrue
after such redemption date, and all rights with respect to such shares shall
forthwith on such redemption date cease and terminate, except only the right of
the holders thereof to receive the amount payable on such redemption from such
bank or trust company at any time after the redemption date from the funds so
deposited, without interest. The Corporation shall be entitled to
receive, from time to time, from the Depositary Company any interest accrued on
such funds, and the holders of any shares called for redemption shall have no
claim to any such interest. Any
6
funds so
deposited and unclaimed at the end of three years from the redemption date
shall, to the extent permitted by law, be released or repaid to the Corporation,
and in the event of such repayment to the Corporation, the holders of record of
the shares so called for redemption shall be deemed to be unsecured creditors of
the Corporation for an amount equivalent to the amount deposited as stated above
for the redemption of such shares and so repaid to the Corporation, but shall in
no event be entitled to any interest.
(e) Any
redemption of the Series C Preferred Stock is subject to the prior approval of
the Office of Thrift Supervision (or any successor bank regulatory agency having
jurisdiction over the Corporation), if such approval is then
required.
Section
7. Voting
Rights. The holders of Series C Preferred Stock will have no
voting rights and will not be entitled to elect any directors, except as
expressly provided by law and except that:
(a) Supermajority Voting Rights — Senior
Securities. Unless the vote or consent of the holders of a
greater number of shares shall then be required by law, the affirmative vote or
consent of the holders of at least two-thirds of all of the shares of (i) Series
C Preferred Stock and (ii) any other class or series of preferred stock that
ranks on parity with the Series C Preferred Stock as to payment of dividends or
distribution of assets upon liquidation, dissolution or winding up of the
Corporation, outstanding at the time, voting together as a single class, given
in person or by proxy, at any special or annual meeting called for the purpose,
will be necessary to permit, effect or validate the creation or issuance, or any
increase in the authorized or issued amount of any class or series of stock
(including any class or series of preferred stock) ranking senior to the Series
C Preferred Stock as to payment of dividends or distribution of assets upon
liquidation, dissolution or winding up of the Corporation;
(b) Supermajority Voting Rights —
Securities Convertible into Senior Securities. At the election
of the Corporation, either (i) the creation or issuance of any obligation or
security convertible into, or evidencing the right to purchase, any class or
series of stock (including any class or series of preferred stock) ranking
senior to the Series C Preferred Stock as to payment of dividends or
distribution of assets upon liquidation, dissolution or winding up of the
Corporation or (ii) the conversion of any convertible security into, or the
exercise of any right to purchase, any class or series of stock (including any
class or series of preferred stock) ranking senior to the Series C Preferred
Stock as to payment of dividends or distribution of assets upon liquidation,
dissolution or winding up of the Corporation, shall require the affirmative vote
or consent of the holders of at least two-thirds of all of the shares, unless
the vote or consent of the holders of a greater number of shares shall then be
required by law, of (x) Series C Preferred Stock and (y) any other class or
series of preferred stock that ranks on parity with the Series C Preferred Stock
as to payment of dividends or distribution of assets upon liquidation,
dissolution or winding up of the Corporation, outstanding at the time, voting
together as a single class, given in person or by proxy, at any special or
annual meeting called for the purpose; and
(c) Supermajority Voting Rights —
Amendment. Unless the vote or consent of the holders of a
greater number of shares shall then be required by law, the affirmative vote or
7
consent of
the holders of at least two-thirds of all of the shares of (i) Series C
Preferred Stock and (ii) any other class or series of preferred stock whose
rights, preferences, privileges or voting powers would be materially and
adversely affected that ranks on parity with the Series C Preferred Stock as to
payment of dividends or distribution of assets upon liquidation, dissolution or
winding up of the Corporation, outstanding at the time, voting together as a
single class, given in person or by proxy, at any special or annual meeting
called for the purpose, will be necessary to permit, effect or validate the
amendment, alteration or repeal of any of the provisions of the Corporation’s
Articles of Incorporation with respect to the Series C Preferred Stock or any
other series of preferred stock, if such amendment, alteration or repeal would
materially and adversely affect any right, preference, privilege or voting power
of the Series C Preferred Stock or of the holders thereof; provided, however ,
that (x) any increase in the amount of authorized preferred stock, the Series C
Preferred Stock, or any other capital stock of the Corporation, or the creation
and issuance of other series of preferred stock, including convertible preferred
stock, or any other capital stock of the Corporation, in each case ranking on a
parity with or junior to the Series C Preferred Stock with respect to the
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, shall not be deemed to materially
and adversely affect any right, preference, privilege or voting power of the
Series C Preferred Stock or the holders thereof and (y) in no event shall any
merger, consolidation or other similar transaction involving the Corporation,
including any future transaction contemplated by the Investment Agreement, dated
as of October 24, 2005 and amended as of November 22, 2005, between the
Corporation and Banco Santander Central Hispano, S.A., require the approval of
the holders of the Series C Preferred Stock, except (1) to the extent any right,
preference, privilege or voting power of the Series C Preferred Stock is
materially and adversely changed as a result of such merger, consolidation or
similar transaction, and (2) to the extent required by law.
(d) Special Voting
Right.
(i) Voting Right. If
and whenever dividends on any shares of the Series C Preferred Stock or any
other class or series of preferred stock that ranks on parity with the Series C
Preferred Stock as to payment of dividends, and upon which similar voting rights
have been conferred and are exercisable, shall have not been declared and paid
for an amount equal to six or more Dividend Periods, whether or not for
consecutive Dividend Periods (a “Nonpayment”), the Board of Directors will be
expanded by two members and the holders of the Series C Preferred Stock
(together with holders of any and all other classes of the Corporation’s
authorized preferred stock having equivalent voting rights, whether or not the
holders of such preferred stock would be entitled to vote for the election of
directors if such default in dividends did not exist) will be entitled to vote
together as a single class (to the exclusion of the holders of common stock) for
the election of two directors of the Corporation to fill such vacancies (the
“Preferred Directors”), provided that the election of the Preferred Directors
shall not cause the Corporation to violate the corporate governance requirement
of the New York Stock Exchange (or any other exchange on which the Corporation’s
securities may be listed) that listed companies must have a majority of
independent directors, and provided further that the Board of Directors shall at
no time include more than two Preferred Directors.
8
(ii) Election. The
election of the Preferred Directors will take place at any annual meeting of
shareholders or any special meeting of the holders of Series C Preferred Stock,
and any other class or series of the Corporation’s stock that ranks on parity
with Series C Preferred Stock as to payment of dividends and for which dividends
have not been paid, called as provided herein. At any time after the
special voting power has vested pursuant to Section 7(d)(i) above, the Board of
Directors, within 30 days after the receipt of written request of at least 20%
of the aggregate liquidation preference of the Series C Preferred Stock (and any
other class or series of preferred stock that ranks on parity with Series C
Preferred Stock as to payment of dividends and for which dividends have not been
paid for six or more Dividend Periods) (“Meeting Request”) shall (unless such
Meeting Request is received less than 90 days before the date fixed for the next
annual or special meeting of shareholders, in which event such election shall be
held at such next annual or special meeting of shareholders), call a meeting of
the holders of Series C Preferred Stock (and any other class or series of
preferred stock that ranks on parity with Series C Preferred Stock as to payment
of dividends and for which dividends have not been paid for six or more Dividend
Periods) for the election of the Preferred Directors to be elected by them as
provided in Section 7(d)(iii) below. The Preferred Directors shall
each be entitled to one vote on any matter.
(iii) Notice for Special
Meeting. Notice for a special meeting of holders of the Series
C Preferred Stock (and any other class or series of preferred stock that ranks
on parity with Series C Preferred Stock as to payment of dividends and for which
dividends have not been paid for six or more Dividend Periods) shall be given in
the manner provided in the Corporation’s bylaws for a special meeting of the
Corporation’s shareholders. The Preferred Directors elected at any
special or annual meeting will hold office until the next annual meeting of the
Corporation’s shareholders, unless the Preferred Directors have been previously
terminated or removed pursuant to Section 7(d)(iv) below. So long as
a Nonpayment continues, any vacancy in the office of a Preferred Director (other
than prior to the initial election of a Preferred Director) may be filled by the
vote of the holders of record of a majority of the outstanding shares of Series
C Preferred Stock (together with any and all other class or series of the
Corporation’s authorized preferred stock having equivalent voting rights,
whether or not the holders of such preferred stock would be entitled to vote for
the election of directors if such default in dividends did not exist) to serve
until the next annual meeting of shareholders.
(iv) Termination;
Removal. If and when full dividends on the Series C Preferred
Stock have been regularly paid for at least four subsequent dividend periods,
whether or not consecutive, following a Nonpayment on the Series C Preferred
Stock and any other class or series of preferred stock that ranks on parity with
the Series C Preferred Stock as to payment of dividends, the holders of the
Series C Preferred Stock shall be divested of the foregoing voting rights
(subject to revesting in the event of each subsequent Nonpayment), and the terms
of office of the Preferred Directors shall immediately terminate and the number
of directors on the Board of Directors shall automatically decrease by
two. The Preferred Directors may be removed at any time without cause
by the holders of record of a majority of the outstanding shares of the Series C
Preferred Stock (together with holders of any and all other classes of the
Corporation’s authorized preferred stock having equivalent voting rights,
whether or not the holders of such
9
preferred
stock would be entitled to vote for the election of directors if such default in
dividends did not exist) when they have the voting rights described in this
Section 7(d).
(e) For
purposes of this Section 7, each holder of Series C Preferred Stock and any
other class or series of preferred stock that ranks on parity with the Series C
Preferred Stock as to payment of dividends, which is entitled to vote on any
matter, will be entitled to vote with respect to such matter, together as a
single class, pro rata in accordance with the respective aggregate liquidation
preference of all shares of Series C Preferred Stock and such other class or
series of preferred stock owned by each holder which is entitled to vote on such
matter.
(f) The
foregoing voting provisions will not apply if, at or prior to the time when the
act with respect to which such vote would otherwise be required shall be
effected, all outstanding shares of Series C Preferred Stock shall have been
redeemed or called for redemption upon proper notice and sufficient funds shall
have been set aside by the Corporation for the benefit of the holders of the
Series C Preferred Stock to effect such redemption, as provided in Section 6(d)
above.
Section
8. Conversion. The
holders of Series C Preferred Stock shall not have any rights to convert such
Series C Preferred Stock into shares of any other class of capital stock of the
Corporation.
Section
9. Rank. Notwithstanding
anything set forth in the Articles of Incorporation or otherwise provided herein
to the contrary, the Board of Directors or any authorized committee of the Board
of Directors, without the vote of the holders of the Series C Preferred Stock,
may authorize and issue additional shares of Junior Stock, Parity Stock or,
subject to the voting rights granted in Sections 7(a) and 7(b), any class of
securities ranking senior to the Series C Preferred Stock as to dividends and
the distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation.
Section
10. Repurchase. Subject
to the limitations imposed herein, the Corporation may purchase and sell Series
C Preferred Stock from time to time to such extent, in such manner, and upon
such terms as the Board of Directors or any duly authorized committee of the
Board of Directors may determine; provided, however, that the Corporation shall
not use any of its funds for any such purchase when there are reasonable grounds
to believe that the Corporation is, or by such purchase would be, rendered
insolvent.
Section
11. Unissued or Reacquired
Shares. Shares of Series C Preferred Stock not issued or which
have been issued and redeemed or otherwise purchased or acquired by the
Corporation shall be restored to the status of authorized but unissued shares of
preferred stock without designation as to series.
Section
12. No Sinking
Fund. Shares of Series C Preferred Stock are not subject to
the operation of a sinking fund.
10
PART
B
COMMON
STOCK
1. General. The
voting, dividend and liquidation rights of the holders of the Common Stock are
subject to and qualified by the rights of holders of the Preferred
Stock.
2. Dividends. Dividends
may be declared and paid on the Common Stock from funds lawfully available
therefor as and when determined by the Board of Directors and subject to any
preferential dividend rights of any then outstanding Preferred
Stock.
3. Dissolution, Liquidation or
Winding Up. In the event of any dissolution, liquidation or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
each issued and outstanding share of Common Stock shall entitle the holder
thereof to receive an equal portion of the net assets of the Corporation
available for distribution to holders of Common Stock, subject to any
preferential rights of any then outstanding Preferred Stock.
4. Voting
Rights. Except as otherwise required by law or these Articles
of Incorporation, each holder of Common Stock shall have one vote in respect of
each share of Common Stock held by such holder of record on the books of the
Corporation for the election of directors and on all matters submitted to a vote
of shareholders of the Corporation.
PART
C
PROVISIONS
APPLICABLE TO ALL CLASSES OF CAPITAL STOCK
1. No Preemptive
Rights. No holder of shares of any class of the Corporation
shall have any preemptive or preferential right to purchase or subscribe to (i)
any shares of any class of the Corporation, whether now or hereafter authorized;
(ii) any warrants, rights, or options to purchase any such shares; or (iii) any
securities or obligations convertible into any such shares or into warrants,
rights, or options to purchase any such shares.
2. Merger, Share Exchange,
Etc. Except as otherwise required in these Articles of
Incorporation as they may hereafter be amended, a merger, statutory share
exchange, sale or other disposition of all or substantially all the
Corporation’s assets otherwise than in the usual and regular course of business,
or an amendment to these Articles of Incorporation or dissolution, shall be
approved by a majority of the votes cast by each voting group that is entitled
to vote on such transaction.
ARTICLE
IV
The
initial registered office shall be located at [__________________________] in
the [City, County] of [____________], Virginia, and the initial registered agent
shall be [___________________________], who is [an individual who is a resident
of Virginia and a [Director of the Corporation] [a member of the Virginia State
Bar]] [a [domestic] [foreign] [stock] [nonstock] [corporation] [limited
liability company] [registered limited liability partnership] authorized to
transact business in the Commonwealth], and whose business address is the same
as the address of the initial registered office.
11
ARTICLE
V
The number
of Directors shall be [___], but may be increased or decreased at any time by
amendment of the Bylaws.
ARTICLE
VI
1. In
this Article:
“applicant”
means the person seeking indemnification pursuant to this Article.
“expenses”
includes counsel fees, expert witness fees and costs of investigation,
litigation and appeal, as well as amounts expanded in asserting a claim for
indemnification.
“liability”
means the obligation to pay a judgment, settlement, penalty, fine or such other
obligation, including, without limitation, any excise tax assessed with respect
to an employee benefit plan, or reasonable expenses incurred with respect to a
proceeding.
“party”
includes an individual who was, is, or is threatened to be made a named
defendant or respondent in a proceeding.
“proceeding”
means any threatened, pending, or completed action, suit, proceeding or appeal,
whether civil, criminal, administrative or investigative and whether formal or
informal.
2. In
any proceeding brought by or in the right of the Corporation or brought by or on
behalf of shareholders of the Corporation, no Director or officer of the
Corporation shall be liable to the Corporation or its shareholders for monetary
damages with respect to any transaction, occurrence or course of conduct,
whether prior or subsequent to the effective date of this Article, except for
liability resulting from such person’s having engaged in willful misconduct or a
knowing violation of the criminal law or any federal or state securities
law.
3. The
Corporation shall indemnify (i) any person who was or is a party to any
proceeding, including a proceeding brought by a shareholder in the right of the
Corporation or brought by or on behalf of shareholders of the Corporation, by
reason of the fact that he or she is or was a Director, officer, employee or
agent of the Corporation, or (ii) any Director, officer, employee or agent who
is or was serving at the request of the Corporation as a director (including a
member of any advisory board), trustee, partner or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability incurred by him or her in connection with such
proceeding unless he or she engaged in willful misconduct or a knowing violation
of the criminal law. A person is considered to be serving an employee
benefit plan at the Corporation’s request if his or her duties to the
Corporation also impose duties on, or otherwise involve services by, him or her
to the plan or to participants in or beneficiaries of the plan. The
Board of Directors is hereby empowered, by a majority vote of a quorum of
disinterested Directors, to enter into a contract to indemnify any Director,
officer, employee or agent in respect of any proceedings arising from any act or
omission, whether occurring before or after the execution of such
contract.
12
4. No
amendment or repeal of this Article shall have any effect on the rights provided
under this Article with respect to any act or omission occurring prior to such
amendment or repeal. The Corporation shall promptly take all such
actions, and make all such determinations, as shall be necessary or appropriate
to comply with its obligation to make any indemnity under this Article and shall
promptly advance or reimburse all expenses, including attorneys’ fees, incurred
by any such Director, officer, employee or agent in connection with such actions
and determinations or proceedings of any kind arising therefrom.
5. The
termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo
contendere or its equivalent, shall not of itself create a presumption
that the applicant did not meet the standard of conduct described in Section 2
or 3 of this Article.
6. Any
indemnification under Section 3 of this Article (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the applicant is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in Section 3 of this Article.
The
determination shall be made:
(a) By
the Board of Directors by a majority vote of a quorum consisting of Directors
not at the time parties to the proceeding;
(b) If
a quorum cannot be obtained under subsection (a) of this Section 6, by majority
vote of a committee duly designated by the Board of Directors (in which
designation Directors who are parties may participate), consisting solely of two
or more Directors not at the time parties to the proceeding;
(c) By
special legal counsel:
(i) Selected
by the Board of Directors or its committee in the manner prescribed in
subsection (a) or (b) of this Section 6; or
(ii) If
a quorum of the Board of Directors cannot be obtained under subsection (a) of
this Section 6 and a committee cannot be designated under subsection (b) of this
Section 6, selected by majority vote of the full Board of Directors, in which
selection Directors who are parties may participate; or
(d) By
the shareholders, but shares owned by or voted under the control of Directors
who are at the time parties to the proceeding may not be voted on the
determination.
Notwithstanding
the foregoing, in the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to this Article shall be made
by special legal counsel agreed upon by the Board of Directors and the
applicant. If the Board of Directors and the applicant are unable to
agree upon such special legal counsel the
13
Board of
Directors and the applicant each shall select a nominee, and the nominees shall
select such special legal counsel.
7. Unless
a determination has been made that indemnification is not permissible, the
Corporation shall make advances or reimburse the expenses incurred by any
applicant who is a party to a proceeding in advance of final disposition of the
proceeding or the making of any determination under Section 3 of this Article if
the applicant furnishes the Corporation with a written undertaking, executed
personally or on his or her behalf, to repay the advance if it is ultimately
determined that he or she did not meet the standard of conduct described in
Section 3 of this Article. Such undertaking shall be an unlimited
general obligation of the applicant but need not be secured and shall be
accepted without reference to financial ability to make repayment.
9. The
Corporation may purchase and maintain insurance to indemnify it against the
whole or any portion of the liability assumed by it in accordance with this
Article and may also procure insurance, in such amounts as the Board of
Directors may determine, on behalf of any person who is or was a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, trustee, employee or
agent of another corporation, limited liability company, partnership, joint
venture, trust, employee benefit plan or other enterprise, against any liability
asserted against or incurred by him or her in any such capacity or arising from
his or her status as such, whether or not the Corporation would have power to
indemnify him or her against such liability under the provisions of this
Article.
10. Every
reference herein to directors, officers, employees or agents shall include
former directors, officers, employees and agents and their respective heirs,
executors and administrators. The indemnification hereby provided and
provided hereafter pursuant to the power hereby conferred by this Article on the
Board of Directors shall not be exclusive of any other rights to which any
person may be entitled, including any right under policies of insurance that may
be purchased and maintained by the Corporation or others, with respect to
claims, issues or matters in relation to which the Corporation would not have
the power to indemnify such person under the provisions of this
Article. Such rights shall not prevent or restrict the power of the
Corporation to make or provide for any further indemnity, or provisions for
determining entitlement to indemnity, pursuant to one or more indemnification
agreements, bylaws, or other arrangements (including, without limitation,
creation of trust funds or security interests funded by letters of credit or
other means) approved by the Board of Directors (whether or not any of the
directors of the Corporation shall be a party to or beneficiary of any such
agreements, bylaws or arrangements); provided, however, that any
provision of such agreements, bylaws or other arrangements shall not be
effective if and to the extent that it is determined that such provision is not
permitted by this Article or applicable laws of the Commonwealth of
Virginia.
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11. Each
provision of this Article shall be severable, and an adverse determination as to
any such provision shall in no way affect the validity of any other
provision.
ARTICLE
VII
1. Affiliated Transactions
Statute. The Corporation shall not be governed by Article 14
of the VSCA.
2. Control Share Acquisition
Statute. The provisions of Article 14.1 of the VSCA shall not
apply to acquisitions of shares of any class of capital stock of the
Corporation.
Dated:
[_______________],
2008
___________________________________
[Name]
Incorporator
15
Exhibit
C
BYLAWS
OF
[____________________________]
ARTICLE
I
Meetings of
Shareholders
1.1
Places of
Meetings. All meetings of the shareholders shall be held at
such place, either within or without the Commonwealth of Virginia, as may, from
time to time, be fixed by the Board of Directors.
1.2
Annual
Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come before
the meeting, shall be held on such date as the Board of Directors of the
Corporation may designate from time to time.
1.4
Notice of
Meetings. Except as otherwise required by the Virginia Stock
Corporation Act (the “VSCA”), written or printed notice stating the place, day
and hour of every meeting of the shareholders and, in case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given not less
than 10 nor more than 60 days before the date of the meeting to each shareholder
of record entitled to vote at such meeting, in any manner permitted by the VSCA,
including by electronic transmission (as defined therein). Meetings
may be held without notice if all the shareholders entitled to vote at the
meeting are present in person or by
proxy or
if notice is waived in writing by those not present, either before or after the
meeting.
1.5
Quorum. Except
as otherwise required by the Articles of Incorporation, any number of
shareholders together holding at least a majority of the outstanding shares of
capital stock entitled to vote with respect to the business to be transacted,
who shall be present in person or represented by proxy at any meeting duly
called, shall constitute a quorum for the transaction of business. If
less than a quorum shall be in attendance at the time for which a meeting shall
have been called, the meeting may be adjourned from time to time by (a) the
chairman of such meeting or (b) a majority of the shareholders present or
represented by proxy without notice other than by announcement at the
meeting.
1.6
Voting. At
any meeting of the shareholders, each shareholder of a class entitled to vote on
the matters coming before the meeting shall have one vote, in person or by
proxy, for each share of capital stock standing in his or her name on the books
of the Corporation at the time of such meeting or on any date fixed by the Board
of Directors not more than 70 days prior to the meeting. Every proxy
shall be in writing, dated and signed by the shareholder entitled to vote or his
or her duly authorized attorney-in-fact.
ARTICLE
II
Directors
2.1
General
Powers. The property, affairs and business of the Corporation
shall be managed under the direction of the Board of Directors, and except as
otherwise expressly provided by the VSCA or the Articles of Incorporation, all
of the powers of the Corporation shall be vested in such Board.
2.2
Number of
Directors. The number of Directors shall be
[___].
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2.3
Election of
Directors.
(a)
Directors
shall be elected at the annual meeting of shareholders to succeed those
Directors whose terms have expired and to fill any vacancies thus
existing.
(b)
Directors
shall hold their offices for terms of one year and until their successors are
elected. Any Director may be removed from office at a meeting called
expressly for that purpose by the vote of shareholders holding not less than a
majority of the shares entitled to vote at an election of
Directors.
(c)
Any
vacancy occurring in the Board of Directors may be filled by the affirmative
vote of the majority of the remaining Directors though less than a quorum of the
Board of Directors.
(d)
A majority
of the number of Directors fixed by these Bylaws shall constitute a quorum for
the transaction of business. The act of a majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
2.4
Meetings of
Directors. Meetings of the Board of Directors shall be held at
places within or without the Commonwealth of Virginia and at times fixed by
resolution of the Board, or upon call of the President, and the Secretary or
officer performing the Secretary’s duties shall give not less than twenty-four
hours’ notice by any manner permitted by the VSCA, including by electronic
transmission (as defined therein), of all meetings of the Directors, provided
that notice need not be given of regular meetings held at times and places fixed
by resolution of the Board. An annual meeting of the Board of
Directors shall be held as soon as practicable after the adjournment of the
annual meeting of shareholders. Meetings may be held at any time
without notice if all of the Directors are present, or if those not present
waive notice in writing either before or after the meeting.
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In
addition, members of the Board of Directors or any committee designated thereby
pursuant to Article III hereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications equipment
whereby all persons participating in a meeting can hear each other, and
participation by such means shall constitute presence in person at such
meeting.
2.5
Actions Without
Meetings. Any action that may be taken at a meeting of the
Board of Directors may be taken without a meeting if a consent in writing,
setting forth the action, shall be signed either before or after such action by
all the Directors. Such consent shall have the same force and effect
as a unanimous vote.
2.6
Resignation. Any
member of the Board of Directors may resign at any time by giving written notice
of his or her intention to do so to the Board of Directors, the Chairman of the
Board of Directors, the President or the Secretary of the
Corporation.
ARTICLE
III
Committees
3.1
Executive
Committee. The Board of Directors may, by vote of a majority
of the number of Directors fixed by these bylaws, designate an Executive
Committee. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by the
VSCA, the Articles of Incorporation or these Bylaws, except as otherwise
provided in the VSCA. The Executive Committee shall report at the
next regular or special meeting of the board of Directors all action that the
Executive Committee may have taken on behalf of the Board since the last regular
or special meeting of the Board of Directors.
3.2
Other
Committees. The Board of Directors, by resolution duly
adopted, may establish committees of the Board having limited authority in the
management of the affairs of
-4-
the
Corporation as it may deem advisable and the members, terms and authority of
such committees shall be as set forth in the resolutions establishing the
same.
3.3
Meetings. Regular
and special meetings of any committee established pursuant to this Article may
be called and held subject to the same requirements with respect to time, place
and notice as are specified in these Bylaws for regular and special meetings of
the Board of Directors.
3.4
Actions Without
Meeting. Any action that may be taken at a meeting of a
committee may be taken without a meeting if a consent in writing, setting forth
the action so to be taken, shall be signed before such action by all the members
of the committee. Such consent shall have the same force and effect
as a unanimous vote.
3.5
Quorum and Manner of
Acting. A majority of the members of any committee serving at
the time of any meeting thereof shall constitute a quorum for the transaction of
business at such meeting. The action of a majority of those members
present at a committee meeting at which a quorum is present shall constitute the
act of the committee.
3.6
Term of
Office. Members of any committee shall be elected by vote of a
majority of the number of Directors fixed by these Bylaws and shall hold office
until their successors are elected by the Board of Directors or until such
committee is dissolved by the Board of Directors.
3.7
Resignation and
Removal. Any member of a committee may resign at any time by
giving written notice of his or her intention to do so to the President or the
Secretary of the Corporation, or may be removed, with or without cause, at any
time by such vote of the Board of Directors as would suffice for his or her
election.
3.8
Vacancies. Any
vacancy occurring in a committee resulting from any cause whatever may be filled
by the affirmative vote of a majority of the Directors of the
Corporation.
-5-
ARTICLE
IV
Officers
4.1
Election. The
officers of the Corporation shall consist of a President, a Secretary and a
Treasurer, each of whom shall be elected by the Board of
Directors. In addition, such other officers as are provided in
Section 4.3 of this Article may from time to time be elected by the Board of
Directors. All officers shall hold office until the next annual
meeting of the Board of Directors or until their successors are
elected. Any two or more officers may be combined in the same person
as the Board of Directors may determine, except that the same person shall not
be President and Secretary.
4.2
Removal of Officers;
Vacancies. Any officer of the Corporation may be removed
summarily with or without cause, at any time by a resolution passed at any
meeting by affirmative vote of a majority of the Directors of the
Corporation. Vacancies may be filled at any meeting of the Board of
Directors.
4.3
Other
Officers. Other officers may from time to time be elected by
the Board, including, without limitation, a Chairman of the Board of Directors,
who, when present, shall preside at all meetings of the Board of Directors, one
or more Vice Presidents (any one or more of whom may be designated as Executive
Vice President or Senior Vice President), one or more Assistant Secretaries and
one or more Assistant Treasurers.
4.4
Duties. The
officers of the Corporation shall have such duties as generally pertain to their
offices, respectively, as well as such powers and duties as from time to time
shall be conferred by the Board of Directors. The Board of Directors
may require any officer to give such bond for the faithful performance of his or
her duties as the Board may see fit.
-6-
ARTICLE
V
Capital
Stock
5.1
Certificates. The
shares of capital stock of the Corporation may but need not be represented by
certificates. When shares are represented by certificates, such
certificates shall be in forms prescribed by the Board of Directors and executed
in any manner permitted by law and stating thereon the information required by
law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may be
required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall
have been used on a share certificate shall for any reason cease to be an
officer of the Corporation and such certificate shall not then have been
delivered by the Corporation, the Board of Directors may nevertheless adopt such
certificate and it may then be issued and delivered as though such person had
not ceased to be an officer of the Corporation.
5.2
Lost, Destroyed and
Mutilated Certificates. Holders of the shares of the
Corporation shall immediately notify the Corporation of any loss, destruction or
mutilation of the certificate therefor, and the Board of Directors may, in its
discretion, cause one or more new certificates for the same number of shares in
the aggregate or cause uncertificated shares for the same number of shares to be
issued to such shareholder upon the surrender of the mutilated
certificate
or upon satisfactory proof of such loss or destruction, and the deposit of a
bond in such form and amount and with such surety as the Board of Directors may
require.
5.3
Transfer of
Shares. Uncertificated shares of the Corporation shall be
transferable or assignable on the books of the Corporation upon proper
instruction from the holder of such shares, and certificated shares of the
Corporation shall be transferable or assignable only on the books of the
Corporation by the holders in person or by attorney on surrender of the
certificate
-7-
for such
shares duly endorsed and, if sought to be transferred by attorney, accompanied
by a written power of attorney to have the same transferred on the books of the
Corporation. The Corporation will recognize the exclusive right of
the person registered on its books as the owner of shares to receive any
dividends and to vote as such owner.
5.4
Fixing Record
Date. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of the shareholders or any adjournment
thereof, or entitled to receive payment for any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than 70 days
prior to the date on which the particular action, requiring such determination
of shareholders, is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote
at any meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
ARTICLE
VI
Miscellaneous
Provisions
6.1
Fiscal
Year. The fiscal year of the Corporation shall end on
[December 31st] of
each year.
6.2
Books and
Records. The Corporation shall keep correct and complete books
and records of account and shall keep minutes of the proceedings of its
shareholders and Board of Directors. The Company shall also keep at its
registered office or principal place of business a
-8-
record of
its shareholders, giving the names and addresses of all shareholders, and the
number, class and series of the shares being held.
6.3
Checks, Notes and
Drafts. Checks, notes, drafts and other orders for the payment
of money shall be signed by such persons as the Board of Directors from time to
time may authorize. When the Board of Directors so authorizes,
however, the signature of any such person may be a facsimile.
6.4
Amendment of
Bylaws. These Bylaws may be amended or altered at any meeting
of the Board of Directors by affirmative vote of a majority of the number of
Directors fixed by these Bylaws. The shareholders entitled to vote in
respect of the election of Directors, however, shall have the power to rescind,
alter, amend or repeal any Bylaws and to enact Bylaws that, if expressly so
provided, may not be amended, altered or repealed by the Board of
Directors.
6.5
Voting of Shares
Held. Unless otherwise provided by resolution of the Board of
Directors, the President shall from time to time appoint an attorney or
attorneys or agent or agents of this Corporation, in the name and on behalf of
this Corporation, to cast the vote which this Corporation may be entitled to
cast as a shareholder or otherwise in any other corporation, any of whose stock
or securities may be held in this Corporation, at meetings of the holders of the
shares or other securities of such other corporation, or to consent in writing
to any action by any such other corporation, and shall instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent and may execute or cause to be executed on behalf of this Corporation
and under its corporate seal or otherwise, such written proxies, consents,
waivers or other instruments as may be necessary or proper in the premises; or,
in lieu of such appointment, the President may attend in person any meetings of
the holders of shares or other securities of any such other corporation and
there vote or exercise any or all power of this
-9-
Corporation
as the holder of such shares or other securities of such other
corporation.
[_____________],
2008
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