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EXHIBIT 10.5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of May 6, 1998, by and among REPUBLIC BANCSHARES, INC. ("Republic"), a
corporation organized and existing under the laws of the State of Florida, with
its principal office located in St. Petersburg, Florida; Republic's wholly-owned
subsidiary Republic Bank (the "Bank"), a commercial bank organized and existing
under the laws of the State of Florida, with its principal office located in St.
Petersburg, Florida; and Lochaven Federal Savings and Loan Association
("Lochaven"), a Federal savings and loan association organized and existing
under the laws of the United States, with its principal office located in
Orlando, Florida.
PREAMBLE
The Boards of Directors of Republic, the Bank and Lochaven are of the
opinion that the transactions described herein are in the best interests of the
parties to this Agreement and their respective stockholders and, accordingly,
have approved this Agreement and the transactions contemplated hereby.
This Agreement provides for the merger of Lochaven with and into the
Bank (the "Merger"). At the effective time of the Merger, the outstanding shares
of the capital stock of Lochaven shall be converted into shares of the common
stock of Republic (except as provided herein). The transactions described in
this Agreement are subject to the approvals of Republic, as sole stockholder of
the Bank, and the stockholders of Lochaven, the Board of Governors of the
Federal Reserve System, the FDIC, and the Department, and the satisfaction of
certain other conditions described in this Agreement.
The parties to this Agreement intend (i) that the Merger for federal
income tax purposes shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and (ii) that this Agreement constitute the agreement and plan of merger
prescribed by Section 658.42 of the Florida Statutes.
Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants and agreements set forth herein, the
Parties agree as follows:
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ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 CONSTITUENT BANKS. The Bank is a commercial bank organized and
existing under the laws of the State of Florida, with its principal office at
000 Xxxxxx Xxxxxx, X.X., Xx. Xxxxxxxxxx, Xxxxxxx. A listing of each branch
office of the Bank is attached hereto as Exhibit A. Lochaven is a savings
association organized and existing under the laws of the United States of
America, with its principal office at 0000 Xxxxx Xxxxxx Xxxxxxx Xxxxx, Xxxxxx
Xxxx, Xxxxxxx. A listing of each branch office of Lochaven is attached hereto as
Exhibit B.
1.2 MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined below), Lochaven shall be merged with and into
the Bank in accordance with the provisions of Section 655.412 of the Florida
Statutes and, to the extent not inconsistent therewith, Part 552 of the Rules
and Regulations of the Office of Thrift Supervision (the "OTS Regulations"), and
all outstanding shares of Lochaven Common Stock shall be exchanged into shares
of Republic Common Stock, with the effect provided in Section 655.417 of the
Florida Statutes and Section 552.13 of the OTS Regulations. The Bank shall be
the Surviving Corporation resulting from the Merger and shall continue to be
governed by the Laws of the State of Florida. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the respective Boards of Directors of Lochaven, Republic and the Bank.
1.3 TIME AND PLACE OF CLOSING. The closing for the Merger (the
"Closing") will take place at 9:00 A.M. on the date that the Effective Time
occurs (or the immediately preceding day if the Effective Time is earlier than
9:00 A.M.), or at such other time as the parties, acting through their duly
authorized officers, may mutually agree. The place of Closing shall be at such
location as may be mutually agreed upon by the parties.
1.4 EFFECTIVE TIME. The Merger contemplated by this Agreement shall
become effective on the date and at the time set forth in the certificate of
merger filed with the Department (the "Certificate of Merger") pursuant to
Section 658.45 of the Florida Statutes (the "Effective Time"). The parties shall
request that the Certificate of Merger have as the Effective Time the date and
time set forth in the filing made with the Department pursuant to Section
548.44(9) of the Florida Statutes. Subject to the terms and conditions hereof,
unless otherwise mutually agreed upon in writing by the duly authorized officers
of each party, the parties shall use their reasonable efforts to cause the
Effective Time to occur on or before the tenth business day (as designated by
Republic) following the last to occur of: (i) the effective date (including
expiration of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the
Merger; or (ii) the
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date on which the stockholders of Lochaven approve the matters relating to this
Agreement required to be approved by such stockholders by applicable Law.
ARTICLE 2
CORPORATE GOVERNANCE
2.1 SURVIVING CORPORATION. The name of the Surviving Corporation shall
be Republic Bank and the specific location of the proposed main office will be
000 Xxxxxx Xxxxxx, X.X., Xx. Xxxxxxxxxx, Xxxxxxx 00000. A list of each existing
and proposed branch office of the Surviving Corporation is attached hereto as
Exhibit C.
2.2 ARTICLES OF INCORPORATION. The Articles of Incorporation of
Republic as in effect immediately prior to the Effective Time shall continue in
effect following the Effective Time, and the Articles of Incorporation of the
Bank in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until otherwise amended or repealed.
A copy of the Articles of Incorporation of the Bank is attached hereto as
Exhibit D.
2.3 BYLAWS. The By-laws of Republic as in effect immediately prior to
the Effective Time shall continue in effect following the Effective Time, and
the By-laws of the Bank in effect immediately prior to the Effective Time shall
be the By-laws of the Surviving Corporation until otherwise amended or repealed.
2.4 DIRECTORS AND OFFICERS. The directors of Republic in office
immediately prior to the Effective Time shall continue in office following the
Effective Time, and the directors of the Bank in office immediately prior to the
Effective Time, together with such additional Persons as may thereafter be
elected, shall serve as the directors of the Surviving Corporation from and
after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. A list of the names and addresses of each of the directors of the
Surviving Corporation immediately following the Effective Time is attached
hereto as Exhibit E. The officers of Republic in office immediately prior to the
Effective Time shall continue in office following the Effective Time, and the
officers of the Bank, together with such additional Persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the By-laws of the Surviving Corporation.
A list of the names and addresses of each of the executive officers of the
Surviving Corporation immediately following the Effective Time is attached
hereto as Exhibit F.
2.5 CAPITAL STOCK AND RETAINED EARNINGS. Republic currently has
20,000,000 shares of Republic Common Stock authorized, of which 7,035,886 shares
are outstanding as of the date hereof. Republic also has 100,000 shares of
Republic Preferred Stock authorized, of which 75,000 shares are outstanding as
of the date
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hereof. As of December 31, 1997, the Bank had retained earnings of
$95,531,000.00.
2.6 TRUST POWERS. The Bank, as the Surviving Corporation, will have
trust powers. Currently, the Bank's trust powers are inactive with the
Department, subject to activation upon the filing of an appropriate application
and notice therefor.
2.7 NONCONFORMING ACTIVITIES. From and after the Effective Time, the
Bank will not engage in any nonconforming activities, except to the extent
necessary to fulfill obligations existing prior to the Merger pursuant to the
provisions of Section 655.418(4) of the Florida Statutes.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3,
at the Effective Time, by virtue of the Merger and without any action on the
part of Republic, the Bank or Lochaven, or the stockholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of Republic Common Stock and Republic Preferred
Stock issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding from and after the Effective Time.
(b) Each share of Bank Common Stock and Bank Preferred Stock
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding from and after the Effective Time.
(c) Each share of Lochaven Common Stock (excluding shares held
by any Lochaven Company or any Republic Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted or shares held
by stockholders who perfect their dissenters' rights of appraisal) issued and
outstanding at the Effective Time shall cease to be outstanding and shall be
converted into and exchanged for 0.2776 of a share of Republic Common Stock (the
"Exchange Ratio").
(d) Each of the options to purchase Lochaven Common Stock
issued and outstanding at the Effective Time, which options were granted
pursuant to Lochaven's customary arrangements consistent with past practice and
are disclosed in Section 3.1 of the Lochaven Disclosure Memorandum (the
"Lochaven options"), shall cease to be outstanding and shall be converted into
and exchanged for the Right to acquire Republic Common Stock on substantially
the same terms applicable to the Lochaven options. The number of shares of
Republic Common Stock to be issued pursuant to the exercise of such options
shall equal the number of shares of Lochaven Common Stock subject to such
options multiplied by the Exchange Ratio, provided that no fractions of shares
of Republic Common Stock shall be issued, and the number of
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shares of Republic Common Stock to be issued upon the exercise of the Lochaven
options, if a fractional share exists, shall equal the number of whole shares
obtained by rounding to the nearest whole number, giving account to such
fraction. The exercise price for the acquisition of Republic Common Stock shall
be the exercise price for each share of Lochaven common stock subject to such
options divided by the Exchange Ratio, adjusted as appropriate for any rounding
to whole shares that may be done.
3.2 ANTI-DILUTION PROVISIONS. In the event Republic changes the number
of shares of Republic Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend or similar recapitalization
with respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted.
3.3 SHARES HELD BY LOCHAVEN OR REPUBLIC. Each of the shares of Lochaven
Common Stock held by any Lochaven Company or by any Republic Company, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of Lochaven Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Republic Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Republic
Common Stock multiplied by the Market Value of one share of Republic Common
Stock at the Effective Time. The Market Value of one share of Republic Common
Stock at the Effective Time shall be determined by calculating the average of
the closing prices of Republic Common Stock on the National Market (as reported
by The Wall Street Journal or, if not reported thereby, any other authoritative
source selected by Republic) on each of the twenty (20) consecutive trading days
ending on the third business day immediately preceding the Effective Time. No
such holder will be entitled to dividends, voting Rights or any other Rights as
a stockholder in respect of any fractional shares.
3.5 DISSENTING STOCKHOLDERS. Any holder of shares of Lochaven Common
Stock who perfects such holder's dissenters' rights of appraisal in accordance
with and as contemplated by Section 552.14 of the OTS Regulations and, to the
extent not inconsistent therewith, Section 658.44 of the Florida Statutes, shall
be entitled to receive the value of such shares in cash as determined pursuant
to such provision of Law; provided, that no such payment shall be made to any
dissenting stockholder unless and until such dissenting stockholder has complied
with the applicable provisions of the OTS Regulations and the Florida Statutes
and surrendered to
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Lochaven the certificate or certificates representing the shares for which
payment is being made. In the event that after the Effective Time a dissenting
stockholder of Lochaven fails to perfect, or effectively withdraws or loses,
such holder's Right to appraisal and of payment for such holder's shares,
Republic shall issue and deliver the consideration to which such holder of
shares of Lochaven Common Stock is entitled under this Article 3 (without
interest) upon surrender by such holder of the certificate or certificates
representing shares of Lochaven Common Stock held by such holder.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Republic
and Lochaven shall cause the exchange agent selected by Republic (the "Exchange
Agent") to mail to the former stockholders of Lochaven appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the certificates theretofore representing shares of Lochaven Common
Stock shall pass, only upon proper delivery of such certificates to the Exchange
Agent). After the Effective Time, each holder of shares of Lochaven Common Stock
(other than shares to be canceled pursuant to Section 3.3 of this Agreement or
as to which dissenters' rights have been perfected as provided in Section 3.5 of
this Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1(c) of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Agreement. To the extent
required by Section 3.4 of this Agreement, each holder of shares of Lochaven
Common Stock issued and outstanding at the Effective Time also shall receive,
upon surrender of the certificate or certificates representing such shares, cash
in lieu of any fractional share of Republic Common Stock to which such holder
may be otherwise entitled (without interest). Republic shall not be obligated to
deliver the consideration to which any former holder of Lochaven Common Stock is
entitled as a result of the Merger until such holder surrenders such holder's
certificate or certificates representing the shares of Lochaven Common Stock for
exchange as provided in this Section 4.1, or otherwise complies with the
procedures of the Exchange Agent with respect to lost, stolen or destroyed
certificates. The certificate or certificates of Lochaven Common Stock so
surrendered shall be duly endorsed as the Exchange Agent may require. Any other
provision of this Agreement notwithstanding, neither Republic, Lochaven nor the
Exchange Agent shall be liable to a holder of Lochaven Common Stock for any
amounts paid or property delivered in good faith to a public official pursuant
to any applicable abandoned property Law.
4.2 RIGHTS OF FORMER LOCHAVEN STOCKHOLDERS. At the Effective Time, the
stock transfer books of Lochaven shall be closed as to holders of Lochaven
Common Stock immediately prior to the Effective Time and no transfer of Lochaven
Common
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Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Agreement, each certificate theretofore representing shares of Lochaven
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement or as to which dissenters' rights have been perfected as provided in
Section 3.5 of this Agreement) shall from and after the Effective Time represent
for all purposes only the Right to receive the consideration provided in
Sections 3.1 and 3.4 of this Agreement in exchange therefor, subject, however to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which have been
declared or made by Lochaven in respect of share shares of Lochaven Common Stock
in accordance with the terms of this Agreement and which remain unpaid at the
Effective Time. To the extent permitted by Law, former stockholders of record of
Lochaven shall be entitled to vote after the Effective Time at any meeting of
Republic stockholders the number of whole shares of Republic Common Stock into
which their respective shares of Lochaven Common Stock are converted, regardless
of whether such holders have exchanged their certificates representing Lochaven
Common Stock for certificates representing Republic Common Stock in accordance
with the provisions of this Agreement. Whenever a dividend or other distribution
is declared by Republic on the Republic Common Stock, the record date for which
is at or after the Effective Time, the declaration shall include dividends or
other distributions on all shares issuable pursuant to this Agreement, but no
dividend or other distribution payable to the holders of record of Republic
Common Stock as of any time subsequent to the Effective Time shall be delivered
to the holder of any certificate representing shares of Lochaven Common Stock
issued and outstanding at the Effective Time until such holder surrenders such
certificate for exchange as provided Section 4.1 of the Agreement. However, upon
surrender of such Lochaven Common Stock certificate, both the Republic Common
Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered dividends and cash payments
to be paid for fractional share interests (without interest) shall be delivered
and paid with respect to each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF LOCHAVEN
Lochaven hereby represents and warrants to Republic:
5.1 ORGANIZATION, STANDING AND POWER.
(a) Lochaven is a federal savings and loan association duly
organized, validly existing, and in good standing under the Laws of the United
States, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Material Assets. Lochaven is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the states of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of
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its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Lochaven.
(b) Lochaven is an "insured institution," as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, is a member
of the Savings Association Insurance Fund and is a member in good standing of
the Federal Home Loan Bank of Atlanta ("FHLB").
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Lochaven has the corporate power and authority necessary
to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Lochaven,
subject to the approval of this Agreement by the required vote of the holders of
outstanding shares of Lochaven Common Stock, which is the only stockholder vote
required for approval of this Agreement and consummation of the Merger by
Lochaven. Subject to such requisite stockholder approval, this Agreement
represents a legal, valid and binding obligation of Lochaven, enforceable
against Lochaven in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the enforcement of
creditors' Rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Lochaven, the consummation by Lochaven of the transactions contemplated hereby,
nor compliance by Lochaven with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of Lochaven's Charter or Bylaws; or
(ii) constitute or result in a Default under, or require any Consent pursuant
to, or result in the creation of any Lien on any Asset of any Lochaven Company
under, any Contract or Permit of any Lochaven Company, where such Default or
Lien, or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Lochaven; or
(iii) subject to receipt of the requisite Consents referred to in Section 9.1(b)
of this Agreement, violate any Law or Order applicable to any Lochaven Company
or any of their respective Material Assets.
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and Securities Laws, and
rules of the NASD, and other than Consents required from Regulatory Authorities,
and other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty
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Corporation with respect to any employee benefit plans, or under the HSR Act,
and other than Consents, filings or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Lochaven, no notice to, filing with, or Consent of,
any public body or authority is necessary for the consummation by Lochaven of
the Merger and the other transactions contemplated in this Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of Lochaven consists of (i)
4,600,000 shares of Lochaven Common Stock, of which 609,094 shares are issued
and outstanding as of the date of this Agreement and not more than 35,000 shares
will be issued and outstanding at the Effective Time. All of the issued and
outstanding shares of capital stock of Lochaven are duly and validly issued and
outstanding and are fully paid and nonassessable under the Laws of the United
States. None of the outstanding shares of capital stock of Lochaven has been
issued in violation of any preemptive Rights of the current or past stockholders
of Lochaven.
(b) Except as set forth in Section 5.3(a) of this Agreement,
or as provided pursuant to the Stock Option Agreement, there are no shares of
capital stock or other equity securities of Lochaven outstanding and no
outstanding Rights relating to the capital stock of Lochaven.
5.4 LOCHAVEN SUBSIDIARIES. Lochaven has disclosed in Section 5.4
of the Lochaven Disclosure Memorandum all of the Lochaven Subsidiaries as of the
date of this Agreement. Lochaven or one of its Subsidiaries owns all of the
issued and outstanding shares of capital stock of each Lochaven Subsidiary. No
equity securities of any Lochaven Subsidiary are or may become required to be
issued (other than to another Lochaven Company) by reason of any Rights, and
there are no Contracts by which any Lochaven Subsidiary is bound to issue (other
than to another Lochaven Company) additional shares of its capital stock or
Rights or by which any Lochaven Company is or may be bound to transfer any
shares of the capital stock of any Lochaven Subsidiary (other than to another
Lochaven Company). There are no Contracts relating to the Rights of any Lochaven
Company to vote or to dispose of any shares of the capital stock of any Lochaven
Subsidiary. All of the shares of capital stock of each Lochaven Subsidiary held
by an Lochaven Company are fully paid and nonassessable under the applicable
corporation Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the Lochaven Company free and clear of any lien. Each
Lochaven Subsidiary is either a Federal savings association or a corporation,
and is duly organized, validly existing, and (as to corporations) in good
standing under the Laws of the jurisdiction in which it is incorporated or
organized, and has the corporate power and authority necessary for it to own,
lease and operate its Assets and to carry on its business as now conducted. Each
Lochaven Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good
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standing in the states of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Lochaven. Each Lochaven
Subsidiary that is a depository institution is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits in which are insured by the Savings Association
Insurance Fund.
5.5 OTS FILINGS; FINANCIAL STATEMENTS.
(a) Lochaven has filed and made available to Republic all
forms, reports and documents required to be filed by Lochaven with the SEC
and/or the OTS since December 31, 1993 (collectively, the "Lochaven OTS
Reports"). The Lochaven OTS Reports (i) at the time filed, complied in all
Material respects with the applicable requirements of the OTS Regulations; and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a Material fact or omit to state a Material fact
required to be stated in such Lochaven OTS Reports or necessary in order to make
the statements in such Lochaven OTS Reports, in light of the circumstances under
which they were made, not misleading. Except for Lochaven Subsidiaries that are
registered as a broker, dealer or investment advisor, none of Lochaven's
Subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the Lochaven Financial Statements (including, in
each case, any related notes) contained in the Lochaven OTS Reports, including
any Lochaven OTS Reports filed after the date of this Agreement until the
Effective Time, was prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements, or in the case of unaudited statements, as
permitted by regulatory accounting principles, and fairly presented the
consolidated financial position of Lochaven and its Subsidiaries as at the
respective dates and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be Material in amount.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Lochaven Company has
any liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Lochaven, except liabilities which are
accrued or reserved against in the consolidated balance sheets of Lochaven as of
December 31, 1997 included in the Lochaven Financial Statements or reflected in
the notes thereto. No Lochaven Company has incurred or paid any Liability since
December 31, 1997, except for such liabilities incurred or paid in the ordinary
course of business consistent with past business practice and which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Lochaven.
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5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1997,
except as disclosed in Section 5.7 of the Lochaven Disclosure Memorandum, (i)
there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Lochaven; and (ii) the Lochaven Companies have not taken any action,
or failed to take any action, prior to the date of this Agreement, which action
or failure, if taken after the date of this Agreement, would represent or result
in a Material breach or violation of any of the covenants and agreements of
Lochaven provided in Article 7 of this Agreement.
5.8 TAX MATTERS.
(a) All Tax returns required to be filed by or on behalf of
any of the Lochaven Companies have been timely filed or requests for extensions
have been timely filed, granted and have not expired for periods ended on or
before December 31, 1996, and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, except to the extent that all
such failures to file, taken together, are not reasonably likely to have a
Material Adverse Effect on Lochaven, and all Tax returns filed are complete and
accurate in all Material respects. All Taxes shown on filed Tax returns have
been paid. There is no audit examination, deficiency or refund Litigation with
respect to any Taxes that is reasonably likely to result in a determination that
would have, individually or in the aggregate, a Material Adverse Effect on
Lochaven, except as reserved against in the Lochaven Financial Statements
delivered prior to the date of this Agreement. All Taxes and other liabilities
due with respect to completed and settled examinations or concluded Litigation
have been paid.
(b) None of the Lochaven Companies has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due that is currently in effect.
(c) Adequate provision for any Taxes due or to become due for
any of the Lochaven Companies for the period or periods through and including
the date of the respective Lochaven Financial Statements has been made and is
reflected on such Lochaven Financial Statements.
(d) Deferred Taxes of the Lochaven Companies have been
adequately provided for in the Lochaven Financial Statements.
(e) Each of the Lochaven Companies is in compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406
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of the Code, except for such instances of noncompliance and such omissions as
are not reasonably likely to have individually or in the aggregate, a Material
Adverse Effect on Lochaven.
(f) None of the Lochaven Companies has made any payments, is
obligated to make any payments, or is a party to any Contract, agreement or
other arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 380G or 162(m) of the Code.
(g) Except as set forth in Section 5.8 of the Lochaven
Disclosure Memorandum there are no liens with respect to Taxes upon any of the
Assets of the Lochaven Companies.
(h) There has not been an ownership change, as defined in Code
Section 382(g), of the Lochaven Companies that occurred during or after any
taxable period in which the Lochaven Companies incurred a net operating loss
that carries over to any Taxable Period ending after December 31, 1995.
(i) No Lochaven Company has filed any Consent under Section
341(f) of the Code concerning collapsible corporations.
(j) All Material elections with respect to Taxes affecting the
Lochaven Companies as of the date of this Agreement have been or will be timely
made as set forth in Section 5.8 of the Lochaven Disclosure Memorandum. After
the date hereof, no election with respect to Taxes will be made without the
prior written consent of Republic, which consent will not be unreasonably
withheld.
(k) No Lochaven Company has or has had a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or
convention between the United States and such foreign country.
5.9 ASSETS. Except as disclosed in Section 5.9 of the Lochaven
Disclosure Memorandum, the Lochaven Companies have good and marketable title,
free and clear of all liens, to all of their respective Assets. All tangible
properties used in the businesses of the Lochaven Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Lochaven's past practices. All Assets that
are Material to Lochaven's business on a consolidated basis, held under leases
or subleases by any of the Lochaven Companies, are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other Laws affecting the enforcement of creditors' Rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceedings may be brought), and each such Contract is in full force and effect.
The Lochaven Companies
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13
currently maintain insurance similar in amounts, scope and coverage to that
maintained by other peer banking organizations. None of the Lochaven Companies
has received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated; or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no claims pending under such policies of
insurance and no notices have been given by an Lochaven Company under such
policies. The Assets of the Lochaven Companies include all Assets required to
operate the business of the Lochaven Companies as presently conducted.
5.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Lochaven, each Lochaven Company, its
Participation Facilities and its Loan Properties are and have been in compliance
with all Environmental Laws, except for violations which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Lochaven.
(b) There is no Litigation pending or to the Knowledge of
Lochaven, threatened before any court, governmental agency or authority or other
forum in which any Lochaven Company or any of its Loan Properties or
Participation Facilities (or any Lochaven Company in respect of any such Loan
Property or Participation Facility) has been or, with respect to threatened
Litigation, may be named as a defendant or potentially responsible party (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law;
or (ii) relating to the release into the environment of any Hazardous Material,
whether or not occurring at, on, under or involving a site owned, leased or
operated by any Lochaven Company or any of its Loan Properties or Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Lochaven.
(c) To the Knowledge of Lochaven, there have been no releases
of Hazardous Material in, on, under or affecting any Participation Facility or
Loan Property of an Lochaven Company, except such as are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
Lochaven.
5.11 COMPLIANCE WITH LAWS. Each Lochaven Company has in effect all
Permits necessary for it to own, lease or operate its Material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Lochaven, and there has occurred no default under any
such Permit, other than defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Lochaven. None of
the Lochaven Companies:
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14
(a) is in violation of any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Lochaven; and
(b) has received any notification or communication from any
agency or department of federal, state or local government or any
Regulatory Authority or the staff thereof (i) asserting that any
Lochaven Company is not in compliance with any of the Laws or Orders
which such governmental authority or Regulatory Authority enforces,
where such noncompliance is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Lochaven; (ii)
threatening to revoke any Permits, the revocation of which is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Lochaven; or (iii) requiring any Lochaven Company to
enter into or consent to the issuance of a cease and desist Order,
formal agreement, directive, commitment or memorandum of understanding,
or to adopt any Board resolution or similar undertaking, which
restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies, its
management or the payment of dividends.
5.12 LABOR RELATIONS. No Lochaven Company is the subject of any
Litigation asserting that it or any other Lochaven Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state Law) or seeking to compel it or any other Lochaven Company to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any Lochaven Company,
pending or threatened, or to the Knowledge of Lochaven, is there any activity
involving any Lochaven Company's employee's seeking to certify a collective
bargaining unit or engaging in any other organization activity.
5.13 EMPLOYEE BENEFIT PLANS.
(a) Lochaven has disclosed in Section 5.13 of the Lochaven
Disclosure Memorandum, and has delivered or made available to Republic prior to
the execution of this Agreement copies in each case of, all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, all other written
employee programs, arrangements or agreements, all medical, vision, dental or
other health plans, all life insurance plans and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by any Applied Company or ERISA
Affiliate (as defined below) thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors or
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15
other beneficiaries are eligible to participate (collectively, the "Lochaven
Benefit Plans"). Any of the Lochaven Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as an "Lochaven ERISA Plan." Each Lochaven ERISA Plan which is also a
"defined benefit plan" (as defined in Section 414(j) of the Code) is referred to
herein as an "Lochaven Pension Plan." No Lochaven Pension Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) All Lochaven Benefit Plans are in compliance with the
applicable terms of ERISA, the Code, and any other applicable Laws the breach or
violation of which are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Lochaven, and each Lochaven ERISA Plan
which is intended to be qualified under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service, and Lochaven
is not aware of any circumstances likely to result in revocation of any such
favorable determination letter. To the knowledge of Lochaven, no Lochaven
Company has engaged in a transaction with respect to any Lochaven Benefit Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject any Lochaven Company to a Tax imposed by either Section
4975 of the Code or Section 502(i) of ERISA in amounts which are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Lochaven.
(c) No Lochaven Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
fair market value of the Assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since the date of the most
recent actuarial valuation, there has been (i) no Material change in the
financial position of any Lochaven Pension Plan; (ii) no change in the actuarial
assumptions with respect to any Lochaven Pension Plan; and (iii) no increase in
benefits under any Lochaven Pension Plan as a result of plan amendments or
changes in applicable Law which is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Lochaven or materially adversely
affect the funding status of any such plan. Neither any Lochaven Pension Plan
nor any "single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any Lochaven Company, or the
single-employer plan of any entity which is considered one employer with
Lochaven under Section 4001 of ERISA or Section 414 of the Code or Section 302
of ERISA (whether or not waived) (an "ERISA Affiliate") has an "accumulated
funding deficiency" within the meaning of Section 412 of the Code or Section 302
of ERISA, which is reasonably likely to have a Material Adverse Effect on
Lochaven. No Lochaven Company has provided or is required to provide, security
to an Lochaven Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
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16
(d) Within the six-year period preceding the Effective Time,
no liability under Subtitle C or D of Title IV of ERISA has been or is expected
to be incurred by any Lochaven Company with respect to any ongoing, frozen or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which liability is reasonably likely to have a Material Adverse
Effect on Lochaven. No Lochaven Company has incurred any withdrawal Liability
with respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate), which
Liability is reasonably likely to have a Material Adverse Effect on Lochaven. No
notice of a "reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been required to
be filed for any Lochaven Pension Plan or by any ERISA Affiliate within the
12-month period ending on the date hereof.
(e) No Lochaven Company has any Liability for retiree health
and life benefits under any of the Lochaven Benefit Plan and there are no
restrictions on the Rights of such Lochaven Company to amend or terminate any
such Plan without incurring any liability thereunder, which liability is
reasonably likely to have a Material Adverse Effect on Lochaven.
(f) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of any Lochaven Company
from any Lochaven Company under any Lochaven Benefit Plan or otherwise; (ii)
increase any benefits otherwise payable under any Lochaven Benefit Plan; or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit, where such payment, increase or acceleration is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Lochaven.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement or employment agreement) of employees and
former employees of any Lochaven Company and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Code or Section 302 of ERISA, have been
fully reflected on the Lochaven Financial Statements to the extent required by
and in accordance with GAAP.
5.14 MATERIAL CONTRACTS. Except as otherwise reflected in the Lochaven
Financial Statements, none of the Lochaven Companies, nor any of their
respective Assets, businesses or operations is a party to or is bound or
affected by or receives benefits under (i) any employment, severance,
terminating, consulting or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $100,000; (ii) any Contract
relating to the borrowing of money by any Lochaven Company or the guarantee by
any Lochaven Company of any such obligation (other than Contracts evidencing
deposit Liabilities, purchases of federal funds, fully-secured
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17
repurchase agreements and Federal Home Loan Bank advances of depository
institution subsidiaries, trade payables and Contracts relating to borrowings or
guarantees made in the ordinary course of business); and (iii) any other
Contract or amendment thereto that would be required to be filed as an exhibit
to a Form 10-K filed by Lochaven with the OTS as of the date of this Agreement
or in any Form 10-K filed for the fiscal year ended December 1996 or any
subsequent fiscal year if Lochaven had been required to make such filings with
the OTS, or in another SEC document and identified to Republic (together with
all Contracts referred to in Section 5.8 and 5.13(a) of this Agreement, the
"Lochaven Contracts"). With respect to each Lochaven Contract: (i) the Contract
is in full force and effect; (ii) no Lochaven Company is in default thereunder,
other than defaults which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Lochaven; (iii) no Lochaven Company
has repudiated or waived any Material provision of any such Contract; and (iv)
no other party to any such Contract is, to the Knowledge of Lochaven, in default
in any respect, other than defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Lochaven or has
repudiated or waived any Material provision thereunder. Except for FHLB
advances, all of the indebtedness of any Lochaven Company for money borrowed is
prepayable at any time by such Lochaven Company without penalty or premium.
5.15 LEGAL PROCEEDINGS.
(a) Except as disclosed in Section 5.15(a) of the Lochaven
Disclosure Memorandum, there is no Litigation instituted or pending or, to the
knowledge of Lochaven, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any Lochaven Company, or against any Asset,
employee benefit plan, interest or Right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Lochaven, nor are there any Orders of any Regulatory Authorities, other than
governmental authorities, or arbitrators outstanding against any Lochaven
Company, that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Lochaven.
(b) Section 5.15(b) of the Lochaven Disclosure Memorandum
includes a summary report of all Litigation as of the date of this Agreement to
which any Lochaven Company is a party and which names an Lochaven Company as a
defendant or cross-defendant and where the maximum exposure is estimated to be
$100,000 or more.
5.16 REPORTS. Since January 1, 1993, or the date of organization if
later, each Lochaven Company has timely filed all reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with any Regulatory Authorities (except, in the case of
state securities authorities, failures to file which are not reasonably likely
to have, individually or in the aggregate, a
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18
Material Adverse Effect on Lochaven). As of their respective dates, each of such
reports and documents, including the financial statements, exhibits and
schedules thereto, complied in all Material respects with all applicable Laws.
As of its respective date, each such report and document did not, in all
Material respects, contain any untrue statement of a Material fact or omit to
state a Material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
5.17 STATEMENTS TRUE AND CORRECT. None of the information supplied or
to be supplied by any Lochaven Company or any Affiliate thereof for inclusion in
the Registration Statement to be filed by Republic with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
any Material fact, or omit to state any Material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Lochaven Company or any Affiliate thereof for inclusion in the
Proxy Statements to be mailed to Republic's and Lochaven's stockholders in
connection with the irrespective Stockholders' Meetings, and any other documents
to be filed by an Lochaven Company or any Affiliate thereof with the SEC or any
other Regulatory Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, and with respect
to the Proxy Statements, when first mailed to the stockholders of Republic and
Lochaven, be false or misleading with respect to any 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 or, in the case of
the Proxy Statements or any amendment thereof or supplement thereto, at the time
of the Stockholders' Meetings, be false or misleading with respect to any
Material fact, or omit to state any Material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meetings. All documents that any Lochaven Company or
any Affiliate thereof is responsible for filing with any regulatory authority in
connection with the transactions contemplated hereby will comply as to form in
all Material respects with the provisions of applicable Law.
5.18 TAX AND REGULATORY MATTERS. Except as specifically contemplated by
this Agreement, no Lochaven Company or any Affiliate thereof has taken or agreed
to take any action or has any knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the transactions contemplated hereby, including
the Merger, from qualifying as a reorganization within the meaning of Section
368(a) of the Code; or (ii) materially impede or delay receipt of any Consents
of Regulatory Authorities referred to in Section 9.1(b) of this Agreement or
result in the imposition of a condition or restriction of the type referred to
in the last sentence of such section.
5.19 CHARTER PROVISIONS. Each Lochaven Company has taken all action so
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the
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grant of any Rights to any Person under the Charter or Articles of
Incorporation, Bylaws or other governing instruments of any Lochaven Company or
restrict or impair the ability of Republic or any of its Subsidiaries to vote or
otherwise to exercise the Rights of a stockholder with respect to shares of any
Lochaven Company that may be directly or indirectly acquired or controlled by
it.
5.20 DERIVATIVES CONTRACTS. Except as disclosed in Section 5.20 of
the Lochaven Disclosure Memorandum, neither Lochaven nor any of its Subsidiaries
is a party to or has agreed to enter into an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial Contract, or any
other interest rate or foreign currency protection Contract not included on its
balance sheet which is a financial derivative Contract (including various
combinations thereof).
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF REPUBLIC
Republic hereby represents and warrants to Lochaven as follows:
6.1 ORGANIZATION, STANDING AND POWER. Republic is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Material Assets. The
Bank is a commercial bank duly organized, validly existing and in good standing
under the laws of the State of Florida and has the corporate power and authority
to carry on its business as now conducted and to own, lease and operate its
Materials Assets. Republic and the Bank is each duly qualified or licensed to
transact business as a foreign corporation in good standing in the states of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Republic.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Republic and the Bank each has the corporate power and
authority necessary to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Republic and the Bank. This Agreement represents a legal, valid and
binding obligation of Republic and the Bank, enforceable against Republic and
the Bank in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
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20
reorganization, moratorium or similar Laws affecting the enforcement of
creditors' Rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Republic or the Bank nor the consummation by Republic or the Bank of the
transactions contemplated hereby nor compliance by Republic or the Bank with any
of the provisions hereof will (i) conflict with or result in a breach of any
provision of Republic's or the Bank's Articles of Incorporation or By-laws; or
(ii) constitute or result in a default under, or require any Consent pursuant to
or result in the creation of any lien or any asset of any Republic Company under
any Contract or Permit of any Republic Company, where such default or lien or
any failure to obtain such Consent is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Republic; or (iii) subject to
receipt of the requisite Consents referred to in Section 9.1(b) of this
Agreement, violate any Law or Order applicable to any Republic Company or any of
their respective Material Assets.
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and Securities Laws and rules
of the NASD and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act and other Consents, filings or notifications which, if not
obtained or made, are not reasonably likely to have, individually or in the
aggregate a Material Adverse Effect on Republic, no notice to, filing with or
Consent of any public body or authority is necessary for the consummation by
Republic of the Merger and the other transactions contemplated in this
Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of Republic
consists of 20,000,000 shares of Republic Common Stock, of which 7,035,886
shares were issued and outstanding as of the date of this Agreement, and 100,000
shares of Republic Preferred Stock, of which 75,000 shares were issued and
outstanding as of the date of this Agreement. All of the issued and outstanding
shares of Republic Common Stock and Republic Preferred Stock are, and all of the
shares of Republic Common Stock to be issued in exchange for shares of Lochaven
Common Stock upon consummation of the Merger, when issued in accordance with the
terms of this Agreement, will be, duly and validly issued and outstanding and
fully paid and nonassessable under the Florida Business Corporation Act. None of
the outstanding shares of Republic Common Stock has been, and none of the shares
of Republic Common Stock to be issued in exchange for shares of Lochaven Common
Stock upon consummation of the Merger will be issued in violation of any
preemptive Rights of the current or past stockholders of Republic.
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6.4 REPUBLIC SUBSIDIARIES. Republic or one of its Subsidiaries
owns all of the issued and outstanding shares of capital stock of the Bank and
each other Republic Subsidiary. No equity securities of any Republic Subsidiary
are or may become required to be issued (other than to another Republic Company)
by reason of any Rights, and there are no Contracts by which any Republic
Subsidiary is bound to issue (other than to another Republic Company) additional
shares of its capital stock or Rights or by which any Republic Company is or may
be bound to transfer any shares of the capital stock of any Republic Subsidiary
(other than to another Republic Company). There are no Contracts relating to the
Rights of any Republic Company to vote or to dispose of any shares of the
capital stock of any Republic Subsidiary. All of the shares of capital stock of
each Republic Subsidiary held by a Republic Company are fully paid and
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the Republic
Company free and clear of any Lien. Each Republic Subsidiary is either a bank or
a corporation, and is duly organized, validly existing, and (as to corporations)
in good standing under the Laws of the jurisdiction in which it is incorporated
or organized, and has the corporate power and authority necessary for it to own,
lease and operate its Assets and to carry on its business as now conducted. Each
Republic Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Republic. Each Republic Subsidiary that is a depository institution is
an "insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Bank Insurance Fund or Savings Association Insurance Fund.
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Republic has filed and made available to Lochaven all
forms, reports and documents required to be filed by Republic and the Bank with
the FDIC and the SEC since December 31, 1994, other than registration statements
on Forms S-4 and S-8 (collectively, the "Republic SEC Reports"). The Republic
SEC Reports (i) at the time filed, complied in all Material respects with the
applicable requirements of the 1933 Act and the 1934 Act, as the case may be;
and (ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a Material fact or omit to state a Material fact
required to be stated in such Republic SEC Reports or necessary in order to make
the statements in such Republic SEC Reports, in light of the circumstances under
which they were made, not misleading.
(b) Each of the Republic Financial Statements (including, in
each case, any related notes) contained in the Republic SEC Reports, including
any Republic SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to
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22
form in all Material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC), and fairly
presented the consolidated financial position of Republic and its subsidiaries
as at the respective dates and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be Material in amount.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. To the Knowledge of
Republic, no Republic Company has any Liabilities that are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Republic,
except Liabilities which are accrued or reserved against in the consolidated
balance sheets of Republic as of December 31, 1997 included in the Republic
Financial Statements or reflected in the notes thereto. Except as disclosed in
Section 6.6 of the Republic Disclosure Memorandum, no Republic Company has
incurred or paid any Liability since December 31, 1997, except for such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Republic.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1997,
except as disclosed in the Republic Financial Statements delivered prior to the
date of this Agreement or in Section 6.7 of the Republic Disclosure Memorandum,
(i) there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Republic; and (ii) the Republic Companies have not taken any action,
or failed to take any action, prior to the date of this Agreement, which action
or failure, if taken after the date of this Agreement, would represent or result
in a Material breach or violation of any of the covenants and agreements of
Republic provided in Article 7 of this Agreement.
6.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of
any of the Republic Companies have been timely filed or requests for extensions
have been timely filed, granted and have not expired for periods ended on or
before December 31, 1997, and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, except to the extent that all
such failures to file, taken together, are not reasonably likely to have a
Material Adverse Effect on Republic, and all Tax Returns filed are complete and
accurate in all Material respects. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency or refund Litigation with
respect to any Taxes that is reasonably likely to result in a determination that
would have, individually or in the aggregate, a Material Adverse Effect on
Republic, except as reserved against in the Republic Financial Statements
delivered prior to the
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date of this Agreement. All Taxes and other Liabilities due with respect to
completed and settled examinations or concluded Litigation have been paid.
(b) Adequate provision for any Taxes due or to become due for
any of the Republic Companies for the period or periods through and including
the date of the respective Republic Financial Statements has been made and is
reflected on such Republic Financial Statements.
(c) Deferred Taxes of the Republic Companies have been
adequately provided for in the Republic Financial Statements.
6.9 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Republic, each Republic Company, its
Participation Facilities and its Loan Properties are and have been in compliance
with all Environmental Laws, except for violations which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Republic.
(b) There is no Litigation pending or, to the Knowledge of
Republic, threatened before any court, governmental agency or authority or other
forum in which any Republic Company or any of its Loan Properties or
Participation Facilities has been or, with respect to threatened Litigation, may
be named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law; or (ii)
relating to the release into the environment of any Hazardous Material, whether
or not occurring at, on, under or involving any of its Loan Properties or
Participation Facilities, except for such Litigation pending or threatened that
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Republic.
(c) To the Knowledge of Republic, there have been no releases
of Hazardous Material in, on, under or affecting any Participation Facility or
Loan Property of a Republic Company, except such as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Republic.
6.10 COMPLIANCE WITH LAWS. Republic is duly registered as a bank
holding company under the BHC Act. Each Republic Company has in effect all
Permits necessary for it to own, lease or operate its Material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Republic, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Republic. No
Republic Company:
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(a) is in violation of any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Republic; and
(b) has received any notification or communication from any
agency or department of federal, state or local government or any
Regulatory Authority or the staff thereof (i) asserting that any
Republic Company is not in compliance with any of the Laws or Orders
which such governmental authority or Regulatory Authority enforces,
where such noncompliance is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Republic; (ii)
threatening to revoke any Permits, the revocation of which is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Republic; or (iii) requiring any Republic Company to
enter into or consent to the issuance of a cease and desist Order,
formal agreement, directive, commitment or memorandum of understanding,
or to adopt any Board resolution or similar undertaking, which
restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies, its
management or the payment of dividends.
6.11 LEGAL PROCEEDINGS. Except as set forth in Section 6.11 of the
Republic Disclosure Memorandum, there is no Litigation instituted or pending or,
to the Knowledge of Republic, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any Republic Company, or against any Asset,
interest or Right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Republic, nor are
there any Orders of any Regulatory Authorities, other governmental authorities
or arbitrators outstanding against any Republic Company, that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Republic.
6.12 REPORTS. Since January 1, 1993, or the date of organization if
later, each Republic Company has filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required to
file with Regulatory Authorities (except, in the case of state securities
authorities, failures to file which are no reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Republic). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits and schedules thereto, complied in all Material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all Material respects, contain any untrue statement of
a Material fact or omit to state a Material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
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6.13 STATEMENTS TRUE AND CORRECT. None of the information supplied or
to be supplied by any Republic Company or any Affiliate thereof for inclusion in
the Registration Statement to be filed by Republic with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
any Material fact or omit to state any Material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Republic Company or any Affiliate thereof for inclusion in the
Proxy Statement/Prospectus to be mailed to Lochaven's stockholders in connection
with its Stockholders' Meeting, and any other documents to be filed by any
Republic Company or any Affiliate thereof with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby will, at the
respective time such documents are filed, and with respect to the Proxy
Statement/Prospectus, when first mailed to the stockholders of Lochaven, be
false or misleading with respect to any 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 or, in the case of the
Proxy Statement/Prospectus or any amendment thereof or supplement thereto, at
the time of the Stockholders' Meeting, be false or misleading with respect to
any Material fact, or omit to state any Material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that any Republic Company or
any Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all Material respects with the provisions of applicable Law.
6.14 TAX AND REGULATORY MATTERS. Except as specifically contemplated by
this Agreement, no Republic Company or any Affiliate thereof has taken or agreed
to take any action or has any Knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the transactions contemplated hereby, including
the Merger, from qualifying for treatment as a reorganization within the meaning
of Section 368(a) of the Code; or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF LOCHAVEN. Unless the prior written consent
of Republic shall have been obtained and, except as otherwise expressly
contemplated herein, Lochaven shall and shall cause each of its Subsidiaries to
(i) operate its business only in the usual, regular and ordinary course; (ii)
preserve intact its business organization and Assets and maintain its Rights and
franchises; (iii) use its reasonable efforts to maintain its current employee
relationships; and (iv) take no action which would (a) adversely affect the
ability of any party to obtain any Consents required for
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the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 9.1(b) of
this Agreement; or (b) adversely affect the ability of any party to perform its
covenants and agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF LOCHAVEN. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, Lochaven covenants and agrees that it will not do or agree or commit
to do, or permit any of its Subsidiaries to do or agree or commit to do, any of
the following without the prior written consent of an authorized officer of
Republic:
(a) amend the Charter or Articles of Incorporation, Bylaws or
other governing instruments of any Lochaven Company; or
(b) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of an Lochaven Company to
another Lochaven Company) in excess of an aggregate of $50,000 (for the
Lochaven Companies on a consolidated basis) except in the ordinary
course of the business of Lochaven or the Lochaven Subsidiaries
consistent with past practices (which shall include, for Lochaven and
the Lochaven Subsidiaries that are depository institutions, creation of
deposit liabilities, purchases of federal funds, advances from the
Federal Reserve Bank or Federal Home Loan Bank, and entry into
repurchase agreements fully secured by U.S. government or agency
securities), or impose or suffer the imposition on any Asset of any
Lochaven Company of any Lien or permit any such Lien to exist (other
than in connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the
ordinary course of business, the satisfaction of legal requirements in
the exercise of trust powers, and Liens in effect as of the date hereof
that are disclosed in the Lochaven Disclosure Memorandum); or
(c) repurchase, redeem or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into
any shares, of the capital stock of any Lochaven Company, or declare or
pay any dividend or make any other distribution in respect of
Lochaven's capital stock; provided that, notwithstanding the provisions
of Section 1.3 of this Agreement, the parties shall cooperate in
selecting the Effective Time to ensure that, with respect to the
quarterly period in which the Effective Time occurs, the holders of
Lochaven Common Stock do not receive both a dividend in respect of
their Lochaven Common Stock and a dividend in respect of Republic
Common Stock or fail to receive any dividend; or
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(d) except for this Agreement or pursuant to the terms of the
Lochaven options, issue, sell, pledge, encumber, authorize the issuance
of, enter into any Contract to issue, sell, pledge, encumber or
authorize the issuance of or otherwise permit to become outstanding any
additional shares of Lochaven Common Stock or any other capital stock
of any Lochaven Company, or any stock appreciation Rights, or any
option, warrant, conversion or other Right to acquire any such stock or
any security convertible into any such stock; or
(e) adjust, split, combine or reclassify any capital stock of
any Lochaven Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Lochaven
Common Stock, or sell, lease, mortgage or otherwise dispose of or
otherwise encumber (x) any shares of capital stock of any Lochaven
Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another Lochaven Company) or (y) any Asset other than in
the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of
three years of less, purchase any securities or make any Material
investment, either by purchase of stock or securities, contributions to
capital, Asset transfers, or purchase of any Assets, in any Person
other than a wholly-owned Lochaven Subsidiary, or otherwise acquire
direct or indirect control over any Person, other than in connection
with (i) foreclosures in the ordinary course of business; (ii)
acquisitions of control by a depository institution Subsidiary in its
fiduciary capacity; or (iii) the creation of new wholly-owned
Subsidiaries organized to conduct or continue activities otherwise
permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any Lochaven Company, except in accordance
with past practice disclosed in Section 7.2(g) of the Lochaven
Disclosure Memorandum or as required by Law; pay any severance or
termination pay or any bonus other than pursuant to written policies or
written Contracts in effect on the date of this Agreement; except as
authorized by Section 8.13 of this Agreement, enter into or amend any
severance agreements with officers of any Lochaven Company; grant any
Material increase in fees or other increases in compensation or other
benefits to directors of any Lochaven Company, except in accordance
with past practice disclosed in Section 7.2(g) of the Lochaven
Disclosure Memorandum; or voluntarily accelerate the vesting of any
stock options or other stock-based compensation or employee benefits;
or
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(h) except as authorized by Section 8.13 of this Agreement,
enter into or amend any employment Contract between any Lochaven
Company and any Person (unless such amendment is required by Law) that
the Lochaven Company does not have the unconditional Right to terminate
without Liability (other than Liability for services already rendered),
at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any Lochaven
Company or make any Material change in or to any existing employee
benefit plans of any Lochaven Company other than any such change that
it required by Law or that, in the opinion of counsel, is necessary or
advisable to maintain the Tax qualified status of any such plan; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP; or
(k) commence any Litigation other than in accordance with past
practice or settle any Litigation involving any Liability of any
Lochaven Company for Material money damages or restrictions upon the
operations of any Lochaven Company; or
(l) except in the ordinary course of business, modify, amend
or terminate any Material Contract or waive, release, compromise or
assign any Material Contract or waive, release, compromise or assign
any Material Rights or claims.
7.3 COVENANTS OF REPUBLIC. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Republic
covenants and agrees that it shall (i) continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment, to
enhance the long-term value of the Republic Common Stock and the business
prospects of the Republic Companies; and (ii) take no action which would (a)
materially adversely affect the ability of any party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentence of Section
9.1(b) of this Agreement; or (b) materially adversely affect the ability of any
party to perform its covenants and agreements under this Agreement; provided,
that the foregoing shall not prevent any Republic Company from discontinuing or
disposing of any of its Assets or business if such action is, in the judgment of
Republic, desirable in the conduct of the business of Republic and its
Subsidiaries.
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7.4 ADVERSE CHANGES IN CONDITION. Each party agrees to give written
notice promptly to the other party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it; or (ii) would cause or constitute a
Material breach of any of its representations, warranties or covenants contained
herein, and to use its reasonable effects to prevent or promptly to remedy the
same.
7.5 REPORTS. Each party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in stockholders' equity and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not Material). As of their
respective dates, such reports filed with the SEC will comply in all Material
respects with the Securities Laws and will not contain any untrue statement of a
Material fact or omit to state a Material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; STOCKHOLDER APPROVAL. As
soon as reasonably practicable after execution of this Agreement, Republic shall
file the Registration Statement with the SEC and shall use its reasonable
efforts to cause the Registration Statement to become effective under the 1933
Act and take any action required to be taken under the applicable state Blue Sky
or Securities Laws in connection with the issuance of the shares of Republic
Common Stock upon consummation of the Merger. Lochaven shall furnish all
information concerning it and the holders of its capital stock as Republic may
reasonably request in connection with such action. Lochaven shall call the
Stockholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as
Lochaven deems appropriate. In connection with the Stockholders' Meeting, (i)
Lochaven shall mail the Proxy Statement/Prospectus to its stockholders; (ii) the
parties shall furnish to each other all information concerning them that they
may reasonably request in connection with such Proxy Statement/Prospectus; (iii)
the Board of Directors of Lochaven shall recommend (subject to compliance with
its fiduciary duties as advised by counsel) to Lochaven's stockholders the
approval of the matters
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submitted for approval; and (iv) the Board of Directors and officers of Lochaven
shall (subject to compliance with its fiduciary duties as advised by counsel)
use its reasonable efforts to obtain such stockholders' approval.
8.2 EXCHANGE LISTING. Republic shall use its reasonable efforts to
list, prior to the Effective Time, on the National Market, subject to official
notice of issuance, the shares of Republic Common Stock to be issued to the
holders of Lochaven Common Stock pursuant to the Merger.
8.3 APPLICATIONS. Republic shall promptly prepare and file, and
Lochaven shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Republic and Lochaven shall execute and file a
Certificate of Merger with the Department.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each party agrees to use, and to cause its
Subsidiaries to use, its reasonable best efforts to take, or cause to be taken,
all actions and to do or cause to be done all things necessary, proper or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable best efforts to
lift or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement; provided that nothing herein shall
preclude either party from exercising its Rights under this Agreement. Each
party shall use, and shall cause each of its Subsidiaries to use, its reasonable
best efforts to obtain all Consents necessary or desirable for the consummation
of the transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each party shall keep the
other party advised of all Material developments relevant to its business and to
consummation of the Merger and shall permit the other party to make or cause to
be made such investigation of the business and properties of its and its
Subsidiaries and of their respective financial and legal conditions as the other
party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operation. No investigation by a party shall affect
the representations and warranties of the other party.
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(b) Each party shall, and shall cause its advisers and agents
to, maintain the confidentiality of all confidential information furnished to it
by the other party concerning its and its Subsidiaries' businesses, operations
and financial positions ("Confidential Information") and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. Each party shall maintain the confidentiality of
all Confidential Information obtained in connection with this Agreement or the
transactions contemplated hereby unless (i) such information becomes publicly
available through no fault of such party, or was, is or becomes available to
that party from a source other than the other party or its Representatives,
which source was itself not bound by a confidentiality agreement with, or other
contractual, legal or fiduciary obligation of confidentiality with respect to
that information; or (ii) the furnishing or use of such information is required
by proper judicial, administrative or other legal proceeding, provided that the
other party is promptly notified in writing of such request, unless such
notification is not, in the opinion of counsel, permitted by Law. Each party and
its Representatives will hold and maintain all Confidential Information in
confidence and will not disclose to any third party or permit any third party
access to any Confidential Information or the substance thereof; provided that a
party may disclose Confidential Information to such of its Representatives who
need to know such information in connection with the transactions contemplated
hereby. If this Agreement is terminated prior to the Effective Time, each party
shall promptly return or certify the destruction of all documents and copies
thereof, and all work papers containing confidential information received from
the other party.
(c) Each party agrees to give the other party notice as soon
as practicable after any determination by it of any fact or occurrence relating
to the other party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent, either
a Material breach of any representation, warranty, covenant or agreement of the
other party or which has had or is reasonably likely to have a Material Adverse
Effect on the other party.
8.7 PRESS RELEASES. Prior to the Effective Time, Republic and Lochaven
shall mutually agree upon and jointly issue any press release or other public
disclosure materially related to this Agreement or any other transaction
contemplated hereby; provided that nothing in this Section 8.7 shall be deemed
to prohibit any party from making any disclosure which its counsel deems
necessary or advisable in order to satisfy such party's disclosure obligations
imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no Lochaven Company nor any Affiliate thereof
nor any Representatives thereof retained by any Lochaven Company shall directly
or indirectly solicit any Acquisition Proposal by any Person. Except to the
extent necessary to comply with the fiduciary duties of Lochaven's Board of
Directors as advised by counsel, no Lochaven Company or any Affiliate or
Representative thereof
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shall furnish any non-public information that it is not legally obligated to
furnish, or negotiate with respect to, or enter into any Contract with respect
to, any Acquisition Proposal, but Lochaven may communicate information about
such an Acquisition Proposal to its stockholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised by
counsel. Lochaven shall promptly notify Republic orally and in writing in the
event that it receives any inquiry or proposal relating to any such transaction.
Lochaven shall (i) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any of the foregoing; and (ii) direct and use its reasonable
efforts to cause all of its Representatives not to engage in any of the
foregoing.
8.9 TAX TREATMENT. Each of the parties undertakes and agrees to use
its reasonable efforts to cause the Merger, and to take no action which would
cause the Merger not, to qualify for treatment as a "reorganization" within the
meaning of Section 368(a) of the Code for federal income Tax purposes.
8.10 STATE TAKEOVER LAWS. Each Lochaven Company shall take all
necessary steps to exempt the transactions contemplated by this Agreement from,
or if necessary challenge the validity or applicability of, any applicable state
or federal "moratorium", "control share", "fair price", "business combination"
or other anti-takeover statute or regulation ("Takeover Laws").
8.11 CHARTER PROVISIONS. Each Lochaven Company shall take all necessary
action to ensure that the entering into of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby do not and will not
result in the grant of any Rights to any Person under the Charter or Articles of
Incorporation, Bylaws, or other governing instruments of any Lochaven Company or
restrict or impair the ability of Republic or any of its Subsidiaries to vote,
or otherwise to exercise the Rights of a stockholder with respect to, shares of
any Lochaven Company that may be directly or indirectly acquired or controlled
by it.
8.12 AGREEMENT OF AFFILIATES. Lochaven has disclosed in Section 8.12 of
the Lochaven Disclosure Memorandum each Person whom it reasonably believes is an
"affiliate" of Lochaven for purposes of Rule 145 under the 1933 Act. Lochaven
shall use its reasonable efforts to cause each such Person to deliver to
Republic not later than 30 days prior to the Effective Time, a written
agreement, in substantially the form of Exhibit 2, providing that such Person
will not sell, pledge, transfer, or otherwise dispose of the shares of Lochaven
Common Stock held by such Person except as contemplated by such agreement or by
this Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of Republic Common Stock to be received by such Person upon consummation
of the Merger except in compliance with applicable provisions of the 1933 Act
and the rules and regulations thereunder and until such time as financial
results covering at least 30 days of combined operations of Republic and
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Lochaven have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies Shares of Republic Common Stock
issued to such affiliates of Lochaven in exchange for shares of Lochaven Common
Stock shall not be transferable until such time as financial results covering at
least 30 days of combined operations of Republic and Lochaven have been
published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies, regardless of whether each such affiliate has
provided the written agreement referred to in this Section 8.12 (and Republic
shall be entitled to place restrictive legends upon certificates for shares of
Republic Common Stock issued to affiliates of Lochaven pursuant to this
Agreement to enforce the provisions of this Section 8.12). Republic shall not be
required to maintain the effectiveness of the Registration Statement under the
1933 Act for the purposes of resale of Republic Common Stock by such affiliates.
8.13 EMPLOYEE BENEFITS AND CONTRACTS.
(a) Following the Effective Time, Republic shall provide
generally to officers and employees of the Lochaven Companies, who at or after
the Effective Time become employees of a Republic Company, employee benefits
under employee benefits under employee benefit plans (other than stock option or
other plans involving the potential issuance of Republic Common Stock except as
set forth in this Section 8.13), on terms and conditions which when taken as a
whole are substantially similar to those currently provided by the Republic
Companies to their similarly situated officers and employees. For purposes of
participation and vesting (but not accrual of benefits) under such employee
benefit plan, (i) service under any qualified defined benefit plans of Lochaven
should be treated as service under Republic's qualified defined benefit plans,
(ii) service under any qualified defined contribution plans of Lochaven shall be
treated as service under Republic's qualified defined contribution plans, and
(ii) service under any other employee benefit plans maintained by Republic.
(b) Following the Effective Time, Republic shall honor on
terms reasonably agreed upon by the parties all employment, severance,
consulting and other compensation Contracts disclosed in Section 8.13 of the
Lochaven Disclosure Memorandum to Republic between any Lochaven Company and any
current or former director, officer or employee thereof, and all provisions for
vested benefits or other vested amounts earned or accrued through the Effective
Time under the Lochaven Benefit Plans.
(c) For a period of one year following the Effective Time,
Republic shall make a severance payment to any former Lochaven employee
terminated by Republic without cause during such period in an amount equal to
the product of such employee's salary or base pay for two weeks multiplied by
the number of whole years such employee was employed with Lochaven.
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8.14 INDEMNIFICATION.
(a) Republic shall indemnify, defend, and hold harmless the
present and former directors, officers, employees and agents of the Lochaven
Companies (each, an "Indemnified Party") against all Liabilities arising out of
actions or omissions occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement) to the full extent permitted under
the OTS Regulations, to the extent not inconsistent with the Florida Business
Corporation Act, and by Lochaven's Charter and Bylaws as in effect on the date
hereof, including provisions relating to advances of expenses incurred in the
defense of any Litigation. Without limiting the foregoing, in any case in which
approval by Republic is required to effectuate any indemnification, Republic
shall direct, at the election of the Indemnified Party, that the determination
of any such approval shall be made by independent counsel mutually agreed upon
between Republic and the Indemnified Party.
(b) If Republic or any of its successors or assigns shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving Person of such consolidation or merger or shall transfer all or
substantially all of its Assets to any Person, then and in each case, proper
provision shall be made so that the successors and assigns of Republic shall
assume the obligations set forth in this Section 8.14.
(c) The provisions of this Section 8.14 are intended to be for
the benefit of and shall be enforceable by, each Indemnified Party, his or her
heirs and representatives.
8.15 CERTAIN MODIFICATIONS. Republic and Lochaven shall consult
with respect to their loan, Litigation and real estate valuation policies and
practices (including loan classifications and levels of reserves) and Lochaven
shall make such modifications or changes to its policies and practices, if any,
prior to the Effective Time, as may be mutually agreed upon. Republic and
Lochaven also shall consult with respect to the character, amount and timing of
restructuring and Merger-related expense charges to be taken by each of the
parties in connection with the transactions contemplated by this Agreement and
shall take such charges in accordance with GAAP, prior to the Effective Time, as
may be mutually agreed upon by the parties. Neither parties' representations,
warranties and covenants contained in this Agreement shall be deemed to be
inaccurate or breached in any respect as a consequence of any modifications or
charges undertaken solely on account of this Section 8.15.
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ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of each party to perform this Agreement and to consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both parties pursuant to Section 11.6 of
this Agreement:
(A) STOCKHOLDER APPROVAL. The stockholders of Lochaven shall
have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by Law,
by the provisions of any governing instrument, or by the rules of the NASD.
(B) REGULATORY APPROVALS. All Consents of, filings and
registration with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in full
force and effect and all waiting periods required by Law shall have expired. No
Consent obtained from any Regulatory Authority that is necessary to consummate
the transactions contemplated hereby shall be conditioned or restricted in a
manner (including requirements relating to the raising of additional capital or
the disposition of Assets) that in the reasonable judgment of the Board of
Directors of Republic would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement that, had
such condition or requirement been known, Republic would not, in its reasonable
judgement, have entered into this Agreement.
(C) CONSENTS AND APPROVALS. Each party shall have obtained any
and all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of any
Default under any Contract or Permit of such party that, if not obtained or
made, is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on such party. No Consent so obtained that is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner which in the reasonable judgment of the Board of
Directors of Republic would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement so as to
render inadvisable the consummation of the Merger.
(D) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced, or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts, or makes
illegal consummation of the transactions contemplated by this Agreement.
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36
(E) REGISTRATION STATEMENT. The Registration Statement shall
have become effective under the 1933 Act, no stop Orders suspending the
effectiveness of the Registration Statement shall have been issued, no action,
suit, proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary approvals
under state Securities Laws or the 1933 Act relating to the issuance or trading
of the shares of Republic Common Stock issuable pursuant to the Merger shall
have been received.
(F) TAX MATTERS. Each party shall have received a written
opinion or opinions from Holland & Knight LLP in a form reasonably satisfactory
to such parties (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code and
(ii) the exchange in the Merger of Lochaven Common Stock for Republic Common
Stock will not give rise to gain or loss to the stockholders of Lochaven with
respect to such exchange (except to the extent of any cash received). In
rendering such Tax Opinion, such counsel shall be entitled to rely upon
representations of officers of Lochaven and Republic reasonably satisfactory in
form and substance to such counsel.
9.2 CONDITIONS TO OBLIGATIONS OF REPUBLIC. The obligations of Republic
to perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Republic pursuant to Section 11.6(a) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of Lochaven
set forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties that are confined to a specified
date shall speak only as of such date). The representations and warranties of
Lochaven set forth in Section 5.3 of this Agreement shall be true and correct
(except for inaccuracies which are de minimis in amount). The representations
and warranties of Lochaven set forth in Sections 5.18, 5.19, and 5.20 of this
Agreement shall be true and correct in all Material respects. There shall not
exist in this Agreement (including the representations and warranties set forth
in Sections 5.3, 5.18, 5.19, and 5.20) any inaccuracies such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a Material
Adverse Effect on Lochaven; provided that, for purposes of this sentence only,
those representations and warranties which are qualified by reference to
"Material" or "Material Adverse Effect" or to the "Knowledge" of Lochaven or to
a matter being "known" by Lochaven shall be deemed not to include such
qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of Lochaven to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior to
the Effective Time shall have been duly performed and complied with in all
Material respects.
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37
(C) CERTIFICATES. Lochaven shall have delivered to Republic
(i) a certificate, dated as of the Closing Date and signed on its behalf by its
duly authorized officers, to the effect that the conditions of its obligations
set forth in Sections 9.2(a) and 9.2(b) of this Agreement have been satisfied,
and (ii) certified copies of resolutions duly adopted by Lochaven's Board of
Directors and stockholders evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all in
such reasonable detail as Republic and its counsel shall request.
(D) LEGAL OPINION. Republic shall have received the opinions
of Smith, Mackinnon, Greeley, Bowdoin & Xxxxxxx, P.A., counsel to Lochaven,
dated as of the Closing Date or such earlier date as may be agreed to by the
parties, with respect to such matters related to Lochaven and the Merger as
Republic may reasonably request. As to certain matters of fact, such counsel may
rely on certificates of public officials and senior officers of Lochaven
knowledgeable and having responsibility with respect to the matters covered by
such certificate.
9.3 CONDITIONS TO OBLIGATIONS OF LOCHAVEN. The obligations of Lochaven
to perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Lochaven pursuant to Section 11.6(b) of this Agreement.
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of Republic
set forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date). The representations and warranties of
Republic set forth in Section 6.3 of this Agreement shall be true and correct
(except for inaccuracies which are de minimis in amount). The representations
and warranties of Republic set forth in Section 6.14 of this Agreement shall be
true and correct in all Material respects. There shall not exist any
inaccuracies such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on Republic; provided that,
for purposes of this sentence only, those representations and warranties which
are qualified by references to "Material" to "Material Adverse Effect" or to the
"Knowledge" of Republic or to a matter being "known" by Republic shall be deemed
not to include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of Republic to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior to
the Effective Time shall have been duly performed and complied with in all
Material respects.
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38
(C) CERTIFICATES. Republic shall have delivered to Lochaven
(i) a certificate, dated as of the Closing Date and signed on its behalf by its
duly authorized officers, to the effect that the conditions of its obligations
set forth in Sections 9.3(a) and 9.3(b) of this Agreement have been satisfied,
and (ii) certified copies of resolutions duly adopted by Republic's Board of
Directors evidencing the taking of all corporate action necessary to authorize
the execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, all in such reasonable detail as
Lochaven and its counsel shall request.
(D) LEGAL OPINION. Lochaven shall have received the opinions
of Holland & Knight LLP, special counsel to Republic, dated as of the Closing
Date or such earlier date as may be agreed to by the parties, with respect to
such matters related to Republic and the Merger as Lochaven may reasonably
request. As to certain matters of fact, such counsel may rely on certificates of
public officials and senior officers of Lochaven knowledgeable and having
responsibility with respect to the matters covered by such certificate.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
stockholders of Lochaven, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of Republic
and the Board of Directors of Lochaven; or
(b) By the Board of Directors of either party (provided that
the terminating party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of Lochaven and Section 9.3(a) of this
Agreement in the case of Republic or in Material breach of any covenant or other
agreement contained in this Agreement) in the event of an inaccuracy of any
representation or warranty of the other party contained in this Agreement which
cannot be or has not been cured within 30 days after the giving or written
notice to the breaching party of such inaccuracy and which inaccuracy would
provide the terminating party the ability to refuse to consummate the Merger
under the applicable standard set forth in Section 9.2(a) of this Agreement in
the case of Lochaven and Section 9.3(a) of this Agreement in the case of
Republic; or
(c) By the Board of Directors of either party in the event of
a Material breach by the other party of any covenant or agreement contained in
this Agreement that cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach; or
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39
(d) By the Board of Directors of either party in the event (i)
any Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal, or (ii) the stockholders of
Lochaven fail to vote their approval of the matters submitted for the approval
at the Stockholders' Meeting where the transactions were presented to such
stockholders for approval and voted upon; or
(e) By the Board of Directors of either party in the event
that the Merger shall not have been consummated by December 1, 1998, if the
failure to consummate the transactions contemplated hereby on or before such
date is not caused by any breach of this Agreement by the party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either party (provided that
the terminating party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of Lochaven and Section 9.3(a) of this
Agreement in the case of Republic or in Material breach of any covenant or other
agreement contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such party to consummate the Merger cannot be
satisfied or fulfilled by the date specified in Section 10.1(e) of this
Agreement.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Section 8.6(b) and Article 11 of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant to
Section 10.1(b), 10.1(c), or 10.1(f) of this Agreement shall not relieve the
breaching party from Liability for an uncured willful breach of a
representation, warranty, covenant or agreement giving rise to such termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants and agreements of the
parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4 and 11 and Sections 8.12, 8.13 and 8.14 of this Agreement.
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40
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"Acquisition Proposal" with respect to a party shall
mean any tender offer or exchange offer or any
proposal for a merger, acquisition of all of the
stock or Assets of, or other business combination
involving such party or any of its Subsidiaries or
the acquisition of a substantial equity interest in,
or a substantial portion of the Assets of, such party
or any of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other
Person directly, or indirectly through one or more
intermediaries, controlling, controlled by or under
common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect
beneficial owner of any 10% or greater equity or
voting interest of such Person; or (iii) any other
Person for which a Person described in clause (ii)
acts in any such a capacity.
"Agreement" shall mean this Agreement and Plan of
Merger, including the Exhibits delivered pursuant
hereto and incorporated herein by reference.
"Assets" of a Person shall mean all of the assets,
properties, businesses, and Rights of such Person of
every kind, nature, character, and description,
whether real, personal, or mixed, tangible or
intangible, accrued or contingent, or otherwise
relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether
or not carried on the books and records of such
Person, and whether or not owned in the name of such
Person or any Affiliate of such Person and wherever
located.
"Bank Common Stock" shall mean the $2.00 par value
common stock of the Bank.
"Bank Preferred Stock" shall mean the $20.00 par
value noncumulative convertible perpetual preferred
stock of the Bank.
"BHC Act" shall mean the Bank Holding Company Act of
1956, as amended.
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41
"Closing Date" shall mean the date on which the
Closing occurs.
"Consent" shall mean any consent, approval,
authorization, clearance, exemption, waiver, or
similar affirmation by any Person pursuant to any
Contract, Law, Order or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract,
indenture, instrument, lease, obligation, plan,
practice, restriction, understanding or undertaking
of any kind or character, or other document to which
any Person is a party or that is binding on any
Person or its capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of
or default under any Contract, Order or Permit, (ii)
any occurrence of any event that with the passage of
time or the giving of notice or both would constitute
a breach or violation of or default under any
Contract, Order or Permit, or (iii) any occurrence of
any event that with or without the passage of time or
the giving of notice would give rise to a Right to
terminate or revoke, change the current terms of or
renegotiate, or to accelerate, increase or impose any
Liability under, any Contract, Order or Permit,
where, in any such event, such Default is reasonably
likely to have, individually or in the aggregate, a
Material Adverse Effect on a party.
"Department" shall mean the Florida Department of
Banking and Finance.
"Environmental Laws" shall mean all Laws relating to
pollution or protection of human health or the
environment (including ambient air, surface water,
ground water, land surface or subsurface strata) and
that are administered, interpreted or enforced by the
United States Environmental Protection Agency and
state and local agencies with jurisdiction over, and
including common Law in respect of, pollution or
protection of the environment, including the
Comprehensive Environmental Response Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq.
U.S.C. 6901 et seq. ("RCRA"), and other Laws relating
to emissions, discharges, releases or threatened
releases of any Hazardous Material, or otherwise
relating to the manufacture, processing,
distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Material.
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42
"ERISA" shall mean the Employee Retirement Income
Security Act or 1974, as amended.
"Exhibits", inclusive, shall mean the Exhibits so
marked, copies of which are attached to this
Agreement. Such Exhibits are hereby incorporated by
reference herein and made a part hereof, and may be
referred to in this Agreement and any other related
instrument or document without being attached hereto.
"FDIC" shall mean the Federal Deposit Insurance
Corporation.
"GAAP" shall mean generally accepted accounting
principles, consistently applied during the periods
involved.
"Hazardous Material" shall mean (i) any hazardous
substance, hazardous material, hazardous waste,
regulated substance or toxic substance (as those
terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants,
contaminants, petroleum, petroleum products or oil
(and specifically shall include asbestos requiring
abatement, removal or encapsulation pursuant to the
requirements of governmental authorities and any
polychlorinated biphenyls).
"HOLA" shall mean the Home Owners' Loan Act of 1933,
as amended.
"HSR Act" shall mean Section 7A of the Xxxxxxx Act,
as added by Title II of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a Person
(including references to such Person being aware of a
particular matter) shall mean the personal knowledge
of the chairman, president, chief financial officer,
chief accounting officer, chief credit officer,
general counsel, and any assistant or deputy general
counsel or any senior or executive vice president of
such Person and the knowledge of any such Persons
obtained or which would have been obtained from a
reasonable investigation.
"Law" shall mean any code, law, ordinance,
regulation, reporting or licensing requirement, rule
or statute applicable to a Person or its Assets,
Liabilities or business, including those promulgated,
interpreted or enforced by any Regulatory Authority.
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43
"Liability" shall mean any direct or indirect,
primary or secondary, liability, indebtedness,
obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any
Person (other than endorsements of notes, bills,
checks and drafts presented for collection or deposit
in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated
or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement,
default of title, easement, encroachment,
encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security
interest, title retention or other security
arrangement, or any adverse Right or interest, charge
or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other
than (i) Liens for current property Taxes not yet due
and payable, and (ii) for depository institution
Subsidiaries of a party, pledges to secure deposits,
and other Liens incurred in the ordinary course of
the banking business.
"Litigation" shall mean any action, arbitration,
cause of action, claim, complaint, criminal
prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry,
administrative or other proceeding or notice (written
or oral) by any Person alleging potential Liability
or requesting information relating to or affecting a
party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by
this Agreement, but shall not include regular,
periodic examinations of depository institutions and
their Affiliates by Regulatory Authorities.
"Loan Property" shall mean any property owned,
leased, or operated by the party in question or by
any of its Subsidiaries or in which such party or
Subsidiary holds a security or other interest
(including an interest in fiduciary capacity), and,
where required by the context, includes the owner or
operator of such property, but only with respect to
such property.
"Lochaven Common Stock" shall mean the $.01 par value
common stock of Lochaven.
"Lochaven Companies" shall mean, collectively,
Lochaven and all Lochaven Subsidiaries.
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44
"Lochaven Disclosure Memorandum" shall mean the
written information entitled "Lochaven Federal
Savings and Loan Association Disclosure Memorandum"
delivered prior to 5:00 p.m., Eastern time, on the
seventh day after the date of this Agreement, to
Republic describing in reasonable detail the matters
contained therein and, with respect to each
disclosure made therein, specifically referencing
each Section or subsection of this Agreement under
which such disclosure is being made. Information
disclosed with respect to one Section or subsection
shall not be deemed to be disclosed for purposes of
any other Section or subsection not specifically
referenced with respect thereto.
"Lochaven Financial Statements" shall mean (i) the
consolidated balance sheets (including related notes
and schedules, if any) of Lochaven as of December 31,
1997, 1996, 1995 and the related statements of
income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any)
for each of the three fiscal years ended December 31,
1997, 1996 and 1995, as filed by Lochaven in SEC
Documents, and (ii) the consolidated balance sheets
of Lochaven (including related notes and schedules,
if any) and related statements of income, changes in
stockholders' if any) included in SEC Documents filed
with respect to periods ended subsequent to December
31, 1997.
"Lochaven Subsidiaries" shall mean the Subsidiaries
of Lochaven, which shall include the Lochaven
Subsidiaries described in Section 5.4 of this
Agreement and any corporation, bank, savings
association or other organization acquired as a
Subsidiary of Lochaven in the future and owned by
Lochaven at the Effective Time.
"Material" for purposes of this Agreement shall be
determined in light of the facts and circumstances of
the matter in question; provided that any specific
monetary amount stated in this Agreement shall
determine materiality in that instance.
"Material Adverse Effect" on a party shall mean an
event, change, or occurrence which, individually or
together with any other event, change or occurrence,
has a material adverse impact on (i) the financial
position, business or results of operations of such
party and its Subsidiaries, taken as a whole, or (ii)
the ability of such party to perform its obligations
under this Agreement or to consummate the Merger or
the other transactions contemplated by
- 44 -
45
this Agreement, provided that "Material Adverse
Effect" shall not be deemed to include the impact of
(a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or
governmental authorities, (b) changes in GAAP or
regulatory accounting principles generally applicable
to banks and their holding companies, (c) actions and
omissions of a party (or any of its Subsidiaries)
taken with the prior informed consent of the other
party in contemplation of the transactions
contemplated hereby, and (d) the Merger and
compliance with the provisions of this Agreement on
the operating performance of the parties.
"NASD" shall mean the National Association of
Securities Dealers, Inc.
"National Market" shall mean The Nasdaq National
Market.
"1933 Act" shall mean the Securities Act of 1933, as
amended.
"1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
"Order" shall mean any administrative decision or
award, decree, injunction, judgment, order,
quasi-judicial decision or award, ruling or writ of
any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency
or Regulatory Authority.
"OTS" shall mean the Office of Thrift Supervision.
"Participation Facility" shall mean any facility or
property in which the party in question or any of its
Subsidiaries participates in the management and,
where required by the context, said term means the
owner or operator of such facility or property, but
only with respect to such facility or property.
"Permit" shall mean any federal, state, local, and
foreign governmental approval, authorization,
certificate, easement, filing, franchise, license,
notice, permit or Right to which any Person is a
party or that is or may be binding upon or inure to
the benefit of any Person or its securities, Assets
or business.
"Person" shall mean a natural person or any legal,
commercial, or governmental entity, such as, but not
limited to, a corporation, general partnership, joint
venture, limited partnership, limited
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46
liability company, trust, business association, group
acting in concert, or any person acting in a
representative capacity.
"Proxy Statement" shall mean the proxy statement used
by and Lochaven to solicit the approval of its
stockholders of the transactions contemplated by this
Agreement, which shall include the prospectus of
Republic relating to the issuance of the Republic
Common Stock to holders of Lochaven Common Stock.
"Republic Common Stock" shall mean the $2.00 par
value common stock of Republic.
"Republic Companies" shall mean, collectively,
Republic and all Republic Subsidiaries.
"Republic Disclosure Memorandum" shall mean the
written information entitled "Republic Bancshares,
Inc. Disclosure Memorandum" delivered prior to the
date of this Agreement to Lochaven describing in
reasonable detail the matters contained therein and,
with respect to each disclosure made therein,
specifically referencing each Section or subsection
of this Agreement under which such disclosure is
being made. Information disclosed with respect to one
Section or subsection shall not be deemed to be
disclosed for purposes of any other Section or
subsection not specifically referenced with respect
thereto.
"Republic Financial Statements" shall mean (i) the
consolidated statements of condition (including
related notes and schedules, if any) of Republic as
of December 31, 1997, and the consolidated statements
of condition (including related notes and schedules,
if any) of the Bank as of December 31, 1996 and 1995,
and the related restated statements of income,
changes in stockholders' equity, and cash flows
(including related notes and schedules, if any) for
each of the three years ended December 31, 1997, 1996
and 1995, as filed by Republic or the Bank in SEC
Documents and (ii) the consolidated statements of
condition of Republic (including related notes and
schedules, if any) and related statements of income,
changes in stockholders' equity and cash flows
(including related notes and schedules, if any)
included in SEC Documents filed with respect to
periods ended subsequent to December 31, 1997.
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47
"Republic Preferred Stock" shall mean the $20.00 par
value noncumulative convertible perpetual preferred
stock of Republic.
"Republic Subsidiaries" shall mean the Subsidiaries
of Republic and any corporation, bank, savings
association or other organization acquired as a
Subsidiary of Republic in the future and owned by
Republic at the Effective Time.
"Registration Statement" shall mean the Registration
Statement on Form S-4, or other appropriate form,
including any pre-effective or post-effective
amendments or supplements thereto, filed with the SEC
by Republic under the 1933 Act with respect to the
shares of Republic Common Stock to be issued to the
stockholders of Lochaven in connection with the
transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively,
the Federal Trade Commission, the United States
Department of Justice, the Board of the Governors of
the Federal Reserve System, the Federal Deposit
Insurance Corporation, the OTS, all state regulatory
agencies having jurisdiction over the parties and
their respective Subsidiaries, the NASD and the SEC.
"Representative" shall mean any investment banker,
financial advisor, attorney, accountant, consultant
or other representative of a Person.
"Rights" shall mean all arrangements, calls,
commitments, Contracts, options, Rights to subscribe
to, scrip, understandings, warrants or other binding
obligations of any character whatsoever relating to,
or securities or Rights convertible into or
exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to
issue additional shares of its capital stock or other
Rights.
"SEC" shall mean the United States Securities and
Exchange Commission.
"SEC Documents" shall mean all forms, proxy
statements, registration statements, reports,
schedules and other documents filed or required to be
filed by a party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws
or the OTS Regulations.
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48
"Securities Laws" shall mean the 1933 Act, the 1934
Act, the Investment Company Act of 1940, as amended,
the Investment Advisors Act of 1940, as amended, the
Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority
promulgated thereunder.
"Stockholders' Meeting" shall mean the meeting of the
stockholders of Lochaven to be held pursuant to
Section 8.1 of this Agreement, including any
adjournment or adjournments thereof.
"Subsidiaries" shall mean all those corporations,
banks, associations or other entities of which the
entity in question owns or controls 50% or more of
the outstanding equity securities either directly or
through an unbroken chain of entities as to each of
which 5% or more of the outstanding equity securities
is owned directly or indirectly by its parent;
provided, there shall not be included any such entity
acquired through foreclosure or any such entity the
equity securities of which are owned or controlled in
a fiduciary capacity.
"Surviving Corporation" shall mean the Bank as the
surviving corporation resulting from the Merger.
"Tax" or "Taxes" shall mean all federal, state, local
and foreign taxes, charges, fees, levies, imposts,
duties or other assessments, including income, gross
receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp,
occupation, windfall profits, environmental, federal
highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social
Security, single business and unemployment,
disability, real property, personal property,
registration, ad valorem, value added, alternative or
add-on minimum, estimated or other tax or
governmental fee of any kind whatsoever, imposed or
required to be withheld by the United States or any
state, local or foreign government or subdivision or
agency thereof, including any interest, penalties or
additions thereto.
"Taxable Period" shall mean any period prescribed by
any governmental authority, including the United
States or any state, local or foreign government or
subdivision or agency thereof for which a Tax Return
is required to be filed or Tax is required to be
paid.
"Tax Return" shall mean any report, return,
information return or other information required to
be supplied to a taxing authority in
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49
connection with Taxes, including any return of an
affiliated or combined or unitary group that includes
a party or its Subsidiaries.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
Certificate of Merger Section 1.4
Closing Section 1.3
Code Preamble
Effective Time Section 1.4
ERISA Affiliate Section 5.13(c)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
FHLB Section 5.1(b)
Indemnified party Section 8.14
Lochaven Benefit Section 5.13(a)
Plans
Lochaven Contracts Section 5.14
Lochaven ERISA Section 5.13(a)
Plan
Lochaven options Section 3.1(d)
Lochaven OTS Section 5.5(a)
Reports
Lochaven Pension Section 5.13(a)
Plan
Market Value Section 3.4
Merger Preamble
OTS Regulations Section 1.3
Republic SEC Reports Section 6.5(a)
Takeover Laws Section 8.10
Tax Opinion Section 9.1(f)
(c) 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 followed by the words "without limitation."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2, each of
the parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration, and application fees, printing fees, and fees
and expenses of its own financial or other consultants, investment brokers,
accountants, and counsel, except
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that each of the parties shall bear and pay one-half of the printing costs
incurred in connection with the printing of the Registration Statement and the
Proxy Statement/Prospectus.
(b) Nothing contained in this Section 11.2 shall constitute or
shall be deemed to constitute liquidated damages for the willful breach by a
party of the terms of this Agreement or otherwise limit the Rights of the
nonbreaching party.
11.3 BROKERS AND FINDERS. Except for McAllen Capital Partners, Inc.
as to Lochaven, each of the parties represents and warrants that neither it nor
any of its officers, directors employees, or Affiliates has employed any broker
or finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon his, her or its representing or being
retained by or allegedly representing or being retained by Lochaven or Republic,
each of Lochaven and Republic, as the case may be, agrees to indemnify and hold
the other party harmless of and from any Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except for the
Confidentiality Agreements). Nothing in this Agreement expressed or implied, is
intended to confer upon any Person, other than the parties or their respective
successors, any Rights, remedies, obligations or Liabilities under or by reason
of this Agreement, other than as provided in Sections 8.12, 8.13 and 8.14 of
this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may
be amended by a subsequent writing signed by each of the parties upon the
approval of the Boards of Directors of each of the parties, whether before or
after stockholder approval of this Agreement has been obtained; provided, that
the provisions of this Agreement relating to the manner or basis in which shares
of Lochaven Common Stock will be exchanged for Republic Common Stock shall not
be amended after the Stockholder's Meeting without the requisite approval of the
holders of the issued and outstanding shares of Lochaven Common Stock entitled
to vote thereon.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, Republic, acting
through its Board of Directors, chief executive officer, chief financial officer
or other authorized officer shall have the Right to waive any Default in the
performance of any term of this Agreement by Lochaven, to waive or extend the
time for the compliance or fulfillment
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by Lochaven of any and all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of Republic under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of Republic.
(b) Prior to or at the Effective Time, Lochaven, acting
through its Board of Directors, chief executive officer, chief financial officer
or other authorized officer shall have the Right to waive any Default in the
performance of any term of this Agreement by Republic, to waive or extend the
time for the compliance or fulfillment by Republic of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Lochaven under this Agreement, except any
condition which, if not satisfied, would result in the violation of any Law. No
such waiver shall be effective unless in writing signed by a duly authorized
officer of Lochaven.
(c) The failure of any party at any time to require
performance of any provision hereof shall in no manner affect the Right of such
party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the Rights, interests or obligations hereunder shall be
assigned by any party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by the parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications that are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage prepaid or by
courier or overnight carrier to the Persons at the addresses set forth below (or
at such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so delivered:
Lochaven: Lochaven Federal Savings and
Loan Association
0000 Xxxxx Xxxxxx Xxxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
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Copy to Counsel: Smith, Mackinnon, Greeley,
Bowdoin & Xxxxxxx, P.A.
Citrus Center, Suite 800
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Republic: Republic Bancshares, Inc.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
Chairman of the Board,
Chief Executive Officer
and President
Copy to Counsel:
Republic Bancshares, Inc.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
General Counsel
11.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Florida, without regard to any
applicable conflicts of Laws.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are part of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of the
parties.
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11.13 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at Law or in equity.
11.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST REPUBLIC BANCSHARES, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
----------------------------- -----------------------------
Xxxxxxxxxxx X. Xxxxxx Xxxx X. Xxxxxxxx
Corporate Secretary Chairman of the Board,
Chief Executive Officer and
[CORPORATE SEAL] President
ATTEST REPUBLIC BANCSHARES, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
----------------------------- -----------------------------
Xxxxxxxxxxx X. Xxxxxx Xxxx X. Xxxxxxxx
Corporate Secretary Chairman of the Board,
Chief Executive Officer and
[CORPORATE SEAL] President
ATTEST: LOCHAVEN FEDERAL SAVINGS AND
LOAN ASSOCIATION
By: By: /s/ Xxxxxx X. Xxxxxxx
----------------------------- -----------------------------
Xxxxxx X. Xxxxxxx
Secretary President and Chief Executive
Officer
[CORPORATE SEAL]
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