AGREEMENT AND PLAN OF MERGER By and between OLD LINE BANCSHARES, INC. And DCB BANCSHARES, INC. Dated as of February 1, 2017
Exhibit
2.1
AGREEMENT AND PLAN
OF MERGER
By and
between
OLD
LINE BANCSHARES, INC.
And
DCB
BANCSHARES, INC.
Dated
as of February 1, 2017
Exhibit
2.1
TABLE
OF CONTENTS
Page
BACKGROUND 1
AGREEMENT 1
ARTICLE I.
GENERAL 1
Section
1.1 Background. 1
Section
1.2 Definitions. 1
Section
1.3 The Merger and
Related Transactions. 1
Section
1.4 [Intentionally
Omitted]. 1
Section
1.5 Additional
Actions. 1
Section
1.6 The Bank
Merger. 1
ARTICLE II. CONSIDERATION; ELECTION
AND EXCHANGE PROCEDURES 1
Section
2.1 Merger
Consideration. 1
Section
2.2 OLB Common
Stock. 1
Section
2.3 Fractional
Shares. 1
Section
2.4 Objecting DCB Common
Stockholders. 1
Section
2.5 Exchange Fund;
Exchange of DCB Certificates. 1
Section
2.6 Anti-Dilution
Provisions. 1
Section
2.7 Other
Matters. 1
ARTICLE III. REPRESENTATIONS AND
WARRANTIES OF DCB 1
Section
3.1 Organization. 1
Section
3.2 Capitalization. 1
Section
3.3 Authority; No
Violation. 1
Section
3.4 Consents; Regulatory
Approvals. 1
Section
3.5 Financial
Statements. 1
Section
3.6 No Material Adverse
Effect. 1
Section
3.7 Taxes. 1
Section
3.8 Contracts; Certain
Changes. 1
Section 3.9Ownership
of Personal Property; Insurance
Coverage. 1
Section
3.10 Litigation and Other
Proceedings. 1
Section
3.11 Compliance with
Applicable Law. 1
Section
3.12 Labor
Matters. 1
Section
3.13 ERISA. 1
Section
3.14 Brokers and
Finders. 1
Section
3.16 Environmental
Matters. 1
Section
3.17 Intellectual
Property. 1
Section
3.18 Information to be
Supplied. 1
Section
3.19 Related Party
Transactions. 1
Section
3.20 Loans. 1
Section
3.21 Allowance for Loan
Losses. 1
Section
3.22 Community
Reinvestment Act. 1
Section
3.23Anti-Money Laundering, OFAC and Information
Security. 1
Section
3.24 Securities
Activities of Employees. 1
Section
3.25 Books and
Records. 1
Section
3.26 Investment
Securities. 1
Section
3.27 Reorganization. 1
Section
3.28 Fairness
Opinion. 1
Section
3.29 Materials Provided
to Stockholders. 1
Section
3.30 Absence of Certain
Changes. 1
Section
3.31 Absence of
Undisclosed Liabilities. 1
Section
3.32 No Option Plans or
Convertible Securities. 1
Section
3.33 Deposits. 1
Section
3.34 Risk Management
Instruments. 1
Section
3.35 Fiduciary
Accounts. 1
Section
3.36 Credit Card Accounts
and Merchant Processing. 1
Section
3.37 Anti-takeover
Laws. 1
Section
3.38 Stockholders’
List. 1
Section
3.39 Bank
Certificates. 1
Section
3.40 Disclosure. 1
ARTICLE IV. REPRESENTATIONS AND
WARRANTIES OF OLB 1
Section
4.1 Organization. 1
Section
4.2 Capitalization. 1
Section
4.3 Authority; No
Violation. 1
Section
4.4 Consents; Regulatory
Approvals. 1
Section
4.5 Financial
Statements. 1
Section
4.6 No Material Adverse
Effect. 1
Section
4.7 Taxes. 1
Section
4.8 Contracts; Certain
Changes. 1
Section 4.9Ownership
of Personal Property; Insurance
Coverage. 1
Section
4.10 Litigation and Other
Proceedings. 1
Section
4.11 Compliance with
Applicable Law. 1
Section
4.12 Labor
Matters. 1
Section
4.13 ERISA. 1
Section
4.14 Brokers and
Finders. 1
Section
4.15 Real Property and
Leases. 1
Section
4.16 Environmental
Matters. 1
Section
4.17 Information to be
Supplied. 1
Section
4.18 Related Party
Transactions. 1
Section
4.19 Loans. 1
Section
4.20 Allowance for Loan
Losses. 1
Section
4.21 Community
Reinvestment Act. 1
Section
4.22 Securities
Activities of Employees. 1
Section
4.23 Books and
Records. 1
Section
4.24 Investment
Securities. 1
Section
4.25 Reorganization. 1
Section
4.26 Fairness
Opinion. 1
Section
4.27 Materials Provided
to Stockholders. 1
Section
4.28 Absence of
Undisclosed Liabilities. 1
Section
4.29Anti-Money Laundering, OFAC and Information
Security. 1
Section
4.30 Intellectual
Property. 1
Section
4.31 Disclosure. 1
Section
4.32 Business. 1
ARTICLE V. COVENANTS OF THE
PARTIES 1
Section
5.1 Conduct of
DCB’s Business. 1
Section
5.2 Conduct of
OLB’s Business. 1
Section
5.3 Access;
Confidentiality. 1
Section
5.4 Regulatory
Matters. 1
Section
5.5 Taking of Necessary
Actions. 1
Section 5.6Duty to
Advise; Duty to Update of
Disclosure Schedules. 1
Section
5.7 Other Undertakings
by OLB and DCB. 1
Section
5.8 Accuracy of the
Registration Statement. 1
ARTICLE VI.
CONDITIONS 1
Section
6.1Conditions to DCB’s Obligations under this
Agreement. 1
Section
6.2Conditions to OLB’s Obligations under this
Agreement. 1
ARTICLE VII.
TERMINATION 1
Section
7.1 Termination. 1
Section
7.2 Effect of
Termination. 1
ARTICLE VIII.
MISCELLANEOUS 1
Section
8.1 Expenses and Other
Fees. 1
Section
8.2 Non-Survival. 1
Section
8.3 Amendment, Extension
and Waiver. 1
Section
8.4 Entire
Agreement. 1
Section
8.5 Binding
Agreement. 1
Section
8.6 Notices. 1
Section
8.7 Disclosure
Schedules. 1
Section
8.8 Tax
Disclosure. 1
Section
8.9 No
Assignment. 1
Section
8.10 Captions;
Interpretation. 1
Section
8.11 Counterparts;
Electronic Signatures. 1
Section
8.12 Severability. 1
Section
8.13 Governing Law;
Venue; No Jury Trial. 1
Section
8.14 Time of
Essence. 1
Exhibit A – List of
Stockholders to Execute Support Agreements
Exhibit B – Support
Agreement
Exhibit C – Bank Merger
Agreement
Exhibit D –
Spreadsheet
Exhibit E – Damascus
Community Bank Employee Change in Control Plan
Exhibit
2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER
(“Agreement”), dated as of
February 1, 2017, is made by and between Old Line Bancshares, Inc.,
a Maryland corporation (“OLB”), and DCB
Bancshares, Inc., a Maryland corporation (“DCB”).
BACKGROUND
1. DCB
owns directly all of the outstanding capital stock of Damascus
Community Bank, a Maryland-chartered commercial bank
(“Damascus”).
2. OLB
owns directly all of the outstanding capital stock of Old Line
Bank, a trust company with commercial banking powers chartered
under the laws of the State of Maryland (“Old Line”).
3. OLB
and DCB desire for DCB to merge with and into OLB, with OLB
surviving the Merger, in accordance with the applicable laws of the
State of Maryland and this Agreement.
4. As
an additional condition and inducement to OLB to enter into this
Agreement, each of the individuals listed on Exhibit A has executed
a Support Agreement in the form attached as Exhibit B.
5. Each
of the parties, by signing this Agreement, adopts it as a plan of
reorganization as defined in IRC Section 368(a) and intends the
Merger to be a reorganization as defined in IRC
Section 368(a).
6. OLB
and DCB desire to provide for certain undertakings, conditions,
representations, warranties, and covenants in connection with the
transactions contemplated hereby and governing the transactions
contemplated herein.
AGREEMENT
ARTICLE
I.
The
Background information is a substantive part of this Agreement and
is incorporated herein and made a part hereof by
reference.
As used
in this Agreement, the following terms shall have the indicated
meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
Acquisition Proposal means a
bona fide written proposal
by a Person other than OLB for: (a) a merger or consolidation of, a
share exchange involving, or an acquisition of 50% or more of the
assets or liabilities of, DCB or any DCB Subsidiary, or any other
business combination involving DCB or any DCB Subsidiary, in a
single transaction or series of related transactions; or (b) a
transaction that involves the transfer of beneficial ownership of
securities representing, or the right to acquire beneficial
ownership of or to vote securities representing, 10% or more of the
then outstanding shares of DCB Common Stock or the then outstanding
equity securities of any DCB Subsidiary.
Affiliate means, with respect to any
Entity, any Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, the Entity and, without limiting the generality of
the foregoing, includes any executive officer, director, manager or
Person who beneficially owns more than ten percent of the equity or
voting securities of the Entity.
AFTAP means adjusted funding target
attainment percentage.
Agreement means this Agreement and Plan
of Merger, including the exhibits and schedules hereto and any
amendment or supplement hereto.
Application means an application for
regulatory approval that is required to consummate the Contemplated
Transactions.
Article III Standard has the meaning
given to the term in Article III of this Agreement.
Article IV Standard has the meaning
given to the term in Article IV of this Agreement.
Articles of Merger means the articles
of merger to be executed by OLB and DCB and filed with SDAT in
accordance with the MGCL.
Average NASDAQ Bank Stock Index Value For The
Price Determination Period has the meaning given to the term
in Section 7.1(j) of this Agreement.
Average Price has the meaning given to
the term in Section
2.1(b) of this Agreement.
Bank Certificates has the meaning given
to the term in Section 2.5(e) of this Agreement.
Bank Merger has the meaning given to
the term in Section 1.6 of this
Agreement.
Bank Merger Agreement has the meaning
given to the term in Section 1.6 of this
Agreement.
BHC Act means the Bank Holding Company
Act of 1956, as amended.
Burdensome Condition has the meaning
given to the term in Section 5.4(a) of this Agreement.
Business Day(s) means any day or days
other than (i) Saturday, (ii) Sunday or (iii) a day on which
Damascus or Old Line is authorized or obligated by applicable law
or executive order to close.
Calculation Date has the meaning given
to the term in Section 2.2(a) of this Agreement.
Cause means: (a) any act or failure to
act that constitutes fraud, incompetence, willful misconduct,
dishonesty, breach of fiduciary duty, intentional failure to
adequately perform his or her duties as an officer or employee of
the employer, or violation of any Law (other than a traffic
violation or similar offense) or any final regulatory order or
agreement with the employer; (b) the conviction of the employee of
a felony or crime involving moral turpitude; (c) the
employee’s entering into any employment or similar
relationship with a Person other than DCB or a DCB Subsidiary; (d)
the employee’s diversion of any business opportunity from
employer (other than on behalf of employer or with the prior
written consent of employer’s board of directors); or (e)
conduct by employee that results in removal or suspension of
employee as an officer or employee of employer pursuant to a
written order by any Regulatory Authority with authority or
jurisdiction over employer.
CERCLA means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. §§ 9601, et seq.
CFPB means the Consumer Financial
Protection Bureau.
CIC Agreement has the meaning given to
the term in Section 5.7(c)(ii)(C) of this
Agreement.
CIC Payment has the meaning given to
the term in Section 5.7(c)(ii)(C) of this
Agreement.
Closing has the meaning given to the
term in Section 1.3(a) of this Agreement.
Closing Date has the meaning given to
the term in Section 1.3(a) of this Agreement.
Closing Market Price has the meaning given to the term in Section
7.1(j) of this Agreement.
Commercial Law Article has the meaning
given the term in Section 3.23(b) of this Agreement.
Commissioner means the Maryland Office
of the Commissioner of Financial Regulation.
Confidentiality Agreement means that
certain Confidentiality Agreement, dated as of November 3, 2016, by
and between OLB and DCB.
Contemplated Transactions means all of
the transactions contemplated by this Agreement, including the (a)
Merger, (b) Bank Merger, and (c) performance by OLB and DCB of
their respective covenants and obligations under this
Agreement.
CRA has the meaning given to the term
in Section 3.22 of this Agreement.
Credit Extension means any loan, lease,
advance, credit facility, credit enhancement, guarantee,
commitment, line of credit or letter of credit.
Damascus has the meaning given to the
term in the Background section of this Agreement.
DCB has the meaning given to the term
in the Background section of this Agreement.
DCB Benefit Plans means all employee
pension benefit plans within the meaning of ERISA
Section 3(2), profit sharing plans, stock purchase plans,
deferred compensation and supplemental income plans, supplemental
executive retirement plans, annual incentive plans, group insurance
plans, and all other employee welfare benefit plans within the
meaning of ERISA Section 3(1) (including vacation pay, sick
leave, short-term disability, long-term disability, and medical
plans) and all other employee benefit plans, policies, agreements
and arrangements currently maintained or contributed to for the
benefit of the employees or former employees (including retired
employees) and any beneficiaries thereof or directors or former
directors of DCB or any other Entity that, together with DCB, is
treated as a single employer under IRC Sections 414(b), (c), (m) or
(o).
DCB Certificate means a certificate that immediately
prior to the Effective Time represents issued and outstanding
shares of DCB Common Stock.
DCB Common Stock has the meaning given
to the term in Section 3.2(a) of this Agreement.
DCB Common Stockholder is any holder of
record of DCB Common Stock immediately prior to the Effective
Time.
DCB Common Stockholders’ Meeting
means the meeting of the holders of DCB Common Stock to consider
and vote on the Agreement and the Merger, and any postponement or
adjournment thereof.
DCB Companies means DCB, Damascus and
any other DCB Subsidiary, collectively.
DCB Disclosure Schedule means,
collectively, the disclosure schedules delivered by DCB to OLB at
or prior to the execution and delivery of this Agreement, as may be
updated pursuant to Section 5.6 of this
Agreement.
DCB Employee has the meaning given to
the term in Section 5.7(c)(ii)(A) of this
Agreement.
DCB ERISA Affiliate means any Entity
that, together with DCB, is treated as a single employer under IRC
Sections 414(b), (c), (m) or (o).
DCB Financials means (a) the
consolidated balance sheets of DCB at December 31, 2015 and 2014
and the consolidated statements of income, statements of
stockholders’ equity and consolidated statements of cash
flows for DCB for the years ended December 31, 2015, 2014 and 2013,
and the notes thereto, as audited by Xxxxx Xxxxxxx Xxxxxx &
Company, LLC, (b) the unaudited interim financial statements of DCB
and the notes thereto for the calendar quarter ending September 30,
2016, (c) the consolidated balance sheet of DCB at December 31,
2016 and 2015 and the consolidated statements of income, statements
of stockholders’ equity and consolidated statements of cash
flows for DCB for the years ended December 31 2016, 2015 and 2014,
and the notes thereto, as audited by Xxxxx Xxxxxxx Xxxxxx &
Company, LLC, and to be delivered within 120 days of December 31,
2016, (d) the unaudited consolidated financial statements of DCB
and the notes thereto for each calendar quarter commencing with the
calendar quarter ending March 31, 2107, to be delivered within 45
days after the end of the respective quarter, (e) unaudited,
internally-prepared consolidated financial statements for each of
October 31, 2016, November 30, 2016 and December 31, 2016, and (f)
unaudited, internally-prepared consolidated financial statements
for each month commencing with the month ended January 31, 2017, to
be delivered within 20 days after the end of the respective month
(the financial statements described in items (e) and (f) are
collectively referred to herein as the “Internal DCB
Financials”).
DCB Governing Documents has the meaning
given to the term in Section 3.1(f) of this
Agreement.
DCB Intellectual Property has the
meaning given to the term in Section 3.17 of this
Agreement.
DCB IT Assets has the meaning given to
the term in Section 3.17 of this Agreement.
DCB Nominees has the meaning given to
the term in Section 1.3(d) of this Agreement.
DCB Real Property has the meaning given
to the term in Section 3.15(a) of this Agreement.
DCB Regulatory Agreement has the
meaning given to the term in Section 3.11(e)(iii) of this
Agreement.
DCB Returns has the meaning given to
the term in Section 3.7(e) of this Agreement.
DCB Subsidiaries means the subsidiaries
of DCB and Damascus as set forth in DCB Disclosure Schedule
3.1(d).
DCB Tangible Equity has the meaning
given to the term in Section2.1(a) of this
Agreement.
DCB Taxes has the meaning given to the
term in Section 3.7(e) of this Agreement.
DCB Termination Fee has the meaning
given to the term in Section 8.1(b) of this Agreement.
Effective Date means the date that
includes the Effective Time, which shall be as soon as practicable
after the Closing Date.
Effective Time means the time at which
the Articles of Merger are filed with SDAT and become effective in
accordance with the MGCL.
Entity means any corporation, limited
liability company, partnership, sole proprietorship, trust, joint
venture, or other form of organization.
Environmental Assessment means an
environmental assessment that is consistent with ASTM 1527-05 or 40
C.F.R. Part 312 and that may include an assessment of the (a)
presence of hazardous, toxic, radioactive, or dangerous materials
or other materials regulated under Environmental Laws, or (b)
presence, amount, physical condition and location of
asbestos-containing materials and lead-based paint or an assessment
of indoor environmental issues.
Environmental Laws means any applicable
federal, state or local Law, statute, ordinance, rule, regulation,
code, license, permit, authorization, common law, agency
requirement, approval, consent, order, judgment, decree, injunction
or agreement with any governmental entity relating to (a) the
protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil,
plant and animal life or any other natural resource), health and
safety as it relates to Hazardous Materials or natural resource
damages, (b) the use, presence, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release or threatened release or disposal of Hazardous
Materials, and/or (c) noise, odor, wetlands, indoor air, pollution,
contamination or any injury to persons or property from exposure to
Hazardous Materials. Environmental Laws include without limitation:
(i) CERCLA; the Resource Conservation and Recovery Act, as amended,
42 U.S.C. §6901, et
seq; the Clean Air Act, as amended, 42 U.S.C. §7401,
et seq; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. §1251,
et seq; the Toxic
Substances Control Act, as amended, 15 U.S.C. §2601,
et seq; the Emergency
Planning and Community Right to Know Act, 42 U.S.C. §11001,
et seq; the Safe Drinking
Xxxxx Xxx, 00 X.X.X. §000x, et seq; and all comparable state and
local Laws; and (ii) any common law (including without limitation
common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to the
presence of or exposure to any Hazardous Materials.
ERISA means the Employee Retirement
Income Security Act of 1974, as amended, and the regulations
promulgated thereunder.
Exchange Act means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
Exchange Agent means American Stock
Transfer & Trust Company, or such other agent as shall be
designated by OLB to act as the exchange agent for purposes of
conducting the exchange procedure described in Section 2.5 of
this Agreement.
Exchange Fund has the meaning given to
the term in Section 2.5(a) of this Agreement.
Exchange Ratio has the meaning given to
the term in Section
2.1(b) of this Agreement.
FDIC means the Federal Deposit
Insurance Corporation.
FHA means the Federal Housing
Administration.
FHLB means the Federal Home Loan Bank
of Atlanta.
FRB means the Board of Governors of the
Federal Reserve System.
GAAP means U.S. generally accepted
accounting principles.
Hazardous Materials means: (a) any
petroleum or petroleum products, natural gas, or natural gas
products, radioactive materials, asbestos, urea formaldehyde foam
insulation, transformers or other equipment that contains
dielectric fluid containing levels of polychlorinated biphenyls
(PCBs), and radon gas; (b) any chemicals, materials, waste or
substances defined as or included in the definition of
“hazardous substances,” “hazardous wastes,”
“hazardous materials,” “extremely hazardous
wastes,” “restricted hazardous wastes,”
“toxic substances,” “toxic pollutants,”
“contaminants,” or “pollutants,” or words
of similar import, under any Environmental Laws; and (c) any other
chemical, material, waste or substance that is in any way regulated
for the protection of human health or environment by any Regulatory
Authorities, including mixtures thereof with other materials, and
including any regulated building materials such as asbestos and
lead.
Indemnified Parties has the meaning
given to the term in Section 5.7(c)(iv) of this
Agreement.
Indemnifying Party has the meaning
given to the term in Section 5.7(c)(iv) of this
Agreement.
Index Ratio has the meaning given to
the term in Section 7.1(j) of this Agreement.
Insured Persons has the meaning given
to the term in Section 5.7(c)(vi) of this Agreement.
Internal DCB Financials has the meaning
given to the term in the definition of “DCB Financials”
set forth in this Section 1.2.
IRC means the Internal Revenue Code of
1986, as amended, and the regulations promulgated
thereunder.
IRS means the Internal Revenue
Service.
Knowledge of DCB means the actual
knowledge of DCB’s and Damascus’ Chairman of the Board
of Directors, Chief Executive Officer, Executive Vice President and
Chief Lending Officer, Executive Vice President and Chief Financial
Officer, Chief Credit Officer and, with respect to Section 3.13
only, Damascus’ Vice President – Human Resources, or,
if no individual is named to any of such positions, the individual
or individuals who perform a similar function for DCB or Damascus,
as applicable, and includes any facts, matters or circumstances set
forth in any written notice or other correspondence from any
Regulatory Authority or any other written notice received by that
Person.
Knowledge of OLB means the actual
knowledge of OLB’s Chairman of the Board, President and Chief
Executive Officer, Chief Financial Officer and Chief Operating
Officer, and Old Line’s Chairman of the Board, President and
Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer, Chief Credit Officer and Chief Lending Officer and, with
respect to Section 4.13 only, OLB’s and Old Line’s
Director of Human Resources, or, if no individual is named to any
of such positions, the individual or individuals who perform a
similar function for OLB or Old Line, as applicable, and includes
any facts, matters or circumstances set forth in any written notice
or other correspondence from any Regulatory Authority or any other
written notice received by that Person.
Law means any and all foreign, federal,
state and local laws, statutes, ordinances, rules, regulations,
codes, and rules of common law, in each case as amended to date,
and any and all judicial and administrative interpretations
thereof, any judicial and administrative orders, decrees,
judgments, injunctions and writs, any and all policies and
directives (including, without limitation, any directive relating
to minimum capital levels) issued by any Regulatory Authority, and
any and all written legally permissible waivers or exceptions
granted by any Regulatory Authorities with respect to compliance
with any of the foregoing.
Letter of Transmittal has the meaning
given to the term in Section 2.5(b) of this
Agreement.
Liens means all liens, pledges,
charges, security interests, mortgages, claims, or other
encumbrances of any kind.
Material Adverse Effect means, with
respect to OLB or DCB, respectively, any effect change,
circumstance, development or occurrence that individually, or taken
in the aggregate together with all other effects, changes,
circumstances, developments or occurrences, that (a) is or is
reasonably likely to be material and adverse to the financial
condition, results of operations or business of OLB and the OLB
Subsidiaries taken as a whole, or DCB and the DCB Subsidiaries
taken as a whole, respectively, or (b) materially impairs the
ability of either OLB, on the one hand, or DCB, on the other hand,
to perform its obligations under this Agreement or otherwise
materially threatens or materially impedes or delays the
consummation of the Contemplated Transactions, other than, in each
case, any change, circumstance, development, occurrence or effect
relating to (i) any change in the value of the respective loan or
investment portfolios of the OLB Companies or the DCB Companies
resulting from a change in interest rates generally, (ii) any
change occurring after the date hereof in any Law or
interpretations thereof by Regulatory Authorities or in GAAP or
applicable regulatory accounting principles, which change affects
banking institutions generally, including any change affecting the
Deposit Insurance Fund, (iii) changes in general economic (except
in the context of determining a Material Adverse Effect for
purposes of asset quality), capital market (except in the context
of determining a Material Adverse Effect for purposes of asset
quality), legal, regulatory or political conditions affecting
banking institutions generally, (iv) the effects of compliance with
this Agreement on the operating performance of OLB or DCB, as the
case may be, including the reasonable expenses incurred in
connection with this Agreement and the Contemplated Transactions,
(v) actions or omissions of a party (or any of its Subsidiaries)
taken pursuant to the terms of this Agreement in contemplation of
the Contemplated Transactions, (vi) any effect with respect to a
party hereto caused, in whole or in substantial part, by the other
party, (vii) any change resulting from any natural disaster or any
acts of terrorism, sabotage, military action or war (whether or not
declared) or any escalation or worsening thereof, (viii) the impact
of the Agreement and the Contemplated Transactions on relationships
with customers or employees (including the loss of personnel
subsequent to the date of this Agreement), and (ix) the public
disclosure of this Agreement or the Contemplated Transactions;
except, in any such case, to the extent any such change, effect,
development, occurrence or circumstance has or would have a
disproportionate effect on the business of DCB or OLB, as the case
may be, relative to other similarly-situated Entities.
Maximum Premium has the meaning given
to the term in Section 5.7(c)(vi) of this Agreement.
Merger has the meaning given to the
term in Section 1.3(b)(v) of this Agreement.
Merger Consideration has the meaning
given to the term in Section 2.1(b) of this Agreement.
MGCL means the Maryland General
Corporation Law, as amended.
NASDAQ means the NASDAQ Stock Market
LLC.
NASDAQ Bank Index has the meaning given
the term in Section 7.1(j) of this Agreement.
Non-Operational Subsidiaries has the
meaning given to the term in Section 3.1(g) of this
Agreement.
Non-Residential Credit Extension means
a Credit Extension other than for an owner-occupied
residence.
Notice of Superior Proposal has the
meaning given to the term in Section 5.7(a)(ii) of this
Agreement.
Objecting DCB Shares means any shares
of DCB Common Stock issued and outstanding immediately prior to the
Closing Date, the holder of which has not voted in favor of the
Merger and who has properly followed the procedures set forth in
Section 3-203 of the MGCL.
OLB has the meaning given to the term
in the Background section of this Agreement.
OLB Benefit Plans means all employee
pension benefit plans within the meaning of ERISA Section 3(2),
profit sharing plans, stock purchase plans, deferred compensation
and supplemental income plans, supplemental executive retirement
plans, annual incentive plans, group insurance plans, and all other
employee welfare benefit plans within the meaning of ERISA
Section 3(1) (including vacation pay, sick leave, short-term
disability, long-term disability, and medical plans) and all other
material employee benefit plans, policies, agreements and
arrangements currently maintained or contributed to for the benefit
of the employees or former employees (including retired employees)
and any beneficiaries thereof or directors or former directors of
OLB or any other Entity that, together with OLB, is treated as a
single employer under IRC Sections 414(b), (c), (m) or
(o).
OLB Common Stock has the meaning given
to the term in Section 4.2(a) of this Agreement.
OLB Companies means OLB, Old Line, and
any other OLB Subsidiary, collectively.
OLB Disclosure Schedule means,
collectively, the disclosure schedules delivered by OLB to DCB at
or prior to the execution and delivery of this Agreement, as may be
updated pursuant to Section 5.6 of this
Agreement.
OLB ERISA Affiliate means any Entity
that, together with OLB, is treated as a single employer under IRC
Sections 414(b), (c), (m) or (o).
OLB Financials means (a) the
consolidated balance sheets of OLB at December 31, 2015 and 2014
and the consolidated statements of income, statements of
comprehensive income, statements of changes in stockholders’
equity and consolidated statements of cash flows for OLB for the
years ended December 31, 2015, 2014 and 2013, and the notes
thereto, as audited by Xxxxx Xxxxxx Xxxxxxx LLP and as set forth in
OLB’s Annual Report on Form 10-K for the year ended December
31, 2015, (b) the consolidated balance sheet of OLB at December 31,
2016 and 2015 and the consolidated statements of income, statements
of comprehensive income, statements of changes in
stockholders’ equity and consolidated statements of cash
flows for OLB for the years ended December 31, 2016, 2015 and 2014,
and the notes thereto, as audited by Xxxxx Xxxxxx Xxxxxxx LLP and
as will be set forth in OLB’s Annual Report on Form 10-K for
the year ended December 31, 2016, to be delivered or made available
within 90 days of December 31, 2016, (c) the unaudited interim
consolidated financial statements and notes thereto included in
OLB’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2016, and (d) the unaudited interim consolidated
financial statements and notes thereto included in OLB’s
Quarterly Reports on Form 10-Q for each calendar quarter commencing
with the quarter ended March 31, 2017, to be delivered or made
available within 45 days after the end of the respective
quarter.
OLB Governing Documents has the meaning
given to the term in Section 4.1(f) of this Agreement.
OLB Intellectual Property has the
meaning given to the term in Section 4.30 of this
Agreement.
OLB IT Assets has the meaning given to
the term in Section 4.30 of this Agreement.
OLB Preferred Stock has the meaning
given to the term in Section 4.2 of this Agreement.
OLB Price Ratio has the meaning given
to the term in Section 7.1(j) of this Agreement.
OLB Real Property has the meaning given
to the term in Section 4.15(a) of this Agreement.
OLB Regulatory Agreement has the meaning
given to the term in Section 4.11(e)(iii) of this
Agreement.
OLB Reports has the meaning given to
the term in Section 4.11 of this Agreement.
OLB Returns has the meaning given to
the term in Section 4.7(c) of this Agreement.
OLB Subsidiaries means the subsidiaries
of OLB and Old Line as set forth in OLB Disclosure Schedule
4.1(d).
OLB Taxes has the meaning given to the
term in Section 4.7(c) of this Agreement.
OLB Termination Fee has the meaning
given to the term in Section 8.1(c) of this Agreement.
Old Line has the meaning given to the
term in the Background section of this Agreement.
PBGC has the meaning given to the term
in Section 3.13(b) of this Agreement.
Per Share Consideration has the meaning
given to the term in Section 2.1(b) of this Agreement.
Per Share Value has the meaning given
to the term in Section
2.1(b)(ii) of this Agreement.
Permitted Employees means officers and
employees of any of the DCB Companies at the level of Vice
President or below.
Person means an individual, an Entity
and any Regulatory Authority; provided, however, that if any
provision of this Agreement in which the term “person”
is used specifies a particular definition of “person”
for purpose of that provision, then the term shall have the meaning
so defined.
Plan of Reorganization has the meaning
given to the term in Section 2.5(e) of this Agreement
Pre-Closing Period means the period
commencing on the date of execution of this Agreement through the
earlier of (a) the Closing Date, and (b) the date this Agreement is
terminated pursuant to Article VII herein.
Price Determination Period has the
meaning given to the term in Section 7.1(j) of this
Agreement.
Registration Statement means the
registration statement on Form S-4, including any pre-effective or
post-effective amendments or supplements thereto, as filed by OLB
with the SEC under the Securities Act with respect to the OLB
Common Stock to be issued to the DCB Common Stockholders in
connection with the Merger.
Regulatory Authority means any federal,
state or local governmental authority, agency or instrumentality,
or any self-regulatory organization, including, without limitation,
the SEC, the Commissioner, the FRB, the FDIC, NASDAQ, and the
respective staffs thereof.
REO means, with respect to the DCB
Companies and the OLB Companies, real property that the DCB
Companies or the OLB Companies, as the case may be, classify as
other real estate owned for financial statement reporting and
regulatory purposes.
Replacement Nominee has the meaning
given to the term in Section 5.7(c)(i) of this
Agreement.
Representatives means, with respect to
an Entity, such Entity’s officers, directors, or employees,
or any investment bankers, financial advisors, attorneys,
accountants, consultants, agents or other representative retained
by any of them.
Residential Credit Extension has the
meaning given to the term in Section 5.1(aa) of this
Agreement.
Retained Employees has the meaning
given to the term in Section 5.7(c)(ii)(A) of this
Agreement.
Rights means warrants, options, rights,
convertible securities, stock appreciation rights, other capital
stock equivalents and other arrangements or commitments that
obligate an Entity to issue or dispose of any of its capital stock
or other ownership interests or that provide for compensation based
on the equity appreciation of its securities.
SDAT means the Maryland State
Department of Assessments and Taxation.
SEC means the U.S. Securities and
Exchange Commission.
SEC Reports has the meaning given to
the term in 4.11(c) of this Agreement.
Securities Act means the Securities Act
of 1933, as amended, and the rules and regulations promulgated
thereunder.
Securities Laws means the Securities
Act, the Exchange Act, and any applicable state blue sky laws,
collectively.
Starting Price has the meaning given to
the term in Section 7.1(j) of this Agreement.
Subsidiary means any Entity, 50% or
more of the equity or other ownership interest of which is owned,
either directly or indirectly, by another Entity, except any Entity
the interest in which is held in the ordinary course of the lending
or fiduciary activities of a bank.
Superior Proposal has the meaning given
to the term in Section 5.7(a)(ii) of this Agreement.
Support Agreement means the Agreement
as set forth in Exhibit B hereto to be signed by the persons set
forth on Exhibit A hereto.
Tail Policy has the meaning given to
the term in Section 5.7(c)(vi) of this Agreement.
Taxing Authority means any federal,
state, local or foreign government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body
exercising tax regulatory authority.
Trading Days means the days on which
NASDAQ is open for trading.
(a) Closing. Unless the parties
hereto agree otherwise, the closing of the Contemplated
Transactions (the “Closing”) will take place
at the offices of Baker, Donelson, Bearman, Xxxxxxxx &
Xxxxxxxxx, PC, located at 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx, at
a time and date to be reasonably selected by OLB after consultation
with DCB and after all conditions to Closing set forth in Article
VI of this Agreement (other than the delivery of certificates,
opinions, and other instruments and documents to be delivered at
the Closing) have been satisfied or waived (the “Closing Date”); provided,
however, that any certificate, opinion, instrument or other
document to be delivered at the Closing may be delivered
electronically. Unless expressly provided otherwise, all
certificates, instruments and other documents to be delivered at
the Closing shall be dated on or as of the Closing Date. The
parties agree to use reasonable efforts to accomplish the Closing
on or before July 7, 2017.
(b) The Merger. Subject to the
terms and conditions of this Agreement and in accordance with the
applicable laws of the State of Maryland, at the Effective
Time:
(i) DCB shall merge
with and into OLB;
(ii) The separate
existence of DCB shall cease;
(iii) OLB shall be the
surviving corporation;
(iv) Each share of DCB
Common Stock issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive the Per
Share Consideration as provided in Article II of this Agreement;
and
(v) All of the property
(real, personal and mixed), rights, powers, duties, obligations and
liabilities of DCB shall be taken and deemed to be transferred to
and vested in OLB, as the surviving corporation, without further
act or deed (the transactions described in the foregoing items (i)
through (v) are collectively referred to herein as the
“Merger”).
At and
after the Effective Time, the Merger shall have the effects set
forth in Section 3-114 of the MGCL.
(c) OLB’s Articles of Incorporation
and Bylaws. On and after the Effective Time, the articles of
incorporation and bylaws of OLB, as in effect immediately prior to
the Effective Time, shall automatically be and remain the articles
of incorporation and bylaws of OLB, as the surviving corporation in
the Merger, until thereafter altered, amended or
repealed.
(d) OLB’s and Old Line’s
Boards of Directors and Officers.
(i) Subsequent to the
date of this Agreement and in accordance with Section 5.7(c)(i),
OLB shall take such actions as may be necessary to, as of the
Effective Time, elect Xxxxxxx X. Xxxxxxxx and another individual
currently serving on DCB’s Board of directors as the parties
mutually agree to at a later date (the “DCB Nominees”) or, if
applicable, a Replacement Nominee listed on DCB Disclosure Schedule 1.3(d),
to the OLB and Old Line boards of directors.
(ii) At the Effective
Time, the officers of OLB duly elected and holding office
immediately prior to the Effective Time shall be the officers of
OLB, as the surviving corporation in the Merger.
If, at
any time after the Effective Time, OLB shall consider or be advised
that any further deeds, assignments or assurances in law or any
other acts are necessary or desirable to (a) vest, perfect or
confirm, of record or otherwise, in OLB its right, title or
interest in, to or under any of the rights, properties or assets of
DCB or Damascus, or (b) otherwise carry out the purposes of this
Agreement, DCB, Damascus and their officers and directors shall be
deemed to have granted to OLB and Old Line an irrevocable power of
attorney to execute and deliver all such deeds, assignments or
assurances in law or any other acts as are necessary or desirable
to (i) vest, perfect or confirm, of record or otherwise, in OLB or
Old Line its right, title or interest in, to or under any of the
rights, properties or assets of DCB or (ii) otherwise carry out the
purposes of this Agreement, and the officers and directors of OLB
and Old Line are authorized in the name of DCB, Damascus or
otherwise to take any and all such action.
Subject
to the terms and conditions of the Agreement and Plan of Merger
attached hereto as Exhibit C (the “Bank Merger Agreement”)
and in accordance with Title 3, Subtitle 7 of the Financial
Institutions Article of the Annotated Code of Maryland and
applicable federal law, immediately after the Merger, Damascus
shall be merged with and into Old Line and the separate existence
of Damascus shall cease (the “Bank Merger”). Old Line
shall be the surviving Entity in the Bank Merger and shall continue
its existence as a trust company with commercial banking powers
under the laws of the State of Maryland, and as a wholly-owned
operating subsidiary of OLB, subject to the provisions of this
Section 1.6.
ARTICLE
II.
(a) Calculation of DCB Tangible
Equity. Within three Business Days following the date on
which the consolidated financial statements of DCB for the year
ended December 31, 2016 have been audited and finalized (the
“Calculation
Date”), DCB shall calculate the “DCB Tangible Equity”,
which shall be DCB’s total stockholders’ equity at
December 31, 2016 less its intangible assets, if any, at December
31, 2016, as such amounts are set forth in DCB’s audited
consolidated balance sheet at the December 31, 2016. Within five
Business Days after the Calculation Date, DCB shall provide OLB
with its calculation of the DCB Tangible Equity and any supporting
documentation necessary for OLB to review such
calculation.
(b) Per Share Consideration.
Subject to Section 2.3 and Section 2.4 hereof, each share of DCB
Common Stock that is issued and outstanding immediately prior to
the Effective Time shall, at the Effective Time, by reason of the
Merger and without any action on the part of the holder thereof,
cease to be outstanding and be automatically cancelled, and shall
be converted into the right to receive that number of shares of OLB
Common Stock (the “Per Share Consideration”)
equal to the exchange ratio (the “Exchange Ratio”)
calculated in accordance with the following:
(i) The Exchange Ratio
shall be the number determined by dividing the Per Share Value
(defined below) by the Average Price (defined below), rounded to
the nearest ten-thousandth.
(ii) The term
“Per Share
Value” shall mean the amount determined by (a)
multiplying the DCB Tangible Equity by 1.60 and (b) dividing such
product by the number of shares of DCB Common Stock that are issued
and outstanding immediately prior to the Effective
Time.
(iii) The term
“Average
Price” shall mean the amount equal to the volume
weighted average of the closing prices of OLB Common Stock for the
ten Trading Days ending two Trading Days prior to the Closing Date;
provided, however, that, except as provided in Section 7.1(j) of
this Agreement, in no event will the Average Price be less than
$20.85 nor greater than the Starting Price.
Example: Assume that the DCB Tangible
Equity is $25,332,000, that 1,613,180 shares of DCB Common Stock
are issued and outstanding immediately prior to the Effective Time,
and the Average Price is $25.09. In such case, the Per Share Value
would be $25.13
(i.e., ($25,332,000 x 1.6)
/ 1,613,180), the Exchange Ratio would be 1.0016 (i.e., $25.13 / $25.09) and, thus, the
Per Share Consideration would be 1.0016 shares of OLB Common
Stock.
Exhibit
D hereto is an example of how the Exchange Ratio and Per Share
Consideration could be calculated under various Average Price
scenarios. One day prior to the Closing Date, OLB shall provide DCB
with its calculation of the Exchange Ratio and any supporting
documentation necessary for DCB to review such
calculation.
The
aggregate Per Share Consideration is sometimes referred to herein
as the “Merger
Consideration.”
Each
share of OLB Common Stock issued and outstanding immediately prior
to the Effective Date shall, on and after the Effective Date,
continue to be issued and outstanding.
Notwithstanding
anything to the contrary contained herein, no fractional shares of
OLB Common Stock and no scrip or certificates therefor shall be
issued in connection with the Merger, no dividend or distribution
with respect to OLB Common Stock shall be payable on or with
respect to any fractional share interest, and such fractional share
interests shall not entitle the owner thereof to vote or to any
other rights of a stockholder of OLB. In lieu of the issuance of
any such fractional share, OLB shall pay to each former holder of
DCB Common Stock who otherwise would be entitled to receive a
fractional share of OLB Common Stock an amount in cash, rounded to
the nearest whole cent and without interest, equal to the product
of (a) the fraction of a share of OLB Common Stock to which such
holder would otherwise have been entitled and (b) the Average
Price. For purposes of determining any fractional share interest,
all shares of DCB Common Stock owned by a DCB Common Stockholder
shall be combined so as to calculate the maximum number of whole
shares of OLB Common Stock issuable to such DCB Common
Stockholder.
(a) The Objecting DCB
Shares will not be converted into or represent a right to receive
the Merger Consideration under this Agreement, and the holder
thereof shall be entitled only to such rights as are granted by
Section 3-202 of the MGCL.
(b) If any holder of
Objecting DCB Shares shall have failed to comply with Section 3-203
of the MGCL, or shall have effectively withdrawn or lost the right
granted thereunder, the Objecting DCB Shares held by such holder
shall be converted into a right to receive the Per Share
Consideration in accordance with the applicable provisions of this
Agreement.
(c) All payments in
respect of Objecting DCB Shares, if any, will be made by
OLB.
(a) Subject to the
other provisions of this Article II, on or immediately prior to the
Closing Date, OLB shall deposit in trust with or otherwise make
available to the Exchange Agent for the benefit of the DCB Common
Stockholders, for exchange in accordance with this Agreement,
through the Exchange Agent, (i) certificates representing the
Merger Consideration and (ii) cash sufficient to pay holders of
what would have been fractional shares of OLB Common Stock pursuant
to Section 2.3 of this Agreement (such certificates for shares of
OLB Common Stock and cash being hereinafter referred to as the
“Exchange
Fund”).
(b) As a condition to
receiving the Per Share Consideration for each share of DCB Common
Stock held, each DCB Common Stockholder shall be required to duly
execute and deliver to the Exchange Agent a letter of transmittal
(each, a “Letter of
Transmittal”). As promptly as practicable, but in any
event no later than five Business Days following the Effective
Time, and provided that DCB has delivered, or caused to be
delivered, to the Exchange Agent all information that is necessary
for the Exchange Agent to perform its obligations as specified
herein, the Exchange Agent shall mail to each holder of record of a
DCB Certificate a Letter of Transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the DCB
Certificate shall pass, only upon delivery of the DCB Certificate
to the Exchange Agent) and instructions for use in effecting the
surrender of the DCB Certificates in exchange for the Merger
Consideration as provided for in this Agreement. Each DCB Common
Stockholder, upon proper surrender of DCB Certificates to the
Exchange Agent, accompanied by duly executed Letters of
Transmittal, shall be entitled to receive in exchange therefor (i)
a certificate representing the number of whole shares of OLB Common
Stock to which such DCB Common Stockholder shall have become
entitled pursuant to the provisions of Section 2.1, and/or
(ii) a check representing the amount of cash in lieu of fractional
shares that such holder has the right to receive hereunder. Each
DCB Certificate so surrendered shall be cancelled. Until so
surrendered, each DCB Certificate will be deemed for all purposes
after the Effective Time to represent and evidence solely the right
to receive the Merger Consideration to be paid therefor pursuant to
this Agreement. Except as required by Law, no interest shall be
payable with respect to the cash payable for fractional shares or
the cash payable for Objecting Shares. If any DCB Common
Stockholder is unable to locate any DCB Certificate(s) to be
surrendered for exchange, the Exchange Agent shall deliver the
corresponding share of the Merger Consideration to the registered
stockholder thereof upon receipt of a lost certificate affidavit
and an indemnity agreement in a form acceptable to the Exchange
Agent and OLB.
(c) The delivery of the
Merger Consideration following the Closing by the Exchange Agent
shall be as soon as practicable following the Exchange
Agent’s receipt of the applicable DCB Certificate(s) and duly
executed Letters of Transmittal.
(d) No dividends or
other distributions declared with respect to OLB Common Stock shall
be paid to the holder of any unsurrendered DCB Certificate until
the holder thereof shall surrender such DCB Certificate(s) in
accordance with this Section 2.5. Pending such surrender, any
dividend or distribution payable in respect of such shares shall be
delivered to the Exchange Agent to be held as part of the Exchange
Fund. After the surrender of a DCB Certificate in accordance with
this Section 2.5, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect
to shares of OLB Common Stock represented by such DCB
Certificate.
(e) To the extent that
shares of DCB Common Stock outstanding immediately prior to the
Effective Time are evidenced by one or more certificates
representing shares of common stock of Damascus, par value $3.00
per share (“Bank
Certificates”), that have not been surrendered
pursuant to Section 4(b) of that certain Plan of Reorganization and
Share Exchange, dated as of April 27, 2016, by and between DCB and
Damascus (the “Plan
of Reorganization”), such shares shall be treated as
outstanding shares of DCB Common Stock, and the Bank Certificates
shall be treated as certificates evidencing shares of DCB Common
Stock, for purposes of this Agreement, except that the holders
thereof shall be entitled to receive the Per Share Consideration in
respect thereof only upon the surrender of the Bank Certificates in
accordance with Section 2.5(b). Shares evidenced by Bank
Certificates shall in all other respects be subject to the same
terms and conditions that apply to shares of DCB Common Stock
evidenced by DCB Certificates under this Section 2.5, including,
without limitation, Section 2.5(d).
(f) If the Person
surrendering a DCB Certificate and signing the accompanying Letter
of Transmittal is not the record holder thereof, or if any
certificate representing shares of OLB Common Stock is to be issued
in a name other than that in which a DCB Certificate surrendered in
exchange therefor is registered, it shall be a condition of the
payment of the Merger Consideration that: (i) such DCB Certificate
is properly endorsed to such Person or is otherwise in the proper
form for transfer, in either case signed exactly as the name of the
record holder appears on such DCB Certificate, and is otherwise in
proper form for transfer, or is accompanied by appropriate evidence
of the authority of the Person surrendering such Certificate and
signing the letter of transmittal to do so on behalf of the record
holder; and (ii) the Person requesting such exchange shall pay to
the Exchange Agent in advance any transfer or other taxes required
by reason of the payment to a Person other than the registered
holder of the DCB Certificate surrendered, or required for any
other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not
payable.
(g) From and after the
Effective Time, there shall be no transfers on the stock transfer
books of DCB of the shares of DCB Common Stock that were issued and
outstanding immediately prior to the Effective Time. If, after the
Effective Time, DCB Certificates are presented for transfer, they
shall be cancelled and exchanged for the Merger Consideration as
provided in this Article II.
(h) The Exchange Agent
will be entitled to deduct and withhold from the cash portion of
the Exchange Fund otherwise payable pursuant to this Agreement or
the Contemplated Transactions hereby to any holder of DCB Common
Stock such amounts as the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the IRC,
or any applicable provision of U.S. federal, state, local or
non-U.S. tax law. To the extent that such amounts are properly
withheld by the Exchange Agent, such withheld amounts will be
treated for all purposes of this Agreement as having been paid to
the holder of the DCB Common Stock in respect of whom such
deduction and withholding were made by the Exchange
Agent.
(i) Any portion of the
Exchange Fund that remains unclaimed by the DCB Common Stockholders
for six months after the Effective Time shall be delivered by the
Exchange Agent to OLB. Any DCB Common Stockholder who has not
theretofore complied with this Section 2.5 shall thereafter be
entitled to look only to OLB for payment of the DCB Common
Stockholder’s share of the Merger Consideration deliverable
in respect of each share of DCB Common Stock such DCB Common
Stockholder holds as determined pursuant to this Agreement, without
any interest thereon.
(j) No Liability. None of OLB, DCB
or the Exchange Agent shall be liable to any Person in respect of
any distributions from the Exchange Fund properly delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar Law. If any DCB Certificate shall not have been
surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or become the property of
any Regulatory Authority), any such Merger Consideration shall, to
the extent permitted by applicable Law, become the property of OLB,
free and clear of all claims or interest of any Person previously
entitled thereto.
In the
event OLB changes (or establishes a record date for changing) the
number of, or provides for the exchange of, shares of OLB Common
Stock issued and outstanding prior to the Effective Time as a
result of a stock split, reverse stock split, stock dividend,
reclassification, or similar transaction with respect to the
outstanding OLB Common Stock, an appropriate adjustment shall be
made to the Exchange Ratio so as to provide the holders of the DCB
Common Stock the same economic benefit as contemplated by this
Agreement prior to such event; provided that, for the avoidance of
doubt, no such adjustment shall be made with regard to the Exchange
Ratio if (a) OLB issues additional shares of OLB Common Stock and
receives consideration for such shares in a bona fide third party
transaction, (b) OLB issues employee or director stock grants or
similar equity awards in the ordinary course of business consistent
with past practice, or (c) shares of OLB Common Stock are
repurchased by or on behalf of OLB.
Nothing
set forth in this Agreement or any exhibit or schedule to this
Agreement shall be construed to:
(a) Preclude any of the
OLB Companies from acquiring or assuming, or to limit in any way
the right of any of the OLB Companies to acquire or assume, prior
to or following the Effective Date, the stock, assets or
liabilities of any financial services institution or Entity other
than DCB or Damascus, whether for cash or by issuance or exchange
of OLB Common Stock or any securities convertible into shares of
OLB Common Stock, unless such transaction would result in a
Material Adverse Effect on OLB;
(b) Preclude OLB from
issuing, or to limit in any way the right of OLB to issue, OLB
Common Stock or other securities in a transaction(s) other than the
Contemplated Transactions;
(c) Preclude OLB from
granting employee, director, or compensatory options at any time
with respect to OLB Common Stock or other securities in the
ordinary course of business consistent with past
practices;
(d) Preclude option
holders or equity compensation plan participants of OLB from
exercising options at any time with respect to OLB Common Stock or
other securities; or
(e) Preclude any of the
OLB Companies from taking, or to limit in any way the right of any
of them to take, any other action not expressly and specifically
prohibited by the terms of this Agreement;
provided, however,
that no action taken by OLB pursuant to this Section 2.7 may impair
the ability of OLB to perform its obligations under this
Agreement.
ARTICLE
III.
DCB
represents and warrants to OLB, for itself and with respect to and
on behalf of each of the DCB Subsidiaries (to the extent
applicable), that the statements contained in this Article III (and
as reflected on the DCB Disclosure Schedules) are true and correct
as of the date of this Agreement and will be true and correct as of
the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout
this Article III, except that those representations and warranties
that by their terms speak as of the date of this Agreement or some
other date shall be true and correct as of such date); provided,
however, that no representation or warranty contained in this
Article III shall be deemed untrue or incorrect, and DCB shall not
be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, circumstance or event
unless such fact, circumstance or event, individually or taken
together with all other facts, circumstances or events inconsistent
with any paragraph of Article III, has had or is reasonably
expected to have a Material Adverse Effect on DCB, disregarding for
these purposes (i) any qualification or exception for, or reference
to, materiality in any such representation or warranty and (ii) any
use of the terms “material,” “materially,”
“in all material respects,” “Material Adverse
Effect” or similar terms or phrases in any such
representation or warranty; provided, however, that the foregoing
standard shall not apply to representations and warranties
contained in Sections 3.1, 3.2, 3.3, 3.6, 3.14, 3.18, 3.27, 3.32
and 3.38, which shall be deemed untrue, incorrect and breached if
they are not true and correct in all material respects (the
“Article III
Standard”).
DCB has
made a good faith effort to ensure that the disclosure on each
schedule of the DCB Disclosure Schedules corresponds to the section
referenced herein. For purposes of the DCB Disclosure Schedules,
however, any item disclosed on any schedule therein is deemed to be
fully disclosed with respect to all schedules under which such item
may be relevant as and to the extent that it is reasonably clear on
the face of such schedule that such item applies to such other
schedule.
(a) DCB is a
corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Maryland. DCB is a bank
holding company duly registered under the BHC Act. DCB has the full
corporate power and lawful authority to carry on its business and
operations as now being conducted and to own or lease all of its
properties and assets as presently owned or leased. DCB is duly
licensed, registered or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or
leased by it makes such licensing, registration or qualification
necessary, except where the failure to be so licensed, registered
or qualified would not have a Material Adverse Effect on DCB, and
all such licenses, registrations and qualifications are in full
force and effect in all material respects. DCB engages in
activities and holds properties only of the types permitted to bank
holding companies by the BHC Act and the rules and regulations
promulgated thereunder.
(b) Damascus is a
Maryland-state chartered bank duly organized, validly existing and
in good standing under the laws of the State of Maryland. Damascus
has the full corporate power and lawful authority to carry on its
business and operations as now being conducted and to own or lease
all of its properties and assets as presently owned or leased.
Damascus is duly licensed, registered or qualified to do business
in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets
owned or leased by it makes such licensing, registration or
qualification necessary, except where the failure to be so
licensed, registered or qualified would not have a Material Adverse
Effect on DCB, and all such licenses, registrations and
qualifications are in full force and effect in all material
respects.
(c) The deposits of
Damascus are insured by the FDIC to the extent provided in the
Federal Deposit Insurance Act and all premiums and assessments
required to be paid in connection therewith have been paid when
due.
(d) DCB Disclosure Schedule 3.1(d)
contains a complete and accurate list of all DCB Subsidiaries. Each
DCB Subsidiary is duly organized, validly existing and in good
standing under the laws of the state of its organization and has
the full corporate power and lawful authority to carry on its
business and operations as now being conducted and to own or lease
all of its properties and assets as presently owned or leased. Each
DCB Subsidiary is duly licensed, registered or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing, registration or
qualification necessary, except where the failure to be so
licensed, registered or qualified would not have a Material Adverse
Effect on DCB, and all such licenses, registrations and
qualifications are in full force and effect in all material
respects. Other than shares of capital stock of the DCB
Subsidiaries listed on DCB
Disclosure Schedule 3.1(d), DCB does not own or control,
directly or indirectly, or have the right to acquire directly or
indirectly, an equity interest in any Entity.
(e) The respective
minute books of DCB and each DCB Subsidiary accurately reflect, in
all material respects, all material actions of their respective
owners and governing bodies, including committees, in each case in
accordance with the ordinary business practice of DCB or the
applicable DCB Subsidiary.
(f) Prior to the date
of this Agreement, DCB has delivered to OLB true and correct copies
of the articles of incorporation and bylaws of DCB, and the charter
documents and bylaws, operating agreement and/or other governing
instrument of each DCB Subsidiary and each as in effect on the date
hereof (collectively, the “DCB Governing
Documents”).
(g) DCB Disclosure Schedule 3.1(g)
contains a complete and accurate list of all DCB Subsidiaries that
are no longer operational or provide any business function for or
on behalf of DCB or Damascus (the “Non-Operational
Subsidiaries”).
(a) The authorized
capital stock of DCB consists of 5,000,000 shares of common stock,
$0.01 par value per
share (“DCB Common
Stock”), of which, as of the date of this Agreement,
1,613,180 (which number includes 209,450 shares represented by Bank
Certificates) shares are duly authorized, validly issued and
outstanding. Except as provided in DCB Disclosure Schedule 3.2(a),
as of the date of this Agreement, there are no bonds, debentures,
notes or other indebtedness of DCB or any DCB Subsidiary having the
right to vote on any matters on which stockholders of DCB may vote,
nor are any trust preferred or subordinated debt securities of DCB
or any DCB Company issued or outstanding. All of the issued and
outstanding shares of DCB Common Stock are fully paid and
nonassessable, free of preemptive rights, except as may be defined
in DCB’s articles of incorporation, and were not issued in
violation of the preemptive rights of any Person or in violation of
any applicable Laws. Except as set forth in DCB Disclosure Schedule 3.2(a),
DCB has not issued nor is DCB or any DCB Subsidiary bound by any
subscription, call, commitment, agreement or other Right of any
character relating to the purchase, sale or issuance of, or right
to receive dividends or other distributions on, any shares of DCB
Common Stock or any other security of DCB or any securities
representing the right to vote, purchase or otherwise receive any
shares of DCB Common Stock or any other security of DCB.
Accordingly, the only securities of DCB to be outstanding
immediately prior to the Effective Time will be 1,613,180 shares of
DCB Common Stock.
(b) Except as disclosed
in DCB Disclosure Schedule
3.2(b), DCB owns, directly or indirectly, all of the capital
stock or other equity ownership interests of the DCB Subsidiaries,
free and clear of any Liens, agreements and restrictions of any
kind or nature, and all of such shares or equity ownership
interests are duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
(c) Except as set forth
on DCB Disclosure Schedule
3.2(c), to the Knowledge of DCB no person or group is the
beneficial owner of five percent or more of the outstanding shares
of DCB Common Stock (the terms “person,”
“group” and “beneficial owner” are as
defined in Section 13(d) of the Exchange Act, and the rules
and regulations thereunder).
(d) DCB does not have a
dividend reinvestment plan or any stockholders’ rights
plan.
(a) DCB has full
corporate power and authority to execute and deliver this Agreement
and, subject to the receipt of all consents, waivers and approvals
described in DCB
Disclosure Schedule 3.4 and approval of the Agreement and
the Merger by the holders of DCB Common Stock as required by
DCB’s articles of incorporation and bylaws and the MGCL, to
consummate the Contemplated Transactions and to otherwise comply
with its obligations under this Agreement. The execution and
delivery of this Agreement by DCB and the consummation by DCB of
the Contemplated Transactions, up to and including the Merger, have
been duly and validly authorized by the board of directors of DCB
and, except for approval by the holders of DCB Common Stock as
required by DCB’s articles of incorporation and bylaws and
the MGCL, no other corporate proceedings on the part of DCB are
necessary to consummate the Contemplated Transactions. This
Agreement has been duly and validly executed and delivered by DCB
and, assuming the due authorization, execution and delivery of this
Agreement by OLB, constitutes the valid and binding obligation of
DCB, enforceable against DCB in accordance with its terms, subject
to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and subject, as to
enforceability, to general principles of equity.
(b) The execution and
delivery of this Agreement by DCB, the consummation of the
Contemplated Transactions, and the compliance by DCB with any of
the terms or provisions hereof, subject to the receipt of all
consents described in DCB
Disclosure Schedule 3.4, the approval of this Agreement and
the Merger by the holders of DCB Common Stock as required by
DCB’s articles of incorporation and bylaws and the MGCL,
DCB’s and OLB’s compliance with any conditions
contained in this Agreement, and compliance by DCB or any DCB
Subsidiary with any of the terms or provisions hereof, do not and
will not:
(i) Conflict with or
result in a breach of any provision of the DCB Governing
Documents;
(ii) Violate any Law
applicable to DCB or any DCB Subsidiary or any of their respective
properties or assets, except where such violation would not have a
Material Adverse Effect; or
(iii) Except as described
in DCB Disclosure Schedule
3.3(b) or pursuant to which consent or notification is
required as set forth in DCB Disclosure Schedule 3.4,
violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event that, with notice or lapse of
time, or both, would constitute a default) under, result in the
termination of, or acceleration of, the performance required by, or
result in a right of termination or acceleration or the creation of
any Lien upon any of the properties or assets of DCB or any DCB
Subsidiary under any of the terms or conditions of any note, bond,
mortgage, indenture, license, lease, agreement, commitment or other
instrument or obligation to which DCB or any DCB Subsidiary is a
party, or by which they or any of their respective properties or
assets may be bound or affected, except where such termination,
acceleration or creation would not have a Material Adverse Effect
on DCB.
(c) Damascus has all
requisite corporate power and authority to execute and deliver the
Bank Merger Agreement and, subject to the receipt of all consents
described in DCB
Disclosure Schedule 3.4, to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger
Agreement and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the board of
directors of Damascus and, other than the approval of the Bank
Merger Agreement by DCB as the sole stockholder of Damascus as
required by Law, no further corporate proceedings of Damascus are
needed to execute and deliver the Bank Merger Agreement and
consummate the transactions contemplated thereby. DCB, as the sole
stockholder of Damascus, shall promptly hereafter approve the Bank
Merger Agreement, and the Bank Merger Agreement will be duly
executed by Damascus on the date of this Agreement. The Bank Merger
Agreement has been duly authorized and, upon due authorization,
execution and delivery by Damascus, will be a legal, valid and
binding agreement of Damascus enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
creditors’ rights generally and general equitable principles.
At the Closing, all other agreements, documents and instruments to
be executed and delivered by Damascus that are referred to in the
Bank Merger Agreement, if any, will have been duly executed and
delivered by Damascus and, assuming due authorization, execution
and delivery by the counterparties thereto, will constitute the
legal, valid and binding obligations of Damascus, enforceable
against Damascus in accordance with their respective terms and
conditions, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
creditors’ rights generally and by general equitable
principles.
(d) The approval of the
Agreement and the Merger by the holders of DCB Common Stock is the
only vote of holders of any class of DCB capital stock necessary to
adopt and approve this Agreement and the Contemplated Transactions.
The affirmative vote of Persons holding at least two-thirds of the
issued and outstanding shares of DCB Common Stock as of the record
date for the DCB Common Stockholders’ Meeting is required to
approve the Agreement and the Merger under the MGCL and DCB’s
articles of incorporation and bylaws.
(e) DCB’s board
of directors, by resolution duly adopted by the unanimous vote of
the entire board of directors at a meeting duly called and held,
has (i) determined that this Agreement and the Contemplated
Transactions, including the Merger, are advisable and are in the
best interests of DCB and its stockholders, (ii) authorized and
approved this Agreement and the Contemplated Transactions, (iii)
directed that the Agreement and the Merger be submitted for
consideration at the DCB Common Stockholders’ Meeting, and
(iv) recommended that its stockholders approve this Agreement and
the Merger.
Except
as described in Section 3.3(b) of this Agreement and as described
in DCB Disclosure Schedule
3.4, no consents, waivers or approvals of, or filings or
registrations with, any Regulatory Authorities or other third
parties are necessary in connection with the execution and delivery
of this Agreement by DCB or the consummation of the Contemplated
Transactions by DCB. DCB has no reason to believe that it will not
be able to obtain all requisite consents, waivers or approvals from
the Regulatory Authorities or any third party in order to
consummate the Contemplated Transactions on a timely basis. To the
Knowledge of DCB, no fact or circumstance exists, including any
possible other transaction pending or under consideration by DCB or
any DCB Company, that would (a) reasonably be expected to prevent
or delay in any material respect, any filings or registrations
with, or consents, waivers or approvals required from, any
Regulatory Authority, or (b) cause a Regulatory Authority acting
pursuant to applicable Law to seek to prohibit or materially delay
consummation of the Contemplated Transactions or impose a
Burdensome Condition.
(a) DCB has previously
delivered the DCB Financials to OLB, except those pertaining to
annual and quarterly periods commencing after September 30, 2016
and monthly periods commencing after December, 31, 2016, which it
will deliver by each respective delivery date as required by this
Agreement. The delivered DCB Financials fairly present, in all
material respects, the consolidated financial position, results of
operations, changes in stockholders’ equity and cash flows of
DCB as of and for the periods ended on the dates thereof. The
delivered DCB Financials comply in all material respects with
applicable accounting and regulatory requirements and, other than
the Internal DCB Financials, have been prepared in accordance with
GAAP consistently applied, except for (i) omission of the notes
from the financial statements, applicable to any interim period,
and (ii) with respect to any interim period, normal year-end
adjustments and notes thereto. Xxxxx Xxxxxxx Xxxxxx & Company,
LLC has not resigned (or informed DCB that it intends to resign) or
been dismissed as independent public accountants of DCB as a result
of or in connection with any disagreements with DCB on a matter of
accounting principles or practices, financial statement disclosure
or auditing scope or procedure.
(b) DCB did not, as of
the date of the DCB Financials or any subsequent date, have any
liabilities, obligations or loss contingencies of any nature,
whether absolute, accrued, contingent or otherwise, that are not
fully reflected or reserved against in the balance sheets included
in the DCB Financials at the date of such balance sheets that would
have been required to be reflected therein in accordance with GAAP
consistently applied or fully disclosed in a note thereto, except
for liabilities, obligations and loss contingencies that are not
material in the aggregate and that are incurred in the ordinary
course of business, consistent with past practice, and except for
liabilities, obligations and loss contingencies that are within the
subject matter of a specific representation and warranty herein or
that have not had a Material Adverse Effect and subject, in the
case of any unaudited statements, to normal recurring audit
adjustments and the absence of notes thereto.
Except
as disclosed on DCB
Disclosure Schedule 3.6, neither DCB nor any DCB Subsidiary
has suffered any adverse change in its assets (including loan
portfolio), liabilities (whether absolute, accrued, contingent or
otherwise), liquidity, net worth, property, financial condition or
results of operations, or any damage, destruction or loss, whether
or not covered by insurance, since December 31, 2015, that in the
aggregate has had or is reasonably likely to have a Material
Adverse Effect on the DCB Companies taken as a whole.
(a) Except as disclosed
in DCB Disclosure Schedule
3.7(a), all DCB Returns required by applicable Law to have
been filed with any Taxing Authority by, or on behalf of, each of
the DCB Companies have been filed on a timely basis in accordance
with all applicable Laws, and such DCB Returns are true, complete
and correct in all material respects, or requests for extensions to
file the DCB Returns have been timely filed, granted and have not
expired, except to the extent that such failures to file, to be
complete or correct or to have extensions granted that remain in
effect individually or in the aggregate would not have a Material
Adverse Effect on DCB. All DCB Taxes shown to be due and payable on
the DCB Returns or on subsequent assessments with respect thereto
have been paid in full or adequate reserves have been established
in the DCB Financials for the payment of such DCB Taxes, except
where any such failure to pay or establish adequate reserves, in
the aggregate, has not had, and is not reasonably likely to have, a
Material Adverse Effect on the DCB Companies. Each of the DCB
Companies has timely withheld and paid over all DCB Taxes required
to have been withheld and paid over by it, and complied with all
information reporting and backup withholding requirements,
including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor,
independent contractor or other third party. There are no Liens on
any of the assets of the DCB Companies with respect to DCB Taxes,
other than Liens for DCB Taxes not yet due and
payable.
(b) Except as disclosed
on DCB Disclosure Schedule
3.7(b), no deficiencies for DCB Taxes have been claimed,
proposed or assessed, with notice to any of the DCB Companies, by
any taxing or other governmental authority against the DCB
Companies that have not been settled, closed or reached a final
determination, or that have not been adequately reserved for in the
DCB Financials, except for deficiencies that, individually or in
the aggregate, have not had, and are not reasonably likely to have,
a Material Adverse Effect on DCB. There are no pending audits
relating to any DCB Tax liability of which any of the DCB Companies
has received written notice. Except as disclosed on DCB Disclosure Schedule 3.7(b),
none of the DCB Companies is a party to any action or proceeding
for assessment or collection of DCB Taxes, nor have such events
been asserted or, to the Knowledge of DCB, threatened against any
of the DCB Companies or any of their assets. No waiver or extension
of any statute of limitations relating to DCB Taxes is in effect
with respect to the DCB Companies. No power of attorney has been
executed by any of the DCB Companies with respect to any DCB Tax
matter that is currently in force.
(c) The DCB Companies
have disclosed on the federal income tax DCB Returns all positions
taken therein that could give rise to a substantial understatement
penalty within the meaning of Section 6662 of the IRC. None of
the DCB Companies has agreed to make, nor is it required to make,
any adjustment under IRC Section 481(a) by reason of a change
in accounting method or otherwise. None of the property of the DCB
Companies is subject to a safe-harbor lease (pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954 as in
effect after the Economic Recovery Tax Act of 1981 and before the
Tax Reform Act of 1986) or is “tax-exempt use property”
(within the meaning of Section 168(h) of IRC) or
“tax-exempt bond financed property” (within the meaning
of Section 168(g)(5) of IRC). Except as disclosed on
DCB Disclosure Schedule
3.7(c), none of the DCB Companies is a party to any tax
sharing agreement or has any continuing obligations under any prior
tax sharing agreement. None of the DCB Companies is, or has been, a
member of any affiliated group within the meaning of Section
1504(a) of the IRC or any similar group defined under a similar
provision of state, local, or non-U.S. law other than a group the
common parent of which was DCB.
(d) None of the DCB
Companies has been a party to any distribution occurring during the
last three years in which the parties to such distribution treated
the distribution as one to which Section 355 of the IRC (or
any similar provision of state, local or foreign law)
applied.
(e) As used in this
Agreement, the term “DCB Taxes” shall mean all
taxes, however denominated, including any interest, penalties or
other additions to tax that may become payable in respect thereof,
imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the
generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and state
income taxes), real property gains taxes, payroll and employee
withholding taxes, unemployment insurance taxes, social security
taxes, sales and use taxes, ad valorem taxes, excise taxes,
franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, and other obligations of the
same or of a similar nature to any of the foregoing, which any of
the DCB Companies is required to pay, withhold or collect. As used
in this Agreement, the term “DCB Returns” shall mean
all reports, estimates, declarations of estimated tax, information
statements and returns relating to, or required to be filed in
connection with, any DCB Taxes, including information returns or
reports with respect to backup withholding and other payments to
third parties.
(f) True and complete
copies of the federal income tax returns and any amendments thereto
of the DCB Companies as filed with the IRS for the years ended
December 31, 2014 and 2015 have been furnished to OLB, and, if the
Effective Date is later than the due dates therefor, true and
complete copies of the federal income tax returns of the DCB
Companies for the years ended on or after December 31, 2016 will be
furnished to OLB within five business days of filing.
(g) True and complete
copies of the state income tax returns of the DCB Companies as
filed with the State of Maryland for the years ended December 31,
2014 and 2015 have been furnished to OLB, and, if the Effective
Date is later than the due dates therefor, true and complete copies
of the state income tax returns of the DCB Companies for the years
ended on or after December 31, 2016 will be furnished to OLB within
five business days of filing.
(a) Except as described
in DCB Disclosure Schedule
3.8(a), 3.11, 3.13(a), or 3.15(a), neither DCB nor any
DCB Subsidiary is a party to or subject to:
(i) Any employment,
consulting, severance, “change-in-control,”
indemnification or termination contract or arrangement with or for
any officer, director, employee, independent contractor, agent or
other Person;
(ii) Any plan,
arrangement or contract providing for bonuses, pensions, options,
deferred compensation, retirement payments, profit sharing, or
similar arrangements for or with any officer, director, employee,
independent contractor, agent, or other Person;
(iii) Except as provided
in the DCB Governing Documents, any agreement that provides for the
indemnification of any of its present or former directors, officers
or employees, or other persons who serve or served as a director,
officer or employee of another corporation, partnership or other
enterprise at the request of DCB and, to the Knowledge of DCB,
there are no claims for which any such person would be entitled to
indemnification under DCB Governing Documents, under any applicable
Law or under any indemnification agreement;
(iv) Any collective
bargaining agreement with any labor union relating to its
employees;
(v) Any agreement that
by its terms limits its payment of dividends;
(vi) Any material
instrument (A) evidencing or relating to indebtedness for borrowed
money, whether directly or indirectly, by way of purchase money
obligation, conditional sale, lease purchase, guaranty or
otherwise, in respect of which it is an obligor to any Person,
other than deposits, FHLB advances, repurchase agreements,
bankers’ acceptances and “treasury tax and loan”
accounts established in the ordinary course of business, and
transactions in “federal funds,” or (B) that contains
financial covenants or other restrictions, other than those
relating to the payment of principal and interest when due, that
would be applicable on or after the Effective Time;
(vii) Any contract, other
than this Agreement, that restricts or prohibits it from engaging
in any type of business permissible under applicable
Law;
(viii) Any contract, plan
or arrangement that provides for payments or benefits in certain
circumstances that, together with other payments or benefits
payable to any participant therein or party thereto, might render
any portion of any such payments or benefits subject to
disallowance of deduction therefor as a result of the application
of Section 280G of the IRC;
(ix) Any contract
involving Intellectual Property (other than contracts entered into
in the ordinary course with customers and off-the-shelf,
“shrink wrap” or force placed software
licenses);
(x) Any lease for real
property;
(xi) Any contract or
arrangement with any broker-dealer or investment
adviser;
(xii) Any investment
advisory contract with any investment company registered under the
Investment Company Act of 1940;
(xiii) Any contract or
arrangement with, or membership in, any local clearing house or
self-regulatory organization;
(xiv) any agreement
(other than this Agreement), contract, arrangement, commitment or
understanding (whether written or oral) that restricts or limits in
any material way the conduct of its business (it being understood
that any non-compete, non-solicitation or similar provision shall
be deemed material);
(xv) any agreement that
grants any right of first refusal, right of first offer or similar
right with respect to any of its material assets, rights or
properties;
(xvi) Any contract in
which it has liability or would incur a contract termination fee of
over $50,000; or
(xvii) Any contract or
arrangement not disclosed pursuant to the other items of this
paragraph (a) that would constitute a “material
contract” as defined in Item 601(b)(10) of Regulation S-K of
the SEC.
(b) True and correct
copies of the contracts, plans, arrangements and instruments listed
in DCB Disclosure Schedule
3.8(a), 3.11, 3.13(a), or 3.15(a) have been made
available to OLB on or before the date hereof and are in full force
and effect on the date hereof. None of the DCB Companies nor, to
the Knowledge of DCB, any other party to any such contract, plan,
arrangement or instrument, has breached any provision of, or is in
default under any term of, any such contract, plan, arrangement or
instrument and no party to any such contract, plan, arrangement or
instrument will have the right to terminate any or all of the
provisions thereof as a result of the Contemplated Transactions,
except where such breach, default or termination is not reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect.
(c) Except as described
in DCB Disclosure Schedule
3.8(c), since December 31, 2015, through and including the
date of this Agreement, none of the DCB Companies has (i) made any
material change in its credit policies or procedures, the effect of
which was or is to make any such policy or procedure less
restrictive in any material respect, (ii) made any material
acquisition or disposition of any assets or properties, or entered
into any contract for any such acquisition or disposition, other
than loans, loan commitments and the disposition of REO in the
ordinary course of business consistent with past practice, (iii)
entered into any lease of real or personal property requiring
annual payments in excess of $50,000, other than in connection with
foreclosed property or in the ordinary course of business
consistent with past practice, or (iv) changed any accounting
methods, principles or practices affecting its assets, liabilities
or businesses, including any reserving, renewal or residual method,
practice or policy.
(d) Except as disclosed
on DCB Disclosure Schedule
3.8(d), neither DCB nor any of the DCB Subsidiaries has
issued, or is obligated under, any letter of credit that is not
fully secured.
(a) Except as disclosed
on DCB Disclosure Schedule
3.9(a), each of the DCB Companies has good and marketable
title to all material assets and properties owned by it in the
conduct of its businesses, whether such assets and properties are
real or personal, tangible or intangible, including assets and
property reflected in the balance sheets contained in the DCB
Financials or acquired subsequent thereto, subject to no Liens,
except:
(i) Those items that
secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to the FHLB,
inter-bank credit facilities or reverse repurchase agreements and
that are described in DCB
Disclosure Schedule 3.9(a) or permitted under Article V
hereof;
(ii) Mechanics liens and
similar liens for labor, materials, services or supplies provided
for such property and incurred in the ordinary course of business
for amounts not yet delinquent or that are being contested in good
faith;
(iii) Statutory Liens for
amounts not yet delinquent or that are being contested in good
faith;
(iv) Liens for current
DCB Taxes not yet due and payable;
(v) Pledges to secure
deposits and other Liens incurred in the ordinary course of the
business of banking;
(vi) Liens,
imperfections of title, easements and other defects of title that
are not reasonably likely to have a Material Adverse
Effect;
(vii) With respect to
personal property reflected in the balance sheets contained in the
DCB Financials, (A) dispositions and encumbrances for adequate
consideration in the ordinary course of business since the date of
such balance sheets and/or (B) dispositions of obsolete personal
property since the date of such balance sheets;
(viii) Those items that
are reflected as liabilities in the DCB Financials;
and
(ix) Items of personal
property that are held in any fiduciary or agency
capacity.
(b) With respect to
material items of real and personal property that are used in the
conduct of its business and leased from other Persons, each of the
DCB Companies has the right under valid and existing leases to use
such real and personal property in all material respects as
presently occupied and used.
(c) With respect to all
agreements pursuant to which any of the DCB Companies has purchased
securities subject to an agreement to resell, if any, it has a
valid, perfected first lien or security interest in the securities
or other collateral securing the repurchase agreement, and the
value of such collateral equals or exceeds the amount of the debt
secured thereby.
(d) Each of the DCB
Companies currently maintains insurance with reputable insurers
against such risks and in such amounts as the management of DCB has
determined to be prudent for such DCB Company’s operations,
and, to the Knowledge of DCB, such insurance is similar in scope
and coverage in all material respects to insurance maintained by
other similarly-situated businesses. Each of DCB and each DCB
Subsidiary is in compliance with its insurance policies, is not in
default under any of the terms thereof and has made accurate
statements on any insurance renewal application. Each such policy
is in full force and effect and, except for policies insuring
against potential liabilities of officers, directors and employees
of DCB and the DCB Subsidiaries, DCB or the relevant DCB Subsidiary
is the sole beneficiary of such policies. All premiums and other
payments due under any such policy have been paid, and all claims
thereunder have been filed in a due and timely
fashion.
(e) None of the DCB
Companies has received notice from any insurance carrier
that:
(i) The insurance will
be cancelled or that coverage thereunder will be reduced or
eliminated; or
(ii) Premium costs with
respect to such insurance will be substantially increased, except
as set forth in DCB
Disclosure Schedule 3.9(f).
(f) There are presently
no material claims pending under such policies of insurance and
none of the DCB Companies has received any notices under such
policies. All such insurance is valid and enforceable and in full
force and effect, and within the last three years, each of the DCB
Companies has received each type of insurance coverage for which it
has applied and during such periods it has not been denied
indemnification for any material claims submitted under any of its
insurance policies. DCB
Disclosure Schedule 3.9(f) identifies all policies of
insurance maintained by the DCB Companies as well as the other
matters required to be disclosed under Section 3.9(e)(ii) and this
Section 3.9(f).
Except
as described in DCB
Disclosure Schedule 3.10, there are no legal,
quasi-judicial, administrative, suit, arbitration or other
proceedings, claims (whether asserted or unasserted), actions or
governmental investigations or inquiries of any kind or nature now
pending or, to the Knowledge of DCB, threatened, before any court,
administrative, regulatory, arbitration or similar body in any
manner against any of the DCB Companies or any of their properties,
and to the Knowledge of DCB there are no facts that reasonably
could be expected to be the basis for any such suit, arbitration,
other proceeding, claim, action, investigation or inquiry. To the
Knowledge of DCB, no pending or threatened suit, arbitration
proceeding claim, action, investigation or inquiry described in
DCB Disclosure Schedule
3.10 could reasonably be expected to (a) have a Material
Adverse Effect, (b) question the validity of any action taken or to
be taken in connection with this Agreement or the Contemplated
Transactions, or (c) materially impair or delay the ability of the
DCB Companies to perform their obligations under this Agreement.
Except as described in DCB
Disclosure Schedule 3.10, none of the DCB Companies is in
default with respect to any judgment, order, writ, injunction,
decree, award, rule, or regulation of any court, arbitrator or
Regulatory Authority.
Except
as disclosed on DCB
Disclosure Schedule 3.11:
(a) Each of the DCB
Companies conducts its business in compliance with all Laws
applicable to it, its properties, assets and deposits, its
business, and its conduct of business and its relationship with its
employees conducting such business, except where noncompliance
would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect;
(b) Each of the DCB
Companies has all material permits, licenses, authorizations,
orders and approvals of all Regulatory Authorities that are
required in order to permit it to own or lease its properties and
carry on its business as it is presently conducted; all such
permits, licenses, authorizations, orders and approvals are in full
force and effect, and no suspension or cancellation of any of them
is, to the Knowledge of DCB, threatened, and to the Knowledge of
DCB no suspension or cancellation of any such permit, license,
certificate, order or approval is threatened or will result from
the consummation of the Contemplated Transactions, subject to
obtaining the receipt of all requisite approvals or consents from
the Regulatory Authorities in order to consummate the Contemplated
Transactions. None of the DCB Companies have been given notice or
been charged with any violation of any law, ordinance, regulation,
order, writ, rule, decree or condition to approval of any
Regulatory Authority that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse
Effect;
(c) Since January 1,
2011, each of the DCB Companies has timely filed all reports,
forms, schedules, registrations, statements and other documents,
together with any amendments required to be made with respect
thereto, that it was required by Law to file with any Regulatory
Authority, and has paid all fees and assessments due and payable in
connection therewith, and each of such filings complied in all
material respects with all Laws under which it was filed (or was
amended so as to be in compliance promptly following discovery of
such noncompliance) and, to the extent such filings contain
financial information, have been prepared in all material respects
in accordance with applicable regulatory accounting principles and
practices throughout the periods covered by such filing, except to
the extent failure to timely file would not, individually or in the
aggregate, be expected to have a Material Adverse Effect; none of
the DCB Companies is required to file periodic reports pursuant to
Sections 13 or 15(d) of the Exchange Act;
(d) No Regulatory
Authority has initiated any proceeding or, to the Knowledge of DCB,
investigation into the business or operations of the DCB Companies
that has not been resolved;
(e) Since January 1,
2014, none of the DCB Companies has received any notification or
communication from any Regulatory Authority:
(i) Asserting that it
is not in substantial compliance with any Law that such Regulatory
Authority enforces, unless such assertion has been waived,
withdrawn or otherwise resolved;
(ii) Threatening to
revoke any license, franchise, permit or governmental authorization
that is material to it; or
(iii) Requiring or
threatening to require it, or indicating that it may be required,
to enter into a cease and desist order, consent agreement, other
agreement or memorandum of understanding, or any other agreement
directing, restricting or limiting, or purporting to direct,
restrict or limit, in any manner its operations, including without
limitation any restriction on the payment of dividends (any such
notice, communication, memorandum, agreement or order described in
this Section 3.11(e)(iii) and addressed specifically to a DCB
Company herein referred to as a “DCB Regulatory
Agreement”);
(f) None of the DCB
Companies has received, consented to or entered into any DCB
Regulatory Agreement that is currently in effect, nor has any DCB
Company been advised since January 1, 2013 by any Regulatory
Authority that it is considering issuing, initiating, ordering or
requesting any DCB Regulatory Agreement that has not already been
issued, initiated, ordered or requested;
(g) There is no
injunction, order, award, judgment, settlement, decree or
regulatory restriction imposed upon or entered into by any of the
DCB Companies or upon any of their assets; and
(h) Since January 1,
2013, (i) none of the DCB Companies nor, to the Knowledge of DCB,
any director, officer, employee, auditor, accountant or other
Representative of DCB or any DCB Subsidiary, has received or
otherwise had or obtained knowledge of any material complaint,
allegation, assertion or claim, whether written or oral, regarding
its accounting or auditing practices, procedures, methodologies or
methods or its internal accounting controls, including any material
complaint, allegation, assertion or claim that it has engaged in
questionable accounting or auditing practices, and (ii) no attorney
representing it, whether or not employed by it, has reported
evidence of a material violation of Securities Laws, breach of
fiduciary duty or similar violation by it or any of its officers,
directors, employees or agents to its board of directors or any
committee thereof or to any director or officer.
There
are no labor or collective bargaining agreements to which any of
the DCB Companies is a party. There is no union organizing effort
pending or, to the Knowledge of DCB, threatened, against any of the
DCB Companies. There is no labor strike, labor dispute (other than
routine employee grievances that are not related to union
employees), work slowdown, stoppage or lockout pending or, to the
Knowledge of DCB, threatened, against any of the DCB Companies.
There are no organizational efforts with respect to the formation
of a collective bargaining unit presently being made or, to the
Knowledge of DCB, threatened, involving employees of any of the DCB
Companies. No arbitration or proceeding asserting that any of the
DCB Companies has committed an unfair labor practice (within the
meaning of the National Labor Relations Act of 1935) or seeking to
compel any of the DCB Companies to bargain with any labor
organization as to wages or conditions of employment is pending or,
to the Knowledge of DCB, threatened, with respect to any of the DCB
Companies before the National Labor Relations Board, the Equal
Employment Opportunity Commission or any other Regulatory Authority
(other than routine employee grievances that are not related to
union employees). Each of the DCB Companies is in compliance in all
material respects with all applicable Laws respecting employment
and employment practices, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor practice.
None of the DCB Companies has made any commitments to others
inconsistent with or in derogation of any of the foregoing. Except
as described in DCB
Disclosure Schedule 3.12, there are no pending or, to the
Knowledge of DCB, threatened, claims or suits against any of the
DCB Companies under any applicable labor or employment Law or
brought or made by a current or former employee or applicant for
employment.
(a) DCB has set forth
in DCB Disclosure Schedule
3.13(a) a complete and accurate list of the DCB Benefit
Plans and made available to OLB a copy of all available written
documents regarding such Benefit Plans including:
(i) A copy of each of
the DCB Benefit Plans and any related trust agreements or other
funding arrangements;
(ii) The most recent
actuarial reports (if any) and financial reports it has received
relating to the DCB Benefit Plans that constitute “qualified
pension plans” under IRC Section 401(a);
(iii) The most recently
filed Form 5500, together with schedules and attachments, as
required (if any) relating to the DCB Benefit Plans that have been
filed with the United States Department of Labor;
(iv) The most recent
favorable determination letters (or opinion letter for a prototype
plan) issued by the IRS that pertain to any of the DCB Benefit
Plans that are “qualified pension plans” under IRC
Section 401(a); and
(v) Summary plan
descriptions and any amendments or material modifications thereto
and any insurance, third party administrator or administrative
services only contracts related to the DCB Benefit Plans within the
meaning of ERISA Section 3(1) or 3(2).
(b) The DCB Companies
have paid in full any insurance premiums due to the Pension Benefit
Guaranty Corporation (“PBGC”) with respect to
any defined benefit pension plans for the six years prior to, and
through, the Effective Date. Except as disclosed in DCB Disclosure Schedule
3.13(b), no pension plan (within the meaning of ERISA
Section 3(2)) maintained or contributed to by any of the DCB
Companies has been terminated or is under notice from the PBGC of
any threat of termination under the procedures of the PBGC. To the
Knowledge of DCB, no circumstance has occurred for which any
reportable event under ERISA Section 4043(b) has been or would
be required that has not been reported or with respect to which the
notice requirement has not been waived. Except as set forth on
DCB Disclosure Schedule
3.13(b), no DCB Benefit Plan is subject to IRC Section 412
or Title IV of ERISA, and as of the Effective Date, to the
Knowledge of DCB, no condition exists that will present a material
risk to OLB of incurring any liability to the PBGC or on account of
the failure to comply with any such provisions in connection with
any such DCB Benefit Plan. Except as disclosed in DCB Disclosure Schedule
3.13(b), no DCB Benefit Plan provides, and none of the DCB
Companies has any obligation to provide, health or welfare benefits
to any individual following termination of such individual’s
employment or service with it or an Affiliate (other than as
required under the Consolidated Omnibus Budget Reconciliation Act
of 1986, as amended or any similar state law).
(c) To the Knowledge of
DCB, none of the DCB Companies has ever contributed to, or
otherwise incurred, any liability with respect to a multi-employer
plan (within the meaning of ERISA Section 3(37)).
(d) Each DCB Benefit
Plan complies in all material respects with the applicable
requirements of ERISA, the IRC, the Patient Protection and
Affordable Care Act of 2010, and any other applicable Laws
governing the DCB Benefit Plan, and each DCB Benefit Plan has at
all times been administered in all material respects in accordance
with all requirements of applicable Law and in accordance with its
terms. Each pension plan adopted by the DCB Companies that is
intended to be qualified under Section 401(a) of the IRC is so
qualified, and, to the Knowledge of DCB, each trust established by
each pension plan is exempt from federal income tax under Section
501(a) of the IRC. Each of the pension plans adopted by the DCB
Companies is, and from its establishment has been, exempt from
federal income tax under Section 501(a) of the IRC. Each of the
pension plans adopted by the DCB Companies has received, or is
entitled to rely upon, a favorable determination letter (or opinion
letter for a prototype plan) from the IRS, and to the Knowledge of
DCB there are no circumstances that will or could result in
revocation of, or inability to continue to rely upon, any such
favorable determination letter or opinion letter. No lawsuits,
claims (other than routine claims for benefits) or complaints to,
or by, any Person, governmental authority, regulatory body or
arbiter have been filed, are pending or, to the Knowledge of DCB,
are threatened, with respect to any DCB Benefit Plan and, to the
Knowledge of DCB, there is no fact or contemplated event that would
give rise to any lawsuit, claim (other than routine claims for
benefits) or complaint with respect to any DCB Benefit Plan.
Without limiting the foregoing, to the Knowledge of DCB, the
following are true:
(i) Each DCB Benefit
Plan that is a defined benefit pension plan subject to IRC Section
412 or Title IV of ERISA as of the most recent actuarial valuation
has an AFTAP determined under IRC Section 430 and 436 that exceeds
the AFTAP level that would impose any funding-based limit on such
plan under IRC Section 436;
(ii) Each DCB Benefit
Plan that is a defined contribution pension plan that is intended
to be qualified under IRC Section 401(a) has had all contributions
made to the plan trust in accordance with the terms of the plan on
a timely basis under the IRC and ERISA;
(iii) With respect to
each DCB Benefit Plan, to the Knowledge of DCB, there is no
occurrence or contract that would constitute any “prohibited
transaction” within the meaning of Section 4975(c) of
the IRC or Section 406 of ERISA, which transaction is not
exempt under applicable Law, including Section 4975(d) of the
IRC or Section 408 of ERISA;
(iv) Except as disclosed
in DCB Disclosure Schedule
3.13(d)(iv), no DCB Benefit Plan is an Employee Stock
Ownership Plan as defined in Section 4975(e)(7) of the
IRC;
(v) No DCB Benefit Plan
is a Qualified Foreign Plan as the term is defined in
Section 404A of the IRC and no DCB Benefit Plan or any related
trust assets or agreements are subject to the laws of any
jurisdiction other than the United States of America or any state,
county or municipality of the United States;
(vi) None of the welfare
plans adopted by the DCB Companies is a Voluntary Employees’
Beneficiary Association as defined in Section 501(c)(9) of the
IRC;
(vii) All of the welfare
plans adopted by the DCB Companies and their related trusts comply
in all material respects with and have been administered in
substantial compliance with (A) Section 4980B of the IRC and
Sections 601 through 609 of ERISA and all U.S. Department of the
Treasury and U.S. Department of Labor regulations issued
thereunder, respectively, (B) the Health Insurance Portability and
Accountability Act of 1996, (C) the applicable provisions of the
Patient Protection and Affordable Care Act of 2010, and (D) the
U.S. Department of Labor regulations issued with respect to such
welfare benefit plans; and
(viii) With respect to
each DCB Benefit Plan, DCB or any DCB ERISA Affiliate has the
authority to amend or terminate such DCB Benefit Plan at any time,
subject to the applicable requirements of ERISA and the IRC and the
provisions of the DCB Benefit Plan.
(e) There is no
existing or, to the Knowledge of DCB, contemplated audit of any DCB
Benefit Plan by the IRS, the U.S. Department of Labor, the PBGC,
any Regulatory Authority or any other governmental authority. In
addition, there are no pending or, to the Knowledge of DCB,
threatened claims by, on behalf of or with respect to any DCB
Benefit Plan, or by or on behalf of any individual participant or
beneficiary of any DCB Benefit Plan, alleging any violation of
ERISA or any other applicable Laws, or claiming benefits (other
than claims for benefits made in the ordinary course of business),
nor, to the Knowledge of DCB, is there any basis likely to enable
such claim to prevail.
(f) Except as disclosed
on DCB Disclosure Schedule
3.13(f), (i) no payment contemplated or required by or under
any DCB Benefit Plan and employment-related agreement would in the
aggregate constitute excess parachute payments as defined in
Section 280G of the IRC (without regard to subsection (b)(4)
thereof), (ii) no DCB Benefit Plan provides for the gross-up or
reimbursement of taxes under Sections 280G, 4999 or 409A of the
IRC, and (iii) neither the execution and delivery of this Agreement
nor the consummation of Contemplated Transactions will (either
alone or in conjunction with any other event) result in, cause the
vesting, exercisability or delivery of, or increase the amount or
value of, any payment, right or other benefit to any current or
former employee, officer, director or other service provider of any
of the DCB Companies.
(g) Except as disclosed
on DCB Disclosure Schedule
3.13(g), no DCB Benefit Plan is a nonqualified deferred
compensation plan within the meaning of Section 409A of the IRC.
Each DCB Benefit Plan (including employment agreements or other
compensation arrangements) that constitutes a nonqualified deferred
compensation plan within the meaning of Section 409A of the IRC has
been written, executed and operated in compliance with Section 409A
of the IRC and the regulations thereunder or an applicable
exemption therefrom.
(h) None of the DCB
Companies is a record-keeper, administrator, custodian, fiduciary,
trustee or otherwise acts on behalf of any plan, program, or
arrangement subject to ERISA (other than any DCB Benefit
Plan).
Except
as set forth on DCB
Disclosure Schedule 3.14, none of the DCB Companies and, to
the Knowledge of DCB, no officer, director, employee, independent
contractor or agent of any DCB Company on its behalf, has employed
any broker, finder, investment banker or financial advisor, or
incurred any liability for any fees or commissions to any broker,
finder, investment banker or financial advisor, in connection with
the Contemplated Transactions
(a) DCB Disclosure Schedule 3.15(a)
contains a true, correct and complete list of all real property
owned, leased or operated by the DCB Companies, including but not
limited to all REO (the “DCB Real Property”).
True, correct and complete copies of all deeds, surveys, title
insurance policies and leases for the properties listed on
DCB Disclosure Schedule
3.15(a), and of all mortgages, deeds of trust and security
agreements to which such properties are subject, have been made
available to OLB to the extent DCB possesses such deeds, surveys,
title insurance policies, leases, mortgages, deeds of trust and
security agreements.
(b) No lease with
respect to any DCB Real Property and no deed with respect to any
DCB Real Property contains any restrictive covenant that materially
restricts the use, transferability or value of such DCB Real
Property. Each lease with respect to any DCB Real Property is a
legal, valid and binding obligation of the parties thereto
enforceable in accordance with its terms (except as may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the
availability of equitable remedies), and is in full force and
effect. There are no existing defaults by the DCB Companies or, to
the Knowledge of DCB, the other party, under any lease with respect
to any DCB Real Property and, to the Knowledge of DCB, there are no
allegations or assertions of such defaults by any party under any
lease with respect to any DCB Real Property or any events that,
with notice or lapse of time or the happening or occurrence of any
other event, would constitute a default under any lease with
respect to any DCB Real Property, except where the existence of
such defaults, individually or in the aggregate, has not had, and
is not reasonably likely to have, a Material Adverse
Effect.
(c) To the Knowledge of
DCB, none of the buildings and structures located on any DCB Real
Property, nor any improvements or appurtenances thereto or
equipment therein, nor the operation or maintenance thereof,
violates in any material manner any land use Laws or restrictive
covenants, or encroaches on any property owned by others, nor does
any building or structure of third parties encroach upon any DCB
Real Property, except for those violations and encroachments that
in the aggregate could not reasonably be expected to have a
Material Adverse Effect. Except as disclosed on DCB Disclosure Schedule
3.15(c), no condemnation proceeding is pending or, to the
Knowledge of DCB, threatened, that would preclude or materially
impair the use of any DCB Real Property in the manner in which it
is currently being used.
(d) The DCB Companies
have a valid and enforceable leasehold interest in or, to the
Knowledge of DCB, based on title insurance owned by it, good and
marketable title to, all DCB Real Property and all improvements
thereon, subject to no Liens of any kind except (i) as noted in the
DCB Financials, (ii) statutory Liens not yet delinquent or that are
being contested in good faith, (iii) minor defects and
irregularities in title and encumbrances that do not materially
impair the use thereof for the purposes for which they are held,
(iv) mechanics liens not yet delinquent or that are being contested
in good faith, and (v) those assets and properties disposed of for
fair market value in the ordinary course of business since the date
of the DCB Financials. All DCB Real Property used in the business
of the DCB Companies is in adequate condition (ordinary wear and
tear excepted) and, to the Knowledge of DCB, is free from defects
that could materially interfere with the current or future use of
such facilities, provided such future use is substantially similar
to its current use.
(e) Except as listed on
DCB Disclosure Schedule
3.15(e), there are no contracts, agreements or arrangements
to sell, lease or otherwise dispose of any of the DCB Real
Property.
With
respect to DCB and each DCB Subsidiary:
(a) Neither the
conduct nor operation of its business nor any condition of any
property currently or previously owned or operated by it (including
REO) results or resulted in a violation of any Environmental Laws
that is reasonably likely to impose a material liability (including
a material remediation obligation) upon DCB or any DCB Subsidiary.
To the Knowledge of DCB, no condition has existed or event has
occurred with respect to any of them or any such property that,
with notice or the passage of time, or both, is reasonably likely
to result in any material liability to DCB or any DCB Subsidiary by
reason of any Environmental Laws. Neither DCB nor any DCB
Subsidiary during the past five years has received any written
notice from any Person or Regulatory Authority that DCB or any DCB
Subsidiary or the operation or condition of any property ever owned
or operated (including Participation Facilities) by any of them are
currently in violation of or otherwise are alleged to have
liability under any Environmental Laws or relating to Hazardous
Materials (including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of
any Hazardous Materials at, on, beneath, or originating from any
such property) for which a material liability is reasonably likely
to be imposed upon DCB or any DCB Subsidiary;
(b) There is no
suit, action, executive or administrative order, directive or
proceeding pending or, to the Knowledge of DCB threatened, before
any court, governmental agency or other forum against DCB or any
DCB Subsidiary (i) for alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or
(ii) relating to the presence of, or release (defined herein) into
the environment of, any Hazardous Materials on any DCB Real
Property;
(c) To the Knowledge of
DCB, except as disclosed in DCB Disclosure Schedule
3.16(c), (i) there are no underground storage tanks on, in
or under any DCB Real Property, and (ii) no underground storage
tanks have been closed or removed from any DCB Real Property except
in compliance with Environmental Laws in all material respects;
and
(d) To the
Knowledge of DCB, the DCB Real Properties (including, without
limitation, soil, groundwater or surface water on, or under the
properties, and buildings thereon) are not contaminated with and do
not otherwise contain any Hazardous Materials other than as
permitted under applicable Environmental Laws.
(a) DCB Disclosure Schedule 3.17(a)
sets forth a complete and correct list of all trademarks, trade
dress, trade names, service marks, domain names, patents,
technology, inventions, trade secrets, know-how and copyrights and
works of authorship owned by or licensed to each of the DCB
Companies for use in its business, and all licenses or other
agreements relating thereto and all agreements relating to third
party intellectual property that it is licensed or authorized to
use in its business, including without limitation any software
licenses other than “shrink wrap” or force placed
software licenses (collectively, the “DCB Intellectual
Property”). Each of the DCB Companies owns or
possesses valid, binding and assignable licenses and other rights
to use without payment all DCB Intellectual Property that is used
in the conduct of its existing businesses free and clear of all
Liens and any claims of ownership by current or former employees or
contractors, other than royalties or payments with respect to
off-the-shelf software. With respect to each item of DCB
Intellectual Property that any of the DCB Companies is licensed or
authorized to use, the license, sublicense or agreement covering
such item is legal, valid, binding, enforceable and in full force
and effect. To the Knowledge of DCB, none of the DCB Companies is
infringing, diluting, misappropriating or violating the
intellectual property of any other Person, and none of the DCB
Companies has received any communications alleging that it has
infringed, diluted, misappropriated or violated any such
intellectual property. None of the DCB Companies has sent any
communications alleging that any Person has infringed, diluted,
misappropriated or violated any DCB Intellectual Property and, to
the Knowledge of DCB, no Person is infringing, diluting,
misappropriating or violating any of the DCB Intellectual Property.
Each of the DCB Companies has taken all commercially reasonable
actions to protect and maintain (a) all material DCB
Intellectual Property and (b) the security and integrity of
its software, databases, networks, systems, equipment and hardware
and to protect the same against unauthorized use, modification or
access thereto, or the introduction of any viruses or other
unauthorized or damaging or corrupting elements. To the Knowledge
of DCB, the computers, computer software, other information
technology equipment, information technology passwords and other
credentials, and all associated documents and records owned or
leased by the DCB Companies (the “DCB IT Assets”) operate
and perform in all material respects in accordance with their
documentation and functional specifications as required by them in
connection with their business, and none of the DCB IT Assets has
materially malfunctioned or failed to meet its requirements within
the past two years except for such malfunctions or failures that
have been remediated. To the Knowledge of DCB, no Person has gained
unauthorized access to the DCB IT Assets. The DCB Companies have
implemented commercially reasonable backup and disaster recovery
technology consistent with industry practices for institutions of
comparable size and complexity.
(b) DCB Disclosure Schedule 3.17(b)
sets forth a complete and correct list of all Persons, other than
directors, officers and employees of the DCB Companies, who have
access to any of the DCB IT Assets.
(a) The information
supplied by DCB for inclusion in the Registration Statement
(including the Prospectus/Proxy Statement), at the time the
Registration Statement is declared effective pursuant to the
Securities Act, and as of the date the Prospectus/Proxy Statement
is mailed to the holders of DCB Common Stock, and up to and
including the date of the DCB Common Stockholders’ Meeting,
(i) will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances in which
they were made, not misleading, (ii) will disclose all facts that
the DCB board of directors deems material to a vote on the
Agreement and the Merger and to the exercise of appraisal rights
pursuant to Subtitle 2 of Title 3 of the MGCL, and (iii) will
comply in all material respects with the applicable requirements of
the Registration Statement as promulgated by the SEC.
(b) The information
supplied by DCB for inclusion in the Applications will, at the time
each such document is filed with any Regulatory Authority and up to
and including the dates of any required regulatory approvals or
consents, as such Applications may be amended by subsequent
filings, be accurate in all material respects.
(c) No document or
certificate delivered to OLB by or for DCB pursuant to a
requirement of this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statement contained in such document or certificate in light of
the circumstances under which it was made not
misleading.
(a) Except as set forth
on DCB Disclosure Schedule
3.19, none of the DCB Companies is a party to any
transaction (including any loan or other credit accommodation but
excluding deposits in the ordinary course of business) with any of
DCB’s Affiliates, and all such transactions (i) were made in
the ordinary course of business, (ii) were made on substantially
the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with Persons who
are not related to or Affiliates of DCB, and (iii) did not involve
more than the normal risk of collectability or present other
unfavorable features.
(b) Except as set forth
in DCB Disclosure Schedule
3.19, as of the date hereof, no Credit Extension by any of
the DCB Companies to any DCB Subsidiary or Affiliate of DCB is
presently in material default or, during the three-year period
prior to the date of this Agreement, has been in material default
or has been restructured, modified or extended in order to avoid or
cure a default, except for rate modifications pursuant to its loan
modification policy that is applicable to all Persons. As of the
date hereof, to the Knowledge of DCB, principal and interest with
respect to any such Credit Extension will be paid when due and the
loan grade classification accorded such Credit Extension is
appropriate.
(a) Except as disclosed
on DCB Disclosure Schedule
3.20(a), all Credit Extensions reflected as assets in the
DCB Financials arose out of bona fide arm’s-length
transactions, were made for good and valuable consideration in the
ordinary course of business, and are being transferred to OLB
and/or Old Line with good and marketable title, free and clear of
any and all Liens and are evidenced by notes, agreements or other
evidences of indebtedness that are true, genuine, correct and what
they purport to be, and to the extent secured, are secured by valid
Liens that are legal, valid and binding obligations of the maker
thereof, enforceable in accordance with the respective terms
thereof, except as such enforcement may be limited by (i)
bankruptcy, insolvency, reorganization or other similar Laws or
equitable principles affecting the enforcement of creditors’
rights that have been perfected or (ii) the pledge of any Credit
Extension to the FHLB as collateral to secure the performance by
the DCB Companies of all obligations owed thereto. All Credit
Extensions reflected as assets in the DCB Financials were made in
accordance in all material respects with sound banking practices,
and, to the Knowledge of DCB, are not subject to any defenses,
setoffs or counterclaims, including without limitation any such as
are afforded by usury or truth in lending Laws, except as may be
provided by bankruptcy, insolvency or similar Laws or by general
principles of equity.
(b) To the Knowledge of
DCB, neither the terms of any Credit Extension by any of the DCB
Companies, any of the documentation for any such Credit Extension,
the manner in which any such Credit Extension has been administered
and serviced, nor the practices of approving or rejecting
applications for a Credit Extension by the DCB Companies, violate
in any material respect any Law applicable thereto, including,
without limitation, the Truth In Lending Act and the CFPB’s
Regulation Z, the CRA, the Equal Credit Opportunity Act, and any
Laws relating to consumer protection, installment sales and
usury.
(c) Except as disclosed
on DCB Disclosure Schedule
3.20(c), none of the agreements pursuant to which any of the
DCB Companies has sold Credit Extensions or pools of Credit
Extensions or participations in Credit Extensions or pools of
Credit Extensions contains any obligation to repurchase such Credit
Extensions or interests therein solely on account of a payment
default by the obligor on any such Credit Extension.
(d) DCB Disclosure Schedule 3.20(d)
sets forth a list of all Credit Extensions as of the date hereof by
DCB or Damascus to any directors, executive officers and principal
stockholders (as such terms are defined in the FRB’s
Regulation O) of any of the DCB Companies. There are no employee,
officer, director or other insider Credit Extensions by any of the
DCB Companies on which the borrower is paying a rate other than
that reflected in the note or other relevant credit or security
agreement or on which the borrower is paying a rate that was not in
compliance with Regulation O and all such Credit Extensions are and
were originated in compliance in all material respects with all
applicable laws.
(e) To the Knowledge of
DCB, no shares of DCB Common Stock were purchased with the proceeds
of a loan made by any of the DCB Companies.
(f) DCB Disclosure Schedule 3.20(f)
sets forth the aggregate amount of all overdrafts that have
occurred during each calendar month since December 31,
2015.
The
allowance for loan losses reflected in reports by the DCB Companies
to each Regulatory Authority has been and will be established in
compliance with the requirements of all regulatory criteria, and
the allowance for loan losses shown in the DCB Financials has been
and will be established and maintained in accordance with GAAP and
applicable Law and in a manner consistent with Damascus’
internal policies. The allowance for loan losses reflected in such
reports and the allowance for loan losses shown in the DCB
Financials, in the opinion of management, was or will be adequate
as of the dates thereof. DCB has disclosed to OLB on DCB Disclosure Schedule 3.21
all Credit Extensions (including participations) by and all
interest-bearing assets of the DCB Companies (a) that have been
accelerated during the past 12 months, (b) that have been
terminated during the past 12 months by reason of a default or
adverse development in the condition of the borrower or other
events or circumstances affecting the credit of the borrower, (c)
pursuant to which a borrower, customer or other party has notified
any of the DCB Companies during the past 12 months of, or has
asserted against any of the DCB Companies, in each case in writing,
any “lender liability” or similar claim, and, to the
Knowledge of DCB, each borrower, customer or other party that has
given any of the DCB Companies any oral notification of, or orally
asserted to or against any of the DCB Companies, any such claim,
(d) that are contractually past due 90 days or more in the payment
of principal and/or interest, (e) that are on non-accrual status,
(f) that are classified as “Other Loans Specially
Mentioned,” “Special Mention,”
“Substandard,” “Doubtful,”
“Loss,” “Classified,”
“Criticized,” “Credit Risk Assets,”
“Concerned Loans,” “Watch List” or words of
similar import by any DCB Company or any Regulatory Authority, (g)
to the Knowledge of DCB, as to which a reasonable doubt exists as
to the timely future collectability of principal and/or interest,
whether or not interest is still accruing or the loans are less
than 90 days past due, (h) where, during the past three years, the
interest rate terms have been reduced and/or the maturity dates
have been extended subsequent to the agreement under which the loan
was originally created due to concerns regarding the
borrower’s ability to pay in accordance with such initial
terms, (i) where a specific reserve allocation exists in connection
therewith, (j) that are required to be accounted for as a troubled
debt restructuring in accordance with Statement of Financial
Accounting Standards No. 15, (k) that were made pursuant to an
exception to policy, and (l) that, to the extent not already
disclosed pursuant to the foregoing items (a) through (k), have
been charged-off at any time since January 1, 2014, together with
true, complete and materially correct copies of reports containing
the principal amount and accrued and unpaid interest of each such
Credit Extension and interest-bearing asset and the identity of the
obligor thereunder, and DCB shall provide an updated DCB Disclosure Schedule 3.21
promptly to OLB after the end of each month after the date hereof
and on the Business Day prior to the Closing Date. The REO and
in-substance foreclosures included in any of Damascus’
non-performing assets are carried at fair value based on current
independent appraisals or current management
appraisals.
Damascus is the
only DCB Company that is subject to the Community Reinvestment Act
(12 U.S.C. §§ 2901 et
seq.) (the “CRA”). To the Knowledge
of DCB, Damascus is in compliance in all material respects with the
CRA and all regulations promulgated thereunder. DCB has supplied
OLB with a copy of Damascus’ current CRA Statement, all
letters and written comments received by Damascus since January 1,
2016 pertaining thereto and any responses by Damascus to such
comments. Damascus has a rating of “satisfactory” or
better as of its most recent CRA compliance examination and DCB and
Damascus have received no communication from any Regulatory
Authority that would lead DCB to believe that Damascus will not
receive a rating of “satisfactory” or better pursuant
to its next CRA compliance examination or that any Regulatory
Authority would seek to restrain, delay or prohibit any of the
Contemplated Transactions as a result of any act or omission of
Damascus under the CRA.
(a) To the Knowledge of
DCB, there do not exist any facts or circumstances that would cause
any of the DCB Companies: (i) to be deemed to be operating in
violation in any material respect of the Bank Secrecy Act, the USA
PATRIOT Act, any order issued with respect to anti-money laundering
by the U.S. Department of the Treasury’s Financial Crimes
Enforcement Network or Office of Foreign Assets Control, or any
other applicable anti-money laundering Law, as well as the
provisions of the Bank Secrecy Act/anti-money laundering program
adopted by the DCB Companies; or (ii) to be deemed not to be in
satisfactory compliance in any material respect with the applicable
privacy of customer information requirements contained in any
federal and state privacy Laws, including without limitation, in
Title V of the Xxxxx-Xxxxx-Xxxxxx Act of 1999 and the regulations
promulgated thereunder, as well as the provisions of the
information security program adopted by the DCB Companies. To the
Knowledge of DCB, no non-public customer information has been
disclosed to or accessed by an unauthorized third party in a manner
that would cause any of the DCB Companies to undertake any remedial
action. The board of directors or other governing body of each DCB
Company that is subject to Section 326 of the USA PATRIOT Act and
the regulations thereunder has adopted, and each such DCB Company
has implemented, a Bank Secrecy Act/anti-money laundering program
that contains adequate and appropriate customer identification
verification procedures that comply with Section 326 of the USA
PATRIOT Act and the regulations thereunder and such Bank Secrecy
Act/anti-money laundering program meets the requirements in all
material respects of Section 352 of the USA PATRIOT Act and the
regulations thereunder, and it has not received written notice from
any Regulatory Authority that such program (A) does not contain
adequate and appropriate customer identification verification
procedures, or (B) has been deemed ineffective. Each of the DCB
Companies has complied in all material respects with any
requirements to file reports and other necessary documents as
required by the USA PATRIOT Act and the regulations
thereunder.
(b) DCB Disclosure Schedule 3.23(b)
describes any event, circumstance or other occurrence, and the
remedial steps taken by any of the DCB Companies with respect
thereto, since January 1, 2011, that constituted either (i) a
“breach of the security of a system,” as such phrase is
defined in Section 14-3504(a) of the Commercial Law Article of the
Annotated Code of Maryland (the “Commercial Law Article”)
with respect to personal information maintained by any of the DCB
Companies, without regard to the application of Section 14-3507(b)
of the Commercial Law Article, or (ii) any other data breach with
respect to, or other unauthorized access to, the electronic
information and records of any of the DCB Companies, including,
without limitation, communications, regulatory correspondence and
reports, documents and data, information relating to products and
services, activities, strategies and plans, IT Assets, other
financial data, and identities of and information regarding sales,
customers, prospects, vendors, suppliers and personnel, including,
without limitation, passwords and other information technology
credentials.
To the
Knowledge of DCB, the officers, employees and agents of the DCB
Companies are now, and at all times in the past have been, in
compliance with all applicable Laws that relate to securities
activities conducted by such officers, employees and agents,
including Laws relating to licenses and permits.
(a) The minute books
and stock ledgers of the DCB Companies that have been made
available to OLB, its Representatives or its Affiliates constitute
all of the minute books and stock ledgers of the DCB Companies and
as of their dates contain a materially complete and accurate record
of all actions of their respective stockholders and boards of
directors (and any committees thereof) and have been maintained in
accordance with applicable Law. All personnel files, reports,
feasibility studies, environmental assessments and reports,
strategic planning documents, financial forecasts, deeds, leases,
lease files, land files, accounting and tax records and all other
records that relate to the business and properties of the DCB
Companies that have been requested by OLB have been made available
to OLB, its Representatives or its Affiliates, and are located at
the offices of the DCB Companies at 00000 Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxx 00000.
(b) Each of the DCB
Companies makes and keeps books, records and accounts that, in
reasonable detail and in all material respects, accurately and
fairly reflect its transactions in and dispositions of its assets
and securities, and all such books, records and accounts have been
maintained in accordance with applicable Law and accounting
requirements. Each of the DCB Companies maintains a system of
internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance
with management’s general or specific authorizations;
(ii) transactions are recorded as necessary (A) to permit
the preparation of financial statements and reports filed with any
Regulatory Authority in conformity with GAAP consistently applied
and any other criteria applicable to such statements, and
(B) to maintain accountability for assets and liabilities;
(iii) access to its assets and incurrence of liabilities is
permitted only in accordance with management’s general or
specific authorizations; (iv) the recorded accountability for
assets and liabilities is compared with existing assets and
liabilities at reasonable intervals and appropriate action is taken
with respect to any differences; and (v) extensions of credit and
other receivables are recorded accurately, and proper and adequate
procedures are implemented to effect the collection thereof on a
current and timely basis. None of the systems, controls, data or
information of the DCB Companies are recorded, stored, maintained,
operated or otherwise wholly or partly dependent on or held by any
means (including any electronic, mechanical or photographic
process, whether computerized or not) that (including all means of
access thereto and therefrom) are not under the exclusive ownership
and control of the DCB Companies or their accountants, except as
would not reasonably be expected to have a Material Adverse Effect.
Except as disclosed on DCB
Disclosure Schedule 3.25(b), to the Knowledge of DCB there
are no significant deficiencies or material weaknesses in the
design or operation of such internal accounting controls that are
reasonably likely to adversely affect in any material respect
DCB’s ability to record, process, summarize and report
financial information. To the Knowledge of DCB, there has occurred
no fraud, whether or not material, that involves management or
other employees who have a significant role in DCB’s internal
accounting controls.
Each of
the DCB Companies has good and marketable title to all securities
that it owns. None of the investment securities reflected in the
DCB Financials under the headings “Securities Available for
Sale” and “Securities Held to Maturity” and,
except as described in DCB
Disclosure Schedule 3.26 or otherwise provided for by this
Agreement, none of the investment securities that any of the DCB
Companies acquired after September 30, 2016, are subject to any
restrictions, whether contractual or statutory, that materially
impair such DCB Company’s ability to freely dispose of such
investment securities at any time, and such DCB Company was
permitted by applicable Law to acquire such investment securities
at the time they were acquired.
As of
the date hereof, DCB does not have any reason to believe that the
Merger will fail to qualify as a tax-free reorganization within the
meaning of Section 368(a) of the IRC. None of the DCB
Companies will take any action that will cause, cause any action to
be taken that will cause, or fail to take any action or fail to
cause any action to be taken if such failure to act will have the
effect of causing, the Merger not to qualify as a tax-free
reorganization within the meaning of Section 368(a) of the
IRC, nor have any of the DCB Companies taken, caused, agreed to
take or cause, or failed to take or cause any such
action.
DCB’s board
of directors has received an opinion (which, if initially rendered
verbally, has been or will be confirmed by a written opinion, dated
no later than the date of this Agreement) from RP Financial, LC. to
the effect that, as of the date thereof, and subject to the terms,
conditions and qualifications set forth therein, the consideration
to be received by the stockholders of DCB pursuant to the terms of
this Agreement is fair, from a financial point of view, to the
stockholders of DCB. Such opinion has not been amended or rescinded
as of the date of this Agreement.
All
proxy materials used in connection with the meetings of DCB’s
stockholders held in 2014, 2015 and 2016, if any, along with any
other form of correspondence between DCB and its stockholders
during those years, including, without limitation, any annual or
quarterly reports provided to stockholders, have been made
available to OLB.
Except
as disclosed in DCB
Disclosure Schedule 3.30 and provided for or contemplated in
this Agreement, since December 31, 2015:
(a) There has not been
any material transaction by any of the DCB Companies other than in
the ordinary course of business and in conformity with past
practices;
(b) There has not been
any acquisition or disposition by any of the DCB Companies of any
property or asset, whether real or personal, having a fair market
value, singularly or in the aggregate, in an amount greater than
$50,000, other than acquisitions or dispositions, including
acquisitions and dispositions of REO and investment securities,
made in the ordinary course of business;
(c) There has not been
any Lien on any of the properties or assets of the DCB Companies,
except to secure extensions of credit in the ordinary course of
business and in conformity with past practice (i.e., Liens on
assets to secure Federal Home Loan Bank, Federal Reserve Bank or
correspondent bank advances being deemed both in the ordinary
course of business and consistent with past
practices);
(d) There has not been
any increase in, or commitment to increase, the compensation
payable or to become payable to any of the officers, directors,
employees or agents of the DCB Companies, or any bonus payment,
other than routine increases made in the ordinary course or
business and consistent with past practice, or any stock option
award, restricted stock award or similar arrangement made to or
with any of such officers, directors, employees or
agents;
(e) None of the DCB
Companies has incurred, assumed or taken any property subject to
any liability in excess of $50,000, except for liabilities incurred
or assumed or property taken subsequent to December 31, 2015 in the
ordinary course of business and in conformity with past
practices;
(f) There has not been
any material alteration in the manner of keeping the books,
accounts, or records of the DCB Companies, or in the accounting
policies or practices therein reflected;
(g) There has not been
any elimination or addition of employee benefits;
(h) There has not been
any deferred routine maintenance of any DCB Real
Property;
(i) There has not been
any elimination of a reserve by any DCB Company where the liability
related to such reserve has remained;
(j) There has not been
any failure by a DCB Company to depreciate capital assets in
accordance with past practice or to eliminate capital assets that
are no longer used in its business; and
(k) There has not been
any extraordinary reduction or deferral by any of the DCB Companies
of ordinary or necessary expenses.
None of
the DCB Companies has any obligation or liability that is material
to its financial condition or operations or that, when combined
with all similar obligations or liabilities, would be material to
its financial condition or operations except (a) as disclosed in
the DCB Financials delivered to OLB prior to the date of this
Agreement, or (b) as contemplated under this Agreement. Except as
disclosed on DCB
Disclosure Schedule 3.31, since December 31,
2015, none of the DCB
Companies has incurred or paid any obligation or liability that
would be material to its financial condition or operations, except
for obligations that are (a) fully reflected or reserved against on
the most recent balance sheet contained in the DCB Financials or
(b) paid in connection with transactions made in the ordinary
course of its business consistent with past practice and applicable
Law.
Except
as described in DCB
Disclosure Schedule 3.33, none of Damascus’ deposits
is a “brokered deposit” as defined in 12 C.F.R. Section
337.6(a)(2).
All
interest rate swaps, caps, floors, option agreements, futures and
forward contracts and other similar risk management arrangements,
whether entered into for DCB’s own account or for the account
of one or more of DCB’s Subsidiaries or their customers (all
of which are set forth in DCB Disclosure Schedule 3.34),
were in all material respects entered into in compliance with all
applicable Laws, and with counterparties believed to be financially
responsible at the time; and to the Knowledge of DCB each of them
constitutes the valid and legally binding obligation of DCB or such
DCB Subsidiary, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditors’
rights or by general equity principles), and is in full force and
effect. Neither DCB nor any DCB Subsidiary, nor, to the Knowledge
of DCB, any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement in any material
respect.
Except
as described in DCB
Disclosure Schedule 3.35, none of the DCB Companies has
trust powers or acts as a trustee, agent, custodian, personal
representative, guardian, conservator or investment
adviser.
None of
the DCB Companies originates, maintains or administers credit card
accounts. Except as described in DCB Disclosure Schedule 3.36,
none of the DCB Companies provides, or has provided, merchant
credit card processing services to any merchants.
The DCB
Companies have taken all actions required to exempt OLB, the
Agreement, the Bank Merger Agreement, the Contemplated Transactions
and the Bank Merger from any provisions of an anti-takeover nature
contained in the DCB Organizational Documents, and the provisions
of any federal or state “anti-takeover,” “fair
price,” “moratorium,” “control share
acquisition” or similar Laws.
Attached hereto as
DCB Disclosure Schedule
3.38 is a list of holders of shares of the DCB Common Stock
complied and provided by Computershare, Inc., the registrar and
transfer agent in respect of the DCB Common Stock, containing their
names, addresses and number of shares held of record. To the
Knowledge of DCB, such stockholders’ list is complete and
accurate in all material respects.
Each
issued and outstanding Bank Certificate that has not been
surrendered pursuant to Section 4(b) of the Plan of Reorganization
constitutes and is deemed for all corporate purposes as evidence
and ownership of an equal number of shares of DCB Common Stock.
Each such Bank Certificate has been cancelled by Damascus and does
not entitle any holder thereof to exercise any rights as a
stockholder of Damascus.
The
schedules delivered by DCB pursuant to this Article III and
elsewhere in this Agreement, which have been delivered concurrently
with the execution and delivery of this Agreement, are true and
correct in all material respects and contain no untrue statements
of material fact or omit any material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE
IV.
OLB
represents and warrants to DCB, for itself and with respect to and
on behalf of each of the OLB Subsidiaries (to the extent
applicable), that the statements contained in this Article IV (and
as reflected on the OLB Disclosure Schedules) are true and correct
as of the date of this Agreement and will be true and correct as of
the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout
this Article IV, except that those representations and warranties
that by their terms speak as of the date of this Agreement or some
other date shall be true and correct as of such date); provided,
however, that no representation or warranty of OLB contained in
this Article IV shall be deemed untrue or incorrect, and OLB shall
not be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, circumstance or event
unless such fact, circumstance or event, individually or taken
together with all other facts, circumstances or events inconsistent
with any paragraph of Article IV, has had or is reasonably expected
to have a Material Adverse Effect on OLB, disregarding for these
purposes (i) any qualification or exception for, or reference to,
materiality in any such representation or warranty and (ii) any use
of the terms “material,” “materially,”
“in all material respects,” “Material Adverse
Effect” or similar terms or phrases in any such
representation or warranty; provided, however, that the foregoing
standard shall not apply to representations and warranties
contained in Sections 4.1, 4.2, 4.3, 4.6, 4.14, 4.17 and 4.25,
which shall be deemed untrue, incorrect and breached if they are
not true and correct in all material respects (the
“Article IV
Standard”).
OLB has
made a good faith effort to ensure that the disclosure on each
schedule of the OLB Disclosure Schedules corresponds to the section
referenced herein. For purposes of the OLB Disclosure Schedules,
however, any item disclosed on any schedule therein is deemed to be
fully disclosed with respect to all schedules under which such item
may be relevant as and to the extent that it is reasonably clear on
the face of such schedule that such item applies to such other
schedule.
(a) OLB is a
corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Maryland. OLB is a bank
holding company duly registered under the BHC Act. OLB has the full
corporate power and lawful authority to carry on its business and
operations as now being conducted and to own or lease all of its
properties and assets as presently owned or leased. OLB is duly
licensed, registered or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or
leased by it makes such licensing, registration or qualification
necessary, except where the failure to be so licensed, registered
or qualified would not have a Material Adverse Effect on OLB, and
all such licenses, registrations and qualifications are in full
force and effect in all material respects. OLB engages in
activities and holds properties only of the types permitted to bank
holding companies by the BHC Act and the rules and regulations
promulgated thereunder.
(b) Old Line is a trust
company duly organized, validly existing and in good standing under
the laws of the State of Maryland. Old Line has the full corporate
power and lawful authority to carry on its business and operations
as now being conducted and to own or lease all of its properties
and assets as presently owned or leased. Old Line is duly licensed,
registered or qualified to do business in each jurisdiction in
which the nature of the business conducted by it or the character
or location of the properties and assets owned or leased by it
makes such licensing, registration or qualification necessary,
except where the failure to be so licensed, registered or qualified
would not have a Material Adverse Effect on OLB, and all such
licenses, registrations and qualifications are in full force and
effect in all material respects.
(c) The deposits of Old
Line are insured by the FDIC to the extent provided in the Federal
Deposit Insurance Act, and all premiums and assessments required to
be paid in connection therewith have been paid when
due.
(d) OLB Disclosure Schedule 4.1(d)
contains a complete and accurate list of all OLB Subsidiaries. Each
OLB Subsidiary is duly organized, validly existing and in good
standing under the laws of the state of its organization and has
the full corporate power and lawful authority to carry on its
business and operations as now being conducted and to own or lease
all of its properties and assets as presently owned or leased. Each
OLB Subsidiary is duly licensed, registered or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing, registration or
qualification necessary, except where the failure to be so
licensed, registered or qualified would not have a Material Adverse
Effect on OLB, and all such licenses, registrations and
qualifications are in full force and effect in all material
respects. Other than shares of capital stock of the OLB
Subsidiaries listed on OLB
Disclosure Schedule 4.1(d), OLB does not own or control,
directly or indirectly, or have the right to acquire directly or
indirectly, an equity interest in any Entity.
(e) The respective
minute books of OLB and each OLB Subsidiary accurately reflect, in
all material respects, all material actions of their respective
owners and governing bodies, including committees, in each case in
accordance with the ordinary business practice of OLB or the
applicable OLB Subsidiary.
(f) Prior to the date
of this Agreement, OLB has delivered or made available to DCB true
and correct copies of the articles of incorporation and bylaws of
OLB, and the charter documents and bylaws, operating agreement
and/or other governing instrument of each OLB Subsidiary and each
as in effect on the date hereof (collectively, the
“OLB Governing
Documents”).
(a) The authorized
capital stock of OLB consists of (i) 25,000,000 shares of Common
Stock, par value $0.01 per share (“OLB Common Stock”), of
which 10,915,914.5 shares are duly authorized, validly issued and
outstanding, and (ii) 1,000,000 shares of preferred stock, par
value $0.01 per share (“OLB Preferred Stock”),
none of which are outstanding, in each case on the date hereof. As
of the date of this Agreement, there are no bonds, debentures,
notes or other indebtedness of OLB or any OLB Subsidiary having the
right to vote on any matters on which stockholders of OLB may vote.
All of the issued and outstanding shares of OLB Common Stock are
fully paid and nonassessable, free of preemptive rights, except as
may be defined in OLB’s articles of incorporation, and were
not issued in violation of the preemptive rights of any Person or
in violation of any applicable Laws. Except pursuant to this
Agreement or as set forth in OLB Disclosure Schedule 4.2(a),
OLB has not issued nor is OLB or any OLB Subsidiary bound by any
subscription, call, commitment, agreement or other Right of any
character relating to the purchase, sale or issuance of, or right
to receive dividends or other distributions on, any shares of OLB
Common Stock, OLB Preferred Stock or any other security of OLB or
any securities representing the right to vote, purchase or
otherwise receive any shares of OLB Common Stock, OLB Preferred
Stock or any other security of OLB. The shares of OLB Common Stock
to be issued pursuant to the Merger have been duly authorized and,
when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid, nonassessable and
free of preemptive rights.
(b) OLB owns, directly
or indirectly, all of the capital stock or other equity ownership
interests of the OLB Subsidiaries, free and clear of any Liens,
agreements and restrictions of any kind or nature, except for those
Subsidiaries identified in OLB Disclosure Schedule 4.2(b),
and all of such shares or equity ownership interests are duly
authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to
the ownership thereof.
(a) OLB has full
corporate power and authority to execute and deliver this Agreement
and, subject to the receipt of all consents, waivers and approvals
described in OLB
Disclosure Schedule 4.4, to consummate the Contemplated
Transactions and to otherwise comply with its obligations under
this Agreement. The execution and delivery of this Agreement by OLB
and the consummation by OLB of the Contemplated Transactions, up to
and including the Merger, have been duly and validly authorized by
the board of directors of OLB and no other corporate proceedings on
the part of OLB are necessary to consummate the Contemplated
Transactions. This Agreement has been duly and validly executed and
delivered by OLB and, assuming the due authorization, execution and
delivery of this Agreement by DCB, constitutes the valid and
binding obligation of OLB, enforceable against OLB in accordance
with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally and
subject, as to enforceability, to general principles of
equity.
(b) The execution and
delivery of this Agreement by OLB, the consummation of the
Contemplated Transactions and the compliance by OLB with any of the
terms or provisions hereof, subject to the receipt of all consents,
waivers and approvals described in OLB Disclosure Schedule 4.4,
OLB’s and DCB’s compliance with any conditions
contained herein, and compliance by OLB or any OLB Subsidiary with
any of the terms or provisions hereof, do not and will
not:
(i) Conflict with, or
result in a breach of, any provision of the OLB Governing
Documents;
(ii) Violate any Law
applicable to OLB or any OLB Subsidiary or any of their respective
properties or assets, except where such violation would not have a
Material Adverse Effect; or
(iii) Except as described
in OLB Disclosure Schedule
4.3(b) or pursuant to which consent or notification is
required as set forth in OLB Disclosure Schedule 4.4,
violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event that, with notice or lapse of
time, or both, would constitute a default) under, result in the
termination of, or acceleration of, the performance required by, or
result in a right of termination or acceleration or the creation of
any Lien upon any of the properties or assets of OLB or any OLB
Subsidiary under any of the terms or conditions of any note, bond,
mortgage, indenture, license, lease, agreement, commitment or other
instrument or obligation to which OLB or any OLB Subsidiary is a
party, or by which they or any of their respective properties or
assets may be bound or affected, except where such termination,
acceleration or creation would not have a Material Adverse Effect
on OLB.
(c) Old Line has all
requisite corporate power and authority to execute and deliver the
Bank Merger Agreement, and, subject to the receipt of all consents
described in OLB
Disclosure Schedule 4.4, to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger
Agreement and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the board of
directors of Old Line and, other than the approval of the Bank
Merger Agreement by OLB as the sole stockholder of Old Line as
required by Law, no further corporate proceedings of Old Line are
needed to execute and deliver the Bank Merger Agreement and
consummate the transactions contemplated thereby. OLB, as the sole
stockholder of Old Line, shall promptly hereafter approve the Bank
Merger Agreement, and the Bank Merger Agreement will be duly
executed by Old Line on the date of this Agreement. The Bank Merger
Agreement has been duly authorized and, upon due authorization,
execution and delivery by Old Line, will be a legal, valid and
binding agreement of Old Line enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
creditors’ rights generally and general equitable principles.
At the Closing, all other agreements, documents and instruments to
be executed and delivered by Old Line that are referred to in the
Bank Merger Agreement, if any, will have been duly executed and
delivered by Old Line and, assuming due authorization, execution
and delivery by the counterparties thereto, will constitute the
legal, valid and binding obligations of Old Line, enforceable
against Old Line in accordance with their respective terms and
conditions, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
creditors’ rights generally and by general equitable
principles.
Except
as described in OLB
Disclosure Schedule 4.4, no consents, waivers or approvals
of, or filings or registrations with, any Regulatory Authorities or
other third parties are necessary in connection with the execution
and delivery of this Agreement by OLB or the consummation of the
Contemplated Transactions by OLB. OLB has no reason to believe that
it will not be able to obtain all requisite consents, waivers or
approvals from the Regulatory Authorities or any third party in
order to consummate the Contemplated Transactions on a timely
basis. To the Knowledge of OLB, no fact or circumstance exists,
including any possible other transaction pending or under
consideration by OLB or any OLB Company, that would (a) reasonably
be expected to prevent or delay in any material respect, any
filings or registrations with, or consents, waivers or approvals
required from, any Regulatory Authority, or (b) cause a Regulatory
Authority acting pursuant to applicable Law to seek to prohibit or
materially delay consummation of the Contemplated Transactions or
impose a Burdensome Condition.
(a) OLB has previously
delivered or made available the OLB Financials to DCB, except those
pertaining to periods commencing after September 30, 2016, which it
will deliver or make available by each respective delivery date as
required by this Agreement. The delivered or made available OLB
Financials fairly present, in all material respects, the
consolidated financial position, results of operations, changes in
stockholders’ equity and cash flows of OLB as of and for the
periods ended on the dates thereof. The delivered or made available
OLB Financials comply in all material respects with applicable
accounting and regulatory requirements and have been prepared in
accordance with GAAP consistently applied, except for (i) omission
of the notes from the financial statements, applicable to any
interim period, and (ii) with respect to any interim period, normal
year-end adjustments and notes thereto. Xxxxx Xxxxxx Xxxxxxx LLP
has not resigned (or informed OLB that it intends to resign) or
been dismissed as independent public accountants of OLB as a result
of or in connection with any disagreements with OLB on a matter of
accounting principles or practices, financial statement disclosure
or auditing scope or procedure.
(b) OLB did not, as of
the date of the OLB Financials or any subsequent date, have any
liabilities, obligations or loss contingencies of any nature,
whether absolute, accrued, contingent or otherwise, that are not
fully reflected or reserved against in the balance sheets included
in the OLB Financials at the date of such balance sheets that would
have been required to be reflected therein in accordance with GAAP
consistently applied or fully disclosed in a note thereto, except
for liabilities, obligations and loss contingencies that are not
material in the aggregate and that are incurred in the ordinary
course of business, consistent with past practice, and except for
liabilities, obligations and loss contingencies that are within the
subject matter of a specific representation and warranty herein or
that have not had a Material Adverse Effect and subject, in the
case of any unaudited statements, to normal recurring audit
adjustments and the absence of notes thereto.
Neither
OLB nor any OLB Subsidiary has suffered any adverse change in its
assets (including loan portfolio), liabilities (whether absolute,
accrued, contingent or otherwise), liquidity, net worth, property,
financial condition or results of operations, or any damage,
destruction or loss, whether or not covered by insurance, since
December 31, 2015, that in the aggregate has had or is reasonably
likely to have a Material Adverse Effect on the OLB Companies taken
as a whole.
(a) Except as disclosed
on OLB Disclosure Schedule
4.7(a), all OLB Returns required by applicable Law to have
been filed with any Taxing Authority by, or on behalf of, each of
the OLB Companies have been filed on a timely basis in accordance
with all applicable Laws, and such OLB Returns are true, complete
and correct in all material respects, or requests for extensions to
file the OLB Returns have been timely filed, granted and have not
expired, except to the extent that such failures to file, to be
complete or correct or to have extensions granted that remain in
effect individually or in the aggregate would not have a Material
Adverse Effect on OLB. All OLB Taxes shown to be due and payable on
the OLB Returns or on subsequent assessments with respect thereto
have been paid in full or adequate reserves have been established
in the OLB Financials for the payment of such OLB Taxes, except
where any such failure to pay or establish adequate reserves, in
the aggregate, has not had, and is not reasonably likely to have, a
Material Adverse Effect on the OLB Companies. Each of the OLB
Companies has timely withheld and paid over all OLB Taxes required
to have been withheld and paid over by it, and complied with all
information reporting and backup withholding requirements,
including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor,
independent contractor or other third party. There are no Liens on
any of the assets of the OLB Companies with respect to OLB Taxes,
other than Liens for OLB Taxes not yet due and
payable.
(b) Except as disclosed
on OLB Disclosure Schedule
4.7(b), no deficiencies for OLB Taxes have been claimed,
proposed or assessed, with notice to any of the OLB Companies, by
any taxing or other governmental authority against the OLB
Companies that have not been settled, closed or reached a final
determination, or that have not been adequately reserved for in the
OLB Financials, except for deficiencies that, individually or in
the aggregate, have not had, and are not reasonably likely to have,
a Material Adverse Effect on OLB. There are no pending audits
relating to any OLB Tax liability of which any of the OLB Companies
has received written notice. Except as disclosed on OLB Disclosure Schedule 4.7(b),
none of the OLB Companies is a party to any action or proceeding
for assessment or collection of OLB Taxes, nor have such events
been asserted or, to the Knowledge of OLB, threatened against any
of the OLB Companies or any of their assets. No waiver or extension
of any statute of limitations relating to OLB Taxes is in effect
with respect to the OLB Companies. No power of attorney has been
executed by any of the OLB Companies with respect to any OLB Tax
matter that is currently in force.
(c) As used in this
Agreement, the term “OLB Taxes” shall mean all
taxes, however denominated, including any interest, penalties or
other additions to tax that may become payable in respect thereof,
imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the
generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and state
income taxes), real property gains taxes, payroll and employee
withholding taxes, unemployment insurance taxes, social security
taxes, sales and use taxes, ad valorem taxes, excise taxes,
franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, and other obligations of the
same or of a similar nature to any of the foregoing, which any of
the OLB Companies is required to pay, withhold or collect. As used
in this Agreement, the term “OLB Returns” shall mean
all reports, estimates, declarations of estimated tax, information
statements and returns relating to, or required to be filed in
connection with, any OLB Taxes, including information returns or
reports with respect to backup withholding and other payments to
third parties.
Except
as described in OLB
Disclosure Schedule 4.8 or in the SEC Reports, neither OLB
nor any OLB Subsidiary is a party to or subject to:
(a) Any collective
bargaining agreement with any labor union relating to its
employees;
(b) Any agreement that
by its terms limits its payment of dividends;
(c) Any contract, other
than this Agreement, that restricts or prohibits it from engaging
in any type of business permissible under applicable
Law;
(d) any agreement
(other than this Agreement), contract, arrangement, commitment or
understanding (whether written or oral) that restricts or limits in
any material way the conduct of its business (it being understood
that any non-compete, non-solicitation or similar provision shall
be deemed material);
(e) Any contract, the
terms of which will require, on account of this Agreement or any of
the Contemplated Transactions, the payment, individually or when
aggregated with all other similar contracts, of a material
financial fee or penalty by OLB or an Old Line Company;
and
(f) Any contract or
arrangement not disclosed pursuant to the other paragraphs of this
Section 4.8 that constitutes a “material contract” as
defined in Item 601(b)(10) of Regulation S-K of the
SEC.
(a) Each of the OLB
Companies has good and marketable title to all material assets and
properties owned by it in the conduct of its businesses, whether
such assets and properties are real or personal, tangible or
intangible, including assets and property reflected in the balance
sheets contained in the OLB Financials or acquired subsequent
thereto, subject to no Liens, except:
(i) Those items that
secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to the FHLB,
inter-bank credit facilities or reverse repurchase agreements and
that are described in OLB
Disclosure Schedule 4.9(a) or permitted under Article V
hereof;
(ii) Mechanics liens and
similar liens for labor, materials, services or supplies provided
for such property and incurred in the ordinary course of business
for amounts not yet delinquent or that are being contested in good
faith;
(iii) Statutory Liens for
amounts not yet delinquent or that are being contested in good
faith;
(iv) Liens for current
OLB Taxes not yet due and payable;
(v) Pledges to secure
deposits and other Liens incurred in the ordinary course of the
business of banking;
(vi) Liens,
imperfections of title, easements and other defects of title that
are not reasonably likely to have a Material Adverse
Effect;
(vii) With respect to
personal property reflected in the balance sheets contained in the
OLB Financials, (A) dispositions and encumbrances for adequate
consideration in the ordinary course of business since the date of
such balance sheets and/or (B) dispositions of obsolete personal
property since the date of such balance sheets;
(viii) Those items that
are reflected as liabilities in the OLB Financials;
and
(ix) Items of personal
property that are held in any fiduciary or agency
capacity.
(b) With respect to
material items of real and personal property that are used in the
conduct of its business and leased from other Persons, each of the
OLB Companies has the right under valid and existing leases to use
such real and personal property in all material respects as
presently occupied and used.
(c) Each of the OLB
Companies currently maintains insurance with reputable insurers
against such risks and in such amounts as the management of OLB has
determined to be prudent for such OLB Company’s operations,
and, to the Knowledge of OLB, such insurance is similar in scope
and coverage in all material respects to insurance maintained by
other similarly-situated businesses. Each of OLB and each OLB
Subsidiary is in compliance with its insurance policies, is not in
default under any of the terms thereof and has made accurate
statements on any insurance renewal application. Each such policy
is in full force and effect and, except for policies insuring
against potential liabilities of officers, directors and employees
of OLB and the OLB Subsidiaries, OLB or the relevant OLB Subsidiary
is the sole beneficiary of such policies. All premiums and other
payments due under any such policy have been paid, and all claims
thereunder have been filed in a due and timely
fashion.
(d) None of the OLB
Companies has received notice from any insurance carrier
that:
(i) The insurance will
be cancelled or that coverage thereunder will be reduced or
eliminated; or
(ii) Premium costs with
respect to such insurance will be substantially
increased.
(e) The OLB Companies
maintain such fidelity bonds and errors and omissions insurance as
may be customary or required under applicable Laws.
Except
as set forth in OLB
Disclosure Schedule 4.10, there are no legal,
quasi-judicial, administrative, arbitration or other proceedings,
claims (whether asserted or unasserted), actions or governmental
investigations or inquiries of any kind or nature now pending or,
to the Knowledge of OLB, threatened, before any court,
administrative, regulatory, arbitration or similar body in any
manner against any of the OLB Companies or any of their properties,
and to the Knowledge of OLB there are no facts that reasonably
could be expected to be the basis for any such suit, arbitration,
other proceeding, claim, action, investigation or inquiry. To the
Knowledge of OLB, no pending or threatened suit, arbitration,
proceeding claim, action, investigation or inquiry described in
OLB Disclosure Schedule
4.10 could reasonably be expected to (a) have a Material
Adverse Effect, (b) question the validity of any action taken or to
be taken in connection with this Agreement or the Contemplated
Transactions, or (c) materially impair or delay the ability of the
OLB Companies to perform their obligations under this Agreement.
Except as disclosed on OLB
Disclosure Schedule 4.10, none of the OLB Companies is in
default with respect to any judgment, order, writ, injunction,
decree, award, rule, or regulation of any court, arbitrator or
Regulatory Authority.
Except
as disclosed on OLB
Disclosure Schedule 4.11:
(a) Each of the OLB
Companies conducts its business in compliance with all Laws
applicable to it, its properties, assets and deposits, its
business, and its conduct of business and its relationship with its
employees conducting such business, except where noncompliance
would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect;
(b) Each of the OLB
Companies has all material permits, licenses, authorizations,
orders and approvals of all Regulatory Authorities that are
required in order to permit it to own or lease its properties and
carry on its business as it is presently conducted; all such
permits, licenses, authorizations, orders and approvals are in full
force and effect, and no suspension or cancellation of any of them
is, to the Knowledge of OLB, threatened, and to the Knowledge of
OLB no suspension or cancellation of any such permit, license,
certificate, order or approval is threatened or will result from
the consummation of the Contemplated Transactions, subject to
obtaining the receipt of all requisite approvals or consents from
the Regulatory Authorities in order to consummate the Contemplated
Transactions. None of the OLB Companies have been given notice or
been charged with any violation of any law, ordinance, regulation,
order, writ, rule, decree or condition to approval of any
Regulatory Authority that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse
Effect;
(c) Since January 1,
2011, each of the OLB Companies has timely filed all reports,
forms, schedules, registrations, statements and other documents,
together with any amendments required to be made with respect
thereto, that it was required by Law to file with any Regulatory
Authority (collectively, the “OLB Reports”), and has
paid all fees and assessments due and payable in connection
therewith, and each of such filings complied in all material
respects with all Laws under which it was filed (or was amended so
as to be in compliance promptly following discovery of such
noncompliance) and, to the extent such filings contain financial
information, have been prepared in all material respects in
accordance with applicable regulatory accounting principles and
practices and, in the case of SEC reports, GAAP, throughout the
periods covered by such filing, except to the extent failure to
timely file would not, individually or in the aggregate, be
expected to have a Material Adverse Effect; none of the OLB Reports
when filed with the SEC (the “SEC Reports”), and if
amended prior to the date hereof, as of the date of such amendment,
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading, and there are no outstanding
comments from or unresolved issues raised by the SEC, as
applicable, with respect to any of the SEC Reports; none of the OLB
Subsidiaries is required to file periodic reports pursuant to
Sections 13 or 15(d) of the Exchange Act;
(d) No Regulatory
Authority has initiated any proceeding or, to the Knowledge of OLB,
investigation into the business or operations of the OLB Companies
that has not been resolved;
(e) Since January 1,
2014, none of the OLB Companies has received any notification or
communication from any Regulatory Authority:
(i) Asserting that it
is not in substantial compliance with any Law that such Regulatory
Authority enforces, unless such assertion has been waived,
withdrawn or otherwise resolved;
(ii) Threatening to
revoke any license, franchise, permit or governmental authorization
that is material to it; or
(iii) Requiring or
threatening to require it, or indicating that it may be required,
to enter into a cease and desist order, consent agreement, other
agreement or memorandum of understanding, or any other agreement
directing, restricting or limiting, or purporting to direct,
restrict or limit, in any manner its operations, including without
limitation any restriction on the payment of dividends (any such
notice, communication, memorandum, agreement or order described in
this Section 4.11(e)(iii) and addressed specifically to an OLB
Company herein referred to as an “OLB Regulatory
Agreement”);
(f) None of the OLB
Companies has received, consented to or entered into any OLB
Regulatory Agreement that is currently in effect, nor has any OLB
Company been advised, since January 1, 2013 by any Regulatory
Authority that it is considering issuing, initiating, ordering or
requesting any OLB Regulatory Agreement that has not already been
issued, initiated, ordered or requested;
(g) There is no
unresolved violation, criticism or exception by any Regulatory
Authority with respect to any OLB Regulatory Agreement, except to
the extent permitted by such OLB Regulatory Agreement;
(h) There is no
injunction, award, order, judgment, settlement, decree or
regulatory restriction imposed upon or entered into by any of the
OLB Companies or upon their assets;
(i) OLB has designed,
implemented and maintained disclosure controls and procedures
(within the meaning of Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) to ensure that material information relating to the
OLB Companies is made known to the management of OLB by others
within those entities as appropriate to allow timely decisions
regarding required disclosure and to make the certifications
required by the Exchange Act with respect to the OLB Reports;
and
(j) Since January 1,
2013, (x) no OLB Company nor, to the Knowledge of OLB, any
director, officer, employee, auditor, accountant or other
Representative of any OLB Company, has received or otherwise had or
obtained knowledge of any material complaint, allegation, assertion
or claim, whether written or oral, regarding its accounting or
auditing practices, procedures, methodologies or methods or its
internal accounting controls, including any material complaint,
allegation, assertion or claim that it has engaged in questionable
accounting or auditing practices, and (y) no attorney representing
any OLB Company, whether or not employed by it, has reported
evidence of a material violation of Securities Laws, breach of
fiduciary duty or similar violation by it or any of officers,
directors, employees or agents to its board of directors or any
committee thereof or to any director or officer.
There
are no labor or collective bargaining agreements to which any of
the OLB Companies is a party. There is no union organizing effort
pending or, to the Knowledge of OLB, threatened, against any of the
OLB Companies. There is no labor strike, labor dispute (other than
routine employee grievances that are not related to union
employees), work slowdown, stoppage or lockout pending or, to the
Knowledge of OLB, threatened, against any of the OLB Companies.
There are no organizational efforts with respect to the formation
of a collective bargaining unit presently being made or, to the
Knowledge of OLB, threatened, involving employees of any of the OLB
Companies. No arbitration or proceeding asserting that any of the
OLB Companies has committed an unfair labor practice (within the
meaning of the National Labor Relations Act of 1935) or seeking to
compel any of the OLB Companies to bargain with any labor
organization as to wages or conditions of employment is pending or,
to the Knowledge of OLB, threatened, with respect to any of the OLB
Companies before the National Labor Relations Board, the Equal
Employment Opportunity Commission or any other Regulatory Authority
(other than routine employee grievances that are not related to
union employees). Each of the OLB Companies is in compliance in all
material respects with all applicable Laws respecting employment
and employment practices, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor practice.
None of the OLB Companies has made any commitments to others
inconsistent with or in derogation of any of the foregoing. Except
as described in OLB
Disclosure Schedule 4.12, there are no pending or, to the
Knowledge of OLB, threatened, claims or suits against any of the
OLB Companies under any applicable labor or employment Law or
brought or made by a current or former employee or applicant for
employment.
(a) OLB has set forth
in OLB Disclosure Schedule
4.13(a) a complete and accurate list of the OLB Benefit
Plans and made available to DCB a copy of all OLB Benefit
Plans.
(b) The OLB Companies
have paid in full any insurance premiums due to the PBGC with
respect to any defined benefit pension plans for the six years
prior to, and through, the Effective Date. Except as disclosed in
OLB Disclosure Schedule
4.13(b), no pension plan (within the meaning of ERISA
Section 3(2)) maintained or contributed to by the OLB
Companies has been terminated or is under notice from the PBGC of
any threat of termination under the procedures of the PBGC. To the
Knowledge of OLB, no circumstance has occurred for which any
reportable event under ERISA Section 4043(b) has been or would
be required that has not been reported or with respect to which the
notice requirement has not been waived. Except as set forth on
OLB Disclosure Schedule
4.13(b), no OLB Benefit Plan is subject to IRC Section 412
or Title IV of ERISA, and as of the Effective Date, to the
Knowledge of OLB, no condition exists that will result in any
liability to the PBGC or on account of the failure to comply with
any such provisions in connection with any such OLB Benefit
Plan.
(c) To the Knowledge of
OLB, none of the OLB Companies has ever contributed to or otherwise
incurred any liability with respect to a multi-employer plan
(within the meaning of ERISA Section 3(37)).
(d) Each OLB Benefit
Plan complies in all material respects with the applicable
requirements of ERISA, the IRC, the Patient Protection and
Affordable Care Act of 2010, and any other applicable Laws
governing the OLB Benefit Plan, and each OLB Benefit Plan has at
all times been administered substantially in all material respects
in accordance with all requirements of applicable law. To the
Knowledge of OLB, each of the pension plans adopted by the OLB
Companies that is intended to be qualified under
Section 401(a) of the IRC and, to the Knowledge of OLB, its
trust, is exempt from federal income tax under IRC Section 501(a)
has received, or is entitled to rely upon, a favorable
determination letter (or opinion letter for a prototype plan) from
the IRS, and to the Knowledge of OLB there are no circumstances
that will or could result in revocation of, or inability to
continue to rely upon, any such favorable determination letter or
opinion letter. Without limiting the foregoing, to the Knowledge of
OLB, the following are true:
(i) Each OLB Benefit
Plan that is a defined benefit pension plan subject to IRC Section
412 or Title IV of ERISA as of the most recent actuarial valuation
has an AFTAP determined under IRC Section 430 and 436 that exceeds
the AFTAP level that would impose any funding-based limit on such
plan under IRC Section 436;
(ii) Each OLB Benefit
Plan that is a defined contribution pension plan that is intended
to be qualified under IRC Section 401(a) has had all contributions
made to the plan trust in accordance with the terms of the plan on
a timely basis under the IRC and ERISA;
(iii) With respect to
each OLB Benefit Plan, to the Knowledge of OLB there is no
occurrence or contract that would constitute any “prohibited
transaction” within the meaning of Section 4975(c) of
the IRC or Section 406 of ERISA, which transaction is not
exempt under applicable Law, including Section 4975(d) of the
IRC or Section 408 of ERISA;
(iv) Except as disclosed
in OLB Disclosure Schedule
4.13(d)(iv), no OLB Benefit Plan is an Employee Stock
Ownership Plan as defined in Section 4975(e)(7) of the
IRC;
(v) No OLB Benefit Plan
is a Qualified Foreign Plan as the term is defined in
Section 404A of the IRC and no OLB Benefit Plan or any related
trust assets or agreements are subject to the laws of any
jurisdiction other than the United States of America or any state,
county or municipality of the United States;
(vi) None of the welfare
plans adopted by the OLB Companies is a Voluntary Employees’
Beneficiary Association as defined in Section 501(c)(9) of the
IRC;
(vii) All of the welfare
plans adopted by the OLB Companies and their related trusts comply
in all material respects with and have been administered in
substantial compliance with (A) Section 4980B of the IRC and
Sections 601 through 609 of ERISA and all U.S. Department of the
Treasury and U.S. Department of Labor regulations issued
thereunder, respectively, (B) the Health Insurance Portability and
Accountability Act of 1996, (C) the applicable provisions of the
Patient Protection and Affordable Care Act of 2010, and (D) the
U.S. Department of Labor regulations issued with respect to such
welfare benefit plans; and
(viii) With respect to
each OLB Benefit Plan, OLB or any OLB ERISA Affiliate has the
authority to amend or terminate such OLB Benefit Plan at any time,
subject to the applicable requirements of ERISA and the IRC and the
provisions of the OLB Benefit Plan.
(e) There is no
existing or, to the Knowledge of OLB, contemplated, audit of any
OLB Benefit Plan by the IRS, the U.S. Department of Labor, the
PBGC, and Regulatory Authority or any other governmental authority.
In addition, there are no pending or, to the Knowledge of OLB,
threatened material claims by, on behalf of or with respect to any
OLB Benefit Plan, or by or on behalf of any individual participant
or beneficiary of any OLB Benefit Plan, alleging any violation of
ERISA or any other applicable Laws, or claiming benefits (other
than claims for benefits made in the ordinary course of business),
nor, to the Knowledge of OLB, is there any basis likely to enable
such claim to prevail.
(f) Except as disclosed
on OLB Disclosure Schedule
4.13(f), (i) no payment contemplated or required by or under
any OLB Benefit Plan and employment-related agreement would in the
aggregate constitute excess parachute payments as defined in
Section 280G of the IRC (without regard to subsection (b)(4)
thereof), (ii) no OLB Benefit Plan provides for the gross-up or
reimbursement of Taxes under Sections 280G, 4999 or 409A of the
IRC, and (iii) neither the execution and delivery of this Agreement
nor the consummation of Contemplated Transactions will (either
alone or in conjunction with any other event) result in, cause the
vesting, exercisability or delivery of, or increase the amount or
value of, any payment, right or other benefit to any current or
former employee, officer, director or other service provider of any
of the OLB Companies.
(g) None of the OLB
Companies is a record-keeper, administrator, custodian, fiduciary,
trustee or otherwise acts on behalf of any plan, program, or
arrangement subject to ERISA (other than any OLB Benefit Plan).
Each OLB Benefit Plan (including employment agreements or other
compensation arrangements) that constitutes a nonqualified deferred
compensation plan within the meaning of Section 409A of the IRC has
been written, executed and operated in compliance with Section 409A
of the IRC and the regulations thereunder or an applicable
exemption therefrom.
Other
than Ambassador Financial Group, Inc., none of the OLB Companies
and, to the Knowledge of OLB, no officer, director, employee,
independent contractor or agent of any OLB Company on its behalf,
has employed any broker, finder, investment banker or financial
advisor, or incurred any liability for any fees or commissions to
any broker, finder, investment banker or financial advisor, in
connection with the Contemplated Transactions.
(a) No deed or lease
with respect to any real property owned, leased or operated by the
OLB Companies, including but not limited to all REO (the
“OLB Real
Property”) contains any restrictive covenant that
materially restricts the use, transferability or value of such OLB
Real Property. Each lease with respect to any OLB Real Property is
a legal, valid and binding obligation of the parties thereto
enforceable in accordance with its terms (except as may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the
availability of equitable remedies), and is in full force and
effect. There are no existing defaults by the OLB Companies or, to
the Knowledge of OLB, the other party, under any lease with respect
to any OLB Real Property and, to the Knowledge of OLB, there are no
allegations or assertions of such defaults by any party under any
lease with respect to any OLB Real Property or any events that,
with notice or lapse of time or the happening or occurrence of any
other event, would constitute a default under any lease with
respect to any OLB Real Property, except where the existence of
such defaults, individually or in the aggregate, has not had, and
is not reasonably likely to have, a Material Adverse
Effect.
(b) To the Knowledge of
OLB, none of the buildings and structures located on any OLB Real
Property, nor any improvements or appurtenances thereto or
equipment therein, nor the operation or maintenance thereof,
violates in any material manner any land use Laws or restrictive
covenants, except for those violations and encroachments that in
the aggregate could not reasonably be expected to have a Material
Adverse Effect. No condemnation proceeding is pending or, to the
Knowledge of OLB, threatened, that would preclude or materially
impair the use of any OLB Real Property in the manner in which it
is currently being used.
(c) The OLB Companies
have a valid and enforceable leasehold interest in or, to the
Knowledge of OLB, based on title insurance owned by it, good and
marketable title to, all OLB Real Property and all improvements
thereon, subject to no Liens of any kind except (i) as noted in the
OLB Financials, (ii) statutory Liens not yet delinquent or that are
being contested in good faith, (iii) minor defects and
irregularities in title and encumbrances that do not materially
impair the use thereof for the purposes for which they are held,
(iv) mechanics liens not yet delinquent or that are being contested
in good faith, and (v) those assets and properties disposed of for
fair market value in the ordinary course of business since the date
of the OLB Financials. To the Knowledge of OLB, all OLB Real
Property used in the business of the OLB Companies is free from
defects that could materially interfere with the current or
intended future use of such facilities.
With
respect to OLB and each OLB Subsidiary:
(a) Neither the
conduct nor operation of its business nor any condition of any
property currently or previously owned or operated by it (including
REO) results or resulted in a violation of any Environmental Laws
that is reasonably likely to impose a material liability (including
a material remediation obligation) upon OLB or any OLB Subsidiary.
To the Knowledge of OLB, no condition has existed or event has
occurred with respect to any of them or any such property that,
with notice or the passage of time, or both, is reasonably likely
to result in any material liability to OLB or any OLB Subsidiary by
reason of any Environmental Laws. Neither OLB nor any OLB
Subsidiary during the past five years has received any written
notice from any Person or Regulatory Authority that OLB or any OLB
Subsidiary or the operation or condition of any property ever owned
or operated (including Participation Facilities) by any of them are
currently in violation of or otherwise are alleged to have
liability under any Environmental Laws or relating to Hazardous
Materials (including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of
any Hazardous Materials at, on, beneath, or originating from any
such property) for which a material liability is reasonably likely
to be imposed upon OLB or any OLB Subsidiary;
(b) There is no
suit, action, executive or administrative order, directive or
proceeding pending or, to the Knowledge of OLB threatened, before
any court, governmental agency or other forum against OLB or any
OLB Subsidiary (i) for alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or
(ii) relating to the presence of, or release (defined herein) into
the environment of, any Hazardous Materials on any OLB Real
Property;
(c) To the Knowledge of
OLB, (i) there are no underground storage tanks on, in or under any
OLB Real Properties, and (ii) no underground storage tanks have
been closed or removed from any OLB Real Properties except in
compliance with Environmental Laws in all material respects;
and
(d) To the Knowledge of
OLB, the OLB Real Properties (including, without limitation, soil,
groundwater or surface water on, or under the properties, and
buildings thereon) are not contaminated with and do not otherwise
contain any Hazardous Materials other than as permitted under
applicable Environmental Laws.
(a) The information
supplied by OLB for inclusion in the Registration Statement
(including the Prospectus/Proxy Statement), at the time the
Registration Statement is declared effective pursuant to the
Securities Act, and as of the date the Prospectus/Proxy Statement
is mailed to the holders of DCB Common Stock, and up to and
including the date of the DCB Common Stockholders’ Meeting,
(i) will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances in which
they were made, not misleading, and (ii) will comply in all
material respects with the provisions of the Exchange
Act.
(b) The information
supplied by OLB for inclusion in the Applications will, at the time
each such document is filed with any Regulatory Authority and up to
and including the dates of any required regulatory approvals or
consents, as such Applications may be amended by subsequent
filings, be accurate in all material respects.
(c) No document or
certificate delivered to DCB by or for OLB pursuant to a
requirement of this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statement contained in such document or certificate in light of
the circumstances under which it was made not
misleading.
Except
as set forth on OLB
Disclosure Schedule 4.18, as is disclosed in the OLB
Financials, and/or as disclosed in the SEC Reports, neither OLB nor
any OLB Subsidiary is a party to any transaction (including any
loan or other credit accommodation but excluding deposits in the
ordinary course of business) with any Affiliate of OLB or any OLB
Subsidiary, and all such transactions were made on substantially
the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with persons who
are not related to or Affiliates of OLB or any OLB
Subsidiary.
(a) Except as set forth
on the OLB Disclosure
Schedule 4.19, all Credit Extensions reflected as assets in
the OLB Financials arose out of bona fide arm’s-length
transactions, were made for good and valuable consideration in the
ordinary course of business, and are evidenced by notes, agreements
or other evidences of indebtedness that are true, genuine and
correct and are what they purport to be, and to the extent secured,
are secured by valid Liens that are legal, valid and binding
obligations of the maker thereof, enforceable in accordance with
the respective terms thereof, except as such enforcement may be
limited by (i) bankruptcy, insolvency, reorganization or other
similar Laws or equitable principles affecting the enforcement of
creditors’ rights that have been perfected or (ii) the pledge
of any Credit Extension to the FHLB as collateral to secure the
performance by the OLB Companies of all obligations owed thereto.
All Credit Extensions reflected as assets in the OLB Financials
were made in accordance in all material respects with sound banking
practices, and, to the Knowledge of OLB, are not subject to any
defenses, setoffs or counterclaims, including without limitation
any such as are afforded by usury or truth in lending Laws, except
as may be provided by bankruptcy, insolvency or similar Laws or by
general principles of equity.
(b) To the Knowledge of
OLB, neither the terms of any Credit Extension by any of the OLB
Companies, any of the documentation for any such Credit Extension,
the manner in which any such Credit Extension has been administered
and serviced, nor the practices of approving or rejecting
applications for a Credit Extension by the OLB Companies, violate
in any material respect any Law applicable thereto, including,
without limitation, the Truth In Lending Act and the CFPB’s
Regulation Z, the CRA, the Equal Credit Opportunity Act, and any
Laws relating to consumer protection, installment sales and
usury.
(c) There are no
executive officer or director (as such terms are defined in the
FRB’s Regulation O) Credit Extensions by any of the OLB
Companies on which the borrower is paying a rate other than that
reflected in the note or other relevant credit or security
agreement or on which the borrower is paying a rate that was not in
compliance with Regulation O and all such Credit Extensions are and
were originated in compliance in all material respects with all
applicable laws.
(d) To the Knowledge of
OLB, no shares of OLB Common Stock were purchased with the proceeds
of a loan made by any of the OLB Companies.
The
allowance for loan losses reflected in reports by the OLB Companies
to each Regulatory Authority has been and will be established in
compliance with the requirements of all regulatory criteria, and
the allowance for loan losses shown in the OLB Financials has been
and will be established and maintained in accordance with GAAP and
applicable Law and in a manner consistent with Old Line’s
internal policies. The allowance for loan losses reflected in such
reports and the allowance for loan losses shown in the OLB
Financials, in the opinion of management, was or will be adequate
as of the dates thereof. The REO and in-substance foreclosures
included in any of Old Line’s non-performing assets are
carried net of reserves at the lower of cost or market value based
on current independent appraisals or current management appraisals.
OLB has disclosed to DCB on OLB Disclosure Schedule 4.20
all Credit Extensions (including participations) by and all
interest-bearing assets of the OLB Companies (a) that are in an
amount of at least $1 million and have been accelerated during the
past 12 months, (b) that are in an amount of at least $1 million
and have been terminated during the past 12 months by reason of a
default or adverse development in the condition of the borrower or
other events or circumstances affecting the credit of the borrower,
and (c) pursuant to which a borrower, customer or other party has
notified any of the OLB Companies during the past 12 months of, or
has asserted against any of the OLB Companies, in each case in
writing, any “lender liability” or similar claim, and,
to the Knowledge of OLB, each borrower, customer or other party
that has given any of the OLB Companies any oral notification of,
or orally asserted to or against any of the OLB Companies, any such
claim, and OLB shall provide an updated OLB Disclosure Schedule 4.20
promptly to DCB after the end of each month after the date hereof
and on the Business Day prior to the Closing Date.
Old
Line is the only OLB Company that is subject to the CRA. To the
Knowledge of OLB, OLB is in compliance in all material respects
with the CRA and all regulations promulgated thereunder. OLB has
supplied DCB with a copy of Old Line’s current CRA Statement,
all letters and written comments received by Old Line since July 8,
2013 pertaining thereto and any responses by Old Line to such
comments. Old Line has a rating of “satisfactory” or
better as of its most recent CRA compliance examination and OLB and
Old Line have received no communication from any Regulatory
Authority that would lead OLB to believe that Old Line will not
receive a rating of “satisfactory” or better pursuant
to its next CRA compliance examination or that any Regulatory
Authority would seek to restrain, delay or prohibit any of the
Contemplated Transactions as a result of any act or omission of Old
Line under the CRA.
To the
Knowledge of OLB, the officers, employees and agents of the OLB
Companies are now, and at all times in the past have been, in
compliance with all applicable Laws that relate to securities
activities conducted by such officers, employees and agents,
including Laws relating to licenses and permits.
(a) The minute books
and stock ledgers of the OLB Companies that have been made
available to DCB, its Representatives or its Affiliates constitute
all of the minute books and stock ledgers of the OLB Companies and
as of their dates contain a materially complete and accurate record
of all actions of their respective stockholders and boards of
directors (and any committees thereof) and have been maintained in
accordance with applicable Law. All personnel files, reports,
feasibility studies, environmental assessments and reports,
strategic planning documents, financial forecasts, deeds, leases,
lease files, land files, accounting and tax records and all other
records that relate to the business and properties of the OLB
Companies that have been requested by DCB have been made available
to DCB, its Representatives or its Affiliates, and are located at
the offices of the OLB Companies at 0000 Xxxxxxx Xxxxx Xxxxx,
Xxxxx, Xxxxxxxx 00000.
(b) Each of the OLB
Companies makes and keeps books, records and accounts that, in
reasonable detail and in all material respects, accurately and
fairly reflect its transactions in and dispositions of its assets
and securities, and all such books, records and accounts have been
maintained in accordance with applicable Law and accounting
requirements. Each of the OLB Companies maintains a system of
internal control over financial reporting (within the meaning of
Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to
provide reasonable assurance that: (i) transactions are
executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary
(A) to permit the preparation of financial statements and
reports filed with any Regulatory Authority in conformity with GAAP
consistently applied and any other criteria applicable to such
statements, and (B) to maintain accountability for assets and
liabilities; (iii) access to its assets and incurrence of
liabilities is permitted only in accordance with management’s
general or specific authorizations; (iv) the recorded
accountability for assets and liabilities is compared with existing
assets and liabilities at reasonable intervals and appropriate
action is taken with respect to any differences; and (v) extensions
of credit and other receivables are recorded accurately, and proper
and adequate procedures are implemented to effect the collection
thereof on a current and timely basis. None of the systems,
controls, data or information of the OLB Companies are recorded,
stored, maintained, operated or otherwise wholly or partly
dependent on or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not)
that (including all means of access thereto and therefrom) are not
under the exclusive ownership and control of the OLB Companies or
their accountants, except as would not reasonably be expected to
have a Material Adverse Effect. Except as disclosed on OLB Disclosure Schedule 4.23(b)
or in the SEC Reports, to the Knowledge of OLB there are no
significant deficiencies or material weaknesses in the design or
operation of such internal control over financial reporting that
are reasonably likely to adversely affect in any material respect
OLB’s ability to record, process, summarize and report
financial information. To the Knowledge of OLB, there has occurred
no fraud, whether or not material, that involves management or
other employees who have a significant role in OLB’s internal
control over financial reporting.
Each of
the OLB Companies has good and marketable title to all securities
that it owns. None of the investment securities reflected in the
OLB Financials under the headings “investment securities
available for sale” and “investment securities held to
maturity” and, except as described in OLB Disclosure Schedule 4.24,
none of the investment securities acquired by the OLB Companies
since September 30, 2016, are subject to any restrictions, whether
contractual or statutory, that materially impair such OLB
Company’s ability to freely dispose of such investment
securities at any time, and such OLB Company was permitted by
applicable Law to acquire such investment securities at the time
they were acquired.
As of
the date hereof, OLB does not have any reason to believe that the
Merger will fail to qualify as a tax-free reorganization within the
meaning of Section 368(a) of the IRC. None of the OLB Companies
will take any action that will cause, cause any action to be taken
that will cause, or fail to take any action or fail to cause any
action to be taken if such failure to act will have the effect of
causing, the Merger not to qualify as a tax-free reorganization
within the meaning of Section 368(a) of the IRC, nor have any of
the OLB Companies taken, caused, agreed to take or cause, or failed
to take or cause any such action.
OLB’s board
of directors has received an opinion (which, if initially rendered
verbally, has been or will be confirmed by a written opinion, dated
no later than the date of this Agreement) from Ambassador Financial
Group, Inc. to the effect that, as of the date thereof, and subject
to the terms, conditions and qualifications set forth therein, the
consideration payable by OLB to stockholders of DCB pursuant to the
terms of this Agreement are fair, from a financial point of view,
to the stockholders of OLB. Such opinion has not been amended or
rescinded as of the date of this Agreement.
All
proxy materials used in connection with the meetings of OLB’s
stockholders held in 2014, 2015 and 2016, along with any other form
of correspondence between OLB and its stockholders during that time
period, either have been filed with the SEC and are publicly
available to DCB via the SEC’s Electronic Data Gathering and
Retrieval system or have been provided to DCB.
None of
the OLB Companies has any obligation or liability that is material
to its financial condition or operations or that, when combined
with all similar obligations or liabilities, would be material to
its financial condition or operations except (a) as disclosed in
the OLB Financials delivered or made available to DCB prior to the
date of this Agreement, or (b) as contemplated under this
Agreement. Except as disclosed in OLB Disclosure Schedule 4.28,
since September 30, 2016, none of the OLB Companies has incurred or
paid any obligation or liability that would be material to its
financial condition or operations of, except for obligations paid
in connection with transactions made by them in the ordinary course
of its business consistent with past practice and applicable
Law.
(a) To the Knowledge of
OLB there do not exist any facts or circumstances that would cause
any of the OLB Companies: (i) to be deemed to be operating in
violation in any material respect of the Bank Secrecy Act, the USA
PATRIOT Act, any order issued with respect to anti-money laundering
by the U.S. Department of the Treasury’s Financial Crimes
Enforcement Network or Office of Foreign Assets Control, or any
other applicable anti-money laundering Law, as well as the
provisions of the Bank Secrecy Act/anti-money laundering program
adopted by the OLB Companies; or (ii) to be deemed not to be in
satisfactory compliance in any material respect with the applicable
privacy of customer information requirements contained in any
federal and state privacy Laws, including without limitation, in
Title V of the Xxxxx-Xxxxx-Xxxxxx Act of 1999 and the regulations
promulgated thereunder, as well as the provisions of the
information security program adopted by the OLB Companies. To the
Knowledge of OLB, no non-public customer information has been
disclosed to or accessed by an unauthorized third party in a manner
that would cause any of the OLB Companies to undertake any remedial
action. The board of directors or other governing body of each OLB
Company that is subject to Section 326 of the USA PATRIOT Act and
the regulations thereunder has adopted, and each such OLB Company
has implemented, a Bank Secrecy Act/anti-money laundering program
that contains adequate and appropriate customer identification
verification procedures that comply with Section 326 of the USA
PATRIOT Act and the regulations thereunder and such Bank Secrecy
Act/anti-money laundering program meets the requirements in all
material respects of Section 352 of the USA PATRIOT Act and the
regulations thereunder, and it has not received written notice from
any Regulatory Authority that such program (x) does not contain
adequate and appropriate customer identification verification
procedures, or (y) has been deemed ineffective. Each of the OLB
Companies has complied in all material respects with any
requirements to file reports and other necessary documents as
required by the USA PATRIOT Act and the regulations
thereunder.
(b) OLB Disclosure Schedule 4.29(b)
describes any event, circumstance or other occurrence, and the
remedial steps taken by any of the OLB Companies with respect
thereto, since January 1, 2011, that constituted either (i) a
“breach of the security of a system,” as such phrase is
defined in Section 14-3504(a) of the Commercial Law Article with
respect to personal information maintained by any of the OLB
Companies, without regard to the application of Section 14-3507(b)
of the Commercial Law Article, or (ii) any other data breach with
respect to, or other unauthorized access to, the electronic
information and records of any of the OLB Companies, including,
without limitation, communications, regulatory correspondence and
reports, documents and data, information relating to products and
services, activities, strategies and plans, the computers, computer
software, other information technology equipment, information
technology passwords and other credentials, and all associated
documents and records owned or leased by the OLB Companies, other
financial data, and identities of and information regarding sales,
customers, prospects, vendors, suppliers and personnel, including,
without limitation, passwords and other information technology
credentials.
Each of
the OLB Companies owns or possesses valid, binding and assignable
licenses and other rights to use without payment all trademarks,
trade dress, trade names, service marks, domain names, patents,
technology, inventions, trade secrets, know-how and copyrights and
works of authorship owned by or licensed to each of the OLB
Companies for use in its business, and all licenses or other
agreements relating thereto and all agreements relating to third
party intellectual property that it is licensed or authorized to
use in its business, including without limitation any software
licenses other than “shrink wrap” or force placed
software licenses (collectively, the “OLB Intellectual
Property”), that is used in the conduct of its
existing businesses free and clear of all Liens and any claims of
ownership by current or former employees or contractors, other than
royalties or payments with respect to off-the-shelf software. With
respect to each item of OLB Intellectual Property that any of the
OLB Companies is licensed or authorized to use, the license,
sublicense or agreement covering such item is legal, valid,
binding, enforceable and in full force and effect. To the Knowledge
of OLB, none of the OLB Companies is infringing, diluting,
misappropriating or violating the intellectual property of any
other Person, and none of the OLB Companies has received any
communications alleging that it has infringed, diluted,
misappropriated or violated any such intellectual property. None of
the OLB Companies has sent any communications alleging that any
Person has infringed, diluted, misappropriated or violated any OLB
Intellectual Property and, to the Knowledge of OLB, no Person is
infringing, diluting, misappropriating or violating any of the OLB
Intellectual Property. Each of the OLB Companies has taken all
commercially reasonable actions to protect and maintain
(a) all material OLB Intellectual Property and (b) the
security and integrity of its software, databases, networks,
systems, equipment and hardware and to protect the same against
unauthorized use, modification or access thereto, or the
introduction of any viruses or other unauthorized or damaging or
corrupting elements. To the Knowledge of OLB, the computers,
computer software, other information technology equipment,
information technology passwords and other credentials, and all
associated documents and records owned or leased by the OLB
Companies (the “OLB
IT Assets”) operate and perform in all material
respects in accordance with their documentation and functional
specifications as required by them in connection with their
business, and none of the OLB IT Assets has materially
malfunctioned or failed to meet its requirements within the past
two years except for such malfunctions or failures that have been
remediated. To the Knowledge of OLB, no Person has gained
unauthorized access to the OLB IT Assets. The OLB Companies have
implemented commercially reasonable backup and disaster recovery
technology consistent with industry practices for institutions of
comparable size and complexity.
The
schedules delivered by OLB pursuant to this Article IV and
elsewhere in this Agreement, which have been delivered concurrently
with the execution and delivery of this Agreement, are true and
correct in all material respects and contain no untrue statements
of material fact or omit any material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
OLB and
the OLB Subsidiaries are engaged in all material respects only in
the business described in the SEC Reports, and the SEC Reports
contain a complete and accurate description in all material
respects of the business of OLB and the OLB Subsidiaries, taken as
a whole.
ARTICLE
V.
Through
the Effective Time, DCB shall, and shall cause each DCB Subsidiary
to, in all material respects, conduct its businesses and engage in
transactions only in the usual, regular and ordinary course and
consistent with past practice, except as otherwise required or
contemplated by this Agreement or with the prior written consent of
OLB. DCB shall, and shall cause each DCB Subsidiary to, use its
commercially reasonable good faith efforts to preserve its business
organization intact, maintain good relationships with employees and
preserve the good will of its customers and others with whom
business relationships exist, provided that, other than in the case
of a Permitted Employee that DCB determines, in good faith, is
necessary to comply with the foregoing requirements, job vacancies
that occur prior to the Effective Date through attrition shall not
be filled and new officers and employees shall not be hired without
the prior written consent of OLB, which shall not be unreasonably
conditioned, withheld or delayed. Through the Effective Time,
without the consent in writing of OLB (such consent not to be
unreasonably withheld, conditioned or delayed), as permitted by
this Agreement or except as may be required, in writing, by any
Regulatory Authority (in which case DCB shall immediately provide
OLB with a copy of such written document), DCB shall not, and shall
not permit any DCB Subsidiary to:
(a) Change any
provision of the DCB Governing Documents;
(b) Change the number
of authorized or issued shares of its capital stock; repurchase,
redeem or otherwise acquire any shares of its capital stock; issue
or grant any call, commitment, subscription, Right or agreement of
any character relating to its authorized or issued capital stock or
any securities convertible into shares of capital stock; or
declare, set aside or pay any dividends (including any special
dividends) or other distribution in respect of capital stock except
for cash dividends declared and paid in the normal course of
business consistent with past practices in an amount not to exceed
$0.02 per share quarterly;
(c) Except as set forth
in DCB Disclosure Schedule
5.1(c) or for retention payments as OLB and DCB may mutually
agree upon for DCB or Damascus employees who remain employed
through the Effective Time, grant any severance, retention or
termination pay, other than pursuant to policies or agreements of
DCB or any DCB Subsidiary in effect on the date hereof for
employees, or enter into or amend any employment, consulting,
severance, compensation, “change-in-control” or
termination contract or arrangement with, any officer, director,
employee, independent contractor, agent or other Person associated
with DCB or any DCB Subsidiary;
(d) Grant job
promotions or increase the rate of compensation of, or pay any
bonus to, any director, officer, employee, independent contractor,
agent or other Person associated with DCB or any DCB Subsidiary,
except, with respect to a Permitted Employee, (i) to the extent
such promotion or increase is made by DCB or a DCB Subsidiary in
the normal course of its business and consistent with its past
practices, or (ii) routine periodic pay increases, selective merit
pay increases and pay-raises in the normal course of business and
consistent with past practices, provided, however, that such
aggregate increases in the rate of compensation shall not be in
excess of 3%, and such aggregate bonuses shall not be in excess of
5% of the aggregate salaries, for all Permitted
Employees;
(e) Except in the
ordinary course consistent with past practice, sell, lease, assign,
transfer, mortgage, encumber or otherwise dispose of or discontinue
any of its assets (excluding loans, which are governed by Section
5.1(w), and securities, which are governed by Section 5.1(q)),
deposits, business or properties or cancel or compromise any debt
or claim, or waive or release any right or claim, except in the
ordinary course of business consistent with past practice for full
and fair consideration actually received; or modify in any material
manner the manner in which it has heretofore conducted its business
or enter into any new line of business;
(f) Except for FHLB
advances with a maturity of six (6) months or less and deposits
taken in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money; or incur,
assume or become subject to, whether directly or by way of any
guarantee or otherwise, any obligations or liabilities (absolute,
accrued, contingent or otherwise) of any other Person, other than
the issuance of letters of credit in the ordinary course of
business and in accordance with the restrictions set forth in
Sections 5.1(y) and (z);
(g) Sell or otherwise
dispose of any DCB Real Property except REO in a reasonably
acceptable commercial manner in the ordinary course of
business;
(h) Take any action
that would result in any of the conditions set forth in Article VI
hereof not being satisfied;
(i) Change any method,
practice, or principle of accounting, except as may be required
from time to time by Law or changes in GAAP or by any Regulatory
Authority;
(j) Waive, release,
grant or transfer any rights of material value or modify or change
in any material respect any existing material agreement to which it
is a party;
(k) Implement any
pension, retirement, profit-sharing, bonus, welfare or similar plan
or arrangement that was not in effect on the date of this
Agreement, or amend any existing pension, retirement,
profit-sharing, bonus, welfare or similar plan or arrangement
except to the extent (i) required by Law or (ii) required by its
terms as a result of this Agreement or in connection with the
Contemplated Transactions; provided, however, that amendments to a DCB Benefit
Plan to modify any of the investment options available thereunder
shall not constitute a breach of this Section 5.1(k);
(l) Implement or adopt
any material change in its: (i) guidelines and policies in
existence on the date hereof with regard to underwriting and making
extensions of credit, the establishment of reserves with respect to
possible losses thereon or the charge-off of losses incurred
thereon; (ii) investment policies and practices; or (iii) other
material banking policies, or otherwise fail to conduct its banking
activities in the ordinary course of business consistent with past
practice except as may be required by changes in Law, GAAP, or the
direction of a Regulatory Authority;
(m) Change deposit or
loan rates, or otherwise fail to conduct its lending and deposit
activities in the ordinary course of business consistent with past
practice;
(n) Enter into, modify,
amend or renew any agreement under which it is obligated to pay
more than $50,000 and that is not terminable by it with 60
days’ notice or less without penalty, payment or other
conditions (other than the condition of notice), or enter into,
renew, extend or modify any other transaction with any of its
Affiliates, other than deposit and loan transactions in the
ordinary course of business and that are in compliance with the
requirements of Law;
(o) Except as required
by Law or at the direction of a Regulatory Authority: (i) implement
or adopt any material change in its interest rate and other risk
management policies, procedures or practices; or (ii) fail to
follow its existing policies or practices with respect to managing
its exposure to interest rate and other risk;
(p) Take any action
that would give rise to a right of payment to any individual under
any employment agreement except for contractually required
compensation;
(q) Purchase or sell
any securities other than in the normal course of business
consistent with past practices other than pursuant to redemptions
by the issuer thereof;
(r) Except in the
ordinary course of business consistent with past practice and
involving an amount not in excess of $50,000 (exclusive of any
amounts paid directly or reimbursed to DCB or any DCB Subsidiary
under any insurance policy maintained by DCB or any DCB
Subsidiary), settle any material action, suit, claim, arbitration,
investigation, inquiry, grievance or other proceeding (or basis
therefor) pending or, to the Knowledge of DCB, threatened, against
or affecting DCB, any DCB Subsidiary or any of their respective
properties or assets. Notwithstanding the foregoing, no settlement
shall be made if it involves a precedent for other similar claims
that, in the aggregate, could reasonably be determined to be
material to DCB and the DCB Subsidiaries, taken as a
whole;
(s) Foreclose upon or
otherwise take title to or possession or control of any real
property without first obtaining a Phase I environmental report
thereon; provided, however, that neither DCB nor any DCB Subsidiary
shall be required to obtain such a report: (i) where, after using
commercially reasonable efforts, it is unable to gain access to the
property, provided that DCB has provided notice to OLB that it has
been unable to gain such access and as a result intends to
foreclose without obtaining a Phase I environmental report thereon;
or (ii) with respect to any one- to four-family, non-agricultural
residential property of five acres or less to be foreclosed upon
unless it has reason to believe that such property contains
hazardous substances known or reasonably suspected to be in
violation of, or require remediation under, Environmental
Laws;
(t) Except as permitted
by Section 5.7(a)(ii), merge or consolidate with any other Entity;
sell or lease all or any substantial portion of its assets or
business; make any acquisition of all or any substantial portion of
the business or assets of any other Person other than in connection
with the collection of any loan or credit arrangement; enter into a
purchase and assumption transaction with respect to deposits and
liabilities; permit the revocation or surrender of its certificate
of authority to maintain, file an application for the opening,
closing or relocation of, or open, close or relocate, any branch or
automated banking facility;
(u) Make any new
capital expenditure, individually or in the aggregate, of $50,000
or more;
(v) Sell or acquire any
loans (excluding originations) or loan participations, except in
the ordinary course of business consistent with past practice (but
in the case of a sale, after giving OLB or Old Line a first right
of refusal to acquire such loan or participation), or sell or
acquire any servicing rights; provided, however, that in no
event shall any of the DCB Companies sell or acquire any loan or
loan participation having a principal balance in excess of
$500,000;
(w) Take any action or
knowingly fail to take any action, which action or failure to act
would preclude the Merger from qualifying as a tax-free
reorganization within the meaning of Section 368(a) of the
IRC;
(x) Make any charitable
or similar contributions, except consistent with past practice and
in amounts not to exceed $5,000 individually and $10,000 in the
aggregate;
(y) Except for any
Non-Residential Credit Extension already committed to by DCB or a
DCB Subsidiary on the date of this Agreement and set forth on
DCB Schedule
5.1(y), enter into, grant, approve, modify or extend any
Non-Residential Credit Extension except in the ordinary course of
business consistent with past practice; provided, however, that none of the DCB Companies
may make a Non-Residential Credit Extension (i) in excess of
$2,000,000, or (ii) to an existing customer that increases the
aggregate loan exposure to such customer to more than
$2,000,000.
(z) Except for any
loan, credit facility, line of credit, or letter of credit for an
owner-occupied residence (collectively, a “Residential Credit
Extension”) already committed to by DCB or a DCB
Subsidiary and set forth on DCB Disclosure Schedule 5.1(z),
enter into, grant, approve, modify or extend any Residential Credit
Extension that would result in a credit exposure in excess of
$1,000,000; provided, however, that (i) after March 31, 2017 none
of the DCB Companies may make a Residential Credit Extension in a
principal amount that exceeds FHA jumbo limit in effect at such
time and (ii) all Residential Credit Extensions made between the
date of this Agreement and March 31, 2017 in a principal amount
that exceeds FHA jumbo limit in effect at such time shall be made
in the ordinary course of business and consistent with past
practice;
(aa) Issue any
communication relating to the Contemplated Transactions to
employees (including general communications relating to benefits
and compensation) without prior consultation with OLB and, to the
extent relating to post-Closing employment, benefit or compensation
information, without the prior consent of OLB (which shall not be
unreasonably withheld, conditioned or delayed) or issue any
communication of a general nature to customers without the prior
approval of OLB (which shall not be unreasonably withheld,
conditioned or delayed), except as required by Law. For
clarification, communications in the ordinary course of business
consistent with past practice that do not relate to the
Contemplated Transactions shall not be prohibited pursuant to this
Section 5.1(aa);
(bb) Change deposit or
loan rates other than in the ordinary course of business consistent
with past practice;
(cc) Enter into any
interest rate swap, floor or cap or similar commitment, agreement
or arrangement, except in the ordinary course of business
consistent with past practice; or
(dd) Agree to do any of
the foregoing.
Through
the Effective Time, except as otherwise consented to in writing by
DCB or as permitted by this Agreement, and except as may be
required by Law or, in writing, by any Regulatory Authority (in
which case OLB shall immediately provide DCB with a copy of such
written document), OLB shall not, and shall not permit any OLB
Subsidiary to:
(a) Take any action
that would result in any of the conditions set forth in Article VI
hereof not being satisfied;
(b) Take any action or
knowingly fail to take any action, which action or failure to act
would preclude the Merger from qualifying as a tax-free
reorganization within the meaning of Section 368(a) of the
IRC; or
(c) Agree to do either
of the foregoing.
(a) Through the
Effective Time, each party hereto shall afford to the other,
including its authorized Representatives, reasonable access to its
and its Subsidiaries’ businesses, properties, assets, books
and records and personnel, at reasonable hours and after reasonable
notice; and the officers of each party shall furnish the other
party making such investigation, including its authorized
Representatives, with such financial and operating data and other
information with respect to such businesses, properties, assets,
books and records, and personnel as the party making such
investigation, or its authorized Representatives, shall from time
to time reasonably request. Each party hereto agrees that it, and
its authorized Representatives, will conduct such investigation and
discussions hereunder in a confidential manner and otherwise in a
manner so as not to interfere unreasonably with the other
party’s normal operations and customer and employee
relationships. Notwithstanding the foregoing, neither OLB nor DCB
shall be required to provide access to or to disclose information
where such access or disclosure would violate the rights of its
customers, jeopardize the attorney-client privilege of the entity
in possession or control of such information or contravene any Law
or binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the
restrictions of the previous sentence apply.
(b) DCB and OLB each
agree that it will not, and will cause their Representatives not
to, use any information obtained pursuant to this Section 5.3
(as well as any other information obtained prior to the date hereof
in connection with entering into this Agreement) for any purpose
unrelated to the consummation of the Contemplated Transactions. DCB
and OLB shall hold all information obtained pursuant to this
Section 5.3 (as well as any other information obtained prior
to the date hereof in connection with entering into this Agreement)
in confidence to the extent required by, and in accordance with,
the provisions of the Confidentiality Agreement, which is
incorporated herein by reference. The parties hereto agree that
such Confidentiality Agreement shall continue in accordance with
its terms, notwithstanding the termination of this
Agreement.
Through
the Effective Time:
(a) OLB and DCB shall
cooperate with one another in the preparation of the Registration
Statement (including the Prospectus/Proxy Statement) and all
Applications, which shall be prepared by OLB and OLB’s
counsel, to the extent such Applications are required to be filed
by an OLB Company, and by DCB and DCB’s counsel, to the
extent such Applications are required to be filed by a DCB Company,
and the making of all filings for, and shall use their reasonable
best efforts to obtain, as promptly as practicable, all necessary
permits, consents, approvals, waivers and authorizations of all
Regulatory Authorities necessary or advisable to consummate the
Contemplated Transactions; provided, however, that in no event
shall OLB or DCB be required to agree to any prohibition,
limitation or other requirement that would (a) prohibit or
materially limit the ownership or operation by OLB or any OLB
Subsidiary of all or any material portion of the business or assets
of DCB or any DCB Subsidiary, (b) compel OLB or DCB to dispose of
all or any material portion of either party’s business or
assets, (ii) impose a material compliance burden, penalty or
obligation on OLB or DCB, or (iii) otherwise materially impair the
value of DCB to OLB (any such requirement alone, or more than one
such requirement together, a “Burdensome
Condition”).
(b) DCB and OLB shall
each promptly furnish the other with copies of written
communications to, or received by them from, any Regulatory
Authority with respect to the Contemplated Transactions to the
extent permitted by Law.
(c) DCB and OLB shall
cooperate with each other in the foregoing matters and shall
furnish the other with all information concerning itself as may be
necessary or advisable in connection with any Application or
filing, including any report filed with the SEC, made by or on
behalf of such party to or with any Regulatory Authority in
connection with the Contemplated Transactions, and in each such
case, the information shall be accurate and complete in all
material respects. In connection therewith, DCB and OLB shall use
their reasonable good faith efforts to provide each other
certificates, “comfort” letters and other documents
reasonably requested by the other to the extent such disclosure is
permitted by Law. Each party hereto shall have the right to review
and approve in advance (such approval not to be unreasonably
withheld, conditioned or delayed) all characterizations of the
information relating to it and any of its subsidiaries that appear
in any filing made in connection with the Contemplated Transactions
with any Regulatory Authority. In addition, OLB and DCB shall each
give the other reasonable time to review the Registration Statement
and any Application to be filed by it prior to the time such
Application is filed with the relevant Regulatory Authority, and
each shall consult the other with respect to the substance and
status of such filings.
Through
the Effective Time, in addition to the specific agreements
contained herein, each party hereto shall use their reasonable best
efforts to take, or cause to be taken by each of its Subsidiaries,
all actions, and to do, or cause to be done by each of its
Subsidiaries, all things necessary, proper or advisable under
applicable Law to consummate and make effective the Contemplated
Transactions as soon as practicable after the date hereof
including, if necessary, appealing any adverse ruling with respect
to any Application.
Through
the closing date, each of DCB and OLB shall promptly advise the
other of any change or event having or reasonably likely to have a
Material Adverse Effect or that it believes would or would be
reasonably likely to cause or constitute a material breach of any
of its representations, warranties or covenants set forth herein.
Through the Closing Date, DCB shall update the DCB Disclosure
Schedules, and OLB shall update the OLB Disclosure Schedules, as
promptly as practicable after the occurrence of any event that, if
such event had occurred prior to the date hereof, would have been
disclosed on such schedule. In addition, DCB shall update and
deliver to OLB the DCB
Disclosure Schedule 3.20(a), and OLB shall update and
deliver to DCB the OLB
Disclosure Schedule 4.20, promptly after the end of each
calendar month during the Pre-Closing Period and on the Business
Day immediately preceding the Closing Date. The delivery of such
updated Disclosure Schedules shall not relieve either party from
liability for any breach or violation of this Agreement and shall
not have any effect for the purposes of determining the
satisfaction of the condition set forth in Sections 6.1(b) or
6.2(b).
(a) Undertakings of
DCB.
(i) Stockholder Approval. As
promptly as practicable after the Registration Statement becomes
effective under the Securities Act, in accordance with applicable
Law and this Agreement, DCB shall submit the Agreement and the
Merger to its stockholders for approval at the DCB Common
Stockholders’ Meeting with the recommendation that its
stockholders approve the Agreement and the Merger.
(ii) Acquisition Proposals. So long
as this Agreement remains in effect, except as otherwise expressly
permitted by this Agreement, DCB shall not, and it shall not
authorize, permit or cause any DCB Subsidiary and their respective
Representatives to, directly or indirectly: (A) initiate, solicit,
induce or encourage (including by way of furnishing information),
or take any action to facilitate the making of, any inquiry, offer
or proposal that constitutes, relates or could reasonably be
expected to lead to an Acquisition Proposal; (B) respond to any
inquiry relating to an Acquisition Proposal; (C) recommend or
endorse an Acquisition Proposal; (D) participate in any discussions
or negotiations regarding any Acquisition Proposal or furnish, or
otherwise afford access, to any Person (other than OLB) any
information or data with respect to DCB or any DCB Subsidiary or
otherwise relating to an Acquisition Proposal; (E) release any
Person from, waive any provisions of, or fail to enforce any
confidentiality agreement or standstill agreement to which DCB or
any DCB Subsidiary is a party; or (F) enter into any agreement,
agreement in principle, letter of intent or similar instrument,
including any exclusivity agreement, with respect to any
Acquisition Proposal or approve or resolve to approve any
Acquisition Proposal or any agreement, agreement in principle,
letter of intent or similar instrument relating to an Acquisition
Proposal. Any violation of the foregoing restrictions by DCB or any
of its Representatives, whether or not such Representative is so
authorized and whether or not such Representative is purporting to
act on behalf of DCB or otherwise, shall be deemed to be a breach
of this Agreement by DCB. DCB and each DCB Subsidiary shall, and
shall cause each of its Representatives to, immediately cease and
cause to be terminated any and all existing discussions,
negotiations, and communications with any Person with respect to
any existing or potential Acquisition Proposal.
Notwithstanding the
foregoing, prior to the approval of the Agreement and the Merger by
DCB’s stockholders at the DCB Common Stockholders’
Meeting, DCB may respond to an inquiry, furnish nonpublic
information regarding itself and the DCB Subsidiaries to, or enter
into discussions with, any Person in response to an unsolicited
Acquisition Proposal that is submitted to DCB by such Person (and
not withdrawn) if: (A) DCB’s board of directors determines in
good faith, after consultation with and having considered the
advice of its outside legal counsel and the advice of RP Financial,
LC., that such Acquisition Proposal constitutes or is reasonably
likely to lead to a Superior Proposal (as defined below); (B) DCB
has not violated any of the restrictions set forth in this Section
5.7(a)(ii); (C) DCB’s board of directors determines in good
faith, after consultation with and based upon the advice of its
outside legal counsel and the advice of RP Financial, LC., that
such action is required in order for the board of directors to
comply with its fiduciary obligations under applicable Law; and (D)
at least two Business Days prior to furnishing any nonpublic
information to, or entering into discussions with, such Person, DCB
provides OLB with written notice of the identity of such Person and
of DCB’s intention to furnish nonpublic information to, or
enter into discussions with, such Person and DCB receives from such
Person an executed confidentiality agreement on terms no more
favorable to such Person than the Confidentiality Agreement, which
confidentiality agreement shall not provide such Person with any
exclusive right to negotiate with DCB. DCB shall promptly provide
to OLB any non-public information regarding DCB or any DCB
Subsidiary provided to any other Person that was not previously
provided to OLB, such additional information to be provided no
later than the date of provision of such information to such other
Person.
DCB
shall promptly (and in any event within 24 hours) notify OLB in
writing if any proposals or offers are received by, any information
is requested from, or any negotiations or discussions are sought to
be initiated or continued with, DCB, any DCB Subsidiary or any of
their Representatives, in each case in connection with any
Acquisition Proposal, and such notice shall indicate the name of
the Person initiating such discussions or negotiations or making
such proposal, offer or information request and the material terms
and conditions of any proposals or offers (and, in the case of
written materials relating to such proposal, offer, information
request, negotiations or discussion, providing copies of such
materials (including e-mails or other electronic communications)).
DCB agrees that it shall keep OLB informed, on a current basis, of
the status and terms of any such proposal, offer, information
request, negotiations or discussions (including any amendments or
modifications to such proposal, offer or request). DCB further
agrees that it will provide OLB with the opportunity to present its
own proposal to the DCB board of directors in response to any such
proposal or offer and negotiate with OLB in good faith with respect
to any such proposal.
For
purposes of this Agreement, “Superior Proposal” means
any unsolicited, bona fide written proposal (or its most recently
amended or modified terms, if amended or modified) made by a third
party to consummate an Acquisition Proposal on terms that the DCB
board of directors determines in its good faith judgment, after
consultation with and having considered the advice of DCB’s
outside legal counsel and RP Financial, LC.: (A) would, if
consummated, result in consideration that is more favorable to the
stockholders of DCB than the Contemplated Transactions (taking into
account all legal, financial, regulatory and other aspects of the
Acquisition Proposal and the Person making the proposal); (B) is
not conditioned on obtaining financing (and with respect to which
DCB has reasonably assured itself of such Person’s ability to
fully finance its Acquisition Proposal); (C) would, if consummated,
result in the acquisition of all, but not less than all, of the
issued and outstanding shares of DCB Common Stock or all or
substantially all of the assets and liabilities of the DCB
Companies on a consolidated basis; and (D) is reasonably likely to
be completed on the terms proposed, in each case taking into
account all legal, financial, regulatory and other aspects of the
proposal.
Neither
the DCB board of directors nor any committee thereof shall: (A)
withdraw, qualify or modify, or propose to withdraw, qualify or
modify, in a manner adverse to OLB in connection with the
Contemplated Transactions (including the Merger), its
recommendation to the stockholders of DCB to approve the Agreement
and the Merger, or make any statement, filing or release, in
connection with the DCB Common Stockholders’ Meeting or
otherwise, inconsistent with the recommendation to the stockholders
of DCB to approve the Agreement and the Merger (it being understood
that taking a neutral position or no position with respect to an
Acquisition Proposal shall be considered an adverse modification of
such recommendation); (B) approve or recommend, or publicly propose
to approve or recommend, any Acquisition Proposal; or (C) enter
into (or cause DCB or any DCB Subsidiary to enter into) any letter
of intent, agreement in principle, acquisition agreement or other
agreement (1) related to any Acquisition Proposal or (2) requiring
DCB to abandon, terminate or fail to consummate any of the
Contemplated Transactions.
Notwithstanding the
foregoing, prior to the date of the DCB Common Stockholders’
Meeting, DCB’s board of directors may approve or recommend to
the stockholders of DCB a Superior Proposal and withdraw, qualify
or modify its recommendation in connection with the Agreement and
the Merger or take any of the other actions otherwise prohibited by
this Section 5.7(a)(ii) after the third Business Day following the
receipt by OLB of a notice (the “Notice of Superior
Proposal”) from DCB advising OLB that the DCB board of
directors has decided that a bona fide unsolicited written
Acquisition Proposal that it received (that did not result from a
breach of this Section 5.7(a)(ii)) constitutes a Superior Proposal
(it being understood that DCB shall be required to deliver a new
Notice of Superior Proposal in respect of any materially revised
Superior Proposal from such third party or its affiliates that DCB
proposes to accept and the subsequent notice period shall be three
Business Days) if, but only if, (A) the DCB board of directors has
reasonably determined in good faith, after consultation with and
having considered the advice of outside legal counsel and the
advice of RP Financial, LC., that the failure to take such actions
would be inconsistent with its fiduciary duties under applicable
law and (B) at the end of such three Business Day period, after
taking into account any adjusted, modified or amended terms as may
have been committed to in writing by OLB since OLB’s receipt
of such Notice of Superior Proposal (provided, however, that OLB
shall not have any obligation to propose any adjustments,
modifications or amendments to the terms and conditions of this
Agreement), the DCB board of directors has again in good faith made
the determination (1) in clause (A) of this paragraph, and (2) that
such Acquisition Proposal constitutes a Superior
Proposal.
(iii) Environmental
Assessments.
(A) OLB shall have the
express right, but not the obligation, to conduct, at its sole cost
and expense, Environmental Assessments of the DCB Companies’
assets, operations and secured interests, including, but not
limited to, the DCB Real Properties. For any DCB Real Property that
is not owned by a DCB Company, access to such DCB Real Property by
OLB shall be conditioned on approval by the property
owner.
(B) If OLB, in its sole
discretion, is unable to reasonably determine that the recognized
environmental conditions identified in the Environmental
Assessments will not result in a Material Adverse Effect, OLB shall
have the express right, but not the obligation, to further assess,
at its sole cost and expense, the recognized environmental
conditions as OLB deems appropriate subject to the following
provisions of this Section 5.7(a)(iii)(B). For any DCB Real
Property that is owned by a DCB Company, such further assessment
shall be subject to prior notice to DCB. For any DCB Real Property
that is not owned by a DCB Company, such further assessment by OLB
shall be conditioned on approval by the property
owner.
(C) OLB agrees to
notify DCB a reasonable time in advance of any Environmental
Assessments scheduled pursuant to this Section 5.7(a)(iii).
Upon receipt of such notice, DCB agrees to permit OLB and its
Representatives to (i) conduct such Environmental Assessments, (ii)
have access to the properties, facilities, environmental documents
and personnel of the DCB Companies, and (iii) conduct such
consultations with the Persons conducting such examinations, as OLB
shall deem necessary; provided, however, that OLB agrees that the
exercise of its rights under this Section 5.7(a)(iii) shall not
unreasonably disturb or interfere with the business activities or
operations of the DCB Companies. Upon request by DCB, OLB shall
provide copies of reports prepared by OLB or its Representatives
for the assessments conducted under this Section
5.7(a)(iii).
(iv) Dissolve Non-Operational
Subsidiaries. Prior to Closing, DCB shall cause the
liquidation and legal dissolution of any and all Non-Operational
Subsidiaries.
(b) Undertakings of OLB and
DCB.
(i) Public
Announcements. OLB and DCB shall consult upon the form and
substance of any press release or public statement related to this
Agreement and the Contemplated Transactions and shall not issue any
press release or make any public statement without the prior
consent of the other party, which shall not be unreasonably delayed
or withheld, but nothing contained herein shall prohibit either
party, following notification to the other party, from making any
disclosure that its counsel deems necessary under applicable
Law.
(ii) Maintenance
of Insurance. OLB and each OLB Subsidiary, and DCB and each
DCB Subsidiary, shall maintain insurance in such amounts as OLB and
DCB, respectively, believe are reasonable to cover such risks as
are customary in relation to the character and location of its and
their respective Subsidiaries’ properties and the nature of
its and their respective Subsidiaries’
businesses.
(iii) Maintenance
of Books and Records. OLB and each OLB Subsidiary, and DCB
and each DCB Subsidiary, shall maintain books of account and
records in accordance with GAAP and on a basis consistent with past
practice.
(iv) Taxes.
OLB and each OLB Subsidiary shall file all OLB Returns, and DCB and
each DCB Subsidiary shall file all DCB Returns, required to be
filed by them, respectively, on or before the date such returns are
due, including any extensions, and pay all taxes shown to be due on
such returns on or before the dates such payments are due, except
those being contested in good faith.
(v) In-House
Operations. OLB and DCB shall cooperate with each other in
the interest of an orderly, cost-effective consolidation of
operations.
(vi) Delivery
of Financial Statements. OLB and DCB shall each deliver, or
in the case of OLB, make available to the other, promptly upon
their completion, but in each case by each respective delivery
date, financial statements that fairly present, in all material
respects, its consolidated financial condition, results of
operations for the periods then ended in accordance with GAAP,
subject to year-end audit adjustments and notes
thereto.
(vii) Delivery
of Regulatory Filings and Documents. Except where prohibited
by Law or the regulations of any Regulatory Authority, OLB and DCB
shall each deliver to the other copies of all reports filed with
Regulatory Authorities promptly upon the filing
thereof.
(c) Undertakings
of OLB.
(i) DCB Director Nominees. Subject
to the articles of incorporation and bylaws of OLB and Old Line,
the MGCL, any approvals and/or requirements of any Regulatory
Authority relating to OLB and the continuing fiduciary duties of
the OLB board of directors, the OLB board of directors shall take
such actions as may be necessary to (A) elect, as soon as is
practicable following the Effective Time, the DCB Nominees to serve
on the OLB board of directors until the next annual meeting of OLB
stockholders that occurs after the Effective Time, (B) cause the
DCB Nominees to be elected, as soon as is practicable following the
Effective Time, to serve on the Old Line board of directors until
the next annual meeting of Old Line’s stockholders that
occurs after the Effective Time, (C) nominate the DCB Nominees for
re-election to the OLB board of directors at the annual meeting of
OLB’s stockholders that follows the Effective Time, to serve
(1) in the case of Xxxxxxx X. Xxxxxxxx, for a term of at least two
years and (2) in the case of the other DCB Nominee, for a term of
at least one year, and (D) cause the DCB Nominees to be elected to
serve on the Old Line board of directors at the annual meeting of
Old Line’s stockholders that follows the Effective Time, to
serve for a term consistent with those set forth in subsection (C)
hereof; provided, however, that if the DCB Nominees shall be
subject to a Disqualification Event, OLB shall take such actions as
may be necessary to fill the vacancy so created with one of the
individuals set forth on DCB Disclosure Schedule 1.3(d),
or with such other individuals as DCB may propose (each a
“Replacement
Nominee”), with the selection being at OLB’s
discretion.
On and
after the Effective Time, (A) the directors of OLB duly elected and
holding office immediately prior to the Effective Time, and (B)
provided the DCB Nominees agree to serve as a director of OLB, the
DCB Nominees, shall be the directors of OLB, each to hold office
until his or her successor is elected and qualified or otherwise in
accordance with applicable Law and the articles of incorporation
and bylaws of OLB and Old Line, as applicable; further provided,
that in no event shall OLB’s obligations under this section
apply with respect to either of the DCB Nominees if such DCB
Nominee shall be subject to a Disqualification Event.
As used
in this Agreement, the term “Disqualification Event”
means, as to the DCB Nominees, the occurrence of any of the
following events: (i) such nominee shall be prohibited by Law or
otherwise from serving as a director of OLB; (ii) such nominee
shall have been charged with or convicted of any felony or a crime
of moral turpitude; (iii) such nominee shall file (or any Entity of
which such nominee shall have been an executive officer or
controlling person within the 90 days prior to filing shall file) a
voluntary petition under any applicable federal or state bankruptcy
or insolvency law, or such nominee shall become (or any Entity
indebted to OLB of which such nominee shall have been an executive
officer or controlling person within the 90 days prior to filing
shall become) the subject of an involuntary petition filed under
any such law that is not dismissed within 90 days; (iv) such
nominee shall be involved in any of the events or circumstances
enumerated in Item 401(f)(3)-(6) of Regulation S-K (or any
successor or substitute provision of similar import) promulgated by
the SEC, or similar provisions of state “blue sky”
laws; (v) the death, disability or other personal reasons beyond
the control of such nominee that prevents him from serving, as
determined by OLB in its sole discretion, as a nominee; or (vi)
such nominee shall violate any covenant or agreement contained in
the Support Agreement. OLB will (i) take such actions as are
necessary to cause Old Line, subject to the fiduciary duties of the
Old Line board of directors, Old Line’s articles of
incorporation and bylaws and the eligibility requirements of any
Regulatory Authority relating to Old Line, and provided that the
DCB Nominees are not subject to a Disqualification Event, to
nominate the DCB Nominees to serve as directors of Old Line during
any time, and for the same term, that the DCB Nominees serve as
directors of OLB, in compliance with Section 1.3(d), and (ii) will,
as the sole stockholder of Old Line, vote to elect the DCB Nominee
so nominated by Old Line.
(ii) Employees, Severance
Policy.
(A) Subject to
OLB’s or the applicable OLB Subsidiary’s personnel and
employment qualification policies and the provisions hereof, and
subject to OLB’s right to require, in its sole discretion and
as a condition of employment, such individuals to execute
confidentiality, non-competition and/or non-solicitation
agreements, OLB will endeavor to continue the employment of each
individual who was an employee of DCB or a DCB subsidiary as of
December 16, 2016 and was continuously an employee of DCB or a DCB
subsidiary through the Effective Time (a “DCB Employee”) in a
position that will contribute to the successful performance of the
combined organization as OLB deems appropriate, consistent with its
plans and strategies, for the efficient and effective operation of
the OLB Companies after the Effective Time. All such employees who
accept offers of employment from an OLB Company (the
“Retained
Employees”) will be employed on an at-will basis.
Notwithstanding anything to the contrary contained in this Section
5.7(c)(ii), no provision of this Agreement shall create any
obligation of OLB or an OLB Subsidiary to retain any DCB Employee
or create any third party benefit except for the Indemnified
Parties’ rights under Section 5.7(c)(iv), which are
expressly intended to be for the irrevocable benefit of, and shall
be enforceable by, each Indemnified Party and his or her heirs and
Representatives. If a DCB Employee (1) is not offered employment
with OLB or an OLB Company, (2) does not accept an offer of
employment because the offer is not for a “Comparable
Position” (as defined in the Damascus Community Bank Employee
Change in Control Plan attached as Exhibit E hereto (the
“Plan”)) or (3) accepts
employment and becomes a Retained Employee but is involuntarily
terminated without Cause within 12 months of the Effective Date,
then OLB will cause Old Line or the applicable OLB Subsidiary to
make a severance payment to the displaced DCB Employee in
accordance with and as set forth in the Plan; provided, however,
that each such DCB Employee eligible for a severance payment
hereunder will receive at least four weeks of “Base
Compensation,” as defined in the Plan.
(B) Any Retained
Employee whose employment with OLB or an OLB Subsidiary is
terminated without Cause after 12 months from the Effective Date
shall receive such severance benefit from OLB or such OLB
Subsidiary as is provided for in OLB’s or the applicable OLB
Subsidiary’s general severance policy for such terminations
(with full credit being given for each full year of service with
DCB or any DCB Subsidiary).
(C) Any DCB Employee
who has or is party to any employment agreement, severance
agreement, change in control agreement or any other agreement or
arrangement (a “CIC
Agreement”) that provides for any payment that would
be triggered by the Merger or the Bank Merger (“CIC Payment”) shall not
receive any severance benefits as provided in Sections
5.7(c)(ii)(A) and (B) but will receive the CIC Payment upon the
occurrence of a triggering event under the CIC Agreement. Any DCB
Employee who waives and relinquishes his or her right to a CIC
Payment will be eligible for a severance payment as provided in
Section 5.7(c)(ii)(A) or (B).
(D) OLB and any OLB
Subsidiary’s obligation hereunder to make payments as
provided in this Section 5.7(c)(ii) is expressly subject to OLB
obtaining a non-objection or waiver of any regulatory prohibition
or limitation on such payment, and OLB’s obligation hereunder
is limited to such amount as determined by the Regulatory
Authorities. DCB will obtain written acknowledgement of OLB’s
obligation hereunder from all DCB employees and officers who may be
eligible for such payments. OLB will use reasonable efforts to
obtain any required regulatory approval or non-objection and shall
file any required notice or application to obtain such approval or
non-objection no later than the later of (i) the date it files its
application for approval of the Bank Merger or (ii) it becomes
aware of the need to obtain any such approval or
non-objection.
(iii) Employee Benefits. As of the
Effective Time, each Retained Employee shall be entitled to full
credit for each year of service with DCB or any DCB Subsidiary for
purposes of determining eligibility for participation and vesting
and benefit accrual in OLB’s or, as appropriate, in the OLB
Subsidiary’s, employee benefit plans, programs and policies,
except as prohibited by Law. OLB shall use the original date of
hire by DCB or a DCB Subsidiary in making these
determinations.
(iv) Indemnification. From and after
the Effective Time, subject to applicable Law, OLB (the
“Indemnifying
Party”) shall indemnify and hold harmless each present
and former director and officer of DCB or a DCB Subsidiary, as
applicable, determined as of the Effective Time (the
“Indemnified
Parties”) against any costs or expenses (including
reasonable attorneys’ fees), judgments, fines, losses,
claims, damages or liabilities and amounts paid in settlement
incurred after the Effective Time in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, based in whole or
in part, or arising in whole or in part out of, or pertaining to
the fact that he or she was a director or officer of DCB or a DCB
Subsidiary or is or was serving at the request of DCB or any DCB
Subsidiary as a director, officer, employee, trustee or other agent
of any other organization or in any capacity with respect to any
DCB Benefit Plan, including, without limitation, any matters
arising in connection with or related to the negotiation, execution
and performance of this Agreement or any of the Contemplated
Transactions, and will advance expenses to such Indemnified Party
in connection therewith, to the fullest extent to which such
Indemnified Parties would be entitled to the right to advancements
of expenses or to be indemnified under the articles of
incorporation and bylaws of DCB in effect on the date of this
Agreement as though the Indemnified Parties were present or former
directors or officers of OLB, or were serving at the request of OLB
or any OLB Subsidiary as a director, officer, employee, trustee or
other agent of any other organization or in any capacity with
respect to any OLB Benefit Plan, as of the Effective Time.
OLB’s obligations under this Section 5.7(c)(iv) shall
continue in full force and effect for a period of six years and one
day from the Effective Date; provided, however, that all rights to
indemnification in respect of any claim asserted or made within
such period shall continue until the final disposition of such
claim.
(v) NASDAQ Listing. To the extent
required, OLB agrees to timely file a “Listing of Additional
Shares Notification Form” with NASDAQ with respect to the
shares of OLB Common Stock to be issued in the Merger, and to use
its best efforts to have the review of such form completed prior to
the Effective Time.
(vi) Directors’ and Officers’
Liability Insurance. Contemporaneously with the Closing, OLB
shall purchase an extended reporting period to DCB’s current
liability insurance policy(ies), for a period to last from the day
after the Effective Date until at least the date that is six years
and one day after the Effective Date, for purposes of covering
actions occurring prior to the Effective Time (the
“Tail
Policy”). Provided that the aggregate cost of the Tail
Policy will not exceed 200.0% of the current annual premium
attributable to the applicable officers’ and directors’
liability coverage in DCB’s and/or Damascus’ liability
insurance policy(ies) in effect as of the date of this Agreement
(the “Maximum
Premium”), the Tail Policy shall provide the same or
better coverage for the individuals who are presently covered by
DCB’s or Damascus’ officers’ and directors’
liability insurance policy(ies) and any other insurance policy(ies)
providing insurance coverage for DCB’s or Damascus’
executive officers and directors (all of such individuals, the
“Insured
Persons”), with respect to actions, omissions, events,
matters or circumstances occurring through the Effective Time. If
OLB is unable to purchase the Tail Policy having the coverage and
aggregate limits contemplated by the foregoing sentence at a cost
that does not exceed Maximum Premium, then the Tail Policy
purchased by OLB shall provide such coverage as may be reasonably
purchased for a cost that does not exceed the Maximum Premium. In
either event, OLB may not cancel, modify or take any action to
limit or terminate the Tail Policy purchased pursuant to this
Section 5.7(c)(iv) unless it replaces such Tail Policy with
coverage provided by insurers having the same or better rating,
coverage and aggregate limits as such Tail Policy; provided,
however, that OLB may, at
its option, replace at any time such policy with another policy
having the same coverage rate.
The
Prospectus/Proxy Statement and the Registration Statement shall
comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act and the rules
and regulations thereunder. DCB and OLB shall promptly notify the
other party if at any time it becomes aware that the
Prospectus/Proxy Statement or the Registration Statement contains
any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances
under which they were made, not misleading. In such event, DCB
shall cooperate with OLB in the preparation of a supplement or
amendment to such Prospectus/Proxy Statement or Registration
Statement that corrects such misstatement or omission, and OLB
shall file an amended Registration Statement or supplement to the
Registration Statement with the SEC, and DCB shall mail a
Prospectus/Proxy Statement and any required amendment or supplement
to holders of DCB Common Stock. OLB will provide DCB and its
counsel with a reasonable opportunity to review and comment on the
Registration Statement and the Prospectus/Proxy Statement and all
responses to requests for additional information by and replies to
comments of the SEC prior to filing such with, or sending such to,
the SEC, and will provide DCB and its counsel with a copy of all
such filings made with the SEC.
ARTICLE
VI.
The
obligations of DCB hereunder shall be subject to satisfaction at or
prior to the Closing Date of each of the following conditions,
unless waived by DCB pursuant to Section 8.3
hereof:
(a) Corporate Proceedings. All
action required to be taken by, or on the part of, OLB and Old Line
to authorize the execution, delivery and performance of this
Agreement, and the consummation of the Contemplated Transactions,
shall have been duly and validly taken by OLB and Old Line,
respectively, and DCB shall have received certified copies of the
resolutions evidencing such authorizations.
(b) Covenants; Representations. The
obligations of OLB and Old Line required by this Agreement to be
performed by OLB and Old Line at or prior to the Closing Date shall
have been duly performed and complied with in all material
respects; and the representations and warranties of OLB set forth
in this Agreement shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of
the Closing Date, except as to any representation or warranty that
specifically relates to an earlier date, in each case in accordance
with the Article IV Standard.
(c) Consents. (i) DCB and Damascus
shall have received all consents and approvals described in
DCB Disclosure Schedule
3.4 and all filings and registrations by DCB and Damascus
described in DCB
Disclosure Schedule 3.4 shall have been accepted or declared
effective, except where the failure to obtain any such consent or
approval, or for any such filing or registration to be accepted or
declared effective, would not reasonably be expected to have a
Material Adverse Effect on OLB or Old Line subsequent to the
Effective Time; (ii) OLB and Old Line shall have received all
consents and approvals described in OLB Disclosure Schedule 4.4 and
all filings and registrations by OLB and Old Line described in
OLB Disclosure Schedule
4.4 shall have been accepted or declared effective, except
where the failure to obtain any such consent or approval, or for
any such filing or registration to be accepted or declared
effective, would not reasonably be expected to have a Material
Adverse Effect on OLB or Old Line subsequent to the Effective Time;
(iii) any statutory waiting period or periods relating to the
consents, approvals, filings and registrations identified in the
foregoing items (i) or (ii) shall have expired; and (iv) no consent
or approval identified in the foregoing items (i) or (ii) shall
have imposed any condition or requirement that, in the reasonable
opinion of the board of directors of DCB, would constitute a
Burdensome Condition or otherwise so materially and adversely
impact the economic or business benefits to DCB of the Contemplated
Transactions as to render consummation of the Merger
inadvisable.
(d) No Injunction or Restraints. No
temporary restraining order, preliminary or permanent injunction or
other judgment, order or decree issued by a Regulatory Authority of
competent jurisdiction located in the United States that enjoins or
prohibits the consummation of the Contemplated Transactions shall
have been issued and remain in effect.
(e) Officer’s Certificate.
OLB shall have delivered to DCB a certificate, dated the Closing
Date and signed, without personal liability, by its President and
Chief Executive Officer, to the effect that, to the best of his
knowledge, information and belief, the conditions set forth in
subsections (a), (b), (c)(ii) and (c)(iii) (but only with respect
to waiting periods applicable to OLB), (d), (f), (k) and (l) of
this Section 6.1 have been satisfied.
(f) Registration Statement. The
Registration Statement shall be effective under the Securities Act,
and no proceedings shall be pending or threatened by the SEC to
suspend the effectiveness of the Registration Statement; and all
approvals deemed necessary by OLB’s counsel from state
securities or “blue sky” authorities with respect to
the Contemplated Transactions shall have been
obtained.
(g) Tax Opinion. DCB shall have
received an opinion of Xxxxxx Xxxxxxxxx LLC, counsel to DCB, dated
the Closing Date, to the effect that on the basis of the facts,
representations and assumptions set forth in such opinion (i) the
Merger constitutes a tax-free reorganization under
Section 368(a) of the IRC, and (ii) any gain realized in the
Merger will be recognized only to the extent of cash or other
property (other than OLB Common Stock) received in the Merger,
including cash received in lieu of fractional share interests; in
rendering their opinion, such counsel may require and rely upon
representations and reasonable assumptions, including those
contained in certificates of officers of DCB, OLB and
others.
(h) Approval by DCB’s
Stockholders. The Agreement and the Merger shall have been
approved by the stockholders of DCB by such vote as is required by
the MGCL and the articles of incorporation and bylaws of
DCB.
(i) Other Documents. DCB shall have
received such other certificates, documents or instruments from OLB
or its officers or others as DCB shall have reasonably requested in
connection with the accounting or income tax treatment of the
Contemplated Transactions, related Securities Laws compliance or to
evidence fulfillment of the conditions set forth in Section 6.1 as
DCB may reasonably request.
(j) Illegality. No Law shall have
been enacted, entered, promulgated or enforced by any Regulatory
Authority that prohibits, restricts or makes illegal the
consummation of the Contemplated Transactions.
(k) No Material Adverse Effect. No
change in the business, property, assets (including loan
portfolios), liabilities (whether absolute, contingent or
otherwise), operations, business prospects, liquidity, income, or
financial condition of OLB or any of the OLB Subsidiaries shall
have occurred since the date of this Agreement, and no information
shall have been provided solely in an updated OLB Disclosure
Schedule pursuant to Section 5.6 of this Agreement, that has had,
or would reasonably be likely to have, a Material Adverse Effect on
OLB.
(l) NASDAQ Listing. To the extent
required, NASDAQ shall have completed its review of the
“Listing of Additional Shares Notification Form” filed
by OLB with NASDAQ with respect to the shares of OLB Common Stock
to be issued in the Merger.
The
obligations of OLB hereunder shall be subject to satisfaction at or
prior to the Closing Date of each of the following conditions,
unless waived by OLB pursuant to Section 8.3
hereof:
(a) Corporate Proceedings. All
action required to be taken by, or on the part of, DCB and Damascus
to authorize the execution, delivery and performance of this
Agreement, and the consummation of the Contemplated Transactions,
shall have been duly and validly taken by DCB and Damascus,
respectively, and OLB shall have received certified copies of the
resolutions evidencing such authorizations.
(b) Covenants; Representations. The
obligations of DCB and Damascus required by this Agreement to be
performed by DCB and Damascus at or prior to the Closing Date shall
have been duly performed and complied with in all material
respects; and the representations and warranties of DCB set forth
in this Agreement shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of
the Closing Date, except as to any representation or warranty that
specifically relates to an earlier date, in each case in accordance
with the Article III Standard.
(c) Consents. (i) OLB and Old Line
shall have received all consents and approvals described in
OLB Disclosure Schedule
4.4 and all filings and registrations by OLB and Old Line
described in OLB
Disclosure Schedule 4.4 shall have been accepted or declared
effective, except where the failure to obtain any such consent or
approval, or for any such filing or registration to be accepted or
declared effective, would not reasonably be expected to have a
Material Adverse Effect on OLB or Old Line subsequent to the
Effective Time; (ii) DCB and Damascus shall have received all
consents and approvals described in DCB Disclosure Schedule 3.4 and
all filings and registrations by DCB and Damascus described in
DCB Disclosure Schedule
3.4 shall have been accepted or declared effective, except
where the failure to obtain any such consent or approval, or for
any such filing or registration to be accepted or declared
effective, would not reasonably be expected to have a Material
Adverse Effect on OLB or Old Line subsequent to the Effective Time;
(iii) any statutory waiting period or periods relating to the
consents, approvals, filings and registrations identified in the
foregoing items (i) or (ii) shall have expired; and (iv) no consent
or approval identified in the foregoing items (i) or (ii) shall
have imposed any condition or requirement that, in the reasonable
opinion of the board of directors of OLB, would constitute a
Burdensome Condition or otherwise so materially and adversely
impact the economic or business benefits to OLB of the Contemplated
Transactions as to render consummation of the Merger
inadvisable.
(d) No Injunction or Restraints. No
temporary restraining order, preliminary or permanent injunction or
other judgment, order or decree issued by a Regulatory Authority of
competent jurisdiction located in the United States that enjoins or
prohibits the consummation of the Contemplated Transactions shall
have been issued and remain in effect.
(e) Officer’s Certificate.
DCB shall have delivered to OLB a certificate, dated the Closing
Date and signed, without personal liability, by both of its
Co-Chief Executive Officers, to the effect that, to the best of
their knowledge, information and belief, the conditions set forth
in subsections (a), (b), (c)(ii) and (iii) (but only with respect
to waiting periods applicable to DCB), (d), (h) and (l) of this
Section 6.2 have been satisfied.
(f) Registration Statement. The
Registration Statement shall be effective under the Securities Act,
and no proceedings shall be pending or threatened by the SEC to
suspend the effectiveness of the Registration Statement; and all
approvals deemed necessary by OLB’s counsel from state
securities or “blue sky” authorities with respect to
the Contemplated Transactions shall have been
obtained.
(g) Tax Opinion. OLB shall have
received an opinion of Baker, Donelson, Bearman, Xxxxxxxx &
Xxxxxxxxx, PC, counsel to OLB dated the Closing Date, to the effect
that on the basis of the facts, representations and assumptions set
forth in such opinion the Merger constitutes a tax-free
reorganization under Section 368(a) of the IRC; in rendering
their opinion, such counsel may require and rely upon
representations and reasonable assumptions, including those
contained in certificates of officers of DCB, OLB and
others.
(h) Approval by DCB’s
Stockholders. The Agreement and the Merger shall have been
approved by the stockholders of DCB by such vote as is required by
the MGCL and the articles of incorporation and bylaws of
DCB.
(i) Limitation on Objecting DCB
Shares. As of the
Effective Date, the holders of no more than ten
percent of the shares of DCB Common Stock that are issued and
outstanding as of the record date for the DCB Common
Stockholders’ Meeting shall have taken the actions required
by Section 3-203 of the MGCL to qualify their shares of DCB
Common Stock as Objecting DCB Shares.
(j) Other Documents. OLB shall have
received such other certificates, documents or instruments from DCB
or its officers or others as OLB shall have reasonably requested in
connection with the accounting or income tax treatment of the
Contemplated Transactions, related Securities Laws compliance or to
evidence fulfillment of the conditions set forth in Section 6.2 as
OLB may reasonably request.
(k) Environmental Assessment
Results. The recognized environmental conditions of any
Environmental Assessments conducted pursuant to
Section 5.7(a)(iii) hereof shall not result in a Material
Adverse Effect on DCB. OLB shall be fully satisfied, in its
reasonable discretion, with the findings of the Environmental
Assessments and any other environmental reports undertaken pursuant
to Section 5.7 of this Agreement.
(l) No Material Adverse Effect. No
change in the business, property, assets (including loan
portfolios), liabilities (whether absolute, contingent or
otherwise), operations, business prospects, liquidity, income, or
financial condition of DCB or any of the DCB Subsidiaries shall
have occurred since the date of this Agreement, and no information
shall have been provided in an updated DCB Disclosure Schedule
pursuant to Section 5.6 of this Agreement, that has had, or would
reasonably be likely to have, a Material Adverse Effect on
DCB.
(m) Third Party Consents. OLB shall
have received all consents and authorizations of landlords and
other persons that are necessary to permit the Contemplated
Transactions to be consummated without the violation of any lease
or other material agreement to which any of the DCB Companies is a
party or by which any of their properties are bound, except where
failure to obtain such consent or authorization would be reasonably
expected not to have a Material Adverse Effect subsequent to the
Merger.
(n) Illegality. No Law shall have
been enacted, entered, promulgated or enforced by any Regulatory
Authority that prohibits, restricts or makes illegal the
consummation of the Contemplated Transactions.
(o) Nasdaq Listing. To the extent
required, and provided that OLB has complied with its obligations
set forth in Section 5.7(c)(v) hereof, NASDAQ shall have completed
its review of the “Listing of Additional Shares Notification
Form” filed by OLB with NASDAQ with respect to the shares of
OLB Common Stock to be issued in the Merger.
Section
6.3 Frustration
of Closing Conditions.
Neither
OLB nor DCB may rely on the failure of any condition set forth in
Section 6.1 or 6.2, as the case may be, to be satisfied if such
failure was caused by such party’s failure to use its
commercially reasonable best efforts to consummate and to make
effective the Contemplated Transactions, as required by and subject
to Section 5.5.
ARTICLE
VII.
Notwithstanding any
other provision of this Agreement, and notwithstanding receipt of
the approval by the stockholders of DCB of the Agreement and the
Merger, this Agreement may be terminated on or at any time prior to
the Closing Date:
(a) By the mutual
written agreement of DCB and OLB;
(b) By either DCB or
OLB (provided that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement
contained herein in a manner that would entitle the other party not
to consummate the Contemplated Transactions) in the event of a
material breach of any representation, warranty, covenant or other
agreement of the other party hereto contained in this Agreement
such that (i) with respect to a representation or warranty, the
condition set forth in the second clause of Section 6.1(b) or
Section 6.2(b), as the case may be, would not be satisfied, and
(ii) with respect to a covenant or other agreement, the condition
set forth in the first clause of Section 6.1(b) or Section 6.2(b),
as the case may be, would not be satisfied, and in each case such
breach cannot be, or shall not have been, remedied within 30 days
after receipt by such party of written notice specifying the nature
of such breach and requesting that it be remedied or which, by its
nature, cannot be cured prior to the Closing; provided, that if such breach cannot reasonably
be cured within such 30-day period but may reasonably be cured
within 60 days, and such cure is being diligently pursued, no such
termination shall occur prior to the expiration of such 60-day
period;
(c) By either DCB or
OLB if the Closing Date shall not have occurred prior to October
31, 2017 (except that if the Closing Date shall not have occurred
by October 31, 2017 because of a failure to obtain any required
approval or consent of a Regulatory Authority, such date shall be
November 30, 2017 unless the conditions of any such required
regulatory approval or consent cannot be satisfied by November 30,
2017), except that if the Closing Date shall not have occurred by
such date because of a material breach of this Agreement by a party
hereto, such breaching party shall not be entitled to terminate
this Agreement in accordance with this provision;
(d) By either DCB or
OLB in the event any Regulatory Authority whose approval or consent
is required for consummation of the Contemplated Transactions shall
issue a definitive written denial of such approval or consent and
any appeals and requests for reconsideration have also received a
definitive written denial or an application therefor has been
permanently withdrawn at the request of a Regulatory
Authority;
(e) By either DCB or
OLB if the stockholders of DCB vote, but fail to approve the
Agreement and the Merger at the DCB Common Stockholders’
Meeting;
(f) By OLB if DCB or
any DCB Subsidiary enters into any agreement, agreement in
principle, letter of intent or similar instrument with respect to
any Superior Proposal or approves or resolves to approve any
agreement, agreement in principle, letter of intent or similar
instrument with respect to a Superior Proposal;
(g) By DCB if at any
time after the date of this Agreement and prior to obtaining the
approval of the Agreement and the Merger by DCB’s
stockholders at the DCB Common Stockholders’ Meeting, DCB
receives a Superior Proposal; provided, however, that DCB shall not
terminate this Agreement pursuant to the foregoing clause
unless:
(i) DCB shall have
complied in all material respects with Section 5.7(a)(ii) of this
Agreement;
(ii) DCB concurrently
pays the DCB Termination Fee payable pursuant to Section 8.1(b);
and
(iii) the board of
directors of DCB concurrently approves, and DCB concurrently enters
into, a definitive agreement with respect to such Superior
Proposal;
(h) By DCB if OLB or
any OLB Subsidiary enters into any definitive term sheet, letter of
intent, agreement or similar type of agreement with a view to being
acquired by, or effecting a business combination, as a result of
which OLB is not the surviving Entity or OLB’s directors, as
of the date of this Agreement, do not comprise the majority of the
surviving Entity’s board of directors, with any person other
than DCB, and the DCB board of directors determines that, after
considering the advice of counsel and R.P. Financial LC., such
transaction is not in the best interests of the DCB Common
Stockholders; provided, however, that DCB must exercise the
termination option under this Section 7.1(h) within 30
calendar days after the date on which OLB is required to file a
Current Report on Form 8-K with the SEC regarding events triggering
the termination option;
(i) By OLB if the DCB
board of directors withdraws, changes or modifies its
recommendation to its stockholders in any manner adverse to OLB
regarding this Agreement or the Merger, or the DCB board of
directors authorizes, recommends or publicly proposes, or publicly
announces an intention to authorize, recommend or propose, an
agreement to enter into an Acquisition Proposal that constitutes a
Superior Proposal; or
(j) By DCB if (i) the
Closing Market Price is less than $16.68 and (ii) the OLB Price
Ratio is less than the Index Ratio by more than 20%.
If DCB
elects to exercise its termination right pursuant to this Section
7.1(j), it shall give prompt (but in any case within 24 hours of
such determination) written notice thereof to OLB. During the five
Business Day period commencing with its receipt of such notice, OLB
may, at its option, increase the Merger Consideration to an amount
to be calculated as if the Average Price were equal to $16.68. If
OLB makes the election contemplated by the preceding sentence
within such five Business Day period, it shall give prompt written
notice to DCB of such election and the revised Per Share
Consideration, whereupon no termination shall have occurred
pursuant to this Section 7.1(j) and this Agreement shall remain in
effect in accordance with its terms (except as the Per Share Common
Stock Consideration shall have been so modified), and any
references in this Agreement to the Per Share Consideration and the
amount thereof shall thereafter be deemed to refer to the Per Share
Consideration and the amount thereof as adjusted pursuant to this
Section 7.1(j).
If the
outstanding shares of OLB Common Stock or any company belonging to
the NASDAQ Bank Stock Index shall be changed into a different
number of shares by reason of any stock dividend, reclassification,
split-up, combination, exchange of shares or similar transaction
between the date of the Agreement and the end of the Price
Determination Period, the Starting Price, the Closing Market Price
and the other amounts in this Section 7.1(j) shall be appropriately
adjusted.
For
purposes of this Section 7.1(j), the following terms shall have the
meanings set forth below:
“Starting Price” shall
mean $27.21, which was the volume weighted average of the closing
prices of OLB Common Stock for the ten Trading Days ending Two
Trading Days prior to the date of this Agreement.
“Closing
Market Price” shall be the volume weighted average of
the closing prices of OLB Common Stock, calculated to two decimal
places, for the Price Determination Period, as reported on the
NASDAQ Capital Market.
“OLB Price Ratio” shall
mean the quotient (multiplied by 100 to express such quotient as a
percentage) obtained by dividing the Closing Market Price by the
Starting Price, calculated to four decimal places.
“Index Ratio” shall mean
the quotient (multiplied by 100 to express such quotient as a
percentage) obtained by dividing the Average NASDAQ Bank Stock
Index Value For The Price Determination Period by $3,783.767, which
was the closing index value of the NASDAQ Bank Index on that date
that was two Trading Days prior to the date of this Agreement, as
quoted by NASDAQ, calculated to three decimal places.
“Average NASDAQ Bank Stock Index Value
For The Price Determination Period” shall mean the
average closing index value of the NASDAQ Bank Index for the Price
Determination Period, as quoted by NASDAQ.
“Price Determination
Period” means the ten consecutive Trading Days
immediately preceding the date that is five Trading Days before the
Closing Date.
“NASDAQ Bank
Index” shall mean the NASDAQ Market Index Sector, having the
trading symbol “IXBK,” for certain bank stocks grouped
by NASDAQ.
If this
Agreement is terminated pursuant to Section 7.1 hereof or
otherwise, this Agreement shall forthwith become void, other than
Sections 5.3(b), 5.7(b)(i), 8.1, 8.2, 8.4, 8.5, 8.6, 8.9, 8.10,
8.11, 8.12 and 8.13 hereof and this Section 7.2, which shall remain
in full force and effect, and there shall be no further liability
on the part of OLB or DCB to the other with respect to the
Contemplated Transactions, except for any liability of OLB or DCB
under such applicable sections of this Agreement.
ARTICLE
VIII.
(a) General Expenses. Whether or
not the Contemplated Transactions are consummated, each party to
this Agreement will pay its respective expenses incurred in
connection with the preparation and performance of its obligations
under this Agreement. Each party agrees to indemnify the other
party against any cost, expense or liability (including reasonable
attorneys’ fees and including those costs of any
party’s enforcement of the rights afforded under this Section
8.1) in respect of any claim made by any party for a broker’s
or finder’s fee in connection with the Merger other than one
based on communications between the party and the claimant seeking
indemnification. OLB shall be responsible for and shall pay all
filing fees, trustee or exchange agent fees and expenses, and blue
sky fees and expenses, if any. The expenses of separate counsel to
any stockholder of DCB shall be borne by such stockholder and not
borne or reimbursed by the DCB Companies or OLB.
(b) DCB Termination Fee. In
recognition of the efforts, expenses and other opportunities
foregone by OLB while structuring and pursuing the Merger, DCB
shall pay to OLB by wire transfer of immediately available funds a
termination fee equal to the amount determined by multiplying 0.052
(i.e., 3.25% of 1.6) by the
DCB Tangible Equity (the “DCB Termination Fee”) as
follows:
(i) if
OLB terminates this Agreement pursuant to: (A) Section 7.1(b); (B)
Section 7.1(c) because the Closing failed to occur prior to
October, 31, 2017 or November 30, 2017, as applicable and such
failure resulted from the knowing, willful and intentional actions
or inactions of DCB or Damascus (provided that OLB is not then in
material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement); (C) Section 7.1(d) because
a Regulatory Authority refused to issue a consent or approval
required for the consummation of any of the Contemplated
Transactions and such refusal resulted from the knowing, willful
and intentional actions or inactions of DCB or Damascus (provided
that OLB is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this
Agreement); or (D) Section 7.1(i) (provided that OLB is not then in
material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement), DCB shall pay the DCB
Termination Fee as promptly as practicable (but in any event within
three Business Days) after termination of the Agreement;
or
(ii) if
OLB or DCB terminates this Agreement pursuant to Sections 7.1(f) or
7.1(g), DCB shall pay the DCB Termination Fee at or prior to the
time of such termination.
If
payment of the DCB Termination Fee is timely made, then OLB will
have no other rights or claims against DCB and its officers,
directors, attorneys and financial advisors under this Agreement,
it being agreed that the acceptance of the DCB Termination Fee
under this Section 8.1 will constitute the sole and exclusive
remedy of OLB against DCB and its officers, directors, attorneys
and financial advisors.
(c) OLB Termination Fee. In
recognition of the efforts, expenses and other opportunities
foregone by DCB while structuring and pursuing the Merger, OLB
shall pay to DCB by wire transfer of immediately available funds a
termination fee equal to the amount determined by multiplying 0.052
(i.e., 3.25% of 1.6) by the
DCB Tangible Equity (the “OLB Termination Fee”),
such OLB Termination Fee to be paid as promptly as practicable (but
in any event within three Business Days) after termination of the
Agreement, if this Agreement is terminated by DCB pursuant to: (i)
Section 7.1(b); (ii) Section 7.1(c) because the Closing failed to
occur prior to October 31, 2017 or November 30, 2017, as
applicable, and such failure resulted from the knowing, willful and
intentional actions or inactions of OLB or Old Line (provided that
DCB is not then in material breach of any representation, warranty,
covenant, or other agreement contained in this Agreement); or (iii)
Section 7.1(d) because a Regulatory Authority refused to issue a
consent or approval required for the consummation of any of the
Contemplated Transactions and such refusal resulted from the
knowing, willful and intentional actions or inactions of OLB or Old
Line (provided that DCB is not then in material breach of any
representation, warranty, covenant, or other agreement contained in
this Agreement).
If
payment of the OLB Termination Fee is timely made, then DCB will
have no other rights or claims against OLB and its officers,
directors, attorneys and financial advisors under this Agreement,
it being agreed that the acceptance of the OLB Termination Fee
under this Section 8.1 will constitute the sole and exclusive
remedy of DCB against OLB and its officers, directors, attorneys
and financial advisors.
All
representations, warranties and, except to the extent specifically
provided otherwise herein, agreements and covenants shall terminate
as of the Closing. Notwithstanding the foregoing, Sections 1.3(b),
1.3(c), 1.3(d), 1.5, 1.6, 2.5(b) through (i), 5.3(b) and 5.7(c)(i)
through (iv) and (vi) shall survive the Closing.
(a) Subject to
applicable Law, at any time prior to the Closing, the parties
may:
(i) Amend
this Agreement;
(ii) Extend
the time for the performance of any of the obligations or other
acts of either party hereto;
(iii) Waive
any term or condition of this Agreement, any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto; or
(iv) Waive
compliance with any of the agreements or conditions contained in
Articles V and VI hereof or otherwise.
(b) This Agreement may
not be amended except by an instrument in writing signed, by
authorized officers, on behalf of the parties hereto. Any agreement
on the part of a party hereto to any extension or waiver shall be
valid only if set forth in an instrument in writing signed by a
duly authorized officer on behalf of such party, but such waiver or
failure to insist on strict compliance with such obligation,
covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other
failure.
This
Agreement, the schedules and exhibits hereto, and any other
documents to be executed in connection herewith, including, without
limitation, the Bank Merger Agreement, and the Confidentiality
Agreement, contain the entire, complete, and integrated agreement
between the parties with respect to the subject matter hereof, and
supersede any prior or contemporaneous arrangements, agreements or
understandings between the parties, written or oral, express or
implied, that may have related to the subject matter hereof in any
way other than the Confidentiality Agreement.
This
Agreement shall inure to the benefit of and be binding upon the
parties hereto and their successors; provided, however, that,
except for (a) the Indemnified Parties’ rights under Section
5.7(c)(iv), and (b) the Insured Person’s rights with respect
to the Tail Policy under Section 5.7(c)(vi), which are expressly
intended to be for the irrevocable benefit of, and shall be
enforceable by, each Indemnified Party and Insured Person,
respectively, and his or her heirs and Representatives, nothing in
this Agreement, expressed or implied, is intended to confer upon
any party, other than the parties hereto and their respective
successors, any rights, remedies, obligations or
liabilities.
All
notices under this Agreement shall be in writing and shall be
deemed sufficient and duly given: (a) when delivered personally to
the recipient; (b) upon confirmation of good transmission if sent
by facsimile; or (c) when delivered to the last known address of
the recipient (i) one Business Day after delivery to a reputable
express courier service for next-day delivery (charges prepaid), or
(ii) three days after being sent to the recipient by certified
mail, return receipt requested and postage prepaid, addressed as
follows:
(a) If to OLB,
to:
Xxxxx
X. Xxxxxxxxx
President and Chief
Executive Officer
Old
Line Bancshares, Inc.
0000
Xxxxxxx Xxxxx Xxxxx
Xxxxx,
XX 00000
Fax:
(000) 000-0000
with a
copy to:
Xxxxx
X. Xxxxxxxxxxx, Xx., Esquire
Baker,
Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx, PC
000
Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx
00000
Fax:
(000) 000-0000
(b) If to DCB,
to:
Xxxxxxx
X. Xxxxxxxx
Chairman of the
Board
DCB
Bancshares, Inc.
00000
Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx
00000
E-mail:
xxxxx@xxxxxxxxxxxx.xxx
with a
copy to:
Xxxxxx
X. Xxxxxx, Esquire
Xxxxxx
Xxxxxxxxx LLC
000
Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX
00000
Fax:
(000) 000-0000
Information
contained on either the DCB Disclosure Schedule or the OLB
Disclosure Schedule shall be deemed to cover the express disclosure
requirement contained in a representation or warranty of this
Agreement and any other representation or warranty of this
Agreement of such party where it is readily apparent it applies to
such provision. The mere inclusion of an item in a Disclosure
Schedule as an exception to a representation or warranty shall not
be deemed an admission by a party that such item represents a
material exception or fact, event or circumstance or that such item
is or could result in a Material Adverse Effect.
Notwithstanding
anything else in this Agreement to the contrary, each party hereto
(and its Representatives) may disclose to any and all Persons,
without limitation of any kind, the federal income tax treatment
and federal income tax structure of any and all Contemplated
Transactions and all materials of any kind (including opinions or
other tax analyses) that are or have been provided to any party (or
to any Representative of any party) relating to such tax treatment
or tax structure; provided,
however, that this authorization of disclosure shall not
apply to restrictions reasonably necessary to comply with
Securities Laws. This authorization of disclosure is not effective
until the earlier of (a) the date of the public announcement of
discussions relating to the Contemplated Transactions, (b) the date
of the public announcement of the Contemplated Transactions, or (c)
the date of execution of an agreement (with or without conditions)
to enter into the Contemplated Transactions.
Neither
party hereto may assign any of its rights or obligations hereunder
to any other person, without the prior written consent of the other
party hereto.
When a
reference is made in this Agreement to Sections or Exhibits, such
reference shall be to a Section of or Exhibit to this Agreement
unless otherwise indicated. The Background Section hereof
constitutes an integral part of this Agreement. References to
Sections include subsections, which are part of the related
Section. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever
the words “include,” “includes” or
“including” are used in this Agreement, they shall be
deemed to be followed by the words “without
limitation.” The phrases “the date of this
Agreement,” “the date hereof” and terms of
similar import, unless the context otherwise requires, shall be
deemed to refer to the date set forth in the Recitals to this
Agreement. All words used in this Agreement shall be construed to
be of such gender or number as the circumstances require. Unless
otherwise specifically noted, the words “herein,”
“hereof,” “hereby,” “hereunder”
and words of similar import refer to this Agreement as a whole and
not to any particular Section, subsection, paragraph, clause or
other subdivision of this Agreement. The parties have participated
jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the
parties and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
This
Agreement may be executed simultaneously in counterparts, each of
which shall be deemed to be an original copy of this Agreement and
all of which together will be deemed to constitute one and the same
agreement. The exchange of copies of this Agreement and of
signature pages by facsimile or other electronic transmission shall
constitute effective execution and delivery of this Agreement as to
the parties and may be used in lieu of the original Agreement for
all purposes. Signatures of the parties transmitted by facsimile or
other electronic transmission shall be deemed to be their original
signatures for all purposes.
The
parties agree that the provisions and covenants contained in each
of the Sections of this Agreement, and within the Sections
themselves, are intended to be separate and divisible provisions
and covenants and if, for any reason, any one or more of them shall
be held to be invalid or unenforceable, in whole or in part, by a
court of competent jurisdiction, then (a) the same shall not be
held to affect the validity of any other provision or covenant
contained in this Agreement and (b) the same shall be deemed to be
modified to the minimum extent necessary for it to be legally
enforceable. The parties hereby expressly request any court of
competent jurisdiction to enforce any such provision or covenant or
to modify any provision thereof so that it shall be enforced by
such court to the fullest extent permitted by applicable
Law.
(a) The laws of the
State of Maryland (without regard to any conflict of laws principle
that would apply the law of another jurisdiction) shall govern this
Agreement in all respects, whether as to its validity,
construction, capacity, performance or otherwise.
(b) The parties agree
that any judicial proceeding arising out of or relating to this
Agreement (including any declaratory judgments) shall be filed
exclusively in the State and Federal courts located in Prince
George’s County, Maryland or in Xxxxxxxxxx County, Maryland
and the District of Maryland, respectively, and each party hereby
consents to, and will submit to, the personal and subject matter
jurisdiction of such courts in any proceeding to enforce any of
their obligations under this Agreement and shall not contend that
any such court is an improper or inconvenient venue. The foregoing
shall not limit the right of any party to obtain execution of
judgment in any other jurisdiction. The prevailing party in any
judicial proceeding arising out of or relating to this Agreement
shall be entitled to recover all costs and attorneys’ fees
from the non-prevailing party.
(c) EACH OF THE PARTIES
HERETO EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OR RIGHT TO
DEMAND TRIAL BY JURY IN ANY ACTION BROUGHT TO ENFORCE THIS
AGREEMENT, OR ANY PROVISION HEREOF, OR FOR DAMAGES DUE AS A RESULT
OF AN ALLEGED BREACH OF THIS AGREEMENT.
With
regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
[Signatures
appear on the following page.]
21
IN WITNESS WHEREOF, the parties have
caused this Agreement to be executed by their duly authorized
officers as of the day and year first above written.
ATTEST:
OLD LINE BANCSHARES, INC.
By:
By:
Name: Xxxxx
Xxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: Assistant
Secretary
Title: President and Chief Executive Officer
ATTEST:
DCB BANCSHARES, INC.
By:
By:
Name: Xxxxx
Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title:
Secretary
Title: Chairman of the Board
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EXHIBIT INDEX
Exhibit A – List of
Stockholders to Execute Support Agreements
Exhibit B – Support
Agreement
Exhibit C – Bank Merger
Agreement
Exhibit D –
Spreadsheet
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