EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
between
COMMUNITY CAPITAL BANK
and
CARVER BANCORP, INC.
Dated April 5, 2006
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ARTICLE 1
DEFINITIONS; INTERPRETATION; DISCLOSURE SCHEDULES
1.1 Definitions............................................................
1.2 Interpretation.........................................................
1.3 Disclosure Schedules...................................................
ARTICLE 2
FORMATION OF INTERIM SUB; THE MERGER
2.1 Formation of Interim Sub; Entry into Plan of Merger....................
2.2 The Merger.............................................................
2.3 Closing................................................................
2.4 Effects of the Merger..................................................
2.5 Name of Surviving Bank.................................................
2.6 Governing Documents of the Surviving Bank..............................
ARTICLE 3
EFFECT ON STOCK; ELECTION PROCEDURES
3.1 Effect on Stock........................................................
3.2 Paying Agent; Exchange Procedures......................................
3.3 Lost, Stolen or Destroyed Certificates.................................
3.4 Dissenters' Rights.....................................................
3.5 Treatment of Options...................................................
ARTICLE 4
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business Prior to the Effective Time........................
4.2 Forbearances of the Bank...............................................
4.3 Forbearances of Parent.................................................
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Standard...............................................................
5.2 Representations and Warranties of the Bank.............................
5.3 Representations and Warranties of Parent...............................
ARTICLE 6
COVENANTS
6.1 Reasonable Best Efforts................................................
6.2 Shareholder Approval...................................................
6.3 No Solicitation........................................................
6.4 Regulatory Applications................................................
6.5 Proxy Statement........................................................
6.6 Press Releases.........................................................
6.7 Takeover Laws..........................................................
6.8 Access; Information....................................................
6.9 Benefit Arrangements...................................................
6.10 Indemnification........................................................
6.11 Disclosure Schedule Supplements........................................
6.12 Failure to Fulfill Conditions..........................................
6.13 Advisory Board.........................................................
6.14 Voting Agreements......................................................
ARTICLE 7
CONDITIONS TO THE MERGER
7.1 Conditions to Each Party's Obligation to Effect the Merger.............
7.2 Conditions to the Obligation of the Bank...............................
7.3 Conditions to the Obligation of Parent.................................
ARTICLE 8
TERMINATION
8.1 Termination............................................................
8.2 Effect of Termination and Abandonment..................................
ARTICLE 9
MISCELLANEOUS
9.1 Survival...............................................................
9.2 Expenses...............................................................
9.3 Notices................................................................
9.4 Waiver; Amendment......................................................
9.5 Alternative Structure..................................................
9.6 Specific Performance...................................................
9.7 Governing Law..........................................................
9.8 Entire Understanding; No Third Party Beneficiaries.....................
9.9 Counterparts...........................................................
AGREEMENT AND PLAN OF MERGER, dated April 5, 2006 (this
"AGREEMENT"), between Community Capital Bank, a New York state-chartered bank
("BANK"), and Carver Bancorp, Inc., a Delaware corporation ("PARENT").
RECITALS
A. THE PROPOSED TRANSACTION. Upon the terms and subject
to the conditions of this Agreement, the parties intend to effect a strategic
business combination pursuant to which a newly formed, wholly owned Subsidiary
("INTERIM SUB") of Parent will merge with and into the Bank (the "MERGER").
B. BOARD DETERMINATIONS. The boards of directors of the
Bank and Parent have each determined that the Merger and the other transactions
contemplated hereby are consistent with, and will further, their respective
business strategies and goals (including the Bank's mission), and are in the
best interests of their respective shareholders and, therefore, have approved,
this Agreement, the Merger and the other transactions contemplated hereby.
C. INTENDED TAX TREATMENT. The parties intend the Merger
to be treated as a purchase of all of the stock of the Bank by Parent for U.S.
federal income tax purposes.
NOW, THEREFORE, in consideration of the premises, and of the
mutual representations, warranties, covenants and agreements contained in this
Agreement, the Bank and Parent agree as follows:
ARTICLE 1
DEFINITIONS; INTERPRETATION; DISCLOSURE SCHEDULES
1.1 DEFINITIONS. This Agreement uses the following
definitions:
"ACQUISITION AGREEMENT" has the meaning assigned in Section
6.3(b).
"ACQUISITION PROPOSAL" means any inquiry, proposal or offer
from any person relating to, or that could reasonably be expected to lead to,
any direct or indirect acquisition or purchase, in one transaction or a series
of transactions, of assets or businesses that constitute 25% or more of the
revenues, net income or assets of the Bank or 25% or more of any class of equity
voting securities of the Bank, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 25% or more of any
class of equity voting securities of the Bank, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution, joint venture,
binding share exchange or similar transaction involving the Bank pursuant to
which any person or the shareholders of any person would own 25% or more of any
class of equity voting securities of the Bank or of any resulting parent company
of the Bank, in each case other than the transactions contemplated by this
Agreement.
"ADVISORY BOARD" has the meaning assigned in Section 6.13.
"AGREEMENT" has the meaning assigned in the Preamble.
"BANK" has the meaning assigned in the Preamble.
"BANK ADVERSE RECOMMENDATION CHANGE" has the meaning assigned
in Section 6.3(b).
"BANK BOARD" means the board of directors of the Bank.
"BANK BYLAWS" means the Bylaws of the Bank.
"BANK COMMON STOCK" means the common stock, par value $10.00
per share, of the Bank.
"BANK FEE" has the meaning assigned in Section 8.2(b)(3).
"BANK FINANCIAL STATEMENTS" has the meaning assigned in
Section 5.2(j).
"BANK LOAN" has the meaning assigned in Section 5.2(x)(4).
"BANK MEETING" has the meaning assigned in Section 6.5(b).
"BANK ORGANIZATION CERTIFICATE" means the Organization
Certificate of the Bank.
"BANK PREFERRED STOCK" means the preferred stock, par value
$1.00 per share, of the Bank.
"BANK STOCK" means, collectively, the Bank Common Stock and
the Bank Preferred Stock.
"BANK STOCK OPTIONS" means all outstanding and unexercised
employee and director options to purchase Bank Common Stock.
"BANK STOCK PLAN" means the Community Capital Bank 1999 Stock
Incentive Plan.
"BENEFIT ARRANGEMENT" means, with respect to the Bank all
benefit and compensation plans, contracts, policies or arrangements covering
current or former employees of the Bank (or any member of a controlled group
under Section 414 of the Code) and current or former directors of the Bank,
including "employee benefit plans" within the meaning of Section 3(3) of ERISA,
and deferred compensation, severance, stock option, stock purchase, stock
appreciation rights, stock based, incentive and bonus plans and all such plans
or arrangements for which the Bank (or any member of a controlled group under
Section 414 of the Code) may have any potential liability.
"BSA" means the Bank Secrecy Act of 1970 and the rules and
regulations thereunder.
"CLOSING" has the meaning assigned in Section 2.3.
"CLOSING DATE" has the meaning assigned in Section 2.3.
"CODE" means the Internal Revenue Code of 1986.
"CONFIDENTIALITY AGREEMENT" means the agreement, dated January
24, 2006, between Parent and the Bank.
"CONSIDERATION" has the meaning assigned in Section 3.1(a).
"CONSTITUENT DOCUMENTS" means the charter or articles or
certificate of incorporation and bylaws of a corporation or banking
organization, the certificate of partnership and partnership agreement of a
general or limited partnership, the certificate of formation and limited
liability company agreement of a limited liability company, the trust agreement
of a trust and the comparable documents of other entities.
"CONTRACT" means, with respect to any person, any agreement
(written or oral), contract, indenture, undertaking, debt instrument, lease,
understanding, arrangement or commitment to which such person or any of its
Subsidiaries is a party or by which any of them may be bound or to which any of
their assets or properties may be subject.
"COSTS" has the meaning assigned in Section 6.10(a).
"CRA" means the Community Reinvestment Act of 1977 and the
rules and regulations thereunder.
"CURRENT PREMIUM" has the meaning assigned in Section 6.10(c).
"DISCLOSURE SCHEDULE" has the meaning assigned in Section 1.3.
"DISSENTING SHARES" means shares of Bank Common Stock that are
held by a shareholder who has properly exercised appraisal rights under
applicable law.
"EFFECTIVE TIME" has the meaning assigned in Section 2.3.
"ENVIRONMENTAL LAWS" means the statutes, rules, regulations,
ordinances, codes, orders, decrees, and any other laws (including common law) of
any foreign, federal, state, local, and any other governmental authority,
regulating, relating to or imposing liability or standards of conduct concerning
pollution, or protection of human health and safety or of the environment, as in
effect on or prior to the date of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA AFFILIATE" has the meaning assigned in Section
5.2(s)(3).
"EXCHANGE ACT" means the Securities Exchange Act of 1934 and
the rules and regulations thereunder.
"EXCHANGE FUND" has the meaning assigned in Section 3.2(a).
"EXCLUDED SHARES" means shares of Bank Common Stock (i)
beneficially owned by Parent (other than shares held in a trust, fiduciary, or
nominee capacity or as a result of debts previously contracted), (ii) reserved
for issuance under the Bank Stock Plan or (iii) held in the Bank's treasury.
"EXTENSION OF CREDIT" has the meaning assigned in Section
4.2(d).
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLB" means a Federal Home Loan Bank.
"GAAP" means United States generally accepted accounting
principles.
"GOVERNMENTAL AUTHORITY" means any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, or any industry self-regulatory authority.
"INDEMNIFIED PARTY" has the meaning assigned in Section
6.10(a).
"INTERIM SUB" has the meaning assigned in the Recitals.
"INTERIM SUB STOCK" means all shares of capital of Interim
Sub.
"INTELLECTUAL PROPERTY" shall mean all (i) trademarks, service
marks, brand names, d/b/a/'s, Internet domain names, logos, symbols, trade
dress, trade names, and other indicia of origin, all applications and
registrations for the foregoing, and all goodwill associated therewith and
symbolized thereby, including all renewals of same, (ii) inventions and
discoveries, whether patentable or not, and all patents, registrations,
invention disclosures and applications therefor, including divisions,
continuations, continuations-in-part and renewal applications, and including
renewals, extensions and reissues, (iii) Trade Secrets, and (iv) published and
unpublished works of authorship, whether copyrightable or not (including without
limitation databases and other compilations of information), copyrights therein
and thereto, and registrations and applications therefor, and all renewals,
extensions, restorations and reversions thereof.
"IT ASSETS" shall mean computers, computer software, firmware,
middleware, servers, workstations, routers, hubs, switches and all other
information technology equipment, and all associated documentation owned or
leased by the Bank and used in the conduct of its business.
"LIEN" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"MATERIAL ADVERSE EFFECT" means, with respect to the Bank or
Parent, any effect that:
(a) is material and adverse to the financial condition,
results of operations or business of the Bank or Parent and its
Subsidiaries, taken as a whole, excluding (with respect to each of
clause (1), (2) or (3), only to the extent that the effect of a change
on it is not materially different than on comparable United States
banking organizations) the impact of (1) changes in banking and other
laws of general applicability or changes in the interpretation thereof
by Governmental Authorities, (2) changes in GAAP or regulatory
accounting requirements applicable to United States banking services
organizations generally, (3) changes in prevailing interest rates or
other general economic conditions affecting United States banking
organizations generally, (4) actions or omissions of a party to this
Agreement that are expressly required by this Agreement or taken with
the prior written consent of the other party to this Agreement, in
contemplation of the transactions contemplated hereby, (5) changes in
national or international political or social conditions including the
engagement by the United States in hostilities, whether or not pursuant
to the declaration of a national emergency or war, or the occurrence of
any military or terrorist attack upon or within the United States that
do not directly interfere with the normal operations of the Bank's
branch offices, or any of its territories, possessions or diplomatic or
consular offices or upon any military installation, equipment or
personnel of the United States, and (6) any change, effect, event or
occurrence arising out of the announcement or performance of this
Agreement and the transactions contemplated hereby, including any
reasonable expenses incurred in connection herewith and therewith that
are substantially consistent with a budget Previously Disclosed to
Parent, or
(b) would materially impair the ability of the Bank or
Parent, respectively, to perform its obligations under this Agreement
or to consummate the transactions contemplated hereby on a timely
basis.
"MATERIAL CONTRACTS" has the meaning assigned in Section
5.2(u)(1).
"MATERIALS OF ENVIRONMENTAL CONCERN" means any hazardous or
toxic substances, materials, wastes, pollutants, or contaminants, including
those defined or regulated as such under any Environmental Law, and any other
substance the presence of which may give rise to liability under Environmental
Law.
"MERGER" has the meaning assigned in the Recitals.
"NOTICE OF SUPERIOR PROPOSAL" has the meaning assigned in
6.3(b).
"OLD CERTIFICATES" has the meaning assigned in Section 3.2(a).
"PARENT" has the meaning assigned in the Preamble.
"PAYING AGENT" has the meaning assigned in Section 3.2(a).
"PENSION PLAN" has the meaning assigned in Section 5.2(s)(2).
"PREVIOUSLY DISCLOSED" means information set forth by a party
in the applicable paragraph of its Disclosure Schedule.
"PROXY STATEMENT" has the meaning assigned in Section 6.5(a).
"REPRESENTATIVES" means, with respect to any person, such
person's directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"REQUISITE REGULATORY APPROVALS" has the meaning assigned in
Section 6.3(a).
"RIGHTS" means, with respect to any person, securities or
obligations convertible into or exercisable or exchangeable for, or giving any
other person any right to subscribe for or acquire, or any options, calls or
commitments relating to, or any stock appreciation right or other instrument the
value of which is determined in whole or in part by reference to the market
price, book or other value of, shares of capital stock, units or other equity
interests of, such first person.
"SBA" means the United States Small Business Administration.
"SEC" means the United States Securities and Exchange
Commission.
"SECURITIES ACT" means the Securities Act of 1933 and the
rules and regulations thereunder.
"SHAREHOLDER APPROVAL" has the meaning assigned in Section
7.1(a).
"SIGNIFICANT SUBSIDIARY" and "SUBSIDIARY" have the meanings
ascribed to those terms in Rule 1-02 of Regulation S-X promulgated by the SEC.
"SUPERIOR PROPOSAL" means a bona fide written Acquisition
Proposal which the Bank Board reasonably concludes in good faith to be more
favorable from a financial point of view to its shareholders than the Merger and
the transactions contemplated hereby (1) after receiving the advice of its
financial advisors, (2) after taking into account the likelihood of consummation
of the proposed transaction on the terms set forth therein (as compared to, and
with due regard for, the terms herein) and (3) after taking into account all
legal (with the advice of outside counsel), financial (including the financing
terms of any such proposal and including any changes to the financial terms of
this Agreement proposed by Parent in response to such offer or otherwise),
regulatory (including the advice of outside counsel regarding the potential for
regulatory approval of any such proposal) and other aspects of such proposal and
any other relevant factors permitted under applicable law.
"SURVIVING BANK" has the meaning assigned in the Section 2.2.
"TAKEOVER LAWS" has the meaning assigned in Section 5.2(h).
"TAX" and "TAXES" means all federal, state, local or foreign
taxes, charges, fees, levies or other assessments, however denominated,
including all net income, gross income, gains, gross receipts, sales, use, ad
valorem, goods and services, capital, production, transfer, franchise, windfall
profits, license, withholding, payroll, employment, disability, employer health,
excise, estimated, severance, stamp, occupation, property, environmental,
unemployment or other taxes, custom duties, fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority whether arising before, on
or after the Effective Time.
"TAX RETURNS" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"TRADE SECRETS" means trade secrets and know-how, including
confidential processes, schematics, business methods, formulae, drawings,
prototypes, models, designs, customer lists and supplier lists in each case,
which are entitled to protection under applicable law.
1.2 INTERPRETATION. (a) In this Agreement, except as
context may otherwise require, references:
(1) to the Preamble, Recitals, Sections, Annex
or Schedules are to the Preamble to, a Recital or Section of, or Annex
or Schedule to, this Agreement;
(2) to this Agreement are to this Agreement, and
the Annexes and Schedules to it, taken as a whole;
(3) to the "transactions contemplated hereby"
includes the transactions provided for in this Agreement and the Annex
to it;
(4) to any agreement (including this Agreement),
contract, statute or regulation are to the agreement, contract, statute
or regulation as amended, modified, supplemented, restated or replaced
from time to time (in the case of an agreement or contract, to the
extent permitted by the terms thereof); and to any section of any
statute or regulation include any successor to the section; and
(5) to any Governmental Authority includes any
successor to that Governmental Authority.
(b) The words "hereby", "herein", "hereof", "hereunder"
and similar terms are to be deemed to refer to this Agreement as a
whole and not to any specific Section.
(c) The words "include", "includes" or "including" are to
be deemed followed by the words "without limitation."
(d) The word "party" is to be deemed to refer to the Bank
or Parent.
(e) The word "person" is to be interpreted broadly to
include any individual, savings association, bank, trust company,
corporation, limited liability company, partnership, association,
joint-stock company, business trust or unincorporated organization.
(f) The table of contents and article and section
headings are for reference purposes only and do not limit or otherwise
affect any of the substance of this Agreement.
(g) This Agreement is the product of negotiation by the
parties, having the assistance of counsel and other advisers. The
parties intend that this Agreement not be construed more strictly with
regard to one party than with regard to the other.
(h) No provision of this Agreement is to be construed to
require, directly or indirectly, any person to take any action, or omit
to take any action, to the extent such action or omission would violate
applicable law (including statutory and common law), rule or
regulation.
1.3 DISCLOSURE SCHEDULE. Before entry into this
Agreement, the Bank delivered to Parent a schedule (the "DISCLOSURE SCHEDULE"),
setting forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more covenants contained in
Article 4 or one or more representations or warranties contained in Article 5;
PROVIDED that the inclusion of an item in a Disclosure Schedule as an exception
to a representation or warranty will not by itself be deemed an admission by a
party that such item is material or was required to be disclosed therein.
ARTICLE 2
FORMATION OF INTERIM SUB; THE MERGER
2.1 FORMATION OF INTERIM SUB; ENTRY INTO PLAN OF MERGER.
To effect the Merger, prior to the Effective Time, (a) Parent will incorporate
Interim Sub with Parent as its sole shareholder, and (b) Parent shall cause
Interim Sub to become a party to this Agreement by executing the signature page
hereof.
2.2 THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, Interim Sub will merge with and into the
Bank at the Effective Time. At the Effective Time, the separate existence of
Interim Sub will terminate. The Bank will be the surviving bank in the Merger
(sometimes hereinafter referred to as THE "SURVIVING BANK"), and the separate
corporate existence of the Bank, with all its rights, privileges, immunities,
powers and franchises, will continue unaffected by the Merger.
2.3 CLOSING. The closing of the Merger (the "CLOSING")
will take place in the offices of Thacher Proffitt & Wood LLP, Two World
Financial Center, New York, New York, at 5:00 p.m. on a business day designated
by Parent that is (a) within 5 days after the expiration of all applicable
waiting periods associated with the Requisite Regulatory Approvals and (b) after
satisfaction or waiver of the conditions set forth in Article 7, other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions (the "CLOSING DATE").
The time on the Closing Date at which the Merger becomes effective is referred
to herein as the "EFFECTIVE TIME".
2.4 EFFECTS OF THE MERGER. The Merger will have the
effects prescribed by applicable state and federal law.
2.5 NAME OF SURVIVING BANK. The name of the Surviving
Bank as of the Effective Time will be the name of the Bank.
2.6 GOVERNING DOCUMENTS OF THE SURVIVING BANK. The Bank
Organization Certificate will be the organization certificate of Interim Sub as
of the Effective Time. The Bank Bylaws will be the bylaws of Interim Sub as of
the Effective Time, which the Bank shall have a reasonable opportunity to review
prior to the Merger.
ARTICLE 3
EFFECT ON STOCK; ELECTION PROCEDURES
3.1 EFFECT ON STOCK. At the Effective Time, as a result
of the Merger and without any action by any holder of Bank Stock or Interim Sub
Stock:
(a) BANK COMMON STOCK. Each share of Bank Common Stock
outstanding immediately prior to the Effective Time, other than
Excluded Shares and Dissenting Shares (the holders of which shall have
only the rights provided under applicable law and this Agreement), will
be converted into the right to receive an amount in cash, without
interest, equal to $40.00 per share of Bank Common Stock (the
"CONSIDERATION").
Shares of Bank Common Stock outstanding immediately prior to
the Effective Time, other than Dissenting Shares, will no longer be
outstanding and will automatically be canceled and will cease to exist.
Holders of Bank Common Stock will cease to be, and will have no rights
as, shareholders of the Bank, and certificates that represented shares
of Bank Common Stock before the Effective Time will be deemed for all
purposes to represent only the right to receive, without interest, (A)
any then unpaid dividend or other distribution with respect to such
Bank Common Stock having a record date before the Effective Time and
(B) the Consideration. After the Effective Time, there will be no
transfers of shares of Bank Common Stock on the stock transfer books of
the Surviving Bank, and shares of Bank Common Stock presented to the
Surviving Bank, Parent or the Paying Agent for any reason will be
canceled and exchanged in accordance with this Article 3.
(b) INTERIM SUB STOCK. Each share of Interim Sub Stock
outstanding immediately prior to the Effective Time will become and be
converted into one duly and validly issued, fully paid and
nonassessable share of common stock of the Surviving Bank.
3.2 PAYING AGENT; EXCHANGE PROCEDURES. At or before the
Effective Time, Parent will deposit with a depository or trust institution of
recognized standing selected by it and reasonably satisfactory to the Bank (in
such capacity, the "PAYING AGENT"), for the benefit of the holders of
certificates formerly representing shares of Bank Common Stock ("OLD
CERTIFICATES"), cash payable pursuant to Section 3.1 (the "EXCHANGE FUND").
(b) EXCHANGE PROCEDURES. Promptly after the Effective
Time (and in any event within four business days), Parent will cause
the Paying Agent to mail to each holder of record of Bank Common Stock
(other than holders of Excluded Shares or Dissenting Shares) (i) a
letter of transmittal in customary form specifying that delivery will
be effected, and risk of loss and title to the Old Certificates will
pass, only upon delivery of the Old Certificates (or affidavits of loss
in lieu thereof as provided in Section 3.3) to the Paying Agent, such
letter of transmittal to be in such form and have such other provisions
as Parent and the Bank may reasonably agree, and (ii) instructions for
use in effecting the surrender of the Old Certificates (or affidavits
of loss in lieu thereof as provided in Section 3.3) in exchange for the
Consideration. Upon surrender of an Old Certificate (or affidavit of
loss in lieu thereof as provided in Section 3.3) to the Paying Agent in
accordance with the terms of such letter of transmittal, duly executed,
the holder of such Old Certificate will be entitled to receive in
exchange therefor a cash amount in immediately available funds equal to
(x) the number of shares of Bank Common Stock represented by such Old
Certificate (or affidavit of loss in lieu thereof as provided in
Section 3.3) multiplied by (y) the Consideration, and the Old
Certificate so surrendered will forthwith be canceled. No interest will
be paid or accrued on any amount payable upon due surrender of the Old
Certificates. If any cash is to be paid in a name other than that in
which the Old Certificate surrendered in exchange therefor is
registered, it will be a condition to the exchange that the person
requesting the exchange (1) pay any transfer or other Taxes required by
reason of the making of the cash payment in a name other than the name
of the holder of the surrendered Old Certificate or (2) establish to
the satisfaction of Parent or the Paying Agent, as the case may be,
that any such Taxes have been paid or are not applicable.
(c) Any portion of the aggregate Consideration or the
proceeds of any investments thereof that remains unclaimed by the
shareholders of Bank for six (6) months after the Effective Time shall
be repaid by the Paying Agent to Parent. Any shareholders of Bank who
have not theretofore complied with this section shall thereafter look
only to Parent for payment of the Consideration deliverable in respect
of each share of Bank Common Stock such shareholder holds as determined
pursuant to this Agreement without any interest thereon. If outstanding
Old Certificates are not delivered and surrendered or the payment for
them is not claimed prior to the date on which such payments would
otherwise escheat to or become the property of any governmental unit or
agency, the unclaimed items shall, to the extent permitted by abandoned
property and any other applicable law, become the property of Parent
(and to the extent not in its possession shall be paid over to it),
free and clear of all claims or interest of any person previously
entitled to such claims. Notwithstanding the foregoing, none of Parent,
the Surviving Bank, the Paying Agent or any other person shall be
liable to any former holder of Bank Common Stock for any amount
delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) Parent or the Paying Agent will be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this
Agreement or the transactions contemplated hereby to any holder of Bank
Common Stock such amounts as Parent (or any Affiliate thereof) or the
Paying Agent are required to deduct and withhold with respect to the
making of such payment under the Code, 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 Parent or the Paying Agent, such
withheld amounts will be treated for all purposes of this Agreement as
having been paid to the holder of the Bank Common Stock in respect of
whom such deduction and withholding were made by Parent or the Paying
Agent. Notwithstanding the foregoing, Parent will not withhold federal
income taxes under Section 1445 of the Code if the Bank has timely
delivered to Parent a properly executed statement satisfying the
requirements of Treasury Regulation Sections 1.897-2(h) and
1.1445-2(c)(3) in a form reasonably acceptable to Parent certifying
that the Bank Common Stock is not a United States real property
interest (as such term is defined by the Code), provided that Parent is
entitled to rely on such statement under Section 1445 and the
regulations thereunder.
3.3 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event
any certificate representing shares of Bank Common Stock shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen or destroyed and, if required by
the Paying Agent, the posting by such person of a bond in such amount as the
Paying Agent may direct as indemnity against any claim that may be made against
it with respect to such Old Certificate, the Paying Agent will issue in exchange
for such lost, stolen or destroyed certificate any cash, unpaid dividends or
other distributions that would be payable or deliverable in respect thereof
pursuant to this Plan had such lost, stolen or destroyed certificate been
surrendered.
3.4 DISSENTERS' RIGHTS. Notwithstanding anything to the
contrary in this Agreement, Dissenting Shares that are outstanding as of the
Effective Time will not be converted into the right to receive the Consideration
unless and until the holder shall have failed to perfect, or shall have
effectively withdrawn or lost, its right to dissent from the Merger under
applicable law and to receive such consideration as may be determined to be due
with respect to such Dissenting Shares pursuant to and subject to the
requirements of applicable law. If any such holder shall have so failed to
perfect or have effectively withdrawn or lost such right after the date of the
Bank Meeting, each share of such holder's Bank Common Stock shall thereupon be
deemed to have been converted into and to have become, as of the Effective Time,
the right to receive, without any interest thereon, the Consideration. The Bank
will give Parent (a) prompt notice of any notice or demands for appraisal or
payment for shares of Bank Common Stock received by the Bank and (b) the
opportunity to participate in and direct all negotiations and proceedings with
respect to any such demands or notices. The Bank will not, without the prior
written consent of Parent, settle, offer to settle or otherwise negotiate, any
such demands. Parent will pay any consideration as may be determined to be due
by a court of competent jurisdiction with respect to Dissenting Shares pursuant
to and subject to the requirements of applicable law.
3.5 TREATMENT OF OPTIONS. Prior to the Effective Time,
the Bank will give notice to each holder of a Bank Stock Option which has been
Previously Disclosed that all unvested Bank Stock Options then outstanding will
become vested immediately prior to the Effective Time and that each outstanding
Bank Stock Option at the Effective Time will be canceled and will only entitle
the holder thereof to receive, as soon as reasonably practicable after the
Effective Time, an amount in cash equal to the product of (x) the total number
of shares of Bank Common Stock subject to the Bank Stock Options of such holder
times (y) the excess, if any, of $40.00 over the exercise price per share of
Bank Common Stock under such Bank Stock Option less applicable Taxes required to
be withheld with respect to such payment; PROVIDED, HOWEVER, that the total
payments to all option holders pursuant to this section shall not exceed
$337,705.
(b) Prior to the Effective Time, the Bank, the Bank Board
and the compensation committee of the Bank Board, as applicable, will
adopt any resolutions and take any actions which are necessary to
effectuate the provisions of Section 3.5(a).
ARTICLE 4
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME.
Except as contemplated by this Agreement or for actions taken in connection with
or to consummate the transactions contemplated by this Agreement or with the
prior written consent of Parent, during the period from the date of this
Agreement to the Effective Time, the Bank shall use its reasonable best efforts
to: (i) conduct its business in the ordinary and usual course consistent with
past practice and prudent banking practice; (ii) maintain and preserve intact
its business organization, properties, leases and advantageous business
relationships and retain the services of its officers and key employees, (iii)
take no action that would adversely affect or delay in any material respect the
ability of the Bank to perform its covenants and agreements on a timely basis
under this Agreement, (iv) take no action that would adversely affect or delay
in any material respect the ability of parties to obtain any necessary
approvals, consents or waivers of any Governmental Authority required for the
transactions contemplated hereby or that would reasonably be expected to result
in any such approvals, consents or waivers containing any material condition or
restriction, and (v) take no action that results in or is reasonably likely to
have a Material Adverse Effect on the Bank.
4.2 FORBEARANCES OF THE BANK. Without limiting the
covenants set forth in Section 4.1, the Bank agrees that from the date hereof
until the Effective Time, except as contemplated by this Agreement or for
actions taken in connection with or to consummate the transactions contemplated
by this Agreement or as Previously Disclosed, without the prior written consent
of Parent, the Bank shall not:
(a) OPERATIONS. Enter into any new line of business or
change its lending, investment (including purchasing any securities
other than United States Department of the Treasury securities and
United States government agency securities with final maturities not
greater than three years), underwriting, risk and asset liability
management and other banking and operating policies, except as required
by applicable law or policies imposed by any Governmental Authority.
(b) CAPITAL EXPENDITURES. Make any capital expenditures
in excess of $10,000 individually or $25,000 in the aggregate.
(c) MATERIAL CONTRACTS. Terminate, enter into, amend,
modify (including by way of interpretation) or renew any Material
Contract.
(d) EXTENSIONS OF CREDIT. Make or renew any individual
loan, revolving credit facility, letter of credit or other individual
extension of credit or commitment to extend credit (collectively,
"EXTENSIONS OF Credit") secured by real estate or guaranteed by the SBA
in excess of $1,500,000 or any other individual Extension of Credit in
excess of $500,000.
(e) CAPITAL STOCK. Other than pursuant to or as a result
of the exercise of Rights Previously Disclosed and outstanding on the
date of this Agreement, change the number of authorized or issued
shares of Bank Stock, issue, sell or otherwise permit to become
outstanding, or dispose of or encumber or pledge, or authorize or
propose the creation of, any additional shares of its stock or any
additional Rights of it with respect to its stock.
(f) DIVIDENDS, DISTRIBUTIONS, REPURCHASES. Other than a
regular annual dividend on Bank Common Stock of $0.20 per share (the
record date for which shall be in April 2006 and the payment date for
which shall be in July 2006), make, declare, pay or set aside for
payment any dividend on or in respect of, or declare or make any
distribution on any shares of its stock or directly or indirectly
adjust, split, combine, redeem, reclassify, purchase or otherwise
acquire, any shares of its stock or any Rights of it with respect to
its stock.
(g) DISPOSITIONS. Sell, transfer, mortgage, encumber or
otherwise dispose of or discontinue any of its assets, deposits,
business or properties, except for sales, transfers, mortgages,
encumbrances or other dispositions or discontinuances in the ordinary
course of business consistent with past practice and in a transaction
that individually or taken together with all other such transactions is
not material to it.
(h) ACQUISITIONS. Acquire (other than by way of
foreclosures or acquisitions of control in a fiduciary or similar
capacity or in satisfaction of debts previously contracted in good
faith, in each case in the ordinary and usual course of business
consistent with past practice and otherwise other than in the ordinary
course of business consistent with past practice) all or any portion of
the assets, business, deposits or properties of any other person.
(i) CONSTITUENT DOCUMENTS. Amend or waive any provision
of its Constituent Documents.
(j) ACCOUNTING METHODS. Implement or adopt any change in
its accounting principles, practices or methods, other than as may be
required by GAAP or applicable accounting requirements of a
Governmental Authority.
(k) TAX MATTERS. Make, change or revoke any material
election in respect of Taxes, file any material amendment to a Tax
Return, adopt or change any accounting method in respect of Taxes or
otherwise, enter into any closing agreement, settle any claim or
assessment in respect of Taxes, or consent to any extension or waiver
of the limitation period applicable to any claim or assessment in
respect of Taxes, or surrender any right to claim a refund of a
material amount of Taxes.
(l) CLAIMS. Settle any action, suit, claim or proceeding
against it, except for an action, suit, claim or proceeding that is
settled in the ordinary course of business in an amount or for
consideration not in excess of $10,000 and that would not (1) impose
any material restriction on its business or, after the Effective Time,
Parent or its Subsidiaries or (2) create precedent for claims that are
reasonably likely to be material to it or, after the Effective Time,
Parent or its Subsidiaries.
(m) COMPENSATION; EMPLOYMENT ARRANGEMENTS; BENEFIT
ARRANGEMENTS. (1) Grant or provide any severance or termination
payments or benefits to any director, officer or employee of the Bank
except as Previously Disclosed, (2) increase the compensation, bonus or
pension, welfare, severance or other benefits of, pay any bonus to, or
make any new equity awards to any director, officer or employee of the
Bank, except as Previously Disclosed, (3) establish, adopt, amend or
terminate any Benefit Arrangement or amend the terms of any outstanding
equity-based awards, (4) take any action to accelerate the vesting or
payment, or fund or in any other way secure the payment, of
compensation or benefits under any Benefit Arrangements, (5) materially
change any actuarial or other assumptions used to calculate funding
obligations with respect to any Benefit Arrangement or to change the
manner in which contributions to such plans are made or the basis on
which such contributions are determined, except as may be required by
GAAP or provide for any post-retirement obligations, (6) forgive any
loans to directors, officers or employees of the Bank or (7) grant any
stock options, restricted stock or other equity or stock or stock-based
awards.
(n) ADVERSE ACTIONS. Notwithstanding any other provision
hereof, knowingly take, or knowingly omit to take, any action that is
reasonably likely to result in any of the conditions to the Merger set
forth in Article 7 not being satisfied in a timely manner, or any
action that is reasonably likely to materially impair its ability to
perform its obligations under this Agreement or to consummate the
transactions contemplated hereby, except as required by applicable law.
(o) BRANCHING. Make any commitment relating to an
application for the opening or closing of any, or open or close any,
branch, automated banking or other office facility.
(p) INDEBTEDNESS. Incur any indebtedness for borrowed
money (or guarantee any indebtedness for borrowed money) or subject any
asset of Bank to any lien, pledge, security interest or other
encumbrance (other than in connection with deposits, repurchase
agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business and transactions in
"federal funds" and the satisfaction of legal requirements in the
exercise of trust powers), except in the ordinary course of business
consistent with past practice.
(q) INVESTMENTS.
(1) Make any investment in any debt security,
including mortgage-backed and mortgage related securities, other than
U.S. government and U.S. government agency securities with final
maturities not greater than three years, that are purchased in the
ordinary course of business consistent with past practice, in either
case, with a purchase price no greater than 101.5% of par value.
(2) Other than investments for the Bank's
portfolio made in accordance with Section 4.2(q)(1), make any
investment either by purchase of stock or securities, contributions to
capital, property transfers or purchase of any property or assets of
any other individual, corporation or other entity other than the
purchase of FHLB common stock necessary to maintain the Bank's
membership status with the FHLB of New York.
(r) HEDGING TRANSACTIONS. Enter into any futures
contract, option, interest rate caps, interest rate floors, interest
rate exchange agreement or other agreement, or take any other action
for purposes of hedging the exposure of its interest-earning assets and
interest-bearing liabilities to changes in market rates of interest.
(s) LOAN PARTICIPATIONS. Sell any participation interest
in any loan (other than sales of loans secured by commercial real
estate that are consistent with past practice).
(t) SERVICING RIGHTS. Purchase or sell servicing rights
(other than loan sales with servicing released).
(u) MAINTENANCE OF PROPERTIES. Fail to maintain all of
its properties in repair, order and condition no worse than on the date
of this Agreement.
(v) REAL ESTATE DEVELOPMENT PROJECTS. Make any investment
or commitment to invest in real estate or in any real estate
development project, other than real estate acquired in satisfaction of
defaulted mortgage loans and investments or commitments approved by the
Bank Board prior to the date of this Agreement and disclosed in writing
to Parent.
(w) BOARD MEMBERS. Elect to the Bank Board any person who
is not a member of the Bank Board as of the date of this Agreement.
(x) COMMITMENTS. Enter into any contract with respect to,
or otherwise agree or commit to do, any of the foregoing.
4.3 FORBEARANCES OF PARENT. Parent agrees that from the
date hereof until the Effective Time, except as contemplated by this Agreement
or for actions taken in connection with or to consummate the transactions
contemplated by this Agreement or as Previously Disclosed, without the prior
written consent of the Bank, it will not, and will cause each of its
Subsidiaries not to:
(a) ADVERSE ACTIONS. Notwithstanding any other provision
hereof, knowingly take any action that is reasonably likely to
materially impair its ability to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby, except
as required by applicable law.
(b) COMMITMENTS. Enter into any contract with respect to,
or otherwise agree or commit to do, any of the foregoing.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 STANDARD. For all purposes of this Agreement, no
representation or warranty of the Bank contained in Section 5.2 (other than the
representations and warranties contained in Sections 5.2(k)(3), (s)(6) and (aa),
which shall be true in all respects and the representations and warranties
contained in Sections 5.2(a), (b), (c), (d), (e), (f), (g), (h), (i), (j),
(k)(1), (k)(2), (n), (s)(1) through (5), (u), (v), (z) and 5.2(bb), which shall
be true in all material respects) and no representation or warranty of Parent
contained in Section 5.3 (other than the representations and warranties
contained in Sections 5.3(h) and (j), which shall be true in all respects, and
the representations and warranties contained Sections 5.3(a), (b), (c), (d),
(e), (g) and (i), which shall be true in all material respects), will be deemed
untrue, and no party will be deemed to have breached a representation or
warranty as a consequence of the existence of any fact, event or circumstance
unless such fact, event or circumstance, individually or taken together with all
other facts, events or circumstances inconsistent with such representation or
warranty contained in Section 5.2 or 5.3, as the case may be, has had or is
reasonably likely to have a Material Adverse Effect with respect to the Bank or
Parent, as the case may be.
5.2 REPRESENTATIONS AND WARRANTIES OF THE BANK. Except as
Previously Disclosed or contemplated hereby, the Bank hereby represents and
warrants to Parent as follows:
(a) ORGANIZATION, STANDING AND AUTHORITY. It is a banking
corporation duly organized, validly existing and in good standing under
the laws of the State of New York. It is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction
where the ownership or leasing of its assets or property or the conduct
of its business requires such qualification. It has Previously
Disclosed and made available to Parent a complete and correct copy of
its Constituent Documents, each as amended to the date hereof, and such
Constituent Documents are in full force and effect.
(b) BANK STOCK. (1) The authorized capital stock of the
Bank consists of 690,000 shares of Bank Common Stock and 100,000 shares
of Bank Preferred Stock. As of the date hereof, 269,179 shares of Bank
Common Stock and no shares of Bank Preferred Stock are outstanding. As
of the date hereof, 22,700 shares of Bank Common Stock are subject to
Bank Stock Options granted under the Bank Stock Plan, and 100,000
shares of Bank Common Stock are reserved for issuance under the Bank
Stock Plan. The Bank has Previously Disclosed a list of all Bank Stock
Options granted under Bank Stock Plan that states: (i) the name of each
holder of Bank Stock Options, (ii) the number of shares of Bank Common
Stock subject to each Bank Stock Option, (iii) the exercise price of
each Bank Stock Option and (iv) the date of each such grant. The Bank
holds no shares of Bank Common Stock as treasury shares. The
outstanding shares of Bank Common Stock have been duly authorized and
are validly issued and outstanding, fully paid and nonassessable and
are not subject to preemptive rights (and were not issued in violation
of any preemptive rights). The shares of Bank Common Stock issuable
pursuant to the Bank Stock Plan have been duly authorized and, upon
issuance, will be validly issued and outstanding, fully paid and
nonassessable and will not be subject to preemptive rights (and will
not be issued in violation of any preemptive rights). Except as set
forth above, as of the date hereof, there are no shares of Bank Stock
reserved for issuance, the Bank does not have any Rights issued or
outstanding with respect to Bank Stock and the Bank does not have any
commitment to authorize, issue or sell any Bank Stock or Rights, except
pursuant to this Agreement. It has no commitment to redeem, repurchase
or otherwise acquire, or to register with the SEC, any shares of Bank
Stock. It has no outstanding bonds, debentures, notes or other
obligations, the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to
vote) on any matter.
(2) There are no voting trusts, proxies,
shareholder agreements or other agreements or understandings with
respect to the voting of shares of Bank Stock.
(3) No bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which
shareholders of the Bank may vote are issued or outstanding.
(c) SUBSIDIARIES AND EQUITY HOLDINGS. (1) It has no
Subsidiaries.
(2) It has Previously Disclosed a list of all
equity securities that it owns, controls or holds.
(d) POWER. It has the corporate power and authority to
own and operate its assets and properties and to conduct its business
as it is now being conducted. It has the corporate power and authority
to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby.
(e) AUTHORITY. It has duly executed and delivered this
Agreement and has taken all corporate action necessary for it to
execute and deliver this Agreement. Subject only to receipt of the
affirmative vote of the holders of two-thirds of the outstanding shares
of Bank Common Stock, this Agreement, the Merger and the transactions
contemplated hereby have been authorized by all necessary corporate
action on its part prior to the date hereof. This Agreement constitutes
the valid and legally binding obligation of the Bank, enforceable
against the Bank 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.
(f) CONSENTS AND APPROVALS. No notices, applications or
other filings are required to be made by it with, nor are any consents,
approvals, registrations, permits, expirations of waiting periods or
other authorizations required to be obtained by it from, any
Governmental Authority or third party in connection with the execution,
delivery or performance by it of this Agreement or the consummation of
the transactions contemplated hereby, except for (1) filings of
applications and notices with, receipt of approvals or no objections
from, and expiration of related waiting periods required by federal and
state banking authorities, including applications and notices to be
filed with the FDIC and the New York State Banking Department and (2)
receipt of the Shareholder Approval. As of the date hereof, it is not
aware of any reason why all necessary consents, approvals, permits and
other authorizations will not be received in order to permit
consummation of the Merger and the other transactions contemplated
hereby. Without limiting the foregoing, as of the date hereof, the Bank
has no formal or informal agreements, arrangements or understandings
with any Governmental Authority, either pending, threatened or in
force, that would, nor is the subject of any investigation or
examination results of which could reasonably be expected to,
materially impede or delay the ability to obtain any Requisite
Regulatory Approvals or the consummation of the transactions
contemplated hereby.
(g) NO DEFAULTS. Subject to making the filings and
receiving the consents and approvals referred to in Section 5.2(f), the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will
not violate, conflict with, require a consent or approval under, result
in a breach of, constitute a default (or an event that, with notice or
lapse of time or both, would constitute a default) under, result in the
right of termination of, accelerate the performance required by,
increase any amount payable under, change the rights or obligations of
a party under, or give rise to any Lien or penalty under, the terms,
conditions or provisions of (1) its Constituent Documents, (2) any
contract, commitment, agreement, arrangement, understanding, indenture,
lease, policy or other instrument of it, or by which it is bound or
affected, or to which it or its businesses, operations, assets or
properties is subject or receives benefits or (3) any law, statute,
ordinance, rule, regulation, judgment, order, decree, permit or
license.
(h) TAKEOVER LAWS AND PROVISIONS. It has taken all action
required to be taken by it in order to exempt this Agreement and the
transactions contemplated hereby from, and this Agreement and the
transactions contemplated hereby and thereby are exempt from, the
requirements of any applicable "moratorium," "control share," "fair
price," "affiliate transaction," "business combination" laws or other
applicable antitakeover laws and regulations of any state
(collectively, "TAKEOVER LAWS").
(i) FINANCIAL ADVISORS. None of it or any of its
directors, officers or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated hereby, except
that, in connection with this Agreement, the Bank has retained RBC
Capital Markets Corporation as its financial advisor, and a complete
and correct copy of its arrangements with RBC Capital Markets
Corporation have been Previously Disclosed. As of the date hereof, the
Bank has received a written opinion of RBC Capital Markets Corporation,
a complete and correct copy of which has been Previously Disclosed,
issued to the Bank, to the effect that the Consideration is fair from a
financial point of view to holders of Bank Common Stock.
(j) FINANCIAL REPORTS AND REGULATORY FILINGS. It has
Previously Disclosed complete and correct copies of its audited
financial statements (including any related notes and schedules
thereto) for the fiscal years ended December 31, 2003, 2004 and 2005,
(collectively, the "BANK FINANCIAL STATEMENTS"). Each of the statements
of financial condition included in the Bank Financial Statements fairly
presents the consolidated financial position of the Bank as of its
date, and each of the statements of income and changes in shareholders'
capital and cash flows or equivalent statements included in the Bank
Financial Statements fairly presents the consolidated results of
operations, changes in shareholders' capital and changes in cash flows,
as the case may be, of the Bank for the periods set forth therein, in
each case in accordance with GAAP consistently applied during the
periods involved.
(2) Since January 1, 2002, it has filed all
reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with (A) the
FDIC, (B) the New York State Banking Department and (C) any other
applicable Governmental Authorities. As of their respective dates (and
without giving effect to any amendments or modifications filed after
the date of this Agreement with respect to reports and documents filed
before the date of this Agreement), each of such reports and documents,
including the financial statements, exhibits and schedules thereto,
complied with all of the statutes, rules and regulations enforced or
promulgated by the Governmental Authority with which they were filed.
(k) ABSENCE OF CERTAIN CHANGES. Since December 31, 2004,
(1) other than in the ordinary and usual course of business consistent
with past practice or in connection with the transactions contemplated
hereby, it has not incurred any obligation or liability, whether or not
accrued, contingent or otherwise and whether or not required to be
disclosed, (2) it has conducted its business in the ordinary and usual
course consistent with past practice and (3) no event has occurred or
fact or circumstance has arisen that, individually or taken together
with all other events, facts, and circumstances (described in any
paragraph of Section 5.2 or otherwise), has had or is reasonably likely
to have a Material Adverse Effect with respect to it.
(l) LITIGATION. There is no action, suit, claim, hearing,
dispute, investigation or proceeding pending or, to its knowledge,
threatened against or affecting it (and it is not aware of any basis
for any such action, suit or proceeding), and there is no judgment,
order, decree, injunction or ruling of any Governmental Authority or
arbitration outstanding against it.
(m) COMPLIANCE WITH LAWS. It:
(1) operates and conducts its business in
compliance with all applicable federal, state, local and foreign laws,
statutes, ordinances, rules, regulations, judgments, orders or decrees
applicable thereto or to the employees conducting such businesses,
including the BSA, the CRA (and, with respect to the CRA, currently has
a rating of "Satisfactory" or better), the USA PATRIOT Act, the Equal
Credit Opportunity Act, the Fair Housing Act, and all other applicable
fair lending laws and other laws relating to discriminatory business
practices;
(2) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are required in
order to permit it to own or lease its assets and properties and to
conduct its business as it is now being conducted, and all such
permits, licenses, authorizations, orders and approvals are in full
force and effect and, to its knowledge, no suspensions or cancellations
are threatened;
(3) has received, since December 31, 2002, no
notification from a Governmental Authority (A) asserting that it is not
in compliance with any of the laws, statutes, ordinances, rules or
regulations that such Governmental Authority enforces, (B) threatening
to suspend, cancel, revoke or condition the continuation of any permit,
license, authorization, order or approval or (C) restricting or
disqualifying, or threatening to restrict or disqualify, its
activities;
(n) REGULATORY MATTERS. It is not subject to, or has been
advised that it is reasonably likely to become subject to, any written
order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission to, or
extraordinary supervisory letter from, or adopted any extraordinary
board resolutions at the request of, any Governmental Authority charged
with the supervision or regulation of financial institutions or issuers
of securities or engaged in the insurance of deposits or otherwise
involved with the supervision or regulation of it.
(o) BOOKS AND RECORDS AND INTERNAL CONTROLS. (1) Its
books and records have been fully, properly and accurately maintained
in all respects, and there are no inaccuracies or discrepancies of any
kind contained or reflected therein.
(2) Its records, systems, controls, data and
information are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct
control of it or accountants (including all means of access thereto and
therefrom), except for any non-exclusive ownership and non-direct
control that would not reasonably be expected to have a materially
adverse effect on the system of internal accounting controls described
in the following sentence. It has established and maintains a system of
internal accounting controls sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the
preparation of financial statements in accordance with GAAP.
(p) TAXES. (1) All Tax Returns that are required to be
filed (taking into account any extensions of time within which to file)
by it have been duly and timely filed and all such Tax Returns were
true, correct and complete in all material respects, (2) all Taxes
shown to be due on the Tax Returns referred to in clause (1) have been
paid in full, (3) no extensions or waivers of statutes of limitation
have been given or requested with respect its Taxes, (4) no Liens for
Taxes exist with respect to any of its assets or properties, except for
statutory Liens for Taxes not yet due and payable or that are being
contested in good faith and reserved for in accordance with GAAP and
(5) it has not been a party to any distribution occurring during the
two-year period prior to the date of this Agreement in which the
parties to such distribution treated the distribution as one to which
Section 355 of the Code applied. The Bank has not participated in any
reportable or listed transaction as defined under Section 6011 of the
Code. If the Bank has participated in a reportable or listed
transaction, it has properly disclosed such transaction in accordance
with the applicable Tax regulations. The Bank has made provisions in
the Bank Financial Statements, in accordance with GAAP, for all Taxes
that have accrued but have not yet been paid. The Bank has retained all
Tax Returns referred to in clauses (1) and (2) above where such
retention by the Bank is required by law. The Bank is in compliance
with all applicable rules and regulations regarding the solicitation,
collection and maintenance of any forms, certifications and other
information required in connection with Federal, state, local or
foreign Tax withholding or reporting. No action, suit, proceeding,
audit or examination of any Tax Return of the Bank by any Governmental
Authority is currently in progress or, to the knowledge of the Bank,
has been threatened in writing. The Bank has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. The Bank has not entered
into a closing agreement, private letter ruling, technical advance
memoranda or any similar agreement or ruling with a Governmental
Authority. The Bank has not been notified in writing by any
jurisdiction that the jurisdiction believes that the Bank was required
to file any Tax Return that was not filed. The Bank will not be
required to include any item of income in, or exclude any items of
deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any change in
method of accounting for a taxable period ending on or prior to the
Closing Date. The Bank has not been a member of an affiliated,
combined, consolidated or unitary Tax group for purposes of filing any
Tax Return.
(q) ENVIRONMENTAL MATTERS. (1) No real property currently
or formerly owned or operated by it is contaminated with a Material of
Environmental Concern requiring remediation under an Environmental Law,
(2) the Bank is not subject to liability for off-site disposal or
contamination, and (3) to the knowledge of the Bank, there are no
circumstances involving the Bank that could result in any claims,
liabilities, costs or restrictions on the ownership, use or transfer of
any property pursuant to an Environmental Law.
(r) LABOR MATTERS. It is not a party to or is not
otherwise bound by any collective bargaining agreement, contract or
other agreement, arrangement or understanding with a labor union or
labor organization, and it is not the subject of a proceeding asserting
that it has committed an unfair labor practice or seeking to compel it
to bargain with a labor union or labor organization. There is no
pending or, to its knowledge, threatened, nor has there been since
December 31, 1998 any labor strike, dispute, walk-out, work stoppage,
slow-down or lockout involving it. Since December 31, 1998, there has
been no activity involving its employees seeking to certify a
collective bargaining unit or engaging in any other organization
activity or any pending demand for certification or representation or
labor union organizing activities. The Bank has made all payments to
employees (or made appropriate accruals to its balance sheet) for any
wages, salaries, commissions, bonuses, or other direct compensation for
any service performed for it to the date hereof or amounts required to
be reimbursed to such employees, other than with respect to the current
pay period. The Bank has complied with all material legal requirements
related to employment and employment practices, including those related
to wages, hours, worker classification, labor relations, collective
bargaining, discrimination, equal opportunity, disability rights or
benefits, affirmative action, workers' compensation, employee leave
issues and the payment and withholding of taxes and other sums as
required.
(s) BENEFIT ARRANGEMENTS. (1) It has Previously Disclosed
a complete and correct list of all of its Benefit Arrangements. It has
made available to Parent complete and correct copies of all Benefit
Arrangements, including any plans, grants or award documents, trust
instruments, insurance contracts, summary plan descriptions, most
recent actuarial reports and Forms 5500 for the past 3 years and loan
agreements forming a part of any Benefit Arrangements, and all
amendments thereto.
(2) All of its Benefit Arrangements, other than
"multiemployer plans" within the meaning of Section 3(37) of ERISA, are
in compliance with ERISA, the Code and other applicable law in all
material respects. Each of its Benefit Arrangements subject to ERISA
that is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("PENSION PLAN"), and that is intended to be
qualified under Section 401(a) of the Code, has received a favorable
determination letter from the Internal Revenue Service covering all tax
law changes prior to the Economic Growth and Tax Relief Reconciliation
Act of 2001, and the Bank is not aware of any circumstances reasonably
likely to result in the loss of the qualification of such Pension Plan
under Section 401(a) of the Code. It has not engaged in a transaction
with respect to any of its Benefit Arrangements that, assuming the
taxable period of such transaction expired as of the date hereof, could
subject it to a tax or penalty imposed by either Section 4975 of the
Code or Section 502(i) of ERISA in an amount which would be material.
It has not incurred and does not reasonably expect to incur a tax or
penalty imposed by Section 4980F of the Code or Section 502 of ERISA.
(3) Neither the Bank nor any entity which is
considered one employer with the Bank under 4001 of ERISA or Section
414 of the Code (an "ERISA AFFILIATE") (x) maintains or contributes to,
or has any liability with respect to, or has within the past six years
maintained or contributed to, a Pension Plan that is subject to
Subtitles C or D of Title IV of ERISA or (y) maintains or has an
obligation to, or has any liability with respect to, contribute to or
has within the past six years maintained or had an obligation to
contribute to, a multiemployer plan as defined in ERISA.
(4) There has been no amendment to, announcement
by it relating to, or change in employee participation or coverage
under, any Benefit Arrangement which would materially increase the
expense of maintaining such Benefit Arrangement above the level of the
expense incurred therefor for the most recent fiscal year. Neither its
execution of this Agreement, the performance of its obligations
hereunder, the consummation of the transactions contemplated hereby,
nor shareholder approval of the transactions contemplated hereby, will
(A) entitle any of its employees, former employees, directors, former
directors or consultants to severance pay or any increase in severance
pay upon any termination of employment after the date hereof, (B)
accelerate the time of payment or vesting or result in any payment or
funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or result in any other
material obligation pursuant to, any of its Benefit Arrangements, (C)
limit or restrict the right of the Bank or after the consummation of
the transactions contemplated hereby, Parent to merge, amend or
terminate any of the Benefit Arrangements, or (D) result in payments
under any of the Benefit Arrangements or otherwise which would not be
deductible under Section 162(m) or Section 280G of the Code. The Seller
has operated in good faith compliance with Section 409A of the Code.
(5) To the Bank's knowledge, no event has
occurred and no condition exists that could subject the Bank or any
ERISA Affiliate to any penalty, fine, liability, obligation or lien
with respect to any Benefit Arrangement. No action, suit, litigation or
proceeding (other than routine claims for benefits) is pending, or to
the Bank's knowledge, threatened; to the Bank's knowledge, no facts or
circumstances exist that could give rise to any such action, suit,
litigation or proceeding; and no administrative investigation, audit,
or other administrative proceeding by the Department of Labor, the
Pension Benefit Guaranty Corporation, the IRS or other governmental
entity are pending, in progress or, to the Bank's knowledge,
threatened. To the Bank's knowledge, no oral or written representation
or communication with respect to any aspect of the Benefit Arrangements
has been made to employees prior to the date hereof which is not in
accordance with the written or otherwise pre-existing terms and
provisions of such plans. The Bank does not have any obligation for
retiree health and life benefits or post retirement benefits other than
as required by applicable health care continuation laws at the expense
of the former employee.
(6) No payments or accelerated vesting, funding
or time or payment under any Benefit Arrangement or otherwise will fail
to be deductible under Section 280G or Section 162(m) of the Code.
(t) PROPERTY. It has good, and, in the case of real
property, marketable, title to, or, in the case of securities and
investments, a "security entitlement" (as defined in the Uniform
Commercial Code) in, or in the case of leased property, a valid
leasehold interest in, all property (whether real or personal, tangible
or intangible, and including securities and investments) and assets
purported to be owned or leased by it, and such property and assets are
not subject to any Liens except mechanics', workmen's, repairmen's,
warehousemen's, carriers' or similar Liens arising in the ordinary
course of business consistent with past practice.
(u) MATERIAL CONTRACTS. It has Previously Disclosed and
made available to Parent complete and correct copies of the following
Contracts ("MATERIAL CONTRACTS") which are all of the Material
Contracts to which it is a party, or by which it may be bound, or to
which it or its assets or properties may be subject:
(A) any lease of real property;
(B) any partnership, limited liability
company, joint venture or other similar agreement or
arrangement;
(C) any Contract relating to the
acquisition or disposition of any business or
operations (whether by merger, sale of stock, sale of
assets or otherwise) as to which there are any
ongoing obligations or that was entered into or has
an effect on or after December 31, 2003;
(D) any Contract for the purchase of
services, materials, supplies, goods, equipment or
other assets or property that provides for either (i)
annual payments of $25,000 or more, or (ii) aggregate
payments of $100,000 or more;
(E) any Contract that creates future
payment obligations in excess of $50,000 and that by
its terms does not terminate or is not terminable
without penalty upon notice of 60 days or less;
(F) any Contract providing for a power
of attorney on behalf of it;
(G) any Contract, other than this
Agreement, providing for exclusive dealing or
limiting the freedom of the Bank or any of its
employees to compete in any line of business or with
any person or in any area, or that would so limit
their freedom;
(H) any Contract, other than this
Agreement, that requires the Bank to disclose
confidential information or to indemnify or hold
harmless any person;
(I) any Contract, other than this
Agreement, with (i) any Affiliate of it, (ii) any
current or former director, officer, employee,
consultant or shareholder of it or any Affiliate of
it, or (iii) any "associate" or member of the
"immediate family" (as such terms are respectively
defined in Rule 12b-2 and Rule 16a-1 of the Exchange
Act) of a person identified in clauses (i) or (ii) of
this paragraph;
(J) any Contract with a Governmental
Authority;
(K) any Contract relating to material
Intellectual Property or material IT Assets,
excluding licenses by the Bank for off the shelf
software and agreements for purchases of equipment
which has been delivered; and
(L) any other Contract not entered into
in the ordinary course of business or that is
material to it or its financial condition or results
of operations.
(2) Each Material Contract is a valid and
legally binding agreement of it and, to its knowledge, the counterparty
or counterparties thereto, is enforceable in accordance with its terms
(except as enforcement 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. It, and, to its knowledge, any counterparty or counterparties,
is not in breach of any provision of or in default (or, with the giving
of notice or lapse of time or both, would be in default) under, and has
not taken any action resulting in the termination of, acceleration of
performance required by, or resulting in a right of termination or
acceleration under, any Material Contract.
(v) MATERIAL INTERESTS OF CERTAIN PERSONS. No officer or
director of it, or "associate" (as such term is defined in Rule 12b-2
under the Exchange Act) of any such officer or director, has any
interest in any material property (whether real or personal, tangible
or intangible) or Contract used in or pertaining to its business.
(w) INSURANCE COVERAGE. It maintains adequate insurance
coverage for all normal risks incident to its businesses and its
properties and assets. Such coverage is of a character and amount at
least equivalent to that typically carried by persons engaged in
similar businesses and subject to the same or similar perils or
hazards. It has Previously Disclosed a complete and correct list of
each Contract representing such coverage.
(x) EXTENSIONS OF CREDIT.
(1) The allowance for loan losses reflected in
the notes to the Bank's audited consolidated statement of financial
condition at December 31, 2005 was adequate, as of the date thereof,
under GAAP.
(2) The Bank has Previously Disclosed a listing,
as of March 31, 2006 by account, of: (A) each borrower, customer or
other party which has notified the Bank during the past twelve months
of, or has asserted against the Bank, in writing, any "lender
liability" or similar claim, and, to the knowledge of the Bank each
borrower, customer or other party which has given the Bank any oral
notification of, or orally asserted to or against the Bank any such
claim; and (B) all loans, (1) that are contractually past due 90 days
or more in the payment of principal and/or interest, (2) that are on
non-accrual status, (3) that as of the date of this Agreement are
classified as "Other Loans Especially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Watch
list" or words of similar import, together with the principal amount of
and accrued and unpaid interest on each such loan and the identity of
the obligor thereunder, (4) where 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, (5) where 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, or (6)
where a specific reserve allocation exists in connection therewith; and
(C) all other assets classified by the Bank as real estate acquired
through foreclosure or in lieu of foreclosure, including in-substance
foreclosures, and all other assets currently held that were acquired
through foreclosure or in lieu of foreclosure.
(3) All loans receivable (including discounts)
and accrued interest entered on the books of the Bank arose out of bona
fide arm's-length transactions, were made for good and valuable
consideration in the ordinary course of the Bank's business, and the
notes or other evidences of indebtedness or guarantees from the SBA, if
applicable, with respect to such loans (including discounts) are each
legal, valid and binding obligations of the maker, guarantor or obligor
thereof, enforceable against such maker, guarantor or obligor in
accordance with their terms. To the knowledge of the Bank, the loans,
discounts and the accrued interest reflected on the books of the Bank
are subject to no defenses, set-offs or counterclaims (including those
afforded by usury or truth-in-lending laws), except as may be provided
by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by general principles of equity. All such loans are owned
by the Bank free and clear of any liens.
(4) With respect to each loan owned by the Bank,
in whole or in part (each, a "BANK LOAN"):
(i) neither the Bank nor any prior
holder of a Bank Loan has modified the note or any of
the related security documents in any material
respect or satisfied (other than the ordinary
amortization of principal or prepayment of principal
as permitted by the applicable loan documents),
canceled or subordinated the note or any of the
related security documents except as otherwise
disclosed by documents in the applicable Bank Loan
file;
(ii) the Bank is the sole holder of
legal and beneficial title to each Bank Loan or the
Bank's applicable participation interest;
(iii) the note and the related security
documents, copies of which are included in the Bank
Loan files, are true and correct copies of the
documents they purport to be and have not been
suspended, amended, modified, canceled or otherwise
changed except as otherwise disclosed by documents in
the applicable Bank Loan file;
(iv) there is no pending or, to the
Bank's knowledge, threatened condemnation proceeding
or similar proceeding affecting the property which
serves as security for a Bank Loan;
(v) there is no litigation or
proceeding pending or, to the Bank's knowledge,
threatened relating to the property which serves as
security for a Bank Loan that would have a material
adverse effect upon the related Bank Loan;
(vi) with respect to a Bank Loan held in
the form of a participation, the participation
documentation is legal, valid, binding and
enforceable and the interest in such Bank Loan of the
Bank created by such participation would not be a
part of the insolvency estate of the Bank Loan
originator or other third party upon the insolvency
thereof; and
(vii) each Bank Loan secured by a
mortgage on residential property (except for
construction loans) was originated by a bank, thrift,
other HUD-approved lender, licensed mortgage broker
or insurance company.
(y) DEPOSITS. As of the date hereof, none of the deposits
of the Bank is a "brokered" deposit or subject to any encumbrance,
legal restraint or other legal process except to the extent any such
deposits serve as collateral for any Bank Loan or are subject to legal
restraint in the ordinary course of the banking business due to the
action of the depositor or a third party.
(z) REGISTRATION OBLIGATIONS. The Bank is not under any
obligation, contingent or otherwise, which will survive the Effective
Time by reason of any agreement to register any transaction involving
any of its securities under the Securities Act.
(aa) REQUIRED VOTE. The affirmative vote of two-thirds of
the outstanding shares of Bank Common Stock is the only vote of
shareholders required to approve this Agreement and the Merger under
the Bank's Constituent Documents or applicable law.
(bb) INTEREST RATE RISK MANAGEMENT INSTRUMENTS. It has
entered into no interest rate swaps, caps, floors and option agreements
or other interest rate risk management arrangements whether for the
account of it or for the account of a customer of it.
5.3 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as
Previously Disclosed or as contemplated hereby, Parent hereby represents and
warrants to the Bank as follows:
(a) ORGANIZATION, STANDING AND AUTHORITY. It is, and
Interim Sub will be, a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation. It is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the
ownership or leasing of its assets or property or the conduct of its
business requires such qualification. Parent has made available to the
Bank a complete and correct copy of the organizational document and
bylaws of Parent as in effect on the date of this Agreement.
(b) SIGNIFICANT SUBSIDIARIES. It owns, directly or
indirectly, all the outstanding equity securities of its Significant
Subsidiaries free and clear of Liens, and all such equity securities
have been duly authorized and are validly issued and outstanding, fully
paid and nonassessable. Each of its Significant Subsidiaries has been
duly organized and is validly existing in good standing under the laws
of the jurisdiction of its organization, and is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction where the ownership or leasing of its assets or property
or the conduct of its business requires such qualification.
(c) POWER. It and each of its Subsidiaries has the
corporate (or comparable) power and authority to own and operate its
assets and properties and to conduct its business as it is now being
conducted. It has the corporate power and authority to execute, deliver
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
(d) AUTHORITY. It has duly executed and delivered this
Agreement and has taken all corporate action necessary for it to
execute and deliver this Agreement. No vote of the holders of Parent
Stock is necessary to approve this Agreement, or the Merger, and this
Agreement and the transactions contemplated hereby have been authorized
by all necessary corporate action. This Agreement constitutes the valid
and legally binding obligation of Parent, enforceable against Parent 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.
(e) CONSENTS AND APPROVALS. No notices, applications or
other filings are required to be made by it or any of its Subsidiaries
with, nor are any consents, approvals, registrations, permits,
expirations of waiting periods or other authorizations required to be
obtained by it or any of its Subsidiaries from, any Governmental
Authority or third party in connection with the execution, delivery or
performance by it of this Agreement or the consummation of the
transactions contemplated hereby, except for filings of applications
and notices with, receipt of approvals or no objections from, and
expiration of related waiting periods required by federal and state
banking authorities, including applications and notices to be filed
with the FDIC, the New York State Banking Department, the Office of
Thrift Supervision and the Board of Governors of the Federal Reserve
System. As of the date hereof, it is not aware of any reason why all
necessary consents, approvals, permits and other authorizations will
not be received in order to permit consummation of the Merger and the
other transactions contemplated hereby. Without limiting the foregoing,
as of the date hereof, neither the Parent nor any of its Subsidiaries
has any formal or informal agreements, arrangements or understandings
with any Governmental Authority, either pending, threatened or in
force, that would, nor is the subject of any investigation or
examination results of which could reasonably be expected to,
materially impede or delay the ability to obtain any Requisite
Regulatory Approvals or the consummation of the transactions
contemplated hereby.
(f) NO DEFAULTS. Subject to making the filings and
receiving the consents and approvals referred to in Section 5.3(e), the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby do not
and will not violate, conflict with, require a consent or approval
under, result in a breach of, constitute a default (or an event that,
with notice or lapse of time or both, would constitute a default)
under, result in the right of termination of, accelerate the
performance required by, increase any amount payable under, change the
rights or obligations of a party under, or give rise to any Lien or
penalty under, the terms, conditions or provisions of (1) its
Constituent Documents or those of its Subsidiaries, (2) any material
contract to which it is a party or (3) any law, statute, ordinance,
rule, regulation, judgment, order, decree, permit or license applicable
to Parent and Subsidiaries.
(g) FINANCIAL REPORTS AND REGULATORY FILINGS. The
financial statements of the Parent included in the Parent's Annual
Report on Form 10-K for the fiscal year ended March 31, 2005 filed with
the SEC have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited financial
statements, as permitted by SEC Form 10-K or the Exchange Act).
(h) ABSENCE OF CERTAIN CHANGES. Since March 31, 2005, no
event has occurred or fact or circumstance has arisen that,
individually or taken together with all other events, facts, and
circumstances (described in any paragraph of Section 5.3 or otherwise),
has had or is reasonably likely to have a Material Adverse Effect with
respect to it.
(i) LITIGATION. As of the date hereof, no action, suit or
proceeding by or against the Parent is pending or, to the knowledge of
the Parent, threatened which could affect the legality, validity or
enforceability of this Agreement or the consummation of the
transactions contemplated hereby.
(j) AVAILABLE FUNDS. It has available to it funds
necessary to satisfy its obligations in connection with the Merger and
the transactions contemplated hereby. It anticipates that, on a PRO
FORMA basis, upon consummation of the Merger it will have the capital
levels required to be "well capitalized" on a consolidated basis under
applicable law.
ARTICLE 6
COVENANTS
6.1 REASONABLE BEST EFFORTS. (a) Subject to the terms and
conditions of this Agreement, the Bank and Parent will use reasonable best
efforts to take, or cause to be taken, in good faith, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby, and each will cooperate fully with, and furnish information
to, the other party to that end.
(b) The Bank and Parent will give prompt notice to the
other of any fact, event or circumstance known to it that (1) is
reasonably likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any Material Adverse
Effect with respect to it or (2) would cause or constitute a breach of
any of its representations, warranties, covenants or agreements
contained herein that reasonably could be expected to give rise,
individually or in the aggregate, to the failure of a condition in
Article 7.
(c) The Bank shall use its reasonable best efforts to
obtain the consent or approval of each person whose consent or approval
shall be required in connection with the transactions contemplated
hereby under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument to which Bank is a
party or is otherwise bound.
6.2 SHAREHOLDER APPROVAL. (a) Prior to the date hereof,
the Bank Board adopted resolutions recommending to the Bank's shareholders
approval of this Agreement and the Merger and any other matters required to be
approved or adopted in order to effect the Merger and the other transactions
contemplated hereby.
6.3 NO SOLICITATION. The Bank shall not, nor shall it
authorize or permit any of its Representatives retained by it to, directly or
indirectly through another person, (i) solicit, initiate or knowingly encourage,
or take any other action designed to, or which could reasonably be expected to,
facilitate, any Acquisition Proposal or (ii) enter into, continue or otherwise
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or otherwise cooperate in any way with,
any Acquisition Proposal. Without limiting the foregoing, it is agreed that any
violation of the restrictions set forth in the preceding sentence by any
Representative of Bank shall be a breach of this Section 6.3(a) by Bank. The
Bank shall, and shall cause any Representative engaged thereby, to immediately
cease and cause to be terminated all existing discussions or negotiations with
any person conducted heretofore with respect to any Acquisition Proposal and
request the prompt return or destruction of all confidential information
previously furnished. Notwithstanding the foregoing, at any time prior to
obtaining the Shareholder Approval, in response to a bona fide written
Acquisition Proposal that the Bank Board in good faith reasonably determines
(after consultation with outside legal counsel and a financial advisor of
nationally recognized reputation) (i) it is legally necessary for the proper
discharge of its fiduciary duties to respond to such Acquisition Proposal and
(ii) such Acquisition Proposal constitutes or is reasonably likely to lead to a
Superior Proposal, and which Acquisition Proposal was made after the date hereof
and did not otherwise result from a breach of this Section 6.3(a), the Bank may,
subject to compliance with Section 6.3(c), (x) furnish information with respect
to the Bank to the person making such Acquisition Proposal (and its
Representatives) pursuant to a customary confidentiality agreement not less
restrictive to such person than the confidentiality provisions of the
Confidentiality Agreement, provided that all such information has previously
been provided to Parent or is provided to Parent prior to or substantially
concurrent with the time it is provided to such person, and (y) participate in
discussions or negotiations with the person making such Acquisition Proposal
(and its Representatives) regarding such Acquisition Proposal.
(b) Neither the Bank Board nor any committee thereof
shall (i) (A) withdraw (or modify in a manner adverse to Parent), or
publicly propose to withdraw (or modify in a manner adverse to the
Bank), the adoption or recommendation by such Bank Board or any such
committee thereof of this Agreement, the Merger or the other
transactions contemplated by this Agreement or (B) adopt or recommend,
or publicly propose to adopt or recommend, any Acquisition Proposal
(any action described in this clause (i) being referred to as a "BANK
ADVERSE RECOMMENDATION CHANGE") or (ii) adopt or recommend, or publicly
propose to adopt or recommend, or allow the Bank to execute or enter
into, any letter of intent, memorandum of understanding, agreement in
principle, merger agreement, acquisition agreement, option agreement,
joint venture agreement, partnership agreement or other similar
contract constituting or related to, or that is intended to or could
reasonably be expected to lead to, any Acquisition Proposal (other than
a confidentiality agreement referred to in Section 6.3(a)) (an
"ACQUISITION AGREEMENT"). Notwithstanding the foregoing, at any time
prior to obtaining Shareholder Approval and subject to Section 6.3(c),
the Bank Board may in response to an Acquisition Proposal that the Bank
Board in good faith reasonably determines (after consultation with
outside legal counsel and a financial advisor of nationally recognized
reputation) constitutes a Superior Proposal and made after the date
hereof and that did not otherwise result from a breach of this Section
6.3, (1) make a Bank Adverse Recommendation Change or (2) cause Bank to
terminate this Agreement and concurrently with or after such
termination enter into an Acquisition Agreement as provided by and with
the effect set forth in Article VIII; PROVIDED, HOWEVER, that the Bank
shall not be entitled to exercise its right to make a Bank Adverse
Recommendation Change or terminate this Agreement pursuant to this
clause until after the fifth business day following Parent's receipt of
written notice (a "NOTICE OF SUPERIOR PROPOSAL") from the Bank advising
Parent that the Bank Board intends to take such action and specifying
the reasons therefor, including the terms and conditions of any
Superior Proposal that is the basis of the proposed action by the Bank
Board (it being understood and agreed that any material amendment to
the financial terms or any other material term of such Superior
Proposal shall require a new Notice of Superior Proposal and a new five
business day period). In determining whether to make a Bank Adverse
Recommendation Change or to cause the Bank to so terminate this
Agreement, the Bank Board shall take into account any changes to the
financial terms of this Agreement definitively offered by Parent in
response to a Notice of Superior Proposal or otherwise.
(c) In addition to the obligations of the Bank set forth
in Sections 6.3(a) and 6.3(b), the Bank shall promptly advise Parent
orally and in writing of any Acquisition Proposal, the material terms
and conditions of any such Acquisition Proposal (including any changes
thereto) and the identity of the person making any such Acquisition
Proposal. The Bank shall (i) keep Parent fully informed in all material
respects of the status and details (including any change to the terms
thereof) of any Acquisition Proposal, (ii) provide to Parent as soon as
practicable after receipt or delivery thereof copies of all
correspondence and other written material sent or provided to the Bank
from any person that describes any of the terms or conditions of any
Acquisition Proposal (including any draft acquisition agreement) and
(iii) keep Parent fully informed in all material respects of the status
and details of any determination by the Bank Board with respect to any
such Acquisition Proposal.
(d) Nothing contained in this Section 6.3 shall prohibit
the Bank from making any disclosure to the shareholders of the Bank
required by applicable law; PROVIDED, HOWEVER, that in no event shall
the Bank or the Bank Board or any committee thereof take, or agree or
resolve to take, any action prohibited by Section 6.3(b) (it being
understood that any accurate disclosure of factual information to the
shareholders of the Bank required to be made to such shareholders under
applicable law shall not be considered a modification prohibited by
clause (i)(A) of Section 6.3(b)).
6.4 REGULATORY APPLICATIONS. (a) The Bank and Parent and
its Subsidiaries (in the case of Parent) will cooperate and use reasonable best
efforts to prepare as promptly as practicable all documentation, to make all
filings and to obtain all consents, approvals, permits and other authorizations
of all Governmental Authorities and third parties to consummate the Merger and
the other transactions contemplated hereby (the "REQUISITE REGULATORY
APPROVALS"), and will use their reasonable best efforts to make all necessary
filings in respect of Requisite Regulatory Approvals of federal and state
banking authorities within 30 days of the date hereof and will make all other
necessary filings in respect of Requisite Regulatory Approvals as promptly as
practicable. Each of the Bank and Parent will have the right to review in
advance, and to the extent practicable each will consult with the other, in each
case subject to applicable laws relating to the exchange of information, with
respect to all material written information submitted to any third party or any
Governmental Authority in connection with the Requisite Regulatory Approvals. In
exercising the foregoing right, each of the parties will act reasonably and as
promptly as practicable. Each party agrees that it will consult with the other
party with respect to obtaining all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated hereby and each party will
keep the other party apprised of the status of material matters relating to
completion of the transactions contemplated hereby.
(b) The Bank and Parent will, upon request, furnish the
other party with all information concerning itself, its Subsidiaries
(in the case of Parent), directors, officers and shareholders and such
other matters as may be reasonably necessary or advisable in connection
with any filing, notice or application made by or on behalf of such
other party or any of its Subsidiaries (in the case of Parent) with or
to any third party or Governmental Authority in connection with the
transactions contemplated hereby.
6.5 PROXY STATEMENT. As soon as practicable after the
date of this Agreement, the Bank will prepare the meeting notice, proxy
statement and other proxy solicitation materials of the Bank in connection with
the Merger (the "PROXY STATEMENT") and all related documents, each in a form
reasonably acceptable to counsel to Parent. The parties agree to cooperate, and
Parent agrees to cause its Subsidiaries to cooperate, with the other party, its
counsel and its accountants, in the preparation of the Proxy Statement.
(b) The Bank and Parent each agrees, as to itself and, in
the case of Parent, its Subsidiaries, that none of the information
supplied or to be supplied by it for inclusion or incorporation by
reference in the Proxy Statement and any amendment or supplement
thereto will, at the date of mailing to shareholders and at the date of
the meeting held to obtain Shareholder Approval (the "BANK MEETING"),
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which such
statement was made, not misleading. The Bank and Parent each further
agrees that if it becomes aware that any information furnished by it
would cause any of the statements in the Proxy Statement to be false or
misleading with respect to any material fact, or to omit to state any
material fact necessary to make the statements therein not false or
misleading, to promptly inform the other party thereof and to take
appropriate steps to correct the Proxy Statement.
6.6 PRESS RELEASES. The Bank and Parent will consult with
each other before issuing any press release, written employee communication or
other written shareholder communication with respect to the Merger or this
Agreement and will not issue any such communication or make any such public
statement without the prior consent of the other party, which will not be
unreasonably withheld or delayed; PROVIDED that a party may, without the prior
consent of the other party (but after prior consultation, to the extent
practicable in the circumstances), issue such communication or make such public
statement as may be required by applicable law or securities exchange rules. The
Bank and Parent will cooperate to develop all public communications and make
appropriate members of management available at presentations related to the
transactions contemplated hereby as reasonably requested by the other party.
6.7 TAKEOVER LAWS. The Bank will not take any action that
would cause the transactions contemplated hereby to be subject to requirements
imposed by any Takeover Law and will take all necessary steps within its control
to exempt (or ensure the continued exemption of) those transactions from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.8 ACCESS; INFORMATION. (a) The Bank agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information, it will afford Parent, and Parent's officers, employees, counsel,
accountants and other authorized Representatives, such access during normal
business hours throughout the period before the Effective Time to the books,
records (including Tax Returns and work papers of independent auditors),
properties, personnel and to such other information as Parent may reasonably
request and, during such period, it will furnish promptly to Parent (1) a copy
of each report, schedule and other document filed by it pursuant to the
requirements of federal or state banking and (2) all other information
concerning the business, properties and personnel of it as Parent may reasonably
request. In addition, the Bank shall provide Parent final monthly general ledger
reports for each month end beginning with January 31, 2006 until the Effective
Time as promptly as they become available. The Bank will not be required to
afford access or disclose information that would jeopardize attorney-client
privilege or contravene any binding agreement with any third party. The parties
will make appropriate substitute arrangements in circumstances where the
previous sentence applies.
(b) No investigation by Parent of the business and
affairs of the Bank, pursuant to this Section 6.8 or otherwise, will
affect or be deemed to modify or waive any representation, warranty,
covenant or agreement in this Agreement.
(c) Parent will hold any information it may obtain from
the Bank in connection with this Agreement and the transactions
contemplated hereby which is nonpublic and confidential to the extent
required by, and in accordance with, the Confidentiality Agreement.
(d) The Bank agrees that it will not, and will cause its
Representatives not to, use any information or documents it may obtain
from Parent in connection with this Agreement and the transactions
contemplated hereby (as well as any other information obtained prior to
the date hereof in connection with the entering into of this Agreement)
for any purpose unrelated to the consummation of the transactions
contemplated hereby. Subject to the requirements of law, the Bank will
keep confidential, and will cause its Representatives to keep
confidential, all information and documents obtained from Parent in
connection with this Agreement and the transactions contemplated hereby
(as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) unless such
information is disclosed with the prior written approval of Parent. If
the Bank or any of its Representatives is required to disclose any
information obtained from Parent in connection with this Agreement or
the transactions contemplated hereby in connection with any judicial or
administrative proceedings (by oral questions, interrogatories,
requests for information or documents, subpoena, Civil Investigation
Demand or similar process), the Bank will in advance of such disclosure
provide the Parent with prompt notice of such requirement(s). The Bank
also agrees, to the extent legally permissible, to provide the Parent,
in advance of any such disclosure, with a list of any information or
documents the Bank intends to disclose (and, if applicable, the text of
the disclosure language itself) and to cooperate with Parent to the
extent it may seek to limit such disclosure, including, if requested,
taking all reasonable steps to resist or avoid any such judicial or
administrative proceedings referred to above. If, in the absence of a
protective order or the receipt of a waiver from Parent after a request
in writing therefor is made by the Bank (such request to be made as
soon as practicable to allow Parent a reasonable amount of time to
respond thereto), the Bank or its Representatives are legally required
to disclose any information or documents to any tribunal to avoid
censure or penalty, the Bank may disclose such information without
liability hereunder. In the event that this Agreement is terminated or
the transactions contemplated hereby shall otherwise fail to be
consummated, the Bank shall promptly cause all copies of documents or
extracts thereof containing information and data as to Parent and its
Subsidiaries to be returned to Parent.
6.9 BENEFIT ARRANGEMENTS. Parent agrees that following
the Effective Time, employees of the Bank as of the Effective Time will be
provided with benefits under employee benefit plans (other than stock options,
restricted stock or other plans involving the issuance of securities of the Bank
or Parent) which in the aggregate are substantially comparable to those
currently provided by Parent to its similarly situated employees, as in effect
from time to time. Parent will cause each employee benefit plan of Parent in
which employees of the Bank as of the Effective Time are eligible to participate
to take into account for purposes of eligibility and vesting thereunder the
service of such employees with the Bank as if such service were with Parent,
and, with respect to welfare benefit plans of Parent in which employees of the
Bank are eligible to participate, Parent agrees to waive any preexisting
conditions, waiting periods and actively at work requirements under such plans.
Parent will honor in accordance with their terms all employee benefit
obligations to current and former employees of the Bank, which have been
Previously Disclosed by the Bank to Parent. Parent agrees that employees of the
Bank as of the Effective Time who are terminated during the period commencing at
the Effective Time and ending on the six-month anniversary thereof for reasons
other than cause within the meaning of Parent's severance plan will be entitled
to receive severance payments and benefits in accordance with Parent's severance
policies applicable to similarly situated employees. Parent will honor all
existing employment agreements with any officer of the Bank which have been
Previously Disclosed. Parent will enter into an employment agreement with
Charles Koehler on the same terms as Mr. Koehler's employment agreement dated
April 2, 2002 except with the following changes: (i) Mr. Koehler's title shall
be President, Community Capital Bank or Division and (ii) the term of the
Agreement shall end eighteen (18) months after the Effective Time.
6.10 INDEMNIFICATION. Following the Effective Time, Parent
will indemnify, defend and hold harmless the directors and officers (when acting
in such capacity) of the Bank (each, an "INDEMNIFIED PARTY") against all costs
or expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "COSTS") as incurred, and will
advance expenses, in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of actions or omissions occurring at or before the Effective Time (including
the transactions contemplated hereby) to the fullest extent permitted under
applicable law.
(b) Any Indemnified Party wishing to claim
indemnification under Section 6.10(a), upon learning of any claim,
action, suit, proceeding or investigation described above, will
promptly notify Parent; PROVIDED that failure so to notify will not
affect the obligations of Parent under Section 6.10(a) unless and to
the extent that Parent is actually and materially prejudiced as a
consequence.
(c) For a period of six years following the Effective
Time, Parent will maintain the Bank's existing director's and officers'
liability insurance policy with respect to acts or omissions prior to
the Effective Time so long as the annual premium therefor is not in
excess of 150% of the last annual premium paid prior to the date hereof
(the "CURRENT PREMIUM"); PROVIDED that if the Bank's existing
director's and officers' insurance policy expires, is terminated or is
cancelled during such six-year period, Parent will use its reasonable
best efforts to obtain as much director's and officers' insurance as
can be obtained for the remainder of such period for a premium not in
excess (on an annualized basis) of 150% of the Current Premium.
(d) If Parent or any of its successors or assigns
consolidates with or merges into any other entity and is not the
continuing or surviving entity of such consolidation or merger or
transfers all or substantially all of its assets to any other entity,
then and in each case, but only to the extent not effected by operation
of law, Parent will cause proper provision to be made so that the
successors and assigns of Parent will assume the obligations set forth
in this Section 6.10.
(e) The provisions of this Section 6.10 shall survive the
Effective Time and are intended to be for the benefit of, and will be
enforceable by, each Indemnified Party and his or her heirs and
Representatives.
6.11 DISCLOSURE SCHEDULE SUPPLEMENTS. From time to time
prior to the Effective Time but no later than the end of each forty-five day
period following the date hereof and until the Effective Time, Bank will
promptly supplement or amend the Disclosure Schedule delivered in connection
herewith with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Disclosure Schedule or which is necessary to
correct any information in such Disclosure Schedule which has been rendered
materially inaccurate thereby. No supplement or amendment to such Disclosure
Schedule shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Article VII or shall relieve Bank of any liability
hereunder.
6.12 FAILURE TO FULFILL CONDITIONS. In the event that
either party determines that a condition to its obligation to complete the
Merger cannot be fulfilled and that it will not waive that condition, it will
promptly notify the other party.
6.13 ADVISORY BOARD. Effective as of the Closing Date,
Parent shall establish an Advisory Board (the "ADVISORY BOARD"). Each
non-executive director who serves on the Board of Directors of the Bank both on
the date of this Agreement and immediately prior to the Effective Time shall be
invited to and may serve on the Advisory Board effective immediately following
the Effective Time. The Advisory Board shall meet quarterly, and shall be
continued for a period of eighteen (18) months. Each Advisory Board member shall
receive an annual retainer of $5,000, payable at the first quarterly meeting of
each year, plus $500 per quarterly meeting attended, payable at the relevant
meeting.
6.14 VOTING AGREEMENTS. The Bank shall use its reasonable
best efforts to have each director and executive officer of the Bank execute a
voting agreement substantially in the form attached as Exhibit A as of the date
hereof.
ARTICLE 7
CONDITIONS TO THE MERGER
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each of the Bank and Parent to consummate
the Merger is subject to the fulfillment or written waiver by the Bank and
Parent before the Effective Time of each of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the Merger
shall have been duly approved by the requisite vote of the holders of
the Bank Stock in accordance with all applicable law and regulations
(the "SHAREHOLDER APPROVAL").
(b) REGULATORY APPROVALS. All material approvals from
Governmental Authorities needed to consummate the Merger shall have
been obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired; and no
such material approval shall include any condition or requirement that
would, in the reasonable judgment of the Board of Directors of Parent,
have a Material Adverse Effect on (x) the Bank or (y) Parent and
Parent's Subsidiaries taken as a whole.
(c) NO INJUNCTION. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in
effect and prohibits consummation of the Merger. No statute, rule,
regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Authority which
prohibits or makes illegal the consummation of the Merger.
7.2 CONDITIONS TO THE OBLIGATION OF THE BANK. The Bank's
obligation to consummate the Merger is also subject to the fulfillment or
written waiver by the Bank before the Effective Time of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES OF PARENT. The
representations and warranties of Parent in this Agreement shall, after
taking into account the standard set forth in Section 5.1, be true and
correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, and the Bank
shall have received a certificate, dated the Closing Date, signed on
behalf of Parent by the Chief Executive Officer and Chief Financial
Officer of Parent to that effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or before the Effective Time,
and the Bank shall have received a certificate, dated the Closing Date,
signed on behalf of Parent by the Chief Executive Officer and Chief
Financial Officer of Parent to that effect.
7.3 CONDITIONS TO THE OBLIGATION OF PARENT. Parent's
obligation to consummate the Merger is also subject to the fulfillment, or
written waiver by Parent and, before the Effective Time of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES OF THE BANK. The
representations and warranties of the Bank in this Agreement shall,
after taking into account the standard set forth in Section 5.1, be
true and correct as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date,
and Parent shall have received a certificate, dated the Closing Date,
signed on behalf of the Bank by the Chief Executive Officer and Chief
Financial Officer of the Bank to that effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE BANK. The Bank
shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or before the Effective
Time, and Parent shall have received a certificate, dated the Closing
Date, signed on behalf of the Bank by the Chief Executive Officer and
Chief Financial Officer of the Bank to that effect.
(c) UNITED STATES REAL PROPERTY INTEREST. The Bank shall
have delivered to Parent a properly executed statement satisfying the
requirements of Treasury Regulation Sections 1.897-2(h) and
1.1445-2(c)(3) in a form reasonably acceptable to Parent certifying
that the Bank Common Stock is not a United States real property
interest (as such term is defined by the Code).
ARTICLE 8
TERMINATION
8.1 TERMINATION. This Agreement may be terminated, and
the Merger may be abandoned, at any time before the Effective Time, by the Bank
or Parent:
(a) MUTUAL AGREEMENT. With the mutual agreement of the
other party.
(b) BREACH. Upon 30 days' prior written notice of
termination, if there has occurred and is continuing: (1) a breach by
the other party of any representation or warranty contained herein
(subject to the standard set forth in Section 5.1) or (2) a breach by
the other party of any covenant or agreement contained herein; PROVIDED
that such breach (under either clause (1) or (2)) would entitle the
non-breaching party not to consummate the Merger under Article 7.
(c) DENIAL OF SHAREHOLDER APPROVAL. If this Agreement and
the Merger are not approved by the requisite vote of the shareholders
of the Bank at the Bank Meeting; PROVIDED that the right to terminate
this Agreement under this Section 8.1(c) shall not be available to any
party whose failure to comply with, or whose breach of any
representation, warranty, covenant or agreement contained in, any
provision of this Agreement has been the cause of, or materially
contributed to, the foregoing.
(d) DENIAL OF REGULATORY APPROVAL. If the approval of any
Governmental Authority required for consummation of the Merger is
denied by final, nonappealable action of such Governmental Authority;
PROVIDED that the right to terminate this Agreement under this Section
8.1(d) shall not be available to any party whose failure to comply
with, or whose breach of any representation, warranty, covenant or
agreement contained in, any provision of this Agreement has been the
cause of, or materially contributed to, the foregoing.
(e) DELAY. If the Effective Time has not occurred by the
close of business on January 31, 2007; PROVIDED that the right to
terminate this Agreement under this Section 8.1(e) shall not be
available to any party whose failure to comply with, or whose breach of
any representation, warranty, covenant or agreement contained in, any
provision of this Agreement has been the cause of, or materially
contributed to, the foregoing.
(f) SUPERIOR PROPOSAL. In the case of the Bank, it will
have the right to terminate this Agreement in accordance with the terms
and subject to the conditions of Section 6.3(b).
(g) BANK ADVERSE RECOMMENDATION CHANGE. In the case of
the Parent, it will have the right to terminate this Agreement if prior
to Bank obtaining Shareholder Approval (i) a Bank Adverse
Recommendation Change shall have occurred or (ii) the Bank Board fails
to publicly reaffirm its adoption and recommendation of this Agreement,
the Merger or the other transactions contemplated by this Agreement
within ten business days of receipt of a written request by Parent to
provide such reaffirmation following an Acquisition Proposal.
8.2 EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement
pursuant to any provision of Section 8.1, this Agreement shall
forthwith become void and have no further force, except that (i) the
first sentence of Section 5.2(i) and Section 5.3(g), this Section 8.2
and Article 9 shall survive such termination of this Agreement and
remain in full force and effect and (ii) termination shall not relieve
a party of any liability for a willful breach of this Agreement.
(b) If this Agreement is terminated, expenses and damages
of the parties hereto shall be determined as follows:
(1) Except as provided below, whether or not the
Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such expenses.
(2) In the event of a willful breach of any
representation, warranty, covenant or agreement contained in this
Agreement, the breaching party shall be liable for any and all damages,
costs and expenses, including all reasonable attorneys' fees, sustained
or incurred by the non-breaching party as a result thereof or in
connection therewith or with respect to the enforcement of its rights
hereunder.
(3) As a condition of Parent's willingness, and
in order to induce Parent to enter into this Agreement, and to
reimburse Parent for incurring the costs and expenses related to
entering into this Agreement and consummating the transactions
contemplated by this Agreement, Bank hereby agrees to pay Parent, and
Parent shall be entitled to payment of, a fee of $500,000 (the "Bank
Fee"), within three business days after written demand for payment is
made by Parent, following the occurrence of any of the events set forth
below:
(A) This Agreement is terminated
pursuant to Sections 8.1(f) and (g); or
(B) The entering into a definitive
agreement by Bank relating to an Acquisition Proposal
or the consummation of an Acquisition Proposal
involving Bank within twelve months after the
occurrence of any of the following: (i) the
termination of the Agreement by Parent pursuant to
Section 8.1(b) because of a willful breach by Bank;
or (ii) the failure of the shareholders of Bank to
approve this Agreement after the occurrence of an
Acquisition Proposal.
(4) If demand for payment of the Bank Fee is
made pursuant to Section 8.2(b)(3) and payment is timely made, then
Parent will not have any other rights or claims against Bank, or their
respective officers and directors, under this Agreement, it being
agreed that the acceptance of the Bank Fee under Section 8.2(b)(3) will
constitute the sole and exclusive remedy of Parent against Bank and
their respective officers and directors.
ARTICLE 9
MISCELLANEOUS
9.1 SURVIVAL. The representations, warranties, agreements
and covenants contained in this Agreement will not survive the Effective Time
(other than Article 2 and Article 3, Sections 6.10 and 8.2 and this Article 9).
9.2 EXPENSES. Each party will bear all expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby.
9.3 NOTICES. All notices, requests and other
communications given or made under this Agreement must be in writing and will be
deemed given when personally delivered, facsimile transmitted (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the persons and addresses set forth below or such other place as
such party may specify by notice.
If to the Bank, to:
Community Capital Bank
111 Livingston Street
Brooklyn, New York 11201
Attention: Charles F. Koehler
Facsimile: (718) 243-0313
with a copy to:
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Attention: H. Rodgin Cohen, Esq.
Mark J. Menting, Esq.
Camille L. Orme, Esq.
Facsimile: (212) 558-3588
If to Parent, to:
Carver Bancorp, Inc.
75 West 125th Street
New York, NY 10027
Attention: Deborah C. Wright
Chairman, President and
Chief Executive Officer
Facsimile: (212) 665-1017
with a copy to:
Thacher Proffitt & Wood LLP
Two World Financial Center
New York, New York 10281
Attention: Kofi Appenteng, Esq.
Facsimile: (212) 912-7751
9.4 WAIVER; AMENDMENT. Before the Effective Time, any
provision of this Agreement may be (a) waived by the party benefited by the
provision, but only in writing, or (b) amended or modified at any time, but only
by a written agreement executed in the same manner as this Agreement, except to
the extent that any such amendment would violate applicable law or require
resubmission of the plan of merger contained in this Agreement to the
shareholders of the Bank.
9.5 ALTERNATIVE STRUCTURE. Notwithstanding anything to
the contrary in this Agreement or the Confidentiality Agreement, before the
Effective Time, Parent may revise the structure of the Merger or otherwise
revise the method of effecting the Merger and the transactions contemplated
hereby, PROVIDED that (a) such revision does not alter or change the kind or
amount of consideration to be delivered to the Bank or shareholders of the Bank,
(b) such revision does not adversely affect the tax consequences to the
shareholders of the Bank (including causing the Merger to be characterized for
United States federal income tax purposes as anything other than a sale of stock
by the shareholders of the Bank), (c) such revised structure or method is
reasonably capable of consummation without significant delay in relation to the
structure contemplated herein and (d) such revision does not otherwise cause any
of the conditions set forth in Article 7 not to be capable of being fulfilled
(unless duly waived by the party entitled to the benefits thereof). This
Agreement and any related documents will be appropriately amended in order to
reflect any such revised structure or method.
9.6 SPECIFIC PERFORMANCE. The parties hereto agree that
if any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would occur,
no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties will be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
9.7 GOVERNING LAW. This Agreement is governed by, and
will be interpreted in accordance with, the laws of the State of New York
applicable to contracts made and to be performed entirely within that State.
9.8 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES.
This Agreement represents the entire understanding of the Bank and Parent
regarding the transactions contemplated hereby and supersede any and all other
oral or written agreements previously made or purported to be made, other than
the Confidentiality Agreement, which will survive the execution and delivery of
this Agreement. Except for Section 6.9, which is intended to benefit the
individuals referred to therein, and Section 6.10, which is intended to benefit
the Indemnified Parties to the extent stated, and as set forth in the following
sentence, nothing expressed or implied in this Agreement is intended to confer
any rights, remedies, obligations or liabilities upon any person other than the
Bank and Parent. The shareholders of the Bank are intended third party
beneficiaries of the agreements of Parent contained in Article 3 hereof to pay
the Consideration at the Effective Time, and the shareholders of the Bank will
be entitled to pursue any available remedies against Parent for any breach of
such agreements.
9.9 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which will be deemed to constitute an original,
and may be delivered by facsimile or other electronic means intended to preserve
the original graphic or pictorial appearance of a document.
* * *
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.
COMMUNITY CAPITAL BANK
By: /s/ CHARLES F. KOEHLER
------------------------
Charles F. Koehler
President and Chief Executive Officer
CARVER BANCORP, INC.
By: /s/ DEBORAH C. WRIGHT
------------------------
Deborah C. Wright
Chairman, President and
Chief Executive Officer