AGREEMENT AND PLAN OF MERGER

 

Exhibit 2.1

 

 

 

 

 

 

 

 

AGREEMENT AND PLAN OF MERGER

 

 

 

DATED AS OF NOVEMBER 21, 2006

 

 

BY AND AMONG

 

 

 

NEW ENGLAND BANCSHARES, INC.,

 

 

 

NEW ENGLAND BANCSHARES ACQUISITION, INC.

 

 

 

AND

 

 

 

FIRST VALLEY BANCORP, INC.

 

 

 

 

 

 

TABLE OF CONTENTS

 

		Page No.
Introductory Statement		1
ARTICLE I     DEFINITIONS		1
ARTICLE II   THE MERGER		6
2.1	The Merger	6
2.2	Closing	6
2.3	Effective Time	6
2.4	Effects of the Merger	6
2.5	Effect on Outstanding Shares of First Valley Bancorp Common Stock	7
2.6	Exchange Procedures	8
2.7	Effect on Outstanding Shares of Acquisition Sub Common Stock	10
2.8	Directors of Surviving Corporation After Effective Time	10
2.9	Certificate of Incorporation and Bylaws	10
2.10	Treatment of Stock Options	10
2.11	Treatment of Restricted Stock	11
2.12	Dissenters’ Rights	11
2.13	Alternative Structure	11
2.14	Absence of Control	12
2.15	Surviving Corporation	12
ARTICLE III     REPRESENTATIONS AND WARRANTIES		12
3.1	Disclosure Letters	12
3.2	Representations and Warranties of First Valley Bancorp	12
3.3	Representations and Warranties of New England Bancshares	28
ARTICLE IV     CONDUCT PENDING THE MERGER		40
4.1	Forbearances by First Valley Bancorp	40
4.2	Forbearances by New England Bancshares	43
ARTICLE V     COVENANTS		44
5.1	Acquisition Proposals	44
5.2	Advice of Changes	45
5.3	Access and Information	45
5.4	Applications; Consents	47
5.5	Antitakeover Provisions	47
5.6	Additional Agreements	47
5.7	Publicity	48
5.8	Shareholder Meeting	48
5.9	Registration of New England Bancshares Common Stock	49
5.10	Notification of Certain Matters	50
5.11	Employee Benefit Matters	50
5.12	Indemnification	51
5.13	Affiliate Letters	52
5.14	Boards of Directors	52
5.15	Capital Contribution	54
5.16	Capital Investment	54
ARTICLE VI     CONDITIONS TO CONSUMMATION		54
6.1	Conditions to Each Party’s Obligations	54

 

EXHIBITS

 

	Exhibit A	Form of Voting Agreement
	Exhibit B	Form of Employment Agreement
	Exhibit C	Form of Change in Control Agreement
	Exhibit D	Form of Change in Control Agreement
	Exhibit E	Form of Employment Agreement
	Exhibit F	Form of Employment Agreement
	Exhibit G	Form of Affiliate Letter

 

 

Agreement and Plan of Merger

 

This is an Agreement and Plan of Merger , dated as of the 21 ^th day of November, 2006 (“ Agreement ”), by and among New England Bancshares, Inc., a Maryland corporation (“ New England Bancshares ”), New England Bancshares Acquisition, Inc., a Connecticut corporation (“ Acquisition Sub ”) and First Valley Bancorp, Inc., a Connecticut corporation (“ First Valley Bancorp ”).

 

Introductory Statement

 

The Board of Directors of each of New England Bancshares and First Valley Bancorp has determined that this Agreement and the business combination and related transactions contemplated hereby are advisable and in the best interests of New England Bancshares or First Valley Bancorp, as the case may be, and in the best long-term interests of the shareholders of New England Bancshares or First Valley Bancorp, as the case may be.

 

The parties hereto intend that the Merger as defined herein shall qualify as a reorganization under the provisions of Section 368(a) of the IRC for federal income tax purposes.

 

New England Bancshares and First Valley Bancorp each desire to make certain representations, warranties and agreements in connection with the business combination and related transactions provided for herein and to prescribe various conditions to such transactions.

 

Acquisition Sub has been organized as a wholly owned subsidiary of New England

Bancshares to facilitate the business combination as contemplated by this Agreement.

 

As a condition and inducement to New England Bancshares’ willingness to enter into this Agreement, each of the members of the Board of Directors of First Valley Bancorp has entered into an agreement dated as of the date hereof in the form of Exhibit A pursuant to which he will vote his shares of First Valley Bancorp Common Stock in favor of this Agreement and the transactions contemplated hereby (the “ Voting Agreement ”).

 

In consideration of their mutual promises and obligations hereunder, the parties hereto adopt and make this Agreement and prescribe the terms and conditions hereof and the manner and basis of carrying it into effect, which shall be as follows:

 

ARTICLE I   

DEFINITIONS

 

The following terms are defined in this Agreement in the Section indicated:

 

Defined Term	Location of Definition
Acquisition Sub	Preamble
Appointment Period	Section 5.14
Banking Laws of Connecticut	Section 3.2(b)(iv)

 

“ Acquisition Proposal ” means any proposal or offer with respect to any of the following (other than the transactions contemplated hereunder): (i) any merger, consolidation, share exchange, business combination, or other similar transaction involving First Valley Bancorp or any of its Subsidiaries; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 25% or more of First Valley Bancorp’s consolidated assets in a single transaction or series of transactions; (iii) any tender offer or exchange offer for 25% or more of the outstanding shares of First Valley Bancorp’s capital stock or the filing of a registration statement under the Securities Act in connection therewith; or (iv) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in an any of the foregoing.

 

“ Agreement ” means this Agreement, as amended, modified or amended and restated from time to time in accordance with its terms.

 

“ BHCA ” means the Bank Holding Company Act of 1956, as amended.

 

“ Banking Commissioner ” means the Banking Commissioner of the State of Connecticut.

 

“ CBCA ” means the Connecticut Business Corporation Act.

 

“ CRA ” means the Community Reinvestment Act.

 

“ Environmental Law ” means any federal, state or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, directive, executive or administrative order, judgment, decree, injunction, or agreement with any Governmental Entity relating to (i) the protection, preservation or restoration of the environment (which includes, without limitation, air, water vapor, surface water, groundwater, drinking water supply, soil, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety as it relates to Hazardous Materials, or (ii) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of, Hazardous Materials, in each case as amended and as now in effect. The term Environmental Law includes, without limitation, the Federal   Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970 as it relates to Hazardous Materials, the Federal Hazardous Substances Transportation Act, the Emergency Planning and Community Right-To-Know Act, the Safe Drinking Water Act, the Endangered Species Act, the National Environmental Policy Act, the Rivers and   Harbors Appropriation Act or any so-called “Superfund” or “Superlien” law, each as amended and as now in effect.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ ERISA Affiliate ” means any entity that is considered one employer with First Valley Bancorp under Section 4001(b)(1) of ERISA or Section 414 of the IRC.

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.  

 

“ Excluded Shares ” shall consist of (i) Dissenters’ Shares and (ii) shares held directly or indirectly by New England Bancshares (other than shares held in a fiduciary capacity or in satisfaction of a debt previously contracted).

“ FDIC ” means the Federal Deposit Insurance Corporation.

 

“ First Valley Bancorp Common Stock ” means the common stock, no par value per share, of First Valley Bancorp.

 

“ FRB ” means the Federal Reserve Board.

 

“ GAAP ” means generally accepted accounting principles.

 

“ Government Regulator ” means any federal or state governmental authority charged with the supervision or regulation of depository institutions or depository institution holding companies or engaged in the insurance of bank deposits.

 

“ Governmental Entity ” means any court, administrative agency or commission or other governmental authority or instrumentality.

 

“ Hazardous Material ” means any substance (whether solid, liquid or gas) which is or could be detrimental to human health or safety or to the environment, currently or hereafter listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law, whether by type or by quantity, including any substance containing any such substance as a component. Hazardous Material includes, without limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance, oil or petroleum, or any derivative or by-product thereof, radon, radioactive material, asbestos, asbestos-containing material, urea formaldehyde foam insulation, lead and polychlorinated biphenyl.

 

“ HOLA ” means the Home Owners’ Loan Act, as amended.

 

“ IRC ” means the Internal Revenue Code of 1986, as amended.

 

“ Knowledge ” means, with respect to a party hereto, actual knowledge of the members of the Board of Directors of that party or any officer of that party with the title ranking not less than vice president.

“ Lien ” means any charge, mortgage, pledge, security interest, claim, lien or encumbrance.

 

“ Loan ” means a loan, lease, advance, credit enhancement, guarantee or other extension of credit.

 

“ Loan Property ” means any property in which the applicable party (or a Subsidiary of it) holds a security interest and, where required by the context, includes the owner or operator of such property, but only with respect to such property.

 

“ Maryland Code ” means the Annotated Code of Maryland.

 

“ Material Adverse Effect ” means an effect which is material and adverse to the business, financial condition or results of operations of First Valley Bancorp or New England Bancshares, as the context may dictate, and its Subsidiaries taken as a whole; provided , however , that any such effect resulting from any: (i) changes in laws, rules or regulations or generally accepted accounting principles or regulatory accounting requirements or interpretations thereof that apply to both New England Bancshares and First Valley Bancorp, or to financial and/or depository institutions generally; (ii) changes in economic conditions affecting financial institutions generally, including but not limited to, changes in the general level of market interest rates; (iii) actions and omissions of New England Bancshares or First Valley Bancorp taken with the prior written consent of the other; or (iv) direct effects of compliance with this Agreement on the operating performance of the parties, including expenses incurred by the parties in consummating the transactions contemplated by this Agreement, shall not be considered in determining if a Material Adverse Effect has occurred.

 

“ New England Bancshares Common Stock ” means the common stock, $0.01 par value per share, of New England Bancshares.

 

“ OTS ” means the Office of Thrift Supervision.

 

“ Participation Facility ” means any facility in which the applicable party (or a Subsidiary of it) participates in the management (including all property held as trustee or in any other fiduciary capacity) and, where required by the context, includes the owner or operator of such property, but only with respect to such property.

 

“ Person ” means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization or other entity.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Subsidiary ” means a corporation, partnership, joint venture or other entity in which First Valley Bancorp or New England Bancshares, as the case may be, has, directly or indirectly, an equity interest representing 50% or more of any class of the capital stock thereof or other equity interests therein.

“ Superior Proposal ” means an unsolicited, bona fide written offer made by a third party to consummate an Acquisition Proposal that: (i) First Valley Bancorp’s Board of Directors determines in good faith, after consulting with its outside legal counsel and its financial advisor, would, if consummated, result in a transaction that is more favorable to the shareholders of First Valley Bancorp than the transactions contemplated hereby (taking into account all legal, financial, regulatory and other aspects of the proposal, including any financing contingencies included in such proposal, the entity making the proposal and the ability to obtain regulatory and/or stockholder approval in a timely manner); (ii) is for 100% of the outstanding shares of First Valley Bancorp Common Stock; and (iii) is, in the written opinion of First Valley Bancorp’s financial advisor, more favorable to the shareholders of First Valley Bancorp from a financial point of view than the transactions contemplated hereby (including any adjustments to the terms and conditions of such transactions proposed by New England Bancshares in response to such Acquisition Proposal).

 

“ Taxes ” means all income, franchise, gross receipts, real and personal property, real property transfer and gains, wage and employment taxes.

 

ARTICLE II

THE MERGER 

 

2.1   The Merger . Upon the terms and subject to the conditions set forth in this Agreement, First Valley Bancorp will merge with and into Acquisition Sub (the “ Merger ”) at the Effective Time. At the Effective Time, the separate corporate existence of First Valley Bancorp shall cease. Acquisition Sub shall be the surviving corporation (hereinafter sometimes referred to in such capacity as the “ Surviving Corporation ”) in the Merger and shall continue to be governed by the CBCA and its name and separate corporate existence, with all of its rights, privileges, immunities, powers and franchises, shall continue unaffected by the Merger.

 

2.2   Closing . The closing of the Merger (the “ Closing ”) will take place in the offices of Muldoon Murphy & Aguggia LLP, 5101 Wisconsin Avenue, Washington, DC, or at such other location as is agreed to by the parties hereto, at 10:00 a.m. on the date designated by New England Bancshares within thirty days following satisfaction or waiver of the conditions to Closing set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing), or such later date as the parties may otherwise agree (the “ Closing Date ”).

 

2.3   Effective Time . In connection with the Closing, the parties shall file with the Connecticut Secretary of State a certificate of merger (the “ Certificate of Merger ”) executed in accordance with the relevant provisions of the CBCA. The Merger shall become effective at such time as a properly executed and certified copy of the Certificate of Merger is duly filed with the Connecticut Secretary of State in accordance with the CBCA or at such later date or time as is agreed upon by the parties (the time the Merger becomes effective being hereinafter referred to as the “ Effective Time ”).

 

2.4   Effects of the Merger . The Merger will have the effects set forth in the CBCA. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, the Surviving Corporation shall possess all the properties, rights, privileges, powers and

franchises of First Valley Bancorp and be subject to all liabilities and obligations of First Valley Bancorp.

 

2.5   Effect on Outstanding Shares of First Valley Bancorp Common Stock .

 

(a)   At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each share of First Valley Bancorp Common Stock issued and outstanding immediately prior to the Effective Time, other than any Dissenting Shares and Excluded Shares (as defined in Section 2.12 of this Agreement), shall, subject to the conditions hereinafter stated, be converted into and represent the right to receive (i) 0.8907 shares (the “ Exchange Ratio ”) of New England Bancshares Common Stock (the “ Stock Consideration ”) and (ii) an aggregate amount of $9.00 in cash without interest (the “ Cash Consideration ”), together with the Stock Consideration, the “ Per Share Merger Consideration ”), provided, however, that the Per Share Merger Consideration shall be increased by the amount equal to the cash dividend declared by New England Bancshares in the third quarter of 2007 on its shares of common stock if the Closing does not occur by June 30, 2007 (other than as the result of the action, inaction or delay by First Valley Bancorp or as the result of a breach of a representation or warranty of First Valley Bancorp (subject to the standard set forth in Section 6.2(a) of this Agreement) or a breach by First Valley Bancorp of one or more covenants in this Agreement (subject to the standard set forth in Section 6.2(b) of this Agreement), which action, inaction, delay, breach of representation, warranty or covenant is the principal cause of failure of the Closing to take place on or before June 30, 2007) divided by the number of whole shares of common stock received by each First Valley Bancorp shareholder. The aggregate of the Cash Consideration and Stock Consideration payable and/or issuable pursuant to this Agreement is sometimes collectively referred to as the “ Merger Consideration. ”

 

(b)   Notwithstanding any other provision of this Agreement, no fraction of a share of New England Bancshares Common Stock and no certificates or scrip therefor will be issued in the Merger; instead, New England Bancshares shall pay to each holder of First Valley Bancorp Common Stock who would otherwise be entitled to a fraction of a share of New England Bancshares Common Stock an amount in cash, rounded to the nearest cent, determined by multiplying such fraction by the average of the closing sales price of New England Bancshares Common Stock, as reported on The Nasdaq Stock Market, for the ten consecutive trading days ending on the date that is ten business days before the Closing Date (“ Measurement Period ”); provided, however, that any date on which fewer than 100 shares of New England Bancshares Common Stock trades shall be disregarded in computing the average closing sales price and the average shall be based upon the closing sales price and number of days on which 100 or more shares of New England Bancshares Common Stock Traded during the Measurement Period.

 

(c)   If, between the date of this Agreement and the Effective Time, the outstanding shares of New England Bancshares Common Stock shall have been changed into a different number of shares or into a different class by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, the Exchange Ratio shall be adjusted appropriately to provide the holders of First Valley Bancorp Common Stock the same economic effect as contemplated by this Agreement prior to such event.

(d)   As of the Effective Time, each Excluded Share, other than Dissenters’ Shares, shall be canceled and retired and shall cease to exist, and no exchange or payment shall be made with respect thereto. All shares of New England Bancshares Common Stock that are held by First Valley Bancorp, if any, other than shares held in a fiduciary capacity or in satisfaction of a debt previously contracted, shall be canceled and shall constitute authorized but unissued shares. In addition, no Dissenters’ Shares shall be converted into shares of New England Bancshares Common Stock pursuant to this Section 2.5 but instead shall be treated in accordance with the provisions set forth in Section 2.12 of this Agreement.

 

2.6   Exchange Procedures .

 

(a)   Appropriate transmittal materials (“ Letter of Transmittal ”) in a form satisfactory to New England Bancshares and First Valley Bancorp shall be mailed as soon as practicable after the Effective Time to each holder of record of First Valley Bancorp Common Stock as of the Effective Time. A Letter of Transmittal will be deemed properly completed only if accompanied by certificates representing all shares of First Valley Bancorp Common Stock to be converted thereby, subject to the provisions of Section 2.6(i) hereof.

 

(b)   At and after the Effective Time, each certificate or certificates representing shares of First Valley Bancorp Common Stock (“ Certificate(s) ”) (except as specifically set forth in Section 2.5 ) shall represent only the right to receive the Merger Consideration.

 

(c)   Prior to the Effective Time, New England Bancshares shall (i) reserve for issuance with its transfer agent and registrar a sufficient number of shares of New England Bancshares Common Stock to provide for payment of the aggregate Stock Consideration and (ii) deposit, or cause to be deposited, with Registrar and Transfer Company (the “ Exchange Agent ”), for the benefit of the holders of shares of First Valley Bancorp Common Stock, for exchange in accordance with this Section 2.6 , an amount of cash sufficient to pay (x) the aggregate Cash Consideration and (y) any amounts due to holders of a fractional share of First Valley Bancorp Common Stock pursuant to Section 2.5(b) .

 

(d)   The Letter of Transmittal shall (i) specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent, (ii) be in a form and contain any other provisions as New England Bancshares and First Valley Bancorp may reasonably determine and (iii) include instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon the proper surrender of the Certificates to the Exchange Agent, together with a properly completed and duly executed Letter of Transmittal, the holder of such Certificates shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of New England Bancshares Common Stock and a check in the amount equal to the cash that such holder has the right to receive, pursuant to Section 2.5 (including any cash in lieu of fractional shares, if any, that such holder has the right to receive pursuant to Section 2.5 , and any dividends or other distributions to which such holder is entitled pursuant to Section 2.5 ). Certificates so surrendered shall forthwith be canceled. As soon as practicable following receipt of the properly completed Letter of Transmittal and any necessary accompanying documentation, the Exchange

Agent shall distribute New England Bancshares Common Stock and cash as provided herein. The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to the shares of New England Bancshares Common Stock held by it from time to time hereunder, except that it shall receive and hold all dividends or other distributions paid or distributed with respect to such shares for the account of the Persons entitled thereto. If there is a transfer of ownership of any shares of First Valley Bancorp Common Stock not registered in the transfer records of First Valley Bancorp, the Merger Consideration shall be issued to the transferee thereof if the Certificates representing such First Valley Bancorp Common Stock are presented to the Exchange Agent, accompanied by all documents required, in the reasonable judgment of New England Bancshares and the Exchange Agent, to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid.

 

(e)   No dividends or other distributions declared or made after the Effective Time with respect to New England Bancshares Common Stock issued pursuant to this Agreement shall be remitted to any Person entitled to receive shares of New England Bancshares Common Stock hereunder until such Person surrenders his or her Certificates in accordance with this Section 2.6 . Upon the surrender of such Person’s Certificates, such Person shall be entitled to receive any dividends or other distributions, without interest thereon, which subsequent to the Effective Time had become payable but not paid with respect to shares of New England Bancshares Common Stock represented by such Person’s Certificates.

(f)   The stock transfer books of First Valley Bancorp shall be closed immediately upon the Effective Time and from and after the Effective Time there shall be no transfers on the stock transfer records of First Valley Bancorp of any shares of First Valley Bancorp Common Stock. If, after the Effective Time, Certificates are presented to New England Bancshares, they shall be canceled and exchanged for the Merger Consideration deliverable in respect thereof pursuant to this Agreement in accordance with the procedures set forth in this Section 2.6 .

 

(g)   Any portion of the aggregate amount of cash to be paid pursuant to Section 2.5 , any dividends or other distributions to be paid pursuant to this Section 2.6 or any proceeds from any investments thereof that remains unclaimed by the shareholders of First Valley Bancorp for six months after the Effective Time shall be repaid by the Exchange Agent to New England Bancshares upon the written request of New England Bancshares. After such request is made, any shareholders of First Valley Bancorp who have not theretofore complied with this Section 2.6 shall look only to New England Bancshares for the Merger Consideration deliverable in respect of each share of First Valley Bancorp Common Stock such shareholder holds, as determined pursuant to Section 2.5 of this Agreement, without any interest thereon. If outstanding Certificates are not surrendered 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 any abandoned property, escheat or other applicable laws, become the property of New England Bancshares (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, neither the Exchange Agent nor any party to this Agreement (or any affiliate thereof) shall be liable to any former holder of First Valley Bancorp

Common Stock for any amount delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.

 

(h)   New England Bancshares and the Exchange Agent shall be entitled to rely upon First Valley Bancorp’s stock transfer books to establish the identity of those Persons entitled to receive the Merger Consideration, which books shall be conclusive with respect thereto. In the event of a dispute with respect to ownership of stock represented by any Certificate, New England Bancshares and the Exchange Agent shall be entitled to deposit any Merger Consideration represented thereby in escrow with an independent third party and thereafter be relieved with respect to any claims thereto.

 

(i)   If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Exchange Agent or New England Bancshares, the posting by such Person of a bond in such amount as the Exchange Agent may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration deliverable in respect thereof pursuant to Section 2.5 .

 

 

2.8   Directors of Surviving Corporation After Effective Time . Immediately after the Effective Time, until their respective successors are duly elected or appointed and qualified, the directors of the Surviving Corporation shall consist of the directors of Acquisition Sub serving immediately prior to the Effective Time.

 

2.9   Certificate of Incorporation and Bylaws . The certificate of incorporation of Acquisition Sub, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with applicable law. The bylaws of Acquisition Sub, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with applicable law.

 

2.10   Treatment of Stock Options . At the Effective Time, each option to acquire shares of First Valley Bancorp Common Stock that is outstanding and unexercised immediately prior thereto (“ First Valley Bancorp Stock Option ”) pursuant to the Valley Bank Amended and Restated 1999 Stock Option and Stock Compensation Plan (the “ First Valley Bancorp Stock Option Plan ”) shall automatically become vested and shall be cancelled and converted into the right to receive from New England Bancshares a cash payment in an amount, subject to required withholding taxes, equal to the difference between (A) the sum of (1) the Exchange Ratio multiplied by the closing price per share of New England Bancshares Common Stock on The Nasdaq Stock Market on the third business day immediately prior to the Closing Date and (2) the Cash Consideration and (B) the exercise price of such First Valley Bancorp Stock Option.

2.11   Treatment of Restricted Stock. At the Effective Time, the restrictions on each share of restricted stock outstanding immediately prior thereto (“ First Valley Bancorp Restricted Stock ”) pursuant to the First Valley Bancorp Stock Option Plan shall automatically lapse and shall be treated as issued and outstanding shares of First Valley Bancorp Common Stock for the purposes of this Agreement, including but not limited to, the provisions of Section 2.5 .

 

2.12   Dissenters’ Rights . Notwithstanding any other provision of this Agreement to the contrary, shares of First Valley Bancorp Common Stock that are outstanding immediately prior to the Effective Time and which are held by shareholders who shall have not voted in favor of the Merger or consented thereto in writing and who properly shall have demanded payment of the fair value for such shares in accordance with the CBCA (collectively, the “ Dissenters’ Shares ”) shall not be converted into or represent the right to receive the Merger Consideration. Such shareholders instead shall be entitled to receive payment of the fair value of such shares held by them in accordance with the provisions of the CBCA, except that all Dissenters’ Shares held by shareholders who shall have failed to perfect or who effectively shall have withdrawn or otherwise lost their rights as dissenting shareholders under the CBCA shall thereupon be deemed to have been converted into and to have become exchangeable, as of the Effective Time, for the right to receive, without any interest thereon, the Merger Consideration upon surrender in the manner provided in Section 2.6 of the Certificate(s) that, immediately prior to the Effective Time, evidenced such shares. First Valley Bancorp shall give New England Bancshares (i) prompt notice of any written demands for payment of fair value of any shares of First Valley Bancorp Common Stock, attempted withdrawals of such demands and any other instruments served pursuant to the CBCA and received by First Valley Bancorp relating to shareholders’ dissenters’ rights and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands under the CBCA consistent with the obligations of First Valley Bancorp thereunder. First Valley Bancorp shall not, except with the prior written consent of New England Bancshares, (x) make any payment with respect to such demand, (y) offer to settle or settle any demand for payment of fair value or (z) waive any failure to timely deliver a written demand for payment of fair value or timely take any other action to perfect payment of fair value rights in accordance with the CBCA.

 

2.13   Alternative Structure . Notwithstanding anything to the contrary contained in this Agreement, prior to the Effective Time, New England Bancshares may specify that the structure of the transactions contemplated by this Agreement be revised and the parties shall enter into such alternative transactions as New England Bancshares may reasonably determine to effect the purposes of this Agreement; provided, however, that such revised structure shall not: (i) alter or change the amount or kind of the Merger Consideration; (ii) materially impede or delay the receipt of any regulatory approval referred to in, or the consummation of the transactions contemplated by, this Agreement; (iii) result in material adverse federal or state income tax consequences to First Valley Bancorp or its shareholders; (iv) result in material adverse changes to the benefits and other arrangements provided to or on behalf of First Valley Bancorp’s directors, officers or other employees; or (v) result in the merger of Valley Bank with and into another bank in which Valley Bank is not the surviving bank or which otherwise materially and adversely affects Valley Bank’s status as a separately operated Subsidiary as contemplated in this Agreement. In the event that New England Bancshares elects to make such a revision, the parties agree to execute appropriate documents to reflect the revised structure.

2.14   Absence of Control . Subject to any specific provisions of this Agreement, it is the intent of the parties hereto that New England Bancshares by reason of this Agreement shall not be deemed (until consummation of the transactions contemplated hereby) to control, directly or indirectly, First Valley Bancorp or to exercise, directly or indirectly, a controlling influence over the management or policies of First Valley Bancorp.

 

2.15   Surviving Corporation . As soon as is practicable following the Merger, New England Bancshares and the Surviving Corporation shall take all action necessary and appropriate so that Valley Bank will become a direct subsidiary of New England Bancshares.

 

ARTICLE III  

REPRESENTATIONS AND WARRANTIES

 

3.1   Disclosure Letters . Prior to the execution and delivery of this Agreement, New England Bancshares and First Valley Bancorp have each delivered to the other a letter (each, its “ Disclosure Letter ”) setting forth, among other things, facts, circumstances and events the disclosure of which is required or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more of their respective representations and warranties (and making specific reference to the Section of this Agreement to which they relate).

 

3.2   Representations and Warranties of First Valley Bancorp . First Valley Bancorp represents and warrants to New England Bancshares that, except as disclosed in First Valley Bancorp’s Disclosure Letter:

 

(a)   Organization and Qualification . First Valley Bancorp is a corporation duly organized and validly existing under the laws of the State of Connecticut and is registered with the FRB as a bank holding company. First Valley Bancorp has all requisite corporate power and authority to own, lease and operate its properties and to conduct the business currently being conducted by it. First Valley Bancorp is duly qualified or licensed as a foreign corporation to transact business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not have a Material Adverse Effect on First Valley Bancorp. First Valley Bancorp engages only in activities (and holds properties only of the types) permitted to bank holding companies by the BHCA and the rules and regulations of the FRB promulgated thereunder.

 

(b)   Subsidiaries .

 

(i)   First Valley Bancorp’s Disclosure Letter sets forth with respect to each of First Valley Bancorp’s Subsidiaries its name, its jurisdiction of incorporation, First Valley Bancorp’s percentage ownership, the number of shares of stock owned or controlled by First Valley Bancorp and the name and number of shares held by any other Person who owns any stock of the Subsidiary. First Valley Bancorp owns of record and beneficially all the capital stock of each of its Subsidiaries free and clear of any Liens. There are no contracts,

commitments, agreements or understandings relating to First Valley Bancorp’s right to vote or dispose of any equity securities of its Subsidiaries. First Valley Bancorp’s ownership interest in each of its Subsidiaries is in compliance with all applicable laws, rules and regulations relating to equity investments by bank holding companies.

 

(ii)   Each of First Valley Bancorp’s Subsidiaries is a corporation duly organized and validly existing under the laws of its jurisdiction of incorporation, has all requisite corporate power and authority to own, lease and operate its properties and to conduct the business currently being conducted by it and is duly qualified or licensed as a foreign corporation to transact business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not have a Material Adverse Effect on such Subsidiary.

 

(iii)   The outstanding shares of capital stock of each Subsidiary have been validly authorized and are validly issued, fully paid and nonassessable. No shares of capital stock of any Subsidiary of First Valley Bancorp are or may be required to be issued by virtue of any options, warrants or other rights, no securities exist that are convertible into or exchangeable for shares of such capital stock or any other debt or equity security of any Subsidiary, and there are no contracts, commitments, agreements or understandings of any kind for the issuance of additional shares of capital stock or other debt or equity security of any Subsidiary or options, warrants or other rights with respect to such securities.

 

(iv)   No Subsidiary of First Valley Bancorp other than Valley Bank is an “insured depository institution” as defined in the Federal Deposit Insurance Act, as amended, and the applicable regulations thereunder. Valley Bank’s deposits are insured by the FDIC to the fullest extent permitted by law. Valley Bank is a member in good standing of the Federal Home Loan Bank of Boston. Valley Bank engages only in activities (and holds properties only of the types) permitted by Connecticut General Statutes 36a-1 et seq. and the regulations promulgated thereunder (the “ Banking Laws of Connecticut ”) and the rules and regulations of the Banking Commissioner promulgated thereunder.

 

(c)   Capital Structure .

 

(i)   The authorized capital stock of First Valley Bancorp consists of 3,000,000 shares of First Valley Bancorp Common Stock.

 

(ii)   As of the date of this Agreement: (A) 1,194,550 shares of First Valley Bancorp Common Stock are issued and outstanding, all of which are validly issued, fully paid and nonassessable and were issued in full compliance with all applicable federal and state securities laws, and no shares of preferred stock are outstanding; and (B) 118,242 shares of First Valley Bancorp Common Stock are reserved for issuance pursuant to outstanding First Valley Bancorp Options and First Valley Bancorp Restricted Stock.

 

(iii)   Set forth in First Valley Bancorp’s Disclosure Letter are: (a) a complete and accurate list of all outstanding First Valley Bancorp Options, including the names

of the optionees, dates of grant, exercise prices, dates of vesting, dates of termination, shares subject to each grant and whether stock appreciation, limited or other similar rights were granted in connection with such options, and (b) a complete and accurate list of all outstanding shares of restricted stock of First Valley Bancorp, including the names of the grantees, dates of grant, dates of vesting and shares subject to each grant.

 

(iv)   No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which shareholders of First Valley Bancorp may vote are issued or outstanding.

 

(v)   Except as set forth in this Section 3.2(c) , as of the date of this Agreement, (A) no shares of capital stock or other voting securities of First Valley Bancorp are issued, reserved for issuance or outstanding and (B) neither First Valley Bancorp nor any of its Subsidiaries has or is bound by any outstanding subscriptions, options, warrants, calls, rights, convertible securities, commitments or agreements of any character obligating First Valley Bancorp or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, any additional shares of capital stock of First Valley Bancorp or obligating First Valley Bancorp or any of its Subsidiaries to grant, extend or enter into any such option, warrant, call, right, convertible security, commitment or agreement. As of the date hereof, there are no outstanding contractual obligations of First Valley Bancorp or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of First Valley Bancorp or any of its Subsidiaries.

 

(d)   Authority . First Valley Bancorp has all requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate actions on the part of First Valley Bancorp’s Board of Directors, and no other corporate proceedings on the part of First Valley Bancorp are necessary to authorize this Agreement or to consummate the transactions contemplated by this Agreement other than the approval and adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of First Valley Bancorp Common Stock. This Agreement has been duly and validly executed and delivered by First Valley Bancorp and constitutes a valid and binding obligation of First Valley Bancorp, enforceable against First Valley Bancorp in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally and to general principles of equity, whether applied in a court of law or a court of equity.

 

(e)   No Violations . The execution, delivery and performance of this Agreement by First Valley Bancorp do not, and the consummation of the transactions contemplated by this Agreement will not, (i) assuming all required governmental approvals have been obtained and the applicable waiting periods have expired, violate any law, rule or regulation or any judgment, decree, order, governmental permit or license to which First Valley Bancorp or any of its Subsidiaries (or any of their respective properties) is subject, (ii) violate the certificate of incorporation or bylaws of First Valley Bancorp or the similar organizational documents of any of its Subsidiaries or (iii) constitute a breach or violation of, or a default under (or an event

which, with due notice or lapse of time or both, would constitute a default under), or result in the termination of, accelerate the performance required by, or result in the creation of any Lien upon any of the properties or assets of First Valley Bancorp or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, indenture, deed of trust, loan agreement or other agreement, instrument or obligation to which First Valley Bancorp or any of its Subsidiaries is a party, or to which any of their respective properties or assets may be subject except, in the case of (iii), for any such breaches, violations or defaults that would not, individually or in the aggregate, have a Material Adverse Effect on First Valley Bancorp.

 

(f)   Consents and Approvals. No consents or approvals of, or filings or registrations with, any Governmental Entity or any third party are required to be made or obtained in connection with the execution and delivery by First Valley Bancorp of this Agreement or the consummation by First Valley Bancorp of the Merger and the other transactions contemplated by this Agreement, except for filings of applications and notices with, receipt of approvals or nonobjections from, and expiration of the related waiting period required by, federal and state banking authorities. As of the date hereof, First Valley Bancorp has no Knowledge of any reason pertaining to First Valley Bancorp why any of the approvals referred to in this Section 3.2(f) should not be obtained without the imposition of any material condition or restriction described in Section 6.1(b) .

 

(g)   Governmental Filings . First Valley Bancorp and each of its Subsidiaries has filed all reports, schedules, registration statements and other documents that it has been required to file since July 20, 2005, in the case of First Valley Bancorp, and since December 31, 2002, in the case of Valley Bank or any of its subsidiaries, with the FRB, the FDIC, the Banking Commissioner or any other Governmental Regulator (collectively, “ First Valley Bancorp’s Reports ”). None of First Valley Bancorp’s Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. No administrative actions have been taken or threatened or orders issued in connection with any of First Valley Bancorp’s Reports. As of their respective dates, each of First Valley Bancorp’s Reports complied in all material respects with all laws or regulations under which it was filed (or was amended so as to be in compliance promptly following discovery of such noncompliance). Any financial statement contained in any of First Valley Bancorp’s Reports (including any footnotes thereto) fairly presented in all material respects the financial position of First Valley Bancorp on a consolidated basis, First Valley Bancorp alone or each of First Valley Bancorp’s Subsidiaries alone, as the case may be, and was prepared in accordance with GAAP or applicable regulations.

 

(h)   Financial Statements . First Valley Bancorp’s Disclosure Letter contains copies of (i) the consolidated statements of financial condition of First Valley Bancorp and its Subsidiaries as of December 31, 2005 and 2004 and related consolidated statements of income, cash flows and changes in stockholders’ equity for each of the years in the three-year period ended December 31, 2005, together with the notes thereto, accompanied by the audit report of First Valley Bancorp’s independent public auditors and (ii) the unaudited consolidated statement of financial condition of First Valley Bancorp and its Subsidiaries as of June 30, 2006 and the related consolidated statements of income and cash flows for the six months ended June 30,

2006. Such financial statements (including any footnotes thereto) were prepared from the books and records of First Valley Bancorp and its Subsidiaries, fairly present the consolidated financial position of First Valley Bancorp and its Subsidiaries in each case at and as of the dates indicated and the consolidated results of operations, retained earnings and cash flows of First Valley Bancorp and its Subsidiaries for the periods indicated, and, except as otherwise set forth in the notes thereto, were prepared in accordance with GAAP consistently applied throughout the periods covered thereby; provided , however , that the unaudited financial statements for interim periods are subject to normal year-end adjustments (which will not be material individually or in the aggregate) and lack a statement of cash-flows and footnotes to the extent permitted under applicable regulations. The books and records of First Valley Bancorp and its Subsidiaries have been, and are being, maintained in all respects in accordance with GAAP and any other legal and accounting requirements and reflect only actual transactions.

 

(i)   Undisclosed Liabilities . Neither First Valley Bancorp nor any of its Subsidiaries has incurred any debt, liability or obligation of any nature whatsoever (whether accrued, contingent, absolute or otherwise and whether due or to become due) other than liabilities reflected on or reserved against in the consolidated balance sheet of First Valley Bancorp as of December 31, 2005, except for (i) liabilities incurred since December 31, 2005 in the ordinary course of business consistent with past practice that, either alone or when combined with all similar liabilities, have not had, and would not reasonably be expected to have, a Material Adverse Effect on First Valley Bancorp and (ii) liabilities incurred for legal, accounting, financial advising fees and out-of-pocket expenses in connection with the transactions contemplated by this Agreement.

 

(j)   Absence of Certain Changes or Events . Since December 31, 2005:

 

(i)   First Valley Bancorp and its Subsidiaries have conducted their respective businesses only in the ordinary and usual course of such businesses consistent with their past practices;

(ii)   there has not been any event or occurrence that has had, or is reasonably expected to have, a Material Adverse Effect on First Valley Bancorp;

 

(iii)   First Valley Bancorp has not declared, paid or set aside any dividends or distributions with respect to the First Valley Bancorp Common Stock;

(iv)   except for supplies or equipment purchased in the ordinary course of business or with respect to purchased items the cost of which have been included in and are within 10% of a written budget or written projection of costs for any new branch office that has been approved by the Board of Directors of First Valley Bancorp or Valley Bank as of the date of this Agreement, neither First Valley Bancorp nor any of its Subsidiaries have made any capital expenditures exceeding individually or in the aggregate $50,000;

 

(v)   there has not been any write-down by Valley Bank in excess of $25,000 with respect to any of its Loans or other real estate owned;

(vi)   there has not been any sale, assignment or transfer of any assets by First Valley Bancorp or any of its Subsidiaries in excess of $10,000 other than in the ordinary course of business or pursuant to a contract, agreement or divestiture of investment securities disclosed in First Valley Bancorp’s Disclosure Letter;

 

(vii)   there has been no increase in the salary, compensation, pension or other benefits payable or to become payable by First Valley Bancorp or any of its Subsidiaries to any of their respective directors, officers or employees, other than in conformity with the policies and practices of such entity in the usual and ordinary course of its business consistent with past practice;

(viii)   except as disclosed in First Valley Bancorp’s Disclosure Letter, neither First Valley Bancorp nor any of its Subsidiaries has paid or made any accrual or arrangement for payment of bonuses or special compensation of any kind or any severance or termination pay to any of their directors, officers or employees; and

 

(ix)    there has been no change in any accounting principles, practices or methods of First Valley Bancorp or any of its Subsidiaries other than as required by GAAP.

 

(k)   Litigation. Other than for routine matters incidental to the business of First Valley Bancorp, which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on First Valley Bancorp, there are no suits, actions or legal, administrative or arbitration proceedings pending or, to the Knowledge of First Valley Bancorp, threatened against or affecting First Valley Bancorp or any of its Subsidiaries or any property or asset of First Valley Bancorp or any of its Subsidiaries. To the Knowledge of First Valley Bancorp, there are no investigations, reviews or inquiries by any court or Governmental Entity pending or threatened against First Valley Bancorp or any of its Subsidiaries. There are no judgments, decrees, injunctions, orders or rulings of any Governmental Entity or arbitrator outstanding against First Valley Bancorp or any of its Subsidiaries that have not been satisfied or that enjoin First Valley Bancorp or any of its Subsidiaries from taking any action.

 

(l)   Absence of Regulatory Actions . Since July 20, 2005, in the case of First Valley Bancorp, and since December 31, 2002, in the case of Valley Bank and any other Subsidiary of First Valley Bancorp, none of First Valley Bancorp or any of its Subsidiaries has been a party to any cease and desist order, written agreement or memorandum of understanding with, or any commitment letter or similar undertaking to, or has been subject to any action, proceeding, order or directive by any Government Regulator, or has adopted any board resolutions at the request of any Government Regulator, or has been advised by any Government Regulator that it is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such action, proceeding, order, directive, written agreement, memorandum of understanding, commitment letter, board resolutions or similar undertaking. There are no unresolved violations, criticisms or exceptions by any Government Regulator with respect to any report or statement relating to any examinations of First Valley Bancorp or its Subsidiaries.

(m)   Compliance with Laws . First Valley Bancorp and each of its Subsidiaries conducts its business in material compliance with all statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable to it. First Valley Bancorp and each of its Subsidiaries has all permits, licenses, certificates of authority, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Entities that are required in order to permit it to carry on its business as it is presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect, and to First Valley Bancorp’s Knowledge, no suspension or cancellation of any of them is threatened. Neither First Valley Bancorp nor any of its Subsidiaries has been given notice or been charged with any violation of, any law, ordinance, regulation, order, writ, rule, decree or condition to approval of any Governmental Entity which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on First Valley Bancorp.

 

(n)   Taxes . All federal, state, local and foreign Tax returns required to be filed by or on behalf of First Valley Bancorp or any of its Subsidiaries have been timely filed or requests for extensions have been timely filed and any such extension shall have been granted and not have expired, and all such filed returns are complete and accurate in all material respects. All Taxes shown on such returns, all Taxes required to be shown on returns for which extensions have been granted and all other taxes required to be paid by First Valley Bancorp or any of its Subsidiaries have been paid in full or adequate provision has been made for any such Taxes on First Valley Bancorp’s balance sheet (in accordance with GAAP). There is no audit examination, deficiency assessment, tax investigation or refund litigation with respect to any Taxes of First Valley Bancorp or any of its Subsidiaries, and no claim has been made in writing by any authority in a jurisdiction where First Valley Bancorp or any of its Subsidiaries do not file Tax returns that First Valley Bancorp or any such Subsidiary is subject to taxation in that jurisdiction. All Taxes, interest, additions and penalties due with respect to completed and settled examinations or concluded litigation relating to First Valley Bancorp or any of its Subsidiaries have been paid in full or adequate provision has been made for any such Taxes on First Valley Bancorp’s balance sheet (in accordance with GAAP). First Valley Bancorp and its Subsidiaries have not executed an extension or waiver of any statute of limitations on the assessment or collection of any Tax due that is currently in effect. First Valley Bancorp and each of its Subsidiaries has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party, and First Valley Bancorp and each of its Subsidiaries has timely complied with all applicable information reporting requirements under Part III, Subchapter A of Chapter 61 of the IRC and similar applicable state and local information reporting requirements. Neither First Valley Bancorp nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or would result, individually or in the aggregate, in connection with this Agreement in the payment of any “excess parachute payments” within the meaning of Section 280G of the IRC and neither First Valley Bancorp nor any of its Subsidiaries has made any payments and is not a party to any agreement, and does not maintain any plan, program or arrangement, that could require it to make any payments (including any deemed payment of compensation upon the exercise of a First Valley Bancorp Option or upon the issuance of any First Valley Bancorp Common Stock), that would not be fully deductible by reason of Section 162(m) of the IRC.

(o)   Agreements .

 

(i)   First Valley Bancorp’s Disclosure Letter lists, and contains a complete and correct copy of, any contract, arrangement, commitment or understanding (whether written or oral) to which First Valley Bancorp or any of its Subsidiaries is a party or is bound:

 

(A)   with any executive officer or other key employee of First Valley Bancorp or any of its Subsidiaries the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving First Valley Bancorp or any of its Subsidiaries of the nature contemplated by this Agreement;

 

(B)   with respect to the employment of any directors, officers, employees or consultants;

 

(C)   any of the benefits of which will be increased, or the vesting or payment of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement (including any stock option plan, phantom stock or stock appreciation rights plan, restricted stock plan or stock purchase plan);

 

(D)   containing covenants that limit the ability of First Valley Bancorp or any of its Subsidiaries to compete in any line of business or with any Person, or that involve any restriction on the geographic area in which, or method by which, First Valley Bancorp (including any successor thereof) or any of its Subsidiaries may carry on its business (other than as may be required by law or any regulatory agency);

 

(E)   pursuant to which First Valley Bancorp or any of its

Subsidiaries may become obligated to invest in or contribute capital to any entity;

 

(F)   that relates to borrowings of money (or guarantees thereof) by First Valley Bancorp or any of its Subsidiaries in excess of $50,000, other than advances from the Federal Home Loan Bank of Boston; or

 

(G)   which is a lease or license with respect to any property, real or personal, whether as landlord, tenant, licensor or licensee, involving a liability or obligation as obligor in excess of $25,000 on an annual basis.

 

(ii)   Neither First Valley Bancorp nor any of its Subsidiaries is in default under (and no event has occurred which, with due notice or lapse of time or both, would constitute a default under) or is in violation of any provision of any note, bond, indenture, mortgage, deed of trust, loan agreement, lease or other agreement to which it is a party or by which it is bound or to which any of its respective properties or assets is subject and, to the Knowledge of First Valley Bancorp, no other party to any such agreement (excluding any loan or extension of credit made by First Valley Bancorp or any of its Subsidiaries) is in default in any

respect thereunder, except for such defaults or violations that would not, individually or in the aggregate, have a Material Adverse Effect on First Valley Bancorp.

 

(p)   Intellectual Property . First Valley Bancorp and each of its Subsidiaries owns or possesses valid and binding licenses and other rights to use without payment all patents, copyrights, trade secrets, trade names, service marks and trademarks material to its business. First Valley Bancorp’s Disclosure Letter sets forth a complete and correct list of all material trademarks, trade names, service marks and copyrights owned by or licensed to First Valley Bancorp or any of its Subsidiaries for use in its business, and all licenses and other agreements relating thereto and all agreements relating to third party intellectual property that First Valley Bancorp or any of its Subsidiaries is licensed or authorized to use in its business, including without limitation any software licenses (collectively, the “ Intellectual Property ”). With respect to each item of Intellectual Property owned by First Valley Bancorp or any of its Subsidiaries, the owner possesses all right, title and interest in and to the item, free and clear of any Lien. With respect to each item of Intellectual Property that First Valley Bancorp or any of its Subsidiaries is licensed or authorized to use, the license, sublicense or agreement covering such item is legal, valid, binding, enforceable and in full force and effect. Neither First Valley Bancorp nor any of its Subsidiaries has received any charge, complaint, claim, demand or notice alleging any interference, infringement, misappropriation or violation with or of any intellectual property rights of a third party (including any claims that First Valley Bancorp or any of its Subsidiaries must license or refrain from using any intellectual property rights of a third party). To the Knowledge of First Valley Bancorp, neither First Valley Bancorp nor any of its Subsidiaries has interfered with, infringed upon, misappropriated or otherwise come into conflict with any intellectual property rights of third parties and no third party has interfered with, infringed upon, misappropriated or otherwise come into conflict with any intellectual property rights of First Valley Bancorp or any of its Subsidiaries.

 

(q)   Labor Matters . First Valley Bancorp and its Subsidiaries are in material compliance with all applicable laws respecting employment, retention of independent contractors, employment practices, terms and conditions of employment, and wages and hours. Neither First Valley Bancorp nor any of its Subsidiaries is or has ever been a party to, or is or has ever been bound by, any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization with respect to its employees, nor is First Valley Bancorp or any of its Subsidiaries the subject of any proceeding asserting that it has committed an unfair labor practice or seeking to compel it or any such Subsidiary to bargain with any labor organization as to wages and conditions of employment nor has any such proceeding been threatened, nor is there any strike, other labor dispute or organizational effort involving First Valley Bancorp or any of its Subsidiaries pending or, to the Knowledge of First Valley Bancorp, threatened.

 

(r)   Employee Benefit Plans .

 

(i)   First Valley Bancorp’s Disclosure Letter contains a complete and accurate list of all pension, retirement, stock option, stock purchase, stock ownership, savings, stock appreciation right, profit sharing, deferred compensation, consulting, bonus, group insurance, severance and other benefit plans, contracts, agreements and arrangements, including,

but not limited to, “employee benefit plans,” as defined in Section 3(3) of ERISA, incentive and welfare policies, contracts, plans and arrangements and all trust agreements related thereto with respect to any present or former directors, officers or other employees of First Valley Bancorp or any of its Subsidiaries (hereinafter referred to collectively as the “ First Valley Bancorp Employee Plans ”). First Valley Bancorp has previously delivered or made available to New England Bancshares true and complete copies of each agreement, plan and other documents referenced in First Valley Bancorp’s Disclosure Letter, along with, where applicable, copies of the IRS Form 5500 or 5500-C for the most recently completed year. There has been no announcement or commitment by First Valley Bancorp or any of its Subsidiaries to create an additional First Valley Bancorp Employee Plan, or to amend any First Valley Bancorp Employee Plan, except for amendments required by applicable law which do not materially increase the cost of such First Valley Bancorp Employee Plan.

 

(ii)   There is no pending or, to the Knowledge of First Valley Bancorp, threatened litigation, administrative action or proceeding relating to any First Valley Bancorp Employee Plan. All of the First Valley Bancorp Employee Plans comply in all material respects with all applicable requirements of ERISA, the IRC and other applicable laws. There has occurred no “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the IRC) with respect to the First Valley Bancorp Employee Plans which is likely to result in the imposition of any penalties or taxes upon First Valley Bancorp or any of its Subsidiaries under Section 502(i) of ERISA or Section 4975 of the IRC.

 

(iii)   No liability to the Pension Benefit Guarantee Corporation has been or is expected by First Valley Bancorp or any of its Subsidiaries to be incurred with respect to any First Valley Bancorp Employee Plan which is subject to Title IV of ERISA (“ First Valley Bancorp Pension Plan ”), or with respect to any “single-employer plan” (as defined in Section 4001(a) of ERISA) currently or formerly maintained by First Valley Bancorp or any ERISA Affiliate. No First Valley Bancorp Pension Plan had an “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, as of the last day of the end of the most recent plan year ending prior to the date hereof; the fair market value of the assets of each First Valley Bancorp Pension Plan exceeds the present value of the “benefit liabilities” (as defined in Section 4001(a)(16) of ERISA) under such First Valley Bancorp Pension Plan as of the end of the most recent plan year with respect to the respective First Valley Bancorp Pension Plan ending prior to the date hereof, calculated on the basis of the actuarial assumptions used in the most recent actuarial valuation for such First Valley Bancorp Pension Plan as of the date hereof; and no notice of a “reportable event” (as defined in Section 4043 of ERISA) for which the 30-day reporting requirement has not been waived has been required to be filed for any First Valley Bancorp Pension Plan within the 12-month period ending on the date hereof. Neither First Valley Bancorp nor any of its Subsidiaries has provided, or is required to provide, security to any First Valley Bancorp Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the IRC. Neither First Valley Bancorp, its Subsidiaries, nor any ERISA Affiliate has contributed to any “multiemployer plan,” as defined in Section 3(37) of ERISA, on or after September 26, 1980.

 

(iv)   Each First Valley Bancorp Employee Plan that is an “employee pension benefit plan” (as defined in Section 3(2) of ERISA) and which is intended to be qualified

under Section 401(a) of the IRC (a “ First Valley Bancorp Qualified Plan ”) has received a favorable determination letter from the IRS, and First Valley Bancorp and its Subsidiaries are not aware of any circumstances likely to result in revocation of any such favorable determination letter. Each First Valley Bancorp Qualified Plan that is an “employee stock ownership plan” (as defined in Section 4975(e)(7) of the IRC) has satisfied all of the applicable requirements of Sections 409 and 4975(e)(7) of the IRC and the regulations thereunder in all material respects and any assets of any such First Valley Bancorp Qualified Plan that, as of the end of the plan year, are not allocated to participants’ individual accounts are pledged as security for, and may be applied to satisfy, any securities acquisition indebtedness.

 

(v)   With respect to each First Valley Bancorp Employee Plan that is a “multiple employer plan” (as defined in Section 4063 of ERISA): (A) none of First Valley Bancorp or any of its Subsidiaries, nor any of their respective ERISA Affiliates, has received any notification, nor has any actual Knowledge, that if First Valley Bancorp or any of its Subsidiaries or any of their respective ERISA Affiliates were to experience a withdrawal or partial withdrawal from such plan it would incur withdrawal liability that would be reasonably likely to have a Material Adverse Effect on First Valley Bancorp; and (B) none of First Valley Bancorp or any of its Subsidiaries, nor any of their respective ERISA Affiliates, has received any notification, nor has any reason to believe, that any First Valley Bancorp Employee Plan is in reorganization, has been terminated, is insolvent, or may be in reorganization, become insolvent or be terminated.

 

(vi)   Neither First Valley Bancorp nor any of its Subsidiaries has any obligations for post-retirement or post-employment benefits under any First Valley Bancorp Employee Plan that cannot be amended or terminated upon 60 days’ notice or less without incurring any liability thereunder, except for coverage required by Part 6 of Title I of ERISA or Section 4980B of the IRC, or similar state laws, the cost of which is borne by the insured individuals.

 

(vii)   All contributions required to be made with respect to any First Valley Bancorp Employee Plan by applicable law or regulation or by any plan document or other contractual undertaking, and all premiums due or payable with respect to insurance policies funding any First Valley Bancorp Employee Plan, for any period through the date hereof have been timely made or paid in full, or to the extent not required to be made or paid on or before the date hereof, have been fully reflected in the financial statements of First Valley Bancorp. Each First Valley Bancorp Employee Plan that is an employee welfare benefit plan under Section 3(1) of ERISA either (A) is funded through an insurance company contract and is not a “welfare benefit fund” within the meaning of Section 419 of the IRC or (B) is unfunded.

 

(s)   Properties .

 

(i)   A list and description of all real property owned or leased by First Valley Bancorp or a Subsidiary of First Valley Bancorp is set forth in First Valley Bancorp’s Disclosure Letter. First Valley Bancorp and each of its Subsidiaries has good and marketable title to all real property owned by it (including any property acquired in a judicial foreclosure proceeding or by way of a deed in lieu of foreclosure or similar transfer), in each case free and

clear of any Liens except (i) liens for taxes not yet due and payable and (ii) such easements, restrictions and encumbrances, if any, as are not material in character, amount or extent, and do not materially detract from the value, or materially interfere with the present use of the properties subject thereto or affected thereby. Each lease pursuant to which First Valley Bancorp or any of its Subsidiaries as lessee, leases real or personal property is valid and in full force and effect and neither First Valley Bancorp nor any of its Subsidiaries, nor, to First Valley Bancorp’s Knowledge, any other party to any such lease, is in default or in violation of any material provisions of any such lease. A complete and correct copy of each such lease is attached to First Valley Bancorp’s Disclosure Letter. All real property owned or leased by First Valley Bancorp or any of its Subsidiaries are in a good state of maintenance and repair (normal wear and tear excepted), conform with all applicable ordinances, regulations and zoning laws and are considered by First Valley Bancorp to be adequate for the current business of First Valley Bancorp and its Subsidiaries. To the Knowledge of First Valley Bancorp, none of the buildings, structures or other improvements located on any real property owned or leased by First Valley Bancorp or any of its Subsidiaries encroaches upon or over any adjoining parcel or real estate or any easement or right-of-way.

 

(ii)   First Valley Bancorp and each of its Subsidiaries has good and marketable title to all tangible personal property owned by it, free and clear of all Liens except such Liens, if any, as are not material in character, amount or extent, and do not materially detract from the value, or materially interfere with the present use of the properties subject thereto or affected thereby. With respect to personal property used in the business of First Valley Bancorp and its Subsidiaries that is leased rather than owned, neither First Valley Bancorp nor any of its Subsidiaries is in default under the terms of any such lease.

 

(t)   Fairness Opinion . First Valley Bancorp has received the opinion of Ostrowski & Company, Inc. to the effect that, as of the date hereof, the Merger Consideration is fair, from a financial point of view, to First Valley Bancorp’s shareholders.

 

(u)   Fees . Other than for financial advisory services performed for First Valley Bancorp by Ostrowski & Company, Inc. pursuant to an agreement dated July 20, 2006, a true and complete copy of which is attached as an exhibit to First Valley Bancorp’s Disclosure Letter, neither First Valley Bancorp nor any of its Subsidiaries, nor any of their respective officers, directors, employees or agents, has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for First Valley Bancorp or any of its Subsidiaries in connection with this Agreement or the transactions contemplated hereby.

 

(v)   Environmental Matters .

 

(i)   Each of First Valley Bancorp and its Subsidiaries, the Participation Facilities, and, to the Knowledge of First Valley Bancorp, the Loan Properties are, and have been, in substantial compliance with all Environmental Laws.

 

(ii)   There is no suit, claim, action, demand, executive or administrative order, directive, investigation or proceeding pending or, to the Knowledge of First Valley

Bancorp, threatened, before any court, governmental agency or board or other forum against First Valley Bancorp or any of its Subsidiaries or any Participation Facility (A) for alleged noncompliance (including by any predecessor) with, or liability under, any Environmental Law or (B) relating to the presence of or release into the environment of any Hazardous Material, whether or not occurring at or on a site owned, leased or operated by First Valley Bancorp or any of its Subsidiaries or any Participation Facility.

 

(iii)   To the Knowledge of First Valley Bancorp, there is no suit, claim, action, demand, executive or administrative order, directive, investigation or proceeding pending or threatened before any court, governmental agency or board or other forum relating to or against any Loan Property (or First Valley Bancorp or any of its Subsidiaries in respect of such Loan Property) (A) relating to alleged noncompliance (including by any predecessor) with, or liability under, any Environmental Law or (B) relating to the presence of or release into the environment of any Hazardous Material, whether or not occurring at a Loan Property.

 

(iv)   Neither First Valley Bancorp nor any of its Subsidiaries has received any notice, demand letter, executive or administrative order, directive or request for information from any Governmental Entity or any third party indicating that it may be in violation of, or liable under, any Environmental Law.

 

(v)   There are no underground storage tanks at any properties owned or operated by First Valley Bancorp or any of its Subsidiaries or any Participation Facility. Neither First Valley Bancorp nor any of its Subsidiaries nor, to the Knowledge of First Valley Bancorp, any other Person or entity, has closed or removed any underground storage tanks from any properties owned or operated by First Valley Bancorp or any of its Subsidiaries or any Participation Facility.

 

(vi)   During the period of (A) First Valley Bancorp’s or any of its Subsidiaries’ ownership or operation of any of their respective current properties or (B) First Valley Bancorp’s or any of its Subsidiaries’ participation in the management of any Participation Facility, there has been no release of Hazardous Materials in, on, under or affecting such properties. To the Knowledge of First Valley Bancorp, prior to the period of (A) First Valley Bancorp’s or any of its Subsidiaries’ ownership or operation of any of their respective current properties or (B) First Valley Bancorp’s or any of its Subsidiaries’ participation in the management of any Participation Facility, there was no contamination by or release of Hazardous Material in, on, under or affecting such properties.

 

(w)   Loan Portfolio; Allowance for Loan Losses .

 

(i)   With respect to each Loan owned by First Valley Bancorp or its Subsidiaries in whole or in part:

 

(A)   The note and the related security documents are each legal, valid and binding obligations of the maker or obligor thereof, enforceable against such maker or obligor in accordance with their terms, subject to bankruptcy, insolvency or similar laws affecting creditor’s ri