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Exhibit 10.1 AGREEMENT AND PLAN OF
MERGER
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER This AGREEMENT AND PLAN
OF MERGER (this "Agreement") is dated as of December 14, 2008,
by and between Investors Bancorp, Inc., a Delaware corporation
("Investors"), and American Bancorp of New Jersey, Inc., a New
Jersey corporation ("ABNJ"). WHEREAS , the Board of
Directors of each of Investors and ABNJ (i) has determined
that this Agreement and the business combination and related
transactions contemplated hereby are in the best interests of their
respective companies and shareholders and (ii) has determined
that this Agreement and the transactions contemplated hereby are
consistent with and in furtherance of their respective business
strategies, and (iii) has adopted a resolution approving this
Agreement and declaring its advisability; and
WHEREAS, in accordance with the terms of this Agreement,
ABNJ will merge with and into Investors (the "Merger"), and
immediately thereafter American Bank of New Jersey, a federally
chartered stock savings bank and wholly owned subsidiary of ABNJ
("American Bank"), will be merged with and into Investors Savings
Bank, a New Jersey chartered stock savings bank and wholly owned
subsidiary of Investors ("Investors Savings Bank"); and
WHEREAS , as a condition to the willingness of Investors to
enter into this Agreement, each of the directors and executive
officers of ABNJ has entered into a Voting Agreement, substantially
in the form of Exhibit A hereto, dated as of the date hereof,
with Investors (the "ABNJ Voting Agreement"), pursuant to which
each such director has agreed, among other things, to vote all
shares of common stock of ABNJ owned by such person in favor of the
approval of this Agreement and the transactions contemplated
hereby, upon the terms and subject to the conditions set forth in
such Voting Agreements; and WHEREAS , the
parties intend the Merger to qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code"), and that this Agreement be and is
hereby adopted as a "plan of reorganization" within the meaning of
Sections 354 and 361 of the Code; and
WHEREAS , the parties desire to make certain
representations, warranties and agreements in connection with the
business transactions described in this Agreement and to prescribe
certain conditions thereto. NOW, THEREFORE , in
consideration of the mutual covenants, representations, warranties
and agreements herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows: ARTICLE I
unaudited interim consolidated financial statements of ABNJ and subsidiaries as of the end of each calendar quarter following September 30, 2008 and for the periods then ended. "ABNJ Equity Plans" shall mean the ABNJ 2005 Stock Option Plan, the ABNJ 2005 Restricted Stock Plan and the ABNJ 2006 Equity Incentive Plan and any amendments thereto. "ABNJ Option" shall mean an option to purchase shares of ABNJ Common Stock granted pursuant to the ABNJ Equity Plans and as set forth in ABNJ DISCLOSURE SCHEDULE 4.3.1. "ABNJ Regulatory Agreement" shall have the meaning set forth in Section 4.12.3. "ABNJ Regulatory Reports" means the Thrift Financial Reports of American Bank and accompanying schedules, as filed with the OTS, for each calendar quarter beginning with the quarter ended March 31, 2007, through the Closing Date, and all Reports filed with the OTS by ABNJ from March 31, 2007 through the Closing Date. "ABNJ Shareholders Meeting" shall have the meaning set forth in Section 8.1.1. "ABNJ Subsidiary" means any corporation, of which more than 50% of the capital stock is owned, either directly or indirectly, by ABNJ or American Bank, except any corporation the stock of which is held in the ordinary course of the lending activities of American Bank. "Affiliate" means any Person who directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person and, without limiting the generality of the foregoing, includes any executive officer or director of such Person and any Affiliate of such executive officer or director. "Agreement" means this agreement and any amendment hereto. "American Bank" shall mean American Bank of New Jersey, a stock savings bank chartered by the OTS, with its principal offices located at 365 Broad Street, Bloomfield, New Jersey 07003, which is a wholly owned subsidiary of ABNJ. "Applications" means the applications for regulatory approval that are required by the transactions contemplated hereby. "Bank Merger" shall mean the merger of American Bank with and into Investors Savings Bank, with Investors Savings Bank as the surviving institution, which merger shall occur immediately following the Merger. "Bank Regulator" shall mean any Federal or state banking regulator, including but not limited to the OTS, FDIC, FRB and the Department, which regulates Investors Savings Bank or American Bank, or any of their respective holding companies or subsidiaries, as the case may be. "BHCA" shall mean the Bank Holding Company Act of 1956, as amended. "Cash Consideration" shall have the meaning set forth in Section 3.1.3. "Cash Election" shall have the meaning set forth in Section 3.1.3. "Cash Election Shares" shall have the meaning set forth in Section 3.1.3. "Certificate" shall mean certificates evidencing shares of ABNJ Common Stock. "Closing" shall have the meaning set forth in Section 2.2. "Closing Date" shall have the meaning set forth in Section 2.2. "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Confidentiality Agreement" shall mean the confidentiality agreement referred to in Section 12.1 of this Agreement.
"Department" shall mean the New Jersey Department of Banking and Insurance. "DGCL" shall mean the Delaware General Corporation Law. "Effective Time" shall mean the date and time specified pursuant to Section 2.2 hereof as the effective time of the Merger. "Election Deadline" shall have the meaning set forth in Section 3.2.3. "Election Form" shall have the meaning set forth in Section 3.2.2. "Election Form Record Date" shall have the meaning set forth in Section 3.2.2. "Environmental Laws" means any applicable Federal, state or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, judgment, decree, injunction or agreement with any governmental entity relating to (1) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface soil, subsurface soil, plant and animal life or any other natural resource), and/or (2) the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Materials of Environmental Concern. The term Environmental Law includes without limitation (a) the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. § 9601, et seq; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. § 6901, et seq; the Clean Air Act, as amended, 42 U.S.C. § 7401, et seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. § 1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C. § 2601, et seq; the Emergency Planning and Community Right to Know Act, 42 U.S.C. § 11001, et seq; the Safe Drinking Water Act, 42 U.S.C. § 300f, et seq; and all comparable state and local laws, and (b) any common law (including without limitation common law that may impose strict liability) that may impose liability or obligations for injuries or damages due to the presence of or exposure to any Materials of Environmental Concern. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Exchange Agent" shall mean such bank or trust company or other agent designated by Investors, which shall act as agent for Investors in connection with the exchange procedures for converting Certificates into the Merger Consideration. "Exchange Fund" shall have the meaning set forth in Section 3.3.1. "Exchange Ratio" shall have the meaning set forth in Section 3.1.3. "FDIA" shall mean the Federal Deposit Insurance Act, as amended. "FDIC" shall mean the Federal Deposit Insurance Corporation or any successor thereto. "FHLB" shall mean the Federal Home Loan Bank of New York. "FINRA" shall mean the Financial Institutions Regulatory Authority. "FRB" shall man the Board of Governors of the Federal Reserve or any successor thereto. "GAAP" shall mean accounting principles generally accepted in the United States of America, consistently applied with prior practice. "Governmental Entity" shall mean any Federal or state court, administrative agency or commission or other governmental authority or instrumentality. "HOLA" shall mean the Home Owners’ Loan Act, as amended. "Investors Savings Bank" shall mean Investors Savings Bank, a New Jersey chartered stock savings bank, with its principal offices located at 101 JFK Parkway, Short Hills, New Jersey 07078, which is a wholly owned subsidiary of Investors.
"Investors" shall mean Investors Bancorp, Inc., a Delaware corporation, with its principal executive offices located at 101 JFK Parkway, Short Hills, New Jersey 07078. "Investors Common Stock" shall mean the common stock, par value $.01 per share, of Investors. "INVESTORS DISCLOSURE SCHEDULE" shall mean a written disclosure schedule delivered by Investors to ABNJ specifically referring to the appropriate section of this Agreement. "Investors Financial Statements" shall mean the (i) the audited consolidated statements of condition (including related notes and schedules) of Investors and subsidiaries as of June 30, 2008, 2007 and 2006 and the consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows (including related notes and schedules, if any) of Investors and subsidiaries for each of the three years ended June 30, 2008, 2007 and 2006, as set forth in Investors’ annual report for the year ended June 30, 2008, and (ii) the unaudited interim consolidated financial statements of Investors and subsidiaries as of the end of each calendar quarter following June 30, 2008, and for the periods then ended, as filed by Investors in its Securities Documents. "Investors Stock Benefit Plans" shall mean the 2006 Equity Incentive Plan. "Investors Subsidiary" means any corporation, of which more than 50% of the capital stock is owned, either directly or indirectly, by Investors or Investors Savings Bank, except any corporation the stock of which is held in the ordinary course of the lending activities of Investors Savings Bank. "IRS" shall mean the United States Internal Revenue Service. "Proxy Statement-Prospectus" shall have the meaning set forth in Section 8.2.1. "Knowledge" as used with respect to a Person (including references to such Person being aware of a particular matter) means those facts that are known or should have been known by the executive officers and directors of such Person, and includes any facts, matters or circumstances set forth in any written notice from any Bank Regulator or any other material written notice received by that Person. "Material Adverse Effect" shall mean, with respect to Investors or ABNJ, respectively, any effect that (i) is material and adverse to the financial condition, results of operations or business of Investors and its Subsidiaries taken as a whole, or ABNJ and its Subsidiaries taken as a whole, respectively, or (ii) does or would materially impair the ability of either ABNJ, on the one hand, or Investors, on the other hand, to perform its obligations under this Agreement or otherwise materially threaten or materially impede the consummation of the transactions contemplated by this Agreement. With respect to ABNJ, and without limiting the foregoing, a Material Adverse Effect shall be deemed to have occurred if loans accounted for on a non-accrual basis, together with loans 90 days or more delinquent ("non-performing loans") at any month end prior to Closing exceed 4% of total loans at such month end (provided that loans (or any amount thereof) accounted for on a non-accrual basis together with loans 90 days or more delinquent that are charged-off after the date hereof but prior to Closing shall be considered non-performing loans for purposes of this calculation). For purposes of this Agreement, the term "Material Adverse Effect" shall not be deemed to include the impact of (a) changes in laws and regulations affecting banks or thrift institutions or their holding companies generally, or interpretations thereof by courts or governmental agencies, (b) changes in GAAP or regulatory accounting principles generally applicable to financial institutions and their holding companies, (c) the impact of compliance with this Agreement on the business, financial condition or results of operations of the parties and their respective subsidiaries, including the expenses incurred by the parties hereto in consummating the transactions contemplated by this Agreement, (d) the payment of any amounts due to, or the provision of any other benefits to, any directors, officers or employees of ABNJ and its Subsidiaries pursuant to the employment agreements, plans and other arrangements described in Section 7.8 of this Agreement, (e) any charge or reserve taken by ABNJ at the request of Investors pursuant to Section 6.11 of this Agreement, (f) actions and omissions of a party hereto (or any of its Subsidiaries) taken with the prior written consent of the other party or pursuant to the terms of this Agreement, (g) 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, or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, unless it uniquely affects either or both of the parties or any of their Subsidiaries or (e) any change in the value of the securities or loan portfolio, or any change in the value of the deposits or borrowings, of Investors or ABNJ, or any of their Subsidiaries, respectively, resulting from a change in interest rates generally. "Materials of Environmental Concern" means pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products, and any other materials regulated under Environmental Laws. "Merger" shall mean the merger of ABNJ with and into Investors (or a subsidiary thereof) pursuant to the terms hereof. "Merger Consideration" shall have the meaning set forth in Section 3.1.6. "Merger Registration Statement" shall mean the registration statement, together with all amendments, filed with the SEC under the Securities Act for the purpose of registering shares of Investors Common Stock to be offered to holders of ABNJ Common Stock in connection with the Merger. "Nasdaq" shall mean the Nasdaq Global Select Market. "NJBCA" shall mean the New Jersey Business Corporation Act. "OTS" shall mean the Office of Thrift Supervision or any successor thereto. "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any successor thereto. "Pension Plan" shall have the meaning set forth in Section 4.13.2. "Person" shall mean any individual, corporation, partnership, joint venture, association, trust or "group" (as that term is defined under the Exchange Act). "Regulatory Approvals" means the approval of any Bank Regulator that is necessary in connection with the consummation of the Merger, the Bank Merger and the related transactions contemplated by this Agreement. "Rights" shall mean warrants, options, rights, convertible securities, stock appreciation rights and other arrangements or commitments which obligate an entity to issue or dispose of any of its capital stock or other ownership interests or which provide for compensation based on the equity appreciation of its capital stock. "SEC" shall mean the Securities and Exchange Commission or any successor thereto. "Securities Act" shall mean the Securities Act of 1933, as amended. "Securities Documents" shall mean all reports, offering circulars, proxy statements, registration statements and all similar documents filed, or required to be filed, pursuant to the Securities Laws. "Securities Laws" shall mean the Securities Act; the Exchange Act; the Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940, as amended; the Trust Indenture Act of 1939, as amended, and the rules and regulations of the SEC promulgated thereunder. "Shortfall Number" shall have the meaning set forth in Section 3.2.5. "Significant Subsidiary" shall have the meaning set forth in Rule 1-02 of Regulation S-X of the SEC. "Stock Consideration" shall have the meaning set forth in Section 3.1.3. "Stock Conversion Number" shall have the meaning set forth in Section 3.2.1. "Stock Election Shares" shall have the meaning set forth in Section 3.1.3. "Stock Election Number" shall have the meaning set forth in Section 3.2.4. "Stock Election" shall have the meaning set forth in Section 3.1.3. "Stock Exchange" shall mean the Nasdaq Stock Market.
"Surviving Corporation" shall have the meaning set forth in
Section 2.1 hereof. "Termination Date" shall mean
September 30, 2009. "Treasury Stock" shall have the
meaning set forth in Section 3.1.2. Other terms used
herein are defined in the preamble and elsewhere in this Agreement.
ARTICLE II
hereto shall use its reasonable best efforts to cause the Merger to qualify, and will not knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken which action or failure to act could prevent the Merger from qualifying as a reorganization under Section 368(a) of the Code. Following the Closing, neither Investors, ABNJ nor any of their affiliates shall knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken, which action or failure to act could cause the Merger to fail to qualify as a reorganization under Section 368(a) of the Code. Investors and ABNJ each hereby agrees to deliver certificates substantially in compliance with IRS published advance ruling guidelines, with customary exceptions and modifications thereto, to enable counsel to deliver the legal opinion contemplated by Section 9.1.6, which certificates shall be effective as of the date of such opinion. 2.7. Possible Alternative Structures. Notwithstanding anything to the contrary contained in this Agreement, prior to the Effective Time, Investors shall be entitled to revise the structure of the Merger or the Bank Merger, including without limitation, by merging ABNJ into a wholly owned subsidiary of Investors, provided that (i) any such subsidiary shall become a party to, and shall agree to be bound by, the terms of this Agreement (ii) there are no adverse Federal or state income tax consequences to ABNJ shareholders as a result of the modification; (iii) the consideration to be paid to the holders of ABNJ Common Stock under this Agreement is not thereby changed in kind, value or reduced in amount; and (iv) such modification will not delay materially or jeopardize the receipt of Regulatory Approvals or other consents and approvals relating to the consummation of the Merger and the Bank Merger or otherwise cause any condition to Closing set forth in Article IX not to be capable of being fulfilled. The parties hereto agree to appropriately amend this Agreement and any related documents in order to reflect any such revised structure. 2.8. Bank Merger Investors and ABNJ shall use their reasonable best efforts to cause the merger of American Bank with and into Investors Savings Bank, with Investors Savings Bank as the surviving institution, to occur as soon as practicable after the Effective Time. In addition, following the execution and delivery of this Agreement, Investors will cause Investors Savings Bank, and ABNJ will cause American Bank, to execute and deliver the Plan of Bank Merger substantially in the form attached to this Agreement as Exhibit A. 2.9. Additional Actions If, at any time after the Effective Time, Investors shall consider or be advised that any further deeds, assignments or assurances in law or any other acts are necessary or desirable to (i) vest, perfect or confirm, of record or otherwise, in Investors its right, title or interest in, to or under any of the rights, properties or assets of ABNJ, American Bank, or (ii) otherwise carry out the purposes of this Agreement, ABNJ and its officers and directors shall be deemed to have granted to Investors an irrevocable power of attorney to execute and deliver, in such official corporate capacities, all such deeds, assignments or assurances in law or any other acts as are necessary or desirable to (a) vest, perfect or confirm, of record or otherwise, in Investors its right, title or interest in, to or under any of the rights, properties or assets of ABNJ or (b) otherwise carry out the purposes of this Agreement, and the officers and directors of the Investors are authorized in the name of ABNJ or otherwise to take any and all such action.
ARTICLE III
3.2. Election Procedures. 3.2.1. Holders of ABNJ Common Stock may elect to receive shares of Investors Common Stock or cash (in either case without interest) in exchange for their shares of ABNJ Common Stock in accordance with the procedures set forth herein; provided that, in the aggregate, and subject to the provisions of Section 3.2.7, 70% of the total number of shares of ABNJ Common Stock issued and outstanding at the Effective Time, excluding any Treasury Shares (the "Stock Conversion Number"), shall be converted into the Stock Consideration and the remaining outstanding shares of ABNJ Common Stock shall be converted into the Cash Consideration. Shares of ABNJ Common Stock as to which a Cash Election (including, pursuant to a Mixed Election) has been made are referred to herein as "Cash Election Shares." Shares of ABNJ Common Stock as to which a Stock Election has been made (including, pursuant to a Mixed Election) are referred to as "Stock Election Shares." Shares of ABNJ Common Stock as to which no election has been made (or as to which an Election Form is not returned properly completed) are referred to herein as "Non-Election Shares." The aggregate number of shares of ABNJ Common Stock with respect to which a Stock Election has been made is referred to herein as the "Stock Election Number." 3.2.2. An election form and other appropriate and customary transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of such Certificates to the Exchange Agent), in such form as ABNJ and Investors shall mutually agree ("Election Form"), shall be mailed no more than 40 business days and no less than 20 business days prior to the anticipated Effective Time or on such earlier date as Investors and ABNJ shall mutually agree (the "Mailing Date") to each holder of record of ABNJ Common Stock as of five business days prior to the Mailing Date (the "Election Form Record Date"). Each Election Form shall permit such holder, subject to the allocation and election procedures set forth in this Section 3.2, (i) to elect to receive the Cash Consideration for all of the shares of ABNJ Common Stock held by such holder, in accordance with Section 3.1.3, (ii) to elect to receive the Stock Consideration for all of such shares, in accordance with Section 3.1.3, (iii) elect to receive the Stock Consideration for a part of such holder’s ABNJ Common Stock and the Cash consideration for the remaining part of such holder’s ABNJ Common Stock, or (iv) to indicate that such record holder has no preference as to the receipt of cash or Investors Common Stock for such shares. A holder of record of shares of ABNJ Common Stock who holds such shares as nominee, trustee or in another representative capacity (a "Representative") may submit multiple Election Forms, provided that each such Election Form covers all the shares of ABNJ Common Stock held by such Representative for a particular beneficial owner. Any shares of ABNJ Common Stock with respect to which the holder thereof shall not, as of the Election Deadline, have made an election by submission to the Exchange Agent of an effective, properly completed Election Form shall be deemed Non-Election Shares. 3.2.3. To be effective, a properly completed Election Form shall be submitted to the Exchange Agent on or before 5:00 p.m., New York City time, on the 25th day following the Mailing Date (or such other time and date as Investors and ABNJ may mutually agree) (the "Election Deadline"); provided, however, that the Election Deadline may not occur on or after the Closing Date. ABNJ shall use its reasonable best efforts to make available up to two separate Election Forms, or such additional Election Forms as Investors may permit, to all persons who become holders (or beneficial owners) of ABNJ Common Stock between the Election Form Record Date and the close of business on the business day prior to the Election Deadline. ABNJ shall provide to the Exchange Agent all information reasonably necessary for it to perform as specified herein. An election shall have been properly made only if the Exchange Agent shall have actually received a properly completed Election Form by the Election Deadline. An Election Form shall be deemed properly completed only if accompanied by one or more Certificates (or customary affidavits and indemnification regarding the loss or destruction of such Certificates or the guaranteed delivery of such Certificates) representing all shares of ABNJ Common Stock covered by such Election Form, together with duly executed transmittal materials included with the Election Form. If an ABNJ shareholder either (i) does not submit a properly completed Election Form in a timely fashion or (ii) revokes its Election Form prior to the Election Deadline (without later submitting a properly completed Election Form prior to the Election Deadline), the shares of ABNJ Common Stock held by such shareholder shall be designated as Non-Election Shares. Any Election Form may be revoked or changed by the person submitting such Election Form to the Exchange Agent by written notice
to the Exchange Agent only if such notice of revocation or change is actually received by the Exchange Agent at or prior to the Election Deadline. Investors shall cause the Certificate or Certificates relating to any revoked Election Form to be promptly returned without charge to the person submitting the Election Form to the Exchange Agent. Subject to the terms of this Agreement and of the Election Form, the Exchange Agent shall have discretion to determine when any election, modification or revocation is received and whether any such election, modification or revocation has been properly made. All Elections shall be revoked automatically if the Exchange Agent is notified in writing by Investors or ABNJ, upon exercise by Investors or ABNJ of its respective or their mutual rights to terminate this Agreement to the extent provided under Article XI, that this Agreement has been terminated in accordance with Article XI. 3.2.4. If the aggregate number of shares of ABNJ Common Stock with respect to which Stock Elections shall have been made (the "Stock Election Number") exceeds the Stock Conversion Number, then all Cash Election Shares and all Non-Election Shares of each holder thereof shall be converted into the right to receive the Cash Consideration, and Stock Election Shares of each holder thereof will be converted into the right to receive the Stock Consideration in respect of that number of Stock Election Shares equal to the product obtained by multiplying (x) the number of Stock Election Shares held by such holder by (y) a fraction, the numerator of which is the Stock Conversion Number and the denominator of which is the Stock Election Number, with the remaining number of such holder’s Stock Election Shares being converted into the right to receive the Cash Consideration. 3.2.5. If the Stock Election Number is less than the Stock Conversion Number (the amount by which the Stock Conversion Number exceeds the Stock Election Number being referred to herein as the "Shortfall Number"), then all Stock Election Shares shall be converted into the right to receive the Stock Consideration and the Non-Election Shares and Cash Election Shares shall be treated in the following manner: (A) If the Shortfall Number is less than or equal to the number of Non-Election Shares, then all Cash Election Shares shall be converted into the right to receive the Cash Consideration and the Non-Election Shares of each holder thereof shall convert into the right to receive the Stock Consideration in respect of that number of Non-Election Shares equal to the product obtained by multiplying (x) the number of Non-Election Shares held by such holder by (y) a fraction, the numerator of which is the Shortfall Number and the denominator of which is the total number of Non-Election Shares, with the remaining number of such holder’s Non-Election Shares being converted into the right to receive the Cash Consideration; or (B) If the Shortfall Number exceeds the number of Non-Election Shares, then all Non-Election Shares shall be converted into the right to receive the Stock Consideration and Cash Election Shares of each holder thereof shall convert into the right to receive the Stock Consideration in respect of that number of Cash Election Shares equal to the product obtained by multiplying (x) the number of Cash Election Shares held by such holder by (y) a fraction, the numerator of which is the amount by which (1) the Shortfall Number exceeds (2) the total number of Non-Election Shares and the denominator of which is the total number of Cash Election Shares, with the remaining number of such holder’s Cash Election Shares being converted into the right to receive the Cash Consideration. 3.2.6. Adjustment to Preserve Tax Treatment. Notwithstanding anything in this Article III to the contrary, if the aggregate value of the Stock Consideration to be delivered as of the Effective Time, less the amount of cash paid in lieu of fractional shares of Investors Common Stock pursuant to Section 3.2.7 (the "Stock Value"), is less than 42.5% of the sum of (i) the aggregate value of the Merger Consideration to be delivered as of the Effective Time, plus (ii) the value of any consideration described in Treasury Regulations Section 1.368-1(e)(1)(ii), plus (iii) the value of any consideration paid by Investors or any of its Subsidiaries (or any "related person" to Investors or any of its Subsidiaries within the meaning of Treasury Regulations Section 1.368-1(e)(3)) to acquire shares of ABNJ Common Stock prior to the Effective Time (such sum, the "Aggregate Value"), then Investors may reduce the number of shares of outstanding ABNJ Common Stock entitled to receive the Cash Consideration and correspondingly increase the number of shares of ABNJ Common Stock entitled to receive the Stock Consideration by the minimum amount necessary to cause the Stock Value to equal 42.5% of the Aggregate Value.
3.2.7. No Fractional Shares. Notwithstanding anything to the contrary contained herein, no certificates or scrip representing fractional shares of Investors Common Stock shall be issued upon the surrender for exchange of Certificates, no dividend or distribution with respect to Investors Common Stock shall be payable on or with respect to any fractional share interest, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a shareholder of Investors. In lieu of the issuance of any such fractional share, Investors shall pay to each former holder of ABNJ Common Stock who otherwise would be entitled to receive a fractional share of Investors Common Stock, an amount in cash, rounded to the nearest cent and without interest, equal to the product of (i) the fraction of a share to which such holder would otherwise have been entitled and (ii) the average of the daily closing sales prices of a share of Investors Common Stock as reported on the Nasdaq for the five consecutive trading days immediately preceding the Closing Date. For purposes of determining any fractional share interest, all shares of ABNJ Common Stock owned by a ABNJ shareholder shall be combined so as to calculate the maximum number of whole shares of Investors Common Stock issuable to such ABNJ shareholder. 3.3. Procedures for Exchange of ABNJ Common Stock. 3.3.1. Investors to Make Merger Consideration Available. After the Election Deadline and no later than the Closing Date, Investors shall deposit, or shall cause to be deposited, with the Exchange Agent for the benefit of the holders of ABNJ Common Stock, for exchange in accordance with this Section 3.3, certificates representing the shares of Investors Common Stock and an aggregate amount of cash sufficient to pay the aggregate amount of cash payable pursuant to this Article III (including any cash that may be payable in lieu of any fractional shares of ABNJ Common Stock) (such cash and certificates for shares of Investors Common Stock, together with any dividends or distributions with respect thereto, being hereinafter referred to as the "Exchange Fund"). 3.3.2. Exchange of Certificates . Investors shall take all steps necessary to cause the Exchange Agent, within five (5) business days after the Effective Time, to mail to each holder of a Certificate or Certificates, a form letter of transmittal for return to the Exchange Agent and instructions for use in effecting the surrender of the Certificates for the Merger Consideration and cash in lieu of fractional shares, if any, into which the ABNJ Common Stock represented by such Certificates shall have been converted as a result of the Merger. The letter of transmittal shall 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. Upon proper surrender of a Certificate for exchange and cancellation to the Exchange Agent, together with a properly completed letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor, as applicable, (i) a certificate representing that number of shares of Investors Common Stock (if any) to which such former holder of ABNJ Common Stock shall have become entitled pursuant to the provisions of Section 3.1 or 3.2 hereof, (ii) a check representing that amount of cash (if any) to which such former holder of ABNJ Common Stock shall have become entitled pursuant to the provisions of Section 3.1 or 3.2 hereof and (iii) a check representing the amount of cash (if any) payable in lieu of fractional shares of Investors Common Stock, which such former holder has the right to receive in respect of the Certificate surrendered pursuant to the provisions of Section 3.2, and the Certificate so surrendered shall forthwith be cancelled. No interest will be paid or accrued on the cash payable in lieu of fractional shares. 3.3.3. Rights of Certificate Holders after the Effective Time . The holder of a Certificate that prior to the Merger represented issued and outstanding ABNJ Common Stock shall have no rights, after the Effective Time, with respect to such ABNJ Common Stock except to surrender the Certificate in exchange for the Merger Consideration as provided in this Agreement. No dividends or other distributions declared after the Effective Time with respect to Investors Common Stock shall be paid to the holder of any unsurrendered Certificate until the holder thereof shall surrender such Certificate in accordance with this Section 3.3. After the surrender of a Certificate in accordance with this Section 3.3, the record holder thereof shall be entitled to receive any such dividends or other distributions, without any interest thereon, which theretofore had become payable with respect to shares of Investors Common Stock represented by such Certificate. 3.3.4. Surrender by Persons Other than Record Holders . If the Person surrendering a Certificate and signing the accompanying letter of transmittal is not the record holder thereof, then it shall be a condition of
the payment of the Merger Consideration that: (i) such Certificate is properly endorsed to such Person or is accompanied by appropriate stock powers, in either case signed exactly as the name of the record holder appears on such Certificate, and is otherwise in proper form for transfer, or is accompanied by appropriate evidence of the authority of the Person surrendering such Certificate and signing the letter of transmittal to do so on behalf of the record holder; and (ii) the person requesting such exchange shall pay to the Exchange Agent in advance any transfer or other taxes required by reason of the payment to a person other than the registered holder of the Certificate surrendered, or required for any other reason, or shall establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. 3.3.5. Closing of Transfer Books . From and after the Effective Time, there shall be no transfers on the stock transfer books of ABNJ of the ABNJ Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates representing such shares are presented for transfer to the Exchange Agent, they shall be exchanged for the Merger Consideration and canceled as provided in this Section 3.3. 3.3.6. Return of Exchange Fund . At any time following the six (6) month period after the Effective Time, Investors shall be entitled to require the Exchange Agent to deliver to it any portions of the Exchange Fund which had been made available to the Exchange Agent and not disbursed to holders of Certificates (including, without limitation, all interest and other income received by the Exchange Agent in respect of all funds made available to it), and thereafter such holders shall be entitled to look to Investors (subject to abandoned property, escheat and other similar laws) with respect to any Merger Consideration that may be payable upon due surrender of the Certificates held by them. Notwithstanding the foregoing, neither Investors nor the Exchange Agent shall be liable to any holder of a Certificate for any Merger Consideration delivered in respect of such Certificate to a public official pursuant to any abandoned property, escheat or other similar law. 3.3.7. Lost, Stolen or Destroyed Certificates . In the event 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 Investors, the posting by such person of a bond in such amount as Investors may reasonably 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. 3.3.8. Withholding. Investors or the Exchange 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 ABNJ Common Stock such amounts as Investors (or any Affiliate thereof) or the Exchange 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 Investors or the Exchange Agent, such withheld amounts will be treated for all purposes of this Agreement as having been paid to the holder of the ABNJ Common Stock in respect of whom such deduction and withholding were made by Investors or the Exchange Agent. 3.3.9. Treatment of ABNJ Options . ABNJ DISCLOSURE SCHEDULE 4.3.1 sets forth all of the outstanding ABNJ Options as of the date hereof. Prior to and effective as of the Effective Time, ABNJ shall take all actions necessary to terminate the ABNJ Equity Plans. Holders of all unexercised ABNJ Options as of the Effective Time will receive, in cancellation of their ABNJ Options, a cash payment from ABNJ immediately prior to the Effective Time, in an amount equal to the product of (x) the number of shares of ABNJ Common Stock provided for in such ABNJ Option and (y) the excess, if any, of $12.50 over the exercise price per share provided for in such ABNJ Option (the "Cash Option Payment"), which cash payment shall be treated as compensation and shall be net of any applicable federal or state withholding tax. Subject to the foregoing, ABNJ Options not exercised prior to the Effective Time shall terminate. Prior to the Effective Time, ABNJ shall obtain the written consent of each option holder to the cancellation of the ABNJ Options in exchange for the Cash Option Payment.
3.4. Reservation of
Shares. 3.4.1. Investors shall reserve for
issuance a sufficient number of shares of the Investors Common
Stock for the purpose of issuing shares of Investors Common Stock
to the ABNJ shareholders in accordance with this Article III.
3.5. Modification of Merger
Consideration Notwithstanding anything in this
Agreement to the contrary, in the event that by May 31, 2009
Investors has not received Regulatory Approvals to issue shares of
Investors Common Stock in the Merger, in accordance with the terms
hereof, then Investors may elect to proceed with the Merger on the
basis of converting each outstanding share of ABNJ Common Stock
into the right to receive the Cash Consideration, all references to
Merger Consideration shall mean the Cash Consideration, and the
applicable provisions of this Agreement shall be deemed modified
accordingly. In such event, and notwithstanding anything contained
in Section 2.7 hereof, the Merger shall be accomplished by
merging a newly formed, wholly owned first tier subsidiary of
Investors with and into ABNJ.
ARTICLE IV
qualified to do business in the states of the United States and foreign jurisdictions where its ownership or leasing of property or the conduct of its business requires such qualification. 4.2.2. American Bank is a federally chartered savings bank duly organized and validly existing under the laws of the United States. The deposits of American Bank are insured by the FDIC to the fullest extent permitted by law, and all premiums and assessments required to be paid in connection therewith have been paid by American Bank when due. American Bank is a member in good standing of the FHLB and owns the requisite amount of stock therein. 4.2.3. ABNJ DISCLOSURE SCHEDULE 4.2.3 sets forth each ABNJ Subsidiary. Each ABNJ Subsidiary is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization. 4.2.4. The respective minute books of ABNJ, American Bank and each other ABNJ Subsidiary accurately records, in all material respects, all material corporate actions of their respective shareholders and boards of directors (including committees). 4.2.5. Prior to the date of this Agreement, ABNJ has made available to Investors true and correct copies of the certificate of incorporation or charter and bylaws of ABNJ, American Bank and each other ABNJ Subsidiary. 4.3. Capitalization. 4.3.1. The authorized capital stock of ABNJ consists of 20,000,000 shares of common stock, $0.10 par value per share, of which 10,859,692 shares are outstanding, validly issued, fully paid and nonassessable and free of preemptive rights, and 10,000,000 shares of Preferred Stock, par value $0.10 per share, of which there are no shares issued and outstanding. There are 3,668,261 shares of ABNJ Common Stock held by ABNJ as Treasury Stock. Neither ABNJ nor any ABNJ Subsidiary has or is bound by any Rights of any character relating to the purchase, sale or issuance or voting of, or right to receive dividends or other distributions on any shares of ABNJ Common Stock, or any other security of ABNJ or a ABNJ Subsidiary or any securities representing the right to vote, purchase or otherwise receive any shares of ABNJ Common Stock or any other security of ABNJ or any ABNJ Subsidiary, other than shares issuable under the ABNJ Equity Plans. ABNJ DISCLOSURE SCHEDULE 4.3.1 sets forth the name of each holder of options to purchase ABNJ Common Stock, the number of shares each such individual may acquire pursuant to the exercise of such options, the grant and vesting dates, and the exercise price relating to the options held. 4.3.2. ABNJ owns all of the capital stock of American Bank, free and clear of any lien or encumbrance. Except for the ABNJ Subsidiaries, ABNJ does not possess, directly or indirectly, any material equity interest in any corporate entity, except for equity interests held in the investment portfolios of ABNJ Subsidiaries, equity interests held by ABNJ Subsidiaries in a fiduciary capacity, and equity interests held in connection with the lending activities of ABNJ Subsidiaries, including stock in the FHLB. Either ABNJ or American Bank owns all of the outstanding shares of capital stock of each ABNJ Subsidiary free and clear of all liens, security interests, pledges, charges, encumbrances, agreements and restrictions of any kind or nature. 4.3.3. To ABNJ’s Knowledge, no Person or "group" (as that term is used in Section 13(d)(3) of the Exchange Act), is the beneficial owner (as defined in Section 13(d) of the Exchange Act) of 5% or more of the outstanding shares of ABNJ Common Stock, except as listed on ABNJ’s DISCLOSURE SCHEDULE 4.3.3. 4.4. Authority; No Violation. 4.4.1. ABNJ has full corporate power and authority to execute and deliver this Agreement and, subject to the receipt of the Regulatory Approvals and the approval of this Agreement by ABNJ’s shareholders, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by ABNJ and the completion by ABNJ of the transactions contemplated hereby, including the Merger, have been duly and validly approved by the Board of Directors of ABNJ, and no other corporate proceedings on the part of ABNJ, except for the approval of the ABNJ shareholders, is necessary to complete the transactions contemplated hereby, including the Merger. This Agreement has been duly and validly executed and delivered
by ABNJ, and subject to approval by the shareholders of ABNJ and receipt of the Regulatory Approvals and due and valid execution and delivery of this Agreement by Investors, constitutes the valid and binding obligation of ABNJ, enforceable against ABNJ 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. 4.4.2. Subject to receipt of Regulatory Approvals and ABNJ’s and Investors’ compliance with any conditions contained therein, and to the receipt of the approval of the shareholders of ABNJ, (A) the execution and delivery of this Agreement by ABNJ, (B) the consummation of the transactions contemplated hereby, and (C) compliance by ABNJ with any of the terms or provisions hereof will not (i) conflict with or result in a breach of any provision of the certificate of incorporation or bylaws of ABNJ or any ABNJ Subsidiary or the charter and bylaws of American Bank; (ii) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to ABNJ or any ABNJ Subsidiary or any of their respective properties or assets; or (iii) violate, conflict with, result in a breach of any provisions of, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default), under, result in the termination of, accelerate the performance required by, or result in a right of termination or acceleration or the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of ABNJ or American Bank under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other investment or obligation to which ABNJ or American Bank is a party, or by which they or any of their respective properties or assets may be bound or affected, except for such violations, conflicts, breaches or defaults under clause (ii) or (iii) hereof which, either individually or in the aggregate, will not have a Material Adverse Effect on ABNJ and the ABNJ Subsidiaries taken as a whole. 4.5. Consents. Except for (a) filings with Bank Regulators, the receipt of the Regulatory Approvals, and compliance with any conditions contained therein and filing of Articles of Combination with Bank Regulators, (b) the filing of the Certificate of Merger with the Secretary of State of the States of Delaware and New Jersey, (c) the filing with the SEC of (i) the Merger Registration Statement and (ii) such reports under Sections 13(a), 13(d), 13(g) and 16(a) of the Exchange Act as may be required in connection with this Agreement and the transactions contemplated hereby and the obtaining from the SEC of such orders as may be required in connection therewith, (d) approval of the listing of Investors Common Stock to be issued in the Merger on the Nasdaq, (e) such filings and approvals as are required to be made or obtained under the securities or "Blue Sky" laws of various states in connection with the issuance of the shares of Investors Common Stock pursuant to this Agreement, and (f) the approval of this Agreement by the requisite vote of the shareholders of ABNJ, no consents, waivers or approvals of, or filings or registrations with, any Governmental Entity are necessary, and, to ABNJ’s Knowledge, no consents, waivers or approvals of, or filings or registrations with, any other third parties are necessary, in connection with (x) the execution and delivery of this Agreement by ABNJ, and (y) the completion of the Merger and the Bank Merger. ABNJ has no reason to believe that (i) any Regulatory Approvals or other required consents or approvals will not be received, or that (ii) any public body or authority, the consent or approval of which is not required or to which a filing is not required, will object to the completion of the transactions contemplated by this Agreement. 4.6. Financial Statements. 4.6.1. ABNJ has previously made available to Investors the ABNJ Regulatory Reports. The ABNJ Regulatory Reports have been prepared in all material respects in accordance with applicable regulatory accounting principles and practices throughout the periods covered by such statements. 4.6.2. ABNJ has previously made available to Investors the ABNJ Financial Statements. The ABNJ Financial Statements have been prepared in accordance with GAAP, and (including the related notes where applicable) fairly present in each case in all material respects (subject in the case of the unaudited interim statements to normal year-end adjustments), the consolidated financial position, results of operations and cash flows of ABNJ and the ABNJ Subsidiaries on a consolidated basis as of and for the respective periods ending
on the dates thereof, in accordance with GAAP during the periods involved, except as indicated in the notes thereto, or in the case of unaudited statements, as permitted by Form 10-Q. 4.6.3. At the date of each balance sheet included in the ABNJ Financial Statements or the ABNJ Regulatory Reports, neither ABNJ nor American Bank, as applicable, had any liabilities, obligations or loss contingencies of any nature (whether absolute, accrued, contingent or otherwise) of a type required to be reflected in such ABNJ Financial Statements or ABNJ Regulatory Reports or in the footnotes thereto which are not fully reflected or reserved against therein or fully disclosed in a footnote thereto, except for liabilities, obligations and loss contingencies which are not material individually or in the aggregate or which are incurred in the ordinary course of business, consistent with past practice, and except for liabilities, obligations and loss contingencies which are within the subject matter of a specific representation and warranty herein and subject, in the case of any unaudited statements, to normal, recurring audit adjustments and the absence of footnotes. 4.6.4. The records, systems, controls, data and information of ABNJ and its Subsidiaries 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 ABNJ or its Subsidiaries 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 material adverse effect on the system of internal accounting controls described below in this Section 4.6.4. ABNJ (x) has implemented and maintains a system of internal control over financial reporting (as required by Rule 13a-15(a) of the Exchange Act) that is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of its financial statements for external purposes in accordance with GAAP, (y) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material information relating to ABNJ, including its consolidated Subsidiaries, is made known to the chief executive officer and the chief financial officer of ABNJ by others within those entities, and (z) has disclosed, based on its most recent evaluation prior to the date hereof, to ABNJ’s outside auditors and the audit committee of ABNJ’s Board of Directors (i) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect ABNJ’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in ABNJ’s internal control over financial reporting. These disclosures (if any) were made in writing by management to ABNJ’s auditors and audit committee and a copy has previously been made available to Investors. As of the date hereof, to the knowledge of ABNJ, its chief executive officer and chief financial officer will be able to give the certifications required pursuant to the rules and regulations adopted pursuant to Section 302 of the Sarbanes-Oxley Act, without qualification, when next due. 4.6.5. Since October 1, 2006, (i) neither ABNJ nor any of its Subsidiaries nor, to the knowledge of ABNJ, any director, officer, employee, auditor, accountant or representative of ABNJ or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of ABNJ or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that ABNJ or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) no attorney representing ABNJ or any of its Subsidiaries, whether or not employed by ABNJ or any of its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by ABNJ or any of its officers, directors, employees or agents to the Board of Directors of ABNJ or any committee thereof or to any director or officer of ABNJ. 4.7. Taxes. Except as set forth in ABNJ DISCLOSURE SCHEDULE 4.7, ABNJ and the ABNJ Subsidiaries that are at least 80 percent owned by ABNJ are members of the same affiliated group within the meaning of Code Section 1504(a). ABNJ has duly filed all federal, state and material local tax returns required to be filed by or with respect to ABNJ and every ABNJ Subsidiary on or prior to the Closing Date, taking into account any
extensions (all such returns, to ABNJ’s Knowledge, being accurate and correct in all material respects) and has duly paid or made provisions for the payment of all material federal, state and local taxes which have been incurred by or are due or claimed to be due from ABNJ and any ABNJ Subsidiary by any taxing authority or pursuant to any written tax sharing agreement on or prior to the Closing Date other than taxes or other charges which (i) are not delinquent, (ii) are being contested in good faith, or (iii) have not yet been fully determined. Except as set forth in ABNJ DISCLOSURE SCHEDULE 4.7(b), as of the date of this Agreement, ABNJ has received no written notice of, and to ABNJ’s Knowledge there is no audit examination, deficiency assessment, tax investigation or refund litigation with respect to any taxes of ABNJ or any of its Subsidiaries, and no claim has been made by any authority in a jurisdiction where ABNJ or any of its Subsidiaries do not file tax returns that ABNJ or any such Subsidiary is subject to taxation in that jurisdiction. Except as set forth in ABNJ DISCLOSURE SCHEDULE 4.7 (c), ABNJ and its Subsidiaries have not executed an extension or waiver of any statute of limitations on the assessment or collection of any material tax due that is currently in effect. ABNJ 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 ABNJ and each of its Subsidiaries, to ABNJ’s Knowledge, has timely complied with all applicable information reporting requirements under Part III, Subchapter A of Chapter 61 of the Code and similar applicable state and local information reporting requirements. 4.8. No Material Adverse Effect. ABNJ has not suffered any Material Adverse Effect since September 30, 2007 and no event has occurred or circumstance arisen since that date which, in the aggregate, has had or is reasonably likely to have a Material Adverse Effect on ABNJ. 4.9. Material Contracts; Leases; Defaults. 4.9.1. Except as set forth in ABNJ DISCLOSURE SCHEDULE 4.9.1, neither ABNJ nor any ABNJ Subsidiary is a party to or subject to: (i) any employment, consulting or severance contract or material arrangement with any past or present officer, director or employee of ABNJ or any ABNJ Subsidiary, except for "at will" arrangements; (ii) any plan, material arrangement or contract providing for bonuses, pensions, options, deferred compensation, retirement payments, profit sharing or similar material arrangements for or with any past or present officers, directors or employees of ABNJ or any ABNJ Subsidiary; (iii) any collective bargaining agreement with any labor union relating to employees of ABNJ or any ABNJ Subsidiary; (iv) any agreement which by its terms limits the payment of dividends by ABNJ or any ABNJ Subsidiary; (v) any instrument evidencing or related to material indebtedness for borrowed money whether directly or indirectly, by way of purchase money obligation, conditional sale, lease purchase, guaranty or otherwise, in respect of which ABNJ or any ABNJ Subsidiary is an obligor to any person, which instrument evidences or relates to indebtedness other than deposits, repurchase agreements, FHLB advances, bankers’ acceptances, and "treasury tax and loan" accounts and transactions in "federal funds" in each case established in the ordinary course of business consistent with past practice, or which contains financial covenants or other restrictions (other than those relating to the payment of principal and interest when due) which would be applicable on or after the Closing Date to Investors or any Investors Subsidiary; (vi) any other agreement, written or oral, that obligates ABNJ or any ABNJ Subsidiary for the payment of more than $25,000 annually or for the payment of more than $50,000 over its remaining term, which is not terminable without cause on 60 days’ or less notice without penalty or payment, or (vii) any agreement (other than this Agreement), contract, arrangement, commitment or understanding (whether written or oral) that restricts or limits in any material way the conduct of business by ABNJ or any ABNJ Subsidiary (it being understood that any non-compete or similar provision shall be deemed material). 4.9.2. Each real estate lease that requires the consent of the lessor or its agent resulting from the Merger or the Bank Merger by virtue of the terms of any such lease, is listed in ABNJ DISCLOSURE SCHEDULE 4.9.2 identifying the section of the lease that contains such prohibition or restriction. Subject to any consents that may be required as a result of the transactions contemplated by this Agreement, to its Knowledge, neither ABNJ nor any ABNJ Subsidiary is in default in any material respect under any material contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a
party, by which its assets, business, or operations may be bound or affected, or under which it or its assets, business, or operations receive benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. 4.9.3. True and correct copies of agreements, contracts, arrangements and instruments referred to in Section 4.9.1 and 4.9.2 have been made available to Investors on or before the date hereof, are listed on ABNJ DISCLOSURE SCHEDULE 4.9.1 and are in full force and effect on the date hereof and neither ABNJ nor any ABNJ Subsidiary (nor, to the Knowledge of ABNJ, any other party to any such contract, arrangement or instrument) has materially breached any provision of, or is in default in any respect under any term of, any such contract, arrangement or instrument. Except as listed on ABNJ DISCLOSURE SCHEDULE 4.9.3(a), no party to any material contract, arrangement or instrument will have the right to terminate any or all of the provisions of any such contract, arrangement or instrument as a result of the execution of, and the consummation of the transactions contemplated by, this Agreement. Except as set forth in ABNJ DISCLOSURE SCHEDULE 4.9.3(b), no plan, contract, employment agreement, termination agreement, or similar agreement or arrangement to which ABNJ or any ABNJ Subsidiary is a party or under which ABNJ or any ABNJ Subsidiary may be liable contains provisions which permit an employee or independent contractor to terminate it without cause and continue to accrue future benefits thereunder. Except as set forth in ABNJ DISCLOSURE SCHEDULE 4.9.3(c), no such agreement, plan, contract, or arrangement (x) provides for acceleration in the vesting of benefits or payments due thereunder upon the occurrence of a change in ownership or control of ABNJ or any ABNJ Subsidiary or upon the occurrence of a subsequent event; or (y) requires ABNJ or any ABNJ Subsidiary to provide a benefit in the form of ABNJ Common Stock or determined by reference to the value of ABNJ Common Stock. 4.9.4. Since December 31, 2007, through and including the date of this Agreement, except as publicly disclosed by ABNJ in the Securities Documents filed or furnished by ABNJ prior to the date hereof, neither ABNJ nor any ABNJ Subsidiary has (i) except for (A) normal increases for employees (other than officers and directors subject to the reporting requirements of Section 16(a) of the Exchange Act) made in the ordinary course of business consistent with past practice, or (B) as required by applicable law, increased the wages, salaries, compensation, pension, or other fringe benefits or perquisites payable to any executive officer, employee, or director from the amount thereof in effect as of December 31, 2007 (which amounts have been previously made available to Investors), granted any severance or termination pay, entered into any contract to make or grant any severance or termination pay (except as required under the terms of agreements or severance plans listed on ABNJ DISCLOSURE SCHEDULE 4.13.1, as in effect as of the date hereof), or paid any bonus other than the customary year-end bonuses in amounts consistent with past practice, (ii) granted any options to purchase shares of ABNJ Common Stock, or any right to acquire any shares of its capital stock to any executive officer, director or employee other than grants to employees (other than officers subject to the reporting requirements of Section 16(a) of the Exchange Act) made in the ordinary course of business consistent with past practice under ABNJ Equity Plans, (iii) increased or established any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan, (iv) made any material election for federal or state income tax purposes, (v) made any material change in the credit policies or procedures of ABNJ or any of its Subsidiaries, the effect of which was or is to make any such policy or procedure less restrictive in any material respect, (vi) made any material acquisition or disposition of any assets or properties, or any contract for any such acquisition or disposition entered into other than loans and loan commitments, (vii) entered into any lease of real or personal property requiring annual payments in excess of $100,000, other than in connection with foreclosed property or in the ordinary course of business consistent with past practice, (viii) changed any accounting methods, principles or practices of ABNJ or its Subsidiaries affecting its assets, liabilities or businesses, including any reserving, renewal or residual method, practice or policy or (ix) suffered any strike, work stoppage, slow-down, or other labor disturbance. 4.9.5. ABNJ did not apply to participate in the Capital Purchase Program established by the United States Treasury Department under the Troubled Assets Relief Program, pursuant to the Emergency Economic Stabilization Act of 2008.
4.10. Ownership of Property; Insurance Coverage. 4.10.1. ABNJ and each ABNJ Subsidiary has good and, as to real property, marketable title to all material assets and properties owned by ABNJ or each ABNJ Subsidiary in the conduct of its businesses, whether such assets and properties are real or personal, tangible or intangible, including assets and property reflected in the balance sheets contained in the ABNJ Regulatory Reports and in the ABNJ Financial Statements or acquired subsequent thereto (except to the extent that such assets and properties have been disposed of in the ordinary course of business, since the date of such balance sheets), subject to no material encumbrances, liens, mortgages, security interests or pledges, except (i) those items which secure liabilities for public or statutory obligations or any discount with, borrowing from or other obligations to FHLB, inter-bank credit facilities, or any transaction by an ABNJ Subsidiary acting in a fiduciary capacity, (ii) statutory liens for amounts not yet delinquent or which are being contested in good faith, (iii) non-monetary liens affecting real property which do not adversely affect the value or use of such real property, and (iv) those described and reflected in the ABNJ Financial Statements. ABNJ and the ABNJ Subsidiaries, as lessee, have the right under valid and existing leases of real and personal properties used by ABNJ and its Subsidiaries in the conduct of their businesses to occupy or use all such properties as presently occupied and used by each of them. Such existing leases and commitments to lease constitute or will constitute operating leases for both tax and financial accounting purposes and the lease expense and minimum rental commitments with respect to such leases and lease commitments are as disclosed in all material respects in the notes to the ABNJ Financial Statements. 4.10.2. With respect to all material agreements pursuant to which ABNJ or any ABNJ Subsidiary has purchased securities subject to an agreement to resell, if any, ABNJ or such ABNJ Subsidiary, as the case may be, has a lien or security interest (which to ABNJ’s Knowledge is a valid, perfected first lien) in the securities or other collateral securing the repurchase agreement, and the value of such collateral equals or exceeds the amount of the debt secured thereby. 4.10.3. ABNJ and each ABNJ Subsidiary currently maintain insurance considered by each of them to be reasonable for their respective operations. Neither ABNJ nor any ABNJ Subsidiary, except as disclosed in ABNJ DISCLOSURE SCHEDULE 4.10.3(a), has received notice from any insurance carrier during the past five years that (i) such insurance will be canceled or that coverage thereunder will be reduced or eliminated, or (ii) premium costs (other than with respect to health insurance) with respect to such policies of insurance will be substantially increased. There are presently no material claims pending under such policies of insurance and no notices have been given by ABNJ or any ABNJ Subsidiary under such policies. All such insurance is valid and enforceable and in full force and effect, and within the last three years ABNJ and each ABNJ Subsidiary has received each type of insurance coverage for which it has applied and during such periods has not been denied indemnification for any material claims submitted under any of its insurance policies. ABNJ DISCLOSURE SCHEDULE 4.10.3(b) identifies all material policies of insurance maintained by ABNJ and each ABNJ Subsidiary as well as the other matters required to be disclosed under this Section. 4.11. Legal Proceedings. Except as set forth in ABNJ DISCLOSURE SCHEDULE 4.11, neither ABNJ nor any ABNJ Subsidiary is a party to any, and there are no pending or, to ABNJ’s Knowledge, threatened legal, administrative, arbitration or other proceedings, claims (whether asserted or unasserted), actions or governmental investigations or inquiries of any nature (i) against ABNJ or any ABNJ Subsidiary, (ii) to which ABNJ or any ABNJ Subsidiary’s assets are or may be subject, (iii) challenging the validity or propriety of any of the transactions contemplated by this Agreement, or (iv) which could adversely affect the ability of ABNJ or American Bank to perform under this Agreement, except for any proceeding, claim, action, investigation or inquiry which, if adversely determined, individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect on ABNJ. 4.12. Compliance With Applicable Law. 4.12.1. To ABNJ’s Knowledge, each of ABNJ and each ABNJ Subsidiary is in compliance in all material respects with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable to it, its properties, assets and deposits, its business, and its conduct of business and its relationship with its employees, including, without limitation, the USA Patriot Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act of 1977, the Home Mortgage Disclosure Act, and all other applicable fair lending laws and other laws relating to discriminatory business practices and neither ABNJ nor any ABNJ Subsidiary has received any written notice to the contrary. The Board of Directors of American Bank has adopted and American Bank has implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that has not been deemed ineffective by any Governmental Authority and that meets the requirements of Sections 352 and 326 of the USA Patriot Act and the regulations thereunder. 4.12.2. Each of ABNJ and each ABNJ Subsidiary has all material permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Entities and Bank Regulators that are required in order to permit it to own or lease its properties and to conduct its business as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to the Knowledge of ABNJ, no suspension or cancellation of any such permit, license, certificate, order or approval is threatened or will result from the consummation of the transactions contemplated by this Agreement, subject to obtaining Regulatory Approvals. 4.12.3. For the period beginning January 1, 2003, neither ABNJ nor any ABNJ Subsidiary has received any written notification or, to ABNJ’s Knowledge, any other communication from any Bank Regulator (i) asserting that ABNJ or any ABNJ Subsidiary is not in material compliance with any of the statutes, regulations or ordinances which such Bank Regulator enforces; (ii) threatening to revoke any license, franchise, permit or governmental authorization which is material to ABNJ or any ABNJ Subsidiary; (iii) requiring, or threatening to require, ABNJ or any ABNJ Subsidiary, or indicating that ABNJ or any ABNJ Subsidiary may be required, to enter into a cease and desist order, agreement or memorandum of understanding or any other agreement with any federal or state governmental agency or authority which is charged with the supervision or regulation of banks or engages in the insurance of bank deposits restricting or limiting, or purporting to restrict or limit, in any material respect the operations of ABNJ or any ABNJ Subsidiary, including without limitation any restriction on the payment of dividends; or (iv) directing, restricting or limiting, or purporting to direct, restrict or limit, in any manner the operations of ABNJ or any ABNJ Subsidiary, including without limitation any restriction on the payment of dividends (any such notice, communication, memorandum, agreement or order described in this sentence is hereinafter referred to as a "ABNJ Regulatory Agreement"). Neither ABNJ nor any ABNJ Subsidiary has consented to or entered into any ABNJ Regulatory Agreement that is currently in effect or that was in effect since January 1, 2003. The most recent regulatory rating given to American Bank as to compliance with the Community Reinvestment Act ("CRA") is satisfactory or better. 4.12.4. Since the enactment of the Sarbanes-Oxley Act, ABNJ has been and is in compliance in all material respects with (i) the applicable provisions of the Sarbanes-Oxley Act and (ii) the applicable listing and corporate governance rules and regulations of the Nasdaq. ABNJ DISCLOSURE SCHEDULE 4.12.4 of sets forth, as of November 30, 2008, a schedule of all officers and directors of ABNJ who have outstanding loans from ABNJ or American Bank, and there has been no default on, or forgiveness or waiver of, in whole or in part, any such loan during the two years immediately preceding the date hereof. 4.13. Employee Benefit Plans. 4.13.1. ABNJ DISCLOSURE SCHEDULE 4.13.1 includes a descriptive list and copy of all existing bonus, incentive, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, stock appreciation, phantom stock, severance, welfare benefit plans (including paid time off policies and other benefit policies and procedures), fringe benefit plans, employment, severance and change in control agreements, split dollar life insurance and any supplemental life insurance agreements and/or policies, and all other material benefit practices, policies and arrangements maintained by ABNJ or any ABNJ Subsidiary in which any employee or former employee, consultant or former consultant or director or former director of ABNJ or any ABNJ Subsidiary participates or to which any such employee, consultant or director is a party or is otherwise entitled to receive benefits (the
"ABNJ Compensation and Benefit Plans"). Except as set forth in ABNJ DISCLOSURE SCHEDULE 4.13.1, neither ABNJ nor any of its Subsidiaries has any commitment to create any additional ABNJ Compensation and Benefit Plan or to materially modify, change or renew any existing ABNJ Compensation and Benefit Plan (any modification or change that increases the cost of such plans would be deemed material), except as required to maintain the qualified status thereof. 4.13.2. To the Knowledge of ABNJ and except as disclosed in ABNJ DISCLOSURE SCHEDULE 4.13.2, each ABNJ Compensation and Benefit Plan has been operated and administered in all material respects in accordance with its terms and with applicable law, including, but not limited to, ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act, COBRA, the Health Insurance Portability and Accountability Act ("HIPAA") and any regulations or rules promulgated thereunder, and all material filings, disclosures and notices required by ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act, COBRA and HIPAA and any other applicable law have been timely made or any interest, fines, penalties or other impositions for late filings have been paid in full and each ABNJ Compensation and Benefit Plan that is subject to Code Section 409A is in compliance with Code Section 409A. Each ABNJ Compensation and Benefit Plan which is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan") and which is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS, and ABNJ is not aware of any circumstances which are reasonably likely to result in revocation of any such favorable determination letter. There is no material pending or, to the Knowledge of ABNJ, threatened action, suit or claim relating to any of the ABNJ Compensation and Benefit Plans ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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