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Agreement And Plan Of Merger

Agreement and Plan of Merger

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NATIONAL COMMERCE CORP | NATIONAL COMMERCE CORPORATION | PRIVATE BANCSHARES, INC

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Delaware     Date: 8/31/2016
Industry: SandLs/Savings Banks     Law Firm: Bryan Cave;Maynard Cooper     Sector: Financial

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Exhibit 2.1

 

 

AGREEMENT AND PLAN OF MERGER

 

by and between

 

NATIONAL COMMERCE CORPORATION

(a Delaware corporation)

 

and

 

PRIVATE BANCSHARES, INC.

(a Georgia corporation)

 

 

 

Dated as of

 

August 30, 2016

 

 

 


 

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is made and entered into as of August 30, 2016, by and between National Commerce Corporation (“ NCC ”), a corporation organized and existing under the Laws of the State of Delaware, with its principal office in Birmingham, Alabama, and Private Bancshares, Inc. (“ PBI ”), a corporation organized and existing under the Laws of the State of Georgia, with its principal office in Atlanta, Georgia.

 

Preamble

 

The respective Boards of Directors of NCC and PBI have determined that the transactions described herein are in the best interests of the Parties and their respective stockholders. This Agreement provides for the acquisition of PBI by NCC pursuant to the merger of PBI with and into NCC (the “ Merger ”). At the effective time of the Merger, and except as provided herein, the outstanding shares of the capital stock of PBI shall be converted into the right to receive shares of common stock of NCC or, at the election of the stockholders of PBI, into cash (subject to the requirements and limitations set forth herein).

 

The transactions described in or otherwise contemplated by this Agreement are subject to, among other things: (i) the filing by NCC and the effectiveness of a registration statement with respect to the shares of common stock of NCC to be issued to stockholders of PBI in the Merger; (ii) the approval of the stockholders of PBI; (iii) the approval of, notice to and/or waiver of the Federal Reserve Board, the OCC and the Georgia Department of Banking and Finance; and (iv) the satisfaction of certain other conditions described in this Agreement. It is the intention of the parties to this Agreement that, for federal income tax purposes, the Merger and the Bank Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the IRC.

 

Certain capitalized terms used but not otherwise defined in this Agreement are defined in Section 11.1 of this Agreement.

 

NOW, THEREFORE, in consideration of the above and the mutual warranties, representations, covenants and agreements set forth herein, the parties agree as follows:

 

Article 1
Transaction and Terms of Merger

 

1.1      The Merger .       Subject to the terms and conditions of this Agreement, at the Effective Time, PBI shall be merged with and into NCC in accordance with the provisions of Section 252 of the DGCL and Section 14-2-1107 of the OCGA. At the Effective Time, the separate corporate existence of PBI shall cease. NCC shall be the surviving corporation resulting from the Merger (the “ Surviving Corporation ”) and shall continue to be governed by the DGCL. The Merger will be consummated pursuant to the terms of this Agreement, which has been unanimously approved and adopted by the respective Boards of Directors of NCC and PBI.

 

 

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1.2      Time and Place of Closing.       The place of the Closing shall be at the offices of Maynard, Cooper & Gale, P.C., Birmingham, Alabama, or such other place as may be mutually agreed upon by the Parties. Subject to the terms and conditions of this Agreement, unless otherwise mutually agreed upon in writing by the chief executive officers of NCC and PBI, the Closing will take place at 9:00 a.m. Central Time on the last Business Day of the month in which the closing conditions set forth in Article 9 below (other than those conditions that are to be satisfied at the Closing) have been satisfied or waived pursuant to Section 11.4 of this Agreement (the date of such Closing, the “ Closing Date ”).

 

1.3      Effective Time. Subject to the terms and conditions of this Agreement and the occurrence of the Closing, the Merger shall become effective: (a) on the date and at the time that the later of the following shall occur: (i) the Certificate of Merger required by the DGCL (the “ Certificate of Merger ”) shall be accepted for filing by the Secretary of State of Delaware, and (ii) the Articles of Merger required by the OCGA (the “ Articles of Merger ”) shall be accepted for filing by the Secretary of State of Georgia; or (b) on such date and at such time subsequent to the date and time established pursuant to subsection 1.3(a) above as may be specified by the Parties in the Certificate of Merger and Articles of Merger (provided that such subsequent date and time shall not be later than a time on the 30th day after the date that the Certificate of Merger is filed) (such time is hereinafter referred to as the “ Effective Time ”). Unless the chief executive officers of NCC and PBI otherwise mutually agree in writing, the Parties shall use their commercially reasonable efforts to cause the Effective Time to occur on the Closing Date.

 

1.4      Voting Agreements. Concurrently with the execution and delivery of this Agreement and as a material condition hereto, each member of the PBI Board and certain executive officers of PBI are entering into Shareholder Voting Agreements with NCC whereby, among other things, such Persons have agreed, upon the terms and subject to the conditions set forth therein, to vote all of the shares of PBI Common Stock owned by them in favor of this Agreement and the Merger and to support actions necessary to consummate the Merger and the Bank Merger.

 

1.5      Merger of Bank Subsidiaries. At the later of the Effective Time or such time as provided in Section 8.13, Private Bank of Buckhead, a Georgia state-chartered bank and wholly owned subsidiary of PBI (“ Private Bank ”) will be merged (the “ Bank Merger ”) with and into National Bank of Commerce, a national banking association and wholly owned subsidiary of NCC (“ NBC ”), with NBC as the surviving association, upon the terms and with the effect set forth in an agreement and plan of merger (the “ Bank Merger Agreement ”) in substantially the form attached hereto as Exhibit A .

 

Article 2
Effect of Merger

 

2.1      Certificate of Incorporation and Bylaws. The Certificate of Incorporation of NCC in effect immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation immediately after the Effective Time, unless and until amended in accordance with applicable Law. The Bylaws of NCC in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation immediately after the Effective Time, unless and until amended in accordance with applicable Law.

 

 

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2.2      Officers and Directors. The directors of the Surviving Corporation immediately following the Effective Time shall consist of the directors of NCC immediately prior to the Effective Time, and such directors shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal. NCC shall take any and all steps required under its Certificate of Incorporation and Bylaws to increase the size of the NCC Board as of the Effective Time and to appoint the PBI Designee, effective as of the Effective Time, to fill such vacancy. Thereafter, NCC agrees to include the PBI Designee in its recommended slate of nominees for election as a director at each of its first and second annual meetings of stockholders following the Effective Time. Nothing in this Section 2.2 shall require NCC to elect, appoint, nominate or recommend the PBI Designee for election to the NCC Board if he or she shall become the subject of a Disqualification; provided, however, that if the PBI Designee becomes the subject of a Disqualification prior to the Effective Time, NCC shall select a substitute PBI Designee. The officers of the Surviving Corporation immediately following the Effective Time shall consist of the officers of NCC immediately prior to the Effective Time, and such officers shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

 

2.3      Effect of Merger. At the Effective Time, the Merger shall have the effect set forth in Sections 259 and 261 of the DGCL and the comparable provisions of the OCGA. Without limiting the generality of the foregoing, all rights, franchises and interests of PBI and NCC in and to every type of property (real, personal and mixed) and choses in action shall be transferred to and vested in the Surviving Corporation by virtue of the Merger without any deed or other transfer. The Surviving Corporation shall hold and enjoy all rights of property, franchises and interests, including appointments, designations and nominations, and all other rights and interests as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee and receiver, and in every other fiduciary capacity, in the same manner and to the same extent as such rights, franchises, and interests were held or enjoyed by PBI and NCC at the Effective Time. All Liabilities and obligations of PBI and NCC shall be deemed to have been assumed by the Surviving Corporation, and the Surviving Corporation shall be bound thereby in the same manner and to the same extent as each of PBI and NCC was so bound at the Effective Time.

 

Article 3
Conversion of constituents’ CAPITAL STOCK

 

3.1      Manner of Converting Shares. Subject to the provisions of this Article 3, at the Effective Time, by virtue of the Merger and without any further action on the part of NCC, PBI or the holders of any shares of capital stock thereof, the shares of capital stock and rights and options to acquire shares of capital stock of the constituent corporations shall be converted as follows:

 

(a)      NCC Capital Stock . Each share of capital stock of NCC issued and outstanding immediately prior to the Effective Time shall continue to be an issued and outstanding share of the capital stock of the Surviving Corporation from and after the Effective Time.

 

(b)      PBI Common Stock Held by Parties . Each share of PBI Common Stock issued and outstanding immediately before the Effective Time that is owned, directly or indirectly, by any PBI Company or any NCC Company (other than shares of PBI Common Stock held in trust accounts (including grantor or rabbi trust accounts), managed accounts and the like, or otherwise held in a fiduciary or agency capacity, that are beneficially owned by third parties and other than shares of PBI Common Stock held, directly or indirectly, in respect of a debt previously contracted) shall be cancelled and shall cease to exist at the Effective Time without any conversion thereof, and no shares of NCC Common Stock, cash or other consideration shall be delivered in exchange therefor.

 

 

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(c)      Exchange Ratio for PBI Common Stock . Subject to Section 3.2 below, each share of PBI Common Stock issued and outstanding immediately prior to the Effective Time (excluding (i) shares cancelled pursuant to Section 3.1(b) above, (ii) Cash Election Shares described in Section 3.1(d) below, and (iii) shares held by stockholders who perfect their dissenters’ rights of appraisal as provided in Section 3.3 below) shall cease to be outstanding and shall be converted into and exchanged for the right to receive 0.85417 shares of NCC Common Stock (the “ Exchange Ratio ”).

 

(d)      Cash Election Shares .

 

(i)     Holders of PBI Common Stock shall be provided with an opportunity to elect to receive cash consideration in lieu of receiving NCC Common Stock in the Merger, in accordance with the election procedures set forth below. Holders who elect to receive cash in lieu of exchanging their shares of PBI Common Stock for NCC Common Stock as specified below shall receive $20.50, without interest thereon (the “ Per Share Cash Consideration ”) for each share of PBI Common Stock that is so converted (each, a “ Cash Election Share ”). Notwithstanding the preceding sentence or anything in this Agreement to the contrary, the aggregate number of Cash Election Shares shall be equal to, as nearly as practicable, but shall not exceed 405,891 (the “ Cash Election Share Limitation ”), and the aggregate cash consideration to be paid in respect of such Cash Election Shares (excluding, for purposes of clarity, amounts paid or payable to holders of Dissenting Shares) shall be equal to, as nearly as practicable, but shall not exceed $8,320,766 (the “ Total Cash Amount ”). However, if the aggregate number of Cash Election Shares exceeds the Cash Election Share Limitation, then at NCC’s sole option and election by written notice to PBI, the Cash Election Share Limitation may be increased to a maximum of 541,188 and the Total Cash Amount may be increased to a maximum of $11,094,354. Subject to the foregoing limitation and the proration procedures set forth in Section 3.1(d)(v), at the Effective Time, each Cash Election Share shall cease to be outstanding and shall be converted into and exchanged for the right to receive the Per Share Cash Consideration.

 

(ii)     The Exchange Agent shall mail an election form in such form as NCC and PBI shall mutually agree (the “ Election Form ”) with or following the issuance of the Proxy Statement/Prospectus, to each holder of record of PBI Common Stock. Each Election Form shall permit a holder (or the beneficial owner through appropriate and customary documentation and instructions) of PBI Common Stock to elect to receive cash with respect to all or a portion of such holder’s PBI Common Stock, subject to the Cash Election Share Limitation in Section 3.1(d)(i) above and the proration procedures set forth in Section 3.1(d)(v).

 

 

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(iii)     Any shares of PBI Common Stock with respect to which the holder shall not have submitted to the Exchange Agent an effective, properly completed Election Form prior to 5:00 p.m. Eastern Time on the day before the PBI Stockholders’ Meeting (or such other time and date as NCC and PBI may mutually agree) (the “ Election Deadline ”), and any shares of PBI Common Stock with respect to which the holder shall have submitted an Election Form prior to the Election Deadline but with respect to which such holder shall have elected not to receive cash, shall, subject to the proration procedure in subsection (v) below, be converted into NCC Common Stock at the Effective Time as set forth in, and subject to, Section 3.1(c) above (all such shares described in this subsection (iii) being referred to as “ Stock Election Shares ”).

 

(iv)     Any Election Form may be revoked or amended by the Person submitting such Election Form at or prior to the Election Deadline. In the event that an Election Form is revoked and a replacement Election Form therefor is not submitted prior to the Election Deadline, the shares of PBI Common Stock represented by such Election Form shall become Stock Election Shares. Subject to the terms of this Agreement and of the Election Form, the Exchange Agent shall have reasonable discretion to determine whether any election, revocation or change has been properly or timely made and to disregard immaterial defects in the Election Forms, and any good faith decision of the Exchange Agent regarding such matters shall be binding and conclusive. Neither NCC nor the Exchange Agent shall be under any obligation to notify any person of any defect in an Election Form.

 

(v)     Within five (5) Business Days after the Election Deadline, unless the Effective Time has not yet occurred, in which case as soon thereafter as practicable, the allocation among the holders of PBI Common Stock in accordance with the Election Forms shall be effected by the Exchange Agent as follows:

 

(A)      Cash Elections More Than the Total Cash Amount . If the aggregate amount of cash that would be paid upon conversion in the Merger of the Cash Election Shares (the “ Potential Cash Payment ”) is greater than the Total Cash Amount, then:

 

(1)     the number of Cash Election Shares designated by each holder of PBI Common Stock who properly submitted an Election Form shall be automatically reduced to that number of shares equal to the product of (i) the number of such holder’s Cash Election Shares designated in the Election Form and (ii) a fraction, the numerator of which is the Cash Election Share Limitation, and the denominator of which is the aggregate number of Cash Election Shares designated in all Election Forms;

 

(2)     each Cash Election Share remaining after adjustment pursuant to subsection (1) above shall be converted into the right to receive the Per Share Cash Consideration pursuant to Section 3.1(d)(i);

 

(3)     each share of PBI Common Stock that would have been a Cash Election Share but for the adjustment pursuant to subsection (1) above shall automatically be deemed to be a Stock Election Share; and

 

 

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(4)     each Stock Election Share, including those so designated pursuant to subsection (3) above, shall be converted into the right to receive NCC Common Stock pursuant to Section 3.1(c).

 

(B)      Cash Elections Less Than the Total Cash Amount . If the Potential Cash Payment is less than the Total Cash Amount, then:

 

(1)     the Exchange Agent shall select first from among the Stock Election Shares that obtained such status because the holders thereof did not submit an effective, properly completed Election Form by the Election Deadline, by a pro rata selection process, and then (if necessary) from among the remaining Stock Election Shares, by a pro rata selection process, a sufficient number of Stock Election Shares to instead receive the Per Share Cash Consideration such that the aggregate cash amount that will be paid in the Merger equals as closely as practicable but does not exceed the Total Cash Amount, and each share of PBI Common Stock that would have been a Stock Election Share but for the adjustment pursuant to this subsection (1) shall automatically be deemed to be a Cash Election Share. The pro rata selection process to be used by the Exchange Agent shall consist of such equitable proration processes as shall be mutually determined by NCC and PBI before the Effective Time;

 

(2)     each Cash Election Share, including those so designated pursuant to subsection (1) above, shall be converted into the right to receive the Per Share Cash Consideration pursuant to Section 3.1(d)(i); and

 

(3)     each Stock Election Share remaining after the adjustment process pursuant to subsection (1) above shall be converted into the right to receive NCC Common Stock pursuant to Section 3.1(c).

 

(C)      Cash Elections Equal to the Total Cash Amount . If the Potential Cash Payment is equal or nearly equal (as determined by the Exchange Agent) to (but in no event in excess of) the Total Cash Amount, then subsections (A) and (B) above shall not apply and:

 

(1)     each Cash Election Share shall be converted into the right to receive the Per Share Cash Consideration pursuant to Section 3.1(d)(i); and

 

(2)     each Stock Election Share shall be converted into the right to receive NCC Common Stock pursuant to Section 3.1(c).

 

(e)      PBI Options . At the Effective Time, each outstanding and unexercised option to purchase shares of PBI Common Stock pursuant to the PBI Stock Option Plan (each, an “ PBI Option ”) will cease to represent an option to purchase PBI Common Stock and will be converted automatically into an option to purchase NCC Common Stock (each, an “ NCC Option ”), and NCC will assume the PBI Stock Option Plan and each PBI Option subject to its terms, including any acceleration in vesting that will occur as a consequence of the Merger according to the instruments governing such PBI Option; provided, however, that after the Effective Time:

 

(i)      the number of shares of NCC Common Stock purchasable upon exercise of each PBI Option will equal the product of (A) the number of shares of PBI Common Stock that were purchasable under the PBI Option immediately before the Effective Time and (B) the Exchange Ratio, rounded to the nearest whole share;

 

 

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(ii)      the per share exercise price for each PBI Option will equal the quotient obtained by dividing (A) the per share exercise price of the PBI Option in effect immediately before the Effective Time by (B) the Exchange Ratio, rounded to the nearest cent; and

 

(iii)      where the context so requires, all references to PBI shall be deemed to be references to NCC and its Subsidiaries, and all references to the PBI Board (or the Compensation Committee thereof) shall be deemed to be references to the NCC Board (or the Compensation Committee thereof).

 

Shares of PBI Common Stock issued to the holder of a PBI Option pursuant to the valid exercise thereof after the Election Deadline but prior to the Effective Time shall, automatically by virtue of this Agreement and without any action on the part of the holder thereof, be deemed Stock Election Shares and converted into the right to receive the form of consideration with respect thereto determined in accordance with Section 3.1(d).

 

Notwithstanding the foregoing, each PBI Option that is intended to be an “incentive stock option” (as defined in Section 422 of the IRC) will be adjusted in accordance with the requirements of Section 424 of the IRC. As soon as practicable after the Effective Time, NCC shall file a Registration Statement on Form S-8 (or any successor or other appropriate forms) with the SEC, with respect to the shares of NCC Common Stock subject to converted or substitute PBI Options and shall use its reasonable efforts to maintain the effectiveness of such registration statement (and maintain the current status of the prospectus or prospectuses associated therewith) for so long as such converted or substitute PBI Options remain outstanding. Subject to the foregoing, the PBI Stock Option Plan shall be frozen as of the Effective Time such that no additional options shall be available or granted thereunder following the Effective Time.

 

(f)      PBI Warrants. No PBI Warrants, whether or not vested or exercisable, will be assumed by any NCC Company or converted into an option or warrant to purchase NCC Common Stock. Concurrently with the execution of this Agreement, PBI shall cause each holder of a PBI Warrant to enter into an amendment to such holder’s PBI Warrant Agreement that provides for the termination of the PBI Warrant and associated PBI Warrant Agreement immediately prior to the Effective Time in the event that the Effective Time occurs prior to any other event of termination set forth in such PBI Warrant Agreement. With respect to all PBI Warrants that are not PBI Capital Warrants, upon any such termination the PBI Warrants shall no longer be exercisable, shall be forfeited in their entirety, and shall not be assumed by any NCC Company or converted into the right to receive shares of PBI Common Stock, NCC Common Stock, cash or other consideration. With respect to PBI Capital Warrants only, if such PBI Capital Warrant has not been previously exercised or terminated but is terminated immediately prior to, and as a result of the occurrence of, the Effective Time pursuant to the amendment referenced above, then upon such termination such PBI Capital Warrant shall be automatically at the Effective Time be converted into and exchanged for the right to receive 0.4375 shares of NCC Common Stock (the “ PBI Capital Warrant Conversion Ratio ”) for each share of PBI Common Stock subject to such PBI Capital Warrant. Such shares of NCC Common Stock will be issued as soon as practicable after the Effective Time upon the surrender of such PBI Capital Warrants pursuant to a process to be implemented by NCC and the Exchange Agent, with such process to be substantially similar to the process provided for in Section 4.1 pertaining to the exchange of certificates representing PBI Common Stock for merger consideration. Shares of PBI Common Stock issued to the holder of a PBI Warrant pursuant to the valid exercise thereof after the Election Deadline but prior to the Effective Time shall, automatically by virtue of this Agreement and without any action on the part of the holder thereof, be deemed Stock Election Shares and converted into the right to receive the form of consideration with respect thereto determined in accordance with Section 3.1(d).

 

 

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(g)      PBI Restricted Stock Units. In accordance with the terms of the PBI Restricted Stock Unit Plan, each PBI Restricted Stock Unit that is outstanding immediately prior to the Effective Time shall, by virtue of this Agreement and without any action on the part of the holder thereof, become fully vested and shall be certificated by PBI and treated as an outstanding share of PBI Common Stock for purposes of this Agreement, which, for purposes of the election procedures set forth in Section 3.1(d), shall be deemed outstanding and of record at the time such election materials are provided to holders of record of PBI Common Stock and shall, without duplication, receive the form of consideration with respect thereto determined in accordance with Section 3.1(d), less applicable withholding Taxes; provided, however, that, with respect to any PBI Restricted Stock Unit that constitutes “deferred compensation” within the meaning of Section 409A of the IRC, such conversion and settlement shall occur on the date that it would otherwise occur under the applicable award agreement absent the application of this Section 3.1(g) to the extent necessary to avoid the imposition of any penalty or other Taxes under Section 409A of the IRC.

 

(h)      Maximum Shares of NCC Common Stock. Assuming that (i) there are no PBI Dissenting Shares, (ii) there is no adjustment to the Exchange Ratio pursuant to Section 3.2 below, (iii) the number of Cash Election Shares equals the Cash Election Share Limitation, (iv) the holders of PBI Options exercise all of the PBI Options and/or all of the NCC Options, as the case may be (and do so by paying the exercise price in cash), (v) the holders of PBI Warrants exercise all of the PBI Warrants prior to the Effective Time (and do so by paying the exercise price in cash), and (vi) all of the PBI Restricted Stock Units that are outstanding as of the date of this Agreement are converted into Stock Election Shares (subject to the proration procedures set forth in Section 3.1(d)(v)), then the holders of PBI Common Stock, the holders of PBI Options, the holders of PBI Warrants, and the holders of PBI Restricted Stock Units shall have the right to receive, in the aggregate, a maximum of 1,964,633 shares of NCC Common Stock as a result of the Merger.   

 

3.2      Anti-Dilution Provisions. If NCC changes the number of shares of NCC Common Stock issued and outstanding prior to the Effective Time as a result of a stock split, reverse stock split, stock dividend or similar recapitalization with respect to such stock and the record date therefor is prior to the Effective Time, then the Exchange Ratio and the PBI Capital Warrant Conversion Ratio shall be proportionately adjusted as needed to preserve the relative economic benefit to the Parties provided for in Section 3.1(c) and Section 3.1(f), respectively.

 

 

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3.3      PBI Dissenting Stockholders. Notwithstanding the provisions of Section 3.1 or anything in this Agreement to the contrary, shares of PBI Common Stock that are issued and outstanding immediately prior to the Effective Time and that are held by a holder who properly dissents from the Merger (“ Dissenting Shares ”) when and in the manner required by Sections 14-2-1301 et seq. of the OCGA (the “ Dissenter Provisions ”) shall not be treated as Stock Election Shares or Cash Election Shares and shall not be converted into the right to receive either shares of NCC Common Stock or the Per Share Cash Consideration, but instead the holder of such Dissenting Shares shall be entitled to payment of the fair value thereof in accordance with the Dissenter Provisions. At the Effective Time, such Dissenting Shares shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist or be outstanding, and the holder thereof shall cease to have any right with respect thereto, except the right to receive the fair value of such Dissenting Shares in accordance with the Dissenter Provisions; provided, however, that no payment shall be made with respect to any Dissenting Shares unless and until the holder thereof shall have complied with the applicable provisions of the Dissenter Provisions and surrendered to the Surviving Corporation the certificate or certificates representing the Dissenting Shares for which payment is to be made. If any holder of shares of PBI Common Stock shall have failed to perfect such holder’s right to receive, or shall have effectively waived, withdrawn, lost or forfeited any right to demand or receive, the fair value of such PBI Common Stock under the Dissenter Provisions, then such holder’s shares of PBI Common Stock shall thereupon be deemed and treated as if they had, at the Effective Time, been Stock Election Shares and converted into the right to receive shares of NCC Common Stock in accordance with Section 3.1(c), subject to the proration adjustment process in Section 3.1(d)(v). PBI shall give NCC (i) prompt notice of any written notices of any holder’s intent to demand payment or exercise appraisal rights in respect of any shares of PBI Common Stock, withdrawals or attempted withdrawals of such notices and any other notices or instruments served pursuant to the Dissenter Provisions and received by PBI relating to any attempted, purported or actual exercise of appraisal rights and (ii) the opportunity to participate in, direct and control all discussions, negotiations and proceedings with respect to the exercise of such appraisal rights under the Dissenter Provisions. Each holder of Dissenting Shares that becomes entitled, pursuant to the Dissenter Provisions, to payment for any Dissenting Shares shall receive payment therefor from the Surviving Corporation (but only after the amount thereof shall have been agreed upon or at the times and in the amounts required by the Dissenter Provisions). PBI shall not, except with the prior written consent of NCC, voluntarily make any payment with respect to, or settle or offer to settle, any demand for payment by a holder of Dissenting Shares. Nothing contained in this Section 3.3 shall in any way limit the right of NCC to terminate this Agreement and abandon the Merger under Section 10.1(i).

 

3.4      Fractional Shares. Fractional shares of NCC Common Stock shall not be issued upon the surrender of certificates representing PBI Common Stock for exchange or upon the surrender of PBI Capital Warrants for exchange; no dividend or distribution with respect to NCC Common Stock shall be payable on or with respect to any fractional share; and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a stockholder of NCC. In lieu of any such fractional share, NCC shall pay to each former stockholder of PBI or former holder of a PBI Capital Warrant who otherwise would be entitled to receive a fractional share of NCC Common Stock an amount in cash (without interest) equal to the product of (i) the Average Quoted Price multiplied by (ii) the fraction of a share of NCC Common Stock to which such holder would otherwise be entitled.

 

 

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Article 4
exchange of shares

 

4.1      Exchange Procedures. Promptly (and within five (5) Business Days) after the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail to the former stockholders of PBI (including former holders of PBI Restricted Stock Units immediately prior to the Effective Time) appropriate transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to the certificates theretofore representing shares of PBI Common Stock shall pass, only upon proper delivery of such certificates to the Exchange Agent). After completion of the allocation procedure set forth in Section 3.1(d)(v) and upon surrender of a certificate or certificates for exchange and cancellation to the Exchange Agent (such shares to be free and clear of all liens, claims and encumbrances), together with a properly executed letter of transmittal, the holder of such certificate or certificates shall be entitled to receive promptly thereafter in exchange therefor: (a) that number of whole shares of NCC Common Stock which such holder of PBI Common Stock became entitled to receive pursuant to Article 3 hereof and (b) a check representing the aggregate cash consideration, if any, which such holder has the right to receive pursuant to the provisions of Article 3 hereof, and the certificate or certificates so surrendered shall forthwith be canceled. The shares of NCC Common Stock to be issued pursuant to Article 3 and this Section 4.1 shall be in uncertificated book entry form, and upon compliance by a former holder of shares of PBI Common Stock with the provisions hereof and of the letter of transmittal, NCC shall instruct its registrar and transfer agent to make appropriate book entries with respect to such shares of NCC Common Stock. Such book entries of the issuance of uncertificated shares shall constitute delivery thereof for all purposes pursuant to this Agreement. No interest will be paid or accrued on the Per Share Cash Consideration, any cash in lieu of fractional shares, or any unpaid dividends and distributions, if any, payable to holders of certificates for PBI Common Stock. The Surviving Corporation shall not be obligated to deliver the consideration to which any former holder of PBI Common Stock is entitled as a result of the Merger until such holder surrenders the certificate or certificates representing the shares of PBI Common Stock for exchange as provided in this Section 4.1. The certificate or certificates for PBI Common Stock so surrendered shall be duly endorsed as the Exchange Agent may require.

 

4.2      Rights of Former PBI Stockholders. At the Effective Time, the stock transfer books of PBI shall be closed as to holders of PBI Common Stock immediately prior to the Effective Time, and no transfer of PBI Common Stock by any such holder shall thereafter be made or recognized. Until surrendered for exchange in accordance with the provisions of Section 4.1 of this Agreement, each certificate theretofore representing shares of PBI Common Stock (each, an “ PBI Certificate ”), other than shares to be canceled pursuant to Section 3.1(b) of this Agreement or as to which dissenter’s rights of appraisal have been perfected as provided in Section 3.3 of this Agreement, shall from and after the Effective Time represent for all purposes only the right to receive the consideration provided in Section 3.1 of this Agreement in exchange therefor. To the extent permitted by Law, former stockholders of record of PBI Common Stock shall be entitled to vote after the Effective Time at any meeting of NCC stockholders (with a record date after the Effective Time) the number of whole shares of NCC Common Stock into which their respective shares of PBI Common Stock (excluding Cash Election Shares) have been converted, regardless of whether such holders have exchanged their PBI Certificates for shares of NCC Common Stock in accordance with the provisions of this Agreement. Whenever a dividend or other distribution is declared by NCC on the NCC Common Stock, the record date for which is at or after the Effective Time, the declaration shall include dividends or other distributions on all shares issuable pursuant to this Agreement. Notwithstanding the preceding sentence, any Person holding any PBI Certificate at or after six (6) months after the Effective Time (the “ Cutoff ”) shall not be entitled to receive any dividend or other distribution payable after the Cutoff to holders of NCC Common Stock, which dividend or other distribution is attributable to such Person’s NCC Common Stock represented by said PBI Certificate held after the Cutoff, until such Person surrenders such PBI Certificate for exchange as provided in Section 4.1 of this Agreement. However, upon surrender of such PBI Certificate, appropriate book entries shall be made with respect to the NCC Common Stock and all such undelivered dividends or other distributions (without interest) and any undelivered cash payments (without interest) shall be delivered and paid with respect to each share represented by such PBI Certificate. No holder of shares of PBI Common Stock shall be entitled to voting rights or to receive any dividends or distributions declared or made with respect to the NCC Common Stock with a record date before the Effective Time.

 

 

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4.3      Identity of Recipient of NCC Common Stock. In the event that the delivery of the consideration provided for in this Agreement is to be made to a Person other than the Person in whose name any certificate representing shares of PBI Common Stock surrendered is registered, such certificate so surrendered shall be properly endorsed (or accompanied by an appropriate instrument of transfer), with the signature(s) appropriately guaranteed, and otherwise in proper form for transfer, and the Person requesting such delivery shall pay any transfer or other taxes required by reason of the delivery to a Person other than the registered holder of such certificate surrendered or establish to the satisfaction of NCC that such tax has been paid or is not applicable.

 

4.4      Lost or Stolen Certificates. If any holder of PBI Common Stock convertible into the right to receive shares of NCC Common Stock or cash is unable to deliver the PBI Certificate that represents PBI Common Stock, NCC shall instruct its registrar and transfer agent, in the absence of actual notice that any such shares have been acquired by a bona fide purchaser, to make appropriate book entries with respect to such holder for the shares of NCC Common Stock to which the holder is entitled for such shares upon presentation of the following: (a) evidence to the reasonable satisfaction of NCC that any such PBI Certificate has been lost, wrongfully taken or destroyed; (b) such security or indemnity as may be reasonably requested by NCC to indemnify and hold NCC and the Exchange Agent harmless; and (c) evidence satisfactory to NCC that such Person is the owner of the shares theretofore represented by each PBI Certificate claimed by the holder to be lost, wrongfully taken or destroyed and that the holder is the Person who would be entitled to present such PBI Certificate for exchange pursuant to this Agreement.

 

4.5      Laws of Escheat. If any of the consideration due or other payments to be paid or delivered to the holders of PBI Common Stock is not paid or delivered within the time period specified by any applicable Laws concerning abandoned property, escheat or similar Laws, and if such failure to pay or deliver such consideration occurs or arises out of the fact that such property is not claimed by the proper owner thereof, NCC or the Exchange Agent shall be entitled (but not required) to dispose of any such consideration or other payments in accordance with applicable Laws concerning abandoned property, escheat or similar Laws. Any other provision of this Agreement notwithstanding, none of NCC, PBI, the Exchange Agent or any other Person acting on their behalf shall be liable to a holder of PBI Common Stock for any amount paid or property delivered in good faith to a public official pursuant to and in accordance with any applicable abandoned property, escheat or similar Law.

 

 

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Article 5
REPRESENTATIONS AND WARRANTIES OF PBI

 

PBI hereby represents and warrants to NCC as follows:

 

5.1      Organization, Standing and Power. PBI is a corporation duly organized, validly existing and in good standing under the Laws of the State of Georgia, and has the corporate power and authority to carry on its business as now conducted and to own, lease and operate its Assets and to incur its Liabilities. PBI is duly qualified or licensed to transact business as a foreign corporation in good standing in the states of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI. PBI has delivered to NCC complete and correct copies of its Articles of Incorporation and Bylaws and the Articles of Incorporation, bylaws or similar governing instruments of each of its Subsidiaries, in each case as amended through the date hereof.

 

5.2      Authority; No Breach By Agreement.

 

(a)     PBI has the corporate power and authority necessary to execute and deliver this Agreement and to perform its obligations hereunder, and to consummate the transactions provided for herein. The execution, delivery and performance of this Agreement and the consummation of the transactions provided for herein, including the Merger, have been duly and validly authorized by all necessary corporate action on the part of PBI, subject to the approval of this Agreement and the Merger by the holders of a majority of the outstanding shares of PBI Common Stock in accordance with the OCGA and PBI’s Articles of Incorporation and Bylaws. Subject to such requisite stockholder approval and required regulatory consents, this Agreement constitutes a legal, valid and binding obligation of PBI, enforceable against PBI in accordance with its terms.

 

(b)     Except as set forth on Schedule 5.2(b) , neither the execution and delivery of this Agreement by PBI or the Bank Merger Agreement by Private Bank, nor the consummation by PBI of the transactions provided for in this Agreement or by Private Bank of the transactions provided for in the Bank Merger Agreement, nor compliance by PBI with any of the provisions hereof or by Private Bank with any of the provisions of the Bank Merger Agreement, will (i) conflict with or result in a breach of any provision of PBI’s Articles of Incorporation or Bylaws or the Articles or Certificate of Incorporation or Bylaws or similar governing documents of any PBI Company or the Shareholders Agreement or (ii) constitute or result in a Default under, or require any Consent pursuant to, or result in the creation of any Lien on any Asset of any PBI Company under, any Contract or Permit of any PBI Company, where such Default or failure to obtain such Consent is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on such PBI Company, or, (iii) subject to receipt of the requisite Consents and approvals of Regulatory Authorities referred to in this Agreement, violate or conflict with any Law or Order applicable to any PBI Company or any of their respective Assets.

 

 

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(c)     Except as set forth on Schedule 5.2(c) , other than (i) in connection or compliance with the provisions of the Securities Laws and applicable state corporate and securities Laws, (ii) Consents required from Regulatory Authorities, (iii) the approval by the stockholders of PBI of this Agreement and the Merger, (iv) notices to or filings with the Internal Revenue Service or the Pension Benefit Guaranty Corporation with respect to any employee benefit plans, and (v) Consents, filings or notifications that, if not obtained or made, are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the PBI Company at issue, no notice to, filing with or Consent of any Person or public body or authority is necessary for the consummation by PBI of the Merger and the other transactions provided for in this Agreement or by Private Bank of the Bank Merger and the other transactions provided for in the Bank Merger Agreement. No consents or approvals of or filings or registrations with any Regulatory Authorities are necessary in connection with the execution and delivery by PBI of this Agreement.

 

5.3      Capital Stock.

 

(a)     The authorized capital stock of PBI consists of 20,000,000 shares of common stock, par value $1.00 per share (the “ PBI Common Stock ”), of which 10,000,000 shares are voting common stock (the “ PBI Voting Common Stock ”) and 10,000,000 shares are nonvoting common stock (the “ PBI Nonvoting Common Stock ”). As of the date hereof, there are: (i) 2,008,527 shares of PBI Voting Common Stock issued and outstanding; (ii) no shares of PBI Nonvoting Common Stock issued and outstanding; (iii) shares of PBI Voting Common Stock reserved for issuance or to be delivered in respect of 172,700 PBI Options that have been granted under the PBI Stock Option Plans; (iv) shares of PBI Voting Common Stock reserved for issuance or to be delivered in respect of 29,713 PBI Restricted Stock Units granted under the PBI Restricted Stock Unit Plan; and (v) shares of PBI Voting Common Stock reserved for issuance or to be delivered in respect of 495,000 PBI Warrants (inclusive of the PBI Capital Warrants). All of the issued and outstanding shares of PBI Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. No bonds, debentures, notes or other indebtedness of PBI having the right to vote on any matters on which the holders of PBI Common Stock may vote are issued or outstanding. PBI does not have and is not bound by any outstanding subscriptions, options, warrants, calls, rights, contracts, commitments, agreements or arrangements of any kind calling for the purchase or issuance of, or the payment of any amount based on, any shares of PBI Common Stock or any other equity securities of PBI or any securities representing the right to purchase or otherwise receive any shares of PBI Common Stock or other equity securities of PBI, except for, as of the date of this Agreement, 172,700 shares of PBI Common Stock currently subject to awards under the PBI Stock Option Plan, 29,713 shares of PBI Common Stock currently subject to awards under the and the PBI Restricted Stock Unit Plan, and 495,000 shares of PBI Common Stock currently issuable pursuant to the exercise of the PBI Warrants. PBI has no Liability for dividends declared or accrued, but unpaid, with respect to any shares of its capital stock.

 

 

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(b)     Immediately prior to the Effective Time, the total number of PBI Capital Warrants convertible into shares of NCC Common Stock pursuant to Section 3.1(f) does not and shall not exceed 33,000 in the aggregate. Immediately prior to the Effective Time, the total number of shares of PBI Common Stock outstanding or deemed outstanding for purposes of this Agreement does not and shall not exceed 2,705,940 in the aggregate, and all of such shares are outstanding by reason of constituting (i) shares of PBI Voting Common Stock issued and outstanding as of the date hereof, (ii) shares of PBI Voting Common Stock issued upon exercise of PBI Options, (iii) shares of PBI Voting Common Stock issued (or deemed issued in accordance with Section 3.1(g)) in respect of PBI Restricted Stock Units, or (iv) shares of PBI Voting Common Stock issued upon the exercise of PBI Warrants.

 

(c)      Schedule 5.3(c) sets forth a complete and accurate list, as of the date of this Agreement, of: (i) the number of shares of PBI Common Stock that have been issued under the PBI Stock Option Plan and PBI Restricted Stock Unit Plan; (ii) the number of shares of PBI Common Stock subject to outstanding awards granted under the PBI Stock Option Plan and PBI Restricted Stock Plan; (iii) the number of shares of PBI Common Stock reserved for future issuance under the PBI Stock Option Plan and PBI Restricted Stock Plan; (iv) the number of shares of PBI Common Stock reserved for issuance upon the exercise of PBI Warrants; (v) all outstanding PBI Stock Options and PBI Restricted Stock Units, indicating with respect to each the name of the holder thereof, the number and type of shares of PBI Common Stock subject to such PBI Stock Option or PBI Restricted Stock Unit, as the case may be, and (if applicable) the exercise price and termination date thereof; and (vi) all outstanding PBI Warrants, indicating with respect to each the name of the holder thereof, the number and type of shares of PBI Common Stock subject to such warrant and the exercise price and termination date thereof. Other than as set forth on Schedule 5.3(c) and other than pursuant to grants and awards made after the date of this Agreement in accordance with, and subject to, the terms of Section 7.2(d), no options, restricted share units, warrants or other equity-based awards are outstanding.

 

(d)     There are no contractual obligations of PBI (i) to repurchase, redeem or otherwise acquire any shares of capital stock or other equity security of PBI, or any securities representing the right to purchase or otherwise receive any shares of capital stock or other equity security of PBI or (ii) pursuant to which PBI is or could be required to register shares of PBI capital stock or other securities under the 1933 Act.

 

(e)     Except as set forth on Schedule 5.3(e) , neither PBI nor any PBI Subsidiary has any Liabilities of any nature for any Indebtedness. Except with respect to Liens securing Indebtedness, which Liens are listed on Schedule 5.3(e) and shall be paid by PBI prior to the Closing Date, no Liens exist on any of the property or assets of PBI or any PBI Subsidiary. Schedule 5.3(e) describes all Indebtedness and Liens relating thereto, and sets forth the principal amounts, interest rates and maturity dates for such Indebtedness.

 

5.4      PBI Subsidiaries.

 

(a)     The PBI Subsidiaries include Private Bank. Each of the PBI Subsidiaries is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization. Each of the PBI Subsidiaries has the power and authority necessary for it to own, lease and operate its Assets, to incur its Liabilities and to carry on its business as now conducted. Each PBI Subsidiary is duly qualified or licensed to transact business as a foreign entity in good standing in the states of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI on a consolidated basis.

 

 

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(b)     The authorized, issued and outstanding capital stock of each PBI Subsidiary is set forth on Schedule 5.4(b) . PBI owns all of the issued and outstanding shares of capital stock of each PBI Subsidiary. None of the shares of capital stock or other securities of any PBI Subsidiary has been issued in violation of the Securities Laws or any preemptive rights. To the Knowledge of each PBI Company, none of the shares of capital stock or other securities of any PBI Subsidiary was issued in violation of the Securities Laws or any preemptive rights. No equity securities of any PBI Subsidiary are or may become required to be issued by reason of any options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of the capital stock of any such PBI Subsidiary, and there are no Contracts by which any PBI Subsidiary is bound to issue additional shares of its capital stock or options, warrants or rights to purchase or acquire any additional shares of its capital stock or by which any PBI Company is or may be bound to transfer any shares of the capital stock of any PBI Subsidiary. There are no Contracts relating to the rights of any PBI Company to vote or to dispose of any shares of the capital stock of any PBI Subsidiary. All of the shares of capital stock of each PBI Subsidiary are fully paid and nonassessable under the applicable Law of the jurisdiction in which such PBI Subsidiary is organized and, except as set forth on Schedule 5.4(b) , are owned by PBI free and clear of any Lien. No PBI Subsidiary has any Liability for dividends declared or accrued, but unpaid, with respect to any of its capital stock. For purposes of this Section 5.4(b), references to “capital stock” shall be deemed to include membership interests with respect to any PBI Company that is a limited liability company.

 

(c)     The minute books of PBI and each PBI Subsidiary contain complete and accurate records in all material respects of all meetings and other corporate actions held or taken by their respective stockholders and Boards of Directors (including all committees thereof), since such entity’s formation.

 

(d)     No PBI Company and no employee or agent thereof is registered or required to be registered as an investment adviser or broker/dealer under the Securities Laws. All activities with respect to the solicitation, offer, marketing and/or sale of securities under “networking” or similar arrangements: (i) are and have at all times been conducted in accordance with all applicable Laws, including, without limitation, the Securities Laws and all state and federal banking Laws and regulations, and (ii) satisfy the definition of a “third party brokerage arrangement” under Section 201 of the Gramm-Leach-Bliley Act of 1999 and regulations promulgated thereunder. There has been no misrepresentation or omission of a material fact by any PBI Company and/or any of their respective agents in connection with the solicitation, marketing or sale of any securities, and each customer has been provided with any and all disclosure materials as required by applicable Law.

 

(e)     None of the PBI Companies is engaged in any activities that are not permissible for a national banking association.

 

 

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5.5      Financial Statements. The PBI Financial Statements for periods ended prior to the date hereof are listed on Schedule 5.5 and have been previously furnished to NCC. The PBI Call Reports for periods ended prior to the date hereof have been filed with the FDIC and are available electronically at https://cdr.ffiec.gov . PBI will promptly deliver to NCC copies of all PBI Financial Statements and PBI Call Reports prepared subsequent to the date hereof. The PBI Financial Statements (as of the dates thereof and for the periods covered thereby) (a) are or, if dated after the date of this Agreement, will be in accordance with the books and records of the PBI Companies, which are or will be, as the case may be, complete and correct and which have been or will have been, as the case may be, maintained in accordance with good business practices and in accordance with applicable legal and accounting principles and reflect only actual transactions, and (b) present or will present, as the case may be, fairly the consolidated financial position of the PBI Companies as of the dates indicated and the consolidated results of operations, changes in stockholders’ equity and cash flows of the PBI Companies for the periods indicated, in accordance with GAAP (subject to exceptions as to consistency specified therein or as may be indicated in the notes thereto or, in the case of interim financial statements, to normal recurring year-end audit adjustments that are not material). The PBI Call Reports have been prepared in material compliance with (i) the rules and regulations of the respective federal or state banking regulator with which they were filed, and (ii) RAP, which principles have been consistently applied during the periods involved, except as otherwise noted therein. Each PBI Call Report fairly presents, in all material respects, the financial position of PBI and the results of its operations at the date and for the period indicated in such PBI Call Report in conformity with the Instructions for the Preparation of Call Reports as promulgated by applicable regulatory authorities.  None of the PBI Call Reports contains any material items of special or nonrecurring income or any other income not earned in the ordinary course of business, except as expressly specified therein. 

 

5.6      Absence of Undisclosed Liabilities. No PBI Company has any material Liabilities, except Liabilities (a) accrued or reserved against in the consolidated balance sheet of PBI as of December 31, 2015, that is included in the PBI Financial Statements or reflected in the notes thereto, (b) incurred or paid in the ordinary course of business consistent with past business practice, (c) incurred or paid pursuant to and in accordance with the terms and conditions of this Agreement, or (d) disclosed on Schedule 5.6 . No PBI Company has incurred or paid any material Liability since December 31, 2015, except for such Liabilities incurred or paid in the ordinary course of business consistent with past business practice. No PBI Company is a party to any material agreement, commitment, transaction, arrangement or other relationship with any unconsolidated or other off balance sheet entity.

 

5.7      Absence of Certain Changes or Events. Except as set forth on Schedule 5.7 , since December 31, 2015: (i) there have been no events, changes or occurrences that have had, or are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI or its Subsidiaries, including, without limitation, any change in the administrative or supervisory standing or rating of PBI with any Regulatory Authority, (ii) the PBI Companies have not taken any action, or failed to take any action, prior to the date of this Agreement, which action or failure, if taken after the date of this Agreement, would represent or result in a material breach or violation of any of the covenants or agreements of PBI provided in Article 7 of this Agreement, and (iii) to the Knowledge of each PBI Company, no fact or condition exists that will cause a Material Adverse Effect on PBI or its Subsidiaries in the future.

 

 

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5.8      Tax Matters.

 

(a)     All Tax returns required to be filed by or on behalf of any of the PBI Companies have been timely filed or requests for extensions have been timely filed, granted and have not expired; all returns filed are complete and accurate in all material respects; and all Taxes shown as due on filed returns, and all other material Taxes owed by any of the PBI Companies, have been paid. There is no audit examination, deficiency, refund Litigation or matter in controversy pending, or to the Knowledge of each PBI Company, threatened, with respect to any Taxes that might result in a determination that would have, individually or in the aggregate, a Material Adverse Effect on PBI, except as reserved against in the PBI Financial Statements delivered prior to the date of this Agreement. All Taxes and other Liabilities due with respect to completed and settled examinations or concluded Litigation have been fully paid.

 

(b)     None of the PBI Companies has executed an extension or waiver of any statute of limitations on the assessment or collection of any Tax due (excluding such statutes that relate to years currently under examination by the Internal Revenue Service or other applicable taxing authorities) that is currently in effect.

 

(c)     Adequate provision for any Taxes due or to become due for any of the PBI Companies for the period or periods through and including the date of the respective PBI Financial Statements has been made and is reflected on such PBI Financial Statements.

 

(d)     Any and all deferred Taxes of the PBI Companies have been provided for in accordance with GAAP.

 

(e)     None of the PBI Companies is responsible for the Taxes of any other Person other than the PBI Companies under Treasury Regulation 1.1502-6 or any similar provision of federal or state Law.

 

(f)     Except as set forth on Schedule 5.8(f) , none of the PBI Companies has made any payment, is obligated to make any payment or is a party to any Contract that could obligate it or any NCC Company as the successor to any such PBI Company to make any payment that would be disallowed as a deduction under Section 280G or 162(m) of the IRC.

 

(g)     There has not been an ownership change, as defined in Section 382(g) of the IRC, that occurred during or after any taxable period in which PBI or any PBI Subsidiaries incurred an operating loss that carries over to any taxable period ending after the fiscal year of PBI immediately preceding the date of this Agreement.

 

(h)     (i) Proper and accurate amounts have been withheld by the PBI Companies from their employees and others for all prior periods in compliance in all material respects with the tax withholding provisions of all applicable federal, state and local Laws, and proper due diligence steps have been taken in connection with back-up withholding, (ii) federal, state and local returns have been filed by the PBI Companies for all periods for which returns were due with respect to withholding, Social Security and unemployment Taxes or charges due to any federal, state or local taxing authority, and (iii) the amounts shown on such returns to be due and payable have been paid in full or adequate provision therefor has been included by PBI in the PBI Financial Statements.

 

 

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(i)      PBI has delivered or made available to NCC correct and complete copies of all Tax returns filed by PBI and each PBI Subsidiary for each fiscal year ended on and after December 31, 2013.

 

(j)      None of the PBI Companies has (i) participated in any reportable transaction within the meaning of Treasury Regulations Section 1.6011-4(b) (or any similar provision of state, local or foreign tax law) or (ii) taken any reporting position on a Tax return, which reporting position (1) if not sustained, would be reasonably likely, absent disclosure, to give rise to a penalty for substantial understatement of federal income tax under Sections 6662 or 6676 of the IRC (or any similar provision of state, local or foreign tax law) and (2) has not adequately been disclosed on such Tax return in accordance with Section 6662(d)(2)(B) of the IRC (or similar provision of state, local or foreign tax Law).

 

(k)     None of the PBI Companies has constituted a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the IRC) in a distribution of shares qualifying for tax-free treatment under Section 355 of the IRC (i) in the two years prior to the date hereof or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(c) of the IRC) in conjunction with the Merger.

 

(l)      At all times during its existence up to and including the Closing Date, PBI has been a validly electing “S corporation” (Subchapter S corporation) under Sections 1361 and 1362 of the IRC for federal income Tax purposes, and an “S corporation” in all states that permit comparable flow-through income Tax treatment for state purposes (whether or not the state requires a separate state election). No actions or omissions have been committed by PBI, holders of PBI Common Stock or otherwise to cause PBI to cease to so qualify as an “S corporation.” At no time has PBI had, within the meaning of IRC Section 1361(b) and the regulations thereunder: (i) more than 100 shareholders (taking into account the special rules regarding family members in IRC Section 1361(c)(1)); (ii) any shareholder who is a person (other than an estate, a trust described in IRC Section 1361(c)(2), or an organization described in IRC Section 1361(c)(6)) who is not an individual; (iii) any shareholder that is a nonresident alien; or (iv) more than one class of stock. No PBI Company is a financial institution that uses the reserve method of accounting for bad debts described in IRC Section 585. Any “trust preferred securities” issued by a PBI Company are properly treated as debt, rather than equity, for federal income Tax purposes. Neither PBI nor any PBI Subsidiary has, in the past five (5) years, acquired assets from a C corporation in a transaction in which the Tax basis of PBI or any PBI Subsidiary for the acquired assets was determined, in whole or in part, by reference to the Tax basis of the acquired assets in the hands of the transferor.

 

(m)     At all times during its existence up to and including the Closing Date, each PBI Subsidiary that otherwise would be taxed as a domestic corporation, as that term is defined in IRC Section 7701(a)(3) and the regulations thereunder, is and always has been, within the meaning of IRC Section 1361(b)(3) and the regulations thereunder, a domestic corporation, a 100% subsidiary of PBI, and a properly electing ‘‘qualified subchapter S subsidiary’’ within the meaning of IRC Section 1361(b)(3)(B).

 

 

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5.9      Loan Portfolio.

 

(a)     (i)     Except as set forth on Schedule 5.9(a)(i) , as of the date of this Agreement, none of the PBI Companies is a creditor as to any written or oral loan agreement, note or borrowing arrangement, including, without limitation, leases, credit enhancements, commitments and interest-bearing assets (excluding investment securities) (“ Loans ”), other than Loans the unpaid principal balance of which does not exceed $25,000 per Loan or $50,000 in the aggregate, under the terms of which the obligor is, as of the date of this Agreement, over 90 days delinquent in payment of principal or interest or in default of any other material provisions.

 

(ii)     Except as set forth on Schedule 5.9(a)(ii) and except for Loans made after the date of this Agreement in accordance with, and subject to, Section 7.2(n), none of the PBI Companies is a creditor as to any Loan, including, without limitation, any loan guaranty, to any director, executive officer or 5% stockholder thereof, or to the Knowledge of each PBI Company, any Person controlling, controlled by or under common control with any of the foregoing.

 

(iii)     All of the Loans held by any of the PBI Companies are in all respects the binding obligations of the respective obligors named therein in accordance with their respective terms, are not subject to any defenses, setoffs or counterclaims, except as may be provided by bankruptcy, insolvency or similar Laws or by general principles of equity. All Loans made by any of the PBI Companies were solicited, originated and exist in material compliance with all applicable Laws and PBI loan policies, except for deviations from such policies that (a) have been approved by current management of PBI, in the case of Loans with an outstanding principal balance that exceeds $25,000, or (b) in the judgment of PBI, will not adversely affect the ultimate collectability of such Loan.

 

(iv)     Except as set forth on Schedule 5.9(a)(iv) , as of the date of this Agreement, none of the PBI Companies holds any Classified Loans in the original principal amount in excess of $25,000 per Loan or $50,000 in the aggregate.

 

(v)     The allowance for possible loan or credit losses (the “ PBI Allowance ”) shown on the consolidated balance sheets of PBI included in the most recent PBI Financial Statements dated prior to the date of this Agreement was, and the PBI Allowance shown on the consolidated balance sheets of PBI included in the PBI Financial Statements as of dates subsequent to the execution of this Agreement will be, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for losses relating to or inherent in the loan and lease portfolios (including accrued interest receivables) of the PBI Companies and other extensions of credit (including letters of credit and commitments to make loans or extend credit) by the PBI Companies as of the dates thereof. PBI has calculated the PBI Allowance in accordance with RAP as applied to banking institutions and in accordance with all applicable rules and regulations.  The values to which PBI has ascribed to other real estate owned shown on the most recent PBI Financial Statements and PBI Call Reports reflect reasonable estimates of the fair value of such other real estate, less estimated costs to dispose of such other real estate, as of the dates thereof. The reserve for losses in respect of Litigation (the “ PBI Litigation Reserve ”) shown on the most recent PBI Financial Statements and PBI Call Reports and the PBI Litigation Reserve to be shown on the PBI Financial Statements and PBI Call Reports as of any date subsequent to the execution of this Agreement will be, as of such dates, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for losses relating to or arising out of all pending or threatened Litigation applicable to PBI and the PBI Subsidiaries as of the dates thereof. Each such reserve described above has been established in accordance with applicable accounting principles and regulatory requirements and guidelines.

 

 

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(b)     The documentation relating to each Loan made by any PBI Company and to all security interests, mortgages and other liens with respect to all collateral for Loans is adequate for the enforcement of the material terms of such Loan, security interest, mortgage or other lien, except for inadequacies in such documentation which will not, individually or in the aggregate, have a Material Adverse Effect on PBI. Except as set forth on Schedule 5.9(b) , no agreement pursuant to which any Loans or other assets have been or shall be sold by any PBI Companies entitles the buyer of such Loans or other assets to cause the PBI Companies to repurchase such Loan or other asset or the buyer to pursue any other form of recourse against the PBI Companies, except in the event of a breach by the PBI Companies of representations or warranties therein. The PBI Companies have no Knowledge of a breach of a representation or warranty by the PBI Companies in any such agreement or of the occurrence of any other facts or circumstances that would entitle the buyer of any Loan or other asset to cause the PBI Companies to repurchase such Loan or other asset or the buyer to pursue any other form of recourse against the PBI Companies.

 

(c)     All Loans made by any PBI Company have been made in material compliance with all applicable Laws at the time of such Loan or any renewal thereof, including, without limitation, Regulation Z, the Federal Consumer Credit Protection Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, and all Laws governing the operation of Georgia-chartered banks. Each PBI Company has systems, policies and procedures in place such that any material violation of any of the foregoing would reasonably be expected to have been detected by such PBI Company.  Each Loan on the books of any PBI Company was made in the ordinary course of its business.

 

(d)     Without limiting the foregoing or anything else in this Agreement:

 

(i)      Each PBI Company has complied with, and all documentation in connection with the origination, processing, underwriting and credit approval of any mortgage or other Loan originated, purchased or serviced by any PBI Company has satisfied in all material respects: (A) all applicable Laws with respect to the origination, insuring, purchase, sale, pooling, servicing, subservicing, or filing of claims in connection with mortgage and other Loans, including all Laws relating to real estate settlement procedures, consumer credit protection, truth in lending, usury limitations, fair housing, transfers of servicing, collection practices, equal credit opportunity and adjustable rate mortgages; (B) the responsibilities and obligations set forth in any agreement between any PBI Company and any Agency, Loan Investor or Insurer; (C) the applicable rules, regulations, guidelines, handbooks and other requirements of any Agency, Loan Investor or Insurer; and (D) the terms and provisions of any mortgage or other collateral documents and other Loan documents with respect to each such Loan. Each PBI Company has systems, policies and procedures in place such that any material violation of any of the foregoing would reasonably be expected to have been detected by such PBI Company; and

 

 

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(ii)      No Agency, Loan Investor or Insurer has (A) claimed in writing that any PBI Company has violated or has not complied with the applicable underwriting standards with respect to Loans sold by any PBI Company to a Loan Investor or Agency, or with respect to any sale of servicing rights to a Loan Investor, (B) imposed in writing restrictions on the activities (including commitment authority) of any PBI Company or (C) indicated in writing to any PBI Company that it has terminated or intends to terminate its relationship with such PBI Company for poor performance, poor loan quality or concern with respect to such PBI Company’s compliance with Laws.

 

5.10      Assets; Real Property; Insurance. Except as set forth on Schedule 5.10 , the PBI Companies have marketable title to, valid leasehold interests in, or valid licenses to use, in each case free and clear of all Liens, all of their respective Assets. All tangible real and personal properties and Assets used in the businesses of the PBI Companies are in good condition, reasonable wear and tear excepted, and are usable in the ordinary course of business consistent with PBI’s past practices. All Assets that are material to PBI’s business on a consolidated basis, held under leases or subleases by any of the PBI Companies, are held under valid Contracts enforceable in accordance with their respective terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting the enforcement of creditors’ rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceedings may be brought), and each such Contract is in full force and effect and there is not under any such Contract any Default or claim of Default by PBI or, to the Knowledge of each PBI Company, by any other party to the Contract. Schedule 5.10(a) identifies each parcel of real estate or interest therein owned by any of the PBI Companies or in which any PBI Company has any ownership interest. Schedule 5.10(b) identifies each parcel of real estate or interest therein leased or subleased by any of the PBI Companies or in which any PBI Company has any leasehold interest. If applicable, Schedule 5.10(b) also lists or otherwise describes each and every written or oral lease or sublease under which any PBI Company is the lessee of any real property. One of the PBI Companies has good and marketable fee simple title to the real property described in Schedule 5.10(a) and has an enforceable leasehold interest in the real property described in Schedule 5.10(b) , free and clear of all Liens. None of the PBI Companies has violated, or is currently in violation of, any Law, regulation or ordinance relating to the ownership or use of the real estate and real estate interests described or required to be described in Schedules 5.10(a) and 5.10(b) , including, without limitation, any Law relating to zoning, building, occupancy, environmental or comparable matters, which individually or in the aggregate would have a Material Adverse Effect on PBI. As to each parcel of real property owned or used by any PBI Company, no PBI Company has received notice of any pending or, to the Knowledge of each of the PBI Companies, threatened condemnation proceedings, Litigation proceedings or mechanic’s or materialmen’s liens. The Assets of the PBI Companies include all assets required to operate the business of the PBI Companies as now conducted. The policies of fire, theft, liability, D&O and other insurance maintained with respect to the Assets or businesses of the PBI Companies provide coverage consistent with current industry practices against loss or Liability, and the fidelity and blanket bonds in effect as to which any of the PBI Companies is a named insured are reasonably sufficient. Schedule 5.10(c) contains a list of all such policies and bonds maintained by any of the PBI Companies, and PBI has provided true and correct copies of each such policy to NCC. Except as set forth on Schedule 5.10(c) , no claims have been made under such policies or bonds, and no PBI Company has Knowledge of any fact or condition presently existing that might form the basis of any such claim.

 

 

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5.11      Environmental Matters.

 

(a)     Each PBI Company, its Participation Facilities and its Loan Properties are, and have been, in compliance with all Environmental Laws, except for violations that are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI.

 

(b)     There is no Litigation pending or, to the Knowledge of any PBI Company, threatened before any court, governmental agency or authority or other forum in which any PBI Company or any of its Participation Facilities has been or, with respect to threatened Litigation, may be named as a defendant (i) for alleged noncompliance (including by any predecessor) with any Environmental Law or (ii) relating to the release into the environment of any Hazardous Material or oil, whether or not occurring at, on, under or involving a site owned, leased or operated by any PBI Company or any of its Participation Facilities, except for such Litigation pending or threatened that is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI.

 

(c)     There is no Litigation pending or, to the Knowledge of any PBI Company, threatened before any court, governmental agency or board or other forum in which any of its Loan Properties (or PBI with respect to such Loan Property) has been or, with respect to threatened Litigation, may be named as a defendant or potentially responsible party (i) for alleged noncompliance (including by any predecessor) with any Environmental Law or (ii) relating to the release into the environment of any Hazardous Material or oil, whether or not occurring at, on, under or involving a Loan Property, except for such Litigation pending or threatened that is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI.

 

(d)     To the Knowledge of each PBI Company, there is no reasonable basis for any Litigation of a type described in Sections 5.11(b) or 5.11(c), except such as is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI.

 

(e)     During the period of (i) any PBI Company’s ownership or operation of any of its respective current properties, (ii) any PBI Company’s participation in the management of any Participation Facility or (iii) any PBI Company’s holding of a security interest in a Loan Property, there have been no releases of Hazardous Material or oil in, on, under or affecting such properties, except such as are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI. Prior to the period of (i) any PBI Company’s ownership or operation of any of its respective current properties, (ii) any PBI Company’s participation in the management of any Participation Facility, or (iii) any PBI Company’s holding of a security interest in a Loan Property, to the Knowledge of each PBI Company, there were no releases of Hazardous Material or oil in, on, under or affecting any such property, Participation Facility or Loan Property, except such as are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI.

 

 

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5.12      Compliance with Laws. PBI is duly registered as a bank holding company under the BHC Act. Each PBI Company has in effect all Permits necessary for it to own, lease or operate its Assets and to carry on its business as now conducted, except for those Permits the absence of which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI, and there has occurred no Default under any such Permit. Except as set forth on Schedule 5.12 , each of the PBI Companies:

 

(a)     is and has been in material compliance with all Laws, Orders and Permits applicable to its business or employees, agents or representatives conducting its business; and

 

(b)     has received no notification or communication from any agency or department of federal, state or local government or any Regulatory Authority or the staff thereof (i) asserting that any PBI Company is not, or suggesting that any PBI Company may not be, in compliance with any of the Laws or Orders that such governmental authority or Regulatory Authority enforces, (ii) threatening to revoke any Permits, (iii) requiring any PBI Company, or suggesting that any PBI Company may be required, to enter into or consent to the issuance of a cease and desist order, formal agreement, directive, commitment or memorandum of understanding, or to adopt any board resolution or similar undertaking, or (iv) directing, restricting or limiting, or purporting to direct, restrict or limit in any manner the operations of any PBI Company, including, without limitation, any restrictions on the payment of dividends, or that in any manner relates to such entity’s capital adequacy, credit or reserve policies or management or business.

 

Without limiting the foregoing, each PBI Company is and has been in compliance with the United States Foreign Corrupt Practices Act and the International Money Laundering Abatement and Anti-Terrorist Financing Act, otherwise known as Title III of the USA PATRIOT Act, the Currency and Foreign Transactions Reporting Act of 1970, as amended, otherwise known as the Bank Secrecy Act, and all regulations issued thereunder, and each PBI Company has properly certified all foreign deposit accounts and has made all necessary tax withholdings on all of its deposit accounts. Each PBI Company has timely and properly filed and maintained all requisite Currency Transaction Reports and other related forms, including any requisite custom reports required by any agency of the United States Department of the Treasury, including the Internal Revenue Service.  No PBI Company or, to the Knowledge of any PBI Company, any director, officer, agent, employee, Affiliate or Person acting on behalf of any PBI Company, is currently subject to any sanctions administered by the Office of Foreign Assets Control of the United Stated Department of the Treasury (“ OFAC ”). No PBI Company or any of its Affiliates does business with the government of, or any Person located in, any country, or with any other Person, targeted by any of the economic sanctions of OFAC or any other Regulatory Authority. No PBI Company is controlled (within the meaning of Laws administered by OFAC) by any such government or Person. Each PBI Company has timely filed all Suspicious Activity Reports with the Financial Crimes Enforcement Network of the United Stated Department of the Treasury required to be filed by it under applicable Law. Each PBI Company has systems, policies and procedures in place such that any material violation of any of the foregoing would reasonably be expected to have been detected by such PBI Company.

 

 

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5.13      Labor Relations; Employees.

 

(a)     No PBI Company is the subject of any Litigation asserting that it or any other PBI Company has committed an unfair labor practice (within the meaning of the National Labor Relations Act or comparable state Law) or seeking to compel it or any other PBI Company to bargain with any labor organization as to wages or conditions of employment, nor is there any strike or other labor dispute involving any PBI Company pending or threatened, nor, to its Knowledge, is there any activity involving any PBI Company’s employees seeking to certify a collective bargaining unit or engaging in any other organization activity. Each PBI Company is and has been in compliance with all Employment Laws, except for violations that are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI.

 

(b)      Schedule 5.13(b) contains a true and complete list showing the names and current annual salaries of all current executive officers of each of the PBI Companies and lists for each such person the amounts paid, payable or expected to be paid as salary, bonus payments and other compensation for 2014, 2015 and 2016. Schedule 5.13(b) also sets forth the name and offices held by each officer and director of each of the PBI Companies.

 

5.14      Employee Benefit Plans.

 

(a)      Schedule 5.14(a) lists, and PBI has delivered or made available to NCC prior to the execution of this Agreement, correct and complete copies of all pension, retirement, profit-sharing, salary continuation and split dollar agreements, deferred compensation, director deferred fee agreements, director retirement agreements, stock option, warrant, restricted stock unit, equity-based compensation, employee stock ownership, severance pay, vacation, bonus or other incentive plans, all other written or unwritten employee programs, arrangements or agreements, all medical, vision, dental or other health plans, all life insurance plans, and all other employee benefit plans or fringe benefit plans, including, without limitation, “employee benefit plans,” as defined in Section 3(3) of ERISA, adopted, maintained by, sponsored in whole or in part by, or contributed to by any PBI Company, any Affiliate of a PBI Company, or any ERISA Affiliate thereof within the last five (5) years for the benefit of employees, retirees, dependents, spouses, directors, independent contractors or other beneficiaries (collectively, the “ PBI Benefit Plans ”). PBI also has delivered or made available to NCC prior to the execution of this Agreement correct and complete copies of (where applicable): (i) all current summary plan descriptions and summaries of material modifications related to such PBI Benefit Plans; (ii) the most recent determination or opinion letters, as applicable, received from the Internal Revenue Service; (iii) the three most recent Form 5500 Annual Reports; (iv) the three most recent audited financial statements and actuarial valuations; (v) all material documents relating to the funding of benefits under each such PBI Benefit Plan; and (vi) any notices to or from the Internal Revenue Service, any office or representative of the Department of Labor or any other governmental entity relating to any material matter of non-compliance in respect of any PBI Benefit Plan. Any PBI Benefit Plan that is an “employee pension benefit plan,” as defined in Section 3(2) of ERISA, is referred to herein as a “ PBI ERISA Plan .” Except as set forth on Schedule 5.14(a) , no PBI Benefit Plan is or has been a “defined benefit plan” (as defined in Section 414(j) of the IRC), a “multi-employer plan” (as defined in Section 3(37) of ERISA), a multiple employer plan (as defined in Section 3(40) of ERISA) or Section 413(c) of the IRC, or a multiple employer welfare arrangement (as defined in Section 3(40)(A) of ERISA.

 

 

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(b)     All PBI Benefit Plans and the administration thereof are in, and have been in, compliance with the applicable terms of ERISA, the IRC and any other applicable Law with respect to which a breach or violation thereof would be reasonably likely to lead to a Material Adverse Effect on PBI. Each PBI ERISA Plan that is intended to be qualified under Section 401(a) of the IRC and each corresponding trust exempt under Section 501(a) of the IRC has received a favorable determination letter or may rely upon an opinion letter issued to the sponsor of a prototype or volume submitter arrangement, as applicable, from the Internal Revenue Service, and PBI is not aware of any circumstances that could result in revocation of any such favorable determination letter/opinion letter. No transaction has been entered into with respect to any PBI Benefit Plan that, assuming the taxable period of such transaction expired as of the date hereof, would subject any PBI Company to a tax or penalty imposed by either Section 4975 of the IRC or Section 502(i) of ERISA in amounts that are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PBI. There are no actions, suits, arbitrations or claims, including any investigations or audits by the Internal Revenue Service or any other governmental authority, pending (other than routine claims for benefits) or threatened against any PBI Benefit Plan, any PBI Company or ERISA Affiliate with regard to any PBI Benefit Plan or related trust. To the Knowledge of each PBI Company, there are no actions, suits, arbitrations or claims, including any investigations or audits by the Internal Revenue Service or any other governmental authority, pending (other than routine claims for benefits) or threatened against any trustee, fiduciary, custodian, administrator or other third party holding or controlling assets of any PBI Benefit Plan respecting such PBI Benefit Plan, and no basis for anticipating any such action, suit, arbitration, claim, investigation or audit exists.

 

(c)     Except as set forth on Schedule 5.14(c) , neither the execution and delivery of this Agreement nor the consummation of the transactions provided for herein will (i) result in any payment (including, without limitation, severance, unemployment compensation, golden parachute or otherwise) becoming due to any director, officer or employee of any PBI Company from any PBI Company under any PBI Benefit Plan, employment contract or otherwise, (ii) increase any benefits otherwise payable under any PBI Benefit Plan, or (iii) result in any acceleration of the time of payment or vesting of any such benefit.

 

(d)     With respect to all PBI Benefit Plans (whether or not subject to ERISA and whether or not qualified under Section 401(a) of the IRC), all contributions due (including any contributions to any trust account or payments due under any insurance policy) previously declared or otherwise required by Law or contract to have been made and any employer contributions (including any contributions to any trust account or payments due under any insurance policy) accrued but unpaid as of the date hereof will be paid by the time required by Law or contract, inclusive of available extensions and grace periods. All contributions required to be made under any PBI Benefit Plan have been made by the applicable due date, inclusive of available extensions and grace periods and such contributions meet the requirements for deductibility under the IRC, and all contributions that are required and that have not been made have been properly recorded on the books of PBI in accordance with GAAP.

 

(e)     Each contract, arrangement, plan, or PBI Benefit Plan that is a “nonqualified deferred compensation plan” (as defined for purposes of Section 409A(d)(1) of the IRC) has been maintained and is, in form and operation, in compliance with Section 409A of the IRC and the applicable guidance issued thereunder, except to the extent of any applicable grandfathering or delayed effective dates permitted by transitional guidance issued by the United States Department of Treasury under Section 409A of the IRC.  No amounts under any such contract, arrangement, plan, or such PBI Benefit Plan are or have been subject to the interest or additional tax set forth under Section 409A(a)(1)(B) of the IRC.  No PBI Company or any of its Affiliates has any obligation to gross-up or indemnify any Person with respect to any Taxes imposed under Section 409A of the IRC.

 

 

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(f)     (i)     Each PBI Benefit Plan that is a “group health plan” (within the meaning of Section 5000(b)(1) of the IRC) has been operated in compliance in all material respects with all Laws applicable to such plan (including the Affordable Care Act), its terms, and the group health plan continuation coverage requirements of Section 4980B of the IRC and Sections 601 through 608 of ERISA (“ COBRA Coverage ”), Section 4980D of the IRC and Sections 701 through 707 of ERISA, Title XXII of the Public Health Service Act and the provisions of the Social Security Act, to the extent such requirements are applicable, including, but not limited to, the availability of any applicable grandfathering or delayed effective dates. Other than as required under COBRA Coverage or other similar applicable Law, no PBI Benefit Plan or written or oral agreement exists that obligates the PBI Companies or any ERISA Affiliate to provide health care coverage, medical, surgical, hospitalization, death or similar benefits (whether or not insured) to any employee, former employee or member of the PBI Board or any ERISA Affiliate following such employee’s, former employee’s or director’s termination of employment, including, but not limited to, retiree medical, health or life benefits.

 

(ii)      No PBI Benefit Plan that is an employee welfare benefit plan under Section 3(1) of ERISA providing health, death or disability benefits is self-funded, self-insured or funded through the general assets of a PBI Company or an ERISA Affiliate, other than plans providing for short-term disability benefits, health reimbursement arrangements or health flexible spending accounts. No PBI Benefit Plan that is an employee welfare benefit plan under Section 3(1) of ERISA is funded by a trust or is subject to Section 419 or 419A of the IRC.

 

5.15      Material Contracts. Except as set forth on Schedule 5.15 , none of the PBI Companies, nor any of their respective Assets, businesses or operations, is a party to, or is bound or affected by, or receives benefits under any of the following (whether written or oral, express or implied): (i) any employment, severance, termination, consulting or retirement Contract with any Person; (ii) any Contract relating to the borrowing of money by any PBI Company or the guarantee by any PBI Company of any such obligation (other than Contracts evidencing deposit Liabilities, purchases of federal funds, fully secured repurchase agreements, trade payables and Contracts relating to borrowings or guarantees made and letters of credit); (iii) any Contract relating to indemnification or defense of any director, officer or employee of any of the PBI Companies or any other Person; (iv) any Contract with any labor union; (v) any Contract relating to the disposition or acquisition of any interest in any business enterprise; (vi) any Contract relating to the extension of credit to, provision of services for, sale, lease or license of Assets to, engagement of services from, or purchase, lease or license of Assets from, any 5% stockholder, director or officer of any of the PBI Companies, any member of the immediate family of the foregoing or, to the Knowledge of any PBI Company, any related interest (as defined in Regulation O promulgated by the FRB) (“ Related Interest ”) of any of the foregoing; (vii) any Contract (A) which limits the freedom of any of the PBI Companies to compete in any line of business or with any Person or (B) which limits the freedom of any other Person to compete in any line of business with any PBI Company; (viii) any Contract providing a power of attorney or similar authorization given by any of the PBI Companies, except as issued in the ordinary course of business with respect to routine matters; or (ix) any Contract (other than deposit agreements and certificates of deposits issued to customers entered into in the ordinary course of business and letters of credit) that involves the payment by any of the PBI Companies of amounts aggregating $50,000 or more in any twelve-month period (together with all Contracts referred to in Sections 5.10 and 5.14(a) of this Agreement, the “ PBI Contracts ”). PBI has delivered or made available to NCC correct and complete copies of all PBI Contracts. Each of the PBI Contracts is in full force and effect, and none of the PBI Companies is in Default under any PBI Contract. All of the indebtedness of any PBI Company for money borrowed is prepayable at any time by such PBI Company without penalty or premium.

 

 

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5.16      Legal Proceedings. Except as set forth on Schedule 5.16 , there is no Litigation instituted or pending, or, to the Knowledge of any PBI Company, threatened (or unasserted but considered probable of assertion) against any PBI Company, or against any Asset, interest, or right of any of them, other than any immaterial, ordinary routine Litigation incidental to the business of PBI and its Subsidiaries, nor are there any Orders of any Regulatory Authorities, other governmental authorities or arbitrators outstanding, pending or, to the Knowledge of any PBI Company, threatened against any PBI Company. No PBI Company has any Knowledge of any fact or condition presently existing that might give rise to any Order, Litigation, investigation or proceeding which, if determined adversely to any PBI Company, would have a Material Adverse Effect on such PBI Company or would materially restrict the right of any PBI Company to carry on its businesses as presently conducted.

 

5.17      Reports. Since January 1, 2013, each PBI Company has timely filed all reports, registration statements, statements and other documents, together with any amendments required to be made with respect thereto, that it was required to file with (i) the SEC, (ii) other Regulatory Authorities, and (iii) any applicable state securities or banking authorities and all other material reports and statements required to be filed by it, and has paid all fees and assessments due and payable in connection therewith. Except for normal examinations conducted by Regulatory Authorities in the ordinary course of the business of the PBI Companies, to the Knowledge of any PBI Company, no Regulatory Authority has initiated any proceeding or, to the Knowledge of any PBI Company, investigation into the business or operations of any PBI Company. There is no unresolved violation, criticism or exception by any Regulatory Authority with respect to any report or statement or lien or any examinations of any PBI Company. As of their respective dates, each of such reports, registrations, statements and documents, including the financial statements, exhibits, and schedules thereto, complied in all material respects with all applicable Laws, including, without limitation, all Securities Laws. As of its respective date, each of such reports, registrations, statements and documents complied in all material respects with the provisions of applicable Law. The financial information and reports contained in each of such reports, registrations, statements and documents (including the related notes, where applicable), (a) have been prepared in all material respects in accordance with GAAP or RAP, as applicable, which principles have been consistently applied during the periods involved, except as otherwise noted therein, (b) fairly present the financial position of the PBI Companies as of the respective dates thereof, and (c) fairly present the results of operations of the PBI Companies for the respective periods therein set forth. No PBI Company is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar contract or arrangement (including any contract or arrangement relating to any transaction or relationship between or among PBI and any other PBI Company, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any “off-balance sheet arrangement”), where the result, purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, PBI or any other PBI Company in PBI’s or such other PBI Company’s financial statements.

 

 

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5.18      Statements True and Correct. Neither this Agreement nor any statement, certificate, instrument or other writing furnished or to be furnished by any PBI Company or any Affiliate thereof to NCC pursuant to this Agreement, including the Exhibits and Schedules hereto, or any other document, agreement or instrument referred to herein, contains or will contain any untrue statement of material fact or omits or will omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the information supplied or to be supplied by any PBI Company or any Affiliate thereof for inclusion in the documents to be prepared by NCC in connection with the transactions provided for in this Agreement, including, without limitation: (i) documents to be filed with the SEC, including, without limitation, the Registration Statement on Form S-4 registering the shares of NCC Common Stock to be offered to the holders of PBI Common Stock, and all amendments thereto (as amended, the “ S-4 Registration Statement ”), and the proxy statement and prospectus in the form contained in the S-4 Registration Statement, and all amendments and supplements thereto, to be delivered to stockholders of PBI in accordance with the provisions of this Agreement (as amended and supplemented from time to time, the “ Proxy Statement/Prospectus ”); (ii) filings pursuant to any state securities Laws; and (iii) filings made in connection with the obtaining of Consents from Regulatory Authorities, in the case of the S-4 Registration Statement, at the time the S-4 Registration Statement is declared effective pursuant to the 1933 Act, in the case of the Proxy Statement/Prospectus, at the time of the mailing thereof and at the time of the meeting of stockholders to which the Proxy Statement/Prospectus relates, and in the case of any other documents, at the time that such documents are filed with a Regulatory Authority and at the time that they are distributed to stockholders of PBI, contains or will contain any untrue statement of a material fact or fails to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. All documents that any PBI Company is responsible for filing with any Regulatory Authority in connection with the transactions provided for herein will comply as to form in all material respects with the provisions of applicable Law.

 

5.19      Accounting, Tax and Regulatory Matters. No PBI Company or any Affiliate thereof has taken any action or has any Knowledge of any fact or circumstance that is reasonably likely to (i) prevent the transactions provided for herein, including the Merger and the Bank Merger, from qualifying as a reorganization within the meaning of Section 368(a) of the IRC, or (ii) materially impede or delay receipt of any Consents of Regulatory Authorities referred to in Section 9.1(b) of this Agreement or result in the imposition of a condition or restriction of the type referred to in the last sentence of such Section 9.1(b).

 

5.20      Offices. The headquarters of each PBI Company and each other office, branch or facility maintained and operated by each PBI Company (including, without limitation, representative and loan production offices and operations centers) and the locations thereof are listed on Schedule 5.20 . None of the PBI Companies maintains any other office or branch or conducts business at any other location, or has applied for or received permission to open any additional office or branch or to operate at any other location.

 

 

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5.21      Data Processing Systems. The electronic data processing systems and similar systems utilized in processing the work of each of the PBI Companies, including both hardware and software, (i) are supplied by a third-party provider; (ii) satisfactorily perform the data processing function for which they are presently being used; and (iii) are wholly within the possession and control of one of the PBI Companies or its third party provider such that physical access to all software, documentation, passwords, access codes, backups, disks and other data storage devices and similar items readily can be made accessible to and delivered into the possession of NCC’s third-party provider.

 

5.22      Intellectual Property. Each of the PBI Companies owns or possesses valid and binding licenses and other rights to use without additional payment all material patents, copyrights, trade secrets, trade names, service marks, trademarks, computer software and other intellectual property used in its business; and none of the PBI Companies has received any notice of conflict with respect thereto that asserts the rights of others. The PBI Companies have in all material respects performed all the obligations required to be performed by them and are not in default in any material respect under any contract, agreement, arrangement or commitment relating to any of the foregoing. Schedule 5.22 lists all of the trademarks, trade names, licenses and other intellectual property used to conduct the businesses of the PBI Companies. Each of the PBI Companies has taken reasonable precautions to safeguard its trade secrets from disclosure to third parties.

 

5.23      Fiduciary Responsibilities . Neither PBI nor any of its Subsidiaries is authorized to act, or has acted or currently acts, in any fiduciary capacity.

 

5.24      Financial Advisor. PBI has retained BSP Securities, LLC, a subsidiary of Banks Street Partners, LLC (the “ PBI Financial Advisor ”) to serve as its financial advisor and has contracted to incur a Liability to the PBI Financial Advisor as of the Effective Time described on Schedule 5.24 (the “ PBI Advisory Fee ”) in connection with the Merger. Other than the PBI Financial Advisor and the PBI Advisory Fee, neither PBI nor any of its Subsidiaries nor any of their respective officers or directors has employed any broker or finder or incurred any Liability for any broker’s fees, commissions or finder’s fees in connection with any of the transactions provided for in this Agreement. Before the execution of this Agreement, the PBI Board has received a written opinion from the PBI Financial Advisor to the effect that, as of the date thereof and based upon and subject to the matters set forth therein, the Exchange Ratio and the Per Share Cash Consideration are fair to the stockholders of PBI from a financial point of view, and such opinion has not been withdrawn, amended, waived, modified or rescinded. The PBI Board may, at its option, elect to have the final fairness opinion updated immediately prior to the Effective Time in order to account for any Material Adverse Effect that may have occurred with regard to NCC.

 

5.25      Regulatory Approvals. PBI knows of no reason why all requisite regulatory approvals regarding the Merger and the Bank Merger should not or cannot be obtained. PBI is “well capitalized” (as defined in 12 C.F.R. Part 225.2(r)) and “well managed” (as defined in 12 C.F.R. Part 225.2(s)). Private Bank is an “eligible depository institution” (as defined in 12 C.F.R. Part 303.2(r)).

 

 

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5.26      Opinion of Counsel. No PBI Company has Knowledge of any facts that would preclude issuance of the opinion of counsel referred to in Section 9.1(e).

 

5.27      Repurchase Agreements; Derivatives; Securitizations. With respect to all agreements currently outstanding pursuant to which any PBI Company has purchased securities subject to an agreement to resell, such PBI Company has a valid, perfected first lien or security interest in the securities or other collateral securing such agreement, and the value of such collateral equals or exceeds the amount of the debt secured thereby. With respect to all agreements currently outstanding pursuant to which any PBI Company has sold securities subject to an agreement to repurchase, no PBI Company has pledged collateral in excess of the amount of the debt secured thereby. No PBI Company has pledged collateral in excess of the amount required under any interest rate swap or other similar agreement currently outstanding. All interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements, whether entered into for the account of any PBI Company or for the account of a customer of any PBI Company, were entered into in the ordinary course of business and in accordance with prudent banking practice and applicable rules, regulations and policies of any regulatory authority and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations of such PBI Company, enforceable according to their terms.  Each PBI Company has duly performed in all material respects all of its obligations under such arrangements to the extent that such obligations to perform have accrued, and there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. No PBI Company is a party to any agreement securitizing any of its assets.

 

5.28      Antitakeover Provisions. Each PBI Company has taken all actions required to exempt such PBI Company, this Agreement and the Merger from any provisions of an anti-takeover nature contained in their organizational documents or the provisions of any federal or state “anti-takeover,” “fair price,” “moratorium,” “control share acquisition” or similar Laws or regulations (collectively, “ Takeover Laws ”). Each PBI Company has taken all action so that the entering into of this Agreement and the consummation of the Merger and the other transactions contemplated by this Agreement do not and will not result in the grant of any rights to any Person under the Articles of Incorporation, Bylaws, or other governing instruments of any PBI Company or restrict or impair the ability of NCC or any of its Subsidiaries to vote, or otherwise to exercise the rights of a stockholder with respect to, shares of any PBI Company that may be directly or indirectly acquired or controlled by it.

 

5.29      Transactions with Management. Except for (a) deposits that are on terms and conditions comparable in all material respects to those made available to other nonaffiliated similarly situated customers of PBI at the time such deposits were entered into, (b) the loans listed on Schedule 5.9(a)(ii) , (c) the agreements designated on Schedule 5.15 , (d) obligations under employee benefit plans of the PBI Companies set forth on Schedule 5.14(a) , and (e) any items described on Schedule 5.29 , there are no contracts with or commitments to present or former stockholders who own or owned more than 1% of the PBI Common Stock, directors, officers or employees (or their Related Interests) involving the expenditure of more than $1,000 as to any one individual (including any business directly or indirectly controlled by any such person) or more than $5,000 for all such contracts for commitments in the aggregate for all such individuals.

 

 

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5.30      Absence of Certain Business Practices. No PBI Company or, to the Knowledge of any PBI Company, any officer, employee or agent of any PBI Company, or any other Person acting on their behalf, has, directly or indirectly, given or agreed to give any gift or similar benefit to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder the business of any PBI Company (or assist any PBI Company in connection with any actual or proposed transaction) that (a) might subject PBI to any damage or penalty in any civil, criminal or governmental Litigation or proceeding, (b) if not given in the past, might have resulted in a Material Adverse Effect on PBI or (c) if not continued in the future, might result in a Material Adverse Effect on PBI or might subject PBI to suit or penalty in any private or governmental Litigation or proceeding.

 

5.31      Privacy of Customer Information. The PBI Companies collectively are the sole owner of all individually identifiable personal information relating to identifiable or identified natural Persons (“ Identifiable Personal Information ”) with respect to customers, former customers and prospective customers. The PBI Companies’ collection, use, and transfer of such Identifiable Personal Information complies with PBI’s privacy policy, the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act and all other applicable privacy and other applicable Laws, and any agreement or industry standard relating to privacy.

 

5.32      Deposits. Except as set forth on Schedule 5.32 , as of the date of this Agreement, none of the deposits of Private Bank are “brokered” deposits or are subject to any encumbrance, legal restraint or other legal process (other than garnishments, pledges, setoff rights, limitations applicable to public deposits, escrow limitations and similar actions taken in the ordinary course of business), and no portion of deposits of PBI represents a deposit of any Affiliate of PBI. The deposit accounts of Private Bank are insured by the FDIC in accordance with the provisions of the Federal Deposit Insurance Act, and PBI has paid all regular premiums and special assessments and filed all reports required thereunder.

 

5.33      Accounting Controls. Each of the PBI Companies maintains accurate books and records reflecting its assets and Liabilities and maintains proper and adequate internal accounting controls that provide assurance that (a) transactions are executed with management’s general or specific authorizations; (b) transactions are recorded as necessary to permit preparation of the PBI Financial Statements and PBI Call Reports in accordance with GAAP and RAP, and to maintain asset and Liability accountability; (c) access to each PBI Company’s assets and incurrence of each PBI Company’s Liabilities are permitted only in accordance with management’s specific or general authorizations; (d) the recorded accountability for assets and Liabilities is compared with the existing assets and Liabilities at reasonable intervals, and appropriate action is taken with respect to any difference; and (e) extensions of credit and other receivables are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis.  None of PBI’s systems, controls, data or information are recorded, stored, maintained, operated or otherwise wholly or partly dependent on or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) which (including all means of access thereto and therefrom) are not under the exclusive ownership and direct control of the PBI Companies or their accountants, except as would not reasonably be expected to have a Material Adverse Effect on PBI.  No PBI Company has been advised of any material deficiencies in the design or operation of internal controls over financial reporting which could reasonably be expected to adversely affect its ability to record, process, summarize and report financial data, or any fraud, whether or not material, that involves management.  No material weakness in internal controls has been identified by PBI’s auditors, and there have been no significant changes in internal controls that could reasonably be expected to materially and adversely affect internal controls.

 

 

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5.34      Registration Obligations. No PBI Company is under any obligation, contingent or otherwise, to register its securities under the 1933 Act, the 1934 Act, or any state securities Laws.

 

 

Article 6
REPRESENTATIONS AND WARRANTIES OF NCC

 

NCC hereby represents and warrants to PBI as follows:

 

6.1      Organization, Standing and Power. NCC is a corporation duly organized, validly existing, and in good standing under the Laws of the State of Delaware, and has the corporate power and authority to carry on its business as now conducted and to own, lease and operate its Assets and to incur its Liabilities. NCC is duly qualified or licensed to transact business as a foreign corporation in good standing in the states of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on NCC.

 

6.2      Authority; No Breach By Agreement.

 

(a)     NCC has the corporate power and authority necessary to execute, deliver and perform its obligations under this Agreement and to consummate the transactions provided for herein. The execution, delivery and performance of this Agreement and the consummation of the transactions provided for herein have been, or prior to the Effective Time will be, duly and validly authorized by all necessary corporate action on the part of NCC. Subject to required regulatory consents, this Agreement constitutes a legal, valid and binding obligation of NCC, enforceable against NCC in accordance with its terms.

 

(b)     Neither the execution and delivery of this Agreement by NCC or of the Bank Merger Agreement by NBC, nor the consummation by NCC of the transactions provided for in this Agreement or by NBC of the transactions provided for in the Bank Merger Agreement, nor compliance by NCC with any of the provisions of this Agreement or by NBC with any of the provisions of the Bank Merger Agreement, will (i) conflict with or result in a breach of any provision of NCC’s Certificate of Incorporation or Bylaws or similar governing documents of NBC, (ii) constitute or result in a Default under, or require any Consent pursuant to, or result in the creation of any Lien on any Asset of any NCC Company under, any Contract or Permit of any NCC Company, where failure to obtain such Consent is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on such NCC Company, or (iii) subject to receipt of the requisite approvals referred to in Section 9.1(b) of this Agreement, violate any Law or Order applicable to any NCC Company or any of their respective Assets.

 

 

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(c)     Other than (i) in connection or compliance with the provisions of the Securities Laws, applicable state corporate and securities Laws, and rules and requirements of Nasdaq, (ii) Consents required from Regulatory Authorities, (iii) notices to or filings with the Internal Revenue Service or the Pension Benefit Guaranty Corporation with respect to any employee benefit plans, (iv) notices to or filings with Nasdaq regarding the listing on Nasdaq of the shares of NCC Common Stock to be issued in the Merger and (v) Consents, filings or notifications that, if not obtained or made, are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on NCC, no notice to, filing with or Consent of any public body or authority is necessary for the consummation by NCC of the Merger and the other transactions provided for in this Agreement or for the consummation by NBC of the Bank Merger and the other transactions provided for in the Bank Merger Agreement. No consents or approvals of or filings or registrations with any Regulatory Authorities are necessary in connection with the execution and delivery by NCC of this Agreement.

 

6.3      Capital Stock. The authorized capital stock of NCC, as of the date of this Agreement, consists of (i) 30,000,000 shares of NCC Common Stock and (ii) 250,000 shares of NCC Preferred Stock. As of the date hereof, 10,903,277 shares of NCC Common Stock and no shares of NCC Preferred Stock are issued and outstanding. All of the shares of NCC Common Stock to be issued in exchange for shares of PBI Common Stock upon consummation of the Merger, when issued in accordance with the terms of this Agreement, will be duly and validly issued and outstanding and fully paid and nonassessable under the DGCL. None of the shares of NCC Common Stock to be issued in exchange for shares of PBI Common Stock upon consummation of the Merger will be issued in violation of any preemptive rights of the stockholders of NCC.

 

6.4      Reports and Financial Statements.

 

(a)     Since January 1, 2013, or the date of organization or acquisition if later, each NCC Company has filed all reports and statements, together with any amendments required to be made with respect thereto, that it was required to file with (i) the SEC, including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy statements, (ii) other Regulatory Authorities, and (iii) any applicable state securities or banking authorities. As of their respective dates, each of such reports and documents, including the NCC Financial Statements, exhibits, and schedules thereto, complied in all material respects with all applicable Laws, including, without limitation, the Securities Laws. As of its respective date, each such report and document did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. The NCC Financial Statements included in such reports (as of the dates thereof and for the periods covered thereby) (A) are, or if dated after the date of this Agreement, will be, in accordance with the books and records of the NCC Companies, which are or will be, as the case may be, complete and correct and which have been or will have been, as the case may be, maintained in accordance with good business practices, and (B) present, or will present, fairly in all material respects the consolidated financial position of the NCC Companies as of the dates indicated and the consolidated results of operations, changes in stockholders’ equity, and cash flows of the NCC Companies for the periods indicated, in accordance with GAAP (subject to exceptions as to consistency specified therein or as may be indicated in the notes thereto or, in the case of interim financial statements, to normal year-end adjustments that are not material). Porter Keadle Moore, LLC is a registered public accounting firm and throughout the periods covered by the financial statements filed by NCC with the SEC has been “independent” with respect to NCC within the meaning of Regulation S-X under the 1934 Act.

 

 

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(b)     NCC maintains a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the 1934 Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Since December 31, 2015, there has not been any material change in the internal controls utilized by NC


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