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SEPARATION AND DISTRIBUTION AGREEMENT
BETWEEN
REPUBLIC FIRST BANCORP, INC.
AND
FIRST BANK OF DELAWARE
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Table of Contents
Page
ARTICLE I CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION
DATE....................................................1
Section 1.1 Treatment of Intercompany
Accounts.....................................................1
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Section 1.2 Charter and
Bylaws.....................................................................1
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Section 1.3 Documents to Be Delivered By RFB and
SpinCo............................................2
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ARTICLE II THE
DISTRIBUTION.......................................................................................2
Section 2.1 The
Distribution.......................................................................2
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Section 2.2 Actions In Connection with the
Distribution............................................3
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Section 2.3 Sole Discretion of
RFB.................................................................3
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Section 2.4 Conditions To
Distribution.............................................................4
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ARTICLE III ACCESS TO
INFORMATION.................................................................................5
Section 3.1 Provision of Corporate
Records.........................................................5
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Section 3.2 Access to
Information..................................................................6
---------------------
Section 3.3 Reimbursement; Other
Matters...........................................................6
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Section 3.4
Confidentiality........................................................................6
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Section 3.5 Privileged
Matters.....................................................................7
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Section 3.6 Ownership of
Information...............................................................8
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Section 3.7 Retention of
Records...................................................................9
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Section 3.8 Limitation of Liability;
Release.......................................................9
--------------------------------
Section 3.9 Other Agreements Providing for Exchange of
Information.................................9
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ARTICLE IV INDEMNIFICATION AND DISPUTE
RESOLUTION................................................................10
Section 4.1 Indemnification by
RFB................................................................10
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Section 4.2 Indemnification by
SpinCo.............................................................10
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Section 4.3
Negotiation...........................................................................10
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Section 4.4 Continuity of Service and
Performance.................................................10
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Section 4.5 Other
Remedies........................................................................10
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Section 4.6
Tolling...............................................................................10
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ARTICLE V
MISCELLANEOUS..........................................................................................11
Section 5.1 Entire
Agreement......................................................................11
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Section 5.2 Governing
Law.........................................................................11
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Section 5.3
Termination...........................................................................11
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Section 5.4
Notices...............................................................................11
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Section 5.5
Counterparts..........................................................................12
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Section 5.6 Binding Effect; Assignment; Third-Party
Beneficiaries.................................12
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Section 5.7
Severability..........................................................................12
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Section 5.8 Failure or Indulgence Not Waiver; Remedies
Cumulative.................................12
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Section 5.9
Amendment.............................................................................13
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Section 5.10
Authority.............................................................................13
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Section 5.11
Interpretation........................................................................13
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Section 5.12 Conflicting
Agreements................................................................13
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ARTICLE VI
DEFINITIONS...........................................................................................13
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(i)
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SEPARATION AND DISTRIBUTION AGREEMENT
THIS SEPARATION AND DISTRIBUTION AGREEMENT (this "Agreement")
is
entered into as of January 31, 2005, between Republic First
Bancorp, Inc., a
Pennsylvania corporation ("RFB"), and First Bank of Delaware, a
Delaware
corporation ("SpinCo"). Capitalized terms used herein and not
otherwise defined
shall have the meanings ascribed to such terms in Article VI
hereof.
RECITALS
WHEREAS, the Board of Directors of RFB (the "RFB Board") has
determined
that it is appropriate and desirable for RFB to separate RFB's
Pennsylvania
banking operations from RFB's Delaware banking operations in a
manner that would
permit RFB to divest its entire ownership interest in SpinCo
through a pro-rata
distribution of all of the outstanding shares of common stock of
SpinCo (the
"SpinCo Common Stock") to the holders of common stock of RFB
(the "RFB Common
Stock"), pursuant to the terms and subject to the conditions of
this Agreement
(the "Distribution");
WHEREAS, the Distribution is intended to qualify as a
tax-free
transaction to RFB and its shareholders pursuant to Sections 355
and
368(a)(1)(D) of the Internal Revenue Code of 1986, as amended
(the "Code");
WHEREAS, SpinCo has filed with the FDIC a registration statement
on
Form 10 to effect the registration of the SpinCo Common Stock in
connection with
the Distribution (the "Form 10");
WHEREAS, RFB has filed an Information Statement on Schedule 14-C
with
the Securities and Exchange Commission describing SpinCo common
stock and the
Distribution, among other matters, and has mailed the
Information Statement to
its shareholders;
WHEREAS, the parties intend in this Agreement, including the
Schedules
and Exhibits hereto, to set forth the principal arrangements
between them
regarding the Distribution;
NOW, THEREFORE, in consideration of the foregoing and the
covenants and
agreements set forth below, the parties hereto agree as
follows:
ARTICLE I
CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION DATE
Section 1.1 Treatment of Intercompany Accounts. On or prior to
the
Distribution Date intercompany accounts, if any, shall be
settled.
Section 1.2 Charter and Bylaws. RFB and SpinCo shall each take
all
actions that may be required to provide for the adoption by
SpinCo, at or prior
to the Distribution Date, of the Amended and Restated Articles
of Incorporation
and the Amended and Restated Bylaws in substantially the same
forms attached
hereto as Exhibit A and Exhibit B, respectively.
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Section 1.3 Documents to Be Delivered By RFB and SpinCo. On or
prior
to the Distribution Date, RFB will execute and deliver to
SpinCo, and SpinCo
will execute and deliver to RFB, all of the following items and
agreements
(collectively, together with all agreements and documents
contemplated by this
Agreement as such agreements may be amended from time to time,
the "Ancillary
Agreements"):
(a) the Tax Disaffiliation Agreement; and
(b) such other agreements, documents or instruments as the
parties
may agree are necessary or desirable in order to achieve the
purposes hereof.
Unless otherwise provided herein, the document deliveries
contemplated
in this Section 1.3 shall occur on or prior to the Distribution
Date.
ARTICLE II
THE DISTRIBUTION
Section 2.1 The Distribution.
(a) Cooperation. SpinCo shall cooperate with RFB to accomplish
the
Distribution and shall, at RFB's direction, promptly take any
and all
actions necessary or desirable to effect the Distribution. RFB
may select
any investment bank or manager in connection with the
Distribution, as well
as any financial printer, solicitation and/or exchange agent and
financial,
legal, accounting and other advisors for RFB; provided, that,
nothing
herein shall prohibit SpinCo from engaging (at its own expense)
its own
financial, legal, accounting and other advisors in connection
with the
Distribution or using the same advisors engaged by RFB. SpinCo
and RFB, as
the case may be, will provide to the distribution or exchange
agent to be
appointed by RFB (the "Distribution Agent") all share
certificates and any
information required in order to complete the Distribution.
(b) Distribution Mechanics.
(i) Subject to Sections 2.3 and 2.4, on or prior to the
Distribution Date, RFB will deliver to the Distribution Agent
for the
benefit of holders of RFB Common Stock on the Record Date, a
single
stock certificate, endorsed by RFB in blank, representing all of
the
outstanding shares of SpinCo Common Stock then owned by RFB, and
shall
cause the transfer agent for the RFB Common Stock to instruct
the
Distribution Agent to distribute on or as soon as practicable
after
the Distribution Date the appropriate number of such shares of
SpinCo
Common Stock to each such holder or designated transferee or
transferees of such holder of RFB Common Stock. The Distribution
shall
be effective at 12:01 a.m. Eastern Standard Time on the
Distribution
Date.
(ii) Subject to Sections 2.3 and 2.4, each holder of RFB
Common
Stock on the Record Date (or such holder's designated transferee
or
transferees) will be entitled to receive in the pro-rata
distribution
a number of shares of SpinCo Common Stock equal to the number
of
shares of RFB Common Stock held by such holder on the Record
Date
multiplied by the distribution ratio determined by the RFB Board
when
it declares the Distribution. RFB and
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SpinCo, as the case may be, will provide to the Distribution
Agent
all share certificates and any information required in order
to
complete the Distribution on the basis specified above.
Section 2.2 Actions In Connection with the Distribution.
(a) Form 10 and Information Statement. SpinCo shall file
such
amendments and supplements to the Form 10, and such amendments
as may
be necessary in order to cause the same to become and remain
effective
as required by Law, including filing such amendments and
supplements
to the Form 10 as may be required by the FDIC or federal, state
or
foreign securities Laws. SpinCo shall mail to the holders of
RFB
Common Stock, at such time on or prior to the Distribution Date
as RFB
shall determine, an Information Statement on Schedule 14-C, as
well as
any other information concerning SpinCo, its business,
operations and
management, the Distribution and such other matters as RFB
shall
reasonably determine are necessary and as may be required by
Law.
(b) Other Documentation. RFB and SpinCo shall also cooperate
in
preparing, filing with the FDIC and causing to become
effective
registration statements or amendments thereof which are required
to
reflect the establishment of, or amendments to, any employee
benefit
and other plans necessary or appropriate in connection with
the
Distribution or other transactions contemplated by this
Agreement and
the Ancillary Agreements. Promptly after receiving a request to
do so
from RFB, to the extent requested by RFB, SpinCo shall prepare
and, to
the extent required under applicable Law, file with the FDIC any
such
documentation that RFB determines is necessary or desirable
to
effectuate the Distribution, and RFB and SpinCo shall each use
its
reasonable commercial efforts to obtain all necessary approvals
from
the FDIC with respect thereto as soon as practicable.
(c) Blue Sky. Promptly after receiving a request to do so
from
RFB, SpinCo shall take all such actions as may be necessary
or
appropriate under the securities or blue sky laws of the United
States
(and any comparable Laws under any foreign jurisdiction) in
connection
with the Distribution.
(d) Exchange Listing. Promptly after receiving a request to do
so
from RFB, SpinCo shall prepare and file, and shall use its
reasonable
commercial efforts to have approved and made effective, an
application
for the original listing of the SpinCo Common Stock to be
distributed
in the Distribution on the Over-The-Counter Bulletin Board or
the Pink
Sheets, subject to official notice of distribution. In addition,
RFB
shall, to the extent possible, give NASDAQ not less than ten
days
advance notice of the Record Date in compliance with Rule 10b-17
under
the Securities Exchange Act of 1934, as amended.
(e) Conditions. SpinCo shall take all reasonable steps
necessary
and appropriate to cause the conditions set forth in Section 2.4
to be
satisfied and to effect the Distribution, or any portion
thereof, on
the terms, in the manner and on the Distribution Date.
Section 2.3 Sole Discretion of RFB. RFB shall, in its sole
and
absolute discretion, determine the date of the consummation of
the Distribution
and all terms of the Distribution, including, without
limitation, the form,
structure and terms of any transaction(s) and/or offering(s) to
effect the
Distribution and the timing of and conditions to the
consummation
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thereof. In addition, RFB may at any time and from time to time
until the
completion of the Distribution decide to abandon the
Distribution or modify or
change the terms of the Distribution, including, without
limitation, by
accelerating or delaying the timing of the consummation of all
or part of the
Distribution.
Section 2.4 Conditions To Distribution. Subject to Section 2.3,
the
following are conditions to the consummation of any part of the
Distribution.
The conditions are for the sole benefit of RFB and shall not
give rise to or
create any duty on the part of RFB or the RFB Board to waive or
not waive any
such condition.
(a) Effective Form 10. The Form 10 shall have been declared
effective under the FDIC rules, with no stop order in effect
with
respect thereto, and the Information Statement shall have been
mailed
to the holders of RFB Common Stock.
(b) Schedule 14-C. The Information Statement on Schedule
14-C
shall have been distributed to the shareholders of RFB at least
twenty
(20) days prior to the Distribution Date.
(c) Blue Sky Laws. The actions and filings with regard to
state
securities and blue sky laws of the United States (and any
comparable
Laws under any foreign jurisdictions) described in Section
2.2(c)
shall have been taken and, where applicable, have become
effective or
been accepted.
(d) Exchange Listing. Arrangements shall have been made to
have
the SpinCo Common Stock quoted by a market maker for trading on
the
Over-The-Counter Bulletin Board or Pink Sheets at the Effective
Time
or as soon as reasonably practicable thereafter, subject to
official
notice of issuance.
(e) IRS Ruling. RFB shall have obtained a private letter
ruling
from the Internal Revenue Service in form and substance
satisfactory
to RFB (in its sole discretion), and such ruling shall remain
in
effect, to the effect that (i) the distribution by RFB to the
holders
of RFB Common Stock on the Record Date of all the SpinCo Common
Stock
in the manner determined by RFB will qualify as a tax-free
distribution for U.S. federal income tax purposes under Section
355 of
the Code; (ii) no gain or loss will be recognized by (and no
amount
will otherwise be included in the income of) RFB as a result of
the
Distribution; and (iii) no gain or loss will be recognized by
(and no
amount will otherwise be included in the income of) the holders
of RFB
Common Stock on the Record Date upon their receipt of shares of
SpinCo
Common Stock pursuant to the Distribution.
(f) Charter and Bylaws. SpinCo's Amended and Restated Articles
of
Association and Amended and Restated Bylaws in substantially the
forms
attached hereto as Exhibit A and Exhibit B, respectively, shall
be in
effect.
(g) Ancillary Agreements. Each of the Ancillary Agreements
shall
have been duly executed and delivered by the parties thereto and
shall
be in full force and effect.
(h) Governmental Approvals. Any material Governmental
Approvals
necessary to consummate the Distribution or any portion thereof
shall
have been obtained and be in full force and effect.
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(i) No Legal Restraints. No order, injunction or decree issued
by
any court or agency of competent jurisdiction or other legal
restraint
or prohibition preventing the consummation of all or any portion
of
the Distribution shall be in effect, and no other event outside
the
control of RFB shall have occurred or failed to occur that
prevents
the consummation of all or any portion of the Distribution.
(j) No Inadvisable Event. The RFB Board shall have approved
the
Distribution and shall have not determined that any events
or
developments shall have occurred that make it inadvisable to
effect
the Distribution.
(k) Fractional Shares. No certificates representing
fractional
shares of SpinCo Common Stock will be distributed in the
Distribution.
As soon as practicable after the consummation of any portion of
the
Distribution, RFB shall direct the Distribution Agent to
determine the
number of whole shares and fractional shares of SpinCo Common
Stock
allocable to each holder of record or beneficial owner of RFB
Common
Stock otherwise entitled to fractional shares of SpinCo Common
Stock,
to aggregate all such fractional shares and sell the whole
shares
obtained thereby at the direction of RFB, in open market
transactions
or otherwise, in each case at then prevailing trading prices,
and to
cause to be distributed to each such holder or for the benefit
of each
such beneficial owner to which a fractional share shall be
allocable
such holder or owner's ratable share of the proceeds of such
sale,
after making appropriate deductions for any amount required to
be
withheld for U.S. federal income tax purposes and to repay
expenses
reasonably incurred by the Distribution Agent, including all
brokerage
charges, commissions and transfer taxes, in connection with such
sale.
RFB and the Distribution Agent shall use their reasonable
commercial
efforts to aggregate the shares of RFB Common Stock that may be
held
by any beneficial owner thereof through more than one account
in
determining the fractional share allocable to such beneficial
owner.
ARTICLE III
ACCESS TO INFORMATION
Section 3.1 Provision of Corporate Records.
(a) After the Effective Time, upon the prior written request
by
SpinCo for specific and identified agreements, documents,
books,
records or files (collectively, "Records") which relate to (x)
SpinCo,
the conduct of the business of SpinCo up to the Effective Time
or the
ownership of the SpinCo Assets up to the Effective Time, or (y)
any
Ancillary Agreement (other than, if needed, the Tax
Disaffiliation
Agreement), RFB shall arrange, as soon as reasonably
practicable
following the receipt of such request, to provide such Records
(or
appropriate copies thereof if RFB has a reasonable need to
retain the
originals) in the possession or control of RFB or any of the
RFB
Subsidiaries, but only to the extent such items are not already
in the
possession or control of SpinCo.
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(b) After the Effective Time, upon the prior written request
by
RFB for specific and identified Records which relate to (x) RFB,
the
conduct of the RFB Business up to the Effective Time or the
ownership
of the RFB Assets up to the Effective Time, or (y) any
Ancillary
Agreement (other than, if needed, the Tax Disaffiliation
Agreement),
SpinCo shall arrange, as soon as reasonably practicable
following the
receipt of such request, to provide such Records (or
appropriate
copies thereof if SpinCo has a reasonable need to retain the
originals) in the possession or control of SpinCo but only to
the
extent such items are not already in the possession or control
of RFB.
Section 3.2 Access to Information.After the Effective Time, each
of
RFB and SpinCo shall afford to the other and its authorized
representatives
reasonable access during normal business hours, subject to
appropriate
restrictions for classified, privileged or confidential
information, to the
personnel, properties, and Records of such party and its
Subsidiaries insofar as
such access is reasonably required by the other party and
relates to (x) such
other party or the conduct of its business or ownership of its
Assets prior to
the Effective Time, (y) any Ancillary Agreement or (z)
litigation or threatened
litigation against such party.
Section 3.3 Reimbursement; Other Matters. Except to the
extent
otherwise contemplated by any Ancillary Agreement, a party
providing Records or
access to personnel, properties or Records to the other party
under this Article
III shall be entitled to receive from the recipient, upon the
presentation of
invoices therefor, reimbursement for payments made for supplies,
disbursements
and other out-of-pocket expenses (including attorneys' fees and
disbursements),
as may be reasonably incurred in providing such Records or
access to personnel,
properties or Records.
Section 3.4 Confidentiality. Neither (i) RFB nor the RFB
Subsidiaries
nor (ii) SpinCo shall use or permit the use of (without the
prior written
consent of the other) and each such entity shall keep, and shall
cause its
representatives to keep, confidential all information concerning
the other party
in its possession, its custody or under its control (except to
the extent that
(A) such information has been in the public domain through no
fault of such
party or (B) such information has been later lawfully acquired
from other
sources by such party or (C) this Agreement or any other
Ancillary Agreement or
any other agreement entered into pursuant hereto permits the use
or disclosure
of such information) to the extent such information, (w) relates
to or was
acquired during the period up to the Effective Time, (x) relates
to any
Ancillary Agreement, (y) is obtained in the course of performing
services for
the other party pursuant to any Ancillary Agreement, or (z) is
based upon or is
derived from information described in the preceding clauses (w),
(x) or (y), and
each party shall not (without the prior written consent of the
other) otherwise
release or disclose such information to any other Person, except
such party's
representatives, unless compelled to disclose such information
by judicial or
administrative process or unless such disclosure is required by
Law and such
party has provided the other party with prompt notice of such
requirement in
order to afford the other party the opportunity to seek an
appropriate
protective order or other remedy. In the event that such
protective order or
other remedy is not obtained or that the other party does not
waive compliance
with the provisions of this Section 3.4, the first party will
furnish only that
portion of such information that it is advised by opinion of
counsel, which
counsel shall be reasonably acceptable to the other party, is
legally required
and will endeavor to obtain assurance that confidential
treatment will be
accorded the information so furnished.
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Notwithstanding anything herein to the contrary, except as
reasonably
necessary to comply with applicable securities laws, RFB, SpinCo
and their
respective representatives may (i) consult any tax advisor
regarding U.S.
federal income tax treatment or tax structure of the
transactions contemplated
by this Agreement, and (ii) disclose to any and all persons,
without limitation
of any kind, the U.S. federal income tax treatment and tax
structure of the
transactions contemplated by this Agreement and all materials of
any kind
(including opinions or other tax analyses) that are provided to
either RFB or
SpinCo relating to s
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