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
----------------
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
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Section 3.3
Reimbursement; Other
Matters...........................................................6
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Section 3.4
Confidentiality........................................................................6
---------------
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
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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
----------------------
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 A
