STOCK PURCHASE AGREEMENT

Exhibit 2.1

STOCK PURCHASE AGREEMENT

by and among

THE BANCORP, INC.,

AMERICAN HOME MORTGAGE HOLDINGS, INC.

and

AMERICAN HOME BANK

dated as of

April 1, 2009

TABLE OF CONTENTS

 

 

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STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”), dated as of April 1, 2009, is entered into by and among The Bancorp, Inc. (“Purchaser”), American Home Mortgage Holdings, Inc., a Delaware corporation, as a debtor and debtor in possession (“Parent”), and American Home Bank, a federal savings association organized under the laws of the United States of America (the “Bank”).

WHEREAS, Parent owns 10,000 shares of common stock, par value $1.00 per share, of the Bank which constitute all of the issued and outstanding shares of capital stock of the Bank (the “Shares”);

WHEREAS, on August 6, 2007 (the “Petition Date”), Parent and certain of its Affiliates (excluding the Bank and the Bank Subsidiary) filed voluntary petitions (“Petitions”) for relief (the “Bankruptcy Cases”) under Chapter 11 of Title 11, U.S.C. §§ 101, et seq. , as amended (the “Bankruptcy Code”), in the United States Bankruptcy Court for the District of Delaware (together with any court having proper jurisdiction with respect to the Bankruptcy Cases, the “Bankruptcy Court”);

WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, and as authorized under Sections 105, 363 and 365 of the Bankruptcy Code, Parent wishes to sell to Purchaser, and Purchaser wishes to purchase from Parent, all of the Shares.

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1 Definitions . As used in this Agreement, in addition to the terms defined elsewhere herein, the following terms have the meanings set forth below when used herein with initial capital letters:

“ 2007 Audited Financial Statements ” has the meaning specified in Section 4.9 hereof.

“ 2008 Audited Financial Statements ” has the meaning specified in Section 4.9 hereof.

“ 2008 TFRs ” has the meaning specified in Section 4.9 hereof.

“ Acquisition Date ” means October 19, 2006.

“ Acting in Concert ” means (i) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement or understanding, or (ii) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. A Person or company which acts in concert with another Person or company shall also be deemed to be acting in concert with any Person or company who is also acting in concert with that other party.

“ Administrative Action ” has the meaning specified in Section 4.7(b) hereof.

“ Affiliate ” means any Person who directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person and, without limiting the generality of the foregoing, also includes any executive officer or director of such Person and any Affiliate of such executive officer or director.

“ Agreement ” or “this Agreement” means this Stock Purchase Agreement, together with the schedules and exhibits hereto.

“ Ancillary Agreements ” means the Escrow Agreement.

“ Arbitrating Accountants ” means a national accounting or consulting firm with experience in the banking business that is independent of Parent and Purchaser and their respective Affiliates.

“ Auction ” has the meaning specified in the Bidding Procedures Order.

“ Auction Date ” has the meaning specified in Section 6.1 hereof.

“ Audited Financial Statements ” has the meaning specified in Section 4.9 hereof.

“ Bank ” has the meaning specified in the Recitals.

“ Bank Loans ” has the meaning specified in Section 4.18 hereof.

“ Bank Retention Plan ” has the meaning set forth on Schedule 4.12(d) of the Disclosure Schedule.

“ Bank Subsidiary ” means Umbrella Service Corporation, an Illinois corporation.

“ Bankruptcy Cases ” has the meaning specified in the Recitals.

“ Bankruptcy Code ” has the meaning specified in the Recitals.

“ Bankruptcy Court ” has the meaning specified in the Recitals.

“ Bidding Procedures ” has the meaning specified in the Bidding Procedures Order.

“ Bidding Procedures Order ” means the Order of the Bankruptcy Court (including all schedules thereto), substantially in the form set forth in Exhibit A hereto, approving the bidding procedures relating to the Sale, including those procedures granting Purchaser the protections and benefits set forth in such Order (including the Break Up Fee).

“ Books and Records ” means all Bank books, ledgers, files, reports, plans, records, manuals and other materials (in any form or medium).

 

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“ Break Up Fee ” has the meaning specified in Section 6.2 hereof.

“ Business ” means the business and operations of the Bank and the Bank Subsidiary.

“ Business Day ” means a day other than Saturday, Sunday or any day on which the Federal Reserve Bank of New York is closed.

“ Charter Documents ” means, with respect to any Person, the charter, certificate or articles of incorporation and by laws, the limited partnership agreement, the partnership agreement or the limited liability company operating agreement and certificate of formation or articles of organization or such other organizational documents of such Person which establish the legal personality of such Person.

“ Closing ” has the meaning specified in Section 3.1 hereof.

“ Closing Date ” means the date upon which the Closing occurs.

“ Closing Tangible Net Book Value ” means the Tangible Net Book Value as of the close of business on the Business Day immediately prior to the Closing Date.

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

“ Competing Transaction ” has the meaning specified in Section 6.1 hereof.

“ Confidentiality Agreement ” has the meaning specified in Section 8.2 hereof.

“ Consent ” means any consent, approval, license, waiver or authorization.

“ CRA ” means the Community Reinvestment Act of 1977 and the regulations promulgated thereunder.

“ Derivative Transaction ” means any swap transaction, option, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities, bonds, equity securities, loans, interest rates, catastrophe events, weather-related events, credit-related events or conditions or any indexes, or any other similar transaction (including any option with respect to any of these transactions) or combination of any of these transactions, including collateralized mortgage obligations or other similar instruments or any debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar arrangements related to such transactions.

“ Disclosure Schedule ” means the disclosure schedules delivered by Parent to Purchaser in connection with this Agreement.

“ Enforceability Exceptions ” has the meaning specified in Section 4.1(b) hereof.

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

“ Escrow Account ” has the meaning set forth in the Escrow Agreement.

 

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“ Escrow Agent ” means Wilmington Trust Company.

“ Escrow Agreement ” means that certain escrow agreement dated as of the Closing Date, by and among Purchaser, Parent and Escrow Agent, substantially in the form of Exhibit E hereto.

“ Escrow Amount ” means, in the event that prior to the Closing, Parent has not been able to obtain an acknowledgement from the appropriate Governmental Entities pursuant to Section 5.4(h) , $900,000.

“ Extension Payment ” has the meaning specified in Section 8.2 hereof.

“ Extension Period ” has the meaning specified in Section 8.2 hereof.

“ Financing Commitments ” has the meaning specified in Section 9.4 hereof.

“ GAAP ” means United States generally accepted accounting principles, applied on a consistent basis.

“ Government Entity ” means any foreign, federal, state or local court, administrative body or other governmental or quasi governmental entity with competent jurisdiction, or any agency, instrumentality or authority thereof, including the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System (the “ Federal Reserve ”), the Department of Housing and Urban Development, the Federal National Mortgage Association (“ Fannie Mae ”), the Government National Mortgage Association (“ Ginnie Mae ”), the Federal Home Loan Mortgage Corporation (“ Freddie Mac ”) and the Federal Trade Commission.

“ HOLA ” means the Home Owners Loan Act of 1934, as amended.

“ Intellectual Property ” means (a) inventions (whether or not patentable), improvements thereto, and U.S. and foreign patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, divisions, extensions, and reexaminations thereof, (b) trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, Internet domain names, and all goodwill associated with any of the foregoing, and all applications, registrations, and renewals in connection therewith, (c) all works of authorship, published and unpublished copyrightable works (whether or not registered), copyrights, and applications, registrations, and renewals in connection therewith, (d) mask works and applications, registrations, and renewals in connection therewith, (e) trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists and information, pricing and cost information, and business and marketing plans and proposals), and (f) computer software (including source code, executable code, data, databases and related documentation).

“ IRS ” means the Internal Revenue Service.

“ Knowledge of Parent ” concerning a particular subject, area or aspect of the Business or the affairs of the Bank, means the actual (and not constructive or imputed) knowledge of any

 

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individual listed on Schedule 1.1(a) after making a reasonable inquiry as to the accuracy of the representation and warranty in question, provided that with respect to Section 4.7(c) , “Knowledge of Parent” means the actual knowledge of any individual listed on Schedule 1.1(a) without any inquiry, and Purchaser acknowledges that such individual has not made any inquiry and has no duty to make any inquiry.

“ Law ” means any law, statute, ordinance, rule, regulation, code, Order, judgment, writ, injunction or decree enacted, issued, promulgated, enforced, or entered by a Government Entity or any common law requirement (including, all federal, state and local statutes, regulations, ordinances, all judicial and administrative orders and determinations, and all common law requirements concerning public health and safety, worker health and safety, and pollution or protection of the environment). For the avoidance of doubt, Law includes the following, together with the regulations promulgated thereunder, (i) the Bank Secrecy Act, (ii) the United States Foreign Corrupt Practices Act, (iii) the U.S.A. Patriot Act, (iv) the Fair Housing Act, (vii) the Home Mortgage Disclosure Act, (v) the Equal Credit Opportunity Act, (vi) the Community Reinvestment Act of 1977, (vii) the privacy provisions of the Gramm-Leach-Bliley Act, (viii) the Fair Consumer Credit Protection Act, and (ix) Truth in Lending laws.

“ Liabilities ” means any and all claims, debts, liabilities, commitments and obligations of any kind, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not asserted, known or unknown, determined, determinable or otherwise, whenever or however arising (including whether arising out of any contract or tort based on negligence or strict liability) and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto, including all costs and expenses relating thereto.

“ Lien ” means, as applied to any Person, any lien, charge, claim, pledge, conditional sale agreement or other title retention agreement, lease, mortgage, deed of trust, right of first refusal, security interest, option, proxy, voting trust or agreement, transfer restriction or other encumbrance (including the filing of, or agreement to give, any financing statement under the Uniform Commercial Code of any jurisdiction).

“ Loss ” or “ Losses ” means any and all losses, Liabilities, costs, claims, damages, penalties and expenses (including reasonable attorneys’ fees and expenses and costs of investigation, enforcement and litigation).

“ Material Adverse Effect ” means any result, occurrence, change, effect, event or circumstance, that, individually or in the aggregate, has had or would reasonably be expected to have, a material adverse effect or change on the business, operations, condition or results of operation of the Bank and the Bank Subsidiary, taken as a whole or the ability of Parent, the Bank or the Bank Subsidiary to perform its obligations under this Agreement, except for any result, occurrence, change, effect, event, or circumstance relating to (i) the economy or the financial markets in general except to the extent specifically related to or disproportionately impacting the Bank, (ii) the industry in which the Bank operates in general and not specifically relating to the Bank, except to the extent disproportionately impacting the Bank, (iii) the announcement of this Agreement or the transaction contemplated hereby or the identity of Purchaser, (iv) changes in applicable Laws after the date hereof, (v) the fact that Parent is

 

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operating as a debtor in possession under the Bankruptcy Code and the Bank’s activities have been accordingly restricted or (vi) changes in GAAP or regulatory accounting principles after the date hereof.

“ Material Contract ” means (a) each contract or agreement that is executory in whole or in part and involves performance of services or the purchase, sale, delivery or lease of goods, materials, supplies, services, equipment or other assets of an amount or value in excess of $50,000 or the equivalent in other currencies on an annual basis, (b) each contract or agreement that is executory in whole or in part that involves expenditures, receipts or Liabilities in excess of $50,000 or the equivalent in other currencies on an annual basis, (c) each lease, sublease, rental or occupancy agreement, and any other contract or agreement affecting the ownership of, leasing of, title to or use of any real property, (d) each contract or agreement containing (i) covenants that in any way purport to materially restrict or prohibit the business activity of the Bank or the Bank Subsidiary or limit the freedom of the Bank or the Bank Subsidiary thereof to engage in any line of business or in any geographic area or to compete with any Person, (ii) most favored nation or similar provisions in favor of any customer of or other counterparty to Parent, the Bank or the Bank Subsidiary, (iii) obligations of Parent, the Bank or the Bank Subsidiary to purchase or otherwise obtain any product or service exclusively from a single party or sell any product or service exclusively to a single party, or (iv) non-solicitation, non-hire or confidentiality provisions for the benefit of the Bank, the Bank Subsidiary or other Person, (e) each contract or agreement that would prevent the continued operation of the business of Bank or the Bank Subsidiary after the date of this Agreement on substantially the same basis as historically operated, (f) any agreement concerning a partnership, joint venture or ownership of any Person other than the Bank Subsidiary, (g) any collective bargaining agreement, (h) any agreement for the provision of services by any Person on a consulting basis or for the employment of any individual on a full-time, part-time, temporary, leased or other basis, (i) any agreement relating to Intellectual Property (other than those related to retail shrink-wrap software licensed by the Bank or the Bank Subsidiary), (j) each other contract, agreement, commitment, arrangement or plan the breach or termination of which would reasonably be expected to have Material Adverse Effect. For the avoidance of doubt, Bank Loans and loan documentation with respect thereto are not Material Contracts under this Agreement.

“ Order ” means, with respect to any Person, any award, decision, injunction, judgment, stipulation, order, ruling, subpoena, writ, decree, consent decree or verdict entered, issued, made or rendered by any Government Entity affecting such Person or any of its properties or assets.

“ Ordinary Course of Business ” means the ordinary course of the conduct of the business of the Bank, consistent with past custom and practice since the Acquisition Date. For the avoidance of doubt, it is agreed and understood that the Bank’s sales of loans and negotiated changes to principal balances due for loans being repaid are in the Ordinary Course of Business.

“ Parent ” has the meaning specified in the preamble.

“ Permits ” has the meaning specified in Section 4.7 hereof.

“ Permitted Liens ” means any and all (a) Liens for Taxes and other governmental charges and assessments that are not yet due and payable and Liens for Taxes being contested in good

 

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faith through appropriate proceedings and covered by a bond in an amount at least equal to the amount of such Lien; and (b) Liens of landlords and carriers, warehousemen, mechanics and materialmen and other like Liens arising in the ordinary course of business for sums not yet due and payable or that are being contested in good faith (provided, that with respect to sums being contested in good faith, such Liens are covered by a bond in an amount at least equal to the amount of such Lien), which are not material to the value of the assets.

“ Person ” means a natural person, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Government Entity or other entity or organization.

“ Petitions ” has the meaning specified in the Recitals.

“ Petition Date ” has the meaning specified in the Recitals.

“ Plan ” means each “employee benefit plan” as defined in Section 3(3) of ERISA, and each other material plan, program, arrangement, practice or agreement providing for compensation, severance, termination pay, deferred compensation, retirement, pension, bonus awards, retention or stock or stock based awards or fringe benefits that is sponsored, maintained or contributed to by Parent, the Bank or the Bank Subsidiary for the benefit of any present or former director, officer or employee of the Bank or the Bank Subsidiary.

“ Proposed Business Plan ” has the meaning set forth in Section 5.3(d) .

“ Proximate Cause Party ” has the meaning specified in Section 8.1(b)(i) hereof.

“ Purchase Price ” has the meaning specified in Section 2.2(a) hereof.

“ Purchaser ” has the meaning specified in the preamble.

“ Related Party Arrangement ” has the meaning specified in Section 4.14 hereof.

“ Representatives ” means, with respect to any Person, the directors, officers, employees, accountants, agents, counsel, insurance brokers, insurance companies, lenders and other financing sources and other representatives of such Person.

“ Requested Party ” has the meaning specified in Section 5.2(a) hereof.

“ Requesting Party ” has the meaning specified in Section 5.2(a) hereof.

“ Sale ” means the sale of the Shares in accordance with the Bidding Procedures Order.

“ Sale Approval Order ” means an Order or Orders of the Bankruptcy Court issued pursuant to Sections 363 and 365 of the Bankruptcy Code, in substantially the form set forth in Exhibit C hereto, that among other things, (i) authorizes and approves the sale, transfer and assignment of the Shares to Purchaser in accordance with the terms and conditions of this Agreement, free and clear of all Liens; (ii) finds that Purchaser has acted in “good faith” within the meaning of Section 363(m) of the Bankruptcy Code; (iii) finds that this Agreement was

 

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negotiated, proposed and entered into by the parties without collusion, in good faith and from arm’s length bargaining positions; (iv) states the Bankruptcy Court shall retain jurisdiction to resolve any controversy or claim arising out of or relating to this Agreement, or any breach hereof as provided in Section 10.11 hereof; and (v) orders that this Agreement and the transactions contemplated hereby may be specifically enforced against and binding upon, and not subject to rejection or avoidance by, Parent or any chapter 7 or chapter 11 trustee of Parent.

“ Sale Hearing ” has the meaning specified in the Bidding Procedures Order.

“ Sale Motion ” means the motion filed by Parent or its Affiliate with the Bankruptcy Court for the approval of the Sale Approval Order.

“ Shares ” has the meaning specified in the Recitals.

“ Tangible Net Book Value ” means (i) stated book value minus (ii) goodwill (each of (i) and (ii) as determined in accordance with GAAP on a basis and using accounting principles and methodology consistent with the existing principles and methodologies of the Bank used in the Audited Financial Statements), after accruing for or paying all fees or expenses incurred by the Bank or on behalf of the Bank in connection with the Sale and as adjusted in accordance with Exhibit B attached hereto.

“ Tax ” or “ Taxes ” means all income, excise, gross receipts, ad valorem, sales, use, employment, franchise, profits, gains, property, transfer, use, payroll, intangibles or other taxes, fees, stamp taxes, duties, charges, levies or assessments of any kind whatsoever (whether payable directly or by withholding), together with any interest and any penalties, additions to tax or additional amounts imposed by any Taxing Authority with respect thereto.

“ Tax Audit Determination ” has the meaning set forth in Section 5.11(f) .

“ Tax Returns ” means all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to a Taxing Authority relating to Taxes.

“ Taxing Authority ” means any Government Entity having jurisdiction over the assessment, determination, collection or imposition of Taxes.

“ Termination Date ” has the meaning specified in Section 8.1(b)(ii) hereof.

“ TFRs ” has the meaning specified in Section 4.9 hereof.

“ Third Party Claim ” has the meaning specified in Section 10.3(b) hereof.

“ Third Party Interests ” has the meaning specified in Section 4.5(a) hereof.

“ Transfer Taxes ” means any federal, state, county, local, foreign and other sales, use, transfer, conveyance, documentary transfer, recording, registration or other similar Tax, fee or charge imposed upon the sale, transfer or assignment of property or any interest therein or the recording thereof, and any penalty, addition to Tax or interest with respect thereto.

 

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“ Unaudited Financial Statements ” has the meaning specified in Section 4.9 hereof.

Section 1.2 Interpretation . When a reference is made in this Agreement to a section or article, such reference shall be to a section or article of this Agreement unless otherwise clearly indicated to the contrary.

(a) Whenever the words “include” “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation.”

(b) The words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement unless otherwise specified.

(c) The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

(d) A reference to any party to this Agreement or any other agreement or document shall include such party’s successors and permitted assigns.

(e) A reference to any legislation or to any provision of any legislation shall include any amendment to, and any modification or reenactment thereof, any legislative provision substituted therefor and all regulations and statutory instruments issued thereunder or pursuant thereto.

(f) When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

(g) Any reference in this Agreement to $ shall mean U.S. dollars.

(h) The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

ARTICLE II

PURCHASE AND SALE OF SHARES

Section 2.1 Purchase and Sale of Shares . On the terms and subject to the conditions set forth herein, at the Closing, Parent shall sell, convey, transfer, assign and deliver to Purchaser, and Purchaser shall purchase from Parent the Shares, free and clear of all “claims” (as defined in the Bankruptcy Code) and Liens.

 

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Section 2.2 Purchase Price . (a) In consideration of the aforesaid sale, conveyance, transfer and delivery to Purchaser of the Shares, Purchaser shall deliver to Parent, at the Closing, the purchase price equal to (i) the Closing Tangible Net Book Value, less (ii) in the event that the Closing takes place prior to July 31, 2009 (or in the event that all closing conditions have been satisfied prior to such date but the parties have mutually agreed pursuant to Section 3.1 , at the request of Parent, to close following such date), $1,000,000 (as adjusted pursuant to this Article II or pursuant to Section 8.2 , the “Purchase Price”) less (iii) the Escrow Amount, if any. In addition, the Purchaser shall deliver to the Escrow Agent, at the Closing, the Escrow Amount, if any, for deposit into the Escrow Account in accordance with the terms of the Escrow Agreement. At the Closing, Purchaser shall pay the Purchase Price (less the Escrow Amount, if any) in cash by wire transfer of immediately available funds to an account or accounts designated in writing to the Purchaser, not less than two Business Days prior to the Closing, by Parent.

(b) Not later than two Business Days nor more than five Business Days prior to the Closing Date, Parent shall prepare and deliver to Purchaser Parent’s good faith estimate of the Closing Tangible Net Book Value. Within the 60 day period following the Closing Date, Purchaser shall have the right to dispute the Closing Tangible Net Book Value as not being an accurate calculation of the Tangible Net Book Value immediately prior to the Closing. If Purchaser does not dispute the Closing Tangible Net Book Value within such 60 day period, such item shall be deemed final by Parent and Purchaser, and the Purchase Price calculated pursuant to Section 2.2(a) shall be deemed final.

(c) If Purchaser disputes the Closing Tangible Net Book Value as not being an accurate calculation of the Tangible Net Book Value immediately prior to the Closing as set forth in Section 2.2(b) above, such dispute shall be resolved in the following manner: (i) Purchaser shall notify Parent of such dispute within 60 days after the Closing Date, which notice shall specify in reasonable detail the nature of the dispute; (ii) during the 30 day period following Parent’s receipt of such notice, Parent and Purchaser shall use their commercially reasonable efforts to resolve such dispute in good faith; and (iii) if at the end of such 30 day period Parent and Purchaser shall have failed to resolve such dispute in writing, Parent and Purchaser shall submit any items, other than items relating solely to calculation of the Closing Tangible Net Book Value to the Bankruptcy Court for resolution or shall submit any items relating solely to the calculation of the Closing Tangible Net Book Value in dispute as promptly as practicable to Arbitrating Accountants to be selected by mutual agreement between Parent and Purchaser. If Parent and Purchaser cannot agree on the selection of Arbitrating Accountants, the Bankruptcy Court shall select the Arbitrating Accountants. The Arbitrating Accountants shall act as an arbitrator and shall resolve the dispute as promptly as practicable after such dispute is referred to it. Each of the parties hereto shall bear all costs and expenses incurred by it in connection with such arbitration, except that the cost of the Arbitrating Accountants hereunder shall be borne equally by Parent and Purchaser. This provision for arbitration shall be specifically enforceable by the parties hereto. The decision of the Arbitrating Accountants or the Bankruptcy Court, as the case may be, in accordance with the provisions hereof shall be final and binding (absent manifest error), and there shall be no right of appeal therefrom. Parent shall keep the official committee of unsecured creditors appointed in the Bankruptcy Cases reasonably informed of activities arising under this Section 2.2(c) and shall provide counsel to such committee with copies of all correspondence and schedules delivered by the parties under this Section 2.2(c) . Upon the resolution of the dispute, the Purchase Price shall be adjusted based on the calculation

 

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of Closing Tangible Net Book Value as finally determined in accordance with this Section 2.2(c) , and Purchaser shall pay Parent (by wire transfer of immediately available funds to an account or accounts designated by Parent) any portion of the Purchase Price not already paid pursuant to Section 2.2(a) or Parent shall pay Purchaser (by wire transfer of immediately available funds to an account or accounts designated by Purchaser) any overpayment of Purchase Price previously paid by Purchaser, as the case may be.

ARTICLE III

THE CLOSING

Section 3.1 Closing . Subject to the terms and conditions of this Agreement, the closing (the “Closing”) of the transaction contemplated hereby shall take place at the offices of Cadwalader, Wickersham & Taft LLP, One World Financial Center, New York, New York or at such other place as the parties hereto may mutually agree, on a date mutually agreeable to Parent and Purchaser, following the satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that by their nature can be satisfied only at the Closing but subject to the fulfillment or waiver of those conditions), provided, that unless the parties shall mutually agree otherwise, the Closing shall take place within 30 days following the satisfaction of the condition set forth in Section 7.1(c) hereof. At the Closing, the appropriate parties shall take all actions required under Sections 3.2 and 3.3 and all other actions not previously taken but required to be taken hereunder at or prior to the Closing.

Section 3.2 Deliveries by Purchaser . (a) At the Closing, Purchaser shall deliver to Parent the following:

(i) the Purchase Price, in accordance with Section 2.2 ;

(ii) the certificate required to be delivered pursuant to Section 7.2(c) ;

(iii) an executed counterpart to the Escrow Agreement; and

(iv) all other previously undelivered documents and certificates required to be delivered by Purchaser to Parent at or prior to the Closing pursuant to this Agreement.

Section 3.3 Deliveries by Parent . (a) At the Closing, Parent shall deliver, or cause to be delivered, to Purchaser the following:

(i) certified copies of (A) the Sale Approval Order, which shall not have been modified or amended in a manner materially adverse to Purchaser that has not been agreed to in writing by Purchaser, and (B) all other Orders of the Bankruptcy Court pertaining to the transactions contemplated by this Agreement;

(ii) true, correct and complete copies of the articles of incorporation of Parent, including any amendments thereto, duly certified as of a recent date by the Secretary of State of Delaware;

 

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(iii) true, correct and complete copies of the charter of the Bank, and any amendments thereto, duly certified as of a recent date by the Office of Thrift Supervision;

(iv) true, correct and complete copies of the articles of incorporation of the Bank Subsidiary, including any amendments thereto, duly certified as of a recent date by the Secretary of State of Illinois;

(v) a certificate of good standing, dated as of a recent date, issued by the Secretary of State of Delaware, duly certifying as to the existence and good standing of Parent under the laws of the State of Delaware;

(vi) a certificate of good standing, dated as of a recent date, issued by the Office of Thrift Supervision, duly certifying as to the existence and good standing of the Bank under the laws of the United States;

(vii) a certificate of good standing, dated as of a recent date, issued by the Secretary of State of Illinois, duly certifying as to the existence and good standing of the Bank Subsidiary under the laws of the State of Illinois;

(viii) a letter, dated as of a recent date, from the Office of Thrift Supervision, to the effect that Parent is a registered thrift holding company under HOLA;

(ix) a certificate, dated as of a recent date, issued by the FDIC, duly certifying that the deposits of the Bank are insured by the FDIC under the Federal Deposit Insurance Act;

(x) the certificates required to be delivered pursuant to Section 7.3(c) ;

(xi) an executed counterpart to the Escrow Agreement;

(xii) stock certificates representing all of the issued and outstanding Shares, duly endorsed in blank (or accompanied by duly executed stock powers);

(xiii) a receipt for the Purchase Price;

(xiv) resignations, effective as of the Closing, of all directors of the Bank and the Bank Subsidiary, except for such persons as shall have been designated in writing prior to the Closing by Purchaser to Parent to remain in such positions immediately following the Closing;

(xv) Deposit release instructions; and

(xvi) all other previously undelivered documents and certificates required to be delivered by Parent to Purchaser at or prior to the Closing pursuant to this Agreement.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND BANK

Except as set forth in the Disclosure Schedule, Parent and Bank hereby represent and warrant to Purchaser that the statements contained in this Article IV are true and correct as of the date of this Agreement (or, if made as of a specified date, as of such date), and shall be true and correct as of the Closing Date as though made on the Closing Date.

Section 4.1 Authorization; Validity of Agreement; Parent Action . (a) Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Parent has the corporate power and authority (i) to execute and deliver this Agreement and each Ancillary Agreement to which Parent is or will be a party, (ii) to perform its obligations hereunder and thereunder (subject to entry and effectiveness of the Bidding Procedures Order), and (iii) to consummate the transactions contemplated hereby and thereby (subject to entry and effectiveness of the Sale Approval Order). The execution, delivery and performance of this Agreement by Parent and of each Ancillary Agreement to which Parent is or will be a party, and the consummation by Parent of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action on the part of Parent and no other corporate actions or proceedings on the part of Parent are necessary to authorize this Agreement, any Ancillary Agreement or any of the transactions contemplated hereby and thereby.

(a) This Agreement has been duly and validly executed and delivered by or on behalf of Parent and (assuming this Agreement constitutes a valid and binding obligation of Purchaser) constitutes the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except (i) as enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium and other Laws affecting the enforcement of creditors’ rights generally from time to time in effect and by general equitable principles relating to enforceability (the “Enforceability Exceptions”), (ii) that enforceability of the provisions hereof requiring consummation of the transactions contemplated hereby is subject to entry and effectiveness of the Sale Approval Order and (iii) that enforceability of all other provisions hereof is subject to entry and approval of the Bidding Procedures Order.

(b) Subject to entry and effectiveness of the Sale Approval Order, when required by this Agreement to be delivered to Purchaser, each Ancillary Agreement will be duly and validly executed and delivered by Parent, and upon such execution and delivery (assuming such Ancillary Agreement constitutes a valid and binding obligation of each other party thereto) will constitute the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its respective terms, subject to the Enforceability Exceptions.

Section 4.2 Organization and Good Standing of Bank .

(a) The Bank is a federal savings association organized, validly existing and in good standing under the laws of the United States of America and has all necessary power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as currently conducted. The Bank is not currently in conflict with, in default under or in violation of any provision of its charter documents. True and correct copies of the Bank’s charter documents as in effect on the date hereof, have been delivered or made available by Parent to Purchaser.

 

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(b) The Bank Subsidiary is duly organized and validly existing under the laws of its jurisdiction of incorporation or formation and has all necessary power and authority to own, operate or lease the properties and assets owned, operated or leased by such subsidiary and to carry on its business as currently conducted.

(c) Each of the Bank and the Bank Subsidiary is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required, except as has not had and would not reasonably be expected to have a Material Adverse Effect.

Section 4.3 Governmental Consents and Approvals; No Violations . Subject to the approval of the Bankruptcy Court, no Consent of, or declaration, filing or registration with, or notice to, any Government Entity is required to be obtained or made, as applicable, by Parent or the Bank in connection with the execution, delivery and performance of this Agreement or any Ancillary Agreement, or the consummation of the transactions contemplated by this Agreement or by any Ancillary Agreement, except for: (a) Consents of, and declarations, filings and registrations with, the Bankruptcy Court; (b) the Consent of the Office of Thrift Supervision to the change of domicile of the Bank and for any capital distributions by the Bank prior to Closing; (c) the Consent of the Federal Reserve and/or the Federal Deposit Insurance Corporation (as applicable) to the transfer of the Shares; and (d) Consents, declarations, filings and registrations the failure to have which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

Section 4.4 Noncontravention . Except as set forth on Schedule 4.4 , the execution, delivery and performance by Parent and the Bank of this Agreement, and the consummation of the transactions contemplated herein will not (a) violate, conflict with, or result in any breach of any of the terms, conditions or provisions of Parent’s, the Bank’s or the Bank Subsidiary’s respective Charter Documents, (b) violate any order, writ, judgment, injunction, decree, statute, law, rule or regulation of any Governmental Entity applicable to Parent, the Bank or the Bank Subsidiary or by which any portion of the Shares, or the Bank’s or the Bank Subsidiary’s properties or assets, is bound or subject, (c) result in the creation or imposition of any Lien upon the Shares or any properties or assets of the Bank or the Bank Subsidiary, or (d) conflict with, result in a breach of, constitute a default under, result in the acceleration of, result in a modification of the terms or conditions of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice, report or other filing (whether with a Governmental Authority or other third party) under any Material Contract or Permit, except in the case of subsections (b), (c) and (d) above, as has not had and would not reasonably be expected to have a Material Adverse Effect.

Section 4.5 Share Ownership .

(a) The amount of authorized, issued and outstanding capital stock of the Bank and the Bank Subsidiary are set forth on Schedule 4.5(a) . Parent is the sole direct beneficial and record owner of the Shares and the Shares constitute all issued and outstanding

 

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shares of the Bank’s capital stock. All of the Shares have been duly authorized, validly issued, fully paid and are nonassessable, except as provided by HOLA, and were not issued in violation of any preemptive or other similar rights. The Bank directly is the sole beneficial and record owner of all issued and outstanding capital stock of the Bank Subsidiary as indicated on Schedule 4.5(a) , which stock has been duly authorized, validly issued, fully paid and are nonassessable, and such ownership is free and clear of all Liens and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock and other equity interests). No shares of capital stock or other equity interests of the Bank Subsidiary have been issued in violation of any preemptive or similar rights of any past or present equityholder of the Bank Subsidiary. Other than as set forth on Schedule 4.5(a) , and the Bank’s ownership of the Bank Subsidiary, neither the Bank nor the Bank Subsidiary owns, directly or indirectly, any shares of capital stock or other equity or ownership interests in any other Person (collectively, “Third Party Interests”). Neither the Bank nor the Bank Subsidiary has any rights to, or is bound by any commitment or obligation to, acquire by any means, directly or indirectly, any Third Party Interests or to make any investment in, or contribution or advance to, any Person, including any Person in which it currently has a Third Party Interest.

(b) Except as set forth in Section 4.5(a) , there (i) are no securities of the Bank or the Bank Subsidiary convertible into, or exchangeable or exercisable for, or evidencing the right to subscribe for, directly or indirectly, shares of capital stock or other securities of the Bank or the Bank Subsidiary, (ii) is no option, warrant, call, preemptive right, subscription or other right, agreement, arrangement, understanding or commitment of any character, written or oral relating to the issued or unissued capital stock or other securities of the Bank or the Bank Subsidiary, obligating either the Bank or the Bank Subsidiary to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or other interest in either the Bank or the Bank Subsidiary, or securities convertible into or exchangeable or exercisable, directly or indirectly, for such shares or interests, or obligating either the Bank or the Bank Subsidiary to grant, extend or enter into any such option, warrant, call, subscription or other right, commitment, arrangement or agreement, (iii) are no voting trusts, proxies or other similar agreements or understandings to which the Bank, the Bank Subsidiary, or Parent are a party or by which the Bank, the Bank Subsidiary, or Parent is bound with respect to the voting of any shares of capital stock or other equity interests of the Bank or the Bank Subsidiary, (iv) are no contractual obligations or commitments to which the Bank, the Bank Subsidiary, or Parent is a party of any character restricting the transfer of, or requiring the registration for sale of, any capital stock or other interest or security of the Bank or the Bank Subsidiary, and (v) is no outstanding contractual obligation of the Bank or of the Bank Subsidiary to repurchase, redeem or otherwise acquire any capital stock or other interest or security of the Bank or an Affiliate of the Bank or the Bank Subsidiary or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in the Bank Subsidiary or any other Person, other than loans issued in the ordinary course of business. No securities of the Bank or the Bank Subsidiary were issued in violation or contravention of any securities laws or regulations.

Section 4.6 No Liens . Subject to entry and effectiveness of the Sale Approval Order, at the Closing, Parent shall transfer to Purchaser good, valid and legal title to the Shares, free and clear of all Liens and Liabilities. The Bank and Bank Subsidiary own all of their assets free and clear of all Liens, other than Permitted Liens.

 

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Section 4.7 Compliance with Laws; Permits .

(a) Except as set forth on Schedule 4.7 , the Bank is and has been since the Acquisition Date in compliance with all applicable Laws (including reporting, filing or similar requirements of all applicable Governmental Entities) in all material respects, and holds and is, and has been in compliance in all material respects with all material permits, concessions, grants, licenses, consents, orders, authorizations and approvals of all Governmental Entities used or necessary for the business and operations of the Bank as presently conducted (the “Permits”). Schedule 4.7 contains a complete list of all of the Bank’s and the Bank Subsidiary’s Permits. The Permits are valid and in full force and effect. Since the Acquisition Date, except as set forth on Schedule 4.7 , the Bank has not received any written notice or other written communication from any Governmental Entity or other Person (i) asserting any violation of, or failure to comply with, any requirement of any Permit or applicable Law or (ii) notification of the nonrenewal, revocation or withdrawal of any Permit. No loss or expiration of any Permit is pending or, to the Knowledge of Parent, threatened other than expiration in accordance with the terms thereof.

(b) Except as set forth on Schedule 4.7 , neither the Bank nor the Bank Subsidiary is or since the Acquisition Date has been a party to, any cease and desist order, consent order, assistance agreement, capital directive, supervisory agreement or other written agreement or memorandum of understanding with, or a party to any commitment letter or similar written undertaking to, or is subject to any order or directive by, or is a recipient of any extraordinary supervisory letter from any Governmental Entity in writing which places any restriction on the business of Bank or the Bank Subsidiary. None of the Parent, the Bank or the Bank Subsidiary has been advised by any Government Entity that it is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any cease and desist order, consent order, assistance agreement, supervisory agreement or other written agreement, memorandum of understanding, extraordinary supervisory letter, commitment letter or similar submission (each, an “Administrative Action”), and the Bank is under no obligation to submit a capital restoration plan. The Bank and the Bank Subsidiary, as applicable, are in material compliance with all terms of any Administrative Action that is disclosed on Schedule 4.7 .

(c) To the Knowledge of Parent, from January 1, 2004 to the Acquisition Date, the Bank was not in violation of applicable Laws in any material respect.

Section 4.8 Litigation; Proceedings . Except as set forth on Schedule 4.8 , there is no action, suit, inquiry, proceeding, audit or investigation by or before any court or governmental or other regulatory or administrative agency or commission or any arbitrator or mediator pending or threatened against or involving the Bank or the Bank Subsidiary, or which questions or challenges the validity of this Agreement or any action taken or to be taken by Parent or the Bank pursuant to this Agreement. Neither the Bank nor the Bank Subsidiary is subject to any judgment, order, injunction, decree or decision by any court or governmental or other regulatory or administrative agency or commission or any arbitrator or mediator which may have an adverse effect on its business practices or on its ability to conduct its business in any area.

Section 4.9 Financial Statements . (a) Attached to Schedule 4.9 , are the following:

(i) the audited consolidated balance sheet and income statement of the Bank for the year ended December 31, 2007 (the “2007 Audited Financial Statements”) and the audited consolidated balance sheet and income statement of the Bank for the year ended December 31, 2008 (the “2008 Audited Financial Statements,” and collectively with the 2007 Audited Financial Statements, the “Audited Financial Statements”); and

 

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(ii) the unaudited consolidated balance sheets and income statements of the Bank as of and for the two-month period ended February 28, 2009 (the “Unaudited Financial Statements”).

(b) The Audited Financial Statements and the Unaudited Financial Statements were prepared in accordance with GAAP and the Unaudited Financial Statements were prepared on a basis and using principles consistent with the preparation of the Audited Financial Statements. The Audited Financial Statements and the Unaudited Financial Statements fairly present, in all material respects, the assets and liabilities, results of operations, changes in stockholders’ equity and cash flows of the Bank as of the respective dates thereof and for the periods then ended. The Bank has calculated its allowance for loan losses in accordance with GAAP as applied to banking institutions and in accordance with all applicable rules and regulations.

(c) The Bank has previously made available to Purchaser its unaudited Thrift Financial Reports on OTS Form 1313 (the “TFRs”) that have been filed by the Bank with the Office of Thrift Supervision for the quarters ended March 31, 2008, June 31, 2008 and September 30, 2008 (collectively, the “2008 TFRs”). The 2008 TFRs have been prepared in all material respects in accordance with applicable regulatory accounting principles and practices throughout the periods covered by such statements.

(d) Except as set forth on Schedule 4.9 , neither the Bank nor the Bank Subsidiary has any Liabilities, except Liabilities that (i) have been incurred in the Ordinary Course of Business since the date of the 2008 Audited Financial Statements not in excess of $100,000, (ii) are accrued or reserved against in the Unaudited Financial Statements, or