Exhibit 1
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Fulton Financial Corp., Gloucester County Bankshares, Inc. to merge
LANCASTER, Pa. - Fulton Financial Corp. (Nasdaq: FULT) of Lancaster, Pa.,and
Gloucester County Bankshares, Inc. of Woodbury, N.J., signed a definitive
agreement today (Oct. 25) to merge through an approximately $32.8 million stock
transaction.
Under the agreement, announced jointly by Fulton Financial president and chief
executive officer Rufus A. Fulton, Jr. and Gloucester County Bankshares
president and chief executive officer Warner A. Knobe, Gloucester County
Bankshares will be merged into $3.3 billion Fulton Financial.
Gloucester County Bankshares' wholly-owned $192 million, five-branch
subsidiary, The Bank of Gloucester County, will become Fulton Financial's ninth
banking affiliate.
The Bank of Gloucester County will retain its name and autonomy.
Based on Tuesday's $21.75 closing Fulton Financial common stock bid price,
each share of Gloucester County Bankshares common stock outstanding at the time
of the merger will be exchanged for 1.555 shares of Fulton Financial stock with
a dollar value of $33.82.
The exchange ratio will be adjusted if the Fulton Financial common stock
closing bid price during a period designated in the merger agreement is between
$20 and $22 per share, with 1.53 the floor for a share price of $22 or more and
1.73 the ceiling for a share price of $20 or less.
Gloucester County Bankshares has 970,279 shares of common stock outstanding.
In relation to Fulton Financial's closing bid price Tuesday, the merger price
is approximately 2.3 times Gloucester County Bankshares' Sept. 30 book value of
$14.61 per share and 11.93 times its estimated 1995 earnings of $2.75 million.
The merger, Fulton Financial's first in New Jersey and third outside of
Pennsylvania, is subject to approval by bank regulatory authorities and
Gloucester County Bankshares shareholders and should close during the second
quarter of 1996.
"This merger continues Fulton Financial Corp.'s well-established philosophy of
moving into high-growth areas and buying high-performance banks with good asset
quality," said Fulton.
Fulton said the Gloucester merger would not dilute Fulton Financial's earnings
per share.
"We're excited about our affiliation with Fulton Financial because it allows
The Bank of Gloucester County to keep its autonomy and remain the leading
locally-run bank in the market," said Knobe. "Yet at the same time, with Fulton
Financial behind us, we'll now be able to offer to our customers the products,
services and lending capabilities of a large regional bank."
Thompson BankWatch recently recognized the safety and soundness of Fulton
Financial and its banks with an "A/B" rating, ranking the company among the
three highest-rated commercial bank holding companies in Pennsylvania.
The corporation's $1.6 billion Lancaster-based flagship, Fulton Bank, was
ranked in the July, 1995 issue of the American Bankers Association Banking
Journal as the 17th best in the country in terms of its five-year average return
on assets (ROA) of 1.53, a key industry measurement of a bank's profitability.
Fulton Bank was also named the "best bank in Pennsylvania" in the June, 1995
issue of Money magazine. That designation was likewise based on the bank's
safety and soundness as well as the variety and reasonable cost of the products
and services offered by the bank.
Once the merger is completed, Fulton Financial will have assets of
approximately $3.5 billion and operate 109 banking offices in Pennsylvania,
Delaware, Maryland and New Jersey through nine affiliates.
# # #
MERGER AGREEMENT
BY AND BETWEEN
GLOUCESTER COUNTY BANKSHARES, INC.
AND
FULTON FINANCIAL CORPORATION
TABLE OF CONTENTS
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Page
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ARTICLE I PLAN OF MERGER............................................... 1
Section 1.1 Plan of Merger......................................... 1
ARTICLE II CONVERSION OF SHARES AND
EXCHANGE OF STOCK CERTIFICATES.............................. 2
Section 2.1 Conversion of Shares................................... 2
(a) General................................................ 2
(b) Antidilution Provision................................. 2
(c) No Fractional Shares................................... 2
(d) Closing Market Price................................... 2
Section 2.2 Exchange of Stock Certificates......................... 3
(a) Exchange Agent......................................... 4
(b) Surrender of Certificates.............................. 4
(c) Dividend Withholding................................... 4
(d) Failure to Surrender Certificates...................... 4
(e) Expenses............................................... 5
Section 2.3 Treatment of Outstanding GCB Options................... 5
Section 2.4 Reservation of Shares.................................. 6
Section 2.5 Taking Necessary Action................................ 6
Section 2.6 Press Releases......................................... 6
Section 2.7 Reservation of Right to Revise Transaction............. 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF GCB........................ 6
Section 3.1 Authority.............................................. 6
Section 3.2 Organization and Standing.............................. 7
Section 3.3 Subsidiaries........................................... 7
Section 3.4 Capitalization......................................... 7
Section 3.5 Charter, Bylaws and Minute Books....................... 8
Section 3.6 Financial Statements................................... 9
Section 3.7 Absence of Undisclosed Liabilities..................... 9
Section 3.8 Absence of Changes..................................... 9
Section 3.9 Dividends, Distributions and Stock Purchases........... 9
Section 3.10 Taxes.................................................. 9
Section 3.11 Title to and Condition of Assets....................... 10
Section 3.12 Contracts.............................................. 11
Section 3.13 Litigation and Governmental Directives................. 11
Section 3.14 Compliance with Laws; Governmental Authorizations...... 12
Section 3.15 Insurance.............................................. 12
Section 3.16 Financial Institutions Bonds........................... 12
Section 3.17 Labor Relations and Employment Agreements.............. 12
Section 3.18 Employee Benefit Plans................................. 13
Section 3.19 Related Party Transactions............................. 13
Section 3.20 No Finder.............................................. 14
Section 3.21 Complete and Accurate Disclosure....................... 14
Section 3.22 Environmental Matters.................................. 15
Section 3.23 Proxy Statement/Prospectus............................. 15
Section 3.24 SEC Filings............................................ 16
Section 3.25 Reports................................................ 16
Section 3.26 Loan Portfolio of the TBGC............................. 16
Section 3.27 Investment Portfolio................................... 17
Section 3.28 Regulatory Examinations................................ 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FFC..................... 17
Section 4.1 Authority.............................................. 18
Section 4.2 Organization and Standing.............................. 18
Section 4.3 Capitalization......................................... 18
Section 4.4 Articles of Incorporation and Bylaws................... 18
Section 4.5 Subsidiaries........................................... 18
Section 4.6 Financial Statements................................... 19
Section 4.7 Absence of Undisclosed Liabilities..................... 19
Section 4.8 Absence of Changes..................................... 20
Section 4.9 Litigation and Governmental Directives................. 20
Section 4.10 Compliance with Laws; Governmental Authorizations...... 20
Section 4.11 Complete and Accurate Disclosure....................... 20
Section 4.12 Labor Relations........................................ 21
Section 4.13 Employee Benefits Plans................................ 21
Section 4.14 Environmental Matters.................................. 21
Section 4.15 SEC Filings............................................ 22
Section 4.16 Proxy Statement/Prospectus............................. 22
ARTICLE V COVENANTS OF GCB............................................. 22
Section 5.1 Conduct of Business.................................... 23
Section 5.2 Best Efforts........................................... 25
Section 5.3 Access to Properties and Records....................... 25
Section 5.4 Subsequent Financial Statements........................ 25
Section 5.5 Update Schedules....................................... 25
Section 5.6 Notice................................................. 25
Section 5.7 Other Proposals........................................ 26
Section 5.8 Affiliate Letters...................................... 26
Section 5.9 No Purchases or Sales of FFC Common Stock
During Price Determination Period...................... 26
Section 5.10 Accounting Treatment................................... 27
Section 5.11 Dividends.............................................. 27
Section 5.12 Agreements with Senior Employees....................... 27
ARTICLE VI COVENANTS OF FFC............................................. 27
Section 6.1 Best Efforts........................................... 27
(a) Applications for Regulatory Approval................... 28
(b) Registration Statement................................. 28
(c) State Securities Laws.................................. 28
(d) Stock Listing.......................................... 28
Section 6.2 Access to Properties and Records....................... 28
Section 6.3 Subsequent Financial Statements........................ 29
Section 6.4 Update Schedule........................................ 29
Section 6.5 Notice................................................. 29
Section 6.6 Employment Arrangements................................ 29
Section 6.7 No Purchase or Sales of FFC Common Stock
During Price Determination Period...................... 30
Section 6.8 Appointment of FFC Director............................ 30
Section 6.9 Continuation of TBGC's Structure, Name and Directors... 30
ARTICLE VII CONDITIONS PRECEDENT......................................... 31
Section 7.1 Common Conditions...................................... 31
(a) Stockholder Approval................................... 31
(b) Regulatory Approvals................................... 31
(c) Stock Listing.......................................... 32
(d) Tax Opinion............................................ 32
(e) Registration Statement................................. 33
(f) No Suits............................................... 33
Section 7.2 Conditions Precedent to Obligations of FFC............. 33
(a) Accuracy of Representations and Warranties............. 34
(b) Covenants Performed.................................... 34
(c) Opinion of Counsel for GCB............................. 34
(d) Affiliate Agreements................................... 34
(e) GCB Options............................................ 34
(f) Financial Confirmation................................. 34
(g) Accounting Treatment................................... 35
(h) Federal and State Securities and Antitrust Laws........ 35
(i) Dissenting Shareholders................................ 35
(j) Environmental Matters.................................. 35
(k) Non-Compete Agreements................................. 36
(l) Closing Documents...................................... 36
Section 7.3 Conditions Precedent to the Obligations of GCB......... 36
(a) Accuracy of Representations and Warranties............. 36
(b) Covenants Performed.................................... 36
(c) Opinion of Counsel for FFC............................. 36
(d) FFC Options............................................ 37
(e) Fairness Opinion....................................... 37
(f) Closing Documents...................................... 37
(g) Financial Confirmation................................. 37
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER............................ 38
Section 8.1 Termination............................................ 38
(a) Mutual Consent......................................... 38
(b) Unilateral Action by FFC............................... 38
(c) Unilateral Action By GCB............................... 38
Section 8.2 Effect of Termination.................................. 38
(a) Effect................................................. 38
(b) Limited Liability...................................... 38
(c) Confidentiality........................................ 39
Section 8.3 Amendment.............................................. 39
Section 8.4 Waiver................................................. 39
ARTICLE IX RIGHTS OF DISSENTING SHAREHOLDERS OF GCB..................... 39
Section 9.1 Rights of Dissenting Shareholders of GCB............... 39
ARTICLE X CLOSING AND EFFECTIVE DATE................................... 40
Section 10.1 Closing................................................ 40
Section 10.2 Effective Date......................................... 40
ARTICLE XI NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES................ 40
Section 11.1 No Survival............................................ 40
ARTICLE XII GENERAL PROVISIONS........................................... 40
Section 12.1 Expenses............................................... 40
Section 12.2 Other Mergers and Acquisitions......................... 41
Section 12.3 Notices................................................ 41
Section 12.4 Counterparts........................................... 42
Section 12.5 Governing Law.......................................... 42
Section 12.6 Parties in Interest.................................... 42
Section 12.7 Entire Agreement....................................... 42
Section 12.8 Materiality Standard................................... 42
MERGER AGREEMENT
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Merger Agreement made as of the 25th day of October, 1995, by and between
FULTON FINANCIAL CORPORATION, a Pennsylvania business corporation having its
administrative headquarters at One Penn Square, P. O. Box 4887, Lancaster,
Pennsylvania 17604 ("FFC"), and GLOUCESTER COUNTY BANKSHARES, INC., a New Jersey
business corporation having its administrative headquarters at 1100 Old
Broadway, Woodbury, New Jersey 08096 ("GCB").
Background:
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FFC is a Pennsylvania bank holding company. GCB is a New Jersey bank holding
company. FFC wishes to acquire GCB, and GCB wishes to merge with and into FFC.
Subject to the terms and conditions of this Agreement, the foregoing transaction
will be accomplished by means of a merger (the "Merger") in which (i) GCB will
be merged with and into FFC, (ii) FFC will survive the Merger, and (iii) all of
the outstanding shares of the common stock of GCB, par value $5.00 per share
("GCB Common Stock"), will be converted into shares of the common stock of FFC,
par value $2.50 per share ("FFC Common Stock"). In addition, The Bank of
Gloucester County ("TBGC"), a New Jersey bank which is a wholly-owned subsidiary
of GCB, will become a wholly-owned subsidiary of FFC as a result of the Merger.
Simultaneously with the execution of this Agreement, the parties are entering
into a Warrant Agreement of even date herewith in the form of Exhibit A attached
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hereto (the "Warrant Agreement"), which provides for the delivery by GCB of a
warrant in the form of Exhibit B attached hereto (the "Warrant") entitling FFC
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to purchase shares of the GCB Common Stock in certain circumstances.
WITNESSETH:
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NOW, THEREFORE, in consideration of the mutual covenants contained herein and
intending to be legally bound, the parties hereby agree as follows:
ARTICLE I
PLAN OF MERGER
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Section 1.1 Plan of Merger. Subject to the terms and conditions of this
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Agreement, GCB shall merge with and into FFC in accordance with the Plan of
Merger in the form of Exhibit C attached hereto.
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ARTICLE II
CONVERSION OF SHARES AND
EXCHANGE OF STOCK CERTIFICATES
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Section 2.1 Conversion of Shares. On the Effective Date (as defined in
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Section 10.2 herein) the shares of GCB Common Stock then outstanding shall be
converted into shares of FFC Common Stock, as follows:
(a) General: Subject to the provisions of Sections 2.1(b), 2.1(c) and
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2.1(d) herein, each share of GCB Common Stock issued and outstanding immediately
before the Effective Date shall, on the Effective Date, be converted into and
become, without any action on the part of the holder thereof, the number (such
number, as it may be adjusted under Section 2.1(b) herein, the "Conversion
Ratio") of shares of FFC Common Stock, based on the Closing Market Price (as
such term is defined in Section 2.1(d) herein), as set forth below:
Conversion
Closing Market Price Ratio
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$20.000 and below 1.730
$20.125 1.718
$20.250 1.705
$20.375 1.693
$20.500 1.680
$20.625 1.668
$20.750 1.655
$20.875 1.642
$21.000 1.630
$21.125 1.617
$21.250 1.605
$21.375 1.592
$21.500 1.580
$21.625 1.567
$21.750 1.555
$21.875 1.542
$22.000 and above 1.530
(b) Antidilution Provision: In the event that FFC shall at any time
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before the Effective Date: (i) issue a dividend in shares of FFC Common Stock,
(ii) combine the outstanding shares of FFC Common Stock into a smaller number of
shares, or (iii) subdivide the outstanding shares of FFC Common Stock into a
2
greater number of shares, then the Conversion Ratio shall be proportionately
adjusted (calculated to two decimal places), so that each GCB stockholder shall
receive on the Effective Date, in exchange for his shares of GCB Common Stock,
the number of shares of FFC Common Stock as would then have been owned by him if
the Effective Date had occurred before the record date of such event. (For
example, if FFC were to declare a ten percent (10%) stock dividend after the
date of this Agreement, if the record date for that stock dividend were to occur
before the Effective Date and if the Closing Market Price is $20.00 or below,
the Conversion Ratio would be adjusted from 1.73 shares to 1.90 shares).
(c) No Fractional Shares: No fractional shares of FFC Common Stock
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shall be issued in connection with the Merger. In lieu of the issuance of any
fractional share to which he would otherwise be entitled, each former
stockholder of GCB shall receive in cash an amount equal to the fair market
value of his fractional interest, which fair market value shall be determined by
multiplying such fraction by the Closing Market Price (as defined in Section
2.1(d) herein).
(d) Closing Market Price: For purposes of this Agreement, the Closing
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Market Price shall be the average of the average of the per share closing bid
prices for FFC Common Stock, rounded up to the nearest $.125, for the ten (10)
trading days immediately preceding the date which is two (2) business days
before the Effective Date, as reported on the National Market System of the
National Association of Securities Dealers Automated Quotation System (NASDAQ),
the foregoing period of ten (10) trading days being hereinafter sometimes
referred to as the "Price Determination Period." (For example, if March 31,
1996 were to be the Effective Date, then the Price Determination Period would be
March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 1996.) In the event that
NASDAQ shall fail to report a closing bid price for FFC Common Stock for any
trading day during the Price Determination Period, the closing bid prices for
that day shall be equal to the average of the closing bid prices and the average
of the closing asked prices as quoted: (i) by F. J. Morrissey & Company, Inc.
and by Ryan, Beck & Co.; or, (ii) in the event that both of these firms are not
then making a market in FFC Common Stock, by two brokerage firms then making a
market in FFC Common Stock to be selected by FFC and approved by GCB.
Section 2.2 Exchange of Stock Certificates. GCB Common Stock certificates
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shall be exchanged for FFC Common Stock certificates in accordance with the
following procedures:
3
(a) Exchange Agent: The transfer agent of FFC shall act as exchange
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agent (the "Exchange Agent") to receive GCB Common Stock certificates from the
holders thereof and to exchange such stock certificates for FFC Common Stock
certificates and (if applicable) to pay cash for fractional shares of GCB Common
Stock pursuant to Section 2.1(c) herein. The Exchange Agent shall, on or
promptly after the Effective Date, mail to each former stockholder of GCB a
notice specifying the procedures to be followed in surrendering such
stockholder's GCB Common Stock certificates.
(b) Surrender of Certificates: As promptly as possible after receipt of
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the Exchange Agent's notice, each former stockholder of GCB shall surrender his
GCB Common Stock certificates to the Exchange Agent; provided, that if any
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former stockholder of GCB shall be unable to surrender his GCB Common Stock
certificates due to loss or mutilation thereof, he may make a constructive
surrender by following procedures comparable to those customarily used by FFC
for issuing replacement certificates to FFC shareholders whose FFC Common Stock
certificates have been lost or mutilated. Upon receiving a proper actual or
constructive surrender of GCB Common Stock certificates from a former GCB
stockholder, the Exchange Agent shall issue to such stockholder, in exchange
therefor, an FFC Common Stock certificate representing the whole number of
shares of FFC Common Stock into which such stockholder's shares of GCB Common
Stock have been converted in accordance with this Article II, together with a
check in the amount of any cash to which such stockholder is entitled, pursuant
to Section 2.1(c) herein, in lieu of the issuance of a fractional share.
(c) Dividend Withholding: Dividends, if any, payable by FFC after the
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Effective Date to any former stockholder of GCB who has not prior to the payment
date surrendered his GCB Common Stock certificates may, at the option of FFC, be
withheld. Any dividends so withheld shall be paid, without interest, to such
former stockholder of GCB upon proper surrender of his GCB Common Stock
certificates.
(d) Failure to Surrender Certificates: All GCB Common Stock
---------------------------------
certificates must be surrendered to the Exchange Agent within two (2) years
after the Effective Date. In the event that any former stockholder of GCB shall
not have properly surrendered his GCB Common Stock certificates within two (2)
years after the Effective Date, the shares of FFC Common Stock that would
otherwise have been issued to him may, at the option of FFC, be sold and the net
proceeds of such sale, together with the cash (if any) to which he is entitled
in lieu of the issuance of a fractional share and any previously accrued
dividends, shall be held by the Exchange Agent in a noninterest bearing account
for his benefit. From and after any such sale, the sole right of such former
stockholder of GCB shall be the right to collect such net proceeds, cash and
accumulated dividends. Subject to all
4
applicable laws of escheat, such net proceeds, cash and accumulated dividends
shall be paid to such former stockholder of GCB, without interest, upon proper
surrender of his GCB Common Stock certificates.
(e) Expenses: All costs and expenses associated with the foregoing
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surrender and exchange procedure shall be borne by FFC.
Section 2.3 Treatment of Outstanding GCB Options.
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(a) Each holder of an option (collectively, "GCB Options") to purchase
shares of GCB Common Stock that is outstanding on the Effective Date and has
been granted pursuant to the GCB 1992 Stock Option Plan (the "GCB Stock Option
Plan") shall be entitled to receive, in cancellation of such GCB Option, an
option to acquire shares of FFC Common Stock on the terms set forth below (an
"FFC Stock Option").
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(b) An FFC Stock Option shall be a stock option to acquire shares of FFC
Common Stock with the following terms: (i) the number of shares of FFC Common
Stock which may be acquired pursuant to such FFC Stock Option shall be equal to
the product of the number of shares of GCB Common Stock covered by the GCB
Option multiplied by the Conversion Ratio, provided that any fractional share of
FFC Common Stock resulting from such multiplication shall be rounded to the
nearest whole share; and (ii) the exercise price per share of FFC Common Stock
shall be equal to the exercise price per share of GCB Common Stock of such GCB
Option, divided by the Conversion Ratio, provided that such exercise price shall
be rounded to the nearest whole cent; (iii) the duration and other terms of such
GCB Option shall be unchanged except that all references to GCB shall be deemed
references to FFC, and that each such FFC Stock Option shall be exercisable at
least until the stated expiration date of the corresponding GCB Option; (iv) FFC
shall assume such stock option as contemplated by Section 424(a) of the Internal
Revenue Code of 1986, as amended (the "Code"); and (v) to the extent GCB Options
qualify as incentive stock options under Section 422 of the Code, the FFC
Options exchanged therefor shall also so qualify. Subject to the foregoing, the
GCB Stock Option Plan and all options or other rights to acquire GCB Common
Stock issued thereunder shall terminate on the Effective Date.
(c) FFC shall not issue or pay for any fractional shares otherwise
issuable upon exercise of a FFC Stock Option. Prior to the Effective Time of
Merger, FFC shall reserve for issuance (and, if not previously registered
pursuant to the Securities Act of 1933, as amended (the "Securities Act"),
--------------
register the number of shares of FFC Common Stock necessary to satisfy FFC's
obligations with
5
respect to the issuance of FFC Common Stock pursuant to the exercise of FFC
Stock Options.
(d) As of the Effective Time of Merger, FFC shall receive agreements
from each holder of a GCB Option, pursuant to which each such holder agrees to
accept such FFC Options in exchange for the cancellation of such GCB Options on
the Effective Date.
Section 2.4 Reservation of Shares. FFC agrees that (i) prior to the Effective
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Date it will take appropriate action to reserve a sufficient number of
authorized but unissued shares of FFC Common Stock to be issued in accordance
with this Agreement, and (ii) on the Effective Date, FFC will issue shares of
FFC Common Stock to the extent set forth in, and in accordance with, this
Agreement.
Section 2.5 Taking Necessary Action. FFC and GCB shall take all such actions
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as may be reasonably necessary or appropriate in order to effectuate the
transactions contemplated hereby including, without limitation, providing
information necessary for preparation of any filings needed to obtain the
regulatory approvals required to consummate the Merger. In case at any time
after the Effective Date any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest FFC with full title to all
properties, assets, rights, approvals, immunities and franchises of GCB, the
officers and directors of GCB, at the expense of FFC, shall take all such
necessary action.
Section 2.6 Press Releases. FFC and GCB agree that all press releases or
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other public communications relating to this Agreement or the transactions
contemplated hereby will require consultation among FFC and GCB, unless counsel
has advised any such party that such release or other public communication must
immediately be issued and the issuing party has not been able, despite its good
faith efforts, to effect such consultation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF GCB
------------------------------
GCB represents and warrants to FFC, as of the date of this Agreement and as of
the date of the Closing (as defined in Section 10.1 herein), as follows:
Section 3.1 Authority. The execution and delivery of this Agreement, the
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Warrant Agreement and the Warrant and the performance of the transactions
6
contemplated herein and therein have been authorized by the Board of Directors
of GCB and, except for the approval of this Agreement by its stockholders, GCB
has taken all corporate action necessary on its part to authorize this
Agreement, the Warrant Agreement and the Warrant and the performance of the
transactions contemplated herein and therein. This Agreement, the Warrant
Agreement and the Warrant have been duly executed and delivered by GCB and,
assuming due authorization, execution and delivery by FFC, constitute valid and
binding obligations of GCB. The execution, delivery and performance of this
Agreement, the Warrant Agreement and the Warrant will not constitute a violation
or breach of or default under (i) the Certificate of Incorporation or Bylaws of
GCB, (ii) the Certificate of Incorporation or Bylaws of TBGC, (iii) any statute,
rule, regulation, order, decree or directive of any governmental authority or
court applicable to GCB or TBGC, or (iv) any agreement, contract, memorandum of
understanding, indenture or other instrument to which GCB or TBGC is a party or
by which GCB or TBGC or any of their properties are bound.
Section 3.2 Organization and Standing. GCB is a business corporation that is
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duly organized, validly existing and in good standing under the laws of the
State of New Jersey. GCB is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"), and has full power and
lawful authority to own and hold its properties and to carry on its business as
presently conducted. TBGC is a bank that is duly organized, validly existing
and in good standing under the laws of the State of New Jersey. TBGC is an
insured bank under the provisions of the Federal Deposit Insurance Act, as
amended (the "FDI Act"), and is not a member of the Federal Reserve System.
TBGC has full power and lawful authority to own and hold its properties and to
carry on its business as presently conducted. TBGC Investment Corp. ("TBGC
Investment") is a business corporation that is duly organized, validly existing
and in good standing of the laws of the State of Delaware. TBGC Investment has
full power and lawful authority to own and hold its properties and to carry on
its business as presently conducted.
Section 3.3 Subsidiaries. TBGC is a wholly-owned direct subsidiary of GCB.
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TBGC Investment is a wholly-owned direct subsidiary of TBGC. Except for TBGC
and TBGC Investment, GCB owns no subsidiaries, directly or indirectly.
Section 3.4 Capitalization. The authorized capital of GCB consists
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exclusively of 5,000,000 shares of GCB Common Stock, of which 970,279 shares are
validly issued, outstanding, fully paid and non-assessable, and no shares are
held as treasury shares. In addition, 136,001 shares of GCB Common Stock are
reserved for issuance upon the exercise of Stock Options granted under GCB's
Stock Option Plan and 241,056 shares of GCB Common Stock are reserved for
7
issuance upon exercise of the Warrant. Except for the GCB Options and the
Warrant, there are no outstanding obligations, options or rights of any kind
entitling other persons to acquire shares of GCB Common Stock and there are no
outstanding securities or other instruments of any kind that are convertible
into shares of GCB Common Stock. The authorized capital of TBGC consists
exclusively of 1,000,000 shares of common stock, par value $5.00 per share (the
"TBGC Common Stock"), of which 840,033 shares are validly issued, outstanding,
fully paid and non-assessable, and no shares are held as treasury shares. All
outstanding shares of TBGC Common Stock are owned beneficially and of record by
GCB. There are no outstanding obligations, options or rights of any kind
entitling other persons to acquire shares of TBGC Common Stock, and there are no
outstanding securities or instruments of any kind that are convertible into
shares of TBGC Common Stock. The authorized capital of TBGC Investment consists
exclusively of 1,000 shares of common stock, par value $1.00 per share (the
"TBGC Investment Common Stock"), of which 100 shares are validly issued,
outstanding, fully paid and non-assessable, and no shares are held as treasury
shares. All outstanding shares of TBGC Investment Common Stock are owned
beneficially and of record by TBGC. There are no outstanding obligations,
options or rights of any kind entitling other persons to acquire shares of TBGC
Investment Common Stock, and there are no outstanding securities or instruments
of any kind that are convertible into shares of TBGC Investment Common Stock.
Section 3.5 Charter, Bylaws and Minute Books. The copies of the Certificate
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of Incorporation and Bylaws of GCB, TBGC and TBGC Investment that have been
delivered to FFC are true, correct and complete. Except as previously disclosed
to FFC in writing, the minute books of GCB, TBGC and TBGC Investment that have
been made available to FFC for inspection are true, correct and complete in all
respects and accurately record the actions taken by the Boards of Directors and
stockholders of GCB, TBGC and TBGC Investment at the meetings documented in such
minutes.
Section 3.6 Financial Statements. GCB and TBGC have delivered to FFC the
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following financial statements: (i) Consolidated Balance Sheets for GCB at
December 1994 and 1993 and Consolidated Statements of Income, Consolidated
Statements of Changes in Shareholders' Equity, and Consolidated Statements of
Cash Flows of GCB for the years ended December 31, 1994, 1993 and 1992,
certified by Grant Thornton LLP, and set forth in the 1994 Annual Report to
GCB's stockholders; and (ii) a Consolidated Statement of Condition of GCB at
June 30, 1995 and Consolidated Statements of Income, Consolidated Statements of
Changes in Shareholders' Equity and Consolidated Statements of Cash Flows of GCB
for the six-month period ended June 30, 1995, as filed with the Securities and
Exchange Commission (the "SEC") in a Quarterly Report on Form 10-Q (the
8
aforementioned Consolidated Statement of Condition as of June 30, 1995 being
hereinafter referred to as the "GCB Balance Sheet"). Each of the foregoing
financial statements fairly present the consolidated financial condition, assets
and liabilities, and results of operations of GCB, TBGC and TBGC Investment at
their respective dates and for the respective periods then ended and has been
prepared in accordance with generally accepted accounting principles
consistently applied, except as otherwise noted in a footnote thereto and
subject, in the case of the interim financial statements contained in GCB's
above-mentioned Quarterly Report, to normal recurring year-end adjustments,
which are not material in any case or in the aggregate.
Section 3.7 Absence of Undisclosed Liabilities. Except as disclosed in
----------- ----------------------------------
Schedule 3.7, or as reflected, noted or adequately reserved against in the GCB
- - ------------
Balance Sheet, as at June 30, 1995, GCB had no consolidated liabilities (whether
accrued, absolute, contingent or otherwise) which were required to be reflected,
noted or reserved against in the GCB Balance Sheet under generally accepted
accounting principles or which were in any case or in the aggregate material.
Except as disclosed in Schedule 3.7, GCB, TBGC and TBGC Investment have not
------------
incurred, since June 30, 1995, any such liability, other than liabilities of the
same nature as those set forth in the GCB Balance Sheet, all of which have been
reasonably incurred in the Ordinary Course of Business. For purposes of this
Agreement, the term "Ordinary Course of Business" shall mean the ordinary course
of business consistent with GCB's, TBGC's and TBGC Investment's customary
business practices.
Section 3.8 Absence of Changes. Since June 30, 1995, GCB, TBGC and TBGC
----------- ------------------
Investment have each conducted their businesses in the Ordinary Course of
Business and, except as disclosed in Schedule 3.8, neither GCB, BGC nor TBGC
------------
Investment has undergone any changes in its condition (financial or otherwise),
assets, liabilities, business or operations, other than changes in the Ordinary
Course of Business, which have not been, in the aggregate, materially adverse as
to GCB, TBGC and TBGC Investment.
Section 3.9 Dividends, Distributions and Stock Purchases. Except as disclosed
----------- --------------------------------------------
in Schedule 3.9, since January 1, 1995, GCB has not declared, set aside, made or
------------
paid any dividend or other distribution in respect of the GCB Common Stock, or
purchased, issued or sold any shares of GCB Common Stock, TBGC Common Stock or
TBGC Investment Common Stock.
Section 3.10 Taxes. GCB, TBGC and TBGC Investment have filed all federal,
------------ -----
state, county, municipal and foreign tax returns, reports and declarations which
are required to be filed by them or either of them as of June 30, 1995. Except
as
9
disclosed in Schedule 3.10: (i) GCB, TBGC and TBGC Investment have paid all
-------------
taxes, penalties and interest which have become due pursuant thereto or which
became due pursuant to federal, state, county, municipal or foreign tax laws
applicable to the periods covered by the foregoing tax returns, (ii) neither
GCB, TBGC nor TBGC Investment has received any notice of deficiency or
assessment of additional taxes, and no tax audits are in process; and (iii) the
Internal Revenue Service (the "IRS") has not commenced or given notice of an
intention to commence any examination or audit of the federal income tax returns
of GCB for any year through and including the year ended December 31, 1994.
Except as disclosed in Schedule 3.10, neither GCB, TBGC nor TBGC Investment has
-------------
granted any waiver of any statute of limitations or otherwise agreed to any
extension of a period for the assessment of any federal, state, county,
municipal or foreign income tax. Except as disclosed in Schedule 3.10, the
-------------
accruals and reserves reflected in the GCB Balance Sheet are adequate to cover
all taxes (including interest and penalties, if any, thereon) that are payable
or accrued as a result of GCB's consolidated operations for all periods prior to
the date of such Balance Sheet.
Section 3.11 Title to and Condition of Assets. Except as disclosed in
------------ --------------------------------
Schedule 3.11; GCB or its subsidiaries have good and marketable title to all
- - -------------
consolidated real and personal properties and assets reflected in the GCB
Balance Sheet or acquired subsequent to June 30, 1995 (other than property and
assets disposed of in the Ordinary Course of Business), free and clear of all
liens or encumbrances of any kind whatsoever; provided, however, that the
-------- -------
representations and warranties contained in this sentence do not cover liens or
encumbrances that: (i) are reflected in the GCB Balance Sheet or in Schedule
--------
3.11; (ii) represent liens of current taxes not yet due or which, if due, may be
- - ----
paid without penalty, or which are being contested in good faith by appropriate
proceedings; and (iii) represent such imperfections of title, liens,
encumbrances, zoning requirements and easements, if any, as are not substantial
in character, amount or extent and do not materially detract from the value, or
interfere with the present or proposed use, of the properties and assets subject
thereto. The structures and other improvements to real estate, furniture,
fixtures and equipment reflected in the GCB Balance Sheet or acquired subsequent
to June 30, 1995: (A) are in good operating condition and repair (ordinary wear
and tear excepted), and (B) comply in all material respects with all applicable
laws, ordinances and regulations, including without limitation all building
codes, zoning ordinances and other similar laws, except where any noncompliance
would not materially detract from the value, or interfere with the present or
proposed use, of such structures, improvements, furniture, fixtures and
equipment. GCB, TBGC and TBGC Investment own or have the right to use all real
and personal properties and assets
10
that are material to the conduct of their respective businesses as presently
conducted.
Section 3.12 Contracts. Each written or oral contract entered into by GCB,
------------ ---------
TBGC or TBGC Investment (other than contracts with customers reasonably entered
into by GCB, TBGC or TBGC Investment in the Ordinary Course of Business) which
involves aggregate payments or receipts in excess of $100,000 per year,
including without limitation every employment contract, employee benefit plan,
agreement, lease, license, indenture, mortgage and other commitment to which
either GCB, TBGC or TBGC Investment is a party or by which GCB, TBGC or TBGC
Investment or any of their properties may be bound (collectively referred to
herein as "Material Contracts") is identified in Schedule 3.12. Except as
-------------
disclosed in Schedule 3.12, all Material Contracts are valid and in full force
-------------
and effect, and all parties thereto have in all material respects performed all
obligations required to be performed by them to date and are not in default in
any material respect. Schedule 3.12 identifies all Material Contracts which
-------------
require the consent or approval of third parties to the execution and delivery
of this Agreement or to the consummation of the transactions contemplated
herein.
Section 3.13 Litigation and Governmental Directives. Except as disclosed in
------------ --------------------------------------
Schedule 3.13, (i) there is no litigation, investigation or proceeding pending,
- - -------------
or to the knowledge of GCB, TBGC or TBGC Investment threatened, that involves
GCB, TBGC or TBGC Investment or any of their properties and that, if determined
adversely, would materially and adversely affect the condition (financial or
otherwise), assets, liabilities, business, operations or future prospects of
GCB, TBGC or TBGC Investment; (ii) there are no outstanding orders, writs,
injunctions, judgments, decrees, regulations, directives, consent agreements or
memoranda of understanding issued by any federal, state or local court or
governmental authority or arbitration tribunal issued against or with the
consent of GCB, TBGC or TBGC Investment that materially and adversely affect the
condition (financial or otherwise), assets, liabilities, business, operations or
future prospects of GCB, TBGC or TBGC Investment or that in any manner restrict
the right of GCB, TBGC or TBGC Investment to carry on their business as
presently conducted taken as a whole; and (iii) neither GCB, TBGC or TBGC
Investment is aware of any fact or condition presently existing that might give
rise to any litigation, investigation or proceeding which, if determined
adversely to either GCB, TBGC or TBGC Investment, would materially and adversely
affect the consolidated condition (financial or otherwise), assets, liabilities,
business, operations or future prospects of GCB, TBGC or TBGC Investment or
would restrict in any manner the right of GCB, TBGC or TBGC Investment to carry
on its business as presently conducted taken as a whole. All litigation (except
for bankruptcy proceedings in which GCB, TBGC or TBGC Investment have filed
proofs of claim) in which GCB, TBGC or
11
TBGC Investment is involved as a plaintiff (other than routine collection and
foreclosure suits initiated in the Ordinary Course of Business in which the
amount sought to be recovered is less than $25,000) is identified in
Schedule 3.13.
- - -------------
Section 3.14 Compliance with Laws; Governmental Authorizations. Except as
------------ ---------------------------------- --------------
disclosed in Schedule 3.14 or where noncompliance would not have a material and
-------------
adverse effect upon the condition (financial or otherwise), assets, liabilities,
business, operations or future prospects of GCB, TBGC or TBGC Investment: (i)
GCB, TBGC and TBGC Investment are in compliance with all statutes, laws,
ordinances, rules, regulations, judgments, orders, decrees, directives, consent
agreements, memoranda of understanding, permits, concessions, grants,
franchises, licenses, and other governmental authorizations or approvals
applicable to GCB, TBGC or TBGC Investment or to any of their properties; and
(ii) all permits, concessions, grants, franchises, licenses and other
governmental authorizations and approvals necessary for the conduct of the
business of GCB, TBGC or TBGC Investment as presently conducted have been duly
obtained and are in full force and effect, and there are no proceedings pending
or threatened which may result in the revocation, cancellation, suspension or
materially adverse modification of any thereof.
Section 3.15 Insurance. All policies of insurance relating to GCB's, TBGC's
------------ ---------
and TBGC Investment's operations (except for title insurance policies),
including without limitation all financial institutions bonds, held by or on
behalf of GCB, TBGC or TBGC Investment are listed in Schedule 3.15. All such
-------------
policies of insurance are in full force and effect, and no notices of
cancellation have been received in connection therewith.
Section 3.16 Financial Institutions Bonds. Since September 11, 1989, TBGC has
------------ ----------------------------
continuously maintained in full force and effect one or more financial
institutions bonds listed in Schedule 3.16 insuring TBGC against acts of
-------------
dishonesty by each of its employees. No claim has been made under any such bond
and TBGC is not aware of any fact or condition presently existing which might
form the basis of a claim under any such bond. TBGC has no reason to believe
that its present financial institutions bond or bonds will not be renewed by its
carrier on substantially the same terms as those now in effect.
Section 3.17 Labor Relations and Employment Agreements. Neither GCB, TBGC nor
------------ -----------------------------------------
TBGC Investment is a party to or bound by any collective bargaining agreement.
GCB, TBGC and TBGC Investment enjoy good working relationships with their
employees, and there are no labor disputes pending, or to the knowledge of GCB,
TBGC or TBGC Investment threatened, that might materially and adversely affect
the condition (financial or otherwise), assets, liabilities, business or
12
operations of GCB, TBGC or TBGC Investment. Except as disclosed in Schedule
--------
3.17, neither GCB, TBGC nor TBGC Investment has any employment contract,
- - ----
severance agreement, deferred compensation agreement, consulting agreement or
similar obligation (an "Employment Obligation") with any director, officer,
employee, agent or consultant, and all such persons are serving at the will and
pleasure of GCB, TBGC or TBGC Investment, as the case may be. Except as
disclosed in Schedule 3.17 or pursuant to a Severance Agreement permitted under
-------------
Sections 5.1(xv) and 5.12 herein, as of the Effective Date (as defined in
Section 10.2 herein), neither GCB, TBGC nor TBGC Investment will have any
liability for employee termination rights arising out of any Employment
Obligation.
Section 3.18 Employee Benefit Plans. All employee benefit plans, contracts or
------------ ----------------------
arrangements to which GCB, TBGC or TBGC Investment is a party or by which GCB,
TBGC or TBGC Investment is bound, including without limitation all pension,
retirement, deferred compensation, incentive, bonus, profit sharing, stock
purchase, stock option, life insurance, death or survivor's benefit, health
insurance, sickness, disability, medical, surgical, hospital, severance, layoff
or vacation plans, contracts or arrangements, are identified in Schedule 3.18.
-------------
GCB's contributory defined contribution plan (the "GCB 401(k) Plan") is exempt
from tax under Sections 401 and 501 of the Code, has been maintained and
operated in material compliance with all applicable provisions of the Code and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). No
"prohibited transaction" (as such term is defined in the Code or in ERISA) has
occurred in respect of the GCB 401(k) Plan or any other employee benefit plan,
including without limitation GCB's Executive Incentive Plan, Loan Pool
Incentive Plan and Branch Manager Incentive Plans (all "employee benefit pension
plans" and all "employee welfare benefit plans", as those terms are defined in
ERISA, of GCB, TBGC or TBGC Investment being collectively referred to herein as
"GCB Benefit Plans" and individually as a "GCB Benefit Plan"), to which GCB,
TBGC or TBGC Investment is a party or by which GCB, TBGC or TBGC Investment is
bound. There have been no material breaches of fiduciary duty by any fiduciary
under or with respect to the GCB 401(k) Plan or any other GCB Benefit Plan, and
no claim is pending or threatened with respect to any GCB Benefit Plan other
than claims for benefits made in the Ordinary Course of Business. Neither GCB,
TBGC nor TBGC Investment has incurred any material liability for any tax imposed
by Section 4975 of the Code or for any penalty imposed by the Code or by ERISA
with respect to the GCB 401(k) Plan or any other GCB Benefit Plan. There has
not been any audit of any GCB Benefit Plan by the Department of Labor, the IRS
or the PBGC since 1989.
Section 3.19 Related Party Transactions. Except as disclosed in Schedule
------------ -------------------------- --------
3.19, neither GCB, TBGC nor TBGC Investment has any contract, extension of
- - ----
13
credit, business arrangement or other relationship of any kind with any of the
following persons: (i) any executive officer or director (including any person
who has served in such capacity since January 1, 1993) of GCB, TBGC or TBGC
Investment; (ii) any stockholder owning five percent (5%) or more of the
outstanding GCB Common Stock; and (iii) any "associate" (as defined in Rule 405
of the SEC) of the foregoing persons or any business in which any of the
foregoing persons is an officer, director, employee or five percent (5%) or
greater equity owner. Each such contract or extension of credit disclosed in
Schedule 3.19, except as otherwise specifically described therein, has been made
- - -------------
in the Ordinary Course of Business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
arms' length transactions with other persons that do not involve more than a
normal risk of collectability or present other unfavorable features.
Section 3.20 No Finder. Except as disclosed in Schedule 3.20, neither GCB,
------------ --------- -------------
TBGC nor TBGC Investment has paid or become obligated to pay any fee or
commission of any kind whatsoever to any broker, finder, advisor or other
intermediary for, on account of or in connection with the transactions
contemplated in this Agreement.
Section 3.21 Complete and Accurate Disclosure. Neither this Agreement
------------ --------------------------------
(insofar as it relates to GCB, TBGC, TBGC Investment GCB Common Stock, TBGC
Common Stock, and the involvement of GCB, BGCand TBGC Investment in the
transactions contemplated hereby) nor any financial statement, schedule
(including without limitation its Schedules to this Agreement), certificate, or
other statement or document delivered by GCB, TBGC or TBGC Investment to FFC in
connection herewith contains any statement which, at the time and in light of
the circumstances under which it is made, is false or misleading with respect to
any material fact or omits to state any material fact necessary to make the
statements contained herein or therein not false or misleading. In particular,
without limiting the generality of the foregoing sentence, the information
provided and the representations made by GCB, TBGC and TBGC Investment to FFC in
connection with the Registration Statement (as defined in Section 6.1(b)
herein), both at the time such information and representations are provided and
made and at the time of the Closing, will be true and accurate in all material
respects and will not contain any false or misleading statement with respect to
any material fact or omit to state any material fact required to be stated
therein or necessary in order (i) to make the statements made therein not false
or misleading, or (ii) to correct any statement contained in an earlier
communication with respect to such information or representations which has
become false or misleading.
14
Section 3.22 Environmental Matters. Except as disclosed in Schedule 3.22,
------------ --------------------- -------------
neither GCB, TBGC nor TBGC Investment has any knowledge that any environmental
contaminant, pollutant, toxic or hazardous waste or other similar substance has
been generated, used, stored, processed, disposed of or discharged onto any of
the real estate now or previously owned or acquired (including without
limitation any real estate acquired by means of foreclosure or exercise of any
other creditor's right) or leased by GCB, TBGC or TBGC Investment. In
particular, without limiting the generality of the foregoing sentence, except as
disclosed in Schedule 3.22, neither GCB, TBGC nor TBGC Investment has any
-------------
knowledge that: (i) any materials containing asbestos have been used or
incorporated in any building or other structure or improvement located on any of
the real estate now or previously owned or acquired (including without
limitation any real estate acquired by means of foreclosure or exercise of any
other creditor's right) or leased by GCB, TBGC or TBGC Investment; (ii) any
electrical transformers, fluorescent light fixtures with ballasts or other
equipment containing PCB's are or have been located on any of the real estate
now or previously owned or acquired (including without limitation any real
estate acquired by means of foreclosure or exercise of any other creditor's
right) or leased by GCB, TBGC or TBGC Investment; or (iii) any underground
storage tanks for the storage of gasoline, petroleum products or other toxic or
hazardous wastes or similar substances are or have ever been located on any of
the real estate now or previously owned or acquired (including without
limitation any real estate acquired by means of foreclosure or exercise of any
other creditor's right) or leased by GCB, TBGC or TBGC Investment.
Section 3.23 Proxy Statement/Prospectus. At the time the Proxy
------------ --------------------------
Statement/Prospectus (as defined in Section 6.1(b) herein) is mailed to the
stockholders of GCB and at all times subsequent to such mailing, up to and
including the Effective Date, the Proxy Statement/Prospectus (including any pre-
and post-effective amendments and supplements thereto), with respect to all
information relating to GCB, TBGC, TBGC Investment, GCB Common Stock, TBGC
Common Stock and all actions taken and statements made by GCB, BGC and TBGC
Investment in connection with the transactions contemplated herein (except for
information provided by FFC to GCB, TBGC or TBGC Investment) will: (i) comply in
all material respects with applicable provisions of the Securities Act of 1933,
as amended (the "1933 Act"), and the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and the applicable rules and regulations of the SEC
thereunder; and (ii) not contain any statement which, at the time and in light
of the circumstances under which it is made, is false or misleading with respect
to any material fact, or omits to state any material fact that is required to be
stated therein or necessary in order (A) to make the statements therein not
false or misleading, or (B) to correct any statement in an earlier communication
with respect to the Proxy Statement/Prospectus which has become false or
misleading.
15
Section 3.24 SEC Filings. No registration statement, offering circular, proxy
------------ -----------
statement, schedule or report filed and not withdrawn, since December 31, 1992,
by GCB with the SEC under the 1933 Act or the 1934 Act, on the date of
effectiveness (in the case of any registration statement or offering circular)
or on the date of filing (in the case of any report or schedule) or on the date
of mailing (in the case of any proxy statement), contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
Section 3.25 Reports. GCB and TBGC have filed all material reports,
------------ -------
registrations and statements that are required to be filed with the Federal
Reserve Board, the Federal Deposit Insurance Corporation (the "FDIC"), the New
Jersey Department of Banking and any other applicable federal, state or local
governmental or regulatory authorities and such reports, registrations and
statements referred to in this Section 3.25 were, as of their respective dates,
in compliance in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the governmental or regulatory authority
with which they were filed; provided, however, that the failure to file any such
report, registration, or statement or the failure of any report, registration or
statement to comply with the applicable regulatory standard shall not be cleared
to be breach of the foregoing representation unless such failure has or may have
a material adverse impact on GCB, TBGC and TBGC Investment on a consolidated
basis. GCB has furnished FFC with, or made available to FFC, copies of all such
filings made in the last three fiscal years and in the period from January 1,
1995 through the date of this Agreement. GCB is required to file reports with
the SEC pursuant to Section 12 of the 1934 Act, and has made all appropriate
filings under the 1934 Act and the rules and regulations promulgated thereunder.
The GCB Common Stock is traded in the over-the-counter market.
Section 3.26 Loan Portfolio of the TBGC.
------------ --------------------------
(a) Attached hereto as Schedule 3.26 is a list of (w) all outstanding
-------------
commercial relationships, i.e. commercial loans, commercial loan commitments and
commercial letters of credit, of TBGC with an aggregate principal amount in
excess of $1,018,000, (x) all loans of TBGC classified by TBGC or any regulatory
authority as "Monitor," "Substandard," "Doubtful" or "Loss," (y) all commercial
and mortgage loans of TBGC classified as "non-accrual," and (z) all commercial
loans of TBGC classified as "in substance foreclosed."
16
(b) TBGC has adequately reserved for or charged off loans in
accordance with applicable regulatory requirements and TBGC's reserve for loan
losses is adequate in all material respects.
Section 3.27 Investment Portfolio. Attached hereto as Schedule 3.27 is a list
------------ -------------------- -------------
of all securities held by GCB, TBGC and TBGC Investment for investment, showing
the principal amount, book value and market value of each security as of a
recent date, and of all short-term investments held by it as of September 30,
1995. These securities are free and clear of all liens, pledges and
encumbrances, except as shown on Schedule 3.27.
-------------
Section 3.28 Regulatory Examinations.
------------ -----------------------
(a) Except for normal examinations conducted by a regulatory agency in
the regular course of the business of GCB, TBGC or TBGC Investment, no
regulatory agency has initiated any proceeding or investigation into the
business or operations of GCB or TBGC. Neither GCB, TBGC nor TBGC Investment
has received any objection from any regulatory agency to GCB's, TBGC's or TBGC
Investment's response to any violation, criticism or exception with respect to
any report or statement relating to any examinations of GCB, TBGC and TBGC
Investment which would have a materially adverse effect on GCB, TBGC and TBGC
Investment on a consolidated basis.
(b) Neither GCB, TBGC nor TBGC Investment will be required to divest
any assets currently held by it or discontinue any activity currently conducted
as a result of the Federal Deposit Insurance Corporation Improvement Act of 1991
any regulations promulgated thereunder, or otherwise which would have a
materially adverse effect on GCB, TBGC and TBGC Investment on a consolidated
basis.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FFC
-------------------------------------
FFC represents and warrants to GCB, as of the date of this Agreement and as of
the date of the Closing, as follows:
Section 4.1 Authority. The execution and delivery of this Agreement and the
----------- ---------
consummation of the transactions contemplated herein have been authorized by the
Board of Directors of FFC, and no other corporate action on the part of FFC is
necessary to authorize this Agreement or the consummation by FFC of the
transactions contemplated herein. This Agreement has been duly executed and
17
delivered by FFC and, assuming due authorization, execution and delivery by GCB,
constitutes a valid and binding obligation of FFC. The execution, delivery and
consummation of this Agreement will not constitute a violation or breach of or
default under the Articles of Incorporation or Bylaws of FFC or any statute,
rule, regulation, order, decree, directive, agreement, indenture or other
instrument to which FFC is a party or by which FFC or any of its properties are
bound.
Section 4.2 Organization and Standing. FFC is a business corporation that is
----------- -------------------------
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. FFC is a registered bank holding company under
the BHC Act and has full power and lawful authority to own and hold its
properties and to carry on its present business.
Section 4.3 Capitalization. The authorized capital of FFC consists
----------- --------------
exclusively of 100,000,000 shares of FFC Common Stock and 10,000,000 shares of
preferred stock without par value (the "FFC Preferred Stock"). There are
validly issued 28,423,962 shares of FFC Common Stock as of the date of this
Agreement, of which 28,382,179 shares are outstanding, fully paid and non-
assessable and 41,783 shares are held as treasury shares. No shares of FFC
Preferred Stock have been issued as of the date of this Agreement, and FFC has
no present intention to issue any shares of FFC Preferred Stock. As of the date
of this Agreement, there are no outstanding obligations, options or rights of
any kind entitling other persons to acquire shares of FFC Common Stock or shares
of FFC Preferred Stock and there are no outstanding securities or other
instruments of any kind convertible into shares of FFC Common Stock or into
shares of FFC Preferred Stock, except as follows: (i) 699,842 shares of FFC
Common Stock are issuable upon the exercise of outstanding stock options granted
under the FFC Incentive Stock Option Plan and the FFC Employee Stock Purchase
Plan and (ii) there are outstanding 28,382,179 Rights representing the right
under certain circumstances to purchase shares of FFC Common Stock pursuant to
the terms of a Rights Agreement, dated June 20, 1989, entered into between FFC
and Fulton Bank and (iii) shares of FFC Common Stock reserved from time to time
for issuance pursuant to FFC's Employee Stock Purchase and Dividend Reinvestment
Plans.
Section 4.4 Articles of Incorporation and Bylaws. The copies of the Articles
----------- ------------------------------------
of Incorporation, as amended, and of the Bylaws, as amended, of FFC that have
been delivered to GCB are true, correct and complete.
Section 4.5 Subsidiaries. Schedule 4.5 contains a list of all subsidiaries
----------- ------------ ------------
("Subsidiaries") which FFC owns, directly or indirectly. Except as otherwise
disclosed on Schedule 4.5: (i) FFC owns, directly or indirectly, all of the
------------
outstanding shares of capital stock of each Subsidiary, and (ii) as of the date
of
18
this Agreement: (A) there are no outstanding obligations, options or rights
of any kind entitling persons (other than FFC or any Subsidiary) to acquire
shares of capital stock of any Subsidiary, and (B) there are no outstanding
securities or other instruments of any kind held by persons (other than FFC or
any Subsidiary) that are convertible into shares of capital stock of any
Subsidiary. Each Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction pursuant to which it is
incorporated. Each Subsidiary has full power and lawful authority to own and
hold its properties and to carry on its business as presently conducted. Each
Subsidiary which is a banking institution is an insured bank under the
provisions of the FDI Act.
Section 4.6 Financial Statements. FFC has delivered to GCB the following
----------- --------------------
financial statements: (i) Consolidated Balance Sheets, Consolidated Statements
of Income, Consolidated Statements of Shareholders' Equity, and Consolidated
Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992,
certified by Arthur Andersen LLP and set forth in the Annual Report to the
shareholders of FFC for the year ended December 31, 1994; and (ii) Consolidated
Balance Sheets as of June 30, 1995 and December 31, 1994, Consolidated
Statements of Income for the three-month and six-month periods ended June 30,
1995 and Consolidated Statements of Cash Flows for the six months ended June 30,
1995 and 1994,as filed with the SEC in a Quarterly Report on Form 10-Q (the
Consolidated Balance Sheet as of June 30, 1995 being hereinafter referred to as
the "FFC Balance Sheet"). Each of the foregoing financial statements fairly
presents the consolidated financial position, assets, liabilities and results of
operations of FFC at their respective dates and for the respective periods then
ended and has been prepared in accordance with generally accepted accounting
principles consistently applied, except as otherwise noted in a footnote thereto
and subject, in the case of the interim financial statements contained in FFC's
above-mentioned Quarterly Report, to normal recurring year-end adjustments,
which are not material in any case or in the aggregate.
Section 4.7 Absence of Undisclosed Liabilities. Except as disclosed in
----------- ----------------------------------
Schedule 4.7 or as reflected, noted or adequately reserved against in the FFC
- - ------------
Balance Sheet, at June 30, 1995 FFC had no material liabilities (whether
accrued, absolute, contingent or otherwise) which are required to be reflected,
noted or reserved against therein under generally accepted accounting principles
or which are in any case or in the aggregate material. Except as described in
Schedule 4.7, since June 30, 1995 FFC has not incurred any such liability other
- - ------------
than liabilities of the same nature as those
set forth in the FFC Balance Sheet, all of which have been reasonably incurred
in the ordinary course of business.
19
Section 4.8 Absence of Changes. Since June 30, 1995, there has not been any
----------- ------------------
material and adverse change in the condition (financial or otherwise), assets,
liabilities, business, operations or future prospects of FFC.
Section 4.9 Litigation and Governmental Directives. Except as disclosed in
----------- --------------------------------------
Schedule 4.9: (i) there is no litigation, investigation or proceeding pending,
- - ------------
or to the knowledge of FFC threatened, that involves FFC or its properties and
that, if determined adversely to FFC, would materially and adversely affect the
condition (financial or otherwise), assets, liabilities, business, operations or
future prospects of FFC; (ii) there are no outstanding orders, writs,
injunctions, judgments, decrees, regulations, directives, consent agreements or
memoranda of understanding issued by any federal, state or local court or
governmental authority or of any arbitration tribunal against FFC which
materially and adversely affect the condition (financial or otherwise), assets,
liabilities, business, operations or future prospects of FFC or restrict in any
manner the right of FFC to carry on its business as presently conducted; and
(iii) FFC is not aware of any fact or condition presently existing that might
give rise to any litigation, investigation or proceeding which, if determined
adversely to FFC, would materially and adversely affect the condition (financial
or otherwise), assets, liabilities, business, operations or future prospects of
FFC or restrict in any manner the right of FFC to carry on its business as
presently conducted.
Section 4.10 Compliance with Laws; Governmental Authorizations. Except as
------------ -------------------------------------------------
disclosed in Schedule 4.10 or where noncompliance would not have a material and
-------------
adverse effect upon the condition (financial or otherwise), assets, liabilities,
business, operations or future prospects of FFC: (i) FFC and each of its
Subsidiaries are in compliance with all statutes, laws, ordinances, rules,
regulations, judgments, orders, decrees, directives, consent agreements,
memoranda of understanding, permits, concessions, grants, franchises, licenses,
and other governmental authorizations or approvals applicable to their
respective operations and properties; and (ii) all permits, concessions, grants,
franchises, licenses and other governmental authorizations and approvals
necessary for the conduct of the respective businesses of FFC and each of its
Subsidiaries as presently conducted have been duly obtained and are in full
force and effect, and there are not proceedings pending or threatened which may
result in the revocation, cancellation, suspension or materially adverse
modification of any thereof.
Section 4.11 Complete and Accurate Disclosure. Neither this Agreement
------------ --------------------------------
(insofar as it relates to FFC, FFC Common Stock, and the involvement of FFC in
the transactions contemplated hereby) nor any financial statement, schedule
(including, without limitation, its Schedules to this Agreement), certificate or
other
20
statement or document delivered by FFC to GCB in connection herewith
contains any statement which, at the time and under the circumstances under
which it is made, is false or misleading with respect to any material fact or
omits to state any material fact necessary to make the statements contained
herein or therein not false or misleading. In particular, without limiting the
generality of the foregoing sentence, the information provided and the
representations made by FFC to GCB in connection with the Registration Statement
(as defined in Section 6.1(b)), both at the time such information and
representations are provided and made and at the time of the Closing, will be
true and accurate in all material respects and will not contain any false or
misleading statement with respect to any material fact or omit to state any
material fact required to be stated therein or necessary in order (i) to make
the statements made not false or misleading, or (ii) to correct any statement
contained in an earlier communication with respect to such information or
representations which has become false or misleading.
Section 4.12 Labor Relations. Neither FFC nor any of its Subsidiaries is a
------------ ---------------
party to or bound by any collective bargaining agreement. FFC and each of its
Subsidiaries enjoy good working relationships with their employees, and there
are no labor disputes pending, or to the knowledge of FFC or any Subsidiary
threatened, that might materially and adversely affect the condition (financial
or otherwise), assets, liabilities, business or operations of FFC.
Section 4.13 Employee Benefits Plans. FFC's contributory profit-sharings
------------ -----------------------
plan, defined benefits pension plan and 401(k) plan (hereinafter collectively
referred to as the "FFC Pension Plans") are exempt from tax under Sections 401
and 501 of the Code, have been maintained and operated in compliance with all
applicable provisions of the Code and ERISA, are not subject to any accumulated
funding deficiency within the meaning of ERISA and the regulations promulgated
thereunder, and do not have any outstanding liability to the PBGC. No
"prohibited transaction" or "reportable event" (as such terms are defined in the
Code or ERISA) has occurred with respect to the FFC Pension Plans or any other
FFC employee benefit plan (each hereinafter called an "FFC Benefit Plan").
There have been no breaches of fiduciary duty by any fiduciary under or with
respect to the FFC Pension Plans or any other FFC Benefit Plan. FFC has not
incurred any liability for any tax imposed by Section 4975 of the Code or for
any penalty imposed by the Code or by ERISA with respect to the FFC Pension
Plans or any other FFC Benefit Plan.
Section 4.14 Environmental Matters. Except as disclosed in Schedule 4.14 or
------------ --------------------- -------------
as reflected, noted or adequately reserved against in the FFC Balance Sheet, FFC
has no knowledge of any material liability relating to any environmental
contaminant, pollutant, toxic or hazardous waste or other similar substance that
21
has been used, generated, stored, processed, disposed of or discharged onto any
of the real estate now or previously owned or acquired (including without
limitation real estate acquired by means of foreclosure or other exercise of any
creditor's right) or leased by FFC and which is required to be reflected, noted
or adequately reserved against in FFC's consolidated financial statements under
generally accepted accounting principles.
Section 4.15 SEC Filings. No registration statement, offering circular, proxy
------------ -----------
statement, schedule or report filed and not withdrawn, since December 31, 1991,
by FFC with the SEC under the 1933 Act or the 1934 Act, on the date of
effectiveness (in the case of any registration statement or offering circular)
or on the date of filing (in the case of any report or schedule) or on the date
of mailing (in the case of any proxy statement), contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 4.16 Proxy Statement/Prospectus. At the time the Proxy
------------ --------------------------
Statement/Prospectus (as defined in Section 6.1(b)) is mailed to the
stockholders of GCB and at all times subsequent to such mailing, up to and
including the Effective Date, the Proxy Statement/Prospectus (including any pre-
and post-effective amendments and supplements thereto), with respect to all
information relating to FFC, FFC Common Stock, and actions taken and statements
made by FFC in connection with the transactions contemplated herein (other than
information provided by GCB or TBGC to FFC), will: (i) comply in all material
respects with applicable provisions of the 1933 Act and 1934 Act and the
pertinent rules and regulations thereunder; and (ii) not contain any statement
which, at the time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omits to state any
material fact that is required to be stated therein or necessary in order (A) to
make the statements therein not false or misleading, or (B) to correct any
statement in an earlier communication with respect to the Proxy
Statement/Prospectus which has become false or misleading.
ARTICLE V
COVENANTS OF GCB
----------------
From the date of this Agreement until the Effective Date, GCB covenants and
agrees to do, and shall cause TBGC and TBGC Investment to do, the following:
22
Section 5.1 Conduct of Business. Except as otherwise consented to by FFC in
----------- -------------------
writing, GCB, TBGC and TBGC Investment shall: (i) use all reasonable efforts to
carry on their respective businesses in, and only in, the Ordinary Course of
Business; (ii) to the extent consistent with prudent business judgment, use all
reasonable efforts to preserve their present business organizations, to retain
the services of their present officers and employees, and to maintain their
relationships with customers, suppliers and others having business dealings with
GCB, TBGC or TBGC Investment; (iii) maintain all of their structures, equipment
and other real property and tangible personal property in good repair, order and
condition, except for ordinary wear and tear and damage by unavoidable casualty;
(iv) use all reasonable efforts to preserve or collect all material claims and
causes of action belonging to GCB, TBGC or TBGC Investment; (v) keep in full
force and effect all insurance policies now carried by GCB, TBGC or TBGC
Investment; (vi) perform in all material respects each of their obligations
under all Material Contracts (as defined in Section 3.12 herein) to which GCB,
TBGC or TBGC Investment is a party or by which any of them may be bound or which
relate to or affect their properties, assets and business; (vii) maintain their
books of account and other records in the Ordinary Course of Business; (viii)
comply in all material respects with all statutes, laws, ordinances, rules and
regulations, decrees, orders, consent agreements, memoranda of understanding and
other federal, state, and local governmental directives applicable to GCB, TBGC
or TBGC Investment and to the conduct of its business; (ix) not amend GCB's,
TBGC's or TBGC Investment's Charter or Bylaws; (x) not enter into or assume any
Material Contract, incur any material liability or obligation, or make any
material commitment, except in the Ordinary Course of Business; (xi) except as
permitted in subparagraph (xxiii) below, not make any material acquisition or
disposition of any properties or assets or subject any of their properties or
assets to any material lien, claim, charge, or encumbrance of any kind
whatsoever; (xii) not take or permit to be taken any action which would
constitute a breach of any representation, warranty or covenant set forth in
this Agreement; (xiii) except as permitted in Section 5.11 herein, not declare,
set aside or pay any dividend or make any other distribution in respect of GCB
Common Stock; (xiv) not authorize, purchase, redeem, issue (except upon the
exercise of outstanding GCB Options) or sell (or grant options or rights to
purchase or sell) any shares of GCB Common Stock or any other equity or debt
securities of GCB; (xv) not increase the rate of compensation of, pay a bonus or
severance compensation to, establish or amend any GCB Benefit Plan (as defined
in Section 3.18 herein) for, or enter into or amend any Employment Obligation
(as defined in Section 3.17 herein) with, any officer, director, employee or
consultant of GCB, TBGC or TBGC Investment, except that GCB, TBGC and TBGC
Investment may grant reasonable salary increases and bonuses to their officers
and employees in the Ordinary Course of Business to the extent consistent with
their past practice, may amend the GCB Stock Option Plan to permit directors
23
of TBGC to continue to hold the FFC Options granted to them under Section 2.3
herein as directors of GCB and may enter into the Severance Agreements permitted
by Section 5.12 herein; (xvi) not enter into any related party transaction of
the kind contemplated in Section 3.19 herein except in the Ordinary Course of
Business consistent with past practice (as disclosed on Schedule 3.19); (xvii)
in determining the additions to loan loss reserves and the loan writeoffs,
writedowns and other adjustments that reasonably should be made by TBGC with
respect to its fiscal year ending December 31, 1995, GCB and TBGC shall consult
with FFC and shall act in accordance with generally accepted accounting
principles and GCB's and TBGC's customary business practices; (xviii) file with
appropriate federal, state, local and other governmental agencies all tax
returns and other material reports required to be filed, pay in full or make
adequate provisions for the payment of all taxes, interest, penalties,
assessments or deficiencies shown to be due on tax returns or by any taxing
authorities and report all information on such returns truthfully, accurately
and completely; (xix) not renew any existing contract for services, goods,
equipment or the like or enter into, amend in any material respect or terminate
any contract or agreement (including without limitation any settlement agreement
with respect to litigation) that is or may reasonably be expected to have a
material adverse effect on GCB, TBGC and TBGC Investment except in the Ordinary
Course of Business consistent with past practice (provided that FFC shall not
unreasonably withhold its consent to such transactions); (xx) except as required
in connection with the real estate at Washington Township, New Jersey owned or
leased by TBGC, not make any capital expenditures other than in the Ordinary
Course of Business or as necessary to maintain existing assets in good repair;
(xxi) not make application for the opening or closing of any, or open or close
any, branches or automated banking facility; (xxii) not make any equity
investment or commitment to make such an investment in real estate or in any
real estate development project, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructuring in the
Ordinary Course of Business consistent with customary banking practice; (xxiii)
not exercise its option to acquire its principal office at 1100 Old Broadway,
Woodbury, New Jersey, pursuant to Section 6 of the Lease Agreement dated April
5, 1989 between 1100 Old Broadway Partnership and TBGC unless such option is
exercised in accordance with such Lease Agreement and FFC provides its prior
written consent of TBGC's appraiser thereunder (which consent shall not be
unreasonably withheld); or (xxiv) not take any other action similar to the
foregoing which would have the effect of frustrating the purposes of this
Agreement or the Merger or cause the Merger not to qualify for pooling-of-
interests accounting treatment (if applicable) or as a tax-free reorganization
under Section 368 of the Code.
24
Section 5.2 Best Efforts. GCB and TBGC shall cooperate with FFC and shall use
----------- ------------
their best efforts to do or cause to be done all things necessary or appropriate
on its part in order to fulfill the conditions precedent set forth in Article
VII of this Agreement and to consummate this Agreement. In particular, without
limiting the generality of the foregoing sentence, GCB and TBGC shall: (i)
cooperate with FFC in the preparation of all required applications for
regulatory approval of the transactions contemplated by this Agreement and in
the preparation of the Registration Statement (as defined in Section 6.1(b));
(ii) call a meeting of its stockholders and take, in good faith, all actions
which are necessary or appropriate on its part in order to secure the approval
of this Agreement by its stockholders at that meeting; and (iii) cooperate with
FFC in making GCB's and TBGC's employees reasonably available for training by
FFC at TBGC's facilities prior to the Effective Date, to the extent that such
training is deemed reasonably necessary by FFC to ensure that TBGC's facilities
will be properly operated in accordance with FFC's policies after the Merger.
Section 5.3 Access to Properties and Records. GCB and TBGC shall give to FFC
----------- --------------------------------
and its authorized employees and representatives (including without limitation
its counsel, accountants, economic and environmental consultants and other
designated representatives) such access during normal business hours to all
properties, books, contracts, documents and records of GCB and TBGC as FFC may
reasonably request, subject to the obligation of FFC and its authorized
employees and representatives to maintain the confidentiality of all nonpublic
information concerning GCB and TBGC obtained by reason of such access and
subject to applicable law.
Section 5.4 Subsequent Financial Statements. Between the date of signing of
----------- -------------------------------
this Agreement and the Effective Date, GCB, TBGC and TBGC Investment shall
promptly prepare and deliver to FFC as soon as practicable all internal monthly
and quarterly financial statements, all quarterly and annual reports to
stockholders and all reports to regulatory authorities prepared by or for either
GCB, TBGC or TBGC Investment (which additional financial statements and reports
are hereinafter collectively referred to as the "Additional GCB Financial
Statements"). The representations and warranties set forth in Sections 3.6, 3.7
and 3.8 shall apply to the Additional GCB Financial Statements.
Section 5.5 Update Schedules. GCB, TBGC or TBGC Investment shall promptly
----------- ----------------
disclose to FFC in writing any change, addition, deletion or other modification
to the information set forth in its Schedules hereto.
Section 5.6 Notice. GCB, TBGC or TBGC Investment shall promptly notify FFC in
----------- ------
writing of any actions, claims, investigations, proceedings or other
25
developments which, if pending or in existence on the date of this Agreement,
would have been required to be disclosed to FFC in order to ensure the accuracy
of the representations and warranties set forth in this Agreement or which
otherwise could materially and adversely affect the condition (financial or
otherwise), assets, liabilities, business operations or future prospects of GCB,
TBGC or TBGC Investment or restrict in any manner their ability to carry on
their respective businesses as presently conducted.
Section 5.7 Other Proposals. GCB, TBGC or TBGC Investment shall not, nor
----------- ---------------
shall they permit any of their officers, directors, employees, agents,
consultants or other representatives to: (i) solicit, initiate or encourage any
proposal for a merger or other acquisition of GCB, TBGC or TBGC Investment, or
any material portion of their properties or assets, with or by any person other
than FFC, or (ii) cooperate with, or furnish any nonpublic information
concerning GCB, TBGC or TBGC Investment to, any person in connection with such a
proposal (an "Acquisition Proposal"); provided, however, that the obligations of
GCB or TBGC and its Directors and other representatives under this Section 5.7
are subject to the limitation that the Board of Directors shall be free to take
such action as the Board of Directors determines, in good faith, that in the
exercise of its fiduciary duties, after receipt of a written opinion of outside
counsel to that effect. GCB will notify FFC immediately if any discussions or
negotiations are sought to be initiated, any inquiry or proposal is made, or any
such information is requested, with respect to an Acquisition Proposal or
potential Acquisition Proposal or if any Acquisition Proposal is received or
indicated to be forthcoming.
Section 5.8 Affiliate Letters. GCB shall deliver or cause to be delivered to
----------- -----------------
FFC, at or before the Closing, a letter from each of the officers and directors
of GCB (and shall use its best efforts to obtain and deliver such a letter from
each stockholder of GCB) who may be deemed to be an "affiliate" (as that term is
defined for purposes of Rules 145 and 405 promulgated by the SEC under the 1933
Act) of GCB, in form and substance satisfactory to FFC, under the terms of which
each such officer, director or stockholder acknowledges and agrees to abide by
all limitations imposed by the 1933 Act and by all rules, regulations and
releases promulgated thereunder by the SEC with respect to the sale or other
disposition of the shares of FFC Common Stock to be received by such person
pursuant to this Agreement.
Section 5.9 No Purchases or Sales of FFC Common Stock During Price
----------- ------------------------------------------------------
Determination Period. GCB and TBGC shall not, and shall ensure that their
- - --------------------
executive officers and directors do not, and shall use their best efforts to
ensure that each stockholder of GCB who may be deemed an "affiliate" (as defined
in SEC Rules 145 and 405) of GCB does not, purchase or sell on NASDAQ, or submit
a
26
bid to purchase or an offer to sell on NASDAQ, directly or indirectly, any
shares of FFC Common Stock or any options, rights or other securities
convertible into shares of FFC Common Stock during the Price Determination
Period.
Section 5.10 Accounting Treatment. GCB acknowledges that FFC presently
------------ --------------------
intends to treat the business combination contemplated by this Agreement as a
"pooling-of-interests" for financial reporting purposes. GCB shall not take
(and shall use its best efforts not to permit any of the directors, officers,
employees, stockholders, agents, consultants or other representatives of GCB or
TBGC to take) any action that would preclude FFC from treating such business
combination as a "pooling-of-interests" for financial reporting purposes.
Section 5.11 Dividends. GCB shall not declare or pay a cash dividend on the
------------ ---------
GCB Common Stock; provided, however, that in the event the Effective Date does
not occur on or before March 31, 1996, GCB may declare and pay a dividend or
dividends which do not exceed, in the aggregate, the amount of the per share
cash dividends on FFC Common Stock paid on or after March 31, 1996 multiplied by
the Conversion Ratio.
Section 5.12 Agreements with Senior Employees. Prior to the Effective Date,
------------ --------------------------------
GCB and TBGC may enter into Severance Agreements in the forms attached hereto as
Exhibit D (the "Severance Agreements") with Warner A. Knobe, Scott H. Kintzing,
- - ---------
Thomas J. Lobosco, Stephen R. Miller, Stephen F. Levitt and Mary C. Traum (the
"Senior Employees"). Without the prior written consent of FFC, GCB and TBGC
shall not modify the terms of the Severance Agreements or any other Employment
Obligations (as defined in Section 3.17) related to the Senior Employees.
Neither GCB or TBGC shall create any new Employment Obligation related to the
Senior Employees.
ARTICLE VI
COVENANTS OF FFC
----------------
From the date of this Agreement until the Effective Date, or until such later
date as may be expressly stipulated in any Section of this Article VI, FFC
covenants and agrees to do the following:
Section 6.1 Best Efforts. FFC shall cooperate with GCB and TBGC and shall
----------- ------------
use its best efforts to do or cause to be done all things necessary or
appropriate on its part in order to fulfill the conditions precedent set forth
in Article VII of this
27
Agreement and to consummate this Agreement. In particular, without limiting the
generality of the foregoing sentence, FFC agrees to do the following:
(a) Applications for Regulatory Approval: FFC shall promptly prepare
------------------------------------
and file, with the cooperation and assistance of (and after review by) GCB and
its counsel and accountants, all required applications for regulatory approval
of the transactions contemplated by this Agreement, including without limitation
an application for approval under the BHC Act and applications for approval
under the New Jersey Banking Act of 1948, as amended, and the Pennsylvania
Banking Code of 1965, as amended.
(b) Registration Statement: FFC shall promptly prepare, with the
----------------------
cooperation and assistance of (and after review by) GCB and its counsel and
accountants, and file with the SEC a registration statement (the Registration
Statement) for the purpose of registering the shares of FFC Common Stock to be
issued to shareholders of GCB under the provisions of this Agreement. FFC may
rely upon all information provided to it by GCB and TBGC in this connection and
FFC shall not be liable for any untrue statement of a material fact or any
omission to state a material fact in the Registration Statement, or in the proxy
statement and prospectus (the Proxy Statement/Prospectus) which is prepared as a
part thereof, if such statement is made by FFC in reliance upon any information
provided to FFC by GCB or TBGC or by any of their officers, agents or
representatives.
(c) State Securities Laws: FFC, with the cooperation and assistance of
---------------------
GCB and its counsel and accountants, shall promptly take all such actions as may
be necessary or appropriate in order to comply with all applicable securities
laws of any state having jurisdiction over the transactions contemplated by this
Agreement.
(d) Stock Listing: FFC, with the cooperation and assistance of GCB and
-------------
its counsel and accountants, shall promptly take all such actions as may be
necessary or appropriate in order to list the shares of FFC Common Stock to be
issued in the Merger on NASDAQ.
Section 6.2 Access to Properties and Records. FFC shall give to GCB and to
----------- --------------------------------
its authorized employees and representatives (including without limitation GCB's
counsel, accountants, economic and environmental consultants and other
designated representatives) such access during normal business hours to all
properties, books, contracts, documents and records of FFC as GCB may reasonably
request, subject to the obligation of GCB and its authorized employees
28
and representatives to maintain the confidentiality of all nonpublic information
concerning FFC obtained by reason of such access.
Section 6.3 Subsequent Financial Statements. Between the date of signing of
----------- -------------------------------
this Agreement and the Effective Date, FFC shall promptly prepare and deliver to
GCB as soon as practicable each Quarterly Report to FFC's shareholders and any
Annual Report to FFC's shareholders normally prepared by FFC. The
representations and warranties set forth in Sections 4.5, 4.6 and 4.7 herein
shall apply to the financial statements (hereinafter collectively referred to as
the "Additional FFC Financial Statements") set forth in the foregoing Quarterly
Reports and any Annual Report to FFC's shareholders.
Section 6.4 Update Schedule. FFC shall promptly disclose to GCB in writing
----------- ---------------
any change, addition, deletion or other modification to the information set
forth in its Schedule to this Agreement.
Section 6.5 Notice. FFC shall promptly notify GCB in writing of any actions,
----------- ------
claims, investigations or other developments which, if pending or in existence
on the date of this Agreement, would have been required to be disclosed to GCB
in order to ensure the accuracy of the representations and warranties set forth
in this Agreement or which otherwise could materially and adversely affect the
condition (financial or otherwise), assets, liabilities, business, operations or
future prospects of FFC or restrict in any manner the right of FFC to carry on
its business as presently conducted.
Section 6.6 Employment Arrangements.
----------- -----------------------
(a) From and after the Effective Date, FFC shall cause TBGC: (i) to
satisfy each of the Employment Obligations (as defined in Section 3.17 herein)
with TBGC's Senior Employees (as defined in Section 5.12 herein), and (ii) to
satisfy TBGC's obligations under the GCB Benefit Plans.
(b) On and after the Effective Date, FFC shall cause TBGC to employ all
officers and employees who were employed by GCB or TBGC as of the Effective
Date, provided, that (i) TBGC shall employ such persons, on and after the
--------
Effective Date, as "at will" employees subject to the continued satisfactory
performance of their respective duties, (ii) except with respect to TBGC's
Senior Employees (who will be offered individual compensation arrangements),
TBGC shall pay compensation to each such person, on and after the Effective
Date, that is at least equal to the aggregate compensation that such person was
receiving from GCB or TBGC prior to the Effective Date, (iii) TBGC shall provide
employee benefits to each such person who is a full-time employee, on and after
the Effective Date, that are
29
substantially equivalent in the aggregate to the employee benefits that such
person was receiving as a full-time employee from GCB or TBGC prior to the
Effective Date, and (iv) TBGC shall provide employee benefits to each such
person who is a part-time employee, on or after the Effective Date, that are the
same as the employee benefits that are being received at the applicable time by
part-time employees of other banking Subsidiaries owned by FFC.
Section 6.7 No Purchase or Sales of FFC Common Stock During Price
----------- -----------------------------------------------------
Determination Period. Neither FFC nor any Subsidiary of FFC, nor any executive
- - --------------------
officer or director of FFC or any Subsidiary of FFC, nor any shareholder of FFC
who may be deemed to be an "affiliate" (as that term is defined for purposes of
Rules 145 and 405 promulgated by the SEC under the 1933 Act) of FFC, shall
purchase or sell on NASDAQ, or submit a bid to purchase or an offer to sell on
NASDAQ, directly or indirectly, any shares of FFC Common Stock or any options,
rights or other securities convertible into shares of FFC Common Stock during
the Price Determination Period; provided, however, that FFC may purchase shares
-------- -------
of FFC Common Stock in the ordinary course of business during the Price
Determination Period pursuant to FFC's Benefit Plans or FFC's dividend
reinvestment plan.
Section 6.8 Appointment of FFC Director. FFC shall, on or promptly after the
----------- ---------------------------
Effective Date, appoint to FFC's Board of Directors Jeffrey G. Albertson to
serve as a director of FFC. During the five-year period after the Effective
Date (or for a period equal to any longer period specified in a similar express
covenant contained in any future agreement providing for the acquisition by FFC
of another financial institution), the FFC Board of Directors shall nominate Mr.
Albertson for election, and support his election, at each annual meeting of
shareholders of FFC at which Mr. Albertson's term expires. During such period,
in the event Mr. Albertson shall cease to serve as a director of FFC, the Board
of Directors of TBGC shall have the right to designate one other person then
serving on as a director of TBGC to serve as a director of FFC (subject to the
concurrence of FFC as to the person designated).
Section 6.9 Continuation of TBGC's Structure, Name and Directors. For a
----------- ----------------------------------------------------
period of five (5) years after the Effective Date (or for a period equal to any
longer period specified in a similar express covenant contained in any future
agreement providing for the acquisition by FFC of another financial
institution), FFC shall (subject to the right of FFC to terminate its
obligations under paragraphs (i), (ii) and (iii) below on the effective date of
an acquisition of FFC which occurs at any time after the date two (2) years
after the Effective Date): (i) preserve the business structure of FFC as a bank
holding company with TBGC as one of its wholly-owned banking subsidiaries; (ii)
preserve the present name of TBGC; (iii) continue in office the present
directors and advisory directors of TBGC who
30
indicate their desire to serve in their respective capacities; and (iv) preserve
indemnity agreements for directors and senior employees of GCB and TBGC,
provided, that (A) each non- employee director of TBGC who is serving in such
- - --------
capacity as of the Effective Date shall continue to receive director's fees from
TBGCof $10,000 per director annually ((and, for a period of two (2) years after
the Effective Date, the Chairman of the Board, the Vice Chairman of the Board,
the Secretary of the Board and the Chairman of the Loan Committee shall be
entitled to receive additional directors fees not to exceed $2,000, $1,500,
$1,000 and $1,000, respectively), and shall continue to receive such other
incidental benefits as he was receiving from TBGC prior to the Effective Date
(such benefits being previously disclosed to FFC), and (B) each director or
advisory director of TBGC who has reached the age of 70 as of the Effective
Date, or within three (3) years thereafter, shall be permitted to serve for a
period of at least three (3) years after the Effective Date before becoming
subject to FFC's mandatory retirement rules for directors. The TBGC Board of
Directors (subject to the concurrence of FFC as to the persons appointed, such
concurrence not to be unreasonably withheld) (i) may appoint persons to fill
vacancies on the TBGC Board of Directors and (ii) may appoint the counsel,
accountants, appraisers and other professionals who provide services to TBGC.
For the purposes of the foregoing, the "acquisition of FFC" shall be deemed to
have occurred upon a merger of FFC into any other entity, a transfer of all or
substantially all of the assets of FFC or the effectuation by FFC of a
transaction or series of related transactions in which more than 50% of the
voting stock of FFC is disposed of.
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
Section 7.1 Common Conditions. The obligations of the parties to consummate
----------- -----------------
this Agreement shall be subject to the satisfaction of each of the following
common conditions prior to or as of the Closing, except to the extent that any
such condition shall have been waived in accordance with the provisions of
Section 8.4 herein:
(a) Stockholder Approval: This Agreement shall have been duly
--------------------
authorized, approved and adopted by the stockholders of GCB.
(b) Regulatory Approvals: The approval of each federal and state
--------------------
regulatory authority having jurisdiction over the transactions contemplated by
this Agreement, including without limitation, the Federal Reserve Board, the New
Jersey Department of Banking, the Pennsylvania Department of Banking and the
Maryland Bank Commissioner, shall have been obtained and all applicable waiting
31
and notice periods shall have expired, subject to no terms or conditions which
would (i) require or could reasonably be expected to require (A) any divestiture
by FFC of a portion of the business of FFC, or any subsidiary of FFC or (B) any
divestiture by GCB or TBGC of a portion of its business which FFC in its good
faith judgment believes will have a significant adverse impact on the business
or prospects of GCB or TBGC, as the case may be, or (ii) impose any condition
upon FFC, or any of its subsidiaries, which in FFC's good faith judgment (x)
would be materially burdensome to FFC and its subsidiaries taken as a whole, (y)
would significantly increase the costs incurred or that will be incurred by FFC
as a result of consummating the Merger or (z) would prevent FFC from obtaining
any material benefit contemplated by it to be attained as a result of the
Merger.
(c) Stock Listing. The shares of FFC Common Stock to be issued in the
-------------
Merger shall have been authorized for listing on NASDAQ.
(d) Tax Opinion. Each of FFC and GCB shall have received an opinion of
-----------
GCB's counsel, Piper & Marbury L.L.P., reasonably acceptable to FFC and GCB,
addressed to FFC and GCB, with respect to federal tax laws or regulations, to
the effect that:
(1) The Merger will constitute a reorganization within the meaning
of Section 368(a)(1)(A) of the Code;
(2) No gain or loss will be recognized by FFC, GCB or TBGC by
reason of the Merger;
(3) The bases of the assets of GCB in the hands of FFC will be the
same as the bases of such assets in the hands of GCB immediately prior to the
Merger;
(4) The holding period of the assets of GCB in the hands of FFC
will include the period during which such assets were held by GCB prior the
Merger;
(5) A holder of GCB Common Stock who receives shares of FFC Common
Stock in exchange for his GCB Common Stock pursuant to the reorganization
(including fractional shares of FFC Common Stock deemed issued as described
below) will not recognize any gain or loss upon the exchange.
(6) A holder of GCB Common Stock who receives cash in lieu of a
fractional share of FFC Common Stock will be treated as if he received a
fractional share of FFC Common Stock pursuant to the reorganization and FFC then
32
redeemed such fractional share for the cash. The holder of GCB Common Stock
will recognize capital gain or loss on the constructive redemption of the
fractional share in an amount equal to the difference between the cash received
and the adjusted basis of the fractional share.
(7) The tax basis of the FFC Common Stock to be received by the
shareholders of GCB pursuant to the terms of this Agreement will include the
holding period of the GCB Common Stock surrendered in exchange therefor,
provided that such GCB Common Stock is held as a capital interest on the
Effective Date.
(8) The holding period of the shares of FFC Common Stock to be
received by the shareholders of GCB will include the period during which they
held the shares of GCB Common Stock surrendered, provided the shares of GCB
Common Stock are held as a capital asset on the date of the exchange.
(e) Registration Statement: The Registration Statement (as defined in
----------------------
Section 6.1(b), including any amendments thereto) shall have been declared
effective by the SEC; the information contained therein shall be true, complete
and correct in all material respects as of the date of mailing of the Proxy
Statement/Prospectus (as defined in Section 6.1(b)) to the shareholders of GCB;
regulatory clearance for the offering contemplated by the Registration Statement
(the "Offering") shall have been received from each federal and state regulatory
authority having jurisdiction over the Offering; and no stop order shall have
been issued and no proceedings shall have been instituted or threatened by any
federal or state regulatory authority to suspend or terminate the effectiveness
of the Registration Statement or the Offering.
(f) No Suits: No action, suit or proceeding shall be pending or
--------
threatened before any federal, state or local court or governmental authority or
before any arbitration tribunal which seeks to modify, enjoin or prohibit or
otherwise adversely and materially affect the transactions contemplated by this
Agreement; provided, however, that if FFC agrees to defend and indemnify GCB
-------- -------
and TBGC and their respective officers and directors with regard to any such
action, suit or proceeding pending or threatened against them or any of them,
then such pending or threatened action, suit or proceeding shall not be deemed
to constitute the failure of a condition precedent to the obligation of GCB to
consummate this Agreement.
Section 7.2 Conditions Precedent to Obligations of FFC. The obligations of
----------- ------------------------------------------
FFC to consummate this Agreement shall be subject to the satisfaction of each of
the following conditions prior to or as of the Closing, except to the extent
that any
33
such condition shall have been waived by FFC in accordance with the provisions
of Section 8.4 herein:
(a) Accuracy of Representations and Warranties: All of the
------------------------------------------
representations and warranties of GCB as set forth in this Agreement, all of the
information contained in Schedule I and all GCB Closing Documents (as defined in
Section 7.2(i)) shall be true and correct in all material respects as of the
Closing as if made on such date (or on the date to which it relates in the case
of any representation or warranty which expressly relates to an earlier date);
provided, that, without limiting the generality of the foregoing clause, a
- - --------
"material" deviation from the accuracy of GCB's representations and warranties
shall be deemed to exist for purposes of this Section 7.2(a) if, as of the
Closing, FFC shall have discovered information not previously disclosed in GCB's
Schedules or in the GCB Balance Sheet indicating that GCB or TBGC has incurred
or will incur costs, expenses, losses and/or liabilities in the aggregate amount
of $1,000,000 or more.
(b) Covenants Performed: GCB shall have performed or complied in all
-------------------
material respects with each of the covenants required by this Agreement to be
performed or complied with by it.
(c) Opinion of Counsel for GCB: FFC shall have received an opinion,
--------------------------
dated the Effective Date, from Piper & Marbury L.L.P., counsel to GCB, in
substantially the form of Exhibit E hereto. In rendering any such opinion, such
---------
counsel may require and, to the extent they deem necessary or appropriate may
rely upon, opinions of other counsel and upon representations made in
certificates of officers of GCB, FFC, affiliates of the foregoing, and others.
(d) Affiliate Agreements. Shareholders of GCB who are or will be
--------------------
affiliates of GCB or FFC for the purposes of Accounting Series Release No. 135
and the 1933 Act shall have entered into agreements with FFC, in form and
substance satisfactory to FFC, reasonably necessary to assure (i) the ability
of FFC to use pooling-of-interests accounting for the Merger; and (ii)
compliance with Rule 145 under the 1933 Act.
(e) GCB Options. All holders of GCB Options shall have delivered
-----------
documentation reasonably satisfactory to FFC canceling the GCB Options in
exchange for FFC Stock Options pursuant to Section 2.8 herein.
(f) Financial Confirmation: FFC (together with its accountants, if the
----------------------
advice of such accountants is deemed necessary or desirable by FFC) shall have
established to its reasonable satisfaction that the GCB Balance Sheet fairly
presents the financial condition, assets and liabilities of GCB as at June 30,
1995,
34
and that, since December 31, 1994, there has not been any material and
adverse change in the condition (financial or otherwise), assets, liabilities,
business, operations or future prospects of GCB. In particular, without
limiting the generality of the foregoing sentence, the Additional GCB Financial
Statements (as defined in Section 5.4) shall indicate that the consolidated
financial condition, assets, liabilities and results of operations of GCB as of
the respective dates reported therein do not vary adversely in any material
respect from the consolidated financial condition, assets, liabilities and
results of operations presented in the GCB Balance Sheet. For purposes of this
Section 7.2(f), the terms "material and adverse change" and "vary adversely in
any material respect" shall mean any change or changes that would result, in the
aggregate, in a reduction of more than five percent (5%) in GCB's consolidated
total shareholders' equity between June 30, 1995 or December 31, 1994, as the
case may be, and any later date up to and including the Effective Date, as
determined in accordance with generally accepted accounting principles
consistently applied.
(g) Accounting Treatment: FFC and its accountants shall have
--------------------
established to their satisfaction that, as of the Closing, the transactions
contemplated by this Agreement can be accounted for as a "pooling-of-interests"
for financial reporting purposes.
(h) Federal and State Securities and Antitrust Laws: FFC and its
-----------------------------------------------
counsel shall have determined to their satisfaction that, as of the Closing, all
applicable securities and antitrust laws of the federal government and of any
state government having jurisdiction over the transactions contemplated by this
Agreement shall have been complied with.
(i) Dissenting Shareholders: Dissenters' rights shall have been
-----------------------
exercised with respect to less than 10% of the outstanding shares of GCB Common
Stock.
(j) Environmental Matters: No environmental problem of the kind
---------------------
contemplated in Section 3.22 and not disclosed in Schedule 3.22 shall have been
-------------
discovered which would, or which potentially could, materially and adversely
affect the condition (financial or otherwise), assets, liabilities, business,
operations or future prospects of either GCB, TBGC or TBGC Investment, provided,
--------
that for purposes of determining the materiality of an undisclosed environmental
problem or problems, the definition of "material" shall be governed by the
proviso to Section 7.2(a) of this Agreement.
35
(k) Non-Compete Agreements: Each of the directors of GCB and/or TBGC as
----------------------
of the date of this Agreement shall deliver to FFC a Non-Compete Agreement in
the form of Exhibit F attached hereto.
---------
(l) Closing Documents: GCB shall have delivered to FFC: (i) a
-----------------
certificate signed by GCB's President and Chief Executive Officer and by its
Secretary verifying that, to the best of their knowledge after reasonable
investigation, all of the representations and warranties of GCB set forth in
this Agreement are true and correct in all material respects as of the Closing
and that GCB has performed in all material respects each of the covenants
required to be performed by it under this Agreement; (ii) all consents and
authorizations of landlords and other persons that are necessary to permit this
Agreement to be consummated without violation of any lease or other agreement to
which GCB or TBGC is a party or by which they or any of their properties are
bound; and (iii) such other certificates and documents as FFC and its counsel
may reasonably request (all of the foregoing certificates and other documents
being herein referred to as the "GCB Closing Documents").
Section 7.3 Conditions Precedent to the Obligations of GCB. The obligation of
----------- ----------------------------------------------
GCB to consummate this Agreement shall be subject to the satisfaction of each of
the following conditions prior to or as of the Closing, except to the extent
that any such condition shall have been waived by GCB in accordance with the
provisions of Section 8.4 herein:
(a) Accuracy of Representations and Warranties: All of the
------------------------------------------
representations and warranties of FFC as set forth in this Agreement, all of the
information contained in its Schedules and all FFC Closing Documents (as defined
in Section 7.3(e) of this Agreement) shall be true and correct in all material
respects as of the Closing as if made on such date (or on the date to which it
relates in the case of any representation or warranty which expressly relates to
an earlier date).
(b) Covenants Performed: FFC shall have performed or complied in all
-------------------
material respects with each of the covenants required by this Agreement to be
performed or complied with by FFC.
(c) Opinion of Counsel for FFC: GCB shall have received an opinion from
--------------------------
Barley, Snyder, Senft & Cohen, counsel to FFC, dated the Effective Date, in
substantially the form of Exhibit G hereto. In rendering any such opinion, such
---------
counsel may require and, to the extent they deem necessary or appropriate may
rely upon, opinions of other counsel and upon representations made in
certificates of officers of FFC, GCB, affiliates of the foregoing, and others.
36
(d) FFC Options: FFC Options shall be substituted in cancellation of
-----------
the GCB Options pursuant to Section 2.3 herein.
(e) Fairness Opinion: GCB shall have obtained from Berwind Financial
----------------
Group, L.P., or from another independent financial advisor selected by the Board
of Directors of GCB, an opinion dated within five (5) days of the Proxy
Statement/Prospectus to be furnished to the shareholders of GCB stating that the
terms of the acquisition contemplated by this Agreement are fair to the
shareholders of GCB from a financial point of view.
(f) Closing Documents: FFC shall have delivered to GCB: (i) a
-----------------
certificate signed by FFC's President and Chief Executive Officer and by its
Secretary verifying that, to the best of their knowledge after reasonable
investigation, all of the representations and warranties of FFC set forth in
this Agreement are true and correct in all material respects as of the Closing
and that FFC has performed in all material respects each of the covenants
required to be performed by FFC; and (ii) such other certificates and documents
as GCB and its counsel may reasonably request (all of the foregoing certificates
and documents being herein referred to as the "FFC Closing Documents").
(g) Financial Confirmation: GCB (together with its accountants, if the
----------------------
advice of such accountants is deemed necessary or desirable by GCB) shall have
established to its reasonable satisfaction that the FFC Balance Sheet fairly
presents the financial condition, assets and liabilities of FFC as at June 30,
1995, and that, since December 31, 1994, there has not been any material and
adverse change in the condition (financial or otherwise), assets, liabilities,
business, operations or future prospects of FFC. In particular, without
limiting the generality of the foregoing sentence, the Additional FFC Financial
Statements shall indicate that the financial condition, assets, liabilities and
results of operations of FFC as of the respective dates reported therein do not
vary adversely in any material respect from the financial condition, assets,
liabilities and results of operations presented in the FFC Balance Sheet. For
purposes of this Section 7.3(g), the terms "material and adverse change" and
"vary adversely in any material respect" shall mean any change or changes that
would result, in the aggregate, in a reduction of more than five percent (5%) in
FFC's consolidated total shareholders' equity between June 30, 1995 or December
31, 1994, as the case may be, and any later date up to and including the
Effective Date, as determined in accordance with generally accepted accounting
principles consistently applied.
37
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 8.1 Termination. This Agreement may be terminated at any time before
----------- -----------
the Effective Date (whether before or after the authorization, approval and
adoption of this Agreement by the stockholders of GCB) as follows:
(a) Mutual Consent: This Agreement may be terminated by mutual consent
--------------
of the parties upon the affirmative vote of a majority of each of the Boards of
Directors of GCB and FFC, followed by written notices given to the other party.
(b) Unilateral Action by FFC: This Agreement may be terminated
------------------------
unilaterally by the affirmative vote of the Board of Directors of FFC, followed
by written notice given to GCB, if: (i) there has been a material breach by GCB
of any representation, warranty or covenant set forth in this Agreement and such
breach has not been cured within thirty (30) days after written notice of such
breach has been given by FFC to GCB; or (ii) any condition precedent to FFC's
obligations as set forth in Article VII of this Agreement remains unsatisfied,
through no fault of FFC, on October 31, 1996.
(c) Unilateral Action By GCB: This Agreement may be terminated
------------------------
unilaterally by the affirmative vote of a majority of the Board of Directors of
GCB, followed by written notice given to FFC, if: (i) there has been a material
breach by FFC of any representation, warranty or covenant set forth in this
Agreement and such breach has not been cured within thirty (30) days after
written notice of such breach has been given by GCB to FFC; or (ii) any
condition precedent to GCB's obligations as set forth in Article VII of this
Agreement remains unsatisfied, through no fault of GCB, on October 31, 1996.
Section 8.2 Effect of Termination.
----------- ---------------------
(a) Effect. In the event of a permitted termination of this Agreement
------
under Section 8.1 herein shall become null and void and the transactions
contemplated herein shall thereupon be abandoned, except that the provisions
relating to limited liability and confidentiality set forth in Sections 8.2(b)
and 8.2(c) herein shall survive such termination.
(b) Limited Liability. The termination of this Agreement in accordance
-----------------
with the terms of Section 8.1 herein shall create no liability on the part of
either party, or on the part of either party's directors, officers,
shareholders, agents or representatives, except that if this Agreement is
terminated by FFC by reason of a
38
material breach by GCB, or if this Agreement is terminated by GCB by reason of a
material breach by FFC, and such breach involves an intentional, willful or
grossly negligent misrepresentation or breach of covenant, the breaching party
shall be liable to the nonbreaching party for all costs and expenses reasonably
incurred by the nonbreaching party in connection with the preparation, execution
and attempted consummation of this Agreement, including the fees of its counsel,
accountants, consultants and other advisors and representatives.
(c) Confidentiality. In the event of a permitted termination of this
---------------
Agreement under Section 8.1 herein, neither FFC nor GCB nor TBGC shall use or
disclose to any other person any confidential information obtained by it during
the course of its investigation of the other party or parties, except as may be
necessary in order to establish the liability of the other party or parties for
breach as contemplated under Section 8.2(b) herein.
Section 8.3 Amendment. To the extent permitted by law, this Agreement may be
----------- ---------
amended at any time before the Effective Date (whether before or after the
authorization, approval and adoption of this Agreement by the stockholders of
GCB), but only by a written instrument duly authorized, executed and delivered
by FFC and by GCB; provided, however, that any amendment to the provisions of
-------- -------
Section 2.1 herein relating to the consideration to be received by the former
stockholders of GCB in exchange for their shares of GCB Common Stock shall not
take effect until such amendment has been approved, adopted or ratified by the
stockholders of GCB in accordance with applicable New Jersey law.
Section 8.4 Waiver. Any term or condition of this Agreement may be waived, to
----------- ------
the extent permitted by applicable federal and state law, by the party or
parties entitled to the benefit thereof at any time before the Effective Date
(whether before or after the authorization, approval and adoption of this
Agreement by the stockholders of GCB) by a written instrument duly authorized,
executed and delivered by such party or parties.
ARTICLE IX
RIGHTS OF DISSENTING Shareholders OF GCB
----------------------------------------
Section 9.1 Rights of Dissenting Shareholders of GCB. The stockholders of GCB
----------- ----------------------------------------
shall be entitled to and may exercise dissenters' rights if and to the extent
they are entitled to do so under the provisions of Sections 14A:11-1 et. seq. of
--------
the New Jersey Business Corporation Act.
39
ARTICLE X
CLOSING AND EFFECTIVE DATE
--------------------------
Section 10.1 Closing. Provided that all conditions precedent set forth in
------------ -------
Article VII of this Agreement shall have been satisfied or shall have been
waived in accordance with Section 8.4 of this Agreement, the parties shall hold
a closing (the "Closing") at the offices of FFC at One Penn Square, Lancaster,
Pennsylvania, within thirty (30) days after the receipt of all required
regulatory approvals and after the expiration of all applicable waiting periods
on a date to be agreed upon by the parties, at which time the parties shall
deliver the GCB Closing Documents, the FFC Closing Documents, the opinions of
counsel required by Sections 7.1(c), 7.2(c) and 7.3(c) herein, and such other
documents and instruments as may be necessary or appropriate to effectuate the
purposes of this Agreement.
Section 10.2 Effective Date. The merger of GCB with and into FFC shall become
------------ --------------
effective and this Agreement shall be consummated on the date specified in the
Articles or Certificate of Merger (the "Effective Date") as filed with the
Secretary of State of the State of New Jersey and the Department of State of the
Commonwealth of Pennsylvania.
ARTICLE XI
NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES
---------------------------------------------
Section 11.1 No Survival. The representations and warranties of GCB and of
------------ -----------
FFC set forth in this Agreement shall expire and be terminated on the Effective
Date by consummation of this Agreement, and no such representation or warranty
shall thereafter survive.
ARTICLE XII
GENERAL PROVISIONS
------------------
Section 12.1 Expenses. Except as provided in Section 8.2(b) herein, each
------------ --------
party shall pay its own expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated herein. For purposes of this
Section 12.1 herein, the cost of printing the Proxy Statement/Prospectus shall
be deemed to be an expense of FFC.
40
Section 12.2 Other Mergers and Acquisitions. Subject to the right of GCB to
------------ ------------------------------
refuse to consummate this Agreement pursuant to Section 8.1(c) herein by reason
of a material breach by FFC of the warranty and representation set forth in
Section 4.7 herein, nothing set forth in this Agreement shall be construed: (i)
to preclude FFC from acquiring, or to limit in any way the right of FFC to
acquire, prior to or following the Effective Date, the stock or assets of any
other financial services institution or other corporation or entity, whether by
issuance or exchange of FFC Common Stock or otherwise; (ii) to preclude FFC from
issuing, or to limit in any way the right of FFC to issue, prior to or following
the Effective Date, FFC Common Stock, FFC Preferred Stock or any other equity or
debt securities; or (iii) to preclude FFC from taking, or to limit in any way
the right of FFC to take, any other action not expressly and specifically
prohibited by the terms of this Agreement.
Section 12.3 Notices. All notices, claims, requests, demands and other
------------ -------
communications which are required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly delivered if delivered
in person, transmitted by telegraph or facsimile machine (but only if receipt is
acknowledged in writing), or mailed by registered or certified mail, return
receipt requested, as follows:
(a) If to FFC, to:
Rufus A. Fulton, Jr., President
and Chief Executive Officer
Fulton Financial Corporation
One Penn Square
P.O. Box 4887
Lancaster, Pennsylvania 17604
With a copy to:
Paul G. Mattaini, Esq.
Barley, Snyder, Senft & Cohen
126 East King Street
Lancaster, PA 17602
41
(b) If to GCB, to:
Warner A. Knobe, President and
Chief Executive Officer
Gloucester County Bankshares, Inc.
1100 Old Broadway
Woodbury, NJ 08096
With a copy to:
James J. Winn, Jr., Esq.
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, MD 21201
Section 12.4 Counterparts. This Agreement may be executed simultaneously in
------------ ------------
several counterparts, each of which shall be deemed an original, but all such
counterparts together shall be deemed to be one and the same instrument.
Section 12.5 Governing Law. This Agreement shall be deemed to have been made
------------ -------------
in, and shall be governed by and construed in accordance with the substantive
laws of, the Commonwealth of Pennsylvania.
Section 12.6 Parties in Interest. This Agreement shall be binding upon and
------------ -------------------
inure to the benefit of the parties hereto and their respective successors,
assigns and legal representatives; provided, however, that neither party may
-------- -------
assign its rights or delegate its duties under this Agreement without the prior
written consent of the other party.
Section 12.7 Entire Agreement. This Agreement, together with the Warrant
------------ ----------------
Agreement and the Warrant being executed by the parties on the date hereof, sets
forth the entire understanding and agreement of the parties hereto and
supersedes any and all prior agreements, arrangements and understandings,
whether oral or written, relating to the subject matter hereof and thereof.
Section 12.8 Materiality Standard. For the purposes of this Agreement, terms
------------ --------------------
such as "material," "materially," "in any material respect," etc., as they may
apply to GCB or its subsidiaries, shall be measured with respect to GCB and its
subsidiaries on a consolidated basis.
42
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers all as of the day and year first above written.
FULTON FINANCIAL CORPORATION
By: /s/ Rufus A. Fulton, Jr.
--------------------------------
Rufus A. Fulton, Jr., President
and Chief Executive Officer
Attest: /s/ K. E. Shenenberger
-----------------------------
K. E. Shenenberger, Secretary
GLOUCESTER COUNTY BANKSHARES, INC.
By: /s/ Warner A. Knobe
--------------------------------
Warner A. Knobe, President
and Chief Executive Officer
Attest: /s/ Dale T. Taylor
----------------------------
Dale T. Taylor, Secretary
INDEX OF SCHEDULES
------------------
Schedule 2.3 GCB Options
- - ------------
Schedule 3.7 Undisclosed Liabilities
- - ------------
Schedule 3.8 Changes
- - ------------
Schedule 3.9 Dividends, Distributions and Stock Purchases
- - ------------
Schedule 3.10 Taxes
- - -------------
Schedule 3.11 Title to and Condition of Assets
- - -------------
Schedule 3.12 Contracts
- - -------------
Schedule 3.13 Litigations and Governmental Directives
- - -------------
Schedule 3.14 Compliance with Laws; Governmental
- - ------------- Authorizations
Schedule 3.15 Insurance
- - -------------
Schedule 3.16 Financial Institution Bonds
- - -------------
Schedule 3.17 Labor Relations and Employment Agreements
- - -------------
Schedule 3.18 Employee Benefit Plans
- - -------------
Schedule 3.19 Related Party Transactions
- - -------------
Schedule 3.20 Finders
- - -------------
Schedule 3.22 Environmental Matters
- - -------------
Schedule 3.26 Loan Portfolio
- - -------------
Schedule 3.27 Investment Portfolio
- - -------------
Schedule 4.5 Subsidiaries
- - ------------
Schedule 4.7 Undisclosed Liabilities
- - ------------
Schedule 4.9 Litigation and Governmental Directives
- - ------------
Schedule 4.10 Compliance with Laws; Governmental
- - ------------- Authorizations
Schedule 4.14 Environmental Matters
- - -------------
INDEX OF EXHIBITS
-----------------
Exhibit A Form of Warrant Agreement
- - ---------
Exhibit B Form of Warrant
- - ---------
Exhibit C Form of Plan of Merger
- - ---------
Exhibit D Forms of Severance Agreements
- - ---------
Exhibit E Form of Opinion of GCB's Counsel
- - ---------
Exhibit F Form of Non-Compete Agreement
- - ---------
Exhibit G Form of Opinion of FFC's Counsel
- - ---------