SEPARATION AND DISTRIBUTION AGREEMENT
BETWEEN
REPUBLIC FIRST BANCORP, INC.
AND
FIRST BANK OF DELAWARE
Table of Contents
Page
ARTICLE I CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION DATE....................................................1
Section 1.1 Treatment of Intercompany Accounts.....................................................1
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Section 1.2 Charter and Bylaws.....................................................................1
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Section 1.3 Documents to Be Delivered By RFB and SpinCo............................................2
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ARTICLE II THE DISTRIBUTION.......................................................................................2
Section 2.1 The Distribution.......................................................................2
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Section 2.2 Actions In Connection with the Distribution............................................3
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Section 2.3 Sole Discretion of RFB.................................................................3
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Section 2.4 Conditions To Distribution.............................................................4
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ARTICLE III ACCESS TO INFORMATION.................................................................................5
Section 3.1 Provision of Corporate Records.........................................................5
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Section 3.2 Access to Information..................................................................6
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Section 3.3 Reimbursement; Other Matters...........................................................6
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Section 3.4 Confidentiality........................................................................6
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Section 3.5 Privileged Matters.....................................................................7
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Section 3.6 Ownership of Information...............................................................8
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Section 3.7 Retention of Records...................................................................9
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Section 3.8 Limitation of Liability; Release.......................................................9
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Section 3.9 Other Agreements Providing for Exchange of Information.................................9
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ARTICLE IV INDEMNIFICATION AND DISPUTE RESOLUTION................................................................10
Section 4.1 Indemnification by RFB................................................................10
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Section 4.2 Indemnification by SpinCo.............................................................10
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Section 4.3 Negotiation...........................................................................10
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Section 4.4 Continuity of Service and Performance.................................................10
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Section 4.5 Other Remedies........................................................................10
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Section 4.6 Tolling...............................................................................10
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ARTICLE V MISCELLANEOUS..........................................................................................11
Section 5.1 Entire Agreement......................................................................11
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Section 5.2 Governing Law.........................................................................11
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Section 5.3 Termination...........................................................................11
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Section 5.4 Notices...............................................................................11
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Section 5.5 Counterparts..........................................................................12
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Section 5.6 Binding Effect; Assignment; Third-Party Beneficiaries.................................12
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Section 5.7 Severability..........................................................................12
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Section 5.8 Failure or Indulgence Not Waiver; Remedies Cumulative.................................12
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Section 5.9 Amendment.............................................................................13
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Section 5.10 Authority.............................................................................13
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Section 5.11 Interpretation........................................................................13
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Section 5.12 Conflicting Agreements................................................................13
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ARTICLE VI DEFINITIONS...........................................................................................13
(i)
SEPARATION AND DISTRIBUTION AGREEMENT
THIS SEPARATION AND DISTRIBUTION AGREEMENT (this "Agreement") is
entered into as of January 31, 2005, between Republic First Bancorp, Inc., a
Pennsylvania corporation ("RFB"), and First Bank of Delaware, a Delaware
corporation ("SpinCo"). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in Article VI hereof.
RECITALS
WHEREAS, the Board of Directors of RFB (the "RFB Board") has determined
that it is appropriate and desirable for RFB to separate RFB's Pennsylvania
banking operations from RFB's Delaware banking operations in a manner that would
permit RFB to divest its entire ownership interest in SpinCo through a pro-rata
distribution of all of the outstanding shares of common stock of SpinCo (the
"SpinCo Common Stock") to the holders of common stock of RFB (the "RFB Common
Stock"), pursuant to the terms and subject to the conditions of this Agreement
(the "Distribution");
WHEREAS, the Distribution is intended to qualify as a tax-free
transaction to RFB and its shareholders pursuant to Sections 355 and
368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, SpinCo has filed with the FDIC a registration statement on
Form 10 to effect the registration of the SpinCo Common Stock in connection with
the Distribution (the "Form 10");
WHEREAS, RFB has filed an Information Statement on Schedule 14-C with
the Securities and Exchange Commission describing SpinCo common stock and the
Distribution, among other matters, and has mailed the Information Statement to
its shareholders;
WHEREAS, the parties intend in this Agreement, including the Schedules
and Exhibits hereto, to set forth the principal arrangements between them
regarding the Distribution;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I
CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION DATE
Section 1.1 Treatment of Intercompany Accounts. On or prior to the
Distribution Date intercompany accounts, if any, shall be settled.
Section 1.2 Charter and Bylaws. RFB and SpinCo shall each take all
actions that may be required to provide for the adoption by SpinCo, at or prior
to the Distribution Date, of the Amended and Restated Articles of Incorporation
and the Amended and Restated Bylaws in substantially the same forms attached
hereto as Exhibit A and Exhibit B, respectively.
Section 1.3 Documents to Be Delivered By RFB and SpinCo. On or prior
to the Distribution Date, RFB will execute and deliver to SpinCo, and SpinCo
will execute and deliver to RFB, all of the following items and agreements
(collectively, together with all agreements and documents contemplated by this
Agreement as such agreements may be amended from time to time, the "Ancillary
Agreements"):
(a) the Tax Disaffiliation Agreement; and
(b) such other agreements, documents or instruments as the parties
may agree are necessary or desirable in order to achieve the
purposes hereof.
Unless otherwise provided herein, the document deliveries contemplated
in this Section 1.3 shall occur on or prior to the Distribution Date.
ARTICLE II
THE DISTRIBUTION
Section 2.1 The Distribution.
(a) Cooperation. SpinCo shall cooperate with RFB to accomplish the
Distribution and shall, at RFB's direction, promptly take any and all
actions necessary or desirable to effect the Distribution. RFB may select
any investment bank or manager in connection with the Distribution, as well
as any financial printer, solicitation and/or exchange agent and financial,
legal, accounting and other advisors for RFB; provided, that, nothing
herein shall prohibit SpinCo from engaging (at its own expense) its own
financial, legal, accounting and other advisors in connection with the
Distribution or using the same advisors engaged by RFB. SpinCo and RFB, as
the case may be, will provide to the distribution or exchange agent to be
appointed by RFB (the "Distribution Agent") all share certificates and any
information required in order to complete the Distribution.
(b) Distribution Mechanics.
(i) Subject to Sections 2.3 and 2.4, on or prior to the
Distribution Date, RFB will deliver to the Distribution Agent for the
benefit of holders of RFB Common Stock on the Record Date, a single
stock certificate, endorsed by RFB in blank, representing all of the
outstanding shares of SpinCo Common Stock then owned by RFB, and shall
cause the transfer agent for the RFB Common Stock to instruct the
Distribution Agent to distribute on or as soon as practicable after
the Distribution Date the appropriate number of such shares of SpinCo
Common Stock to each such holder or designated transferee or
transferees of such holder of RFB Common Stock. The Distribution shall
be effective at 12:01 a.m. Eastern Standard Time on the Distribution
Date.
(ii) Subject to Sections 2.3 and 2.4, each holder of RFB Common
Stock on the Record Date (or such holder's designated transferee or
transferees) will be entitled to receive in the pro-rata distribution
a number of shares of SpinCo Common Stock equal to the number of
shares of RFB Common Stock held by such holder on the Record Date
multiplied by the distribution ratio determined by the RFB Board when
it declares the Distribution. RFB and
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SpinCo, as the case may be, will provide to the Distribution Agent
all share certificates and any information required in order to
complete the Distribution on the basis specified above.
Section 2.2 Actions In Connection with the Distribution.
(a) Form 10 and Information Statement. SpinCo shall file such
amendments and supplements to the Form 10, and such amendments as may
be necessary in order to cause the same to become and remain effective
as required by Law, including filing such amendments and supplements
to the Form 10 as may be required by the FDIC or federal, state or
foreign securities Laws. SpinCo shall mail to the holders of RFB
Common Stock, at such time on or prior to the Distribution Date as RFB
shall determine, an Information Statement on Schedule 14-C, as well as
any other information concerning SpinCo, its business, operations and
management, the Distribution and such other matters as RFB shall
reasonably determine are necessary and as may be required by Law.
(b) Other Documentation. RFB and SpinCo shall also cooperate in
preparing, filing with the FDIC and causing to become effective
registration statements or amendments thereof which are required to
reflect the establishment of, or amendments to, any employee benefit
and other plans necessary or appropriate in connection with the
Distribution or other transactions contemplated by this Agreement and
the Ancillary Agreements. Promptly after receiving a request to do so
from RFB, to the extent requested by RFB, SpinCo shall prepare and, to
the extent required under applicable Law, file with the FDIC any such
documentation that RFB determines is necessary or desirable to
effectuate the Distribution, and RFB and SpinCo shall each use its
reasonable commercial efforts to obtain all necessary approvals from
the FDIC with respect thereto as soon as practicable.
(c) Blue Sky. Promptly after receiving a request to do so from
RFB, SpinCo shall take all such actions as may be necessary or
appropriate under the securities or blue sky laws of the United States
(and any comparable Laws under any foreign jurisdiction) in connection
with the Distribution.
(d) Exchange Listing. Promptly after receiving a request to do so
from RFB, SpinCo shall prepare and file, and shall use its reasonable
commercial efforts to have approved and made effective, an application
for the original listing of the SpinCo Common Stock to be distributed
in the Distribution on the Over-The-Counter Bulletin Board or the Pink
Sheets, subject to official notice of distribution. In addition, RFB
shall, to the extent possible, give NASDAQ not less than ten days
advance notice of the Record Date in compliance with Rule 10b-17 under
the Securities Exchange Act of 1934, as amended.
(e) Conditions. SpinCo shall take all reasonable steps necessary
and appropriate to cause the conditions set forth in Section 2.4 to be
satisfied and to effect the Distribution, or any portion thereof, on
the terms, in the manner and on the Distribution Date.
Section 2.3 Sole Discretion of RFB. RFB shall, in its sole and
absolute discretion, determine the date of the consummation of the Distribution
and all terms of the Distribution, including, without limitation, the form,
structure and terms of any transaction(s) and/or offering(s) to effect the
Distribution and the timing of and conditions to the consummation
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thereof. In addition, RFB may at any time and from time to time until the
completion of the Distribution decide to abandon the Distribution or modify or
change the terms of the Distribution, including, without limitation, by
accelerating or delaying the timing of the consummation of all or part of the
Distribution.
Section 2.4 Conditions To Distribution. Subject to Section 2.3, the
following are conditions to the consummation of any part of the Distribution.
The conditions are for the sole benefit of RFB and shall not give rise to or
create any duty on the part of RFB or the RFB Board to waive or not waive any
such condition.
(a) Effective Form 10. The Form 10 shall have been declared
effective under the FDIC rules, with no stop order in effect with
respect thereto, and the Information Statement shall have been mailed
to the holders of RFB Common Stock.
(b) Schedule 14-C. The Information Statement on Schedule 14-C
shall have been distributed to the shareholders of RFB at least twenty
(20) days prior to the Distribution Date.
(c) Blue Sky Laws. The actions and filings with regard to state
securities and blue sky laws of the United States (and any comparable
Laws under any foreign jurisdictions) described in Section 2.2(c)
shall have been taken and, where applicable, have become effective or
been accepted.
(d) Exchange Listing. Arrangements shall have been made to have
the SpinCo Common Stock quoted by a market maker for trading on the
Over-The-Counter Bulletin Board or Pink Sheets at the Effective Time
or as soon as reasonably practicable thereafter, subject to official
notice of issuance.
(e) IRS Ruling. RFB shall have obtained a private letter ruling
from the Internal Revenue Service in form and substance satisfactory
to RFB (in its sole discretion), and such ruling shall remain in
effect, to the effect that (i) the distribution by RFB to the holders
of RFB Common Stock on the Record Date of all the SpinCo Common Stock
in the manner determined by RFB will qualify as a tax-free
distribution for U.S. federal income tax purposes under Section 355 of
the Code; (ii) no gain or loss will be recognized by (and no amount
will otherwise be included in the income of) RFB as a result of the
Distribution; and (iii) no gain or loss will be recognized by (and no
amount will otherwise be included in the income of) the holders of RFB
Common Stock on the Record Date upon their receipt of shares of SpinCo
Common Stock pursuant to the Distribution.
(f) Charter and Bylaws. SpinCo's Amended and Restated Articles of
Association and Amended and Restated Bylaws in substantially the forms
attached hereto as Exhibit A and Exhibit B, respectively, shall be in
effect.
(g) Ancillary Agreements. Each of the Ancillary Agreements shall
have been duly executed and delivered by the parties thereto and shall
be in full force and effect.
(h) Governmental Approvals. Any material Governmental Approvals
necessary to consummate the Distribution or any portion thereof shall
have been obtained and be in full force and effect.
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(i) No Legal Restraints. No order, injunction or decree issued by
any court or agency of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of all or any portion of
the Distribution shall be in effect, and no other event outside the
control of RFB shall have occurred or failed to occur that prevents
the consummation of all or any portion of the Distribution.
(j) No Inadvisable Event. The RFB Board shall have approved the
Distribution and shall have not determined that any events or
developments shall have occurred that make it inadvisable to effect
the Distribution.
(k) Fractional Shares. No certificates representing fractional
shares of SpinCo Common Stock will be distributed in the Distribution.
As soon as practicable after the consummation of any portion of the
Distribution, RFB shall direct the Distribution Agent to determine the
number of whole shares and fractional shares of SpinCo Common Stock
allocable to each holder of record or beneficial owner of RFB Common
Stock otherwise entitled to fractional shares of SpinCo Common Stock,
to aggregate all such fractional shares and sell the whole shares
obtained thereby at the direction of RFB, in open market transactions
or otherwise, in each case at then prevailing trading prices, and to
cause to be distributed to each such holder or for the benefit of each
such beneficial owner to which a fractional share shall be allocable
such holder or owner's ratable share of the proceeds of such sale,
after making appropriate deductions for any amount required to be
withheld for U.S. federal income tax purposes and to repay expenses
reasonably incurred by the Distribution Agent, including all brokerage
charges, commissions and transfer taxes, in connection with such sale.
RFB and the Distribution Agent shall use their reasonable commercial
efforts to aggregate the shares of RFB Common Stock that may be held
by any beneficial owner thereof through more than one account in
determining the fractional share allocable to such beneficial owner.
ARTICLE III
ACCESS TO INFORMATION
Section 3.1 Provision of Corporate Records.
(a) After the Effective Time, upon the prior written request by
SpinCo for specific and identified agreements, documents, books,
records or files (collectively, "Records") which relate to (x) SpinCo,
the conduct of the business of SpinCo up to the Effective Time or the
ownership of the SpinCo Assets up to the Effective Time, or (y) any
Ancillary Agreement (other than, if needed, the Tax Disaffiliation
Agreement), RFB shall arrange, as soon as reasonably practicable
following the receipt of such request, to provide such Records (or
appropriate copies thereof if RFB has a reasonable need to retain the
originals) in the possession or control of RFB or any of the RFB
Subsidiaries, but only to the extent such items are not already in the
possession or control of SpinCo.
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(b) After the Effective Time, upon the prior written request by
RFB for specific and identified Records which relate to (x) RFB, the
conduct of the RFB Business up to the Effective Time or the ownership
of the RFB Assets up to the Effective Time, or (y) any Ancillary
Agreement (other than, if needed, the Tax Disaffiliation Agreement),
SpinCo shall arrange, as soon as reasonably practicable following the
receipt of such request, to provide such Records (or appropriate
copies thereof if SpinCo has a reasonable need to retain the
originals) in the possession or control of SpinCo but only to the
extent such items are not already in the possession or control of RFB.
Section 3.2 Access to Information.After the Effective Time, each of
RFB and SpinCo shall afford to the other and its authorized representatives
reasonable access during normal business hours, subject to appropriate
restrictions for classified, privileged or confidential information, to the
personnel, properties, and Records of such party and its Subsidiaries insofar as
such access is reasonably required by the other party and relates to (x) such
other party or the conduct of its business or ownership of its Assets prior to
the Effective Time, (y) any Ancillary Agreement or (z) litigation or threatened
litigation against such party.
Section 3.3 Reimbursement; Other Matters. Except to the extent
otherwise contemplated by any Ancillary Agreement, a party providing Records or
access to personnel, properties or Records to the other party under this Article
III shall be entitled to receive from the recipient, upon the presentation of
invoices therefor, reimbursement for payments made for supplies, disbursements
and other out-of-pocket expenses (including attorneys' fees and disbursements),
as may be reasonably incurred in providing such Records or access to personnel,
properties or Records.
Section 3.4 Confidentiality. Neither (i) RFB nor the RFB Subsidiaries
nor (ii) SpinCo shall use or permit the use of (without the prior written
consent of the other) and each such entity shall keep, and shall cause its
representatives to keep, confidential all information concerning the other party
in its possession, its custody or under its control (except to the extent that
(A) such information has been in the public domain through no fault of such
party or (B) such information has been later lawfully acquired from other
sources by such party or (C) this Agreement or any other Ancillary Agreement or
any other agreement entered into pursuant hereto permits the use or disclosure
of such information) to the extent such information, (w) relates to or was
acquired during the period up to the Effective Time, (x) relates to any
Ancillary Agreement, (y) is obtained in the course of performing services for
the other party pursuant to any Ancillary Agreement, or (z) is based upon or is
derived from information described in the preceding clauses (w), (x) or (y), and
each party shall not (without the prior written consent of the other) otherwise
release or disclose such information to any other Person, except such party's
representatives, unless compelled to disclose such information by judicial or
administrative process or unless such disclosure is required by Law and such
party has provided the other party with prompt notice of such requirement in
order to afford the other party the opportunity to seek an appropriate
protective order or other remedy. In the event that such protective order or
other remedy is not obtained or that the other party does not waive compliance
with the provisions of this Section 3.4, the first party will furnish only that
portion of such information that it is advised by opinion of counsel, which
counsel shall be reasonably acceptable to the other party, is legally required
and will endeavor to obtain assurance that confidential treatment will be
accorded the information so furnished.
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Notwithstanding anything herein to the contrary, except as reasonably
necessary to comply with applicable securities laws, RFB, SpinCo and their
respective representatives may (i) consult any tax advisor regarding U.S.
federal income tax treatment or tax structure of the transactions contemplated
by this Agreement, and (ii) disclose to any and all persons, without limitation
of any kind, the U.S. federal income tax treatment and tax structure of the
transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to either RFB or
SpinCo relating to such tax treatment or tax structure.
Section 3.5 Privileged Matters. The parties hereto recognize that
legal and other professional services that have been and will be provided prior
to the Effective Time have been and will be rendered for the benefit of each of
the members of the RFB Group, and each of the members of the SpinCo Group, and
that each of the members of the RFB Group, and each of the members of the SpinCo
Group, should be deemed to be the client for the purposes of asserting all
privileges which may be asserted under applicable Law. Except as otherwise
specifically provided in the Tax Disaffiliation Agreement, if any, with respect
to tax matters, to allocate the interests of each party in the information as to
which any party is entitled to assert a privilege, the parties agree as follows:
(a) RFB shall be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged
information which relates solely to the RFB Business, whether or not
the privileged information is in the possession of or under the
control of RFB or SpinCo. RFB shall also be entitled, in perpetuity,
to control the assertion or waiver of all privileges in connection
with privileged information that relates solely to the subject matter
of any claims constituting RFB Liabilities, now pending or which may
be asserted in the future, in any Action initiated against or by RFB,
whether or not the privileged information is in the possession of or
under the control of RFB or SpinCo.
(b) SpinCo shall be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged
information which relates solely to the business of SpinCo, whether or
not the privileged information is in the possession of or under the
control of RFB or SpinCo. SpinCo shall also be entitled, in
perpetuity, to control the assertion or waiver of all privileges in
connection with privileged information which relates solely to the
subject matter of any claims constituting SpinCo Liabilities, now
pending or which may be asserted in the future, in any Action
initiated against or by SpinCo, whether or not the privileged
information is in the possession of SpinCo or under the control of RFB
or SpinCo.
(c) The parties hereto agree that they shall have a shared
privilege, with equal right to assert or waive, subject to the
restrictions in this Section 3.5, with respect to all privileges not
allocated pursuant to the terms of Sections 3.5(a) and (b). All
privileges relating to any Action, disputes or other matters which
involve RFB and SpinCo in respect of which such parties retain any
responsibility or liability under this Agreement, shall be subject to
a shared privilege among them.
(d) No party hereto may waive any privilege which could be
asserted under any applicable Law, and in which any other party hereto
has a shared privilege, without the consent of the other party, which
consent shall not be unreasonably withheld or delayed, except to the
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extent reasonably required in connection with any Action with Third
Parties or as provided in subsection (e) below.
(e) In the event of any Action or dispute between any of the
parties hereto, any party and a Subsidiary of another party hereto, or
a Subsidiary of one party hereto and a Subsidiary of another party
hereto, either such party, to the extent necessary in connection with
such Action or dispute, may waive a privilege in which the other party
has a shared privilege, without obtaining the consent of the other
party, provided that such waiver of a shared privilege shall be
effective only as to the use of information with respect to such
Action or dispute between the relevant parties and/or their
Subsidiaries, and shall not operate as a waiver of the shared
privilege with respect to Third Parties.
(f) If a dispute arises between or among the parties hereto or
their respective Subsidiaries regarding whether a privilege should be
waived to protect or advance the interest of any party, each party
agrees that it shall negotiate in good faith, shall endeavor to
minimize any prejudice to the rights of the other parties, and shall
not unreasonably withhold consent to any request for waiver by another
party. Each party hereto specifically agrees that it will not withhold
consent to waiver for any purpose except to protect its own legitimate
interests.
(g) Upon receipt by any party hereto or by any Subsidiary thereof
of any subpoena, discovery or other request which arguably calls for
the production or disclosure of information subject to a shared
privilege or as to which another party has the sole right hereunder to
assert a privilege, or if any party obtains knowledge that any of its
or any of its Subsidiaries' current or former representatives has
received any subpoena, discovery or other requests which arguably
calls for the production or disclosure of such privileged information,
such party shall promptly notify the other party of the existence of
the request and shall provide the other party a reasonable opportunity
to review the information (to the extent such information is available
to such party) and to assert any rights it or they may have under this
Section 3.5 or otherwise to prevent the production or disclosure of
such privileged information.
(h) The transfer of all Records and other information pursuant to
this Agreement is made in reliance on the agreement of RFB and SpinCo,
as set forth in Section 3.4 and this Section 3.5, to maintain the
confidentiality of privileged information and to assert and maintain
all applicable privileges. The access to information being granted
pursuant to Sections 3.1 and 3.2 hereof and the transfer of privileged
information between and among the parties and their respective
Subsidiaries pursuant to this Agreement shall not be deemed a waiver
of any privilege that has been or may be asserted under this Agreement
or otherwise.
Section 3.6 Ownership of Information. Any Information owned by one
party or any of its Subsidiaries that is provided to a requesting party pursuant
to this Article III shall be deemed to remain the property of the providing
party. Unless specifically set forth herein, nothing contained in this Agreement
shall be construed as granting or conferring rights of license or otherwise in
any such information.
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Section 3.7 Retention of Records.
(a) RFB shall deliver to SpinCo upon SpinCo's request all Records
that are specifically identified by SpinCo and known by RFB, after
reasonable inquiry, to be in its control or possession relating to
SpinCo Assets, SpinCo Liabilities or the business of SpinCo. Except
(a) as provided in the Tax Disaffiliation Agreement, if needed, or (b)
when a longer retention period is otherwise required by Law or agreed
to in writing, the RFB Group and SpinCo shall retain in a reasonably
retrievable format, for a period of at least six years, all Records
relating to the business of SpinCo as of the Effective Time.
Notwithstanding the foregoing, in lieu of retaining any specific
Records, RFB may offer in writing to deliver such Records to SpinCo
and, if such offer is not accepted within ninety days, the offered
Records may be destroyed or otherwise disposed of at any time. If
SpinCo shall request in writing prior to the expiration of such
ninety-day period that any of Records proposed to be destroyed or
disposed of be delivered to SpinCo, RFB shall promptly arrange for
delivery of such requested Records (at SpinCo's cost).
(b) SpinCo shall deliver to RFB upon RFB's request all Records
that are specifically identified by RFB and known by SpinCo, after
reasonable inquiry, to be in its control or possession relating to RFB
Assets, RFB Liabilities or the business of RFB. Except (i) as provided
in the Tax Disaffiliation Agreement, if needed, or (ii) when a longer
retention period is otherwise required by Law or agreed to in writing,
the RFB Group and SpinCo shall retain in a reasonably retrievable
format, for a period of at least six years, all Records relating to
the business of RFB as of the Effective Time. Notwithstanding the
foregoing, in lieu of retaining any specific Records, SpinCo may offer
in writing to deliver such Records to RFB and, if such offer is not
accepted within ninety days, the offered Records may be destroyed or
otherwise disposed of at any time. If RFB shall request in writing
prior to the expiration of such ninety-day period that any of Records
proposed to be destroyed or disposed of be delivered to RFB, SpinCo
shall promptly arrange for delivery of such requested Records (at
RFB's cost).
Section 3.8 Limitation of Liability; Release.
(a) No party shall have any liability to any other party in the
event that any information exchanged or provided pursuant to this
Agreement which is an estimate or forecast, or which is based on an
estimate or forecast, is found to be inaccurate.
(b) Effective upon the Distribution and except as otherwise
specifically set forth in this Agreement, each of RFB and SpinCo
releases and forever discharges the other and its representatives and
Subsidiaries, of and from all Liabilities against such other party,
its representatives and Subsidiaries or any of its successors or
assigns, which the releasing party has or ever had, which arise out of
or relate to events, circumstances or actions taken by such other
party prior to the Distribution; provided, however, that the foregoing
general release shall not apply to this Agreement, the Ancillary
Agreements or the transactions contemplated hereby or thereby and
shall not affect either party's right to enforce this Agreement or any
of the Ancillary Agreements in accordance with their terms.
Section 3.9 Other Agreements Providing for Exchange of Information.
The rights and obligations granted under this Article III are subject to any
specific limitations, qualifications or additional provisions on the sharing,
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exchange or confidential treatment of Information set forth in any Ancillary
Agreement.
ARTICLE IV
INDEMNIFICATION AND DISPUTE RESOLUTION
Section 4.1 Indemnification by RFB. RFB shall, and shall cause each
member of the RFB Group to, indemnify, defend and hold harmless SpinCo from and
against any and all Losses of SpinCo arising out of, by reason of or otherwise
in connection with the RFB Liabilities or alleged RFB Liabilities, including any
breach by RFB of any provision of this Section 4.1.
Section 4.2 Indemnification by SpinCo. SpinCo shall, and shall cause
each member of SpinCo to, indemnify, defend and hold harmless RFB from and
against any and all Losses of RFB arising out of, by reason of or otherwise in
connection with the SpinCo Liabilities or alleged SpinCo Liabilities, including
any breach by SpinCo of any provision of this Section 4.2. SpinCo shall be
jointly and severally liable for the indemnification obligations imposed by this
Section 4.2.
Section 4.3 Negotiation. In the event of a controversy, dispute or
claim arising out of, in connection with, or in relation to the interpretation,
performance, nonperformance, validity or breach of this Agreement or otherwise
arising out of, or in any way related to this Agreement or the transactions
contemplated hereby, including any claim based on contract, tort, statute or
constitution (but excluding any controversy, dispute or claim arising out of any
agreement relating to the use or lease of real property if any Third Party is a
party to such controversy, dispute or claim) (collectively, "Agreement
Disputes"), the management of the parties shall negotiate in good faith for a
reasonable period of time to settle such Agreement Dispute; provided, however,
such reasonable period shall not, unless otherwise agreed by the parties in
writing, exceed sixty days from the time a party has first given written notice
of such Agreement Dispute to the other party.
Section 4.4 Continuity of Service and Performance. Unless otherwise
agreed in writing, the parties will continue to provide services and honor all
other commitments under this Agreement and each Ancillary Agreement during the
course of dispute resolution pursuant to the provisions of this Article IV with
respect to all matters not subject to such dispute, controversy or claim.
Section 4.5 Other Remedies. Nothing in this Article IV shall limit
the right that any party may otherwise have to seek to obtain from any court of
competent jurisdiction (i) preliminary injunctive relief in order to preserve
the status quo pending the resolution of a dispute or (ii) temporary or
permanent injunctive relief from any breach of any provisions of this Agreement.
By seeking such relief, a party in no way waives its arbitration rights under
this Agreement.
Section 4.6 Tolling. The parties acknowledge and agree that any
statute of limitations or any other defense that could be raised by a party
based upon the passage or expiration of time with respect to any Agreement
Dispute shall be suspended and tolled during the period in which
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the parties are negotiating in good faith pursuant to Section 4.3 hereof. The
parties' time to commence any action in connection with any Agreement Dispute
will not be extended by the number of days encompassed in the tolled period, and
no party will be prejudiced in any way by the passage of time during the tolled
period.
ARTICLE V
MISCELLANEOUS
Section 5.1 Entire Agreement. This Agreement, the Ancillary
Agreements and the Annexes, Exhibits and Schedules referenced or attached hereto
and thereto, constitute the entire agreement between the parties with respect to
the subject matter hereof and thereof and shall supersede all prior written and
oral and all contemporaneous oral agreements and understandings, negotiations,
discussions, writings, commitments and conversations with respect to the subject
matter hereof and thereof, and there are no agreements or understandings between
the parties other than those set forth or referred to herein or therein.
Section 5.2 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with and all Agreement Disputes hereunder
shall be governed by the procedural Laws and substantive Laws of the
Commonwealth of Pennsylvania as to all matters regardless of the Laws that might
otherwise govern under principles of conflicts of laws applicable thereto.
Section 5.3 Termination. This Agreement and all Ancillary Agreements
may be terminated at any time prior to the Distribution by and in the sole
discretion of RFB without the approval of SpinCo or the shareholders of RFB. In
the event of termination pursuant to this Section 5.3, no party shall have any
liability of any kind to the other party or any other Person, except to the
extent otherwise agreed by the parties.
Section 5.4 Notices. All notices and other communications required or
permitted to be given by either party pursuant to the terms of this Agreement
shall be in writing to and shall be deemed to have been duly given when
delivered in person, by express or overnight mail delivery by a nationally
recognized courier (delivery charges prepaid), or by registered or certified
mail (postage prepaid, return receipt requested), as follows:
if to RFB:
Republic First Bancorp, Inc.
1608 Walnut Street
Philadelphia, Pennsylvania 19103
Attention: Harry D. Madonna, CEO
if to SpinCo:
First Bank of Delaware
Brandywine Commons
1000 Rocky Run Parkway
11
Wilmington, Delaware 19803
Attention: Paul Frenkiel, CFO
or to such other address as the party to whom notice is given may have
previously furnished to the other in writing in the manner set forth above. All
notices and other communication shall be deemed to have been given and received
on the date of actual delivery.
Section 5.5 Counterparts. This Agreement, including the Schedules and
Exhibits hereto and the other documents referred to herein, and each Ancillary
Agreement may be executed in counterparts, each of which shall be deemed to be
an original but all of which shall constitute one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
Section 5.6 Binding Effect; Assignment; Third-Party Beneficiaries.
SpinCo may not, directly or indirectly, in whole or in part, whether by
operation of Law or otherwise, assign or transfer this Agreement or its rights
hereunder, without RFB's prior written consent and, except as otherwise
permitted hereby, any attempted assignment, transfer or delegation without such
prior written consent shall be voidable at the sole option of RFB. RFB may not,
directly or indirectly, in whole or in part, whether by operation of Law or
otherwise, assign or transfer this Agreement or its rights hereunder, without
SpinCo's prior written consent and, except as otherwise permitted hereby, any
attempted assignment, transfer or delegation without such prior written consent
shall be voidable at the sole option of SpinCo.
Nothing in this Agreement shall restrict any transfer of this Agreement by RFB
or SpinCo, whether by operation of Law or otherwise. Without limiting the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their permitted successors and assigns. This Agreement shall
be binding upon and inure solely to the benefit of each party hereto and its
legal representatives and successors and assigns and nothing in this Agreement,
express or implied, is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 5.7 Severability. If any term or other provision of this
Agreement is determined by a court or administrative agency of competent
jurisdiction or arbitrator in any binding arbitration, to be invalid, illegal or
incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement will nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party hereto. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties hereto as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the fullest
extent possible. If the parties are unable to reach agreement on any such
modification, an arbitrator selected in accordance with Article III shall have
the authority to determine such modification.
Section 5.8 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of either party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation,
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warranty or agreement herein, nor shall any single or partial exercise of any
such right preclude other or further exercise thereof or of any other right. All
rights and remedies existing under this Agreement or the Schedules or Exhibits
attached hereto are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
Section 5.9 Amendment. This Agreement may be amended at any time
prior to the Distribution Date by and in the sole discretion of RFB, without the
approval of SpinCo nor the shareholders of RFB. From and after the Distribution,
no change or amendment will be made to this Agreement except by an instrument in
writing signed on behalf of each of the parties to such agreement.
Section 5.10 Authority. Each of the parties hereto represents to the
other that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement and each Ancillary Agreement, (b)
the execution, delivery and performance by it of this Agreement and each
Ancillary Agreement have been duly authorized by all necessary corporate or
other actions, (c) it has duly and validly executed and delivered this Agreement
and each Ancillary Agreement, and (d) this Agreement and each Ancillary
Agreement is a legal, valid and binding obligation, enforceable against it in
accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting creditors' rights
generally and general equity principles.
Section 5.11 Interpretation. The headings contained in this Agreement,
in any Exhibit or Schedule hereto and in the table of contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.
Section 5.12 Conflicting Agreements. In the event of conflict between
this Agreement and any Ancillary Agreement or other agreement executed in
connection herewith, the provisions of such other agreement shall prevail.
ARTICLE VI
DEFINITIONS
"Action" means any demand, action, suit, countersuit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority or any
arbitration or mediation tribunal.
"Affiliate" means, with respect to any specified Person, a Person that
controls, is controlled by, or is under common control with such specified
Person. As used herein, "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through ownership of voting securities or other interests,
by contract or otherwise.
"Agreement" has the meaning set forth in the Introductory Paragraph hereof.
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"Agreement Disputes" has the meaning set forth in Section 4.3 hereof.
"Ancillary Agreements" has the meaning set forth in Section 1.3 hereof.
"Assets" means assets, properties and rights, wherever located (including
in the possession of vendors or other third parties or elsewhere), whether real,
personal or mixed, tangible, intangible or contingent, in each case whether or
not recorded or reflected or required to be recorded or reflected on the books
and records or financial statements of any Person, including, but not limited
to, the following:
(i) tangible personal property (such as equipment and furniture,
including, but not limited to, office machinery, automated teller
machines, shelving, office supplies and artwork, automobiles and
trucks);
(ii) real property, leaseholds and subleaseholds therein,
improvements, fixtures, and fittings thereon, including, but not
limited to, any banking houses, drive-in banking facilities,
teller facilities and administrative offices together with
appurtenant parking, storage and service facilities, and
easements, rights-of-way, and other appurtenants thereto (such as
appurtenant right in and to public streets);
(iii)intellectual property, goodwill associated therewith, licenses
and sublicenses granted and obtained with respect thereto, and
rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all
jurisdictions;
(iv) agreements, contracts, indentures, mortgages, instruments,
guaranties, other similar arrangements, and rights thereunder
(collectively, "Contracts");
(v) all rights under insurance policies and all rights in the nature
of insurance, indemnification or contribution;
(vi) accounts, notes, and other receivables;
(vii) securities,
(viii) claims, prepayments, refunds, loans, causes of action, choses
in action, rights of recovery, rights of set off, and rights of
recoupment;
(ix) franchises, approvals, permits, licenses, orders, registrations,
certificates, variances, and similar right obtained from any
Governmental Authority;
(x) books, records, ledgers, files, documents, correspondence, lists,
plats, architectural plans, drawings, and specifications,
creative materials, advertising and promotional materials,
studies, reports, and other printed or written materials; and
(xi) cash.
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"Book Value" means with respect to RFB or SpinCo, the shareholders' equity
of such party, determined in accordance with generally acceptable accounting
principles in the United States, as of the close of business on the Distribution
Date.
"Code" has the meaning set forth in the Recitals hereof.
"Contracts" has the meaning set forth in the definition of Assets hereof.
"Distribution" has the meaning set forth in the Recitals hereof.
"Distribution Agent" has the meaning set forth in Section 2.1(a) hereof.
"Distribution Date" means the date as so determined by RFB in its sole and
absolute discretion in accordance with Article II hereof on which the
Distribution is effective.
"Effective Time" means 12:01 a.m., Eastern time, on the Distribution Date.
"Form 10" has the meaning set forth in the Recitals hereof.
"Governmental Approvals" means any notices, reports or other filings to be
made, or any consents, registrations, approvals, permits or authorizations to be
obtained from, any Governmental Authority.
"Governmental Authority" shall mean any federal, state, local, foreign or
international court, government, department, commission, board, bureau, agency,
official or other regulatory, administrative or governmental authority.
"Information" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books, audit
work papers, work papers from internal audits, contracts, instruments, surveys,
discoveries, ideas, concepts, know-how, techniques, designs, specifications,
drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data,
computer data, disks, diskettes, tapes, computer programs or other software,
marketing plans, customer names, communications by or to attorneys (including
attorney-client privileged communications), memos and other materials prepared
by attorneys or under their direction (including attorney work product), and
other technical, financial, employee or business information or data.
"Information Statement" means the information statement on Schedule 14-C.
"Law" means any applicable federal, state, local or foreign law, statute,
ordinance, directive, rule, regulation, judgment, order, injunction, decree,
arbitration award, agency requirement, license or permit of any Governmental
Authority.
"Loss" means any loss, liability, damages, claim, demand, judgment or
settlement of any nature or kind, know or unknown, fixed, accrued, absolute or
contingent, liquidated or unliquidated, including all reasonable costs and
expenses (legal, accounting or otherwise as such costs are incurred) relating
thereto. The amount of any indemnifiable Loss shall be reduced by
15
the net amount of the tax or insurance benefit actually realized by an
indemnified party by reason of such Loss.
"Liabilities" means any and all debts, liabilities, obligations,
responsibilities, response actions, losses, deposits as defined in Section 3(1)
of the Federal Deposit Insurance Act, damages (whether compensatory, punitive or
treble), fines, penalties and sanctions, absolute or contingent, matured or
unmatured, liquidated or unliquidated, foreseen or unforeseen, joint, several or
individual, asserted or unasserted, accrued or unaccrued, known or unknown,
whenever arising, including those arising under or in connection with any Law
(including any environmental law), Action, threatened Action, order or consent
decree of any Governmental Authority, or any award of any arbitration tribunal,
and those arising under any contract, guarantee, commitment or undertaking,
whether sought to be imposed by a Governmental Authority, private party, or
party to this Agreement, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, or otherwise, and
including any costs, expenses, interest, attorneys' fees, disbursements and
expenses of counsel, expert and consulting fees and costs related thereto or to
the investigation or defense thereof.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Record Date" means the close of business on the date to be determined by
the RFB Board as the record date for determining the shareholders of RFB
entitled to receive shares of SpinCo Common Stock pursuant to a pro-rata
distribution of shares of SpinCo Common Stock as part of the Distribution.
"Records" has the meaning set forth in Section 3.1(a) hereof.
"RFB" has the meaning set forth in the Introductory Paragraph hereof.
"RFB Assets" means, collectively, all the Assets owned or held by RFB or
any RFB Subsidiary immediately after giving effect to the Distribution, except
the SpinCo Assets.
"RFB Board" has the meaning set forth in the Recitals hereof.
"RFB Common Stock" has the meaning set forth in the Recitals hereof.
"RFB Group" means RFB and each Subsidiary and Affiliate of RFB immediately
after the Distribution Date and each Person that becomes a Subsidiary or an
Affiliate of RFB (other than any member of the SpinCo Group) after the
Distribution Date.
"RFB Liabilities" means:
(i) any and all Liabilities that are expressly contemplated
by this Agreement or any Ancillary Agreement (or any Schedules
hereto or thereto) as Liabilities to be retained or assumed by
RFB or any member of the RFB Group, and all agreements,
obligations and Liabilities of any member of the RFB Group under
this Agreement or any of the Ancillary Agreements;
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(ii) all Liabilities (other than taxes and any
employee-related Liabilities which are specifically covered by
the Tax Disaffiliation Agreement, if any, primarily relating to,
arising out of or resulting from:
(A) the operation of the business of RFB, as conducted at
any time prior to, on or after the Distribution Date
(including any Liability relating to, arising out of or
resulting from any act or failure to act by any
representative (whether or not such act or failure to
act is or was within such Person's authority));
(B) the operation of any business conducted by RFB or any
RFB Subsidiary at any time after the Effective Time
(including any Liability relating to, arising out of or
resulting from any act or failure to act by any
representative (whether or not such act or failure to
act is or was within such Person's authority)); or
(C) any RFB Assets, whether arising before, on or after the
Distribution Date; and
(iii) RFB's Share of all Shared Liabilities.
Notwithstanding the foregoing, the RFB Liabilities shall not include: (y)
any Liabilities that are expressly contemplated by this Agreement or any
Ancillary Agreement (or any Schedules hereto or thereto) as Liabilities to be
retained or assumed by SpinCo; or (z) all agreements and obligations of SpinCo
under this Agreement or any of the Ancillary Agreements. Any contrary provision
of this Agreement notwithstanding, any Liabilities or Losses in respect of any
Action relating to the Business shall constitute RFB Liabilities.
"RFB Subsidiaries" means all of the Subsidiaries of RFB other than SpinCo.
"Shared Liabilities" means all Liabilities that are neither RFB Liabilities
(as defined without giving effect to clause (iii) of the definition of RFB
Liabilities) nor SpinCo Liabilities (as defined without giving effect to clause
(iv) of the definition of SpinCo Liabilities).
"SpinCo" has the meaning set forth in the Introductory Paragraph hereof.
"SpinCo Assets" means, collectively, all the Assets that will be owned by
SpinCo as of the Effective Time and after giving effect to the Distribution,
including:
(i) all of the Assets reflected on the SpinCo Balance Sheet
or the accounting records supporting such balance sheet;
(ii) all of the Assets expressly allocated to SpinCo under
this Agreement or any of the Ancillary Agreements; and
(iii) any other Asset acquired by the RFB Group or SpinCo
from the date of the SpinCo Balance Sheet to the Effective Time
that is owned by the RFB Group or SpinCo as of the Effective Time
and that is of a nature or type that would have resulted in such
17
Asset being included as an Asset on the SpinCo Balance Sheet had
it been acquired on or prior to the date of the SpinCo Balance
Sheet, determined on a basis consistent with the determination of
the Assets included on the SpinCo Balance Sheet.
"SpinCo Balance Sheet" means the balance sheet of SpinCo, including the
notes thereto, as of September 30, 2004.
"SpinCo Board" has the meaning set forth in the Recitals hereof.
"SpinCo Common Stock" has the meaning set forth in the Recitals hereof.
"SpinCo Liabilities" means:
(i) any and all Liabilities that are expressly contemplated
by this Agreement or any Ancillary Agreement (or any Schedules
hereto or thereto) as Liabilities to be retained or assumed by
SpinCo, and all agreements, obligations and Liabilities of SpinCo
under this Agreement or any of the Ancillary Agreements;
(ii) all Liabilities (other than taxes and any
employee-related Liabilities which are specifically covered by
the Tax Disaffiliation Agreement, if any, primarily relating to,
arising out of or resulting from:
(A) the operation of the business of SpinCo, as
conducted at any time prior to, on or after the Distribution
Date (including any Liability relating to, arising out of or
resulting from any act or failure to act by any
representative with respect to the business of SpinCo
(whether or not such act or failure to act is or was within
such Person's authority));
(B) the operation of any business conducted by SpinCo
at any time after the Effective Time (including any
Liability relating to, arising out of or resulting from any
act or failure to act by any representative (whether or not
such act or failure to act is or was within such Person's
authority)); or
(C) any SpinCo Assets, whether arising before, on or
after the Distribution Date; and
(iii) all Liabilities reflected as liabilities or
obligations on the SpinCo Balance Sheet or the accounting records
supporting such balance sheet, and all Liabilities arising or
assumed after the date of such balance sheet which, had they
arisen or been assumed on or before such date and been retained
as of such date, would have been reflected on such balance sheet,
determined on a basis consistent with the determination of the
Liabilities included on the SpinCo Balance Sheet, subject to any
discharge of such Liabilities subsequent to the date of the
SpinCo Balance Sheet; and
(iv) SpinCo's share of all Shared Liabilities.
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Notwithstanding the foregoing, the SpinCo Liabilities shall not include:
(y) any Liabilities that are expressly contemplated by this Agreement or any
Ancillary Agreement (or any Schedules hereto or thereto) as Liabilities to be
retained or assumed by any member of the RFB Group; or (z) all agreements and
obligations of any member of the RFB Group under this Agreement or any of the
Ancillary Agreements. Any contrary provision of this Agreement notwithstanding,
any Liabilities or Losses in respect of any Action relating to the business of
SpinCo shall constitute SpinCo Liabilities.
"Subsidiary" means with respect to any specified Person, corporation,
limited liability company, partnership or other legal entity of which such
Person or its Subsidiaries owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of the members
of the board of directors or similar governing body.
"Third Party" means a Person who is not a party hereto or a Subsidiary
thereof.
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WHEREFORE, the parties have signed this Distribution Agreement effective as
of the date first set forth above.
REPUBLIC FIRST BANCORP, INC. FIRST BANK OF DELAWARE
By: /s/ Harry D. Madonna By: /s/ Paul Frenkiel
- -------------------------------------------- ------------------------------
Name: Harry D. Madonna Name: Paul Frenkiel
Title: President and Chief Executive Officer Title: Chief Financial Officer
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