AGREEMENT AND PLAN OF MERGER By and between OLD LINE BANCSHARES, INC. And BAY BANCORP, INC. Dated as of September 27, 2017
Exhibit 2.1
AGREEMENT
AND PLAN OF MERGER
By and
between
OLD
LINE BANCSHARES, INC.
And
BAY
BANCORP, INC.
Dated
as of September 27, 2017
TABLE
OF CONTENTS
Page
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BACKGROUND
|
1
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AGREEMENT
|
1
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|
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ARTICLE I. GENERAL
|
1
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|
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Section
1.1
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Background.
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1
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Section
1.2
|
Definitions.
|
1
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Section
1.3
|
The Merger and Related Transactions.
|
15
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Section
1.4
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The Bank Merger.
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16
|
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Section
1.5
|
Additional Actions.
|
16
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ARTICLE II. CONSIDERATION; CONVERSION; EXCHANGE
PROCEDURES
|
17
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|
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Section
2.1
|
Merger Consideration.
|
17
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Section
2.2
|
OLB Common Stock.
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18
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Section
2.3
|
Fractional Shares.
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18
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Section
2.4
|
Objecting BYBK Common Stockholders.
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19
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Section
2.5
|
Exchange Fund; Exchange of BYBK Certificates.
|
19
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Section
2.6
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Adjustments.
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21
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Section
2.7
|
Other Matters.
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22
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ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BYBK
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23
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|
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Section
3.1
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Organization.
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24
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Section
3.2
|
Capitalization.
|
25
|
|
Section
3.3
|
Authority; No Violation; BYBK Debt.
|
26
|
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Section
3.4
|
Consents; Regulatory Approvals.
|
28
|
|
Section
3.5
|
Financial Statements and Related Matters.
|
28
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|
Section
3.6
|
No Material Adverse Effect.
|
29
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Section
3.7
|
Taxes.
|
29
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Section
3.8
|
Contracts; Certain Changes.
|
31
|
|
Section
3.9
|
Ownership of Personal Property; Insurance Coverage.
|
33
|
|
Section
3.10
|
Legal Proceedings.
|
35
|
i
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Section
3.11
|
Compliance with Applicable Law.
|
35
|
|
Section
3.12
|
Labor Matters.
|
38
|
|
Section
3.13
|
ERISA.
|
38
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|
Section
3.14
|
Brokers and Finders.
|
41
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|
Section
3.15
|
Real Property and Leases.
|
41
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|
Section
3.16
|
Environmental Matters.
|
43
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Section
3.17
|
Intellectual Property.
|
44
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|
Section
3.18
|
Information to be Supplied.
|
45
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|
Section
3.19
|
Related Party Transactions.
|
46
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|
Section
3.20
|
Loans.
|
46
|
|
Section
3.21
|
Allowance for Loan Losses.
|
48
|
|
Section
3.22
|
Community Reinvestment Act.
|
48
|
|
Section
3.23
|
Anti-Money Laundering; OFAC; Sanctions; and Information
Security.
|
49
|
|
Section
3.24
|
Securities Activities of Employees.
|
50
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|
Section
3.25
|
Books and Records; Internal Control.
|
50
|
|
Section
3.26
|
Investment Securities.
|
52
|
|
Section
3.27
|
Reorganization.
|
52
|
|
Section
3.28
|
Fairness Opinion.
|
52
|
|
Section
3.29
|
Materials Provided to Stockholders.
|
52
|
|
Section
3.30
|
Absence of Certain Changes.
|
53
|
|
Section
3.31
|
Absence of Undisclosed Liabilities.
|
54
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Section
3.32
|
Option Plans and Convertible Securities.
|
54
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Section
3.33
|
Deposits.
|
54
|
|
Section
3.34
|
Risk Management Instruments.
|
54
|
|
Section
3.35
|
Fiduciary Accounts.
|
55
|
|
Section
3.36
|
Credit Card Accounts and Merchant Processing.
|
55
|
|
Section
3.37
|
No Broker-Dealer Subsidiary.
|
55
|
|
Section
3.38
|
No Insurance Subsidiary.
|
55
|
|
Section
3.39
|
Business.
|
55
|
|
Section
3.40
|
Anti-takeover Laws.
|
55
|
|
Section
3.41
|
Stockholders’ List.
|
56
|
|
Section
3.42
|
Disclosure.
|
56
|
ii
|
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF OLB
|
56
|
|
|
Section
4.1
|
Organization.
|
57
|
|
Section
4.2
|
Capitalization.
|
58
|
|
Section
4.3
|
Authority; No Violation.
|
59
|
|
Section
4.4
|
Consents; Regulatory Approvals.
|
61
|
|
Section
4.5
|
Financial Statements.
|
61
|
|
Section
4.6
|
No Material Adverse Effect.
|
62
|
|
Section
4.7
|
Taxes.
|
62
|
|
Section
4.8
|
Contracts; Certain Changes.
|
63
|
|
Section
4.9
|
Ownership of Personal Property; Insurance Coverage.
|
63
|
|
Section
4.10
|
Legal Proceedings.
|
65
|
|
Section
4.11
|
Compliance with Applicable Law.
|
65
|
|
Section
4.12
|
Labor Matters.
|
68
|
|
Section
4.13
|
ERISA.
|
68
|
|
Section
4.14
|
Brokers and Finders.
|
70
|
|
Section
4.15
|
Real Property and Leases.
|
70
|
|
Section
4.16
|
Environmental Matters.
|
70
|
|
Section
4.17
|
Information to be Supplied.
|
71
|
|
Section
4.18
|
Related Party Transactions.
|
71
|
|
Section
4.19
|
Loans.
|
72
|
|
Section
4.20
|
Allowance for Loan Losses.
|
73
|
|
Section
4.21
|
Community Reinvestment Act.
|
73
|
|
Section
4.22
|
Securities Activities of Employees.
|
73
|
|
Section
4.23
|
Books and Records; Internal Control.
|
74
|
|
Section
4.24
|
Investment Securities.
|
75
|
|
Section
4.25
|
Reorganization.
|
75
|
|
Section
4.26
|
Fairness Opinion.
|
75
|
|
Section
4.27
|
Materials Provided to Stockholders.
|
76
|
|
Section
4.28
|
Absence of Undisclosed Liabilities.
|
76
|
|
Section
4.29
|
Anti-Money Laundering, OFAC and Information Security.
|
76
|
iii
|
Section
4.30
|
Intellectual Property.
|
77
|
|
Section
4.31
|
Business.
|
78
|
|
Section
4.32
|
Disclosure.
|
78
|
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ARTICLE V. COVENANTS OF THE PARTIES
|
78
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|
|
Section
5.1
|
Conduct of BYBK’s Business.
|
78
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Section
5.2
|
Conduct of OLB’s Business.
|
82
|
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Section
5.3
|
Access; Confidentiality.
|
83
|
|
Section
5.4
|
Regulatory Matters.
|
84
|
|
Section
5.5
|
Taking of Necessary Actions.
|
84
|
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Section
5.6
|
Duty to Advise; Duty to Update of Disclosure
Schedules.
|
85
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|
Section
5.7
|
Other Undertakings by OLB and BYBK.
|
85
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Section
5.8
|
Accuracy of the Registration Statement.
|
95
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ARTICLE VI. CONDITIONS
|
96
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|
|
Section
6.1
|
Conditions to BYBK’s Obligations under this
Agreement.
|
96
|
|
Section
6.2
|
Conditions to OLB’s Obligations under this
Agreement.
|
98
|
|
ARTICLE VII. TERMINATION
|
100
|
|
|
Section
7.1
|
Termination.
|
100
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Section
7.2
|
Effect of Termination.
|
103
|
|
ARTICLE VIII. MISCELLANEOUS
|
104
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|
|
Section
8.1
|
Expenses and Other Fees.
|
104
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Section
8.2
|
Non-Survival.
|
105
|
|
Section
8.3
|
Amendment, Extension and Waiver.
|
105
|
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Section
8.4
|
Entire Agreement.
|
106
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Section
8.5
|
Binding Agreement.
|
106
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Section
8.6
|
Notices.
|
106
|
|
Section
8.7
|
Disclosure Schedules.
|
107
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|
Section
8.8
|
Tax Disclosure.
|
107
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|
Section
8.9
|
No Assignment.
|
107
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|
Section
8.10
|
Captions; Interpretation.
|
108
|
|
Section
8.11
|
Counterparts; Electronic Signatures.
|
108
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|
Section
8.12
|
Severability.
|
108
|
iv
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Section
8.13
|
Governing Law; Venue; No Jury Trial.
|
108
|
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Section
8.14
|
Time of Essence.
|
109
|
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Exhibit
A – List of
Stockholders to Execute Support Agreements
|
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Exhibit B – Support Agreement
|
|
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Exhibit
C – Bank Merger
Agreement
|
|
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Exhibit
D – Illustration
of Exchange Ratio and Termination Right
Provisions
|
|
|
v
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER
(“Agreement”), dated as of
September 27, 2017, is made by and between Old Line Bancshares,
Inc., a Maryland corporation (“OLB”), and Bay Bancorp,
Inc., a Maryland corporation (“BYBK”).
BACKGROUND
1. BYBK
owns directly all of the outstanding capital stock of Bay Bank,
FSB, a federal savings bank (“Bay Bank”).
2. OLB
owns directly all of the outstanding capital stock of Old Line
Bank, a trust company with commercial banking powers chartered
under the laws of the State of Maryland (“Old Line”).
3. OLB
and BYBK desire for BYBK to merge with and into OLB, with OLB
surviving the Merger, in accordance with the applicable laws of the
United States, the State of Maryland and this
Agreement.
4. As
an additional condition and inducement to OLB to enter into this
Agreement, each of the individuals listed on Exhibit A has executed
a Support Agreement in the form attached as Exhibit B.
5. Each
of the Parties, by signing this Agreement, adopts it as a plan of
reorganization as defined in IRC Section 368(a) and intends the
Merger to be a reorganization as defined in IRC
Section 368(a).
6. OLB
and BYBK desire to provide for certain undertakings, conditions,
representations, warranties and covenants in connection with the
transactions contemplated hereby and governing the transactions
contemplated herein.
AGREEMENT
NOW THEREFORE, in consideration of the
mutual covenants, agreements, representations and warranties herein
contained, the Parties, intending to be legally bound hereby, agree
as follows:
ARTICLE I.
Section
1.1 Background.
The
Background information is a substantive part of this Agreement and
is incorporated herein and made a part hereof by
reference.
Section
1.2 Definitions.
As used
in this Agreement, the following terms shall have the indicated
meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
401(k) Plan has the meaning given to
the term in Section 5.7(a)(v) of this Agreement.
Acquisition Proposal means a
bona fide written proposal
by a Person other than OLB for: (a) a merger or consolidation of, a
share exchange involving, or an acquisition of 50% or more of the
assets or liabilities of, BYBK or any BYBK Subsidiary, or any other
business combination involving BYBK or any BYBK Subsidiary, in a
single transaction or series of related transactions; or (b) a
transaction that involves the transfer of beneficial ownership of
securities representing, or the right to acquire beneficial
ownership of or to vote securities representing, 10% or more of the
then outstanding shares of BYBK Common Stock or the then
outstanding equity securities of any BYBK Subsidiary.
Affiliate means, with respect to any
Entity, any Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, the Entity and, without limiting the generality of
the foregoing, includes any executive officer, director, manager or
Person who beneficially owns more than ten percent of the equity or
voting securities of the Entity.
AFTAP means adjusted funding target
attainment percentage.
Agreement means this Agreement and Plan
of Merger, including the exhibits and schedules hereto and any
amendment or supplement hereto.
Application means an application for
regulatory approval that is required to consummate the Contemplated
Transactions.
Article III Standard has the meaning
given to the term in Article III of this Agreement.
Article IV Standard has the meaning
given to the term in Article IV of this Agreement.
Articles of Merger means the articles
of merger to be executed by OLB and BYBK and filed with SDAT in
accordance with the MGCL.
Average Closing Price has the meaning
given to the term in Section 7.1(m) of this Agreement.
Average Price has the meaning given to
the term in Section
2.1(a) of this Agreement.
Bank Merger has the meaning given to
the term in Section 1.4 of this
Agreement.
Bank Merger Agreement has the meaning
given to the term in Section 1.4 of this
Agreement.
Bay Bank has the meaning given to the
term in the Background section of this Agreement.
BHC Act means the Bank Holding Company
Act of 1956, as amended.
2
Books and Records means all files,
ledgers and correspondence, all manuals, reports, texts, notes,
memoranda, invoices, receipts, accounts, accounting records and
books, financial statements and financial working papers and all
other records and documents of any nature or kind whatsoever,
including those recorded, stored, maintained, operated, held or
otherwise wholly or partly dependent on discs, tapes and other
means of storage, including any electronic, magnetic, mechanical,
photographic or optical process, whether computerized or not, and
all software, passwords and other information and means of or for
access thereto, belonging to the applicable Party and its
Subsidiaries or relating to their business.
Business Day(s) means any day or days
other than (i) Saturday, (ii) Sunday or (iii) a day on which Bay
Bank or Old Line is authorized or obligated by applicable Law or
executive order to close.
Burdensome Condition has the meaning
given to the term in Section 5.4(a) of this Agreement.
BYBK has the meaning given to the term
in the Background section of this Agreement.
BYBK Advisers means ▇▇▇▇▇ Group, LLC
and RP Financial LC.
BYBK Benefit Plans means all employee
pension benefit plans within the meaning of ERISA
Section 3(2), profit sharing plans, stock purchase plans,
deferred compensation and supplemental income plans, supplemental
executive retirement plans, annual incentive plans, group insurance
plans, and all other employee welfare benefit plans within the
meaning of ERISA Section 3(1) (including vacation pay, sick
leave, short-term disability, long-term disability and medical
plans) and all other employee benefit plans, policies, agreements
and arrangements currently maintained or contributed to for the
benefit of the employees or former employees (including retired
employees) and any beneficiaries thereof or directors or former
directors of BYBK or any other Entity that, together with BYBK, is
treated as a single employer under IRC Sections 414(b), (c), (m) or
(o).
BYBK Certificate means a certificate or book-entry share
registered in the transfer books of BYBK that immediately prior to
the Effective Time represents issued and outstanding shares of BYBK
Common Stock.
BYBK Common Stock has the meaning given
to the term in Section 3.2(a) of this Agreement.
BYBK Common Stockholder is any holder
of record of BYBK Common Stock immediately prior to the Effective
Time.
BYBK Common Stockholders’ Meeting
means the meeting of the holders of BYBK Common Stock to consider
and vote on the Merger, and any postponement or adjournment
thereof.
BYBK Common Stock Options has the
meaning given to the term in Section 2.1(b) of this
Agreement.
3
BYBK Companies means BYBK, Bay Bank and
any other BYBK Subsidiary, collectively.
BYBK Disclosure Schedule means,
collectively, the disclosure schedules delivered by BYBK to OLB at
or prior to the execution and delivery of this Agreement, as may be
updated pursuant to Section 5.6 of this
Agreement.
BYBK Employee has the meaning given to
the term in Section 5.7(c)(iii)(A) of this
Agreement.
BYBK ERISA Affiliate means any Entity
that, together with BYBK, is treated as a single employer under IRC
Sections 414(b), (c), (m) or (o).
BYBK Financials means (a) the
consolidated balance sheets, consolidated statements of income,
consolidated statements of comprehensive income, consolidated
statements of stockholders’ equity and consolidated
statements of cash flows for BYBK for the years ended December 31,
2016 and 2015, and the notes thereto, as audited by ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ LLP and as set forth in BYBK’s Annual Report on Form
10-K for the year ended December 31, 2016, (b) the unaudited
interim financial statements of BYBK and the notes thereto included
in BYBK’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2017, (c) the consolidated balance sheets, consolidated
statements of income, consolidated statements of comprehensive
income, consolidated statements of stockholders’ equity and
consolidated statements of cash flows for BYBK for the year ending
December 31, 2017 and 2016, and the notes thereto, to be audited by
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, and as will be set forth in BYBK’s
Annual Report on Form 10-K for the year ending December 31, 2017,
to be delivered or made available within 90 days of December 31,
2017 provided that the Effective Date is later than such due date,
(d) the unaudited consolidated financial statements of BYBK and the
notes thereto included in BYBK’s Quarterly Reports on Form
10-Q for each calendar quarter commencing with the quarter ending
September 30, 2017, to be delivered within 45 days after the end of
the respective quarter provided that the Effective Date is later
than such due dates, (e) unaudited, internally-prepared
consolidated financial statements for each of July 31, 2017 and
August 31, 2017, and (f) unaudited, internally-prepared
consolidated financial statements for each month commencing with
the month ended September 30, 2017, to be delivered within 20 days
after the end of the respective month provided that the Effective
Date is later than such due dates (the financial statements
described in items (e) and (f) are collectively referred to herein
as the “Internal
BYBK Financials”).
BYBK Governing Documents has the
meaning given to the term in Section 3.1(f) of this
Agreement.
BYBK Intellectual Property has the
meaning given to the term in Section 3.17(a) of this
Agreement.
BYBK IT Assets has the meaning given to
the term in Section 3.17(b) of this Agreement.
BYBK Nominees has the meaning given to
the term in Section 5.7(c)(ii) of this Agreement.
4
BYBK Permitted Liens has the meaning given
to the term in Section 3.9(a) of this Agreement.
BYBK Real Property has the meaning
given to the term in Section 3.15(a) of this
Agreement.
BYBK Regulatory Agreement has the
meaning given to the term in Section 3.11(e)(iii) of this
Agreement.
BYBK Reports has the meaning given to
the term in Section 3.11(c) of this Agreement.
BYBK SEC Reports has the meaning given
to the term in Section 3.11(c) of this Agreement.
BYBK Returns has the meaning given to
the term in Section 3.7(e) of this Agreement.
BYBK Subsidiaries means the
Subsidiaries of BYBK and Bay Bank as set forth in BYBK Disclosure Schedule
3.1(d).
BYBK Taxes has the meaning given to the
term in Section 3.7(e) of this Agreement.
BYBK Termination Fee has the meaning
given to the term in Section 8.1(b) of this Agreement.
Cause means: (a) any act or failure to
act that constitutes fraud, incompetence, willful misconduct,
dishonesty, breach of fiduciary duty, intentional failure to
adequately perform his or her duties as an officer or employee of
the employer, or violation of any Law (other than a traffic
violation or similar offense) or any final regulatory order or
agreement with the employer; (b) the conviction of the employee of
a felony or crime involving moral turpitude; (c) the
employee’s entering into any employment or similar
relationship with a Person other than BYBK, a BYBK Subsidiary, OLB
or an OLB Subsidiary; (d) the employee’s diversion of any
business opportunity from employer (other than on behalf of
employer or with the prior written consent of employer’s
board of directors); or (e) conduct by the employee that results in
removal or suspension of employee as an officer or employee of
employer pursuant to a written order by any Regulatory Authority
with authority or jurisdiction over the employer.
CERCLA means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. §§ 9601, et seq.
CFPB means the Consumer Financial
Protection Bureau.
Charge-off Reduction has the meaning
given to the term in Section 2.6(c) of this Agreement.
CIC Agreement has the meaning given to
the term in Section 5.7(c)(iii)(D) of this
Agreement.
5
CIC Payment has the meaning given to
the term in Section 5.7(c)(iii)(D) of this
Agreement.
Claim has the meaning given to the term
in Section 5.7(c)(v) of this
Agreement.
Closing has the meaning given to the
term in Section 1.3(a) of this Agreement.
Closing Date has the meaning given to
the term in Section 1.3(a) of this Agreement.
Commercial Law Article has the meaning
given the term in Section 3.23(c) of this Agreement.
Commissioner means the Maryland Office
of the Commissioner of Financial Regulation.
Confidentiality Agreement means that
certain Confidentiality Agreement, dated as of June 26, 2017, by
and between OLB and ▇▇▇▇▇ Group, LLC as representative of
BYBK.
Contract means any written or oral
agreement, arrangement, authorization, commitment, contract,
indenture, instrument, lease, license, obligation, plan, practice,
restriction, understanding or undertaking of any kind or character,
or other document to which any Person is a party or that is binding
on any Person or its capital stock, assets or
business.
Contemplated Transactions means all of
the transactions contemplated by this Agreement, including the (a)
Merger, (b) Bank Merger, and (c) performance by OLB and BYBK of
their respective covenants and obligations under this
Agreement.
Costs has the meaning given to the term
in Section 5.7(c)(v) of this
Agreement.
CRA has the meaning given to the term
in Section 3.22 of this Agreement.
Credit Extension means any loan, lease,
advance, credit facility, credit enhancement, guarantee,
commitment, line of credit or letter of credit.
Determination Date has the meaning
given to the term in Section 7.1(m) of this Agreement.
Displaced Employee has the meaning
given to the term in Section 5.7(c)(iii)(A) of this
Agreement.
▇▇▇▇▇ means the SEC’s Electronic
Data Gathering and Retrieval system.
Effective Date means the date that
includes the Effective Time, which shall be as soon as practicable
after the Closing Date.
Effective Time means the time at which
the Articles of Merger are filed with SDAT and become effective in
accordance with the MGCL.
6
Entity means any corporation, limited
liability company, partnership, sole proprietorship, trust, joint
venture or other form of organization.
Environmental Assessment means an
environmental assessment that is consistent with ASTM 1527-05 or 40
C.F.R. Part 312 and that may include an assessment of the (a)
presence of hazardous, toxic, radioactive, or dangerous materials
or other materials regulated under Environmental Laws, or (b)
presence, amount, physical condition and location of
asbestos-containing materials and lead-based paint or an assessment
of indoor environmental issues.
Environmental Laws means any applicable
federal, state or local Law, statute, ordinance, rule, regulation,
code, license, permit, authorization, common law, agency
requirement, approval, consent, order, judgment, decree, injunction
or Contract with any governmental entity relating to (a) the
protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil,
plant and animal life or any other natural resource), health and
safety as it relates to Hazardous Materials or natural resource
damages, (b) the manufacture, distribution, use, presence, storage,
handling, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or threatened
release or disposal or discharge of Hazardous Materials, and/or (c)
noise, odor, wetlands, indoor air, pollution, contamination or any
injury to persons or property from exposure to Hazardous Materials.
Environmental Laws include without limitation: (i) CERCLA; the
Resource Conservation and Recovery Act, as amended, 42 U.S.C.
§6901, et seq; the
Clean Air Act, as amended, 42 U.S.C. §7401, et seq; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. §1251, et seq; the Toxic Substances Control
Act, as amended, 15 U.S.C. §2601, et seq; the Emergency Planning and
Community Right to Know Act, 42 U.S.C. §11001, et seq; the Safe Drinking ▇▇▇▇▇ ▇▇▇, ▇▇
▇.▇.▇. §▇▇▇▇, et seq;
and all comparable state and local Laws; and (ii) any common law
(including without limitation common law that may impose strict
liability) that may impose liability or obligations for injuries or
damages due to the presence of or exposure to any Hazardous
Materials.
ERISA means the Employee Retirement
Income Security Act of 1974, as amended, and the regulations
promulgated thereunder.
Exchange Act means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
Exchange Agent means American Stock
Transfer & Trust Company, or such other agent as shall be
designated by OLB to act as the exchange agent for purposes of
conducting the exchange procedure described in Section 2.5 of
this Agreement.
Exchange Fund has the meaning given to
the term in Section 2.5(a) of this Agreement.
Exchange Ratio has the meaning given to
the term in Section
2.1(a) of this Agreement.
FDIC means the Federal Deposit
Insurance Corporation.
FHLB means the Federal Home Loan Bank
of Atlanta.
7
Final Index Price has the meaning given
to the term in Section 7.1(m) of this Agreement.
FRB means the Board of Governors of the
Federal Reserve System.
GAAP means U.S. generally accepted
accounting principles.
Hazardous Materials means: (a) any
petroleum or petroleum products, natural gas, or natural gas
products, radioactive materials, asbestos, urea formaldehyde foam
insulation, transformers or other equipment that contains
dielectric fluid containing levels of polychlorinated biphenyls
(PCBs), and radon gas; (b) any chemicals, materials, waste or
substances defined as or included in the definition of
“hazardous substances,” “hazardous wastes,”
“hazardous materials,” “extremely hazardous
wastes,” “restricted hazardous wastes,”
“toxic substances,” “toxic pollutants,”
“contaminants,” or “pollutants,” or words
of similar import, under any Environmental Laws; and (c) any other
chemical, material, waste or substance that is in any way regulated
for the protection of human health or environment by any Regulatory
Authorities, including mixtures thereof with other materials, and
including any regulated building materials such as asbestos and
lead.
HOLA means the Home Owners Loan Act of
1933, as amended.
Indemnified Parties has the meaning
given to the term in Section 5.7(c)(v) of this
Agreement.
Indemnifying Party has the meaning
given to the term in Section 5.7(c)(v) of this
Agreement.
Index Group has the meaning given to
the term in Section 7.1(m) of this Agreement.
Index Price has the meaning given to
the term in Section 7.1(m) of this Agreement.
Index Ratio has the meaning given to
the term in Section 7.1(m) of this Agreement.
Insurance Policies means all policies,
contracts and other arrangements by which one or more Persons have
undertaken to indemnify or guarantee one or more other Persons
against a loss arising from a specified contingency or peril,
including, without limitation, contracts of fidelity
insurance.
Insured Person has the meaning given to
the term in Section 5.7(c)(viii) of this Agreement.
Internal BYBK Financials has the
meaning given to the term in the definition of “BYBK
Financials” set forth in this Section 1.2.
IRC means the Internal Revenue Code of
1986, as amended, and the regulations promulgated
thereunder.
8
IRS means the Internal Revenue
Service.
Knowledge of BYBK means the actual
knowledge of BYBK’s and Bay Bank’s Chairman of the
Board of Directors, President and Chief Executive Officer, and
Executive Vice President - Chief Financial Officer, Bay
Bank’s Executive Vice President and Chief Banking Officer and
Senior Vice President and Chief Credit Officer, and, for purposes
only of Section 3.12 and Section 3.13 hereof, ▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice
President of Bay Bank or, if no individual is named to any of such
positions, the individual or individuals who perform a similar
function for BYBK or Bay Bank, as applicable, and includes any
facts, matters or circumstances set forth in any written notice or
other correspondence from any Regulatory Authority or any other
written notice received by that Person.
Knowledge of OLB means the actual
knowledge of OLB’s Chairman of the Board, President and Chief
Executive Officer, Chief Financial Officer and Chief Operating
Officer, and Old Line’s Chairman of the Board, President and
Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer, Chief Credit Officer and Chief Lending Officer and, for
purposes only of Section 4.12 and Section 4.13 hereof, OLB’s
and Old Line’s Director of Human Resources, or, if no
individual is named to any of such positions, the individual or
individuals who perform a similar function for OLB or Old Line, as
applicable, and includes any facts, matters or circumstances set
forth in any written notice or other correspondence from any
Regulatory Authority or any other written notice received by that
Person.
Law means any and all foreign, federal,
state and local laws, statutes, ordinances, rules, regulations,
codes, and rules of common law, in each case as amended to date,
and any and all judicial and administrative interpretations
thereof, any Order, any and all policies and directives (including,
without limitation, any directive relating to minimum capital
levels) issued by any Regulatory Authority, and any and all written
legally permissible waivers or exceptions granted by any Regulatory
Authorities with respect to compliance with any of the
foregoing.
Lawsuit has the meaning given to the
term in Section 2.6(b) of this Agreement.
Letter of Transmittal has the meaning
given to the term in Section 2.5(b) of this
Agreement.
Liens means all liens, pledges,
charges, security interests, mortgages, claims or other
encumbrances of any kind with respect to any property or property
interest.
Litigation means any legal,
quasi-judicial or administrative action, arbitration, cause of
action, lawsuit, claim (whether asserted or unasserted), complaint,
proceeding, criminal prosecution, governmental or other
examination, inquiry or investigation, audit (other than regular
audits of financial statements by outside auditors), compliance
review, inspection, hearing, administrative or other proceeding
relating to or affecting a Party, its business, its records, its
policies, its practices, its compliance with Law, its actions, its
assets (including Contracts related to it) or the Contemplated
Transactions, but shall not include regular, periodic examinations
of depository institutions and their Affiliates by Regulatory
Authorities.
Loan Recovery Amount has the meaning
given to the term in Section 2.6(c) of this Agreement.
9
Material Adverse Effect means, with
respect to OLB or BYBK, respectively, any effect, change,
circumstance, development or occurrence that individually, or taken
in the aggregate together with all other effects, changes,
circumstances, developments or occurrences, that (a) is or is
reasonably likely to be material and adverse to the financial
condition, results of operations or business of OLB and the OLB
Subsidiaries taken as a whole, or BYBK and the BYBK Subsidiaries
taken as a whole, respectively, or (b) materially impairs the
ability of either OLB, on the one hand, or BYBK, on the other hand,
to perform its obligations under this Agreement or otherwise
materially threatens or materially impedes or delays the
consummation of the Contemplated Transactions, other than, in each
case, any change, circumstance, development, occurrence or effect
relating to (i) any change in the value of the respective loan or
investment portfolios of the OLB Companies or the BYBK Companies
resulting from a change in interest rates generally, (ii) any
change occurring after the date hereof in any Law or
interpretations thereof by Regulatory Authorities or in GAAP or
applicable regulatory accounting principles, which change affects
banking institutions generally, including any change affecting the
Deposit Insurance Fund, (iii) changes in general economic (except
in the context of determining a Material Adverse Effect for
purposes of asset quality), capital market (except in the context
of determining a Material Adverse Effect for purposes of asset
quality), legal, regulatory or political conditions affecting
banking institutions generally, (iv) the effects of compliance with
this Agreement on the operating performance of OLB or BYBK, as the
case may be, including the reasonable expenses incurred in
connection with this Agreement and the Contemplated Transactions,
(v) actions or omissions of a Party (or any of its Subsidiaries)
taken pursuant to the terms of this Agreement in contemplation of
the Contemplated Transactions, (vi) any effect with respect to a
Party caused, in whole or in substantial part, by the other Party,
(vii) any change resulting from any natural disaster or any acts of
terrorism, sabotage, military action or war (whether or not
declared) or any escalation or worsening thereof, (viii) the impact
of the Agreement and the Contemplated Transactions on relationships
with customers or employees (including the loss of personnel
subsequent to the date of this Agreement), and (ix) the public
disclosure of this Agreement or the Contemplated Transactions;
except, in any such case, to the extent any such change, effect,
development, occurrence or circumstance has or would have a
disproportionate effect on the business of BYBK or OLB, as the case
may be, relative to other similarly-situated Entities.
Maximum Premium has the meaning given
to the term in Section 5.7(c)(viii) of this Agreement.
Merger has the meaning given to the
term in Section 1.3(b)(v) of this Agreement.
Merger Consideration has the meaning
given to the term in Section 2.1(a) of this Agreement.
MGCL means the Maryland General
Corporation Law, as amended.
NASDAQ means the NASDAQ Stock Market
LLC.
Net Loan Recovery Amount has the
meaning given to the term in Section 2.6(c) of this
Agreement.
10
Non-Operational Subsidiaries has the
meaning given to the term in Section 3.1(g) of this
Agreement.
Non-Residential Credit Extension means
a Credit Extension other than for an owner-occupied
residence.
Notice of Superior Proposal has the
meaning given to the term in Section 5.7(a)(ii) of this
Agreement.
Objecting BYBK Shares means any shares
of BYBK Common Stock issued and outstanding immediately prior to
the Closing Date, the holder of which has not voted in favor of the
Merger and who has properly followed the procedures set forth in
Section 3-203 of the MGCL, assuming that the holders of shares
of BYBK Common Stock have the right to demand and receive payment
of the fair value of their shares of BYBK common stock pursuant to
Section 3-202 of the MGCL.
OCC means the Office of the Comptroller
of the Currency.
OFAC has the meaning given to the term
in Section 3.23(b) of this Agreement.
OLB has the meaning given to the term
in the Background section of this Agreement.
OLB Benefit Plans means all employee
pension benefit plans within the meaning of ERISA Section 3(2),
profit sharing plans, stock purchase plans, deferred compensation
and supplemental income plans, supplemental executive retirement
plans, annual incentive plans, group insurance plans, and all other
employee welfare benefit plans within the meaning of ERISA
Section 3(1) (including vacation pay, sick leave, short-term
disability, long-term disability, and medical plans) and all other
material employee benefit plans, policies and Contracts currently
maintained or contributed to for the benefit of the employees or
former employees (including retired employees) and any
beneficiaries thereof or directors or former directors of OLB or
any other Entity that, together with OLB, is treated as a single
employer under IRC Sections 414(b), (c), (m) or (o).
OLB Common Stock has the meaning given
to the term in Section 4.2(a) of this Agreement.
OLB Common Stockholders’ Meeting
means the meeting of the holders of OLB Common Stock to consider
and vote on the Merger.
OLB Companies means OLB, Old Line and
any other OLB Subsidiary, collectively.
OLB Disclosure Schedule means,
collectively, the disclosure schedules delivered by OLB to BYBK at
or prior to the execution and delivery of this Agreement, as may be
updated pursuant to Section 5.6 of this
Agreement.
OLB ERISA Affiliate means any Entity
that, together with OLB, is treated as a single employer under IRC
Sections 414(b), (c), (m) or (o).
11
OLB Financials means (a) the
consolidated balance sheets of OLB at December 31, 2016 and 2015
and the consolidated statements of income, consolidated statements
of comprehensive income, consolidated statements of changes in
stockholders’ equity and consolidated statements of cash
flows for OLB for the years ended December 31, 2016, 2015 and 2014,
and the notes thereto, as audited by ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP and
as set forth in OLB’s Annual Report on Form 10-K for the year
ended December 31, 2016, (b) the consolidated balance sheets of OLB
at December 31, 2017 and 2016 and the consolidated statements of
income, the consolidated statements of comprehensive income, the
consolidated statements of changes in stockholders’ equity
and the consolidated statements of cash flows for OLB for the years
ending December 31, 2017, 2016 and 2015, and the notes thereto, to
be audited by ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP and as will be set forth in
OLB’s Annual Report on Form 10-K for the year ending December
31, 2017, to be delivered or made available within 90 days of
December 31, 2017 provided that the Effective Date is later than
such due date, (c) the unaudited interim consolidated financial
statements and notes thereto included in OLB’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2017, and (d)
the unaudited interim consolidated financial statements and notes
thereto included in OLB’s Quarterly Reports on Form 10-Q for
each calendar quarter commencing with the quarter ending September
30, 2017, to be delivered or made available within 45 days after
the end of the respective quarter provided that the Effective Date
is later than such due dates.
OLB Governing Documents has the meaning
given to the term in Section 4.1(f) of this Agreement.
OLB Intellectual Property has the
meaning given to the term in Section 4.30 of this
Agreement.
OLB IT Assets has the meaning given to
the term in Section 4.30 of this Agreement.
OLB Permitted Liens has the meaning given
to the term in Section 4.9(a) of this Agreement.
OLB Preferred Stock has the meaning
given to the term in Section 4.2 of this Agreement.
OLB Ratio has the meaning given to the
term in Section 7.1(m) of this Agreement.
OLB Real Property has the meaning given
to the term in Section 4.15(a) of this Agreement.
OLB Regulatory Agreement has the meaning
given to the term in Section 4.11(e)(iii) of this
Agreement.
OLB Reports has the meaning given to
the term in Section 4.11(c) of this Agreement.
OLB Returns has the meaning given to
the term in Section 4.7(c) of this Agreement.
12
OLB SEC Reports has the meaning given
to the term in 4.11(c) of this Agreement.
OLB Subsidiaries means the Subsidiaries
of OLB and Old Line as set forth in OLB Disclosure Schedule
4.1(d).
OLB Taxes has the meaning given to the
term in Section 4.7(c) of this Agreement.
OLB Termination Fee has the meaning
given to the term in Section 8.1(c) of this Agreement.
Old Line has the meaning given to the
term in the Background section of this Agreement.
Order means any administrative decision
or award, decree, injunction, judgment, order, consent decree,
quasi-judicial decision or award, ruling or writ of any federal,
state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory
Authority.
Ordinary Course means the conduct of
the business of the applicable Party in substantially the same
manner as such business was operated on the date of this Agreement,
including operations in conformance and consistent with the
applicable Party’s practices and procedures prior to and as
of such date. Without limiting the scope of the foregoing, the term
“Ordinary Course” shall include a Party’s
practices and procedures with respect to its past deposit and loan
marketing promotional activities, including the offering of special
interest rates and other terms.
Party means either OLB or BYBK, and
“Parties” means OLB and BYBK.
PBGC has the meaning given to the term
in Section 3.13(b) of this Agreement.
Per Share Consideration has the meaning
given to the term in Section 2.1(a) of this Agreement.
Permitted Employees means officers and
employees of any of the BYBK Companies at the level of Vice
President or below.
Person means an individual, an Entity
and any Regulatory Authority; provided, however, that if any
provision of this Agreement in which the term “person”
is used specifies a particular definition of “person”
for purpose of that provision, then the term shall have the meaning
so defined.
Pool has the meaning given to the term
in Section 3.20(c) of this Agreement.
Pre-Closing Period means the period
commencing on the date of execution of this Agreement through the
earlier of (a) the Closing Date, and (b) the date this Agreement is
terminated pursuant to Article VII herein.
13
Prospectus/Proxy Statement means the
prospectus/proxy statement, together with any supplements thereto,
to be sent to holders of BYBK Common Stock and holders of OLB
Common Stock in connection with the Merger, the BYBK Common
Stockholders’ Meeting and the OLB Common Stockholders’
Meeting.
Registration Statement means the
registration statement on Form S-4, including any pre-effective or
post-effective amendments or supplements thereto, as filed by OLB
with the SEC under the Securities Act with respect to the OLB
Common Stock to be issued to the BYBK Common Stockholders in
connection with the Merger.
Regulatory Authority means any federal,
state or local governmental authority, agency or instrumentality,
or any self-regulatory organization, including, without limitation,
the SEC, the Commissioner, the FRB, the OCC, the FDIC, NASDAQ, and
the respective staffs thereof.
REO means, with respect to the BYBK
Companies and the OLB Companies, real property that the BYBK
Companies or the OLB Companies, as the case may be, classify as
other real estate owned for financial statement reporting and
regulatory purposes.
Replacement Nominee has the meaning
given to the term in Section 5.7(c)(ii) of this
Agreement.
Representatives means, with respect to
an Entity, such Entity’s officers, directors or employees, or
any investment bankers, financial or other advisors, attorneys,
accountants, consultants or other representatives or agents engaged
or retained by any of them.
Residential Credit Extension has the
meaning given to the term in Section 5.1(c)(xxvi) of this
Agreement.
Retained Employees has the meaning
given to the term in Section 5.7(c)(iii)(A) of this
Agreement.
Rights means warrants, options, rights,
convertible securities, stock appreciation rights, other capital
stock equivalents and other arrangements or commitments that
obligate an Entity to issue or dispose of any of its capital stock
or other ownership interests or that provide for compensation based
on the equity appreciation of its securities.
Sanctioned Countries has the meaning
given to the term in Section 3.23(b) of this
Agreement.
Sanctions has the meaning given to the
term in Section 3.23(b) of this Agreement.
SDAT means the Maryland State
Department of Assessments and Taxation.
SEC means the U.S. Securities and
Exchange Commission.
Securities Act means the Securities Act
of 1933, as amended, and the rules and regulations promulgated
thereunder.
14
Securities Laws means the Securities
Act, the Exchange Act, the Investment Company Act of 1940, as
amended, and the rules and regulations promulgated thereunder, the
Investment Advisers Act of 1940, as amended, and the rules and
regulations promulgated thereunder, the Trust Indenture Act of
1939, as amended, and the rules and regulations promulgated
thereunder, and any applicable state securities or “blue
sky” laws, collectively.
Starting Date has the meaning given to
the term in Section 7.1(m) of this Agreement.
Starting Price has the meaning given to
the term in Section 7.1(m) of this Agreement.
Subsidiary means any Entity, 50% or
more of the equity or other ownership interest of which is owned,
either directly or indirectly, by another Entity, except any Entity
the interest in which is held in the Ordinary Course of the lending
or fiduciary activities of a bank.
Superior Proposal has the meaning given
to the term in Section 5.7(a)(ii) of this Agreement.
Support Agreement means the Agreement
as set forth in Exhibit B hereto to be signed by the persons set
forth on Exhibit A hereto.
Tail Policy has the meaning given to
the term in Section 5.7(c)(viii) of this Agreement.
Taxing Authority means any federal,
state, local or foreign government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body
exercising tax regulatory authority.
Trading Days means the days on which
NASDAQ is open for trading.
Section
1.3 The Merger and
Related Transactions.
(a) Closing. Unless the Parties
agree otherwise, the closing of the Contemplated Transactions (the
“Closing”) will take place
at the offices of Baker, Donelson, Bearman, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, a professional corporation, located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at a time and date after January 1, 2018 to be
reasonably selected by OLB after consultation with BYBK and after
all conditions to Closing set forth in Article VI of this Agreement
(other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing) have been
satisfied or waived (the “Closing Date”); provided,
however, that any certificate, opinion, instrument or other
document to be delivered at the Closing may be delivered
electronically. Unless expressly provided otherwise, all
certificates, instruments and other documents to be delivered at
the Closing shall be dated on or as of the Closing
Date.
(b) The Merger. Subject to the
terms and conditions of this Agreement and in accordance with the
applicable Laws of the State of Maryland, at the Effective
Time:
(i) BYBK shall merge
with and into OLB;
15
(ii) The
separate existence of BYBK shall cease;
(iii) OLB
shall be the surviving corporation;
(iv) Each
share of BYBK Common Stock issued and outstanding immediately prior
to the Effective Time shall be converted into the right to receive
the Per Share Consideration as provided in Article II of this
Agreement; and
(v) All of the property
(real, personal and mixed), rights, powers, duties, obligations and
liabilities of BYBK shall be taken and deemed to be transferred to
and vested in OLB, as the surviving corporation, without further
act or deed (the transactions described in the foregoing items (i)
through (v) are collectively referred to herein as the
“Merger”).
At and
after the Effective Time, the Merger shall have the effects set
forth in Section 3-114 of the MGCL.
(c) OLB’s Articles of Incorporation
and Bylaws. On and after the Effective Time, the articles of
incorporation and bylaws of OLB, as in effect immediately prior to
the Effective Time, shall automatically be and remain the articles
of incorporation and bylaws of OLB, as the surviving corporation in
the Merger, until thereafter altered, amended or
repealed.
(d) Board of Directors and
Officers.
(i) Subject to Section
5.7(c)(ii), at the Effective Time, the directors of OLB duly
elected and holding office immediately prior to the Effective Time
shall be the directors of OLB, as the surviving corporation in the
Merger.
(ii) At
the Effective Time, the officers of OLB duly elected and holding
office immediately prior to the Effective Time shall be the
officers of OLB, as the surviving corporation in the
Merger.
Section
1.4 The Bank
Merger.
Subject
to the terms and conditions of the Agreement and Plan of Merger
attached hereto as Exhibit C (the “Bank Merger Agreement”)
and in accordance with Title 3, Subtitle 7 of the Financial
Institutions Article of the Annotated Code of Maryland and
applicable federal Law, immediately after the Merger, Bay Bank
shall be merged with and into Old Line and the separate existence
of Bay Bank shall cease (the “Bank Merger”). Old Line
shall be the surviving Entity in the Bank Merger and shall continue
its existence as a trust company with commercial banking powers
under the laws of the State of Maryland, and as a wholly-owned
operating Subsidiary of OLB, subject to the provisions of this
Section 1.4.
Section
1.5 Additional
Actions.
If, at
any time after the Effective Time, OLB shall consider or be advised
that any further deeds, assignments or assurances in law or any
other acts are necessary or desirable to (a) vest, perfect or
confirm, of record or otherwise, in OLB its right, title or
interest in, to or under any of the rights, properties or assets of
BYBK or Bay Bank, or (b) otherwise carry out the purposes of this
Agreement, BYBK, Bay Bank and their officers and directors shall be
deemed to have granted to OLB and Old Line an irrevocable power of
attorney to execute and deliver all such deeds, assignments or
assurances in law or any other acts as are necessary or desirable
to (i) vest, perfect or confirm, of record or otherwise, in OLB or
Old Line its right, title or interest in, to or under any of the
rights, properties or assets of BYBK or (ii) otherwise carry out
the purposes of this Agreement, and the officers and directors of
OLB and Old Line are authorized in the name of BYBK, Bay Bank or
otherwise to take any and all such action.
16
ARTICLE II.
CONSIDERATION;
CONVERSION; EXCHANGE PROCEDURES
Section
2.1 Merger
Consideration.
(a) Subject to Section
2.3 and Section 2.4 hereof, each share of BYBK Common Stock that is
issued and outstanding immediately prior to the Effective Time
shall, at the Effective Time, by reason of the Merger and without
any action on the part of the holder thereof, cease to be
outstanding and be automatically cancelled, and shall be converted
into the right to receive, in exchange for each such share, that
number of shares of OLB Common Stock equal to the Exchange Ratio
(the “Per Share
Consideration”); provided, however, that each share of
BYBK Common Stock issued and outstanding immediately prior to the
Effective Time that is held by any Subsidiary of BYBK, by OLB or
any Subsidiary of OLB (in each case other than shares held in any
BYBK Benefit Plan or OLB Benefit Plan or related trust accounts or
otherwise held in any fiduciary or agency capacity or as a result
of debts previously contracted) shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to
exist, and no payment shall be made with respect
thereto.
Subject
to any adjustments occurring after the date hereof as contemplated
by Section 2.6 below, in the event that the Average Price
is:
(i) between $25.66 and
$29.15, then the Per Share Consideration shall equal the number of
shares of OLB Common Stock determined by dividing $11.80 by the
Average Price;
(ii) $29.16
or above, then the Per Share Consideration shall equal 0.4047
shares of OLB Common Stock; or
(iii) $25.65
or below, then the Per Share Consideration shall equal 0.4600
shares of OLB Common Stock (such ratio in any of (i), (ii) or
(iii), the “Exchange Ratio”).
Exhibit
D hereto is an example of how the Exchange Ratio could be
calculated under various Average Price scenarios. In all cases the
Exchange Ratio will be rounded to the nearest
ten-thousandth.
For
purposes of this Agreement, “Average Price” means the
amount equal to the volume weighted average of the closing prices
of OLB Common Stock as reported on the NASDAQ Capital Market for
the 20 Trading Days ending five Trading Days prior to the Closing
Date.
At
least two Business Days prior to the Closing Date, OLB shall
provide BYBK with its calculation of the Exchange Ratio and any
supporting documentation necessary for BYBK to review such
calculation.
The
aggregate Per Share Consideration is sometimes referred to herein
as the “Merger
Consideration.”
17
(b) Also at the
Effective Time, each Right in respect of BYBK Common Stock pursuant
to a stock option (collectively, the “BYBK Common Stock
Options”) granted by BYBK that is outstanding at the
Effective Time, whether or not exercisable, shall be terminated by
BYBK and converted into the right to receive cash in an amount
(rounded to the nearest whole cent and without interest) determined
by multiplying (i) the number of shares of BYBK Common Stock
issuable upon the exercise of such BYBK Common Stock Option by (ii)
the difference between (A) the Average Price multiplied by the Per
Share Consideration (after giving effect to Section 2.6 of this
Agreement) and (B) the exercise price per share of BYBK Common
Stock issuable upon the exercise of such BYBK Common Stock Option.
If such amount is a negative number, the BYBK Common Stock Option
shall be terminated without any payment therefor. Prior to the
Effective Time, BYBK shall (i) obtain any necessary consents or
make any necessary amendments to the terms of any outstanding BYBK
Common Stock Options to give effect to the transactions
contemplated by this Section 2.1(b), (ii) take all actions as may
be necessary to terminate (and, except as provided in this Section
2.1(b), ensure that neither BYBK nor Bay Bank remains bound by or
liable for) any outstanding BYBK Common Stock Options or other
Rights to acquire BYBK Common Stock and (iii) ensure that any BYBK
plans, agreements or other arrangements that allow the grant of
BYBK Common Stock Options or other Rights in respect to of BYBK
Stock, if any, will be amended to eliminate the ability to grant
any such BYBK Common Stock Options or other Rights in respect of
BYBK Common Stock effective as of immediately after the Effective
Time. All payments under this Section 2.1(b) shall be made by OLB
at or as soon as administratively practicable (and within 30 days)
after the Effective Time, pursuant to OLB’s ordinary payroll
practices, and shall be subject to any applicable
withholdings.
Section
2.2
OLB Common
Stock.
Each
share of OLB Common Stock issued and outstanding immediately prior
to the Effective Date shall, on and after the Effective Date,
continue to be issued and outstanding.
Section
2.3
Fractional
Shares.
Notwithstanding
anything to the contrary contained herein, no fractional shares of
OLB Common Stock and no scrip, book-entry shares or certificates
therefor shall be issued in connection with the Merger, no dividend
or distribution with respect to OLB Common Stock shall be payable
on or with respect to any fractional share interest, and such
fractional share interests shall not entitle the owner thereof to
vote or to any other rights of a stockholder of OLB. In lieu of the
issuance of any such fractional share, OLB shall pay to each former
holder of BYBK Common Stock who otherwise would be entitled to
receive a fractional share of OLB Common Stock an amount in cash,
rounded to the nearest whole cent and without interest, equal to
the product of (a) the fraction of a share of OLB Common Stock to
which such holder would otherwise have been entitled and (b) the
Average Price. For purposes of determining any fractional share
interest, all shares of BYBK Common Stock owned by a BYBK Common
Stockholder shall be combined so as to calculate the maximum number
of whole shares of OLB Common Stock issuable to such BYBK Common
Stockholder.
18
Section
2.4
Objecting BYBK
Common Stockholders.
(a) Any Objecting BYBK
Shares will not be converted into or represent a right to receive
the Merger Consideration under this Agreement, and the holder
thereof shall be entitled only to such rights as are granted by
Section 3-202 of the MGCL.
(b) If any holder of
Objecting BYBK Shares shall have failed to comply with Section
3-203 of the MGCL, or shall have effectively withdrawn or lost the
right granted thereunder, the Objecting BYBK Shares held by such
holder shall be converted into a right to receive the Per Share
Consideration in accordance with the applicable provisions of this
Agreement.
(c) All payments in
respect of Objecting BYBK Shares, if any, will be made by
OLB.
(d) BYBK shall give OLB
prompt (but in any event within two Business Days) written notice
of any demands for appraisal of any shares of BYBK Common Stock and
any withdrawals of such demands, and OLB shall have the right to
participate in and direct all negotiations and proceedings with
respect to such demands. BYBK shall not, except with the prior
written consent of OLB, voluntarily make any payment with respect
to or settle, or offer or agree to settle, any such demand for
payment.
Section
2.5
Exchange Fund;
Exchange of BYBK Certificates.
(a) Subject to the
other provisions of this Article II, on or immediately prior to the
Closing Date, OLB shall deposit, or cause to be deposited, in trust
with or otherwise make available to the Exchange Agent for the
benefit of the BYBK Common Stockholders, for exchange in accordance
with this Agreement, through the Exchange Agent, (i) evidence of
OLB Common Stock in book-entry form issuable pursuant to Section
2.1(a) for shares of OLB Common Stock equal to the aggregate Merger
Consideration to be issued to the BYBK Common Stockholders and (ii)
cash sufficient to pay holders of what would have been fractional
shares of OLB Common Stock pursuant to Section 2.3 of this
Agreement (collectively, the “Exchange
Fund”).
(b) As a condition to
receiving the Per Share Consideration for each share of BYBK Common
Stock held, each BYBK Common Stockholder shall be required to duly
execute and deliver to the Exchange Agent a letter of transmittal
(each, a “Letter of
Transmittal”). As promptly as practicable, but in any
event no later than five Business Days following the Effective
Time, and provided that BYBK has delivered, or caused to be
delivered, to the Exchange Agent all information that is necessary
for the Exchange Agent to perform its obligations as specified
herein, the Exchange Agent shall mail to each holder of record of a
BYBK Certificate a Letter of Transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the BYBK
Certificate shall pass, only upon delivery of the BYBK Certificate
to the Exchange Agent) and instructions for use in effecting the
surrender of the BYBK Certificates in exchange for the Merger
Consideration as provided for in this Agreement (such Letter of
Transmittal and instructions to include applicable provisions with
respect to delivery of an “agent’s message” or
other appropriate instructions with respect to BYBK Certificates
that are book-entry shares). Each BYBK Common Stockholder, upon
proper surrender of BYBK Certificates to the Exchange Agent,
accompanied by duly executed Letters of Transmittal, shall be
entitled to receive in exchange therefor (i) the Merger
Consideration to which such BYBK Common Stockholder shall have
become entitled pursuant to the provisions of Section 2.1(a),
and/or (ii) a check representing the amount of cash in lieu of
fractional shares that such holder has the right to receive
hereunder. Each BYBK Certificate so surrendered shall be cancelled.
Until so surrendered, each BYBK Certificate will be deemed for all
purposes after the Effective Time to represent and evidence solely
the right to receive the Merger Consideration to be paid therefor
pursuant to this Agreement. Except as required by Law, no interest
shall be payable with respect to the cash payable for fractional
shares or the cash payable for Objecting Shares. If any BYBK Common
Stockholder is unable to locate any BYBK Certificate(s) to be
surrendered for exchange, the Exchange Agent shall deliver the
corresponding share of the Merger Consideration to the registered
stockholder thereof upon receipt of a lost certificate affidavit
and an indemnity agreement in a form acceptable to the Exchange
Agent and OLB.
19
(c) The delivery of the
Merger Consideration following the Closing by the Exchange Agent
shall occur as soon as practicable following the Exchange
Agent’s receipt of the applicable BYBK Certificate(s) and
duly executed Letters of Transmittal. Unless otherwise agreed to by
OLB, the shares of OLB Common Stock delivered to each BYBK Common
Stockholder pursuant to the Merger shall be in book-entry
form.
(d) No dividends or
other distributions declared with respect to OLB Common Stock with
a record date after the Effective Time shall be paid to the holder
of any unsurrendered BYBK Certificate until the holder thereof
shall surrender such BYBK Certificate(s) in accordance with this
Section 2.5. Pending such surrender, any dividend or distribution
payable in respect of such shares shall be delivered to the
Exchange Agent to be held as part of the Exchange Fund. Subject to
applicable Laws, after the surrender of a BYBK Certificate in
accordance with this Section 2.5, the record holder thereof shall
be entitled to receive any such dividends or other distributions,
without any interest thereon, which theretofore had become payable
with respect to shares of OLB Common Stock represented by such BYBK
Certificate.
(e) At the Effective
Time, the share transfer books of BYBK shall be closed, and
thereafter there shall be no further registration or transfers of
shares of BYBK Common Stock. From and after the Effective Time,
Persons who held shares of BYBK Common Stock immediately prior to
the Effective Time shall cease to have rights with respect to such
shares, except with respect to the right to receive the applicable
portion of the Merger Consideration and as otherwise provided for
herein. On or after the Effective Time, BYBK Certificates presented
to the Exchange Agent or OLB for any reason shall be cancelled and
exchanged for the Merger Consideration as provided in this Article
II.
(f) The Exchange Agent
will be entitled to deduct and withhold from the cash portion of
the Exchange Fund otherwise payable pursuant to this Agreement or
the Contemplated Transactions hereby to any holder of BYBK Common
Stock such amounts as the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the IRC,
or any applicable provision of U.S. federal, state, local or
non-U.S. tax law. To the extent that such amounts are properly
withheld by the Exchange Agent, such withheld amounts will be
treated for all purposes of this Agreement as having been paid to
the holder of the BYBK Common Stock in respect of whom such
deduction and withholding were made by the Exchange
Agent.
(g) Any portion of the
Exchange Fund (including any interest and other income received
with respect thereto) that remains unclaimed by the BYBK Common
Stockholders for six months after the Effective Time shall be
delivered by the Exchange Agent to OLB. Any BYBK Common Stockholder
who has not theretofore complied with this Section 2.5 shall
thereafter be entitled to look only to OLB for payment of the BYBK
Common Stockholder’s share of the Merger Consideration
deliverable in respect of each share of BYBK Common Stock such BYBK
Common Stockholder holds as determined pursuant to this Agreement,
without any interest thereon.
20
(h) No Liability. None of OLB, BYBK
or the Exchange Agent, or any employee, officer, director, agent or
Affiliate of any of them, shall be liable to any Person in respect
of any distributions from the Exchange Fund properly delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar Law. If any BYBK Certificate shall not have been
surrendered prior to three years after the Effective Time (or
immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or become the property of
any Regulatory Authority), any such Merger Consideration shall, to
the extent permitted by applicable Law, become the property of OLB,
free and clear of all claims or interest of any Person previously
entitled thereto or their successors, assigns or personal
representatives.
Section
2.6
Adjustments.
(a) Anti-Dilution Provisions. In
the event OLB changes (or establishes a record date for changing)
the number of, or provides for the exchange of, shares of OLB
Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, reverse stock split, stock dividend,
reclassification, reorganization, recapitalization or similar
transaction with respect to the outstanding OLB Common Stock, and
the record date therefor or the effective date thereof, as
applicable, is prior to the Effective Time, an appropriate
adjustment shall be made to the Exchange Ratio so as to provide the
holders of the BYBK Common Stock the same economic benefit as
contemplated by this Agreement prior to such event; provided that,
for the avoidance of doubt, no such adjustment shall be made with
regard to the Exchange Ratio if (a) OLB issues additional shares of
OLB Common Stock and receives consideration for such shares in a
bona fide third party transaction, (b) OLB issues employee or
director stock grants or similar equity awards in the Ordinary
Course, or (c) shares of OLB Common Stock are repurchased by or on
behalf of OLB.
(b)
Litigation Adjustment. With
respect to the after-tax income recognized, on or after August 4,
2017 and prior to the Effective Time, by BYBK or Bay
Bank from
the settlement of the lawsuit captioned ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, et al. v. Bay Bank,
FSB, No. RDB 16-03260 (the
“Lawsuit”), in the United
States District Court for the District of Maryland, (i) the value
of the Merger Consideration shall be increased by such after-tax
income and (ii) the Exchange Ratio shall be increased by an amount
determined by (A) dividing such after-tax income by the number of
shares of BYBK Common Stock that are issued and outstanding
immediately prior to the Effective Date, and (B) dividing the
amount calculated pursuant to the foregoing item (A) by the Average
Price. Any income or other consideration received from settlement
or other resolution of the Lawsuit after the Effective Date will
not be added to the Merger Consideration.
Example 2(b): Assume that there
are 10,717,889 shares of BYBK Common Stock outstanding immediately
prior to the Effective Time and the Average Price is $27.00, such
that (i) the Exchange Ratio, prior to any adjustment pursuant to
Section 2.6 of this Agreement, is 0.4370 and (ii) the Merger
Consideration, prior to any adjustment, is 4,683,717.493 shares of
OLB Common Stock, with an aggregate value of $126,460,372.311.
Assume further that Bay Bank recognizes after-tax income of
$984,750 in connection with the resolution of the
Lawsuit prior to the Effective Time. In such case, (i) the value of
the Merger Consideration, as adjusted pursuant to this Section
2.6(b), would be increased to
$127,445,122.311 and (ii) the Exchange
Ratio, as adjusted pursuant to this Section 2.6(b), would be
increased by 0.0034 to
0.4404.
21
(c) Loan Resolution. In the event
and to extent that BYBK or Bay Bank recognizes, on or after August
4, 2017 and prior to the Effective Time, after-tax income as of a
result of a resolution of one or more of the loans listed on
BYBK Disclosure Schedule
2.6(c) (the “Loan Recovery Amount”)
and such Loan Recovery Amount exceeds the amount listed on
BYBK Disclosure Schedule
2.6(c) as the “5/31/17 Ledger Balance,” (i) the
value of the Merger Consideration shall be increased by the Loan
Recovery Amount (the “Net Loan Recovery
Amount”) and (ii) the Exchange Ratio shall be
increased by an amount determined by (A) dividing the Net Loan
Recovery Amount by the number of shares of BYBK Common Stock that
are issued and outstanding immediately prior to the Effective Date,
and (B) dividing the amount calculated pursuant to the foregoing
item (i) by the Average Price, subject to the following
limitations: (1) if the BYBK and Bay Bank net loan and lease
charge-offs between August 4, 2017 and the Effective Date exceeds
$226,000, the Net Loan Recovery Amount will be reduced by such
excess (the “Charge-off Reduction”);
and (2) in no event will the Charge-off Reduction exceed $500,000.
Any income or other consideration received as a result of
resolution of one or more of the loans listed on BYBK Disclosure Schedule 2.6(c)
after the Effective Date will not be added to the Merger
Consideration.
Example 2(c): Assume that there
are 10,717,889 shares of BYBK Common Stock outstanding immediately
prior to the Effective Time and the Average Price is $27.00, such
that (i) the Exchange Ratio, prior to any adjustment pursuant to
Section 2.6 of this Agreement, is 0.4370 and (ii) the Merger
Consideration, prior to any adjustment, is 4,683,717.493 shares of
OLB Common Stock, with an aggregate value of $126,460,372.311.
Assume further that the resolution of certain loans listed on BYBK
Disclosure Schedule 2.6(c) results in a Loan Recovery Amount of
$750,000, and the amount of Bay Bank’s net loan and lease
charge-offs recognized prior to the Effective Time is equal to
$275,000. In such case, (i) the Charge-Off Reduction would be
$49,000, (ii) the adjusted Net Loan Recovery Amount would be
$701,000, (iii) the value of the Merger Consideration, as adjusted
pursuant to this Section 2.6(c), would be increased to
$127,161,372.311, and (ii) the Exchange Ratio, as adjusted pursuant
to this Section 2.6(c), would be increased by 0.0024 to
0.4394.
Combined Example: Assume that
all of the facts and circumstances set forth in Example 2(b) and
Example 2(c) were to occur. In such case, (i) the value of the
Merger Consideration, as adjusted pursuant to Section 2.6(b) and
Section 2.6(c), would be increased to
$128,146,122.311 and (ii) the Exchange
Ratio, as adjusted pursuant to Section 2.6(b) and Section 2.6(c),
would be increased by 0.0058 to
0.4428.
Section
2.7
Other
Matters.
Nothing
set forth in this Agreement or any exhibit or schedule to this
Agreement shall be construed to:
(a) Preclude any of the
OLB Companies from acquiring or assuming, or to limit in any way
the right of any of the OLB Companies to acquire or assume, prior
to or following the Effective Date, the stock, assets or
liabilities of any financial services institution or Entity other
than BYBK or Bay Bank, whether for cash or by issuance or exchange
of OLB Common Stock or any securities convertible into shares of
OLB Common Stock, unless such transaction would result in a
Material Adverse Effect on OLB;
22
(b) Preclude OLB from
issuing, or to limit in any way the right of OLB to issue, OLB
Common Stock or other securities in a transaction(s) other than the
Contemplated Transactions;
(c) Preclude OLB from
granting employee, director or compensatory options at any time
with respect to OLB Common Stock or other securities in the
Ordinary Course;
(d) Preclude option
holders or equity compensation plan participants of OLB from
exercising options at any time with respect to OLB Common Stock or
other securities; or
(e) Preclude any of the
OLB Companies from taking, or to limit in any way the right of any
of them to take, any other action not expressly and specifically
prohibited by the terms of this Agreement.
Provided, however,
that OLB shall not take, or permit any OLB Company to take, any of
the foregoing actions pursuant to this Section 2.7 if doing so
would impair the ability of OLB to perform its obligations under
this Agreement and/or consummate the Contemplated Transactions as
and when otherwise required by this Agreement.
ARTICLE III.
REPRESENTATIONS AND
WARRANTIES OF BYBK
BYBK
represents and warrants to OLB, for itself and with respect to and
on behalf of each of the BYBK Subsidiaries (to the extent
applicable), that the statements contained in this Article III (and
as reflected on the BYBK Disclosure Schedules) are true and correct
as of the date of this Agreement and will be true and correct as of
the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout
this Article III, except that those representations and warranties
that by their terms speak as of the date of this Agreement or some
other date shall be true and correct as of such date); provided,
however, that no representation or warranty of BYBK contained in
this Article III shall be deemed untrue or incorrect, and BYBK
shall not be deemed to have breached a representation or warranty,
as a consequence of the existence of any fact, circumstance or
event unless such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events
inconsistent with any paragraph of Article III, has had or is
reasonably expected to have a Material Adverse Effect on BYBK,
disregarding for these purposes (i) any qualification or exception
for, or reference to, materiality in any such representation or
warranty and (ii) any use of the terms “material,”
“materially,” “in all material respects,”
“Material Adverse Effect” or similar terms or phrases
in any such representation or warranty; provided, however, that the
foregoing standard shall not apply to representations and
warranties contained in Sections 3.1, 3.2, 3.3, 3.6, 3.14, 3.18,
3.27, 3.32 and 3.41, which shall be deemed untrue, incorrect and
breached if they are not true and correct in all material respects
(the “Article III
Standard”).
BYBK
has made a good faith effort to ensure that the disclosure on each
schedule of the BYBK Disclosure Schedules corresponds to the
section referenced herein. For purposes of the BYBK Disclosure
Schedules, however, any item disclosed on any schedule therein is
deemed to be fully disclosed with respect to all schedules under
which such item may be relevant as and to the extent that it is
reasonably clear on the face of such schedule that such item
applies to such other schedule.
23
Section
3.1
Organization.
(a) BYBK is a
corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Maryland. BYBK is a savings
and loan holding company duly registered under HOLA. BYBK has the
corporate power and lawful authority to carry on its business and
operations as now being conducted and to own or lease and operate
all of its properties and assets as presently owned or leased and
operated. BYBK is duly licensed, registered or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing, registration or
qualification necessary, except where the failure to be so
licensed, registered or qualified would not have a Material Adverse
Effect on BYBK, and all such licenses, registrations and
qualifications are in full force and effect in all material
respects. BYBK engages in activities and holds properties only of
the types permitted to savings and loan holding companies by HOLA
and the rules and regulations promulgated thereunder.
(b) Bay Bank is a
federal savings bank duly organized, validly existing and in good
standing under the laws of the United States of America. Bay Bank
has the corporate power and lawful authority to carry on its
business and operations as now being conducted and to own or lease
and operate all of its properties and assets as presently owned or
leased and operated. Bay Bank is duly licensed, registered or
qualified to do business in each jurisdiction in which the nature
of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing,
registration or qualification necessary, except where the failure
to be so licensed, registered or qualified would not have a
Material Adverse Effect on BYBK, and all such licenses,
registrations and qualifications are in full force and effect in
all material respects.
(c) Bay Bank is an
“insured depository institution” as defined in the
Federal Deposit Insurance Act and applicable regulations
thereunder, the deposits of Bay Bank are insured by the FDIC
through the Deposit Insurance Fund to the extent provided in the
Federal Deposit Insurance Act, and all premiums and assessments
required to be paid in connection therewith have been paid when
due. No proceedings for the revocation or termination of such
deposit insurance are pending or, to the Knowledge of BYBK,
threatened.
(d) BYBK Disclosure Schedule 3.1(d)
contains a complete and accurate list of all BYBK Subsidiaries.
Each BYBK Subsidiary is duly formed, validly existing and in good
standing under the laws of the state of its formation and has the
power and lawful authority to carry on its business and operations
as now being conducted and to own or lease and operate all of its
properties and assets as presently owned or leased and operated.
Each BYBK Subsidiary is duly licensed, registered or qualified to
do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing,
registration or qualification necessary, except where the failure
to be so licensed, registered or qualified would not have a
Material Adverse Effect on BYBK, and all such licenses,
registrations and qualifications are in full force and effect in
all material respects. Other than the equity interests of the BYBK
Subsidiaries listed on BYBK Disclosure Schedule
3.1(d), BYBK does not own or control, directly or
indirectly, or have the right to acquire directly or indirectly, an
equity interest in any Entity.
24
(e) The respective
minute books of BYBK and each BYBK Subsidiary accurately reflect,
in all material respects, all material actions of their respective
owners and governing bodies, including committees, in each case in
accordance with the ordinary business practice of BYBK or the
applicable BYBK Subsidiary.
(f) Prior to the date
of this Agreement, BYBK has delivered or made available to OLB
true, correct and complete copies of the articles of incorporation
and bylaws of BYBK, and the charter documents and bylaws, operating
agreement and/or other governing instrument of each BYBK Subsidiary
and each as in effect on the date hereof (collectively, the
“BYBK Governing
Documents”). The BYBK Governing Documents comply with
applicable Law, except for any failure to be in compliance that
would not reasonably be likely to have, either individually or in
the aggregate, a Material Adverse Effect on BYBK.
(g) BYBK Disclosure Schedule 3.1(g)
contains a complete and accurate list of all BYBK Subsidiaries that
are no longer operational or provide any business function for or
on behalf of BYBK or Bay Bank (the “Non-Operational
Subsidiaries”).
Section
3.2
Capitalization.
(a) The authorized
capital stock of BYBK consists of (i) 20,000,000 shares of common
stock, $1.00 par value
per share (“BYBK
Common Stock”), of which, as of the date of this
Agreement, 10,717,889 shares are duly and validly issued and
outstanding, including 50,662 shares of restricted BYBK Common
Stock issued under BYBK equity compensation plans, and 176,544
shares were reserved for issuance upon the exercise of outstanding
Rights in respect of BYBK common stock, and (ii) 9,201 shares of
preferred stock, of which, as of the date of this Agreement, no
shares are issued and outstanding. Except as provided in
BYBK Disclosure Schedule
3.2(a), as of the date of this Agreement, there are not
outstanding any bonds, debentures, notes or other indebtedness of
BYBK or any BYBK Subsidiary having the right to vote (or that are
convertible into, or exchangeable for, securities of BYBK having
the right to vote) on any matters on which stockholders of BYBK may
vote, nor are any trust preferred or subordinated debt securities
of BYBK or any BYBK Company issued or outstanding. All of the
issued and outstanding shares of BYBK Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable
under the MGCL, free of preemptive rights, except as may be defined
in BYBK’s articles of incorporation, and were not issued in
violation of the preemptive rights or other rights to subscribe for
or purchase securities of any Person or in violation of any
applicable Laws. Except as set forth in this Section 3.2(a) and
BYBK Disclosure Schedule
3.2(a), BYBK has not issued nor is BYBK or any BYBK
Subsidiary bound by any subscription, call, commitment, agreement
or other Right of any character relating to the purchase, sale or
issuance of, or right to receive dividends or other distributions
on, any shares of BYBK Common Stock or any other security of BYBK
or any securities representing the right to vote, purchase or
otherwise receive any shares of BYBK Common Stock or any other
security of BYBK. Accordingly, as of immediately prior to the
Effective Time no more than 10,894,433 shares of BYBK Common Stock
will be issued and outstanding and no more than 176,544 shares of
BYBK Common Stock will be reserved for issuance upon the exercise
of outstanding BYBK Rights.
25
(b) Except as disclosed
in BYBK Disclosure
Schedule 3.2(b), BYBK owns, directly or indirectly, all of
the capital stock or other equity ownership interests of the BYBK
Subsidiaries, free and clear of any Liens, Contracts and
restrictions of any kind or nature, and all of such shares or
equity ownership interests are duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. No
capital stock (or other equity interest) of any BYBK Subsidiary is
or may become required to be issued (other than to another BYBK
Company) by reason of any Rights, and there are no Contracts by
which a BYBK Subsidiary is bound to issue (other than to another
BYBK Company) additional shares of its capital stock (or other
equity interests) or Rights or by which any BYBK Company is or may
be bound to transfer any shares of the capital stock (or other
equity interests) of a Subsidiary of BYBK (other than to another
BYBK Company). There are no Contracts relating to the rights of any
BYBK Company to vote or to dispose of any shares of its capital
stock (or other equity interests), or any shares of capital stock
(or other equity interests) of a BYBK Subsidiary.
(c) Except as set forth
on BYBK Disclosure
Schedule 3.2(c), to the Knowledge of BYBK no person or group
is the beneficial owner of five percent or more of the outstanding
shares of BYBK Common Stock (the terms “person,”
“group” and “beneficial owner” are as
defined in Section 13(d) of the Exchange Act, and the rules
and regulations thereunder).
(d) There are no
Contracts pursuant to which BYBK or any BYBK Subsidiary is or could
be required to register shares of BYBK’s capital stock or
other securities under the Securities Act or to issue, deliver,
transfer or sell any shares of capital stock, Rights or other
securities of BYBK or any BYBK Subsidiary. No BYBK Subsidiary owns
any capital stock of BYBK.
(e) BYBK does not have
a dividend reinvestment plan or any stockholders’ rights
plan.
Section
3.3
Authority; No
Violation; BYBK Debt.
(a) BYBK has the
corporate power and authority necessary to execute and deliver this
Agreement and, subject to the receipt of all consents, waivers and
approvals described in BYBK Disclosure Schedule 3.4
and approval of the Merger by the holders of BYBK Common Stock as
required by BYBK’s articles of incorporation and bylaws and
the MGCL, to consummate the Contemplated Transactions and to
otherwise perform its obligations under this Agreement. The
execution and delivery of this Agreement by BYBK and the
consummation by BYBK of the Contemplated Transactions, up to and
including the Merger, have been duly and validly authorized by the
board of directors of BYBK and, except for approval by the holders
of BYBK Common Stock as required by BYBK’s articles of
incorporation and bylaws and the MGCL, no other corporate
proceedings on the part of BYBK are necessary to consummate the
Contemplated Transactions. This Agreement has been duly and validly
executed and delivered by BYBK and, assuming the due authorization,
execution and delivery of this Agreement by OLB, constitutes a
legal, valid and binding obligation of BYBK, enforceable against
BYBK in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or similar Laws affecting the
enforcement of creditors’ rights generally and except that
the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before
which any proceeding may be brought.
26
(b) The execution and
delivery of this Agreement by BYBK, the consummation of the
Contemplated Transactions, and the compliance by BYBK with any of
the terms or provisions hereof, subject to the receipt of all
consents, waivers and approvals described in BYBK Disclosure Schedule 3.4,
the approval of the Merger by the holders of BYBK Common Stock as
required by BYBK’s articles of incorporation and bylaws and
the MGCL, BYBK’s and OLB’s compliance with any
conditions contained in this Agreement, and compliance by BYBK or
any BYBK Subsidiary with any of the terms or provisions hereof, do
not and will not:
(i) Conflict with, or
result in a breach of, any provision of the BYBK Governing
Documents;
(ii) Violate,
or constitute or result in a default under, or require any consent,
waiver, approval or similar action pursuant to, any Law applicable
to BYBK or any BYBK Subsidiary or any of their respective
properties or assets, except where such violation would not have a
Material Adverse Effect; or
(iii) Except
as described in BYBK
Disclosure Schedule 3.3(b) or pursuant to which consent or
notification is required as set forth in BYBK Disclosure Schedule 3.4,
violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event that, with notice or lapse of
time, or both, would constitute a default) under, result in the
termination of, or acceleration of, the performance required by, or
result in a right of termination or acceleration or the creation of
any Lien upon any of the properties or assets of BYBK or any BYBK
Subsidiary under any of the terms or conditions of any note, bond,
mortgage, indenture, license, lease, Contract or other instrument
or obligation to which BYBK or any BYBK Subsidiary is a party, or
by which they or any of their respective properties or assets may
be bound or affected, except where such termination, acceleration
or creation would not have a Material Adverse Effect on
BYBK.
(c) Bay Bank has all
requisite corporate power and authority to execute and deliver the
Bank Merger Agreement and, subject to the receipt of all consents
described in BYBK
Disclosure Schedule 3.4, to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger
Agreement and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the board of
directors of Bay Bank and, other than the approval of the Bank
Merger Agreement by BYBK as the sole stockholder of Bay Bank as
required by Law, no further corporate proceedings of Bay Bank are
needed to execute and deliver the Bank Merger Agreement and
consummate the transactions contemplated thereby. BYBK, as the sole
stockholder of Bay Bank, shall promptly hereafter approve the Bank
Merger Agreement, and the Bank Merger Agreement will be duly
executed by Bay Bank on the date of this Agreement. The Bank Merger
Agreement has been duly authorized and, assuming the due
authorization, execution and delivery of the Bank Merger Agreement
by Old Line, will be a legal, valid and binding agreement of Bay
Bank enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or similar Laws affecting the
enforcement of creditors’ rights generally and except that
the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before
which any proceeding may be brought. At the Closing, all other
Contracts, documents and instruments to be executed and delivered
by Bay Bank that are referred to in the Bank Merger Agreement, if
any, will have been duly executed and delivered by Bay Bank and,
assuming due authorization, execution and delivery by the
counterparties thereto, will constitute the legal, valid and
binding obligations of Bay Bank, enforceable against Bay Bank in
accordance with their respective terms and conditions, subject to
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or similar Laws affecting the
enforcement of creditors’ rights generally and except that
the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before
which any proceeding may be brought.
27
(d) The approval of the
Merger by the holders of BYBK Common Stock is the only vote of
holders of any class of BYBK capital stock necessary to adopt and
approve this Agreement and the Contemplated Transactions. The
affirmative vote of Persons holding at least two-thirds of the
issued and outstanding shares of BYBK Common Stock as of the record
date for the BYBK Common Stockholders’ Meeting is required to
approve the Merger under the MGCL and BYBK’s articles of
incorporation and bylaws.
(e) BYBK’s board
of directors, by resolution duly adopted by the unanimous vote of
the entire board of directors at a meeting duly called and held,
has (i) determined that this Agreement and the Contemplated
Transactions, including the Merger, are advisable and are in the
best interests of BYBK and its stockholders, (ii) authorized and
approved this Agreement and the Contemplated Transactions, (iii)
directed that the Merger be submitted for consideration at the BYBK
Common Stockholders’ Meeting, and (iv) recommended that its
stockholders approve the Merger.
(f) BYBK has no debt
that is secured by Bay Bank capital stock.
Section
3.4
Consents;
Regulatory Approvals.
Except
as described in Section 3.3(b) of this Agreement and BYBK Disclosure Schedule 3.4,
no consents, waivers or approvals of, or filings or registrations
with, any Regulatory Authorities or other third parties are
necessary in connection with the execution and delivery of this
Agreement by BYBK or the consummation of the Contemplated
Transactions by BYBK. BYBK has no reason to believe that it will
not be able to obtain all requisite consents, waivers or approvals
from the Regulatory Authorities or any third party in order to
consummate the Contemplated Transactions on a timely basis. To the
Knowledge of BYBK, no fact or circumstance exists, including any
possible other transaction pending or under consideration by BYBK
or any BYBK Company, that would (a) reasonably be expected to
prevent or delay in any material respect, any filings or
registrations with, or consents, waivers or approvals required
from, any Regulatory Authority, or (b) cause a Regulatory Authority
acting pursuant to applicable Law to seek to prohibit or materially
delay consummation of the Contemplated Transactions or impose a
Burdensome Condition.
Section
3.5
Financial
Statements and Related Matters.
(a) BYBK has delivered
or made available to OLB the BYBK Financials, except those
pertaining to annual and quarterly periods ending on or after
September 30, 2017 and monthly periods commencing after June 30,
2017, which it will deliver or make available by each respective
delivery date as required by this Agreement. The BYBK Financials
with respect to periods ending prior to the date of this Agreement
(i) are true, accurate and complete in all material respects, and
have been prepared from, and are in accordance with, the Books and
Records of BYBK and the BYBK Subsidiaries and (ii) fairly present,
in all material respects, the consolidated financial position,
results of operations, changes in stockholders’ equity and
cash flows of BYBK as of and for the periods ended on the dates
thereof. The BYBK Financials with respect to periods ended prior to
the date of this Agreement comply in all material respects with
applicable accounting and regulatory requirements and, other than
the Internal BYBK Financials, have been prepared in accordance with
GAAP consistently applied, except for (i) omission of the notes
from the financial statements, applicable to any interim period,
and (ii) with respect to any interim period, normal year-end
adjustments and notes thereto.
28
(b) BYBK did not, as of
the date of the BYBK Financials or any subsequent date, have any
liabilities, obligations or loss contingencies of any nature,
whether absolute, accrued, contingent or otherwise, that are not
fully reflected or reserved against in the balance sheets included
in the BYBK Financials at the date of such balance sheets that
would have been required to be reflected therein in accordance with
GAAP consistently applied or fully disclosed in a note thereto,
except for liabilities, obligations and loss contingencies that are
not material in the aggregate and that are incurred in the Ordinary
Course, and except for liabilities, obligations and loss
contingencies that are within the subject matter of a specific
representation and warranty herein or that have not had a Material
Adverse Effect and subject, in the case of any unaudited
statements, to normal recurring audit adjustments and the absence
of notes thereto.
(c) During the periods
covered by the BYBK Financials with respect to periods ended prior
to the date of this Agreement, BYBK’s independent registered
public accounting firm, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, was independent
of BYBK and its management. As of the date hereof, BYBK’s
independent registered public accounting firm, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LLP, has not resigned (or informed BYBK that it intends to resign)
or been dismissed as a result of or in connection with any
disagreements with BYBK on a matter of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure.
Section
3.6 No Material Adverse
Effect.
Except
as disclosed on BYBK
Disclosure Schedule 3.6, since June 30, 2017:
(a) no events have
occurred that have had or would be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
BYBK;
(b) neither BYBK nor
any BYBK Subsidiary has suffered any adverse change in its assets
(including loan portfolio), liabilities (whether absolute, accrued,
contingent or otherwise), liquidity, net worth, property, financial
condition or results of operations, or any damage, destruction or
loss, whether or not covered by insurance, that in the aggregate
has had or is reasonably likely to have a Material Adverse Effect
on the BYBK Companies taken as a whole; and
(c) BYBK and the BYBK
Subsidiaries have carried on their respective businesses only in
the Ordinary Course.
Section
3.7
Taxes.
(a) Except as disclosed
in BYBK Disclosure
Schedule 3.7(a), all BYBK Returns required by applicable Law
to have been filed with any Taxing Authority by, or on behalf of,
each of the BYBK Companies have been filed on a timely basis in
accordance with all applicable Laws, and such BYBK Returns are
true, complete and correct in all material respects, or requests
for extensions to file the BYBK Returns have been timely filed,
granted and have not expired, except to the extent that such
failures to file, to be complete or correct or to have extensions
granted that remain in effect individually or in the aggregate
would not have a Material Adverse Effect on BYBK. All BYBK Taxes
shown to be due and payable on the BYBK Returns or on subsequent
assessments with respect thereto have been paid in full or adequate
reserves have been established in the BYBK Financials for the
payment of such BYBK Taxes, except where any such failure to pay or
establish adequate reserves, in the aggregate, has not had, and is
not reasonably likely to have, a Material Adverse Effect on the
BYBK Companies. Each of the BYBK Companies has timely withheld and
paid over all BYBK Taxes required to have been withheld and paid
over by it, and complied with all information reporting and backup
withholding requirements, including maintenance of required records
with respect thereto, in connection with amounts paid or owing to
any employee, creditor, independent contractor or other third
party. There are no Liens on any of the assets of the BYBK
Companies with respect to BYBK Taxes, other than Liens for BYBK
Taxes not yet due and payable.
29
(b) Except as disclosed
on BYBK Disclosure
Schedule 3.7(b), no deficiencies for BYBK Taxes have been
claimed, proposed or assessed, with notice to any of the BYBK
Companies, by any taxing or other governmental authority against
the BYBK Companies that have not been settled, closed or reached a
final determination, or that have not been adequately reserved for
in the BYBK Financials, except for deficiencies that, individually
or in the aggregate, have not had, and are not reasonably likely to
have, a Material Adverse Effect on BYBK. There are no pending
audits relating to any BYBK Tax liability of which any of the BYBK
Companies has received written notice. Except as disclosed on
BYBK Disclosure Schedule
3.7(b), none of the BYBK Companies is a party to any action
or proceeding for assessment or collection of BYBK Taxes, nor have
such events been asserted or, to the Knowledge of BYBK, threatened
against any of the BYBK Companies or any of their assets. No waiver
or extension of any statute of limitations relating to BYBK Taxes
is in effect with respect to the BYBK Companies. No power of
attorney has been executed by any of the BYBK Companies with
respect to any BYBK Tax matter that is currently in
force.
(c) The BYBK Companies
have disclosed on the federal income tax BYBK Returns all positions
taken therein that could give rise to a substantial understatement
penalty within the meaning of Section 6662 of the IRC. None of
the BYBK Companies has agreed to make, nor is it required to make,
any adjustment under IRC Section 481(a) by reason of a change
in accounting method or otherwise. None of the property of the BYBK
Companies is subject to a safe-harbor lease (pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954 as in
effect after the Economic Recovery Tax Act of 1981 and before the
Tax Reform Act of 1986) or is “tax-exempt use property”
(within the meaning of Section 168(h) of IRC) or
“tax-exempt bond financed property” (within the meaning
of Section 168(g)(5) of IRC). Except as disclosed on
BYBK Disclosure Schedule
3.7(c), none of the BYBK Companies is a party to any tax
sharing agreement or has any continuing obligations under any prior
tax sharing agreement. None of the BYBK Companies is, or has been,
a member of any affiliated group within the meaning of Section
1504(a) of the IRC or any similar group defined under a similar
provision of state, local, or non-U.S. law other than a group the
common parent of which was BYBK.
(d) None of the BYBK
Companies has been a party to any distribution occurring during the
last three years in which the parties to such distribution treated
the distribution as one to which Section 355 of the IRC (or
any similar provision of state, local or foreign law)
applied.
(e) As used in this
Agreement, the term “BYBK Taxes” shall mean
all taxes, however denominated, including any interest, penalties
or other additions to tax that may become payable in respect
thereof, imposed by any federal, territorial, state, local or
foreign government or any agency or political subdivision of any
such government, which taxes shall include, without limiting the
generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and state
income taxes), real property gains taxes, payroll and employee
withholding taxes, unemployment insurance taxes, social security
taxes, sales and use taxes, ad valorem taxes, excise taxes,
franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, and other obligations of the
same or of a similar nature to any of the foregoing, which any of
the BYBK Companies is required to pay, withhold or collect. As used
in this Agreement, the term “BYBK Returns” shall mean
all reports, estimates, declarations of estimated tax, information
statements and returns relating to, or required to be filed in
connection with, any BYBK Taxes, including information returns or
reports with respect to backup withholding and other payments to
third parties.
30
(f) True and complete
copies of the federal income tax returns and any amendments thereto
of the BYBK Companies as filed with the IRS for the year ended
December 31, 2015 have been furnished to OLB; true and complete
copies of the federal income tax returns of the BYBK Companies for
the year ended December 31, 2016 will be furnished to OLB within
five Business Days of filing; and, if the Effective Date is later
than the due dates therefor, true and complete copies of the
federal income tax returns of the BYBK Companies for the years
ending after December 31, 2017 will be furnished to OLB within five
Business Days of filing.
(g) True and complete
copies of the state income tax returns of the BYBK Companies as
filed with the State of Maryland for the year ended December 31,
2015 have been furnished to OLB; true and complete copies of the
state income tax returns of the BYBK Companies for the year ended
December 31, 2016 will be furnished to OLB within five Business
Days of filing; and, if the Effective Date is later than the due
dates therefor, true and complete copies of the state income tax
returns of the BYBK Companies for the years ending on or after
December 31, 2017 will be furnished to OLB within five Business
Days of filing.
Section
3.8
Contracts; Certain
Changes.
(a) Except as disclosed
in the BYBK SEC Reports or as described in BYBK Disclosure Schedule
3.8(a), BYBK
Disclosure Schedule 3.11, BYBK Disclosure Schedule
3.13(a), or BYBK
Disclosure Schedule 3.15(a), neither BYBK nor any BYBK
Subsidiary is a party to or subject to:
(i) Any employment,
consulting, severance, “change-in-control,”
indemnification, retirement or termination Contract with or for any
officer, director, employee, independent contractor, agent or other
Person;
(ii) Any
Contract providing for bonuses, pensions, options, deferred
compensation, retirement payments, profit sharing, or similar
arrangements for or with any officer, director, employee,
independent contractor, agent, or other Person;
(iii) Except
as provided in the BYBK Governing Documents, any Contract that
provides for the indemnification of any of its present or former
directors, officers or employees, or other persons who serve or
served as a director, officer or employee of another corporation,
partnership or other enterprise at the request of BYBK and, to the
Knowledge of BYBK, there are no claims for which any such person
would be entitled to indemnification under BYBK Governing
Documents, under any applicable Law or under any indemnification
agreement;
(iv) Any
collective bargaining agreement with any labor union relating to
its employees;
(v) Any Contract that
by its terms limits its payment of dividends;
(vi) Any
material instrument (A) evidencing or relating to indebtedness for
borrowed money, whether directly or indirectly, by way of purchase
money obligation, conditional sale, lease purchase, guaranty or
otherwise, in respect of which it is an obligor to any Person,
other than deposits, FHLB advances, repurchase agreements,
bankers’ acceptances and “treasury tax and loan”
accounts established in the Ordinary Course and transactions in
“federal funds,” or (B) that contains financial
covenants or other restrictions, other than those relating to the
payment of principal and interest when due, that would be
applicable on or after the Effective Time;
31
(vii) Any
Contract, other than this Agreement, that restricts or prohibits it
from engaging in any type of business permissible under applicable
Law;
(viii) Any
Contract that provides for payments or benefits in certain
circumstances that, together with other payments or benefits
payable to any participant therein or party thereto, might render
any portion of any such payments or benefits subject to
disallowance of deduction therefor as a result of the application
of Section 280G of the IRC;
(ix) Any
Contract involving Intellectual Property (other than Contracts
entered into in the Ordinary Course with customers and
off-the-shelf, “shrink wrap” or force placed software
licenses);
(x) Any lease for real
property;
(xi) Any
Contract with any broker-dealer or investment adviser;
(xii) Any
investment advisory Contract with any investment company registered
under the Investment Company Act of 1940;
(xiii) Any
Contract with, or membership in, any local clearing house or
self-regulatory organization;
(xiv) any
Contract (other than this Agreement) that restricts or limits in
any material way the conduct of its business (it being understood
that any non-compete, non-solicitation or similar provision shall
be deemed material);
(xv) any
Contract that grants any “most favored nation” right,
right of first refusal, right of first offer or similar right with
respect to any of its material assets, rights or
properties;
(xvi) Any
Contract in which it has liability or would incur a termination fee
of over $100,000; or
(xvii) Any
Contract not disclosed pursuant to the other items of this
paragraph (a) that would constitute a “material
contract” as defined in Item 601(b)(10) of Regulation S-K of
the SEC.
(b) True and correct
copies of the Contracts listed in BYBK Disclosure Schedule
3.8(a), BYBK
Disclosure Schedule 3.11, BYBK Disclosure Schedule
3.13(a), and BYBK
Disclosure Schedule 3.15(a) have been made available to OLB
on or before the date hereof and are in full force and effect on
the date hereof. None of the BYBK Companies nor, to the Knowledge
of BYBK, any other party to any such Contracts, has breached any
provision of, or is in default under any term of, any such
Contracts and no party to any such Contracts will have the right to
terminate any or all of the provisions thereof as a result of the
Contemplated Transactions, except where such breach, default or
termination is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect.
32
(c) Except as described
in BYBK Disclosure
Schedule 3.8(c), since December 31, 2016, through and
including the date of this Agreement, none of the BYBK Companies
has (i) made any material change in its credit policies or
procedures, the effect of which was or is to make any such policy
or procedure less restrictive in any material respect, (ii) made
any material acquisition or disposition of any assets or
properties, or entered into any contract for any such acquisition
or disposition, other than loans, loan commitments and the
disposition of REO in the Ordinary Course, (iii) entered into any
lease of real or personal property requiring annual payments in
excess of $100,000, other than in connection with foreclosed
property or in the Ordinary Course, or (iv) changed any accounting
methods, principles or practices affecting its assets, liabilities
or businesses, including any reserving, renewal or residual method,
practice or policy.
(d) Except as disclosed
on BYBK Disclosure
Schedule 3.8(d), neither BYBK nor any of the BYBK
Subsidiaries has issued, or is obligated under, any letter of
credit that is not fully secured.
Section
3.9
Ownership of
Personal Property; Insurance Coverage.
(a) Each of the BYBK
Companies has good and marketable title to all material assets and
properties owned by it in the conduct of its businesses, whether
such assets and properties are real or personal, tangible or
intangible, including assets and property reflected in the balance
sheets contained in the BYBK Financials or acquired subsequent
thereto, subject to no Liens, except:
(i) Those items that
secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to the FHLB,
inter-bank credit facilities or reverse repurchase agreements and
that are described in BYBK
Disclosure Schedule 3.9(a) or permitted under Article V
hereof;
(ii) Mechanics
liens and similar liens for labor, materials, services or supplies
provided for such property and incurred in the Ordinary Course for
amounts not yet due or that are being contested in good
faith;
(iii) Statutory
Liens securing payments not yet due or that are being contested in
good faith;
(iv) Liens
for current BYBK Taxes not yet due and payable;
(v) Pledges to secure
deposits and other Liens incurred in the Ordinary Course of the
business of banking;
(vi) Liens,
imperfections or irregularities of title, and other defects of
title that are not reasonably likely to have a Material Adverse
Effect;
(vii) Easements,
rights of way and other similar encumbrances that do not materially
affect the use of the properties or assets subject thereto or
affected thereby or otherwise materially impair business operations
at such properties;
33
(viii) With
respect to personal property reflected in the balance sheets
contained in the BYBK Financials, (A) dispositions and encumbrances
for adequate consideration in the Ordinary Course since the date of
such balance sheets and/or (B) dispositions of obsolete personal
property since the date of such balance sheets;
(ix) Those
items that are reflected as liabilities in the BYBK Financials;
and
(x) Items of personal
property that are held in any fiduciary or agency capacity
(collectively, “BYBK
Permitted Liens”).
(b) With respect to
material items of real and personal property that are used in the
conduct of its business and leased from other Persons, each of the
BYBK Companies has the right under valid, binding and existing
leases to use such real and personal property in all material
respects as presently occupied and used. There is not under any
such lease any material existing default by any BYBK Company or, to
the Knowledge of BYBK, any other party thereto, or any event that
with notice or lapse of time would constitute such a material
default and all rent and other sums and charges due and payable
under such leases have been paid.
(c) With respect to all
agreements pursuant to which any of the BYBK Companies has
purchased securities subject to an agreement to resell, if any, it
has a valid, perfected first lien or security interest in the
securities or other collateral securing the repurchase agreement,
and the value of such collateral equals or exceeds the amount of
the debt secured thereby.
(d) Each of the BYBK
Companies currently maintains Insurance Policies with reputable
insurers against such risks and in such amounts as the management
of BYBK has reasonably determined to be prudent for such BYBK
Company’s operations and, to the Knowledge of BYBK, such
Insurance Policies are similar in scope and coverage in all
material respects to Insurance Policies maintained by other
similarly-situated businesses. Each of BYBK and each BYBK
Subsidiary is in compliance with its Insurance Policies, is not in
default under any of the terms thereof and has made accurate
statements on any insurance renewal application. Each such
Insurance Policy is in full force and effect and, except for
Insurance Policies insuring against potential liabilities of
officers, directors and employees of BYBK and the BYBK
Subsidiaries, BYBK or the relevant BYBK Subsidiary is the sole
beneficiary of such Insurance Policies. All premiums and other
payments due under such Insurance Policies have been paid, and all
material notices and claims thereunder have been filed in a due and
timely fashion. BYBK
Disclosure Schedule 3.9(d) identifies all Insurance Policies
maintained by the BYBK Companies.
(e) None of the BYBK
Companies has received notice from any insurance carrier
that:
(i) Any of its
Insurance Policies will be cancelled, terminated or not renewed or
that coverage thereunder will be reduced or eliminated;
or
(ii) Premium
costs with respect to any such Insurance Policy will be
substantially increased.
34
(f) Except as disclosed
in BYBK Disclosure
Schedule 3.9(f), there are presently no material claims
pending under such Insurance Policies and none of the BYBK
Companies has received any notices under such Insurance Policies.
All such Insurance Policies are valid and enforceable and in full
force and effect. Within the last three years, each of the BYBK
Companies has received each type of insurance coverage for which it
has applied and, during such periods, it has not been denied
indemnification for any material claims submitted under any of its
Insurance Policies.
Section
3.10
Legal
Proceedings.
Except
as disclosed in the BYBK SEC Reports or as described in
BYBK Disclosure Schedule
3.10, there is no Litigation now pending or, to the
Knowledge of BYBK, threatened, against any of the BYBK Companies or
any of their properties, or against any current or former officer,
director or employee of a BYBK Company in their capacities as such
or a BYBK Benefit Plan, or against any asset, interest, or right of
any of them, and to the Knowledge of BYBK there are no facts that
reasonably could be expected to be the basis for any such
Litigation. To the Knowledge of BYBK, no pending or threatened
Litigation described in BYBK Disclosure Schedule 3.10
could reasonably be expected to (a) have a Material Adverse Effect,
(b) question the validity of any action taken or to be taken in
connection with this Agreement or the Contemplated Transactions, or
(c) materially impair or delay the ability of the BYBK Companies to
perform their obligations under this Agreement. Except as described
in BYBK Disclosure
Schedule 3.10, none of the BYBK Companies is in default with
respect to any Order.
Section
3.11
Compliance with
Applicable Law.
Except
as disclosed on BYBK
Disclosure Schedule 3.11:
(a) Each of the BYBK
Companies conducts its business in compliance with all Laws
applicable to it, its properties, assets and deposits, its
business, and its conduct of business and its relationship with its
employees conducting such business, except where noncompliance
would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect;
(b) Each of the BYBK
Companies has, and since December 31, 2012, has had, all material
permits, licenses, authorizations, orders and approvals of all
Regulatory Authorities that are required in order to permit it to
own or lease its properties and carry on its business as it is
presently conducted, and have paid all fees and assessments due and
payable in connection therewith; all such permits, licenses,
authorizations, orders and approvals are in full force and effect,
and no suspension or cancellation of any of them is, to the
Knowledge of BYBK, threatened, and to the Knowledge of BYBK no
suspension or cancellation of any such permit, license,
certificate, order or approval is threatened or will result from
the consummation of the Contemplated Transactions, subject to
obtaining the receipt of all requisite approvals or consents from
the Regulatory Authorities in order to consummate the Contemplated
Transactions. None of the BYBK Companies is in default or violation
of any such permits, licenses, authorizations, orders and
approvals. None of the BYBK Companies have been given notice or
been charged with any violation of any Law or condition to approval
of any Regulatory Authority that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse
Effect;
35
(c) Since January 1,
2012, each of the BYBK Companies has timely filed all reports,
forms, filings, schedules, information, data, registrations,
submissions, statements and other documents, together with any
amendments required to be made with respect thereto, that it was
required by Law to file with any Regulatory Authority
(collectively, the “BYBK Reports”), and has
paid all fees and assessments due and payable in connection
therewith, and each of such reports, forms, filings, etc. were
complete and accurate in all material respects and complied in all
material respects with all Laws under which it was filed (or was
amended so as to be in compliance promptly following discovery of
such noncompliance) and, to the extent such filings contain
financial information, have been prepared in all material respects
in accordance with applicable regulatory accounting principles and
practices and, in the case of the BYBK SEC reports, GAAP,
throughout the periods covered by such filing, except to the extent
failure to timely file would not, individually or in the aggregate,
be expected to have a Material Adverse Effect; except as disclosed
in BYBK Disclosure
Schedule 3.11, none of the BYBK Reports when filed with the
SEC (the “BYBK SEC
Reports”), and if amended prior to the date hereof, as
of the date of such amendment, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; there (i) is no unresolved violation, criticism or
exception by any Regulatory Authority with respect to any report or
statement relating to any examinations, inspections or
investigations of BYBK or any BYBK Subsidiary (not including any
supervisory suggestions or recommendations), (ii) are no
outstanding formal or informal inquiries by, or unresolved
disagreements or disputes with, any Regulatory Authority with
respect to the business, operations, policies or procedures of BYBK
or any BYBK Subsidiary, and (iii) are no outstanding comments from
or unresolved issues raised by the SEC, as applicable, with respect
to any of the BYBK SEC Reports; and none of the BYBK Subsidiaries
is required to file periodic reports pursuant to Sections 13 or
15(d) of the Exchange Act;
(d) No Regulatory
Authority has initiated any proceeding or, to the Knowledge of
BYBK, investigation into the business or operations of the BYBK
Companies that has not been resolved;
(e) Since January 1,
2014, none of the BYBK Companies has received any notification or
communication from any Regulatory Authority:
(i) Asserting that it
is not in substantial compliance with any Law that such Regulatory
Authority enforces, unless such assertion has been waived,
withdrawn or otherwise resolved;
(ii) Threatening
to revoke any license, franchise, permit or governmental
authorization that is material to it; or
(iii) Except
as disclosed in BYBK
Disclosure Schedule 3.11, requiring or threatening to
require it, or indicating that it may be required, to enter into a
cease and desist order, consent agreement, other agreement or
memorandum of understanding, or any other agreement directing,
restricting or limiting, or purporting to direct, restrict or
limit, in any manner its operations, including without limitation
any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this
Section 3.11(e)(iii) and addressed specifically to a BYBK Company
herein referred to as a “BYBK Regulatory
Agreement”);
36
(f) Other than as
disclosed in BYBK
Disclosure Schedule 3.11, none of the BYBK Companies has
received, consented to or entered into any BYBK Regulatory
Agreement that is currently in effect, nor has any BYBK Company
been advised since January 1, 2013 by any Regulatory Authority that
it is considering issuing, initiating, ordering or requesting any
BYBK Regulatory Agreement that has not already been issued,
initiated, ordered or requested;
(g) There is no
unresolved violation, criticism or exception by any Regulatory
Authority with respect to any BYBK Regulatory Agreement, except to
the extent permitted by such BYBK Regulatory
Agreement;
(h) There is no
settlement, Order or regulatory restriction imposed upon or entered
into by any of the BYBK Companies or upon any of their
assets;
(i) BYBK has designed
and implemented and maintains disclosure controls and procedures
(within the meaning of Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) to ensure that material information relating to the
BYBK Companies is made known to the management of BYBK by others
within those entities as appropriate to allow timely decisions
regarding required disclosure and to make the certifications
required by the Exchange Act with respect to the BYBK SEC
Reports;
(j) Since January 1,
2013, (i) no BYBK Company nor, to the Knowledge of BYBK, any
director, officer, employee, auditor, accountant or other
Representative of any BYBK Company, has received or otherwise had
or obtained knowledge of any material complaint, allegation,
assertion or claim, whether written or oral, regarding its
accounting or auditing practices, procedures, methodologies or
methods or its internal accounting controls, including any material
complaint, allegation, assertion or claim that it has engaged in
questionable accounting or auditing practices, and (ii) no attorney
representing any BYBK Company, whether or not employed by it, has
reported evidence of a material violation of Securities Laws,
breach of fiduciary duty or similar violation by it or any of its
officers, directors, employees or agents to its board of directors
or any committee thereof or to any director or officer;
and
(k) BYBK has, in all
material respects, (i) properly certified all foreign deposit
accounts and has made all necessary tax withholdings on all of its
deposit accounts, (ii) timely and properly filed and maintained all
requisite Currency Transaction Reports and other related forms,
including any requisite Custom Reports required by any agency of
the U.S. Department of the Treasury, including the IRS, and (iii)
timely filed all Suspicious Activity Reports with the Financial
Crimes Enforcement Network (bureau of the U.S. Department of the
Treasury) required to be filed by it pursuant to applicable
Laws.
37
Section
3.12
Labor
Matters.
(a) There are no labor
or collective bargaining agreements to which any of the BYBK
Companies is a party. There is no union organizing effort pending
or, to the Knowledge of BYBK, threatened, against any of the BYBK
Companies or involving employees of any of the BYBK Companies.
There is no labor strike or labor dispute (other than routine
employee grievances that are not related to union employees), work
slowdown, stoppage, lockout or other job action pending or, to the
Knowledge of BYBK, threatened, against any of the BYBK Companies.
No Litigation asserting that any of the BYBK Companies has
committed an unfair labor practice (within the meaning of the
National Labor Relations Act of 1935 or comparable state law) or
other violation of state or federal labor Law or seeking to compel
any of the BYBK Companies to bargain with any labor organization or
other employee representative as to wages or conditions of
employment is pending or, to the Knowledge of BYBK, threatened,
with respect to any of the BYBK Companies before the National Labor
Relations Board, the Equal Employment Opportunity Commission or any
other Regulatory Authority (other than routine employee grievances
that are not related to union employees). Each of the BYBK
Companies is in compliance in all material respects with all
applicable Laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice. Except as described in
BYBK Disclosure Schedule
3.12, there is no pending or, to the Knowledge of BYBK,
threatened, Litigation against any of the BYBK Companies under any
applicable labor or employment Law or brought or made by a current
or former employee or applicant for employment.
(b) To BYBK’s
Knowledge, no employee of any BYBK Company is a party to, or is
otherwise bound by, any Contract, including any confidentiality or
non-competition agreement, that in any way adversely affects or
restricts the performance of such employee’s
duties.
(c) All of the BYBK
Companies’ employees are employed in the United States and
are either United States citizens or are legally entitled to work
in the United States under the Immigration Reform and Control Act
of 1986, as amended, other United States immigration Laws and the
Laws related to the employment of non-United States citizens
applicable in the state in which the employees are employed. Each
individual who renders services to any BYBK Company has provided
proof of employment eligibility and is properly classified by BYBK
as having the status of an employee or contractor or other
non-employee status (including for purposes of taxation and tax
reporting and under BYBK Benefit Plans).
Section
3.13
ERISA.
(a) BYBK has set forth
in BYBK Disclosure
Schedule 3.13(a) a complete and accurate list of the BYBK
Benefit Plans and made available to OLB a copy of all available
written documents regarding such BYBK Benefit Plans
including:
(i) A copy of each of
the BYBK Benefit Plans and any related trust agreements or other
funding arrangements;
(ii) The
most recent actuarial reports (if any) and financial reports it has
received relating to the BYBK Benefit Plans that constitute
“qualified pension plans” under IRC
Section 401(a);
38
(iii) The
most recently filed Form 5500, together with schedules and
attachments, as required (if any) relating to the BYBK Benefit
Plans that have been filed with the United States Department of
Labor;
(iv) The
most recent favorable determination letters (or opinion letter for
a prototype plan) issued by the IRS that pertain to any of the BYBK
Benefit Plans that are “qualified pension plans” under
IRC Section 401(a); and
(v) Summary plan
descriptions and any amendments or material modifications thereto
and any insurance, third party administrator or administrative
services only Contracts related to the BYBK Benefit Plans within
the meaning of ERISA Section 3(1) or 3(2).
(b) The BYBK Companies
have paid in full any insurance premiums due to the Pension Benefit
Guaranty Corporation (“PBGC”) with respect to
any defined benefit pension plans for the six years prior to, and
through, the Effective Date. Except as disclosed in BYBK Disclosure Schedule
3.13(b), no pension plan (within the meaning of ERISA
Section 3(2)) maintained or contributed to by any of the BYBK
Companies has been terminated or is under notice from the PBGC of
any threat of termination under the procedures of the PBGC. To the
Knowledge of BYBK, no circumstance has occurred for which any
reportable event under ERISA Section 4043(b) has been or would
be required that has not been reported or with respect to which the
notice requirement has not been waived. Except as set forth on
BYBK Disclosure Schedule
3.13(b), no BYBK Benefit Plan is subject to IRC Section 412
or Title IV of ERISA, and as of the Effective Date, to the
Knowledge of BYBK, no condition exists that will present a material
risk to OLB of incurring any liability to the PBGC or on account of
the failure to comply with any such provisions in connection with
any such BYBK Benefit Plan. Except pursuant to Contracts relating
to employment disclosed in BYBK Disclosure Schedule 3.8 or
as disclosed in BYBK
Disclosure Schedule 3.13(b), no BYBK Benefit Plan provides,
and none of the BYBK Companies has any obligation to provide,
health or welfare benefits to any individual following termination
of such individual’s employment or service with it or an
Affiliate (other than as required under the Consolidated Omnibus
Budget Reconciliation Act of 1986, as amended or any similar state
law).
(c) To the Knowledge of
BYBK, none of the BYBK Companies has ever contributed to, or
otherwise incurred, any liability with respect to a multi-employer
plan (within the meaning of ERISA Section 3(37)).
(d) Each BYBK Benefit
Plan complies in all material respects with the applicable
requirements of ERISA, the IRC, the Patient Protection and
Affordable Care Act of 2010, and any other applicable Laws
governing the BYBK Benefit Plan, and each BYBK Benefit Plan has at
all times been administered in all material respects in accordance
with all requirements of applicable Law and in accordance with its
terms. Each pension plan adopted by the BYBK Companies that is
intended to be qualified under Section 401(a) of the IRC is so
qualified, and, to the Knowledge of BYBK, each trust established by
each pension plan is exempt from federal income tax under Section
501(a) of the IRC. Each of the pension plans adopted by the BYBK
Companies is, and from its establishment has been, exempt from
federal income tax under Section 501(a) of the IRC. Each of the
pension plans adopted by the BYBK Companies has received, or is
entitled to rely upon, a favorable determination letter (or opinion
letter for a prototype plan) from the IRS, and to the Knowledge of
BYBK there are no circumstances that will or could result in
revocation of, or inability to continue to rely upon, any such
favorable determination letter or opinion letter. No Litigation
(other than routine claims for benefits) has been filed, is pending
or, to the Knowledge of BYBK, is threatened, with respect to any
BYBK Benefit Plan and, to the Knowledge of BYBK, there is no fact
or contemplated event that would give rise to any Litigation (other
than routine claims for benefits) with respect to any BYBK Benefit
Plan. Without limiting the foregoing, to the Knowledge of BYBK, the
following are true:
39
(i) Each
BYBK Benefit Plan that is a defined benefit pension plan subject to
IRC Section 412 or Title IV of ERISA as of the most recent
actuarial valuation has an AFTAP determined under IRC Section 430
and 436 that exceeds the AFTAP level that would impose any
funding-based limit on such plan under IRC Section
436;
(ii) Each
BYBK Benefit Plan that is a defined contribution pension plan that
is intended to be qualified under IRC Section 401(a) has had all contributions
made to the plan trust in accordance with the terms of the plan on
a timely basis under the IRC and ERISA;
(iii) With
respect to each BYBK Benefit Plan, to the Knowledge of BYBK there
is no occurrence or Contract that would constitute any
“prohibited transaction” within the meaning of
Section 4975(c) of the IRC or Section 406 of ERISA, which
transaction is not exempt under applicable Law, including
Section 4975(d) of the IRC or Section 408 of
ERISA;
(iv) Except
as disclosed in BYBK
Disclosure Schedule 3.13(d)(iv), no BYBK Benefit Plan is an
Employee Stock Ownership Plan as defined in Section 4975(e)(7)
of the IRC;
(v) No BYBK Benefit
Plan is a Qualified Foreign Plan as the term is defined in
Section 404A of the IRC and no BYBK Benefit Plan or any
related trust assets or agreements are subject to the laws of any
jurisdiction other than the United States of America or any state,
county or municipality of the United States;
(vi) None
of the welfare plans adopted by the BYBK Companies is a Voluntary
Employees’ Beneficiary Association as defined in
Section 501(c)(9) of the IRC;
(vii) All
of the welfare plans adopted by the BYBK Companies and their
related trusts comply in all material respects with and have been
administered in substantial compliance with (A) Section 4980B
of the IRC and Sections 601 through 609 of ERISA and all U.S.
Department of the Treasury and U.S. Department of Labor regulations
issued thereunder, respectively, (B) the Health Insurance
Portability and Accountability Act of 1996, (C) the applicable
provisions of the Patient Protection and Affordable Care Act of
2010, and (D) the U.S. Department of Labor regulations issued with
respect to such welfare benefit plans; and
(viii) With
respect to each BYBK Benefit Plan, BYBK or any BYBK ERISA Affiliate
has the authority to amend or terminate such BYBK Benefit Plan at
any time, subject to the applicable requirements of ERISA and the
IRC and the provisions of the BYBK Benefit Plan.
(e) There is no
existing or, to the Knowledge of BYBK, contemplated, audit of any
BYBK Benefit Plan by the IRS, the U.S. Department of Labor, the
PBGC, any Regulatory Authority or any other governmental authority.
In addition, there is no pending or, to the Knowledge of BYBK,
threatened Litigation by, on behalf of or with respect to any BYBK
Benefit Plan, or by or on behalf of any individual participant or
beneficiary of any BYBK Benefit Plan, alleging any violation of
ERISA or any other applicable Laws, or claiming benefits (other
than claims for benefits made in the Ordinary Course), nor, to the
Knowledge of BYBK, is there any basis likely to enable such
Litigation to prevail.
40
(f) Except as disclosed
on BYBK Disclosure
Schedule 3.13(f), (i) no payment contemplated or required by
or under any BYBK Benefit Plan and employment-related agreement
would in the aggregate constitute excess parachute payments as
defined in Section 280G of the IRC (without regard to subsection
(b)(4) thereof), (ii) no BYBK Benefit Plan provides for the
gross-up or reimbursement of taxes under Sections 280G, 4999 or
409A of the IRC, and (iii) neither the execution and delivery of
this Agreement nor the consummation of Contemplated Transactions
will (either alone or in conjunction with any other event) result
in, cause the vesting, exercisability or delivery of, or increase
the amount or value of, any payment, right or other benefit to any
current or former employee, officer, director or other service
provider of any of the BYBK Companies.
(g) Except as disclosed
on BYBK Disclosure
Schedule 3.13(g), no BYBK Benefit Plan is a nonqualified
deferred compensation plan within the meaning of Section 409A of
the IRC. Each BYBK Benefit Plan (including employment Contracts or
other compensation arrangements) that constitutes a nonqualified
deferred compensation plan within the meaning of Section 409A of
the IRC has been written, executed and operated in compliance with
Section 409A of the IRC and the regulations thereunder or an
applicable exemption therefrom.
(h) None of the BYBK
Companies is a record-keeper, administrator, custodian, fiduciary,
trustee or otherwise acts on behalf of any plan, program or
arrangement subject to ERISA (other than any BYBK Benefit
Plan).
Section
3.14
Brokers and
Finders.
Other
than the BYBK Advisers, none of the BYBK Companies and, to the
Knowledge of BYBK, no officer, director, employee, independent
contractor, agent or Affiliate of any BYBK Company on its behalf,
has employed any broker, finder, investment banker or financial
advisor, or incurred any liability for any fees or commissions to
any broker, finder, investment banker or financial advisor, in
connection with the Contemplated Transactions
Section
3.15
Real Property and
Leases.
(a) BYBK Disclosure Schedule
3.15(a) contains a true, correct and complete list of all
street addresses and fee owners of all real property owned, leased
or operated by the BYBK Companies or otherwise occupied by a BYBK
Company or used or held for use by any BYBK Company, including but
not limited to all REO (the “BYBK Real Property”).
Other than as set forth on BYBK Disclosure Schedule
3.15(a), there are no Persons in possession of any portion
of any of the BYBK Real Property owned or leased by any BYBK
Company other than such BYBK Company, and no Person other than a
BYBK Company has the right to use or occupy for any purpose any
portion of any of the BYBK Real Property owned, leased or licensed
by a BYBK Company. BYBK and the BYBK Subsidiaries own or lease all
properties as are necessary to their operations as now conducted.
True, correct and complete copies of all deeds, surveys, title
insurance policies and leases for the properties listed on
BYBK Disclosure Schedule
3.15(a), and of all mortgages, deeds of trust and security
agreements to which such properties are subject, have been made
available to OLB to the extent BYBK possesses such deeds, surveys,
title insurance policies, leases, mortgages, deeds of trust and
security agreements. There are no outstanding options, rights of
first offer or refusal or other pre-emptive rights or purchase
rights with respect to any BYBK Real Property owned by a BYBK
Company, or any portion thereof.
41
(b) Except as disclosed
in BYBK Disclosure
Schedule 3.15(b), no lease with respect to any BYBK Real
Property and no deed with respect to any BYBK Real Property
contains any restrictive covenant that materially restricts the
use, transferability or value of such BYBK Real Property. Each
lease with respect to any BYBK Real Property is a legal, valid and
binding obligation of the parties thereto enforceable in accordance
with its terms (except as may be limited by bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium or
similar Laws affecting the enforcement of creditors’ rights
generally and the availability of equitable remedies), and is in
full force and effect. There are no existing defaults by the BYBK
Companies or, to the Knowledge of BYBK, the other party, under any
lease with respect to any BYBK Real Property and, to the Knowledge
of BYBK, there are no allegations or assertions of such defaults by
any party under any lease with respect to any BYBK Real Property or
any events that, with notice or lapse of time or the happening or
occurrence of any other event, would constitute a default under any
lease with respect to any BYBK Real Property, except where the
existence of such defaults, individually or in the aggregate, has
not had, and is not reasonably likely to have, a Material Adverse
Effect.
(c) To the Knowledge of
BYBK, none of the buildings and structures located on any BYBK Real
Property, nor any improvements or appurtenances thereto or
equipment therein, nor the operation or maintenance thereof,
violates in any material manner any land use Laws or restrictive
covenants, or encroaches on any property owned by others, nor does
any building or structure of third parties encroach upon any BYBK
Real Property, except for those violations and encroachments that
in the aggregate could not reasonably be expected to have a
Material Adverse Effect. Except as disclosed on BYBK Disclosure Schedule
3.15(c), no condemnation or eminent domain proceeding is
pending or, to the Knowledge of BYBK, threatened, that would
preclude or materially impair the use of any BYBK Real Property in
the manner in which it is currently being used.
(d) The BYBK Companies
have a valid and enforceable leasehold interest in or, to the
Knowledge of BYBK, based on title insurance owned by it, good and
marketable title to, all BYBK Real Property and all improvements
thereon, subject to no Liens of any kind except (i) as noted in the
BYBK Financials, (ii) statutory Liens securing payments not yet due
or that are being contested in good faith, (iii) minor defects and
irregularities in title and encumbrances that do not materially
impair the use thereof for the purposes for which they are held,
(iv) mechanics liens for amounts not yet due or that are being
contested in good faith, and (v) those assets and properties
disposed of for fair market value in the Ordinary Course since the
date of the BYBK Financials. All BYBK Real Property used in the
business of the BYBK Companies is in adequate condition (ordinary
wear and tear excepted) and, to the Knowledge of BYBK, is free from
defects that could materially interfere with the current or
intended future use of such facilities, provided such future use is
substantially similar to its current use.
(e) Except as listed on
BYBK Disclosure Schedule
3.15(e), there are no Contracts to sell, lease or otherwise
dispose of any of the BYBK Real Property.
42
Section
3.16
Environmental
Matters.
With
respect to BYBK and each BYBK Subsidiary:
(a) Neither the
conduct nor operation of its business nor any condition of any
property currently or previously owned or operated by it (including
REO) results or resulted in a violation of any Environmental Laws
that is reasonably likely to impose a material liability (including
a material remediation obligation) upon BYBK or any BYBK
Subsidiary. To the Knowledge of BYBK, no condition has existed or
event has occurred with respect to any of them or any such property
that, with notice or the passage of time, or both, is reasonably
likely to result in any material liability to BYBK or any BYBK
Subsidiary by reason of any Environmental Laws. Neither BYBK nor
any BYBK Subsidiary during the past five years has received any
written notice from any Person or Regulatory Authority that BYBK or
any BYBK Subsidiary or the operation or condition of any property
ever owned or operated by any of them are currently in
violation of or otherwise are alleged to have liability under any
Environmental Laws or relating to Hazardous Materials (including,
but not limited to, responsibility (or potential responsibility)
for the cleanup or other remediation of any Hazardous Materials at,
on, beneath or originating from any such property) for which a
material liability is reasonably likely to be imposed upon BYBK or
any BYBK Subsidiary;
(b) There is no
Order or Litigation pending or, to the Knowledge of BYBK
threatened, before any court, governmental agency or other forum
against BYBK or any BYBK Subsidiary (i) for alleged noncompliance
(including by any predecessor) with, or liability under, any
Environmental Law or (ii) relating to the presence, release,
discharge, spillage or disposal into the environment of, any
Hazardous Materials, whether or not occurring at, on, under,
adjacent to or affecting (or potentially affecting) a site
currently or formerly owned, leased or operated by any BYBK Company
or any BYBK Real Property, nor, to the Knowledge of BYBK, is there
any reasonable basis for any such Litigation or Order;
(c) To the Knowledge of
BYBK, (i) there are no underground storage tanks on, in or under
any BYBK Real Property, and (ii) no underground storage tanks have
been closed or removed from any BYBK Real Property except in
compliance with Environmental Laws in all material respects;
and
(d) To the
Knowledge of BYBK, the BYBK Real Properties (including, without
limitation, soil, groundwater or surface water on, or under the
properties, and buildings thereon) are not contaminated with and do
not otherwise contain any Hazardous Materials other than as
permitted under applicable Environmental Laws.
43
Section
3.17
Intellectual
Property.
(a) BYBK Disclosure Schedule
3.17(a) sets forth a complete and correct list of all
trademarks, trade dress, trade names, service marks, service names,
brand names, domain names, logos, patents, technology, inventions,
trade secrets, know-how, copyrights, works of authorship and other
intellectual property rights used in the conduct of the existing
business of each of the BYBK Companies for use in its business, and
all registrations, applications, technology rights, licenses or
other Contracts relating thereto and all Contracts relating to
third party intellectual property that it is licensed or authorized
to use in its business, including without limitation any software
licenses (collectively, the “BYBK Intellectual
Property”) other than “shrink wrap,”
“click wrap” or “browser wrap” licenses,
free licenses, open source licenses or force placed software
licenses. To the Knowledge of BYBK, each of the BYBK Companies owns
or possesses valid, binding and assignable licenses and other
rights to use without payment (other than as set forth in the
applicable license) all BYBK Intellectual Property that is used in
the conduct of its existing businesses free and clear of all Liens
(other than BYBK Permitted Liens) and any claims of ownership by
current or former employees or contractors, other than royalties or
payments with respect to off-the-shelf software. With respect to
each item of BYBK Intellectual Property that any of the BYBK
Companies is licensed or authorized to use, the license, sublicense
or Contract covering such item is legal, valid, binding,
enforceable and in full force and effect, and no BYBK Company is in
default under or violation of any of its material BYBK Intellectual
Property licenses. To the Knowledge of BYBK, none of the BYBK
Companies is infringing, diluting, misappropriating or violating
the intellectual property of any other Person, and, except as
disclosed in BYBK
Disclosure Schedule 3.17(a), none of the BYBK Companies has
received any communications alleging that it has infringed,
diluted, misappropriated or violated any such intellectual
property. Except as disclosed in BYBK Disclosure Schedule
3.17(a), none of the BYBK Companies has sent any
communications alleging that any Person has infringed, diluted,
misappropriated or violated any BYBK Intellectual Property and, to
the Knowledge of BYBK, no Person is infringing, diluting,
misappropriating or violating any of the BYBK Intellectual
Property. Subject to any trademark filings required by Law in
connection with the Merger, the validity, continuation and
effectiveness of all licenses and other Contracts relating to
material BYBK Intellectual Property used by any BYBK Company in the
Ordinary Course and the current terms thereof will not be affected
by the Contemplated Transactions, the use of all material
Intellectual Property of each of the BYBK Companies’
trademarks will be transferred to OLB in connection with the
Contemplated Transactions and after the Effective Time, no Person
besides OLB shall have right and title to the “Bay
Bank” or “Bay Bancorp, Inc.” trade names and
trademarks when used in connection with the BYBK Companies’
currently-offered goods and services in the territories in which
they currently operate. For the avoidance of doubt, all third-party
rights used by any of the BYBK Companies pursuant to software
licenses that are not required to be listed in BYBK Disclosure Schedule
3.17(a) are nevertheless within the definition of
“BYBK Intellectual Property.”
44
(b) Each of the BYBK
Companies has taken commercially reasonable actions to protect and
maintain (a) all material BYBK Intellectual Property and
(b) the security and integrity of its software, databases,
networks, systems, equipment and hardware and to protect the same
against unauthorized use, modification or access thereto, or the
introduction of any disabling codes or instructions, spyware,
Trojan horses, worms, viruses or other software or elements that
permit or cause unauthorized access to, or disruption, impairment,
disablement or destruction of, software, data or other materials.
To the Knowledge of BYBK, the computers, computer software, other
information technology equipment, information technology passwords
and other credentials, and all associated documents and records
owned or leased by the BYBK Companies (the “BYBK IT Assets”), operate
and perform in all material respects in accordance with their
documentation and functional specifications as required by them in
connection with their business, and none of the BYBK IT Assets has
materially malfunctioned or failed to meet its requirements within
the past two years except for such malfunctions or failures that
have been remediated. To the Knowledge of BYBK, except as disclosed
in BYBK Disclosure
Schedule 3.17(b), no Person has gained unauthorized access
to the BYBK IT Assets. Each of the BYBK Companies has implemented
commercially reasonable backup and disaster recovery policies,
procedures, systems and technology consistent with industry
practices for financial institutions of comparable size and
complexity, and sufficient to reasonably maintain the operation of
the respective businesses of BYBK and each of the BYBK Subsidiaries
in all material respects.
(c) BYBK
Disclosure Schedule 3.17(c) sets forth a complete and
correct list of all Persons, other than directors, officers and
employees of the BYBK Companies, who have access to any of the BYBK
IT Assets.
Section
3.18
Information to be
Supplied.
(a) The information
supplied by BYBK for inclusion in the Registration Statement
(including the Prospectus/Proxy Statement), at the time the
Registration Statement is declared effective pursuant to the
Securities Act, and as of the date the Prospectus/Proxy Statement
is mailed to the holders of BYBK Common Stock and OLB Common Stock,
and up to and including the date of the BYBK Common
Stockholders’ Meeting and the OLB Common Stockholders’
Meeting, (i) will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances in
which they were made, not misleading, (ii) will disclose all facts
that the BYBK board of directors deems material to a vote on the
Merger and to the exercise of appraisal rights pursuant to Subtitle
2 of Title 3 of the MGCL, and (iii) will comply in all material
respects with the applicable requirements of the Registration
Statement as promulgated by the SEC.
(b) The information
supplied by BYBK for inclusion in the Applications will, at the
time each such document is filed with any Regulatory Authority and
up to and including the dates of any required regulatory approvals
or consents, as such Applications may be amended by subsequent
filings, be accurate in all material respects.
(c) No document or
certificate delivered to OLB by or for BYBK pursuant to a
requirement of this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statement contained in such document or certificate, in light
of the circumstances under which it was made, not
misleading.
45
Section
3.19
Related Party
Transactions.
(a) Except as set forth
on BYBK Disclosure
Schedule 3.19 or on BYBK Disclosure Schedule
3.20(d), as is disclosed in the BYBK Financials, and/or as
disclosed in the BYBK SEC Reports, neither BYBK nor any BYBK
Subsidiary is a party to any transaction (including any loan or
other credit accommodation but excluding deposits in the Ordinary
Course) with any Affiliate of BYBK or any BYBK Subsidiary, and all
such transactions (i) were made in the Ordinary Course, (ii) were
made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with Persons who are not related to or Affiliates of
BYBK or any BYBK Subsidiary, and (iii) did not involve more than
the normal risk of collectability or present other unfavorable
features.
(b) Except as set forth
in BYBK Disclosure
Schedule 3.19, as of the date hereof, no Credit Extension by
any of the BYBK Companies to any BYBK Subsidiary or Affiliate of
BYBK is presently in material default or, during the three-year
period prior to the date of this Agreement, has been in material
default or has been restructured, modified or extended in order to
avoid or cure a default, except for rate modifications pursuant to
its loan modification policy that is applicable to all Persons. As
of the date hereof, to the Knowledge of BYBK, principal and
interest with respect to any such Credit Extension will be paid
when due and the loan grade classification accorded such Credit
Extension is appropriate.
Section
3.20
Loans.
(a) Except as disclosed
in BYBK Disclosure
Schedule 3.20(a), all Credit Extensions reflected as assets
in the BYBK Financials or currently outstanding that will be
reflected as assets in the BYBK Financials arose out of bona fide
arm’s-length transactions, were made for good and valuable
consideration in the Ordinary Course, and are being transferred to
OLB and/or Old Line with good and marketable title, free and clear
of any and all Liens, and are evidenced by notes, Contracts or
other evidences of indebtedness that are true, genuine, correct and
what they purport to be, and to the extent secured, are secured by
valid Liens that are legal, valid and binding obligations of the
maker thereof, enforceable in accordance with the respective terms
thereof, except as such enforcement may be limited by (i)
bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or similar Laws affecting the
enforcement of creditors’ rights generally or equitable
principles affecting the enforcement of creditors’ rights
that have been perfected or (ii) the pledge of any Credit Extension
to the FHLB as collateral to secure the performance by the BYBK
Companies of all obligations owed thereto. All Credit Extensions
reflected, or currently outstanding that will be reflected, as
assets in the BYBK Financials were made in accordance in all
material respects with sound banking practices, and to the
Knowledge of BYBK, are not subject to any defenses, setoffs or
counterclaims, including without limitation any such as are
afforded by usury or truth in lending Laws, except as may be
provided by bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or similar Laws affecting the
enforcement of creditors’ rights generally or by general
principles of equity. The notes or other credit or security
documents with respect to each such outstanding Credit Extension
were in compliance in all material respects with all applicable
Laws at the time of origination or purchase by any BYBK Company and
are complete and correct in all material respects.
46
(b) To the Knowledge of
BYBK, neither the terms of any Credit Extension by any of the BYBK
Companies, any of the documentation for any such Credit Extension,
the manner in which any such Credit Extension has been administered
and serviced, nor the practices of approving or rejecting
applications for a Credit Extension by the BYBK Companies, violate
in any material respect any Law applicable thereto, including,
without limitation, the Truth In Lending Act and the CFPB’s
Regulation Z, the CRA, the Equal Credit Opportunity Act and any
Laws relating to consumer protection, installment sales and
usury.
(c) Except as disclosed
on BYBK Disclosure
Schedule 3.20(c), none of the Contracts pursuant to which
any of the BYBK Companies has sold Credit Extensions or pools of
Credit Extensions or participations in Credit Extensions or pools
of Credit Extensions contains any obligation to repurchase such
Credit Extensions or interests therein solely on account of a
payment default by the obligor on any such Credit Extension. Except
as would not be material to the BYBK Companies as a whole, each
Credit Extension included in a pool of Credit Extensions
originated, securitized or, to the Knowledge of BYBK, acquired by
any BYBK Company (a “Pool”) meets all
eligibility requirements (including all applicable requirements for
obtaining mortgage insurance certificates and loan guaranty
certificates) for inclusion in such Pool. All such Pools have been
finally certified or, if required, recertified in accordance with
all applicable Laws, except where the time for certification or
recertification has not yet expired. No Pools have been improperly
certified and, except as would not be material to BYBK and the BYBK
Companies taken as a whole, no Credit Extension has been bought out
of a Pool without all required approvals of the applicable
investors.
(d) BYBK Disclosure Schedule
3.20(d) sets forth a list of all Credit Extensions as of the
date hereof by BYBK or Bay Bank to any directors, executive
officers and principal stockholders (as such terms are defined in
the FRB’s Regulation O) of any of the BYBK Companies. There
are no employee, officer, director or other insider Credit
Extensions by any of the BYBK Companies on which the borrower is
paying a rate other than that reflected in the note or other
relevant credit or security agreement or on which the borrower is
paying a rate that was not in compliance with Regulation O and all
such Credit Extensions are and were originated in compliance in all
material respects with all applicable Laws.
(e) To the Knowledge of
BYBK, no shares of BYBK Common Stock were purchased with the
proceeds of a loan made by any of the BYBK Companies.
47
Section
3.21
Allowance for Loan
Losses.
The
allowance for loan losses reflected in reports by the BYBK
Companies to each Regulatory Authority has been and will be
established in compliance with the requirements of all regulatory
criteria, and the allowance for loan losses shown in the BYBK
Financials has been and will be established and maintained in
accordance with GAAP and applicable Law and in a manner consistent
with Bay Bank’s internal policies. The allowance for loan
losses reflected in such reports and the allowance for loan losses
shown in the BYBK Financials, in the opinion of management, was or
will be adequate as of the dates thereof. BYBK has disclosed to OLB
on BYBK Disclosure
Schedule 3.21 all Credit Extensions (including
participations) by and all interest-bearing assets of the BYBK
Companies (a) that have been accelerated during the past 12 months,
(b) that have been terminated during the past 12 months by reason
of a default or adverse development in the condition of the
borrower or other events or circumstances affecting the credit of
the borrower, (c) pursuant to which a borrower, customer or other
party has notified any of the BYBK Companies during the past 12
months of, or has asserted against any of the BYBK Companies, in
each case in writing, any “lender liability” or similar
claim, and, to the Knowledge of BYBK, each borrower, customer or
other party that has given any of the BYBK Companies any oral
notification of, or orally asserted to or against any of the BYBK
Companies, any such claim, (d) that are contractually past due 90
days or more in the payment of principal and/or interest, (e) that
are on non-accrual status, (f) that are classified as “Other
Loans Specially Mentioned,” “Special Mention,”
“Substandard,” “Doubtful,”
“Loss,” “Classified,”
“Criticized,” “Credit Risk Assets,”
“Concerned Loans,” “Watch List” or words of
similar import by any BYBK Company or any Regulatory Authority, (g)
to the Knowledge of BYBK, as to which a reasonable doubt exists as
to the timely future collectability of principal and/or interest,
whether or not interest is still accruing or the loans are less
than 90 days past due, (h) where, during the past three years, the
interest rate terms have been reduced and/or the maturity dates
have been extended subsequent to the agreement under which the loan
was originally created due to concerns regarding the
borrower’s ability to pay in accordance with such initial
terms, (i) where a specific reserve allocation exists in connection
therewith, (j) that are required to be accounted for as a troubled
debt restructuring in accordance with Statement of Financial
Accounting Standards No. 15, (k) that were made pursuant to an
exception to policy, and (l) that, to the extent not already
disclosed pursuant to the foregoing items (a) through (k), have
been charged-off at any time since January 1, 2014, together with
true, complete and materially correct copies of reports containing
the principal amount and accrued and unpaid interest of each such
Credit Extension and interest-bearing asset and the identity of the
obligor thereunder, and BYBK shall provide an updated BYBK Disclosure Schedule 3.21
promptly to OLB after the end of each month after the date hereof
and on the Business Day prior to the Closing Date. The REO and
in-substance foreclosures included in any of Bay Bank’s
non-performing assets are carried at fair value based on current
independent appraisals or current management
appraisals.
Section
3.22
Community
Reinvestment Act.
Bay
Bank is the only BYBK Company that is subject to the Community
Reinvestment Act (12 U.S.C. §§ 2901 et seq.) (the “CRA”). To the Knowledge
of BYBK, Bay Bank is in compliance in all material respects with
the CRA and all regulations promulgated thereunder. BYBK has
supplied OLB with a copy of Bay Bank’s current CRA Statement,
all letters and written comments received by Bay Bank since
September 16, 2016 pertaining thereto and any responses by Bay Bank
to such comments. Bay Bank has a rating of
“satisfactory” or better as of its most recent CRA
compliance examination and BYBK and Bay Bank have received no
communication from any Regulatory Authority that would lead BYBK to
believe that Bay Bank will not receive a rating of
“satisfactory” or better pursuant to its next CRA
compliance examination or that any Regulatory Authority would seek
to restrain, delay or prohibit any of the Contemplated Transactions
as a result of any act or omission of Bay Bank under the
CRA.
48
Section
3.23
Anti-Money
Laundering; OFAC; Sanctions; and Information Security.
(a) To the Knowledge of
BYBK, there do not exist any facts or circumstances that would
cause any of the BYBK Companies: (i) to be deemed to be operating
in violation in any material respect of the Bank Secrecy Act, the
USA PATRIOT Act, any Order issued with respect to anti-money
laundering by the U.S. Department of the Treasury’s Financial
Crimes Enforcement Network or Office of Foreign Assets Control
(“OFAC”), or any other applicable anti-money laundering
Law, as well as the provisions of the Bank Secrecy Act/anti-money
laundering program adopted by the BYBK Companies; or (ii) to be
deemed not to be in satisfactory compliance in any material respect
with the applicable privacy of customer information requirements
contained in any federal and state privacy Laws, including without
limitation, in Title V of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999 and
the regulations promulgated thereunder, as well as the provisions
of the information security program adopted by the BYBK Companies.
To the Knowledge of BYBK, no non-public customer information has
been disclosed to or accessed by an unauthorized third party in a
manner that would cause any of the BYBK Companies to undertake any
remedial action. The board of directors or other governing body of
each BYBK Company that is subject to Section 326 of the USA PATRIOT
Act and the regulations thereunder has adopted, and each such BYBK
Company has implemented, a Bank Secrecy Act/anti-money laundering
program that contains adequate and appropriate customer
identification verification procedures that comply with Section 326
of the USA PATRIOT Act and the regulations thereunder and such Bank
Secrecy Act/anti-money laundering program meets the requirements in
all material respects of Section 352 of the USA PATRIOT Act and the
regulations thereunder, and it has not received written notice from
any Regulatory Authority that such program (A) does not contain
adequate and appropriate customer identification verification
procedures, or (B) has been deemed ineffective. Each of the BYBK
Companies has complied in all material respects with any
requirements to file reports and other necessary documents as
required by the USA PATRIOT Act and the regulations
thereunder.
(b) No BYBK Company or,
to the Knowledge of BYBK, any director, officer, agent, employee,
Affiliate or other Person on behalf of any BYBK Company, is (a)
engaged in any services (including financial services), transfers
of goods, software or technology, or any other business activity
related to (i) Cuba, Iran, North Korea, Sudan, Syria or the Crimea
region of Ukraine claimed by Russia (the “Sanctioned Countries”),
(ii) the government of any Sanctioned Country, (iii) any Person
located in, resident in, formed under the laws of, or owned or
controlled by the government of, any Sanctioned Country, or (iv)
any Person made subject of any sanctions administered or enforced
by the United States Government, including, without limitation,
OFAC’s list of Specially Designated Nationals, or by the
United Nations Security Council, the European Union, the United
Kingdom’s Office of Financial Sanctions Implementation (Her
Majesty’s Treasury), or other relevant sanctions authority
(collectively, “Sanctions ”), (b) engaged
in any transfers of goods, technologies or services (including
financial services) that may assist the governments of Sanctioned
Countries or facilitate money laundering or other activities
proscribed by United States Law, (c) is a Person currently the
subject of any Sanctions or (d) located, organized or resident in
any Sanctioned Country.
49
(c) BYBK Disclosure Schedule
3.23(c) describes any event, circumstance or other
occurrence, and the remedial steps taken by any of the BYBK
Companies with respect thereto, since January 1, 2012, that
constituted either (i) a “breach of the security of a
system,” as such phrase is defined in Section 14-3504(a) of
the Commercial Law Article of the Annotated Code of Maryland (the
“Commercial Law
Article”) with respect to personal information
maintained by any of the BYBK Companies, without regard to the
application of Section 14-3507(b) of the Commercial Law Article, or
(ii) any other data breach with respect to, or other unauthorized
access to, the electronic information and records of any of the
BYBK Companies, including, without limitation, communications,
regulatory correspondence and reports, documents and data,
information relating to products and services, activities,
strategies and plans, BYBK IT Assets, other financial data, and
identities of and information regarding sales, customers,
prospects, vendors, suppliers and personnel, including, without
limitation, passwords and other information technology
credentials.
(d) Except
as disclosed in BYBK
Disclosure Schedule 3.23(d), BYBK and each of its
Subsidiaries has (i) complied in all material respects with its
published privacy policies and internal privacy policies and
guidelines, including with respect to the collection, storage,
transmission, transfer, disclosure, destruction and use of
personally identifiable information and (ii) taken commercially
reasonable measures to ensure that all personally identifiable
information in its possession or control is reasonably protected
against loss, damage and unauthorized access, use, modification or
other misuse. To BYBK’s Knowledge, there has been no loss,
damage or unauthorized access, use, modification or other misuse of
any such information by BYBK, any of its Subsidiaries or any other
Person.
Section
3.24
Securities
Activities of Employees.
To the
Knowledge of BYBK, the officers, employees and agents of the BYBK
Companies are now, and at all times in the past have been, in
compliance with all applicable Laws that relate to securities
activities conducted by such officers, employees and agents,
including Laws relating to licenses and permits.
Section
3.25
Books and Records;
Internal Control.
(a) The minute books
and stock ledgers of the BYBK Companies that have been made
available to OLB, its Representatives or its Affiliates constitute
all of the minute books and stock ledgers of the BYBK Companies and
as of their dates contain a materially complete and accurate record
of all actions of their respective stockholders and boards of
directors (and any committees thereof) and have been maintained in
accordance with applicable Law. All personnel files, reports,
feasibility studies, environmental assessments and reports,
strategic planning documents, financial forecasts, deeds, leases,
lease files, land files, accounting and tax records and all other
records that relate to the business and properties of the BYBK
Companies that have been requested by OLB have been made available
to OLB, its Representatives or its Affiliates, and are located at
the offices of the BYBK Companies at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
50
(b) BYBK maintains a
system of internal control over financial reporting (within the
meaning of Rules 13a-15(f) and 15d-15(f) of the Exchange Act)
sufficient to provide reasonable assurance that: (i) transactions
by or with the BYBK Companies are executed in accordance with
management’s general or specific authorizations; (ii)
transactions by or with the BYBK Companies are recorded as
necessary (A) to permit the preparation of financial statements and
reports filed with any Regulatory Authority in conformity with GAAP
consistently applied and any other criteria applicable to such
statements, and (B) to maintain accountability for assets and
liabilities; (iii) access to the assets of, and the incurrence of
liabilities by, the BYBK Companies is permitted only in accordance
with management’s general or specific authorizations; (iv)
the recorded accountability for assets and liabilities of the BYBK
Companies is compared with existing assets and liabilities of the
BYBK Companies at reasonable intervals and appropriate action is
taken with respect to any differences; and (v) extensions of credit
by and other receivables of the BYBK Companies are recorded
accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis. Except
as disclosed in the BYBK SEC Reports or on BYBK Disclosure Schedule
3.25(b), since December 31, 2012, neither BYBK nor, to
BYBK’s Knowledge, any employee, auditor, accountant or
representative of any BYBK Company, has received or otherwise had
or obtained knowledge of any complaint, allegation, assertion or
claim, whether written or oral, regarding the adequacy of
BYBK’s internal control over financial reporting or integrity
of the BYBK Financials or the accounting or auditing practices,
procedures, methodologies or methods (including with respect to
loan loss reserves, write-downs, charge-offs and accruals) of BYBK
or any of its Subsidiaries or their respective internal accounting
controls, including any complaint, allegation, assertion or claim
that BYBK or any of its Subsidiaries has engaged in questionable
accounting or auditing practices. To the Knowledge of BYBK there
are no significant deficiencies or material weaknesses in the
design or operation of such internal control over financial
reporting that are reasonably likely to adversely affect in any
material respect BYBK’s ability to record, process, summarize
and report financial information. To the Knowledge of BYBK, except
as disclosed on BYBK
Disclosure Schedule 3.25(b), there has occurred no fraud,
whether or not material, that involves management or other
employees who have a significant role in BYBK’s internal
control over financial reporting.
(c) Each of the BYBK
Companies makes and keeps Books and Records that, in reasonable
detail and in all material respects, accurately and fairly reflect
its transactions in and dispositions of its assets and securities,
and all such Books and Records have been and are being maintained
in the Ordinary Course in accordance with applicable Law and
accounting requirements. None of the records, systems, controls,
data or information of the BYBK Companies are recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or
held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) that (including
all means of access thereto and therefrom) are not under the
exclusive ownership and control of the BYBK Companies or their
accountants, except as would not reasonably be expected to have a
Material Adverse Effect. Except as disclosed on BYBK Disclosure Schedule
3.25(b), no attorney representing BYBK or any BYBK
Subsidiary, whether or not employed by BYBK or any BYBK Subsidiary,
has reported evidence of a material violation of Securities Laws,
breach of fiduciary duty or similar violation by BYBK or any of its
officers, directors or employees to the board of directors of BYBK
or any committee thereof or to any director or officer of BYBK. To
BYBK’s Knowledge, except as disclosed on BYBK Disclosure Schedule
3.25(b), there has been no instance of fraud by any BYBK
Company, whether or not material, that occurred during any period
covered by BYBK Financials.
51
Section
3.26
Investment
Securities.
(a) Each of the BYBK
Companies has good and marketable title to all securities that it
owns (except those sold under repurchase agreements or held in any
fiduciary or agency capacity). None of the investment securities
reflected in the BYBK Financials under the headings
“investment securities available for sale” and
“investment securities held to maturity” and, except as
described in BYBK
Disclosure Schedule 3.26, none of the investment securities
that any of the BYBK Companies acquired after June 30, 2017, are
subject to any restrictions, whether contractual or statutory, that
materially impair such BYBK Company’s ability to freely
dispose of such investment securities at any time, and such BYBK
Company was permitted by applicable Law to acquire such investment
securities at the time they were acquired.
(b) BYBK and its
Subsidiaries employ, to the extent applicable, investment,
securities, risk management and other policies, practices and
procedures that BYBK believes are customary and reasonable in the
context of their respective businesses, and BYBK and its
Subsidiaries have, since December 31, 2012, been in compliance with
such policies, practices and procedures in all material
respects.
Section
3.27
Reorganization.
As of
the date hereof, BYBK does not have any reason to believe that the
Merger will fail to qualify as a tax-free reorganization within the
meaning of Section 368(a) of the IRC. None of the BYBK
Companies will take any action that will cause, cause any action to
be taken that will cause or fail to take any action or fail to
cause any action to be taken if such failure to act will have the
effect of causing, the Merger not to qualify as a tax-free
reorganization within the meaning of Section 368(a) of the
IRC, nor have any of the BYBK Companies taken, caused, agreed to
take or cause or failed to take or cause any such
action.
Section
3.28
Fairness
Opinion.
BYBK’s board
of directors has received an opinion (which, if initially rendered
verbally, has been or will be confirmed by a written opinion, dated
no later than the date of this Agreement) from the BYBK Advisers to
the effect that, as of the date thereof, and subject to the terms,
conditions and qualifications set forth therein, the consideration
to be received by the stockholders of BYBK pursuant to the terms of
this Agreement is fair, from a financial point of view, to the
stockholders of BYBK. Such opinion has not been amended or
rescinded as of the date of this Agreement.
Section
3.29
Materials Provided
to Stockholders.
All
proxy materials used in connection with the meetings of
BYBK’s stockholders held in 2015, 2016 and 2017, along with
any other form of correspondence between BYBK and its stockholders
during those years, including, without limitation, any annual or
quarterly reports provided to stockholders, either have been filed
with the SEC and are publicly available to OLB via ▇▇▇▇▇ or have
been provided to OLB.
52
Section
3.30
Absence of Certain
Changes.
Except
as disclosed in the BYBK SEC Reports, in BYBK Disclosure Schedule 3.30,
or provided for or contemplated by this Agreement, since December
31, 2016:
(a) There has not been
any material transaction by any of the BYBK Companies other than in
the Ordinary Course;
(b) There has not been
any acquisition or disposition by any of the BYBK Companies of any
property or asset, whether real or personal, having a fair market
value, singularly or in the aggregate, in an amount greater than
$100,000, other than acquisitions or dispositions, including
acquisitions and dispositions of REO and investment securities,
made in the Ordinary Course;
(c) There has not been
any Lien on any of the properties or assets of the BYBK Companies,
except to secure extensions of credit in the Ordinary Course (i.e.,
Liens on assets to secure Federal Home Loan Bank, Federal Reserve
Bank or correspondent bank advances being deemed both in the
Ordinary Course);
(d) There has not been
any increase in, or commitment to increase, the compensation
payable or to become payable to any of the officers, directors,
employees or agents of the BYBK Companies, or any bonus payment,
other than routine increases made in the Ordinary Course, or any
stock option award, restricted stock award or similar arrangement
made to or with any of such officers, directors, employees or
agents;
(e) None of the BYBK
Companies has incurred, assumed or taken any property subject to
any liability in excess of $100,000, except for liabilities
incurred or assumed or property taken subsequent to December 31,
2016 in the Ordinary Course;
(f) There has not been
any material alteration in the manner of keeping the Books and
Records of the BYBK Companies, or in the accounting policies or
practices therein reflected;
(g) There has not been
any elimination or addition of employee benefits;
(h) There has not been
any deferred routine maintenance of any BYBK Real
Property;
(i) There has not been
any elimination of a reserve by any BYBK Company where the
liability related to such reserve has remained;
(j) There has not been
any failure by a BYBK Company to depreciate capital assets in
accordance with past practice or to eliminate capital assets that
are no longer used in its business;
(k) There has not been
any extraordinary reduction or deferral by any of the BYBK
Companies of ordinary or necessary expenses; and
(l) No events have
occurred that have had or would be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
BYBK Companies, taken as a whole.
53
Section
3.31
Absence of
Undisclosed Liabilities.
None of
the BYBK Companies has any obligation or liability that is material
to its financial condition or operations or that, when combined
with all similar obligations or liabilities, would be material to
its financial condition or operations except (a) as disclosed in
the BYBK Financials delivered or made available to OLB prior to the
date of this Agreement, or (b) as contemplated under this
Agreement. Except as disclosed in BYBK Disclosure Schedule 3.31,
since December 31, 2016, none of the BYBK Companies has
incurred or paid any obligation or liability that would be material
to its financial condition or operations, except for obligations
that are (a) fully reflected or reserved against on the most recent
balance sheet contained in the BYBK Financials or (b) paid in
connection with transactions made in the Ordinary Course consistent
with applicable Law.
Section
3.32
Option Plans and
Convertible Securities.
Except
as disclosed in BYBK
Disclosure Schedule 3.30, (a) the BYBK Companies do not
maintain any form of equity plan, including without limitation, an
equity compensation or other stock option plan, that might entitle
any Person to receive Rights from any of the BYBK Companies, and
(b) no Rights with respect to any equity plan of the BYBK Companies
are outstanding.
Section
3.33
Deposits.
(a) All of the deposits
held by Bay Bank (including the records and documentation
pertaining to such deposits) have been established and are held in
compliance in all material respects with (i) all applicable
policies, practices and procedures of Bay Bank, and (ii) all
applicable Laws, including anti-money laundering and anti-terrorism
Laws and embargoed persons requirements.
(b) Except as described
in BYBK Disclosure
Schedule 3.33, none of Bay Bank’s deposits is a
“brokered deposit” as defined in 12 C.F.R. Section
337.6(a)(2).
Section
3.34
Risk Management
Instruments.
All
interest rate swaps, caps, floors, option agreements, futures and
forward contracts and other similar risk management arrangements,
whether entered into for BYBK’s own account or for the
account of one or more of BYBK’s Subsidiaries or their
customers (all of which are set forth in BYBK Disclosure Schedule 3.34),
were in all material respects entered into in compliance with all
applicable Laws and with counterparties believed to be financially
responsible at the time; and to the Knowledge of BYBK each of them
constitutes the valid and legally binding obligation of BYBK or
such BYBK Subsidiary, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship,
moratorium or similar Laws affecting the enforcement of
creditors’ rights generally or by general equity principles),
and is in full force and effect. Neither BYBK nor any BYBK
Subsidiary, nor, to the Knowledge of BYBK, any other party thereto,
is in breach of any of its obligations under any such agreement or
arrangement in any material respect.
54
Section
3.35
Fiduciary
Accounts.
Except
as described in BYBK
Disclosure Schedule 3.35, none of the BYBK Companies has
trust powers or acts as a trustee, agent, custodian, personal
representative, guardian, conservator or investment
adviser.
Section
3.36
Credit Card
Accounts and Merchant Processing.
None of
the BYBK Companies originates, maintains or administers credit card
accounts. Except as described in BYBK Disclosure Schedule 3.36,
none of the BYBK Companies provides, or has provided, merchant
credit card processing services to any merchants.
Section
3.37
No Broker-Dealer
Subsidiary.
Neither
BYBK nor any BYBK Subsidiary is a broker-dealer required to be
registered under the Exchange Act with the SEC.
Section
3.38
No Insurance
Subsidiary.
Neither
BYBK nor any BYBK Subsidiary conducts insurance operations that
require a license from any Regulatory Authority under any
applicable Law.
Section
3.39
Business.
(a) BYBK and the BYBK
Subsidiaries are engaged in all material respects only in the
business described in the BYBK SEC Reports, and the BYBK SEC
Reports contain a complete and accurate description in all material
respects of the business of BYBK and the BYBK Subsidiaries, taken
as a whole.
(b) The assets
reflected in the most recent BYBK Financial Statements that are
owned or leased by the BYBK Companies, and in combination with the
BYBK Real Property, the BYBK Intellectual Property and contractual
benefits and burdens of the BYBK Companies constitute, as of the
Closing Date, all of the assets, rights and interests necessary to
enable the BYBK Companies to operate consolidated businesses in the
Ordinary Course and as the same is expected to be conducted on the
Closing Date.
Section
3.40
Anti-takeover
Laws.
The
BYBK Companies have taken all actions required to exempt OLB, the
Agreement, the Bank Merger Agreement, the Contemplated Transactions
and the Bank Merger from any provisions of an anti-takeover nature
contained in the BYBK Organizational Documents and the provisions
of any federal or state “anti-takeover,” “fair
price,” “affiliate transaction,” “business
combination,” “moratorium,” “control share
acquisition” or similar Laws.
55
Section
3.41
Stockholders’
List.
Attached hereto as
BYBK Disclosure Schedule
3.41 is a list of holders of shares of the BYBK Common Stock
compiled and provided by Computershare, Inc., the registrar and
transfer agent in respect of the BYBK Common Stock, containing
their names, addresses and number of shares held of record. To the
Knowledge of BYBK, such stockholders’ list is complete and
accurate in all material respects.
Section
3.42
Disclosure.
The
schedules delivered by BYBK pursuant to this Article III and
elsewhere in this Agreement, which have been delivered concurrently
with the execution and delivery of this Agreement, are true and
correct in all material respects and contain no untrue statements
of material fact or omit any material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND
WARRANTIES OF OLB
OLB
represents and warrants to BYBK, for itself and with respect to and
on behalf of each of the OLB Subsidiaries (to the extent
applicable), that the statements contained in this Article IV (and
as reflected on the OLB Disclosure Schedules) are true and correct
as of the date of this Agreement and will be true and correct as of
the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout
this Article IV, except that those representations and warranties
that by their terms speak as of the date of this Agreement or some
other date shall be true and correct as of such date); provided,
however, that no representation or warranty of OLB contained in
this Article IV shall be deemed untrue or incorrect, and OLB shall
not be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, circumstance or event
unless such fact, circumstance or event, individually or taken
together with all other facts, circumstances or events inconsistent
with any paragraph of Article IV, has had or is reasonably expected
to have a Material Adverse Effect on OLB, disregarding for these
purposes (i) any qualification or exception for, or reference to,
materiality in any such representation or warranty and (ii) any use
of the terms “material,” “materially,”
“in all material respects,” “Material Adverse
Effect” or similar terms or phrases in any such
representation or warranty; provided, however, that the foregoing
standard shall not apply to representations and warranties
contained in Sections 4.1, 4.2, 4.3, 4.6, 4.14, 4.17 and 4.25,
which shall be deemed untrue, incorrect and breached if they are
not true and correct in all material respects (the
“Article IV
Standard”).
OLB has
made a good faith effort to ensure that the disclosure on each
schedule of the OLB Disclosure Schedules corresponds to the section
referenced herein. For purposes of the OLB Disclosure Schedules,
however, any item disclosed on any schedule therein is deemed to be
fully disclosed with respect to all schedules under which such item
may be relevant as and to the extent that it is reasonably clear on
the face of such schedule that such item applies to such other
schedule.
56
Section
4.1
Organization.
(a) OLB is a
corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Maryland. OLB is a bank
holding company duly registered under the BHC Act. OLB has the
corporate power and lawful authority to carry on its business and
operations as now being conducted and to own or lease and operate
all of its properties and assets as presently owned or leased and
operated. OLB is duly licensed, registered or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing, registration or
qualification necessary, except where the failure to be so
licensed, registered or qualified would not have a Material Adverse
Effect on OLB, and all such licenses, registrations and
qualifications are in full force and effect in all material
respects. OLB engages in activities and holds properties only of
the types permitted to bank holding companies by the BHC Act and
the rules and regulations promulgated thereunder.
(b) Old Line is a trust
company duly organized, validly existing and in good standing under
the laws of the State of Maryland. Old Line has the corporate power
and lawful authority to carry on its business and operations as now
being conducted and to own or lease and operate all of its
properties and assets as presently owned or leased and operated.
Old Line is duly licensed, registered or qualified to do business
in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets
owned or leased by it makes such licensing, registration or
qualification necessary, except where the failure to be so
licensed, registered or qualified would not have a Material Adverse
Effect on OLB, and all such licenses, registrations and
qualifications are in full force and effect in all material
respects.
(c) Old Line is an
“insured depository institution” as defined in the
Federal Deposit Insurance Act and applicable regulations
thereunder, the deposits of Old Line are insured by the FDIC
through the Deposit Insurance Fund to the extent provided in the
Federal Deposit Insurance Act, and all premiums and assessments
required to be paid in connection therewith have been paid when
due. No proceedings for the revocation or termination of such
deposit insurance are pending or, to the Knowledge of OLB,
threatened.
(d) OLB Disclosure Schedule 4.1(d)
contains a complete and accurate list of all OLB Subsidiaries. Each
OLB Subsidiary is duly formed, validly existing and in good
standing under the laws of the state of its formation and has the
power and lawful authority to carry on its business and operations
as now being conducted and to own or lease and operate all of its
properties and assets as presently owned or leased and operated.
Each OLB Subsidiary is duly licensed, registered or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing, registration or
qualification necessary, except where the failure to be so
licensed, registered or qualified would not have a Material Adverse
Effect on OLB, and all such licenses, registrations and
qualifications are in full force and effect in all material
respects. Other than equity interests of the OLB Subsidiaries
listed on OLB Disclosure
Schedule 4.1(d), OLB does not own or control, directly or
indirectly, or have the right to acquire directly or indirectly, an
equity interest in any Entity.
57
(e) The respective
minute books of OLB and each OLB Subsidiary accurately reflect, in
all material respects, all material actions of their respective
owners and governing bodies, including committees, in each case in
accordance with the ordinary business practice of OLB or the
applicable OLB Subsidiary.
(f) Prior to the date
of this Agreement, OLB has delivered or made available to BYBK
true, correct and complete copies of the articles of incorporation
and bylaws of OLB, and the charter documents and bylaws, operating
agreement and/or other governing instrument of each OLB Subsidiary
and each as in effect on the date hereof (collectively, the
“OLB Governing
Documents”).
Section
4.2
Capitalization.
(a) The authorized
capital stock of OLB consists of (i) 25,000,000 shares of Common
Stock, par value $0.01 per share (“OLB Common Stock”), of
which 12,467,517.5 shares are duly and validly issued and
outstanding, and (ii) 1,000,000 shares of preferred stock, par
value $0.01 per share (“OLB Preferred Stock”),
none of which are outstanding, in each case on the date hereof. As
of the date of this Agreement, there are not outstanding any bonds,
debentures, notes or other indebtedness of OLB or any OLB
Subsidiary having the right to vote on any matters on which
stockholders of OLB may vote. All of the issued and outstanding
shares of OLB Common Stock are fully paid and nonassessable under
the MGCL, free of preemptive rights, except as may be defined in
OLB’s articles of incorporation, and were not issued in
violation of the preemptive rights of any Person or in violation of
any applicable Laws. Except pursuant to this Agreement or as set
forth in OLB Disclosure
Schedule 4.2(a), OLB has not issued nor is OLB or any OLB
Subsidiary bound by any subscription, call, commitment, agreement
or other Right of any character relating to the purchase, sale or
issuance of, or right to receive dividends or other distributions
on, any shares of OLB Common Stock, OLB Preferred Stock or any
other security of OLB or any securities representing the right to
vote, purchase or otherwise receive any shares of OLB Common Stock,
OLB Preferred Stock or any other security of OLB. The shares of OLB
Common Stock to be issued pursuant to the Merger have been duly
authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid,
nonassessable and free of preemptive rights.
(b) Except as disclosed
in OLB Disclosure Schedule
4.2(b), OLB owns, directly or indirectly, all of the capital
stock or other equity ownership interests of the OLB Subsidiaries,
free and clear of any Liens, Contracts and restrictions of any kind
or nature, and all of such shares or equity ownership interests are
duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
58
Section
4.3
Authority; No
Violation.
(a) OLB
has the corporate power and authority necessary to execute and
deliver this Agreement and, subject to the receipt of all consents,
waivers and approvals described in OLB Disclosure Schedule 4.4 and
approval of the Merger by the holders of OLB Common Stock as
required by OLB’s articles of incorporation and bylaws and
the MGCL, to consummate the Contemplated Transactions and to
otherwise perform its obligations under this Agreement. The
execution and delivery of this Agreement by OLB and the
consummation by OLB of the Contemplated Transactions, up to and
including the Merger, have been duly and validly authorized by the
board of directors of OLB and, except for approval by the holders
of OLB Common Stock as required by OLB’s articles of
incorporation and bylaws and the MGCL, no other corporate
proceedings on the part of OLB are necessary to consummate the
Contemplated Transactions. This Agreement has been duly and validly
executed and delivered by OLB and, assuming the due authorization,
execution and delivery of this Agreement by BYBK, constitutes a
legal, valid and binding obligation of OLB, enforceable against OLB
in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship,
moratorium or similar Laws affecting the enforcement of
creditors’ rights generally and except that the availability
of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any
proceeding may be brought.
(b) The execution and
delivery of this Agreement by OLB, the consummation of the
Contemplated Transactions, and the compliance by OLB with any of
the terms or provisions hereof, subject to the receipt of all
consents, waivers and approvals described in OLB Disclosure Schedule 4.4,
the approval of the Merger by the holders of OLB Common Stock as
required by OLB’s articles of incorporation and bylaws and
the MGCL, OLB’s and BYBK’s compliance with any
conditions contained in this Agreement, and compliance by OLB or
any OLB Subsidiary with any of the terms or provisions hereof, do
not and will not:
(i) Conflict with, or
result in a breach of, any provision of the OLB Governing
Documents;
(ii) Violate,
or constitute or result in a default under, or require any consent,
waiver, approval or similar action pursuant to, any Law applicable
to OLB or any OLB Subsidiary or any of their respective properties
or assets, except where such violation would not have a Material
Adverse Effect; or
(iii) Except
as described in OLB
Disclosure Schedule 4.3(b) or pursuant to which consent or
notification is required as set forth in OLB Disclosure Schedule 4.4,
violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event that, with notice or lapse of
time, or both, would constitute a default) under, result in the
termination of, or acceleration of, the performance required by, or
result in a right of termination or acceleration or the creation of
any Lien upon any of the properties or assets of OLB or any OLB
Subsidiary under any of the terms or conditions of any note, bond,
mortgage, indenture, license, lease, Contract or other instrument
or obligation to which OLB or any OLB Subsidiary is a party, or by
which they or any of their respective properties or assets may be
bound or affected, except where such termination, acceleration or
creation would not have a Material Adverse Effect on
OLB.
59
(c) Old Line has all
requisite corporate power and authority to execute and deliver the
Bank Merger Agreement and, subject to the receipt of all consents
described in OLB
Disclosure Schedule 4.4, to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger
Agreement and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the board of
directors of Old Line and, other than the approval of the Bank
Merger Agreement by OLB as the sole stockholder of Old Line as
required by Law, no further corporate proceedings of Old Line are
needed to execute and deliver the Bank Merger Agreement and
consummate the transactions contemplated thereby. OLB, as the sole
stockholder of Old Line, shall promptly hereafter approve the Bank
Merger Agreement, and the Bank Merger Agreement will be duly
executed by Old Line on the date of this Agreement. The Bank Merger
Agreement has been duly authorized and, assuming the due
authorization, execution and delivery of the Bank Merger Agreement
by Bay Bank, will be a legal, valid and binding agreement of Old
Line enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or similar Laws affecting the
enforcement of creditors’ rights generally and except that
the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before
which any proceeding may be brought. At the Closing, all other
Contracts, documents and instruments to be executed and delivered
by Old Line that are referred to in the Bank Merger Agreement, if
any, will have been duly executed and delivered by Old Line and,
assuming due authorization, execution and delivery by the
counterparties thereto, will constitute the legal, valid and
binding obligations of Old Line, enforceable against Old Line in
accordance with their respective terms and conditions, subject to
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or similar Laws affecting the
enforcement of creditors’ rights generally and except that
the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before
which any proceeding may be brought.
(d) The approval of the
Merger by the holders of OLB Common Stock is the only vote of
holders of any class of OLB capital stock necessary to adopt and
approve this Agreement and the Contemplated Transactions. The
affirmative vote of Persons holding at least two-thirds of the
issued and outstanding shares of OLB Common Stock as of the record
date for the OLB Common Stockholders’ Meeting is required to
approve the Merger under the MGCL and OLB’s articles of
incorporation and bylaws.
(e) OLB’s board
of directors, by resolution duly adopted by the unanimous vote of
the entire board of directors at a meeting duly called and held,
has (i) determined that this Agreement and the Contemplated
Transactions, including the Merger, are advisable and are in the
best interests of OLB and its stockholders, (ii) authorized and
approved this Agreement and the Contemplated Transactions, (iii)
directed that the Merger be submitted for consideration at the OLB
Common Stockholders’ Meeting, and (iv) recommended that its
stockholders approve the Merger.
60
Section
4.4
Consents;
Regulatory Approvals.
Except
as described in Section 4.3(b) of this Agreement and OLB Disclosure Schedule 4.4, no
consents, waivers or approvals of, or filings or registrations
with, any Regulatory Authorities or other third parties are
necessary in connection with the execution and delivery of this
Agreement by OLB or the consummation of the Contemplated
Transactions by OLB. OLB has no reason to believe that it will not
be able to obtain all requisite consents, waivers or approvals from
the Regulatory Authorities or any third party in order to
consummate the Contemplated Transactions on a timely basis. To the
Knowledge of OLB, no fact or circumstance exists, including any
possible other transaction pending or under consideration by OLB or
any OLB Company, that would (a) reasonably be expected to prevent
or delay in any material respect, any filings or registrations
with, or consents, waivers or approvals required from, any
Regulatory Authority, or (b) cause a Regulatory Authority acting
pursuant to applicable Law to seek to prohibit or materially delay
consummation of the Contemplated Transactions or impose a
Burdensome Condition.
Section
4.5
Financial
Statements.
(a) OLB has delivered
or made available to BYBK the OLB Financials, except those
pertaining to annual and quarterly periods ending on or after
September 30, 2017, which it will deliver or make available by each
respective delivery date as required by this Agreement. The OLB
Financials with respect to periods ending prior to the date of this
Agreement (i) are true, accurate and complete in all material
respects, and have been prepared from, and are in accordance with,
the Books and Records of OLB and the OLB Subsidiaries and (ii)
fairly present, in all material respects, the consolidated
financial position, results of operations, changes in
stockholders’ equity and cash flows of OLB as of and for the
periods ended on the dates thereof. The OLB Financials with respect
to periods ended prior to the date of this Agreement comply in all
material respects with applicable accounting and regulatory
requirements and have been prepared in accordance with GAAP
consistently applied, except for (i) omission of the notes from the
financial statements, applicable to any interim period, and (ii)
with respect to any interim period, normal year-end adjustments and
notes thereto.
(b) OLB did not, as of
the date of the OLB Financials or any subsequent date, have any
liabilities, obligations or loss contingencies of any nature,
whether absolute, accrued, contingent or otherwise, that are not
fully reflected or reserved against in the balance sheets included
in the OLB Financials at the date of such balance sheets that would
have been required to be reflected therein in accordance with GAAP
consistently applied or fully disclosed in a note thereto, except
for liabilities, obligations and loss contingencies that are not
material in the aggregate and that are incurred in the Ordinary
Course, and except for liabilities, obligations and loss
contingencies that are within the subject matter of a specific
representation and warranty herein or that have not had a Material
Adverse Effect and subject, in the case of any unaudited
statements, to normal recurring audit adjustments and the absence
of notes thereto.
(c) During the periods
covered by the OLB Financials with respect to periods ended prior
to the date of this Agreement, OLB’s independent registered
public accounting firm, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, was independent
of OLB and its management. As of the date hereof, OLB’s
independent registered public accounting firm, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LLP, has not resigned (or informed OLB that it intends to resign)
or been dismissed as a result of or in connection with any
disagreements with OLB on a matter of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure.
61
Section
4.6
No Material Adverse
Effect.
Neither
OLB nor any OLB Subsidiary has suffered any adverse change in its
assets (including loan portfolio), liabilities (whether absolute,
accrued, contingent or otherwise), liquidity, net worth, property,
financial condition or results of operations, or any damage,
destruction or loss, whether or not covered by insurance, since
June 30, 2017, that in the aggregate has had or is reasonably
likely to have a Material Adverse Effect on the OLB Companies taken
as a whole.
Section
4.7
Taxes.
(a) Except as disclosed
in OLB Disclosure Schedule
4.7(a), all OLB Returns required by applicable Law to have
been filed with any Taxing Authority by, or on behalf of, each of
the OLB Companies have been filed on a timely basis in accordance
with all applicable Laws, and such OLB Returns are true, complete
and correct in all material respects, or requests for extensions to
file the OLB Returns have been timely filed, granted and have not
expired, except to the extent that such failures to file, to be
complete or correct or to have extensions granted that remain in
effect individually or in the aggregate would not have a Material
Adverse Effect on OLB. All OLB Taxes shown to be due and payable on
the OLB Returns or on subsequent assessments with respect thereto
have been paid in full or adequate reserves have been established
in the OLB Financials for the payment of such OLB Taxes, except
where any such failure to pay or establish adequate reserves, in
the aggregate, has not had, and is not reasonably likely to have, a
Material Adverse Effect on the OLB Companies. Each of the OLB
Companies has timely withheld and paid over all OLB Taxes required
to have been withheld and paid over by it, and complied with all
information reporting and backup withholding requirements,
including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor,
independent contractor or other third party. There are no Liens on
any of the assets of the OLB Companies with respect to OLB Taxes,
other than Liens for OLB Taxes not yet due and
payable.
(b) Except as disclosed
on OLB Disclosure Schedule
4.7(b), no deficiencies for OLB Taxes have been claimed,
proposed or assessed, with notice to any of the OLB Companies, by
any taxing or other governmental authority against the OLB
Companies that have not been settled, closed or reached a final
determination, or that have not been adequately reserved for in the
OLB Financials, except for deficiencies that, individually or in
the aggregate, have not had, and are not reasonably likely to have,
a Material Adverse Effect on OLB. There are no pending audits
relating to any OLB Tax liability of which any of the OLB Companies
has received written notice. Except as disclosed on OLB Disclosure Schedule 4.7(b),
none of the OLB Companies is a party to any action or proceeding
for assessment or collection of OLB Taxes, nor have such events
been asserted or, to the Knowledge of OLB, threatened against any
of the OLB Companies or any of their assets. No waiver or extension
of any statute of limitations relating to OLB Taxes is in effect
with respect to the OLB Companies. No power of attorney has been
executed by any of the OLB Companies with respect to any OLB Tax
matter that is currently in force.
62
(c) As used in this
Agreement, the term “OLB Taxes” shall mean all
taxes, however denominated, including any interest, penalties or
other additions to tax that may become payable in respect thereof,
imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the
generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and state
income taxes), real property gains taxes, payroll and employee
withholding taxes, unemployment insurance taxes, social security
taxes, sales and use taxes, ad valorem taxes, excise taxes,
franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, and other obligations of the
same or of a similar nature to any of the foregoing, which any of
the OLB Companies is required to pay, withhold or collect. As used
in this Agreement, the term “OLB Returns” shall mean
all reports, estimates, declarations of estimated tax, information
statements and returns relating to, or required to be filed in
connection with, any OLB Taxes, including information returns or
reports with respect to backup withholding and other payments to
third parties.
Section
4.8
Contracts; Certain
Changes.
Except
as described in OLB
Disclosure Schedule 4.8 or in the OLB SEC Reports, neither
OLB nor any OLB Subsidiary is a party to or subject
to:
(a) Any collective
bargaining agreement with any labor union relating to its
employees;
(b) Any Contract that
by its terms limits its payment of dividends;
(c) Any Contract, other
than this Agreement, that restricts or prohibits it from engaging
in any type of business permissible under applicable
Law;
(d) any Contract (other
than this Agreement) that restricts or limits in any material way
the conduct of its business (it being understood that any
non-compete, non-solicitation or similar provision shall be deemed
material);
(e) Any Contract, the
terms of which will require, on account of this Agreement or any of
the Contemplated Transactions, the payment, individually or when
aggregated with all other similar Contracts, of a material
financial fee or penalty by OLB or an Old Line Company;
and
(f) Any Contract not
disclosed pursuant to the other paragraphs of this Section 4.8 that
constitutes a “material contract” as defined in Item
601(b)(10) of Regulation S-K of the SEC.
Section
4.9
Ownership of
Personal Property; Insurance Coverage.
(a) Each of the OLB
Companies has good and marketable title to all material assets and
properties owned by it in the conduct of its businesses, whether
such assets and properties are real or personal, tangible or
intangible, including assets and property reflected in the balance
sheets contained in the OLB Financials or acquired subsequent
thereto, subject to no Liens, except:
63
(i) Those items that
secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to the FHLB,
inter-bank credit facilities or reverse repurchase agreements and
that are described in OLB
Disclosure Schedule 4.9(a) or permitted under Article V
hereof;
(ii) Mechanics
liens and similar liens for labor, materials, services or supplies
provided for such property and incurred in the Ordinary Course for
amounts not yet due or that are being contested in good
faith;
(iii) Statutory
Liens securing payments not yet due or that are being contested in
good faith;
(iv) Liens
for current OLB Taxes not yet due and payable;
(v) Pledges to secure
deposits and other Liens incurred in the Ordinary Course of the
business of banking;
(vi) Liens,
imperfections or irregularities of title, and other defects of
title that are not reasonably likely to have a Material Adverse
Effect;
(vii) Easements,
rights of way and other similar encumbrances that do not materially
affect the use of the properties or assets subject thereto or
affected thereby or otherwise materially impair business operations
at such properties;
(viii) With
respect to personal property reflected in the balance sheets
contained in the OLB Financials, (A) dispositions and encumbrances
for adequate consideration in the Ordinary Course since the date of
such balance sheets and/or (B) dispositions of obsolete personal
property since the date of such balance sheets;
(ix) Those
items that are reflected as liabilities in the OLB Financials;
and
(x) Items of personal
property that are held in any fiduciary or agency capacity
(collectively, “OLB
Permitted Liens”).
(b) With respect to
material items of real and personal property that are used in the
conduct of its business and leased from other Persons, each of the
OLB Companies has the right under valid, binding and existing
leases to use such real and personal property in all material
respects as presently occupied and used. There is not under any
such lease any material existing default by any OLB Company or, to
the Knowledge of OLB, any other party thereto, or any event that
with notice or lapse of time would constitute such a material
default and all rent and other sums and charges due and payable
under such leases have been paid.
(c) Each of the OLB
Companies currently maintains Insurance Policies with reputable
insurers against such risks and in such amounts as the management
of OLB has reasonably determined to be prudent for such OLB
Company’s operations and, to the Knowledge of OLB, such
Insurance Policies are similar in scope and coverage in all
material respects to Insurance Policies maintained by other
similarly-situated businesses. Each of OLB and each OLB Subsidiary
is in compliance with its Insurance Policies, is not in default
under any of the terms thereof and has made accurate statements on
any insurance renewal application. Each such Insurance Policy is in
full force and effect and, except for Insurance Policies insuring
against potential liabilities of officers, directors and employees
of OLB and the OLB Subsidiaries, OLB or the relevant OLB Subsidiary
is the sole beneficiary of such Insurance Policies. All premiums
and other payments due under such Insurance Policies have been
paid, and all material notices and claims thereunder have been
filed in a due and timely fashion. OLB Disclosure Schedule 4.9(c)
identifies all Insurance Policies maintained by the OLB
Companies.
64
(d) None of the OLB
Companies has received notice from any insurance carrier
that:
(i) Any of its
Insurance Policies will be cancelled, terminated or not renewed or
that coverage thereunder will be reduced or eliminated;
or
(ii) Premium
costs with respect to any such Insurance Policy will be
substantially increased.
Section
4.10
Legal
Proceedings.
Except
as described in OLB
Disclosure Schedule 4.10, there is no Litigation now pending
or, to the Knowledge of OLB, threatened, against any of the OLB
Companies or any of their properties, and to the Knowledge of OLB
there are no facts that reasonably could be expected to be the
basis for any such Litigation. To the Knowledge of OLB, no pending
or threatened Litigation described in OLB Disclosure Schedule 4.10
could reasonably be expected to (a) have a Material Adverse Effect,
(b) question the validity of any action taken or to be taken in
connection with this Agreement or the Contemplated Transactions, or
(c) materially impair or delay the ability of the OLB Companies to
perform their obligations under this Agreement. Except as described
in OLB Disclosure Schedule
4.10, none of the OLB Companies is in default with respect
to any Order.
Section
4.11
Compliance with
Applicable Law.
Except
as disclosed on OLB
Disclosure Schedule 4.11:
(a) Each of the OLB
Companies conducts its business in compliance with all Laws
applicable to it, its properties, assets and deposits, its
business, and its conduct of business and its relationship with its
employees conducting such business, except where noncompliance
would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect;
(b) Each of the OLB
Companies has, and since December 31, 2012, has had, all material
permits, licenses, authorizations, orders and approvals of all
Regulatory Authorities that are required in order to permit it to
own or lease its properties and carry on its business as it is
presently conducted, and have paid all fees and assessments due and
payable in connection therewith; all such permits, licenses,
authorizations, orders and approvals are in full force and effect,
and no suspension or cancellation of any of them is, to the
Knowledge of OLB, threatened, and to the Knowledge of OLB no
suspension or cancellation of any such permit, license,
certificate, order or approval is threatened or will result from
the consummation of the Contemplated Transactions, subject to
obtaining the receipt of all requisite approvals or consents from
the Regulatory Authorities in order to consummate the Contemplated
Transactions. None of the OLB Companies is in default or violation
of any such permits, licenses, authorizations, orders and
approvals. None of the OLB Companies have been given notice or been
charged with any violation of any Law or condition to approval of
any Regulatory Authority that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse
Effect;
65
(c) Since January 1,
2012, each of the OLB Companies has timely filed all reports,
forms, filings, schedules, information, data, registrations,
submissions, statements and other documents, together with any
amendments required to be made with respect thereto, that it was
required by Law to file with any Regulatory Authority
(collectively, the “OLB Reports”), and has
paid all fees and assessments due and payable in connection
therewith, and each of such reports, forms, filings, etc. were
complete and accurate in all material respects and complied in all
material respects with all Laws under which it was filed (or was
amended so as to be in compliance promptly following discovery of
such noncompliance) and, to the extent such filings contain
financial information, have been prepared in all material respects
in accordance with applicable regulatory accounting principles and
practices and, in the case of the OLB SEC reports, GAAP, throughout
the periods covered by such filing, except to the extent failure to
timely file would not, individually or in the aggregate, be
expected to have a Material Adverse Effect; none of the OLB Reports
when filed with the SEC (the “OLB SEC Reports”), and if
amended prior to the date hereof, as of the date of such amendment,
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading; there (i) is no unresolved
violation, criticism or exception by any Regulatory Authority with
respect to any report or statement relating to any examinations,
inspections or investigations of OLB or any OLB Subsidiary (not
including any supervisory suggestions or recommendations), (ii) are
no outstanding formal or informal inquiries by, or unresolved
disagreements or disputes with, any Regulatory Authority with
respect to the business, operations, policies or procedures of OLB
or any OLB Subsidiary, and (iii) are no outstanding comments from
or unresolved issues raised by the SEC, as applicable, with respect
to any of the OLB SEC Reports; and none of the OLB Subsidiaries is
required to file periodic reports pursuant to Sections 13 or 15(d)
of the Exchange Act;
(d) No Regulatory
Authority has initiated any proceeding or, to the Knowledge of OLB,
investigation into the business or operations of the OLB Companies
that has not been resolved;
(e) Since January 1,
2014, none of the OLB Companies has received any notification or
communication from any Regulatory Authority:
(i) Asserting that it
is not in substantial compliance with any Law that such Regulatory
Authority enforces, unless such assertion has been waived,
withdrawn or otherwise resolved;
(ii) Threatening
to revoke any license, franchise, permit or governmental
authorization that is material to it; or
(iii) Requiring
or threatening to require it, or indicating that it may be
required, to enter into a cease and desist order, consent
agreement, other agreement or memorandum of understanding, or any
other agreement directing, restricting or limiting, or purporting
to direct, restrict or limit, in any manner its operations,
including without limitation any restriction on the payment of
dividends (any such notice, communication, memorandum, agreement or
order described in this Section 4.11(e)(iii) and addressed
specifically to an OLB Company herein referred to as an
“OLB Regulatory
Agreement”);
66
(f) None of the OLB
Companies has received, consented to or entered into any OLB
Regulatory Agreement that is currently in effect, nor has any OLB
Company been advised since January 1, 2013 by any Regulatory
Authority that it is considering issuing, initiating, ordering or
requesting any OLB Regulatory Agreement that has not already been
issued, initiated, ordered or requested;
(g) There is no
unresolved violation, criticism or exception by any Regulatory
Authority with respect to any OLB Regulatory Agreement, except to
the extent permitted by such OLB Regulatory Agreement;
(h) There is no
settlement, Order or regulatory restriction imposed upon or entered
into by any of the OLB Companies or upon any of their
assets;
(i) OLB has designed
and implemented and maintains disclosure controls and procedures
(within the meaning of Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) to ensure that material information relating to the
OLB Companies is made known to the management of OLB by others
within those entities as appropriate to allow timely decisions
regarding required disclosure and to make the certifications
required by the Exchange Act with respect to the OLB SEC
Reports;
(j) Since January 1,
2013, (i) no OLB Company nor, to the Knowledge of OLB, any
director, officer, employee, auditor, accountant or other
Representative of any OLB Company, has received or otherwise had or
obtained knowledge of any material complaint, allegation, assertion
or claim, whether written or oral, regarding its accounting or
auditing practices, procedures, methodologies or methods or its
internal accounting controls, including any material complaint,
allegation, assertion or claim that it has engaged in questionable
accounting or auditing practices, and (ii) no attorney representing
any OLB Company, whether or not employed by it, has reported
evidence of a material violation of Securities Laws, breach of
fiduciary duty or similar violation by it or any of its officers,
directors, employees or agents to its board of directors or any
committee thereof or to any director or officer; and
(k) OLB has, in all
material respects, (i) properly certified all foreign deposit
accounts and has made all necessary tax withholdings on all of its
deposit accounts, (ii) timely and properly filed and maintained all
requisite Currency Transaction Reports and other related forms,
including any requisite Custom Reports required by any agency of
the U.S. Department of the Treasury, including the IRS, and (iii)
timely filed all Suspicious Activity Reports with the Financial
Crimes Enforcement Network (bureau of the U.S. Department of the
Treasury) required to be filed by it pursuant to applicable
Laws.
67
Section
4.12 Labor
Matters.
There
are no labor or collective bargaining agreements to which any of
the OLB Companies is a party. There is no union organizing effort
pending or, to the Knowledge of OLB, threatened, against any of the
OLB Companies or involving employees of any of the OLB Companies.
There is no labor strike or labor dispute (other than routine
employee grievances that are not related to union employees), work
slowdown, stoppage, lockout or other job action pending or, to the
Knowledge of OLB, threatened, against any of the OLB Companies. No
Litigation asserting that any of the OLB Companies has committed an
unfair labor practice (within the meaning of the National Labor
Relations Act of 1935 or comparable state law) or other violation
of state or federal labor Law or seeking to compel any of the OLB
Companies to bargain with any labor organization or other employee
representative as to wages or conditions of employment is pending
or, to the Knowledge of OLB, threatened, with respect to any of the
OLB Companies before the National Labor Relations Board, the Equal
Employment Opportunity Commission or any other Regulatory Authority
(other than routine employee grievances that are not related to
union employees). Each of the OLB Companies is in compliance in all
material respects with all applicable Laws respecting employment
and employment practices, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor practice.
Except as described in OLB
Disclosure Schedule 4.12, there is no pending or, to the
Knowledge of OLB, threatened, Litigation against any of the OLB
Companies under any applicable labor or employment Law or brought
or made by a current or former employee or applicant for
employment.
Section
4.13
ERISA.
(a) OLB has set forth
in OLB Disclosure Schedule
4.13(a) a complete and accurate list of the OLB Benefit
Plans and made available to BYBK a copy of all available written
documents regarding such OLB Benefit Plans.
(b) The OLB Companies
have paid in full any insurance premiums due to the PBGC with
respect to any defined benefit pension plans for the six years
prior to, and through, the Effective Date. Except as disclosed in
OLB Disclosure Schedule
4.13(b), no pension plan (within the meaning of ERISA
Section 3(2)) maintained or contributed to by any of the OLB
Companies has been terminated or is under notice from the PBGC of
any threat of termination under the procedures of the PBGC. To the
Knowledge of OLB, no circumstance has occurred for which any
reportable event under ERISA Section 4043(b) has been or would
be required that has not been reported or with respect to which the
notice requirement has not been waived. Except as set forth on
OLB Disclosure Schedule
4.13(b), no OLB Benefit Plan is subject to IRC Section 412
or Title IV of ERISA, and as of the Effective Date, to the
Knowledge of OLB, no condition exists that will result in any
liability to the PBGC or on account of the failure to comply with
any such provisions in connection with any such OLB Benefit
Plan.
(c) To the Knowledge of
OLB, none of the OLB Companies has ever contributed to, or
otherwise incurred any liability with respect to, a multi-employer
plan (within the meaning of ERISA Section 3(37)).
68
(d) Each OLB Benefit
Plan complies in all material respects with the applicable
requirements of ERISA, the IRC, the Patient Protection and
Affordable Care Act of 2010, and any other applicable Laws
governing the OLB Benefit Plan, and each OLB Benefit Plan has at
all times been administered substantially in all material respects
in accordance with all requirements of applicable Law. To the
Knowledge of OLB, each of the pension plans adopted by the OLB
Companies that is intended to be qualified under
Section 401(a) of the IRC and, to the Knowledge of OLB, its
trust, is exempt from federal income tax under IRC Section 501(a)
has received, or is entitled to rely upon, a favorable
determination letter (or opinion letter for a prototype plan) from
the IRS, and to the Knowledge of OLB there are no circumstances
that will or could result in revocation of, or inability to
continue to rely upon, any such favorable determination letter or
opinion letter. Without limiting the foregoing, to the Knowledge of
OLB, the following are true:
(i) Each
OLB Benefit Plan that is a defined benefit pension plan subject to
IRC Section 412 or Title IV of ERISA as of the most recent
actuarial valuation has an AFTAP determined under IRC Section 430
and 436 that exceeds the AFTAP level that would impose any
funding-based limit on such plan under IRC Section
436;
(ii) Each
OLB Benefit Plan that is a defined contribution pension plan that
is intended to be qualified under IRC Section 401(a) has had all contributions
made to the plan trust in accordance with the terms of the plan on
a timely basis under the IRC and ERISA;
(iii) With
respect to each OLB Benefit Plan, to the Knowledge of OLB there is
no occurrence or Contract that would constitute any
“prohibited transaction” within the meaning of
Section 4975(c) of the IRC or Section 406 of ERISA, which
transaction is not exempt under applicable Law, including
Section 4975(d) of the IRC or Section 408 of
ERISA;
(iv) Except
as disclosed in OLB
Disclosure Schedule 4.13(d)(iv), no OLB Benefit Plan is an
Employee Stock Ownership Plan as defined in Section 4975(e)(7)
of the IRC;
(v) No OLB Benefit Plan
is a Qualified Foreign Plan as the term is defined in
Section 404A of the IRC and no OLB Benefit Plan or any related
trust assets or agreements are subject to the laws of any
jurisdiction other than the United States of America or any state,
county or municipality of the United States;
(vi) None
of the welfare plans adopted by the OLB Companies is a Voluntary
Employees’ Beneficiary Association as defined in
Section 501(c)(9) of the IRC;
(vii) All
of the welfare plans adopted by the OLB Companies and their related
trusts comply in all material respects with and have been
administered in substantial compliance with (A) Section 4980B
of the IRC and Sections 601 through 609 of ERISA and all U.S.
Department of the Treasury and U.S. Department of Labor regulations
issued thereunder, respectively, (B) the Health Insurance
Portability and Accountability Act of 1996, (C) the applicable
provisions of the Patient Protection and Affordable Care Act of
2010, and (D) the U.S. Department of Labor regulations issued with
respect to such welfare benefit plans; and
(viii) With
respect to each OLB Benefit Plan, OLB or any OLB ERISA Affiliate
has the authority to amend or terminate such OLB Benefit Plan at
any time, subject to the applicable requirements of ERISA and the
IRC and the provisions of the OLB Benefit Plan.
(e) There is no
existing or, to the Knowledge of OLB, contemplated, audit of any
OLB Benefit Plan by the IRS, the U.S. Department of Labor, the
PBGC, any Regulatory Authority or any other governmental authority.
In addition, there is no pending or, to the Knowledge of OLB,
threatened material Litigation by, on behalf of or with respect to
any OLB Benefit Plan, or by or on behalf of any individual
participant or beneficiary of any OLB Benefit Plan, alleging any
violation of ERISA or any other applicable Laws, or claiming
benefits (other than claims for benefits made in the Ordinary
Course), nor, to the Knowledge of OLB, is there any basis likely to
enable such Litigation to prevail.
69
(f) Except as disclosed
on OLB Disclosure Schedule
4.13(f), (i) no payment contemplated or required by or under
any OLB Benefit Plan and employment-related agreement would in the
aggregate constitute excess parachute payments as defined in
Section 280G of the IRC (without regard to subsection (b)(4)
thereof), (ii) no OLB Benefit Plan provides for the gross-up or
reimbursement of taxes under Sections 280G, 4999 or 409A of the
IRC, and (iii) neither the execution and delivery of this Agreement
nor the consummation of Contemplated Transactions will (either
alone or in conjunction with any other event) result in, cause the
vesting, exercisability or delivery of, or increase the amount or
value of, any payment, right or other benefit to any current or
former employee, officer, director or other service provider of any
of the OLB Companies.
(g) None of the OLB
Companies is a record-keeper, administrator, custodian, fiduciary,
trustee or otherwise acts on behalf of any plan, program, or
arrangement subject to ERISA (other than any OLB Benefit Plan).
Each OLB Benefit Plan (including employment Contracts or other
compensation arrangements) that constitutes a nonqualified deferred
compensation plan within the meaning of Section 409A of the IRC has
been written, executed and operated in compliance with Section 409A
of the IRC and the regulations thereunder or an applicable
exemption therefrom.
Section
4.14
Brokers and
Finders.
Other
than Fig Partners, LLC, none of the OLB Companies and, to the
Knowledge of OLB, no officer, director, employee, independent
contractor, agent or Affiliate of any OLB Company on its behalf,
has employed any broker, finder, investment banker or financial
advisor, or incurred any liability for any fees or commissions to
any broker, finder, investment banker or financial advisor, in
connection with the Contemplated Transactions.
Section
4.15
Real Property and
Leases.
(a) OLB and the OLB
Subsidiaries own or lease all properties as are necessary to their
operations as now conducted. No deed or lease with respect to any
real property owned, leased or operated by the OLB Companies,
including but not limited to all REO (the “OLB Real Property”)
contains any restrictive covenant that materially restricts the
use, transferability or value of such OLB Real Property. Each lease
with respect to any OLB Real Property is a legal, valid and binding
obligation of the parties thereto enforceable in accordance with
its terms (except as may be limited by bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium or
similar Laws affecting the enforcement of creditors’ rights
generally and the availability of equitable remedies), and is in
full force and effect. There are no existing defaults by the OLB
Companies or, to the Knowledge of OLB, the other party, under any
lease with respect to any OLB Real Property and, to the Knowledge
of OLB, there are no allegations or assertions of such defaults by
any party under any lease with respect to any OLB Real Property or
any events that, with notice or lapse of time or the happening or
occurrence of any other event, would constitute a default under any
lease with respect to any OLB Real Property, except where the
existence of such defaults, individually or in the aggregate, has
not had, and is not reasonably likely to have, a Material Adverse
Effect.
(b) To the Knowledge of
OLB, none of the buildings and structures located on any OLB Real
Property, nor any improvements or appurtenances thereto or
equipment therein, nor the operation or maintenance thereof,
violates in any material manner any land use Laws or restrictive
covenants, except for those violations and encroachments that in
the aggregate could not reasonably be expected to have a Material
Adverse Effect. No condemnation or eminent domain proceeding is
pending or, to the Knowledge of OLB, threatened, that would
preclude or materially impair the use of any OLB Real Property in
the manner in which it is currently being used.
(c) The OLB Companies
have a valid and enforceable leasehold interest in or, to the
Knowledge of OLB, based on title insurance owned by it, good and
marketable title to, all OLB Real Property and all improvements
thereon, subject to no Liens of any kind except (i) as noted in the
OLB Financials, (ii) statutory Liens securing payments not yet due
or that are being contested in good faith, (iii) minor defects and
irregularities in title and encumbrances that do not materially
impair the use thereof for the purposes for which they are held,
(iv) mechanics liens for amounts not yet due or that are being
contested in good faith, and (v) those assets and properties
disposed of for fair market value in the Ordinary Course since the
date of the OLB Financials. To the Knowledge of OLB, all OLB Real
Property used in the business of the OLB Companies is free from
defects that could materially interfere with the current or
intended future use of such facilities, provided such future use is
substantially similar to its current use.
Section
4.16
Environmental
Matters.
With
respect to OLB and each OLB Subsidiary:
(a) Neither the
conduct nor operation of its business nor any condition of any
property currently or previously owned or operated by it (including
REO) results or resulted in a violation of any Environmental Laws
that is reasonably likely to impose a material liability (including
a material remediation obligation) upon OLB or any OLB Subsidiary.
To the Knowledge of OLB, no condition has existed or event has
occurred with respect to any of them or any such property that,
with notice or the passage of time, or both, is reasonably likely
to result in any material liability to OLB or any OLB Subsidiary by
reason of any Environmental Laws. Neither OLB nor any OLB
Subsidiary during the past five years has received any written
notice from any Person or Regulatory Authority that OLB or any OLB
Subsidiary or the operation or condition of any property ever owned
or operated by any of them are currently in violation of or
otherwise are alleged to have liability under any Environmental
Laws or relating to Hazardous Materials (including, but not limited
to, responsibility (or potential responsibility) for the cleanup or
other remediation of any Hazardous Materials at, on, beneath or
originating from any such property) for which a material liability
is reasonably likely to be imposed upon OLB or any OLB
Subsidiary;
70
(b) There is no
Order or Litigation pending or, to the Knowledge of OLB threatened,
before any court, governmental agency or other forum against OLB or
any OLB Subsidiary (i) for alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or
(ii) relating to the presence, release, discharge, spillage or
disposal into the environment of, any Hazardous Materials, whether
or not occurring at, on, under, adjacent to or affecting (or
potentially affecting) a site currently or formerly owned, leased
or operated by any OLB Company or any OLB Real Property, nor, to
the Knowledge of OLB, is there any reasonable basis for any such
Litigation or Order;
(c) To the Knowledge of
OLB, (i) there are no underground storage tanks on, in or under any
OLB Real Property, and (ii) no underground storage tanks have been
closed or removed from any OLB Real Property except in compliance
with Environmental Laws in all material respects; and
(d) To the Knowledge of
OLB, the OLB Real Properties (including, without limitation, soil,
groundwater or surface water on, or under the properties, and
buildings thereon) are not contaminated with and do not otherwise
contain any Hazardous Materials other than as permitted under
applicable Environmental Laws.
Section
4.17
Information to be
Supplied.
(a) The information
supplied by OLB for inclusion in the Registration Statement
(including the Prospectus/Proxy Statement), at the time the
Registration Statement is declared effective pursuant to the
Securities Act, and as of the date the Prospectus/Proxy Statement
is mailed to the holders of OLB Common Stock and BYBK Common Stock,
and up to and including the date of the OLB Common
Stockholders’ Meeting and the BYBK Common Stockholders’
Meeting, (i) will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances in
which they were made, not misleading, (ii) will disclose all facts
that the OLB board of directors deems material to a vote on the
Merger, and (iii) will comply in all material respects with the
applicable requirements of the Registration Statement as
promulgated by the SEC.
(b) The information
supplied by OLB for inclusion in the Applications will, at the time
each such document is filed with any Regulatory Authority and up to
and including the dates of any required regulatory approvals or
consents, as such Applications may be amended by subsequent
filings, be accurate in all material respects.
(c) No document or
certificate delivered to BYBK by or for OLB pursuant to a
requirement of this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statement contained in such document or certificate, in light
of the circumstances under which it was made, not
misleading.
Section
4.18 Related Party
Transactions.
Except
as set forth on OLB
Disclosure Schedule 4.18, as is disclosed in the OLB
Financials, and/or as disclosed in the OLB SEC Reports, neither OLB
nor any OLB Subsidiary is a party to any transaction (including any
loan or other credit accommodation but excluding deposits in the
Ordinary Course) with any Affiliate of OLB or any OLB Subsidiary,
and all such transactions were made on substantially the same
terms, including interest rates and collateral, as those prevailing
at the time for comparable transactions with Persons who are not
related to or Affiliates of OLB or any OLB Subsidiary.
71
Section
4.19
Loans.
(a) Except as disclosed
in OLB Disclosure Schedule
4.19, all Credit Extensions reflected as assets in the OLB
Financials or currently outstanding that will be reflected as
assets in the OLB Financials arose out of bona fide
arm’s-length transactions, were made for good and valuable
consideration in the Ordinary Course, and are evidenced by notes,
Contracts or other evidences of indebtedness that are true,
genuine, correct and what they purport to be, and to the extent
secured, are secured by valid Liens that are legal, valid and
binding obligations of the maker thereof, enforceable in accordance
with the respective terms thereof, except as such enforcement may
be limited by (i) bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium or similar Laws affecting
the enforcement of creditors’ rights generally or equitable
principles affecting the enforcement of creditors’ rights
that have been perfected or (ii) the pledge of any Credit Extension
to the FHLB as collateral to secure the performance by the OLB
Companies of all obligations owed thereto. All Credit Extensions
reflected, or currently outstanding that will be reflected, as
assets in the OLB Financials were made in accordance in all
material respects with sound banking practices and, to the
Knowledge of OLB, are not subject to any defenses, setoffs or
counterclaims, including without limitation any such as are
afforded by usury or truth in lending Laws, except as may be
provided by bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or similar Laws affecting the
enforcement of creditors’ rights generally or by general
principles of equity.
(b) To the Knowledge of
OLB, neither the terms of any Credit Extension by any of the OLB
Companies, any of the documentation for any such Credit Extension,
the manner in which any such Credit Extension has been administered
and serviced, nor the practices of approving or rejecting
applications for a Credit Extension by the OLB Companies, violate
in any material respect any Law applicable thereto, including,
without limitation, the Truth In Lending Act and the CFPB’s
Regulation Z, the CRA, the Equal Credit Opportunity Act, and any
Laws relating to consumer protection, installment sales and
usury.
(c) There are no
executive officer or director (as such terms are defined in the
FRB’s Regulation O) Credit Extensions by any of the OLB
Companies on which the borrower is paying a rate other than that
reflected in the note or other relevant credit or security
agreement or on which the borrower is paying a rate that was not in
compliance with Regulation O and all such Credit Extensions are and
were originated in compliance in all material respects with all
applicable Laws.
(d) To the Knowledge of
OLB, no shares of OLB Common Stock were purchased with the proceeds
of a loan made by any of the OLB Companies.
72
Section
4.20
Allowance for Loan
Losses.
The
allowance for loan losses reflected in reports by the OLB Companies
to each Regulatory Authority has been and will be established in
compliance with the requirements of all regulatory criteria, and
the allowance for loan losses shown in the OLB Financials has been
and will be established and maintained in accordance with GAAP and
applicable Law and in a manner consistent with Old Line’s
internal policies. The allowance for loan losses reflected in such
reports and the allowance for loan losses shown in the OLB
Financials, in the opinion of management, was or will be adequate
as of the dates thereof. The REO and in-substance foreclosures
included in any of Old Line’s non-performing assets are
carried net of reserves at the lower of cost or market value based
on current independent appraisals or current management appraisals.
OLB has disclosed to BYBK on OLB Disclosure Schedule 4.20
all Credit Extensions (including participations) by and all
interest-bearing assets of the OLB Companies (a) that are in an
amount of at least $1.0 million and have been accelerated during
the past 12 months, (b) that are in an amount of at least $1.0
million and have been terminated during the past 12 months by
reason of a default or adverse development in the condition of the
borrower or other events or circumstances affecting the credit of
the borrower, and (c) pursuant to which a borrower, customer or
other party has notified any of the OLB Companies during the past
12 months of, or has asserted against any of the OLB Companies, in
each case in writing, any “lender liability” or similar
claim, and, to the Knowledge of OLB, each borrower, customer or
other party that has given any of the OLB Companies any oral
notification of, or orally asserted to or against any of the OLB
Companies, any such claim, and OLB shall provide an updated
OLB Disclosure Schedule
4.20 promptly to BYBK after the end of each month after the
date hereof and on the Business Day prior to the Closing
Date.
Section
4.21
Community
Reinvestment Act.
Old
Line is the only OLB Company that is subject to the CRA. To the
Knowledge of OLB, OLB is in compliance in all material respects
with the CRA and all regulations promulgated thereunder. OLB has
supplied BYBK with a copy of Old Line’s current CRA
Statement, all letters and written comments received by Old Line
since March 6, 2017 pertaining thereto and any responses by Old
Line to such comments. Old Line has a rating of
“satisfactory” or better as of its most recent CRA
compliance examination and OLB and Old Line have received no
communication from any Regulatory Authority that would lead OLB to
believe that Old Line will not receive a rating of
“satisfactory” or better pursuant to its next CRA
compliance examination or that any Regulatory Authority would seek
to restrain, delay or prohibit any of the Contemplated Transactions
as a result of any act or omission of Old Line under the
CRA.
Section
4.22
Securities
Activities of Employees.
To the
Knowledge of OLB, the officers, employees and agents of the OLB
Companies are now, and at all times in the past have been, in
compliance with all applicable Laws that relate to securities
activities conducted by such officers, employees and agents,
including Laws relating to licenses and permits.
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Section
4.23
Books and Records;
Internal Control.
(a) The minute books
and stock ledgers of the OLB Companies that have been made
available to BYBK, its Representatives or its Affiliates constitute
all of the minute books and stock ledgers of the OLB Companies and
as of their dates contain a materially complete and accurate record
of all actions of their respective stockholders and boards of
directors (and any committees thereof) and have been maintained in
accordance with applicable Law. All personnel files, reports,
feasibility studies, environmental assessments and reports,
strategic planning documents, financial forecasts, deeds, leases,
lease files, land files, accounting and tax records and all other
records that relate to the business and properties of the OLB
Companies that have been requested by BYBK have been made available
to BYBK, its Representatives or its Affiliates.
(b) OLB maintains a
system of internal control over financial reporting (within the
meaning of Rules 13a-15(f) and 15d-15(f) of the Exchange Act)
sufficient to provide reasonable assurance that: (i) transactions
by or with the OLB Companies are executed in accordance with
management’s general or specific authorizations; (ii)
transactions by or with the OLB Companies are recorded as necessary
(A) to permit the preparation of financial statements and reports
filed with any Regulatory Authority in conformity with GAAP
consistently applied and any other criteria applicable to such
statements, and (B) to maintain accountability for assets and
liabilities; (iii) access to the assets of, and the incurrence of
liabilities by, the OLB Companies is permitted only in accordance
with management’s general or specific authorizations; (iv)
the recorded accountability for assets and liabilities of the OLB
Companies is compared with existing assets and liabilities of the
OLB Companies at reasonable intervals and appropriate action is
taken with respect to any differences; and (v) extensions of credit
by and other receivables of the OLB Companies are recorded
accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis. Except
as disclosed in the OLB SEC Reports, since December 31, 2012,
neither OLB nor, to OLB’s Knowledge, any employee, auditor,
accountant or representative of any OLB Company, has received or
otherwise had or obtained knowledge of any complaint, allegation,
assertion or claim, whether written or oral, regarding the adequacy
of OLB’s internal control over financial reporting or
integrity of the OLB Financials or the accounting or auditing
practices, procedures, methodologies or methods (including with
respect to loan loss reserves, write-downs, charge-offs and
accruals) of OLB or any of its Subsidiaries or their respective
internal accounting controls, including any complaint, allegation,
assertion or claim that OLB or any of its Subsidiaries has engaged
in questionable accounting or auditing practices. Except as
disclosed in the OLB SEC Reports, to the Knowledge of OLB there are
no significant deficiencies or material weaknesses in the design or
operation of such internal control over financial reporting that
are reasonably likely to adversely affect in any material respect
OLB’s ability to record, process, summarize and report
financial information. To the Knowledge of OLB, there has occurred
no fraud, whether or not material, that involves management or
other employees who have a significant role in OLB’s internal
control over financial reporting.
74
(c) Each of the OLB
Companies makes and keeps Books and Records that, in reasonable
detail and in all material respects, accurately and fairly reflect
its transactions in and dispositions of its assets and securities,
and all such Books and Records have been and are being maintained
in the Ordinary Course in accordance with applicable Law and
accounting requirements. None of the records, systems, controls,
data or information of the OLB Companies are recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or
held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) that (including
all means of access thereto and therefrom) are not under the
exclusive ownership and control of the OLB Companies or their
accountants, except as would not reasonably be expected to have a
Material Adverse Effect. No attorney representing OLB or any OLB
Subsidiary, whether or not employed by OLB or any OLB Subsidiary,
has reported evidence of a material violation of Securities Laws,
breach of fiduciary duty or similar violation by OLB or any of its
officers, directors or employees to the board of directors of OLB
or any committee thereof or to any director or officer of OLB. To
OLB’s Knowledge, there has been no instance of fraud by any
OLB Company, whether or not material, that occurred during any
period covered by OLB Financials.
Section
4.24
Investment
Securities.
Each of
the OLB Companies has good and marketable title to all securities
that it owns (except those sold under repurchase agreements or held
in any fiduciary or agency capacity). None of the investment
securities reflected in the OLB Financials under the headings
“investment securities available for sale” and
“investment securities held to maturity” and, except as
described in OLB
Disclosure Schedule 4.24, none of the investment securities
acquired by the OLB Companies since June 30, 2017, are subject to
any restrictions, whether contractual or statutory, that materially
impair such OLB Company’s ability to freely dispose of such
investment securities at any time, and such OLB Company was
permitted by applicable Law to acquire such investment securities
at the time they were acquired.
Section
4.25
Reorganization.
As of
the date hereof, OLB does not have any reason to believe that the
Merger will fail to qualify as a tax-free reorganization within the
meaning of Section 368(a) of the IRC. None of the OLB Companies
will take any action that will cause, cause any action to be taken
that will cause or fail to take any action or fail to cause any
action to be taken if such failure to act will have the effect of
causing, the Merger not to qualify as a tax-free reorganization
within the meaning of Section 368(a) of the IRC, nor have any of
the OLB Companies taken, caused, agreed to take or cause or failed
to take or cause any such action.
Section
4.26
Fairness
Opinion.
OLB’s board
of directors has received an opinion (which, if initially rendered
verbally, has been or will be confirmed by a written opinion, dated
no later than the date of this Agreement) from FIG Partners, LLC,
to the effect that, as of the date thereof, and subject to the
terms, conditions and qualifications set forth therein, the
consideration payable by OLB to stockholders of BYBK pursuant to
the terms of this Agreement is fair, from a financial point of
view, to the stockholders of OLB. Such opinion has not been amended
or rescinded as of the date of this Agreement.
75
Section
4.27
Materials Provided
to Stockholders.
All
proxy materials used in connection with the meetings of OLB’s
stockholders held in 2015, 2016 and 2017, along with any other form
of correspondence between OLB and its stockholders during those
years, including, without limitation, any annual or quarterly
reports provided to stockholders, either have been filed with the
SEC and are publicly available to BYBK via ▇▇▇▇▇ or have been
provided to BYBK.
Section
4.28
Absence of
Undisclosed Liabilities.
None of
the OLB Companies has any obligation or liability that is material
to its financial condition or operations or that, when combined
with all similar obligations or liabilities, would be material to
its financial condition or operations except (a) as disclosed in
the OLB Financials delivered or made available to BYBK prior to the
date of this Agreement, or (b) as contemplated under this
Agreement. Except as disclosed in OLB Disclosure Schedule 4.28,
since December 31, 2016, none of the OLB Companies has incurred or
paid any obligation or liability that would be material to its
financial condition or operations, except for obligations that are
(a) fully reflected or reserved against on the most recent balance
sheet contained in the OLB Financials or (b) paid in connection
with transactions made in the Ordinary Course consistent with
applicable Law.
Section
4.29
Anti-Money
Laundering, OFAC and Information Security.
(a) To the Knowledge of
OLB there do not exist any facts or circumstances that would cause
any of the OLB Companies: (i) to be deemed to be operating in
violation in any material respect of the Bank Secrecy Act, the USA
PATRIOT Act, any Order issued with respect to anti-money laundering
by the U.S. Department of the Treasury’s Financial Crimes
Enforcement Network or Office of Foreign Assets Control, or any
other applicable anti-money laundering Law, as well as the
provisions of the Bank Secrecy Act/anti-money laundering program
adopted by the OLB Companies; or (ii) to be deemed not to be in
satisfactory compliance in any material respect with the applicable
privacy of customer information requirements contained in any
federal and state privacy Laws, including without limitation, in
Title V of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999 and the regulations
promulgated thereunder, as well as the provisions of the
information security program adopted by the OLB Companies. To the
Knowledge of OLB, no non-public customer information has been
disclosed to or accessed by an unauthorized third party in a manner
that would cause any of the OLB Companies to undertake any remedial
action. The board of directors or other governing body of each OLB
Company that is subject to Section 326 of the USA PATRIOT Act and
the regulations thereunder has adopted, and each such OLB Company
has implemented, a Bank Secrecy Act/anti-money laundering program
that contains adequate and appropriate customer identification
verification procedures that comply with Section 326 of the USA
PATRIOT Act and the regulations thereunder and such Bank Secrecy
Act/anti-money laundering program meets the requirements in all
material respects of Section 352 of the USA PATRIOT Act and the
regulations thereunder, and it has not received written notice from
any Regulatory Authority that such program (i) does not contain
adequate and appropriate customer identification verification
procedures, or (ii) has been deemed ineffective. Each of the OLB
Companies has complied in all material respects with any
requirements to file reports and other necessary documents as
required by the USA PATRIOT Act and the regulations
thereunder.
76
(b) OLB Disclosure Schedule 4.29(b)
describes any event, circumstance or other occurrence, and the
remedial steps taken by any of the OLB Companies with respect
thereto, since January 1, 2012, that constituted either (i) a
“breach of the security of a system,” as such phrase is
defined in Section 14-3504(a) of the Commercial Law Article with
respect to personal information maintained by any of the OLB
Companies, without regard to the application of Section 14-3507(b)
of the Commercial Law Article, or (ii) any other data breach with
respect to, or other unauthorized access to, the electronic
information and records of any of the OLB Companies, including,
without limitation, communications, regulatory correspondence and
reports, documents and data, information relating to products and
services, activities, strategies and plans, OLB IT Assets, other
financial data, and identities of and information regarding sales,
customers, prospects, vendors, suppliers and personnel, including,
without limitation, passwords and other information technology
credentials.
(c) OLB and each of its
Subsidiaries has (i) complied in all material respects with its
published privacy policies and internal privacy policies and
guidelines, including with respect to the collection, storage,
transmission, transfer, disclosure, destruction and use of
personally identifiable information, and (ii) taken commercially
reasonable measures to ensure that all personally identifiable
information in its possession or control is reasonably protected
against loss, damage and unauthorized access, use, modification or
other misuse. To OLB’s Knowledge, there has been no loss,
damage, or unauthorized access, use, modification or other misuse
of any such information by OLB, any of its Subsidiaries or any
other Person.
Section
4.30
Intellectual
Property.
To the
Knowledge of OLB, each of the OLB Companies owns or possesses
valid, binding and assignable licenses and other rights to use
without payment (other than as set forth in the applicable license)
all trademarks, trade dress, trade names, service marks, service
names, brand names, domain names, logos, patents, technology,
inventions, trade secrets, know-how, copyrights, works of
authorship and other intellectual property rights used in the
conduct of its existing business, and all registrations,
applications, technology rights, licenses or other Contracts
relating thereto and all Contracts relating to third party
intellectual property that it is licensed or authorized to use in
its business, including without limitation any software licenses
(collectively, the “OLB Intellectual Property”). To the
Knowledge of OLB, all OLB Intellectual Property that is used in the
conduct of the existing businesses of the OLB Companies is free and
clear of all Liens (other than OLB Permitted Liens) and any claims
of ownership by current or former employees or contractors, other
than royalties or payments with respect to off-the-shelf software.
With respect to each item of OLB Intellectual Property that any of
the OLB Companies is licensed or authorized to use, to the
Knowledge of OLB, the license, sublicense or Contract covering such
item is legal, valid, binding, enforceable and in full force and
effect. No OLB Company is in default under or violation of any of
its material OLB Intellectual Property licenses. To the Knowledge
of OLB, none of the OLB Companies is infringing, diluting,
misappropriating or violating the intellectual property of any
other Person, and none of the OLB Companies has received any
communications alleging that it has infringed, diluted,
misappropriated or violated any such intellectual property. None of
the OLB Companies has sent any communications alleging that any
Person has infringed, diluted, misappropriated or violated any OLB
Intellectual Property and, to the Knowledge of OLB, no Person is
infringing, diluting, misappropriating or violating any of the OLB
Intellectual Property. Each of the OLB Companies has taken
commercially reasonable actions to protect and maintain (a) all
material OLB Intellectual Property and (b) the security and
integrity of its software, databases, networks, systems, equipment
and hardware and to protect the same against unauthorized use,
modification or access thereto, or the introduction of any
disabling codes or instructions, spyware, Trojan horses, worms,
viruses or other unauthorized, damaging or corrupting software or
elements that permit or cause unauthorized access to, or
disruption, impairment, disablement or destruction of, software,
data or other materials. To the Knowledge of OLB, the computers,
computer software, other information technology equipment,
information technology passwords and other credentials, and all
associated documents and records owned or leased by the OLB
Companies (the “OLB IT Assets”), operate and perform in
all material respects in accordance with their documentation and
functional specifications as required by them in connection with
their business, and none of the OLB IT Assets has materially
malfunctioned or failed to meet its requirements within the past
two years except for such malfunctions or failures that have been
remediated. To the Knowledge of OLB, no Person has gained
unauthorized access to the OLB IT Assets. The OLB Companies have
implemented commercially reasonable backup and disaster recovery
policies, procedures, systems and technology consistent with
industry practices for financial institutions of comparable size
and complexity, and sufficient to reasonably maintain the operation
of the respective businesses of the OLB Companies in all material
respects.
77
Section
4.31
Business.
(a) OLB and the OLB
Subsidiaries are engaged in all material respects only in the
business described in the OLB SEC Reports, and the OLB SEC Reports
contain a complete and accurate description in all material
respects of the business of OLB and the OLB Subsidiaries, taken as
a whole.
(b) The assets
reflected in the most recent OLB Financial Statements that are
owned or leased by the OLB Companies, and in combination with the
OLB Real Property, the OLB Intellectual Property and contractual
benefits and burdens of the OLB Companies constitute, as of the
Closing Date, all of the assets, rights and interests necessary to
enable the OLB Companies to operate consolidated businesses in the
Ordinary Course and as the same is expected to be conducted on the
Closing Date.
Section
4.32
Disclosure.
The
schedules delivered by OLB pursuant to this Article IV and
elsewhere in this Agreement, which have been delivered concurrently
with the execution and delivery of this Agreement, are true and
correct in all material respects and contain no untrue statements
of material fact or omit any material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE V.
COVENANTS OF THE
PARTIES
Section
5.1
Conduct of
BYBK’s Business.
(a) Through the
Effective Time, BYBK shall, and shall cause each BYBK Subsidiary
to:
(i) In all material
respects, conduct its businesses and engage in transactions only in
the Ordinary Course, except as otherwise required or contemplated
by this Agreement or with the prior written consent of OLB;
and
(ii) Use
its commercially reasonable good faith efforts to preserve its
business organization intact, maintain good relationships with
employees and preserve the good will of its customers and others
with whom business relationships exist, provided that, other than
in the case of a Permitted Employee that BYBK determines, in good
faith, is necessary to comply with the provisions of this Section
5.1(a), job vacancies that occur prior to the Effective Date
through attrition shall not be filled and new officers and
employees shall not be hired without the prior written consent of
OLB, which shall not be unreasonably conditioned, withheld or
delayed.
(b) Beginning on the
date that is two weeks after the date hereof, and every two weeks
thereafter, BYBK shall provide to OLB a report describing all of
the following that has occurred in the prior month: (i) approval of
or entry into new Credit Extensions with principal balances or
commitments of $500,000 or more, (ii) renewals or extensions of
existing Credit Extensions for any Credit Extensions of $1,000,000
or more, or (iii) material amendments or modifications to Credit
Extensions with principal balances or commitments of $1,500,000 or
more.
78
(c) Through the
Effective Time, without the consent in writing of OLB (such consent
not to be unreasonably withheld, conditioned or delayed), as
permitted by this Agreement or except as may be required, in
writing, by any Regulatory Authority (in which case BYBK shall
immediately provide OLB with a copy of such written document), BYBK
shall not, and shall not permit any BYBK Subsidiary
to:
(i) Change any
provision of the BYBK Governing Documents;
(ii) Change
the number of authorized or issued shares of its capital stock;
repurchase, redeem or otherwise acquire any shares of its capital
stock; issue or grant any call, commitment, subscription, Right or
agreement of any character relating to its authorized or issued
capital stock or any securities convertible into shares of capital
stock; or declare, set aside or pay any dividends (including any
special dividends) or other distribution in respect of capital
stock;
(iii) Except
as set forth in BYBK
Disclosure Schedule 5.1(c)(iii), grant any severance,
retention or termination pay, other than pursuant to policies or
Contracts of BYBK or any BYBK Subsidiary in effect on the date
hereof for employees who are not executive officers, or enter into
or amend any employment, consulting, severance, compensation,
“change-in-control” or termination Contract with, any
officer, director, employee, independent contractor, agent or other
Person associated with BYBK or any BYBK Subsidiary;
(iv) Except
as set forth in BYBK
Disclosure Schedule 5.1(c)(iv), grant job promotions or
increase the rate of compensation or benefits of, or pay any bonus
to, any director, officer, employee, independent contractor, agent
or other Person associated with BYBK or any BYBK Subsidiary,
except, with respect to a Permitted Employee, (A) to the extent
such promotion or increase is made by BYBK or a BYBK Subsidiary in
the Ordinary Course, or (B) routine periodic pay increases,
selective merit pay increases and pay raises in the Ordinary
Course, provided, however, that such aggregate increases in the
rate of compensation and benefits shall not be in excess of 3%, and
such aggregate bonuses shall not be in excess of 5%, of the
aggregate salaries for all Permitted Employees;
(v) Except in the
Ordinary Course, sell, lease, assign, transfer, mortgage, encumber
or otherwise dispose of or discontinue any of its assets (excluding
loans, which are governed by Section 5.1(c)(xxii), and securities,
which are governed by Section 5.1(c)(xvii)), deposits, business or
properties or cancel or compromise any debt or claim, or waive or
release any right or claim, except in the Ordinary Course for full
and fair consideration actually received; or modify in any material
manner the manner in which it has heretofore conducted its business
or enter into any new line of business;
79
(vi) Except
for FHLB advances with a maturity of six months or less and
deposits taken in the Ordinary Course, incur any indebtedness for
borrowed money; or incur, assume or become subject to, whether
directly or by way of any guarantee or otherwise, any obligations
or liabilities (absolute, accrued, contingent or otherwise) of any
other Person, other than the issuance of letters of credit in the
Ordinary Course and in accordance with the restrictions set forth
in Sections 5.1(c)(xv) and (xvi);
(vii) Sell
or otherwise dispose of any BYBK Real Property except REO in a
reasonably acceptable commercial manner in the Ordinary
Course;
(viii) Take
any action that would result in any of the conditions set forth in
Article VI hereof not being satisfied;
(ix) Change
any method, practice, or principle of accounting or tax compliance,
except as may be required from time to time by Law or changes in
GAAP or by any Regulatory Authority;
(x) Waive, release,
grant or transfer any rights of material value or modify or change
in any material respect any existing material Contract to which it
is a party;
(xi) Implement
any pension, retirement, profit-sharing, bonus, welfare or similar
plan or arrangement that was not in effect on the date of this
Agreement, or amend any existing pension, retirement,
profit-sharing, bonus, welfare or similar plan or arrangement
except to the extent (A) required by Law or (B) required by its
terms as a result of this Agreement or in connection with the
Contemplated Transactions; provided, however, that amendments to a BYBK Benefit
Plan to modify any of the investment options available thereunder
shall not constitute a breach of this Section
5.1(c)(xi);
(xii) Implement
or adopt any material change in its: (A) guidelines and policies in
existence on the date hereof with regard to underwriting and making
extensions of credit, the establishment of reserves with respect to
possible losses thereon or the charge-off of losses incurred
thereon; (B) investment policies and practices; or (C) other
material banking policies, or otherwise fail to conduct its banking
activities in the Ordinary Course except as may be required by
changes in Law or GAAP or at the direction of a Regulatory
Authority;
(xiii) Change
deposit or loan rates other than in the Ordinary Course, or
otherwise fail to conduct its lending and deposit activities in the
Ordinary Course;
(xiv) Enter
into, modify, amend or renew any Contract under which it is
obligated to pay more than $100,000 and that is not terminable by
it with 60 days’ notice or less without penalty, payment or
other conditions (other than the condition of notice), or enter
into, renew, extend or modify any other transaction with any of its
Affiliates, other than deposit and loan transactions in the
Ordinary Course and that are in compliance with the requirements of
Law;
80
(xv) Except
as required by Law or at the direction of a Regulatory Authority:
(A) implement or adopt any material change in its interest rate and
other risk management policies, procedures or practices; or (B)
fail to follow its existing policies or practices with respect to
managing its exposure to interest rate and other risk;
(xvi) Take
any action that would give rise to a right of payment to any
individual under any employment Contract except for contractually
required compensation;
(xvii) Purchase
or sell any securities other than in the Ordinary Course, other
than pursuant to redemptions by the issuer thereof;
(xviii) Except
for the Lawsuit and/or the lawsuit captioned ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ v. Bay Bank, FSB,
pending in the Circuit Court for Baltimore County, Case No.
03-C-17-007139, settle, waive or release or agree or consent to the
issuance of any Order in connection with any Litigation except in
the Ordinary Course and involving an amount not in excess of
$100,000 (exclusive of any amounts paid directly or reimbursed to
BYBK or any BYBK Subsidiary under any insurance policy maintained
by BYBK or any BYBK Subsidiary), pending or, to the Knowledge of
BYBK, threatened, against or affecting BYBK, any BYBK Subsidiary or
any of their respective properties or assets, provided that such
Litigation does not arise out of or relate to the Contemplated
Transactions. Notwithstanding the foregoing, no settlement shall be
made if it involves a precedent for other similar claims that, in
the aggregate, could reasonably be determined to be material to
BYBK and the BYBK Subsidiaries, taken as a whole;
(xix) Foreclose
upon or otherwise take title to or possession or control of any
real property without first obtaining a Phase I environmental
report thereon; provided, however, that neither BYBK nor any BYBK
Subsidiary shall be required to obtain such a report: (A) where,
after using commercially reasonable efforts, it is unable to gain
access to the property, provided that BYBK has provided notice to
OLB that it has been unable to gain such access and as a result
intends to foreclose without obtaining a Phase I environmental
report thereon; or (B) with respect to any one- to four-family,
non-agricultural residential property of five acres or less to be
foreclosed upon unless it has reason to believe that such property
contains hazardous substances known or reasonably suspected to be
in violation of, or require remediation under, Environmental
Laws;
(xx) Except
as permitted by Section 5.7(a)(ii), merge or consolidate with any
other Entity; sell or lease all or any substantial portion of its
assets or business; make any acquisition of all or any substantial
portion of the business or assets of any other Person other than in
connection with the collection of any loan or credit arrangement;
enter into a purchase and assumption transaction with respect to
deposits and liabilities; or permit the revocation or surrender of
its certificate of authority to maintain, file an application for
the opening, closing or relocation of, or open, close or relocate,
any branch or automated banking facility;
81
(xxi) Make,
or commit to make, any new capital expenditure, individually or in
the aggregate, of $100,000 or more;
(xxii) Sell
or acquire any loans (excluding originations) or loan
participations, except in the Ordinary Course (but in the case of a
sale, after giving OLB or Old Line a first right of refusal to
acquire such loan or participation), or sell or acquire any
servicing rights except in the Ordinary Course;
(xxiii) Take
any action or knowingly fail to take any action, which action or
failure to act would preclude the Merger from qualifying as a
tax-free reorganization within the meaning of Section 368(a)
of the IRC;
(xxiv) Make
any charitable or similar contributions, except consistent with
past practice and in amounts not to exceed $10,000 individually and
$50,000 in the aggregate;
(xxv) Except
for any Non-Residential Credit Extension already committed to by
BYBK or a BYBK Subsidiary on the date of this Agreement and set
forth on BYBK Schedule
5.1(c)(xxv), enter into, grant, approve, modify or extend
any Non-Residential Credit Extension except in the Ordinary
Course;
(xxvi) Except
for any loan, credit facility, line of credit or letter of credit
for an owner-occupied residence (each, a “Residential Credit
Extension”) already committed to by BYBK or a BYBK
Subsidiary and set forth on BYBK Disclosure Schedule
5.1(c)(xxvi), enter into, grant, approve, modify or extend
any Residential Credit Extension except in the Ordinary
Course;
(xxvii) Issue
any communication to any BYBK employee related to post-Closing
employment benefits or compensation without the prior consent of
OLB (which shall not be unreasonably withheld, conditioned or
delayed);
(xxviii) Enter
into any interest rate swap, floor or cap or similar Contract,
except in the Ordinary Course; or
(xxix) Agree
to do any of the foregoing.
Provided, however,
that nothing contained in this Section 5.1(c) shall apply to, or
prohibit or otherwise restrict in any manner, the resolution by
BYBK or Bay Bank, in their sole but reasonable discretion, of any
loan disclosed in BYBK
Disclosure Schedule 2.6(c).
Section
5.2
Conduct of
OLB’s Business.
Through
the Effective Time, except as otherwise consented to in writing by
BYBK or as permitted by this Agreement, and except as may be
required by Law or, in writing, by any Regulatory Authority (in
which case OLB shall immediately provide BYBK with a copy of such
written document), OLB shall not, and shall not permit any OLB
Subsidiary to:
(a) Take any action
that would result in any of the conditions set forth in Article VI
hereof not being satisfied;
82
(b) Take any action or
knowingly fail to take any action, which action or failure to act
would preclude the Merger from qualifying as a tax-free
reorganization within the meaning of Section 368(a) of the
IRC; or
(c) Agree to do either
of the foregoing.
Section
5.3
Access;
Confidentiality.
(a) Through the
Effective Time, each Party shall afford to the other, including its
authorized Representatives, reasonable access to its and its
Subsidiaries’ businesses, properties, assets, Books and
Records, and personnel, at reasonable hours and after reasonable
notice; and the officers of each Party shall furnish the other
Party making such investigation, including its authorized
Representatives, with such financial and operating data and other
information with respect to such businesses, properties, assets,
Books and Records, and personnel as the Party making such
investigation, or its authorized Representatives, shall from time
to time reasonably request. Each Party agrees that it, and its
authorized Representatives, will conduct such investigation and
discussions hereunder in a confidential manner and otherwise in a
manner so as not to interfere unreasonably with the other
Party’s normal operations and customer and employee
relationships. Notwithstanding the foregoing, neither Party shall
be required to provide access to or to disclose information where
such access or disclosure would violate the rights of its
customers, jeopardize the attorney-client privilege of the Party in
possession or control of such information or contravene any Law or
binding Contract entered into prior to the date of this Agreement.
The Parties will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the
previous sentence apply. No investigation by a Party shall affect
the ability of such Party to rely on the representations,
warranties, covenants and Contracts of the other
Party.
(b) BYBK and OLB each
agree that it will not, and will cause their Representatives not
to, use any information obtained pursuant to this Section 5.3
(as well as any other information obtained prior to the date hereof
in connection with entering into this Agreement) for any purpose
unrelated to the consummation of the Contemplated Transactions.
BYBK and OLB shall hold all information obtained pursuant to this
Section 5.3 (as well as any other information obtained prior
to the date hereof in connection with entering into this Agreement)
in confidence to the extent required by, and in accordance with,
the provisions of the Confidentiality Agreement, which is
incorporated herein by reference. The Parties agree that such
Confidentiality Agreement shall continue in accordance with its
terms, notwithstanding the termination of this
Agreement.
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Section
5.4
Regulatory
Matters.
Through
the Effective Time:
(a) OLB and BYBK shall
cooperate with one another in the preparation of the Registration
Statement (including the Prospectus/Proxy Statement) and all
Applications, which shall be prepared by OLB and OLB’s
counsel, to the extent such Applications are required to be filed
by an OLB Company, and by BYBK and BYBK’s counsel, to the
extent such Applications are required to be filed by a BYBK
Company, and the making of all filings for, and shall use their
reasonable best efforts to obtain, as promptly as practicable, all
necessary permits, consents, approvals, waivers and authorizations
of all Regulatory Authorities necessary or advisable to consummate
the Contemplated Transactions and to comply with the terms and
conditions of all such permits, consents, approvals, waivers and
authorizations; provided, however, that in no event shall OLB or
BYBK be required to agree to any prohibition, limitation or other
requirement that would (i) prohibit or materially limit the
ownership or operation by OLB or any OLB Subsidiary of all or any
material portion of the business or assets of BYBK or any BYBK
Subsidiary, (ii) compel OLB or BYBK to dispose of all or any
material portion of either Party’s business or assets, (iii)
impose a material compliance burden, penalty or obligation on OLB
or BYBK, or (iv) otherwise materially impair the value of BYBK to
OLB (any such requirement alone, or more than one such requirement
together, a “Burdensome
Condition”).
(b) BYBK and OLB shall
each promptly furnish the other with copies of written
communications to, or received by them from, any Regulatory
Authority with respect to the Contemplated Transactions to the
extent permitted by Law.
(c) BYBK and OLB shall
cooperate with each other in the foregoing matters and shall
furnish the other with all information concerning itself as may be
necessary or advisable in connection with any Application or
filing, including any report filed with the SEC, made by or on
behalf of such Party to or with any Regulatory Authority in
connection with the Contemplated Transactions, and in each such
case, the information shall be accurate and complete in all
material respects. In connection therewith, BYBK and OLB shall use
their reasonable good faith efforts to provide each other
certificates, “comfort” letters and other documents
reasonably requested by the other to the extent such disclosure is
permitted by Law. Each Party shall have the right to review and
approve in advance (such approval not to be unreasonably withheld,
conditioned or delayed) all characterizations of the information
relating to it and any of its Subsidiaries that appear in any
filing made in connection with the Contemplated Transactions with
any Regulatory Authority. In addition, OLB and BYBK shall each give
the other reasonable time to review the Registration Statement and
any Application to be filed by it prior to the time such
Application is filed with the relevant Regulatory Authority, and
each shall consult the other with respect to the substance and
status of such filings.
Section
5.5
Taking of Necessary
Actions.
Through
the Effective Time, in addition to the specific agreements
contained herein, each Party shall use their reasonable best
efforts to take, or cause to be taken by each of its Subsidiaries,
all actions, and to do, or cause to be done by each of its
Subsidiaries, all things necessary, proper or advisable under
applicable Law to consummate and make effective the Contemplated
Transactions as soon as practicable after the date hereof
including, if necessary, appealing any adverse ruling with respect
to any Application.
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Section
5.6
Duty to Advise;
Duty to Update of Disclosure Schedules.
Through
the closing date, each of BYBK and OLB shall promptly advise the
other of any change or event having or reasonably likely to have a
Material Adverse Effect or that it believes would or would be
reasonably likely to cause or constitute a material breach of any
of its representations, warranties or covenants set forth herein.
Through the Closing Date, BYBK shall update the BYBK Disclosure
Schedules, and OLB shall update the OLB Disclosure Schedules, as
promptly as practicable after the occurrence of any event that, if
such event had occurred prior to the date hereof, would have been
disclosed on such schedule. In addition, BYBK shall update and
deliver to OLB the BYBK
Disclosure Schedule 3.20(a) and the BYBK Disclosure Schedule 3.21,
and OLB shall update and deliver to BYBK the OLB Disclosure Schedule 4.20,
promptly after the end of each calendar month during the
Pre-Closing Period and on the Business Day immediately preceding
the Closing Date. The delivery of such updated Disclosure Schedules
shall not relieve either Party from liability for any breach or
violation of this Agreement and shall not have any effect for the
purposes of determining the satisfaction of the condition set forth
in Sections 6.1(b) or 6.2(b).
Section
5.7
Other Undertakings
by OLB and BYBK.
(a) Undertakings of
BYBK.
(i) Stockholder Approval. As
promptly as practicable after the Registration Statement becomes
effective under the Securities Act, in accordance with applicable
Law and this Agreement, BYBK shall submit the Merger to its
stockholders for approval at the BYBK Common Stockholders’
Meeting with the recommendation that its stockholders approve the
Merger.
(ii) Acquisition
Proposals. So long as this Agreement remains in effect,
except as otherwise expressly permitted by this Agreement, BYBK
shall not, and it shall not authorize, permit or cause any BYBK
Subsidiary or their respective Representatives to, directly or
indirectly: (A) initiate, solicit, induce or encourage (including
by way of furnishing information or providing assistance), or take
any action to facilitate the making of, any inquiry, offer or
proposal that constitutes, relates or could reasonably be expected
to lead to an Acquisition Proposal; (B) respond to any inquiry
relating to an Acquisition Proposal; (C) recommend or endorse an
Acquisition Proposal; (D) participate in any discussions or
negotiations regarding any Acquisition Proposal or furnish, or
otherwise afford access, to any Person (other than OLB) any
information or data with respect to BYBK or any BYBK Subsidiary or
otherwise relating to an Acquisition Proposal; (E) release any
Person from, waive any provisions of, or fail to enforce any
confidentiality agreement or standstill agreement to which BYBK or
any BYBK Subsidiary is a party; or (F) enter into any agreement,
agreement in principle, letter of intent or similar instrument,
including any exclusivity agreement, with respect to any
Acquisition Proposal or approve or resolve to approve any
Acquisition Proposal or any agreement, agreement in principle,
letter of intent or similar instrument relating to an Acquisition
Proposal. Any violation of the foregoing restrictions by BYBK or
any of its Representatives, whether or not such Representative is
so authorized and whether or not such Representative is purporting
to act on behalf of BYBK or otherwise, shall be deemed to be a
breach of this Agreement by BYBK. BYBK and each BYBK Subsidiary
shall, and shall cause each of its Representatives to, immediately
cease and cause to be terminated any and all existing activities,
discussions, negotiations and communications with any Person with
respect to any existing or potential Acquisition
Proposal.
85
Notwithstanding the
foregoing, prior to the approval of the Merger by BYBK’s
stockholders at the BYBK Common Stockholders’ Meeting, BYBK
may respond to an inquiry, furnish nonpublic information regarding
itself and the BYBK Subsidiaries to, or enter into discussions
with, any Person in response to an unsolicited Acquisition Proposal
that is submitted to BYBK by such Person (and not withdrawn) if:
(A) BYBK’s board of directors determines in good faith, after
consultation with and having considered the advice of its outside
legal counsel and the advice of the BYBK Advisers, that such
Acquisition Proposal constitutes or is reasonably likely to lead to
a Superior Proposal (as defined below); (B) BYBK has not violated
any of the restrictions set forth in this Section 5.7(a)(ii); (C)
BYBK’s board of directors determines in good faith, after
consultation with and based upon the advice of its outside legal
counsel and the advice of the BYBK Advisers, that such action is
required in order for the board of directors to comply with its
fiduciary obligations under applicable Law; and (D) at least two
Business Days prior to furnishing any nonpublic information to, or
entering into discussions with, such Person, BYBK provides OLB with
written notice of the identity of such Person and of BYBK’s
intention to furnish nonpublic information to, or enter into
discussions with, such Person and BYBK receives from such Person an
executed confidentiality agreement on terms no more favorable to
such Person than the Confidentiality Agreement, which
confidentiality agreement shall not provide such Person with any
exclusive right to negotiate with BYBK. BYBK shall promptly provide
to OLB any non-public information regarding BYBK or any BYBK
Subsidiary provided to any other Person that was not previously
provided to OLB, such additional information to be provided no
later than the date of provision of such information to such other
Person.
BYBK
shall promptly (and in any event within 24 hours) notify OLB in
writing if any proposals or offers are received by, any information
is requested from, or any negotiations or discussions are sought to
be initiated or continued with, BYBK, any BYBK Subsidiary or any of
their Representatives, in each case in connection with any
Acquisition Proposal, and such notice shall indicate the name of
the Person initiating such discussions or negotiations or making
such proposal, offer or information request and the material terms
and conditions of any proposals or offers (and, in the case of
written materials relating to such proposal, offer, information
request, negotiations or discussion, providing copies of such
materials (including e-mails or other electronic communications)).
BYBK agrees that it shall keep OLB informed, on a current basis, of
the status and terms of any such proposal, offer, information
request, negotiations or discussions (including any amendments or
modifications to such proposal, offer or request). BYBK further
agrees that it will provide OLB with the opportunity to present its
own proposal to the BYBK board of directors in response to any such
proposal or offer and negotiate with OLB in good faith with respect
to any such proposal.
For
purposes of this Agreement, “Superior Proposal” means
any unsolicited, bona fide written proposal (or its most recently
amended or modified terms, if amended or modified) made by a third
party to consummate an Acquisition Proposal on terms that the BYBK
board of directors determines in its good faith judgment, after
consultation with and having considered the advice of BYBK’s
outside legal counsel and the BYBK Advisers: (A) would, if
consummated, result in consideration that is more favorable to the
stockholders of BYBK than the Contemplated Transactions (taking
into account all legal, financial, regulatory and other aspects of
the Acquisition Proposal and the Person making the proposal); (B)
is not conditioned on obtaining financing (and with respect to
which BYBK has reasonably assured itself of such Person’s
ability to fully finance its Acquisition Proposal); (C) would, if
consummated, result in the acquisition of all, but not less than
all, of the issued and outstanding shares of BYBK Common Stock or
all or substantially all of the assets and liabilities of the BYBK
Companies on a consolidated basis; and (D) is reasonably likely to
be completed on the terms proposed, in each case taking into
account all legal, financial, regulatory and other aspects of the
proposal.
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Neither
the BYBK board of directors nor any committee thereof shall: (A)
withdraw, qualify or modify, or propose to withdraw, qualify or
modify, in a manner adverse to OLB in connection with the
Contemplated Transactions (including the Merger), its
recommendation to the stockholders of BYBK to approve the Merger,
or make any statement, filing or release, in connection with the
BYBK Common Stockholders’ Meeting or otherwise, inconsistent
with the recommendation to the stockholders of BYBK to approve the
Merger (it being understood that taking a neutral position or no
position with respect to an Acquisition Proposal shall be
considered an adverse modification of such recommendation); (B)
approve or recommend, or publicly propose to approve or recommend,
any Acquisition Proposal; or (C) enter into (or cause BYBK or any
BYBK Subsidiary to enter into) any letter of intent, agreement in
principle, acquisition agreement or other agreement (1) related to
any Acquisition Proposal or (2) requiring BYBK to abandon,
terminate or fail to consummate any of the Contemplated
Transactions.
Notwithstanding the
foregoing, prior to the date of the BYBK Common Stockholders’
Meeting, BYBK’s board of directors may approve or recommend
to the stockholders of BYBK a Superior Proposal and withdraw,
qualify or modify its recommendation in connection with the
Agreement and the Merger or take any of the other actions otherwise
prohibited by this Section 5.7(a)(ii) after the third Business Day
following the receipt by OLB of a notice (the “Notice of Superior
Proposal”) from BYBK advising OLB that the BYBK board
of directors has decided that a bona fide unsolicited written
Acquisition Proposal that it received (that did not result from a
breach of this Section 5.7(a)(ii)) constitutes a Superior Proposal
(it being understood that BYBK shall be required to deliver a new
Notice of Superior Proposal in respect of any materially revised
Superior Proposal from such third party or its affiliates that BYBK
proposes to accept and the subsequent notice period shall be three
Business Days) if, but only if, (A) the BYBK board of directors has
reasonably determined in good faith, after consultation with and
having considered the advice of outside legal counsel and the
advice of the BYBK Advisers, that the failure to take such actions
would be inconsistent with its fiduciary duties under applicable
Law and (B) at the end of such three Business Day period, after
taking into account any adjusted, modified or amended terms as may
have been committed to in writing by OLB since OLB’s receipt
of such Notice of Superior Proposal (provided, however, that OLB
shall not have any obligation to propose any adjustments,
modifications or amendments to the terms and conditions of this
Agreement), the BYBK board of directors has again in good faith
made the determination (1) in clause (A) of this paragraph, and (2)
that such Acquisition Proposal constitutes a Superior
Proposal.
(iii) Environmental
Assessments.
(A) OLB shall have the
express right, but not the obligation, to conduct, at its sole cost
and expense, Environmental Assessments of the BYBK Companies’
assets, operations and secured interests, including, but not
limited to, the BYBK Real Properties. For any BYBK Real Property
that is not owned by a BYBK Company, access to such BYBK Real
Property by OLB shall be conditioned on approval by the property
owner.
87
(B) If OLB, in its sole
discretion, is unable to reasonably determine that the recognized
environmental conditions identified in the Environmental
Assessments will not result in a Material Adverse Effect, OLB shall
have the express right, but not the obligation, to further assess,
at its sole cost and expense, the recognized environmental
conditions as OLB deems appropriate subject to the following
provisions of this Section 5.7(a)(iii)(B). For any BYBK Real
Property that is owned by a BYBK Company, such further assessment
shall be subject to prior notice to BYBK. For any BYBK Real
Property that is not owned by a BYBK Company, such further
assessment by OLB shall be conditioned on approval by the property
owner.
(C) OLB agrees to
notify BYBK a reasonable time in advance of any Environmental
Assessments scheduled pursuant to this Section 5.7(a)(iii).
Upon receipt of such notice, BYBK agrees to permit OLB and its
Representatives to (1) conduct such Environmental Assessments, (2)
have access to the properties, facilities, environmental documents
and personnel of the BYBK Companies, and (3) conduct such
consultations with the Persons conducting such examinations, as OLB
shall deem necessary; provided, however, that OLB agrees that the
exercise of its rights under this Section 5.7(a)(iii) shall not
unreasonably disturb or interfere with the business activities or
operations of the BYBK Companies. Upon request by BYBK, OLB shall
provide copies of reports prepared by OLB or its Representatives
for the assessments conducted under this Section
5.7(a)(iii).
(iv) Dissolve
Non-Operational Subsidiaries. Prior to Closing, BYBK shall
cause the liquidation and legal dissolution of any and all
Non-Operational Subsidiaries.
(v) 401(k) Plans. If requested by
OLB in a writing delivered to BYBK following the date hereof and
prior to the Closing Date, the BYBK Companies shall take all
necessary action (including without limitation the adoption of
resolutions and plan amendments and the delivery of any required
notices) to terminate, effective immediately prior to the Effective
Time, any BYBK Benefit Plan that is intended to constitute a
tax-qualified defined contribution plan under IRC Section 401(k) (a
“401(k)
Plan”). BYBK shall provide OLB with a copy of the
resolutions, plan amendments, notices and other documents prepared
to effectuate the termination of the 401(k) Plans in advance and
give OLB a reasonable opportunity to comment on such documents
(which comments shall be considered in good faith by BYBK), and
prior to the Closing Date, BYBK shall provide OLB with the final
documentation evidencing the termination of the 401(k) Plans. In
the event of termination of the 401(k) Plan, OLB and BYBK shall use
commercially reasonable efforts to afford participants in the
401(k) Plan who are Retained Employees with outstanding participant
loans under such plan to elect a rollover of the loan balance from
the 401(k) Plan to a 401(k) plan of OLB in connection with an
election by such participant to rollover his or her entire account
in the 401(k) Plan to a 401(k) plan of OLB, subject to the terms
and conditions of the OLB’s 401(k) plan and the requirements
of the OLB’s 401(k) plan record-keeper; provided, that each
such loan satisfies all material legal requirements, is not a
nonexempt “prohibited transaction” under Section 406 of
ERISA or Section 4975 of the IRC and is not in default as of the
date of the rollover. No action taken by BYBK or any of the Bay
Companies pursuant to this Section 5.1(a)(v) at the request of OLB,
and no financial or other effect as a result thereof, whether taken
individually or in the aggregate, shall be deemed to have or
constitute a Material Adverse Effect for any purpose contemplated
by this Agreement.
88
(vi) Other
BYBK Benefit Plans. To the extent requested by OLB prior to
the Closing Date, the BYBK Companies shall cooperate in good faith
with OLB to amend, freeze, terminate or modify any BYBK Benefit
Plan not covered by subsection (v) of this Section 5.7(a) in
accordance with the terms of such plan or agreement and applicable
Law, to be effective as of the Effective Time (or at such time
mutually agreed to by the Parties), except that the winding up of
any such plan or agreement may be completed following the Closing
Date; provided, however, that none of the Bay Companies shall be
required to take any action to terminate the Carrollton Bank
Retirement Income Plan. BYBK shall provide OLB with a copy of the
resolutions, plan amendments, notices and other documents prepared
to effectuate the actions contemplated by this Section 5.7(a)(vi),
as applicable, and give OLB a reasonable opportunity to comment on
such documents (which comments shall be considered in good faith by
BYBK), and prior to the Closing Date, BYBK shall provide OLB with
the final documentation evidencing that the actions contemplated
herein have been effectuated. No action taken by BYBK or any of the
Bay Companies pursuant to this Section 5.1(a)(vi) at the request of
OLB, and no financial or other effect as a result thereof, whether
taken individually or in the aggregate, shall be deemed to have or
constitute a Material Adverse Effect for any purpose contemplated
by this Agreement.
(b) Undertakings of OLB and
BYBK.
(i) Public
Announcements. OLB and BYBK shall consult upon the form and
substance of any press release or public statement related to this
Agreement and the Contemplated Transactions and shall not issue any
press release or make any public statement without the prior
consent of the other Party, which shall not be unreasonably delayed
or withheld, but nothing contained herein shall prohibit either
Party, following notification to the other Party, from making any
disclosure that its counsel deems necessary under applicable Law or
the rules and regulations of any securities exchange.
(ii) Maintenance
of Insurance. OLB and each OLB Subsidiary, and BYBK and each
BYBK Subsidiary, shall maintain Insurance Policies in such amounts
as OLB and BYBK, respectively, believe are reasonable to cover such
risks as are customary in relation to the character and location of
its and their respective Subsidiaries’ properties and the
nature of its and their respective Subsidiaries’
businesses.
(iii) Maintenance
of Books and Records. OLB and each OLB Subsidiary, and BYBK
and each BYBK Subsidiary, shall maintain Books and Records in
accordance with GAAP and on a basis consistent with past
practice.
(iv) Taxes.
OLB and each OLB Subsidiary shall file all OLB Returns, and BYBK
and each BYBK Subsidiary shall file all BYBK Returns, required to
be filed by them, respectively, on or before the date such returns
are due, including any extensions, and pay all taxes shown to be
due on such returns on or before the dates such payments are due,
except those being contested in good faith.
(v) In-House
Operations. OLB and BYBK shall cooperate with each other in
the interest of an orderly, cost-effective consolidation of
operations.
89
(vi) Delivery
of Financial Statements. OLB and BYBK shall each deliver or
make available to the other, promptly upon their completion, but in
each case by each respective delivery date, financial statements
that (A) are true, accurate and complete in all material respects,
and that have been prepared from, and are in accordance with, the
Books and Records of the applicable Party and its Subsidiaries, (B)
fairly present, in all material respects, the consolidated
financial condition, results of operations, changes in
stockholders’ equity and cash flows of such Party as of and
for the periods ended on the dates thereof, and (C) comply in all
material respects with applicable accounting and regulatory
requirements and, other than the Internal BYBK Financials, are
prepared in accordance with GAAP consistently applied, except for
(1) omission of the notes from the financial statements, applicable
to any interim period, and (2) with respect to any interim period,
normal year-end adjustments and notes thereto.
(vii) Delivery
of Regulatory Filings and Documents. Except where prohibited
by Law, OLB and BYBK shall each deliver to the other copies of all
reports filed with Regulatory Authorities promptly upon the filing
thereof.
(c)
Undertakings of
OLB.
(i) Stockholder Approval. As
promptly as practicable after the Registration Statement becomes
effective under the Securities Act, in accordance with the Exchange
Act, applicable Law and this Agreement, OLB shall submit the Merger
to its stockholders for approval at the OLB Common
Stockholders’ Meeting with the recommendation that its
stockholders approve the Merger.
(ii) BYBK
Director Nominees. Subject to the articles of incorporation
and bylaws of OLB and Old Line, the MGCL, any approvals and/or
requirements of any Regulatory Authority relating to OLB and the
continuing fiduciary duties of the OLB board of directors, the OLB
board of directors shall take such actions as may be necessary to
(A) elect, as soon as is practicable following the Effective Time,
(1) ▇▇▇▇ ▇. ▇▇▇▇▇, (2) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and (3) one other
individual currently serving on BYBK’s board of directors as
the Parties mutually agree to at a later date (the
“BYBK
Nominees”) or, if applicable, a Replacement Nominee
listed on BYBK Disclosure
Schedule 5.7(c)(ii), to serve on the OLB board of directors
until the next annual meeting of OLB stockholders that occurs after
the Effective Time, (B) cause the BYBK Nominees to be elected, as
soon as is practicable following the Effective Time, to serve on
the Old Line board of directors until the next annual meeting of
Old Line’s stockholders that occurs after the Effective Time,
(C) nominate each of the BYBK Nominees (or, in each case, his
Replacement Nominee) for re-election to the OLB board of directors
at the annual meeting of OLB’s stockholders that follows the
Effective Time, with (1) the individual to be selected by the
Parties at a later date (or his Replacement Nominee, if applicable)
to serve for a term of at least one year, (2) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (or
his Replacement Nominee, if applicable) to serve for a term of at
least two years and (3) ▇▇▇▇ ▇. ▇▇▇▇▇ (or his Replacement Nominee,
if applicable) to serve for a term of at least three years, and (D)
cause the BYBK Nominees to be elected to serve on the Old Line
board of directors at the annual meeting of Old Line’s
stockholders that follows the Effective Time, to serve for a term
consistent with those set forth in subsection (C) hereof; provided,
however, that if any of the BYBK Nominees shall be subject to a
Disqualification Event or declines, prior to the Effective Time, to
serve on the OLB board of directors, OLB shall take such actions as
may be necessary to fill the vacancy created with one of the
individual(s) set forth on BYBK Disclosure Schedule
5.7(c)(ii) (each a “Replacement Nominee”),
with the selection being at OLB’s discretion except as
expressly provided otherwise in BYBK Disclosure Schedule
5.7(c)(ii).
90
On and
after the Effective Time, (A) the directors of OLB duly elected and
holding office immediately prior to the Effective Time, and (B)
provided the BYBK Nominees agree to serve as a director of OLB, the
BYBK Nominees, shall be the directors of OLB, each to hold office
until his or her successor is elected and qualified or otherwise in
accordance with applicable Law and the articles of incorporation
and bylaws of OLB and Old Line, as applicable; further provided,
that in no event shall OLB’s obligations under this section
apply with respect to any of the BYBK Nominees if such BYBK Nominee
shall be subject to a Disqualification Event.
As used
in this Agreement, the term “Disqualification Event”
means, as to the BYBK Nominees, the occurrence of any of the
following events: (A) such nominee shall be prohibited by Law or
otherwise from serving as a director of OLB; (B) such nominee shall
have been charged with or convicted of any felony or a crime of
moral turpitude; (C) such nominee shall file (or any Entity of
which such nominee shall have been an executive officer or
controlling person within the 90 days prior to filing shall file) a
voluntary petition under any applicable federal or state bankruptcy
or insolvency law, or such nominee shall become (or any Entity
indebted to OLB of which such nominee shall have been an executive
officer or controlling person within the 90 days prior to filing
shall become) the subject of an involuntary petition filed under
any such law that is not dismissed within 90 days; (D) such nominee
shall be involved in any of the events or circumstances enumerated
in Item 401(f)(3)-(6) of Regulation S-K (or any successor or
substitute provision of similar import) promulgated by the SEC, or
similar provisions of state “blue sky” laws; (E) the
death, disability or other personal reasons beyond the control of
such nominee that prevents him from serving, as determined by OLB
in its sole discretion, as a nominee; or (F) such nominee shall
violate any covenant or agreement contained in the Support
Agreement. OLB will (A) take such actions as are necessary to cause
Old Line, subject to the fiduciary duties of the Old Line board of
directors, Old Line’s articles of incorporation and bylaws
and the eligibility requirements of any Regulatory Authority
relating to Old Line, and provided that the BYBK Nominees are not
subject to a Disqualification Event, to nominate the BYBK Nominees
to serve as directors of Old Line during any time, and for the same
term, that the BYBK Nominees serve as directors of OLB, and (B)
will, as the sole stockholder of Old Line, vote to elect the BYBK
Nominee so nominated by Old Line.
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(iii) Employees,
Severance Policy.
(A) Subject to
OLB’s or the applicable OLB Subsidiary’s personnel and
employment qualification policies and the provisions hereof, and
subject to OLB’s right to require, in its sole discretion and
as a condition of employment, such individuals to execute
confidentiality, non-competition and/or non-solicitation
agreements, OLB will endeavor to continue the employment of each
individual who was an employee of BYBK or a BYBK Subsidiary as of
August 4, 2017 and was continuously an employee of BYBK or a BYBK
Subsidiary until immediately prior to the Effective Time (a
“BYBK
Employee”) in a position that will contribute to the
successful performance of the combined organization as OLB deems
appropriate, consistent with its plans and strategies, for the
efficient and effective operation of the OLB Companies after the
Effective Time. All such employees who accept offers of employment
from an OLB Company (the “Retained Employees”) will
be employed on an at-will basis. Notwithstanding anything to the
contrary contained in this Section 5.7(c)(iii), no provision of
this Agreement shall create any obligation of OLB or an OLB
Subsidiary to retain any BYBK Employee or create any third party
benefit except for the Indemnified Parties’ rights under
Section 5.7(c)(v), which are expressly intended to be for the
irrevocable benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and Representatives. If a
BYBK Employee is not retained as contemplated and described in this
Section 5.7(c)(iii)(A), or if OLB elects to eliminate a position or
does not offer a BYBK Employee comparable employment with an OLB
Company (i.e., a position of substantially similar job descriptions
or responsibilities at substantially the same salary level), or a
Retained Employee is terminated by an OLB Company without Cause
within six months of the Effective Date (each such BYBK Employee or
Retained Employee, a “Displaced Employee”),
then OLB will make, or cause Old Line or the applicable OLB
Subsidiary to make, severance payments to the Displaced Employee as
set forth in this Section 5.7(c)(iii).
(B) Subject to the
provisions of Section 5.7(c)(iii)(D), OLB will pay, or will cause
Old Line or the applicable OLB Subsidiary to pay, to any Displaced
Employee:
(1)
With respect to non-exempt Displaced Employees, two weeks of
severance pay plus one additional week of severance pay for each
full year of employment with BYBK or a BYBK Subsidiary, up to a
maximum of 12 weeks of severance pay;
(2)
With respect to Displaced Employees who are exempt officers or
employees of a BYBK Company with less than five full years of
employment with BYBK or a BYBK Subsidiary, six weeks of severance
pay plus one additional week of severance pay for each full year of
employment with BYBK or a BYBK Subsidiary, up to a maximum of ten
weeks of severance pay; and
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(3)
With respect to Displaced Employees who are exempt officers or
employees of a BYBK Company with at least five full years of
employment with BYBK or a BYBK Subsidiary, 12 weeks of severance
pay plus two additional weeks of severance pay for each full year
of employment with BYBK or a BYBK Subsidiary beyond five years of
employment, up to a maximum of 26 weeks of severance
pay.
Severance benefits
as set forth in this Section 5.7(c)(iii)(B) will be calculated
based on the applicable Displaced Employee’s base salary or
other base rate of pay in effect for such Displaced Employee
immediately prior to the Effective Time. Years of employment will
be based on the applicable Displaced Employee’s number of
full years employed with BYBK or a BYBK Subsidiary or any
predecessor thereto.
(C) Any Retained
Employee whose employment with OLB or an OLB Subsidiary is
terminated without Cause after six months from the Effective Date
shall receive such severance benefit from OLB or such OLB
Subsidiary as is provided for in OLB’s or the applicable OLB
Subsidiary’s general severance policy for such terminations
(with full credit being given for each full year of service with
BYBK or any BYBK Subsidiary).
(D) Any BYBK Employee
who has or is party to any employment agreement, severance
agreement, change in control agreement or any other Contract (a
“CIC
Agreement”) that provides for any payment that would
be triggered by the Merger or the Bank Merger (“CIC Payment”) shall not
receive any severance benefits as provided in Sections
5.7(c)(iii)(A) and (B) but will receive the CIC Payment upon the
occurrence of a triggering event under the CIC Agreement. Any BYBK
Employee who waives and relinquishes his or her right to a CIC
Payment will be eligible for a severance payment as provided in
Sections 5.7(c)(iii)(A) and (B).
(E) OLB and any OLB
Subsidiary’s obligation hereunder to make payments as
provided in this Section 5.7(c)(iii) is expressly subject to OLB
obtaining a non-objection or waiver of any regulatory prohibition
or limitation on such payment, and OLB’s obligation hereunder
is limited to such amount as determined by the Regulatory
Authorities. BYBK will obtain written acknowledgement of
OLB’s obligation hereunder from all BYBK employees and
officers who may be eligible for such payments. OLB will use
reasonable efforts to obtain any required regulatory approval or
non-objection and shall file any required notice or application to
obtain such approval or non-objection no later than the later of
(1) the date it files its application for approval of the Bank
Merger or (2) the date it becomes aware of the need to obtain any
such approval or non-objection.
(iv) Employee
Benefits. As of the Effective Time, each Retained Employee
shall be entitled to full credit for each year of service with BYBK
or any BYBK Subsidiary for purposes of determining eligibility for
participation and vesting and benefit accrual in OLB’s or, as
appropriate, in the OLB Subsidiary’s, employee benefit plans,
programs and policies, except as prohibited by Law. OLB shall use
the original date of hire by BYBK or a BYBK Subsidiary in making
these determinations.
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(v) Indemnification.
(A) From and after the
Effective Time, subject to applicable Law, OLB (the
“Indemnifying
Party”) shall indemnify and hold harmless each present
and former director and officer of BYBK or a BYBK Subsidiary, as
applicable, determined as of the Effective Time (the
“Indemnified
Parties”) against any costs or expenses (including
reasonable attorneys’ fees), judgments, fines, losses,
claims, damages or liabilities and amounts paid in settlement
incurred after the Effective Time (“Costs”) in connection
with any claim, action, suit, proceeding or investigation
(“Claim”), whether civil,
criminal, administrative or investigative, arising out of matters
existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, based
in whole or in part, or arising in whole or in part out of, or
pertaining to the fact that he or she was a director or officer of
BYBK or a BYBK Subsidiary or is or was serving at the request of
BYBK or any BYBK Subsidiary as a director, officer, employee,
trustee or other agent of any other organization or in any capacity
with respect to any BYBK Benefit Plan, including, without
limitation, any matters arising in connection with or related to
the negotiation, execution and performance of this Agreement or any
of the Contemplated Transactions, and will advance expenses
(including, for the avoidance of doubt, reasonable attorneys’
fees) to such Indemnified Party in connection therewith, to the
fullest extent to which such Indemnified Party would be entitled to
the right to advancements of expenses or to be indemnified under
the articles of incorporation and bylaws of BYBK in effect on the
date of this Agreement as though the Indemnified Parties were
present or former directors or officers of OLB, or were serving at
the request of OLB or any OLB Subsidiary as a director, officer,
employee, trustee or other agent of any other organization or in
any capacity with respect to any OLB Benefit Plan, as of the
Effective Time. OLB’s
obligations under this Section 5.7(c)(v) shall continue in full
force and effect for a period of six years and one day from the
Effective Date; provided, however, that all rights to
indemnification in respect of any claim asserted or made within
such period shall continue until the final disposition of such
claim.
(B) In the event of any
such Claim (whether arising before or after the Effective Time):
(A) OLB shall have the right to assume the defense thereof and OLB
shall not be liable to any Indemnified Party for any legal expenses
of other counsel or any other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof,
except that if OLB elects not to assume such defense or independent
legal counsel for the Indemnified Party advises that there are
substantive issues that raise conflicts of interest between OLB and
the Indemnified Party, the Indemnified Party may retain counsel
satisfactory to it, and OLB shall pay all reasonable fees and
expenses of such counsel for the Indemnified Party promptly as
statements therefor are received; provided, that OLB shall be
obligated pursuant to Section 5.7(c)(v) and this Section 5.7(c)(vi)
to pay for only one firm of counsel for all Indemnified Parties and
shall not be liable to any Indemnified Party for any legal expenses
of other counsel or any other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof; (B)
the Indemnified Party will cooperate in the defense of any such
Claim; and (C) OLB shall not be liable for any settlement effected
without its prior written consent; and provided, further, that OLB
shall not have any obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall determine, and
such determination shall have become final and not subject to
further appeal, that the indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable Law.
Notwithstanding any provision of this Section 5.7(c)(v) to the
contrary, OLB shall have no obligation to indemnify an Indemnified
Party in respect of a Claim if the Indemnified Party fails to
provide notice of such Claim to OLB promptly after becoming aware
thereof and such failure to provide notice materially prejudices
OLB with respect to such Claim. Any such notice from an Indemnified
Party will be effective if given in accordance with Section 8.6(a)
of this Agreement, provided, however, that such notice must be
provided to OLB at its then-current main office.
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(vi) NASDAQ
Listing. To the extent required, OLB agrees to timely file a “Listing of Additional Shares
Notification Form” with NASDAQ with respect to the shares of OLB Common Stock to
be issued in the Merger, and to use its best efforts to have the
review of such form completed prior to the Effective
Time.
(vii) Directors’
and Officers’ Liability Insurance. Contemporaneously
with the Closing, OLB shall purchase an extended reporting period
to BYBK’s current liability Insurance Policy(ies), for a
period to last from the day after the Effective Date until at least
the date that is six years and one day after the Effective Date,
for purposes of covering actions occurring prior to the Effective
Time (the “Tail
Policy”). Provided that the aggregate cost of the Tail
Policy will not exceed 150% of the current annual premium
attributable to the applicable officers’ and directors’
liability coverage in BYBK’s and/or Bay Bank’s
liability Insurance Policy(ies) in effect as of the date of this
Agreement (the “Maximum Premium”), the
Tail Policy shall provide the same or better coverage for the
individuals who are presently covered by BYBK’s or Bay
Bank’s officers’ and directors’ liability
Insurance Policy(ies) and any other Insurance Policy(ies) providing
insurance coverage for BYBK’s or Bay Bank’s executive
officers and directors (each such individual, an
“Insured
Person”), with respect to actions, omissions, events,
matters or circumstances occurring through the Effective Time. If
OLB is unable to purchase the Tail Policy having the coverage and
aggregate limits contemplated by the foregoing sentence at a cost
that does not exceed Maximum Premium, then the Tail Policy
purchased by OLB shall provide such coverage as may be reasonably
purchased for a cost that does not exceed the Maximum Premium. In
either event, OLB may not cancel, modify or take any action to
limit or terminate the Tail Policy purchased pursuant to this
Section 5.7(c)(viii) unless it replaces such Tail Policy with
coverage provided by insurers having the same or better rating,
coverage and aggregate limits as such Tail Policy; provided,
however, that OLB may, at
its option, replace at any time such policy with another Insurance
Policy having the same or better coverage rate.
Section
5.8
Accuracy of the
Registration Statement.
The
Prospectus/Proxy Statement and the Registration Statement shall
comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act. BYBK and OLB
shall promptly notify the other Party if at any time it becomes
aware that the Prospectus/Proxy Statement or the Registration
Statement contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. In such
event, BYBK shall cooperate with OLB in the preparation of a
supplement or amendment to such Prospectus/Proxy Statement or
Registration Statement that corrects such misstatement or omission,
and OLB shall file an amended Registration Statement or supplement
to the Registration Statement with the SEC, and BYBK and OLB shall
mail a Prospectus/Proxy Statement and any required amendment or
supplement to holders of BYBK Common Stock and the OLB Common
Stock, respectively. OLB will provide BYBK and its counsel with a
reasonable opportunity to review and comment on the Registration
Statement and the Prospectus/Proxy Statement and all responses to
requests for additional information by and replies to comments of
the SEC prior to filing such with, or sending such to, the SEC, and
will provide BYBK and its counsel with a copy of all such filings
made with the SEC.
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ARTICLE VI.
CONDITIONS
Section
6.1
Conditions to
BYBK’s Obligations under this Agreement.
The
obligations of BYBK hereunder shall be subject to satisfaction at
or prior to the Closing Date of each of the following conditions,
unless waived by BYBK pursuant to Section 8.3
hereof:
(a) Corporate Proceedings. All
action required to be taken by, or on the part of, OLB and Old Line
to authorize the execution, delivery and performance of this
Agreement, and the consummation of the Contemplated Transactions,
shall have been duly and validly taken by OLB and Old Line,
respectively, and BYBK shall have received certified copies of the
resolutions evidencing such authorizations.
(b) Covenants; Representations. The
obligations of OLB and Old Line required by this Agreement to be
performed by OLB and Old Line at or prior to the Closing Date shall
have been duly performed and complied with in all material
respects; and the representations and warranties of OLB set forth
in this Agreement shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of
the Closing Date, except as to any representation or warranty that
specifically relates to an earlier date, in each case in accordance
with the Article IV Standard.
(c) Consents. (i) BYBK and Bay Bank
shall have received all consents and approvals described in
BYBK Disclosure Schedule
3.4 and all filings and registrations by BYBK and Bay Bank
described in BYBK
Disclosure Schedule 3.4 shall have been accepted or declared
effective, except where the failure to obtain any such consent or
approval, or for any such filing or registration to be accepted or
declared effective, would not reasonably be expected to have a
Material Adverse Effect on OLB or Old Line subsequent to the
Effective Time; (ii) OLB and Old Line shall have received all
consents and approvals described in OLB Disclosure Schedule 4.4 and
all filings and registrations by OLB and Old Line described in
OLB Disclosure Schedule
4.4 shall have been accepted or declared effective, except
where the failure to obtain any such consent or approval, or for
any such filing or registration to be accepted or declared
effective, would not reasonably be expected to have a Material
Adverse Effect on OLB or Old Line subsequent to the Effective Time;
(iii) any statutory waiting period or periods relating to the
consents, approvals, filings and registrations identified in the
foregoing items (i) or (ii) shall have expired; and (iv) no consent
or approval identified in the foregoing items (i) or (ii) shall
have imposed any condition or requirement that, in the reasonable
opinion of the board of directors of BYBK, would constitute a
Burdensome Condition or otherwise so materially and adversely
impact the economic or business benefits to BYBK of the
Contemplated Transactions as to render consummation of the Merger
inadvisable.
(d) No Injunction or Restraints. No
court or Regulatory Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Order
(whether temporary, preliminary or permanent) or taken any other
action that enjoins, prohibits, restricts or makes illegal
consummation of the Contemplated Transactions (including the
Merger) that remains in effect.
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(e) Officer’s Certificate.
OLB shall have delivered to BYBK a certificate, dated the Closing
Date and signed, without personal liability, by its President and
Chief Executive Officer, to the effect that, to the best of his
knowledge, information and belief, the conditions set forth in
subsections (a), (b), (c)(ii) and (c)(iii) (but only with respect
to waiting periods applicable to OLB), (d), (f), (i), (l) and (m)
of this Section 6.1 have been satisfied.
(f) Registration Statement. The
Registration Statement shall be effective under the Securities Act,
and no proceedings shall be pending or threatened by the SEC to
suspend the effectiveness of the Registration Statement; and all
approvals deemed necessary by OLB’s counsel from state
securities or “blue sky” authorities with respect to
the Contemplated Transactions shall have been
obtained.
(g) Tax Opinion. BYBK shall have
received an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLC, counsel to BYBK, dated
the Closing Date, to the effect that on the basis of the facts,
representations and assumptions set forth in such opinion (i) the
Merger constitutes a tax-free reorganization under
Section 368(a) of the IRC, and (ii) any gain realized in the
Merger will be recognized only to the extent of cash or other
property (other than OLB Common Stock) received in the Merger,
including cash received in lieu of fractional share interests; in
rendering their opinion, such counsel may require and rely upon
representations and reasonable assumptions, including those
contained in certificates of officers of BYBK, OLB and
others.
(h) Approval by BYBK’s
Stockholders. The Merger shall have been approved by the
stockholders of BYBK by such vote as is required by the MGCL and
the articles of incorporation and bylaws of BYBK.
(i) Approval by OLB’s
Stockholders. The Merger shall have been approved by the
stockholders of OLB by such vote as is required by the MGCL and the
articles of incorporation and bylaws of OLB.
(j) Other Documents. BYBK shall
have received such other certificates, documents or instruments
from OLB or its officers or others as BYBK shall have reasonably
requested in connection with the accounting or income tax treatment
of the Contemplated Transactions, related Securities Laws
compliance or to evidence fulfillment of the conditions set forth
in Section 6.1 as BYBK may reasonably request.
(k) Illegality. No Law shall have
been enacted, entered, promulgated or enforced by any Regulatory
Authority that prohibits, restricts or makes illegal the
consummation of the Contemplated Transactions.
(l) No Material Adverse Effect. No
change in the business, property, assets (including loan
portfolios), liabilities (whether absolute, contingent or
otherwise), operations, business prospects, liquidity, income or
financial condition of OLB or any of the OLB Subsidiaries shall
have occurred since the date of this Agreement, and no information
shall have been provided solely in an updated OLB Disclosure
Schedule pursuant to Section 5.6 of this Agreement, that has had,
or would reasonably be likely to have, a Material Adverse Effect on
OLB.
(m) NASDAQ
Listing. To the extent required, NASDAQ shall have completed
its review of the “Listing of
Additional Shares Notification Form” filed by OLB with
NASDAQ with respect to the shares of
OLB Common Stock to be issued in the Merger.
97
Section
6.2
Conditions to
OLB’s Obligations under this Agreement.
The
obligations of OLB hereunder shall be subject to satisfaction at or
prior to the Closing Date of each of the following conditions,
unless waived by OLB pursuant to Section 8.3
hereof:
(a) Corporate Proceedings. All
action required to be taken by, or on the part of, BYBK and Bay
Bank to authorize the execution, delivery and performance of this
Agreement, and the consummation of the Contemplated Transactions,
shall have been duly and validly taken by BYBK and Bay Bank,
respectively, and OLB shall have received certified copies of the
resolutions evidencing such authorizations.
(b) Covenants; Representations. The
obligations of BYBK and Bay Bank required by this Agreement to be
performed by BYBK and Bay Bank at or prior to the Closing Date
shall have been duly performed and complied with in all material
respects; and the representations and warranties of BYBK set forth
in this Agreement shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of
the Closing Date, except as to any representation or warranty that
specifically relates to an earlier date, in each case in accordance
with the Article III Standard.
(c) Consents. (i) OLB and Old Line
shall have received all consents and approvals described in
OLB Disclosure Schedule
4.4 and all filings and registrations by OLB and Old Line
described in OLB
Disclosure Schedule 4.4 shall have been accepted or declared
effective, except where the failure to obtain any such consent or
approval, or for any such filing or registration to be accepted or
declared effective, would not reasonably be expected to have a
Material Adverse Effect on OLB or Old Line subsequent to the
Effective Time; (ii) BYBK and Bay Bank shall have received all
consents and approvals described in BYBK Disclosure Schedule 3.4
and all filings and registrations by BYBK and Bay Bank described in
BYBK Disclosure Schedule
3.4 shall have been accepted or declared effective, except
where the failure to obtain any such consent or approval, or for
any such filing or registration to be accepted or declared
effective, would not reasonably be expected to have a Material
Adverse Effect on OLB or Old Line subsequent to the Effective Time;
(iii) any statutory waiting period or periods relating to the
consents, approvals, filings and registrations identified in the
foregoing items (i) or (ii) shall have expired; and (iv) no consent
or approval identified in the foregoing items (i) or (ii) shall
have imposed any condition or requirement that, in the reasonable
opinion of the board of directors of OLB, would constitute a
Burdensome Condition or otherwise so materially and adversely
impact the economic or business benefits to OLB of the Contemplated
Transactions as to render consummation of the Merger
inadvisable.
(d) No Injunction or Restraints. No
court or Regulatory Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Order
(whether temporary, preliminary or permanent) or taken any other
action that enjoins, prohibits, restricts or makes illegal
consummation of the Contemplated Transactions (including the
Merger) that remains in effect.
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(e) Officer’s Certificate.
BYBK shall have delivered to OLB a certificate, dated the Closing
Date and signed, without personal liability, by its President and
Chief Executive Officer, to the effect that, to the best of his
knowledge, information and belief, the conditions set forth in
subsections (a), (b), (c)(ii) and (iii) (but only with respect to
waiting periods applicable to BYBK), (d), (h), (m) and (n) of this
Section 6.2 have been satisfied.
(f) Registration Statement. The
Registration Statement shall be effective under the Securities Act,
and no proceedings shall be pending or threatened by the SEC to
suspend the effectiveness of the Registration Statement; and all
approvals deemed necessary by OLB’s counsel from state
securities or “blue sky” authorities with respect to
the Contemplated Transactions shall have been
obtained.
(g) Tax Opinion. OLB shall have
received an opinion of Baker, Donelson, Bearman, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, a professional corporation, counsel to OLB dated the
Closing Date, to the effect that on the basis of the facts,
representations and assumptions set forth in such opinion the
Merger constitutes a tax-free reorganization under
Section 368(a) of the IRC; in rendering their opinion, such
counsel may require and rely upon representations and reasonable
assumptions, including those contained in certificates of officers
of BYBK, OLB and others.
(h) Approval by BYBK’s
Stockholders. The Merger shall have been approved by the
stockholders of BYBK by such vote as is required by the MGCL and
the articles of incorporation and bylaws of BYBK.
(i) Approval by OLB’s
Stockholders. The Merger shall have been approved by the
stockholders of OLB by such vote as is required by the MGCL and the
articles of incorporation and bylaws of OLB.
(j) Limitation on
Objecting BYBK Shares. As of the Effective Date, the holders of no more than ten percent of the shares
of BYBK Common Stock that are
issued and outstanding as of the record date for the BYBK Common
Stockholders’ Meeting shall have taken the actions required
by Section 3-203 of the MGCL to qualify their shares of BYBK
Common Stock as Objecting BYBK Shares.
(k) Other Documents. OLB shall have
received such other certificates, documents or instruments from
BYBK or its officers or others as OLB shall have reasonably
requested in connection with the accounting or income tax treatment
of the Contemplated Transactions, related Securities Laws
compliance or to evidence fulfillment of the conditions set forth
in Section 6.2 as OLB may reasonably request.
(l) Environmental Assessment
Results. The recognized environmental conditions of any
Environmental Assessments conducted pursuant to
Section 5.7(a)(iii) hereof shall not result in a Material
Adverse Effect on BYBK. OLB shall be fully satisfied, in its
reasonable discretion, with the findings of the Environmental
Assessments and any other environmental reports undertaken pursuant
to Section 5.7(a)(iii) of this Agreement.
(m) No Material Adverse Effect. No
change in the business, property, assets (including loan
portfolios), liabilities (whether absolute, contingent or
otherwise), operations, business prospects, liquidity, income or
financial condition of BYBK or any of the BYBK Subsidiaries shall
have occurred since the date of this Agreement, and no information
shall have been provided in an updated BYBK Disclosure Schedule
pursuant to Section 5.6 of this Agreement, that has had, or would
reasonably be likely to have, a Material Adverse Effect on
BYBK.
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(n) Third Party Consents. OLB shall
have received all consents and authorizations of landlords and
other persons that are necessary to permit the Contemplated
Transactions to be consummated without the violation of any lease
or other material Contract to which any of the BYBK Companies is a
party or by which any of their properties are bound, except where
failure to obtain such consent or authorization would be reasonably
expected not to have a Material Adverse Effect subsequent to the
Merger.
(o) Illegality. No Law shall have
been enacted, entered, promulgated or enforced by any Regulatory
Authority that prohibits, restricts or makes illegal the
consummation of the Contemplated Transactions.
(p) Nasdaq Listing. To the extent
required, and provided that OLB has complied with its obligations
set forth in Section 5.7(c)(vii) hereof, NASDAQ shall have
completed its review of the “Listing of Additional Shares Notification
Form” filed by OLB with NASDAQ with respect to the shares of OLB Common Stock to
be issued in the Merger.
Section
6.3
Frustration of Closing Conditions.
Neither
OLB nor BYBK may rely on the failure of any condition set forth in
Section 6.1 or 6.2, as the case may be, to be satisfied if such
failure was caused by such Party’s failure to use its
commercially reasonable best efforts to consummate and to make
effective the Contemplated Transactions, as required by and subject
to Section 5.5.
ARTICLE VII.
TERMINATION
Section
7.1
Termination.
Notwithstanding any
other provision of this Agreement, and notwithstanding receipt of
the approval by the stockholders of both BYBK and OLB of the
Merger, this Agreement may be terminated on or at any time prior to
the Closing Date:
(a) By the mutual
written agreement of BYBK and OLB;
(b) By either BYBK or
OLB (provided that the terminating Party is not then in material
breach of any representation, warranty, covenant or other agreement
contained herein in a manner that would entitle the other Party not
to consummate the Contemplated Transactions) in the event of a
material breach of any representation, warranty, covenant or other
agreement of the other Party contained in this Agreement such that
(i) with respect to a representation or warranty, the condition set
forth in the second clause of Section 6.1(b) or Section 6.2(b), as
the case may be, would not be satisfied, and (ii) with respect to a
covenant or other agreement, the condition set forth in the first
clause of Section 6.1(b) or Section 6.2(b), as the case may be,
would not be satisfied, and in each case such breach cannot be, or
shall not have been, remedied within 30 days after receipt by such
Party of written notice specifying the nature of such breach and
requesting that it be remedied or which, by its nature, cannot be
cured prior to the Closing; provided, that if such breach cannot reasonably
be cured within such 30-day period but may reasonably be cured
within 60 days, and such cure is being diligently pursued, no such
termination shall occur prior to the expiration of such 60-day
period;
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(c) By either BYBK or
OLB if the Closing Date shall not have occurred prior to April 30,
2018 (except that if the Closing Date shall not have occurred by
April 30, 2018 because of a failure to obtain any required approval
or consent of a Regulatory Authority, such date shall be June 30,
2018 unless the conditions of any such required regulatory approval
or consent cannot be satisfied by June 30, 2018), except that if
the Closing Date shall not have occurred by such date because of a
material breach of this Agreement by a Party, such breaching Party
shall not be entitled to terminate this Agreement in accordance
with this provision;
(d) By either BYBK or
OLB in the event any Regulatory Authority whose approval or consent
is required for consummation of the Contemplated Transactions shall
issue a definitive written denial of such approval or consent and
any appeals and requests for reconsideration have also received a
definitive written denial or an application therefor has been
permanently withdrawn at the request of a Regulatory
Authority;
(e) By either BYBK or
OLB if any Regulatory Authority whose approval or consent is
required for consummation of the Contemplated Transactions grants
such consent or approval but such approval or consent contains or
would result in the imposition of a Burdensome Condition and there
is no meaningful possibility that such consent or approval could be
revised prior to June 30, 2018 so as not to contain or result in a
Burdensome Condition;
(f) By either BYBK or
OLB if the holders of OLB Common Stock or the holders of BYBK
Common Stock vote on, but fail to approve, the Merger at the OLB
Common Stockholders’ Meeting or the BYBK Common
Stockholders’ Meeting, respectively;
(g) By OLB if BYBK or
any BYBK Subsidiary enters into any agreement, agreement in
principle, letter of intent or similar instrument with respect to
any Superior Proposal or approves or resolves to approve any
agreement, agreement in principle, letter of intent or similar
instrument with respect to a Superior Proposal;
(h) By BYBK if at any
time after the date of this Agreement and prior to obtaining the
approval of the Merger by the holders of BYBK Common Stock at the
BYBK Common Stockholders’ Meeting, BYBK receives a Superior
Proposal; provided, however, that BYBK shall not terminate this
Agreement pursuant to the foregoing clause unless:
(i) BYBK shall have
complied in all material respects with Section 5.7(a)(ii) of this
Agreement;
(ii) BYBK
concurrently pays the BYBK Termination Fee payable pursuant to
Section 8.1(b); and
(iii) the
board of directors of BYBK concurrently approves, and BYBK
concurrently enters into, a definitive agreement with respect to
such Superior Proposal;
101
(i) By BYBK if OLB or
any OLB Subsidiary enters into any definitive term sheet, letter of
intent, agreement or similar type of agreement with a view to being
acquired by, or effecting a business combination, as a result of
which OLB is not the surviving Entity or OLB’s directors, as
of the date of this Agreement, do not comprise the majority of the
surviving Entity’s board of directors, with any person other
than BYBK, and the BYBK board of directors determines that, after
considering the advice of counsel and the BYBK Advisers, such
transaction is not in the best interests of the BYBK Common
Stockholders; provided, however, that BYBK must exercise the
termination option under this Section 7.1(i) within 30
calendar days after the date on which OLB is required to file a
Current Report on Form 8-K with the SEC regarding events triggering
the termination option;
(j) By OLB if the BYBK
board of directors withdraws, changes or modifies its
recommendation to its stockholders in any manner adverse to OLB
regarding this Agreement or the Merger, or the BYBK board of
directors authorizes, recommends or publicly proposes, or publicly
announces an intention to authorize, recommend or propose, an
agreement to enter into an Acquisition Proposal that constitutes a
Superior Proposal;
(k) By BYBK if the OLB
board of directors withdraws, changes or modifies its
recommendation to its stockholders in any manner adverse to BYBK
regarding this Agreement or the Merger;
(l) By either BYBK or
OLB if any Law permanently restraining, enjoining or otherwise
prohibiting the consummation of the Contemplated Transactions shall
have become final and nonappealable, provided that the Party
seeking to terminate this Agreement pursuant to this Section 7.1(l)
shall have used its reasonable best efforts to contest, appeal and
remove such Law; or
(m) By BYBK if, at any
time during the five-day period commencing with the fifth Trading
Day immediately preceding the Effective Date (the
“Determination
Date”), both of the following conditions are
satisfied:
(i) The number obtained
by dividing the average of the daily closing prices for the shares
of OLB Common Stock for the 20 consecutive full trading days on
which such shares are actually traded on NASDAQ (the
“Average Closing
Price”) by the Starting Price (the “OLB Ratio”) shall be less
than 0.90; and
(ii) the
OLB Ratio shall be less than 0.85 of the quotient of (x) the Final
Index Price divided by (y) the Index Price on the Starting Date
(each as defined below) (the “Index
Ratio”);
provided, however,
that if BYBK elects to exercise its termination right pursuant to
this Section 7.1(m), it shall give prompt written notice to OLB
(and provided that such notice of election to terminate may be
withdrawn at any time within the aforementioned five-day period).
During the five-day period commencing with receipt of such notice,
OLB shall have the option to increase the Merger Consideration by
(A) increasing the Exchange Ratio (calculated to the nearest
ten-thousandth) or (B) provided that such payment will not result
in the Merger failing to constitute a reorganization within the
meaning of Section 368(a) of the IRC, making a cash payment of all
or part of the increase so that, in either case, the value of the
Per Share Consideration (calculated on the basis of the Closing
Price) equals the lesser of:
102
(i) the product of the
Starting Price, 0.90 and the Exchange Ratio (as in effect
immediately prior to any increase in the Exchange Ratio pursuant to
this Section 7.1(m)); and
(ii) an
amount equal to (A) the product of the Index Ratio, 0.85, the
Exchange Ratio (as in effect immediately prior to any increase in
the Exchange Ratio pursuant to this Section 7.1(m)), and the
Average Closing Price, divided by (B) the OLB Ratio.
If OLB
so elects within such five-day period, it shall give prompt written
notice to BYBK of such election and the revised Exchange Ratio
whereupon no termination shall have occurred pursuant to this
Section 7.1(m) and this Agreement shall remain in effect in
accordance with its terms, provided that any references in this
Agreement to the “Exchange Ratio” shall thereafter be
deemed to refer to the Exchange Ratio as increased pursuant to this
Section 7.1(m).
For
purposes of this Section 7.1(m), the following terms shall have the
meanings indicated:
“Final Index Price” means
the average of the Index Prices for the 20 consecutive Trading Days
ending on the Trading Day prior to the Determination
Date.
“Index Group” means the
NASDAQ Bank Index.
“Index Price” means the
closing price on such date of the Index Group.
“Starting Date” means
September 26, 2017, the last trading day immediately preceding the
date of the first public announcement of entry into this
Agreement.
“Starting Price” means
$27.00.
If the
outstanding shares of OLB Common Stock or any company belonging to
the Index Group shall be changed into a different number of shares
by reason of any stock dividend, reclassification, split-up,
combination, exchange of shares or similar transaction between the
date of the Agreement and the Determination Date, then the Starting
Price, the Average Closing Price and the other amounts in this
Section 7.1(m) shall be appropriately adjusted to reflect such
change.
Exhibit D hereto includes an
example of how this Section 7.1(m) would operate under various
assumptions.
Section
7.2
Effect of
Termination.
If this
Agreement is terminated pursuant to Section 7.1 hereof or
otherwise, this Agreement shall forthwith become void, other than
Sections 5.3(b), 5.7(b)(i), 8.1, 8.2, 8.4, 8.5, 8.6, 8.9, 8.10,
8.11, 8.12 and 8.13 hereof and this Section 7.2, which shall remain
in full force and effect, and there shall be no further liability
on the part of OLB or BYBK to the other with respect to the
Contemplated Transactions, except for any liability of OLB or BYBK
under such applicable sections of this Agreement.
103
ARTICLE VIII.
MISCELLANEOUS
Section
8.1
Expenses and Other
Fees.
(a) General Expenses. Whether or
not the Contemplated Transactions are consummated, each Party to
this Agreement will pay its respective expenses incurred in
connection with the preparation and performance of its obligations
under this Agreement. Each Party agrees to indemnify the other
Party against any cost, expense or liability (including reasonable
attorneys’ fees and including those costs of any
Party’s enforcement of the rights afforded under this Section
8.1) in respect of any claim made by any Party for a broker’s
or finder’s fee in connection with the Merger other than one
based on communications between the Party and the claimant seeking
indemnification. OLB shall be responsible for and shall pay all
filing fees, trustee or exchange agent fees and expenses, and blue
sky fees and expenses, if any. The expenses of separate counsel to
any stockholder of BYBK shall be borne by such stockholder and not
borne or reimbursed by BYBK or OLB.
(b) BYBK Termination Fee. In
recognition of the efforts, expenses and other opportunities
foregone by OLB while structuring and pursuing the Merger, BYBK
shall pay to OLB by wire transfer of immediately available funds a
termination fee equal to $5,076,000 (the “BYBK Termination Fee”) as
follows:
(i) if
OLB terminates this Agreement pursuant to: (A) Section 7.1(b); (B)
Section 7.1(c) because the Closing failed to occur prior to April
30, 2018 or June 30, 2018, as applicable, and such failure resulted
from the knowing, willful and intentional actions or inactions of
BYBK or Bay Bank (provided that OLB is not then in material breach
of any representation, warranty, covenant or other agreement
contained in this Agreement); (C) Section 7.1(d) because a
Regulatory Authority refused to issue a consent or approval
required for the consummation of any of the Contemplated
Transactions and such refusal resulted from the knowing, willful
and intentional actions or inactions of BYBK or Bay Bank (provided
that OLB is not then in material breach of any representation,
warranty, covenant or other agreement contained in this Agreement);
or (D) Section 7.1(j) (provided that OLB is not then in material
breach of any representation, warranty, covenant or other agreement
contained in this Agreement), then BYBK shall pay the BYBK
Termination Fee as promptly as practicable (but in any event within
three Business Days) after termination of the Agreement;
or
(ii) if
OLB or BYBK terminates this Agreement pursuant to Sections 7.1(g)
or 7.1(h), then BYBK shall pay the BYBK Termination Fee at or prior
to the time of such termination.
If
payment of the BYBK Termination Fee is timely made, then OLB will
have no other rights or claims against BYBK and its officers,
directors, attorneys and financial advisors under this Agreement,
it being agreed that the acceptance of the BYBK Termination Fee
under this Section 8.1 will constitute the sole and exclusive
remedy of OLB against BYBK and its officers, directors, attorneys
and financial advisors.
104
(c) OLB Termination Fee. In
recognition of the efforts, expenses and other opportunities
foregone by BYBK while structuring and pursuing the Merger, OLB
shall pay to BYBK by wire transfer of immediately available funds a
termination fee equal to $5,076,000 (the “OLB Termination Fee”) if
BYBK terminates this Agreement pursuant to: (i) Section 7.1(b);
(ii) Section 7.1(c) because the Closing failed to occur prior to
April 30, 2018 or June 30, 2018, as applicable, and such failure
resulted from the knowing, willful and intentional actions or
inactions of OLB or Old Line (provided that BYBK is not then in
material breach of any representation, warranty, covenant or other
agreement contained in this Agreement); (iii) Section 7.1(d)
because a Regulatory Authority refused to issue a consent or
approval required for the consummation of any of the Contemplated
Transactions and such refusal resulted from the knowing, willful
and intentional actions or inactions of OLB or Old Line (provided
that BYBK is not then in material breach of any representation,
warranty, covenant or other agreement contained in this Agreement);
or (iv) Section 7.1(k) (provided that BYBK is not then in material
breach of any representation, warranty, covenant or other agreement
contained in this Agreement). In any such case, OLB shall pay the
OLB Termination Fee as promptly as practicable (but in any event
within three Business Days) after termination of the
Agreement.
If
payment of the OLB Termination Fee is timely made, then BYBK will
have no other rights or claims against OLB and its officers,
directors, attorneys and financial advisors under this Agreement,
it being agreed that the acceptance of the OLB Termination Fee
under this Section 8.1 will constitute the sole and exclusive
remedy of BYBK against OLB and its officers, directors, attorneys
and financial advisors.
Section
8.2
Non-Survival.
All
representations, warranties and, except to the extent specifically
provided otherwise herein, agreements and covenants shall terminate
as of the Closing. Notwithstanding the foregoing, Sections 1.1, 1.2
1.3(b), 1.3(c), 1.3(d), 1.5, 2.5(b) through (h), 5.3(b) and
5.7(c)(ii) through (vi) and (viii) shall survive the
Closing.
Section
8.3
Amendment,
Extension and Waiver.
(a) Subject to
applicable Law, at any time prior to the Closing, the Parties
may:
(i) Amend
this Agreement;
(ii) Extend
the time for the performance of any of the obligations or other
acts of either Party;
(iii) Waive
any term or condition of this Agreement, any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto; or
(iv) Waive
compliance with any of the agreements or conditions contained in
Articles V and VI hereof or otherwise.
105
(b) This Agreement may
not be amended except by an instrument in writing signed, by
authorized officers, on behalf of the Parties. Any agreement on the
part of a Party to any extension or waiver shall be valid only if
set forth in an instrument in writing signed by a duly authorized
officer on behalf of such Party, but such waiver or failure to
insist on strict compliance with such obligation, covenant,
agreement, or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other
failure.
Section
8.4
Entire
Agreement.
This
Agreement, the schedules and exhibits hereto, and any other
documents to be executed in connection herewith, including, without
limitation, the Bank Merger Agreement, and the Confidentiality
Agreement, contain the entire, complete and integrated agreement
between the Parties with respect to the subject matter hereof, and
supersede any prior or contemporaneous Contracts between the
Parties, written or oral, express or implied, that may have related
to the subject matter hereof in any way other than the
Confidentiality Agreement.
Section
8.5 Binding
Agreement.
This
Agreement shall inure to the benefit of and be binding upon the
Parties and their successors; provided, however, that, except for
(a) the Indemnified Parties’ rights under Section 5.7(c)(v),
and (b) the Insured Person’s rights with respect to the Tail
Policy under Section 5.7(c)(viii), which are expressly intended to
be for the irrevocable benefit of, and shall be enforceable by,
each Indemnified Party and Insured Person, respectively, and his or
her heirs and Representatives, nothing in this Agreement, expressed
or implied, is intended to confer upon any Party, other than the
Parties and their respective successors, any rights, remedies,
obligations or liabilities.
Section
8.6
Notices.
All
notices under this Agreement shall be in writing and shall be
deemed sufficient and duly given: (a) when delivered personally to
the recipient; (b) upon confirmation of good transmission if sent
by facsimile; or (c) when delivered to the last known address of
the recipient (i) one Business Day after delivery to a reputable
express courier service for next-day delivery (charges prepaid), or
(ii) three days after being sent to the recipient by certified
mail, return receipt requested and postage prepaid, addressed as
follows:
(a) If to OLB,
to:
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
President and Chief
Executive Officer
Old
Line Bancshares, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
with a
copy to (which shall not
constitute notice):
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇., Esquire
Baker,
Donelson, Bearman, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, a professional
corporation
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
106
(b) If to BYBK,
to:
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
President and Chief
Executive Officer
Bay
Bancorp, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇
E-mail:
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
with a
copy to (which shall not
constitute notice):
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLC
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Section
8.7 Disclosure
Schedules.
Information
contained on either the BYBK Disclosure Schedule or the OLB
Disclosure Schedule shall be deemed to cover the express disclosure
requirement contained in a representation or warranty of this
Agreement and any other representation or warranty of this
Agreement of such Party where it is readily apparent it applies to
such provision. The mere inclusion of an item in a Disclosure
Schedule as an exception to a representation or warranty shall not
be deemed an admission by a Party that such item represents a
material exception or fact, event or circumstance or that such item
is or could result in a Material Adverse Effect.
Section
8.8 Tax
Disclosure.
Notwithstanding
anything else in this Agreement to the contrary, each Party (and
its Representatives) may disclose to any and all Persons, without
limitation of any kind, the federal income tax treatment and
federal income tax structure of any and all Contemplated
Transactions and all materials of any kind (including opinions or
other tax analyses) that are or have been provided to any Party (or
to any Representative of any Party) relating to such tax treatment
or tax structure; provided,
however, that this authorization of disclosure shall not
apply to restrictions reasonably necessary to comply with
Securities Laws. This authorization of disclosure is not effective
until the earlier of (a) the date of the public announcement of
discussions relating to the Contemplated Transactions, (b) the date
of the public announcement of the Contemplated Transactions, or (c)
the date of execution of an agreement (with or without conditions)
to enter into the Contemplated Transactions.
Section
8.9 No
Assignment.
Neither
Party may assign any of its rights or obligations hereunder to any
other person, without the prior written consent of the other
Party.
107
Section
8.10
Captions;
Interpretation.
When a
reference is made in this Agreement to Sections or Exhibits, such
reference shall be to a Section of or Exhibit to this Agreement
unless otherwise indicated. The Background Section hereof
constitutes an integral part of this Agreement. References to
Sections include subsections, which are part of the related
Section. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever
the words “include,” “includes” or
“including” are used in this Agreement, they shall be
deemed to be followed by the words “without
limitation.” The phrases “the date of this
Agreement,” “the date hereof” and terms of
similar import, unless the context otherwise requires, shall be
deemed to refer to the date set forth in the Recitals to this
Agreement. All words used in this Agreement shall be construed to
be of such gender or number as the circumstances require. Unless
otherwise specifically noted, the words “herein,”
“hereof,” “hereby,” “hereunder”
and words of similar import refer to this Agreement as a whole and
not to any particular Section, subsection, paragraph, clause or
other subdivision of this Agreement. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the
Parties and no presumption or burden of proof shall arise favoring
or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement.
Section
8.11
Counterparts;
Electronic Signatures.
This
Agreement may be executed simultaneously in counterparts, each of
which shall be deemed to be an original copy of this Agreement and
all of which together will be deemed to constitute one and the same
agreement. The exchange of copies of this Agreement and of
signature pages by facsimile or other electronic transmission shall
constitute effective execution and delivery of this Agreement as to
the Parties and may be used in lieu of the original Agreement for
all purposes. Signatures of the Parties transmitted by facsimile or
other electronic transmission shall be deemed to be their original
signatures for all purposes.
Section
8.12
Severability.
The
Parties agree that the provisions and covenants contained in each
of the Sections of this Agreement, and within the Sections
themselves, are intended to be separate and divisible provisions
and covenants and if, for any reason, any one or more of them shall
be held to be invalid or unenforceable, in whole or in part, by a
court of competent jurisdiction, then (a) the same shall not be
held to affect the validity of any other provision or covenant
contained in this Agreement and (b) the same shall be deemed to be
modified to the minimum extent necessary for it to be legally
enforceable. The Parties hereby expressly request any court of
competent jurisdiction to enforce any such provision or covenant or
to modify any provision thereof so that it shall be enforced by
such court to the fullest extent permitted by applicable
Law.
Section
8.13
Governing Law;
Venue; No Jury Trial.
(a) The laws of the
State of Maryland (without regard to any conflict of laws principle
that would apply the law of another jurisdiction) shall govern this
Agreement in all respects, whether as to its validity,
construction, capacity, performance or otherwise.
108
(b) The Parties agree
that any judicial proceeding arising out of or relating to this
Agreement (including any declaratory judgments) shall be filed
exclusively in the State and Federal courts located in Prince
George’s County, Maryland or in ▇▇▇▇▇▇ County, Maryland and
the District of Maryland, respectively, and each Party hereby
consents to, and will submit to, the personal and subject matter
jurisdiction of such courts in any proceeding to enforce any of
their obligations under this Agreement and shall not contend that
any such court is an improper or inconvenient venue. The foregoing
shall not limit the right of any Party to obtain execution of
judgment in any other jurisdiction. The prevailing Party in any
judicial proceeding arising out of or relating to this Agreement
shall be entitled to recover all costs and attorneys’ fees
from the non-prevailing Party.
(c) EACH OF THE PARTIES
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OR RIGHT TO DEMAND
TRIAL BY JURY IN ANY ACTION BROUGHT TO ENFORCE THIS AGREEMENT, OR
ANY PROVISION HEREOF, OR FOR DAMAGES DUE AS A RESULT OF AN ALLEGED
BREACH OF THIS AGREEMENT.
Section
8.14
Time of
Essence.
With
regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
[Signatures
appear on the following page.]
109
IN WITNESS WHEREOF, the parties have
caused this Agreement to be executed by their duly authorized
officers as of the day and year first above written.
ATTEST:
OLD LINE
BANCSHARES, INC.
By:
By:
Name: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
Title:
Secretary
Title: President
and Chief Executive Officer
ATTEST:
BAY BANCORP,
INC.
By:
By:
Name: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Title:
Secretary
Title: President
and Chief Executive Officer
110
EXHIBIT INDEX
Exhibit A – List of Stockholders to Execute Support
Agreements
Exhibit B – Support Agreement
Exhibit C – Bank Merger Agreement
Exhibit D – Illustration of Exchange Ratio and
Termination Right Provisions
111