AGREEMENT AND PLAN OF MERGER
By and Between
SUN BANCORP, INC.
And
COMMUNITY BANCORP OF NEW JERSEY
Dated as of February 16, 2004
AGREEMENT AND PLAN OF MERGER
By and Between
SUN BANCORP, INC.
AND
COMMUNITY BANCORP OF NEW JERSEY
This AGREEMENT AND PLAN OF MERGER, dated as of the 16th day of
February, 2004 (this "Agreement"), by and between Sun Bancorp, Inc., a New
Jersey corporation ("Sun"), and Community Bancorp of New Jersey, a New Jersey
corporation ("Community") collectively, the ("Parties").
WITNESSETH THAT:
WHEREAS, the Boards of Directors of Sun and Community deem it in the
best interests of Sun and Community, respectively, and of their respective
shareholders, that Sun and Community merge pursuant to this Agreement in a
transaction that qualifies as a reorganization pursuant to Section 368 of the
Internal Revenue Code of 1986 (as amended, the "Code") (the "Merger");
WHEREAS, Community owns all the issued and outstanding capital stock of
the Community Bank of New Jersey, a New Jersey-chartered commercial bank
("Community Bank"), and Sun owns all of the issued and outstanding capital stock
of Sun National Bank, a national bank ("Sun Bank"), and it is contemplated that,
in connection with the consummation of this Agreement and pursuant to the terms
of a certain Plan of Merger (the "Bank Merger Agreement"), Community Bank will
be merged with and into Sun Bank (the "Bank Merger");
WHEREAS, as an inducement and condition to Sun's entering into this
Agreement, each of the directors and executive officers of Community have
entered into Affiliate and Voting Agreements with Sun pursuant to which they
have agreed to vote their Community Shares (as defined herein) in favor of
approval of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties and agreements herein contained, the
parties agree that Community will be merged with and into Sun and that the terms
and conditions of the Merger, the mode of carrying the Merger into effect,
including the manner of converting the shares of common stock of Community, no
par value per share, into shares of common stock of Sun, par value of $1.00 per
share (the "Sun Shares"), shall be as hereinafter set forth.
2
ARTICLE 1
THE MERGER
Section 1.1 Consummation of Merger; Closing Date.
------------------------------------
(a) Subject to the provisions hereof, including, without limitation,
Section 2.5 hereof respecting the possible restructuring of the transaction
under certain circumstances, Community shall be merged with and into Sun (which
has heretofore and shall hereinafter be referred to as the "Merger") pursuant to
the laws of the State of New Jersey, and Sun shall be the surviving corporation
(sometimes hereinafter referred to as "Surviving Corporation" when reference is
made to it after the Effective Time of the Merger (as defined below)). The
Merger shall become effective on the date and at the time on which the
Certificate of Merger has been duly filed with the Division of Revenue of New
Jersey, unless a later date is specified in such Certificate of Merger (such
time is hereinafter referred to as the "Effective Time of the Merger"). Subject
to the terms and conditions hereof, unless otherwise agreed upon by Sun and
Community, the Effective Time of the Merger shall occur on the tenth (10th)
business day following the later to occur of (i) the effective date (including
expiration of any applicable waiting period) of the last required Consent (as
defined herein) of any Regulatory Authority (as defined herein) having authority
over the transactions contemplated under the Merger Agreement or the Bank Merger
Agreement and (ii) the date on which the shareholders of Community approve the
transactions contemplated by this Agreement, or such other time as the parties
may agree.
(b) The closing of the Merger (the "Closing") shall take place at the
principal offices of Sun at 10:00 a.m. local time on the day that the Effective
Time of the Merger occurs, or such other date, time and place as the parties
hereto may agree (the "Closing Date"). Subject to the provisions of this
Agreement, at the Closing there shall be delivered to each of the parties hereto
the opinions, certificates and other documents and instruments required to be so
delivered pursuant to this Agreement.
Section 1.2 Effect of Merger. At the Effective Time of the Merger,
------------------
Community shall be merged with and into Sun and the separate existence of
Community shall cease. The Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of Sun, as in effect on the date hereof and as
otherwise amended prior to the Effective Time of the Merger, shall be the
Amended and Restated Certificate of Incorporation and the Amended and Restated
Bylaws of the Surviving Corporation until further amended as provided therein
and in accordance with applicable law. The Surviving Corporation shall have all
the rights, privileges, immunities and powers and shall be subject to all the
duties and liabilities of a corporation organized under the laws of the State of
New Jersey and shall thereupon and thereafter possess all other privileges,
immunities and franchises of a private, as well as of a public nature, of each
of the constituent corporations. All property (real, personal and mixed) and all
debts on whatever account, including subscriptions to shares, and all choses in
action, all and every other
3
interest, of or belonging to or due to each of the constituent corporations so
merged shall be taken and deemed to be transferred to and vested in the
Surviving Corporation without further act or deed. The title to any real estate,
or any interest therein, vested in any of the constituent corporations shall not
revert or be in any way impaired by reason of the Merger. The Surviving
Corporation shall thenceforth be responsible and liable for all the liabilities
and obligations of each of the constituent corporations so merged and any claim
existing or action or proceeding pending by or against either of the constituent
corporations may be prosecuted as if the Merger had not taken place or the
Surviving Corporation may be substituted in its place. Neither the rights of
creditors nor any liens upon the property of any constituent corporation shall
be impaired by the Merger.
Section 1.3 Further Assurances. From and after the Effective Time of the
-------------------
Merger, as and when requested by the Surviving Corporation, the officers and
directors of Community last in office shall execute and deliver or cause to be
executed and delivered in the name of Community such deeds and other instruments
and take or cause to be taken such further or other actions as shall be
necessary in order to vest or perfect in or confirm of record or otherwise to
the Surviving Corporation title to and possession of all of the property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority of Community.
Section 1.4 Directors and Officers. Except as otherwise set forth herein,
-----------------------
from and after the Effective Time of the Merger, the directors of the Surviving
Corporation and officers of the Surviving Corporation shall be those persons
serving as directors and officers of Sun immediately prior to the Effective Time
of the Merger, and such additional persons, in each case, as Sun, at or prior to
the Effective Time of the Merger, shall designate in writing.
ARTICLE 2
CONVERSION OF CONSTITUENTS' CAPITAL SHARES
Section 2.1 Manner of Conversion of Community Shares. Subject to the
--------------------------------------------
provisions hereof, as of the Effective Time of the Merger and by virtue of the
Merger and without any further action on the part of Sun, Community or the
holder of any shares thereof, the shares of the constituent corporations shall
be converted as follows:
(a) Each share of capital stock of Sun outstanding immediately prior
to the Effective Time of the Merger shall, after the Effective Time of the
Merger, remain outstanding and unchanged.
(b) Each share of common stock of Community (the "Community Shares")
held by Community or by Sun (or any of their subsidiaries), other than such
shares the holders of which become entitled to fair value under Section 14A:11-1
of the New Jersey Business Corporation Act ("Dissenting Shares") or such shares
held in a fiduciary capacity or as a result of
4
debts previously contracted, shall be canceled and retired and no consideration
shall be paid or delivered in exchange therefor.
(c) Except with regard to: (i) Community Shares excluded under
Section 2.1(b) above, each Community Share outstanding immediately prior to the
Effective Time of the Merger shall be converted into the right to receive 0.83
of a Sun Share. (Such number of Sun Shares, as may be adjusted as provided
herein, is hereinafter referred to as the "Per Share Stock Consideration").
Thereafter, subject to Sections 2.3, 2.5 and 2.7, each outstanding certificate
representing a Community Share shall represent solely the right to receive the
Per Share Stock Consideration.
(d) In the event that Sun declares a change in the number of Sun
Shares issued and outstanding prior to the Effective Time as a result of a stock
split, stock dividend, recapitalization, or similar transaction with respect to
such stock and the record date therefor (in the case of a stock dividend) or the
effective date thereof (in the case of a stock split or similar recapitalization
for which a record date is not established) shall be prior to the Effective Time
or announces a special extraordinary cash dividend with a record date prior to
the Effective Time, the Per Share Stock Consideration shall be proportionately
adjusted.
Section 2.2 Community Stock Options. As of and immediately prior to the
------------------------
Effective Time of the Merger, all rights with respect to Community Shares
issuable pursuant to the exercise of stock options ("Community Options") granted
by Community under the Community Stock Option Plans set forth in Schedule 2.2
(the "Community Stock Option Plans"), each of which are listed and described on
Schedule 2.2 and which are outstanding at the Effective Time of the Merger,
shall be exchanged as follows: such Community Options held by each individual as
detailed at Schedule 2.2 shall have all of his or her Community Options assumed
by Sun and such Community Options shall be converted into an option to purchase
a number of Sun Shares (rounded down to the nearest whole share) equal to (i)
the number of shares of Community Shares subject to such option immediately
prior to the Effective Time multiplied by (ii) the Per Share Stock
Consideration, and the per share exercise price for Sun Shares issuable upon the
exercise of such assumed stock options shall be equal to (i) the exercise price
per share of Community Shares at which such option was exercisable immediately
prior to the Effective Time divided by (ii) the Per Share Stock Consideration
(rounded to the nearest whole cent); provided, however, that in the case of any
stock option to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code, the conversion formula shall be
adjusted, if necessary, to comply with section 424(a) of the Code. Except as
otherwise provided herein, the assumed stock options shall be subject to the
same terms and conditions (including expiration date, vesting and exercise
provisions) as were applicable to the corresponding Community Stock Options
immediately prior to the Effective Time (but taking into account any changes
thereto, including the acceleration thereof, provided for in the Community Stock
Option Plans by reason of this Agreement or the transactions contemplated
hereby); provided, however, that thereafter references to Community shall be
deemed to be references to Sun.
5
Section 2.3 Fractional Shares. Notwithstanding any other provision of this
-----------------
Agreement, each holder of Community Shares converted pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a Sun Share (after
taking into account all certificates delivered by such holder), shall receive,
in lieu thereof, cash (without interest) in an amount equal to such fractional
part (to the nearest thousandth) of such Sun Share, multiplied by the market
value of one Sun Share at the Effective Time of the Merger. The market value of
a Sun Share at the Effective Time of the Merger shall be the average of the last
sale price for the five trading days prior to the Effective Time of such Sun
Shares, as reported by The Nasdaq Stock Market ("NASDAQ") ending on the last
business day preceding the Effective Time of the Merger, or, if the Sun Shares
hereafter become listed for trading on any national securities exchange
registered under the Exchange Act, the average of the last sale price for the
five trading days prior to the Effective Time of such Sun Shares on the
applicable dates as reported on the principal securities exchange on which the
Sun Shares are then listed for trading. No such holder will be entitled to
dividends, voting rights or any other rights as a shareholder in respect of any
fractional share.
Section 2.4 Effectuating Conversion.
-----------------------
(a) Prior to the Effective Time, Sun will appoint an exchange agent
(the "Exchange Agent"). The Exchange Agent may employ sub-agents in connection
with performing its duties. As of the Effective Time of the Merger, Sun will
deliver or cause to be delivered to the Exchange Agent the consideration to be
paid by Sun for Community Shares, along with the appropriate cash payment in
lieu of fractional interests in Sun Shares. As promptly as practicable after the
Effective Time of the Merger, the Exchange Agent shall send or cause to be sent
to each former holder of record of Community Shares (other than holders of
Dissenting Shares) transmittal materials (the "Letter of Transmittal") for use
in exchanging their certificates formerly representing Community Shares for the
consideration provided for in this Agreement. The Letter of Transmittal will
contain instructions with respect to the surrender of certificates representing
Community Shares and the receipt of the consideration contemplated by this
Agreement and will require each holder of Community Shares to transfer good and
marketable title to such Community Shares to Sun, free and clear of all liens,
claims and encumbrances.
(b) At the Effective Time of the Merger, the stock transfer books of
Community shall be closed as to holders of Community Shares immediately prior to
the Effective Time of the Merger and no transfer of Community Shares by any such
holder shall thereafter be made or recognized and each outstanding certificate
formerly representing Community Shares shall, without any action on the part of
any holder thereof, no longer represent Community Shares. If, after the
Effective Time of the Merger, certificates are properly presented to the
Exchange Agent, such certificates (other than Dissenting Shares) shall be
exchanged for the consideration contemplated by this Agreement into which
Community Shares represented thereby were converted in the Merger.
6
(c) In the event that any holder of record as of the Effective Time
of the Merger of Community Shares (other than Dissenting Shares) is unable to
deliver the certificate which represents such holder's Community Shares, Sun, in
the absence of actual notice that any Community Shares theretofore represented
by any such certificate have been acquired by a bona fide purchaser shall
deliver to such holder the consideration contemplated by this Agreement and the
amount of cash representing fractional Sun Shares to which such holder is
entitled in accordance with the provisions of this Agreement upon the
presentation of all of the following:
(i) An affidavit or other evidence to the reasonable
satisfaction of Sun that any such certificate has been lost, wrongfully
taken or destroyed;
(ii) Such security or indemnity as may be reasonably requested by
Sun to indemnify and hold Sun harmless in respect of such stock
certificate(s); and
(iii)Evidence to the satisfaction of Sun that such holder is the
owner of Community Shares theretofore represented by each certificate
claimed by such holder to be lost, wrongfully taken or destroyed and that
such holder is the person who would be entitled to present each such
certificate for exchange pursuant to this Agreement.
(d) In the event that the delivery of the consideration contemplated
by this Agreement and the amount of cash representing fractional Sun Shares are
to be made to a person other than the person in whose name any certificate
representing Community Shares surrendered is registered, such certificate so
surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer), with the signature(s) appropriately guaranteed, and
otherwise in proper form for transfer, and the person requesting such delivery
shall pay any transfer or other taxes required by reason of the delivery to a
person other than the registered holder of such certificate surrendered or
establish to the satisfaction of Sun that such tax has been paid or is not
applicable.
(e) Except as set forth at Section 2.1(d), no holder of Community
Shares shall be entitled to receive any dividends or distributions declared or
made with respect to the Sun Shares with a record date before the Effective Time
of the Merger. Neither the consideration contemplated by this Agreement, any
amount of cash representing fractional Sun Shares nor any dividend or other
distribution with respect to Sun Shares where the record date thereof is on or
after the Effective Time of the Merger shall be paid to the holder of any
unsurrendered certificate or certificates representing Community Shares, and Sun
shall not be obligated to deliver any of the consideration contemplated by this
Agreement, any amount of cash representing fractional Sun Shares or any such
dividend or other distribution with respect to Sun Shares until such holder
shall surrender the certificate or certificates representing Community Shares as
provided for by the Agreement. Subject to applicable laws, following surrender
of any such certificate or certificates, there shall be paid to the holder of
the certificate or certificates then representing Sun Shares issued in the
Merger, without interest at the time of such surrender, the consideration
contemplated by this Agreement, the amount of any cash representing fractional
Sun Shares and
8
the amount of any dividends or other distributions with respect to Sun Shares to
which such holder is entitled as a holder of Sun Shares.
Section 2.5 Determination of Alternative Structures. The parties may at any
---------------------------------------
time change the method of affecting the combination (including by providing for
the merger of Community with a wholly owned subsidiary of Sun) if and to the
extent requested by either party and consented to by the other party (such
consent not to be unreasonably withheld); provided, however, that no such
changes shall (i) alter or change the amount or kind of consideration to be
issued to holders of the capital stock of Community as provided for in this
Agreement (the "Merger Consideration"), (ii) adversely affect the tax treatment
of Community's shareholders as a result of receiving the Merger Consideration or
the tax treatment of either party pursuant to this Agreement or (iii) materially
impede or delay consummation of the transactions contemplated by this Agreement.
Section 2.6 Laws of Escheat.(a) If any of the consideration due or other
----------------
payments to be paid or delivered to the holders of Community Shares is not paid
or delivered within the time period specified by any applicable laws concerning
abandoned property, escheat or similar laws, and if such failure to pay or
deliver such consideration occurs or arises out of the fact that such property
is not claimed by the proper owner thereof, Sun or the Exchange Agent shall be
entitled to dispose of any such consideration or other payments in accordance
with applicable laws concerning abandoned property, escheat or similar laws. Any
other provision of this Agreement notwithstanding, none of Community, Sun, the
Exchange Agent, nor any other Person acting on their behalf shall be liable to a
holder of Community Shares for any amount paid or property delivered in good
faith to a public official pursuant to and in accordance with any applicable
abandoned property, escheat or similar law.
Section 2.7 Dissenting Shares.
-----------------
(a) Any holders of Dissenting Shares shall be entitled to payment for
such shares only to the extent permitted by and in accordance with the
provisions of the New Jersey Business Corporation Act ("NJBCA"); provided,
however, that if, in accordance with the NJBCA, any holder of Dissenting Shares
shall forfeit such right to payment of the fair value of such shares, such
shares shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the Per Share
Stock Consideration without interest from Sun. Dissenting Shares shall not,
after the Effective Time, be entitled to vote for any purpose or receive any
dividends or other distributions and shall be entitled only to such rights as
are afforded in respect of Dissenting Shares pursuant to the NJBCA.
(b) Community shall give Sun (i) prompt notice of any written
objections to the Merger and any written demands for the payment of the fair
value of any shares, withdrawals of such demands, and any other instruments
served pursuant to the NJBCA received by Community and (ii) the opportunity to
participate in all negotiations and proceedings with respect to such demands
under the NJBCA. Community shall not voluntarily make any payment
8
with respect to any demands for payment of fair value and shall not, except with
the prior written consent of Sun, settle or offer to settle any such demands.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF COMMUNITY
Community hereby represents and warrants to Sun as follows as of the date hereof
and as of all times up to and including the Effective Time of the Merger (except
as otherwise provided):
Section 3.1 Corporate Organization.
----------------------
(a) Community is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey. Community has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as such business is now being conducted, and is
duly licensed or qualified to do business in all such places where the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it make such qualification necessary, except where the
failure to be so licensed or qualified would not have a Material Adverse Effect
(as defined herein) on the business, assets, operations, financial condition or
results of operations (such business, assets, operations, financial condition or
results of operations hereinafter collectively referred to as the "Condition")
of Community on a consolidated basis. Community is duly registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended (the "BHC
Act"). True and correct copies of the Certificate of Incorporation and the
Bylaws of Community, each as amended to the date hereof, have been delivered to
Sun.
(b) Community Bank is a commercial bank, duly organized, validly
existing and in good standing under the laws of the state of New Jersey.
Community Bank has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as such business is now being
conducted, and Community Bank is duly licensed or qualified to do business in
New Jersey and in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed or qualified would not have a Material Adverse Effect on
Community Bank. True and correct copies of the Certificate of Incorporation and
the Bylaws of Community Bank, each as amended to the date hereof, have been
delivered to Sun.
(c) Each subsidiary of Community and Community Bank is a corporation,
limited liability company or partnership duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization. Each subsidiary has the corporate or requisite power and authority
to own or lease all of its properties and assets and to carry on its business as
such business is now being conducted, and is duly licensed or qualified to do
business in all such places where the nature of the business being conducted by
each
9
subsidiary or the character or location of the properties and assets owned or
leased by each subsidiary make such qualification necessary, except where the
failure to be so licensed or qualified (or steps necessary to cure such failure)
would not have a Material Adverse Effect on the Condition of Community on a
consolidated basis.
(d) Community and each of its subsidiaries has in effect all federal,
state, local and foreign governmental, regulatory and other authorizations,
permits and licenses necessary for each of them to own or lease its properties
and assets and to carry on its business as now conducted, the absence of which,
either individually or in the aggregate, would have a Material Adverse Effect on
the Condition of Community on a consolidated basis.
(e) Schedule 3.1(e) lists all subsidiaries and all entities (whether
corporations, limited liability companies, partnerships or similar
organizations) of Community (other than Community Bank) and Community Bank,
including the corresponding percentage ownership, in which Community or
Community Bank, as appropriate, owns, directly or indirectly, five percent (5%)
or more of the ownership interests as of the date of this Agreement and
indicates for each of Community's or Community Bank's subsidiaries as of such
date, its jurisdiction of organization and the jurisdiction(s) wherein it is
qualified to do business. All of such subsidiaries and ownership interests are
in compliance with all applicable laws, rules and regulations relating to direct
investment in equity ownership interests. Community or Community Bank, as
appropriate, owns either directly or indirectly, all of the outstanding capital
stock of each of its subsidiaries. No subsidiary of Community (other than
Community Bank) or Community Bank is an "insured depositary institution" as
defined in the Federal Deposit Insurance Act, as amended, and the applicable
regulations thereunder. All of the shares of capital stock of each of the
subsidiaries of Community and Community Bank are duly authorized, validly
issued, fully paid and nonassessable and not subject to any preemptive rights
and are owned by Community or Community Bank, as appropriate, free and clear of
any claims, liens, encumbrances or restrictions (other than those imposed by
applicable federal and state securities laws), and there are no agreements or
understandings with respect to the voting or disposition of any such shares.
(f) The minute books of Community and Community Bank contain complete
and accurate records in all material respects of all meetings and other
corporate actions held or taken by their respective shareholders and Boards of
Directors (including all committees thereof).
Section 3.2 Capitalization.
---------------
(a) The authorized capital stock of Community consists of 10,000,000
Community Shares, of which 3,407,847 Community Shares are issued and outstanding
as of the date hereof (22,357 of which is held in the treasury of Community).
All of the issued and outstanding Community Shares have been duly authorized and
validly issued and all such shares are fully paid and nonassessable. As of the
date hereof, there are no outstanding options, warrants, commitments, or other
rights or instruments to purchase or acquire any shares of
10
capital stock of Community, or any securities or rights convertible into or
exchangeable for shares of capital stock of Community, except for options to
purchase 549,821 Community Shares (which are described in more detail in
Schedule 3.2).
(b) The authorized capital stock of Community Bank consists of
5,000,000 shares of common stock, no par value per share of which 1,796,917
shares as of the date hereof are issued and outstanding (none of which is held
in the treasury of Community Bank) (the "Community Bank Shares"). All of the
issued and outstanding Community Bank Shares have been duly authorized and
validly issued and all such shares are fully paid and nonassessable. As of the
date hereof, there are no outstanding options, warrants, commitments or other
rights or instruments to purchase or acquire any shares of capital stock of
Community Bank, or any securities or rights convertible into or exchangeable for
shares of capital stock of Community Bank.
(c) All of the issued and outstanding shares of capital stock of
Community Bank:
(i) are owned by Community; and
(ii) are so owned free and clear of all liens and encumbrances
and adverse claims thereto.
Section 3.3 Financial Statements; Filings.
------------------------------
(a) Community has previously delivered to Sun copies of the audited
consolidated financial statements of Community as of and for the years ended
December 31, 2002, December 31, 2001 and December 31, 2000 and unaudited
consolidated financial statements for the quarters ended March 31, 2003, June
30, 2003 and September 30, 2003 and Community shall deliver to Sun, as soon as
practicable following the preparation of additional financial statements for
each subsequent calendar quarter (or other reporting period) or year of
Community, the additional consolidated financial statements of Community as of
and for such subsequent calendar quarter (or other reporting period) or year
(such financial statements, unless otherwise indicated, being hereinafter
referred to collectively as the "Financial Statements of Community").
(b) Community has previously delivered to Sun copies of the call
reports of Community Bank as of and for each of the years ended December 31,
2003, December 31, 2002 and December 31, 2001 and call reports for the quarters
ended March 31, 2003, June 30, 2003 and September 30, 2003 and Community Bank
and Community shall deliver to Sun, as soon as practicable following the
preparation of additional call reports for each subsequent calendar quarter (or
other reporting period) or year, the call reports of Community Bank as of and
for such subsequent calendar quarter (or other reporting period) or year (such
Call Reports, unless
11
otherwise indicated, being hereinafter referred to collectively as the
"Financial Regulatory Reports of Community Bank").
(c) Each of the Financial Statements of Community and each of the
Financial Regulatory Reports of Community Bank (including the related notes,
where applicable) have been or will be prepared in all material respects in
accordance with generally accepted accounting principles or regulatory
accounting principles, whichever is applicable, which principles have been or
will be consistently applied during the periods involved, except as otherwise
noted therein, and the books and records of Community and Community Bank have
been, are being, and will be maintained in all material respects in accordance
with applicable legal and accounting requirements and reflect only actual
transactions. Each of the Financial Statements of Community and each of the
Financial Regulatory Reports of Community Bank (including the related notes,
where applicable) fairly present or will fairly present the financial position
of Community on a consolidated basis, as applicable, and the financial position
of Community Bank (as the case may be) as of the respective dates thereof and
fairly present or will fairly present the results of operations of Community on
a consolidated basis, as applicable, and the results of operations of Community
Bank (as the case may be) for the respective periods therein set forth.
(d) To the extent not prohibited by law, Community has heretofore
delivered or made available, or caused to be delivered or made available, to Sun
all reports and filings made or required to be made by Community, Community Bank
or any of their respective subsidiaries with the Regulatory Authorities, and
will from time to time hereafter furnish, or cause Community Bank to furnish to
Sun, upon filing or furnishing the same to the Regulatory Authorities, all such
reports and filings made after the date hereof with the Regulatory Authorities.
As of the respective dates of such reports and filings, all such reports and
filings did not and shall not contain any untrue statement of a material fact or
omit 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.
(e) Except as set forth in Schedule 3.3(e), since December 31, 2002,
none of Community, Community Bank or any of their respective subsidiaries has
incurred any obligation or liability (contingent or otherwise) that has or might
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Condition of Community on a consolidated basis, except
obligations and liabilities (i) which are accrued or reserved against in the
Financial Statements of Community or the Financial Regulatory Reports of
Community Bank, or reflected in the notes thereto, or (ii) which were incurred
after December 31, 2002, in the ordinary course of business consistent with past
practices. Since December 31, 2002, neither Community nor Community Bank have
incurred or paid any obligation or liability which would be material to the
Condition of Community on a consolidated basis, except as may have been incurred
or paid in the ordinary course of business, consistent with past practices.
Section 3.4 Loan Portfolio; Reserves. Except as set forth in Schedule 3.4,
-------------------------
(i) all evidences of indebtedness in original principal amount in excess of
$500,000 reflected as assets
12
in the Financial Statements of Community and the Financial Regulatory Reports of
Community Bank as of September 30, 2003 were as of such dates in all respects
the binding obligations of the respective obligors named therein in accordance
with their respective terms, and were not subject to any defenses, setoffs, or
counterclaims, except as may be provided by bankruptcy, insolvency or similar
laws or by general principles of equity; and (ii) the allowances for possible
loan losses shown on the Financial Statements of Community and the Financial
Regulatory Reports of Community Bank as of September 30, 2003 were, and the
allowance for possible loan losses to be shown on the Financial Statements of
Community and the Financial Regulatory Reports of Community Bank as of any date
subsequent to the execution of this Agreement will be, as of such dates,
adequate to provide for possible losses, net of recoveries relating to loans
previously charged off, in respect of loans outstanding (including accrued
interest receivable) of Community and Community Bank and other extensions of
credit (including letters of credit or commitments to make loans or extend
credit);
Section 3.5 Certain Loans and Related Matters. Except as set forth in
------------------------------------
Schedule 3.5, none of Community, Community Bank or their respective subsidiaries
is a party to any written or oral: (i) loan agreement, note or borrowing
arrangement, other than credit card loans and other loans the unpaid balance of
which does not exceed $25,000 per loan, under the terms of which the obligor is
sixty (60) days delinquent in payment of principal or interest or in default of
any other provision as of the date hereof; (ii) loan agreement, note or
borrowing arrangement which has been classified or, in the exercise of
reasonable diligence by Community, Community Bank or any Regulatory Authority,
should have been classified by any bank examiner (whether regulatory or
internal) as "substandard," "doubtful," "loss," "other loans especially
mentioned," "other assets especially mentioned," "special mention," "credit risk
assets," "classified," "criticized," "watch list," "concerned loans" or any
comparable classifications by such persons; (iii) loan agreement, note or
borrowing arrangement, including any loan guaranty, with any director or
executive officer of Community, Community Bank or any Community subsidiary or
any five percent (5%) shareholder of Community, Community Bank or any Community
subsidiary, or any person, corporation or enterprise controlling, controlled by
or under common control with any of the foregoing; or (iv) loan agreement, note
or borrowing arrangement in violation of any law, regulation or rule applicable
to Community, Community Bank or any Community subsidiary including, but not
limited to, those promulgated, interpreted or enforced by any Regulatory
Authority and which violation could have a Material Adverse Effect on the
Condition of Community.
Section 3.6 Authority; No Violation.
-----------------------
(a) Community has full corporate power and authority to execute and
deliver this Agreement and, subject to the approval of the shareholders of
Community and to the receipt of the Consents of the Regulatory Authorities, to
consummate the transactions contemplated hereby. The Board of Directors of
Community has duly and validly approved this Agreement and the transactions
contemplated hereby, has authorized the execution and delivery of this
Agreement, has directed that this Agreement and the transactions contemplated
hereby be submitted to Community's shareholders for approval at a meeting of
such shareholders and,
13
except for the adoption of such Agreement by its shareholders and the execution
and filing of the Certificate of Merger, no other corporate proceeding on the
part of Community is necessary to consummate the transactions so contemplated.
This Agreement, when duly and validly executed by Community and delivered by
Community (and assuming due authorization, execution and delivery by Sun), will
constitute a valid and binding obligation of Community, and will be enforceable
against Community in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
receivership 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) Neither the execution and delivery of this Agreement by Community
nor the consummation by Community of the transactions contemplated hereby, nor
compliance by Community with any of the terms or provisions hereof, will (i)
violate any provision of the Certificate of Incorporation or Bylaws of
Community, or the Certificate of Incorporation or Bylaws of any Community
subsidiary, (ii) assuming that the Consents of the Regulatory Authorities and
approvals referred to herein are duly obtained, violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Community, Community Bank or any of their respective properties or
assets, or (iii) violate, conflict with, result in a breach of any provisions
of, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the respective
properties or assets of Community or Community Bank under, any of the terms,
conditions or provisions of any material note, bond, mortgage, indenture, deed
of trust, license, permit, lease, agreement or other instrument or obligation to
which Community or Community Bank is a party, or by which any of them or any of
their respective properties or assets may be bound or affected.
Section 3.7 Consents and Approvals. Except for (i) the approval of the
------------------------
shareholders of Community pursuant to the proxy statement of Community relating
to the meeting of the shareholders of Community at which the Merger is to be
considered (the "Joint Proxy Statement/Prospectus"); (ii) the Consents of the
Regulatory Authorities; (iii) the filing of Certificate of Merger with the State
New Jersey; and (iv) as set forth in Schedule 3.7, no Consents of any person are
necessary in connection with the execution and delivery by Community of this
Agreement, and the consummation of the Merger and the other transactions
contemplated hereby.
Section 3.8 Broker's Fees. Except for ▇▇▇▇ ▇▇▇▇ & Co., whose engagement
--------------
letter is set forth in Schedule 3.8, neither of Community or Community Bank, nor
any of their respective officers or directors, has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement.
14
Section 3.9 Absence of Certain Changes or Events. Except as set forth in
-------------------------------------
Schedule 3.9, since December 31, 2002, there has not been (a) any declaration,
payment or setting aside of any dividend or distribution (whether in cash, stock
or property) in respect of Community Shares or (b) any change or any event
involving a prospective change in the Condition of Community on a consolidated
basis, or a combination of any such change(s) and any such event(s) which has
had, or is reasonably likely to have, a Material Adverse Effect on the Condition
of Community on a consolidated basis or on Community or Community Bank
generally, including, without limitation any change in the administration or
supervisory standing or rating of Community or Community Bank with any
Regulatory Authority, and no fact or condition exists as of the date hereof
which might reasonably be expected to cause any such event or change in the
future.
Section 3.10 Legal Proceedings; Etc. Except as set forth in Schedule 3.10,
-----------------------
neither Community nor Community Bank is a party to any, and there are no pending
or, to the knowledge of Community and each Community subsidiary, threatened,
judicial, administrative, arbitral or other proceedings, claims, actions, causes
of action or governmental investigations against Community or Community Bank
challenging the validity of the transactions contemplated by this Agreement and,
to the knowledge of Community and each Community subsidiary as of the date
hereof, there is no proceeding, claim, action or governmental investigation
against Community or Community Bank; no judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator is outstanding against Community or Community Bank which has had,
or is reasonably likely to have, a Material Adverse Effect on the Condition of
Community on a consolidated basis; there is no default by Community or Community
Bank under any material contract or agreement to which Community or Community
Bank is a party; and none of Community or Community Bank is a party to any
agreement, order or memorandum in writing by or with any Regulatory Authority
restricting the operations of Community or Community Bank and none of Community
or Community Bank has been advised by any Regulatory Authority that any such
Regulatory Authority is contemplating issuing or requesting the issuance of any
such order or memorandum in the future.
Section 3.11 Taxes and Tax Returns.
---------------------
(a) Community has previously delivered or made available to Sun
copies of the federal, state and local income tax returns of Community and, if
consolidated returns do not exist for all periods, of Community Bank and each of
its respective subsidiaries, for the years 2000, 2001 and 2002 and all schedules
and exhibits thereto, and such returns have not been examined by the Internal
Revenue Service or any other taxing authority. Except as reflected in Schedule
3.11, Community, Community Bank and their respective subsidiaries have duly
filed in correct form all federal, state and local information returns and tax
returns required to be filed on or prior to the date hereof, and Community,
Community Bank and any of their respective subsidiaries have duly paid or made
adequate provisions for the payment of all taxes and other governmental charges
which are owed by Community, Community Bank or any of their respective
subsidiaries to any federal, state or local taxing authorities, whether or not
reflected in such returns (including, without limitation, those owed in respect
of the properties, income,
15
business, capital stock, deposits, franchises, licenses, sales and payrolls of
Community, Community Bank and any of their respective subsidiaries), other than
taxes and other charges which (i) are not yet delinquent or are being contested
in good faith or (ii) have not been finally determined. The amounts set forth as
liabilities for taxes on the Financial Statements of Community and the Financial
Regulatory Reports of Community Bank are sufficient, in the aggregate, for the
payment of all unpaid federal, state and local taxes (including any interest or
penalties thereon), whether or not disputed, accrued or applicable, for the
periods then ended, and have been computed in accordance with generally accepted
accounting principles. None of Community, Community Bank nor any of their
respective subsidiaries is responsible for the taxes of any other person other
than Community, Community Bank and any of their respective subsidiaries, under
Treasury Regulation 1.1502-6 or any similar provision of federal, state or
foreign law.
(b) Except as disclosed in Schedule 3.11, neither of Community,
Community Bank nor any of their respective subsidiaries has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any federal, state or local taxes due that is currently in effect,
and deferred taxes of Community, Community Bank or any of their respective
subsidiaries, have been adequately provided for in the Financial Statements of
Community.
(c) Except as disclosed in Schedule 3.11, neither of Community,
Community Bank nor any of their respective subsidiaries has made any payment, is
obligated to make any payment or is a party to any contract, agreement or other
arrangement that could obligate it to make any payment that would be disallowed
as a deduction under Section 280G or 162(m) of the Code.
(d) There has not been an ownership change, as defined in Section
382(g) of the Code, of Community, Community Bank or any of their respective
subsidiaries that occurred during or after any taxable period in which
Community, Community Bank or any of their respective subsidiaries incurred an
operating loss that carries over to any taxable period ending after the fiscal
year of Community immediately preceding the date of this Agreement.
(e) (i) Proper and accurate amounts have been withheld by Community,
Community Bank and their respective subsidiaries from their employees and others
for all prior periods in compliance in all material respects with the tax
withholding provisions of all applicable federal, state and local laws and
regulations, and proper due diligence steps have been taken in connection with
back-up withholding; (ii) federal, state and local returns have been filed by
Community, Community Bank and their respective subsidiaries for all periods for
which returns were due with respect to withholding, Social Security and
unemployment taxes or charges due to any federal, state or local taxing
authority; and (iii) the amounts shown on such returns to be due and payable
have been paid in full or adequate provision therefor have been included by
either Community or Community Bank in the Financial Statements of Community.
16
Section 3.12 Employee Benefit Plans.
-----------------------
(a) None of Community, Community Bank or any of their respective
subsidiaries has or maintains any "employee benefit plan," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), except as described in Schedule 3.12(a) (the "Employee Benefit
Plans"). Community, Community Bank and their respective subsidiaries have, with
respect to each such plan, delivered to Sun true and complete copies of: (i) all
plan texts and agreements and related trust agreements or annuity contracts and
any amendments thereto; (ii) all summary plan descriptions and material employee
communications; (iii) the Form 5500 filed in each of the most recent three plan
years (including all schedules thereto and the opinions of independent
accountants); (iv) the most recent actuarial valuation (if any); (v) the most
recent annual and periodic accounting of plan assets; (vi) if the plan is
intended to qualify under Section 401(a) or 403(a) of the Code, the most recent
determination letter received from the Internal Revenue Service; and (vii) all
material communications with any governmental entity or agency (including,
without limitation, the Department of Labor, Internal Revenue Service and the
Pension Benefit Guaranty Corporation ("PBGC")).
(b) Except as described in Schedule 3.12(b), no Employee Benefit Plan
is a defined benefit plan. None of Community, Community Bank or any of their
respective subsidiaries (or any pension plan maintained by any of them) has
incurred any liability to the PBGC or the Internal Revenue Service with respect
to any pension plan qualified under Section 401 of the Code, except liabilities
to the PBGC pursuant to Section 4007 of ERISA, all which have been fully paid.
No reportable event under Section 4043(b) of ERISA (including events waived by
PBGC regulation) has occurred with respect to any such pension plan.
(c) None of Community, Community Bank or any of their respective
subsidiaries has incurred any liability under Section 4201 of ERISA for a
complete or partial withdrawal from, or agreed to participate in, any
multi-employer plan as such term is defined in Section 3(37) of ERISA.
(d) All Employee Benefit Plans comply with the applicable provisions
of ERISA and the Code that are applicable, or intended to be applicable,
including, but not limited to, COBRA, HIPAA and any applicable, similar state
law. None of Community, Community Bank or any of their respective subsidiaries
has any material liability under any such plan that is not reflected in the
Financial Statements of Community or the Financial Regulatory Reports of
Community Bank. Neither Community, Community Bank, any Employee Benefit Plan nor
any employee, administrator or agent thereof, is or has been in violation of the
transaction code set rules under HIPAA ▇▇.▇▇. 1172-1174 or the HIPAA privacy
rules under 45 CFR Part 160 and subparts A and E of Part 164. No penalties have
been imposed on Community, Community Bank, any Employee Benefit Plan, or any
employee, administrator or agent thereof, under HIPAA ss. 1176 or ss. 1177.
17
For purposes of this Agreement, "COBRA" means the provision of Section
4980B of the Code and the regulations thereunder, and Part 6 of the Subtitle B
of title I of ERISA and any regulations thereunder, and "HIPAA" means the
provisions of the Code and ERISA as enacted by the Health Insurance Portability
and Accountability Act of 1996.
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)
has occurred with respect to any Employee Benefit Plan which would result in the
imposition, directly or indirectly, of an excise tax under Section 4975 of the
Code or a civil penalty under Section 502(i) of ERISA; and no actions have
occurred which could result in the imposition of a penalty under any section or
provision of ERISA.
(f) No Employee Benefit Plan which is a defined benefit pension plan
has any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan exceeds the plan's "benefit liabilities," as that term is defined in
Section 4001(a)(16) of ERISA, when determined under actuarial factors that would
apply if the plan terminated in accordance with all applicable legal
requirements.
(g) Except as described in Schedule 3.12(g), neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment or obligation (including,
without limitation, 9everance, bonus, deferred compensation, retirement,
unemployment compensation, golden parachute or otherwise) becoming due to any
director or any officer or employee of Community, Community Bank or any of their
respective subsidiaries under any Employee Benefit Plan or otherwise, (ii)
increase any benefits or obligations otherwise payable under any benefit plan or
(iii) result in any acceleration of the time of payment or vesting of any such
benefits or obligations.
(h) No Employee Benefit Plan is a multiemployer plan as defined in
Section 414(f) of the Code or Section 3(37) or 4001(a)(3) of ERISA. Community,
Community Bank and their respective subsidiaries have never been a party to or
participant in a multiemployer plan.
(i) There are no actions, liens, suits or claims pending or
threatened (other than routine claims for benefits) with respect to any Employee
Benefit Plan or against the assets of any Employee Benefit Plan. No assets of
Community, Community Bank or their respective subsidiaries are subject to any
lien under Section 302(f) of ERISA or Section 412(n) of the Code.
(j) Each Employee Benefit Plan which is intended to qualify under
Section 401(a) or 403(a) of the Code so qualifies and its related trust is
exempt from taxation under Section 501(a) of the Code. No event has occurred or
circumstance exists that will or could give rise to a disqualification or loss
of tax-exempt status of any such plan or trust.
18
(k) No Employee Benefit Plan is a multiple employer plan within the
meaning of Section 413(c) of the Code or Section 4063, 4064 or 4066 of ERISA. No
Employee Benefit Plan is a multiple employer welfare arrangement as defined in
Section 3(40) of ERISA.
(l) Each employee pension benefit plan, as defined in Section 3(2) of
ERISA , that is not qualified under Section 401(a) or 403(a) of the Code is
exempt from Part 2, 3 and 4 of Title I of ERISA as an unfunded plan that is
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees, pursuant to Section
201(2), 301(a)(3) and 401(a)(1) of ERISA. Except as disclosed on Schedule
3.12(l), no assets of Community, Community Bank or their respective subsidiaries
are allocated to or held in a grantor trust or "rabbi trust" or similar funding
vehicle.
(m) Except as set forth on Schedule 3.12(m), no Employee Benefit Plan
provides benefits to any current or former employee of Community, Community Bank
or their respective subsidiaries following the retirement or other termination
of service (other than coverage mandated by COBRA, the cost of which is fully
paid by the current or former employee or his or her dependents). Any such plan
may be amended or terminated at any time by unilateral action of Community,
Community Bank or their respective subsidiaries.
(n) With respect to each Employee Benefit Plan, there are no funded
benefit obligations for which contributions have not been made or properly
accrued and there are no unfunded benefit obligations that have not been
accounted for by reserves or otherwise properly footnoted in accordance with
generally accepted accounting principles on the Financial Statements of
Community.
(o) Set forth at Schedule 3.12(o) is a true and complete copy of the
Community Bank Directors Deferred Compensation Plan and related Trust Agreement
and all amendments and restatements of such plan from the date of first adoption
of such plan and trust and implementation; a certified copy of all minutes of
the Board of Directors approving such plan and all amendments and restatements
thereto, all plan participant joinder agreements related to such plan,
information related to any life insurance contracts and agreements whereby
parties other than Community or Community Bank have an ownership interest in the
assets of such policies or related death benefits, copies of all correspondence
related to such plan and all amendments thereto with the FDIC and the New Jersey
Department of Banking and Insurance related to such plan implementation and any
amendments and restatements thereto, and copies of any correspondence related to
such plan with respect to compliance with ERISA filed with any federal or state
governmental entity. The Directors Deferred Compensation Plan, as amended, set
forth at Schedule 3.12(o), has been duly and validly authorized by all necessary
corporate action on the part of Community Bank, has been duly and validly
executed by Community Bank, is a valid and binding obligation of Community Bank,
and has been adopted, implemented and administered in compliance with all
applicable federal and state laws, including but not limited to the applicable
provisions of the Banking Act of 1948 of the State of New Jersey.
19
Section 3.13 Title and Related Matters.
-------------------------
(a) Each of Community, Community Bank and their respective
subsidiaries has good title, and as to owned real property, has good and
marketable title in fee simple absolute, to all assets and properties, real or
personal, tangible or intangible, reflected as owned by or leased or subleased
by or carried under the name of any of them on the Financial Statements of
Community or the Financial Regulatory Reports of Community Bank or acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since
December 31, 2002), free and clear of all liens, encumbrances, mortgages,
security interests, restrictions, pledges or claims, except for (i) those liens,
encumbrances, mortgages, security interests, restrictions, pledges or claims
reflected in the Financial Statements of Community and the Financial Regulatory
Reports of Community Bank or incurred in the ordinary course of business after
December 31, 2002, (ii) statutory liens for amounts not yet delinquent or which
are being contested in good faith, and (iii) liens, encumbrances, mortgages,
security interests, pledges, claims and title imperfections that are not in the
aggregate material to the Condition of Community on a consolidated basis.
(b) All agreements pursuant to which Community, Community Bank or any
of their respective subsidiaries leases, subleases or licenses material real or
material personal properties from others are valid, binding and enforceable in
accordance with their respective terms, and there is not, under any of such
leases or licenses, any existing default or event of default, or any event which
with notice or lapse of time, or both, would constitute a default or force
majeure, or provide the basis for any other claim of excusable delay or
nonperformance, except for defaults which individually or in the aggregate would
not have a Material Adverse Effect on the Condition of Community on a
consolidated basis. Community, Community Bank and their respective subsidiaries
have all right, title and interest as a lessee under the terms of each lease or
sublease, free and clear of all liens, claims or encumbrances (other than the
rights of the lessor) as of the Effective Time of the Merger, and shall have the
right to transfer each lease or sublease pursuant to this Agreement.
(c) Except as set forth in Schedule 3.13(c), (i) all of the
buildings, structures and fixtures owned, leased or subleased by Community,
Community Bank and their respective subsidiaries are in good operating condition
and repair, subject only to ordinary wear and tear and/or minor defects which do
not interfere with the continued use thereof in the conduct of normal
operations, and (ii) all of the material personal properties owned, leased or
subleased by Community, Community Bank and their respective subsidiaries are in
good operating condition and repair, subject only to ordinary wear and tear
and/or minor defects which do not interfere with the continued use thereof in
the conduct of normal operations.
Section 3.14 Real Estate.
-----------
(a) Schedule 3.14(a) identifies each parcel of real estate or
interest therein owned, leased or subleased by Community, Community Bank or
their respective subsidiaries or
20
in which Community, Community Bank or their respective subsidiaries has any
ownership or leasehold interest.
(b) Schedule 3.14(b) lists or otherwise describes each and every
written or oral lease or sublease, together with the current name, address and
telephone number of the landlord or sublandlord and the landlord's property
manager (if any), under which Community or Community Bank is the lessee of any
real property and which relates in any manner to the operation of the businesses
of Community or Community Bank.
(c) None of Community, Community Bank or their respective
subsidiaries has violated, or is currently in violation of, any law, regulation
or ordinance relating to the ownership or use of the real estate and real estate
interests described in Schedules 3.14(a) and 3.14(b) including, but not limited
to any law, regulation or ordinance relating to zoning, building, occupancy,
environmental or comparable matter.
(d) As to each parcel of real property owned or used by Community,
Community Bank or any of their respective subsidiaries, none of Community or
Community Bank has received notice of any pending or, to the knowledge of
Community and each Community subsidiary, threatened condemnation proceedings,
litigation proceedings or mechanic's or materialmen's liens.
Section 3.15 Environmental Matters.
---------------------
(a) Each of Community, Community Bank, the Participation Facilities
(as defined below), and the Loan Properties (as defined below) are, and have
been, in material compliance, and there are no present circumstances that would
prevent or interfere with the continuation of such material compliance with all
applicable federal, state and local laws, including common law, rules,
regulations and ordinances, and with all applicable decrees, orders and
contractual obligations relating to pollution or the protection of the
environment or the discharge of, or exposure to, Hazardous Materials (as defined
below) in the environment or workplace.
(b) There is no litigation pending or, to the knowledge of Community,
Community Bank or any of their respective subsidiaries, threatened before any
court, governmental agency or board or other forum in which Community, Community
Bank or any Participation Facility has been or, with respect to threatened
litigation, may be, named as defendant (i) for alleged noncompliance (including
by any predecessor), with respect to any Environmental Law (as defined below) or
(ii) relating to the release into the environment of any Hazardous Material (as
defined below), whether or not occurring at, on or involving a site owned,
leased or operated by Community, Community Bank or any Participation Facility.
(c) There is no litigation pending or, to the knowledge of Community,
Community Bank or any of their respective subsidiaries, threatened before any
court,
21
governmental agency or board or other forum in which any Loan Property (or
Community or Community Bank in respect of such Loan Property) has been or, with
respect to threatened litigation, may be, named as a defendant or potentially
responsible party (i) for alleged noncompliance (including by any predecessor)
with any Environmental Law or (ii) relating to the release into the environment
of any Hazardous Material, whether or not occurring at, on or involving a Loan
Property.
(d) To the knowledge of Community, Community Bank or any of their
respective subsidiaries, there is no reasonable basis for any litigation of a
type described in Section 3.15(b) and Section 3.15(c) of this Agreement.
(e) During the period of (i) ownership or operation by Community or
Community Bank of any of their respective current properties, (ii) participation
by Community or Community Bank in the management of any Participation Facility,
or (iii) holding by Community or Community Bank of a security interest in any
Loan Property, there have been no releases of Hazardous Material in, on, under
or affecting such properties.
(f) Prior to the period of (i) ownership or operation by Community or
Community Bank of any of their respective current properties, (ii) participation
by Community or Community Bank in the management of any Participation Facility,
or (iii) holding by Community or Community Bank of a security interest in any
Loan Property, to the knowledge of Community, Community Bank or any of their
respective subsidiaries, there were no releases of Hazardous Material or oil in,
on, under or affecting any such property, Participation Facility or Loan
Property.
Section 3.16 Commitments and Contracts.
-------------------------
(a) Except as set forth in Schedule 3.16, none of Community,
Community Bank or their respective subsidiaries is a party or subject to any of
the following (whether written or oral, express or implied):
(i) Any employment contract or understanding (including any
understandings or obligations with respect to severance or
termination pay liabilities or fringe benefits) with any
present or former officer, director, employee, including in
any such person's capacity as a consultant (other than those
which either are terminable at will without any further
amount being payable thereunder or as a result of such
termination by Community or Community Bank);
(ii) Any labor contract or agreement with any labor union;
22
(iii)Any contract covenants which limit the ability of Community
or Community Bank to compete in any line of business or
which involve any restriction of the geographical area in
which Community or Community Bank may carry on its
businesses (other than as may be required by law or
applicable regulatory authorities);
(iv) Any lease (other than real estate leases described on
Schedule 3.14(b)) or other agreements or contracts with
annual payments aggregating $25,000 or more; or
(v) Any other contract or agreement which would be required to
be disclosed in reports filed by Community with the Federal
Reserve Board, the New Jersey Department of Banking and
Insurance or the FDIC and which has not been so disclosed.
(b) Except as set forth in Schedule 3.16(b), there is not, under any
agreement, lease or contract to which Community, Community Bank or any of their
respective subsidiaries is a party, any existing default or event of default, or
any event which with notice or lapse of time, or both, would constitute a
default or force majeure, or provide the basis for any other claim of excusable
delay or non-performance.
(c) Except as set forth on Schedule 3.16(c), (i) neither the
execution of this Agreement nor the consummation of the transactions
contemplated hereby will result in termination of any of the material service
contracts (including leases, agreements or licenses) to which Community or
Community Bank is a party ("Service Contracts"), or modification or acceleration
of any of the terms of such Service Contracts; and (ii) no consents are required
to be obtained and no notices are required to be given in order for the Service
Contracts to remain effective, without any modification or acceleration of any
of the terms thereof, following the consummation of the transactions
contemplated by this Agreement.
(d) Schedule 3.16(d) lists the deadlines for extensions or
terminations of any material leases, agreements or licenses (including
specifically data processing agreements) to which Community or Community Bank is
a party.
Section 3.17 Regulatory, Accounting and Tax Matters. None of Community,
----------------------------------------
Community Bank or any of their respective subsidiaries has taken or agreed to
take any action or has any knowledge of any fact or has agreed to any
circumstance that would (i) materially impede or delay receipt of any Consents
of any Regulatory Authorities referred to in this Agreement including, matters
relating to the Community Reinvestment Act and protests thereunder; or (ii)
prevent the transactions contemplated by this Agreement from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
23
Section 3.18 Registration Obligations. Except with respect to obligators
-------------------------
set forth on Schedule 3.18, neither of Community or Community Bank is under any
obligation, contingent or otherwise, which will survive the Merger to register
any of its securities under the Securities Act of 1933 or any state securities
laws.
Section 3.19 Antitakeover Provisions. Community, Community Bank and their
-----------------------
respective subsidiaries have taken all actions required to exempt Community,
this Agreement, the Merger, the Bank Merger Agreement and the Bank Merger from
any provisions of an antitakeover nature contained in their organizational
documents, and the provisions of any federal or state "antitakeover," "fair
price," "moratorium," "control share acquisition" or similar laws or
regulations.
Section 3.20 Insurance. Community, Community Bank and their respective
---------
subsidiaries are presently insured as set forth on Schedule 3.20, and during
each of the past three calendar years have been insured, for such amounts
against such risks as companies or institutions engaged in a similar business
would, in accordance with good business practice, customarily be insured. To the
knowledge of Community and Community Bank, the policies of fire, theft,
liability and other insurance maintained with respect to the assets or
businesses of Community and each Community subsidiary provide adequate coverage
against loss, and the fidelity bonds in effect as to which Community or
Community Bank is named an insured are sufficient for their purpose. Such
policies of insurance are listed and described in Schedule 3.20.
Section 3.21 Labor.
-----
(a) No work stoppage involving Community, Community Bank or any of
their respective subsidiaries is pending as of the date hereof or, to the
knowledge of Community, Community Bank and their respective subsidiaries,
threatened. None of Community, Community Bank or any of their respective
subsidiaries is involved in, or, to the knowledge of Community, Community Bank
and their respective subsidiaries, threatened with or affected by, any
proceeding asserting that Community, Community Bank or any of their respective
subsidiaries has committed an unfair labor practice or any labor dispute,
arbitration, lawsuit or administrative proceeding which might reasonably be
expected to have a Material Adverse Effect on Community. No union represents or
claims to represent any employees of Community, Community Bank or their
respective subsidiaries, and, to the knowledge of Community, Community Bank and
their respective subsidiaries, no labor union is attempting to organize
employees of Community, Community Bank or their respective subsidiaries.
(b) Community, Community Bank or their respective subsidiaries have
made available to Sun a true and complete list of all employees of Community,
Community Bank and their respective subsidiaries as of the date hereof, together
with the employee position, title, salary and date of hire, and all information
with respect to all benefit plans or policies, bonus arrangements, commissions,
severance plans or policies, compensation arrangements or other benefits
provided to such employees. Except as set forth on Schedule 3.21(b), the
consummation of the transactions contemplated hereby will not cause Sun to incur
or suffer any liability relating
24
to, or obligation to pay, severance, termination or other payments to any person
or entity. Except as set forth on Schedule 3.16(a) hereto, no employee of
Community, Community Bank or their respective subsidiaries has any contractual
right to continued employment by Community.
(c) Community, Community Bank and their respective subsidiaries are
in compliance with all applicable laws and regulations relating to employment or
the workplace, including, without limitation, provisions relating to wages,
hours, collective bargaining, safety and health, work authorization, equal
employment opportunity, immigration and the withholding of income taxes,
unemployment compensation, workers compensation, employee privacy and right to
know and social security contributions.
(d) Except as set forth on Schedule 3.21(d) hereto, there has not
been, there is not presently pending or existing and there is not threatened any
proceeding against or affecting Community, Community Bank or their respective
subsidiaries relating to the alleged violation of any legal requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations Board,
the Equal Employment Opportunity Commission or any comparable governmental body,
organizational activity, or other labor or employment dispute against or
affecting Community, Community Bank or their respective subsidiaries.
Section 3.22 Compliance with Laws. Each of Community, Community Bank and
---------------------
their respective subsidiaries has conducted its business in accordance with all
applicable federal, foreign, state and local laws, regulations and orders, and
each is in material compliance with such laws, regulations and orders. Except as
disclosed in Schedule 3.22, none of Community or Community Bank:
(a) is in violation of any laws, orders or permits applicable to its
business or the employees or agents or representatives conducting its business
(other than where such violation will not, alone or in the aggregate, have a
Material Adverse Effect on Community), and
(b) has received a notification or communication from any agency or
department of any federal, state or local governmental authority or any
Regulatory Authority or the staff thereof (i) asserting that Community or
Community Bank is not in compliance with any laws or orders which such
governmental authority or Regulatory Authority enforces (other than where such
non-compliance will not, alone or in the aggregate, have a Material Adverse
Effect on Community), (ii) threatening to revoke any permit or license (other
than licenses or permits the revocation of which will not, alone or in the
aggregate, have a Material Adverse Effect on Community), (iii) requiring
Community or Community Bank to enter into any cease and desist order, formal
agreement, commitment or memorandum of understanding, or to adopt any
resolutions or similar undertakings, or (iv) directing, restricting or limiting,
or purporting to direct, restrict or limit in any material manner, the
operations of Community or Community Bank, including, without limitation, any
restrictions on the payment of dividends, or that in any manner relates to such
entity's capital adequacy, credit policies, management or business.
25
(c) Neither Community nor Community Bank is aware of, has been
advised of, or has reason to believe that any facts or circumstances exist,
which would cause Community Bank: (i) to be deemed to be operating in violation
in any material respect of the federal Bank Secrecy Act, as amended, and its
implementing regulations (31 C.F.R. Part 103), the USA PATRIOT Act of 2001,
Public Law 107-56 (the "USA PATRIOT Act"), and the regulations promulgated
thereunder, any order issued with respect to anti-money laundering by the U.S.
Department of the Treasury's Office of Foreign Assets Control, or any other
applicable anti-money laundering statute, rule or regulation; 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 and regulations, including without limitation, in Title V
of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999 and regulations promulgated thereunder, as
well as the provisions of the information security program adopted by Community
Bank pursuant to 12 C.F.R. Part 570. Furthermore, the Board of Directors of
Community Bank has adopted and Community Bank has implemented an anti-money
laundering program that contains adequate and appropriate customer
identification verification procedures that comply with Section 326 of the USA
Patriot Act and such anti-money laundering program meets the requirements in all
material respects of Section 352 of the USA PATRIOT Act and the regulations
thereunder.
Section 3.23 Transactions with Management. Except for (a) deposits, all of
----------------------------
which are on terms and conditions comparable to those made available to other
customers of Community Bank at the time such deposits were entered into, (b) the
loans listed on Schedule 3.5 or arm's length loans to employees entered into in
the ordinary course of business, (c) the agreements listed on Schedule 3.16, (d)
obligations under employee benefit plans of Community, Community Bank and their
respective subsidiaries set forth in Schedule 3.12 and (e) the items described
on Schedule 3.23 and any loans or deposit agreements entered into in the
ordinary course with customers of Community Bank, there are no contracts with or
commitments to directors, officers or employees involving the expenditure of
more than $5,000 as to any one individual, including, with respect to any
business directly or indirectly controlled by any such person, or $5,000 for all
such contracts for commitments in the aggregate for all such individuals.
Section 3.24 Derivative Contracts. Neither of Community or Community Bank
---------------------
is a party to or has agreed to enter into an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial contract or
agreement, or any other contract or agreement not included in Financial
Statements of Community and the Financial Statements of Community Bank which is
a financial derivative contract (including various combinations thereof)
("Derivative Contracts"), except for those Derivative Contracts set forth in
Schedule 3.24.
Section 3.25 Deposits. None of the deposits of Community Bank are
--------
"brokered" deposits as such term is defined in the Rules and Regulations of the
FDIC or are subject to any encumbrance, legal restraint or other legal process
(other than garnishments, pledges, set off rights, escrow limitations and
similar actions taken in the ordinary course of business), and no
26
portion of such deposits represents a deposit of any affiliate of Community's
except as set forth in Schedule 3.25.
Section 3.26 Accounting Controls; Disclosure Controls.
----------------------------------------
(a) Each of Community, Community Bank and their respective
subsidiaries has devised and maintained systems of internal accounting control
sufficient to provide reasonable assurances that: (i) all material transactions
are executed in accordance with general or specific authorization of the Board
of Directors and the duly authorized executive officers of Community, Community
Bank and their respective subsidiaries; (ii) all material transactions are
recorded as necessary to permit the preparation of financial statements in
conformity with generally accepted accounting principles consistently applied
with respect to institutions such as Community, Community Bank and their
respective subsidiaries or any other criteria applicable to such financial
statements, and to maintain proper accountability for items therein; (iii)
access to the material properties and assets of Community, Community Bank and
their respective subsidiaries is permitted only in accordance with general or
specific authorization of the Board of Directors and the duly authorized
executive officers of Community, Community Bank and their respective
subsidiaries; and (iv) the recorded accountability for items is compared with
the actual levels at reasonable intervals and appropriate actions taken with
respect to any differences.
(b) To the extent required, Community and Community Bank have in
place "disclosure controls and procedures" as defined in Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934, as amended, to allow
Community's management to make timely decisions regarding required disclosures
and to make the certifications of the Chief Executive Officer and Chief
Financial Officer of Community required under the Securities Exchange Act of
1934, as amended.
Section 3.27 Proxy Materials. None of the information relating to Community
---------------
or Community Bank to be included in the Joint Proxy Statement/Prospectus which
is to be mailed to the shareholders of Community and Sun in connection with the
solicitation of their approval of this Agreement will, at the time such Joint
Proxy Statement/Prospectus is mailed or at the time of the meeting of
shareholders to which such Joint Proxy Statement/Prospectus relates, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make a statement therein not false or misleading.
Section 3.28 Deposit Insurance. The deposit accounts of Community Bank are
-----------------
insured by the FDIC in accordance with the provisions of the Federal Deposit
Insurance Act (the "Act"); Community Bank has paid all regular premiums and
special assessments and filed all reports required under the Act.
Section 3.29 Intellectual Property. Each of Community, Community Bank and
---------------------
their respective subsidiaries owns or possesses valid and binding licenses and
other rights to use without payment all patents, copyrights, trade secrets,
trade names, servicemarks, trademarks,
27
computer software and other intellectual property used in its businesses;
neither of Community or Community Bank has received any notice of conflict with
respect thereto that asserts the right of others.
Section 3.30 SEC Filings. Community has filed all forms, reports and
-------
documents required to be filed by Community with the SEC since January 1, 2000
(collectively, the Community SEC Reports"). The Community SEC Reports (i) at the
time they were filed, complied in all material respects with the applicable
requirements of the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, as the case may be, (ii) did not at the time
they were filed (or if amended or superseded by filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
Community's SEC Reports or necessary in order to make statements in Community's
SEC Reports, in light of the circumstances under which they were made, not
misleading.
Section 3.31 Untrue Statements and Omissions. No representation or warranty
-------------------------------
contained in Article 3 of this Agreement or in the Schedules contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 3.32 Fairness Opinion. Prior to the execution of this Agreement,
-----------------
Community has received an opinion from ▇▇▇▇, ▇▇▇▇ & Co. to the effect that as of
the date thereof and based upon and subject to the matters set forth therein,
the Per Share Stock Consideration is fair to the shareholders of Community from
a financial point of view. Such opinion has not been amended or rescinded as of
the date of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SUN
Sun hereby represents and warrants to Community as follows as of the
date hereof and also on the Effective Time of the Merger (except as otherwise
provided):
Section 4.1 Organization and Related Matters of Sun.
---------------------------------------
(a) Sun is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey. Sun has the corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as now conducted, or as proposed to be conducted pursuant to this
Agreement, and Sun is licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by Sun, or the character or
location of the properties and assets owned or leased by Sun makes such
licensing or qualification necessary, except where the failure to be so licensed
or qualified (or steps necessary to cure such failure) would not have a Material
Adverse Effect on the Condition of Sun on a consolidated basis. Sun is duly
registered as a bank holding company under the BHC Act. True
29
and correct copies of the Amended and Restated Certificate of Incorporation of
Sun and the Amended and Restated Bylaws of Sun, each as amended to the date
hereof, have been made available to Community.
(b) Sun Bank is a national bank, duly organized, validly existing and
in good standing under the laws of the United States. Sun Bank has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as such business is now being conducted. True and correct
copies of the Articles of Association and the Bylaws of Sun Bank, each as
amended to the date hereof, have been delivered to Community.
(c) Each subsidiary of Sun and Sun Bank is a corporation, limited
liability company or partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization.
Each subsidiary has the corporate or requisite power and authority to own or
lease all of its properties and assets and to carry on its business as such
business is now being conducted, and is duly licensed or qualified to do
business in all such places where the nature of the business being conducted by
each subsidiary or the character or location of the properties and assets owned
or leased by each subsidiary make such qualification necessary, except where the
failure to be so licensed or qualified (or steps necessary to cure such failure)
would not have a Material Adverse Effect on the Condition of Sun on a
consolidated basis.
(d) Sun has in effect all federal, state, local and foreign
governmental, regulatory and other authorizations, permits and licenses
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted, the absence of which, either individually or in the
aggregate, would have a Material Adverse Effect on the Condition of Sun on a
consolidated basis.
Section 4.2 Capitalization.
--------------
(a) As of December 31, 2003, the authorized capital stock of Sun
consisted of 25,000,000 shares of common stock, par value $1.00 per share,
13,290,747 shares of which are issued and outstanding (exclusive of any such
shares held in the treasury of Sun as of the date hereof), and 1,000,000 shares
of preferred stock, par value $1.00 per share, none of which is issued and
outstanding as of the date hereof. All issued and outstanding Sun Shares have
been duly authorized and validly issued, and all such shares are fully paid and
nonassessable.
(b) The authorized capital stock of Sun Bank consists of 750,000
shares of common stock, $5.00 par value per share, of which 607,577 shares as of
the date hereof are issued and outstanding (none of which is held in the
treasury of Sun Bank) (the "Sun Bank Shares"). All of the issued and outstanding
Sun Bank Shares have been duly authorized and validly issued and all such shares
are fully paid and, subject to 12 U.S.C. Section 55, nonassessable. As of the
date hereof, there are no outstanding options, warrants, commitments or other
rights or instruments to purchase or acquire any shares of capital stock of Sun
Bank, or any securities or rights convertible into or exchangeable for shares of
capital stock of Sun Bank.
29
(c) All of the issued and outstanding shares of capital stock of Sun
Bank are owned by Sun free and clear of all liens and encumbrances and adverse
claims thereto.
Section 4.3 Authorization. The execution, delivery, and performance of this
-------------
Agreement, and the consummation of the transactions contemplated hereby and in
any related agreements, have been duly authorized by the Boards of Directors of
Sun, and no other corporate proceedings on the part of Sun are or will be
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement is the valid and binding obligation of Sun enforceable against it
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, 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. Neither the execution, delivery or performance of this Agreement nor
the consummation of the transactions contemplated hereby will (i) violate any
provision of the Amended and Restated Certificate of Incorporation or Amended
and Restated Bylaws of Sun or, (ii) to Sun's knowledge and assuming that any
necessary Consents are duly obtained, (A) violate, conflict with, result in a
breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of, accelerate the performance required by or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of Sun under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
permit, lease, agreement or other instrument or obligation to which Sun is a
party, or by which Sun or any of its properties or assets may be bound or
affected, (B) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Sun or any of its material
properties or assets, except for (X) such conflicts, breaches or defaults as are
set forth in Schedule 4.4; and (Y) with respect to (B) above, such as
individually or in the aggregate will not have a Material Adverse Effect on the
Condition of Sun on a consolidated basis.
Section 4.4 Financial Statements.
--------------------
(a) Sun has made available to Community copies of the consolidated
financial statements of Sun as of and for the years ended December 31, 2001 and
2002, and for the period ended March 31, 2003, June 30, 2003 and September 30,
2003, and Sun will make available to Community, as soon as practicable following
the preparation of additional consolidated financial statements for each
subsequent calendar quarter or year of Sun, the consolidated financial
statements of Sun as of and for such subsequent calendar quarter or year (such
consolidated financial statements, unless otherwise indicated, being hereinafter
referred to collectively as the "Financial Statements of Sun").
(b) Each of the Financial Statements of Sun (including the related
notes) have been or will be prepared in all material respects in accordance with
generally accepted accounting principles, which principles have been or will be
consistently applied during the
30
periods involved, except as otherwise noted therein, and the books and records
of Sun have been, are being, and will be maintained in all material respects in
accordance with applicable legal and accounting requirements and reflect only
actual transactions. Each of the Financial Statements of Sun (including the
related notes) fairly presents or will fairly present the consolidated financial
position of Sun as of the respective dates thereof and fairly presents or will
fairly present the results of operations of Sun for the respective periods
therein set forth.
(c) Except for the issuance in December 2003 of $40 million aggregate
principal amount of floating rate preferred securities, since December 31, 2002,
Sun has not incurred any obligation or liability (contingent or otherwise) that
has or might reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Condition of Sun on a consolidated basis, except
obligations and liabilities (i) which are accrued or reserved against in the
Financial Statements of Sun or reflected in the notes thereto, and (ii) which
were incurred after December 31, 2002 in the ordinary course of business
consistent with past practices. Since December 31, 2002, and except for the
matters described in (i) and (ii) above, Sun has not incurred or paid any
obligation or liability which would be material to the Condition of Sun on a
consolidated basis.
Section 4.5 Absence of Certain Changes or Events. Since December 31, 2002,
------------------------------------
there has not been any material adverse change in the Condition of Sun on a
consolidated basis, and to the knowledge of Sun, no fact or condition exists
which might reasonably be expected to cause such a material adverse change in
the future.
Section 4.6 Consents and Approvals. Except for (i) the Consents of the
------------------------
Regulatory Authorities; (ii) approval of this Agreement by the shareholders of
Sun; (iii) filing of Certificate of Merger with the State of New Jersey; and
(iv) as disclosed in Schedule 4.7, no consents or approvals by, or filings or
registrations with, any third party or any public body, agency or authority are
necessary in connection with the execution and delivery by Sun of this
Agreement, and the consummation of the Merger and the other transactions
contemplated hereby.
Section 4.7 Proxy Materials. None of the information relating solely to Sun
---------------
or any Subsidiary to be included or incorporated by reference in the Joint Proxy
Statement/Prospectus which is to be mailed to the shareholders of Community and
Sun in connection with the solicitation of their approval of this Agreement
will, at the time such Joint Proxy Statement/Prospectus is mailed or at the time
of the meeting of shareholders of Community to which such Joint Proxy
Statement/Prospectus relates, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make a
statement therein not false or misleading.
Section 4.8 Accounting, Tax, Regulatory Matters. Sun has not agreed to take
-----------------------------------
any action, has no knowledge of any fact and has not agreed to any circumstance
that would (i) prevent the transactions contemplated hereby, including the
Merger, from qualifying as a reorganization within the meaning of Section 368 of
the Code, or (ii) materially impede or delay
31
receipt of any Consent from any Regulatory Authority referred to in this
Agreement including matters relating to the Community Reinvestment Act.
Section 4.9 Untrue Statements and Omissions. No representation or warranty
-------------------------------
contained in Article 4 of this Agreement or in the Schedules of Sun contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
Section 4.10. Broker's Fees. Except for Sandler ▇'▇▇▇▇▇ & Partners, L.P.,
-------------
neither of Sun or Sun Bank, nor any of their respective officers or directors,
has employed any broker or finder or incurred any liability for any broker's
fees, commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement.
Section 4.10 Title and Related Matters.
-------------------------
(a) Each of Sun, Sun Bank and their respective subsidiaries has good
title, and as to owned real property, has good and marketable title in fee
simple absolute, to all assets and properties, real or personal, tangible or
intangible, reflected as owned by or leased or subleased by or carried under the
name of any of them on the Financial Statements of Sun or the Financial
Regulatory Reports of Sun Bank or acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of for fair value in
the ordinary course of business since December 31, 2002), free and clear of all
liens, encumbrances, mortgages, security interests, restrictions, pledges or
claims, except for (i) those liens, encumbrances, mortgages, security interests,
restrictions, pledges or claims reflected in the Financial Statements of Sun and
the Financial Regulatory Reports of Sun Bank or incurred in the ordinary course
of business after December 31, 2002, (ii) statutory liens for amounts not yet
delinquent or which are being contested in good faith, and (iii) liens,
encumbrances, mortgages, security interests, pledges, claims and title
imperfections that are not in the aggregate material to the Condition of Sun on
a consolidated basis.
32
(b) All agreements pursuant to which Sun, Sun Bank or any of their
respective subsidiaries leases, subleases or licenses material real or material
personal properties from others are valid, binding and enforceable in accordance
with their respective terms, and there is not, under any of such leases or
licenses, any existing default or event of default, or any event which with
notice or lapse of time, or both, would constitute a default or force majeure,
or provide the basis for any other claim of excusable delay or nonperformance,
except for defaults which individually or in the aggregate would not have a
Material Adverse Effect on the Condition of Sun on a consolidated basis.
Section 4.12. Accounting Controls; Disclosure Controls.
----------------------------------------
(a) Each of Sun, Sun Bank and their respective subsidiaries has
devised and maintained systems of internal accounting control sufficient to
provide reasonable assurances that: (i) all material transactions are executed
in accordance with general or specific authorization of the Board of Directors
and the duly authorized executive officers of Sun, Sun Bank and their respective
subsidiaries; (ii) all material transactions are recorded as necessary to permit
the preparation of financial statements in conformity with generally accepted
accounting principles consistently applied with respect to institutions such as
Sun, Sun Bank and their respective subsidiaries or any other criteria applicable
to such financial statements, and to maintain proper accountability for items
therein; (iii) access to the material properties and assets of Sun, Sun Bank and
their respective subsidiaries is permitted only in accordance with general or
specific authorization of the Board of Directors and the duly authorized
executive officers of Sun, Sun Bank and their respective subsidiaries; and (iv)
the recorded accountability for items is compared with the actual levels at
reasonable intervals and appropriate actions taken with respect to any
differences.
(b) To the extent required, Sun has in place "disclosure controls and
procedures" as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended, to allow Sun's management to make timely
decisions regarding required disclosures and to make the certifications of the
Chief Executive Officer and Chief Financial Officer of Sun required under the
Securities Exchange Act of 1934, as amended.
Section 4.13 Deposit Insurance. The deposit accounts of Sun Bank are
------------------
insured by the FDIC in accordance with the provisions of the Federal Deposit
Insurance Act (the "Act"); Sun Bank has paid all regular premiums and special
assessments and filed all reports required under the Act.
Section 4.14 SEC Filings. Sun has filed all forms, reports and documents
-----------
required to be filed by Sun with the SEC since January 1, 2003 (collectively,
the Sun SEC Reports"). The Sun SEC Reports (i) at the time they were filed,
complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended, as the case may be, (ii) did not at the time they were filed (or if
amended or superseded by filing prior to the date of this Agreement, then on the
date of such
33
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Sun's SEC Reports or necessary in
order to make statements in Sun's SEC Reports, in light of the circumstances
under which they were made, not misleading
Section 4.15 Loan Reserves. The allowances for possible loan losses shown
--------------
on the Financial Statements of Sun and the Financial Regulatory Reports of Sun
Bank as of September 30, 2003 were, and the allowance for possible loan losses
to be shown on the Financial Statements of Sun and the Financial Regulatory
Reports of Sun Bank as of any date subsequent to the execution of this Agreement
will be, as of such dates, adequate to provide for possible losses, net of
recoveries relating to loans previously charged off, in respect of loans
outstanding (including accrued interest receivable) of Sun and Sun Bank and
other extensions of credit (including letters of credit or commitments to make
loans or extend credit).
Section 4.16 Environmental Matters. To our knowledge, each of Sun, Sun
----------------------
Bank, the Participation Facilities (as defined below), and the Loan Properties
(as defined below) are, and have been, in material compliance, and there are no
present circumstances that would prevent or interfere with the continuation of
such material compliance with all applicable federal, state and local laws,
including common law, rules, regulations and ordinances, and with all applicable
decrees, orders and contractual obligations relating to pollution or the
protection of the environment or the discharge of, or exposure to, Hazardous
Materials (as defined below) in the environment or workplace. There is no
litigation pending or, to the knowledge of Sun, Sun Bank or any of their
respective subsidiaries, threatened before any court, governmental agency or
board or other forum in which Sun, Sun Bank or any Participation Facility has
been or, with respect to threatened litigation, may be, named as defendant (i)
for alleged noncompliance (including by any predecessor), with respect to any
Environmental Law (as defined below) or (ii) relating to the release into the
environment of any Hazardous Material (as defined below), whether or not
occurring at, on or involving a site owned, leased or operated by Sun, Sun Bank
or any Participation Facility.
Section 4.17 Legal Proceedings; Etc. Neither Sun nor Sun Bank is a party to
----------------------
any, and there are no pending or, to the knowledge of Sun and each Sun
subsidiary, threatened, judicial, administrative, arbitral or other proceedings,
claims, actions, causes of action or governmental investigations against Sun or
Sun Bank challenging the validity of the transactions contemplated by this
Agreement and, to the knowledge of Sun and each Sun subsidiary as of the date
hereof, there is no proceeding, claim, action or governmental investigation
against Sun or Sun Bank; no judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator is outstanding against Sun or Sun Bank which has had, or is
reasonably likely to have, a Material Adverse Effect on the Condition of Sun on
a consolidated basis; there is no default by Sun or Sun Bank under any material
contract or agreement to which Sun or Sun Bank is a party; and none of Sun or
Sun Bank is a party to any agreement, order or memorandum in writing by or with
any Regulatory Authority restricting the operations of Sun or Sun Bank and none
of Sun or Sun Bank has been advised by any Regulatory Authority that any such
Regulatory Authority is contemplating issuing or requesting the issuance of any
such order or memorandum in the future.
34
Section 4.18 Labor.
-----
(a) No work stoppage involving Sun, Sun Bank or any of their
respective subsidiaries is pending as of the date hereof or, to the knowledge of
Sun, Sun Bank and their respective subsidiaries, threatened. None of Sun, Sun
Bank or any of their respective subsidiaries is involved in, or, to the
knowledge of Sun, Sun Bank and their respective subsidiaries, threatened with or
affected by, any proceeding asserting that Sun, Sun Bank or any of their
respective subsidiaries has committed an unfair labor practice or any labor
dispute, arbitration, lawsuit or administrative proceeding which might
reasonably be expected to have a Material Adverse Effect on Sun. No union
represents or claims to represent any employees of Sun, Sun Bank or their
respective subsidiaries, and, to the knowledge of Sun, Sun Bank and their
respective subsidiaries, no labor union is attempting to organize employees of
Sun, Sun Bank or their respective subsidiaries.
(b) Sun, Sun Bank and their respective subsidiaries are in compliance
with all applicable laws and regulations relating to employment or the
workplace, including, without limitation, provisions relating to wages, hours,
collective bargaining, safety and health, work authorization, equal employment
opportunity, immigration and the withholding of income taxes, unemployment
compensation, workers compensation, employee privacy and right to know and
social security contributions.
Section 4.19 Compliance with Laws. Each of Sun, Sun Bank and their
----------------------
respective subsidiaries has conducted its business in accordance with all
applicable federal, foreign, state and local laws, regulations and orders, and
each is in material compliance with such laws, regulations and orders. None of
Sun or Sun Bank:
(a) is in violation of any laws, orders or permits applicable to its
business or the employees or agents or representatives conducting its business
(other than where such violation will not, alone or in the aggregate, have a
Material Adverse Effect on Sun), or
(b) since January 1, 2003, has received a notification or
communication from any agency or department of any federal, state or local
governmental authority or any Regulatory Authority or the staff thereof (i)
asserting that Sun or Sun Bank is not in compliance with any laws or orders
which such governmental authority or Regulatory Authority enforces (other than
where such non-compliance will not, alone or in the aggregate, have a Material
Adverse Effect on Sun), (ii) threatening to revoke any permit or license (other
than licenses or permits the revocation of which will not, alone or in the
aggregate, have a Material Adverse Effect on Sun), (iii) requiring Sun or Sun
Bank to enter into any cease and desist order, formal agreement, commitment or
memorandum of understanding, or to adopt any resolutions or similar
undertakings, or (iv) directing, restricting or limiting, or purporting to
direct, restrict or limit in any material manner, the operations of Sun or Sun
Bank, including, without limitation, any restrictions on the payment of
dividends, or that in any manner relates to such entity's capital adequacy,
credit policies, management or business.
35
ARTICLE 5
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of the Business of Community and Community
-------------------------------------------------------------
Subsidiaries.
-------------
(a) During the period from the date of this Agreement to the
Effective Time of the Merger, Community shall, and shall cause Community Bank
and its respective subsidiaries to, (i) conduct its business in the usual,
regular and ordinary course consistent with past practice and prudent banking
principles, (ii) use its best efforts to maintain and preserve intact its
business organization, employees, goodwill with customers and advantageous
business relationships and retain the services of its officers and key
employees, (iii) preserve for itself and Sun the goodwill of the customers of
Community, Community Bank and their respective subsidiaries and others with whom
business relationships exist, and (iv) except as required by law or regulation,
take no action which would adversely affect or delay the ability of Community or
Sun to obtain any Consent from any Regulatory Authority or other approvals
required for the consummation of the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement.
(b) During the period from the date of this Agreement to the
Effective Time of the Merger, except as required by law or regulation, Community
shall not, and it shall not permit any Community subsidiary, without the prior
written consent of Sun, to:
(i) change, delete or add any provision of or to the Certificate
of Incorporation or Bylaws of Community or Community Bank;
(ii) except for the issuance of Community Shares pursuant to the
terms of the Community Options, change the number of shares
of the authorized, issued or outstanding capital stock of
Community, including any issuance, purchase, redemption,
split, combination or reclassification thereof, or issue or
grant any option, warrant, call, commitment, subscription,
right or agreement to purchase relating to the authorized or
issued capital stock of Community, declare, set aside or pay
any dividend or other distribution with respect to the
outstanding capital stock of Community; provided that
Community may pay a one time special cash dividend of up to
$.75 per share on each Community Share issued and
outstanding (other than shares held in treasury and
unawarded shares held in benefit plans) immediately prior to
the Effective Time.
36
(iii)incur any material liabilities or material obligations
(other than deposit liabilities and short-term borrowings in
the ordinary course of business), whether directly or by way
of guaranty, including any obligation for borrowed money, or
whether evidenced by any note, bond, debenture, or similar
instrument, except in the ordinary course of business
consistent with past practice;
(iv) make any capital expenditures individually in excess of
$10,000, or in the aggregate in excess of $10,000 other than
pursuant to binding commitments existing on December 31,
2003 and disclosed at Schedule 5.1(b)(iv), or as otherwise
disclosed at Schedule 5.1(b)(iv) as of the date of this
Agreement, and other than expenditures necessary to maintain
existing assets in good repair;
(v) sell, transfer, convey or otherwise dispose of any real
property (including "other real estate owned") or interest
therein having a book value in excess of or in exchange for
consideration in excess of $10,000;
(vi) pay any bonuses to any employee, officer, director or other
person except pursuant to the terms of an enforceable
written employment agreement; enter into any new, or amend
in any respect any existing, employment, consulting,
non-competition or independent contractor agreement with any
person; alter the terms of any existing incentive bonus or
commission plan; adopt any new or amend in any material
respect any existing employee benefit plan, except as may be
required by law; grant any general increase in compensation
to its employees as a class or to its officers except for
non-executive officers in the ordinary course of business
and consistent with past practices and policies or except in
accordance with the terms of an enforceable written
agreement; grant any material increase in fees or other
compensation or in other benefits to any of its directors;
or effect any change in any material respect in retirement
benefits to any class of employees or officers, except as
required by law;
(vii)enter into or extend any agreement, lease or license
relating to real property, personal property, data
processing or bankcard functions relating to Community or
Community Bank that involves an aggregate of $10,000 or
more;
(viii) acquire five percent (5%) or more of the assets or equity
securities of any Person or acquire direct or indirect
control of any person,
37
other than in connection with (A) any internal
reorganization or consolidation involving existing Community
subsidiaries which has been approved in advance in writing
by Sun, (B) foreclosures in the ordinary course of business,
(C) acquisitions of control by Community Bank or any other
Community subsidiary engaged in banking in a fiduciary
capacity or (D) the creation of any new Community subsidiary
organized to conduct and continue activities otherwise
permitted by this Agreement;
(ix) originate, purchase, extend or grant any loan in principal
amount in excess of $3.0 million, or engage or participate
in any lending activities, including modifications to any
loans existing on the date hereof, other than in the
ordinary course of business consistent with past practices;
provided however, Community Bank shall consult with Sun Bank
with respect to origination, purchase or extension of all
loans with principal amount in excess of $1.5 million;
(x) file any applications or make any contract with respect to
branching by Community Bank (whether de novo, purchase, sale
or relocation) or acquire or construct, or enter into any
agreement to acquire or construct, any interest in real
property, other than pursuant to legally binding contracts
in effect on the date of this Agreement;
(xi) form any new subsidiary or cause or permit a material change
in the activities presently conducted by any subsidiary of
Community or make additional investments in subsidiaries;
(xii)increase or decrease the rate of interest paid on time
deposits or on certificates of deposit, except in a manner
and pursuant to policies consistent with Community and
Community Bank's past practices;
(xiii) take any action that is intended or may reasonably be
expected to result in any of the conditions to the Merger
set forth in Article 7 not being satisfied;
(xiv)purchase or otherwise acquire any investment securities for
its own account other than those issued or guaranteed by the
US Treasury, the Federal Home Loan Bank System, the Federal
National Mortgage Association, the Government National
Mortgage Association, or the Federal Home Loan Mortgage
Corporation, or
38
any Derivative Contract. Any security purchased shall not
have an average remaining life to maturity of greater than
two years; or
(xv) commence any cause of action or proceeding other than in
accordance with past practice or settle any action, claim,
arbitration, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing,
inquiry or other proceeding against Community, Community
Bank or any of their respective subsidiaries for material
money damages or restrictions upon any of their operations.
Section 5.2 Current Information. During the period from the date of this
--------------------
Agreement to the Effective Time of the Merger or the time of termination or
abandonment of this Agreement, Community will cause one or more of its
designated representatives to confer on a regular and frequent basis with
representatives of Sun and to report the general status of the ongoing
operations of Community. Community will promptly notify Sun of any material
change in the normal course of business or the operations or the properties of
Community or Community Bank, any governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated)
affecting Community or an Community subsidiary, the institution or the threat of
material litigation, claims, threats or causes of action involving Community or
Community Bank, and will keep Sun fully informed of such events. Community will
furnish to Sun, promptly after the preparation and/or receipt by Community
thereof, copies of its unaudited monthly and quarterly periodic financial
statements and call reports for the applicable periods then ended, and such
financial statements and call reports shall, upon delivery to Sun, be treated,
for purposes of Section 3.3 hereof, as among the Financial Statements of
Community and the Financial Regulatory Reports of Community Bank.
Section 5.3 Access to Properties; Personnel and Records; Systems
-------------------------------------------------------------
Integration.
------------
(a) For so long as this Agreement shall remain in effect, Community,
Community Bank and their respective subsidiaries shall permit Sun or its agents
full access, during normal business hours, to the properties of Community,
Community Bank and their respective subsidiaries, and shall disclose and make
available (together with the right to copy) to Sun and to its internal auditors,
loan review officers, attorneys, accountants and other representatives, all
books, papers and records relating to the assets, stock, properties, operations,
obligations and liabilities of Community or Community Bank, including all books
of account (including the general ledger), tax records, minute books of
directors' and shareholders' meetings, organizational documents, bylaws,
contracts and agreements, filings with any regulatory agency, examination
reports, correspondence with regulatory or taxing authorities, documents
relating to assets, titles, abstracts, appraisals, consultant's reports, plans
affecting employees, securities transfer records and stockholder lists, and any
other assets, business activities or prospects in which Sun may have a
reasonable interest, and Community, Community Bank and their respective
subsidiaries shall use their reasonable best efforts to provide Sun and its
representatives access to the work papers of Community's and Community
40
subsidiaries' accountants. For so long as this Agreement shall remain in effect,
Community shall permit a Sun representative to attend Community board meetings,
provided that the Community board may convene in executive session without the
presence of a Sun representative in the event that Community wishes to discuss
matters associated to its fiduciary duties with respect to the Agreement and
matters related thereto. Community, Community Bank and their respective
subsidiaries shall not be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of any customer, would contravene any law, rule, regulation, order or
judgment or would violate any confidentiality agreement; provided that
Community, Community Bank and their respective subsidiaries shall cooperate with
Sun in seeking to obtain Consents from appropriate parties under whose rights or
authority access is otherwise restricted. The foregoing rights granted to Sun
shall not, whether or not and regardless of the extent to which the same are
exercised, affect the representations and warranties made in this Agreement by
Community, Community Bank and their respective subsidiaries.
(b) All information furnished by the parties hereto pursuant to this
Agreement shall be treated as the sole property of the party providing such
information until the consummation of the Merger contemplated hereby and, if
such transaction shall not occur, the party receiving the information shall
return to the party which furnished such information, all documents or other
materials containing, reflecting or referring to such information, shall use its
best efforts to keep confidential all such information, and shall not directly
or indirectly use such information for any competitive or other commercial
purposes. The obligation to keep such information confidential shall continue
for two (2) years from the date the proposed transactions are abandoned but
shall not apply to (1) any information which (A) the party receiving the
information was already in possession of prior to disclosure thereof by the
party furnishing the information, (B) was then available to the public, or (C)
became available to the public through no fault of the party receiving the
information; or (2) disclosures pursuant to a legal requirement or in accordance
with an order of a court of competent jurisdiction or regulatory agency;
provided, however, the party which is the subject of any such legal requirement
or order shall use its best efforts to give the other party at least ten (10)
business days prior notice thereof. Each party hereto acknowledges and agrees
that a breach of any of their respective obligations under this Section 5.3
would cause the other irreparable harm for which there is no adequate remedy at
law, and that, accordingly, each is entitled to injunctive and other equitable
relief for the enforcement thereof in addition to damages or any other relief
available at law. Without the consent of the other party, neither party shall
use information furnished to such party other than for the purposes of the
transactions contemplated hereby.
(c) From and after the date hereof, Community shall cause Community
Bank and its directors, officers and employees to, and shall make all reasonable
efforts to cause Community Bank's data processing service providers to,
cooperate and assist Sun in connection with an electronic and systematic
conversion of all applicable data regarding Community Bank to Sun Bank's system
of electronic data processing. In furtherance of, and not in limitation of, the
foregoing, Community shall cause Community Bank to make reasonable arrangements
during normal business hours to permit personnel and representatives of Sun Bank
to train Community Bank employees in Sun Bank's system of electronic data
processing. Community
40
and Community Bank shall permit Sun to train the Community's employees during
the one month period before the anticipated Effective Time of the Merger with
regard to Sun's operations, policies and procedures at Sun's sole cost and
expense. This training may take place at Community's branch offices at such
times to be determined in cooperation with Community and shall be conducted in a
manner so as to not interfere with the business operations of the branch
offices.
Section 5.4 Approval of Shareholders. Sun and Community will take all steps
------------------------
necessary under applicable laws to call, give notice of, convene and hold a
meeting of their shareholders at such time as may be mutually agreed to by the
parties for the purpose of approving this Agreement and the transactions
contemplated hereby and for such other purposes consistent with the complete
performance of this Agreement as may be necessary or desirable. The Board of
Directors of Community will recommend to its shareholders the approval of this
Agreement and the transactions contemplated hereby and Sun and Community will
use their best efforts to obtain the necessary approvals by their shareholders
of this Agreement and the transactions contemplated hereby.
Section 5.5 No Other Bids. Except with respect to this Agreement and the
-------------
transactions contemplated hereby, neither Community nor any "Affiliate" (as
defined herein) thereof, nor any investment banker, attorney, accountant or
other representative (collectively, "representative") retained by Community,
Community Bank or any of their respective subsidiaries shall directly or
indirectly initiate, solicit, encourage or otherwise facilitate any inquiries or
the making of any proposal or offer that constitutes, or may reasonably be
expected to lead to, any "takeover proposal" (as defined below) by any other
party. Except to the extent necessary to comply with the fiduciary duties of
Community's Board of Directors as advised in writing by counsel to such Board of
Directors, neither Community nor any Affiliate or representative thereof shall
furnish any non-public information that it is not legally obligated to furnish
or negotiate or enter into any agreement or contract with respect to any
takeover proposal, and shall direct and use its reasonable efforts to cause its
affiliates or representatives not to engage in any of the foregoing, but
Community may communicate information about such a takeover proposal to its
shareholders if and to the extent it is required to do so in order to comply
with its legal obligations as advised in writing by counsel. Community shall
promptly notify Sun orally and in writing in the event that it receives any
inquiry or proposal relating to any such transaction. Community shall
immediately cease and cause to be terminated as of the date of this Agreement
any existing activities, discussions or negotiations with any other parties
conducted heretofore with respect to any of the foregoing. As used in this
Section 5.5, "takeover proposal" shall mean any proposal for a merger or other
business combination involving Community, Community Bank or any of their
respective subsidiaries or for the acquisition of a significant equity interest
in Community, Community Bank or any of their respective subsidiaries or for the
acquisition of a significant portion of the assets or liabilities of Community,
Community Bank or any of their respective subsidiaries.
41
Section 5.6 Notice of Deadlines. Schedule 5.6 lists the deadlines for
--------------------
extensions or terminations of any material leases, agreements or licenses
(including specifically real property leases and data processing agreements) to
which Community or Community Bank is a party.
Section 5.7 Maintenance of Properties; Certain Remediation and Capital
--------------------------------------------------------------
Improvements. Community, Community Bank and their respective subsidiaries will
------------
maintain their respective properties and assets in satisfactory condition and
repair for the purposes for which they are intended, ordinary wear and tear
excepted.
Section 5.8 Environmental Audits. Upon the written request of Sun, which
---------------------
request shall occur within thirty days of the date hereof, Community will, at
Sun's expense, with respect to each parcel of real property that Community or
Community Bank owns, procure and deliver to Sun, an environmental audit, which
audit shall be reasonably acceptable to and shall be conducted by a firm
reasonably acceptable to Sun.
Section 5.9 Title Insurance. Upon the written request of Sun, which request
---------------
shall occur within thirty (30) days of the date hereof, Community will, at Sun's
expense, with respect to each parcel of real property that Community or
Community Bank owns, procure and deliver to Sun, at least thirty (30) days prior
to the Effective Time of the Merger, a commitment to issue owner's title
insurance in such amounts and by such insurance company reasonably acceptable to
Sun, which policy shall be free of all material exceptions to Sun's reasonable
satisfaction.
Section 5.10 Surveys. Upon the written request of Sun, which request shall
-------
occur within thirty (30) days of the date hereof, with respect to each parcel of
real property as to which a title insurance policy is to be procured pursuant to
Section 5.10, Sun, at its own expense, will procure and deliver to Sun at least
thirty (30) days prior to the Effective Time of the Merger, a survey of such
real property, which survey shall be reasonably acceptable to and shall be
prepared by a licensed surveyor reasonably acceptable to Sun, disclosing the
locations of all improvements, easements, sidewalks, roadways, utility lines and
other matters customarily shown on such surveys and showing access affirmatively
to public streets and roads and providing the legal description of the property
in a form suitable for recording and insuring the title thereof (the "Survey").
The Survey shall not disclose any survey defect or encroachment from or onto
such real property that has not been cured or insured over prior to the
Effective Time of the Merger.
Section 5.11 Consents to Assign and Use Leased Premises. With respect to
-------------------------------------------
the leases disclosed in Schedule 3.14(b), Community will, or shall cause
Community Bank and each applicable subsidiary of Community and Community Bank
to, obtain all Consents necessary or appropriate to transfer and assign all
right, title and interest of Community, Community Bank and their respective
subsidiaries to Sun Bank and to permit the use and operation of the leased
premises by Sun Bank.
42
Section 5.12 Compliance Matters. Prior to the Effective Time of the Merger,
------------------
Community shall take, or cause to be taken, all steps reasonably requested by
Sun to cure any deficiencies in regulatory compliance by Community or Community
Bank; provided, however, neither Sun nor Sun Bank shall be responsible for
discovering or have any obligation to disclose the existence of such defects to
Community nor shall Sun have any liability resulting from such deficiencies or
attempts to cure them.
Section 5.13 Conforming Accounting and Reserve Policies. Upon written
---------------------------------------------
confirmation from Sun that all conditions to closing set forth in Articles 8 and
9 have been satisfied or waived, at the request of Sun, Community shall
immediately prior to Closing establish and take such reserves and accruals as
Sun reasonably shall request to conform Community Bank's loan, accrual, reserve
and other accounting policies to the policies of Sun Bank.
Section 5.14 Bank Merger Agreement. Prior to the Effective Time of the
----------------------
Merger, Sun Bank and Community Bank shall have executed and delivered the Bank
Merger Agreement substantially in the form annexed hereto as Exhibit 5.14.
Community agrees that it shall vote by action by written consent or as otherwise
required the shares of capital stock of Community Bank held by Community in
favor of such Bank Merger Agreement and the transactions contemplated thereby.
Section 5.15 Affiliate and Voting Agreements. Community shall deliver to
--------------------------------
Sun as of the date of the Agreement, a Voting Agreement in form and substance as
set forth at Exhibit 5.15, executed by each director and executive officer of
Community.
Section 5.16. Directors Deferred Compensation Plan. Subject to the
----------------------------------------
limitations and restrictions set forth at 6.9 herein, the Directors Deferral
Plan and related Trust Agreement shall be terminated by Community Bank at and
immediately prior to the Effective Time and Community Bank shall make payments
to plan participants in amounts not to exceed the amounts set forth at Schedule
5.16, less applicable tax withholding.
43
ARTICLE 6
ADDITIONAL COVENANTS AND AGREEMENTS
Section 6.1 Best Efforts; Cooperation. Subject to the terms and conditions
-------------------------
herein provided, each of the parties hereto agrees to use its best efforts
promptly to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or otherwise, including attempting to obtain all necessary
Consents, to consummate and make effective, as soon as practicable, the
transactions contemplated by this Agreement.
Section 6.2 Regulatory Matters.
------------------
(a) As promptly as practicable following the execution and delivery
of this Agreement, but in no event more than 60 days from the date hereof, Sun
and Community shall cause to be prepared and filed all required applications and
filings with the Regulatory Authorities which are necessary or contemplated for
the obtaining of the Consents of the Regulatory Authorities or consummation of
the Merger. Such applications and filings shall be in such form as may be
prescribed by the respective government agencies and shall contain such
information as they may require. The parties hereto will cooperate with each
other and use their best efforts to prepare and execute all necessary
documentation, to effect all necessary or contemplated filings and to obtain all
necessary or contemplated permits, consents, approvals, rulings and
authorizations of government agencies and third parties which are necessary or
contemplated to consummate the transactions contemplated by this Agreement,
including, without limitation, those required or contemplated from the
Regulatory Authorities, and the shareholders of Community. Each of the parties
shall have the right to review and approve in advance, which approval shall not
be unreasonably withheld, any filing made with, or written material submitted
to, any government agencies in connection with the transactions contemplated by
this Agreement.
(b) Each party hereto will furnish the other party with all
information concerning itself, its Subsidiaries, directors, trustees, officers,
shareholders and depositors, as applicable, and such other matters as may be
necessary or advisable in connection with any statement or application made by
or on behalf of any such party to any governmental body in connection with the
transactions, applications or filings contemplated by this Agreement. Upon
request, the parties hereto will promptly furnish each other with copies of
written communications received by them or their respective Subsidiaries from,
or delivered by any of the foregoing to, any governmental body in respect of the
transactions contemplated hereby.
Section 6.3 Employment and Employee Benefits Matters.
----------------------------------------
(a) The parties acknowledge that nothing in this Agreement shall be
construed as constituting an employment agreement between Sun or any of its
affiliates and any officer or
44
employee of Community, Community Bank or any of their respective subsidiaries or
an obligation on the part of Sun or any of its affiliates to employ any such
officers or employees.
(b) The parties agree that appropriate steps shall be taken to
terminate all employee benefit plans of Community, Community Bank or any of
their respective subsidiaries immediately prior to, at or as soon as
administratively feasible following the Effective Time of the Merger, provided
that the conditions of this Subsection (b) and of paragraphs (i)-(ii) below are
then met and provided further that all employees of Community, Community Bank or
any of their respective subsidiaries who were participating immediately prior to
the Merger in employee benefit plans of Community, Community Bank or any of
their respective subsidiaries for which Sun maintains a corresponding plan shall
commence participation in Sun's corresponding plan upon the later of the
Effective Time of the Merger or the date of termination of coverage under the
Employee Benefit Plans of Community, Community Bank or any of their respective
subsidiaries without any gap or interruption in coverage (including any gap
affecting any of Community employee's dependents), whether a gap in time of
coverage or in waiting or elimination periods. Subject to Section 6.3(c) hereof
and except as otherwise specifically provided below, Sun agrees that the
officers and employees of Community, Community Bank or any of their respective
subsidiaries who Sun or its subsidiaries employ shall be eligible to participate
in Sun's employee benefit plans, including welfare and fringe benefit plans,
sick leave, vacation, holiday pay and similar payroll practices, on the same
basis as and subject to the same conditions as are applicable to any newly-hired
employee of Sun; provided, however, that:
(i) with respect to each Sun Health Plan, Sun shall waive all
waiting periods under said plans for pre-existing
conditions; and
(ii) Credit for each such employee's past service with Community,
Community Bank or any of their respective subsidiaries prior
to the Effective Time of the Merger ("Past Service Credit")
shall be given by Sun to employees for purposes of:
(A) determining vacation, severance, sick leave and other
leave benefits and accruals, in accordance with the
established policies of Sun;
(B) establishing eligibility for participation in and
vesting under Sun's welfare and fringe benefit plans,
and for purposes of determining the scheduling of
vacations and other determinations which are made based
on length of service.
(iii)with respect to participation in any group medical or
dental insurance plans by employees of Community who shall
become employees of Sun or Sun Bank as of the Effective
Time, Sun shall credit all amounts paid by Community
employees as deductibles
45
under the Community plans in the 2004 calendar year towards
deductibles in 2004 under the corresponding Sun plans.
(c) Subject to the limitations and restrictions set forth at Section
6.9 herein, any full time employee of Community or Community Bank (excluding the
three executive officers) whose employment with Sun or Sun Bank is involuntarily
by Sun or Sun Bank after the Effective Time and for a period of six months
thereafter, absent termination for cause in accordance with policies of Sun or
Sun Bank, shall receive severance payments in accordance with the policy and
years of service information set forth at Schedule 6.3(c)
Section 6.4 Indemnification.
---------------
(a) For a period of six (6) years after the Effective Time of the
Merger, Sun shall indemnify, defend and hold harmless each person entitled to
indemnification from Community (each an "Indemnified Party") against all
liability arising out of actions or omissions occurring at or prior to the
Effective Time of the Merger (including, without limitation, transactions
contemplated by this Agreement) to the same extent and subject to the conditions
set forth in Community's and Community Bank's Certificate of Incorporation or
Bylaws, in each case as in effect as of the date hereof.
(b) After the Effective Time of the Merger, directors, officers and
employees of Community and Community Bank, except for the indemnification rights
provided for in this Section 6.4 above, shall have indemnification rights having
prospective application only. These prospective indemnification rights shall
consist of such rights to which directors, officers and employees of Sun and its
subsidiaries would be entitled under the Certificate of Incorporation and Bylaws
of Sun or the particular subsidiary for which they are serving as officers,
directors or employees and under such directors' and officers' liability
insurance policy as Sun may then make available to officers, directors and
employees of Sun and its subsidiaries.
(c) Sun shall use its best efforts (and Community shall cooperate
prior to the Effective Time of the Merger) to maintain in effect for a period of
three (3) years after the Effective Time of the Merger Community's existing
directors' and officers' liability insurance policy (provided that Sun may
substitute therefor (i) policies with comparable coverage and amounts containing
terms and conditions which are substantially no less advantageous or (ii)with
the consent of Community (given prior to the Effective Time of the Merger) any
other policy with respect to claims arising from facts or events which occurred
prior to the Effective Time of the Merger and covering persons who are currently
covered by such insurance; provided, that Sun shall not be obligated to make
premium payments for such three (3) year period in respect of such policy (or
coverage replacing such policy) which exceed, for the portion related to
Community's and Community Bank's directors and officers, 150% of the annual
premium payments on Community's current policy, as in effect as of the date of
this Agreement (the "Maximum Amount"). If the amount of premium that is
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, Sun shall use its reasonable efforts to
46
maintain the most advantageous policies of director's and officer's liability
insurance obtainable for a premium equal to the Maximum Amount.
(d) If Sun or any of its successors or assigns shall consolidate with
or merge into any other person and shall not be continuing or surviving person
of such consolidation or merger, or shall transfer all or substantially all of
its assets to any person, then, and in each case, proper provisions shall be
made so that the successors and assigns of Sun shall assume the obligations set
forth in this Section 6.4.
Section 6.5 Registration Statement. Sun shall use its best efforts to cause
----------------------
the Registration Statement to be filed with the SEC within the sixty days of the
date hereof and shall use its best efforts to cause such Registration Statement
to be declared effective under the Securities Act, which Registration Statement,
at the time it becomes effective, and at the Effective Time of the Merger, shall
in all material respects conform to the requirements of the Securities Act and
the general rules and regulations of the SEC promulgated thereunder. The
Registration Statement shall include the form of Joint Proxy
Statement/Prospectus for the meeting of Sun's and Community's shareholders to be
held for the purpose of having such shareholders vote upon the approval of this
Agreement. Community, Community Bank and their respective subsidiaries will
furnish to Sun the information required to be included in the Registration
Statement with respect to its business and affairs before it is filed with the
SEC and again before any amendments are filed. Sun shall take all actions
required to qualify or obtain exemptions from such qualifications for the Sun
Shares to be issued in connection with the transactions contemplated by this
Agreement under applicable state blue sky securities laws, as appropriate.
Section 6.6 Section 16 Matters. Prior to the Effective Time, the Board of
------------------
Directors of Community and of Sun (or appropriate committees thereof) shall
adopt (if necessary) a resolution consistent with the interpretive guidance of
the SEC so that the disposition by any officer or director of Community who is a
covered person of Community for purposes of Section 16 under the Exchange Act
(together with the rules and regulations promulgated thereunder, "Section 16")
of Community Shares or Community Options pursuant to this Agreement and the
Merger shall be an exempt transaction for purposes of Section 16.
Section 6.7 Transaction Expenses of Community.
---------------------------------
(a) For planning purposes, set forth at Community Schedule 6.7(a)
hereto, Community has provided Sun with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by Community
in connection with this Agreement and the transactions contemplated thereunder
based on facts and circumstances then currently known, including the fees and
expenses of counsel, accountants, investment bankers and other professionals.
Community shall use its best efforts to maintain expenses within the budget,
provided that in the event the actual facts and circumstances differ from the
assumptions upon which the budget is based, then the budget shall be adjusted to
reasonably correspond to such change.
47
(b) Promptly after the execution of this Agreement, Community
shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements within thirty (30)
days. Community shall review these invoices and track such expenses against the
budget referenced above, and Community shall advise Sun of such matters prior to
payment of such invoices.
(c) Community shall cause its professionals to render monthly
invoices within thirty (30) days after the end of each month. Community shall
advise Sun monthly of such invoices for professional services, disbursements and
reimbursable expenses which Community has incurred in connection with this
Agreement prior to payment of such invoices, and Community shall track such
expenses against the budget referenced above.
(d) Sun, in reasonable consultation with Community, shall make
all arrangements with respect to the printing and mailing of the Joint Proxy
Statement/Prospectus. Each party shall be responsible for their proportionate
expenses with respect to the printing of the Joint Proxy Statement/Prospectus.
(e) Not later than two business days prior to the Closing
Date, Community shall provide Sun with an accounting of all transaction related
expenses incurred by it through the Closing Date, including a good faith
estimate of such expenses incurred or to be incurred through the Closing Date
but as to which invoices have not yet been submitted. Community shall detail any
variance of such transaction expenses to the budget set forth at Community
Schedule 6.7(a) as of the date of the Agreement.
Section 6.8 Press Releases. Sun and Community agree that they will not
--------------
issue any press release or other public disclosure related to this Agreement or
the transactions contemplated hereby, without first consulting with the other
party as to the form and substance of such disclosures which may relate to the
transactions contemplated by this Agreement, provided, however, that nothing
contained herein shall prohibit either party, following notification to the
other party, from making any disclosure which is required by law or regulation.
Section 6.9 Prior Notice and Approval Before Payments To Be Made.
----------------------------------------------------
(a) No payments shall be made by Community or Community Bank to any
director, officer or employee in accordance with any agreement, contract, plan
or arrangement (including, but not limited to any employment agreement,
severance arrangement, stock option, deferred compensation plan, vacation or
leave plan or other compensation or benefits program), upon the termination of
such agreement, contract, plan or arrangement or upon the termination of
employment or service of such recipient with Community or Community Bank, except
to the extent that such intended payments (i) have been set forth in the
Community Schedules furnished to Sun at the date of this Agreement, (ii) with
prior written notice to Sun of such intended payment, (iii) delivery of a
written acknowledgement and release executed by the recipient and the Community
and Community Bank satisfactory to Sun in form and substance, and (iv) the
consent of Sun.
48
(b) Prior to the Effective Time, Community and Community Bank, with
the assistance of its tax accountants, shall determine if any payments made or
to be made by the Community or Community Bank shall constitute an "excess
parachute payment" in accordance with Section 280G of the Code, shall furnish
Sun with a schedule of any non-deductible payments in accordance with Section
280G of the Code, and take such steps as are necessary so that the IRS Forms
1099 and W-2 and related forms shall properly report the non-deductible status
of any such payments.
Section 6.10 Nasdaq Listing. Sun shall use its reasonable best efforts
--------------
to cause the Sun Shares to be issued in the Merger to be approved for listing
for quotation on the NASDAQ, subject to official notice of issuance, as of the
Effective Time.
Section 6.11 Current Information of Sun. During the period from the
----------------------------
date of this Agreement to the Effective Time of the Merger or the time of
termination or abandonment of this Agreement, Sun will cause one or more of its
designated representatives to confer on a regular and frequent basis with
representatives of Community and to report the general status of the ongoing
operations of Sun. Sun will promptly notify Community of any material change in
the normal course of business or the operations or the properties of Sun or Sun
Bank, any governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) affecting Sun or an Sun
subsidiary, the institution or the threat of material litigation, claims,
threats or causes of action involving Sun or Sun Bank, and will keep Sun fully
informed of such events. Sun will furnish to Community, promptly after the
preparation and/or receipt by Sun thereof, copies of its unaudited monthly and
quarterly periodic financial statements and call reports for the applicable
periods then ended, and such financial statements and call reports shall, upon
delivery to Community, be treated, for purposes of Section 4.4 hereof, as among
the Financial Statements of Sun and the Financial Regulatory Reports of Sun
Bank.
Section 6.12 Community Banking Group Board. As of the Effective Time of
-----------------------------
the Merger Sun shall use its best efforts to appoint each of the members of the
Board of Directors of Community and Community Bank to a Community Banking Group
Board to be established by Sun following the Effective Time. Membership of any
person on such Community Banking Group Board shall be conditional upon execution
of an agreement providing that such person will not engage in activities
competitive with Sun. Community and Community Bank will use its best efforts to
have each director of Community and Community Bank as of the date of this
Agreement execute and deliver the agreement set forth at Exhibit 6.12.
Section 6.13. Board of Directors of Sun and Sun Bank. As soon as
------------------------------------------
practicable after the Effective Time, Sun and Sun Bank shall appoint ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ and two other individuals of Sun's and Sun Bank's choosing who were
formerly serving on the Board of Directors of Community immediately prior to the
Effective Time and who are acceptable to Sun and Sun Bank to the Board of
Directors of Sun and Sun Bank to serve until the next annual meeting of Sun and
Sun Bank, subject to the right of removal for cause. Directors appointed to Sun
or Sun
49
Bank's Board of Directors pursuant hereto shall no longer serve as directors of
the Community Banking Group Board appointed pursuant to Section 6.12 of this
Agreement.
Section 6.14 Registration of Sun Shares related to Exchanged Options.
--------------------------------------------------------
As soon as practicable after the Effective Time, Sun shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), with respect to the Sun Shares subject to issuance upon the
exercise of such Community Options exchanged in accordance with Section 2.2
herein.
Section 6.15 Notification of Certain Matters. Each party shall give
---------------------------------
prompt notice to the others of (a) any event, condition, change, occurrence, act
or omission which causes any of its representations hereunder to cease to be
true in all material respects (or, with respect to any such representation which
is qualified as to materiality, causes such representation to cease to be true
in all respects); and (b) any event, condition, change, occurrence, act or
omission which individually or in the aggregate has, or which, so far as
reasonably can be foreseen at the time of its occurrence, is reasonably likely
to have, a Material Adverse Effect on such party. Each of Community and Sun
shall give prompt notice to the other party of any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement.
ARTICLE 7
MUTUAL CONDITIONS TO CLOSING
The obligations of Sun, on the one hand, and Community, on the other hand, to
consummate the transactions provided for herein shall be subject to the
satisfaction of the following conditions, unless waived as hereinafter provided
for:
Section 7.1 Shareholder Approval. The Merger shall have been approved
---------------------
by the requisite vote of the shareholders of Community and Sun.
Section 7.2 Regulatory Approvals. All necessary Consents of the
---------------------
Regulatory Authorities shall have been obtained and all notice and waiting
periods required by law to pass after receipt of such Consents shall have
passed, and all conditions to consummation of the Merger set forth in such
Consents shall have been satisfied.
Section 7.3 Litigation. There shall be no actual or threatened causes
----------
of action, investigations or proceedings (i) challenging the validity or
legality of this Agreement or the consummation of the transactions contemplated
by this Agreement, or (ii) seeking damages in connection with the transactions
contemplated by this Agreement, or (iii) seeking to restrain or invalidate the
transactions contemplated by this Agreement, which, in the case of (i) through
(iii), and in the reasonable judgment of either Sun or Community, based upon
advice of counsel, would have a Material Adverse Effect with respect to the
interests of Sun or Community, as the case may be.
50
Section 7.4 Proxy Statement and Registration Statement. The
--------------------------------------------------
Registration Statement shall have been declared effective by the SEC, no stop
order suspending the effectiveness of the Registration Statement shall have been
issued, no action, suit, proceeding or investigation by the SEC to suspend the
effectiveness of the Registration Statement shall have been initiated, and Sun
shall have received all state securities laws, or "blue sky" permits or other
authorizations, or confirmations as to the availability of exemptions from
registration requirements, as may be necessary to issue the Sun Shares pursuant
to the terms of this Agreement.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF SUN
The obligation of Sun to consummate the Merger are subject to the fulfillment of
each of the following conditions, unless waived as hereinafter provided for:
Section 8.1 Representations and Warranties. The representations and
-------------------------------
warranties of Community set forth in this Agreement and in any certificate or
document delivered pursuant hereto shall be true and correct in all material
respects as of the date of this Agreement and as of all times up to and
including the Effective Time of the Merger (as though made on and as of the
Effective Time of the Merger except to the extent such representations and
warranties are by their express provisions made as of a specified date and
except for changes therein contemplated by this Agreement).
Section 8.2 Performance of Obligations. Community shall have performed
--------------------------
all covenants, obligations and agreements required to be performed by it under
this Agreement prior to the Effective Time of the Merger.
Section 8.3 Certificate Representing Satisfaction of Conditions.
--------------------------------------------------------
Community shall have delivered to Sun a certificate of the Chief Executive
Officer of Community dated as of the Closing Date as to the satisfaction of the
matters described in Section 8.1 and Section 8.2 hereof, and such certificate
shall be deemed to constitute additional representations, warranties, covenants,
and agreements of Community under Article 3 of this Agreement.
Section 8.4 Absence of Adverse Facts. There shall have been no
---------------------------
determination by Sun that any fact, event or condition exists or has occurred
that, in the judgment of Sun, would have a Material Adverse Effect on, or which
may be foreseen to have a Material Adverse Effect on, the Condition of Community
on a consolidated basis or the consummation of the transactions contemplated by
this Agreement.
Section 8.5 Opinion of Counsel. Sun shall have received an opinion of
------------------
counsel from Windels, Marx, Lane & ▇▇▇▇▇▇▇▇▇▇, LLP, counsel to Community,
satisfactory to Sun and its counsel, dated as of the Effective Time of the
Merger, to the effect set forth in Exhibit 8.5 hereof.
51
Section 8.6 Consents Under Agreements. Community shall have obtained
--------------------------
the consent or approval of each Person (other than the Consents of the
Regulatory Authorities) whose consent or approval shall be required in order to
permit the succession by the Surviving Corporation to any obligation, right or
interest of Community under any loan or credit agreement, note, mortgage,
indenture, lease, license, or other agreement or instrument, except those for
which failure to obtain such consents and approvals would not in the opinion of
Sun, individually or in the aggregate, have a Material Adverse Effect on the
Surviving Corporation or upon the consummation of the transactions contemplated
by this Agreement.
Section 8.7 Material Condition. There shall not be any action taken, or
------------------
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger by any Regulatory Authority which, in connection with
the grant of any Consent by any Regulatory Authority, imposes, in the judgment
of Sun, any material adverse requirement upon Sun or any Sun Subsidiary,
including, without limitation, any requirement that Sun sell or dispose of any
significant amount of the assets of Community, Community Bank and their
respective subsidiaries, or any other Sun Subsidiary.
Section 8.8 Certification of Claims. Community shall have delivered a
-----------------------
certificate to Sun that Community is not aware of any pending or threatened
claim under the directors and officers insurance policy or the fidelity bond
coverage of Community, Community Bank or any of their respective subsidiaries.
Section 8.9 Dissenting Shares. No more than 5% of the issued and
------------------
outstanding shares of Community common stock shall be Dissenting Shares.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF COMMUNITY
The obligation of Community to consummate the Merger as contemplated herein is
subject to each of the following conditions, unless waived as hereinafter
provided for:
Section 9.1 Representations and Warranties. The representations and
-------------------------------
warranties of Sun contained in this Agreement or in any certificate or document
delivered pursuant to the provisions hereof will be true and correct, in all
material respects, as of the Effective Time of the Merger (as though made on and
as of the Effective Time of the Merger), except to the extent such
representations and warranties are by their express provisions made as of a
specified date and except for changes therein contemplated by this Agreement.
Section 9.2 Performance of Obligations. Sun shall have performed all
---------------------------
covenants, obligations and agreements required to be performed by them and under
this Agreement prior to the Effective Time of the Merger.
52
Section 9.3 Certificate Representing Satisfaction of Conditions. Sun
-----------------------------------------------------
shall have delivered to Community a certificate dated as of the Effective Time
of the Merger as to the satisfaction of the matters described in Section 9.1 and
Section 9.2 hereof, and such certificate shall be deemed to constitute
additional representations, warranties, covenants, and agreements of Sun under
Article 4 of this Agreement.
Section 9.4 Opinion of Counsel. Community shall have received the
-------------------
opinion of ▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC, special counsel to Sun, satisfactory to
Community and its counsel, dated the Effective Time of the Merger, to the effect
set forth in Exhibit 9.4 hereof.
Section 9.5 Listing of Sun Shares. The Sun Shares to be issued in
-----------------------
connection herewith shall have been approved for listing on NASDAQ, as of the
Effective Time.
ARTICLE 10
TERMINATION, WAIVER AND AMENDMENT
Section 10.1 Termination. This Agreement may be terminated and the
-----------
Merger abandoned at any time prior to the Effective Time of the Merger:
(a) by the mutual consent in writing of the Board of Directors of Sun
and Community; or
(b) by the Board of Directors of Sun or Community if the Merger shall
not have occurred on or prior to October 31, 2004, provided that the failure to
consummate the Merger on or before such date is not caused by any breach of any
of the representations, warranties, covenants or other agreements contained
herein by the party electing to terminate pursuant to this Section 10.1(b);
(c) by the Board of Directors of Sun or Community (provided that the
terminating party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
8.1 of this Agreement in the case of Community and Section 9.1 in the case of
Sun or in breach of any covenant or agreement contained in this Agreement) in
the event of an inaccuracy of any representation or warranty of the other party
contained in this Agreement which cannot be or has not been cured within thirty
(30) days after the giving of written notice to the breaching party of such
inaccuracy and which inaccuracy would provide the terminating party the ability
to refuse to consummate the Merger under the applicable standard set forth in
Section 8.1 of this Agreement in the case of Community and Section 9.1 of this
Agreement in the case of Sun; or
(d) by the Board of Directors of Sun or Community (provided that the
terminating party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
8.1 of this
53
Agreement in the case of Community and Section 9.1 in the case of Sun or in
breach of any covenant or other agreement contained in this Agreement) in the
event of a material breach by the other party of any covenant or agreement
contained in this Agreement which cannot be or has not been cured within thirty
(30) days after the giving of written notice to the breaching party of such
breach; or
(e) by the Board of Directors of Sun or Community in the event (i)
any Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal, or (ii) the shareholders of
Community fail to vote their approval of this Agreement and the Merger and the
transactions contemplated hereby as required by applicable law at Community's
shareholders' meeting where the transactions were presented to such shareholders
for approval and voted upon; or
(f) by the Board of Directors of Sun or Community (provided that the
terminating party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
8.1 of this Agreement in this case of Community and Section 9.1 in the case of
Sun or in breach of any covenant or agreement contained in this Agreement) upon
delivery of written notice of termination at the time that it is determined that
any of the conditions precedent to the obligations of such party to consummate
the Merger (other than as contemplated by Section 10.1(e) of this Agreement)
cannot be satisfied or fulfilled by the date specified in Section 10.1(b) of
this Agreement; or
(g) By the Board of Directors of Sun, (a) if Community's fails to
hold its shareholder meeting to vote on the Agreement within 60 days of the
Registration Statement filed with respect to the Sun Shares to be issued in
accordance with this Agreement being declared effective by the Securities and
Exchange Commission, or (b) if Community's Board of Directors either (i) fails
to recommend, or fails to continue its recommendation, that the shareholders of
Community vote in favor of the adoption of this Agreement, or (ii) modifies,
withdraws or changes in any manner adverse to Sun its recommendation that the
shareholders of Community vote in favor of the adoption of this Agreement; or
(h) By Community if it determines by a vote of the majority of the
members of its Board of Directors, and notifies Sun, at any time during the five
(5) day period commencing two (2) business days after the Determination Date and
if both of the following conditions are satisfied:
(i) The Average Closing Price of Sun Common Stock is less than
$22.89 (adjusted as set forth in the last sentence of this
Section 10.1(h)); and
(ii) (x) the number obtained by dividing the Average Closing
Price on the Determination Date by the Starting Price (such
number being
54
referred to herein as the "Sun Ratio") shall be less than
(y) the number obtained by dividing the Index Price on the
Determination Date by the Index Price on the Starting Date
and subtracting 0.175 from the quotient in this clause
(ii)(y) (such number being referred to herein as the "Index
Ratio");
If Community elects to terminate this Agreement pursuant to this
Section 10.1(h), it shall give notice to Sun within the aforementioned five (5)
day period, provided such notice may be withdrawn at any time. During the five
(5) day period commencing with its receipt of such notice, Sun shall have the
option of adjusting the Per Share Stock Consideration to equal the lesser of (i)
a number equal to a quotient (rounded to the nearest one-thousandth), the
numerator of which is the product of $22.89 multiplied by the Per Share Stock
Consideration (as then in effect) and the denominator of which is the Average
Closing Price, and (ii) a number equal to a quotient (rounded to the nearest
one-thousandth), the numerator of which is the Index Ratio multiplied by the Per
Share Stock Consideration (as then in effect) and the denominator of which is
the Sun Ratio. If Sun makes an election contemplated by the preceding sentence,
within such five-day period, it shall give prompt written notice to Community of
such election and the revised Per Share Stock Consideration, whereupon no
termination shall have occurred pursuant to this Section and this Agreement
shall remain in effect in accordance with its terms (except as the Per Share
Stock Consideration shall have been so modified), and any reference in this
Agreement to "Per Share Stock Consideration" shall thereafter be deemed to refer
to the Per Share Stock Consideration as adjusted pursuant to this Section
10.1(h).
For purposes of this Section 10.1(h), the following terms shall have
the meaning indicated:
"Average Closing Price" shall mean the average of the per share closing
prices of the Sun Common Stock as reported on the NASDAQ for the 20
consecutive trading days ending on the Determination Date as reported
by The Wall Street Journal, expressed in decimal figures carried to
five figures.
"Determination Date" means the tenth (10th) trading day prior to the
Closing Date.
"Index Group" means the twenty-two (22) financial institution companies
listed below, the common stock of all of which shall be publicly traded
and as to which there shall not have been a publicly announced proposal
since the Starting Date and before the Determination Date for any such
company to be acquired or for such company to acquire another company
or companies in transactions with a value exceeding 25% of the
acquiror's market capitalization. In the event that any such company is
removed from the Index Group, the weights (which shall be determined
based upon the market capitalization of the outstanding shares of
common stock) shall be redistributed proportionately for purposes of
determining the Index Price. The twenty-two (22) financial institution
companies and the weights attributed to them are as follows:
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
Financial Institution Holding Company Value ($M) Weighting
------------------------------------- ---------- ---------
Company Name Ticker
Provident Bankshares Corporation PBKS 783.29 7.2%
First Commonwealth Financial Corporation FCF 886.40 8.2%
NBT Bancorp Inc. NBTB 710.29 6.6%
Community Bank System, Inc. CBU 671.40 6.2%
National Penn Bancshares, Inc. NPBC 800.44 7.4%
U.S.B. Holding Co., Inc. UBH 452.12 4.2%
S&T Bancorp, Inc. STBA 802.24 7.4%
Harleysville National Corporation HNBC 675.32 6.2%
Yardville National Bancorp YANB 258.47 2.4%
Sterling Financial Corporation SLFI 507.80 4.7%
▇▇▇▇▇ Spring Bancorp, Inc. SASR 521.55 4.8%
Financial Institutions, Inc. FISI 268.60 2.5%
▇▇▇▇▇▇▇▇ Trustco, Inc. TMP 379.79 3.5%
Community Banks, Inc. CMTY 372.66 3.4%
Sterling Bancorp STL 446.65 4.1%
▇▇▇▇▇▇ Valley Holding Corp. HUVL 468.82 4.3%
Univest Corporation of Pennsylvania UVSP 421.71 3.9%
Lakeland Bancorp, Incorporated LBAI 273.52 2.5%
Interchange Financial Services Corporation IFCJ 308.34 2.9%
Arrow Financial Corporation AROW 288.97 2.7%
Suffolk Bancorp SUBK 376.76 3.5%
Sun Bancorp, Inc. SUBI 134.10 1.2%
"Index Price" on a given date, means the weighted average (weighted in
accordance with the Weighting Factors above, which were calculated with
reference to the market capitalizations of the outstanding shares of
common stock of the Companies listed above) based upon the closing
prices on such date of the common stock of the companies comprising the
Index Group.
"Starting Date" means February 13, 2004.
"Starting Price" means $26.93 per share.
If Sun or any company belonging to the Index Group declares or effects a stock
dividend, reclassification, recapitalization, split-up, combination, exchange of
shares or similar transaction between the Starting Date and the Determination
Date, the prices for the common stock of such company shall be appropriately
adjusted for the purposes of applying this Section 10.1(h).
(i) By the Board of Community, in the event the Board,
after receipt of the written legal opinion from counsel
detailing that such action of accepting such takeover
proposal is required in order for the Board to comply
with
56
its fiduciary duties under applicable laws of the State
of New Jersey , and, provided that Community is not in
breach of the provisions of this Agreement, including,
but not limited to Section 5.5 hereof, in the exercise
of its fiduciary duty, to terminate this Agreement and
accept a takeover proposal (as defined in Section 5.5)
Section 10.2 Effect of Termination; Termination Fee.
--------------------------------------
(a) In the event of the termination and abandonment of this Agreement
pursuant to Section 10.1 of this Agreement, the Agreement shall terminate and
have no effect, except as otherwise provided herein and except that the
provisions of this Section 10.2, Section 10.5 and Article 11 of this Agreement
shall survive any such termination and abandonment.
(b) If, after the date of this Agreement, (i) Sun terminates this
Agreement in accordance with Sections 10.1(g) or 10.1(i), or (ii) an Acquisition
Transaction (as defined below) is offered, presented or proposed to Community or
its shareholders, and thereafter this Agreement and the Merger are disapproved
by Community or by the shareholders of Community, an Acquisition Transaction is
consummated or a definitive agreement is entered into by Community relating to
an Acquisition Transaction (each of (i) and (ii) being a "Trigger Event"), then
immediately upon the occurrence of a Trigger Event and in addition to any other
rights and remedies of Sun, Community shall pay Sun a cash amount of $3,250,000
as an agreed-upon termination fee plus reimbursement to Sun for its expenses
incurred in negotiation and pursuit of the Agreement and the related
transactions contemplated thereunder, including but not limited to fees and
expenses of its legal counselors, investment advisors, accountants and related
professionals and costs associated with such transaction and process
(collectively, the "Termination Fee"). For purposes of this Section 10.2,
"Acquisition Transaction" shall, with respect to Community, mean any of the
following: (a) a merger or consolidation, or any similar transaction (other than
the Merger) of any company with either Community or Community Bank, (b) a
purchase, lease or other acquisition of all or substantially all the assets of
either Community or Community Bank, (c) a purchase or other acquisition of
"beneficial ownership" by any "person" or "group" (as such terms are defined in
Section 13(d)(3) of the Securities Exchange Act) (including by way of merger,
consolidation, share exchange, or otherwise) which would cause such person or
group to become the beneficial owner of securities representing 15% or more of
the voting power of either Community or Community Bank or any significant
subsidiary of Community, or (d) a tender or exchange offer to acquire securities
representing 15% or more of the voting power of Community.
(c) Community and Sun agree that the Termination Fee is fair and
reasonable in the circumstances. If a court of competent jurisdiction shall
nonetheless, by a final, nonappealable judgment, determine that the amount of
any such Termination Fee exceeds the maximum amount permitted by law, then the
amount of such Termination Fee shall be reduced to the maximum amount permitted
by law in the circumstances, as determined by such court of competent
jurisdiction.
57
Section 10.3 Amendments. To the extent permitted by law, this Agreement
----------
may be amended by a subsequent writing signed by each of Sun and Community.
Section 10.4 Waivers. Subject to Section 11.11 hereof, prior to or at
-------
the Effective Time of the Merger, Sun, on the one hand, and Community, on the
other hand, shall have the right to waive any default in the performance of any
term of this Agreement by the other, to waive or extend the time for the
compliance or fulfillment by the other of any and all of the other's obligations
under this Agreement and to waive any or all of the conditions to its
obligations under this Agreement, except any condition, which, if not satisfied,
would result in the violation of any law or any applicable governmental
regulation.
Section 10.5 Non-Survival of Representations, Warranties and Covenants.
---------------------------------------------------------
The representations, warranties, covenants or agreements in this Agreement or in
any instrument delivered by Sun or Community shall not survive the Effective
Time of Merger, except that Section 5.3(b), Section 6.3(b), and Section 6.4
shall survive the Effective Time of the Merger, and any representation, warranty
or agreement in any agreement, contract, report, opinion, undertaking or other
document or instrument delivered hereunder in whole or in part by any person
other than Sun, Community (or directors and officers thereof in their capacities
as such) shall survive the Effective Time of Merger; provided that no
representation or warranty of Sun or Community contained herein shall be deemed
to be terminated or extinguished so as to deprive Sun, on the one hand, and
Community, on the other hand, of any defense at law or in equity which any of
them otherwise would have to any claim against them by any person, including,
without limitation, any shareholder or former shareholder of either party. No
representation or warranty in this Agreement shall be affected or deemed waived
by reason of the fact that Sun or Community and/or its representatives knew or
should have known that any such representation or warranty was, is, might be or
might have been inaccurate in any respect.
ARTICLE 11
MISCELLANEOUS
Section 11.1 Definitions. Except as otherwise provided herein, the
-----------
capitalized terms set forth below (in their singular and plural forms as
applicable) shall have the following meanings:
"Affiliate" of a person shall mean (i) any other person
directly or indirectly through one or more intermediaries controlling,
controlled by or under common control of such person, (ii) any officer,
director, partner, employer or direct or indirect beneficial owner of any 10% or
greater equity of voting interest of such person or (iii) any other persons for
which a person described in clause (ii) acts in any such capacity.
"Consent" shall mean a consent, approval or authorization,
waiver, clearance, exemption or similar affirmation by any person pursuant to
any lease, contract, permit, law, regulation or order.
58
"Environmental Law" means any applicable federal, state or
local law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree or injunction relating
to (i) 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), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of any substance presently listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether
by type or by substance as a component.
"Loan Property" means any property owned by Community,
Community Bank or any of their subsidiaries, or in which Community, Community
Bank or any of their subsidiaries holds a security interest, and, where required
by the context, includes the owner or operator of such property, but only with
respect to such property.
"Hazardous Material" means any pollutant, contaminant, or
hazardous substance within the meaning of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., or any
similar federal, state or local law. Hazardous Material shall include, but not
be limited to, (i) any hazardous substance, hazardous material, hazardous waste,
regulated substance, or toxic substance (as those terms are defined by any
applicable Environmental Laws) and (ii) any chemicals, pollutants, contaminants,
petroleum, petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the requirements of
governmental authorities and any polychlorinated biphenyls).
"Participation Facility" means any facility in which
Community, Community Bank or any of their subsidiaries has engaged in
Participation in the Management of such facility, and, where required by the
context, includes the owner or operator of such facility, but only with respect
to such facility.
"Participation in the Management" of a facility has the
meaning set forth in 40 ▇.▇.▇.▇▇. 300.1100(c).
"Material Adverse Effect," with respect to any party, shall
mean any event, change or occurrence which, together with any other event,
change or occurrence, has a material adverse impact on (i) the financial
position, business or results of operation, financial performance or prospects
of such party and their respective subsidiaries, taken as a whole, or (ii) the
ability of such party to perform its obligations under this Agreement or to
consummate the Merger and the other transactions contemplated by this Agreement;
provided, however, that "Material Adverse Effect" shall not be deemed to include
the impact of actions or omissions of a party taken with the prior written
consent of the other in contemplation of the transactions contemplated by this
Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board of
Governors of the Federal Reserve System (the "FRB"), the Federal Deposit
Insurance Corporation (the "FDIC"), and all state regulatory
59
agencies having jurisdiction over the parties (including the New Jersey
Department of Banking and Insurance), the National Association of Securities
Dealers, Inc., all national securities exchanges and the Securities and Exchange
Commission (the "SEC").
Section 11.2 Entire Agreement. This Agreement and the documents
-----------------
referred to herein contain the entire agreement among Sun and Community with
respect to the transactions contemplated hereunder and this Agreement supersedes
all prior arrangements or understandings with respect thereto, whether written
or oral. The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
person, firm, corporation or entity, other than the parties hereto and their
respective successors, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
Section 11.3 Notices. All notices or other communications which are
-------
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by first class or registered or certified mail, postage
prepaid, telegram or telex or other facsimile transmission addressed as follows:
60
If to Community:
Community Bancorp of New Jersey
▇▇▇▇ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇, President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Windels, Marx, Lane & ▇▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Merger/Integration Committee
C/O ▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Sun, then to:
Sun Bancorp, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Spidi, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices or other communications shall be deemed to have been delivered
(i) upon receipt when delivery is made by hand, (ii) on the third (3rd) business
day after deposit in the United States mail when delivery is made by first
class, registered or certified mail, and (iii)
61
upon transmission when made by telegram, telex or other facsimile transmission
if evidenced by a sender transmission completed confirmation.
Section 11.4 Severability. If any term, provision, covenant or
------------
restriction contained in this Agreement is held by a court of competent
jurisdiction or other competent authority to be invalid, void or unenforceable
or against public or regulatory policy, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall remain in full
force and effect and in no way shall be affected, impaired or invalidated, if,
but only if, pursuant to such remaining terms, provisions, covenants and
restrictions the Merger may be consummated in substantially the same manner as
set forth in this Agreement as of the later of the date this Agreement was
executed or last amended.
Section 11.5 Costs and Expenses. Expenses incurred by Community on the
------------------
one hand and Sun on the other hand, in connection with or related to the
authorization, preparation and execution of this Agreement, the solicitation of
shareholder approval and all other matters related to the closing of the
transactions contemplated hereby, including all fees and expenses of agents,
representatives, counsel and accountants employed by either such party or its
affiliates, shall be borne solely and entirely by the party which has incurred
same.
Section 11.6 Captions. The captions as to contents of particular
--------
articles, sections or paragraphs contained in this Agreement and the table of
contents hereto are inserted only for convenience and are in no way to be
construed as part of this Agreement or as a limitation on the scope of the
particular articles, sections or paragraphs to which they refer.
Section 11.7 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document with the same force and
effect as though all parties had executed the same document.
Section 11.8 Persons Bound; No Assignment. This Agreement shall be
------------------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, distributees, and assigns, but notwithstanding the
foregoing, this Agreement may not be assigned by any party hereto unless the
prior written consent of the other parties is first obtained (other than by Sun
to a subsidiary of Sun).
Section 11.9 Governing Law. This Agreement is made and shall be
--------------
governed by and construed in accordance with the laws of the State of New Jersey
(without respect to its conflicts of laws principles) except to the extent
federal law may apply.
Section 11.10 Exhibits and Schedules. Each of the exhibits and
------------------------
schedules attached hereto is an integral part of this Agreement and shall be
applicable as if set forth in full at the point in the Agreement where reference
to it is made.
62
Section 11.11 Waiver. The waiver by any party of the performance of any
------
agreement, covenant, condition or warranty contained herein shall not invalidate
this Agreement, nor shall it be considered a waiver of any other agreement,
covenant, condition or warranty contained in this Agreement. A waiver by any
party of the time for performing any act shall not be deemed a waiver of the
time for performing any other act or an act required to be performed at a later
time. The exercise of any remedy provided by law, equity or otherwise and the
provisions in this Agreement for any remedy shall not exclude any other remedy
unless it is expressly excluded. The waiver of any provision of this Agreement
must be signed by the party or parties against whom enforcement of the waiver is
sought. This Agreement and any exhibit, memorandum or schedule hereto or
delivered in connection herewith may be amended only by a writing signed on
behalf of each party hereto.
Section 11.12 Construction of Terms. Whenever used in this Agreement,
---------------------
the singular number shall include the plural and the plural the singular.
Pronouns of one gender shall include all genders. Accounting terms used and not
otherwise defined in this Agreement have the meanings determined by, and all
calculations with respect to accounting or financial matters unless otherwise
provided for herein, shall be computed in accordance with generally accepted
accounting principles, consistently applied. References herein to articles,
sections, paragraphs, subparagraphs or the like shall refer to the corresponding
articles, sections, paragraphs, subparagraphs or the like of this Agreement. The
words "hereof", "herein", and terms of similar import shall refer to this entire
Agreement. Unless the context clearly requires otherwise, the use of the terms
"including", "included", "such as", or terms of similar meaning, shall not be
construed to imply the exclusion of any other particular elements.
63
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered, and their respective seals hereunto affixed, by their officers
thereunto duly authorized, and have caused this Agreement to be dated as of the
date and year first above written.
[CORPORATE SEAL]
SUN BANCORP, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its President and Chief Executive Officer
ATTEST:
/s/▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇
Its Executive Vice President and
Chief Financial Officer
[CORPORATE SEAL]
COMMUNITY BANCORP OF NEW JERSEY
By: /s/▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
Its President and Chief Executive Officer
ATTEST:
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its Secretary