EX-10.1






Exhibit 10.1




EXECUTION COPY



PURCHASE AND ASSUMPTION AGREEMENT




dated as of




May 21, 2009




by and among




Banco Popular North America




and




Investors Savings Bank




 









 





	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE 1	 	 	 	 
	 
	 	 	 	 	 	 
	CERTAIN DEFINITIONS	 	 	 	 
	 
	 	 	 	 	 	 
	1.1

	 	Certain Definitions
	 	 	1	 
	1.2

	 	Accounting Terms
	 	 	8	 
	1.3

	 	Interpretation
	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE 2	 	 	 	 
	 
	 	 	 	 	 	 
	THE P&A TRANSACTION	 	 	 	 
	 
	 	 	 	 	 	 
	2.1

	 	Purchase and Sale of Assets
	 	 	9	 
	2.2

	 	Assumption of Liabilities
	 	 	9	 
	2.3

	 	Purchase Price
	 	 	10	 
	2.4

	 	Assumption of IRA and Keogh Account Deposits
	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE 3	 	 	 	 
	 
	 	 	 	 	 	 
	CLOSING PROCEDURES; ADJUSTMENTS	 	 	 	 
	 
	 	 	 	 	 	 
	3.1

	 	Closing
	 	 	11	 
	3.2

	 	Payment at Closing
	 	 	11	 
	3.3

	 	Adjustment of Purchase Price
	 	 	11	 
	3.4

	 	Proration; Other Closing Date Adjustments
	 	 	12	 
	3.5

	 	Seller Deliveries
	 	 	12	 
	3.6

	 	Purchaser Deliveries
	 	 	13	 
	3.7

	 	Owned Real Property Filings
	 	 	14	 
	3.8

	 	Allocation of Purchase Price
	 	 	14	 
	 
	 	 	 	 	 	 
	ARTICLE 4	 	 	 	 
	 
	 	 	 	 	 	 
	TRANSITIONAL MATTERS	 	 	 	 
	 
	 	 	 	 	 	 
	4.1

	 	Transitional Arrangements
	 	 	14	 
	4.2

	 	Customers
	 	 	15	 
	4.3

	 	Direct Deposits
	 	 	16	 
	4.4

	 	Direct Debits
	 	 	17	 
	4.5

	 	Escheat Deposits
	 	 	17	 
	4.6

	 	Access to Records
	 	 	17	 
	4.7

	 	Interest Reporting and Withholding
	 	 	18	 
	4.8

	 	Negotiable Instruments
	 	 	18	 
	4.9

	 	ATM/Debit Cards; POS Cards
	 	 	18	 
	4.10

	 	Data Processing Conversion for the Branches
and Handling of Certain Items
	 	 	19	 
	4.11

	 	Employee Training
	 	 	20	 






ii









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE 5	 	 	 	 
	 
	 	 	 	 	 	 
	REPRESENTATIONS AND WARRANTIES OF SELLER	 	 	 	 
	 
	 	 	 	 	 	 
	5.1

	 	Corporate Organization and Authority
	 	 	20	 
	5.2

	 	No Conflicts
	 	 	21	 
	5.3

	 	Approvals and Consents
	 	 	21	 
	5.4

	 	Leases
	 	 	21	 
	5.5

	 	Undisclosed Liabilities
	 	 	22	 
	5.6

	 	Regulatory Matters
	 	 	22	 
	5.7

	 	Compliance with Laws
	 	 	22	 
	5.8

	 	Records
	 	 	22	 
	5.9

	 	Title to Assets
	 	 	22	 
	5.10

	 	Deposits
	 	 	22	 
	5.11

	 	Environmental Laws; Hazardous Substances
	 	 	22	 
	5.12

	 	Brokers’ Fees
	 	 	23	 
	5.13

	 	Owned Real Property
	 	 	23	 
	5.14

	 	Limitations on Representations and Warranties
	 	 	24	 
	 
	 	 	 	 	 	 
	ARTICLE 6	 	 	 	 
	 
	 	 	 	 	 	 
	REPRESENTATIONS AND WARRANTIES OF PURCHASER	 	 	 	 
	 
	 	 	 	 	 	 
	6.1

	 	Corporate Organization and Authority
	 	 	24	 
	6.2

	 	No Conflicts
	 	 	24	 
	6.3

	 	Approvals and Consents
	 	 	24	 
	6.4

	 	Regulatory Matters
	 	 	25	 
	6.5

	 	Litigation and Undisclosed Liabilities
	 	 	25	 
	6.6

	 	Financing to be Available
	 	 	25	 
	6.7

	 	Brokers’ Fees
	 	 	26	 
	6.8

	 	Limitations on Representations and Warranties
	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE 7	 	 	 	 
	 
	 	 	 	 	 	 
	COVENANTS OF THE PARTIES	 	 	 	 
	 
	 	 	 	 	 	 
	7.1

	 	Activity in the Ordinary Course
	 	 	26	 
	7.2

	 	Access and Confidentiality
	 	 	27	 
	7.3

	 	Regulatory Approvals
	 	 	29	 
	7.4

	 	Consents
	 	 	29	 
	7.5

	 	Efforts to Consummate; Further Assurances
	 	 	30	 
	7.6

	 	Solicitation of Accounts
	 	 	30	 
	7.7

	 	Insurance
	 	 	31	 
	7.8

	 	Change of Name, Etc
	 	 	31	 






iii









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE 8	 	 	 	 
	 
	 	 	 	 	 	 
	TAXES AND EMPLOYEE BENEFITS	 	 	 	 
	 
	 	 	 	 	 	 
	8.1

	 	Tax Representations
	 	 	31	 
	8.2

	 	Proration of Taxes
	 	 	32	 
	8.3

	 	Sales and Transfer Taxes
	 	 	32	 
	8.4

	 	Information Returns
	 	 	32	 
	8.5

	 	Payment of Amount Due under Article 8
	 	 	32	 
	8.6

	 	Assistance and Cooperation
	 	 	32	 
	8.7

	 	Transferred Employees
	 	 	32	 
	 
	 	 	 	 	 	 
	ARTICLE 9	 	 	 	 
	 
	 	 	 	 	 	 
	CONDITIONS TO CLOSING	 	 	 	 
	 
	9.1

	 	Conditions to Obligations of Purchaser
	 	 	35	 
	9.2

	 	Conditions to Obligations of Seller
	 	 	35	 
	 
	 	 	 	 	 	 
	ARTICLE 10	 	 	 	 
	 
	 	 	 	 	 	 
	TERMINATION	 	 	 	 
	 
	 	 	 	 	 	 
	10.1

	 	Termination
	 	 	36	 
	10.2

	 	Effect of Termination
	 	 	37	 
	 
	 	 	 	 	 	 
	ARTICLE 11	 	 	 	 
	 
	 	 	 	 	 	 
	INDEMNIFICATION	 	 	 	 
	 
	 	 	 	 	 	 
	11.1

	 	Indemnification
	 	 	37	 
	11.2

	 	Exclusivity
	 	 	40	 
	11.3

	 	AS-IS Sale; Waiver of Warranties
	 	 	40	 
	 
	 	 	 	 	 	 
	ARTICLE 12	 	 	 	 
	 
	 	 	 	 	 	 
	MISCELLANEOUS	 	 	 	 
	 
	 	 	 	 	 	 
	12.1

	 	Survival
	 	 	40	 
	12.2

	 	Assignment
	 	 	41	 
	12.3

	 	Binding Effect
	 	 	41	 
	12.4

	 	Public Notice
	 	 	41	 
	12.5

	 	Notices
	 	 	41	 
	12.6

	 	Expenses
	 	 	42	 
	12.7

	 	Governing Law
	 	 	42	 
	12.8

	 	Waiver of Jury Trial
	 	 	42	 
	12.9

	 	Entire Agreement; Amendment
	 	 	42	 
	12.10

	 	Third Party Beneficiaries
	 	 	43	 






iv









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	12.11

	 	Counterparts
	 	 	43	 
	12.12

	 	Headings
	 	 	43	 
	12.13

	 	Severability
	 	 	43	 
	12.14

	 	Specific Performance
	 	 	43	 







v









 








List of Schedules




	 	 	 
	 
	 	 
	Schedule 1.1(a)

	 	Appraised Value of Owned Real Properties
	 
	 	 
	Schedule 1.1(b)

	 	Branches/Real Properties
	 
	 	 
	Schedule 1.1(c)

	 	Deposits
	 
	 	 
	Schedule 1.1(e)

	 	Seller’s Knowledge
	 
	 	 
	Schedule 1.1(f)

	 	Branch Employees
	 
	 	 
	Schedule 2.4(c)

	 	Excluded IRA/Keogh Account Deposits
	 
	 	 
	Schedule 3.5(a)

	 	Form of Deed
	 
	 	 
	Schedule 3.5(b)

	 	Form of Bill of Sale
	 
	 	 
	Schedule 3.5(c)

	 	Form of Assignment and Assumption Agreement
	 
	 	 
	Schedule 3.5(d)

	 	Form of Assignment of Lease and Assumption Agreement
	 
	 	 
	Schedule 3.5(e)

	 	Form of Assignment of Sublease and Assumption Agreement
	 
	 	 
	Schedule 3.5(f)

	 	Form of Certificate of Officer
	 
	 	 
	Schedule 3.6(e)

	 	Form of Certificate of Officer
	 
	 	 
	Schedule 7.4(b)-1

	 	Estoppel Certificate — Branch Lease
	 
	 	 
	Schedule 7.4(b)-2

	 	Estoppel Certificate — Tenant Lease
	 
	 	 
	Schedule 7.4(c)

	 	Form of Non Disturbance Agreement
	 
	 	 
	Schedule 7.6(a)

	 	The Existing Branches



















 





     This PURCHASE AND ASSUMPTION AGREEMENT, dated as of May 21, 2009 (this “Agreement”),
by and among Banco Popular North America, a banking corporation organized under the laws of the
State of New York, with its principal office located at 7 West Street, New York, New York, 10019
(“Seller”), and Investors Savings Bank, a New Jersey chartered savings bank, with its
principal office located at 101 JFK Parkway, Short Hills, New Jersey, 07078 (“Purchaser”).



RECITALS




     WHEREAS, Seller desires to sell, and Purchaser desires to acquire, certain assets of Seller in
accordance with the terms and provisions of this Agreement; and



     WHEREAS, Seller desires to transfer to Purchaser, and Purchaser desires to assume from Seller,
certain liabilities of Seller in accordance with the terms and provisions of this Agreement



     NOW, THEREFORE, in consideration of the premises and the mutual promises and obligations set
forth herein, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby subject to the terms and
conditions set forth herein, Seller and Purchaser agree as follows:



ARTICLE 1




CERTAIN DEFINITIONS




     1.1 Certain Definitions. The terms set forth below are used in this Agreement
with the following meanings:




     “Accrued Interest” means, as of any date, with respect to a Deposit, interest
which is accrued on such Deposit to but excluding such date and not yet posted to the
relevant deposit account.




     “ACH” has the meaning set forth in Section 4.3.




     “ACH Direct Deposit Cut-Off Date” has the meaning set forth in Section 4.3.




     “Adjusted Payment Amount” means (x) the aggregate balance (including Accrued
Interest) of the Deposits, minus (y) the Purchase Price, each as set forth on the
Final Closing Statement. For avoidance of doubt, the Adjusted Payment Amount may be a
negative amount.




     “Adjustment Date” has the meaning set forth in Section 3.3(a).




     “Affiliate” means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such person. As used
in this definition, the term “person” shall be broadly interpreted to include, without
limitation, any corporation, company, partnership and individual or group.



1









 






     “Agreement” means this Purchase and Assumption Agreement, including all
schedules, exhibits and addenda, each as amended from time to time in accordance with
Section 12.9(b).




     “Appraised Value of the Owned Real Property” means the appraised value of the
Owned Real Property as set forth in Schedule 1.1(a).




     “Assets” has the meaning set forth in Section 2.1(a).




     “Assignment and Assumption Agreement” has the meaning set forth in Section
3.5(c).




     “Branch Employees” means the employees of Seller or its Affiliates employed at
the Branches as of the date hereof who continue to be employed by Seller on the Closing Date
(including, without limitation, those employees who on the Closing Date are on family and
medical leave, military leave or personal, short-term or long-term disability or pregnancy
leave and who are eligible to return to work under Seller’s policies), except to the extent
employees leave the employ of Seller, and shall include employees hired to replace such
departing employee in the ordinary course of business. Schedule 1.1(f) contains a complete
and accurate list of the employees of Seller or its Affiliates employed at the Branches as
of the date hereof, including those employees who as of the date hereof are on family and
medical leave, military leave or personal, short-term or long-term disability or pregnancy
leave and who are eligible to return to work under Seller’s policies, and such list shall be
updated promptly upon Purchaser’s request from time to time following the date hereof to
reflect changes to the foregoing with the final such update to occur no later than ten (10)
calendar days prior to the Closing Date. From the date hereof through the Closing date,
Seller shall not transfer Branch Employees to other offices of Seller.




     “Branch Lease Security Deposit” means any security deposit held by the lessor
under a Branch Lease.




     “Branch Leases” means the leases under which Seller leases land and/or
buildings used as Branches, including without limitation ground leases.




     “Branches” means each of the banking offices of Seller at the locations
identified on Schedule 1.1(b) hereto.




     “Business Day” means a day on which banks are generally open for business in
New Jersey, and which is not a Saturday or Sunday.




     “Cash on Hand” means, as of any date, all petty cash, vault cash, teller cash,
ATM cash, prepaid postage and cash equivalents held at a Branch.




     “Closing” and “Closing Date” refer to the closing of the P&A
Transaction, which is to be held on such date as provided in Article 3 hereof and which
shall be deemed to be effective at 11:59 p.m. New Jersey time on such date.



2









 






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




     “Commissioner” means the Commissioner of Banking and Insurance of the State of
New Jersey, and where appropriate includes the Department of Banking and Insurance of the
State of New Jersey.




     “Controlling Party” has the meaning set forth in Section 11.1(f).




     “Customers” shall mean, individually and collectively, the Persons named as the
owners of the deposit accounts relating to the Deposits.




     “Deposit(s)” means all of Seller’s obligations and liabilities relating to (a)
the deposit accounts listed on Schedule 1.1(c) hereto and as updated on the Draft
Closing Statement., and (b) deposit accounts which are opened on behalf of a Customer by
Bank Employees between the date of this Agreement and the close of business on the Closing
Date, including, without limitation, all passbook accounts, statement savings accounts,
checking, Money Market and NOW accounts, Interest on Lawyers Trust Accounts (“IOLTAs”),
certificates of deposit, and IRA accounts, together with Accrued Interest thereon, all as
exists at the close of business on the Closing Date, but excluding any claim or other
liability relating to the origination of any such deposit account or the administration of
any such deposit account prior to the close of business on the Closing Date, but shall
exclude the Excluded IRA/Keogh Deposits, deposits that are pledged as security for a loan or
other obligation of Seller (which pledged deposits are set forth in Schedule
1.1(c)), and deposits that are linked to loans originated and retained by Seller (which
linked deposits are also set forth in Schedule 1.1(c)).




     “Draft Allocation Statement” has the meaning set forth in Section 3.10(a).




     “Draft Closing Statement” means a draft closing statement, prepared by Seller,
as of the close of business of the third (3rd) Business Day preceding the Closing
Date setting forth an estimated calculation of both the Purchase Price and the Estimated
Payment Amount.




     “Encumbrances” means all mortgages, claims, charges, liens, encumbrances,
easements, limitations, restrictions, commitments and security interests, Acts of Assembly,
ordinances, restrictions, requirements, resolutions, laws or orders of any governmental
authority now or hereafter acquiring jurisdiction over the Assets, and all amendments or
additions thereto in force as of the date of this Agreement or in force as of the Closing
Date, and other matters now of public record relating to the Real Property, except for
statutory liens securing Tax and/or other payments not yet due, liens incurred in the
ordinary course of business, including without limitation liens in favor of mechanics or
materialmen, and any such matters as do not materially and adversely affect the current use
of the properties or assets subject thereto or affected thereby or which otherwise do not
materially impair the business operations at such properties and except
for obligations pursuant to applicable escheat and unclaimed property laws relating to
the Escheat Deposits.



3









 






     “Environmental Law” means any Federal, state, or local law, statute, rule,
regulation, code, rule of common law, order, judgment, decree, injunction or agreement with
any Federal, state, or local governmental authority, (a) relating to the protection,
preservation or restoration of the environment (including, without limitation, air, water
vapor, surface water, groundwater, drinking water supply, surface land, subsurface land,
plant and animal life or any other natural resource) or to human health or safety or (b) the
exposure to, or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous Substances, in
each case as amended and now in effect. Environmental Laws include, without limitation, the
Clean Air Act (42 USC §7401 et seq.); the Comprehensive Environmental
Response Compensation and Liability Act (42 USC §9601 et seq.); the Resource
Conservation and Recovery Act (42 USC §6901 et seq.); the Federal Water
Pollution Control Act (33 USC §1251 et seq.); and the Occupational Safety
and Health Act (29 USC §651 et seq.).




     “Escheat Deposits” means, as of any date, Deposits and safe deposit box
contents, in each case held on such date at the Branches which become subject to escheat, in
the calendar year in which the Closing occurs, to any governmental authority pursuant to
applicable escheat and unclaimed property laws.




     “Estimated Payment Amount” means (x) the aggregate balance (including Accrued
Interest) of the Deposits, minus (y) the Estimated Purchase Price, each as set forth
on the Draft Closing Statement as reasonably agreed upon prior to Closing between Seller and
Purchaser. For avoidance of doubt, the Estimated Payment Amount may be a negative amount.




     “Estimated Purchase Price” means the Purchase Price as set forth on the Draft
Closing Statement.




     “Excluded IRA/Keogh Deposits” has the meaning set forth in Section 2.4(c).




     “Excluded Taxes” means any Taxes of, or relating to, the Assets, the
Liabilities or the operation of the Branches for, or applicable to, the Pre-Closing Tax
Period.




     “Existing Branches” means the branches operated by Seller listed on Schedule
7.6(a) which are not subject to the P&A Transaction.




     “FDIC” means the Federal Deposit Insurance Corporation.




     “FDIC Special Assessment” means the emergency special assessment imposed by the
FDIC payable on September 30, 2009 with respect to deposits as of June 30, 2009.




     “Federal Funds Rate” on any day means the per annum rate of interest (rounded
upward to the nearest 1/100 of 1%) which is the weighted average of the rates on overnight
federal funds transactions arranged on such day or, if such day is not a
Business Day, the previous Business Day, by federal funds brokers computed and released
by the Federal Reserve Bank of New York (or any successor) in substantially the



4









 






same manner
as such Federal Reserve Bank currently computes and releases the weighted average it refers
to as the “Federal Funds Effective Rate” at the date of this Agreement.




     “Federal Reserve Board” means the Board of Governors of the Federal Reserve
System.




     “FedWire Direct Deposit Cut-off Date” has the meaning set forth in Section 4.3.




     “Final Allocation Statement” has the meaning set forth in Section 3.10(a).




     “Final Closing Statement” means a final closing statement, prepared by Seller
in accordance with the accounting policies used in preparing the Draft Closing Statement, on
or before the thirtieth (30th) calendar day following the Closing Date setting
forth both the Purchase Price and the Adjusted Payment Amount.




     “GAAP” has the meaning set forth in Section 1.2.




     “Hazardous Substance” means any substance, whether liquid, solid or gas (a)
listed, identified or designated as hazardous or toxic; (b) which, applying criteria
specified in any Environmental Law, is hazardous or toxic; or (c) the use or disposal, or
any manner or aspect of management or handling, of which is regulated under Environmental
Law.




     “Information” has the meaning set forth in Section 7.2(c).




     “IRA” means an “individual retirement account” or similar account created by a
trust for the exclusive benefit of any individual or his beneficiaries in accordance with
the provisions of Section 408 of the Code.




     “IRS” means the Internal Revenue Service.




     “Item” means checks, drafts, negotiable orders of withdrawal and items of a
like kind which are drawn on or deposited and credited to the Deposit accounts.




     “Keogh Account” means an account created by a trust for the benefit of
employees (some or all of whom are owner-employees) and that complies with the provisions of
Section 401 of the Code.




     “Lease Assignment” has the meaning set forth in Section 3.5(d).




     “Liabilities” has the meaning set forth in Section 2.2(a).




     “Loss” means the amount of losses, liabilities, damages and reasonable expenses
actually incurred by the indemnified party or its Affiliates in connection with the matters
described in Section 11.1, less the amount of the economic benefit (if any) to the
indemnified party or its Affiliates obtained or to be obtained in connection with any such
damage, loss, liability or expense (including net Tax benefits obtainable under
applicable



5









 






law, amounts recovered under insurance policies net of deductibles, recovery by
setoffs or counterclaims, and other economic benefits).




     “Material Adverse Effect” means (a) with respect to Seller, a material adverse
effect on (i) the business or direct economic results of operations of the Branches, taken
as a whole (excluding any effect to the extent arising out of or resulting from (A) changes,
after the date hereof, in generally accepted accounting principles or regulatory accounting
requirements applicable to banks or savings associations and their holding companies
generally, (B) changes, after the date hereof, in laws, rules or regulations of general
applicability or interpretations thereof by courts or governmental agencies or authorities,
(C) changes, after the date hereof, in global or national political conditions or in general
U.S. or global economic or market conditions affecting banks or their holding companies
generally (including changes in interest or exchange rates or in credit availability and
liquidity), (D) public disclosure of the transactions contemplated hereby, including the
impact thereof on customers, suppliers, licensors and employees, or (E) the commencement,
occurrence, continuation or intensification of any war, sabotage, armed hostilities or acts
of terrorism not directly involving the Assets, or (ii) the ability of Seller to timely
consummate the P&A Transaction as contemplated by this Agreement, and (b) with respect to
Purchaser, a material adverse effect on the ability of Purchaser to perform any of its
financial or other obligations under this Agreement, including the ability of Purchaser to
timely consummate the P&A Transaction as contemplated by this Agreement. For purposes of
this Agreement, a Material Adverse Effect with respect to Seller shall be deemed to have
occurred, without limitation, if the results of any “phase II environmental audit”
referenced in Section 7.2(b) indicates that there is potential liability under the
Environmental Laws, including for clean up costs, that may exceed $500,000.




     “Non-Controlling Party” has the meaning set forth in Section 11.1(f).




     “Order” has the meaning set forth in Section 9.1(b).




     “Owned Branches” has the meaning set forth in Section 7.10(a).




     “Owned Real Property” means Real Property where Seller owns both the real
property and improvements thereon that are used for Branches.




     “P&A Transaction” means the purchase and sale of Assets and the assumption of
Liabilities described in Sections 2.1 and 2.2.




     “Personal Property” means all of the personal property goods of Seller located
in the Branches consisting of the trade fixtures, shelving, furniture, on-premises ATMs
(excluding Seller licensed software), equipment, security systems, safe deposit boxes
(exclusive of contents), vaults, sign structures (exclusive of signage containing any trade
name, trademark or service mark, if any, of Seller or any of its Affiliates) and supplies
excluding any items consumed or disposed of, but including new items acquired or
obtained, in the ordinary course of the operation of the Branches through the Closing
Date; provided, however, that the foregoing shall not include any (i) controller or
server of the branch or (ii) personal computers.



6









 






     “POS” has the meaning set forth in Section 4.9.




     “Post-Closing Processing Period” has the meaning set forth in Section 4.2(c).




     “Pre-Closing Tax Period” means a taxable period or portion thereof that ends on
or prior to the Closing Date; if a taxable period begins on or prior to the Closing Date and
ends after the Closing Date, then the portion of the taxable period that ends on and
includes the Closing Date shall constitute the Pre-Closing Tax Period.




     “Property Taxes” means real, personal, and intangible ad valorem property
Taxes.




     “Purchase Price” has the meaning set forth in Section 2.3.




     “Purchaser Taxes” has the meaning set forth in Section 11.1(f).




     “Real Property” means the parcels of real property on which the Branches listed
on Schedule 1.1(b) are located, including any improvements thereon, which Schedule indicates
whether or not such real property is Owned Real Property.




     “Records” means as to the Assets and Liabilities, all records and original
documents, or where reasonable, appropriate copies thereof, in Seller’s possession that
pertain to and are used by Seller to administer, reflect, monitor, evidence or record
information respecting the business or conduct of the Branches (including transaction
tickets through the Closing Date and all records for closed accounts located in Branches and
excluding any other transaction tickets and records for closed accounts) and all such
records and original documents, or where reasonable and appropriate copies thereof,
regarding the Assets, or the Deposits, including all such records maintained on electronic
or magnetic media in the electronic database system of Seller reasonably accessible by
Branch, or to comply with the applicable laws and governmental regulations to which the
Deposits are subject, including but not limited to applicable unclaimed property and escheat
laws.




     “Regulatory Approvals” means the following approvals required to consummate the
P&A Transaction: the approval of the FDIC and the Commissioner.




     “Regulatory Authority” means any federal or state banking, other regulatory,
self-regulatory or enforcement authority or any court, administrative agency or commission
or other governmental authority or instrumentality.




     “Returned Items” has the meaning set forth in Section 4.10(c).




     “Safe Deposit Agreements” means the agreements relating to safe deposit boxes
located in the Branches.




     “Seller Disclosure Schedule” means the disclosure schedule of Seller delivered
to Purchaser in connection with the execution and delivery of this Agreement.




     “Seller Taxes” has the meaning set forth in Section 11.1(f).



7









 






     “Seller’s knowledge” or other similar phrases means information that is
actually known to the persons set forth on Schedule 1.1(e).




     “Straddle Period” means any taxable period beginning on or prior to and ending
after the Closing Date.




     “Tax Claim” has the meaning set forth in Section 11.1(f).




     “Tax Returns” means any report, return, declaration, statement, claim for
refund, information return or statement relating to Taxes or other information or document
required to be supplied to a taxing authority in connection with Taxes, including any
schedule or attachment thereto, and including any amendment thereof.




     “Taxes” means all taxes, charges, fees, levies or other like assessments,
including income, gross receipts, excise, real and personal and intangible property, sales,
use, transfer (including transfer gains taxes), withholding, license, payroll, recording, ad
valorem and franchise taxes, whether computed on a separate or consolidated, unitary or
combined basis or in any other manner, whether disputed or not and including any obligation
to indemnify or otherwise assume or succeed to the tax liability of another person, imposed
by the United States, or any state, local or foreign government or subdivision or agency
thereof and such term shall include any interest, penalties or additions to tax attributable
to such assessments.




     “Tenant Leases” means leases, subleases, licenses or other use agreements
between Seller and tenants with respect to Real Property, if any.




     “Tenant Security Deposit” means any security deposit held by Seller with
respect to a Tenant Lease.




     “Transaction Account” means any account at a Branch in respect of which
deposits therein are withdrawable in practice upon demand or upon which third party drafts
may be drawn by the depositor, including checking accounts, negotiable order of withdrawal
accounts and money market deposit accounts.




     “Transfer Date” means the Closing Date, except that for Branch Employees on
disability leave at the Closing Date, “Transfer Date” means the date of active commencement
of such Branch Employee’s employment with Purchaser or one of its Affiliates, as applicable.




     “Transfer Taxes” has the meaning set forth in Section 8.3.




     “Transferred Employees” has the meaning set forth in Section 8.7(a).



     1.2 Accounting Terms. All accounting terms not otherwise defined herein shall
have the respective meanings assigned to them in accordance with consistently applied generally
accepted accounting principles as in effect from time to time in the United States of America
(“GAAP”).



8









 





     1.3 Interpretation. All references in this Agreement to Articles or Sections are
references to Articles or Sections of this Agreement, unless some other reference is clearly
indicated. The rule of construction against the draftsman shall not be applied in interpreting and
construing this Agreement.



ARTICLE 2




THE P&A TRANSACTION




     2.1 Purchase and Sale of Assets. Subject to the terms and conditions set forth in
this Agreement, at the Closing, Seller shall grant, sell, convey, assign, transfer and deliver to
Purchaser, and Purchaser shall purchase and accept from Seller, all of Seller’s right, title and
interest, as of the Closing Date, in and to the following (collectively, the “Assets”):




	 	(i)	 	Cash on Hand;
	 
	 	(ii)	 	the Owned Real Property;
	 
	 	(iii)	 	the Personal Property;
	 
	 	(iv)	 	Seller’s interests in the Branch Leases and Tenant Leases;
	 
	 	(v)	 	the Branch Lease Security Deposits;
	 
	 	(vi)	 	the Safe Deposit Agreements; and
	 
	 	(vii)	 	the Records.





     2.2 Assumption of Liabilities. (a) Subject to the terms and conditions set forth
in this Agreement, at the Closing, Purchaser shall assume, pay, perform and discharge all duties,
responsibilities, obligations or liabilities of Seller (whether accrued, contingent or otherwise)
to be discharged, performed, satisfied or paid on or after the Closing Date, with respect to the
following (collectively, the “Liabilities”):




	 	(i)	 	the Deposits, including IRA and Keogh Accounts to the extent
contemplated by Section 2.4;
	 
	 	(ii)	 	the Branch Leases, Tenant Leases, Tenant Security Deposits
and the Owned Real Property;
	 
	 	(iii)	 	the Safe Deposit Agreements;
	 
	 	(iv)	 	except as set forth in Section 8.7, all liabilities arising
out of the employment of the Branch Employees and their dependents and
beneficiaries; and
	 
	 	(v)	 	any liability for (a) Taxes of, or relating to, the Assets,
the Liabilities or the business or operation of the Branches, other than
Excluded Taxes and (b) Transfer Taxes.





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     (b) Notwithstanding anything to the contrary in this Agreement, Purchaser shall not
assume or be bound by any duties, responsibilities, obligations or liabilities of Seller, or of any
of Seller’s Affiliates, of any kind or nature, known, unknown, contingent or otherwise, other than
the Liabilities or as otherwise expressly set forth herein.



     2.3 Purchase Price. The purchase price (“Purchase Price”) for the Assets
shall be the sum of:



     (a) An amount equal to 1.0% of the average daily balance (including Accrued Interest) of
the Deposits for the period commencing ten (10) calendar days prior to and inclusive of the second
(2nd) Business Day prior to the Closing Date and ending on the second (2nd)
Business Day prior to the Closing Date;



     (b) The aggregate amount of Cash on Hand as of the Closing Date;



     (c) The aggregate net book value of all the Assets, other than Cash on Hand and Owned
Real Property, as reflected on the books of Seller as of the close of business of the month-end day
most recently preceding the Closing Date; and



     (d) The Appraised Value of the Owned Real Property.



     2.4 Assumption of IRA and Keogh Account Deposits. (a) With respect to Deposits
in IRAs, Seller will use reasonable efforts and will cooperate with Purchaser in taking any action
reasonably necessary to accomplish either the appointment of Purchaser as successor custodian or
the delegation to Purchaser (or to an Affiliate of Purchaser) of Seller’s authority and
responsibility as custodian of all such IRA deposits (except self-directed IRA deposits),
including, but not limited to, sending to the depositors thereof appropriate notices, cooperating
with Purchaser (or such Affiliate) in soliciting consents from such depositors, and filing any
appropriate applications with applicable Regulatory Authorities. If any such delegation is made to
Purchaser (or such Affiliate), Purchaser (or such Affiliate) will perform all of the duties so
delegated and comply with the terms of Seller’s agreement with the depositor of the IRA deposits
affected thereby.



     (b) With respect to Deposits in Keogh Accounts, Seller shall use reasonable efforts and
cooperate with Purchaser to invite depositors thereof to direct a transfer of each such depositor’s
Keogh Account and the related Deposits to Purchaser (or an Affiliate of Purchaser), as trustee
thereof, and to adopt Purchaser’s (or such Affiliate’s) form of Keogh Master Plan as a successor to
that of Seller. Purchaser (or such Affiliate) will not be required to assume a Keogh Account
unless Purchaser (or such Affiliate) has received the documents reasonably necessary
for such assumption at or before the Closing. With respect to any owner of a Keogh Account
who does not adopt Purchaser’s (or such affiliate’s) form of Keogh Master Plan, Seller will use
reasonable efforts in order to enable Purchaser (or such Affiliate) to retain such Keogh Accounts
at the Branches.



     (c) If, notwithstanding the foregoing, as of the Closing Date, Purchaser shall be unable
to retain deposit liabilities in respect of an IRA or Keogh Account, such deposit liabilities,
which shall on or prior to the Closing Date be set forth on Schedule 2.4(c), shall be



10









 







excluded from Deposits for purposes of this Agreement and shall constitute “Excluded IRA/Keogh Account
Deposits.”.



ARTICLE 3




CLOSING PROCEDURES; ADJUSTMENTS




     3.1 Closing. (a) The Closing will be held at the offices of Investors Savings
Bank, at 101 JFK Parkway, Short Hills, New Jersey, or such other place as may be agreed to by the
parties.



     (b) Subject to the satisfaction or, where legally permitted, the waiver of the
conditions set forth in Article 9, the parties anticipate that the Closing Date shall be September
30, 2009, or an earlier mutually agreeable date, or, if the Closing cannot occur on such date, it
is the intention of the parties to have the Closing on the date that is the last business day of
the month during which all regulatory approvals are received and all related waiting periods have
expired. Unless the parties agree pursuant to Section 4.10(a) that the conversion of the data
processing with respect to the Branches and the Assets and Liabilities will be performed on a date
other than the Closing Date, the Closing Date shall be a Friday.



     3.2 Payment at Closing. (a) At Closing, (i) if the Estimated Payment Amount is a
positive amount, Seller shall pay to Purchaser an amount in dollars equal to such positive amount,
or (ii) if the Estimated Payment Amount is a negative amount, Purchaser shall pay to Seller an
amount in dollars equal to the absolute value of such negative amount. In addition, Purchaser
shall be responsible for payment of any Transfer Taxes due or incurred in connection with the
transactions contemplated by this Agreement.



     (b) All payments to be made hereunder by one party to the other shall be made by wire
transfer of immediately available funds (in all cases to an account specified in writing by Seller
or Purchaser, as the case may be, to the other not later than the third (3rd) Business
Day prior to the Closing Date) on or before 12:00 noon New Jersey time on the date of payment.



     (c) If any instrument of transfer contemplated herein shall be recorded in any public record
before the Closing and thereafter the Closing does not occur, then at the request of such
transferring party the other party will deliver (or execute and deliver) such instruments and take
such other action as such transferring party shall reasonably request to revoke such purported
transfer.



     3.3 Adjustment of Purchase Price. (a) On or before 12:00 noon New Jersey time on
the thirtieth (30th) calendar day following the Closing Date (the “Adjustment
Date”), Seller shall deliver to the Purchaser the Final Closing Statement and shall make
available such work papers, schedules and other supporting data as may be reasonably requested by
Purchaser to enable it to verify the amounts set forth in the Final Closing Statement.



     (b) The determination of the Adjusted Payment Amount shall be final and binding on the
parties hereto on the thirtieth (30th) calendar day after receipt by Purchaser of the
Final Closing Statement, unless Purchaser shall notify Seller in writing of its disagreement with
any



11









 







amount included therein or omitted therefrom, in which case, if the parties are unable to
resolve the disputed items within ten (10) Business Days of the receipt by Seller of notice of such
disagreement, such items shall be determined by a nationally recognized independent accounting firm
selected by mutual agreement between Seller and Purchaser. Such accounting firm shall be
instructed to resolve the disputed items within ten (10) Business Days of engagement, to the extent
reasonably practicable. The determination of such accounting firm shall be final and binding on
the parties hereto. The fees of any such accounting firm shall be divided equally between Seller
and Purchaser.



     (c) On or before 12:00 noon New Jersey time on the tenth (10th) Business Day
after the Adjusted Payment Amount shall have become final and binding or, in the case of a dispute,
the date of the resolution of the dispute pursuant to Section 3.3(b) above, if the Adjusted Payment
Amount exceeds the Estimated Payment Amount, Seller shall pay to Purchaser an amount in dollars
equal to such excess, plus interest on such excess amount from the Closing Date to but excluding
the payment date, at the Federal Funds Rate or, if the Estimated Payment Amount exceeds the
Adjusted Payment Amount, Purchaser shall pay to Seller an amount in dollars equal to such excess,
plus interest on such excess amount from the Closing Date to but excluding the payment date, at the
Federal Funds Rate. Any payments required by Section 3.4 shall be made contemporaneously with the
foregoing payment.



     3.4 Proration; Other Closing Date Adjustments. (a) Except as otherwise
specifically provided in this Agreement, it is the intention of the parties that Seller will
operate the Branches for its own account until 11:59 p.m. New Jersey time on the Closing Date, and
that Purchaser shall operate the Branches, hold the Assets and assume the Liabilities for its own
account after the Closing Date. Thus, except as otherwise specifically provided in this Agreement,
items of income and expense, as defined herein, shall be prorated as of 11:59 p.m. New Jersey time
on the Closing Date, and settled between Seller and Purchaser on the Closing Date, whether or not
such adjustment would normally be made as of such time. Items of proration will be handled at
Closing as an adjustment to the Purchase Price unless otherwise agreed by the parties hereto.



     (b) For purposes of this Agreement, items of proration and other adjustments shall
include, without limitation: (i) rental payments under the Branch Leases and the Tenant Leases;
(ii) Property Taxes and assessments; (iii) FDIC deposit insurance assessments, except for the FDIC
Special Assessment, which shall be borne by Seller; (iv) trustee or custodian fees on IRA and Keogh
Accounts; (v) prepaid expenses and items and accrued but unpaid liabilities, as of the
close of business on the Closing Date; and (vi) safe deposit rental payments previously
received by Seller.



     3.5 Seller Deliveries. At the Closing, Seller shall deliver to Purchaser:



     (a) Special Warranty Deeds in substantially the form of Schedule 3.5(a), pursuant to
which the Owned Real Property shall be transferred to Purchaser “AS IS”, “WHERE IS” and with all
faults;



     (b) A bill of sale in substantially the form of Schedule 3.5(b), pursuant to which the
Personal Property shall be transferred to Purchaser “AS IS”, “WHERE IS” and with all faults;



12









 





     (c) An assignment and assumption agreement in substantially the form of Schedule 3.5(c)
(except as otherwise required by local state law), with respect to the Liabilities, (the
“Assignment and Assumption Agreement”);



     (d) Lease assignment and assumption agreements, in recordable form, in substantially
the form of Schedule 3.5(d), with respect to each of the Branch Leases (the “Lease
Assignments”);



     (e) Sublease assignment and assumption agreements in substantially the form of Schedule
3.5(e), with respect to each of the Branch Leases (the “Sublease Assignments”);



     (f) An Officer’s Certificate in substantially the form of Schedule 3.5(f);



     (g) The Draft Closing Statement;



     (h) Seller’s resignation as trustee or custodian, as applicable, with respect to each
IRA or Keogh Account included in the Deposits and designation of Purchaser as successor trustee or
custodian with respect thereto, as contemplated by Section 2.4;



     (i) A certificate of non-foreign status pursuant to Treasury Regulations Section
1.1445-2(b)(2) from Seller; and



     (j) Such other documents as the parties determine are reasonably necessary to consummate
the P&A Transaction as contemplated hereby.



     3.6 Purchaser Deliveries. At the Closing, Purchaser shall deliver to Seller:



     (a) The Assignment and Assumption Agreement;



     (b) Purchaser’s acceptance of its appointment as successor trustee or custodian, as
applicable, of the IRA and Keogh Accounts included in the Deposits and assumption of the fiduciary
obligations of the trustee or custodian with respect thereto, as contemplated by Section 2.4;



     (c) The Lease Assignments and such other instruments and documents as any landlord under
a Branch Lease may reasonably require as necessary for providing for the assumption by Purchaser of
a Branch Lease, each such instrument and document in form and substance reasonably satisfactory to
the parties and dated as of the Closing Date;



     (d) The Sublease Assignments and such other instruments and documents as any subtenant
under a Tenant Lease may reasonably require as necessary for providing for the assumption by
Purchaser of a Tenant Lease, each such instrument and document in form and substance reasonably
satisfactory to the parties and dated as of the Closing Date;



     (e) An Officer’s Certificate in substantially the form of Schedule 3.6(e); and



     (f) Such other documents as the parties determine are reasonably necessary to consummate
the P&A Transaction as contemplated hereby.



13









 





     3.7 Owned Real Property Filings. On or prior to the Closing Date, Purchaser shall
file or record, or cause to be filed or recorded, any and all documents necessary in order that the
legal and equitable title to Owned Real Property shall be duly vested in Purchaser. Purchaser
agrees to engage a mutually acceptable title company in connection with the foregoing actions. Any
expenses or documentary transfer Taxes with respect to such filings and all escrow closing costs
shall be borne by Purchaser.



     3.8 Allocation of Purchase Price. (a) No later than the Adjustment Date, Seller
shall prepare and deliver to Purchaser a draft of a statement (the “Draft Allocation
Statement”) setting forth the allocation of the total consideration paid by Purchaser to Seller
pursuant to this Agreement among the Assets for purposes of Section 1060 of the Code. If, within
thirty (30) calendar days of the receipt of the Draft Allocation Statement, Purchaser shall not
have objected in writing to such draft, the Draft Allocation Statement shall become the Final
Allocation Statement, as defined below. If Purchaser objects to the Draft Allocation Statement in
writing within such thirty (30) calendar-day period, Purchaser and Seller shall negotiate in good
faith to resolve any disputed items. If, within ninety (90) calendar days after the Adjustment
Date, Purchaser and Seller fail to agree on such allocation, any disputed aspects of such
allocation shall be resolved by a nationally recognized independent accounting firm mutually
acceptable to Purchaser and Seller. The allocation of the total consideration, as agreed upon by
Purchaser and Seller (as a result of either the Purchaser’s failure to object to the Draft
Allocation Statement or of good faith negotiations between Purchaser and Seller) or determined by
an accounting firm under this Section 3.10(a), (the “Final Allocation Statement”) shall be
final and binding upon the parties. Each of Purchaser and Seller shall bear all fees and costs
incurred by it in connection with the determination of the allocation of the total consideration,
except that the parties shall each pay one-half (50%) of the fees and expenses of such accounting
firm.



     (b) Purchaser and Seller shall report the transaction contemplated by this Agreement
(including income Tax reporting requirements imposed pursuant to Section 1060 of the Code) in
accordance with the allocation specified in the Final Allocation Statement. Each of Purchaser and
Seller agrees to timely file, or cause to be timely filed, IRS Form 8594 (or any comparable
form under state or local Tax law) and any required attachment thereto in accordance with the
Final Allocation Statement. Except as otherwise required pursuant to a “determination” under
Section 1313 of the Code (or any comparable provision of state or local law), neither Purchaser nor
Seller shall take, or shall permit its Affiliates to take, a Tax position which is inconsistent
with the Final Allocation Statement. In the event any party hereto receives notice of an audit in
respect of the allocation of the consideration paid for the Assets, such party shall immediately
notify the other party in writing as to the date and subject of such audit.



ARTICLE 4




TRANSITIONAL MATTERS




     4.1 Transitional Arrangements. Seller and Purchaser agree to cooperate and to
proceed as follows to effect the transfer of account record responsibility for the Branches:



     (a) Not later than thirty (30) calendar days after the date of this Agreement, Seller
will meet with Purchaser to investigate, confirm and agree upon mutually acceptable transaction



14









 







settlement procedures and specifications, files, procedures and schedules, for the transfer of
account record responsibility; provided, however, that Seller shall not be obligated under this
Agreement to provide Purchaser any information regarding Seller’s relationship with the customers
outside of the relevant Branch (e.g., other customer products, householding information).



     (b) Not later than sixty (60) calendar days after the date of this Agreement, Seller
shall deliver to Purchaser the mutually agreed upon specifications and conversion sample files.



     (c) From time to time prior to the Closing, after Purchaser has tested and confirmed the
conversion sample files, Purchaser may request and Seller shall provide reasonable additional
file-related information, including, without limitation, complete name and address, account
masterfile, ATM account number information, applicable transaction and stop/hold/caution
information, account-to-account relationship information and any other related information with
respect to the Deposits.



     (d) From the date of this Agreement, through the Closing and for a reasonable period of
time thereafter, upon the reasonable request of Purchaser Seller will cooperate with Purchaser and
will make available from time to time a reasonable number of technical personnel for consultation
with Purchaser concerning matters other than the matters referred to in this Section 4.1.



     (e) Upon the reasonable request of Purchaser, Seller will cooperate to assist Purchaser with
respect to the continuation, at Purchaser’s expense, of any third-party vendor services to the
Branches from and after the Closing Date. From the date of this Agreement until the Closing,
Seller and Purchaser shall cooperate in good faith to address any transitional issues that may
arise and that are not specifically addressed in this Article IV.



     4.2 Customers. (a) Not later than thirty (30) calendar days nor earlier than
forty-five (45) calendar days prior to the Closing Date (except as otherwise required by applicable
law):




	 	(i)	 	Seller will notify the holders of Deposits to be transferred
on the Closing Date that, subject to the terms and conditions of this
Agreement, Purchaser will be assuming liability for such Deposits; and
	 
	 	(ii)	 	each of Seller and Purchaser shall provide, or join in
providing where appropriate, all notices to customers of the Branches and
other persons that either Seller or Purchaser, as the case may be, is required
to give under applicable law or the terms of any other agreement between
Seller and any customer in connection with the transactions contemplated
hereby.




A party proposing to send or publish any notice or communication pursuant to this Section 4.2 shall
furnish to the other party a copy of the proposed form of such notice or communication, to the
extent reasonably practicable, two (2) Business Days, but in any event at least one (1) Business
Day, in advance of the proposed date of the first mailing, posting, or other dissemination thereof
to customers, and shall not unreasonably refuse to amend such notice to incorporate any changes
that the other such party proposes as necessary to comply with


15









 






 applicable law. All costs and
expenses of any notice or communication sent or published by Purchaser or Seller shall be the
responsibility of the party sending such notice or communication and all costs and expenses of any
joint notice or communication shall be shared equally by Seller and Purchaser. As soon as
reasonably practicable and in any event within thirty (30) calendar days after the date hereof,
Seller shall provide to Purchaser a report of the names and addresses of the owners of the Deposits
and the lessees of the safe deposit boxes as of the date hereof in connection with the mailing of
such materials. No communications by Purchaser, and no communications by Seller outside the
ordinary course of business, to any such owners, customers or lessees shall be made prior to the
Closing Date except as provided in this Agreement or otherwise agreed to by the parties in writing.




     (b) Following the giving of any notice described in paragraph (a) above, Purchaser and
Seller shall deliver to each new customer at any of the Branches such notice or notices as may be
reasonably necessary to notify such new customers of Purchaser’s pending assumption of liability
for the Deposits and to comply with applicable law.



     (c) Notwithstanding the provisions of Section 7.6, neither Purchaser nor Seller shall
object to the use, by depositors of the Deposits, of payment orders issued to or ordered by such
depositors on or prior to the Closing Date, which payment orders bear the name, or any logo,
trademark, service mark or the proprietary mark of Seller, or any of their respective Affiliates;
provided, however, that Purchaser shall notify Deposit account customers that, upon the expiration
of a post-Closing processing period, which shall be sixty (60) calendar days after Closing Date
(the “Post-Closing Processing Period”), any Items which are drawn on Seller shall not
thereafter be honored by Seller. Such notice shall be given by delivering written instructions to
such effect to such Deposit account customers in accordance with this Section 4.2.



     (d) During the period beginning on the Closing Date and ending on the ninetieth
(90th) calendar day thereafter, Seller shall, by commercially reasonable efforts and at
Purchaser’s expense (A) accept as a correspondent bank for forwarding to Purchaser all Items which
are presented to Seller for payment or credit in any manner including, without limitation, through
Seller’s Federal Reserve cash letters or correspondent bank cash letters or deposited by Deposit
account customers, correspondent banks or others but excluding ATM withdrawals, deposits and
transfers unless initiated with an automated teller machine card issued by Purchaser; and (B) batch
all such items in paper format (checks or IRDs) or electronic format and have them available for
pickup by Purchaser no later than 12:00 noon New Jersey time on the Business Day after presentation
to Seller. For deposits processed in error by Seller, copies of the deposit slips and copies of
the deposited items will be batched and provided to Purchaser by 12:00 noon New Jersey time on the
next Business Day and will be provided via secured email to allow memo posting of the deposits to
the customer accounts.



     4.3 Direct Deposits. Seller will use its reasonable best efforts to transfer to
Purchaser on the Closing Date all of those automated clearing house (“ACH”) and FedWire
direct deposit arrangements related (by agreement or other standing arrangement) to the Deposits.
For a period of ninety (90) calendar days following the Closing, in the case of ACH direct deposits
to accounts containing Deposits (the final Business Day of such period being the “ACH Direct
Deposit Cut-Off Date”), Seller shall transfer to Purchaser all received ACH direct deposits
each Business Day at 10:00 a.m. New Jersey time, to the extent reasonably practicable, but in any



16









 







event not later than 10:30 a.m. New Jersey time. Such transfers shall contain Direct Deposits
effective for that Business Day only. On each Business Day, for a period of thirty (30) calendar
days following the Closing Date (the final Business Day of such period being the “FedWire
Direct Deposit Cut-Off Date”), FedWires received by Seller shall be returned (as soon as is
practicable after receipt) to the originator with an indication of Purchaser’s correct Wire Room
contact information and an instruction that such wire should be sent to Purchaser. Compensation
for ACH direct deposits or FedWire direct deposits not forwarded to Purchaser on the same Business
Day as that on which Seller has received such deposits will be handled in accordance with the
applicable rules established by the United States Council on International Banking. After the
respective ACH Direct Deposit Cut-Off Date or FedWire Direct Deposit Cut-Off Date, Seller may
discontinue accepting and forwarding ACH and FedWire entries and funds and return such direct
deposits to the originators marked “Account Closed.” Seller and its Affiliates shall not be liable
for any overdrafts that may thereby be created. Purchaser and Seller shall agree on a reasonable
period of time prior to the Closing during which Seller will no longer be obligated to accept new
direct deposit arrangements related to the Branches. At the time of the ACH Direct Deposit Cut-Off
Date, Purchaser will provide ACH originators with account numbers relating to the Deposits.



     4.4 Direct Debits. As soon as practicable after the date of this Agreement and
after the notice provided in Section 4.2(a), Purchaser shall send appropriate notice to all
customers having accounts constituting Deposits the terms of which provide for direct debit of such
accounts by third parties, instructing such customers concerning the transfer of customer direct
debit authorizations from Seller to Purchaser. Such notice shall be in a form reasonably agreed to
by the parties. For a period of ninety (90) calendar days following the Closing, Seller shall
transfer to Purchaser all received direct debits on accounts constituting Deposits each Business
Day at 10:00 a.m. New Jersey time, to the extent reasonably
practicable, but in any event not later than 10:30 a.m. New Jersey time. Such transfers shall
contain Direct Debits effective for that Business Day only. Thereafter, Seller may discontinue
forwarding such entries and return them to the originators marked “Account Closed.” Purchaser and
Seller shall agree on a reasonable period of time prior to the Closing during which Seller will no
longer be obligated to accept new direct debit arrangements related to the Branches. On the
Closing Date, Purchaser shall provide ACH originators of such Direct Debits with account numbers
relating to the Deposits.



     4.5 Escheat Deposits. No current Escheat Deposits are being sold. After Closing,
Purchaser shall be solely responsible for the proper reporting and transmission to the appropriate
governmental entity of Escheat Deposits.



     4.6 Access to Records. (a) From and after the Closing Date, each of the parties
shall permit the other reasonable access to any applicable Records in its possession relating to
matters arising on or before the Closing Date and reasonably necessary in connection with any
claim, action, litigation or other proceeding involving the party requesting access to such Records
or in connection with any legal obligation owed by such party to any present or former depositor or
other customer, subject to confidentiality requirements. All Records, whether held by Purchaser or
Seller, shall be maintained for such periods as are required by law, unless the parties shall agree
in writing to a longer period. Between the date hereof and the Closing Date, Purchaser and Seller
shall use their reasonable best efforts to develop policies and procedures to be followed by



17









 







each party in connection with any request by Purchaser, following the Closing Date, for Seller to
provide it with Records retained by Seller following the Closing.



     (b) Each party agrees that any records or documents that come into its possession as a result
of the transactions contemplated by this Agreement, to the extent relating to the other party’s
business and not relating to the Assets and Liabilities (which becomes the property of the
Purchaser), shall remain the property of the other party, and shall, upon the other party’s request
from time to time and as it may elect in its sole discretion, be returned to the other party or
destroyed, and each party agrees not to make any use of such records or documents and to keep such
records and documents confidential in accordance with Section 7.2(b).



     4.7 Interest Reporting and Withholding. (a) Unless otherwise agreed to by the
parties, Seller will report to applicable taxing authorities and holders of Deposits, with respect
to the period from January 1 of the year in which the Closing occurs through the Closing Date, all
interest (including dividends and other distributions with respect to money market accounts)
credited to, withheld from and any early withdrawal penalties imposed upon the Deposits. Purchaser
will report to the applicable taxing authorities and holders of Deposits, with respect to all
periods from the day after the Closing Date, all such interest credited to, withheld from and any
early withdrawal penalties imposed upon the Deposits. Any amounts required by any governmental
agencies to be withheld from any of the Deposits through the Closing Date will be withheld by
Seller in accordance with applicable law or appropriate notice from any governmental agency and
will be remitted by Seller to the appropriate agency on or prior to the applicable due date. Any
such withholding required to be made subsequent to the Closing Date will be withheld by Purchaser
in accordance with applicable law or appropriate notice from any governmental agency and will be
remitted by Purchaser to the appropriate agency on or prior to the applicable due date.



     (b) Unless otherwise agreed by the parties, Seller shall be responsible for delivering
to payees all IRS notices with respect to information reporting and tax identification numbers
required to be delivered through the Closing Date with respect to the Deposits, and Purchaser shall
be responsible for delivering to payees all such notices required to be delivered following the
Closing Date with respect to the Deposits.



     4.8 Negotiable Instruments. Seller will remove any supply of Seller’s money
orders, official checks, gift checks, travelers’ checks or any other negotiable instruments located
at each of the Branches on the Closing Date.



     4.9 ATM/Debit Cards; POS Cards. Seller will provide Purchaser with a list of ATM
access/debit cards and Point-of-Sale (“POS”) cards issued by Seller to depositors of any
Deposits, and a record thereof in a format reasonably agreed to by the parties containing all
addresses therefor, as soon as practicable and in no event later than forty-five (45) Business Days
after the date of this Agreement. At or promptly after the Closing, Seller will provide Purchaser
with a revised record through the Closing. In instances where a depositor of a Deposit made an
assertion of error regarding an account pursuant to the Electronic Funds Transfer Act and Federal
Reserve Board Regulation E, and Seller, prior to the Closing, recredited the disputed amount to the
relevant account during the conduct of the error investigation, Purchaser agrees to comply with a
written request from Seller to debit such account in a stated amount and remit such



18









 







amount to Seller, to the extent of the balance of funds available in the accounts. Seller agrees to
indemnify Purchaser for any claims or losses that Purchaser may incur as a result of complying with
such request from Seller. Seller will not be required to disclose to Purchaser customers’ PINs or
algorithms or logic used to generate PINs. Purchaser shall reissue ATM access/debit cards to
depositors of any Deposits not earlier than forty-five (45) Business Days nor later than ten (10)
Business Days prior to the Closing Date, which cards shall be effective as of 11:59 p.m. New Jersey
time on the Closing Date. Purchaser and Seller agree to settle any and all ATM transactions and
POS transactions effected on or before 11:59 p.m. New Jersey time on the Closing Date, but
processed after the Closing Date, as soon as practicable. In addition, Purchaser assumes
responsibility for and agrees to pay on presentation all POS transactions initiated before or after
the Closing with POS cards issued by Seller to access Transaction Accounts.



     4.10 Data Processing Conversion for the Branches and Handling of Certain Items.
(a) The parties shall use their reasonable best efforts to have the conversion of the data
processing with respect to the Branches and the Assets and Liabilities completed on the Closing
Date. If the data processing conversion does not occur on the Closing Date, the parties shall
cooperate with each other (and with their respective third party processors) in order to have the
data processing conversion occur as soon a practicable following the Closing Date. Seller and
Purchaser agree to cooperate to facilitate the orderly transfer of data processing information in
connection with the P&A Transaction. Within ten (10) Business days of the date of this Agreement,
Purchaser and/or its representatives shall be permitted access (subject to the provisions of
Section 7.2(a)) to review each Branch for the purpose of installing automated
equipment for use by Branch personnel. Following the receipt of all Regulatory Approvals
(except for the expiration of statutory waiting periods), but in no event later than forty-five
(45) Business Days prior to the Closing Date, Purchaser shall be permitted, at its expense, to
install and test communication lines, both internal and external, from each site and prepare for
the installation of automated equipment on the Closing Date.



     (b) As soon as practicable and in no event more than three (3) Business Days after the
Closing Date, Purchaser shall mail to each depositor in respect of a Transaction Account (i) a
letter approved by Seller requesting that such depositor promptly cease writing Seller’s drafts
against such Transaction Account and (ii) new drafts which such depositor may draw upon Purchaser
against such Transaction Accounts. Purchaser shall use its reasonable best efforts to cause these
depositors to begin using such drafts and cease using drafts bearing Seller’s name. The parties
hereto shall use their reasonable best efforts to develop procedures that cause Seller’s drafts
against Transaction Accounts received after the Closing Date to be cleared through Purchaser’s
then-current clearing procedures. During the sixty (60) Business Day period after the Closing
Date, if it is not possible to clear Transaction Account drafts through Purchaser’s then-current
clearing procedures, Seller shall make available to Purchaser as soon as practicable but in no
event more than three (3) Business Days after receipt all Transaction Account drafts drawn against
Transaction Accounts. Seller shall have no obligation to pay such forwarded Transaction Account
drafts. Upon the expiration of such sixty (60) Business Day period, Seller shall cease forwarding
drafts against Transaction Accounts. Seller shall be compensated for its processing of the drafts
and for other services rendered to Purchaser during the sixty (60) Business Day period following
the Closing Date in accordance with Schedule 4.10.



19









 





     (c) Any items that were credited for deposit to or cashed against a Deposit prior to the
Closing and are returned unpaid on or within forty-five (45) Business Days after the Closing Date
(“Returned Items”) will be handled as set forth herein. Except as set forth below,
Returned Items shall be the responsibility of Seller. If depositor’s bank account at Seller is
charged for the Returned Item, Seller shall forward such Returned Item to Purchaser. If upon
Purchaser’s receipt of such Returned Item there are sufficient funds in the Deposit to which such
Returned Item was credited or any other Deposit transferred at the Closing standing in the name of
the party liable for such Returned Item, Purchaser will debit any or all of such Deposits an amount
equal in the aggregate to the Returned Item, and shall repay that amount to Seller. If there are
not sufficient funds in the Deposit because of Purchaser’s failure to honor holds placed on such
Deposit, Purchaser shall repay the amount of such Returned Item to Seller. Any items that were
credited for deposit to or cashed against an account at the Branches to be transferred at the
Closing prior to the Closing and are returned unpaid more than forty-five (45) Business Days after
the Closing will be the responsibility of Seller.



     (d) During the forty-five (45) Business-day period after the Closing Date, any deposits
or other payments received by Purchaser in error shall be returned to Seller within two (2)
Business Days of receipt by Purchaser.



     (e) Prior to the Closing Date, Purchaser will open and maintain one demand deposit
account with Seller, to be used for settlement activity following the Closing Date. Seller will
provide Purchaser with a daily statement for this account. Purchaser will be responsible for
initiating all funding and draw-down activity against this account. The Purchaser will ensure
that all debit (negative) balances are funded no later than one day following the day the
account went into a negative status. Activity that will be settled through these accounts will
include but not be limited to: items drawn on a Deposit but presented to Seller for payment, ACH
transactions, Direct Debit transactions and Returned Items.



     4.11 Employee Training. Seller and Purchaser shall agree to mutually acceptable
terms and conditions under which Purchaser shall be permitted to provide training to Seller’s
employees at the Branches who are reasonably anticipated to become Transferred Employees. Any such
training will be conducted in a manner that will not interfere with the business activities of the
Branches. Purchaser shall reimburse Seller for the additional time spent by, and all related,
reasonable travel expenses incurred by, any such prospective Transferred Employee in connection
with such training activities to the extent such time and expenses would not have been spent or
incurred by such prospective Transferred Employee but for such training activities. Such training
activities may take place, as mutually agreed by the parties, at a Branch or off-site.



ARTICLE 5




REPRESENTATIONS AND WARRANTIES OF SELLER




     Seller represents and warrants to Purchaser as follows, except as set forth in the Seller
Disclosure Schedule:



     5.1 Corporate Organization and Authority. Seller is a banking corporation, duly
organized and validly existing under the laws of the State of New York, and has the requisite



20









 







power and authority to conduct the business now being conducted at the Branches. Seller has the
requisite corporate power and authority and has taken all corporate action necessary in order to
execute and deliver this Agreement and to consummate the transactions contemplated hereby. This
Agreement is a valid and binding agreement of Seller enforceable against Seller in accordance with
its terms subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.



     5.2 No Conflicts. The execution, delivery and performance of this Agreement by
Seller does not, and will not, (i) violate any provision of its charter or by-laws or (ii) subject
to Regulatory Approvals, violate or constitute a breach of, or default under, any law, rule,
regulation, judgment, decree, ruling or order of any court, government or governmental agency to
which Seller is subject or any agreement or instrument of Seller, or to which Seller is subject or
by which Seller is otherwise bound, which violation, breach, contravention or default referred to
in this clause (ii), individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect (assuming the receipt of any required consents of lessors under the Branch
Leases in respect of the transactions herein contemplated). Seller has all material licenses,
franchises, permits, certificates of public convenience, orders and other authorizations of all
federal, state and local governments and
governmental authorities necessary for the lawful conduct of its business at each of the
Branches as now conducted and, except as would not individually or in the aggregate be reasonably
expected to have a Material Adverse Effect, all such licenses, franchises, permits, certificates of
public convenience, orders and other authorizations, are valid and in good standing and, to
Seller’s knowledge, are not subject to any suspension, modification or revocation or proceedings
related thereto.



     5.3 Approvals and Consents. Other than Regulatory Approvals or as otherwise
disclosed in writing to Purchaser by Seller prior to the date hereof, no notices, reports or other
filings are required to be made by Seller with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by Seller from, any governmental or regulatory
authorities of the United States or the several States in connection with the execution and
delivery of this Agreement by Seller and the consummation of the transactions contemplated hereby
by Seller, the failure to make or obtain any or all of which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.



     5.4 Leases. Each Branch Lease and each Tenant Lease is the valid and binding
obligation of Seller, and to Seller’s knowledge, of each other party thereto; and there does not
exist with respect to Seller’s obligations thereunder, or, to Seller’s knowledge, with respect to
the obligations of the lessor thereof, any material default, or event or condition which
constitutes or, after notice or passage of time or both, would constitute a material default on the
part of Seller or the lessor or sublessee, as applicable, under any such Branch Lease or Tenant
Lease. As used in this Section 5.4, the term “lessor” includes any sub-lessor of the property to
Seller. The Branch Leases give Seller the right to occupy the building and land comprising the
related Branch. There are no subleases relating to any Branch created or suffered to exist by
Seller, or to Seller’s knowledge, created or suffered to exist by any other person.



21









 





     5.5 Undisclosed Liabilities. Other than the Liabilities, there are no material
obligations or liabilities of Seller relating to the Branches. Seller has not promised retiree
health or retiree medical benefits to the Branch Employees.



     5.6 Regulatory Matters. (a) There are no pending or, to Seller’s knowledge,
threatened disputes or controversies between Seller and any federal, state or local governmental
agency or authority that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.



     (b) Neither Seller nor any of its Affiliates has received any indication from any
federal or state governmental agency or authority that such agency would oppose or refuse to grant
a Regulatory Approval.



     (c) Neither Seller nor any of its Affiliates is a party to any written order, decree,
agreement or memorandum of understanding with, or commitment letter or similar submission to, any
federal or state regulatory agency or authority charged with the supervision or regulation of
depository institutions, nor has any of them been advised by any such agency or authority that
it is contemplating issuing or requesting any such order, decree, agreement, memorandum of
understanding, commitment letter or submission, in each case which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.



     5.7 Compliance with Laws. The banking business of the Branches has been conducted
in compliance, in all material respects, with all federal, state and local laws, regulations and
ordinances applicable thereto.



     5.8 Records. The Records respecting the operations of the Branches and the Assets
and Liabilities accurately reflect in all material respects as of their respective dates the net
book value of the Assets and Liabilities being transferred to Purchaser hereunder. The Records
include all customary Branch, customer and customer-related information reasonably necessary to
service the Deposits on an ongoing basis, and to otherwise operate the business being acquired
under this Agreement in substantially the manner currently operated by Seller.



     5.9 Title to Assets. Subject to the terms and conditions of this Agreement, on
the Closing Date Purchaser will acquire good and marketable title to all of the material Assets,
free and clear of any Encumbrances.



     5.10 Deposits. All of the Deposit accounts have been administered and originated,
in compliance in all material respects with the documents governing the relevant type of Deposit
account and all applicable laws. The Deposit accounts are insured by the FDIC through the Deposit
Insurance Fund to the fullest extent permitted by law, and all premiums and assessments required to
be paid in connection therewith have been paid when due.



     5.11 Environmental Laws; Hazardous Substances. Except as would not, individually
or in the aggregate, have a Material Adverse Effect, each parcel of Real Property:




	 	(i)	 	is and has been operated by Seller in compliance with all
applicable Environmental Laws;





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	 	(ii)	 	is not the subject of any written notice from any
governmental authority or other person alleging the violation of, or liability
under, any applicable Environmental Laws;
	 
	 	(iii)	 	is not currently subject to any court order, administrative
order or decree arising under any Environmental Law;
	 
	 	(iv)	 	to Seller’s knowledge, has not been used for the disposal of
Hazardous Substances and is not contaminated with any Hazardous Substances
requiring remediation or response under any applicable Environmental Law; and
	 
	 	(v)	 	to Seller’s knowledge, has not had any releases, emissions,
or discharges of Hazardous Substances except as permitted under applicable
Environmental Laws.





     5.12 Brokers’ Fees. Seller has not employed any broker or finder or incurred any
liability for any brokerage fees, commission or finders’ fees in connection with the transactions
contemplated by this Agreement, except for the fees and commissions of Hovde Financial, Inc., for
which Seller shall be solely liable.



     5.13 Owned Real Property.



     (a) Seller will convey good and marketable title to the Owned Real Property, free and
clear of all Encumbrances. No lien, title defect, judgment or encumbrance which either (i) (A)
does not specifically pertain to the Real Property and (B) is insured over by the title company
insuring Purchaser’s title to the Real Property or (ii) is not an Encumbrance, shall be deemed to
render title to the Real Property unmarketable or uninsurable.



     (b) Seller has not received any written notice of any uncured current violation,
citations, summonses, subpoenas, compliance orders, directives, suits, other legal process, or
other written notice of potential liability under applicable zoning, building, fire and other
applicable laws and regulations relating to the Owned Real Property and there is no action, suit,
proceeding or investigation pending or threatened before any governmental authority which relates
to Seller or the Owned Real Property.



     (c) Seller has not received any written notice of any actual or pending condemnation
proceeding relating to the Branches.



     (d) To Seller’s knowledge, Seller has received no notice of any default or breach by
Seller under any covenant, condition, restriction, right of way or easement affecting the Owned
Real Property or any portion thereof, and no such default or breach now exists.



     (e) Neither Seller nor any of its Affiliates has entered into any agreement regarding
the Owned Real Property, and the Owned Real Property is not subject to any claim, demand, suit,
lien, proceeding or litigation of any kind, pending or outstanding, or to Seller’s knowledge,
threatened, which would be binding upon Purchaser or its successors or assigns and materially
affect or limit Purchaser’s or its successors’ or assigns’ use and enjoyment of the Owned Real



23









 







Property or which would materially limit or restrict Purchaser’s right or ability to enter into
this Agreement and consummate the sale and purchase contemplated hereby.



     (f) To Seller’s knowledge, Seller has received no notice of any default or breach by
Seller under any covenant, condition, restriction, right of way or easement affecting the Owned
Real Property or any portion thereof, and no such default or breach now exists.



     5.14 Limitations on Representations and Warranties. Except for the
representations and warranties specifically set forth in this Agreement, neither Seller nor any of
its agents, Affiliates or representatives, nor any other person, makes or shall be deemed to make
any representation or warranty to Purchaser, express or implied, at law or in equity, with respect
to the transactions
contemplated hereby and Seller hereby disclaims any such representation or warranty whether by
Seller or any of its officers, directors, employees, agents or representatives or any other person



ARTICLE 6




REPRESENTATIONS AND WARRANTIES OF PURCHASER




     Purchaser represents and warrants to Seller as follows:



     6.1 Corporate Organization and Authority. Purchaser is a stock savings bank, duly
organized and validly existing under the laws of New Jersey and has the requisite power and
authority to conduct the business conducted at the Branches substantially as currently conducted by
Seller. Purchaser has the requisite corporate power and authority and has taken all corporate
action necessary in order to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement is a valid and binding agreement of Purchaser enforceable
against Purchaser in accordance with its terms subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general equity principles.



     6.2 No Conflicts. The execution, delivery and performance of this Agreement by
Purchaser does not, and will not, (i) violate any provision of its charter or by-laws or (ii)
subject to Regulatory Approvals, violate or constitute a breach of, or default under, any law,
rule, regulation, judgment, decree, ruling or order of any court, government or governmental
authority to which Purchaser is subject or any agreement or instrument of Purchaser, or to which
Purchaser is subject or by which Purchaser is otherwise bound, which violation, breach,
contravention or default referred to in this clause (ii), individually or in the aggregate, would
be reasonably expected to have a Material Adverse Effect.



     6.3 Approvals and Consents. Other than Regulatory Approvals, no notices, reports
or other filings are required to be made by Purchaser with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by Purchaser from, any governmental or
regulatory authorities of the United States or the several States in connection with the execution
and delivery of this Agreement by Purchaser and the consummation of the transactions contemplated
hereby by Purchaser, the failure to make or obtain any or all of which,



24









 







individually or in the
aggregate, would be reasonably expected to have a Material Adverse Effect.



     6.4 Regulatory Matters. (a) Except as previously disclosed in writing to Seller,
there are no pending or, to Purchaser’s knowledge, threatened disputes or controversies between
Purchaser and any federal, state or local governmental agency or authority that, individually or in
the aggregate, would be reasonably expected to have a Material Adverse Effect.



     (b) Neither Purchaser nor any of its Affiliates has received any indication from any
federal or state governmental agency or authority that such agency would oppose or refuse to grant
a Regulatory Approval.



     (c) Neither Purchaser nor any of its Affiliates is a party to any written order, decree,
agreement or memorandum of understanding with, or commitment letter or similar submission to, any
federal or state regulatory agency or authority charged with the supervision or regulation of
depository institutions, nor has Purchaser been advised by any such agency or authority that it is
contemplating issuing or requesting any such order, decree, agreement, memorandum of understanding,
commitment letter or submission, in each case which, individually or in the aggregate, would be
reasonably expected to have a Material Adverse Effect.



     (d) Purchaser is, and on a pro forma basis giving effect to the P&A Transaction, will
be, (i) at least “well capitalized”, as defined for purposes of the tests used by the OTS to
evaluate the capital of a national bank, and (ii) in compliance with all capital requirements,
standards and ratios required by each state or federal bank regulator with jurisdiction over
Purchaser, including, without limitation, any such higher requirement, standard or ratio as shall
apply to institutions engaging in the acquisition of insured institution deposits, assets or
branches, and no such regulator is likely to, or has indicated that it may, condition any of the
Regulatory Approvals upon an increase in Purchaser’s capital or compliance with any capital
requirement, standard or ratio.



     (e) Purchaser has no reason to believe that it will be required to divest deposit
liabilities or branches as a condition to the receipt of any of the Regulatory Approvals.



     (f) Each of the subsidiaries or Affiliates of Purchaser that is an insured depository
institution was rated “Satisfactory” or “Outstanding” following its most recent Community
Reinvestment Act examination by the regulatory agency responsible for its supervision. Purchaser
has received no notice of and has no knowledge of any planned or threatened objection by any
community group to the transactions contemplated hereby.



     6.5 Litigation and Undisclosed Liabilities. There are no actions, suits or
proceedings pending or, to Purchaser’s knowledge, threatened against Purchaser, or obligations or
liabilities (whether or not accrued, contingent or otherwise) or, to Purchaser’s knowledge, facts
or circumstances that could reasonably be expected to result in any claims against or obligations
or liabilities of Purchaser that, individually or in the aggregate, would have a Material Adverse
Effect



     6.6 Financing to be Available. Purchaser’s ability to consummate the transactions
contemplated by this Agreement is not contingent on raising any equity capital, obtaining



25









 







financing therefor, consent of any lender or any other matter relating to funding the P&A Transaction.



     6.7 Brokers’ Fees. Purchaser has not employed any broker or finder or incurred
any liability for any brokerage fees, commission or finders’ fees in connection with the
transactions contemplated by this Agreement, except for fees and commissions for which Purchaser
shall be solely liable.



     6.8 Limitations on Representations and Warranties. Except for the representations
and warranties specifically set forth in this Agreement, neither Purchaser nor any of its agents,
Affiliates or representatives, nor any other person, makes or shall be deemed to make any
representation or warranty to Seller, express or implied, at law or in equity, with respect to the
transactions contemplated hereby and Purchaser hereby disclaims any such representation or warranty
whether by Purchaser or any of its officers, directors, employees, agents or representatives or any
other person.



ARTICLE 7




COVENANTS OF THE PARTIES




     7.1 Activity in the Ordinary Course. Until the Closing Date, except (i) as may be
required by a Regulatory Authority or applicable law, (ii) as set forth in Schedule 7.1 of the
Seller Disclosure Schedule or (iii) as contemplated hereby, (a) Seller shall conduct the business
of the Branches (including, without limitation, filling open positions at the Branches but
excluding job posting in the Branches for open positions at other offices of Seller or its
Affiliates) in the ordinary and usual course of business consistent with past practice and (b)
Seller shall not, without the prior written consent of Purchaser, which consent shall not be
unreasonably withheld, conditioned or delayed:




	 	(i)	 	Increase or agree to increase the salary, remuneration or
compensation of any employee at any Branch other than in accordance with
Seller’s existing customary policies generally applicable to employees having
similar rank or duties or as required by contractual commitments outstanding
on the date hereof, or pay or agree to pay any uncommitted bonus to any
employee at any Branch other than regular bonuses granted in the ordinary
course of Seller’s business, or, other than in the ordinary course of business
consistent with past practice, transfer any employee at any Branch (other than
any employees at any Branch who do not become Transferred Employees) to
another branch or office of Seller or any of its Affiliates, other than
temporary assignments of a fill-in nature in the ordinary course of business;
	 
	 	(ii)	 	Transfer to or from any Branch to or from any of Seller’s
other operations or branches any material Assets or any Deposits, except (A)
in the ordinary course of business or as contemplated by this Agreement, (B)
upon the unsolicited request of a depositor customer, or (C) if such Deposit
is pledged as security for a loan or other obligation of Seller;





26









 











	 	(iii)	 	Sell, transfer, assign, encumber or otherwise dispose of or
enter into any contract, agreement or understanding to sell, transfer, assign,
encumber or dispose of any of the Assets existing on the date hereof, except
in the ordinary course of business consistent with past practice;
	 
	 	(iv)	 	Make or agree to make any material improvements to the Owned
Real Property, except with respect to commitments for such made on or before
the date of this Agreement, as set forth in Schedule 7.1(v) of the Seller
Disclosure Schedule, and normal maintenance or refurbishing purchased or made
in the ordinary course of business;
	 
	 	(v)	 	File any application or give any notice to relocate or close
any Branch or relocate or close any Branch;
	 
	 	(vi)	 	Amend, terminate or extend in any material respect any Branch
Lease or Tenant Lease; provided, however, Seller may extend any Branch Lease
or Tenant Lease if, in its reasonable business judgment, and after
consultation with Purchaser, Seller determines such extension is necessary to
deliver the Branch on the Closing Date as a fully operative branch banking
operation;
	 
	 	(vii)	 	Except as permitted by this Section 7.1, knowingly take, or
knowingly permit its Affiliates to take, any action impairing Purchaser’s
rights in any Deposit or Asset,
	 
	 	(viii)	 	Fail to price Deposits in all material respects in accordance with the
deposit pricing policies in effect at similarly situated branches of Seller
located in New Jersey; or
	 
	 	(ix)	 	Agree with, or commit to, any person to do any of the things
described in clauses (i) through (viii) except as contemplated hereby.





     7.2 Access and Confidentiality. (a) Until the Closing Date, Seller shall afford
to Purchaser and its officers and authorized agents and representatives reasonable access to the
properties, books, records, contracts, documents, files and other information of or relating to the
Assets and Liabilities. Purchaser and Seller each will identify to the other, within ten (10)
calendar days after the date hereof, a selected group of their respective salaried personnel that
shall constitute a “transition group” who will be available to Seller and Purchaser, respectively,
at reasonable times (limited to normal operating hours) to provide information and assistance in
connection with Purchaser’s investigation of matters relating to the Assets and Liabilities. Such
transition group will also work cooperatively to identify and resolve issues arising from any
commingling of Seller’s records with respect to the Branches with Seller’s records for its other
branches and operations not subject to this Agreement. Seller shall furnish Purchaser with such
additional financial and operating data and other information about its business operations at the
Branches as may be reasonably necessary for the orderly transfer of the business operations of the
Branches and for purposes of enabling Purchaser to comply with its securities law disclosure
obligations. Any investigation pursuant to this Section 7.2(a) shall be conducted in such manner
as not to interfere unreasonably with the conduct of Seller’s business. Notwithstanding the



27









 







foregoing, Seller shall not be required to provide access to or disclose information where such
access or disclosure would impose an unreasonable burden on Seller, or any employee of Seller or
would violate or prejudice the rights of customers, jeopardize any attorney-client privilege or
contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or binding agreement
entered into prior to the date of this
Agreement. The parties hereto shall use reasonable best efforts to make appropriate
substitute disclosure arrangements under circumstances in which the restrictions of the preceding
sentence apply.



     (b) Seller shall permit Purchaser, at Purchaser’s expense, to cause a “phase I
environmental audit” and a “phase II environmental audit” to be performed at each Branch at any
time prior to the Closing Date; provided, however, that Purchaser shall have the right to conduct a
“phase II environmental audit” prior to the Closing only to the extent that a “phase II
environmental audit” is within the scope of additional testing recommended by the “phase I
environmental audit” to be performed as a result of a “Recognized Environmental Condition” (as such
term is defined by The American Society for Testing Materials) that was discovered in the “phase I
environmental audit.” Prior to performing any “phase II environmental audits,” Purchaser will
provide Seller with a copy of its proposed work plan and Purchaser will cooperate in good faith
with Seller to address any comments or suggestions made by Seller regarding the work plan.
Purchaser and its environmental consultant shall conduct all environmental assessments pursuant to
this Section 7.2(b) at mutually agreeable times and so as to eliminate or minimize to the greatest
extent possible interference with Seller’s operation of its business, and Purchaser shall maintain
or cause to be maintained adequate insurance with respect to any assessment conducted hereunder.
Purchaser shall be required to restore each Owned Real Property to its pre-assessment condition.
All costs and expenses incurred in connection with any “phase I environmental audit” and any “phase
II environmental audit,” and any restoration and clean up, shall be borne solely by Purchaser.



     (c) Each party to this Agreement shall hold, and shall cause its respective directors,
officers, employees, agents, consultants and advisors to hold, in strict confidence, except to the
extent necessary to discharge obligations pursuant to Section 7.3 or unless compelled to disclose
by judicial or administrative process or, based on the advice of its counsel, by other requirements
of law or the applicable requirements of any regulatory agency or relevant stock exchange, all
non-public records, books, contracts, instruments, computer data and other data and information
(collectively, “Information”) concerning the other party (or, if required under a contract
with a third party, such third party) furnished to it by such other party or its representatives
pursuant to this Agreement (except to the extent that such information can be shown to have been
(i) previously known by such party on a non-confidential basis, (ii) in the public domain through
no fault of such party or (iii) later lawfully acquired from other sources by the party to which it
was furnished), and neither party shall release or disclose such Information to any other person,
except its auditors, attorneys, financial advisors, bankers, other consultants and advisors and, to
the extent permitted above, any Regulatory Authority. Without limiting the foregoing, Purchaser
may meet with Branch Employees, promptly following execution of this Agreement and through the
Closing to discuss employment retention and other employment related matters at mutually agreeable
times and so long as such meetings do not interfere unreasonably with the conduct of Seller’s
business.



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     7.3 Regulatory Approvals. As soon as practicable and in no event later than
fifteen (15) Business Days after the date of this Agreement, and assuming the full and timely
cooperation and assistance of Seller, Purchaser shall prepare and file any applications, notices
and filing required in order to obtain the Regulatory Approvals. Purchaser shall use reasonable
best efforts to obtain each such approval
as promptly as reasonably practicable and to the extent best possible in order to permit the
Closing to occur not later than September 30, 2009. Seller will use reasonable best efforts to
cooperate in connection therewith (including the furnishing of any information and any reasonable
undertaking or commitments which may be required to obtain the Regulatory Approvals). Each party
will provide the other with copies of any applications and all correspondence relating thereto
prior to filing, other than material filed in connection therewith under a claim of
confidentiality. If any Regulatory Authority shall require the modification of any of the terms
and provisions of this Agreement as a condition to granting any Regulatory Approval, the parties
hereto will negotiate in good faith to seek a mutually agreeable adjustment to the terms of the
transaction contemplated hereby, such agreement not to be unreasonably withheld, conditioned or
delayed.



     7.4 Consents. (a) Seller agrees to use reasonable best efforts to obtain from
lessors under Branch Leases and any other parties the consent of which is required in order to
assign or transfer any Asset or Deposit to Purchaser on the Closing Date, any required consents to
such assignment or transfer to Purchaser on the Closing Date; provided that in the case of any
Branch Lease, if any consent set forth in this Section 7.4(a) is not obtained, notwithstanding
Seller’s use of reasonable best efforts as required hereunder, the parties may take such actions as
specified in Purchaser Disclosure Schedule 7.4(a) with respect to such Branch Lease; provided,
further, that Seller shall not be obligated to incur any monetary obligations or expenditures to
the parties whose consent is requested in connection with the utilization of its reasonable best
efforts to obtain any such required consents.



     (b) Seller will use reasonable best efforts to procure estoppel certificates substantially in
the form of Schedule 7.4(b)-1 attached hereto, from each lessor under Branch Leases and in the form
of Schedule 7.4(b)-2 from each subtenant under Tenant Leases, which certificates shall be at the
expense of the Purchaser; provided that in the case of any Branch Lease, if any estoppel
certificate as set forth in this Section 7.4(b) is not obtained, notwithstanding Seller’s use of
reasonable best efforts as required hereunder, the parties may take such actions as specified in
Purchaser Disclosure Schedule 7.4(b) with respect to such Branch Lease; provided, further, that
Seller shall not be obligated to incur any monetary obligations or expenditures to lessors or
subtenants in connection with the utilization of its reasonable best efforts to obtain such
estoppel certificates.



     (c) Seller will use its reasonable best efforts to procure non disturbance agreements from any
mortgage lender holding a mortgage lien on any Real Property at which a Branch Lease is operated,
substantially in the form of Schedule 7.4(c) hereto; provided, however, Seller shall not be
obligated to incur any monetary obligations or expenditures to mortgage lenders in connection with
the utilization of its reasonable best efforts to obtain such non disturbance agreements.



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     7.5 Efforts to Consummate; Further Assurances. (a) Purchaser and Seller agree to
use reasonable best efforts to satisfy or cause to be satisfied as soon as practicable their
respective obligations hereunder and the conditions precedent to the Closing.



     (b) From time to time following the Closing, at Purchaser’s request and expense, Seller
will duly execute and deliver such assignments, bills of sale, deeds, acknowledgments and other
instruments of conveyance and transfer as shall be necessary or appropriate to vest in Purchaser
the full legal and equitable title to the Assets.



     (c) Subject to Section 4.3, on and after the Closing Date, each party will promptly
deliver to the other all mail and other communications properly addressable or deliverable to the
other as a consequence of the P&A Transaction; and without limitation of the foregoing, on and
after the Closing Date, Seller shall promptly forward any mail, communications or other material
relating to the Deposits or the Assets transferred on the Closing Date, including, but not limited
to, that portion of any IRS “B” tapes that relates to such Deposits, to such employees of Purchaser
at such addresses as may from time to time be specified by Purchaser in writing.



     (d) The costs incurred by a party in performing its obligations to the other (x) under
Sections 7.5(a) and (c) shall be borne by the initial recipient and (y) otherwise under this
Section 7.5 shall be borne by Purchaser.



     7.6 Solicitation of Accounts. (a) For a period of forty-eight (48) months
following the Closing Date, Seller agrees that it and its Affiliates shall not offer financial
services and products to any Customer. Notwithstanding the foregoing sentence, Seller and its
Affiliates shall be permitted to (a) continue to engage in all customary communications, including
distribution of loan statements and promotional loan materials, with any former customers of the
Branches with whom Seller or an Affiliate maintains a banking or lending arrangement after the
Closing Date as permitted by this Agreement, (b) engage in advertising, solicitations or marketing
campaigns, programs or other efforts not primarily directed to or targeted at the Customers, (c)
respond to unsolicited inquiries, and (d) provide notices or communications relating to the
transactions contemplated hereby in accordance with the provisions hereof. Without limiting the
foregoing, Seller and its affiliates will not use confidential information contained in Branch
customer information files to solicit financial services business, including deposits and other
financial products. For a period of forty-eight (48) months following the Closing Date, neither
Seller nor any affiliate shall establish or operate a branch office in Clifton, Montclair, Newark
or East Orange, New Jersey, except as to the Existing Branches and as otherwise specified in
Schedule 7.6(a).



     (b) Prior to the Closing Date, Purchaser agrees that it will not attempt to solicit
Branch customers through advertising nor transact its business in a way which would induce such
Customers to close any account and open accounts directly with Purchaser or would otherwise result
in a transfer of all or a portion of an existing account from Seller to Purchaser or its
Affiliates. Notwithstanding the foregoing sentence, Purchaser and its Affiliates shall be
permitted to (i) engage in advertising, solicitations or marketing campaigns not directed to or
targeted at such Customers, (ii) engage in lending, deposit, safe deposit, trust or other financial
services relationships existing as of the date hereof with such customers through other branch
offices of Purchaser, (iii) respond to unsolicited inquiries by such customers with respect to



30









 







banking or other financial services, and (iv) provide notices or communications relating to the
transactions contemplated hereby in accordance with the provisions hereof.



     7.7 Insurance. Seller will maintain in effect until the Closing Date all casualty
and public liability policies relating to the Branches and maintained by Seller on the date hereof
or to procure comparable replacement coverage and maintain such policies or replacement coverage in
effect until the Closing Date. Purchaser shall provide all casualty and public liability insurance
for the Branches after the Closing Date. In the event of any material damage, destruction or
condemnation affecting Real Property between the date hereof and the time of the Closing, Purchaser
shall have the right to exclude any Real Property so affected from the Assets to be acquired,
require Seller to take reasonable steps to repair or replace the damaged or destroyed property, or
require Seller to deliver to Purchaser any insurance proceeds and other payments, to the extent of
the fair market value or the replacement cost of the Real Property, received by Seller as a result
thereof unless, in the case of damage or destruction, Seller has repaired or replaced the damaged
or destroyed property.



     7.8 Change of Name, Etc. Immediately after the Closing, Purchaser will (a) change
the name and logo on all documents and facilities relating to the Assets and the Liabilities to
Purchaser’s name and logo, (b) notify all persons whose Deposits or Safe Deposit Agreements are
transferred under this Agreement of the consummation of the transactions contemplated by this
Agreement, and (c) provide all appropriate notices to the FDIC and any other Regulatory Authorities
required as a result of the consummation of such transactions. Seller shall cooperate with any
commercially reasonable request of Purchaser directed to accomplish the removal of Seller’s signage
by Purchaser and the installation of Purchaser’s signage by Purchaser; provided, however, that (i)
all such removals and all such installations shall be at the expense of Purchaser, (ii) such
removals and installations shall be performed in such a manner that does not unreasonably interfere
with the normal business activities and operations of the Branches, (iii) such installed signage
shall comply with the applicable Branch Lease and all applicable zoning and permitting laws and
regulations, and (iv) such installed signage shall have, if necessary, received the prior approval
of the owner or landlord of the facility, and such installed signage shall be covered in such a way
as to make the Purchaser signage unreadable at all times prior to the Closing, but such cover shall
display the name and/or logo of Seller (or of its Affiliates) in a manner reasonably acceptable to
Seller. Purchaser agrees not to use any forms or other documents bearing Seller or any of its
Affiliates’ name or logo after the Closing without the prior written consent of Seller, and, if
such consent is given, Purchaser agrees that all such forms or other documents to which such
consent relates will be stamped or otherwise marked in such a way that identifies Purchaser as the
party using the form or other document.



ARTICLE 8




TAXES AND EMPLOYEES




     8.1 Tax Representations. Seller represents and warrants to Purchaser that, all
material Tax Returns with respect to the Assets, the Liabilities or the operation of the Branches
that are required to be filed (taking into account any extension of time within which to file)
before the Closing Date have been or will be duly filed, and all material Taxes shown to be due on
such Tax Returns have been or will be paid in full.



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     8.2 Proration of Taxes. For purposes of this Agreement, in the case of any
Straddle Period, (1) Property Taxes for the Pre-Closing Tax Period shall be equal to the amount of
such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which
is the number of days during the Straddle Period that are in the Pre-Closing Tax Period and the
denominator of which is the number of days in the entire Straddle Period, and (2) Taxes (other than
Property Taxes) for the Pre-Closing Tax Period shall be computed as if such taxable period ended as
of the close of business on the Closing Date.



     8.3 Sales and Transfer Taxes. Purchaser shall pay all transfer, recording, sales,
use (including all bulk sales Taxes) and other similar Taxes and fees (collectively, the
“Transfer Taxes”), that are payable or that arise as a result of the P&A Transaction, when
due. The party which has the primary obligation to do so under applicable Law shall file any Tax
Return that is required to be filed in respect of Transfer Taxes described in this Section 8.3, and
the other party shall cooperate with respect thereto as necessary. Purchaser shall indemnify and
hold Seller harmless from and against any such Taxes.



     8.4 Information Returns. At the Closing or as soon thereafter as is practicable,
Seller shall provide Purchaser with a list of all Deposits on which Seller is back-up withholding
as of the Closing Date.



     8.5 Payment of Amount Due under Article 8. Any payment by Seller to Purchaser, or
to Seller from Purchaser, under this Article 8 (other than payments required by Section 8.3) to the
extent due at the Closing may be offset against any payment due the other party at the Closing.
All subsequent payments under this Article 8 shall be made as soon as determinable and shall be
made and bear interest from the date due to the date of payment as provided in Section 3.2(b).



     8.6 Assistance and Cooperation. After the Closing Date, each of Seller and
Purchaser shall:



     (a) Make available to the other and to any taxing authority as reasonably requested all
relevant information, records, and documents relating to Taxes with respect to the Assets, the
Liabilities, or the operation of the Branches;



     (b) Provide timely notice to the other in writing of any pending or proposed Tax audits
(with copies of all relevant correspondence received from any taxing authority in connection with
any Tax audit or information request) or Tax assessments with respect to the Assets, the
Liabilities, or the operation of the Branches for taxable periods for which the other may have a
liability under this Agreement; and



     (c) The party requesting assistance or cooperation shall bear the other party’s
reasonable out-of-pocket expenses in complying with such request to the extent that those expenses
are attributable to fees and other costs of unaffiliated third party service providers.



     8.7 Transferred Employees. (a) At least fifteen (15) calendar days prior to the
Closing Date and effective as of the Closing Date, Purchaser agrees that it shall offer employment
to all Branch Employees (it being understood that offers of employment will be made to such
employees of Seller or its Affiliates then working at the Branches and will also be subsequently



32









 







extended to any individuals subsequently hired for employment at the Branches prior to the Closing
Date), and will employ each Branch Employee who has not declined such offer, effective as of the
Closing Date (or, with respect to a Branch Employee who is on (x) disability leave at the Closing
Date, who actively commences employment with Purchaser within 180 calendar days after the Closing
Date, or (y) military leave at the Closing Date, who actively commences employment with Purchaser
within the time period mandated by applicable law, in each case effective as of the date such
Branch Employee actively commences employment with Purchaser). On and after the Closing Date, each
Branch Employee employed by Purchaser, as of the first day of such Branch Employee’s active
employment with Purchaser or one of its Affiliates, shall be defined as a “Transferred
Employee” for purposes of this Agreement. Each Transferred Employee’s employment with Seller
shall cease as of the applicable Transfer Date. Subject to the provisions of this Section 8.7,
Transferred Employees shall be subject to the employment terms, conditions and rules applicable to
other similarly situated employees of Purchaser. Nothing contained in this Agreement shall be
construed as an employment contract between Purchaser and any Branch Employee or Transferred
Employee. For a period of five years following the Closing Date, Seller shall not, directly or
through an affiliate or entity or otherwise, solicit for employment any Transferred Employee;
provided, however, that nothing shall be deemed to prohibit Seller and/or its Affiliates from (i)
using general solicitations not targeted at Transferred Employees (including, without limitation,
job announcements in newspapers and industry publications or on the Internet), (ii) using employee
search firms, so long as such employee search firms are not advised by Seller or its Affiliates
after the date hereof to engage in targeted solicitations of Transferred Employees, (iii)
discussing employment with any Transferred Employee who contacts Seller and/or its Affiliates
independently without any solicitation by Seller or its Affiliates that is otherwise prohibited by
this Section 8.7(a) or (iv) soliciting any Transferred Employee who ceases to be employed by
Purchaser prior to Seller and/or any of its Affiliates soliciting such Transferred Employee.



     (b) Each Transferred Employee shall be provided employment subject to the following
terms and conditions:




	 	(i)	 	Except as otherwise specifically provided herein, from and
after the Closing Date, each Transferred Employee shall be provided employee
benefits and
compensation opportunities that are substantially equivalent to those provided
to similarly situated employees of the Purchaser in accordance with the terms
of Purchaser’s employee benefit plans commencing on such Transferred Employee’s
Transfer Date. Without limiting the generality of the foregoing, Purchaser
shall provide each Transferred Employee with credit for such Transferred
Employee’s period of service as recognized by Seller immediately prior to the
applicable Transfer Date (including any service credited from predecessors by
merger or acquisition to Seller) with respect to all of Purchaser’s employee
benefit plans, practices and policies (but not for accrual of benefits under
any defined benefit pension plan or post-retirement welfare benefit plan of the
Purchaser), provided that such service shall not be recognized to the extent
such recognition would result in a duplication of benefits and provided that
such credit for prior service with Seller will not be provided with respect to
the Purchaser’s employee stock ownership plan.





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	 	(ii)	 	Each Transferred Employee shall be eligible to participate in
the medical, dental, or other welfare plans of Purchaser, as such plans may
exist, on and after the applicable Transfer Date, and any pre-existing
conditions, provisions or actively at-work requirements of such plans shall be
waived with respect to any such Transferred Employee (it being understood that
general requirements of formal employment with Purchaser shall not be waived).
All Transferred Employees who cease participation in a Seller’s medical
and/or dental or other welfare plans on the applicable Transfer Date and
become participants in a corresponding Purchaser plan shall receive credit for
all co-payments and deductibles paid under Seller’s medical and dental plans,
upon substantiation, in a form satisfactory to Purchaser that such co-payments
and/or deductibles or portion thereof have been satisfied.





     (c) Except as provided in this Section 8.7, Seller shall remain solely responsible for
any and all Liabilities and obligations arising under the employee benefit plans (or associated
assets and liabilities) of Seller and its Affiliates with respect to service of the Transferred
Employees prior to the Closing Date, and Purchaser shall not assume or otherwise acquire any of the
employee benefit plans of Seller and its Affiliates. Seller shall pay, discharge, and be
responsible for (i) all salary and wages arising out of employment of each Transferred Employee
through the applicable Transfer Date , and (ii) any employee benefits (including, but not limited
to, accrued vacation) arising under Seller’s employee benefit plans and employee programs prior to
the applicable Transfer Date, including (x) benefits with respect to claims incurred prior to the
Closing Date but reported after the Closing Date and (y) severance, if any, payable to any Branch
Employee solely as a result of the cessation of such Branch Employee’s employment with Seller and
its Affiliates pursuant to and in accordance with the terms and conditions of the severance plan of
Seller and its Affiliates applicable to such Branch Employee as of immediately prior to the Closing
Date. From and after the applicable Transfer Date, Purchaser shall pay, discharge, and be
responsible for all salary, wages, and benefits arising out of or relating to the employment of
each Transferred Employee by Purchaser from and after the applicable Transfer Date, including,
without limitation, all claims under Purchaser’s welfare benefits plans incurred after the
applicable Transfer Date. Claims are incurred as of the date services are provided or
disability payments are accrued, notwithstanding when the injury or illness may have occurred.
Seller shall be responsible for all retiree medical claims and benefits under Seller’s retiree
medical plans or programs with respect to the Transferred Employees and any former Branch
Employees, such that the Purchaser shall have no liability with respect to any retiree medical plan
maintained by Seller..



     (d) Nothing in this Agreement shall be construed to grant any Branch Employee a right to
continued employment by, or to receive any payments or benefits from, Purchaser or Seller or their
respective Affiliates or through any employee benefit plan. This Agreement shall not limit
Purchaser’s or Purchaser’s Affiliate’s ability or right to amend or terminate any benefit or
compensation plan or program of Purchaser or its Affiliates and nothing contained herein shall be
construed as an amendment to or modification of any such plan. This Section 8.7 shall be binding
upon and inure solely to the benefit of each party to this Agreement, and nothing in this Section
8.7, express or implied, is intended to confer upon any other person, including, any current or
former director, officer or employee of Seller or any of its Affiliates, any rights or remedies of
any nature whatsoever under or by reason of this Section 8.7.



34









 





ARTICLE 9




CONDITIONS TO CLOSING




     9.1 Conditions to Obligations of Purchaser. Unless waived in writing by
Purchaser, the obligation of Purchaser to consummate the P&A Transaction is conditioned upon
satisfaction of each of the following conditions:



     (a) Regulatory Approvals. The Regulatory Approvals shall have been made or
obtained, and shall remain in full force and effect, and all waiting periods applicable to the
consummation of the P&A Transaction shall have expired or been terminated.



     (b) Orders. No court or governmental authority of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary or permanent) (any of the
foregoing, an “Order”) which is in effect and which prohibits or makes illegal the
consummation of the P&A Transaction.



     (c) Representations and Warranties; Covenants. The representations and
warranties of Seller contained in this Agreement shall be true in all respects as of the Closing
Date (except that representations and warranties as of a specified date need only be true on and as
of such date); provided, however, that for purposes of determining the satisfaction of the
condition set forth in this Section 9.1(c), such representations and warranties shall be deemed to
be so true and correct if the failure or failures of such representations and warranties to be true
and correct (such representations and warranties to be read for this purpose without reference to
any qualification set forth therein relating to “materiality” or “Material Adverse Effect”) do not
constitute, individually or in the aggregate, a Material Adverse Effect with respect to Seller.



     Purchaser shall have received at Closing a certificate to that effect dated as of such Closing
Date and executed by the Chief Executive Officer, Chief Financial Officer, President or the Senior
Vice President of Legal and Governmental Affairs of Seller. Seller shall have performed its
covenants and agreements herein on or prior to the Closing Date in all material respects.
Purchaser shall have received at Closing a certificate to that effect dated as of such Closing Date
and executed by the Chief Executive Officer, Chief Financial Officer, President or the Senior Vice
President of Legal and Governmental Affairs of Seller.



     9.2 Conditions to Obligations of Seller. Unless waived in writing by Seller, the
obligation of Seller to consummate the P&A Transaction is conditioned upon satisfaction of each of
the following conditions:



     (a) Regulatory Approvals. The Regulatory Approvals, shall have been made or
obtained, and shall remain in full force and effect, and all waiting periods applicable to the
consummation of the P&A Transaction shall have expired or been terminated.



     (b) Orders. No Order shall be in effect that prohibits or makes illegal the
consummation of the P&A Transaction.



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     (c) Representations and Warranties; Covenants. The representations and
warranties of Purchaser contained in this Agreement shall be true in all respects as of the Closing
Date (except that representations and warranties as of a specific date need to be true only as of
such date); provided, however, that for purposes of determining the satisfaction of the condition
set forth in this Section 9.2(c), such representations and warranties (except for Section 6.7,
which shall be true and correct as of the Closing as written) shall be deemed to be so true and
correct if the failure or failures of such representations and warranties to be true and correct
(such representations and warranties to be read for this purpose without reference to any
qualification set forth therein relating to “materiality” or “Material Adverse Effect”) do not
constitute, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser.
Seller shall have received at Closing a certificate to that effect dated as of such Closing Date
and executed by the Chief Executive Officer, Chief Financial Officer, President or any Executive
Vice President of Purchaser. Purchaser shall have performed its covenants and agreements herein
on or prior to the Closing Date in all material respects. Seller shall have received at Closing a
certificate to that effect dated as of such Closing Date and executed by the Chief Executive
Officer, Chief Financial Officer, President or any Executive Vice President of Purchaser.



ARTICLE 10




TERMINATION




     10.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date:



     (a) By the mutual written agreement of Purchaser and Seller;



     (b) By Seller or Purchaser, in the event of a breach by the other of any representation,
warranty or agreement contained herein which is not cured or cannot be cured within thirty (30)
calendar days after written notice of such termination has been delivered to the breaching party
and which would if occurring or continuing on the Closing Date, permit the terminating party not to
consummate the P&A Transaction under the standard set forth in Sections 9.1(c) or 9.2(c), as
applicable;



     (c) By Seller, in the event the Regulatory Approvals have not been obtained on or prior
to October 31, 2009;



     (d) By Seller or Purchaser, in the event the Closing has not occurred by the date that
is seven (7) months after the date of this Agreement, unless the failure to so consummate is due to
a breach of this Agreement by the party seeking to terminate; or



     (e) By either Seller or Purchaser, if any governmental agencies or authorities that must
grant a Regulatory Approval has denied approval of the P&A Transaction or any governmental agency
or authority of competent jurisdiction shall have issued a final and nonappealable order
permanently enjoining or otherwise prohibiting the consummation of the P&A Transaction.



36









 





     10.2 Effect of Termination. In the event of termination of this Agreement and
abandonment of the transactions contemplated hereby pursuant to Section 10.1, no party hereto (or
any of its directors, officers, employees, agents or Affiliates) shall have any liability or
further obligation to any other party, except as provided in Section 7.2(b) and except that neither
Seller nor Purchaser shall be relieved or released from any liabilities or damages arising out of
any willful breach of this Agreement.



ARTICLE 11




INDEMNIFICATION




     11.1 Indemnification. (a) Subject to Section 12.1, Seller shall indemnify and
hold harmless Purchaser and any person directly or indirectly controlling or controlled by
Purchaser and their respective directors, officers, employees, agents and attorneys from and
against any and all Losses arising out of or attributable to the following:




	 	(i)	 	any material breach of any representation or warranty made by
Seller in this Agreement, except for any representation or warranty set forth
in Section 5.11 (which is subject to Section 11.1(a)(iv));
	 
	 	(ii)	 	any material breach of any covenant or agreement to be
performed by Seller pursuant to this Agreement;
	 
	 	(iii)	 	any liability, obligation or duty of Seller that is not a
Liability; and
	 
	 	(iv)	 	any material breach of any representation or warranty made by
Seller in Section 5.11, and, subject to Section 11.1(g), the presence of any
hazardous substance at any of the Owned Real Property which is required, by
any applicable Environmental Law, to be removed or otherwise remediated.





     (b) Subject to Section 12.1, Purchaser shall indemnify and hold harmless Seller and any
person directly or indirectly controlling or controlled by Seller and their respective directors,
officers, employees, agents and attorneys from and against any and all Losses arising out of or
attributable to the following:




	 	(i)	 	any material breach of any representation or warranty made by
Purchaser in this Agreement;
	 
	 	(ii)	 	any material breach of any covenant or agreement to be
performed by Purchaser pursuant to this Agreement; or
	 
	 	(iii)	 	the Liabilities.





     (c) To exercise its indemnification rights under this Section 11.1 as a result of the
assertion against it of any claim or potential liability for which indemnification is provided, the
indemnified party shall promptly notify the indemnifying party of the assertion of such claim,
discovery of any such potential liability or the commencement of any action or proceeding in



37









 







respect of which indemnity may be sought hereunder (including, with respect to claims arising from
a breach of representation or warranty made in Article 8, the commencement of an audit,
administrative investigation or judicial proceeding by any governmental authority); provided,
however, that in no event shall notice of claim for indemnification under this Agreement be given
later than the expiration of one (1) year from the Closing Date (excluding only claims for
indemnification under Section 11.1(a)(iv), which may be given at anytime within two (2) years from
the Closing Date, and Sections 11.1(a)(iii) and 11.1(b)(iii), which may be given at any time);
provided, further, that any delay or failure by the indemnified party to give notice shall relieve
the indemnifying party of its obligations hereunder only to the extent, if at all, that the
indemnifying party is actually and materially prejudiced by reason of such delay or failure. The
indemnified party shall advise the indemnifying party of all facts relating to such assertion
within the knowledge of the indemnified party, and shall afford the indemnifying party the
opportunity, at the indemnifying party’s sole cost and expense, to defend against such claims for
liability. In any such action or proceeding, the indemnified party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at its own expense unless (i)
the indemnifying party and the indemnified party mutually agree to the retention of such counsel or
(ii) the named parties to any such suit, action, or proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party, and in the reasonable judgment of
the indemnified party, representation of the indemnifying party and the indemnified party by the
same counsel would be inadvisable due to actual or potential differing defenses or conflicts of
interests between them.



     (d) Neither party to this Agreement shall settle, compromise, discharge or consent to an
entry of judgment with respect to a claim or liability subject to indemnification under this
Article 11 without the other party’s prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed); provided that the indemnifying party may agree
without the prior written consent of the indemnified party to any settlement, compromise, discharge
or consent to an entry of judgment in each case that by its terms obligates the indemnifying party
to pay the full amount of the liability in connection with such claim and which unconditionally
releases the indemnified party from all liability in connection with such claim and which, in the
case of Purchaser as an indemnified party, does not materially impair Purchaser’s use or enjoyment
of any of its Real Property.



     (e) Notwithstanding anything to the contrary contained in this Agreement:



     (i) an indemnifying party shall not be liable under this Section 11.1, other than in respect
of Sections 11.1(a)(iii), 11.1(a)(iv) and 11.1(b)(iii), for any Losses sustained by the indemnified
party unless and until the aggregate amount of all indemnifiable Losses sustained by the
indemnified party other than in respect of Sections 11.1(a)(iii), 11.1(a)(iv) and 11.1(b)(iii)
shall exceed $50,000, in which event the indemnifying party shall provide indemnification hereunder
in respect of all such indemnifiable Losses in excess of $50,000; provided, however, that any
individual items where the loss relating thereto is less than $5,000 shall not be aggregated for
purposes hereof; and provided, further, that the maximum aggregate amount of indemnification
payments payable by Seller or Purchaser pursuant to this Section 11.1, other than in respect of
Sections 11.1(a)(iii), 11.1(a)(iv) and 11.1(b)(iii), shall be $1,400,000.



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     (ii) Seller shall not be liable under Section 11.1(a)(iv) for any Losses sustained by the
indemnified party unless and until the aggregate amount of all indemnifiable Losses sustained by
the indemnified party in respect thereof shall exceed $50,000, in which event Seller shall provide
indemnification hereunder in respect of all such indemnifiable Losses in excess of $50,000;
provided, however, that any individual items where the loss relating thereto is less than $5,000
shall not be aggregated for purposes hereof; and provided, further, that the maximum aggregate
amount of indemnification payments payable by Seller pursuant to Section 11.1(a)(iv) shall be
$500,000.



     (iii) In no event shall either party hereto be entitled to consequential or punitive damages
or damages for lost profits in any action relating to the subject matter of this Agreement.



     (f) Notwithstanding the foregoing, if a third party claim includes or would reasonably
be expected to include both a claim for Taxes that are Liabilities pursuant to Section 2.2(a)(vii)
(“Purchaser Taxes”) and a claim for Taxes that are not Liabilities pursuant to Section
2.2(a)(vii) (“Seller Taxes”), and such claim for Seller Taxes is not separable from such a
claim for Purchaser Taxes, Purchaser (if the claim for Purchaser Taxes exceeds or reasonably would
be expected to exceed in amount the claim for Seller Taxes) or otherwise Seller (Seller or
Purchaser, as the case may be, the “Controlling Party”) shall be entitled to control the
defense of such third party claim (such third party claim, a “Tax Claim”). In such case,
the other party (Seller or Purchaser, as the case may be, the “Non-Controlling Party”)
shall be entitled to participate fully (at the Non-Controlling Party’s sole expense) in the conduct
of such Tax Claim and the Controlling Party shall not settle such Tax Claim without the consent of
such Non-Controlling Party (which consent shall not be unreasonably withheld, conditioned or
delayed). The costs and expenses of conducting the defense of such Tax Claim shall be reasonably
apportioned based on the relative amounts of the Tax Claim that are Seller Taxes and that are
Purchaser Taxes.



     (g) Purchaser shall not have any right to indemnification under Section 11.1(a)(iv)
unless (i) Purchaser promptly informs Seller of Purchaser’s discovery of any hazardous substances
and (ii) Purchaser sends Seller a written notice of claim for indemnification specifying with
reasonable particularity the nature, extent and location of the hazardous substances within
forty-five (45) calendar days of Purchaser’s discovery of same. Prior to Purchaser incurring any
indemnifiable costs under Section 11.1(a)(iv), Purchaser shall submit a remediation plan and
detailed cost estimate for Seller’s reasonable review and approval. Seller shall also have the
right, at its sole option, to remove or otherwise remediate any such hazardous substances from the
applicable Owned Real Property, in which case Purchaser shall have no right to indemnification for
such hazardous substances (provided that Seller notifies Purchaser, within thirty (30) calendar
days from receipt of Purchaser’s claim for indemnification, of Seller’s intention to do so and
provided Seller shall, without unreasonable delay, remove or remediate such hazardous substances).



     (h) Notwithstanding any other term or provision of this Agreement, the indemnifying party will
not be required to indemnify the indemnified party for a Loss to the extent that the indemnified
party receives insurance payments covering such Loss, provided that the occurrence of such Loss
would not result in the loss of any insurance coverage by the indemnified party. In



39









 







the event that any insurance paid to the indemnified party shall be less that the amount of the Loss, the
indemnifying party shall remain liable for the difference between the insurance payment received
and the amount of the Loss.



     11.2 Exclusivity. After the Closing, except as expressly set forth in Sections
4.3, 4.9 and 8.3, and except in the case of common law fraud relating to the entry into this
Agreement, this Article 11 will provide the exclusive remedy for any misrepresentation, breach of
warranty, covenant or other agreement or other claim arising out of this Agreement or the
transactions contemplated hereby; provided that it is understood and agree that the foregoing shall
not prevent a party from seeking or obtaining specific performance, injunctive relief or any other
available non-monetary equitable remedy.



     11.3 AS-IS Sale; Waiver of Warranties. Except as set forth in Article 5 and
Section 8.1, Purchaser acknowledges that the Assets and Liabilities are being sold and accepted on
an “AS-IS-WHERE-IS” basis, and are being accepted without any representation or warranty. As part
of Purchaser’s agreement to purchase and accept the Assets and Liabilities AS-IS-WHERE-IS, and not
as a limitation on such agreement, TO THE FULLEST EXTENT PERMITTED BY LAW, SELLER HEREBY DISCLAIMS
AND PURCHASER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES AND RELEASES ANY AND ALL ACTUAL OR
POTENTIAL RIGHTS PURCHASER MIGHT HAVE AGAINST SELLER OR ANY PERSON DIRECTLY OR INDIRECTLY
CONTROLLING SELLER REGARDING ANY FORM OF WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR TYPE,
RELATING TO THE ASSETS AND LIABILITIES, EXCEPT THOSE SET FORTH IN ARTICLE 5 AND SECTION 8.1. SUCH
WAIVER AND RELEASE IS, TO THE FULLEST EXTENT PERMITTED BY LAW, ABSOLUTE, COMPLETE, TOTAL AND
UNLIMITED IN EVERY WAY. SUCH WAIVER
AND RELEASE INCLUDES TO THE FULLEST EXTENT PERMITTED BY LAW, BUT IS NOT LIMITED TO, A WAIVER
AND RELEASE OF EXPRESS WARRANTIES (EXCEPT THOSE SET FORTH IN ARTICLE 5 AND SECTION 8.1), IMPLIED
WARRANTIES, WARRANTIES OF FITNESS FOR A PARTICULAR USE, WARRANTIES OF MERCHANTABILITY, WARRANTIES
OF HABITABILITY, STRICT LIABILITY RIGHTS AND CLAIMS OF EVERY KIND AND TYPE, INCLUDING BUT NOT
LIMITED TO CLAIMS REGARDING DEFECTS WHICH WERE NOT OR ARE NOT DISCOVERABLE, ALL OTHER EXTANT OR
LATER CREATED OR CONCEIVED OF STRICT LIABILITY OR STRICT LIABILITY TYPE CLAIMS AND RIGHTS.



ARTICLE 12




MISCELLANEOUS




     12.1 Survival. The parties’ respective representations and warranties contained
in this Agreement shall survive until the first anniversary of the Closing Date, and thereafter
neither party may claim any Loss in relation to a breach thereof. The agreements and covenants
contained in this Agreement shall not survive the Closing except to the extent expressly
contemplating performance thereafter.



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     (b) No claim based on any breach of any representation or warranty shall be valid or
made unless notice with respect thereto is given to the indemnifying party in accordance with this
Agreement on or before the date specified in Section 11.1(c).



     12.2 Assignment. Neither this Agreement nor any of the rights, interests or
obligations of either party may be assigned by either party hereto without the prior written
consent of the other party, and any purported assignment in contravention of this Section 12.2
shall be void.



     12.3 Binding Effect. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
permitted assigns.



     12.4 Public Notice. Prior to the Closing Date, neither Purchaser nor Seller shall
directly or indirectly make or cause to be made any press release for general circulation, public
announcement or disclosure or issue any notice or general communication to employees with respect
to any of the transactions contemplated hereby without the prior written consent of the other party
(which consent shall not be unreasonably withheld, conditioned or delayed). Purchaser and Seller
each agree that, without the other party’s prior written consent, it shall not release or disclose
any of the terms or conditions of the transactions contemplated herein to any other person.
Notwithstanding the foregoing, each party may make such public disclosure as, based on the advice
of its counsel, may be required by law or as necessary to obtain the Regulatory Approvals. For the
avoidance of any doubt, both Seller and Purchaser covenant and agree that any press release
prepared by either party announcing the execution of this Agreement or the consummation of the P&A
Transaction shall be subject to the
other party’s review and approval, which approval shall not be unreasonably withheld,
conditioned or delayed.



     12.5 Notices. All notices, requests, demands, consents and other communications
given or required to be given under this Agreement and under the related documents shall be in
writing and delivered to the applicable party at the address indicated below:



	 	 	 	 	 
	 

	 	If to Seller:
	 	Banco Popular North America

120 Broadway

New York, New York 10271

Attention: Chris A. McFadden

Fax: (212) 417-6680
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Banco Popular North America 

120 Broadway 

New York, New York 10271

Attention: Brian F. Doran, Esq. 

Fax: (212) 417-6602
	 
	 	 	 	 
	 

	 	If to Purchaser:
	 	Investors Savings Bank 

101 JFK Parkway 

Short Hills, New Jersey 07078

Fax: (973) 924-5192

Attention: Domenick A. Cama






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	 	With a copy to:
	 	Luse Gorman Pomerenk & Schick 

5335 Wisconsin Avenue, N.W., Suite 400

Washington, D.C. 20015

Attention: John J. Gorman 

Fax: (202) 362-2902





or, as to each party at such other address as shall be designated by such party in a written notice
to the other party complying as to delivery with the terms of this Section. Any notices shall be
in writing, including telegraphic or facsimile communication, and may be sent by registered or
certified mail, return receipt requested, postage prepaid, or by fax, or by overnight delivery
service. Notice shall be effective upon actual receipt thereof.




     12.6 Expenses. Except as expressly provided otherwise in this Agreement, each
party shall bear any and all costs and expenses which it incurs, or which may be incurred on its
behalf, in connection with the preparation of this Agreement and consummation of the transactions
described herein, and the expenses, fees, and costs necessary for any approvals of the appropriate
Regulatory Authorities.



     12.7 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New Jersey applicable to agreements made and entirely to
be performed in such commonwealth and
without regard to its principles of conflict of laws. The parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any matter arising out of or
in connection with, this Agreement or the transactions contemplated hereby shall be brought in any
federal or state court sitting in Essex County, New Jersey.



     12.8 Waiver of Jury Trial. The parties hereby waive, to the fullest extent
permitted by law, any right to trial by jury of any claim, demand, action, or cause of action (i)
arising under this Agreement or (ii) in any way connected with or related or incidental to the
dealings of the parties in respect of this Agreement or any of the transactions contemplated
hereby, in each case, whether now existing or hereafter arising, and whether in contract, tort,
equity, or otherwise. The parties hereby further agree and consent that any such claim, demand,
action, or cause of action shall be decided by court trial without a jury and that the parties may
file a copy of this Agreement with any court as written evidence of the consent of the parties to
the waiver of their right to trial by jury.



     12.9 Entire Agreement; Amendment. This Agreement contains the entire
understanding of and all agreements between the parties hereto with respect to the subject matter
hereof and supersedes any prior or contemporaneous agreement or understanding, oral or written,
pertaining to any such matters which agreements or understandings shall be of no force or effect
for any purpose; provided, however, that the terms of any confidentiality agreement between the
parties hereto previously entered into, to the extent not inconsistent with any provisions of this
Agreement, shall continue to apply.



     (b) This Agreement may not be amended or supplemented in any manner except by mutual
agreement of the parties and as set forth in a writing signed by the parties hereto or their



42









 







respective successors in interest. The waiver of any beach of any provision under this Agreement
by any party shall not be deemed to be waiver of any preceding or subsequent breach under this
Agreement. No such waiver shall be effective unless in writing.



     12.10 Third Party Beneficiaries. Except as expressly provided in Section 11.1,
this Agreement shall not benefit or create any right or cause of action in or on behalf of any
person other than Seller and Purchaser.



     12.11 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 instrument. A facsimile or electronic copy of a signature page shall be deemed to be an
original signature page.



     12.12 Headings. The headings used in this Agreement are inserted for purposes of
convenience of reference only and shall not limit or define the meaning of any provisions of this
Agreement.



     12.13 Severability. If any provision of this Agreement, as applied to any party
or circumstance, shall be judged by a court of competent jurisdiction to be void, invalid or
unenforceable, the same shall in no way effect any other
provision of this Agreement, the application of any such provision and any other circumstances
or the validity or enforceability of the other provisions of this Agreement.



     12.14 Specific Performance. The parties hereto agree that irreparable damage
would occur if any provision of this Agreement were not performed in accordance with the terms
hereof (and, more specifically, that irreparable damage would likewise occur if the P&A Transaction
was not consummated), and, accordingly, that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the
terms and provisions hereof (including the parties’ obligation to consummate the P&A Transactions,
subject to the terms and conditions of this Agreement).



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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the date and year first above written.



	 	 	 	 	 
	 	BANCO POPULAR NORTH AMERICA

 	 
	 	By:  	/s/
David H. Chafey, Jr.	 
	 	 	David H. Chafey, Jr. 	 
	 	 	President 	 
	 
	 	INVESTORS SAVINGS BANK

 	 
	 	By:  	/s/ Domenick A. Cama	 
	 	 	Domenick A. Cama 	 
	 	 	Executive Vice President and Chief

Operating Officer 	 
	 




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