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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ISLANDS BANCORP
ISLANDS COMMUNITY BANK, N.A.
AMERIS BANCORP
AND
AMERICAN BANKING COMPANY
AS OF AUGUST 15, 2006
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1. TERMS OF MERGERS AND CLOSING
SECTION 1.1 Terms of Company Merger 1
SECTION 1.2 Terms of Bank Merger 1
SECTION 1.3 Time and Place of Closing 2
SECTION 1.4 Effective Time 2
ARTICLE 2. ARTICLES; BY-LAWS; MANAGEMENT
SECTION 2.1 Company Merger 2
SECTION 2.2 Bank Merger 2
ARTICLE 3. MANNER OF CONVERTING AND EXCHANGING SHARES IN THE
COMPANY MERGER
SECTION 3.1 Conversion of Shares 3
SECTION 3.2 Exchange of Shares 6
SECTION 3.3 Shares Held by Target or Purchaser 6
SECTION 3.4 Rights of Former Target Shareholders 7
SECTION 3.5 Treatment of Stock Options 7
SECTION 3.6 Treatment of Warrants 7
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF TARGET AND
TARGET BANK
SECTION 4.1 Organization, Standing and Power 8
SECTION 4.2 Authority; No Breach 9
SECTION 4.3 Capital Stock 10
SECTION 4.4 Target Subsidiary 10
SECTION 4.5 Financial Statements 10
SECTION 4.6 Absence of Undisclosed Liabilities 11
SECTION 4.7 Absence of Certain Changes or Events 11
SECTION 4.8 Tax Matters 11
SECTION 4.9 Target Allowance for Possible Loan Losses 12
SECTION 4.10 Assets 13
SECTION 4.11 Environmental Matters 13
SECTION 4.12 Compliance with Laws 14
SECTION 4.13 Labor Relations 16
SECTION 4.14 Employee Benefit Plans 16
SECTION 4.15 Material Contracts 18
SECTION 4.16 Legal Proceedings 19
SECTION 4.17 Reports 19
SECTION 4.18 Statements True and Correct 19
SECTION 4.19 Tax and Regulatory Matters 20
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SECTION 4.20 Intellectual Property 20
SECTION 4.21 Charter Provisions 21
SECTION 4.22 State Takeover Laws 21
SECTION 4.23 Derivatives 21
SECTION 4.24 Community Reinvestment Act 21
SECTION 4.25 Privacy of Customer Information 21
SECTION 4.26 Technology Systems 21
SECTION 4.27 Opinion of Financial Advisor 22
SECTION 4.28 Board Recommendation 22
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
SECTION 5.1 Organization, Standing and Power 22
SECTION 5.2 Authority; No Breach 23
SECTION 5.3 Capital Stock 23
SECTION 5.4 Purchaser Subsidiaries 24
SECTION 5.5 Financial Statements 25
SECTION 5.6 Absence of Undisclosed Liabilities 25
SECTION 5.7 Absence of Certain Changes or Events 25
SECTION 5.8 Tax Matters 26
SECTION 5.9 Purchaser Allowance for Possible Loan Losses 26
SECTION 5.10 Assets 26
SECTION 5.11 Environmental Matters 27
SECTION 5.12 Compliance with Laws 28
SECTION 5.13 Labor Relations 29
SECTION 5.14 Employee Benefit Plans 32
SECTION 5.15 Legal Proceedings 32
SECTION 5.16 Reports 32
SECTION 5.17 Statements True and Correct 332
SECTION 5.18 Tax and Regulatory Matters 33
SECTION 5.19 Charter Provisions 33
SECTION 5.20 Community Reinvestment Act 33
ARTICLE 6. CONDUCT OF BUSINESS PENDING CONSUMMATION
SECTION 6.1 Affirmative Covenants of Target 33
SECTION 6.2 Negative Covenants of Target 34
SECTION 6.3 Affirmative Covenants of Purchaser 36
SECTION 6.4 Adverse Changes in Condition 36
SECTION 6.5 Reporting Requirements 36
ARTICLE 7. ADDITIONAL AGREEMENTS
SECTION 7.1 Registration Statement; Proxy Statement; Shareholder 37
Approval
SECTION 7.2 Listing 37
SECTION 7.3 Applications 37
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SECTION 7.4 Filings with State Offices 37
SECTION 7.5 Agreement as to Efforts to Consummate 37
SECTION 7.6 Investigation and Confidentiality 38
SECTION 7.7 Press Releases 39
SECTION 7.8 No Solicitation 39
SECTION 7.9 Tax Treatment 41
SECTION 7.10 Agreement of Affiliates 41
SECTION 7.11 Employee Benefits and Contracts 41
SECTION 7.12 Large Deposits 42
SECTION 7.13 Indemnification Against Certain Liabilities 42
SECTION 7.14 Voting Agreement 42
SECTION 7.15 Cooperation; Attendance at Board Meetings 42
SECTION 7.16 Section 16 Matters 43
SECTION 7.17 Local Advisory Board 43
ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
SECTION 8.1 Conditions to Obligations of Each Party 43
SECTION 8.2 Conditions to Obligations of Purchaser 44
SECTION 8.3 Conditions to Obligations of Target 46
ARTICLE 9. TERMINATION
SECTION 9.1 Termination 47
SECTION 9.2 Effect of Termination 48
ARTICLE 10. MISCELLANEOUS
SECTION 10.1 Definitions 49
SECTION 10.2 Expenses; Effect of Certain Terminations 58
SECTION 10.3 Brokers and Finders 58
SECTION 10.4 Entire Agreement 58
SECTION 10.5 Amendments 59
SECTION 10.6 Waivers 59
SECTION 10.7 Assignment 59
SECTION 10.8 Notices 60
SECTION 10.9 Governing Law 60
SECTION 10.10 Counterparts 60
SECTION 10.11 Interpretation 61
SECTION 10.12 Enforcement of Agreement 61
SECTION 10.13 Severability 61
SECTION 10.14 Survival 61
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LIST OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION
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1.2 Bank Merger Agreement
3.5(a) List of Option Holders
3.6(a) List of Warrant Holders
3.6(b) Form of letter from Warrant Holders
7.10 Form of Affiliate Agreement
7.14 Form of Shareholder Voting Agreement
8.2(d) Matters as to which Target counsel will opine
8.2(f) Form of Non-Competition and Non-Disclosure Agreement
8.3(d) Matters as to which Purchaser counsel will opine
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of August 15, 2006, by and among ISLANDS BANCORP ("Target"), a South
Carolina corporation, and ISLANDS COMMUNITY BANK, N.A. ("Target Bank"), a
national banking association, on the one hand, and AMERIS BANCORP ("Purchaser"),
a Georgia corporation, and AMERICAN BANKING COMPANY ("Purchaser Bank"), a
Georgia state-chartered bank, on the other hand. Certain terms used in this
Agreement are defined in Section 10.1 hereof.
PREAMBLE
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The Boards of Directors of Target, Purchaser, Target Bank and Purchaser
Bank are of the opinion that the transactions described herein are in the best
interests of the respective Parties and their shareholders. This Agreement
provides for (i) the merger of Target Bank with and into Purchaser Bank (the
"Bank Merger") and (ii) the combination of Target with Purchaser pursuant to the
merger of Target with and into Purchaser, as a result of which the outstanding
shares of the capital stock of Target shall be converted into the right to
receive cash and shares of the common stock of Purchaser and the shareholders of
Target (other than those shareholders, if any, who exchange their shares solely
for cash) shall become shareholders of Purchaser (the "Company Merger" and,
together with the Bank Merger, the "Mergers"). The transactions described in
this Agreement are subject to the approvals of the shareholders of Target, the
Board of Governors of the Federal Reserve System, the Georgia Department of
Banking and Finance and the satisfaction of certain other conditions described
in this Agreement. It is the intention of the parties to this Agreement that
the Company Merger for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants and agreements set forth herein, the Parties agree as
follows:
ARTICLE 1.
TERMS OF MERGERS AND CLOSING
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SECTION 1.1 TERMS OF COMPANY MERGER. Subject to the terms and
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conditions of this Agreement, at the Effective Time, Target shall be merged with
and into Purchaser in accordance with the provisions of Section 14-2-1107 of the
GBCC and with the effect provided in Section 14-2-1106 of the GBCC. Purchaser
shall be the Surviving Corporation resulting from the Company Merger and shall
continue to be governed by the Laws of the State of Georgia. The Company Merger
shall be consummated pursuant to the terms of this Agreement, which has been
approved and adopted by the respective Boards of Directors of Target and
Purchaser.
SECTION 1.2 TERMS OF BANK MERGER. Concurrent with the consummation of
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the Company Merger, Target Bank shall be merged with and into Purchaser Bank in
accordance with the Financial Institutions Code of Georgia pursuant to the terms
and conditions of the Bank Plan of Merger and Merger Agreement attached hereto
as Exhibit 1.2 (the "Bank Merger
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Agreement"). Target shall vote the shares of Target Bank in favor of the Bank
Merger Agreement and the Bank Merger.
SECTION 1.3 TIME AND PLACE OF CLOSING. The Closing shall take place at
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10:00 a.m. on the date that the Effective Time occurs or at such other time as
the Parties, acting through their chief executive officers or chief financial
officers, may mutually agree (the "Closing Date"). The Closing shall be held at
such location as may be mutually agreed upon by the Parties or may be conducted
by mail or facsimile as may be mutually agreed upon by the Parties.
SECTION 1.4 EFFECTIVE TIME. The Company Merger shall become effective
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on the date and at the time specified in the Georgia Articles of Merger
reflecting the Company Merger to be filed with the Secretary of State of the
State of Georgia (the "Effective Time"). Subject to the terms and conditions
hereof, unless otherwise mutually agreed upon in writing by the chief executive
officer or chief financial officer of each Party, the Parties shall use their
reasonable efforts to cause the Effective Time to occur within thirty (30) days
after the last to occur of (i) the effective date (including expiration of any
applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Company Merger
and (ii) the date on which the shareholders of Target approve this Agreement to
the extent such approval is required by applicable Law. The Bank Merger
Agreement shall become effective at the date and time specified therein.
ARTICLE 2.
ARTICLES; BY-LAWS; MANAGEMENT
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SECTION 2.1 COMPANY MERGER. The Articles of Incorporation and By-Laws
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of Purchaser, as in effect immediately prior to the Effective Time, shall remain
unchanged by reason of the Company Merger and shall be the Articles of
Incorporation and By-Laws of Purchaser as the Surviving Corporation. The
directors and officers of Purchaser at the Effective Time shall be the directors
and officers of Purchaser as the Surviving Corporation until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be. Each share of Purchaser Common Stock
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding from and after the Effective Time. At the Effective
Time, the shares of Target Common Stock shall be converted as set forth in
Article 3.
SECTION 2.2 BANK MERGER.
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(a) The Articles of Incorporation and By-Laws of Purchaser Bank, as in
effect immediately prior to the effective time of the Bank Merger, shall remain
unchanged by reason of the Bank Merger and shall be the Articles of
Incorporation and By-Laws of Purchaser Bank as the surviving entity in the Bank
Merger. The directors and officers of Purchaser Bank at the effective time of
the Bank Merger shall be the directors and officers of Purchaser Bank as the
surviving entity in the Bank Merger until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified, as
the case may be. Subject to the
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provisions of Section 2.2(b) hereof, at the effective time of the Bank Merger
and by virtue thereof, (i) all shares of capital stock of Target Bank shall be
canceled and (ii) the shares of capital stock of Purchaser Bank, as the
surviving entity in the Bank Merger, issued and outstanding immediately prior to
such effective time shall continue to be issued and outstanding, and no
additional shares shall be issued as a result of the Bank Merger.
(b) The Parties agree that, notwithstanding any provision hereof to the
contrary, upon the request of Purchaser, the method of effecting the Bank Merger
may be changed to provide for the merger of Target Bank with and into a
Purchaser Subsidiary other than Purchaser Bank, and the Target Companies shall
cooperate in such efforts, including by entering into an appropriate amendment
to this Agreement (to the extent such amendment only changes the method of
effecting the Bank Merger and does not substantively affect this Agreement or
the rights and obligations of the Parties or their respective shareholders
hereunder); provided, however, that any actions taken pursuant to this Section
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2.2(b) shall not (i) alter or change the kind or amount of consideration to be
issued to holders of Outstanding Target Shares, the Option Holders or the
Warrant Holders as provided for in this Agreement; (ii) adversely affect the tax
consequences of the Company Merger to the holders of Outstanding Target Shares;
(iii) Materially delay the receipt of the Consent of any Regulatory Authority
required pursuant to Section 8.1(b) hereof; or (iv) otherwise cause any
condition to Closing set forth herein not to be capable of being fulfilled
(unless duly waived by the Party entitled to the benefits thereof).
ARTICLE 3.
MANNER OF CONVERTING AND EXCHANGING SHARES IN THE COMPANY
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MERGER
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SECTION 3.1 CONVERSION OF SHARES. Subject to the provisions of this
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Article 3, at the Effective Time, by virtue of the Company Merger and without
any action on the part of the holders thereof, the shares of Purchaser Common
Stock and Target Common Stock issued and outstanding immediately prior to the
Effective Time shall be converted as follows:
(a) Each share of Purchaser Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) At the Effective Time, each share of Target Common Stock (including
any shares currently subject to options or warrants which are exercised prior to
the Effective Time) outstanding immediately prior to the Effective Time, other
than (i) shares with respect to which the holders thereof, prior to the
Effective Time, met the requirements of, and perfected their dissenters' rights
under, Chapter 13 of the SCCA with respect to shareholders dissenting from the
Company Merger (the "Dissenting Shares"), and (ii) shares held by Target or by
Purchaser or the Purchaser Subsidiaries, in each case other than in a fiduciary
capacity (each an "Outstanding Target Share" and, collectively, the "Outstanding
Target Shares"), shall automatically be converted at the Effective Time into the
right to receive cash and shares of Purchaser Common Stock, plus cash in lieu of
fractional shares pursuant to Section 3.1(i) below, as set forth in this Section
3.1. Subject to the remaining provisions of this Section 3.1, each Target
shareholder who does not dissent may elect to have each Outstanding Target Share
held by such Target Shareholder converted into (i) cash in the amount of the
Target Stock Price (the "Cash
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Consideration") or (ii) a number of shares of Purchaser Common Stock (the "Stock
Consideration") equal to the Target Stock Price divided by the Average Market
Price.
(c) Purchaser and Target shall each use its commercially reasonable
efforts to mail to each holder of shares of Target Common Stock outstanding on
the record date fixed for the Shareholders' Meeting (the "Record Date") a form
("Form of Election") designed for the purpose of allowing the shareholder to
elect, subject to the proration and election procedures set forth in this
Section 3.1, whether to receive (i) the Cash Consideration for all of his or her
Outstanding Target Shares (a "Cash Election"), (ii) the Stock Consideration for
all of his or her Outstanding Target Shares (a "Stock Election"), or (iii) the
Cash Consideration and the Stock Consideration for his or her Outstanding Target
Shares in the relative proportions specified by such Target shareholder (a
"Combination Election"). Target shareholders who hold such shares as nominees,
trustees or in other representative capacities (a "Representative") may submit
multiple Forms of Election, provided that such Representative certifies that
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each such Form of Election covers all the shares of Target Common Stock held by
each such Representative for a particular beneficial owner. A Form of Election
must be received by the Exchange Agent no later than by the close of business
five (5) days prior to the Effective Time (the "Election Deadline") in order to
be effective. All elections shall be irrevocable.
(d) Prior to the Effective Time, Purchaser shall select a bank or trust
company reasonably acceptable to Target to act as exchange agent (the "Exchange
Agent") to effectuate the delivery of the Cash Consideration and the Stock
Consideration to holders of Target Common Stock. Elections shall be made by
holders of Target Common Stock by mailing, faxing or otherwise delivering to the
Exchange Agent a Form of Election. To be effective, a Form of Election must be
properly completed, signed and submitted to the Exchange Agent. Purchaser shall
have the discretion, which it may delegate in whole or in part to the Exchange
Agent, to determine whether Forms of Election have been properly completed,
signed and submitted and to disregard immaterial defects in Forms of Election.
The decision of Purchaser (or the Exchange Agent) in such matters shall be
conclusive and binding. Neither Purchaser nor the Exchange Agent will be under
any obligation to notify any Person of any defect in a Form of Election;
provided, however, that Purchaser (or the Exchange Agent) shall use its
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reasonable best efforts to notify holders of Target Common Stock of any such
defect.
(e) A holder of Target Common Stock who does not submit a Form of
Election which is received by the Exchange Agent prior to the Election Deadline
shall be deemed to have made a Stock Election to receive the Stock Consideration
for each of his or her Outstanding Target Shares (a "Default Stock Election").
If Purchaser or the Exchange Agent shall determine, in its sole discretion, that
any purported Cash Election, Stock Election or Combination Election was not
properly made, such purported election shall be deemed to be of no force and
effect, and the Target shareholder making such purported election shall for
purposes hereof be deemed to have made a Default Stock Election.
(f) All shares of Target Common Stock which are subject to Cash
Elections or the cash portion of Combination Elections are referred to herein as
"Cash Election Shares." All shares of Target Common Stock which are subject to
Stock Elections (including Default Stock Elections) or the stock portion of
Combination Elections are referred to herein as "Stock Election
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Shares." The sum of the number of Dissenting Shares and the number of Cash
Election Shares shall not be greater than 25% of the sum of the Outstanding
Target Shares and the number of Dissenting Shares (the "Maximum Cash Election
Number"). The number of Stock Election Shares shall not be greater than 75% of
the number of Outstanding Target Shares (the "Maximum Stock Election Number").
(g) If, after the results of the Forms of Election are calculated, the
number of Stock Election Shares exceeds the Maximum Stock Election Number, then
the Exchange Agent shall determine the number of Stock Election Shares which
must be redesignated as Cash Election Shares, and all Target shareholders who
have made a Default Stock Election shall, on a pro rata basis, have such number
of their Stock Election Shares redesignated as Cash Election Shares so that the
Maximum Stock Election Number is achieved. If, after redesignating to Cash
Election Shares all shares for which a Default Stock Election was made, the
Maximum Stock Election Number is not achieved, then the Exchange Agent shall
determine the additional number of Stock Election Shares which must be
redesignated as Cash Election Shares, and all Target shareholders who have Stock
Election Shares shall, on a pro rata basis, have such number of their Stock
Election Shares redesignated as Cash Election Shares so that the Maximum Stock
Election Number is achieved. If, after the results of the Forms of Election are
calculated, the number of Cash Election Shares exceeds the Maximum Cash Election
Number, then the Exchange Agent shall determine the number of Cash Election
Shares which must be redesignated as Stock Election Shares, and all Target
Shareholders who have Cash Election Shares shall, on a pro rata basis, have such
number of their Cash Election Shares redesignated as Stock Election Shares so
that the Maximum Cash Election Number is achieved. Purchaser or the Exchange
Agent shall make all computations contemplated by this Section 3.1, and all such
computations shall be conclusive and binding on the holders of Target Common
Stock.
(h) After the redesignation procedure set forth in Section 3.1(g) above
is completed, all Cash Election Shares shall be converted into the right to
receive the Cash Consideration, and all Stock Election Shares shall be converted
into the right to receive the Stock Consideration. Such certificates previously
evidencing shares of Target Common Stock ("Old Certificates") shall be exchanged
for (i) certificates evidencing the Stock Consideration or (ii) the Cash
Consideration, multiplied in each case by the number of shares previously
evidenced by the canceled certificate, upon the surrender of such certificates
in accordance with the provisions of Section 3.2 hereof, without interest.
Notwithstanding the foregoing, however, no fractional shares of Purchaser Common
Stock shall be issued, and, in lieu thereof, a cash payment shall be made
pursuant to Section 3.1(i) below.
(i) Notwithstanding any other provision of this Agreement, each holder
of Outstanding Target Shares exchanged pursuant to the Company Merger who would
otherwise have been entitled to receive a fraction of a share of Purchaser
Common Stock as Stock Consideration (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Purchaser
Common Stock multiplied by the Average Market Price. No such holder will be
entitled to dividends, voting rights, or any other rights as a shareholder in
respect of any fractional shares.
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(j) Each share of the Target Common Stock that is not an Outstanding
Target Share as of the Effective Time shall be cancelled without consideration
therefor.
(k) No Dissenting Shares shall be converted in the Company Merger. All
such shares shall be cancelled and the holders thereof shall thereafter have
only such rights as are granted to dissenting shareholders under Chapter 13 of
the SCCA; provided, however, that if any such shareholder fails to perfect his
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or her rights as a dissenting shareholder with respect to his or her Dissenting
Shares in accordance with Chapter 13 of the SCCA, such shares held by such
shareholder shall, upon the happening of that event, be treated the same as all
other holders of Target Common Stock who at the Effective Time held Outstanding
Target Shares.
SECTION 3.2 EXCHANGE OF SHARES. Target shall send or cause to be sent
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to each holder of Outstanding Target Shares as of the Record Date a form of
letter of transmittal (the "Letter of Transmittal") for use in exchanging Old
Certificates for cash and certificates representing Purchaser Common Stock which
shall be deposited with the Exchange Agent by Purchaser as of the Effective
Time. The Letter of Transmittal shall be mailed within ten (10) business days
following the date of the Shareholders' Meeting. The Letter of Transmittal will
contain instructions with respect to the surrender of Old Certificates and the
distribution of the Cash Consideration and certificates evidencing the Stock
Consideration, which shall be deposited with the Exchange Agent by Purchaser as
of the Effective Time. If any certificates for shares of Purchaser Common Stock
are to be issued in a name other than that for which an Old Certificate
surrendered or exchanged is issued, the Old Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and the person
requesting such exchange shall affix any requisite stock transfer tax stamps to
the Old Certificate surrendered or provide funds for their purchase or establish
to the satisfaction of the Exchange Agent that such taxes are not payable.
Unless and until Old Certificates or evidence that such certificates have been
lost, stolen or destroyed (accompanied by such security or indemnity as shall be
requested by Purchaser) are presented to the Exchange Agent, the holder thereof
shall not be entitled to receive the consideration to be paid in exchange
therefor pursuant to the Company Merger or any dividends payable on any
Purchaser Common Stock to which he or she is entitled or to exercise any rights
as a shareholder of Purchaser Common Stock, except as provided in Section 3.5
below. Subject to applicable Law and to the extent that the same has not yet
been paid to a public official pursuant to applicable abandoned property Laws,
upon surrender of his or her Old Certificates, the holder thereof shall be paid
the consideration to which he or she is entitled. All such property, if held by
the Exchange Agent for payment or delivery to the holders of unsurrendered Old
Certificates and unclaimed at the end of one (1) year from the Effective Time,
shall at such time be paid or redelivered by the Exchange Agent to Purchaser,
and after such time any holder of an Old Certificate who has not surrendered
such certificate shall, subject to applicable Laws and to the extent that the
same has not yet been paid to a public official pursuant to applicable abandoned
property Laws, look as a general creditor only to Purchaser for payment or
delivery of such property. In no event will any holder of Target Common Stock
exchanged in the Company Merger be entitled to receive any interest on any
amounts held by the Exchange Agent or Purchaser.
SECTION 3.3 SHARES HELD BY TARGET OR PURCHASER. Each of the shares of
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Target Common Stock held by any Target Company or by any Purchaser Company, in
each case
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other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
SECTION 3.4 RIGHTS OF FORMER TARGET SHAREHOLDERS. At the Effective
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Time, the stock transfer books of Target shall be closed as to holders of Target
Common Stock immediately prior to the Effective Time, and no transfer of Target
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 3.2 of
this Agreement, each Old Certificate (other than shares to be canceled pursuant
to Section 3.1(j) of this Agreement) shall from and after the Effective Time
represent for all purposes only the right to receive the consideration provided
in Section 3.1 of this Agreement in exchange therefor. To the extent permitted
by Law, former shareholders of record of Target shall be entitled to vote after
the Effective Time at any meeting of shareholders of Purchaser the number of
whole shares of Purchaser Common Stock into which their respective shares of
Target Common Stock are converted, regardless of whether such holders have
exchanged their certificates representing Target Common Stock for certificates
representing Purchaser Common Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by Purchaser
on the Purchaser Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares issuable pursuant to this Agreement, but no dividend or other
distribution payable to the holders of record of Purchaser Common Stock as of
any time subsequent to the Effective Time shall be delivered to the holder of
any certificate representing shares of Target Common Stock issued and
outstanding at the Effective Time until such holder surrenders such certificate
for exchange as provided in Section 3.2 of this Agreement. However, upon
surrender of such Target Common Stock certificate, the Purchaser Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest), the Cash Consideration (without interest) and any undelivered
cash payments to be paid for fractional share interests (without interest) shall
be delivered and paid with respect to each share represented by such
certificate.
SECTION 3.5 TREATMENT OF STOCK OPTIONS. The name of each holder
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("Option Holder") of an option to purchase shares of Target Common Stock issued
by Target ("Target Option") and the number of Target Options owned by such
Option Holder is set forth on Exhibit 3.5(a) hereto. Each Target Option shall
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be cancelled upon consummation of the Company Merger, and all rights in respect
thereof will cease to exist, in consideration of the automatic conversion at the
Effective Time of such Target Option into the right to receive, on the Closing
Date, cash in an amount equal to (i) the aggregate number of Option Shares for
which such Target Option could have been exercised immediately prior to the
Effective Time (whether or not such Target Option is then exercisable),
multiplied by (ii) the difference between (A) the Target Stock Price and (B) the
exercise price for each Option Share subject to such Target Option.
SECTION 3.6 TREATMENT OF WARRANTS. The name of each holder ("Warrant
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Holder") of a warrant to purchase shares of Target Common Stock issued by Target
("Target Warrant") and the number of Target Warrants owned by such Warrant
Holder is set forth on Exhibit 3.6(a) hereto. At the election of the Warrant
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Holder, the entirety of each Target Warrant held by such Warrant Holder shall be
converted at the Effective Time into the right to receive, on
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the Closing Date, either (a) cash in an amount equal to (i) the aggregate number
of Warrant Shares for which such Target Warrant could have been exercised
immediately prior to the Effective Time (whether or not such Target Warrant is
then exercisable), multiplied by (ii) the difference between (A) the Target
Stock Price and (B) the exercise price for each Warrant Share subject to such
Target Warrant, or (b) a number of shares of Purchaser Common Stock equal to (i)
the aggregate number of Warrant Shares for which such Target Warrant could have
been exercised immediately prior to the Effective Time (whether or not such
Target Warrant is then exercisable), multiplied by (ii) the quotient obtained by
dividing (A) the difference between (1) the Target Stock Price and (2) the
exercise price for each Warrant Share subject to such Target Warrant, by (B) the
Average Market Price. Such election shall be made by the Warrant Holder's
delivery to Target of an election notice in the form set forth in Exhibit A to
Exhibit 3.6(b) hereto prior to the Election Deadline. A Warrant Holder who does
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not deliver such an election notice to Target by the Election Deadline shall
receive cash in respect of 50% of the Warrant Shares issuable upon the exercise
of such Warrant Holder's Target Warrant and Purchaser Common Stock in respect of
the remaining 50% of such Warrant Shares, in each case in an amount determined
in accordance with the second sentence of this Section 3.6. Target has
previously delivered to Purchaser a letter agreement in the form set forth in
Exhibit 3.6(b) with each Warrant Holder pursuant to which each Warrant Holder
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has consented to the provisions of this Section 3.6.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF TARGET AND TARGET BANK
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Target and Target Bank hereby, jointly and severally, represent and warrant
to Purchaser as follows:
SECTION 4.1 ORGANIZATION, STANDING AND POWER.
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(a) Target is a corporation duly organized, validly existing, and in
good standing under the Laws of the State of South Carolina, and is duly
registered as a bank holding company under the BHC Act. Target has the
corporate power and authority to carry on its business as now conducted and to
own, lease and operate its Assets. Target is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character of its assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Target.
(b) Target Bank is a national bank duly organized, validly existing,
and in good standing under the Laws of the United States of America, and has the
corporate power and authority to carry on its business as now conducted and to
own, lease and operate its Assets. Target Bank is duly qualified or licensed to
transact business and in good standing in the jurisdictions where the character
of its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on it. The minute books and other
organizational documents and corporate records for
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Target Bank have been made available to Purchaser for its review and are true
and complete in all Material respects as in effect as of the date of this
Agreement and accurately reflect in all Material respects all amendments thereto
and all proceedings of the Board of Directors and shareholders thereof.
SECTION 4.2 AUTHORITY; NO BREACH.
----------------------
(a) Each of Target and the Target Bank has the corporate power and
authority necessary to execute, deliver and perform its obligations under this
Agreement and the Bank Merger Agreement and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of
this Agreement and the Bank Merger Agreement and the consummation of the
transactions contemplated herein and therein, including the Mergers, have been
duly and validly authorized by all necessary corporate action in respect thereof
on the part of Target and Target Bank, subject to the approval of this Agreement
by the holders of the outstanding Target Common Stock and by Target, as the sole
shareholder of Target Bank. Subject to such requisite shareholder approval,
this Agreement and the Bank Merger Agreement represent legal, valid and binding
obligations of Target and Target Bank, as the case may be, enforceable against
them in accordance with their respective terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) With respect to each of Target and Target Bank, neither the
execution and delivery of this Agreement or the Bank Merger Agreement, nor the
consummation of the transactions contemplated hereby or thereby, nor compliance
with any of the provisions hereof or thereof, will (i) conflict with or result
in a breach of any provision of its Articles of Incorporation or Association or
its By-Laws, or (ii) constitute or result in a Default or loss of benefit under,
or require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Target Company under, any Contract or Permit of any Target Company,
where such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Target, or (iii) subject to receipt of the requisite approvals referred to in
Section 8.1(b) of this Agreement, violate any Law or Order applicable to any
Target Company or any of their respective Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate Laws, and other than Consents
required from Regulatory Authorities, and other than notices to or filings with
the IRS or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, and other than Consents, filings or notifications which, if not
obtained or made, are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Target, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
Target or Target Bank of the Mergers and the other transactions contemplated in
this Agreement.
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SECTION 4.3 Capital Stock.
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(a) The authorized capital stock of Target consists of (i) 10,000,000
shares of Target Common Stock, of which 740,260 shares are issued and
outstanding as of the date of this Agreement, and (ii) 2,000,000 shares of
Preferred Stock, none of which are issued or outstanding as of the date of this
Agreement. All of the issued and outstanding shares of capital stock of Target
are duly and validly issued and outstanding and are fully paid and nonassessable
under the SCCA. None of the outstanding shares of capital stock of Target has
been issued in violation of any preemptive rights of the current or past
shareholders of Target.
(b) The authorized capital stock of Target Bank consists of 600,000
shares of common stock, $5.00 par value per share. All of the issued and
outstanding shares of capital stock of Target Bank are duly and validly issued
and outstanding and are fully paid and nonassessable (except for assessment
pursuant to 12 U.S.C. Sec.55). None of the outstanding shares of capital stock
of Target Bank has been issued in violation of any preemptive rights of the
current or past shareholders of Target Bank.
(c) Except as set forth in Sections 4.3(a) and (b) of this Agreement,
there are no shares of capital stock or other equity securities of Target or
Target Bank outstanding and, except as set forth in Exhibit 3.5(a) and Exhibit
-------------- -------
3.6(a), there are no outstanding options, warrants, scrip, rights to subscribe
------
to, calls, or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock of
Target or Target Bank or contracts, commitments, understandings or arrangements
by which Target or Target Bank is or may be bound to issue additional shares of
its capital stock or options, warrants or rights to purchase or acquire any
additional shares of its capital stock.
SECTION 4.4 TARGET SUBSIDIARY. Target Bank is the only Subsidiary of
------------------
Target, and Target owns all of the issued and outstanding shares of capital
stock of Target Bank. No equity securities of Target Bank are or may become
required to be issued (other than to a Target Company) by reason of any options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of Target Bank, and there are no Contracts by
which Target Bank is bound to issue (other than to a Target Company) additional
shares of its capital stock or options, warrants or rights to purchase or
acquire any additional shares of its capital stock or by which any Target
Company is or may be bound to transfer any shares of the capital stock of Target
Bank (other than to a Target Company). There are no Contracts relating to the
rights of any Target Company to vote or to dispose of any shares of the capital
stock of Target Bank. Target Bank is an insured institution as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder.
SECTION 4.5 FINANCIAL STATEMENTS.
---------------------
(a) Target has timely filed all Target Financial Statements with the
SEC, and Target will deliver to Purchaser copies of all financial statements,
audited or unaudited, of Target prepared subsequent to the date hereof. The
Target Financial Statements (as of the dates thereof and for the periods covered
thereby) (i) are or, if prepared after the date of this Agreement, will be in
accordance with the books and records of the Target Companies, which are or will
be, as
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the case may be, complete and correct and which have been or will have been, as
the case may be, maintained in accordance with good business practices, and (ii)
present or will present, as the case may be, fairly the consolidated financial
position of the Target Companies as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows of the
Target Companies for the periods indicated, in accordance with GAAP (subject to
any exceptions as to consistency specified therein or as may be indicated in the
notes thereto or, in the case of interim financial statements, to normal
recurring year-end adjustments that are not Material). To the Knowledge of
Target, (x) the Target Financial Statements do not contain any untrue statement
of a Material fact or omit to state a Material fact necessary to make the Target
Financial Statements not misleading with respect to the periods covered thereby;
and (y) the Target Financial Statements fairly present, in all Material
respects, the financial condition, results of operations and cash flows of
Target as of and for the periods covered by them.
(b) Target's external auditor is and has been throughout the periods
covered by the Target Financial Statements (i) "independent" with respect to
Target within the meaning of Regulation S-X under the 1933 Act and (ii) in
compliance with subsections (g) through (l) of Section 10A of the 1934 Act and
the related rules of the SEC and the Public Company Accounting Oversight Board.
Except as Previously Disclosed, Target's auditors have not performed any
non-audit services for Target since January 1, 2004.
SECTION 4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as Previously
-----------------------------------
Disclosed, no Target Company has any Liabilities that are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Target,
except Liabilities which are accrued or reserved against in the consolidated
balance sheets of Target as of June 30, 2006 included in the Target Financial
Statements or reflected in the notes thereto. Except as Previously Disclosed,
no Target Company has incurred or paid any Liability since June 30, 2006, except
for such Liabilities incurred or paid in the ordinary course of business
consistent with past business practice and which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Target.
SECTION 4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as Previously
------------------------------------
Disclosed, since June 30, 2006, (a) there have been no events, changes or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Target, (b) the Target Companies
have not taken any action, or failed to take any action, prior to the date of
this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a Material breach or violation of any of
the covenants and agreements of Target provided in Article 7 of this Agreement,
and (c) each Target Company has conducted its business in the ordinary and usual
course (excluding the incurrence of expenses in connection with this Agreement
and the transactions contemplated hereby).
SECTION 4.8 TAX MATTERS.
------------
(a) All Tax returns required to be filed by or on behalf of any of the
Target Companies have been duly filed or requests for extensions have been
timely filed, granted and have not expired for periods ended on or before June
30, 2006, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse
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Effect on Target, and all returns filed are complete and accurate to the
Knowledge of Target. All Taxes shown on filed returns have been paid. As of
the date of this Agreement, there is no audit examination, deficiency or refund
Litigation with respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on Target, except as reserved against in the Target Financial
Statements delivered prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) None of the Target Companies has executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax due that
is currently in effect, and no unpaid tax deficiency has been asserted in
writing against or with respect to any Target Company, which deficiency is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Target.
(c) Adequate provision for any Taxes due or to become due for any of
the Target Companies for the period or periods through and including the date of
the most recent respective Target Financial Statements has been made and is
reflected on such Target Financial Statements.
(d) Deferred Taxes of the Target Companies have been provided for in
accordance with GAAP.
(e) Each of the Target Companies is in compliance with, and its records
contain all information and documents (including properly completed IRS Forms
W-4 and W-9) necessary to comply with, all applicable information reporting and
Tax withholding requirements under federal, state and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Target.
(f) No Target Company has made any payments, is obligated to make any
payments or is a party to any contract, agreement or other arrangement that
could obligate it to make any payments that would be disallowed as a deduction
under Section 280G or 162(m) of the Internal Revenue Code.
(g) There are no Material Liens with respect to Taxes upon any of the
Assets of any Target Company.
(h) No Target Company has filed any consent under former Section 341(f)
of the Internal Revenue Code concerning collapsible corporations.
(i) No Target Company has or has had a permanent establishment in any
foreign country, as defined in any applicable tax treaty or convention between
the United States and such foreign country.
SECTION 4.9 TARGET ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance
------------------------------------------
for possible loan or credit losses (the "Target Allowance") shown on the
consolidated balance sheets of Target included in the most recent Target
Financial Statements dated prior to the date of this
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Agreement was, and the Target Allowance shown on the consolidated balance sheets
of Target included in the financial statements of Target as of dates subsequent
to the execution of this Agreement will be, as of the dates thereof, adequate
(within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for losses relating to or inherent in the loan and lease
portfolios (including accrued interest receivables) of the Target Bank and other
extensions of credit (including letters of credit and commitments to make loans
or extend credit) by Target Bank as of the dates thereof, except where the
failure of such Target Allowance to be so maintained is not reasonably likely to
have a Material Adverse Effect on Target.
SECTION 4.10 ASSETS. Except as Previously Disclosed or as disclosed or
------
reserved against in the Target Financial Statements, or where the failure to own
good and marketable title is not reasonably likely to have a Material Adverse
Effect on Target, the Target Companies have good and marketable title, free and
clear of all Liens, to all of their respective Assets. All Material tangible
properties used in the businesses of the Target Companies are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with Target's past practices. All Assets which are Material
to Target's business on a consolidated basis, held under leases or subleases by
any of the Target Companies are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. The
policies of fire, theft, liability and other insurance maintained with respect
to the Assets or businesses of the Target Companies provide adequate coverage
under current industry practices against loss or Liability, and the fidelity and
blanket bonds in effect as to which any of the Target Companies is a named
insured are reasonably sufficient. No Target Company has received notice from
any insurance carrier that (i) such insurance will be cancelled or that coverage
thereunder will be reduced or eliminated or (ii) premium costs with respect to
such policies of insurance will be substantially increased. The Assets of the
Target Companies include all assets required to operate the businesses of the
Target Companies as presently conducted.
SECTION 4.11 ENVIRONMENTAL MATTERS.
----------------------
(a) Each Target Company, its Participation Facilities and, to the
Knowledge of such Target Company, its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Target.
(b) There is no Litigation pending or, to the Knowledge of Target,
threatened before any court, governmental agency or authority or other forum in
which any Target Company or any of its Participation Facilities has been or,
with respect to threatened Litigation, may be named as a defendant (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release into the environment of any Hazardous Material
or oil, whether or not occurring at, on, under or involving a site owned, leased
or operated by any Target Company or any of its Participation Facilities, except
for such Litigation pending or, to
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the Knowledge of Target, threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Target.
(c) There is no Litigation pending or, to the Knowledge of Target,
threatened before any court, governmental agency or board or other forum in
which any of its Loan Properties (or any Target Company in respect of such Loan
Property) has been or, with respect to threatened Litigation, may be named as a
defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material or oil, whether or
not occurring at, on, under or involving a Loan Property, except for such
Litigation pending or, to the Knowledge
of Target, threatened that is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Target.
(d) To the Knowledge of Target, there is no reasonable basis for any
Litigation of a type described in subsections (b) or (c) above, except such as
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Target.
(e) To the Knowledge of Target, during the period of (i) any Target
Company's ownership or operation of any Loan Property, (ii) any Target Company's
participation in the management of any Participation Facility, or (iii) any
Target Company's holding of a security interest in a Loan Property, there has
been no release of Hazardous Material or oil in, on, under or affecting any such
Participation Facility or Loan Property, the release or presence of which could
reasonably be expected to result in any reporting, clean up or remedial
obligation pursuant to any Environmental Law, except such as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Target.
(f) Prior to the period of (i) any Target Company's ownership or
operation of any Loan Property, (ii) any Target Company's participation in the
management of any Participation Facility, or (iii) any Target Company's holding
of a security interest in a Loan Property, to the Knowledge of Target, there has
been no release of any Hazardous Material or oil in, on, under or affecting any
such Participation Facility or Loan Property, the release or presence of which
could reasonably be expected to result in any reporting, clean up or remedial
obligation pursuant to any Environmental Law, except such as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Target.
SECTION 4.12 COMPLIANCE WITH LAWS.
----------------------
(a) Each Target Company has in effect all Permits necessary for it to
own, lease or operate its Assets and to carry on its business as now conducted,
except for those Permits the absence of which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Target, and there
has occurred no Default under any such Permit, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Target.
(b) Except as Previously Disclosed, no Target Company:
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(i) is in violation of any Laws, Orders or Permits applicable to
its business or employees conducting its business, including the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the USA Patriot Act of 2001, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Target; and
(ii) has received any notification or communication from any
agency or department of federal, state or local government or any
Regulatory Authority or the staff thereof (A) asserting that any Target
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Target, (B) threatening to revoke
any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Target, or
(C) requiring any Target Company to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts Materially the conduct of its business, or in
any manner relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.
(c) Except as is not reasonably likely to have, either individually or
in the aggregate, a Material Adverse Effect on Target, each Target Company has
properly administered all accounts for which it acts as a fiduciary, including
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents thereof and all applicable Law. No Target
Company, or any director, officer or employee of any Target Company, has
committed any breach of trust or fiduciary duty with respect to any such
fiduciary account that is reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect on Target, and, except as would not be
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect on Target, the accountings for each such fiduciary account are
true and correct and accurately reflect the assets of such fiduciary account.
(d) The records, systems, controls, data and information of Target and
Target Bank are recorded, stored, maintained and operated under means (including
any electronic, mechanical or photographic process, whether computerized or not)
that are under the exclusive ownership and direct control of Target and Target
Bank or accountants (including all means of access thereto and therefrom),
except for any non-exclusive ownership and non-direct control that would not
reasonably be expected to have a Material Adverse Effect on the system of
internal accounting controls described in the immediately following sentence.
Target and Target Bank have devised and maintain a system of internal accounting
controls sufficient to provide reasonable assurances regarding the reliability
of financial reporting and the preparation of financial statements in accordance
with GAAP. Target (i) has designed disclosure controls and procedures to ensure
that Material information relating to Target, including Target Bank, is made
known to the management of Target by others within those entities and (ii) has
disclosed, based on its most recent evaluation prior to the date hereof, to
Target's auditors and the audit committee of its Board of Directors (A) any
significant deficiencies or material weaknesses in the design or operation of
internal controls which are reasonably likely to adversely affect in any
Material respect its ability to record, process, summarize and report financial
data and (B) any
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fraud, whether or not Material, that involves management or other employees who
have a significant role in its internal controls. Target has made available to
Purchaser a summary of any such disclosure made by management to Target's
auditors and audit committee since January 1, 2004.
SECTION 4.13 LABOR RELATIONS. No Target Company is the subject of any
---------------
Litigation asserting that it or any other Target Company has committed an unfair
labor practice (within the meaning of the National Labor Relations Act or
comparable state Law) or seeking to compel it or any other Target Company to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any Target Company, pending
or, to its Knowledge, threatened nor, to its Knowledge, is there any activity
involving any Target Company's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
SECTION 4.14 EMPLOYEE BENEFIT PLANS.
------------------------
(a) Target has delivered or made available to Purchaser prior to the
execution of this Agreement copies of all pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership, severance pay,
vacation, bonus or other incentive plans, all other written employee programs,
arrangements or agreements, all medical, vision, dental or other health plans,
all life insurance plans, and all other employee benefit plans or fringe benefit
plans, including "employee benefit plans," as that term is defined in Section
3(3) of ERISA, currently adopted, maintained by, sponsored in whole or in part
by, or contributed to by any Target Company or Affiliate thereof for the benefit
of employees, retirees, dependents, spouses, directors, independent contractors
or other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries are eligible to
participate (collectively, the "Target Benefit Plans"). Any of the Target
Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "Target ERISA
Plan." Each Target ERISA Plan which is also a "defined benefit plan" (as
defined in Section 414(j)) of the Internal Revenue Code) is referred to herein
as a "Target Pension Plan." No Target Pension Plan is or has been a
multi-employer plan within the meaning of Section 3(37) of ERISA. Except as
Previously Disclosed, the Target Companies do not participate in either a
multi-employer plan or a multiple employer plan.
(b) The Target Companies have delivered or made available to Purchaser
prior to the execution of this Agreement correct and complete copies of the
following documents: (i) all trust agreements or other funding arrangements for
all Target Benefit Plans (including insurance contracts) and all amendments
thereto; (ii) with respect to any such Target Benefit Plans or amendments, all
determination letters, Material rulings, Material opinion letters, Material
information letters or Material advisory opinions issued by the IRS, the United
States Department of Labor or the Pension Benefit Guaranty Corporation; (iii)
all annual reports or returns, audited or unaudited financial statements,
actuarial valuations and reports and summary annual reports prepared for any
Target Benefit Plan with respect to the most recent plan year; and (iv) the most
recent summary plan descriptions and any Material modifications thereto.
(c) All Target Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code and any other applicable Laws, the
breach or violation of which are
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reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Target. Target maintains a 401(k) plan originally adopted under a
volume submitter arrangement offered by or in conjunction with its third party
service provider. Effective on or about January 1, 2003, Target changed third
party service providers and subsequent required plan amendments have been
prepared by the successor third party service provider. Target has not obtained
an individual determination letter from the Internal Revenue Service concerning
the 401(k) plan's tax-qualified status and, as a result of the foregoing events,
Target may not be able to rely upon any favorable letter or advisory opinion
that may have been issued to the volume submitter practitioner. No Target
Company has engaged in a transaction with respect to any Target Benefit Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject any Target Company to a tax or penalty imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in amounts
which are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Target or any Target Company.
(d) No Target Pension Plan has any "unfunded current liability," as
that term is defined in Section 302(d)(8)(A) of ERISA, based on actuarial
assumptions set forth for such plan's most recent actuarial valuation, and the
fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities", as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since the date of the most
recent actuarial valuation, there has been (i) no Material change in the
financial position of any Target Pension Plan, (ii) no change in the actuarial
assumptions with respect to any Target Pension Plan, and (iii) no increase in
benefits under any Target Pension Plan as a result of plan amendments or changes
in applicable Law, which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Target or Materially adversely affect
the funding status of any such plan. Neither any Target Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any Target Company, or the single-employer
plan of any entity which is considered one employer with Target under Section
4001 of ERISA or Section 414 of the Internal Revenue Code or Section 302 of
ERISA (whether or not waived) (an "ERISA Affiliate"), has an "accumulated
funding deficiency" within the meaning of Section 412 of the Internal Revenue
Code or Section 302 of ERISA, which is reasonably likely to have a Material
Adverse Effect on Target. No Target Company has provided, or is required to
provide, security to a Target Pension Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code.
All premiums required to be paid under ERISA Section 4006 have been timely paid
by all Target Companies except to the extent any failure to do so would not have
a Materially Adverse Effect on Target.
(e) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by any Target Company with respect to any ongoing, frozen or
terminated single-employer plan or the single--employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Material Adverse
Effect on Target. Except as Previously Disclosed, no Target Company has
incurred any withdrawal Liability with respect to a multi-employer plan under
Subtitle B of Title IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate), which Liability is reasonably likely to have a Material
Adverse Effect on Target. No notice of a "reportable event," within the meaning
of Section 4043 of ERISA for which the 30-day reporting
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requirement has not been waived, has been required to be filed for any Target
Pension Plan or by any ERISA Affiliate within the 12-month period ending on the
date hereof.
(f) Except as required under Title I, Part 6 of ERISA and Internal
Revenue Code Section 4980B, no Target Company has any obligations for retiree
health and life benefits under any of the Target Benefit Plans and there are no
restrictions on the rights of such Target Company to amend or terminate any such
Plan without incurring any Liability thereunder, which Liability is reasonably
likely to have a Material Adverse Effect on Target.
(g) Except as Previously Disclosed, neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any payment (including severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director or any employee of
any Target Company from any Target Company under any Target Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any Target Benefit
Plan, or (iii) result in any acceleration of the time of payment or vesting of
any such benefit, where such payment, increase or acceleration is reasonably
likely to have a Material Adverse Effect on Target.
(h) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement or employment agreement) of employees and former
employees of any Target Company and its beneficiaries, other than entitlements
accrued pursuant to funded retirement plans subject to the provisions of Section
412 of the Internal Revenue Code or Section 302 of ERISA, have been fully
reflected on the Target Financial Statements to the extent required by and in
accordance with GAAP.
SECTION 4.15 MATERIAL CONTRACTS. Except as Previously Disclosed or
-------------------
otherwise reflected in the Target Financial Statements, none of the Target
Companies, nor any of their respective Assets, businesses or operations, is a
party to, or is bound or affected by, or receives benefits under, (a) any
employment, severance, termination, consulting or retirement Contract providing
for aggregate payments to any Person in any calendar year in excess of $25,000,
(b) any Contract relating to the borrowing of money by any Target Company or the
guarantee by any Target Company of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully secured
repurchase agreements, trade payables and Contracts relating to borrowings or
guarantees made in the ordinary course of business), and (c) any other Contract
or amendment thereto that would be required to be filed as an exhibit to any
report filed by Target with any Regulatory Authority as of the date of this
Agreement that has not been filed by Target with any Regulatory Authority as an
exhibit to any report filed by Target for the fiscal year ended December 31,
2005 (together with all Contracts referred to in Sections 4.10 and 4.14(a) of
this Agreement, the "Target Contracts"). With respect to each Target Contract,
(i) the Contract is in full force and effect, (ii) no Target Company is in
Default thereunder other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Target
Companies, (iii) no Target Company has repudiated or waived any Material
provision of any such Contract, and (iv) no other party to any such Contract is,
to the Knowledge of the Target Companies, in Default in any respect, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the
-18-
Target Companies, or has repudiated or waived any Material provision thereunder.
Except as Previously Disclosed, all of the indebtedness of the Target Companies
for money borrowed is prepayable at any time by the Target Companies without
penalty or premium.
SECTION 4.16 LEGAL PROCEEDINGS. Except as Previously Disclosed, there
-----------------
is no Litigation instituted or pending or, to the Knowledge of Target,
threatened (or unasserted but considered probable of assertion and which, if
asserted, would have at least a reasonable probability of an unfavorable
outcome) against any Target Company, or against any Asset, interest or right of
any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Target, nor are there any Orders of any
Regulatory Authorities, other governmental authorities or arbitrators
outstanding against any Target Company, that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Target.
SECTION 4.17 REPORTS. Except as Previously Disclosed, since January 1,
-------
2004, each Target Company has timely filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Regulatory Authority and has paid
all fees and assessments due and payable in connection therewith, except where
the failure to file such report, registration or statement or to pay any such
fee or assessment is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Target. Except as Previously Disclosed,
as of their respective dates, each of such reports, registrations and statements
(as amended, in the case of any report, registration or statement that has been
amended in accordance with applicable Law), including the financial statements,
exhibits, and schedules thereto, complied in all Material respects with all
applicable Laws. Except as Previously Disclosed, as of their respective dates,
none of such reports, registrations or statements contained any untrue statement
of a Material fact or omitted to state a Material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.18 STATEMENTS TRUE AND CORRECT. No statement, certificate,
----------------------------
instrument or other writing furnished or to be furnished by any Target Company
or any Affiliate thereof to Purchaser pursuant to this Agreement or any other
document, agreement or instrument referred to herein contains or will contain
any untrue statement of Material fact or will omit to state a Material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by any Target Company or any Affiliate thereof for inclusion in the
Registration Statement to be filed by Purchaser with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect to
any Material fact, or omit to state any Material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Target Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to the Target shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by any Target Company
or any Affiliate thereof with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of Target, be false or misleading with respect
to any Material fact, or omit to state any Material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy
-19-
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meeting, be false or misleading with respect to any Material fact,
or omit to state any Material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any Target Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all Material
respects with the provisions of applicable Law.
SECTION 4.19 TAX AND REGULATORY MATTERS. Except as Previously
-----------------------------
Disclosed, no Target Company or any Affiliate thereof has taken any action, or
has any Knowledge of any fact or circumstance that is reasonably likely, to (a)
prevent the transactions contemplated hereby, including the Company Merger, from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (b) Materially impede or delay receipt of any Consents
of Regulatory Authorities referred to in Section 8.1(b) of this Agreement or
result in the imposition of a condition or restriction of the type referred to
in the second sentence of such Section. To the Knowledge of Target, there
exists no fact, circumstance, or reason why the requisite Consents referred to
in Section 8.1(b) of this Agreement cannot be received in a timely manner
without the imposition of any condition or restriction of the type described in
the second sentence of such Section 8.1(b).
SECTION 4.20 INTELLECTUAL PROPERTY.
----------------------
(a) Target has Previously Disclosed to Purchaser all patents,
trademarks, trade names, trade secrets, copyrights, processes, service marks,
royalty rights or design rights owned, used or licensed (as licensor or
licensee) by Target Companies in the operation of their respective businesses
and all applications therefor and registrations thereof, whether foreign or
domestic, owned or controlled by Target Companies (the "Intellectual Property"),
and, in the case of any such rights that are so owned, the jurisdiction in which
such rights or applications have been registered, filed or issued, and, in the
case of any such rights that are not so owned, the agreements under which such
rights arise. Each of the Target Companies has taken all action necessary to
keep the Intellectual Property owned by it in full force and effect, including
filing all necessary affidavits and other documents and utilizing such property
in interstate commerce. Each of the Target Companies is the sole and exclusive
owner of the Intellectual Property which has been Previously Disclosed as being
owned by it, with the sole and exclusive right, except to the extent indicated
therein, to use and license such property. No claim has been asserted or, to
Target's Knowledge, threatened seeking cancellation or concurrent use of any
registered trademark, trade name or service ▇▇▇▇ owned, used or licensed by any
of the Target Companies.
(b) There are no claims, demands or suits pending or, to Target's
Knowledge, threatened against any of the Target Companies claiming an
infringement by any of the Target Companies of any patents, copyrights,
processes, licenses, trademarks, service marks or trade names of others in
connection with its business; none of the Intellectual Property or, as the case
may be, the rights granted to any of the Target Companies in respect thereof,
infringes on the rights of any Person or is being infringed upon by any Person;
and none of the Intellectual Property is subject to any outstanding order,
decree, judgment, stipulation, injunction, restriction or agreement restricting
the scope of its use by any of the Target Companies.
-20-
SECTION 4.21 CHARTER PROVISIONS. Each Target Company has taken all
-------------------
action so that the entering into of this Agreement and the consummation of the
Mergers and the other transactions contemplated by this Agreement do not and
will not result in the grant of any rights to any Person under its Articles of
Incorporation or Association or its By-Laws or other governing instruments
(other than, with respect to Target, voting, dissenters' rights of appraisal or
other similar rights) or restrict or impair the ability of Purchaser to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of any
Target Company that may be acquired or controlled by it.
SECTION 4.22 STATE TAKEOVER LAWS. Target has taken all necessary
---------------------
action to exempt the transactions contemplated by this Agreement from any
applicable "moratorium," "control share," "fair price," "business combination"
or other state takeover Law.
SECTION 4.23 DERIVATIVES. All interest rate swaps, caps, floors,
-----------
option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for Target's own account, or for
the account of either Target Bank or its customers, were entered into (i) in
accordance with prudent business practices and all applicable Laws and (ii) with
counterparties believed to be financially responsible.
SECTION 4.24 COMMUNITY REINVESTMENT ACT. Each Target Bank has complied
--------------------------
in all Material respects with the provisions of the Community Reinvestment Act
("CRA") and the rules and regulations thereunder, has a CRA rating of not less
than "satisfactory," has received no Material criticism from regulators with
respect to discriminatory lending practices, and has no Knowledge of any
conditions or circumstances that are likely to result in a CRA rating of less
than "satisfactory" or Material criticism from regulators with respect to
discriminatory lending practices.
SECTION 4.25 PRIVACY OF CUSTOMER INFORMATION.
----------------------------------
(a) Each Target Bank is the sole owner of all individually identifiable
personal information ("IIPI") relating to its customers, former customers and
prospective customers that will be transferred to Purchaser Companies pursuant
to this Agreement and the other transactions contemplated hereby. For purposes
of this Section 4.25, "IIPI" means any information relating to an identified or
identifiable natural person.
(b) The collection and use of such IIPI by each Target Bank and the
transfer of such IIPI to Purchaser Companies complies with all applicable
privacy policies, the Fair Credit Reporting Act, the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and
all other applicable state, federal and foreign privacy Law.
SECTION 4.26 TECHNOLOGY SYSTEMS.
-------------------
(a) Except as Previously Disclosed, no action will be necessary as a
result of the transactions contemplated by this Agreement to enable the
electronic data processing, information, record keeping, communications,
telecommunications, hardware, third party software, networks, peripherals,
portfolio trading and computer systems, including any
-21-
outsourced systems and processes, and Intellectual Property that are used by the
Target Companies (collectively, the "Technology Systems") to continue to be used
by the Surviving Corporation and its Subsidiaries to the same extent and in the
same manner that such Technology Systems have been used by the Target Companies
prior to the Effective Time.
(b) The Technology Systems (for a period of eighteen (18) months prior
to the Effective Time) have not suffered unplanned disruption causing a Material
Adverse Effect on the business of any of the Target Companies. Except for
ongoing payments due under relevant third party agreements, the Technology
Systems are free from any Liens. Except as Previously Disclosed, access to
business critical parts of the Technology Systems is not shared with any third
party.
(c) None of the Target Companies has received notice of or is aware of
any Material circumstances, including the execution of this Agreement, that
would enable any third party to terminate any of its agreements or arrangements
relating to the Technology Systems (including maintenance and support).
SECTION 4.27 OPINION OF FINANCIAL ADVISOR. Target has received the
-------------------------------
opinion of ▇▇▇▇ ▇▇▇▇▇▇ Investments, Inc. dated the date of this Agreement, to
the effect that the consideration to be received by the holders of Target Common
Stock pursuant hereto is fair, from a financial point of view, to such holders,
a signed copy of which has been delivered to Purchaser.
SECTION 4.28 BOARD RECOMMENDATION. The Board of Directors of Target,
---------------------
at a meeting duly called and held, has (i) determined that this Agreement and
the transactions contemplated hereby, including the Mergers, taken together, are
fair to and in the best interests of Target's shareholders and (ii) resolved to
recommend that the holders of the shares of Target Common Stock approve this
Agreement and the Company Merger.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser hereby represents and warrants to Target and Target Bank as
follows:
SECTION 5.1 ORGANIZATION, STANDING AND POWER. Each of
-----------------------------------
Purchaser and Purchaser Bank is a corporation duly organized, validly existing,
and in good standing under the Laws of the State of Georgia, and Purchaser is
duly registered as a bank holding company under the BHC Act. Each of Purchaser
and Purchaser Bank has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Assets. Each of
Purchaser and Purchaser Bank is duly qualified or licensed to transact business
as a foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Purchaser.
-22-
SECTION 5.2 AUTHORITY; NO BREACH.
----------------------
(a) Each of Purchaser and Purchaser Bank has the corporate power and
authority necessary to execute, deliver and perform its obligations under this
Agreement and the Bank Merger Agreement and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of
this Agreement and the Bank Merger Agreement and the consummation of the
transactions contemplated herein and therein, including the Mergers, have been
duly and validly authorized by all necessary corporate action in respect thereof
on the part of Purchaser and Purchaser Bank. This Agreement and the Bank Merger
Agreement represent legal, valid and binding obligations of Purchaser and
Purchaser Bank, as the case may be, enforceable against them in accordance with
their respective terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) With respect to each of Purchaser and Purchaser Bank, neither the
execution and delivery of this Agreement or the Bank Merger Agreement, nor the
consummation of the transactions contemplated hereby or thereby, nor compliance
with any of the provisions hereof or thereof, will (i) conflict with or result
in a breach of any provision of its Articles of Incorporation or By-Laws, or
(ii) constitute or result in a Default or loss of benefit under, or require any
Consent pursuant to, or result in the creation of any Lien on any Asset of any
Purchaser Company under, any Contract or Permit of any Purchaser Company, where
such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Purchaser, or (iii) subject to receipt of the requisite approvals referred to in
Section 8.1(b) of this Agreement, violate any Law or Order applicable to any
Purchaser Company or any of its Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate Laws and rules of the NASD, and
other than Consents required from Regulatory Authorities, and other than notices
to or filings with the IRS or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, and other than Consents, filings or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Purchaser, no
notice to, filing with, or Consent of, any public body or authority is necessary
for the consummation by Purchaser or Purchaser Bank of the Mergers and the other
transactions contemplated in this Agreement.
SECTION 5.3 CAPITAL STOCK.
--------------
(a) The authorized capital stock of Purchaser consists of (i)
30,000,000 shares of Purchaser Common Stock, of which 13,033,445 shares were
issued and outstanding as of July 31, 2006, and (ii) 5,000,000 shares of
Preferred Stock, none of which are issued or outstanding as of the date of this
Agreement. All of the issued and outstanding shares of Purchaser Common Stock
and all of the issued and outstanding shares of capital stock of Purchaser Bank
are, and all of the shares of Purchaser Common Stock to be issued in exchange
for shares of Target Common
-23-
Stock upon consummation of the Company Merger, when issued in accordance with
the terms of this Agreement, will be, duly and validly issued and outstanding
and fully paid and nonassessable under the GBCC. None of the outstanding shares
of Purchaser Common Stock has been, and none of the shares of Purchaser Common
Stock to be issued in exchange for shares of Target Common Stock upon
consummation of the Company Merger will be, issued in violation of any
preemptive rights of the current or past shareholders of Purchaser. Options to
purchase 502,088 shares of Purchaser Common Stock under the Purchaser Stock
Plans were outstanding as of July 31, 2006. Purchaser owns all of the issued
and outstanding shares of capital stock of Purchaser Bank free and clear of all
Liens.
(b) Except as set forth in Section 5.3(a) of this Agreement or as
Previously Disclosed, there are no shares of capital stock or other equity
securities of Purchaser outstanding and no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of Purchaser or contracts, commitments,
understandings or arrangements by which Purchaser is or may be bound to issue
additional shares of its capital stock or options, warrants or rights to
purchase or acquire any additional shares of its capital stock.
SECTION 5.4 PURCHASER SUBSIDIARIES. The Purchaser Subsidiaries are as
----------------------
set forth in Purchaser's SEC Documents. Purchaser owns all of the issued and
outstanding shares of capital stock of each Purchaser Subsidiary. No equity
securities of any Purchaser Subsidiary are or may become required to be issued
(other than to a Purchaser Company) by reason of any options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of any such Subsidiary, and there are no Contracts
by which any Purchaser Subsidiary is bound to issue (other than to a Purchaser
Company) additional shares of its capital stock or options, warrants or rights
to purchase or acquire any additional shares of its capital stock or by which
any Purchaser Company is or may be bound to transfer any shares of the capital
stock of any Purchaser Subsidiary (other than to a Purchaser Company). There
are no Contracts relating to the rights of any Purchaser Company to vote or to
dispose of any shares of the capital stock of any Purchaser Subsidiary. All of
the shares of capital stock of each Purchaser Subsidiary held by a Purchaser
Company are fully paid and nonassessable under the applicable corporation Law of
the jurisdiction in which such Subsidiary is incorporated or organized and are
owned by the Purchaser Company free and clear of any Lien. Each Purchaser
Subsidiary is either a bank or a corporation, and is duly organized, validly
existing, and (as to corporations) in good standing under the Laws of the
jurisdiction in which it is incorporated or organized, and has the corporate
power and authority necessary for it to own, lease and operate its Assets and to
carry on its business as now conducted. Each Purchaser Subsidiary is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Purchaser. Each Purchaser
Subsidiary that is a depository institution is an insured institution as defined
in the Federal Deposit Insurance Act and applicable regulations thereunder.
-24-
SECTION 5.5 FINANCIAL STATEMENTS.
---------------------
(a) Purchaser has timely filed all Purchaser Financial Statements with
the SEC, and Purchaser will deliver to Target copies of all financial
statements, audited and unaudited, of Purchaser prepared subsequent to the date
hereof. The Purchaser Financial Statements (as of the dates thereof and for the
periods covered thereby) (a) are or, if dated after the date of this Agreement,
will be in accordance with the books and records of the Purchaser Companies,
which are or will be, as the case may be, complete and correct and which have
been or will have been, as the case may be, maintained in accordance with good
business practices, and (b) present or will present, as the case may be, fairly
the consolidated financial position of the Purchaser Companies as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows of the Purchaser Companies for the periods indicated, in
accordance with GAAP (subject to exceptions as to consistency specified therein
or as may be indicated in the notes thereto or, in the case of interim financial
statements, to normal recurring year-end adjustments that are not Material). To
the Knowledge of Purchaser, (i) the Purchaser Financial Statements do not
contain any untrue statement of a Material fact or omit to state a Material fact
necessary to make the Purchaser Financial Statements not misleading with respect
to the periods covered by them; and (ii) the Purchaser Financial Statements
fairly present, in all Material respects, the financial condition, results of
operations and cash flows of Purchaser as of and for the periods covered by
them.
(b) Purchaser's external auditor is and has been throughout the periods
covered by the Purchaser Financial Statements (i) "independent" with respect to
Purchaser within the meaning of Regulation S-X under the 1933 Act and (ii) in
compliance with subsections (g) through (l) of Section 10A of the 1934 Act and
the related rules of the SEC and the Public Company Accounting Oversight Board.
Except as Previously Disclosed, Purchaser's auditors have not performed any
non-audit services for Purchaser since January 1, 2004.
SECTION 5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Purchaser Company
-----------------------------------
has any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Purchaser, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Purchaser as
of June 30, 2006 included in the Purchaser Financial Statements or reflected in
the notes thereto. No Purchaser Company has incurred or paid any Liability
since June 30, 2006, except for such Liabilities incurred or paid in the
ordinary course of business consistent with past business practice and which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Purchaser.
SECTION 5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as Previously
------------------------------------
Disclosed, since June 30, 2006, (a) there have been no events, changes or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Purchaser, (b) the Purchaser
Companies have not taken any action, or failed to take any action, prior to the
date of this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a Material breach or violation of any of
the covenants and agreements of Purchaser provided in Article 7 of this
Agreement, and (c) each Purchaser Company has conducted its business in the
ordinary and usual course (excluding the incurrence of expenses in connection
with this Agreement and the transactions contemplated hereby).
-25-
SECTION 5.8 TAX MATTERS.
------------
(a) All Tax returns required to be filed by or on behalf of any of the
Purchaser Companies have been timely filed or requests for extensions have been
timely filed, granted and have not expired for periods ended on or before June
30, 2006, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on Purchaser, and all returns filed are complete and accurate to
the Knowledge of Purchaser. All Taxes shown on filed returns have been paid.
As of the date of this Agreement, there is no audit examination, deficiency or
refund Litigation with respect to any Taxes that is reasonably likely to result
in a determination that would have, individually or in the aggregate, a Material
Adverse Effect on Purchaser, except as reserved against in the Purchaser
Financial Statements delivered prior to the date of this Agreement. All Taxes
and other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid.
(b) None of the Purchaser Companies has executed an extension or waiver
of any statute of limitations on the assessment or collection of any Tax due
that is currently in effect, and no unpaid tax deficiency has been asserted in
writing against or with respect to any Purchaser Company, which deficiency is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Purchaser.
(c) Adequate provision for any Taxes due or to become due for any of
the Purchaser Companies for the period or periods through and including the date
of the respective Purchaser Financial Statements has been made and is reflected
on such Purchaser Financial Statements.
(d) Deferred Taxes of the Purchaser Companies have been provided for in
accordance with GAAP.
SECTION 5.9 PURCHASER ALLOWANCE FOR POSSIBLE LOAN LOSSES. The
-------------------------------------------------
allowance for possible loan or credit losses (the "Purchaser Allowance") shown
on the consolidated balance sheets of Purchaser included in the most recent
Purchaser Financial Statements dated prior to the date of this Agreement was,
and the Purchaser Allowance shown on the consolidated balance sheets of
Purchaser included in the financial statements of Purchaser as of dates
subsequent to the execution of this Agreement will be, as of the dates thereof,
adequate (within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for losses relating to or inherent in the loan and lease
portfolios (including accrued interest receivables) of the Purchaser Companies
and other extensions of credit (including letters of credit and commitments to
make loans or extend credit) by the Purchaser Companies as of the dates thereof,
except where the failure of such Purchaser Allowance to be so adequate is not
reasonably likely to have a Material Adverse Effect on Purchaser.
SECTION 5.10 ASSETS. Except as Previously Disclosed or as disclosed or
------
reserved against in the Purchaser Financial Statements, the Purchaser Companies
have good and marketable title, free and clear of all Liens, to all of their
respective Assets. All Material tangible properties used in the businesses of
the Purchaser Companies are in good condition, reasonable
-26-
wear and tear excepted, and are usable in the ordinary course of business
consistent with Purchaser's past practices. All Assets which are Material to
Purchaser's business on a consolidated basis, held under leases or subleases by
any of the Purchaser Companies, are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. The
policies of fire, theft, liability and other insurance maintained with respect
to the Assets or businesses of the Purchaser Companies provide adequate coverage
under current industry practices against loss or Liability, and the fidelity and
blanket bonds in effect as to which any of the Purchaser Companies is a named
insured are reasonably sufficient. No Purchaser Company has received notice
from any insurance carrier that (i) such insurance will be cancelled or that
coverage thereunder will be reduced or eliminated or (ii) premium costs with
respect to such policies of insurance will be substantially increased. The
Assets of the Purchaser Companies include all assets required to operate the
businesses of the Purchaser Companies as presently conducted.
SECTION 5.11 ENVIRONMENTAL MATTERS.
----------------------
(a) Each Purchaser Company, its Participation Facilities and, to the
Knowledge of such Purchaser Company, its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Purchaser.
(b) There is no Litigation pending or, to the Knowledge of Purchaser,
threatened before any court, governmental agency or authority or other forum in
which any Purchaser Company or any of its Participation Facilities has been or,
with respect to threatened Litigation, may be named as a defendant (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release into the environment of any Hazardous Material
or oil, whether or not occurring at, on, under or involving a site owned, leased
or operated by any Purchaser Company or any of its Participation Facilities,
except for such Litigation pending or, to the Knowledge of Purchaser, threatened
that is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Purchaser.
(c) There is no Litigation pending or, to the Knowledge of Purchaser,
threatened before any court, governmental agency or board or other forum in
which any of its Loan Properties (or any Purchaser Company in respect of such
Loan Property) has been or, with respect to threatened Litigation, may be named
as a defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor), with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material or oil, whether or
not occurring at, on, under or involving a Loan Property, except for such
Litigation pending or, to the Knowledge of Purchaser, threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Purchaser.
-27-
(d) To the Knowledge of Purchaser, there is no reasonable basis for any
Litigation of a type described in subsections (b) or (c) above, except such as
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Purchaser.
(e) To the Knowledge of Purchaser, during the period of (i) any
Purchaser Company's ownership or operation of any Loan Property, (ii) any
Purchaser Company's participation in the management of any Participation
Facility, or (iii) any Purchaser Company's holding of a security interest in a
Loan Property, there has been no release of Hazardous Material or oil in, on,
under or affecting such property, Participation Facility or Loan Property, the
release or presence of which could reasonably be expected to result in any
reporting, clean up or remedial obligation pursuant to any Environmental Law,
except such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Purchaser.
(f) Prior to the period of (i) any Purchaser Company's ownership or
operation of any Loan Property, (ii) any Purchaser Company's participation in
the management of any Participation Facility, or (iii) any Purchaser Company's
holding of a security interest in a Loan Property, to the Knowledge of
Purchaser, there has been no release of any Hazardous Material or oil in, on,
under or affecting any such Participation Facility or Loan Property, the release
or presence of which could reasonably be expected to result in any reporting,
clean up or remedial obligation pursuant to any Environmental Law, except such
as are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Purchaser.
SECTION 5.12 COMPLIANCE WITH LAWS.
----------------------
(a) Each Purchaser Company has in effect all Permits necessary for it
to own, lease or operate its Assets and to carry on its business as now
conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Purchaser, and there has occurred no Default under any such Permit, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Purchaser.
(b) Except as Previously Disclosed, no Purchaser Company:
(i) is in violation of any Laws, Orders or Permits applicable to
its business or employees conducting its business, including the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the USA Patriot Act of 2001, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Purchaser; and
(iii) has received any notification or communication from any
agency or department of federal, state or local government or any
Regulatory Authority or the staff thereof (A) asserting that any Purchaser
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Purchaser, (B) threatening to
revoke any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Purchaser,
or (C) requiring any Purchaser Company to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
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commitment or memorandum of understanding, or to adopt any Board
resolution or similar undertaking, which restricts Materially the conduct
of its business, or in any manner relates to its capital adequacy, its
credit or reserve policies, its management, or the payment of dividends.
(c) Except as is not reasonably likely to have, either individually or
in the aggregate, a Material Adverse Effect on Purchaser, each Purchaser Company
has properly administered all accounts for which it acts as a fiduciary,
including accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents thereof and all applicable Law. No
Purchaser Company, or any director, officer or employee of any Purchaser
Company, has committed any breach of trust or fiduciary duty with respect to any
such fiduciary account that is reasonably likely to have, either individually or
in the aggregate, a Material Adverse Effect on Purchaser, and, except as would
not be reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect on Purchaser, the accountings for each such fiduciary
account are true and correct and accurately reflect the assets of such fiduciary
account.
(d) The records, systems, controls, data and information of Purchaser
and the Purchaser Subsidiaries are recorded, stored, maintained and operated
under means (including any electronic, mechanical or photographic process,
whether computerized or not) that are under the exclusive ownership and direct
control of Purchaser and its Subsidiaries or accountants (including all means of
access thereto and therefrom), except for any non-exclusive ownership and
non-direct control that would not reasonably be expected to have a Material
Adverse Effect on the system of internal accounting controls described in the
immediately following sentence. Purchaser and the Purchaser Subsidiaries have
devised and maintain a system of internal accounting controls sufficient to
provide reasonable assurances regarding the reliability of financial reporting
and the preparation of financial statements in accordance with GAAP. Purchaser
(i) has designed disclosure controls and procedures to ensure that Material
information relating to Purchaser, including the Purchaser Subsidiaries, is made
known to the management of Purchaser by others within those entities and (ii)
has disclosed, based on its most recent evaluation prior to the date hereof, to
Purchaser's auditors and the audit committee of its Board of Directors (A) any
significant deficiencies or material weaknesses in the design or operation of
internal controls which are reasonably likely to adversely affect in any
Material respect its ability to record, process, summarize and report financial
data and (B) any fraud, whether or not Material, that involves management or
other employees who have a significant role in its internal controls. Purchaser
has made available to Target a summary of any such disclosure made by management
to Purchaser's auditors and audit committee since January 1, 2004.
SECTION 5.13 LABOR RELATIONS. No Purchaser Company is the subject of
----------------
any Litigation asserting that it or any other Purchaser Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state Law) or seeking to compel it or any other Purchaser Company to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any Purchaser Company,
pending or, to its Knowledge, threatened, nor, to its Knowledge, is there any
activity involving any Purchaser Company's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
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SECTION 5.14 EMPLOYEE BENEFIT PLANS.
----------------------
(a) For purposes of this Agreement, "Purchaser Benefit Plans" means all
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus or other incentive
plans, all other written employee programs, arrangements or agreements, all
medical, vision, dental or other health plans, all life insurance plans, and all
other employee benefit plans or fringe benefit plans, including "employee
benefit plans," as that term is defined in Section 3(3) of ERISA, currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
any Purchaser Company or Affiliate thereof for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries are eligible to
participate. Any of the Purchaser Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Purchaser ERISA Plan." Each Purchaser ERISA Plan which is also a
"defined benefit plan" (as defined in Section 414(j)) of the Internal Revenue
Code) is referred to herein as a "Purchaser Pension Plan." No Purchaser Pension
Plan is or has been a multi-employer plan within the meaning of Section 3(37) of
ERISA. The Purchaser Companies do not participate in either a multi-employer
plan or a multiple employer plan.
(b) All Purchaser Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code and any other applicable Laws, the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Purchaser. Each Purchaser Benefit
Plan which is intended to be qualified under Section 401(a) of the Internal
Revenue Code has received a favorable determination letter from the IRS or may
rely upon an opinion issued by the IRS to a prototype sponsor, and neither
Purchaser nor any Purchaser Company is aware of any circumstances reasonably
likely to result in revocation of any such favorable determination letter or
failure of any Purchaser Benefit Plan intended to satisfy Internal Revenue Code
Section 401 to satisfy the Tax qualification provisions of the Internal Revenue
Code applicable thereto. No Purchaser Company has engaged in a transaction with
respect to any Purchaser Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject any Purchaser Company
to a tax or penalty imposed by either Section 4975 of the Internal Revenue Code
or Section 502(i) of ERISA in amounts which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Purchaser or any
Purchaser Company.
(c) No Purchaser Pension Plan has any "unfunded current liability," as
that term is defined in Section 302(d)(8)(A) of ERISA, based on actuarial
assumptions set forth for such plan's most recent actuarial valuation, and the
fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities", as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since the date of the most
recent actuarial valuation, there has been (i) no Material change in the
financial position of any Purchaser Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Purchaser Pension Plan, and (iii) no
increase in benefits under any Purchaser Pension Plan as a result of plan
amendments or changes in applicable Law, which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Purchaser or
Materially adversely affect the funding status of any such plan.
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Neither any Purchaser Pension Plan nor any "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
Purchaser Company, or the single-employer plan of any ERISA Affiliate, has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA, which is reasonably likely to
have a Material Adverse Effect on Purchaser. No Purchaser Company has provided,
or is required to provide, security to a Purchaser Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Internal Revenue Code. All premiums required to be paid under ERISA Section
4006 have been timely paid by all Purchaser Companies except to the extent any
failure to do so would not have a Materially Adverse Effect on Purchaser.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by any Purchaser Company with respect to any ongoing, frozen or
terminated single-employer plan or the single--employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Material Adverse
Effect on Purchaser. Except as Previously Disclosed, no Purchaser Company has
incurred any withdrawal Liability with respect to a multi-employer plan under
Subtitle B of Title IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate), which Liability is reasonably likely to have a Material
Adverse Effect on Purchaser. No notice of a "reportable event," within the
meaning of Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any Purchaser Pension Plan or
by any ERISA Affiliate within the 12-month period ending on the date hereof.
(e) Except as required under Title I, Part 6 of ERISA and Internal
Revenue Code Section 4980B, no Purchaser Company has any obligations for retiree
health and life benefits under any of the Purchaser Benefit Plans and there are
no restrictions on the rights of such Purchaser Company to amend or terminate
any such Plan without incurring any Liability thereunder, which Liability is
reasonably likely to have a Material Adverse Effect on Purchaser.
(f) Except as Previously Disclosed, neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any payment (including severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director or any employee of
any Purchaser Company from any Purchaser Company under any Purchaser Benefit
Plan or otherwise, (ii) increase any benefits otherwise payable under any
Purchaser Benefit Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefit, where such payment, increase or
acceleration is reasonably likely to have a Material Adverse Effect on
Purchaser.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement or employment agreement) of employees and former
employees of any Purchaser Company and its beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the Purchaser Financial Statements to the extent
required by and in accordance with GAAP.
-31-
SECTION 5.15 LEGAL PROCEEDINGS. Except as Previously Disclosed, there
-----------------
is no Litigation instituted or pending or, to the Knowledge of Purchaser,
threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable outcome)
against any Purchaser Company, or against any Asset, interest, or right of any
of them, that is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Purchaser, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Purchaser Company, that are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Purchaser.
SECTION 5.16 REPORTS. Except as Previously Disclosed, since January 1,
-------
2004, each Purchaser Company has timely filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with the SEC, other Regulatory
Authorities, and any applicable state securities or banking authorities and has
paid all fees and assessments due and payable in connection therewith, except
where the failure to so file such report, registration or statement or to pay
any such fee or assessment is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Purchaser. As of their respective
dates, each of such reports, registrations and statements, including the
financial statements, exhibits, and schedules thereto, complied in all Material
respects with all applicable Laws. As of their respective dates, none of such
reports, registrations or statements contained any untrue statement of a
Material fact or omitted to state a Material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
SECTION 5.17 STATEMENTS TRUE AND CORRECT. No statement, certificate,
----------------------------
instrument or other writing furnished or to be furnished by any Purchaser
Company or any Affiliate thereof to Target pursuant to this Agreement or any
other document, agreement or instrument referred to herein contains or will
contain any untrue statement of Material fact or will omit to state a Material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the information supplied or
to be supplied by any Purchaser Company or any Affiliate thereof for inclusion
in the Registration Statement to be filed by Purchaser with the SEC, will, when
the Registration Statement becomes effective, be false or misleading with
respect to any Material fact, or omit to state any Material fact necessary to
make the statements therein not misleading. None of the information supplied or
to be supplied by any Purchaser Company or any Affiliate thereof for inclusion
in the Proxy Statement to be mailed to Target's shareholders in connection with
the Shareholders' Meeting, and any other documents to be filed by any Purchaser
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of Target, be false or misleading with respect
to any Material fact, or omit to state any Material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any Material fact, or omit to state any Material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All
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documents that any Purchaser Company or any Affiliate thereof is responsible for
filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all Material respects with the
provisions of applicable Law.
SECTION 5.18 TAX AND REGULATORY MATTERS. No Purchaser Company or any
---------------------------
Affiliate thereof has taken any action, or has any Knowledge of any fact or
circumstance that is reasonably likely, to (a) prevent the transactions
contemplated hereby, including the Company Merger, from qualifying as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (b) Materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 8.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the second
sentence of such Section. To the Knowledge of Purchaser, there exists no fact,
circumstance or reason why the requisite Consents referred to in Section 8.1(b)
of this Agreement cannot be received in a timely manner without the imposition
of any condition or restriction of the type described in the second sentence of
such Section 8.1(b).
SECTION 5.19 CHARTER PROVISIONS. Each Purchaser Company has taken all
------------------
action so that the entering into of this Agreement and the consummation of the
Mergers and the other transactions contemplated by this Agreement do not and
will not result in the grant of any rights to any Person under its Articles of
Incorporation or By-Laws or other governing instruments or restrict or impair
the ability of any Target shareholder to vote, or otherwise to exercise the
rights of a shareholder with respect to, shares of Purchaser Common Stock that
may be acquired or controlled by such shareholder.
SECTION 5.20 COMMUNITY REINVESTMENT ACT. Purchaser has complied in all
--------------------------
Material respects with the provisions of the CRA and the rules and regulations
thereunder, has a CRA rating of not less than "satisfactory," and has received
no Material criticism from regulators with respect to discriminatory lending
practices, and has no Knowledge of any conditions or circumstances that are
likely to result in CRA ratings of less than "satisfactory" or Material
criticism from regulators with respect to discriminatory lending practices.
ARTICLE 6.
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
SECTION 6.1 AFFIRMATIVE COVENANTS OF TARGET. Unless the prior written
-------------------------------
consent of Purchaser shall have been obtained, and except as otherwise
contemplated herein, Target shall and shall cause Target Bank to: (a) operate
its business in the usual, regular, and ordinary course; (b) preserve intact its
business organization and Assets and maintain its rights and franchises; (c) use
its reasonable efforts to cause its representations and warranties set forth in
this Agreement to be correct at all times; and (d) take no action which would
(i) adversely affect the ability of any Party to obtain any Consents required
for the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the second sentence of Section 8.1(b) of
this Agreement or (ii) adversely affect in any Material respect the ability of
either Party to perform its covenants and agreements under this Agreement.
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SECTION 6.2 NEGATIVE COVENANTS OF TARGET. From the date of this
--------------------------------
Agreement until the earlier of the Effective Time or the termination of this
Agreement, Target covenants and agrees that it will not do or agree or commit to
do, or permit any of its Subsidiaries to do or agree or commit to do, any of the
following without the prior written consent of the chief executive officer or
chief financial officer of Purchaser, which consent shall not be unreasonably
withheld or delayed:
(a) amend the Articles of Incorporation or Association, By-Laws or
other governing instruments of any Target Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Target Company to another Target
Company) (for the Target Companies on a consolidated basis) except in the
ordinary course of the business of Target Companies consistent with past
practices (which shall include, for Target Subsidiaries that are depository
institutions, creation of deposit liabilities, purchases of federal funds,
receipt of Federal Home Loan Bank advances, and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any share of stock of any Target Company of any Lien or permit
any such Lien to exist; or
(c) repurchase, redeem or otherwise acquire or exchange (other than
redemptions without the payment of any additional consideration or exchanges in
the ordinary course under employee benefit plans or exercises or conversions
prior to the Effective Time of Target Options or Target Warrants pursuant to the
terms thereof), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of any Target Company, or
declare or pay any dividend or make any other distribution in respect of
Target's capital stock; or
(d) except for this Agreement or pursuant to another agreement with a
Purchaser Company, or pursuant to the exercise of Target Options or Target
Warrants outstanding as of the date hereof and pursuant to the terms thereof in
existence on the date hereof, or as Previously Disclosed, issue, sell, pledge,
encumber, authorize the issuance of or enter into any Contract to issue, sell,
pledge, encumber or authorize the issuance of or otherwise permit to become
outstanding, any additional shares of Target Common Stock or any other capital
stock of any Target Company, or any stock appreciation rights, or any option,
warrant, conversion or other right to acquire any such stock, or any security
convertible into any such stock; or
(e) adjust, split, combine or reclassify any capital stock of any
Target Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Target Common Stock or sell, lease,
mortgage or otherwise dispose of or otherwise encumber (i) any shares of capital
stock of any Target Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another Target Company) or (ii) any Asset having a book
value in excess of $50,000 other than in the ordinary course of business for
reasonable and adequate consideration; or
(f) acquire another business or merge or consolidate with another
entity or acquire direct or indirect control over any Person, other than in
connection with (i) internal reorganizations or consolidations involving
existing Subsidiaries, (ii) foreclosures in the ordinary
-34-
course of business, or (iii) acquisitions of control by a depository institution
Subsidiary in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees or
officers of any Target Company (including such discretionary increases as may be
contemplated by existing employment agreements), except in accordance with past
practice Previously Disclosed or as required by Law; pay any bonus except to
employees in accordance with past practice Previously Disclosed or the
provisions of any applicable program or plan adopted by its Board of Directors
prior to the date of this Agreement; enter into or amend any severance
agreements with officers of any Target Company; or pay any bonus to, or grant
any increase in fees or other increases in compensation or other benefits to,
directors of any Target Company; or
(h) enter into or amend any employment Contract between any Target
Company and any Person (unless such amendment is required by Law) that the
Target Company does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time on
or after the Effective Time; or
(i) adopt any new employee benefit plan of any Target Company or make
any Material change in or to any existing employee benefit plans of any Target
Company other than any such change that is required by Law or that, in the
opinion of counsel, is necessary or advisable to maintain the tax qualified
status of any such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to conform
to changes in regulatory accounting requirements or GAAP; or
(k) fail to maintain its books, accounts and records in the usual
manner on a basis consistent with that heretofore employed; or
(l) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any Target Company
for money damages in excess of $25,000 or which involves Material restrictions
upon the operations of any Target Company; or
(m) enter into any new line of banking or nonbanking business in which
it is not actively engaged as of the date of this Agreement; or
(n) (i) charge off (except as may otherwise be required by Law or by
regulatory authorities or by GAAP consistently applied) or sell (except in the
ordinary course of business consistent with past practices or as the Board of
Directors of the respective Target Company deems necessary to conduct safe and
sound banking practices) any of its portfolio of loans, discounts or financing
leases, or (ii) sell any asset held as other real estate or other foreclosed
assets for an amount Materially less than 100% of its book value; or
(o) except in the ordinary course of business, modify, amend or
terminate any Material Contract or waive, release, compromise or assign any
Material rights or claims; or
(p) make any Material election with respect to Taxes; or
-35-
(q) except for purchases of U.S. Treasury securities or U.S. Government
agency securities, which in either case have maturities of five (5) years or
less, (i) purchase any securities or make any Material investment, either by
purchase of stock or securities, contributions to capital, Asset transfers or
purchase of any assets, in any Person other than any Target Company, or (ii)
otherwise acquire direct or indirect control over any Person other than in
connection with (A) foreclosures in the ordinary course of business, (B)
acquisitions of control by a depository institution Subsidiary in its fiduciary
capacity, or (C) the creation of new, wholly-owned Subsidiaries organized to
conduct or continue activities otherwise permitted by this Agreement.
SECTION 6.3 AFFIRMATIVE COVENANTS OF PURCHASER. Unless the prior
-------------------------------------
written consent of Target shall have been obtained, and except as otherwise
contemplated herein, Purchaser shall and shall cause each Purchaser Subsidiary
to: (a) operate its business in the usual, regular, and ordinary course; (b)
preserve intact its business organization and Assets and maintain its rights and
franchises; (c) use its reasonable efforts to cause its representations and
warranties set forth in this Agreement to be correct at all times; and (d) take
no action which would (i) adversely affect the ability of any Party to obtain
any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the second
sentence of Section 8.1(b) of this Agreement or (ii) adversely affect in any
Material respect the ability of either Party to perform its covenants and
agreements under this Agreement.
SECTION 6.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give
------------------------------
written notice promptly to the other Party upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) is reasonably likely to cause
or constitute a Material breach of any of its representations, warranties or
covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
SECTION 6.5 REPORTING REQUIREMENTS. Each Party and its Subsidiaries
-----------------------
shall timely file all reports required to be filed by it with Regulatory
Authorities between the date of this Agreement and the Effective Time and shall
deliver to the other Party copies of all such reports promptly after the same
are filed. If financial statements are contained in any such reports filed with
the SEC, such financial statements will fairly present the consolidated
financial position of the entity filing such statements as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity and cash flows for the periods then ended in accordance with GAAP
(subject in the case of interim financial statements to normal recurring
year-end adjustments that are not Material). As of their respective dates, such
reports filed with the SEC will comply in all Material respects with the
Securities Laws and will not contain any untrue statement of a Material fact or
omit to state a Material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to another Regulatory Authority shall be prepared in accordance with
Laws applicable to such reports.
-36-
ARTICLE 7.
ADDITIONAL AGREEMENTS
---------------------
SECTION 7.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER
--------------------------------------------------------
APPROVAL. As soon as practicable after execution of this Agreement, Purchaser
--------
shall file the Registration Statement with the SEC, and shall use its best
efforts to cause the Registration Statement to become effective under the 1933
Act and take any action required to be taken under applicable Securities Laws in
connection with the issuance of the shares of Purchaser Common Stock upon
consummation of the Company Merger. Target shall furnish all information
concerning it and the holders of its capital stock as Purchaser may reasonably
request in connection with such action. Target shall call a Shareholders'
Meeting, to be held as soon as reasonably practicable after the Registration
Statement is declared effective by the SEC, for the purpose of voting upon
approval of this Agreement and the transactions contemplated hereby and such
other related matters as it deems appropriate. In connection with the
Shareholders' Meeting, (a) Purchaser shall prepare and file on Target's behalf a
Proxy Statement (which shall be included in the Registration Statement and which
shall include an explanation of the restrictions on resale with respect to the
shares of Purchaser Common Stock received by the holders of Target Common Stock
in the Company Merger) with the SEC and mail it to Target's shareholders, (b)
each of the Parties shall furnish to the other all information concerning it
that the other Party may reasonably request in connection with such Proxy
Statement, (c) the Board of Directors of Target shall unanimously recommend to
its shareholders (subject to compliance with their fiduciary duties as advised
by counsel) that they approve this Agreement and the transactions contemplated
hereby, and (d) the Board of Directors and officers of Target shall use their
best efforts to obtain such shareholders' approval. Target, as the sole
shareholder of Target Bank, shall take all action to effect shareholder approval
of the Bank Merger Agreement.
SECTION 7.2 LISTING. Purchaser shall use its best efforts to list,
-------
prior to the Effective Time, on the NASDAQ Global Select Market, the shares of
Purchaser Common Stock to be issued to the holders of Target Common Stock
pursuant to the Company Merger.
SECTION 7.3 APPLICATIONS. Purchaser shall promptly prepare and file,
------------
and Target shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.
SECTION 7.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to
--------------------------
the conditions of this Agreement, Purchaser shall execute and file the Georgia
Articles of Merger with the Secretary of State of the State of Georgia in
connection with the Closing.
SECTION 7.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the
-----------------------------------------
terms and conditions of this Agreement, each Party agrees to use, and to cause
its Subsidiaries to use, its commercially reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Laws, as promptly as practicable so as to
permit consummation of the Mergers at the earliest possible date and to
otherwise enable consummation of the transactions contemplated hereby and shall
cooperate
-37-
fully with the other Party hereto to that end (it being understood that any
amendments to the Registration Statement filed by Purchaser in connection with
the Purchaser Common Stock to be issued in the Company Merger or a
resolicitation of proxies as a consequence of an acquisition agreement by
Purchaser or any of its Subsidiaries shall not violate this covenant), including
using its efforts to lift or rescind any Order adversely affecting its ability
to consummate the transactions contemplated herein and to cause to be satisfied
the conditions referred to in Article 8 of this Agreement. Each Party shall
use, and shall cause each of its Subsidiaries to use, its commercially
reasonable efforts to obtain all Consents necessary or desirable for the
consummation of the transactions contemplated by this Agreement.
SECTION 7.6 INVESTIGATION AND CONFIDENTIALITY.
-----------------------------------
(a) Prior to the Effective Time, each Party will keep the other Party
advised of all Material developments relevant to its business and to the
consummation of the Mergers and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations.
(b) Except as may be required by applicable Law or legal process, and
except for such disclosure to those of its directors, officers, employees and
representatives as may be appropriate or required in connection with the
transactions contemplated hereby, each Party shall hold in confidence all
nonpublic information obtained from the other Party (including work papers and
other Material derived therefrom) as a result of this Agreement or in connection
with the transactions contemplated hereby (whether so obtained before or after
the execution hereof) until such time as the Party providing such information
consents to its disclosure or such information becomes otherwise publicly
available. Promptly following any termination of this Agreement, each of the
Parties agrees to use its best efforts to cause its respective directors,
officers, employees and representatives to destroy or return to the providing
party all such nonpublic information (including work papers and other material
retrieved therefrom), including all copies thereof. Each Party shall, and shall
cause its advisers and agents to, maintain the confidentiality of all
confidential information furnished to it by the other Party concerning its and
its Subsidiaries' businesses, operations and financial position and shall not
use such information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return all documents and copies
thereof and all work papers containing confidential information received from
the other Party.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a Material
breach of any representation, warranty, covenant or agreement of the other Party
or which has had or is reasonably likely to have a Material Adverse Effect on
the other Party.
-38-
(d) Neither any Party nor any Subsidiary of a Party shall be required
to provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of its customers, jeopardize the
attorney-client or similar privilege with respect to such information or
contravene any Law, rule, regulation, Order, judgment, decree, fiduciary duty or
agreement entered into prior to the date of this Agreement. The Parties will
use their reasonable efforts to make appropriate substitute disclosure
arrangements, to the extent practicable, in circumstances in which the
restrictions of the immediately preceding sentence apply.
(e) Notwithstanding subsection (b) of this Section 7.6 or any other
written or oral understanding or agreement to which the Parties are parties or
by which they are bound, the Parties acknowledge and agree that any obligations
of confidentiality contained herein and therein that relate to the tax treatment
and tax structure of the Mergers (and any related transaction or arrangements)
have not applied from the commencement of discussions between the Parties and
will not hereafter apply to the Parties; and each Party (and each of its
employees, representatives, or other agents) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the Mergers and all materials of any kind that are provided to such Party
relating to such tax treatment and tax structure, all within the meaning of
Treasury Regulation Section 1.6011-4; provided, however, that each Party
-------- -------
recognizes that each other Party has a right to maintain, in its sole
discretion, any privilege that would protect the confidentiality of a
communication relating to the Mergers, including a confidential communication
with its attorney or a confidential communication with a federally authorized
tax practitioner under Section 7525 of the Internal Revenue Code and that such
privilege is not intended to be affected by the foregoing. These principles are
meant to be interpreted so as to prevent the Mergers from being treated as
offered under "conditions of confidentiality" within the meaning of the Treasury
Regulations promulgated under Internal Revenue Code Sections 6011 and
6111(d)(2).
SECTION 7.7 PRESS RELEASES. Prior to the Effective Time, Target and
---------------
Purchaser shall consult with each other as to the form and substance of any
press release or other public disclosure Materially related to this Agreement or
any transaction contemplated hereby; provided, however, that nothing in this
-------- -------
Section 7.7 shall be deemed to prohibit any Party from making any disclosure
which its counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
SECTION 7.8 NO SOLICITATION.
----------------
(a) Target shall not, nor shall it permit any of its Subsidiaries to,
nor shall it authorize or permit any officer, director of employee of, or any
investment banker, attorney or other advisor or representative of, Target or any
of its Subsidiaries to, (i) solicit or initiate, or encourage the submission of,
any Takeover Proposal or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal;
provided, however, that, subject to compliance with subsection (c) below and
-------- -------
after having consulted with independent outside legal counsel and having
determined, in good faith, that the failure to do so would likely constitute a
breach by the Target Board of Directors of its fiduciary duties to Target
shareholders under applicable Law, Target may, in response to an unsolicited
Takeover Proposal that (i) was not
-39-
received in violation of this Section 7.8, (ii) is not subject to financing and
(iii) the Target Board of Directors determines in good faith, after consultation
with a financial advisor of nationally recognized reputation to such effect,
would result in a transaction more favorable to Target shareholders than the
Company Merger, (A) furnish information with respect to Target to any Person
pursuant to a confidentiality agreement and (B) participate in negotiations
regarding such Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the immediately
preceding sentence by any executive officer of Target or any of its Subsidiaries
or any investment banker, attorney or other advisor or representative of Target
or any of its Subsidiaries, whether or not such person is purporting to act on
behalf of Target or any of its Subsidiaries or otherwise, shall be deemed to be
a breach of this Section 7.8 by Target. For purposes of this Agreement,
"Takeover Proposal" means an inquiry, proposal or acquisition or purchase of a
substantial amount of assets of Target or any of its Subsidiaries (other than
investors in the ordinary course of business) or of over 15% of any class of
equity securities of Target or any of its Subsidiaries or any tender offer or
exchange offer that, if consummated, would result in any Person beneficially
owning 15% or more of any class of equity securities of Target or any of its
Subsidiaries, or any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution or similar
transaction involving Target or any of its Subsidiaries other than the
transactions contemplated by this Agreement, or any other transaction the
consummation of which would reasonably be expected to impede, interfere with,
prevent or Materially delay the Mergers or which would reasonably be expected to
dilute Materially the benefits to Purchaser of the transactions contemplated
hereby.
(b) Except as set forth herein, neither the Board of Directors of
Target nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Purchaser, the approval or
recommendation of such Board of Directors or any such committee of this
Agreement or the Mergers, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (iii) enter into any agreement with respect
to any Takeover Proposal. Notwithstanding the foregoing, if, after consultation
with independent outside legal counsel and its financial advisors, the Board of
Directors determines, in good faith, that failure to do so would likely
constitute a breach of its fiduciary duties to Target shareholders under
applicable Law, then, prior to the Shareholders' Meeting, the Target Board of
Directors may (subject to the terms of this and the following sentences) approve
or recommend (and, in connection therewith, withdraw or modify its approval or
recommendation of this Agreement or the Mergers) a Superior Proposal, or enter
into an agreement with respect to a Superior Proposal, in each case at any time
after the second Business Day following Purchaser's receipt of written notice (a
"Notice of Superior Proposal") advising Purchaser that the Target Board of
Directors has received a Superior Proposal, specifying the Material terms and
conditions of such Superior Proposal and identifying the Person making such
Superior Proposal; provided that Target shall not enter into an agreement with
--------
respect to a Superior Proposal unless Target shall have furnished Purchaser with
written notice no later than 12:00 noon one (1) day in advance of any date that
it intends to enter into such agreement. For purposes of this Agreement, a
"Superior Proposal" means any bona fide proposal (not subject to financing) to
acquire, directly or indirectly, for consideration consisting of cash or
securities, more than 50% of the shares of Target Common Stock or of the common
stock of either Target Bank then outstanding or all or substantially all of the
assets of Target or of either Target Bank and otherwise on terms that the
-40-
Target Board of Directors determines in its good faith judgment (after
consultation with a financial advisor of nationally recognized reputation) to be
more favorable to Target shareholders than the Company Merger.
(c) In addition to the obligations of Target set forth in subsection
(b) above, Target shall immediately advise Purchaser orally and in writing of
any request for information or of any Takeover Proposal, or any inquiry with
respect to or which could lead to any Takeover Proposal, the Material terms and
conditions of such request, Takeover Proposal or inquiry, and the identity of
the person making any Takeover Proposal or inquiry. Target shall keep Purchaser
fully informed of the status and details (including amendments or proposed
amendments) of any such request, Takeover Proposal or inquiry.
(d) Nothing contained in this Section 7.8 shall prohibit Target from
making any disclosure to Target's shareholders if the Target Board of Directors
determines in good faith, after receipt of the written advice of outside counsel
to such effect, that it is required to do so in order to discharge properly its
fiduciary duties to shareholders under applicable Law; provided that Target does
--------
not, except as permitted by subsection (b) above, withdraw or modify, or propose
to withdraw or modify, its position with respect to the Mergers or approve or
recommend, or propose to approve or recommend, a Takeover Proposal.
SECTION 7.9 TAX TREATMENT. Each of the Parties undertakes and agrees
--------------
to use its reasonable efforts to cause the Company Merger to, and to take no
action which would cause the Company Merger not to, qualify for treatment as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code for federal income tax purposes.
SECTION 7.10 AGREEMENT OF AFFILIATES. Target has Previously Disclosed
-----------------------
all Persons whom it reasonably believes are "affiliates" of Target for purposes
of Rule 145 under the 1933 Act. Target shall use its best efforts to cause each
such Person to deliver to Purchaser not later than thirty (30) days after the
date of this Agreement, a written agreement, substantially in the form of
Exhibit 7.10 hereto, providing that such Person will not sell, pledge, transfer
-------------
or otherwise dispose of the shares of Target Common Stock held by such Person
except as contemplated by such agreement and will not sell, pledge, transfer or
otherwise dispose of the shares of Purchaser Common Stock to be received by such
Person upon consummation of the Company Merger except in compliance with
applicable provisions of the 1933 Act and the rules and regulations thereunder.
Regardless of whether each such affiliate has provided the written agreement
referred to in this Section, Purchaser shall be entitled to place restrictive
legends upon certificates for shares of Purchaser Common Stock issued to
affiliates of Target pursuant to this Agreement to enforce the provisions of
this Section.
SECTION 7.11 EMPLOYEE BENEFITS AND CONTRACTS. Target will terminate
---------------------------------
the Target Benefit Plans as of the Effective Time, other than the Contract of
Employment between Target and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated November 17, 2005, which
Purchaser Bank shall assume as of the Effective Time. Following the Effective
Time, Purchaser shall provide generally to officers and employees of the Target
Companies, who at or after the Effective Time become employees of a Purchaser
Company (collectively, "New Purchaser Employees"), benefits under the employee
benefit plans of Purchaser on terms and conditions which, when taken as a whole,
are
-41-
substantially similar to those currently provided by the Purchaser Companies to
their similarly situated officers and employees. For purposes of participation,
vesting and benefit accrual under all employee plans of the Purchaser Companies,
the service of the employees of the Target Companies prior to the Effective Time
shall be treated as service with a Purchaser Company participating in such
employee benefit plans. Purchaser also shall credit New Purchaser Employees for
amounts paid under Target Benefit Plans for the plan year for purposes of
applying deductibles, co-payments and out-of-pocket maximums under the employee
benefit plans of Purchaser.
SECTION 7.12 LARGE DEPOSITS. Prior to the Closing, Target will provide
--------------
Purchaser with a list of all certificates of deposit or checking, savings or
other deposits owned by persons who, to the Knowledge of Target, had deposits
aggregating more than $100,000 and a list of all certificates of deposit or
checking, savings or other deposits owned by directors and officers of Target
and each Target Bank and their Affiliates in an amount aggregating more than
$100,000 as of the last day of the calendar month immediately prior to the
Closing.
SECTION 7.13 INDEMNIFICATION AGAINST CERTAIN LIABILITIES. Purchaser
---------------------------------------------
agrees that all rights to indemnification and all limitations of liability
existing in favor of the officers and directors of Target and each Target Bank
("Indemnified Parties") as provided in their respective Articles of
Incorporation or Association and By-Laws as of the date hereof with respect to
matters occurring prior to the Effective Time shall survive the Mergers. To the
extent available, Purchaser shall maintain in effect for not less than three (3)
years after the Closing Date policies of directors' and officers' liability
insurance comparable to those maintained by Target with carriers comparable to
Target's existing carriers and containing terms and conditions which are no less
advantageous in any Material respect to the officers and directors of Target and
which cover Target's present officers and directors for such three-year period
regardless of whether or not such Persons remain employed by Target after the
Closing Date, provided that the annual premium for such insurance shall not
--------
exceed 150% of the most current annual premium paid by Target for its directors'
and officers' liability insurance.
SECTION 7.14 VOTING AGREEMENT. Concurrent with the execution hereof,
-----------------
Target shall obtain and deliver to Purchaser an agreement in substantially the
form of Exhibit 7.14 hereto from each member of Target's Board of Directors.
-------------
SECTION 7.15 COOPERATION; ATTENDANCE AT BOARD MEETINGS. In order to
-------------------------------------------
facilitate the Mergers and the combination of the respective businesses of
Purchaser and Target as promptly as practicable following the Effective Time and
to the extent not in violation of applicable Laws or the directives of any
Regulatory Authority: (i) Target shall, and shall cause its Subsidiaries to,
consult with Purchaser on all strategic and operational matters; and (ii) an
individual selected by Purchaser reasonably acceptable to Target shall have the
right to attend all meetings of the Board of Directors of Target and Target Bank
in a non-voting observer capacity, to receive notice of such meetings and to
receive the information provided by Target or Target Bank to such Boards of
Directors, provided that Target or Target Bank may require that any person
--------
proposing to attend any meetings of its Boards of Directors shall agree to hold
in confidence and trust and to act in a fiduciary manner with respect to all
information so received during such meetings or otherwise. Notwithstanding the
foregoing, this Section 7.15 shall not
-42-
apply with respect to any meeting, or portion of a meeting, of the Board of
Directors of Target at which such Board plans to discuss (i) matters related to
Target's rights and obligations under this Agreement or (ii) any Takeover
Proposal.
SECTION 7.16 SECTION 16 MATTERS. Prior to the Effective Time: (a) the
------------------
Board of Directors of Purchaser, or an appropriate committee of non-employee
directors thereof, shall adopt a resolution consistent with the interpretive
guidance of the SEC so that the acquisition by any officer or director of the
Target who may become a covered person of Purchaser for purposes of Section 16
of the 1934 Act (together with the rules and regulations thereunder, "Section
16"), of shares of Purchaser Common Stock or options to purchase shares of
Purchaser Common Stock pursuant to this Agreement and the Merger shall be an
exempt transaction for purposes of Section 16; and (b) the Board of Directors of
Purchaser, or an appropriate committee of non-employee directors thereof, shall
adopt a resolution consistent with the interpretive guidance of the SEC so that
the disposition by any officer or director Target who is a covered person of
Target for purposes of Section 16 of shares of Purchaser Common Stock pursuant
to this Agreement and the Merger shall be an exempt transaction for purposes of
Section 16.
SECTION 7.17 LOCAL ADVISORY BOARD. For a period of one (1) year
----------------------
following the consummation of the Mergers, Purchaser Bank shall maintain at the
current location of the Target Bank a local advisory board, the members of which
shall be ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, D. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, J. ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇. Each advisory board
member shall receive compensation for his or her service in the amount of $300
per month.
ARTICLE 8.
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
SECTION 8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
-----------------------------------------
obligations of each Party to perform this Agreement and consummate the Mergers
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
10.6 of this Agreement:
(a) SHAREHOLDER APPROVAL. The shareholders of Target shall have
---------------------
approved this Agreement, and the consummation of the transactions contemplated
hereby, including the Merger, as and to the extent required by Law or by the
provisions of any governing instruments.
(b) REGULATORY APPROVALS. All Consents of, filings and registrations
---------------------
with, and notifications to, all Regulatory Authorities required for consummation
of the Mergers shall have been obtained or made and shall be in full force and
effect, and all waiting periods required by Law shall have expired. No Consent
obtained from any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
(including requirements relating to the raising of additional capital or the
disposition of Assets) which, in the reasonable judgment of the Board of
Directors of either Party, would so Materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement so as to
render inadvisable the consummation of the Mergers; provided,
--------
-43-
however, that no such condition or restriction shall be deemed to be Materially
-------
adverse unless it Materially differs from terms and conditions customarily
imposed by any Regulatory Authority in connection with similar transactions.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained any and all
----------------------
Consents required for consummation of the Mergers (other than those referred to
in Section 8.1(b) of this Agreement) or for the preventing of any Default under
any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on such Party. No Consent obtained which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
which, in the reasonable judgment of the Board of Directors of any of the
Parties, would so Materially adversely impact the economic or business benefits
of the transactions contemplated by this Agreement so as to render inadvisable
the consummation of the Mergers.
(d) LEGAL PROCEEDINGS. No court or governmental or Regulatory
------------------
Authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, Materially restricts or
makes illegal consummation of the transactions contemplated by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement shall be
-----------------------
effective under the 1933 Act, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under all Securities
Laws relating to the issuance or trading of the shares of Purchaser Common Stock
issuable pursuant to the Company Merger shall have been received.
(f) NASD LISTING. The shares of Purchaser Common Stock issuable
-------------
pursuant to the Company Merger shall have been approved for listing (subject to
issuance) on the NASDAQ Global Select Market.
SECTION 8.2 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
--------------------------------------
Purchaser to perform this Agreement and consummate the Mergers and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Purchaser pursuant to Section 10.6(a) of
this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
------------------------------
of Target set forth or referred to in this Agreement shall be true and correct
in all respects as of the date of this Agreement and as of the Effective Time
with the same effect as though all such representations and warranties had been
made on and as of the Effective Time (provided that representations and
--------
warranties which are confined to a specified date shall speak only as of such
date), except (i) as expressly contemplated by this Agreement, or (ii) for
representations and warranties (other than the representations and warranties
set forth in Section 4.3 of this Agreement, which shall be true in all respects)
the inaccuracies of which relate to matters that are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Target or
would reasonably likely result in Purchaser's inability to comply with the
Sarbanes-
-44-
Oxley Act of 2002; provided that, for purposes of this Section 8.2(a) only,
--------
those representations and warranties that are qualified by reference to
"Material" or "Material Adverse Effect" shall be deemed not to include such
qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
-------------------------------------------
agreements and covenants of Target to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all Material
respects.
(c) CERTIFICATES. Target shall have delivered to Purchaser (i) a
------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer, to the effect that the conditions set forth in Sections
8.2(a) and 8.2(b) of this Agreement have been satisfied, and (ii) certified
copies of resolutions duly adopted by Target's Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as Purchaser and its counsel shall reasonably request.
(d) OPINION OF COUNSEL. Target shall have delivered to Purchaser an
--------------------
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel to Target, dated as of the Closing
Date, covering those matters set forth in Exhibit 8.2(d) hereto, which opinion
--------------
may be rendered in accordance with the Interpretive Standards on Legal Opinions
to Third Parties in Corporate Transactions promulgated by the Corporate and
Banking Law Section of the State Bar of Georgia (January 1, 1992) (the
"Interpretive Standards").
(e) ACCOUNTANT'S LETTERS. Purchaser shall have received from ▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇, LLC, letters dated not more than five (5) days prior to (i) the date of
the Proxy Statement and (ii) the Effective Time, with respect to certain
financial information regarding Target, in form and substance reasonably
satisfactory to Purchaser, which letters shall be based upon customary specified
procedures undertaken by such firm.
(f) NONCOMPETE AGREEMENTS. Each member of Target's Board of Directors
----------------------
shall have executed and delivered to Purchaser a Non-Competition and
Non-Disclosure Agreement substantially in the form attached hereto as Exhibit
-------
8.2(f).
------
(g) TAX MATTERS. Purchaser shall have received the opinion of ▇▇▇▇▇▇ &
-----------
▇▇▇▇▇▇ LLP, counsel to Purchaser, dated the Closing Date, to the effect that for
federal income tax purposes the Company Merger will constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code. In rendering
such opinion, counsel to Purchaser shall be entitled to rely upon customary
representations and assumptions provided by Purchaser and Target that counsel to
Purchaser reasonably deems relevant.
(h) MINIMUM TANGIBLE CAPITAL. Target shall have delivered to Purchaser
------------------------
a certificate, signed on its behalf by its acting chief executive officer,
promptly following the close of business on the Business Day that is two (2)
Business Days prior to the Closing Date certifying that, as of such time, the
Tangible Capital of Target is at least (i) $6,000,000 or (ii) $6,150,000, as the
case may be.
-45-
(i) STOCK OPTIONS. The Board of Directors of Target, or the
--------------
appropriate committee thereof, shall have taken all necessary action to permit
all Target Options to be converted into the right to receive cash as set forth
in Section 3.5 hereof as of the Effective Time.
SECTION 8.3 CONDITIONS TO OBLIGATIONS OF TARGET. The obligations of
-------------------------------------
Target to perform this Agreement and consummate the Mergers and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Target pursuant to Section 10.6(b) of
this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
------------------------------
of Purchaser set forth or referred to in this Agreement shall be true and
correct in all respects as of the date of this Agreement and as of the Effective
Time with the same effect as though all such representations and warranties had
been made on and as of the Effective Time (provided that representations and
warranties which are confined to a specified date shall speak only as of such
date), except (i) as expressly contemplated by this Agreement, or (ii) for
representations and warranties (other than the representations and warranties
set forth in Section 5.3 of this Agreement, which shall be true in all respects)
the inaccuracies of which relate to matters that are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Purchaser;
provided that, for purposes of this Section 8.3(a), those representations and
--------
warranties that are qualified by references to "Material" or "Material Adverse
Effect" shall be deemed not to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
-------------------------------------------
agreements and covenants of Purchaser to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all Material
respects.
(c) CERTIFICATES. Purchaser shall have delivered to Target (i) a
------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 8.3(a) and 8.3(b) of this Agreement have been
satisfied, and (ii) certified copies of resolutions duly adopted by Purchaser's
Board of Directors evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as Target and its counsel shall reasonably request.
(d) OPINION OF COUNSEL. Purchaser shall have delivered to Target an
--------------------
opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to Purchaser, dated as of the Closing
Date, covering those matters set forth in Exhibit 8.3(d) hereto, which opinion
--------------
may be rendered in accordance with the Interpretive Standards.
(e) DELIVERY OF MERGER CONSIDERATION. Purchaser shall have delivered
----------------------------------
the Cash Consideration and the Stock Consideration to the Exchange Agent.
(f) TAX MATTERS. Target shall have received the opinion of ▇▇▇▇▇▇
------------
▇▇▇▇▇▇▇▇▇ LLP, counsel to Target, dated the Closing Date, to the effect that for
federal income tax purposes the
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Company Merger will constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code. In rendering such opinion, counsel to
Target shall be entitled to rely upon customary representations and assumptions
provided by Purchaser and Target that counsel to Target reasonably deems
relevant.
(g) TAIL INSURANCE COVERAGE. Purchaser shall have provided Target
-------------------------
written documentation evidencing the effectiveness of the insurance coverage
described in Section 7.13 hereof.
ARTICLE 9.
TERMINATION
-----------
SECTION 9.1 TERMINATION. Notwithstanding any other provision of this
-----------
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Target, this Agreement may be terminated and the Mergers
abandoned at any time prior to the Effective Time:
(a) by mutual consent of the Boards of Directors of Purchaser and
Target; or
(b) by the Board of Directors of either Party (provided that the
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terminating Party is not then in Material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
of a Material breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within thirty
(30) days after the giving of written notice to the breaching Party of such
breach and which breach would provide the non-breaching Party the ability to
refuse to consummate the Mergers under the standard set forth in Section 8.2(a)
of this Agreement in the case of Purchaser and Section 8.3(a) of this Agreement
in the case of Target; or
(c) by the Board of Directors of either Party (provided that the
terminating Party is not then in Material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
of a Material breach by the other Party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within (30) days after
the giving of written notice to the breaching Party of such breach; or
(d) by the Board of Directors of either Party (provided that the
terminating Party is not then in Material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
(i) any Consent of any Regulatory Authority required for consummation of the
Mergers and the other transactions contemplated hereby has been denied by final
non-appealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal, or (ii) the shareholders of
Target fail to approve this Agreement and the transactions contemplated hereby
as required by the SCCA at the Shareholders' Meeting where the transactions were
presented to such shareholders for approval and voted upon (assuming, for this
purpose, that Purchaser votes the proxies granted to it pursuant to Section 7.14
hereof in favor thereof); or
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(e) by the Board of Directors of either Party in the event that the
Company Merger shall not have been consummated by March 31, 2007, provided the
--------
failure to consummate the Company Merger on or before such date was not caused
by any breach of this Agreement by the Party electing to terminate pursuant to
this Section 9.1(e); or
(f) by the Board of Directors of either Party (provided that the
terminating Party is not then in Material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
that any of the conditions precedent to the obligations of such Party to
consummate the Mergers cannot be satisfied or fulfilled by the date specified in
Section 9.1(e) of this Agreement; or
(g) by the Board of Directors of either party if the Average Market
Price (determined without regard to the proviso in the definition thereof) is
less than $21.00, unless the Parties shall have agreed in writing prior to the
Closing Date for the Purchaser to, in its discretion, either issue additional
shares of Purchaser Common Stock or pay additional cash to holders of
Outstanding Target Shares, such that, as a result thereof, each Outstanding
Target Share will be converted into the right to receive cash or shares of
Purchaser Common Stock having an aggregate value equal to the Target Stock
Price; or
(h) by the Board of Directors of Purchaser if the Board of Directors of
Target (A) shall withdraw, modify or change its recommendation with respect to
this Agreement or the Mergers or shall have resolved to do so, or (B) shall have
recommended or approved a Takeover Proposal or shall have resolved to do so; or
(i) by the Board of Directors of Target in connection with entering
into a definitive agreement in accordance with Section 7.8(b), provided that it
--------
has complied with all provisions thereof, including the notice provisions
therein, and that it makes simultaneous payment of the Termination Fee; or
(j) by the Board of Directors of Purchaser if Target fails to properly
file required reports with the SEC on a timely basis; or
(k) by the Board of Directors of Purchaser if, prior to the Effective
Time, there shall have occurred any event, change, occurrence, condition or
state of facts that would, individually or in the aggregate, have a Material
Adverse Effect on Target.
SECTION 9.2 EFFECT OF TERMINATION. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 9.1 hereof, this Agreement
shall become null and void and have no effect, except (i) as provided in
Sections 10.2 and 10.14 hereof, and (ii) for any liability of a Party arising
out of a willful breach of any representation, warranty or covenant in this
Agreement prior to the date of termination, unless such breach was required by
Law or by any bank or bank holding company regulatory authority. Each Party
hereby agrees that its sole right and remedy with respect to any non-willful
breach of a representation or warranty or covenant by the other Party shall be
not to close the transactions described herein if such breach results in the
nonsatisfaction of a condition set forth in Article 8 hereof; provided, however,
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that the foregoing shall not be deemed to be a waiver of any claim for a willful
breach of a representation, warranty or covenant or for fraud (except if such
breach is required by Law
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or by any insurance regulatory authority, or bank or bank holding company
regulatory authority), in which case the Parties will have all available legal
rights and remedies.
ARTICLE 10.
MISCELLANEOUS
-------------
SECTION 10.1 DEFINITIONS. Except as otherwise provided herein, the
-----------
capitalized terms set forth below (in their singular and plural forms as
applicable) shall have the following meanings:
"Affiliate" of a Person shall mean (a) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person or (b) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person.
"Assets" of a Person shall mean all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books and records
of such Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"Average Market Price" means the arithmetic average of the daily closing
price per share of Purchaser Common Stock (adjusted appropriately for any stock
split, stock dividend, recapitalization, reclassification or similar transaction
that is effected or for which a record date occurs), as reported on the NASDAQ
Global Select Market, for each of the ten (10) consecutive trading days ending
on (and including) the trading day that occurs two (2) trading days prior to
(and not including) the Closing Date; provided, however, that if the Average
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Market Price as calculated above is greater than $28.00, then the Average Market
Price for purposes of this Agreement shall be $28.00, and if the Average Market
Price as calculated above is less than $21.00, then the Average Market Price for
purposes of this Agreement shall be $21.00.
"Bank Merger" shall have the meaning set forth in the Preamble hereto.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"Business Day" shall mean any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
Georgia generally are authorized or required by Law or other government action
to close.
"Cash Consideration" shall have the meaning set forth in Section 3.1(b) of
this Agreement.
"Cash Election" shall have the meaning set forth in Section 3.1(c) of this
Agreement.
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"Cash Election Shares" shall have the meaning set forth in Section 3.1(f)
of this Agreement.
"Closing" shall mean the closing of the transactions contemplated hereby,
as described in Section 1.3 of this Agreement.
"Closing Date" shall have the meaning set forth in Section 1.3 of this
Agreement.
"Combination Election" shall have the meaning set forth in Section 3.1(c)
of this Agreement.
"Company Merger" shall have the meaning set forth in the Preamble hereto.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, Assets or business.
"CRA" shall have the meaning set forth in Section 4.24 of this Agreement.
"Default" shall mean (a) any breach or violation of or default under any
Contract, Order or Permit, (b) any occurrence of any event that with the passage
of time or the giving of notice or both would constitute a breach or violation
of or default under any Contract, Order or Permit, or (c) any occurrence of any
event that with or without the passage of or the giving of notice would give
rise to a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase or impose any Liability under, any
Contract, Order or Permit.
"Default Stock Election" shall have the meaning set forth in Section 3.1(e)
of this Agreement.
"Dissenting Shares" shall have the meaning set forth in Section 3.1(b) of
this Agreement.
"Effective Time" shall mean the date and time at which the Company Merger
becomes effective as defined in Section 1.4 of this Agreement.
"Election Deadline" shall have the meaning set forth in Section 3.1(c) of
this Agreement.
"Environmental Laws" shall mean all Laws which are administered,
interpreted or enforced by the United States Environmental Protection Agency and
state and local agencies with primary jurisdiction over pollution or protection
of the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
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"ERISA Affiliate" shall have the meaning set forth in Section 4.14(d) of
this Agreement.
"Exchange Agent" shall have the meaning set forth in Section 3.1(d) of this
Agreement.
"Exhibits" shall mean the Exhibits attached to this Agreement, which
Exhibits are hereby incorporated by reference herein and made a part hereof and
may be referred to in this Agreement and any other related instrument or
document without being attached hereto.
"Expenses and Fees" shall have the meaning set forth in Section 10.2(a) of
this Agreement.
"Form of Election" shall have the meaning set forth in Section 3.1(c) of
this Agreement.
"GAAP" shall mean generally accepted accounting principles consistently
applied during the periods involved.
"Georgia Articles of Merger" shall mean the Articles of Merger or
Certificate of Merger, if applicable, to be executed by Purchaser and filed with
the Secretary of State of the State of Georgia relating to the Company Merger as
contemplated by Section 1.4 of this Agreement.
"GBCC" shall mean the Georgia Business Corporation Code.
"Hazardous Material" shall mean any pollutant, contaminant, or hazardous
substance within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sec. 9601 et seq.,
or any similar federal, state or local Law.
"IIPI" shall have the meaning set forth in Section 4.25(a) of this
Agreement.
"Indemnified Parties" shall have the meaning set forth in Section 7.13 of
this Agreement.
"Intellectual Property" shall have the meaning set forth in Section 4.20 of
this Agreement.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Interpretive Standards" shall have the meaning set forth in Section 8.2(d)
of this Agreement.
"IRS" shall mean the United States Internal Revenue Service.
"Islands Common Stock" shall have the meaning set forth in Section 4.3(b)
of this Agreement.
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"Knowledge" as used with respect to a Person shall mean the Knowledge after
reasonable due inquiry of the President, Chief Financial Officer, Chief
Accounting Officer, Chief Credit Officer or any Senior or Executive Vice
President of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities or business, including those promulgated, interpreted or enforced by
any of the Regulatory Authorities.
"Letter of Transmittal" shall have the meaning set forth in Section 3.2 of
this Agreement.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills, checks
and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge or claim
of any nature whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due and
payable, (ii) for depository institution Subsidiaries of a Party, pledges to
secure deposits and other Liens incurred in the ordinary course of the banking
business, and (iii) Liens which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on a Party.
"Litigation" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its
business, its Assets (including Contracts related to it), or the transactions
contemplated by this Agreement, but shall not include regular, periodic
examinations of depository institutions and their Affiliates by Regulatory
Authorities.
"Loan Property" shall mean any property owned by the Party in question or
by any of its Subsidiaries or in which such Party or Subsidiary holds a security
interest, and, where required by the context, includes the owner or operator of
such property, but only with respect to such property.
"Material" or "Materially" for purposes of this Agreement shall be
determined in light of the facts and circumstances of the matter in question,
provided that any specific monetary amount stated in this Agreement shall
determine Materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event, change or
occurrence which has a Material adverse impact on (a) the financial position,
business, or results of operations of such Party and its Subsidiaries taken as a
whole, or (b) the ability of such Party to perform its
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obligations under this Agreement or to consummate the Mergers or the other
transactions contemplated by this Agreement, provided that "Material adverse
--------
impact" shall not be deemed to include the impact of (w) changes in economic or
other conditions, including the interest rate environment, affecting the banking
industry in general, (x) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(y) changes in generally accepted accounting principles or regulatory accounting
principles generally applicable to banks and their holding companies, and (z)
the Mergers and compliance with the provisions of this Agreement on the
operating performance of the Parties.
"Maximum Cash Election Number" shall have the meaning set forth in Section
3.1(f) of this Agreement.
"Maximum Stock Election Number" shall have the meaning set forth in Section
3.1(f) of this Agreement.
"Mergers" shall have the meaning set forth in the Preamble hereto.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"New Purchaser Employees" shall have the meaning set forth in Section 7.11
of this Agreement.
"1933 Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Notice of Superior Proposal" shall have the meaning set forth in Section
7.8(b) of this Agreement.
"Old Certificates" shall have the meaning set forth in Section 3.1(h) of
this Agreement.
"Option Holder" shall have the meaning set forth in Section 3.5 of this
Agreement.
"Option Shares" shall mean the shares of Target Common Stock issuable by
Target in connection with the exercise of any Target Option (whether or not such
Target Option is then exercisable).
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority.
"Outstanding Target Share" shall have the meaning set forth in Section
3.1(b) of this Agreement.
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"Participation Facility" shall mean any facility or property in which the
Party in question or any of its Subsidiaries participates in the management
(including any property or facility held in a joint venture) and, where required
by the context, said term means the owner or operator of such facility or
property, but only with respect to such facility or property.
"Party" shall mean either Target and Target Bank, collectively, or
Purchaser and Purchaser Bank, collectively, and "Parties" shall mean Target,
Target Bank, Purchaser and Purchaser Bank, collectively.
"Permit" shall mean any federal, state, local or foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its capital stock, Assets,
Liabilities or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Previously Disclosed" shall mean information (a) delivered in writing
prior to or contemporaneously with the execution and delivery of this Agreement
in the manner and to the Party and counsel described in Section 10.8 of this
Agreement and describing in reasonable detail the matters contained therein,
provided that in the case of Subsidiaries acquired after the date of this
--------
Agreement, such information may be so delivered by the acquiring Party to the
other Party prior to the date of such acquisition, (b) disclosed prior to the
date of this Agreement by one Party to the other Party in an SEC Document
delivered to such other Party in which the specific information has been
identified by the delivering Party, or (c) disclosed in writing during
Purchaser's due diligence investigation pursuant to Section 7.6(a) by Target to
Purchaser describing in reasonable detail the matters contained therein.
"Proxy Statement" shall mean the proxy statement used by Target to solicit
the approval of its shareholders of the transactions contemplated by this
Agreement and shall include the prospectus of Purchaser relating to shares of
Purchaser Common Stock to be issued to the shareholders of Target.
"Purchaser Allowance" shall have the meaning set forth in Section 5.9 of
this Agreement.
"Purchaser Benefit Plans" shall have the meaning set forth in Section
5.14(a) of this Agreement.
"Purchaser Common Stock" shall mean the $1.00 par value common stock of
Purchaser.
"Purchaser Companies" shall mean, collectively, Purchaser and all Purchaser
Subsidiaries, including Purchaser Bank.
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"Purchaser ERISA Plan" shall have the meaning set forth in Section 5.14(a)
of this Agreement.
"Purchaser Financial Statements" shall mean (a) the consolidated balance
sheets (including related notes and schedules, if any) of Purchaser as of
December 31, 2005, 2004 and 2003, and the related statements of income, changes
in shareholders' equity, and cash flows (including related notes and schedules,
if any) and for each of the three years ended December 31, 2005, 2004 and 2003,
as filed by Purchaser in its SEC Documents, and (b) the consolidated balance
sheets of Purchaser (including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in its SEC Documents filed with
respect to periods ended subsequent to December 31, 2005.
"Purchaser Pension Plan" shall have the meaning set forth in Section
5.14(a) of this Agreement.
"Purchaser Stock Plans" shall mean the existing stock option and other
stock-based compensation plans of Purchaser.
"Purchaser Subsidiaries" shall mean the Subsidiaries of Purchaser.
"Record Date" shall have the meaning set forth in Section 3.1(c) of this
Agreement.
"Registration Statement" shall mean the Registration Statement on Form S-4,
or other appropriate form, to be filed with the SEC by Purchaser under the 1933
Act in connection with the transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the SEC, the NASD, the United States Department of Justice, the
Board of the Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation, the
Georgia Department of Banking and Finance, the South Carolina Board of Financial
Institutions, and all other federal, state, county, local or other governmental
or regulatory agencies, authorities, instrumentalities, commissions, boards or
bodies having jurisdiction over the Parties and their respective Subsidiaries.
"Representative" shall have the meaning set forth in Section 3.1(c) of this
Agreement.
"SCCA" shall mean the South Carolina Business Corporation Act of 1988.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Documents" shall mean all reports and registration statements filed by
a Party or any of its Subsidiaries with the SEC pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisers Act of 1940, as
amended, the Trust Indenture Act
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of 1939, as amended, state blue sky Laws, and the rules and regulations of any
Regulatory Authority promulgated thereunder.
"Shareholders' Meeting" shall mean the meeting of the shareholders of
Target to be held pursuant to Section 7.1 of this Agreement, including any
adjournment or postponement thereof.
"Stock Consideration" shall have the meaning set forth in Section 3.1(b) of
this Agreement.
"Stock Election" shall have the meaning set forth in Section 3.1(c) of this
Agreement.
"Stock Election Shares" shall have the meaning set forth in Section 3.1(f)
of this Agreement.
"Subsidiaries" shall mean all those corporations, banks, associations or
other entities of which the entity in question owns or controls 5% or more of
the outstanding equity securities either directly or through an unbroken chain
of entities as to each of which 5% or more of the outstanding equity securities
is owned directly or indirectly by its parent; provided, however, that there
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shall not be included any such entity acquired through foreclosure or any such
entity the equity securities of which are owned or controlled in a fiduciary
capacity.
"Superior Proposal" shall have the meaning set forth in Section 7.8(b) of
this Agreement.
"Surviving Corporation" shall mean Purchaser as the surviving corporation
resulting from the Company Merger.
"Takeover Proposal" shall have the meaning set forth in Section 7.8(a) of
this Agreement.
"Tangible Capital" shall be determined in accordance with GAAP and shall
mean the (i) total capital of the Target Companies (excluding accumulated
comprehensive income) on a consolidated basis minus (ii) (A) goodwill and core
deposit intangible balances of Target Companies on a consolidated basis and (B)
all Target expenses related to the Merger, including legal fees, accounting
fees, investment banking fees, printing charges, costs incurred in terminating
existing data processing contracts and success fee, change of control or similar
payments required to be made to employees as a result of the consummation of the
Merger.
"Target Allowance" shall have the meaning set forth in Section 4.9 of this
Agreement.
"Target Benefit Plans" shall have the meaning set forth in Section 4.14(a)
of this Agreement.
"Target Common Stock" shall mean the no par value Common Stock of Target.
"Target Companies" shall mean, collectively, Target and all Target
Subsidiaries, including Target Bank.
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"Target Contracts" shall have the meaning set forth in Section 4.15 of this
Agreement.
"Target ERISA Plan" shall have the meaning set forth in Section 4.14 of
this Agreement.
"Target Financial Statements" shall mean (a) the consolidated balance
sheets (including related notes and schedules, if any) of Target as of December
31, 2005, 2004 and 2003, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) for each of the three years ended December 31, 2005, 2004 and 2003, as
filed by Target in its SEC Documents, and (b) the consolidated balance sheets of
Target (including related notes and schedules, if any) and related statements of
income, changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) included in its SEC Documents filed with respect to
periods ended subsequent to December 31, 2005.
"Target Option" shall have the meaning set forth in Section 3.5 of this
Agreement.
"Target Pension Plan" shall have the meaning set forth in Section 4.14(a)
of this Agreement.
"Target Stock Plans" shall mean the existing stock option and other
stock-based compensation plans of Target.
"Target Stock Price" shall mean $22.50, unless the Tangible Capital of
Target for purposes of Section 8.2(h) hereof is less than $6,150,000 but greater
than or equal to $6,000,000, in which case Target Stock Price shall mean $22.25.
"Target Subsidiaries" shall mean the Subsidiaries of Target, which shall
include the Target Subsidiaries described in Section 4.4 of this Agreement and
any Person acquired as a Subsidiary of Target in the future and owned by Target
at the Effective Time.
"Target Warrant" shall have the meaning set forth in Section 3.6 of this
Agreement.
"Taxes" shall mean any federal, state, county, local, foreign or other
taxes, assessments, charges, fares, or impositions, including interest and
penalties thereon or with respect thereto.
"Technology Systems" shall have the meaning set forth in Section 4.26 of
this Agreement.
"Termination Fee" shall have the meaning set forth in Section 10.2 of this
Agreement.
"Warrant Holder" shall have the meaning set forth in Section 3.6 of this
Agreement.
"Warrant Shares" shall mean the shares of Target Common Stock issuable by
Target in connection with the exercise of any Target Warrant (whether or not
such Target Warrant is then exercisable).
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SECTION 10.2 EXPENSES; EFFECT OF CERTAIN TERMINATIONS.
---------------------------------------------
(a) Except as otherwise provided in this Section 10.2, (i) each of the
Parties shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
filing, registration and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants and
counsel; and (ii) each of the Parties shall bear and pay one-half of costs
incurred in connection with the printing and mailing of the Registration
Statement and the Proxy Statement (the foregoing clauses (i) and (ii),
collectively, the "Expenses and Fees").
(b) Target shall pay, or cause to be paid, in same day funds to
Purchaser, cash in the amount of $500,000 (the "Termination Fee") upon demand if
(A) Purchaser terminates this Agreement pursuant to Section 9.1(h) or Target
terminates this Agreement pursuant to Section 9.1(i), or (B) prior to the
termination of this Agreement (other than by Target pursuant to Section 9.1(c),
9.1(d)(i), 9.1(e) or 9.1(g)), a Takeover Proposal shall have been made and
within one (1) year of such termination, Target enters into an agreement with
respect to, or approves or recommends such Takeover Proposal.
(c) In the event this Agreement is terminated as a result of
Purchaser's willful breach of any of its representations, warranties or
covenants contained herein, unless such breach was required by Law or by any
bank or bank holding company Regulatory Authority, Purchaser shall reimburse
Target for its reasonable out-of-pocket expenses directly relating to the
Company Merger in an amount not to exceed $250,000, which amount shall not be
deemed an exclusive remedy or liquidated damages.
(d) In the event this Agreement is terminated as a result of Target's
willful breach of any of its representations, warranties or covenants contained
herein, unless such breach was required by Law or by any bank or bank holding
company Regulatory Authority, and other than under circumstances in which the
provisions of Section 10.2(b) hereof shall apply, Target shall reimburse
Purchaser for its reasonable out-of-pocket expenses relating to the Company
Merger in an amount not to exceed $250,000, which amount shall not be deemed an
exclusive remedy or liquidated damages.
SECTION 10.3 BROKERS AND FINDERS. Except for ▇▇▇▇ ▇▇▇▇▇▇ Investments,
-------------------
Inc. with respect to Target, each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions or finders'
fees in connection with this Agreement or the transactions contemplated hereby.
In the event of a claim by any broker or finder based upon its representing or
being retained by or allegedly representing or being retained by Target or
Purchaser, each of Target and Purchaser, as the case may be, agrees to indemnify
and hold the other Party harmless of and from any Liability in respect of any
such claim.
SECTION 10.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
----------------
herein, this Agreement (including the Bank Merger Agreement and the other
documents and instruments referred to herein) constitutes the entire agreement
between the Parties with respect
-58-
to the transactions contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral. Nothing in this
Agreement, expressed or implied, is intended to confer upon any Person, other
than the Parties or their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, other than as
provided in Section 7.13 of this Agreement.
SECTION 10.5 AMENDMENTS. To the extent permitted by Law, this
----------
Agreement may be amended by a subsequent writing signed by each of the Parties
upon the approval of the Boards of Directors of each of the Parties; provided,
--------
however, that after any such approval by the holders of Target Common Stock,
-------
there shall be made no amendment decreasing the consideration to be received by
Target shareholders without the further approval of such shareholders.
SECTION 10.6 WAIVERS.
-------
(a) Prior to or at the Effective Time, Purchaser, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by Target, to waive or extend the time for the compliance or
fulfillment by Target of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
Purchaser under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of Purchaser.
(b) Prior to or at the Effective Time, Target, acting through its Board
of Directors, chief executive officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by Purchaser, to waive or extend the time for the compliance or fulfillment by
Purchaser of any and all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of Target under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Target.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
SECTION 10.7 ASSIGNMENT. Except as expressly contemplated hereby,
----------
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party; provided, however, that if
-------- -------
Purchaser is acquired before the Closing, this Agreement may be assigned by
Purchaser and assumed by the acquiring Person without Target's consent.
-59-
Subject to the immediately preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by the Parties and their
respective successors and assigns.
SECTION 10.8 NOTICES. All notices or other communications which are
-------
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
Purchaser: Ameris Bancorp
▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
Copy to (which copy will not constitute notice to Purchaser):
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
Target: Islands Bancorp
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
Copy to (which copy will not constitute notice to Target):
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
One Atlantic Center, Fourteenth Floor
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
SECTION 10.9 GOVERNING LAW. This Agreement shall be governed by and
--------------
construed in accordance with the Laws of the State of Georgia, without regard to
any applicable conflicts of Laws, except to the extent that the federal Laws of
the United States may apply to the Mergers.
SECTION 10.10 COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which together shall
-60-
constitute one and the same instrument. Executed counterparts of this Agreement
may be delivered by the Parties via facsimile transmission.
SECTION 10.11 INTERPRETATION. The captions contained in this Agreement
--------------
are for reference purposes only and are not part of this Agreement. When a
reference is made in this Agreement to Articles, Sections or Exhibits, such
reference will be to an Article or Section of or Exhibit to this Agreement
unless otherwise indicated. The table of contents contained in this Agreement
is for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they will be deemed to be followed by
the words "without limitation." Unless the context otherwise requires (i) "or"
is disjunctive but not necessarily exclusive, (ii) words in the singular include
the plural and vice versa, (iii) the use in this Agreement of a pronoun in
reference to a Party hereto includes the masculine, feminine or neuter, as the
context may require, and (iv) terms used herein that are defined in GAAP have
the meanings ascribed to them therein. No provision of this Agreement will be
interpreted in favor of, or against, any of the Parties to this Agreement by
reason of the extent to which any such Party or its counsel participated in the
drafting thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof, and no rule of strict construction
will be applied against any Party hereto. This Agreement will not interpreted
or construed to require any Person to take any action, or fail to take any
action, if to do so would violate any applicable Law.
SECTION 10.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
SECTION 10.13 SEVERABILITY. Any term or provision of this Agreement
------------
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
SECTION 10.14 SURVIVAL. The respective representations, warranties,
--------
obligations, covenants and agreements of the Parties shall not survive the
Effective Time or the termination and abandonment of this Agreement, except that
(i) Articles Two, Three and Ten and Sections 7.6(b), 7.9, 7.11 and 7.13 of this
Agreement shall survive the Effective Time; and (ii) Sections 7.6(b), 9.2, 10.1,
10.2, 10.9 and 10.14 shall survive the termination and abandonment of this
Agreement.
[SIGNATURES ON NEXT PAGE.]
-61-
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by its officers as of the day and year first above written.
ATTEST: ISLANDS BANCORP
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ D. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- -------------------------------------
Secretary Its: Chairman of the Board
-------------------------------------
[CORPORATE SEAL]
ATTEST: ISLANDS COMMUNITY BANK, N.A.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ D. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- -------------------------------------
Secretary Its: Chairman of the Board
-------------------------------------
[CORPORATE SEAL]
ATTEST: AMERIS BANCORP
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
----------------------------------- -------------------------------------
Secretary Its: President and Chief Executive Officer
-------------------------------------
[CORPORATE SEAL]
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
----------------------------------- -------------------------------------
Secretary Its: President and Chief Executive Officer
-------------------------------------
[CORPORATE SEAL]
EXHIBIT 1.2
-----------
BANK PLAN OF MERGER AND MERGER AGREEMENT
----------------------------------------
THIS BANK PLAN OF MERGER AND MERGER AGREEMENT (the "Agreement") is made and
entered into as of the ___ day of ___________, 2006, by and between AMERICAN
BANKING COMPANY, a Georgia state-chartered bank (the "Surviving Bank"), and
ISLANDS COMMUNITY BANK, N.A., a national banking association (the "Merging
Bank") (the Merging Bank and the Surviving Bank are hereinafter collectively
referred to as the "Constituent Banks").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Constituent Banks, Ameris Bancorp, a Georgia corporation and
the sole shareholder of the Surviving Bank ("Ameris"), and Islands Bancorp, a
South Carolina corporation and the sole shareholder of the Merging Bank
("Islands"), have entered into that certain Agreement and Plan of Merger dated
as of August 15, 2006 (the "Holding Company Agreement"), pursuant to which
Islands would be merged with and into Ameris (the "Company Merger");
WHEREAS, the Boards of Directors of the Constituent Banks deem it advisable
and for the benefit of said Constituent Banks that the Merging Bank merge with
and into the Surviving Bank immediately upon, and subject to, the consummation
of the Company Merger (the "Merger"); and
WHEREAS, the Financial Institutions Code of Georgia (the "Code") authorizes
the merger of a national bank and a bank organized under the Code, subject to
applicable provisions of the Code and the approval of such merger by the
Department of Banking and Finance of the State of Georgia (the "Department");
NOW, THEREFORE, for and in consideration of the premises and other mutual
agreements, covenants, representations and warranties contained herein, the
parties hereto agree as follows:
I.
MERGER; EFFECTIVE TIME
1.1 Merger. At the Effective Time, as hereinafter defined, the Merging
------
Bank shall be merged with and into the Surviving Bank, in accordance with the
Code. The Surviving Bank shall survive the Merger, the separate existence of
the Merging Bank shall cease, and the Merger shall in all respects have the
effect provided for in the applicable provisions of the Code.
1.2 Effective Time. Subject to the consummation of the Company Merger
---------------
in accordance with the Holding Company Agreement, Articles of Merger evidencing
the transactions contemplated herein shall be delivered to the Department for
filing in accordance with the Code.
The Merger shall be effective upon the issuance of a certificate of merger with
respect thereto by the Secretary of State of the State of Georgia (the
"Effective Time").
II.
NAME OF SURVIVING BANK; ARTICLES OF
INCORPORATION; BYLAWS; DIRECTORS; OFFICERS
2.1 Name of Surviving Bank. The name of the Surviving Bank shall be
-------------------------
"American Banking Company" or such other name as the Surviving Bank shall be
operating under immediately prior to the Effective Time.
2.2 Articles of Incorporation of the Surviving Bank. The Articles of
-------------------------------------------------
Incorporation of the Surviving Bank in effect at the Effective Time shall (until
further amended) continue to be the Articles of Incorporation of the Surviving
Bank.
2.3 Bylaws of the Surviving Bank. The Bylaws of the Surviving Bank in
-----------------------------
effect at the Effective Time shall (until further amended) continue to be the
Bylaws of the Surviving Bank.
2.4 Directors of the Surviving Bank. At the Effective Time, the
-----------------------------------
directors of the Merging Bank immediately prior thereto shall cease to hold
office, and each director of the Surviving Bank immediately prior thereto shall
remain a director of the Surviving Bank and shall thereafter hold such office
for the remainder of his or her term of office and until his or her successor
has been elected and qualified, or as otherwise provided in the Articles of
Incorporation or the Bylaws of the Surviving Bank or by the Code. The names of
such directors are set forth on Schedule 2.4 attached hereto.
2.5 Executive Officers of the Surviving Bank. At the Effective Time,
------------------------------------------
the executive officers of the Merging Bank immediately prior thereto shall cease
to hold office, and each executive officer of the Surviving Bank immediately
prior thereto shall remain an executive officer of the Surviving Bank, and each
of the foregoing shall thereafter hold such office for the remainder of his or
her term of office and until his or her successor has been elected or appointed
and qualified, or as otherwise provided in the Articles of Incorporation or the
Bylaws of the Surviving Bank or by the Code. The names of such executive
officers are set forth on Schedule 2.5 attached hereto.
III.
SECURITIES
The shares of the capital stock of the Constituent Banks shall be converted
as follows:
3.1 Stock of the Surviving Bank. At the Effective Time, each share of
----------------------------
the common stock of the Surviving Bank issued and outstanding immediately prior
to the Effective Time shall remain outstanding, shall be unaffected by the
consummation of the Merger and shall continue to be held by Ameris.
2
3.2 Stock of the Merging Bank. At the Effective Time, each share of
----------------------------
the common stock of the Merging Bank shall, by virtue of the Merger and without
any action by the holder thereof, be extinguished.
IV.
GENERAL
4.1 Approval of Shareholders and the Department. This Agreement is
------------------------------------------------
subject to approval by the shareholders of the Constituent Banks and by the
Department.
4.2 Necessary Action. The directors and officers of the Constituent
-----------------
Banks shall carry out and consummate this Agreement and shall have the power to
adopt all resolutions, execute and file all documents and take all other actions
that they may deem necessary or desirable for the purpose of effecting the
merger of the Constituent Banks in accordance with this Agreement and the Code.
4.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms hereof to produce or
account for more than one of such counterparts. Executed counterparts may be
delivered by facsimile transmission.
[Signatures on following page.]
3
IN WITNESS WHEREOF, each of the parties to this Agreement has caused this
Agreement to be signed and delivered by its duly authorized officers, as of the
date first written above.
ATTEST: AMERICAN BANKING COMPANY
By:
----------------------------------- -------------------------------------
Secretary Its:
-------------------------------------
[CORPORATE SEAL]
ATTEST: ISLANDS COMMUNITY BANK, N.A.
By:
----------------------------------- -------------------------------------
Secretary Its:
-------------------------------------
[CORPORATE SEAL]
4
SCHEDULE 2.4
------------
DIRECTORS OF SURVIVING BANK
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SCHEDULE 2.5
------------
EXECUTIVE OFFICERS OF SURVIVING BANK
------------------------------------
President and CEO: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Chief Financial Officer: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
Executive Vice President: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Executive Vice President: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
EXHIBIT 3.5(a)
--------------
LIST OF HOLDERS OF TARGET OPTIONS
---------------------------------
NAME NUMBER
---- ------
▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,500
▇▇▇▇ ▇▇▇▇▇▇▇ 9,450
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 2,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ 19,919
▇▇▇▇▇ ▇▇▇▇▇▇ 1,000
▇▇▇▇▇ ▇▇▇▇▇▇ 5,000
▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,000
EXHIBIT 3.6(a)
--------------
LIST OF HOLDERS OF TARGET WARRANTS
----------------------------------
NAME NUMBER
---- ------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 12,051
▇▇▇▇▇ ▇▇▇▇ 11,005
▇▇▇▇ ▇▇▇▇▇▇▇▇ 9,919
▇▇▇▇▇▇ ▇▇▇▇▇▇ 11,005
▇▇▇▇▇ ▇▇▇▇ 3,724
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 12,300
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 11,204
▇▇▇▇▇ ▇▇▇▇▇ 11,404
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 19,919
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10,019
EXHIBIT 3.6(b)
--------------
___________, 2006
______________________
______________________
______________________
RE: Warrants for Shares of Common Stock of Islands Bancorp
--------------------------------------------------------------
Dear ________________:
As you know, Islands Bancorp ("Islands") has entered into an Agreement and
Plan of Merger (the "Merger Agreement") with Ameris Bancorp ("Ameris") and
certain of their respective subsidiaries which provides, among other things, for
the merger of Islands with and into Ameris (the "Merger"). In connection with
the Merger, shareholders of Islands will receive in exchange for their shares of
common stock of Islands, no par value ("Islands Common Stock"), cash or shares
(the "Merger Consideration") of common stock of Ameris ("Ameris Common Stock").
Pursuant to the terms of one or more warrant agreements issued to you by Islands
(each a "Warrant"), you have the right to acquire _______ shares of Islands
Common Stock (the "Warrant Shares") at $10.00 per share. This letter will
clarify the status of your Warrants in connection with the Merger.
The Merger Agreement provides that, upon consummation of the Merger, your
Warrants will be converted into the right to receive cash or shares Ameris
Common Stock. In lieu of giving effect to the provisions of any Warrant, you
hereby consent and agree that Ameris will issue to you with respect to the
Warrant Shares for which your Warrants may be exercised either cash or shares of
Ameris Common Stock as set forth in Section 3.6 of the Merger Agreement.
You must make your election to receive cash or shares of Ameris Common
Stock no later than ____________, 2006 on the form attached hereto as Exhibit A.
---------
Pursuant to the Merger Agreement, if you do not make an election by this date,
you will be deemed to have made a default election to receive cash for 50% of
your Warrant Shares and Ameris Common Stock for 50% of your Warrant Shares.
Please acknowledge your agreement with the terms of this letter by signing
where indicated below. By signing hereunder, you agree and acknowledge that
your consent to receive cash or Ameris Common Stock for your Warrants is
irrevocable and that, upon the consummation of the Merger, all Warrants held by
you on the Closing Date shall be cancelled, and all rights thereunder shall
cease to exist except as provided in this letter.
Sincerely,
Ameris Bancorp
[ACKNOWLEDGEMENT ON FOLLOWING PAGE]
ACKNOWLEDGMENT OF WARRANT HOLDER
Warrant Holder acknowledges and agrees to the terms this letter from Ameris
Bancorp as of this _____ day of _______, 2006.
------------------------------
(Warrant Holder)
2
EXHIBIT A
FORM OF WARRANT ELECTION
Pursuant to Section 3.6 of the Merger Agreement, I hereby elect to receive in
exchange for each of my Warrants:
[_] (a) cash in an amount equal to (i) the aggregate number of Warrant
Shares for which my Warrants may be exercised, multiplied by (ii) the
difference between (A) the Target Stock Price (as defined in the Merger
Agreement) and (B) the exercise price for each Warrant Share; or
--
[_] (b) a number of shares of Ameris Common Stock equal to (i) the
aggregate number of Warrant Shares for which my Warrant may be exercised,
multiplied by (ii) the quotient obtained by dividing (A) the difference
between (1) the Target Stock Price (as defined in the Merger Agreement) and
(2) the exercise price for each Warrant Share, by (B) the Average Market
Price (as defined in the Merger Agreement).
WARRANT HOLDER
----------------------------------
Signature
Name:
-----------------------------
Date:
-----------------------------
3
EXHIBIT 7.10
------------
AFFILIATE AGREEMENT
-------------------
Ameris Bancorp
▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Ladies and Gentlemen:
The undersigned is a shareholder of Islands Bancorp ("Target"), a South
Carolina corporation, and will become a shareholder of Ameris Bancorp
("Purchaser") pursuant to the transactions described in the Agreement and Plan
of Merger, dated as of August 15, 2006 (the "Agreement"), by and between Target
and Purchaser and certain of their respective subsidiaries. Under the terms of
the Agreement, Target will be merged into and with Purchaser (the "Merger"), and
the shares of the no par value common stock of Target ("Target Common Stock")
will be converted into and exchanged for cash or shares of the $1.00 par value
common stock of Purchaser ("Purchaser Common Stock"). This Affiliate Agreement
represents an agreement between the undersigned and Purchaser regarding certain
rights and obligations of the undersigned in connection with the shares of
Purchaser Common Stock to be received by the undersigned as a result of the
Merger.
In consideration of the Merger and the mutual covenants contained herein,
the undersigned and Purchaser hereby agree as follows:
1. AFFILIATE STATUS. The undersigned understands and agrees that as to
----------------
Target the undersigned is an "affiliate" under Rule 145(c) as defined in Rule
405 of the Rules and Regulations of the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended ("1933 Act"), and the
undersigned anticipates that the undersigned will be such an "affiliate" at the
time of the Merger.
2. COVENANTS AND WARRANTIES OF UNDERSIGNED. The undersigned
-------------------------------------------
represents, warrants and agrees that:
(a) The Purchaser Common Stock received by the undersigned as a
result of the Merger will be taken for his or her own account and not for
others, directly or indirectly, in whole or in part.
(b) Purchaser has informed the undersigned that any distribution
by the undersigned of Purchaser Common Stock has not been registered under the
1933 Act and that shares of Purchaser Common Stock received pursuant to the
Merger can only be sold by the undersigned (i) following registration under the
1933 Act, or (ii) in conformity with the volume and other requirements of Rule
145(d) promulgated by the SEC as the same now exist or may
hereafter be amended, or (iii) to the extent some other exemption from
registration under the 1933 Act might be available. The undersigned understands
that Purchaser is under no obligation to file a registration statement with the
SEC covering the disposition of the undersigned's shares of Purchaser Common
Stock.
3. RESTRICTIONS ON TRANSFER.
--------------------------
(a) The undersigned understands and agrees that stop transfer
instructions with respect to the shares of Purchaser Common Stock received by
the undersigned pursuant to the Merger will be given to Purchaser's Transfer
Agent and that there will be placed on the certificates for such shares, or
shares issued in substitution thereof, a legend stating in substance:
"The shares represented by this certificate may not be
sold, transferred or otherwise disposed of except or unless
(i) covered by an effective registration statement under the
Securities Act of 1933, as amended, (ii) in accordance with
(x) Rule 145(d) (in the case of shares issued to an
individual who is not an affiliate of Purchaser) or (y) Rule
---
144 (in the case of shares issued to an individual who is an
affiliate of Purchaser) of the Rules and Regulations of such
Act, or (iii) in accordance with a legal opinion
satisfactory to counsel for Purchaser that such sale or
transfer is otherwise exempt from the registration
requirements of such Act."
(b) Such legend will also be placed on any certificate
representing Purchaser securities issued subsequent to the original issuance of
the Purchaser Common Stock pursuant to the Merger as a result of any stock
dividend, stock split or other recapitalization as long as the Purchaser Common
Stock issued to the undersigned pursuant to the Merger has not been transferred
in such manner to justify the removal of the legend therefrom. In addition, if
the provisions of Rules 144 and 145 are amended to eliminate restrictions
applicable to the Purchaser Common Stock received by the undersigned pursuant to
the Merger, or at the expiration of the restrictive period set forth in Rule
145(d), Purchaser, upon the request of the undersigned, will cause the
certificates representing the shares of Purchaser Common Stock issued to the
undersigned in connection with the Merger to be reissued free of any legend
relating to the restrictions set forth in Rules 144 and 145(d) upon receipt by
Purchaser of an opinion of its counsel to the effect that such legend may be
removed.
4. UNDERSTANDING OF RESTRICTIONS ON DISPOSITIONS. The undersigned has
----------------------------------------------
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon his or her ability to sell, transfer or otherwise
dispose of the shares of Purchaser Common Stock received by the undersigned in
connection with the Merger, to the extent he or she believes necessary, with his
or her counsel or counsel for Target.
5. FILING OF REPORTS BY PURCHASER. Purchaser agrees, for a period of
--------------------------------
three years after the effective date of the Merger, to file on a timely basis
all reports required to be filed by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), so that the public
information provisions of Rule 145(d) promulgated by the SEC as the same are
2
presently in effect will be available to the undersigned in the event the
undersigned desires to transfer any shares of Purchaser Common Stock issued to
the undersigned pursuant to the Merger.
6. TRANSFER UNDER RULE 145(D). If the undersigned desires to sell or
----------------------------
otherwise transfer the shares of Purchaser Common Stock received by him or her
in connection with the Merger at any time during the restrictive period set
forth in Rule 145(d), the undersigned will provide the necessary representation
letter to the Transfer Agent for Purchaser Common Stock, together with such
additional information as the Transfer Agent may reasonably request. If
Purchaser's counsel concludes that such proposed sale or transfer complies with
the requirements of Rule 145(d), Purchaser shall cause such counsel, at
Purchaser's expense, to provide such opinions as may be necessary to Purchaser's
Transfer Agent so that the undersigned may complete the proposed sale or
transfer.
7. ACKNOWLEDGMENTS. The undersigned recognizes and agrees that the
---------------
foregoing provisions also apply with respect to Target Common Stock held by, and
Purchaser Common Stock issued in connection with the Merger to, (a) the
undersigned's spouse, (b) any relative of the undersigned or of the
undersigned's spouse who has the same home as the undersigned, (c) any trust or
estate in which the undersigned, the undersigned's spouse, and any such relative
collectively own at least a 10% beneficial interest or of which any of the
foregoing serves as trustee, executor or in any similar capacity, and (d) any
corporation or other organization in which the undersigned, the undersigned's
spouse and any such relative collectively own at least 10% of any class of
equity securities or of the equity interest.
8. MISCELLANEOUS. This Affiliate Agreement is the complete agreement
-------------
between Purchaser and the undersigned concerning the subject matter hereof. Any
notice required to be sent to any party hereunder shall be sent by registered or
certified mail, return receipt requested, using the addresses set forth herein
or such other address as shall be furnished in writing by the parties. This
Affiliate Agreement shall be governed by the laws of the State of Georgia.
[SIGNATURES ON NEXT PAGE.]
3
This Affiliate Agreement is executed as of the ____ day of
_________________, 2006.
Very truly yours,
----------------------------
Signature
----------------------------
Print Name
----------------------------
----------------------------
----------------------------
----------------------------
Address
----------------------------
Telephone No.
AGREED TO AND ACCEPTED as of
____________________, 2006
AMERIS BANCORP
By:
--------------------------
Its:
--------------------------
4
EXHIBIT 7.14
------------
SHAREHOLDER VOTING AGREEMENT
----------------------------
This SHAREHOLDER VOTING AGREEMENT (the "Agreement") is entered into as of
_________ 2006, by and among AMERIS BANCORP, a Georgia corporation ("Ameris"),
and ____________________ (each a "Shareholder" and collectively the
"Shareholders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, as of the date hereof, each Shareholder "beneficially owns" (as
such term is defined in Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended) and is entitled to dispose of (or to direct the disposition
of) and to vote (or to direct the voting of) the number of shares of common
stock, no par value per share (the "Common Stock"), of Islands Bancorp (the
"Company"), set forth opposite such Shareholder's name on Schedule I hereto
(such shares of Common Stock, together with any other shares of Common Stock the
voting power over which is acquired by any Shareholder during the period from
and including the date hereof through and including the date on which this
Agreement is terminated in accordance with its terms, are collectively referred
to herein as the "Subject Shares");
WHEREAS, Ameris and the Company and certain of their respective
subsidiaries propose to enter into an Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), pursuant to which, among other things,
the Company will merge with and into Ameris (the "Merger"); and
WHEREAS, as a condition to the willingness of Ameris to enter into the
Merger Agreement, and as an inducement and in consideration therefor, each
Shareholder is executing this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms. For purposes of this Agreement,
capitalized terms used and not defined herein shall have the respective meanings
ascribed to them in the Merger Agreement.
Section 1.2 Other Definitions. For purposes of this Agreement:
(a) "Affiliate" means, with respect to any specified Person, any Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. For
purposes of this Agreement, with respect to each Shareholder, the term
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
(c) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group.
(d) "Representative" means, with respect to any particular Person, any
director, officer, employee, accountant, consultant, legal counsel, investment
banker, advisor, agent or other representatives of such Person.
ARTICLE II
VOTING AGREEMENT AND IRREVOCABLE PROXY
Section 2.1 Agreement to Vote the Subject Shares. Each Shareholder, in
his or her capacity as such, hereby agrees that, during the period commencing on
the date hereof and continuing until the termination of this Agreement (such
period, the "Voting Period"), at any meeting (or any adjournment or postponement
thereof) of the Company's shareholders, however called, or in connection with
any written consent of the Company's shareholders, such Shareholder shall vote
(or cause to be voted) its Subject Shares (x) in favor of the approval of the
terms of the Merger Agreement, the Merger and the other transactions
contemplated by the Merger Agreement (and any actions required in furtherance
thereof), (y) against any action, proposal, transaction or agreement that would
result in a breach in any respect of any covenant, representation or warranty or
any other obligation or agreement of the Company contained in the Merger
Agreement or of any Shareholder contained in this Agreement, and (z) except with
the written consent of Ameris, against the following actions or proposals (other
than the transactions contemplated by the Merger Agreement): (i) any Takeover
Proposal; and (ii) (A) any change in the persons who constitute the board of
directors of the Company that is not approved in advance by at least a majority
of the persons who were directors of the Company as of the date of this
Agreement (or their successors who were so approved); (B) any material change in
the present capitalization of the Company or any amendment of the Company's
articles of incorporation or bylaws; (C) any other material change in the
Company's corporate structure or business; or (D) any other action or proposal
involving the Company or any of its subsidiaries that is intended, or could
reasonably be expected, to prevent, impede, interfere with, delay, postpone or
adversely affect the transactions contemplated by the Merger Agreement. Any
such vote shall be cast or consent shall be given in accordance with such
procedures relating thereto so as to ensure that it is duly counted for purposes
of determining that a quorum is present and for purposes of recording the
results of such vote or consent. Each Shareholder agrees not to enter into any
agreement or commitment with any Person the effect of which would be
inconsistent with or violative of the provisions and agreements contained in
this Article II.
Section 2.2 Grant of Irrevocable Proxy. Each Shareholder hereby
appoints Ameris and any designee of Ameris, and each of them individually, as
such Shareholder's proxy and attorney-in-fact, with full power of substitution
and resubstitution, to vote or act by written consent during the Voting Period
with respect the Subject Shares in accordance with Section 2.1. This proxy is
given to secure the performance of the duties of each Shareholder under this
Agreement. The Shareholders shall promptly cause a copy of this Agreement to be
deposited with the Company at its principal place of business. Each Shareholder
shall take such further action or execute such other instruments as may be
necessary to effectuate the intent of this proxy.
2
Section 2.3 Nature of Irrevocable Proxy. The proxy and power of
attorney granted pursuant to Section 2.2 by each Shareholder shall be
irrevocable during the term of this Agreement, shall be deemed to be coupled
with an interest sufficient in law to support an irrevocable proxy and shall
revoke any and all prior proxies granted by such Shareholder. The power of
attorney granted by each Shareholder herein is a durable power of attorney and
shall survive the dissolution, bankruptcy, death or incapacity of such
Shareholder. The proxy and power of attorney granted hereunder shall terminate
upon the termination of this Agreement.
ARTICLE III
COVENANTS
Section 3.1 Generally.
(a) Except for pledges in existence as of the date hereof, each
Shareholder agrees that during the Voting Period, except as contemplated by the
terms of this Agreement, it shall not (i) sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of (collectively, a "Transfer"), or enter
into any contract, option or other agreement with respect to, or consent to, a
Transfer of, any or all of the Subject Shares; provided, however, that any
Shareholder may Transfer any or all of its Subject Shares to any other
Shareholder and may pledge or encumber any Subject Shares so long as such pledge
or encumbrance would not impair any Shareholder's ability to perform its
obligations under this Agreement; or (ii) take any action that would have the
effect of preventing, impeding, interfering with or adversely affecting its
ability to perform its obligations under this Agreement.
(b) In the event of a stock dividend or distribution, or any change in
the Common Stock by reason of any stock dividend or distribution, split-up,
recapitalization, combination, exchange of shares or the like, the term "Subject
Shares" shall be deemed to refer to and include the Subject Shares as well as
all such stock dividends and distributions and any securities into which or for
which any or all of the Subject Shares may be changed or exchanged or which are
received in such transaction.
Section 3.2 Standstill Obligations of Shareholders. Each Shareholder,
jointly and severally, covenants and agrees with Ameris that, during the Voting
Period:
(a) such Shareholder shall not, nor shall such Shareholder permit any
controlled Affiliate of such Shareholder to, nor shall such Shareholder act in
concert with or permit any controlled Affiliate to act in concert with any
Person to make, or in any manner participate in, directly or indirectly, a
"solicitation" of "proxies" (as such terms are used in the rules of the
Securities and Exchange Commission) or powers of attorney or similar rights to
vote, or seek to advise or influence any Person with respect to the voting of,
any shares of Common Stock in connection with any vote or other action on any
matter, other than to recommend that shareholders of the Company vote in favor
of the Merger and the Merger Agreement and otherwise as expressly provided by
Article II of this Agreement;
(b) such Shareholder shall not, nor shall such Shareholder permit any
controlled Affiliate of such Shareholder to, nor shall such Shareholder act in
concert with or permit any controlled Affiliate to act in concert with any
Person to, deposit any shares of Common Stock in
3
a voting trust or subject any shares of Common Stock to any arrangement or
agreement with any Person with respect to the voting of such shares of Common
Stock, except as provided by Article II of this Agreement; and
(c) such Shareholder shall not, and shall direct its Representatives
not to, directly or indirectly, through any officer, director, agent or
otherwise, enter into, solicit, initiate, conduct or continue any discussions or
negotiations with, or knowingly encourage or respond to any inquiries or
proposals by, or provide any information to, any Person, other than Ameris,
relating to any Takeover Proposal, other than in compliance with the terms of
the Merger Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER
Each Shareholder hereby represents and warrants, severally and not jointly,
to Ameris as follows:
Section 4.1 Due Organization, etc. Such Shareholder has all necessary
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
Section 4.2 Ownership of Shares. Schedule I sets forth, opposite such
Shareholder's name, the number of shares of Common Stock over which such
Shareholder has record and beneficial ownership as of the date hereof. As of
the date hereof, such Shareholder is the lawful owner of the shares of Common
Stock denoted as being owned by such Shareholder on Schedule I and has the sole
power to vote (or cause to be voted) such shares of Common Stock. Except as set
forth on such Schedule I, neither such Shareholder nor any Affiliate of such
Shareholder owns or holds any right to acquire any additional shares of any
class of capital stock of the Company or other securities of the Company or any
interest therein or any voting rights with respect to any securities of the
Company. Such Shareholder has good and valid title to the Common Stock denoted
as being owned by such Shareholder on Schedule I, free and clear of any and all
pledges, mortgages, liens, charges, proxies, voting agreements, encumbrances,
adverse claims, options, security interests and demands of any nature or kind
whatsoever, other than those created by this Agreement or as could not
reasonably be expected to impair such Shareholder's ability to perform its
obligations under this Agreement.
Section 4.3 No Conflicts. (i) No filing with any governmental
authority, and no authorization, consent or approval of any other Person is
necessary for the execution of this Agreement by such Shareholder and the
consummation by such Shareholder of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by such Shareholder,
the consummation by such Shareholder of the transactions contemplated hereby or
compliance by such Shareholder with any of the provisions hereof shall (A)
conflict with or result in any breach of the organizational documents of such
Shareholder, (B) result in, or give rise to, a violation or breach of or a
default under any of the terms of any material contract, understanding,
agreement or other instrument or obligation to which such Shareholder is a party
or by which such Shareholder or any of its Subject Shares or assets may be
bound, or (C) violate any applicable order, writ, injunction, decree, judgment,
statute, rule or regulation, except for any
4
of the foregoing as could not reasonably be expected to impair such
Shareholder's ability to perform its obligations under this Agreement.
Section 4.4 Reliance by Ameris. Such Shareholder understands and
acknowledges that Ameris is entering into the Merger Agreement in reliance upon
the execution and delivery of this Agreement by such Shareholder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AMERIS
Ameris hereby represents and warrants to the Shareholders as follows:
Section 5.1 Due Organization, etc. Ameris is a company duly organized
and validly existing under the laws of the jurisdiction of its incorporation.
Ameris has all necessary corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Ameris have been duly authorized by all
necessary action on the part of Ameris.
Section 5.2 Conflicts. (i) No filing with any governmental authority,
and no authorization, consent or approval of any other Person is necessary for
the execution of this Agreement by Ameris and the consummation by Ameris of the
transactions contemplated hereby and (ii) none of the execution and delivery of
this Agreement by Ameris, the consummation by Ameris of the transactions
contemplated hereby shall (A) conflict with or result in any breach of the
organizational documents of Ameris, (B) result in, or give rise to, a violation
or breach of or a default under any of the terms of any material contract,
understanding, agreement or other instrument or obligation to which Ameris is a
party or by which Ameris or any of its assets may be bound, or (C) violate any
applicable order, writ, injunction, decree, judgment, statute, rule or
regulation, except for any of the foregoing as could not reasonably be expected
to impair Ameris's ability to perform its obligations under this Agreement.
Section 5.3 Reliance by the Shareholders. Ameris understands and
acknowledges that the Shareholders are entering into this Agreement in reliance
upon the execution and delivery of the Merger Agreement by Ameris.
ARTICLE VI
TERMINATION
Section 6.1 Termination. This Agreement shall terminate, become null
and void and have no effect upon the earliest to occur of (i) the mutual consent
of Ameris and the Shareholders, (ii) the Effective Time, (iii) the date of
termination of the Merger Agreement in accordance with its terms, and (iv) the
date of any modification, waiver or amendment to the Merger Agreement in a
manner that reduces either the Stock Consideration or the Cash Consideration;
provided, however, that termination of this Agreement shall not prevent any
-------- -------
party hereunder from seeking any remedies (at law or in equity) against any
other party hereto for such party's breach of any of the terms of this
Agreement. Notwithstanding the foregoing, Section 7.1 and Sections 7.5 through
7.16, inclusive, of this Agreement shall survive the termination of this
Agreement.
5
ARTICLE VII
MISCELLANEOUS
Section 7.1 Appraisal Rights. To the extent permitted by applicable
law, each Shareholder hereby waives any rights of appraisal or rights to dissent
from the Merger that it may have under applicable law.
Section 7.2 Publication. Each Shareholder hereby permits Ameris to
publish and disclose in the Proxy Statement/Prospectus (including, without
limitation, all documents and schedules filed with the Securities and Exchange
Commission) his or her identity and ownership of shares of Common Stock and the
nature of his or her commitments, arrangements and understandings pursuant to
this Agreement; provided, however, that such publication and disclosure is
subject in all cases to the prior review and comment by the Company and its
advisors.
Section 7.3 Affiliate Letters. Each Shareholder agrees to execute an
affiliate agreement, as soon as practicable after the date hereof, in
substantially the form attached as Exhibit 7.10 to the Merger Agreement.
Section 7.4 Further Actions. Each of the parties hereto agrees to use
its, his or her reasonable best efforts to do all things necessary to effectuate
this Agreement.
Section 7.5 Fees and Expenses. Each of the parties shall be
responsible for its, his or her own fees and expenses in connection with the
entering into of this Agreement and the consummation of the transactions
contemplated hereby.
Section 7.6 Amendments, Waivers, etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified, except upon the
execution and delivery of a written agreement executed by each of the parties
hereto. The failure of any party hereto to exercise any right, power or remedy
provided under this Agreement or otherwise available in respect hereof at law or
in equity, or to insist upon compliance by any other party hereto with its, his
or her obligations hereunder, and any custom or practice of the parties at
variance with the terms hereof shall not constitute a waiver by such party of
its, his or her right to exercise any such or other right, power or remedy or to
demand such compliance.
Section 7.7 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof in
addition to any other remedies at law or in equity.
Section 7.8 Notices. Any notices or other communications required or
permitted under, or otherwise in connection with this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person or
upon confirmation of receipt when transmitted by facsimile transmission (with
confirmation) or on receipt after dispatch by registered or certified mail,
postage prepaid, addressed, or on the next Business Day if transmitted by
national overnight courier, in each case as follows:
6
If to Ameris, addressed to it at:
Ameris Bancorp
▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
If to Target, addressed to:
with a copy to:
Section 7.9 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 7.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
Section 7.11 Entire Agreement. This Agreement (together with the
Merger Agreement, to the extent referred to herein) constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
Section 7.13 Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of each of the
parties, except that Ameris may assign and transfer its rights and obligations
hereunder to any direct or indirect wholly-owned subsidiary of Ameris.
7
Section 7.14 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their respective
successors and assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
Section 7.15 Governing Law; Consent to Jurisdiction; Waiver of Trial by
Jury.
(a) This Agreement and the transactions contemplated hereby, and all
disputes between the parties under or related to the Agreement or the facts and
circumstances leading to its execution, whether in contract, tort or otherwise,
shall be governed by and construed in accordance with the laws of the State of
South Carolina, without regard to the application of South Carolina principles
of conflicts of laws.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV)
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.15(c).
Section 7.16 Counterparts. This Agreement may be executed in
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
[signature page follows]
8
IN WITNESS WHEREOF, Ameris has caused this Agreement to be duly executed,
and each Shareholder has duly executed this Agreement, all as of the day and
year first above written.
AMERIS BANCORP
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
[NAMES OF SHAREHOLDERS]
EXHIBIT 8.2(d)
--------------
MATTERS AS TO WHICHTARGET COUNSELWILL OPINE
-------------------------------------------
1. Target is a corporation duly organized and validly existing under
the laws of the State of South Carolina with corporate power and authority (a)
to conduct its business as described in the Proxy Statement and (b) to own and
use its Assets.
2. Target Bank is a national bank duly organized and validly existing
under the laws of the United States of America with all requisite power and
authority to conduct its business as described in the Proxy Statement and to own
and use its Assets. The deposits of Target Bank are insured by the Federal
Deposit Insurance Corporation to the extent provided by law.
3. Target's authorized shares consist of _________________ shares of
Common Stock, no par value per share, of which _________________ shares were
outstanding as of ___________, 2006, and _________________ shares of Preferred
Stock, _________________ of which were outstanding as of _______________, 2006.
The outstanding shares of Target Common Stock have been duly authorized and
validly issued, were not issued in violation of any statutory preemptive rights
of shareholders, and are fully paid and nonassessable. To our knowledge, except
for Target Options and as Previously Disclosed, there are no options,
subscriptions, warrants, calls, rights or commitments obligating Target to issue
equity securities or acquire its equity securities.
4. Target owns directly or indirectly all the issued and outstanding
shares of the capital stock of Target Bank. To our knowledge, there are no
options, subscriptions, warrants, calls, rights or commitments obligating Target
Bank to issue equity securities or acquire its equity securities.
5. The execution and delivery by Target of the Agreement do not, and if
Target were now to perform its obligations under the Agreement such performance
would not, result in any violation of the Articles of Incorporation or Bylaws of
Target or the Articles of Association or Bylaws of Target Bank or, to our
knowledge, result in any breach of, or default or acceleration under, any
Material Contract or Order to which Target or Target Bank is a party or by which
Target or Target Bank is bound.
6. The execution and delivery by Target Bank of the Bank Merger
Agreement do not, and if Target Bank were now to perform its obligations under
the Bank Merger Agreement such performance would not, result in any violation of
the Articles of Incorporation,
Articles of Association or Bylaws of either Target Bank or, to our knowledge,
result in any breach of, or default or acceleration under, any Material Contract
or Order to which Target Bank is a party or by which Target Bank is bound.
7. Target has duly authorized the execution and delivery of the
Agreement and all performance by Target thereunder and has duly executed and
delivered the Agreement.
8. The Agreement is enforceable against Target.
9. Target Bank has duly authorized the execution and delivery of the
Bank Merger Agreement and all performance by it thereunder and has duly executed
and delivered the Bank Merger Agreement.
10. The Bank Merger Agreement is enforceable against Target Bank.
2
EXHIBIT 8.2(f)
--------------
NON-COMPETITION AND NON-DISCLOSURE AGREEMENT
--------------------------------------------
THIS NON-COMPETITION AND NON-DISCLOSURE AGREEMENT (the "Agreement") is made
and entered into as of the ______ day of _____________, 2006 by and between
AMERIS BANCORP, a Georgia corporation ("Ameris"), and [NAME OF DIRECTOR], an
individual resident of the State of ________ ("Director").
W I T N E S S E T H:
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WHEREAS, pursuant to the terms of that certain Agreement and Plan of Merger
(the "Merger Agreement") dated as of August 15, 2006 between Ameris and Islands
Bancorp ("Islands") and certain of their respective subsidiaries, Ameris and
Islands have agreed, upon the terms and subject to the conditions set forth in
the Merger Agreement, to a strategic combination of Ameris and Islands, and the
shareholders of Islands will receive a combination of cash and shares of Ameris
Common Stock in exchange for their shares of the common stock of Islands (the
"Merger");
WHEREAS, prior to the Merger, Islands was, and after the Merger, Ameris
will continue to be, in the business of owning and operating financial
institutions engaged in the business of banking, including, without limitation,
the solicitation of time and demand deposits and the making of residential,
consumer, commercial and corporate loans;
WHEREAS, Director is currently a shareholder and director of Islands, has
heretofore been responsible for overseeing the management of the business of
Islands, and has knowledge of the trade secrets, customer information and other
confidential and proprietary information of Islands and its subsidiary;
WHEREAS, the execution of this Agreement is contemplated by the Merger
Agreement, to which this Agreement is attached as Exhibit 8.2(g);
WHEREAS, in order to protect the goodwill of the business of Islands and
the other value to be acquired by Ameris pursuant to the Merger Agreement, for
which Ameris is paying substantial consideration, Ameris and Director have
agreed that Ameris' obligation to consummate the transactions contemplated by
the Merger Agreement are subject to the condition, among others, that Director
shall have entered into this Agreement;
WHEREAS, Director acknowledges that the provisions of this Agreement are
reasonable and necessary to protect the legitimate interest of Ameris and the
business and goodwill acquired by it pursuant to the Merger Agreement; and
WHEREAS, in order to induce Ameris to consummate the Merger and the other
transactions contemplated by the Merger Agreement, Director is willing to enter
into this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth herein, the parties agree as follows:
1. DEFINITIONS. As used in this Agreement, terms defined in the
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preamble and recitals of this Agreement shall have the meanings set forth
therein and the following terms shall have the meanings set forth below:
(a) "Ameris Market" shall mean the geographic area within a radius
of fifty (50) miles of the main office of Islands Community Bank, N.A., located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(b) "Competitive Business" shall mean any Person engaged in the
business of banking, including, without limitation, the solicitation of time and
demand deposits and the making of residential, consumer, commercial and
corporate loans.
(c) "Confidential Information" shall mean all client and vendor
lists, marketing arrangements, business plans, projections, financial
information, training manuals, pricing manuals, product development plans,
market strategies, internal performance statistics and other competitively
sensitive information concerning Ameris, Islands and their respective
subsidiaries which is material to Ameris and Islands and not generally known by
the public, other than Trade Secrets, whether or not in written or tangible
form.
(d) "Key Employee" shall mean any Person who is employed in a
management, executive, supervisory, training, marketing or sales capacity for
another Person.
(e) "Person" shall mean any individual, corporation, firm,
unincorporated organization, association, partnership, limited liability
company, trust (inter vivos or testamentary), estate of a deceased, insane or
incompetent individual, business trust, joint stock company, joint venture or
other organization, entity or business, whether acting in an individual,
fiduciary or other capacity.
(f) "Restricted Period" shall mean the period from the date hereof
until the first (1st) anniversary of the Effective Time (as defined in the
Merger Agreement).
(g) "Trade Secrets" shall mean Trade Secrets, as defined in the
Georgia Trade Secrets Act, and shall include, without limitation, the whole or
any portion or phase of any technical information, designs, processes,
procedures or improvements that are valuable and not generally known to the
competitors of Ameris or Islands, whether or not in written or tangible form.
2. NO COMPETING BUSINESS. Director hereby agrees that during the
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Restricted Period, except as permitted by Section 5 of this Agreement, Director
will not, directly or indirectly, render any services to, or serve in a capacity
with, any Competitive Business in the Ameris Market that is substantially
similar or identical to the services which he performed for, or the capacity in
which he served, Islands at any time during the two years prior to the date of
this Agreement, without regard to (a) whether the Competitive Business has its
office or other business facilities within the Ameris Market, or (b) whether
Director resides or reports to an office within the Ameris Market.
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3. NO SOLICITATION.
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3.1 Director hereby agrees that during the Restricted Period, except as
permitted by Section 5 of this Agreement, Director will not, directly or
indirectly, solicit, divert or take away the business of any customer of Ameris
Bancorp or American Banking Company within the Ameris Market.
3.2 Director hereby agrees that during the Restricted Period, except as
permitted by Section 5 of this Agreement, Director will not, directly or
indirectly, recruit, solicit or otherwise induce or influence any Key Employee
of Ameris Bancorp or American Banking Company to discontinue such employment or
agency relationship.
4. NO DISCLOSURE OF PROPRIETARY INFORMATION.
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4.1 Director hereby agrees that he will not directly or indirectly
disclose to anyone, or use or otherwise exploit for his own benefit or for the
benefit of anyone other than Ameris and Islands and their respective
subsidiaries, any Trade Secrets for as long as they remain Trade Secrets, except
as permitted by Section 5 of this Agreement.
4.2 Director hereby agrees that, during the Restricted Period, he will
not directly or indirectly disclose to anyone, or use or otherwise exploit for
Director's own benefit or for the benefit of anyone other than Ameris and
Islands and their respective subsidiaries, any Confidential Information, except
as permitted by Section 5 of this Agreement.
5. PERMITTED ACTIVITIES. The restrictions set forth in Sections 2, 3
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and 4 of this Agreement shall not apply to actions taken by Director during the
time he is employed by Ameris or Islands or any of their respective subsidiaries
to the extent, but only to the extent, that such actions are expressly approved
by the Board of Directors of Ameris.
6. REPRESENTATIONS AND WARRANTIES. Director represents and warrants
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that this Agreement constitutes the legal, valid and binding obligation of
Director, enforceable against him in accordance with its terms. Director
represents and warrants that he has no right, title, interest or claim in, to or
under any Trade Secrets or Confidential Information.
7. WAIVERS. Ameris will not be deemed as a consequence of any act,
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delay, failure, omission, forbearance or other indulgences granted from time to
time by Ameris or for any other reason (a) to have waived, or to be estopped
from exercising, any of its rights or remedies under this Agreement, or (b) to
have modified, changed, amended, terminated, rescind, or superseded any of the
terms of this Agreement.
8. INJUNCTIVE RELIEF. Director acknowledges (a) that any violation of
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this Agreement will result in irreparable injury to Ameris; (b) that damages at
law would not be reasonable or adequate compensation to Ameris for violation of
this Agreement; and (c) that Ameris shall be entitled to have the provisions of
this Agreement specifically enforced by preliminary and permanent injunctive
relief without the necessity of proving actual damages and without posting bond
or other security, as well as to an equitable accounting of all earnings,
profits and other benefits arising out of any such violation.
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9. NOTICES. All notices and other communications under this Agreement
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shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified mail,
postage prepaid, return receipt requested; or (d) overnight delivery service
requiring acknowledgment of receipt. Any such notice or communication shall be
sent to the appropriate party at its address or facsimile number given below (or
at such other address or facsimile number for such party as shall be specified
by notice given hereunder):
To Ameris:
Ameris Bancorp
▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
with a copy (which shall not constitute notice to Ameris) to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
To Director:
[NAME]
[ADDRESS AND FAX NUMBER]
All such notices and communications shall be deemed received upon (a) actual
receipt thereof by the addressee; (b) actual delivery thereof to the appropriate
address as evidenced by an acknowledged receipt; or (c) in the case of a
facsimile transmission, upon transmission thereof by the sender and confirmation
of receipt. In the case of notices or communications sent by facsimile
transmission, the sender shall contemporaneously mail a copy of the notice or
communication to the addressee at the address provided for above; provided,
however, that such mailing shall in no way alter the time at which the facsimile
notice or communication is deemed received.
10. SUCCESSORS IN INTEREST. This Agreement shall be binding upon, and
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shall inure to the benefit of and be enforceable by, the parties hereto and
their respective heirs, legal representatives, successors and assigns, and any
reference to a party hereto shall also be a reference to any such heir, legal
representative, successor or assign.
11. NUMBER; GENDER. Whenever the context so requires, the singular
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number shall include the plural and the plural shall include the singular, and
the gender of any pronoun shall include the other genders.
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12. CAPTIONS. The titles and captions contained in this Agreement are
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inserted herein only as a matter of convenience and for reference and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provision hereof. Unless otherwise specified to the contrary, all references
to Sections are references to Sections of this Agreement.
13. CONTROLLING LAW; CONSENT TO JURISDICTION.
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13.1 This Agreement, and all disputes between the parties under or
related to this Agreement or the facts and circumstances leading to its
execution, whether in contract, tort or otherwise, shall be governed by and
construed in accordance with the laws of the State of Georgia, without regard to
the application of Georgia principles of conflicts of laws.
13.2 Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of any
Georgia State court, or Federal court of the United States of America, sitting
in Georgia, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or for recognition or
enforcement of any judgment relating thereto, and each of the parties hereby
irrevocably and unconditionally (a) agrees not to commence any such action or
proceeding except in such courts; (b) agrees that any claim in respect of any
such action or proceeding may be heard and determined in such Georgia State
court or, to the extent permitted by law, in such Federal court; (c) waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any such action or
proceeding in any such Georgia State or Federal court; and (d) waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such Georgia State or Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 9. Nothing in this Agreement shall
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
14. INTEGRATION; AMENDMENT. This Agreement and the documents executed
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pursuant hereto or in connection herewith supersede all negotiations, agreements
and understandings among the parties with respect to the subject matter hereof
and constitutes the entire agreement among the parties hereto. This Agreement
may not be amended, modified or supplemented except by written agreement of the
parties hereto.
15. SEVERABILITY. Any provision hereof which is prohibited or
------------
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive
any provision of law which renders any such provision prohibited or
unenforceable in any respect. In the event that any provision of this Agreement
should ever be deemed to exceed the time, geographic, product or service or any
other limitations permitted by applicable law, then such provision shall be
deemed reformed to the maximum extent permitted by applicable law.
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16. COUNTERPARTS. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms hereof to produce or
account for more than one of such counterparts. Executed counterparts of this
Agreement may be delivered via facsimile transmission.
17. ENFORCEMENT OF CERTAIN RIGHTS. Nothing expressed or implied in
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this Agreement is intended, or shall be construed, to confer upon or give any
person other than the parties hereto, and their respective heirs, legal
representatives, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, or result in such person being
deemed a third party beneficiary of this Agreement.
18. ATTORNEYS' FEES. If either party hereto brings any action, suit,
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counterclaim, appeal or arbitration for any relief against the other party
hereto, declaratory or otherwise, to enforce the terms hereof or to declare
rights hereunder (collectively, an "Action"), the prevailing party in such
action shall be entitled to payment of its reasonable attorneys' fees and costs
incurred in bringing and prosecuting such Action and/or enforcing any judgment,
order, ruling, or award (collectively, a "Decision") granted therein, all of
which shall be deemed to have accrued on the date of commencement of such
Action. Any Decision entered in such Action shall contain a specific provision
providing for the recovery of attorneys' fees and costs incurred in enforcing
such Decision.
[SIGNATURES NEXT PAGE]
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IN WITNESS WHEREOF, Director has duly executed and delivered this
Agreement, and Ameris has caused this Agreement to be duly executed and
delivered on its behalf by an officer thereunto duly authorized, all as of the
date first above written.
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[NAME OF DIRECTOR]
AMERIS BANCORP
By:
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Its:
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EXHIBIT 8.3(d)
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MATTERS AS TO WHICH PURCHASER COUNSEL WILL OPINE
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1. Purchaser is a corporation duly organized and validly existing under
the laws of the State of Georgia with corporate power and authority (a) to
conduct its business as described in the Proxy Statement and (b) to own and use
its Assets.
2. Purchaser Bank is a corporation duly organized and validly existing
under the laws of the State of Georgia with corporate power and authority (a) to
conduct its business as described in the Proxy Statement and (b) to own and use
its Assets. The deposits of Purchaser Bank are insured by the Federal Deposit
Insurance Corporation to the extent provided by law.
3. Purchaser's authorized shares consist of 30,000,000 shares of Common
Stock, $1.00 par value per share, of which ________________ shares were
outstanding as of ____________, 2006, and 5,000,000 shares of Preferred Stock,
none of which were outstanding as of _______________, 2006. The outstanding
shares of Purchaser Common Stock have been duly authorized and validly issued,
were not issued in violation of any statutory preemptive rights of shareholders,
and are fully paid and nonassessable. To our knowledge, except as Previously
Disclosed, there are no options, subscriptions, warrants, calls, rights or
commitments obligating Purchaser to issue equity securities or acquire its
equity securities. The shares of Purchaser Common Stock to be issued to the
shareholders of Target upon consummation of the Merger have been registered
under the 1933 Act, and when issued in accordance with the Agreement, will be
validly issued, fully paid and nonassessable.
4. The execution and delivery by Purchaser of the Agreement do not, and
if Purchaser were now to perform its obligations under the Agreement such
performance would not, result in any violation of the Articles of Incorporation
or Bylaws of Purchaser or, to our knowledge, result in any breach of, or default
or acceleration under, any Material Contract or Order to which Purchaser is a
party or by which Purchaser is bound.
5. The execution and delivery by Purchaser Bank of the Bank Merger
Agreement do not, and if Purchaser Bank were now to perform its obligations
under the Bank Merger Agreement such performance would not, result in any
violation of the Articles of Incorporation or Bylaws of Purchaser Bank or, to
our knowledge, result in any breach of, or default or acceleration under, any
Material Contract or Order to which Purchaser Bank is a party or by which
Purchaser Bank is bound.
6. Purchaser has duly authorized the execution and delivery of the
Agreement and all performance by Purchaser thereunder and has duly executed and
delivered the Agreement.
7. The Agreement is enforceable against Purchaser.
8. Purchaser Bank has duly authorized the execution and delivery of the
Bank Merger Agreement and all performance by Purchaser Bank thereunder and has
duly executed and delivered the Bank Merger Agreement.
9. The Bank Merger Agreement is enforceable against Purchaser Bank.
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