EX-2.1
2
mergerplan030705.htm
AGREEMENT AND PLAN OF MERGER WITH FIRST CITIZENS DATED 3/7/05
EXHIBIT
2.1
AGREEMENT
AND PLAN OF REORGANIZATION AND MERGER
Agreement
and Plan
of
Reorganization
and Merger
By
and Among
Summit
Financial Corporation
Summit
National Bank
and
First
Citizens Bank
and
Trust Company, Inc.
and
joined in by
First
Citizens Bancorporation, Inc.
March
7, 2005
TABLE
OF CONTENTS
| ARTICLE
I. DEFINITIONS
| |
| ARTICLE
II. THE MERGER
| |
|
2.01.
Nature of Transaction; Plan of Merger
|
5
|
|
2.02.
Effect of Merger; Surviving Corporation
|
5
|
|
2.03.
Assets and Liabilities of SFC and SNB
|
5
|
|
2.04.
Conversion and Exchange of Stock
|
5
|
|
(a)
Conversion of SFC Stock
|
6
|
|
(b)
Cancellation of SNB Stock
|
6
|
|
(c)
Exchange and Payment Procedures; Surrender of Certificates
|
6
|
|
(d)
Antidilutive Adjustments
|
7
|
|
(e)
Dissenters
|
7
|
|
(f)
Lost Certificates
|
7
|
|
2.05.
Articles of Incorporation, Bylaws and Management
|
7
|
|
2.06.
Closing; Effective Time
|
8
|
|
ARTICLE
III. REPRESENTATIONS AND WARRANTIES OF SFC AND SNB
| |
|
3.01.
Organization; Standing; Power
|
8
|
|
3.02.
Capital Stock and Securities
| 8
|
|
3.03.
Principal Shareholders
| 8
|
|
3.04.
Subsidiaries
| 8
|
|
3.05.
Convertible Securities, Options, Etc
| 9
|
|
3.06.
Authorization and Validity of Agreement
| 9
|
|
3.07.
Validity of Transactions; Absence of Required Consents or
Waivers
| 9
|
|
3.08.
SFC Books and Records
| 10
|
|
3.09.
SFC Reports
| 10
|
|
3.10.
SFC Financial Statements
| 10
|
|
3.11.
SFC Tax Returns and Other Tax Matters
| 10
|
|
3.12.
Absence of Material Adverse Changes or Certain Other
Events
| 11
|
|
3.13.
Absence of Undisclosed Liabilities
| 11
|
|
3.14.
Compliance with Existing Obligations
| 11
|
|
3.15.
Litigation and Compliance with Law
| 11
|
|
3.16.
Real Properties
| 12
|
|
3.17.
Loans, Accounts, Notes and Other Receivables
| 13
|
|
3.18.
Securities Portfolio and Investments
| 14
|
|
3.19.
Personal Property and Other Assets
| 14
|
|
3.20.
Patents and Trademarks
| 14
|
|
3.21.
Environmental Matters
| 14
|
|
3.22.
Absence of Brokerage or Finders Commissions
| 15
|
|
3.23.
Material Contracts
| 16
|
|
3.24.
Employment Matters; Employee Relations
| 16
|
|
3.25.
Employment Agreements; Employee Benefit Plans; Other
Arrangements
| 17
|
|
3.26.
Insurance
| 18
|
|
3.27.
Insurance of Deposits
| 18
|
|
3.28.
Indemnification Obligations
| 18
|
|
3.29.
Obstacles to Regulatory Approval
| 19
|
|
3.30.
Disclosure
| 19
|
| | |
| ARTICLE
IV. REPRESENTATIONS AND WARRANTIES OF FCB
| |
|
4.01.
Organization; Standing; Power
| 19
|
|
4.02.
Authorization and Validity of Agreement
| 19
|
|
4.03.
Validity of Transactions; Absence of Required Consents or
Waivers
| 20
|
|
4.04.
Obstacles to Regulatory Approval
| 20
|
|
4.05
Bancorp Financial Statements
| 20
|
|
4.06
Absence of Material Adverse Changes or Certain Other
Events
| 20
|
|
4.07
Absence of Undisclosed Liabilities
| 21
|
|
4.08.
Disclosure
| 21
|
| ARTICLE
V. COVENANTS OF SFC AND SNB
| |
|
5.01.
Affirmative Covenants of SFC and SNB
| 21
|
|
(a)
SFC Shareholders’ Meeting; Proxy Statement; Recommendation
| 21
|
|
(b)
Conduct of Business Prior to Effective Time
| 22
|
|
(c)
Periodic Financial and Other Information
| 22
|
|
(d)
Notice of Certain Changes or Events
| 23
|
|
(e)
Accruals for Loan Loss Reserve, Expenses and Other Accounting
Matters
| 24
|
|
(f)
Loan
Charge-Offs
| 24
|
|
(g)
Consents
to Assignment of Contracts and Leases
| 24
|
|
(h)
Access
| 24
|
|
(i)
Pricing of Deposits and Loans
| 25
|
|
(j)
Further Action; Instruments of Transfer
| 25
|
|
5.02.
Negative Covenants of SFC and SNB
| 25
|
|
(a)
Amendments to Articles of Incorporation or Bylaws
| 25
|
|
(b)
Change in Capitalization
| 25
|
|
(c)
Sale or Issuance of Stock or Other Securities
| 25
|
|
(d)
Purchase or Redemption of Shares
| 25
|
|
(e)
Options, Warrants and Rights
| 25
|
|
(f)
Dividends and Distributions
| 26
|
|
(g)
Employment, Benefit or Retirement Agreements or Plans
| 26
|
|
(h)
Increase in Compensation; Bonuses
| 26
|
|
(i)
Accounting Practices; Independent Accountants
| 26
|
|
(j)
Acquisitions; Additional Branch Offices
| 26
|
|
(k)
Changes in Business Practices
| 27
|
|
(l)
Exclusive Merger Agreement
| 27
|
|
(m)
Acquisition or Disposition of Assets
| 27
|
|
(n)
Debt; Liabilities
| 28
|
|
(o)
Liens; Encumbrances
| 28
|
|
(p)
Waiver of Rights
| 28
|
|
(q)
Other Contracts
| 28
|
|
(r)
Deposit Liabilities
| 29
|
|
(s)
Changes in Lease Agreements
| 29
|
| ARTICLE
VI. COVENANTS OF FCB AND BANCORP
| |
|
6.01.
Employees; Employee Benefits
| 29
|
|
(a)
Employment of
SFC and SNB Employees
| 29
|
|
(b)
Employee
Benefits
| 29
|
|
6.02.
Further Action; Instruments of Transfer
| 30
|
|
6.03.
Notices of Certain Changes or Events
| 30
|
|
6.04
Financing
| 30
|
| ARTICLE
VII. ADDITIONAL MUTUAL AGREEMENTS
| |
|
7.01.
Regulatory Approvals
| 30
|
|
7.02.
Information for Proxy Statement and Applications for Regulatory
Approvals
| 30
|
|
7.03.
Announcements; Confidential Information
| 31
|
|
7.04.
Real Property Matters
| 32
|
|
7.05.
Directors’ and Officers’ Liability Insurance
| 34
|
|
7.06.
Final Tax Return
| 34
|
|
7.07.
Expenses
| 34
|
|
7.08.
Employment Agreements
| 34
|
|
(a)
New Employment Agreements
| 34
|
|
(b)
Existing Employment Agreements
| 35
|
|
7.09.
Treatment of Section 401(k) Plan
| 35
|
|
7.10.
SFC Stock Option Termination and Releases
| 35
|
|
7.11.
Correction of Credit Documentation and Compliance
Deficiencies
| 36
|
| | |
| ARTICLE
VIII. CONDITIONS PRECEDENT TO MERGER
| |
|
8.01.
Conditions to all Parties’ Obligations
| 36
|
|
(a)
Approval by Regulatory Authorities; Disadvantageous
Conditions
| 36
|
|
(b)
Adverse Proceedings, Injunction, Etc.
| 36
|
|
(c)
Approval by Boards of Directors and Xxxxxxxxxxxx
| 00
|
|
(x)
No Termination or Abandonment
| 37
|
|
(e)
Articles of Merger; Other Actions
| 37
|
|
8.02.
Additional Conditions to SFC’s and SNB’s Obligations
| 37
|
|
(a)
Material Adverse Change
| 37
|
|
(b)
Compliance with Laws
| 37
|
|
(c)
FCB’s and Bancorp’s Representations and Warranties and Performance
of
| |
|
Agreements;
Officers’ Certificate
| 37
|
|
(d)
Legal Opinion of FCB’s Counsel
| 38
|
|
(e)
Other Documents and Information
| 38
|
|
(f)
Fairness Opinion
| 38
|
|
(g)
Acceptance by SFC’s Counsel
| 38
|
|
(h)
Deposit of Merger Consideration
| 38
|
|
(i)
Completion of Subordinated Debt Offering
| 38
|
|
8.03.
Additional Conditions to FCB’s and Bancorp’s Obligations
| 38
|
|
(a)
Material Adverse Change
| 38
|
|
(b)
Compliance with Laws
| 38
|
|
(c)
SFC’s and SNB’s Representations and Warranties and
Performance
| |
|
of
Agreements; Officers’ Certificate
| 39
|
|
(d)
Completion of Subordinated Debt Offering
| 39
|
|
(e)
Employment Agreements
| 39
|
|
(f)
Termination of SFC Stock Options
| 39
|
|
(g)
Consents to Assignments; Estoppel Certificates
| 39
|
|
(h)
Legal Opinion of SFC’s Counsel
| 40
|
|
(i)
Other Documents and Information
| 40
|
|
(j)
Acceptance by FCB’s Counsel
| 40
|
| ARTICLE
IX. TERMINATION; BREACH; REMEDIES
| |
|
9.01.
Mutual Termination
| 40
|
|
9.02.
Unilateral Termination
| 40
|
|
(a)
Termination
by FCB
| 40
|
|
(b)
Termination by the SFC
| 41
|
|
(c)
Survival
of Certain Covenants Following Termination
| 43
|
|
9.03.
Termination
Fees
| 43
|
|
9.04.
Breach; Remedies
| 44
|
|
(a)
Breach by
SFC or SNB
| 44
|
|
(b)
Breach by FCB or Bancorp
| 44
|
|
(c)
Willful and Intentional Breach
| 44
|
|
(d)
Other Remedies
| 45
|
| ARTICLE
X. INDEMNIFICATION
| |
|
10.01.
Indemnification
Following Termination of Agreement
| 45
|
|
(a)
By SFC and
SNB
| 45
|
|
(b)
By FCB and Bancorp
| 45
|
|
(c)
Procedure for
Claiming Indemnification
| 46
|
|
10.02
Indemnification of
SFC’s, SNB’s, FFI’s and SIS’s
| |
|
Directors
and Officers Following Effective Time
| 46
|
| ARTICLE
XI. MISCELLANEOUS PROVISIONS
| |
|
11.01.
Survival of Representations, Warranties, Indemnification and Other
Agreements
| 47
|
|
(a)
Representations,
Warranties and Other Agreements
| 47
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|
(b)
Indemnification
| 47
|
|
11.02.
Waiver
| 48
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|
11.03.
Amendment
| 48
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|
11.04.
Notices
| 48
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|
11.05.
Previous Disclosure of Information
| 48
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|
11.06.
Further Assurance
| 48
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|
11.07.
Headings and Captions
| 48
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|
11.08.
Gender and Number
| 49
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|
11.09.
Entire Agreement
| 49
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|
11.10.
Severability of Provisions
| 49
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|
11.11.
Assignment
| 49
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|
11.12.
Counterparts
| 49
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|
11.13.
Governing Law
| 49
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|
11.14.
Inspection
| 49
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|
SIGNATURES
| 50
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|
EXHIBIT
A - Plan of Merger
| A-1
|
|
EXHIBIT
B - Form of
Legal Opinion of SFC’s and SNB’s Legal Counsel
| B-1
|
|
EXHIBIT
C - Terms of
Subordinated Debt Financing
| C-1
|
|
EXHIBIT
D - Form of Legal
Opinion of FCB’s and Bancorp’s Legal Counsel
| D-1
|
Agreement
and Plan of Reorganization and Merger
By
and Among
Summit
Financial Corporation,
Summit
National Bank
and
First
Citizens Bank and Trust Company, Inc.
And
Joined in By
First
Citizens Bancorporation, Inc.
THIS
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (the
“Agreement”) is entered into as of the 7th day of March, 2005, by and between
FIRST
CITIZENS BANK AND TRUST COMPANY, INC. (“FCB”),
SUMMIT
FINANCIAL CORPORATION (“SFC”),
and
SUMMIT NATIONAL BANK (“SNB”),
and is being joined in by FIRST
CITIZENS BANCORPORATION, INC. (“Bancorp”)
for purposes of its agreement to the terms hereof.
WHEREAS, FCB is
a
South Carolina bank with its principal office and place of business located in
Columbia,
South Carolina, and is a wholly-owned bank subsidiary of First
Citizens Bancorporation, Inc. (“Bancorp”), a
South Carolina business corporation
which also has its principal office and place of business in Columbia,
South
Carolina; and,
WHEREAS, Bancorp
is a
South Carolina business corporation with its principal office and place of
business located in Columbia,
South Carolina, is the owner of all the issued and
outstanding shares of common stock of FCB and is a financial holding company
registered as such with the Board of Governors of the Federal Reserve System;
and,
WHEREAS, SFC is
a
South Carolina business corporation with its principal office and place of
business located in Greenville,
South Carolina, and, by virtue of its being the
owner of all the issued and outstanding shares of common stock of SNB and
Freedom Finance, Inc. (“FFI”), is a financial holding company registered as such
with the Board of Governors of the Federal Reserve System; and,
WHEREAS, SNB is
a national banking association with its principal office and place of business
located in Greenville,
South Carolina, and is a wholly-owned subsidiary of SFC
and the owner of all the issued and outstanding shares of common stock of Summit
Investment Services, Inc. (“SIS”), a
South Carolina business corporation which
has its principal office and place of business in Greenville, South Carolina;
and,
WHEREAS, FCB,
SFC and SNB have agreed that it is in their mutual best interests and in the
best interests of their respective shareholders for SFC and SNB to be merged
with and into FCB in the manner and upon the terms and conditions contained in
this Agreement and the Plan of Merger attached as an exhibit hereto;
and,
WHEREAS, to
effectuate the foregoing, FCB, SFC and SNB desire to adopt this Agreement and
Plan of Reorganization; and,
1
WHEREAS, FCB’s
and Bancorp’s Boards of Directors have approved this Agreement, and Bancorp has
approved this Agreement in its capacity as FCB’s sole shareholder and desires to
join in the execution of this Agreement for purposes of evidencing its approval
of the transactions described herein and its agreement to the terms hereof;
and,
WHEREAS, SNB’s
and SFC’s Boards of Directors have approved this Agreement, and SFC’s Board of
Directors has approved this Agreement in its capacity as SNB’s sole
shareholder.
NOW,
THEREFORE, in
consideration of the premises, the mutual benefits to be derived from this
Agreement, and the representations, warranties, conditions, covenants and
promises herein contained, and subject to the terms and conditions hereof, FCB,
Bancorp, SFC and SNB hereby adopt and make this Agreement and mutually agree as
provided below.
Article
I
Definitions
As used
in this Agreement, certain of the capitalized terms used throughout this
Agreement are listed below with their meanings as used herein.
1.01 Best
Knowledge. The
term “Best Knowledge of SFC” or “Knowledge,” when used with reference to facts
or information known by SFC, SNB, SIS or FFI, refers to facts or information of
which J.
Xxxxxxxx Xxxxxx, Xxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx III, Xxxxxx X. Xxxxxxxxxx,
Xxxxx X. Xxxxxxxx, Xx., J. Xxxxxxx Xxxx and
Xxxxxxx X. Xxxxxxxxx, Xx. are
consciously aware or of which they should have become consciously aware in the
ordinary course of business and the performance of their management
duties.
The term
“Best Knowledge of FCB” or “Knowledge,” when used with reference to certain
facts or information known by FCB or Bancorp, refers to facts or information of
which executive officers of FCB or Bancorp are consciously aware or of which
they should have become consciously aware in the ordinary course of business and
the performance of their management duties.
1.02. Dissenters’
Rights. The
term “Dissenters’ Rights” means the right to dissent from the Merger and receive
cash under and in the manner described in Chapter 13 of the South Carolina
Business Corporation Act of 1988, as amended.
1.03. Effective
Time. The
term Effective Time means the date and time at which the Merger shall become
effective as specified in Articles of Merger executed by FCB and filed by it
with the South Carolina Secretary of State in accordance with applicable law in
order to effectuate the Merger of SFC and SNB into FCB.
1.04. Environmental
Laws. The
term “Environmental Laws” means (a)
all
federal, state and local statutes, regulations and ordinances, (b)
all
common law, and (c)
all
orders, decrees, and similar provisions having the force or effect of law and to
which SFC, SNB, SIS or FFI is subject, which, in the case of any of the above,
concern or relate to pollution or protection of the environment; standards of
conduct and bases of obligations or liability relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, reporting, testing, processing, discharge, release,
threatened release, control or clean-up of any “Hazardous Substances” (as
defined in subparagraph 1.11 below); public or worker health and safety;
wetlands protection, drainage or stormwater management; noise; odor; or indoor
air pollution.
1.05. FCB
Material Adverse Change. The
term “FCB Material Adverse Change” means a material adverse change in or
affecting FCB and Bancorp considered as one entity, in Bancorp’s
2
consolidated
financial condition or results of operations, in Bancorp’s businesses,
investments, Loan portfolio or operations, or in the ability of FCB or Bancorp
to consummate the transactions described herein, but
shall not include any change resulting from (a) the
execution or announcement of this Agreement, (b) any
actions taken by any of the SFC Companies or any of their respective affiliates
after the date hereof and prior to the Effective Time that relate to, or affect,
the businesses of FCB or Bancorp, (c) compliance
by FCB or Bancorp with the terms of this Agreement, or (d) any
reasonable out-of-pocket costs or expenses associated with, relating to or
arising from the transactions contemplated by this Agreement (including legal,
accounting and financial advisory fees and disbursements).
1.06. FCB
Material Adverse Effect. The
term “FCB
Material Adverse Effect” means a material adverse effect on FCB and Bancorp
considered as one entity, on Bancorp’s consolidated financial condition or
results of operations, on Bancorp’s or FCB’s business, or on the ability of FCB
and Bancorp to consummate the transactions described herein or to carry on its
business as presently conducted, or on FCB’s ability to conduct SNB’s business
following the Merger, but
shall not include any effect resulting from (a) the
execution or announcement of this Agreement, (b) any
actions taken by any of the SFC Companies or any of their respective affiliates
after the date hereof and prior to the Effective Time that
relate to, or affect, the businesses of FCB or Bancorp, (c)
compliance by FCB or Bancorp with the terms of this Agreement, or (d) any
reasonable out-of-pocket costs or expenses associated with, relating to or
arising from the transactions contemplated by this Agreement (including legal,
accounting and financial advisory fees and disbursements).
1.07. FDIC. The
term “FDIC” means the Federal Deposit Insurance Corporation.
1.08. FFI
Stock. The
term “FFI Stock” means the outstanding $1.00 par value common stock of
FFI.
1.09. FRB. The
term “FRB” means, collectively, the Federal Reserve Board and the Federal
Reserve Bank of Richmond.
1.10. GAAP. The
term “GAAP” means accounting principles generally accepted in the United
States.
1.11. Hazardous
Substance. The
term “Hazardous Substance” means any materials, substances, wastes, chemical
substances, or mixtures presently listed, defined, designated, classified or
otherwise regulated as hazardous, toxic, or dangerous under any Environmental
Laws, whether by type or quantity, including without limitation pesticides,
pollutants, contaminants, toxic chemicals, oil, or other petroleum products or
byproducts, asbestos or materials containing (or presumed to contain) asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, lead, radon,
methyl tertiary butyl ether or radioactive material.
1.12. Loans. The
term “Loans” means any and all loans, lines of credit, letters of credit or
other extensions of credit (including all unfunded commitments to make a Loan or
issue or extend credit), and all accounts, notes and other receivables of any of
the SFC Companies.
1.13. OCC. The
term “OCC” means the Office of the Comptroller of the Currency.
1.14. Previously
Disclosed. The
terms “Previously Disclosed to FCB” and “Previously Disclosed to SFC” shall mean
the disclosure of information by SFC and SNB to FCB and Bancorp, or by FCB and
Bancorp to SFC, respectively, as of the last day of the calendar month
immediately preceding the date of this Agreement or as of such other date as is
specified herein, in the manner described in Paragraph 11.05 of this
Agreement.
1.15. Regulatory
Authorities. The
term “Regulatory Authorities” includes each and every federal, state or local
governmental, regulatory, or judicial authority having jurisdiction over SFC,
SNB,
3
SIS, FFI,
FCB or Bancorp, or any of their respective business operations, properties or
assets, or the transactions described herein.
1.16. SEC. The
term “SEC” means the Securities and Exchange Commission.
1.17. 0000
Xxx. The
term “1934 Act” means the Securities Exchange Act of 1934, as
amended.
1.18. SFC
Audited Financial Statements. The term
“SFC Audited Financial Statements” means SFC’s audited consolidated statements
of financial condition as of December 31, 2004 and 2003, and its audited
consolidated statements of income, shareholders’ equity and cash flows for the
three years ended December 31, 2004, 2003 and 2002, together with the notes
thereto.
1.19. SFC
Companies. The
term “SFC Companies” refers collectively to SFC, SNB, SIS and FFI.
1.20. SFC
Material Adverse Change. The
term “SFC Material Adverse Change” means a material adverse change in or
affecting SFC, SNB, SIS and FFI considered as one entity, in SFC’s consolidated
financial condition or results of operations, in the SFC Companies’ respective
businesses, investments, Loan portfolio or operations, or in the ability of SFC
or SNB to consummate the transactions described herein or to carry on SNB’s
business as presently conducted, or in FCB’s ability to conduct SNB’s business
following the Merger, but
shall not include any change resulting from (a) the
execution or announcement of this Agreement, (b) any
actions taken by FCB or Bancorp or any of their respective affiliates after the
date hereof and prior to the Effective Time that relate to, or affect, the
businesses of the SFC Companies, (c)
compliance by SFC or SNB with the terms of this Agreement, or (d) any
reasonable out-of-pocket costs or expenses associated with, relating to or
arising from the transactions contemplated by this Agreement (including legal,
accounting and financial advisory fees and disbursements).
1.21. SFC
Material Adverse Effect. The
term “SFC Material Adverse Effect” means a material adverse effect on SFC, SNB,
SIS and FFI considered as one entity, on SFC’s consolidated financial condition
or results of operations, on the SFC Companies’ respective businesses,
investments, Loan portfolio or operations, or on the ability of SFC or SNB to
consummate the transactions described herein or to carry on SNB’s business as
presently conducted, or on FCB’s ability to conduct SNB’s business following the
Merger, but
shall not include any effect resulting from (a) the
execution or announcement of this Agreement, (b) any
actions taken by FCB or Bancorp or any of their respective affiliates after the
date hereof and prior to the Effective Time that relate to, or affect, the
businesses of the SFC Companies, (c)
compliance by SFC or SNB with the terms of this Agreement, or (d) any
reasonable out-of-pocket costs or expenses associated with, relating to or
arising from the transactions contemplated by this Agreement (including legal,
accounting and financial advisory fees and disbursements).
1.22. SFC
Real Property. The
term “SFC Real Property” means all real property owned or leased by the SFC
Companies, including SNB’s and FFI’s office facilities and all other real estate
or foreclosed properties, including improvements thereon.
1.23. SFC
Stock. The
term “SFC Stock” means the outstanding $1.00 par value common stock of
SFC.
1.24. SFC
Stock Option. The
term “SFC Stock Option” means any and all options to purchase shares of SFC
Stock that have been issued prior to the date of this Agreement pursuant to any
option plan maintained or provided by SFC or otherwise and that remain
outstanding and unexercised on the date of this Agreement.
1.25. SIS
Stock. The
term “SIS Stock” means the outstanding $1.00 par value common stock of
SIS.
4
1.26. SNB
Stock. The
term “SNB Stock” means the outstanding $5.00 par value common stock of
SNB.
1.27. South
Carolina Board. The
term “South Carolina Board” means the South Carolina State Board of Financial
Institutions.
Article
II
The
Merger
2.01. Nature
of Transaction; Plan of Merger. Subject
to the provisions of this Agreement, at the Effective Time SFC and SNB each
simultaneously will be merged into and with FCB (the “Merger”) as provided in
the plan of merger (the “Plan of Merger”) attached as Exhibit A to this
Agreement.
2.02. Effect
of Merger; Surviving Corporation. At
the Effective Time, and by reason of the Merger, the separate corporate
existences of SFC and SNB shall cease while the corporate existence of FCB as
the surviving corporation in the Merger shall continue with all of its purposes,
objects, rights, privileges, powers and franchises, all of which shall be
unaffected and unimpaired by the Merger. Following the Merger, FCB shall
continue to operate as a South Carolina bank and will conduct its business at
the then legally established branch and main offices of FCB and SNB. The
duration of the corporate existence of FCB, as the surviving corporation, shall
be perpetual and unlimited.
2.03. Assets
and Liabilities of SFC and SNB. At
the Effective Time, and by reason of the Merger, and in accordance with
applicable law, all of the property, assets and rights of every kind and
character of SFC and SNB (including without limitation all real, personal or
mixed property, all debts due on whatever account, all other choses in action
and every other interest of or belonging to or due to SFC or SNB, whether
tangible or intangible) shall be transferred to and vest in FCB, and FCB shall
succeed to all the rights, privileges, immunities, powers, purposes and
franchises of a public or private nature of SFC and SNB, all without any
conveyance, assignment or further act or deed; and FCB shall become responsible
for all of the liabilities, duties and obligations of every kind, nature and
description of SFC and SNB as of the Effective Time. By virtue of the Merger,
SFC’s interest in and ownership of the outstanding shares of FFI Stock, and
SNB’s interest in and ownership of the outstanding shares of SIS Stock, shall be
transferred to and vest in FCB, and SIS and FFI shall become wholly-owned
subsidiaries of FCB.
2.04. Conversion
and Exchange of Stock.
(a) Conversion
of SFC Stock. Except
as otherwise provided in this Agreement, at the Effective Time all rights of
SFC’s shareholders with respect to all outstanding shares of SFC Stock shall
cease to exist and, as consideration for and to effect the Merger, each such
outstanding share (not to exceed an aggregate of the 4,525,855 shares
outstanding on the date of this Agreement and up to 664,848 shares for which
options to purchase SFC Stock have been issued by SFC and could be exercised
before the Closing) shall be converted, without any action by SFC, FCB or any
SFC shareholder, into the right to receive cash in the amount of $22.00, all in
the manner and subject to the limitations described in this
Agreement.
At the
Effective Time, and without any action by FCB, SFC or any SFC shareholder, SFC’s
stock transfer books shall be closed and there shall be no further transfers of
SFC Stock on its stock transfer books or the registration of any transfer of a
certificate evidencing SFC Stock (a “SFC Certificate”) by any holder thereof,
and the holders of SFC Certificates shall cease to be, and shall have no further
rights as, shareholders of SFC other than as provided in this Agreement.
Following the Effective Time, SFC Certificates shall evidence only the right of
the registered holders thereof to receive the consideration into which their SFC
Stock was converted at the Effective Time as provided in this
5
Paragraph
2.04(a), or, in the case of SFC Stock held by shareholders who properly shall
have exercised Dissenters’ Rights, cash as provided in Paragraph 2.04(e)
below.
(b) Cancellation
of SNB Stock. At the
Effective Time, all outstanding shares of SNB Stock shall be cancelled, and no
cash or other consideration shall be issued in exchange for or with respect to
those shares.
(c) Exchange
and Payment Procedures; Surrender of Certificates.
(i) Prior to
the Effective Time, FCB shall designate an agent reasonably acceptable to SFC to
act as agent for the holders of the SFC Stock in connection with the Merger (the
“Paying Agent”) to receive in trust, the aggregate consideration to which
holders of SFC Stock shall become entitled pursuant to Paragraph 2.04(a) (the
“Merger Consideration”). SFC and SNB agree that FCB’s own trust department, or
the corporate trust department of First-Citizens Bank & Trust Company,
Raleigh, North Carolina, each shall be acceptable to them as FCB’s Paying
Agent.
(ii) At the
Effective Time, FCB shall deposit the Merger Consideration with the Paying
Agent. The Merger Consideration shall be held in trust for the benefit of the
holders of SFC Stock and such cash shall not be used for any other purposes;
provided that FCB may direct the Paying Agent to invest such cash, provided that
such investments (A) shall be
in obligations of or guaranteed by the United States of America, in commercial
paper obligations receiving the highest rating from Standard & Poor’s
Corporation, or in certificates of deposit of domestic commercial banks with
capital exceeding $250,000,000 (collectively, the “Permitted Investments”) or in
money market funds which are invested solely in Permitted Investments, and
(B) shall
have maturities that will not prevent or delay payments to be made pursuant to
Paragraph 2.04(a) and this Paragraph 2.04(c). If for any reason (including
losses) the funds held by the Paying Agent are inadequate to pay the amounts to
which the holders of SFC Stock shall be entitled under Paragraph 2.04(a),
Bancorp and FCB shall be liable for the payment thereof.
(iii) As
promptly as practicable
after the
Effective Time, FCB and
Bancorp shall cause to
be mailed to each
record
holder, as of the Effective Time, whose shares of SFC Stock were converted
pursuant to Paragraph 2.04(a) into the right to receive the Merger
Consideration, a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to a SFC Certificate shall pass, only
upon proper delivery of the SFC Certificate to the Paying Agent and shall be in
such form and have such other provisions as FCB may reasonably specify) and
instructions for effecting the surrender of a SFC Certificate in exchange for
the Merger Consideration for the SFC Stock. Upon surrender of a SFC Certificate
for cancellation to the Paying Agent or to such other agent or agents as may be
appointed by FCB, together with such letter of transmittal duly executed and
completed in accordance with the instructions thereto, the holder of such SFC
Certificate shall receive promptly in exchange therefor the Merger Consideration
for each share of SFC Stock formerly evidenced thereby, and such SFC Certificate
shall forthwith be canceled.
(iv) At any
time following the 12 month anniversary of the Effective Time, FCB shall be
entitled to require the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) which had been made available to the
Paying Agent, and holders shall be entitled to look to FCB (subject to abandoned
property, escheat or other similar laws) only as a general creditor thereof with
respect to the Merger Consideration payable upon due surrender of their SFC
Certificates without any interest thereon. Notwithstanding the foregoing,
neither FCB, Bancorp nor the Paying Agent shall be liable to any holder of a SFC
Certificate for Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(d) Antidilutive
Adjustments. If,
prior to the Effective Time, SFC shall declare any dividend payable in shares of
SFC Stock or shall subdivide, split, reclassify or combine the presently
outstanding shares of SFC Stock, then an appropriate and proportionate
adjustment shall be made in the
6
amount of
cash into which each share of SFC Stock will be converted at the Effective Time
pursuant to this Agreement.
(e) Dissenters. Any
shareholder of SFC who properly exercises Dissenters’ Rights shall be entitled
to receive payment of the fair value of his or her shares of SFC Stock in the
manner and pursuant to the procedures provided in Chapter 13 of the South
Carolina Business Corporation Act of 1988. Shares of SFC Stock held by persons
who exercise Dissenters’ Rights shall not be converted as described in Paragraph
2.04(a). However, if any shareholder of SFC who exercises Dissenters’ Rights
shall fail to perfect those rights, or effectively shall waive or lose such
rights, then each of his or her shares of SFC Stock shall be deemed to have been
converted into the right to receive cash as of the Effective Time as provided in
Paragraph 2.04(a) hereof.
(f) Lost
Certificates. In the
event that any SFC Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such SFC
Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed SFC Certificate the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Article II, provided, that
the person to whom the Merger Consideration is paid shall, as a condition
precedent to the payment thereof, and at the sole discretion of FCB, give FCB a
bond in such sum as it may direct or otherwise indemnify FCB and Bancorp in a
manner satisfactory to them against any claim that may be made against FCB or
Bancorp with respect to shares of SFC Stock represented by the SFC Certificate
claimed to have been lost, stolen or destroyed..
2.05 Articles
of Incorporation, Bylaws and Management. The
Articles of Incorporation and Bylaws of FCB in effect at the Effective Time
shall be the Articles of Incorporation and Bylaws of FCB as the surviving
corporation in the Merger. The directors of FCB in office at the Effective Time
shall constitute the Board of Directors of FCB as the surviving corporation in
the Merger and shall continue to hold such offices until removed as provided by
law or until the election or appointment of their respective successors. The
officers of FCB in office at the Effective Time shall continue to serve in their
same positions as officers of FCB as the surviving corporation in the Merger
until removed as provided by law or until the election or appointment of their
respective successors.
2.06. Closing;
Effective Time. The
consummation and closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of FCB in Columbia, South Carolina,
or at such other place as FCB shall designate, on a date mutually agreeable to
FCB and SFC (the “Closing Date”) after the expiration of any and all required
waiting periods following the effective date of required approvals of the Merger
by governmental or regulatory authorities (but in no event more than five
business days following the satisfaction of all conditions to consummation of
the Merger as described in Article VIII of this Agreement). At the Closing, FCB,
Bancorp, SFC and SNB shall take such actions (including without limitation the
delivery of certain closing documents and the execution of Articles of Merger
under South Carolina law) as are required in this Agreement and as otherwise
shall be required by law to consummate the Merger and cause it to become
effective.
Subject
to the terms and conditions set forth in this Agreement, the Merger shall become
effective on the Effective Time specified in Articles of Merger executed by FCB
and filed by it with the South Carolina Secretary of State in accordance with
applicable law; provided,
however, that
the Effective Time shall in no event be more than three business days following
the Closing Date.
Article
III
Representations
and Warranties of SFC and SNB
Except as
otherwise specifically described in this Agreement or as Previously Disclosed to
FCB, SFC and SNB hereby make the following representations and warranties to
FCB.
7
3.01. Organization;
Standing; Power. SFC is
duly organized and incorporated, validly existing and in good standing as a
business corporation under the laws of the State of South Carolina and is a
registered financial holding company under the Bank Holding Company Act of 1956,
as amended.
SNB is
duly organized, validly existing and in good standing as a national banking
association under the laws of the United States of America.
SIS and
FFI each is duly organized and incorporated, validly existing and in good
standing as a business corporation under the laws of the State of South
Carolina.
Each of
the SFC Companies (i) has all
requisite power and authority (corporate and other) to own, lease and operate
its properties and to carry on its business as it now is being conducted;
(ii) is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the properties owned, leased or operated by it therein, or in
which the transaction of its business, makes such qualification necessary,
except where failure so to qualify would not have an SFC Material Adverse
Effect; and (iii) is not
transacting business or operating any properties owned or leased by it in
violation of any provision of federal, state or local law or any rule or
regulation promulgated thereunder, except where such violation would not result
in an SFC Material Adverse Effect.
3.02. Capital
Stock and Securities.
SFC’s authorized capital stock consists of 20,000,000 shares of SFC Stock,
of which 4,525,855 shares are issued and outstanding as of the date of this
Agreement and constitute SFC’s only outstanding equity securities. The
outstanding shares of SFC Stock are listed on The Nasdaq SmallCap
Market.
SNB’s
authorized capital stock consists of 2,000,000 shares of SNB Stock, of which
850,000 shares are issued and outstanding. All of the SNB Stock is held,
beneficially and of record, by SFC, and those shares constitute SNB’s only
outstanding equity securities.
SIS’s
authorized capital stock consists of 100,000 shares of SIS Stock, of which 1,000
shares are issued and outstanding. All of the SIS Stock is held, beneficially
and of record, by SNB, and those shares constitute SIS’s only outstanding equity
securities.
FFI’s
authorized capital stock consists of 100,000 shares of FFI Stock, of which 1,000
shares are issued and outstanding. All of the FFI Stock is held, beneficially
and of record, by SFC, and those shares constitute FFI’s only outstanding equity
securities.
Each
outstanding share of SFC Stock, SNB Stock, SIS Stock and FFI Stock (i) has been
duly authorized and is validly issued and outstanding, and is fully paid and,
except with respect to the SNB Stock as provided in 12 USC 55, nonassessable,
(ii) has been
legally issued pursuant to an effective registration statement filed under the
Securities Act of 1933, as amended, or an available exemption from such
registration, and in conformity with applicable state securities laws, and
(iii) has not
been issued in violation of the preemptive rights of any shareholder. The SFC
Stock is registered with the SEC under the 1934 Act, and SFC is subject to the
registration and reporting requirements of the 1934 Act. The SNB Stock, SIS
Stock and FFI Stock are not registered under, and SNB, SIS and FFI are not
subject to the registration and reporting requirements of, the 1934
Act.
3.03. Principal
Shareholders. To the
Best Knowledge of SFC, no person or entity beneficially owns, directly or
indirectly, more than 5% of the outstanding shares of SFC Stock.
3.04. Subsidiaries. With the
exception of SNB, FFI and SIS, SFC has no subsidiaries, direct or indirect; and,
except for equity securities included in its investment portfolio and Previously
Disclosed to FCB, SFC does not own any stock or other equity interest in any
other corporation, service corporation, joint venture, partnership or other
entity.
8
With the
exception of SIS, SNB has no subsidiaries, direct or indirect, and, except for
equity securities included in its investment portfolio and Previously Disclosed
to FCB, SNB does not own any stock or other equity interest in any other
corporation, service corporation, joint venture, partnership or other
entity.
SIS and
FFI have no subsidiaries, direct or indirect; and SIS and FFI do not own any
stock or other equity interest in any other corporation, service corporation,
joint venture, partnership or other entity.
3.05. Convertible
Securities, Options, Etc. None of
the SFC Companies have any outstanding (a) securities
or other obligations (including debentures or other debt instruments) which are
convertible into shares of SFC Stock, SNB Stock, SIS Stock or FFI Stock, or any
other securities of any of the SFC Companies, (b) options,
warrants, rights, calls or other commitments of any nature which entitle any
person to receive or acquire any shares of SFC Stock, SNB Stock, SIS Stock or
FFI Stock or any other securities of any of the SFC Companies, or (c) plan,
agreement or other arrangement pursuant to which shares of SFC Stock, SNB Stock,
SIS Stock or FFI Stock or any other securities of any of the SFC Companies, or
options, warrants, rights, calls or other commitments of any nature pertaining
to any securities of any of the SFC Companies, have been or may be
issued.
3.06. Authorization
and Validity of Agreement. This
Agreement has been duly and validly approved by SFC’s and SNB’s respective
Boards of Directors and by SFC as the sole shareholder of SNB. Subject only to
approval of this Agreement by the shareholders of SFC in the manner required by
law and required approvals of Regulatory Authorities (as contemplated by
Paragraph 7.01), (a) SFC and
SNB each has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations and agreements and carry out the
transactions described in this Agreement, (b) all
corporate proceedings and approvals required to authorize SFC and SNB to enter
into this Agreement and to perform its obligations and agreements and carry out
the transactions described herein have been duly and properly completed or
obtained, and (c) this
Agreement constitutes the valid and binding agreement of each of SFC and SNB
enforceable in accordance with its terms (except to the extent enforceability
may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect which affect creditors’ rights generally, (ii) legal and
equitable limitations on the availability of injunctive relief, specific
performance and other equitable remedies, and (iii) general
principles of equity and applicable laws or court decisions limiting the
enforceability of indemnification provisions).
3.07. Validity
of Transactions; Absence of Required Consents or
Waivers. Subject
to approval of this Agreement by the shareholders of SFC in the manner required
by law and receipt of required approvals of Regulatory Authorities, neither the
execution and delivery of this Agreement, nor the consummation of the
transactions described herein, nor compliance by SFC or SNB with any of their
respective obligations or agreements contained herein, nor any action or
inaction by SFC or SNB required herein, will conflict
with or result in a breach of the terms and conditions of, or constitute a
default or violation under any provision of, the Articles of Incorporation or
Association, as applicable, or Bylaws of SFC or SNB or, except where the same
could not, individually or in the aggregate, reasonably be expected to have an
SFC Material Adverse Effect, (a) conflict
with or result in a breach of the terms and conditions of, or constitute a
default or violation under any provision of, any contract, agreement, lease,
mortgage, note, bond, indenture, license, obligation or understanding (oral or
written) to which either of them is bound or to which either of them or their
respective businesses, capital stock or properties or assets is subject;
(b) result in
the creation or imposition of any lien, claim, interest, charge, restriction or
encumbrance upon any of the properties or assets of any of the SFC Companies;
(c) violate
any applicable federal or state statute, law, rule or regulation, or any
judgment, order, writ, injunction or decree of any court, administrative or
regulatory agency or governmental body; or (d) result in
the acceleration of any obligation or indebtedness of any of the SFC
Companies.
9
No
further consents, approvals or waivers are required to be obtained from any
person or entity in connection with SFC’s or SNB’s execution and delivery of
this Agreement, or the performance of their obligations or agreements or the
consummation of the transactions described herein, except for required approvals
of SFC’s shareholders and of Regulatory Authorities.
3.08. SFC
Books and Records. The SFC
Companies’ respective books of account and business records have been maintained
in all material respects in compliance with all applicable legal, regulatory and
accounting requirements, and such books and records are complete and reflect
accurately in all material respects their respective items of income and expense
and all of their respective assets, liabilities and stockholders’ equity. The
SFC Companies’ minute books are complete and accurately reflect in all material
respects all corporate actions which their respective shareholders and boards of
directors, and all committees thereof, have taken during the time periods
covered by such minute books.
3.09. SFC
Reports. To the
Best Knowledge of SFC, (a) since
December 31, 1999, each of the SFC Companies has filed all reports,
registrations and statements and other filings, together with any amendments
required to be made with respect thereto (“Reports”), that it was required to
file with any Regulatory Authority; (b) each
such Report filed by the SFC Companies complied in all material respects with
all the statutes, rules and regulations enforced or promulgated by the
Regulatory Authorities with which it was filed and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and (c) none of
the SFC Companies have been notified by a Regulatory Authority that any such
Report filed by any of them was deficient in any material respect as to form or
content.
3.10. SFC
Financial Statements. SFC has
Previously Disclosed to FCB a copy of the SFC Audited Financial Statements. The
SFC Audited Financial Statements (a) were
prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated, (b) are in
accordance with the SFC Companies’ books and records, and (c) present
fairly in all material respects SFC’s consolidated financial condition, assets
and liabilities, results of operations, changes in shareholders’ equity and
changes in cash flows as of the dates indicated and for the periods specified
therein. The SFC Audited Financial Statements have been audited by KPMG LLP,
which serves as SFC’s independent registered public accounting
firm.
3.11. SFC
Tax Returns and Other Tax Matters. Since
January 1, 1999, (a) each of
the SFC Companies has timely filed or caused to be filed all federal, state and
local income tax returns and reports which are required by law to have been
filed, and, to the Best Knowledge of SFC, all such returns and reports were
true, correct and complete in all material respects and contained all material
information required to be contained therein; (b) all
federal, state and local income, profits, franchise, sales, use, occupation,
property, excise, withholding, employment and other taxes (including interest
and penalties), charges and assessments attributable to periods ending on or
before December 31, 2004, which have become due from or been assessed or levied
against any of the SFC Companies or their respective properties have been fully
paid or, if not yet due, a reserve or accrual, which is adequate in all material
respects for the payment of all such taxes to be paid and the obligation for
such unpaid taxes, is reflected on the SFC Audited Financial Statements;
(c) none of
the SFC Companies have been involved in any audit by or other dispute with the
Internal Revenue Service (the “IRS”) or the South Carolina Department of Revenue
(the “SCDOR”) or other taxing authority, and none of the SFC Companies have
received any notification from the IRS, the SCDOR or other taxing authority of
the pendency of any audit or examination in connection with any such tax return
or report; (d) none of
the SFC Companies has waived or extended the statute of limitations (or been
asked to execute a waiver or extend a statute of limitations) with respect to
any tax year, the audit of any such tax return or report, or the assessment or
collection of any tax.
10
3.12. Absence
of Material
Adverse Changes or Certain Other Events.
(a) Since
December 31, 2004, (i) each of
the SFC Companies has conducted its business only in the ordinary course,
(ii) there
has occurred no SFC Material Adverse Change, and (iii) there
have occurred no events or developments, and there currently exist no conditions
or circumstances, which, individually or in the aggregate, and with the lapse of
time or otherwise, reasonably could be expected to cause, create or result in an
SFC Material Adverse Change.
(b) Since
December 31, 2004, and except as described in Paragraph 3.13 below, (i) none of
the SFC Companies have incurred any material liability, engaged in any material
transaction, or entered into any material agreement, (ii)
increased the salaries, compensation or general benefits payable or provided to
its employees (with the exception of routine increases in the salaries of
employees effected at such times and in such amounts as is consistent with their
past practices and salary administration and review policies and procedures in
effect prior to December 31, 2004), (iii) suffered
any material loss, destruction or damage to any of their properties or assets
not reserved for in the SFC Audited Financial Statements, or (iv) made a
material acquisition or disposition of any assets or entered into any material
contract or lease.
3.13. Absence
of Undisclosed Liabilities. None of
the SFC Companies have any material liabilities or obligations, whether known or
unknown, matured or unmatured, accrued, absolute, contingent or otherwise,
whether due or to become due (including without limitation tax liabilities or
unfunded liabilities under employee benefit plans or arrangements), other than
(a) those
reflected in the SFC Audited Financial Statements, (b)
increases in SNB’s deposit accounts in the ordinary course of its business since
December 31, 2004, or (c) unfunded
commitments to make, issue or extend Loans in amounts which, either individually
or in the aggregate, do not exceed the lesser of amounts which are consistent
with SNB’s and FFI’s lending practices prior to the date of this Agreement or
the maximum amounts permitted by applicable banking regulations.
3.14. Compliance
with Existing Obligations. Each of
the SFC Companies has performed in all material respects all obligations
required to be performed by it under, and it is not in default in any material
respect under, or in violation in any material respect of, the terms and
conditions of, its Articles of Incorporation or Association, as applicable,
Bylaws or any material contract, agreement, lease, mortgage, note, bond,
indenture, license, obligation, understanding or other undertaking (whether oral
or written) by which it is bound or to which its business, operations, capital
stock, properties or assets are subject.
3.15. Litigation
and Compliance with Law.
(a) There are
no actions, suits, arbitrations, controversies or other proceedings or
investigations (or, to the Best Knowledge of SFC, any facts or circumstances
which reasonably could be expected to result in such), including without
limitation any such action by any Regulatory Authority, which are pending or, to
the Best Knowledge of SFC, threatened, contemplated or probable of assertion,
(i) against
any of the SFC Companies or any of their respective businesses or assets, or
(ii) to the
Best Knowledge of SFC, otherwise relating to or affecting any of the SFC
Companies or any of their respective businesses or assets.
(b) Each of
the SFC Companies has all licenses, permits, orders, authorizations or approvals
(“Permits”) of all federal, state, local or foreign governmental or regulatory
agencies that are required for the conduct of its business or to own, lease and
operate its properties, all such Permits are in full force and effect, no
violations have occurred with respect to any such Permits, and no proceeding is
pending or, to the Best Knowledge of SFC, threatened or probable of assertion,
to suspend, cancel, revoke or limit any Permit, except where the failure to
obtain or maintain any such Permits, or the occurrence of any such violations,
suspensions, cancellations, revocations or limitations, individually or in the
aggregate, could reasonably be expected to result in an SFC Material Adverse
Effect.
11
(c) (i) None of
the SFC Companies are subject to any supervisory agreement, enforcement order,
writ, injunction, capital directive, supervisory directive, memorandum of
understanding or other similar agreement, order, directive, memorandum or
consent of, with or issued by any Regulatory Authority relating to its financial
condition, directors or officers, employees, operations, capital, regulatory
compliance or any other matter; (ii) there
are no judgments, orders, stipulations, injunctions, decrees or awards against
any of the SFC Companies which limit, restrict, regulate, enjoin or prohibit in
any material respect any of their present or past businesses or practices; and
(iii) none of
the SFC Companies have been notified by any Regulatory Authority or any court
that it is contemplating, threatening or requesting the issuance of any such
agreement, order, writ, injunction, directive, memorandum, judgment,
stipulation, decree or award.
(d) To the
Best Knowledge of SFC, none of the SFC Companies are in violation or default in
any material respect under, and each of them has complied in all material
respects with, all laws, statutes, ordinances, rules, regulations, orders,
writs, injunctions or decrees of any Regulatory Authority (including without
limitation all provisions of South Carolina law relating to usury, the Consumer
Credit Protection Act, and all other federal and state laws and regulations
applicable to extensions of credit by SNB and FFI). No person or authority has
asserted a claim, and, to the Best Knowledge of SFC, there is no reasonable
basis for any claim by any person or authority, for compensation, reimbursement,
damages or other penalties or relief for any violations described in this
subparagraph (d).
(e) To the
Best Knowledge of SFC, it has complied and is in compliance in all material
respects with the requirements, including all corporate governance requirements,
of The Nasdaq SmallCap Market for the continued listing of the SFC
Stock.
3.16. Real
Properties.
(a) SFC has
Previously Disclosed to FCB a list of all parcels of SFC Real Property owned by
one of the SFC Companies. With respect to each such parcel of owned SFC Real
Property, the SFC Company owning that parcel has good and marketable fee simple
title to that SFC Real Property and owns the same free and clear of all
mortgages, liens, leases, encumbrances, title defects and exceptions to title
other than (i) the lien
of current taxes not yet due and payable, and (ii) such
imperfections of title and restrictions, covenants and easements (including
utility easements) which do not materially and adversely affect the economic
value or marketability of that SFC Real Property or materially detract from,
interfere with or restrict the present or future use of that SFC Real Property
for the purposes for which it currently is used.
(b) SFC has
Previously Disclosed to FCB a list of all parcels of SFC Real Property in which
one of the SFC Companies has a leasehold interest, together with true and
complete copies of the lease agreement pertaining to each such parcel (the
“Lease Agreements”). With respect to each such parcel, (i) the SFC
Company-lessee of such parcel has unconditionally accepted occupancy of and
currently is occupying that property; (ii) the
lease term, commencement date, expiration date, renewal terms, and current rent
applicable to that parcel is as set forth in the Lease Agreement pertaining to
it; (iii) the
Lease Agreement pertaining to that parcel is in full force and effect and has
not been modified or amended; (iv)
the terms
and conditions of the Lease Agreement pertaining to that parcel will continue
without modification notwithstanding the Merger, and the Merger will not be
deemed to be a transfer or assignment in violation of or otherwise to violate
the Lease Agreement, to require the approval of the landlord under the Lease
Agreement, or to
prevent the exercise of or result in the loss of any right or option to renew or
extend the Lease Agreement or to purchase that parcel; (v) the
SFC Company-lessee of such parcel has performed all of the lessee’s obligations
(including the payment of rent) under the Lease Agreement pertaining to that
parcel, and no event of default by the lessee exists or has occurred under that
Lease Agreement (including without limitation any default that would prevent the
exercise of or result in the loss of any right or option to renew or extend the
Lease Agreement or to purchase that parcel); and
12
(vi) to
the Best Knowledge of SFC, the landlord with respect to that parcel has
performed all of the landlord’s obligations under the Lease Agreement pertaining
to that parcel, and no event of default by the landlord exists or has occurred
under that Lease Agreement.
(c) The SFC
Real Property complies in all material respects with all applicable federal,
state and local laws, regulations, ordinances or orders of any governmental or
regulatory authority, including without limitation those relating to zoning,
building and use permits, as well as the Americans with Disabilities Act. The
parcels of SFC Real Property upon which SNB’s and FFI’s offices are situated, or
which are used by SNB and FFI in conjunction with their respective businesses,
may, under applicable zoning ordinances, be used for the purposes for which they
currently are used as a matter of right rather than as a conditional or
nonconforming use.
(d) With
respect to each parcel of SFC Real Property that currently is used by SNB or FFI
as an office, (i)
all
improvements and fixtures included in or on that SFC Real Property are in
satisfactory condition and repair and performing the functions and operations
for which they were designed, ordinary wear and tear excepted, and (ii) there
does not exist any condition which materially and adversely affects the economic
value or marketability of that SFC Real Property or materially detracts from,
interferes with or restricts SNB’s or FFI’s present use (or FCB’s use after the
Merger) of that SFC Real Property or those improvements and fixtures for the
purposes for which they currently are used.
3.17. Loans,
Accounts, Notes and Other Receivables.
(a) All Loans
reflected as assets on the SFC Companies’ respective books and records
(i) have
resulted from bona fide business transactions in the ordinary course of their
respective operations, (ii) in all
material respects were made in accordance with their respective standard
practices and procedures, and (iii) are owned
by them, respectively, free and clear of all liens, encumbrances, assignments,
participation or repurchase agreements or other exceptions to title or to the
ownership or collection rights of any other person or entity.
(b) All
records of the SFC Companies regarding all outstanding Loans and all other real
estate owned, are accurate in all material respects, and, to the Best Knowledge
of SFC, each Loan which the SFC Companies’ respective Loan documentation
indicates is secured by any real or personal property or property rights (“Loan
Collateral”) is secured by valid, perfected and enforceable liens on all such
Loan Collateral having the priority described in their records of such
Loan.
(c) To the
Best Knowledge of SFC, each Loan reflected as an asset on the SFC Companies’
books, and each guaranty therefor, is the legal, valid and binding obligation of
the obligor or guarantor thereon, and no defense, offset or counterclaim has
been asserted with respect to any material Loan or guaranty.
(d) SFC has
Previously Disclosed to FCB a written listing of (i) each
Loan or other asset of any of the SFC Companies which, as of the last day of the
calendar year immediately preceding the date of this Agreement, was classified
by any Regulatory Authority, or by any of the SFC Companies themselves, as
“Loss,” “Doubtful,” “Substandard” or “Special Mention” (or otherwise by words of
similar import), or which any of the SFC Companies otherwise have designated as
a special asset, a “potential problem Loan,” or for special handling, or placed
on any “watch list” because of concerns regarding the ultimate collectibility or
deteriorating condition of such asset or any obligor or Loan Collateral
therefor, (ii) each
Loan which, as of the last day of the calendar year immediately preceding the
date of this Agreement, was past due more than 30 days as to the payment of
principal and/or interest, and (iii) each
Loan as to which, to the Best Knowledge of SFC, any obligor thereon (including
the borrower or any guarantor) was in default (other than as a result of
nonpayment of principal or interest), was the subject of a proceeding in
bankruptcy, or has indicated any inability or intention not to repay such Loan
in accordance with its terms.
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(e) To the
Best Knowledge of SFC, each of the Loans (with the exception of those Loans
Previously Disclosed to FCB pursuant to Paragraph 3.17(d) above) is collectible
in the ordinary course of the SFC Companies’ business in an amount which is not
less than the amount at which it is carried on their books and
records.
(f) The SFC
Companies’ reserves for possible Loan losses (the “Loan Loss Reserves”) has been
established in conformity with GAAP, sound banking practices and all applicable
requirements, rules and policies of Regulatory Authorities and, in the best
judgment of management and the Boards of Directors of the SFC Companies, is
reasonable in view of the size and character of the SFC Companies’ Loan
portfolios, current economic conditions and other relevant factors and is
adequate in all material respects to provide for losses relating to or the risk
of loss inherent in the SFC Companies’ Loan portfolios.
3.18. Securities
Portfolio and Investments. SFC has
Previously Disclosed to FCB a listing of all securities owned, of record or
beneficially, by each of the SFC Companies as of the last day of the calendar
year immediately preceding the date of this Agreement. All securities owned by
each of the SFC Companies are held free and clear of all mortgages, liens,
pledges, encumbrances or any other restriction or rights of any other person or
entity, whether contractual or statutory (with the exception of customary
pledges or sales of securities by SNB in the ordinary course of its business to
secure public funds deposits or in connection with “repurchase agreements”
entered into by it with its customers), which would materially impair the
ability of any of the SFC Companies to dispose freely of any such security
and/or otherwise to realize the benefits of ownership thereof at any time. There
are no voting trusts or other agreements or undertakings to which any of the SFC
Companies are a party with respect to the voting of any such securities. With
respect to all “repurchase agreements” under which any of the SFC Companies has
“purchased” securities under agreement to resell, it has a valid and, to the
Best Knowledge of SFC, perfected, first lien or security interest in the
government securities or other collateral securing the repurchase agreement, and
the value of the collateral securing each such repurchase agreement equals or
exceeds the amount of the debt owed to it which is secured by such
collateral.
Since
December 31, 2004, there has been no material deterioration or adverse change in
the quality, or any material decrease in the value, of any of the SFC Companies’
securities portfolios as a whole.
3.19. Personal
Property and Other Assets. All
banking equipment, data processing equipment, vehicles, and other personal
property used by each of the SFC Companies and material to the operation of its
business are owned by it free and clear of all liens, encumbrances, leases,
title defects or exceptions to title. To the Best Knowledge of SFC, all personal
property material to the SFC Companies’ respective businesses is in satisfactory
operating condition and repair, ordinary wear and tear excepted.
3.20. Patents
and Trademarks. To the
Best Knowledge of SFC, each of the SFC Companies owns, possesses or has the
right to use any and all patents, licenses, trademarks, trade names, copyrights,
trade secrets and proprietary and other confidential information necessary to
conduct its business as now conducted; and, to the Best Knowledge of SFC, none
of the SFC Companies have violated, and none of them currently is in conflict
with, any patent, license, trademark, trade name, copyright or proprietary right
of any other person or entity.
3.21. Environmental
Matters.
(a) SFC has
Previously Disclosed to FCB, and provided FCB with copies of, all written
reports, correspondence, notices or other information or materials in the SFC
Companies’ possession pertaining to environmental surveys or assessments of any
of the SFC Real Property and any improvements thereon, the presence of any
Hazardous Substance on any of the SFC Real Property, or any violation or alleged
violation of Environmental Laws on, affecting or otherwise involving any of the
SFC Real Property or involving any of the SFC Companies.
14
(b) To the
Best Knowledge of SFC, there has been no presence, use, production, generation,
handling, transportation, treatment, storage, disposal, emission, discharge,
release or threatened release of any Hazardous Substances by any person on, from
or relating to any of the SFC Real Property which constitutes a violation of any
Environmental Laws, or any removal, clean-up or remediation of any Hazardous
Substances from, on or relating to any of the SFC Real Property.
(c) None of
the SFC Companies have violated any Environmental Laws relating to any of the
SFC Real Property and, to the Best Knowledge of SFC, there has been no violation
of any Environmental Laws relating to any of the Real Property by any other
person or entity for whose liability or obligation with respect to any
particular matter or violation any of the SFC Companies are or may become
responsible or liable.
(d) To the
Best Knowledge of SFC, none of the SFC Companies are subject to any claims,
demands, causes of action, suits, proceedings, losses, damages, penalties,
liabilities, obligations, costs or expenses of any kind and nature which arise
out of, under or in connection with, or which result from or are based upon, the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, reporting, testing, processing,
emission, discharge, release, threatened release, control, removal, clean-up or
remediation of any Hazardous Substances on, from or relating to any of the SFC
Real Property, by any person or entity.
(e) To the
Best Knowledge of SFC, no facts, events or conditions relating to any of the SFC
Real Property, or the operations of any of the SFC Companies at any of their
office locations, will prevent, hinder or limit continued compliance with
Environmental Laws or give rise to any investigatory, emergency removal,
remedial or corrective actions, obligations or liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to Environmental
Laws.
(f) To the
Best Knowledge of SFC, (i) there
has been no violation of any Environmental Laws with respect to any Loan
Collateral by any person or entity for whose liability or obligation with
respect to any particular matter or violation any of the SFC Companies are or
may become responsible or liable, (ii) none of
the SFC Companies are subject to any claims, demands, causes of action, suits,
proceedings, losses, damages, penalties, liabilities, obligations, costs or
expenses of any kind and nature which arise out of, under or in connection with,
or which result from or are based upon, the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, reporting, testing, processing, emission, discharge,
release, threatened release, control, removal, clean-up or remediation of any
Hazardous Substances on, from or relating to any Loan Collateral, by any person
or entity, (iii) there are
no facts, events or conditions relating to any Loan Collateral that will give
rise to any investigatory, emergency removal, remedial or corrective actions,
obligations or liabilities pursuant to Environmental Laws; and (iv) there is
no Hazardous Substance on, from, under, at or relating to any Loan Collateral in
an amount, volume, or concentration sufficient to invoke or require regulation
under any Environmental Laws.
3.22. Absence
of Brokerage or Finders Commissions. Except
for SFC’s engagement of Xxxxx X. Xxxxx & Co. by SFC’s Board of Directors as
its financial adviser in connection with the Merger and to provide it with an
opinion as to the fairness, from a financial point of view, of the terms of the
Merger to SFC’s shareholders, (a) all
negotiations relative to this Agreement and the transactions described herein
have been carried on by SFC directly (or through its legal counsel) with FCB,
and no person or firm has been retained by or has acted on behalf of, pursuant
to any agreement, arrangement or understanding with, or under the authority of,
any of the SFC Companies or either of their respective Boards of Directors, as a
broker, finder or agent or has performed similar functions or otherwise is or
may be entitled to receive or claim a brokerage fee or other commission in
connection with or as a result of the transactions described herein; and
(b) none of
the SFC Companies have agreed, and none of them have any obligation, to pay any
brokerage fee or commission, or, with the exception of its legal counsel
and
15
accountants,
any other fee or compensation, to any person or entity in connection with or as
a result of the transactions described herein.
SFC has
Previously Disclosed to FCB the terms of its Board of Directors’ engagement of
Xxxxx X. Xxxxx & Co. (including fees to be paid to that firm by
SFC).
3.23. Material
Contracts. Other
than agreements with customers relating to Loans or other banking services which
were made in the ordinary course of their businesses, or as Previously Disclosed
to FCB by SFC, none of the SFC Companies are parties to or bound by any
agreement (a) involving
money or other property in an amount or with an aggregate cumulative value over
its full term in excess of $100,000, (b) which is
not to be performed in full prior to December 31, 2005, (c) which
calls for the provision of goods or services to any of the SFC Companies and
cannot be terminated without material penalty upon no more than 30 days notice
to the other party thereto, (d) which
otherwise is material to the SFC Companies considered as one enterprise and was
not entered into in the ordinary course of business, (e) which
involves hedging, options or any similar trading activity, or interest rate
exchanges or swaps, (f) which
commits SNB or FFI to make, issue or extend any Loan other than commitments in
the ordinary course of their respective businesses for Loans which do not exceed
that amount typically dealt with in the normal course of their respective
businesses, (g) which
involves the sale of any assets of any of the SFC Companies which are used in
and are material to the operation of their respective businesses, (h) which
involves any purchase or sale of real property, or which involves the purchase
or sale of any other assets in the amount of more than $50,000 in the case of
any single transaction or $150,000 in the case of all such transactions,
(i) which
involves the purchase, sale, issuance, redemption or transfer of any capital
stock or other securities of any of the SFC Companies, or (j) with any
director or officer of any of the SFC Companies, or any principal shareholder of
SFC (including without limitation any consulting agreement.
None of
the SFC Companies are in default in any material respect, and there has not
occurred any event which with the lapse of time or giving of notice or both
would constitute such a default, under any contract, lease, insurance policy,
commitment or arrangement to which they are parties or by which they or their
respective properties are bound or affected or under which they or their
property receives benefits, where the consequences of such default would have an
SFC Material Adverse Effect.
3.24. Employment
Matters; Employee Relations. SFC has
Previously Disclosed to FCB a listing of the names, years of credited service
and current base salary or wage rates of all employees of the respective SFC
Companies’ as of the last day of the calendar month immediately preceding the
date of this Agreement. Each of the SFC Companies (a) has in
all material respects paid in full to or, to the extent required by GAAP,
accrued on behalf of all its respective directors, officers and employees all
wages, salaries, commissions, bonuses, fees and other direct compensation for
all labor or services performed by them, and all vacation pay, sick pay,
severance pay, overtime pay and other amounts for which it is obligated under
applicable law or its existing agreements, benefit plans, policies or practices,
and
(b) is in
compliance with all applicable federal, state and local laws, statutes, rules
and regulations with regard to employment and employment practices, terms and
conditions, wages and hours and other compensation matters. To the Best
Knowledge of SFC, no person has asserted that any of the SFC Companies are
liable in any amount for any arrearage in wages or employment taxes or for any
penalties for failure to comply with any of the foregoing.
There is
no action, suit or proceeding by any person pending or, to the Best Knowledge of
SFC, threatened, against any of the SFC Companies (or any of their employees),
alleging employment discrimination, sexual harassment, wrongful discharge or
similar claims involving any of the SFC Companies.
None of
the SFC Companies are parties to or bound by any collective bargaining agreement
with any of their employees, any labor union or any other collective bargaining
unit or organization. There is no pending or, to the Best Knowledge of SFC,
threatened labor dispute, work
16
stoppage
or strike involving any of the SFC Companies and any of their respective
employees, or any pending or threatened proceeding in which it is asserted that
any of the SFC Companies have committed an unfair labor practice; and to the
Best Knowledge of SFC, there is no activity involving the employees of any of
the SFC Companies seeking to certify a collective bargaining unit or engaging in
any other labor organization activity.
3.25. Employment
Agreements; Employee Benefit Plans; Other Arrangements.
(a) SFC has
Previously Disclosed to FCB a true and complete list of all “Plans” maintained
by any of the SFC Companies or to which any of them are parties. For purposes of
this Agreement, the term “Plans” shall include any and all (i)
bonus,
incentive compensation, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock and stock option plans maintained or provided by any
of the SFC Companies or under which any of them has any obligation to any
person; (ii)
employment agreements, salary continuation agreements, and severance contracts
to which any of the SFC Companies are parties or under which they have any
obligation to any person; (iii)
medical,
dental, health, and life insurance plans maintained or provided by any of the
SFC Companies or under which they have any obligation to any person;
(iv)
vacation, sickness and other leave plans maintained or provided by any of the
SFC Companies, (v)
disability and death benefit plans maintained or provided by any of the SFC
Companies; and (vi) all
other employee benefit plans, contracts, or arrangements to which any of the SFC
Companies are parties or which are maintained or contributed to by any of them
for the benefit of any of their respective current or former employees or
directors or any of their beneficiaries.
(b) True and
complete copies of all Plans, including, but not limited to, any trust
instruments and/or insurance contracts, if any, forming a part thereof or
applicable to the administration of any such Plan or the assets thereof, and all
amendments thereto, have been Previously Disclosed to FCB.
(c) Neither
the execution and delivery of this Agreement, nor the consummation of the
transactions described herein, will (i) result in
any payment to any person (including without limitation any severance
compensation or payment, unemployment compensation, “golden parachute” or
“change in control” payment, or otherwise) becoming due under any Plan or
agreement to any director, officer, employee or consultant, (ii) increase
any benefits otherwise payable under any Plan or agreement, or (iii) result in
any acceleration of the time of payment or vesting of any such
benefit.
(d) Since
January 1, 1999, none of the SFC Companies have maintained, sponsored,
participated in or contributed to plan (including a multiemployer plan) within
the meaning of Section 3(27) of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”) that is or was subject to the provisions of
Section 412 of the Internal Revenue Code of 1986, as amended (the “Code”),
Title IV of ERISA, or Section 302 of ERISA.
(e) Since
January 1, 1999, SNB’s Section 401(k) plan (referenced in Paragraph 7.09 below)
(the “Retirement Plan”) is the sole Plan that is or has been maintained,
participated in or contributed to by the SFC Companies that is (i) an
“employee pension benefit plan” within the meaning of Section 3(2) of ERISA, and
(ii) intended
to be qualified under Code Section 401(a). The Retirement Plan has received a
favorable determination as to its qualification or is utilizing a prototype plan
document and is relying on the prototype plan’s national opinion letter. To the
Best Knowledge of SFC, there are no circumstances that are reasonably likely to
result in the revocation or denial of the Retirement Plan’s qualified status, or
any issues relating to the qualification or exemption of the Retirement Plan
that are currently pending before the IRS, the United States Department of
Labor, or any court or that are threatened.
17
(f) All
reports and returns with respect to the Plans required to be filed with any
governmental department, agency, service or other authority, including without
limitation Internal Revenue Service Form 5500 (Annual Report), have been
properly and timely filed.
(g) Each Plan
has been established and administered in accordance with its terms and in
compliance with the applicable provisions of ERISA. To the Best Knowledge of
SFC, there is no pending or threatened litigation relating to any Plan. To the
Best Knowledge of SFC, none of the SFC Companies have engaged in a transaction
with respect to any Plan that could subject any of them or a Plan to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i)
of ERISA.
(h) All
contributions required to be made pursuant to the terms of each of the Plans
(including without limitation the Retirement Plan and any other Plan that is a
“pension plan” (as defined in Section 3(2) of ERISA) have been timely
made.
(i) Except as
Previously Disclosed to FCB, as of the last day of the most recent plan year
ending prior to the date hereof, the current value of assets of each Plan that
is a “pension plan” (as defined in Section 3(2) of ERISA) equaled or exceeded
the actuarially determined present value of all “benefit liabilities,” within
the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the applicable Plan’s most recent
actuarial valuation). To the Best Knowledge of SFC, there has not been any
material adverse change in the financial condition of any such Plan that is a
“pension plan” (as defined in Section 3(2) of ERISA) since the last day of the
most recent plan year.
(j) Except as
provided in the terms of the Retirement Plan itself, there are no restrictions
on the rights of any of the SFC Companies to terminate any Retirement Plan
without incurring any liability thereunder.
3.26. Insurance. SFC has
Previously Disclosed to FCB a listing of each blanket bond, liability insurance,
property and casualty, workers’ compensation and employer liability, life or
other insurance policy in effect on the last day of the calendar month
immediately preceding the date of this Agreement, and in which any of the SFC
Companies were insured parties or beneficiaries (the “Policies”). The Policies
provide coverage in such amounts and against such liabilities, casualties,
losses or risks as is customary or reasonable for entities engaged in the
businesses of the SFC Companies or as is required by applicable law or
regulation; and, in the reasonable opinion of management of SFC and SNB, the
insurance coverage provided under the Policies is reasonable and adequate in all
respects for the SFC Companies. To the Best Knowledge of SFC, each of the
Policies is in full force and effect and is valid and enforceable in accordance
with its terms, and each of the SFC Companies has complied in all material
respects with requirements (including the giving of required notices) under each
such Policy in order to preserve all material rights thereunder with respect to
all matters. None of the SFC Companies are in default under the provisions of,
have received notice of cancellation or nonrenewal of, or any material premium
increase on, or have failed to pay any premium on, any such Policy, and, to the
Best Knowledge of SFC, there has not been any material inaccuracy in any
application for any Policy. There are no pending claims with respect to any
Policy, and, to the Best Knowledge of SFC, there currently are no conditions,
and there has occurred no event, that is reasonably likely to form the basis for
any such claim.
3.27. Insurance
of Deposits. All
deposits of SNB are insured by the Bank Insurance Fund of the FDIC to the
maximum extent permitted by law, all deposit insurance premiums due from SNB to
the FDIC have been paid in full in a timely fashion, SNB has not received any
notice that any proceedings to terminate such insurance have been commenced or
are contemplated by the FDIC, and, to the Best Knowledge of SFC, no such
proceedings are contemplated.
3.28. Indemnification
Obligations. Except
to the extent provided by their respective Articles of Incorporation or
Association, as applicable, or Bylaws in effect on the date of this Agreement,
or as otherwise required by Chapter 8 of the South Carolina Business Corporation
Act of 1988 or the National
18
Bank Act
of 1864, as amended, or regulations thereunder, none of the SFC Companies have
any obligation to indemnify or hold harmless any of their current or former
directors, officers or employees, or any other person, against or from any costs
or expenses (including attorneys’ fees), judgments, fines, amounts paid in
settlement, losses, claims, damages or liabilities incurred in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative.
3.29. Obstacles
to Regulatory Approval. To the
Best Knowledge of SFC, there exists no fact or condition (including without
limitation SNB’s record of compliance with the Community Reinvestment Act) that
may reasonably be expected to prevent or materially impede or delay any of the
SFC Companies or FCB from obtaining all approvals of Regulatory Authorities
required in order to consummate the transactions described in this Agreement;
and, if any such fact or condition becomes known to SFC or SNB, it shall
promptly (and in any event within three days after obtaining such Knowledge)
give notice of such fact or condition to FCB in the manner provided
herein.
3.30. Disclosure. To the
Best Knowledge of SFC, no written statement, certificate, schedule, list or
other written information furnished by or on behalf of any of the SFC Companies
to FCB or Bancorp or their employees or agents in connection with this Agreement
and the transactions described herein, when considered as a whole, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Article
IV
Representations
and Warranties of FCB and Bancorp
Except as
otherwise specifically described in this Agreement or as Previously Disclosed to
SFC, FCB and Bancorp hereby make the following representations and warranties to
SFC and SNB. Following Bancorp’s completion of the subordinated debt offering
described in Paragraphs 8.02(i) and 8.03(d) below, then FCB’s and Bancorp’s
representations in Paragraphs 4.05, 4.06 and 4.07 below shall terminate and be
of no further force or effect, effective as of the date of this
Agreement.
4.01. Organization;
Standing; Power. Each of
FCB and Bancorp, (a) is duly
organized and incorporated, validly existing and in good standing under the laws
of South Carolina, (b) has all
requisite power and authority (corporate and other) to own its respective
properties and conduct its respective business as it now is being conducted, and
(c) is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the properties owned or leased by it therein, or in which the
transaction of its respective business, makes such qualification necessary,
except where failure so to qualify would not have an FCB Material Adverse
Effect.
4.02. Authorization
and Validity of Agreement. This
Agreement has been duly and validly approved by FCB’s and Bancorp’s Boards of
Directors and by Bancorp in its capacity as FCB’s sole shareholder. Subject only
to receipt of required approvals of Regulatory Authorities (as contemplated by
Paragraph 7.01), (a) each of
FCB and Bancorp has the corporate power and authority to execute and deliver
this Agreement and to perform its obligations and agreements and carry out the
transactions described herein, (b) all
corporate proceedings required to be taken to authorize each of FCB and Bancorp
to enter into this Agreement and to perform its obligations and agreements and
carry out the transactions described herein have been duly and properly taken,
and (c) this
Agreement constitutes the valid and binding agreement of each of FCB and Bancorp
enforceable in accordance with its terms (except to the extent enforceability
may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect which affect creditors’ rights generally, (ii) legal and
equitable limitations on the availability of injunctive relief, specific
performance and other equitable remedies, and (iii) general
principles of equity and applicable laws or court decisions limiting the
enforceability of indemnification provisions).
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4.03. Validity
of Transactions; Absence of Required Consents or
Waivers. Subject
to receipt of required approvals of Regulatory Authorities, neither the
execution and delivery of this Agreement, nor the consummation of the
transactions described herein, nor compliance by FCB and Bancorp with any of
their respective obligations or agreements contained herein, will conflict
with or result in a breach of the terms and conditions of, or constitute a
default or violation under any provision of, FCB’s or Bancorp’s Articles of
Incorporation or Bylaws, or, except where the same could not, individually or in
the aggregate, reasonably be expected to have an FCB Material Adverse Effect,
(a) conflict
with or result in a breach of the terms and conditions of, or constitute a
default or violation under any provision of, any contract, agreement, lease,
mortgage, note, bond, indenture, license, or obligation or understanding (oral
or written) to which FCB or Bancorp is bound or by which either of them, or
their respective businesses, capital stock or any of their respective properties
or assets may be affected; (b) result in
the creation or imposition of any lien, claim, interest, charge, restriction or
encumbrance upon any of FCB’s or Bancorp’s properties or assets; (c) violate
any applicable federal or state statute, law, rule or regulation, or any order,
writ, injunction or decree of any court, administrative or regulatory agency or
governmental body; or (d) result in
the acceleration of any obligation or indebtedness of FCB or
Bancorp.
No
further consents, approvals or waivers are required to be obtained from any
person or entity in connection with FCB’s or Bancorp’s execution and delivery of
this Agreement, or the performance of their respective obligations or agreements
or the consummation of the transactions described herein, except for required
approvals of Regulatory Authorities as described in
Paragraph 7.01.
4.04. Obstacles
to Regulatory Approval. To the
Best Knowledge of FCB, no fact or condition (including without limitation FCB’s
record of compliance with the Community Reinvestment Act) exists that may
reasonably be expected to prevent or materially impede or delay FCB, Bancorp or
the SFC Companies from obtaining all approvals of Regulatory Authorities
required in order to consummate the transactions described in this Agreement;
and, if any such fact or condition becomes known to FCB or Bancorp, it shall
promptly (and in any event within three days after obtaining such Knowledge)
give notice of such fact or condition to SFC in the manner provided
herein.
4.05. Bancorp
Financial Statements. Bancorp
has Previously Disclosed to SFC a copy of Bancorp’s audited financial statements
for the years ended December 31, 2003 and 2002 and Bancorp’s unaudited financial
statements for the quarter ended September 30, 2004. Following the date of this
Agreement, Bancorp promptly will deliver to SFC all other annual or quarterly
financial statements of Bancorp contained in its reports filed
under the 1934 Act. Bancorp’s audited financial statements and unaudited
financial statements (a) were
prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated, (b) are in
accordance with the Bancorp’s books and records, and (c) present
fairly in all material respects Bancorp’s consolidated financial condition,
assets and liabilities, results
of operations, changes
in shareholders’ equity and changes in cash flows as of the dates indicated and
for the periods specified therein;
provided, however, that,
to the extent permitted by GAAP and other applicable regulations the unaudited
financial statements are
subject to normal year-end adjustments (which will not be material individually
or in the aggregate) and lack footnotes.
Bancorp’s audited financial statements have been audited by Pricewaterhouse
Coopers LLP which serves as Bancorp’s independent registered public accounting
firm.
4.06. Absence
of Material Adverse Changes or Certain Other Events.
Since
September 30, 2004, (a) each of
Bancorp and FCB has conducted its business in the ordinary course, (b) there
has occurred no FCB Material Adverse Change, and (c) there
have occurred no events or developments, and there currently exist no conditions
or circumstances, which, individually or in the aggregate, and with the lapse of
time or otherwise, reasonably could be expected to cause, create or result in an
FCB Material Adverse Effect.
4.07. Absence
of Undisclosed Liabilities.
Bancorp
and FCB do not have any material
liabilities or obligations, whether known or unknown, matured or unmatured,
accrued, absolute,
20
contingent
or otherwise, whether due or to become due (including without limitation tax
liabilities or unfunded liabilities under employee benefit plans or
arrangements), other than (a)
those
reflected in the Bancorp’s unaudited financial
statements for the quarter ended September 30, 2004, (b)
increases in FCB’s deposit accounts in the ordinary course of its business since
September 30, 2004, or (c)
unfunded
commitments to make, issue or extend Loans in amounts which, either individually
or in the aggregate, do not exceed the lesser of amounts which are consistent
with FCB’s lending practices prior to the date of this Agreement or the maximum
amounts permitted by applicable banking regulations.
4.08. Disclosure. To the
Best Knowledge of FCB, no written statement, certificate, schedule, list or
written information furnished by or on behalf of FCB or Bancorp to the SFC
Companies or their employees or agents in connection with this Agreement, when
considered as a whole, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.
Article
V
Covenants
of SFC and SNB
5.01. Affirmative
Covenants of SFC and SNB. SFC and
SNB each agrees as follows:
(a) SFC
Shareholders’ Meeting; Proxy Statement; Recommendation. SFC
shall cause a meeting of its shareholders (the “SFC Shareholders’ Meeting”) to
be duly called and held as soon as practicable after the date of this Agreement
for the purpose of voting by SFC’s shareholders on the approval of the Plan of
Merger. In connection with the call and conduct of, and all other matters
relating to, the SFC Shareholders’ Meeting (including the solicitation of
appointments of proxies), SFC will comply in all material respects with all
provisions of applicable law and regulations and with its Articles of
Incorporation and Bylaws.
SFC will
solicit appointments of proxies from its shareholders for use at the SFC
Shareholders’ Meeting and, in connection with that solicitation, will prepare
and distribute to its shareholders proxy solicitation materials (a “Proxy
Statement”) that, in all material respects, shall contain or be accompanied by
such information regarding the SFC Shareholders’ Meeting, this Agreement, the
parties hereto, the Merger and other transactions described herein, and
otherwise be in such form and contain such information, as is required by the
1934 Act and rules and regulations of the SEC thereunder (including without
limitation Regulation 14A), or as SFC’s Board of Directors otherwise shall
determine.
SFC will
mail the Proxy Statement to its shareholders on a date mutually agreed upon by
SFC and FCB, but in no event less than 20 days prior to the scheduled date of
the SFC Shareholders’ Meeting; provided,
however, that no
such materials shall be mailed to SFC’s shareholders unless and until the Proxy
Statement shall have been filed by SFC with the SEC, the
review period applicable thereto shall have expired, and SFC shall have
satisfactorily responded to and complied with any comments of the SEC
thereon.
SFC
covenants that its directors, individually and collectively as SFC’s Board of
Directors, will recommend that SFC’s shareholders vote their shares of SFC Stock
at the SFC Shareholders’ Meeting in favor of approval of the Plan of Merger. The
Proxy Statement distributed to SFC’s shareholders in connection with the SFC
Shareholders’ Meeting will state that SFC’s Board of Directors considers the
Merger to be advisable and in the best interests of SFC and its shareholders and
that the Board of Directors recommends that SFC’s shareholders vote for approval
of the Plan of Merger. Notwithstanding the foregoing, if SFC’s Board of
Directors reasonably believes in good faith, after consultation with and receipt
of the advice of its outside legal counsel and financial advisers, that such a
recommendation would violate the directors’ duties or obligations as such to SFC
or to its shareholders under applicable law, then the Board of Directors may
submit the Agreement to shareholders at the SFC Shareholders’ Meeting without
recommendation and, to the extent required by law, communicate the
basis
21
for its
lack of a recommendation to the shareholders in the Proxy Statement or any
appropriate amendment or supplement thereto.
(b) Conduct
of Business Prior to Effective Time. Although
the parties recognize that the operation of the SFC Companies until the
Effective Time is the responsibility of their respective Boards of Directors and
officers, between the date of this Agreement and the Effective Time, and except
as otherwise provided herein or expressly agreed to in writing by FCB’s Chief
Executive Officer, President or Chief Financial Officer, SFC and SNB each will
carry on their respective businesses, and will cause SIS and FFI to carry on
their respective businesses, in and only in the regular and usual course in
substantially the same manner as such business heretofore was conducted, and, to
the extent consistent with such business and within its ability to do so, and
subject to the use of sound business judgment, each of the SFC Companies will
use commercially reasonable efforts to:
(i) preserve
intact its present business organizations, keep available its present officers
and employees, and preserve its relationships with customers, depositors,
creditors, correspondents, suppliers, and others having business relationships
with it;
(ii) maintain
all of its properties and equipment in customary repair, order and condition,
ordinary wear and tear excepted;
(iii) maintain
its books of account and records in the usual, regular and ordinary manner in
accordance with sound business practices applied on a consistent
basis;
(iv) comply in
all material respects with all laws, rules and regulations applicable to it, to
its properties, assets or employees, and to the conduct of its
business;
(v) not
change its existing Loan underwriting guidelines, policies or procedures in any
material respect except as may be required by law;
(vi) except to
the extent that changed circumstances dictate otherwise, continue to maintain in
force the Policies described in Paragraph 3.26; and not cancel, terminate,
fail to renew, or modify any Policy, or allow any Policy to be cancelled or
terminated, unless the cancelled or terminated Policy is replaced with a bond or
policy providing coverage, or unless the Policy as modified provides coverage,
that is substantially equivalent to the Policy that is replaced or
modified;
(vii) promptly
notify FCB of any actual or, to the Best Knowledge of SFC, threatened litigation
by or against any of the SFC Companies, together with a description of the
circumstances surrounding any such actual or threatened litigation, its present
status and management’s evaluation of such litigation; and
(viii) promptly
provide to FCB such information about its financial condition, results of
operations, prospects, businesses, assets, Loan portfolio, investments,
properties, employees or operations, as FCB reasonably shall
request.
(c) Periodic
Financial and Other Information.
Following the date of this Agreement and from time to time as indicated below
until the Effective Time, SFC and SNB promptly will deliver the following
information to FCB in writing:
(i) within
five business days following each calendar month-end, SFC’s unaudited
consolidated year-to-date income statement and an unaudited consolidated
statement of condition, each as of that month-end;
(ii) within 15
days following each calendar quarter-end, SFC’s interim unaudited consolidated
financial statements for and as of the end of that quarterly
period;
22
(iii) promptly
following the filing thereof, a copy of each report, registration, statement or
other filing (and any amendments thereto) made by any of the SFC Companies with
or to any Regulatory Authority;
(iv) within
five business days following each calendar month-end, a current listing of all
classified or “watch list” Loans, along with the outstanding balance and amount
specifically allocated to the Loan Loss Reserves for each such classified or
“watch list” Loan;
(v) within 15
days following each calendar quarter-end, management’s analysis of SNB’s and
FFI’s Loan Loss Reserves;
(vi) with
respect to SNB’s Loans or any commitment to make, issue or extend any Loan, a
copy of each month’s directors report, simultaneously with the distribution
thereof to members of SNB’s board of directors;
(vii) within
five business days following each calendar month-end, the following information
with respect to SNB’s Loans or any commitments to make, issue or extend any
Loan, all as of that month-end:
| |
(A)
|
a
listing of (1)
each Loan made by SNB to a borrower, or commitment by SNB to make, issue
or extend any Loan to a borrower, in excess of the lesser of $750,000 or
an amount that would cause SNB’s credit exposure to that borrower to
exceed that amount, and (2)
each renewal, extension or modification by SNB of the terms of, or
commitment by SNB to renew, extend or modify the terms of, any existing
Loan to a borrower to whom SNB has a credit exposure in excess of
$750,000;
|
| |
(B)
|
a
list of Loans that are past due as to principal or interest for more than
30 days;
|
| |
(C)
|
a
list of Loans in nonaccrual status;
|
| |
(D)
|
a
list of Loans for which there has been no reduction in principal for a
period of longer than one year;
|
| |
(E)
|
a
list of all foreclosed real property or other real estate owned and all
repossessed personal property;
|
| |
(F)
|
a
list of all reworked or restructured Loans still outstanding, including
original terms, restructured terms and status;
and
|
| |
(G)
|
a
then current listing of all documentation or compliance exceptions
relating to SNB’s Loans.
|
(d) Notice
of Certain Changes or Events. Following
the execution of this Agreement and up to the Effective Time, SFC and SNB
promptly will notify FCB in writing of and provide to it such further
information as it shall request regarding (i) any SFC
Material Adverse Change, or (ii) the
actual or prospective existence or occurrence of any condition or event of which
SFC or SNB has Knowledge and which has caused or, with the lapse of time or
otherwise, reasonably could be expected to result in an SFC Material Adverse
Change or to cause any statement, representation or warranty of SFC or SNB
herein to be or become inaccurate, misleading or incomplete in any material
respect, or which has resulted or reasonably could be expected to cause, create
or result in the breach or
23
violation
in any material respect of any of SFC’s or SNB’s covenants or agreements
contained herein or in the failure of any of the conditions described in
Paragraphs 8.01 or 8.03.
(e) Accruals
for Loan Loss Reserve, Expenses and Other Accounting
Matters. SFC and
SNB will make such appropriate accounting entries in their books and records and
take such other actions as FCB, in its sole discretion, deems to be required by
GAAP, or which FCB otherwise reasonably deems to be necessary, appropriate or
desirable in anticipation of the Merger and which are not in violation of GAAP
or applicable law, including without limitation additional provisions to SNB’s
or FFI’s Loan Loss Reserves or accruals or the creation of reserves for employee
benefit and Merger-related expenses; provided,
however, that
notwithstanding any provision of this Agreement to the contrary, and except as
otherwise agreed to by SFC and FCB, SFC and SNB shall not be required to make
any such accounting entries until immediately prior to the Closing
and only
following receipt of written confirmation from FCB that it is not aware of any
fact or circumstance that would prevent completion of the Merger; and,
provided
further, however, that no
such entry made as a result of such a request by FCB shall, itself alone,
constitute a breach by SFC or SNB of any representation, warranty or covenant
made by them in this Agreement.
(f) Loan
Charge-Offs. SFC and
SNB will make such appropriate accounting entries in their books and records and
take such other actions which are not in violation of GAAP or applicable law as
FCB reasonably deems to be necessary, appropriate or desirable to charge-off any
Loans on SNB’s books, or any portions thereof, that FCB, in its sole discretion,
considers to be losses or that FCB otherwise believes, in good faith, are
required to be charged off pursuant to applicable banking regulations, GAAP or
otherwise, or that otherwise would be charged off by FCB after the Effective
Time in accordance with its Loan administration and charge-off policies and
procedures; provided,
however, that
notwithstanding any provision of this Agreement to the contrary, and except as
otherwise agreed to by SFC and FCB, SFC and SNB shall not be required to make
any such accounting entries or take any such actions until immediately prior to
the Closing and only
following receipt of written confirmation from FCB that it is not aware of any
fact or circumstance that would prevent completion of the Merger; and,
provided
further, however, that no
such entry made as a result of such a request by FCB shall, itself alone,
constitute a breach by SFC or SNB of any representation, warranty or covenant
made by them in this Agreement.
(g) Consents
to Assignment of Contracts and Leases. With
respect to each contract or other agreement (including without limitation each
lease or rental agreement pertaining to real or personal property, and each
software license) to which any of the SFC Companies are parties and which FCB
reasonably believes requires the consent of any other contracting party in
connection with an actual or deemed assignment or transfer of the SFC Companies’
interests or obligations thereunder as a result of the Merger, SFC and SNB will
use their commercially reasonable efforts to obtain the written consent of the
other parties to the assignment to FCB of the SFC Companies’ rights and
obligations under the agreement (including, in the case of Lease Agreements
pertaining to leased SFC Real Property, estoppel certificates from each of the
landlords under those Lease Agreements), each of which consents shall be in a
form reasonably satisfactory to FCB.
(h) Access. Following
the date of this Agreement and to and including the Effective Time, SFC and SNB
will provide FCB and its employees, accountants, legal counsel, environmental
consultants or other consultants or other representatives and agents access to
all of the SFC Companies’ books, records, files (including without limitation
credit files and Loan documentation and records), minutes of meetings of their
Boards of Directors, Board committees and shareholders, books and other
information (whether maintained electronically or otherwise), to all their
properties and facilities, and to all their employees, accountants, legal
counsel, environmental or other consultants, or other representatives or agents,
as FCB shall, in its reasonable discretion, consider to be necessary or
appropriate for the purpose of conducting ongoing reviews and investigations of
the assets and business affairs of the SFC Companies, preparing for consummation
of the Merger and the consolidation of SFC’s and SNB’s operations into those of
FCB, determining the accuracy of SFC’s and SNB’s representations
24
and
warranties in this Agreement or their compliance with their covenants in this
Agreement, or for any other reason relating to this Agreement or the Merger;
provided,
however, that any
investigation or reviews conducted by or on behalf of FCB shall be performed in
such a manner as will not interfere unreasonably with the SFC Companies’ normal
operations or with their relationship with their customers or employees, and
shall be conducted in accordance with procedures established by the
parties.
(i) Pricing
of Deposits and Loans.
Following the date of this Agreement, SFC, SNB and FFI will make pricing
decisions with respect to SNB’s deposit accounts and SNB’s and FFI’s Loans in a
manner consistent with their past practices based on competition and prevailing
market interest rates in their banking markets.
(j) Further
Action; Instruments of Transfer. SFC and
SNB will (i) use their
commercially reasonable efforts in good faith to take or cause to be taken all
action required of them under this Agreement as promptly as practicable so as to
permit the consummation of the transactions described herein at the earliest
possible date, (ii) perform
all acts and execute and deliver to FCB all documents or instruments required of
them herein, or as otherwise shall be reasonably necessary or useful to or
requested by FCB, in consummating such transactions, and, (iii) cooperate
with FCB in every way in carrying out and pursue diligently the expeditious
completion of such transactions.
5.02. Negative
Covenants of SFC and SNB. SFC and
SNB each agrees that, between the date hereof and the Effective Time, and
without the prior written consent and authorization of FCB’s Chief Executive
Officer, President or Chief Financial Officer, none of the SFC Companies will
take any of the actions described below.
(a) Amendments
to Articles of Incorporation or Bylaws. None of
the SFC Companies will amend their respective Articles of Incorporation or
Association, as applicable, or Bylaws.
(b) Change
in Capitalization. None of
the SFC Companies will make any change in their authorized capital stock, create
any other or additional authorized capital stock or other securities, or
reclassify, combine or split any shares of their capital stock or other
securities.
(c) Sale
or Issuance of Shares or Other Securities. None of
the SFC Companies will sell or issue any additional shares of capital stock
or other securities, including any securities convertible into capital stock, or
enter into any agreement or understanding with respect to any such action.
However, notwithstanding anything to the contrary contained in this Agreement,
(i)
this
Paragraph 5.02(c) shall not prohibit SNB from issuing certificates of deposit,
or selling portfolio securities for liquidity purposes, all in the ordinary
course of its business, and (ii) SFC may
issue and sell shares of SFC Stock upon the exercise of an SFC Stock Option that
was granted prior to, and remains outstanding and in effect on, the date of this
Agreement, provided that the SFC Stock Option is exercisable in accordance with
its terms at the time of such exercise and that the sale of SFC Stock upon such
exercise is in accordance with the terms and conditions of that SFC Stock Option
as in effect on the date of, or as otherwise contemplated by, this
Agreement.
(d) Purchase
or Redemption of Shares. None of
the SFC Companies will purchase, redeem, retire or otherwise acquire any shares
of their capital stock.
(e) Options,
Warrants and Rights. None of
the SFC Companies will grant or issue any options, warrants, calls, puts or
other rights of any kind relating to the purchase, redemption or conversion of
shares of their capital stock or any other securities (including securities
convertible into capital stock) or enter into any agreement or understanding
with respect to any such action.
(f) Dividends
and Distributions. SFC will
not declare or pay any dividends (whether in cash or in stock) on its
outstanding shares of capital stock or make any other distributions on or in
respect of any shares of its capital stock or otherwise to its shareholders;
provided,
however, that
if
25
the
Merger has not become effective on or before June 30, 2005, and to the extent
otherwise permitted by applicable law and consistent with SFC’s prior practices,
SFC shall be permitted to pay a cash dividend on the SFC Stock during July 2005
in an amount not in excess of $0.075 per outstanding share and, if the Merger
has not become effective on or before November 20, 2005, and to the extent
otherwise permitted by applicable law and consistent with SFC’s prior practices,
SFC shall be permitted to pay a second cash dividend on the SFC Stock during
December 2005 in an amount not in excess of $0.075 per outstanding
share.
(g) Employment,
Benefit or Retirement Agreements or Plans. Except as
required by law or otherwise contemplated in this Agreement, none of the SFC
Companies will (i) enter
into, become bound by, or amend any oral or written contract, agreement or
commitment for the employment or compensation of any director, officer, employee
or consultant which is not immediately terminable by them without cost or other
liability on no more than 30 days’ notice; (ii) adopt,
enter into, become bound by, or amend any profit-sharing, bonus, incentive,
change in control or “golden parachute,” stock option, stock purchase, pension,
retirement, deferred compensation, insurance (hospitalization, life or other),
paid leave (sick leave, vacation leave or other) or similar contract, agreement,
commitment, understanding, plan or arrangement (whether formal or informal) with
respect to or which provides for benefits for any of their current or former
directors, officers, employees or consultants; provided,
however, that SNB
may modify or amend any one or more of its Salary Continuation Agreements
described in Paragraph 7.08(b) below in the manner and to the extent provided in
that Paragraph in order for it or them to comply with Section 409A of the
Code, if applicable; or (iii) enter
into, become bound by, or amend any contract with or commitment to any labor or
trade union or association or any collective bargaining group.
(h) Increase
in Compensation; Bonuses. Except as
contemplated below, none of the SFC Companies will increase the compensation or
benefits of, or pay any bonus or other special or additional compensation to,
any of their current or former directors, officers, employees or consultants.
Notwithstanding anything to the contrary contained in this Agreement, prior to
the Effective Time SFC and SNB may (i)
make
payments pursuant to and in accordance with the terms of the FFI Bonus Plan, the
SNB LOA Incentive Plan, the SNB Account Officer Incentive Plan, the SNB FSR
Incentive Plan, the SNB Teller Incentive Plan, and SFC’s director attendance fee
arrangement, all as Previously Disclosed to FCB, and (ii) review
and make reasonable merit increases in the salaries of their employees,
provided, that the
times and amounts of those increases are consistent with their past practices
and their salary administration and review policies and procedures in effect on
December 31, 2004. Notwithstanding anything contained herein to the contrary,
following the date of this Agreement and prior to the Effective Time, SFC shall,
at its sole discretion, be permitted to pay special recognition cash bonuses to
officers and employees of the SFC Companies up to an aggregate amount of $50,000
for all such cash bonuses.
(i) Accounting
Practices; Independent Accountants. None of
the SFC Companies will make any changes in their accounting methods, practices
or procedures or in depreciation or amortization policies, schedules or rates
heretofore applied except as required by GAAP or applicable governmental
regulations or as recommended by its independent public accountants, and SFC
will not change its independent public accountants.
(j) Acquisitions;
Additional Branch Offices. None of
the SFC Companies will, directly or indirectly, (i) acquire
(by merger or otherwise), or acquire any branch or all or any significant part
of the assets of, any other person or entity, (ii) open any
new branch office other than SNB’s proposed new Pleasantburg branch, or
(iii) enter
into or become bound by any contract, agreement, commitment or letter of intent
relating to, or otherwise take or agree to take any action in furtherance of,
any such transaction or the opening of a new branch office other than SNB’s
proposed new Pleasantburg branch.
(k) Changes
in Business Practices. Except as
may be required by their respective Regulatory Authorities, or otherwise as
shall be required by applicable law, regulation or this Agreement, none of the
SFC Companies will (i) change in
any material respect the nature of their business or the
26
manner in
which they conduct their business, (ii) discontinue
any material portion or line of their business, or (iii) change in
any material respect their lending, investment, asset-liability management or
other material banking or business policies.
(l) Exclusive
Merger Agreement. Unless,
due to a material change in circumstances after the date hereof, SFC’s Board of
Directors reasonably believes in good faith, following consultation with and
receipt of the advice of its outside legal counsel and financial advisers, that
any such action or inaction would violate the directors’ duties or obligations
as such to SFC or to its shareholders, SFC will not, directly, or indirectly
through any person, (i) encourage,
solicit or attempt to initiate or procure discussions, negotiations or offers
with or from any person or entity (other than FCB) relating to a merger or other
acquisition of any of the SFC Companies, the purchase or acquisition of any
equity or other securities (other than certificates of deposit) issued by, or
all or any significant part of the assets of, any of the SFC Companies or any
branch office of SNB, or provide assistance to any person in connection with any
such offer; (ii) except
to the extent required by law, disclose to any person or entity any information
not customarily disclosed to the public concerning any of the SFC Companies or
their business, or afford to any other person or entity access to the
properties, facilities, books or records of any of the SFC Companies;
(iii) sell or
transfer any branch office of SNB or all or any significant part of the assets
of any of the SFC Companies to any other person or entity; or (iv) enter
into or become bound by any contract, agreement, commitment or letter of intent
relating to, or otherwise take or agree to take any action in furtherance of,
any such transaction.
(m) Acquisition
or Disposition of Assets. None of
the SFC Companies will:
(i) Sell or
lease (as lessor), or enter into or become bound by any contract, agreement,
option or commitment relating to the sale, lease (as lessor) or other
disposition of, any real property in any amount, other than real property
acquired by SNB in connection with the foreclosure in the ordinary course of its
business of a mortgage that secured one of its Loans;
(ii) Except as
provided below, sell or lease (as lessor), or enter into or become bound by any
contract, agreement, option or commitment relating to the sale, lease (as
lessor) or other disposition of, any equipment or any other fixed or capital
asset (other than real property) having a book value or a fair market value,
whichever is greater, of more than $25,000 in the case of any individual item or
asset, or $75,000 in the aggregate for all such items or assets; provided,
however, that
this provision shall not prohibit SNB from selling investment portfolio
securities for liquidity purposes in the ordinary course of its
business;
(iii) Purchase
or lease (as lessee), or enter into or become bound by any contract, agreement,
option or commitment relating to the purchase, lease (as lessee) or other
acquisition of, any real property in any amount, other than real property
associated with SNB’s proposed new Pleasantburg branch, or real property that is
the subject of a mortgage securing one of SNB’s Loans that is being foreclosed
upon in the ordinary course of its business;
(iv) Purchase
or lease (as lessee), or enter into or become bound by any contract, agreement,
option or commitment relating to the purchase, lease (as lessee) or other
acquisition of, any equipment or any other fixed asset (other than real
property) having a purchase price, or involving aggregate lease payments, in
excess of $25,000 in the case of any individual item, or $75,000 in the
aggregate for all such items or assets, other than equipment or other fixed
assets reasonably related to SNB’s proposed new Pleasantburg branch, or data
processing-related equipment reasonably required in connection with SNB’s data
processing functions;
(v) Enter
into any purchase or other commitment or contract for supplies or services other
than in the usual and ordinary course of their business consistent with past
practices;
27
(vi) Except in
the ordinary course of their business consistent with their past practices,
sell, purchase or repurchase, or enter into or become bound by any contract,
agreement, option or commitment to sell, purchase or repurchase, any Loan or
other receivable or any participation in any Loan or other
receivable;
(vii) Except in
the ordinary course of their business consistent with their past practices with
respect to investment securities, loans and similar assets, sell or dispose of,
or enter into or become bound by any contract, agreement, option or commitment
relating to the sale or other disposition of, any other asset (whether tangible
or intangible, and including without limitation any trade name, trademark,
copyright, service xxxx or intellectual property right or license);
or
(viii) assign
their rights to or otherwise give any other person their permission or consent
to use or do business under the corporate name of any of the SFC Companies or
any name similar thereto; or release, transfer or waive any license or right
granted to them by any other person to use any trademark, trade name, copyright,
service xxxx or intellectual property right.
(n) Debt;
Liabilities. With the
exception of SNB’s acceptance of deposits, entering into repurchase agreements,
Fed funds purchases, borrowings from the Federal Home Loan Bank, and issuance of
letters of credit, and direct investments in SNB by the Federal Reserve Bank of
Richmond pursuant to its Treasury Tax and Loan Investment Program, in any such
case in the ordinary course of SNB’s business consistent with its past
practices, none of the SFC Companies will (i) enter
into or become bound by any promissory notes, loan agreements or other
agreements or arrangements pertaining to their borrowing of money, (ii) assume,
guarantee, endorse or otherwise become responsible or liable for any debt,
liability or other obligation of any other person or entity (other than the
endorsement of checks and drafts for collection in the ordinary course of their
businesses), or (iii) except in
the ordinary course of their business consistent with their past practices,
incur any other liability or obligation (absolute or contingent).
(o) Liens;
Encumbrances. With the
exception of SNB’s pledges of Loans or portfolio securities to the Federal Home
Loan Bank to secure borrowings permitted by Paragraph 5.02(n) above, and pledges
of securities in the ordinary course of its business and consistent with its
past practices in connection with the securing of public funds deposits or
repurchase agreements, none of the SFC Companies will mortgage, pledge or
subject any of their assets to, or permit any of their assets to become or,
except for those liens or encumbrances Previously Disclosed to FCB, remain
subject to, any lien or any other encumbrance.
(p) Waiver
of Rights. Except to
the extent required by any other Paragraph of this Agreement, none of the SFC
Companies will waive, release or compromise any rights in their favor against or
with respect to any of their current or former officers, directors,
shareholders, employees, consultants, or members of families of current or
former officers, directors, shareholders, employees or consultants, nor will any
of them waive, release or compromise any material rights against or with respect
to any other person or entity except in the ordinary course of their business
and in good faith for fair value in money or money’s worth.
(q) Other
Contracts. None of
the SFC Companies will enter into or become bound by any contracts, agreements,
commitments or understandings (other than those permitted elsewhere in this
Paragraph 5.02) (i) for or
with respect to any charitable contributions in excess of $3,000 in the case of
any one contribution or $30,000 in the aggregate; (ii) with any
governmental or regulatory agency or authority except as required by law;
(iii) which is
entered into other than in the ordinary course of their business; or
(iv) whether
or not in the ordinary course of their business, which would obligate or commit
them to make expenditures over any period of time of more than $50,000 in the
case of any one contract, agreement, commitment or understanding, or more than
$100,000 in the case of all contracts, agreements, commitments or
understandings, other than contracts, agreements, commitments or understandings
(including without limitation the renewal of existing data processing-related
agreements) entered into in
28
the
ordinary course of SNB’s and FFI’s banking operations, reasonably related to
SNB’s proposed new Pleasantburg branch, or as otherwise permitted by this
Agreement.
(r) Deposit
Liabilities. Except
for changes or actions reasonably required for purposes of asset/liability
management in the ordinary course of its business, SNB will not make any
material change in its current deposit policies and procedures or take any
actions designed to materially increase or decrease the aggregate level of its
deposits as of the date of this Agreement.
(s) Changes
in Lease Agreements.
None of
the SFC Companies will (i) other
than at the end of the term of a Lease Agreement under the terms of which it
does not have an option to renew, surrender their leasehold interest in any
parcel of leased SFC Real Property, or seek or agree to the termination of the
Lease Agreement pertaining to any such parcel, or (ii) modify or
amend the Lease Agreement
pertaining to any parcel of leased SFC Real Property other than in connection
with the renewal of a Lease Agreement at the end of its term. Prior to renewing
or amending a Lease Agreement as described above, SFC will consult with FCB and
permit FCB to express its views regarding the terms of the renewal or
amendment.
Article
VI
Covenants
of FCB and Bancorp
Except as
otherwise specifically provided in this Agreement, FCB and Bancorp each agrees
as follows:
6.01. Employees;
Employee Benefits.
(a) Employment
of SFC and SNB Employees. Except
as otherwise contemplated by Paragraph 7.08 below, current employees of the SFC
Companies who remain employed by them at the Effective Time will be offered
employment with FCB (or will remain employees of FFI or SIS) on an “at will”
basis after the Effective Time. In the case of each such employee who elects to
become an employee of FCB, or to remain an employee of FFI or SIS, following the
Effective Time (a “Continuing Employee”), such employment will be in such a
position, at such location within FCB’s system, and for such rate of
compensation, as shall be determined in the ordinary course of FCB’s business
following the Effective Time, and except as otherwise provided in separate
agreements with certain employees as contemplated by Paragraph 7.08, nothing in
this Agreement shall be deemed to constitute an employment agreement between FCB
and any such person or to obligate FCB to employ any such person for any
specific term or period of time, in any specific position, or at any specific
salary or rate of compensation, or to restrict FCB’s right to terminate the
employment of any such person at any time following the Effective Time and for
any reason satisfactory to it.
(b) Employee
Benefits. Except
as otherwise provided in this Agreement, following the Effective Time, each
Continuing Employee shall be entitled to participate in employee benefit plans
provided generally by FCB to its employees from time to time on the same basis,
and subject to the same eligibility and vesting requirements and other
conditions, restrictions and limitations, as generally are in effect and
applicable to other FCB employees. Each Continuing Employee will be given credit
for his or her full years of service with the SFC Companies prior to the
Effective Time for purposes of (i) eligibility
for participation and vesting (but in no event for benefit accrual purposes) in
the case of FCB’s Section 401(k) savings plan and defined benefit pension plan,
and (ii) for all
purposes under FCB’s other benefit plans that may be offered to Continuing
Employees from time to time. Continuing Employees’ participation in FCB’s health
insurance plans will be without regard to any pre-existing condition exclusions
under FCB’s health insurance plans provided that any such pre-existing condition
would have been covered under SFC’s health insurance plan that covered the
Continuing Employee immediately prior to the Effective Time. Continuing
Employees shall not be required to satisfy the deductible and employee payments
required by FCB’s comprehensive medical and/or dental plans for the calendar
year of the
29
Effective
Time to the extent of amounts previously credited during such calendar year
under comparable plans maintained by SFC.
6.02 Further
Action; Instruments of Transfer. Each of
FCB and Bancorp covenants and agrees with SFC and SNB that it (a) will use
commercially reasonable efforts in good faith to take or cause to be taken all
action required of it under this Agreement as promptly as practicable so as to
permit the consummation of the transactions described herein at the earliest
possible date, (b) shall
perform all acts and execute and deliver to SFC and SNB all documents or
instruments required of it herein, and (c) will
cooperate with SFC and SNB in every way in carrying out and pursue diligently
the expeditious completion of such transactions.
6.03 Notice
of Certain Changes or Events.
Following
the execution of this Agreement, Bancorp and/or FCB promptly will notify SFC in
writing of and provide to it such further information as it shall request
regarding (i)
any FCB
Material Adverse Change, or (ii)
the
actual or prospective existence or occurrence of any condition or event of which
Bancorp and/or FCB has Knowledge and which has caused or, with the lapse of time
or otherwise, reasonably could be expected to result in a FCB Material Adverse
Change or to cause any statement, representation or warranty of Bancorp and/or
FCB herein to be or become inaccurate, misleading or incomplete in any material
respect, or which has resulted or reasonably could be expected to cause, create
or result in the breach or violation in any material respect of any of Bancorp’s
and/or FCB’s covenants or agreements contained herein or in the failure of any
of the conditions described in Paragraphs 8.01 or 8.02. Following
Bancorp’s completion of the subordinated debt offering described in Paragraphs
8.02(i) and 8.03(d) below, then FCB and Bancorp’s agreement in this Paragraph
6.03 shall terminate and be of no further force or effect, effective as of the
date of this Agreement.
6.04. Financing.
Bancorp
will use commercially reasonable efforts to complete the subordinated debt
offering referred to in Paragraph 8.02(i) and 8.03(d) below in accordance with
the terms described
therein.
Article
VII
Additional
Mutual Agreements
7.01. Regulatory
Approvals. SFC,
SNB, FCB and Bancorp each agrees with the others that, as soon as practicable
following the date of this Agreement, it will prepare and file, or cause to be
prepared and filed, all applications required to be filed by it under applicable
law and regulations for approvals by Regulatory Authorities of the Merger or
other transactions described in this Agreement, including without limitation any
required applications for the approval of the South Carolina Board, the FDIC,
the OCC and the FRB. SFC, SNB, FCB and Bancorp each agrees (a) to use
commercially reasonable efforts in good faith to obtain all necessary approvals
of Regulatory Authorities required for consummation of the Merger and other
transactions described herein, and (b) before
the filing of any such application required to be filed, to give each other
party an opportunity to review and comment on the form and content of such
application. Should the appearance of any of the officers, directors, employees
or counsel of SFC, SNB, FCB or Bancorp be requested by any of the others or by
any Regulatory Authority at any hearing in connection with any such application,
it will use commercially reasonable efforts to arrange for such
appearance.
7.02. Information
for Proxy Statement and Applications for Regulatory
Approvals. SFC,
SNB, FCB and Bancorp each agrees with the others that (a) it will
cooperate with the others in the preparation of the Proxy Statement and
applications for required approvals of Regulatory Authorities, and it will
promptly respond to requests by any of the others and its legal counsel for
information, and will provide all information, documents, financial statements
or other material, that is required for, or that may be reasonably requested by
any other party for inclusion in, any such document; (b) none of
the information provided by it in writing for inclusion in any of such documents
will contain any untrue
30
statement
of a material fact, or omit any material fact required to be stated therein or
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading, at and as of the time
(i) the
Proxy Statement is filed with the SEC, (ii) the
Proxy Statement is mailed to SFC’s shareholders, (iii) the
applications for required approvals of Regulatory Authorities are filed, and
(iv)
approvals of Regulatory Authorities are granted.
7.03. Announcements;
Confidential Information.
(a) SFC, SNB
and FCB each agrees that no persons other than the parties to this Agreement are
authorized to make any public announcements or statements about this Agreement
or any of the transactions described herein, and that, without the prior review
and consent of the other parties (which consent shall not unreasonably be denied
or delayed), it will not make any public announcement, statement or disclosure
as to the terms and conditions of this Agreement or the transactions described
herein, except for such disclosures as may be required incidental to obtaining
the required approval of any Regulatory Authority to the consummation of the
transactions described herein;
provided,
however, that
the foregoing shall not prevent Xxxxx X. Xxxxx & Co. from publishing a
tombstone announcement of the Closing of the transaction as contemplated by this
Agreement, and
shall not prevent Wachovia Securities, Inc. or another investment banking firm
representing Bancorp from publishing a tombstone announcement of the completion
of the subordinated debt offering referred to in Paragraph 8.03(d)
below.
(b) For
purposes of this Paragraph 7.03, “Confidential Information” refers to any
information (including business and financial information) that a party to whom
the information pertains (an “Informing Party”) provides or makes available, in
connection with this Agreement, to a party for whose benefit the information is
provided (a “Receiving Party”), or to that party’s affiliates, directors,
officers, employees, attorneys, advisers, consultants, representatives and
agents (a “Receiving Party Representative”), or which a Receiving Party or a
Receiving Party Representative may otherwise obtain from any examination of an
Informing Party’s documents, books, records, files or other written materials
(including electronic records and information imbedded therein) or from any
discussions with any of the Informing Party’s directors, officers, employees,
attorneys, advisers, consultants, representatives and agents, and shall be
deemed to include, without limitation, (i) all such
documents, books, records, files or other written materials themselves and all
information contained therein (whether maintained in writing, electronically, on
microfiche or otherwise), (ii) all
corporate minutes, financial projections and budgets, historical and projected
sales reports, acquisition or other expansion analyses or plans, pro forma
financial data, capital spending budgets and plans, market studies and business
plans, (iii) all
information relative to financial results and condition, operations, policies
and procedures, computer systems and software, shareholders, employees,
officers, and directors, and (iv) all
information relative to customers and former or prospective customers.
The
Receiving Party shall not, and shall not permit any Receiving Party
Representative to, remove any Confidential Information of the Informing Party
from the Informing Party’s offices without the consent of the Informing
Party.
(c) Prior to
the Effective Time, all Confidential Information of an Informing Party is
proprietary to the Informing Party and constitutes either trade secrets or
confidential information of the Informing Party and shall be held in strict
confidence by a Receiving Party and, except as otherwise provided herein, may
not be disclosed by a Receiving Party to any person or entity not a party to
this Agreement except to a Receiving Party Representative, unless the Receiving
Party can demonstrate that the same information as the Confidential Information
to be disclosed:
| |
(i)
|
already
was in its possession prior to such Confidential Information being
obtained from the Informing Party;
|
| |
(ii)
|
already
was publicly available at the time it was received by the Receiving Party
or the Receiving Party Representative or, at the time of any disclosure by
the Receiving Party or Receiving Party Representative, has become publicly
available through no fault of or violation of
this
|
31
Agreement
by the Receiving Party or any other person that the Receiving Party knows, or
has reason to know, is obligated to protect such Confidential Information;
or
| |
(iii)
|
was
developed independently by or for the Receiving Party or the Receiving
Party Representative, without the use of any Confidential Information
received from the Informing Party.
|
(d) Notwithstanding
anything contained in this Paragraph 7.03 to the contrary, prior to the
Effective Time the Receiving Party may disclose Confidential Information to the
Receiving Party’s affiliates, directors, officers, employees, agents, attorneys,
advisers and consultants who are directly involved in the transactions described
in this Agreement; provided,
however, that
the Receiving Party shall be responsible for any disclosure of Confidential
Information by any such persons or entities (who shall be deemed Receiving Party
Representatives) in violation of the above restrictions.
(e) Upon
termination of this Agreement, the Receiving Party will deliver or cause to be
delivered to the Informing Party all tangible embodiments (and all copies of)
Confidential Information of the Informing Party in the possession of the
Receiving Party or any Receiving Party Representative.
(f) Prior to
the Effective Time, the Receiving Party shall not use, or permit any other
persons to use, any Confidential Information of the Informing Party for any
purpose other than in connection with this Agreement in an unlawful manner, or
to interfere with or attempt to terminate or otherwise adversely affect any
actual or proposed contractual or business relationship of the Informing
Party.
(g) Notwithstanding
anything contained in this Paragraph 7.03 to the contrary, neither SFC, SNB, FCB
nor Bancorp shall be required to obtain the prior consent of the other parties
for any public announcement, statement or disclosure (whether or not involving
Confidential Information) which it, in good faith and upon the advice of its
legal counsel, believes is required by law or any listing or trading agreement
concerning its publicly traded securities; provided,
however, that
before any such disclosure may be made by either party upon the advice of its
legal counsel, it shall, except where such notice is prohibited by law or any
such listing or trading agreement, or with respect to filings with the SEC or to
obtain approvals of Regulatory Authorities necessary to approve the transactions
contemplated by this Agreement, give the other party reasonable notice of its
intent to make such disclosure, the form of content of that disclosure, and the
basis upon which its legal counsel has advised it that such disclosure is
required by law or by any such listing or trading agreement, so that the other
party may seek a protective order or other similar or appropriate relief, and
the party intending to make such disclosure also shall undertake in good faith
to have any Confidential Information to be disclosed treated confidentially by
the party to whom the disclosure is made. In the case of filings by either party
with the SEC or with Regulatory Authorities, the filing party will provide a
copy of any such filing to the other party prior to its being filed and to give
such other party a reasonable opportunity to review and comment on the content
thereof.
7.04. Real
Property Matters.
(a) At its
option and expense, following the date of this Agreement, FCB may cause to be
conducted (i) a title
examination, physical survey, zoning compliance review, and structural
inspection of any or all of the SFC Real Property and improvements thereon
(collectively, the “Property Examination”), and (ii) site
inspections, environmental assessments, historic reviews, and regulatory
analyses of any or all of the SFC Real Property, together with such other
studies, testing and intrusive sampling and analyses as FCB shall deem necessary
or desirable (collectively, the “Environmental Survey”). If, in the course of
the Property Examination or Environmental Survey, FCB identifies one or more
“Material Defects” (as defined below), FCB will give prompt written notice
thereof to SNB describing the facts or conditions constituting each such
Material Defect.
32
(b) For
purposes of this Agreement, a “Material Defect” shall include:
(i) the
existence of any lien (other than the lien of real property taxes not yet due
and payable), encumbrance, title imperfection or title irregularity relating to
any of the SFC Real Property, other than (A) SFC Real
Property leased by FFI as its offices (“FFI Real Estate”), (B) other
real property that was acquired by SNB in connection with the foreclosure in the
ordinary course of its business of a mortgage that secured one of its Loans
(“SNB OREO”), or (C) with
respect to SNB’s landlord’s fee title (but not SNB’s leasehold interest) in SFC
Real Property currently leased by SNB at 000 Xx. Xxxxxxxxxxxx Xxxxx and 000 X.
Xxxxx Xxxxxx xx Xxxxxxxxxx, Xxxxx Xxxxxxxx;
(ii) the
existence of any zoning restriction, easement, covenant or other restriction, or
the existence of any facts or conditions that constitute a breach of SFC’s and
SNB’s representations and warranties contained in Paragraph 3.16 or 3.21,
relating or with respect to any of the SFC Real Property, other than FFI Real
Estate or SNB OREO, in either such case that FCB reasonably believes will
materially adversely affect its use of that SFC Real Property for the purpose
for which and in the manner in which it currently is used or the value or
marketability of that SFC Real Property;
(iii) the
existence of any structural defects or conditions of disrepair in the
improvements on any parcel of the SFC Real Property, other than FFI Real Estate
or SNB OREO (including any equipment, fixtures or other components related
thereto); or
(iv) the
existence of facts or circumstances relating to any of the SFC Real Property,
other than FFI Real Estate, and other than SNB OREO which has not been operated
or managed by SNB and with respect to which SNB has not engaged in any
activities that would result in its loss of lender liability protections under
applicable Environmental Laws, reflecting that (A)
there
likely has been a discharge, disposal, release, threatened release, or emission
by any person of any Hazardous Substance on, from, under, at, or relating to
that SFC Real Property, or (B)
any
action has been taken or not taken, or a condition or event likely has occurred
or exists, with respect to that SFC Real Property (including, without
limitation, any removal or disposal of materials from the SFC Real Property)
which constitutes or would constitute a violation of any Environmental Laws or
any contract or other agreement between any of the SFC Companies and any other
person or entity, as to which, in either such case, FCB reasonably believes,
based on the advice of legal counsel or other consultants, that any of the SFC
Companies could incur costs or become responsible or liable, or that FCB could
incur costs or become responsible or liable, whether before or after the
Effective Time, for assessment, removal, remediation, monetary damages
(including without limitation any liability to other persons for property damage
or personal injury), or civil, criminal or administrative penalties or other
corrective action.
(c) Notwithstanding
anything contained in this Agreement to the contrary, no condition or
circumstance described in Paragraph 7.04(b) shall be deemed to be a Material
Defect if, following receipt of the notice thereof from FCB, SFC and SNB shall
cure or correct the condition or circumstances giving rise to that Material
Defect in a manner and to an extent reasonably satisfactory to FCB.
(d) In the
event that:
(i) FCB
reasonably believes that (A)
the total
of the costs and expenses that it could incur in fully correcting all Material
Defects identified by it that are described in Paragraphs 7.04(b)(i) and/or
(iii) above, plus (B) the
total of the costs and expenses that FCB could incur in fully correcting all
Material Defects identified by it that are described in Paragraph 7.04(b)(iv)
and/or all other amounts for which any of the SFC Companies could become
responsible or liable, or for which FCB could become responsible or liable,
whether before or after the Effective Time, related to all those Material
Defects as described in Paragraph 7.04(b)(iv), plus (C) the
total of the costs and expenses
33
incurred,
or which would be incurred prior to Closing, by SFC and SNB in correcting
Material Defects as provided in Paragraph 7.04(c) above, exceed an aggregate of
$1,500,000, or
(ii) FCB
identifies one or more Material Defects described in Paragraph 7.04(b)(ii)
above,
then FCB
shall have the right and option, exercisable upon written notice to SFC, to
terminate this Agreement.
(e) It is
contemplated that FCB will conduct the Property Examination and the
Environmental Survey following the date of this Agreement and prior to the
Effective Time. It is the intent of this Agreement, and SFC and SNB understand
and agree, that, upon completion of the Property Examination and Environmental
Survey, any of the facts, conditions, circumstances or other matters described
in Paragraph 7.04(b) may be deemed by FCB to constitute a Material Defect, with
the result that FCB may exercise its rights under this Paragraph 7.04, without
regard to any actual knowledge on or prior to the date of this Agreement on the
part of FCB or its officers or advisers of that Material Defect or the facts,
conditions, circumstances or other matters pertaining thereto and without regard
to any disclosure by SFC or SNB to FCB, or to any of its officers or advisers,
prior to the date of this Agreement, whether pursuant to Paragraph 11.05 below
or otherwise.
7.05. Directors’
and Officers’ Liability Insurance. SFC,
SNB, FCB and Bancorp agree that, immediately prior to the Effective Time, SFC
and SNB shall purchase “tail” coverage with respect to its directors’ and
officers’ liability and errors and omissions liability insurance, effective at
the Effective Time and for the maximum term available and in the same amount of
coverage as is provided by their then current directors’ and officers’ and
errors and omissions liability insurance policy, provided that the total costs
of such tail coverage shall not exceed an aggregate of $75,000 without FCB’s
prior written approval.
7.06. Final
Tax Return. SFC,
SNB, FCB and Bancorp agree that FCB will make all necessary arrangements for
FCB’s independent accountants, PricewaterhouseCoopers LLP, to prepare, and FCB
will cause to be filed, the SFC Companies’ final federal and state income tax
returns for the year in which the Effective Time occurs.
7.07. Expenses. Subject
to the provisions of Paragraph 9.04 below, and whether or not this
Agreement shall be terminated or the Merger shall be consummated, SFC, SNB, FCB
and Bancorp each agrees to pay its own costs and expenses incurred or to be
incurred in connection with the execution and performance of its obligations
under this Agreement, or otherwise in connection with this Agreement and the
transactions described herein (including without limitation all accounting fees,
legal fees, consulting or financial advisory fees, filing fees, printing and
mailing costs, and travel expenses). For purposes of this Agreement, expenses
associated with the printing and mailing of the Proxy Statement and all amounts
owed by SFC to Xxxxx X. Xxxxx & Co. for its services and for rendering the
“SFC Fairness Opinion” described in Paragraph 8.02(f), will be deemed to
have been incurred solely by SFC.
7.08. Employment
and Salary Continuation Agreements.
(a) New
Employment Agreements. Prior to
the date of this Agreement, SFC has entered into an Employment Agreement with
each of Xxxxx X. Xxxxxxxx, Xx., Xxxxx X. Xxxxxxxx and J. Xxxxxxx Xxxx (the
“New Employment Agreements”) in a form which has been approved by FCB, copies of
which have been Previously Disclosed to FCB. At the Effective Time, FCB shall,
by virtue of the Merger, assume and become responsible for SFC’s obligations,
and succeed to SFC’s rights, under each of the New Employment Agreements.
Following the date of this Agreement and prior to the Effective Time, SNB will
maintain the New Employment Agreements in effect and will not make or agree to
any amendments to or modification of any of the New Employment Agreements except
with the written consent of FCB.
34
(b) Existing
Employment Agreements. At the
Effective Time, FCB shall, by virtue of the Merger, assume and become
responsible for SFC’s and SNB’s respective obligations, and succeed to SFC’s and
SNB’s respective rights, under those certain existing Employment Agreements with
each of J. Xxxxxxxx Xxxxxx, Xxxxxx X. Xxxxxxxxxx, Xxxxxxx X. Xxxxxxxxx, Xx., and
Xxxxx X. Xxxxxx III (the “Existing Employment Agreements”) and those certain
Salary Continuation Agreements with each of J. Xxxxxxxx Xxxxxx, Xxxxxx X.
Xxxxxxxxxx, Xxxxx X. Xxxxxxxx, Xx. and Xxxxx X. Xxxxxxxx. Following the
date of this Agreement and prior to the Effective Time, SFC and SNB will
maintain each of the Existing Employment Agreements in effect and will not make
or agree to any amendments to or modifications of any of the Existing Employment
Agreements except with the written consent of FCB.
Prior to
the Effective Time SNB may modify or amend any one or more of the Salary
Continuation Agreements to the extent reasonably necessary in order for it or
them to comply with Section 409A of the Code, if applicable, provided that no
such modification or amendment may materially increase the benefits or
compensation provided under any such agreement or obligate or subject SNB or its
successors to the payment of any excise or other tax or additional payment
obligation. SNB shall use commercially reasonable efforts to effect any such
necessary modifications or amendments prior to the Effective Time. However, in
the event that those modifications or amendments cannot be effected or completed
prior to the Effective Time, then FCB agrees that it will use commercially
reasonable efforts to effect or complete the same following the Effective Time
but prior to December 31, 2005, or, if the same cannot reasonably be completed
by that date, as soon thereafter as possible; and, thereafter, FCB agrees that
it will use commercially reasonable efforts to make such further modifications
or amendments to the Salary Continuation Agreements as shall be necessary to
cause them to comply with changes in the Code or regulations promulgated
thereunder; provided, that FCB
shall not be required to make any such modification or amendment that would
obligate or subject FCB or its successors to the payment of any excise or other
tax or additional payment obligation under any of those agreements.
7.09. Treatment
of Section 401(k) Plan. SNB’s
Section 401(k) plan will be terminated, effective immediately prior to the
Effective Time. Each participant in SNB’s plan at the time it is terminated may
elect, upon completion of the termination and the final liquidation of the plan,
(a) to
receive a distribution of the assets credited to his or her plan account at that
time, (b) to have
those assets credited as a direct “roll-over” to the participant’s individual
retirement plan account, or, (c) if the
participant has become a participant in FCB’s Section 401(k) plan, to have those
assets credited as a “roll-over” to the participant’s plan account under FCB’s
plan.
SFC and
SNB agree that they will take or cause to be taken such actions as FCB shall
reasonably consider to be necessary or desirable in connection with or to effect
or facilitate such plan termination. As successor to SNB, FCB agrees that, as of
the Effective Time, it will assume any and all administrative and fiduciary
duties of SFC or SNB with respect to completion of the termination and
liquidation of SNB’s plan, including, without limitation, duties relating to
filings with the Internal Revenue Service relating to the plan.
7.10. SFC
Stock Option Termination and Releases.
Following the date of this Agreement, and not less than 30 days before the
Effective Time, SFC shall enter into a written agreement (an “Option Release”)
in form reasonably satisfactory to FCB with each holder of a then outstanding
SFC Stock Option and providing that, immediately prior to the Effective Time,
(a) each
then outstanding SFC Stock Option held by that holder shall terminate
automatically and be cancelled, (b) with
respect to each such SFC Stock Option, SFC will pay to that holder, in cash, an
amount (if any) equal to (i) $22.00,
minus the exercise price of that SFC Stock Option as provided in the written
agreement evidencing it, multiplied by (ii) the
number of shares covered by the SFC Stock Option, (c) the
holder understands and agrees that no assurances or representations are being
made to him or her by SFC or FCB with respect to the tax treatment of any such
payment, and the holder will be and remain responsible for the timely payment of
all federal and state income taxes and his or her portion of any FICA and FUTA
taxes applicable to the above payment, (d) SFC and
its successors in interest may withhold from such payment any and all
such
35
taxes
that it reasonably believes it is required to withhold, and (e) the
holder fully and completely releases SFC and its successors in interest from any
further obligation with respect to his or her SFC Stock Options and from any
liability for the tax consequences of such payment.
No such
payment shall be made to any holder of an SFC Stock Option unless and until the
holder executes and delivers an Option Release to SFC. Payments made by SFC
pursuant to executed Option Releases as described in this Paragraph 7.10
shall not be deemed to breach any covenant of SFC or SNB hereunder or to result
in a breach of any representation or warranty of SFC or SNB herein,
provided, that
such payments shall not be made with respect to an aggregate number of SFC Stock
Options that exceeds the number of such options Previously Disclosed to FCB. As
a result of the Merger, FCB will become responsible for SFC’s payment
obligations, and shall become entitled to all rights of SFC, under each Option
Release, from and after the Effective Time.
7.11 Correction
of Credit Documentation and Compliance Deficiencies. If,
during the course of its continuing review of SNB’s credit files after the date
of this Agreement, FCB identifies situations or circumstances relating to
specific Loans or credit files that FCB reasonably considers to be material
deficiencies in Loan documentation or to constitute violations of applicable
banking rules or regulations relating to Loans, SNB will cooperate in good faith
with FCB to correct, in all material respects, those deficiencies or violations
prior to the Effective Time.
Article
VIII
Conditions
Precedent to Merger
8.01.
Conditions
to all Parties’ Obligations.
Notwithstanding any other provision of this Agreement to the contrary, the
obligations of each of the parties to this Agreement to consummate the
transactions described herein shall be conditioned upon the satisfaction of each
of the following conditions precedent on or prior to the Closing
Date:
(a) Approval
by Regulatory Authorities; Disadvantageous Conditions.
(i) The Merger
and other transactions described in this Agreement shall have been approved, to
the extent required by law, by the South Carolina Board, the FDIC, the OCC and
the FRB, and by all other Regulatory Authorities having jurisdiction over such
transactions; (ii) no
Regulatory Authority shall have objected to or withdrawn its approval of such
transactions or imposed any condition on such transactions or its approval
thereof, which condition is reasonably deemed by FCB to so adversely impact the
economic or business benefits of this Agreement to FCB as to render it
inadvisable for it to consummate the Merger; (iii) the
15-day or 30-day waiting period, as applicable, required following necessary
approvals of federal Regulatory Authorities for review of the transactions
described herein by the United States Department of Justice shall have expired,
and, in connection with any such review, no objection to the Merger shall have
been raised; and (iv) all other
consents, approvals and permissions, and the satisfaction of all of the
requirements prescribed by law or regulation, necessary to the carrying out of
the transactions contemplated herein shall have been procured.
(b) Adverse
Proceedings, Injunction, Etc. There
shall not be (i) any
order, decree or injunction of any court or agency of competent jurisdiction
which enjoins or prohibits the Merger or any of the other transactions described
in this Agreement or either of the parties hereto from consummating any such
transaction, (ii) any
pending or threatened investigation of the Merger or any of such other
transactions by the United States Department of Justice, or any actual or
threatened litigation under federal antitrust laws relating to the Merger or any
other such transaction, (iii) any suit,
action or proceeding by any person (including any Regulatory Authority), pending
or threatened before any court or governmental agency in which it is sought to
restrain or prohibit SFC, SNB, FCB or Bancorp from consummating the Merger or
carrying out any of the terms or provisions of this Agreement, or (iv) any other
suit, claim, action or proceeding pending or threatened against any of the SFC
Companies, FCB or Bancorp or any of their respective officers or directors which
shall reasonably be considered by SFC or
36
FCB to be
materially burdensome in relation to the proposed Merger or materially adverse
in relation to the financial condition, results of operations, businesses,
assets, Loan portfolio, investments, properties or operations of either such
corporation, and which has not been dismissed, terminated or resolved to the
satisfaction of all parties hereto within 90 days of the institution or threat
thereof.
(c) Approval
by Boards of Directors and Shareholders. The
Boards of Directors of each of SFC, SNB, FCB and Bancorp shall have duly
approved and adopted this Agreement, the shareholders of SFC shall have duly
approved the Plan of Merger at the SFC Shareholders’ Meeting, and SFC and
Bancorp, as the sole shareholders of SNB and FCB, respectively, shall have duly
approved and adopted the Plan of Merger, all by appropriate resolutions and to
the extent required by and in accordance with the provisions of this Agreement,
applicable law, and applicable provisions of their respective Articles of
Incorporation or Association, as applicable, and ByLaws.
(d) No
Termination or Abandonment. This
Agreement shall not have been terminated or abandoned by either party
hereto.
(e) Articles
of Merger; Other Actions. The
Articles of Merger described in Paragraph 2.06 shall have been duly
executed by FCB and filed with the South Carolina Secretary of State as provided
in that Paragraph.
8.02. Additional
Conditions to SFC’s and SNB’s Obligations.
Notwithstanding any other provision of this Agreement to the contrary, but
except as otherwise provided in Paragraphs 8.02(a) and 8.02(c) below, SFC’s and
SNB’s separate obligation to consummate the transactions described herein shall
be conditioned upon the satisfaction of each of the following conditions
precedent on or before the Closing Date:
(a) Material
Adverse Change. Since
the date of this Agreement, there shall not have occurred any FCB Material
Adverse Change, and there shall not have occurred any events or developments,
and there shall not exist any conditions or circumstances which, individually or
in the aggregate, and with the lapse of time or otherwise, reasonably could be
expected to cause, create or result in any FCB Material Adverse Change.
Following
Bancorp’s completion of the subordinated debt offering described in Paragraphs
8.02(i) and 8.03(d) below, this Paragraph 8.02(a) shall terminate and be of no
further force or effect and shall no longer be a condition to SFC’s and SNB’s
obligations hereunder, without regard to the occurrence of any change, event,
development, condition or circumstance described above, whether before or after
the completion of the offering.
(b) Compliance
with Laws. FCB
shall have complied in all material respects with all federal and state laws and
regulations applicable to the transactions described in this Agreement where the
violation of or failure to comply with any such law or regulation could or may
be material and adverse to FCB’s ability to consummate the Merger.
(c) FCB’s
and Bancorp’s Representations and Warranties and Performance of Agreements;
Officers’ Certificate. Unless
waived in writing by SFC as provided in Paragraph 11.02, each of the
representations and warranties of FCB and Bancorp contained in this Agreement
shall have been true and correct in all material respects as of the date hereof,
and they shall remain true and correct in all material respects on and as of the
Closing Date with the same force and effect as though made on and as of such
date, except (i) for
changes or exceptions which, individually or in the aggregate, have not had, and
cannot reasonably be expected to have, an FCB Material Adverse Effect, or
(ii) as
otherwise contemplated by this Agreement; and FCB and Bancorp each shall have
performed in all material respects all of its obligations, covenants and
agreements hereunder to be performed by it on or before the Closing Date. As
provided in Articles IV and VI, following Bancorp’s completion of the
subordinated debt offering described in Paragraphs 8.02(i) and 8.03(d) below,
FCB’s and Bancorp’s representations and warranties under Paragraphs 4.05, 4.06
and 4.07, and its covenant under Paragraph 6.03, shall terminate and be of no
further force or effect, and the truth and accuracy of those representations and
warranties,
37
and
compliance with that covenant, whether before or after completion of the
offering, shall no longer be conditions to SFC’s and SNB’s obligations
hereunder.
SFC and
SNB shall have received a certificate dated as of the Closing Date and executed
by FCB and Bancorp and their Chief Executive Officer and Chief Financial Officer
to the effect that the conditions of this subparagraph have been met and as to
such other matters as may be reasonably requested by SFC.
(d) Legal
Opinion of FCB’s Counsel. SFC shall
have received the written legal opinion of Xxxxxxxx & Roof, LLP, legal
counsel to FCB and Bancorp, dated as of the Closing Date, substantially in the
form attached as Exhibit B to this Agreement.
(e) Other
Documents and Information. FCB and
Bancorp each shall have provided to SFC correct and complete copies (certified
by its Secretary) of its Articles of Incorporation and Bylaws and resolutions of
their respective Boards of Directors and and FCB’s sole shareholder pertaining
to approval of this Agreement and the Merger and other transactions contemplated
herein, together with a certificate of the incumbency of FCB’s and Bancorp’s
officers who executed this Agreement or any other documents delivered to SFC and
SNB in connection with the Closing.
(f) Fairness
Opinion. SFC
shall have received from its financial adviser, Xxxxx X. Xxxxx & Co., a
written opinion, dated one business day prior to the mailing date for the Proxy
Statement, in a form reasonably satisfactory to it (the “SFC Fairness Opinion”),
to the effect that the terms of the Merger, including the consideration to be
received by SFC’s shareholders in the Merger, is fair, from a financial point of
view, to SFC and its shareholders, and Xxxxx X. Xxxxx & Co. shall have
delivered a letter to SFC, dated as of the Closing Date, to the effect that it
remains its opinion that the terms of the Merger are fair, from a financial
point of view, to SFC and its shareholders. SFC shall use commercially
reasonable efforts to obtain the SFC Fairness Opinion and the subsequent letter
from Xxxxx X. Xxxxx & Co.
(g) Acceptance
by SFC’s Counsel. The form
and substance of all legal matters described in this Agreement or related to the
transactions contemplated herein shall be reasonably acceptable to SFC’s legal
counsel.
(h) Deposit
of Merger Consideration. FCB shall
have deposited the Merger Consideration with the Paying Agent as described in
Paragraph 2.04(c).
(i) Completion
of Subordinated Debt Offering. Bancorp
shall have completed an issuance and sale of subordinated debt securities in an
aggregate original principal amount of not less than $75,000,000.
8.03. Additional
Conditions to FCB’s and Bancorp’s Obligations.
Notwithstanding
any other provision of this Agreement to the contrary, FCB’s and Bancorp’s
separate obligation to consummate the transactions described herein shall be
conditioned upon the satisfaction of each of the following conditions precedent
on or before the Closing Date:
(a) Material
Adverse Change. Since
the date of this Agreement, there shall not have occurred any SFC Material
Adverse Change, and there shall not have occurred any events or developments,
and there shall not exist any conditions or circumstances which, individually or
in the aggregate, and with the lapse of time or otherwise, reasonably could be
expected to cause, create or result in any SFC Material Adverse
Change.
(b) Compliance
with Laws. SFC
and SNB each shall have complied in all material respects with all federal and
state laws and regulations applicable to the transactions described in
this
38
Agreement
where the violation of or failure to comply with any such law or regulation
reasonably could be expected to cause, create or result in an SFC Material
Adverse Effect.
(c) SFC’s
and SNB’s Representations and Warranties and Performance of Agreements;
Officers’ Certificate. Unless
waived in writing by FCB as provided in Paragraph 11.02, each of the
representations and warranties of SFC and SNB contained in this Agreement shall
have been true and correct in all material respects as of the date hereof, and
they shall remain true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made on and as of such
date, except (i) for
changes or exceptions which, individually or in the aggregate, have not had, and
cannot reasonably be expected to have, an SFC Material Adverse Effect, or
(ii) as
otherwise contemplated by this Agreement; and SFC and SNB each shall have
performed in all material respects all its obligations, covenants and agreements
hereunder to be performed by it on or before the Closing Date.
FCB and
Bancorp shall have received a certificate dated as of the Closing Date and
executed by SFC and SNB and their Chief Executive Officer and Chief Financial
Officer to the effect that the conditions of this subparagraph have been met and
as to such other matters as may be reasonably requested by FCB.
(d) Completion
of Subordinated Debt Offering. Bancorp
shall have successfully completed an issuance and private placement, through
Wachovia Securities, Inc., and without any requirement of registration under the
Securities Act of 1933, as amended, of subordinated debt securities in an
aggregate original principal amount of not less than $75,000,000 and which shall
be on terms (including without limitation maturity date, interest rate and
placement fees or commissions) which are no less favorable to Bancorp than those
set forth in Exhibit C to this Agreement and the net proceeds of which shall
qualify for treatment as “Tier II” capital on Bancorp’s books under applicable
rules and policies of the FRB.
(e) Employment
Agreements.
(i) The New
Employment Agreements described in Paragraph 7.08(a) shall have been executed
and delivered by SFC and each of the officers of SNB named in that subparagraph,
and SFC shall have delivered a fully executed copy of each such Employment
Agreement to FCB, and each such Employment Agreement shall remain in full force
and effect and shall not have been modified or amended by SFC except with the
written consent of FCB; and (ii) each of
the Existing Employment Agreements described in Paragraph 7.08(b) shall remain
in full force and effect and shall not have been modified or amended by SFC
except with the written consent of FCB.
(f) Termination
of SFC Stock Options. Except
to the extent that they shall previously have been exercised in accordance with
their terms or cancelled in accordance with the terms of the applicable stock
option plans under which they were issued, each holder of an unexercised SFC
Stock Option that is outstanding immediately prior to the Closing shall have
executed and delivered to SFC an Option Release in a form reasonably
satisfactory to FCB, and all outstanding SFC Stock Options shall have been
effectively terminated, all in the manner described in Paragraph 7.10, effective
not later than the Effective Time.
(g) Consents
to Assignments; Estoppel Certificates. SFC
shall have obtained and delivered to FCB the consents to assignments of
contracts (including estoppel certificates pertaining to Lease Agreements)
requested by FCB pursuant to Paragraph 5.01(g) above with respect to
(i) each
Lease Agreement covering any banking office of SNB, and (ii)
except to
the extent that the failure to obtain any such consent could not reasonably be
expected to have an SFC Material Adverse Effect or, following the Effective
Time, an FCB Material Adverse Effect, or to result in a material disruption in
the business of any of the SFC Companies or, following the Effective Time, FCB,
each other contract of any of the SFC Companies.
39
(h) Legal
Opinion of SFC’s Counsel. FCB shall
have received the written legal opinion of XxXxxx Law Firm, P.A., legal counsel
to SFC and SNB, dated as of the Closing Date, substantially in the form attached
as Exhibit D to this Agreement.
(i) Other
Documents and Information. SFC and
SNB shall have provided to FCB correct and complete copies (all certified by
SFC’s and SNB’s Secretaries) of SFC’s and SNB’s Articles of Incorporation or
Association, as applicable, and Bylaws, and resolutions of their respective
Boards of Directors and shareholders pertaining to approval of this Agreement
and the Merger and other transactions contemplated herein, together with a
certificate as to the incumbency of SFC’s and SNB’s officers who executed this
Agreement or any other documents delivered to FCB in connection with the
Closing.
(j) Acceptance
by FCB’s Counsel. The form
and substance of all legal matters described in this Agreement or related to the
transactions contemplated herein shall be reasonably acceptable to FCB’s legal
counsel.
Article
IX
Termination;
Breach; Remedies
9.01. Mutual
Termination. At any
time prior to the Effective Time (and whether before or after approval hereof by
the shareholders of SFC), this Agreement may be terminated by the mutual
agreement of SFC and FCB. Upon any such mutual termination, all obligations of
SFC, SNB, FCB and Bancorp hereunder shall terminate and each party shall pay its
own costs and expenses as provided in Paragraph 7.07.
9.02. Unilateral
Termination. Prior to
the Effective Time, this Agreement may be terminated by either FCB or SFC
(whether before or after approval hereof by SFC’s shareholders) upon written
notice to the other parties in the manner provided herein and under the
circumstances described below.
(a) Termination
by FCB. This
Agreement may be terminated by FCB by action of its Board of Directors or
Executive Committee:
(i) if any of
the conditions to FCB’s and Bancorp’s obligations set forth in
Paragraphs 8.01(a)(i), 8.01(a)(ii), or 8.03(d) above shall not have been
satisfied in all material respects or effectively waived in writing by FCB by
September 30, 2005 (except to the extent the failure of such condition to be
satisfied has been caused by the failure of FCB or Bancorp to satisfy any of its
obligations, covenants or agreements contained herein);
(ii) if SFC or
SNB shall have violated or failed to fully perform any of their obligations,
covenants or agreements contained in Article V or VII herein in any material
respect;
(iii) if FCB
determines at any time that (A)
any of
SFC’s or SNB’s representations or warranties contained in Article III above or
in any other certificate or writing delivered pursuant to this Agreement shall
have been false or misleading in any material respect when made or would have
been false or misleading in any material respect except for the fact that the
representation or warranty was limited to or qualified based on the Best
Knowledge of SFC, or that (B) there
has occurred any event or development or that there exists any condition or
circumstance which has caused or, with the lapse of time or otherwise,
reasonably could be expected to cause any such representations or warranties to
become false or misleading in any material respect or that would cause any such
representation or warranty to become false or misleading in any material respect
except for the fact that the representation or warranty was limited to or
qualified based on the Best Knowledge of SFC, except, in either such case, for
inaccuracies, changes and exceptions in and to representations or warranties
that, individually or in the aggregate, have not had, and cannot reasonably be
expected to have, an SFC Material Adverse Effect;
40
(iv) if SFC’s
shareholders do not approve this Agreement and the Merger at the SFC
Shareholders’ Meeting or if, notwithstanding FCB’s and Bancorp’s satisfaction in
all material respects of their obligations under Paragraphs 7.02 above, the SFC
Shareholders’ Meeting is not held by September 30, 2005;
(v) if the
Merger shall not have become effective on or before December 31, 2005, or
such later date as shall be mutually agreed upon in writing by FCB and
SFC;
(vi) under the
circumstances described in Paragraph 7.04; or
(vii) if, for
the reasons and to the extent permitted by Paragraph 5.01(a), the Proxy
Statement distributed by SFC to its shareholders in connection with the SFC
Shareholders’ Meeting does not state that SFC’s Board of Directors considers the
Merger to be advisable and in the best interests of SFC and its shareholders and
that the Board recommends that SFC’s shareholders vote for approval of the Plan
of Merger (or, after having made such a recommendation in the Proxy Statement,
the Board withdraws, qualifies or revises that recommendation in any material
respect).
However,
before FCB may terminate this Agreement for any of the reasons specified above
in (i), (ii) or (iii) of this Paragraph 9.02(a), it shall give written
notice to SFC in the manner provided herein stating its intent to terminate and
a description of the specific breach, default, violation or other condition
giving rise to its right to so terminate, and such termination by FCB shall not
become effective if, within 30 days following the giving of such notice, SFC or
SNB shall cure such breach, default or violation or satisfy such condition to
the reasonable satisfaction of FCB or, if such breach, default, violation or
other condition is not reasonably susceptible to cure or satisfaction within 30
days, then, following receipt of FCB’s written notice, SFC or SNB shall have
promptly commenced good faith efforts to cure or satisfy the breach, default,
violation or condition, shall diligently continue those efforts, and shall
actually cure or satisfy the breach, default, violation or condition to FCB’s
reasonable satisfaction within a reasonable time thereafter. In the event SFC or
SNB cannot or does not cure such breach, default or violation or satisfy such
condition to the reasonable satisfaction of FCB within such notice period (or
during the extended period described above), termination of this Agreement by
FCB thereafter shall be effective upon its giving of written notice of
termination to SFC in the manner provided herein.
(b) Termination
by SFC. Prior to
the Effective Time, this Agreement may be terminated by SFC by action of its
Board of Directors:
(i) if any of
the conditions to SFC’s and SNB’s obligations set forth in
Paragraph 8.01(a)(i), 8.01(a)(ii) or 8.02(i) above shall not have been
satisfied in all material respects or effectively waived in writing by SFC by
September 30, 2005 (except to the extent that the failure of such condition to
be satisfied has been caused by the failure of SFC or SNB to satisfy any of its
obligations, covenants or agreements contained herein);
(ii) if FCB or
Bancorp shall have violated or failed to fully perform any of their obligations,
covenants or agreements contained in Article VI or VII herein in any material
respect except for breaches, violations or failures that, individually or in the
aggregate, have not had, and cannot reasonably be expected to have, a material
adverse effect on FCB’s ability to consummate the Merger or as otherwise
provided in Paragraph 8.02(c);
(iii) if SFC
determines at any time that, except as otherwise provided in Paragraph 8.02(c),
(A)
any of
FCB’s or Bancorp’s representations and warranties contained in Article IV herein
or in any other certificate or writing delivered pursuant to this Agreement
shall have been false or misleading in any material respect when made or would
have been false or misleading in any material respect except for the fact that
the representation or warranty was limited to or qualified based on the
Best
41
Knowledge
of FCB, or that (B) there has
occurred any event or development or that there exists any condition or
circumstance which has caused or, with the lapse of time or otherwise,
reasonably could be expected to cause any such representations or warranties to
become false or misleading in any material respect or that would cause any such
representation or warranty to become false or misleading in any material respect
except for the fact that the representation or warranty was limited to or
qualified based on the Best Knowledge of FCB, except, in either such case, for
inaccuracies, changes and exceptions in and to representations or warranties
that, individually or in the aggregate, have not had, and cannot reasonably be
expected to have, a material adverse effect on FCB’s ability to consummate the
Merger;
(iv) if,
notwithstanding SFC’s satisfaction of its obligations under Paragraphs 5.01(a)
and 7.02 above, its shareholders do not approve this Agreement and the Merger at
the SFC Shareholders’ Meeting;
(v) if the
Merger shall not have become effective on or before December 31, 2005, or
such later date as shall be mutually agreed upon in writing by SFC and FCB;
or,
(vi) in the
event that the Board of Directors of SFC determines in good faith, after
consultation with and receipt of the advice of its outside counsel and financial
advisers, that in light of a
“Superior Proposal” (as defined below) it is necessary to terminate this
Agreement in order to comply with its fiduciary duties to SFC and to SFC’s
shareholders under applicable law; provided,
however, that
SFC’s Board of Directors may terminate this Agreement pursuant to this Paragraph
9.02(b)(vi) only if it concurrently enters into an “Acquisition Agreement” (as
defined below) related to a Superior Proposal; and, provided
further, however, that
this Agreement may be terminated pursuant to this Paragraph 9.02(b)(vi) only
after the tenth business day following FCB’s receipt of written notice advising
FCB that the Board of Directors of SFC is prepared to accept a Superior
Proposal, and only if, during such ten-day period, if FCB so elects, SFC and its
advisers shall have negotiated in good faith with FCB to make such adjustments
in the terms and conditions of this Agreement as would enable FCB to proceed
with the transactions contemplated herein on such adjusted terms.
“Superior
Proposal” means an unsolicited, bona fide, written offer made by a third party
to consummate an “Acquisition Proposal” (as defined below) that SFC’s
Board of Directors determines, in good faith, after consulting with its outside
legal counsel and its financial adviser, would, if consummated, result in a
transaction that is more favorable to the shareholders of SFC than the
transactions contemplated hereby.
“Acquisition
Proposal” means any proposal or offer with respect to any of the following
(other than the transactions contemplated hereunder): (A) any
merger, consolidation, share exchange, business combination, or other similar
transaction involving SFC or SNB, (B) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 25% or
more of SFC’s consolidated assets in a single transaction or series of related
transactions; or (C) any
tender offer or exchange offer
for 25% or more of the outstanding shares of SFC’s or SNB’s capital stock, or
the filing of a registration statement under the Securities Act of 1933, as
amended, in connection therewith.
“Acquisition
Agreement” means any letter of intent, agreement in principle, acquisition
agreement or other similar agreement, in any case in writing, that relates to or
provides for any transaction that is described in or contemplated by the term
Acquisition Proposal.
However,
before SFC may terminate this Agreement for any of the reasons specified above
in clause (i), (ii) or (iii) of this Paragraph 9.02(b), it shall give
written notice to FCB in the manner provided herein stating its intent to
terminate and a description of the specific breach, default, violation or other
condition giving rise to its right to so terminate, and such termination by SFC
shall not become effective if, within 30 days following the giving of such
notice, FCB or Bancorp shall cure such breach, default or violation or satisfy
such condition to the reasonable satisfaction of SFC or, if such breach,
default, violation or other condition is not reasonably susceptible to cure or
satisfaction within 30
42
days,
then, following receipt of SFC’s written notice, FCB or Bancorp shall have
promptly commenced good faith efforts to cure or satisfy the breach, default,
violation or condition, shall diligently continue those efforts, and shall
actually cure or satisfy the breach, default, violation or condition to SFC’s
reasonable satisfaction within a reasonable time thereafter. In the event FCB or
Bancorp cannot or does not cure such breach, default or violation or satisfy
such condition to the reasonable satisfaction of SFC within such notice period
(or during the extended period described above), termination of this Agreement
by SFC thereafter shall be effective upon its giving of written notice thereof
to FCB in the manner provided herein.
(c) Survival
of Certain Covenants Following Termination.
Notwithstanding anything contained in this Agreement to the contrary, SFC’s,
SNB’s, FCB’s and Bancorp’s respective rights, obligations and liabilities
pursuant to Paragraphs 7.03, 9.01, 9.02, 9.03, 9.04 and 10.01 of this Agreement
shall not be affected by a termination of this Agreement, and, following any
such termination, those rights, obligations and liabilities shall survive,
remain in full force and effect and be fully enforceable in accordance with
their terms.
9.03. Termination
Fees.
(a) If FCB
terminates this Agreement pursuant to Paragraph 9.02(a)(vii), then SFC shall
make payment to FCB of a termination fee in the amount of $500,000. Such amount
shall be paid by wire transfer of immediately available funds within two
business days following such termination. Additionally, if at any time after the
date of this Agreement and before the date 12 months after such termination
SFC or SNB shall have executed or entered into an Acquisition Agreement, then
SFC and SNB shall be obligated, jointly and severally, to make payment to FCB of
an additional termination fee in the amount of $1,000,000. Such additional
amount shall be paid by wire transfer of immediately available funds within two
business days following the later of such termination or the date the
Acquisition Agreement is executed or entered into.
(b) If this
Agreement is terminated by SFC pursuant to Paragraph 9.02(b)(ii) where
FCB’s or Bancorp’s failure to fully perform any of its obligations, covenants or
agreements that gives rise to such termination was for reasons reasonably within
FCB’s or Bancorp’s control, then FCB and Bancorp shall be obligated, jointly and
severally, to make payment to SFC of a termination fee in the amount of
$500,000. Such
amount shall be paid by wire transfer of immediately available funds within two
business days following such termination.
(c) If this
Agreement is terminated by FCB pursuant to Paragraph 9.02(a)(ii) where
SFC’s or SNB’s failure to fully perform any of its obligations, covenants or
agreements that gives rise to such termination was for reasons reasonably within
SFC’s or SNB’s control, then SFC and SNB shall be obligated, jointly and
severally, to make payment to FCB of a termination fee in the amount of
$500,000. Such amount shall be paid by wire transfer of immediately available
funds within two business days following such termination. Additionally, if at
any time after the date of this Agreement and prior to the date of such
termination an Acquisition Proposal has been publicly announced, disclosed or
communicated or otherwise made known to the senior
management or Board of Directors of SFC, then SFC and SNB shall be obligated,
jointly and severally, to make payment to FCB of an additional termination fee
in the amount of $1,000,000 if, at any time after the date of this Agreement and
before the date 12 months after such termination, SFC or SNB shall have
executed or entered into an Acquisition Agreement. Such additional amount shall
be paid by wire transfer of immediately available funds within two business days
following the later of such termination or the date the Acquisition Agreement is
executed or entered into.
(d) If this
Agreement is terminated either by FCB pursuant to Paragraph 9.02(a)(iv), or by
SFC pursuant to Paragraph 9.02(b)(iv), and in any such case an Acquisition
Proposal has been publicly announced, disclosed or communicated or made known to
the senior management or Board of Directors of SFC
at any time after the date of this Agreement and prior to the date of the
SFC
43
Shareholders’
Meeting or, in the case of a termination by FCB as a result of the SFC
Shareholder meeting not being held by the date specified in Paragraph
9.02(a)(iv), prior to the date of such termination, then SFC and SNB shall be
obligated, jointly and severally, to make payment to FCB of a termination fee in
the amount of $1,500,000 if, at any time after the date of this Agreement and
before the date 12 months after such termination, SFC or SNB shall have
executed or entered into an Acquisition Agreement. Such amount shall be paid by
wire transfer of immediately available funds within two business days following
the later of such termination or the date the Acquisition Agreement is executed
or entered into.
(e) If SFC
terminates this Agreement pursuant to Paragraph 9.02(b)(vi), then SFC and SNB
shall be obligated, jointly and severally, to make payment to FCB of a
termination fee in
the amount of $1,500,000. Such amount shall be paid by wire transfer of
immediately available funds within two business days following such
termination.
(f) Any
termination fees payable by FCB, Bancorp, SFC or SNB under any provision of this
Paragraph 9.03 shall be in addition to, and not in lieu of, any other amounts
that also may become payable by any of them pursuant to Paragraph 9.04
below.
9.04. Breach;
Remedies.
(a) Breach
by SFC or SNB.
Except as
otherwise provided in this Paragraph 9.04, and in addition to any termination
fees that FCB shall have a right to receive from SFC and SNB under Paragraph
9.03 above, in the event of a breach by SFC or SNB of any of its representations
or warranties contained in Article III of this Agreement or in any other
certificate or writing delivered pursuant to this Agreement, or in the event of
SFC’s or SNB’s failure to perform or violation of any of its obligations,
agreements or covenants contained in Articles V or VII of this Agreement, FCB’s
sole right and remedy shall be to terminate this Agreement prior to the
Effective Time to the extent provided in Paragraph 9.02(a); and, in the
event of any such termination of this Agreement by FCB due to a failure by SFC
or SNB to perform any of their obligations, agreements or covenants contained in
Articles V or VII of this Agreement for reasons reasonably within its control,
SFC and SNB additionally shall be obligated, jointly and severally, to reimburse
FCB and Bancorp for up to (but not more than) $250,000 in expenses described in
Paragraph 7.07 which actually have been incurred by FCB and
Bancorp.
(b) Breach
by FCB or Bancorp.
Except as
otherwise provided in this Paragraph 9.04, and in addition to any termination
fees that SFC shall have a right to receive from FCB and Bancorp under Paragraph
9.03 above, in the event of a breach by FCB or Bancorp of any of its
representations or warranties contained in Article IV of this Agreement, or in
the event of FCB’s or Bancorp’s failure to perform or violation of any of its
obligations, agreements or covenants contained in Articles VI or VII of this
Agreement, SFC’s and SNB’s sole right and remedy shall be to terminate this
Agreement prior to the Effective Time to the extent provided in
Paragraph 9.02(b); and, in the event of any such termination of this
Agreement by SFC and SNB due to a failure by FCB to perform any of its
obligations, agreements or covenants contained in Articles VI or VII of this
Agreement for reasons reasonably within its control, FCB and Bancorp
additionally shall be obligated to reimburse SFC and SNB for up to (but not more
than) an aggregate of $250,000 in expenses described in Paragraph 7.07 which
actually have been incurred by SFC and SNB.
(c) Willful
and Intentional Breach.
Notwithstanding subparagraphs 9.04(a) and 9.04(b) or any other provision of this
Agreement to the contrary, if either party to this Agreement breaches this
Agreement by willfully or intentionally and without justification refusing to
consummate the transactions described in this Agreement or perform its
obligations contained in Articles V, VI or VII of this Agreement, such party
shall be obligated to pay all expenses actually incurred by the other parties
described in Paragraph 7.07, together with other damages recoverable at law
or in equity. For
purposes of this Paragraph 9.04(c), the good
faith refusal of a party to perform any of its obligations under this Agreement
pursuant to an exception expressly provided for herein with respect to the
exercise by its Board of Directors of fiduciary duties shall not be deemed to be
without justification.
44
(d) Other
Remedies.
Notwithstanding any other provision of this Article IX to the contrary, either
party shall be entitled to commence an action to obtain appropriate equitable
relief in the event of a violation or imminent violation by the other party of
Paragraph 7.03 above or to enforce the indemnification obligation of the other
party under Paragraph 10.01 below.
Article
X
Indemnification
10.01. Indemnification
Following Termination of Agreement.
(a) By
SFC and SNB. SFC
and SNB agree that, in the event this Agreement is terminated for any reason and
the Merger is not consummated, it will indemnify, hold harmless and defend FCB
and Bancorp and their respective officers, directors, attorneys, financial
advisers and consultants from and against any and all claims, disputes, demands,
causes of action, suits or proceedings of any third party (including any
Regulatory Authority), together with all losses, damages, liabilities,
obligations, costs and expenses of every kind and nature in connection therewith
(including without limitation reasonable attorneys’ fees and legal costs and
expenses in connection therewith), whether known or unknown, and whether now
existing or hereafter arising, which may be threatened against, incurred,
undertaken, received or paid by them:
(i) in
connection with or which arise out of, result from, or are based upon
(A) the
operations or business transactions of any of the SFC Companies or their
relationship with any of their employees, or (B) the
failure of any of the SFC Companies’ to comply with any statute or regulation of
any federal, state or local government or agency (or any political subdivision
thereof) in connection with the transactions described in this
Agreement;
(ii) in
connection with or which arise out of, result from, or are based upon any fact,
condition or circumstance that constitutes a breach by SFC or SNB of, or any
inaccuracy, incompleteness or inadequacy in, any of its representations or
warranties under or in connection with this Agreement, or any failure of SFC or
SNB to perform any of its covenants, agreements or obligations under or in
connection with this Agreement; or,
(iii) in
connection with or which arise out of, result from, or are based upon any
information provided by SFC or SNB which is included in the Proxy Statement and
which information causes the Proxy Statement at the time of its mailing to SFC’s
shareholders to contain any untrue statement of a material fact or to omit any
material fact required to be stated therein or necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not false or misleading.
(b) By
FCB and Bancorp. FCB and
Bancorp each agrees that, in the event this Agreement is terminated for any
reason and the Merger is not consummated, it will indemnify, hold harmless and
defend SFC and SNB and their respective officers, directors, attorneys,
financial advisers and consultants from and against any and all claims,
disputes, demands, causes of action, suits, proceedings of any third party
(including any Regulatory Authority), together with all losses, damages,
liabilities, obligations, costs and expenses of every kind and nature in
connection therewith (including without limitation reasonable attorneys’ fees
and legal costs and expenses in connection therewith), whether known or unknown,
and whether now existing or hereafter arising, which may be threatened against,
incurred, undertaken, received or paid by them:
(i) in
connection with or which arise out of, result from, or are based upon
(A) FCB’s or
Bancorp’s operations or business transactions or their relationship with any of
their employees, or (B) FCB’s or
Bancorp’s failure to comply with any statute or regulation of any federal,
state
45
or local
government or agency (or any political subdivision thereof) in connection with
the transactions described in this Agreement;
(ii) in
connection with or which arise out of, result from, or are based upon any fact,
condition or circumstance that constitutes a breach by FCB or Bancorp of, or any
inaccuracy, incompleteness or inadequacy in, any of its representations or
warranties under or in connection with this Agreement, or any failure of FCB or
Bancorp to perform any of its covenants, agreements or obligations under or in
connection with this Agreement; or,
(iii) in
connection with or which arise out of, result from, or are based upon any
information provided by FCB or Bancorp which is included in the Proxy Statement
and which information causes the Proxy Statement at the time of its mailing to
SFC’s shareholders to contain any untrue statement of a material fact or to omit
any material fact required to be stated therein or necessary in order to make
the statements contained therein, in light of the circumstances under which they
were made, not false or misleading.
(c) Procedure
for Claiming Indemnification. If any
matter subject to indemnification under this Paragraph 10.01 arises in the form
of a claim (herein referred to as a “Third Party Claim”) against SFC, SNB or
FCB, or their respective successors and assigns, or any of their respective
subsidiary entities, officers, directors, attorneys, financial advisers or
consultants (collectively, “Indemnitees”), the Indemnitee promptly shall give
notice and details thereof, including copies of all pleadings and pertinent
documents, to the party obligated for indemnification hereunder (the
“Indemnitor”). Within 15 days of such notice, the Indemnitor either (i) shall pay
the Third Party Claim either in full or upon agreed compromise, or (ii) shall
notify the applicable Indemnitee that the Indemnitor disputes the Third Party
Claim and intends to defend against it, and thereafter shall so defend and pay
any adverse final judgment or award in regard thereto. Such defense shall be
controlled by the Indemnitor and the cost of such defense shall be borne by it,
except that the Indemnitee shall have the right to participate in such defense
at its own expense and provided that the Indemnitor shall have no right in
connection with any such defense or the resolution of any such Third Party Claim
to impose any cost, restriction, limitation or condition of any kind that
compromises the Indemnitee hereunder. In the case of an Indemnitee that is an
officer, director or attorney of a party to this Agreement, then that party
agrees that it shall cooperate in all reasonable respects in the defense of any
such Third Party Claim, including making personnel, books and records relevant
to the Third Party Claim available to the Indemnitor without charge therefor
except for out-of-pocket expenses. If the Indemnitor fails to take action within
15 days as hereinabove provided or, having taken such action, thereafter fails
diligently to defend and resolve the Third Party Claim, the Indemnitee shall
have the right to pay, compromise or defend the Third Party Claim and to assert
the indemnification provisions hereof. The Indemnitee also shall have the right,
exercisable in good faith, to take such action as may be necessary to avoid a
default prior to the assumption of the defense of the Third Party Claim by the
Indemnitor.
| |
10.02
|
Indemnification
of SFC’s, SNB’s, FFI’s and SIS’s
Directors
and Officers Following Effective Time.
|
(a) From and
after the Effective Time, and without releasing any insurance carrier and after
exhaustion of all applicable director and officer liability insurance coverage
for SFC, SNB, SIS and FFI and their directors and officers, FCB, as successor in
interest to SFC and SNB, will be obligated to indemnify each present and former
director and officer of SFC, SNB, SIS and FFI, and each officer or employee of
SFC, SNB, SIS and FFI that is serving or has served as a director or trustee of
another entity expressly at SFC’s or SNB’s request or direction (each, an
“Indemnified Party”), as and to the extent that each of those persons would have
had a right to be indemnified by SFC, SNB, SIS and FFI under their respective
Articles of Incorporation or
Association, as applicable, and Bylaws in effect on the date of this Agreement,
or under Chapter 8 of the South Carolina Business Corporation Act of 1988, or
under The National Bank Act, had the Merger not been consummated, against any
costs or expenses (including reasonable attorneys’ fees), judgments, fines,
amounts paid in settlement, losses, claims damages or
46
liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time
(including the transaction contemplated by this Agreement), whether asserted or
claimed prior to, at or after the Effective Time, as they are from time to time
incurred.
(b) Any
Indemnified Party wishing to claim indemnification under this Section 10.02,
upon learning of any such claim, action, suit, proceeding or investigation,
shall promptly notify FCB thereof, but the failure to so notify shall not
relieve FCB of any liability it may have hereunder to such Indemnified Party if
such failure does not materially and substantially prejudice FCB.
Notwithstanding anything contained in this Section 10.02 to the contrary, FCB
shall have the right to assume the defense of any such claim, action, suit,
proceeding or investigation and, upon such assumption, FCB shall not be liable
to any Indemnified Party
for any legal expenses of other counsel or any other expenses incurred by such
Indemnified Party in connection with the defense thereof. However, if FCB elects
not to assume such defense or counsel for such Indemnified Party, or if there
are issues which raise conflicts of interest between FCB and such Indemnified
Party, such Indemnified Party may retain counsel reasonably satisfactory to him,
and FCB shall pay the reasonable fees and expenses of such counsel.
(c) Notwithstanding
anything contained in this Section 10.02 to the contrary, FCB shall not be
liable for any settlement of any such claim, action, suit, proceeding or
investigation that is
effected without its prior written consent.
(d) In the
event FCB or any of its successors or assigns (i)
consolidates with or merges into any other person or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person
or entity, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of FCB assume the
obligations set forth in this Section 10.02.
(e) The
provisions of this Section 10.02 are intended to be for the benefit of, and
shall be enforceable by, each Indemnified Party and his or her
representatives.
Article
XI
Miscellaneous
Provisions
11.01. Survival
of Representations, Warranties, Indemnification and Other
Agreements.
(a) Representations,
Warranties and Other Agreements. Except
as provided below, none of the representations, warranties or agreements of SFC,
SNB, FCB or Bancorp contained in this Agreement shall survive consummation of
the Merger, and no party shall have any right after the Effective Time to
recover damages or any other relief from any other party to this Agreement by
reason of any breach of representation or warranty, any nonfulfillment or
nonperformance of any agreement contained herein, or otherwise.
(b) Indemnification. The
agreements of SFC, SNB, FCB and Bancorp under Paragraph 10.01 of this Agreement
shall become effective only in the event that this Agreement is terminated, and
those agreements shall survive any such termination, and neither of the parties
shall have any obligations under Paragraph 10.01 in the event of or following
consummation of the Merger. The agreements of FCB under Paragraph 10.02 of this
Agreement shall become effective only at the Effective Time and in the event
that the Merger is consummated, and FCB shall have no obligation under Paragraph
10.02 in the event that this Agreement is terminated and the Merger is not
consummated.
47
11.02. Waiver. Any
term or condition of this Agreement may be waived (except as to matters of
regulatory approvals and other approvals required by law), either in whole or in
part, at any time by the party which is, and whose shareholders are, entitled to
the benefits thereof; provided,
however, that
any such waiver shall be effective only upon a determination by the waiving
party (through action of its Board of Directors or, in FCB’s case, by its Board
of Directors or Executive Committee) that such waiver would not adversely affect
the interests of the waiving party or its shareholders; and, provided further,
that no waiver of any term or condition of this Agreement by any party shall be
effective unless such waiver is in writing and signed by the waiving party, nor
shall any such waiver be construed to be a waiver of any succeeding breach of
the same term or condition or a waiver of any other or different term of
condition. No failure or delay of any party to exercise any power, or to insist
upon a strict compliance by the other party of any obligation, and no custom or
practice at variance with any terms hereof, shall constitute a waiver of the
right of any party to demand full and complete compliance with such
terms.
11.03. Amendment. This
Agreement may be amended, modified or supplemented at any time or from time to
time prior to the Effective Time, and either before or after its approval by the
shareholders of SFC, by an agreement in writing approved by the Boards of
Directors of SFC and SNB and the Boards of Directors or Executive Committees of
FCB and Bancorp and executed in the same manner as this Agreement; provided
however, that, except with the further approval of SFC’s shareholders of that
change or as otherwise provided herein, following approval of this Agreement by
SFC’s shareholders no change may be made in the amount of consideration into
which each share of SFC Stock will be converted.
11.04. Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally or by recognized
overnight courier, by U.S. mail, first class postage prepaid, in each case
addressed as follows (or to such other address as shall have been communicated
to the party giving the notice as provided above):
|
If
to SFC or SNB, to:
Summit
Financial Corporation
0000
Xxxxxxx Xxxx
Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000
Attn:
J. Xxxxxxxx Xxxxxx, Chief Executive Officer
|
With
copy to:
Xxxx
X. Xxxxxx
XxXxxx
Law Firm, P.A.
0000
Xxxxxxx Xxxxxx
Xxxxxxxx,
Xxxxx Xxxxxxxx 00000
|
|
If
to FCB, to:
First
Citizens Bank and Trust Company, Inc.
0000
Xxxx Xxxxxx
Xxxxxxxx,
Xxxxx Xxxxxxxx 00000
Attn:
Xxxxx X. Xxx, Chief Financial Officer
|
With
copy to:
Xxxxxxx
X. Xxxxxx, Xx. X. Xxxxxx
Roof
Xxxx
and Xxxxx, P.A. Xxxxxxxx & Roof
LLP
0000
Xxxxxxx Xxxxx
0000 Xxxx Xx., Xxxxx 000
Xxx
Xxxx, XX 00000 Xxxxxxxx, XX
00000
|
11.05. Previous
Disclosure of Information. In
order for information to be treated as having been “Previously Disclosed” by
either SFC and SNB to FCB, or by FCB and Bancorp to SFC, respectively, such
information shall be contained in a letter delivered by the disclosing
party(ies) to the other(s) prior to the date of this Agreement, which letter
specifically refers to this Agreement and is arranged in paragraphs
corresponding to the Paragraphs and Subparagraphs of this Agreement applicable
thereto.
11.06. Further
Assurance. SFC,
SNB, FCB and Bancorp each agrees to furnish to each other party such further
assurances with respect to the matters contemplated in this Agreement and their
respective agreements, covenants, representations and warranties contained
herein, including the opinion of legal counsel, as such other party may
reasonably request.
11.07. Headings
and Captions. Headings
and captions of the Paragraphs of this Agreement have been inserted for
convenience of reference only and do not constitute a part hereof.
48
11.08. Gender
and Number. As used
in this Agreement, the masculine gender shall include the feminine and neuter,
the singular number shall include the plural, and vice
versa,
whenever such meanings are appropriate.
11.09. Entire
Agreement. This
Agreement (including all schedules and exhibits attached hereto and all
documents incorporated herein by reference) contains the entire agreement of the
parties with respect to the transactions described herein and supersedes any and
all other oral or written agreement(s) heretofore made, and there are no
representations or inducements by or to, or any agreements between, either of
the parties hereto other than those contained herein in writing.
11.10. Severability
of Provisions. The
invalidity or unenforceability of any term, phrase, clause, paragraph,
restriction, covenant, agreement or other provision hereof shall in no way
affect the validity or enforceability of any other provision or part
hereof.
11.11. Assignment. This
Agreement may not be assigned by either party hereto except with the prior
written consent of the other parties hereto.
11.12. Counterparts. Any
number of counterparts of this Agreement may be signed and delivered, each of
which shall be considered an original and which together shall constitute one
agreement.
11.13. Governing
Law. This
Agreement is made in and shall be construed and enforced in accordance with the
laws of South Carolina.
11.14. Inspection. Any
right of FCB and Bancorp under this Agreement to investigate or inspect the
premises, properties, books, records, files and other assets or information of
SFC, SNB, FFI or SIS, or of SFC and SNB to investigate or inspect the same of
FCB and Bancorp, in no way shall establish any presumption that either of them
should have conducted any investigation or that such right has been exercised by
it, its agents, representatives or others. Any investigations or inspections
actually made by SFC, SNB, FCB or Bancorp, or by either of their agents,
representatives or others, prior to the date of this Agreement or otherwise
prior to the Effective Time shall not be deemed in any way in derogation or
limitation of the covenants, representations and warranties made by or on behalf
of either such party in this Agreement.
49
IN
WITNESS WHEREOF, SFC,
SNB and FCB each has caused this Agreement to be executed in its name by its
duly authorized officers and its corporate seal to be affixed hereto as of the
date first above written.
| |
Summit
Financial Corporation
|
|
[CORPORATE
SEAL]
| |
|
ATTEST:
/s/
Xxxxxx X. Xxxxxxxxxx
|
By:
/s/
J. Xxxxxxxx Xxxxxx
|
|
Assistant
Secretary
|
President
and Chief Executive Officer
|
| | |
| |
Summit
National Bank
|
|
[CORPORATE
SEAL]
| |
|
ATTEST
/s/
Xxxxxx X. Xxxxxxxxxx
|
By:
/s/
J. Xxxxxxxx Xxxxxx
|
|
Assistant
Secretary
|
President
and Chief Executive Officer
|
| | |
| |
First
Citizens Bank and Trust Company, Inc.
|
|
[CORPORATE
SEAL]
| |
|
ATTEST:
/s/ Xxxxxxx X. Xxxx
|
By:
/s/Xxx
X. Apple
|
|
Secretary
|
Chairman
and Chief Executive Officer
|
| | |
| |
FIrst
Citizens Bancorporation, Inc.
|
|
[CORPORATE
SEAL]
| |
|
ATTEST:
/s/ Xxxxxxx X. Xxxx
|
By:
/s/
Xxx X. Apple
|
|
Secretary
|
Chairman
and Chief Executive Officer
|
50
EXHIBIT
A
Plan
of Merger
By
and Among
Summit
Financial Corporation
Summit
National Bank
and
First
Citizens Bank and Trust Company, Inc.
1. Names
of Merging Corporations. The
names of the corporations proposed to be merged are SUMMIT
FINANCIAL CORPORATION (“SFC”),
SUMMIT NATIONAL BANK (“SNB”), and
FIRST
CITIZENS BANK AND TRUST COMPANY, INC.
(“FCB”).
2. Nature
of Transaction. Subject
to the provisions of this Plan of Merger, at the “Effective Time” (as
defined in Paragraph 7 below), SFC and SNB each simultaneously will be
merged into and with FCB (the “Merger”).
3. Effect
of Merger; Surviving Corporation. At
the Effective Time, and by reason of the Merger, the separate corporate
existences of SFC and SNB shall cease while the corporate existence of FCB as
the surviving corporation in the Merger shall continue with all of its purposes,
objects, rights, privileges, powers and franchises, all of which shall be
unaffected and unimpaired by the Merger. Following the Merger, FCB shall
continue to operate as a South Carolina bank and will conduct its business at
the then legally established branch and main offices of FCB and SNB. The
duration of the corporate existence of FCB, as the surviving corporation, shall
be perpetual and unlimited.
4. Assets
and Liabilities of SFC and SNB. At
the Effective Time, and by reason of the Merger, and in accordance with
applicable law, all of the property, assets and rights of every kind and
character of SFC and SNB (including without limitation all real, personal or
mixed property, all debts due on whatever account, all other chooses in action
and every other interest of or belonging to or due to SFC or SNB, whether
tangible or intangible) shall be transferred to and vest in FCB, and FCB shall
succeed to all the rights, privileges, immunities, powers, purposes and
franchises of a public or private nature of SFC and SNB, all without any
conveyance, assignment or further act or deed; and, FCB shall become responsible
for all of the liabilities, duties and obligations of every kind, nature and
description of SFC and SNB as of the Effective Time. By virtue of the Merger,
SNB’s interest in and ownership of the outstanding shares of common stock of its
wholly-owned subsidiary, Summit Investment Services, Inc. (“SIS”), and SFC’s
interest in and ownership of the outstanding shares of common stock of its
wholly-owned subsidiary, Freedom Finance, Inc. (“FFI”), shall be transferred to
and vest in FCB, and SIS and FFI shall become wholly-owned subsidiaries of
FCB.
5. Conversion
and Exchange of Stock.
(a) Conversion
of SFC Stock. Except
as otherwise provided in this Plan of Merger, at the Effective Time all rights
of SFC’s shareholders with respect to all outstanding shares of SFC’s $1.00 par
value common stock (“SFC Stock”) shall cease to exist and, as consideration for
and to effect the Merger, each such outstanding share shall be converted,
without any action by SFC, FCB or any SFC shareholder, into the right to receive
cash in the amount of $22.00, all in the manner and subject to the limitations
described in this Plan of Merger.
A-1
At the
Effective Time, and without any action by FCB, SFC or any SFC shareholder, SFC’s
stock transfer books shall be closed and there shall be no further transfers of
SFC Stock on its stock transfer books or the registration of any transfer of a
certificate evidencing SFC Stock (a “SFC Certificate”) by any holder thereof,
and the holders of SFC Certificates shall cease to be, and shall have no further
rights as, shareholders of SFC other than as provided in this Plan of Merger.
Following the Effective Time, SFC Certificates shall evidence only the right of
the registered holders thereof to receive the consideration into which their SFC
Stock was converted at the Effective Time as provided in this Paragraph 5(a), or
in the case of SFC Stock held by shareholders who properly shall have exercised
“Dissenters’ Rights” (as defined in Paragraph 5(e)), cash as provided in Title
13 of the South Carolina Business Corporation Act of 1988.
(b) Cancellation
of SNB Stock. At the
Effective Time, all outstanding shares of SNB’s $5.00 par value common stock
(“SNB Stock”) shall be cancelled, and no cash or other consideration shall be
issued in exchange for or with respect to those shares.
(c) Exchange
and Payment Procedures; Surrender of Certificates.
(i)
Prior to
the Effective Time, FCB shall designate an agent reasonably acceptable to SFC to
act as agent for the holders of the SFC Stock in connection with the Merger (the
“Paying Agent”) to receive in trust, the aggregate consideration to which
holders of SFC Stock shall become entitled pursuant to Paragraph 2.04(a) (the
“Merger Consideration”). SFC and SNB agree that FCB’s own trust department, or
the corporate trust department of First-Citizens Bank & Trust Company,
Raleigh, North Carolina, each shall be acceptable to them as FCB’s Paying
Agent.
(ii) At the
Effective Time, FCB shall deposit the Merger Consideration with the Paying
Agent. The Merger Consideration shall be held in trust for the benefit of the
holders of SFC Stock and such cash shall not used for any other purposes;
provided that FCB may direct the Paying Agent to invest such cash, provided that
such investments (A) shall be
in obligations of or guaranteed by the United States of America, in commercial
paper obligations receiving the highest rating from Standard & Poor’s
Corporation, or in certificates of deposit of domestic commercial banks with
capital exceeding $250,000,000 (collectively, the “Permitted Investments”) or in
money market funds which are invested solely in Permitted Investments, and
(B) shall
have maturities that will not prevent or delay payments to be made pursuant to
Paragraph 5(a) and this Paragraph 5(c). If for any reason (including losses) the
funds held by the Paying Agent are inadequate to pay the amounts to which the
holders of SFC Stock shall be entitled under Paragraph 2.04(a), Bancorp and FCB
shall be liable for the payment thereof.
(iii) As
promptly as practicable after the Effective Time, FCB and Bancorp shall cause to
be mailed to each record holder, as of the Effective Time, whose shares of SFC
Stock were converted pursuant to Paragraph 5(a) into the right to receive the
Merger Consideration, a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to a SFC Certificate shall pass,
only upon proper delivery of the SFC Certificate to the Paying Agent and shall
be in such form and have such other provisions as FCB may reasonably specify)
and instructions for effecting the surrender of a SFC Certificate in exchange
for the Merger Consideration for the SFC Stock. Upon surrender of a SFC
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by FCB, together with such letter of transmittal duly
executed and completed in accordance with the instructions thereto, the holder
of such SFC Certificate shall receive promptly in exchange therefor the Merger
Consideration for each share of SFC Stock formerly evidenced thereby, and such
SFC Certificate shall forthwith be canceled.
(d) Antidilutive
Adjustments. If,
prior to the Effective Time, SFC shall declare any dividend payable in shares of
SFC Stock or shall subdivide, split, reclassify or combine the presently
outstanding shares of SFC Stock, then an appropriate and proportionate
adjustment shall be made in the amount of cash into which each share of SFC
Stock will be converted at the Effective Time pursuant to this Plan of
Merger.
A-2
(e) Dissenters. Any
shareholder of SFC who properly exercises the right of dissent and appraisal
with respect to the Merger as provided in Chapter 13 of the South Carolina
Business Corporation Act of 1988 (“Dissenters’ Rights”), shall be entitled to
receive payment of the fair value of his or her shares of SFC Stock in the
manner and pursuant to the procedures provided therein. Shares of SFC Stock held
by persons who exercise Dissenters’ Rights shall not be converted as described
in Paragraph 5(a). However, if any shareholder of SFC who exercises Dissenters’
Rights shall fail to perfect those rights, or effectively shall waive or lose
such rights, then each of his or her shares of SFC Stock shall be deemed to have
been converted into the right to receive cash as of the Effective Time as
provided in Paragraph 5(a) hereof.
(f) Lost
Certificates. FCB
In the
event that any SFC Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such SFC
Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed SFC Certificate the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Article II, provided, that
the person to whom the Merger Consideration is paid shall, as a condition
precedent to the payment thereof, and at the sole discretion of FCB, give FCB a
bond in such sum as it may direct or otherwise indemnify FCB and Bancorp in a
manner satisfactory to them against any claim that may be made against FCB or
Bancorp with respect to shares of SFC Stock represented by the SFC Certificate
claimed to have been lost, stolen or destroyed.
6. Articles
of Incorporation, Bylaws and Management. The
Articles of Incorporation and Bylaws of FCB in effect at the Effective Time
shall be the Articles of Incorporation and Bylaws of FCB as the surviving
corporation in the Merger. The directors of FCB in office at the Effective Time
shall constitute the Board of Directors of FCB as the surviving corporation in
the Merger and shall continue to hold such offices until removed as provided by
law or until the election or appointment of their respective successors. The
officers of FCB in office at the Effective Time shall continue to serve in their
same positions as officers of FCB as the surviving corporation in the Merger
until removed as provided by law or until the election or appointment of their
respective successors.
7. Effective
Time. The
Merger will become effective at [___] [__].M. on
[_______], 2005
(the “Effective Time”)
A-3
Exhibit
B
[DRAFT
FORM OF SUMMIT LEGAL OPINION]
_________________,
2005
The
Boards of Directors
First
Citizens Bancorporation, Inc.
First
Citizens Bank and Trust Company, Inc.
______________________
Columbia,
SC 2______
RE: Merger of
Summit Financial Corporation and Summit National Bank
with
First Citizens Bancorporation, Inc. and First Citizens Bank and Trust Company,
Inc.
Our File
____________
Gentlemen:
[XxXxxx
Firm Standard Introductory Paragraph(s)]
Based
upon and subject to the foregoing and the qualifications set forth below, it is
our opinion that:
1. Each of
the SFC Companies (i) is
validly existing as a business corporation and a national bank, respectively,
under the laws of South Carolina in the case of SFC, FFI and SIS, and of the
United States in the case of SNB, (ii) has all
requisite corporate power and authority to own its properties and conduct its
businesses as now being conducted as described in SFC’s Form 10-K for the
year ended December 31, 2004, and (iii) is duly
qualified to do business and is in good standing in each other jurisdiction in
which the character of the properties owned or leased by it therein and of which
we have Actual Knowledge, or in which the transaction of its businesses of which
we have Actual Knowledge, makes such qualification necessary, except where
failure so to qualify would not have a SFC Material Adverse Effect.
2. SFC and
SNB each has the corporate power and authority to execute and deliver the
Agreement and to perform its obligations and agreements and carry out the
transactions described therein, all corporate proceedings required to be taken
to authorize each of them to enter into the Agreement and to perform its
obligations and agreements and to carry out the transactions described therein
(including all required approvals of its Board of Directors and shareholders)
have been duly and properly taken, and the Agreement constitutes the valid and
binding agreement of SFC and SNB, enforceable against each of them in accordance
with its terms [subject to customary exceptions].
3. Except
where the same would not have an SFC Material Adverse Effect, neither the
execution and delivery of the Agreement, nor the consummation of the
transactions described therein, nor compliance by SFC or SNB with any of its
obligations or agreements contained
B-1
therein,
will: (i) conflict
with or result in a breach of the terms and conditions of, or constitute a
default or violation under any provision of, SFC’s or SNB’s Articles of
Incorporation or Association, as applicable, or Bylaws, or, to our Actual
Knowledge, any contract, agreement, lease, mortgage, note, bond, indenture,
license, or obligation or understanding (oral or written) to which SFC or SNB is
bound or by which their business, capital stock or any of their properties or
assets may be affected; (ii) to our
Actual Knowledge, result in the creation or imposition of any lien, claim,
interest, charge, restriction or encumbrance upon any of SFC’s or SNB’s
properties or assets; (iii) to our
Actual Knowledge, violate any applicable federal or South Carolina statute, law,
rule or regulation, or any judgment, order, writ, injunction or decree of any
court, administrative or regulatory agency or governmental body; or (iv) to our
Actual Knowledge, result in the acceleration of any obligation or indebtedness
of SFC or SNB.
4. To our
Actual Knowledge, except as Previously Disclosed no consents, approvals or
waivers are required to be obtained by SFC or SNB from any person or entity in
connection with their execution and delivery of the Agreement, or the
performance of their respective obligations or agreements or the consummation of
the transactions described therein, except for required approvals of SFC’s and
SNB’s respective Boards of Directors and shareholders and required approvals of
Regulatory Authorities.
5. All
approvals of Regulatory Authorities required to be obtained by SFC or SNB for
the consummation of the transactions contemplated by the Agreement have been
obtained, all conditions imposed on SFC or SNB in connection therewith that are
required to be satisfied prior to consummation of such transactions have been
satisfied or waived, and, to our Actual Knowledge, all such regulatory approvals
are in full force and effect.
6. To our
Actual Knowledge, (i) neither
SFC or SNB is subject to any supervisory agreement, enforcement order, writ,
injunction, capital directive, supervisory directive, memorandum of
understanding or other similar agreement, order, directive, memorandum or
consent of, with or issued by any regulatory or other governmental authority
(including without limitation the Federal Reserve Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, or the South Carolina Board
of Financial Institutions), and there are no judgments, orders, stipulations,
injunctions, decrees or awards against SFC or SNB, any of which in any manner
limit, restrict, enjoin or prohibit SFC’s or SNB’s consummation of the Merger;
and, (ii) neither
SFC nor SNB has been advised, and neither of them has any reason to believe,
that any regulatory or other governmental authority or any court is
contemplating, threatening, or requesting the issuance of any such agreement,
order, injunction, directive, memorandum, judgment, stipulation, decree, or
award.
7. Subject
to acceptance of such filing[s], the Merger will become effective at the time
specified in Articles of Merger which have been executed by FCB and filed with
the South Carolina Secretary of State [and the Office of the Comptroller of the
Currency] in accordance with applicable law.
[QUALIFICATIONS
AND ASSUMPTIONS]
B-2
Exhibit
C
TERMS
OF SUBORDINATED DEBT
|
Principal
Amount:
|
$75,000,000
|
|
Maturity:
|
15
years
|
|
Offering
Format:
|
Rule
144A, without any requirement of registration under the Securities Act of
1933 or any state securities laws
|
|
Registration
Rights or Exchange Offer Requirement:
|
None
|
|
Rating:
|
No
rating requirement
|
|
Interest
Rate:
|
Fixed
rate, not in excess of 7.25% per annum
|
|
Price
to Public:
|
Not
less than 99.1% of face amount
|
|
Underwriting
Spread:
|
Not
more than 1.00%
|
|
Net
Proceeds:
|
Not
less than $73,575,000
|
|
Other:
|
Terms
necessary to qualify the notes under guidelines of the Federal Reserve
Board for treatment as Tier II capital
|
C-1
Exhibit
D
[DRAFT
FORM OF FCB LEGAL OPINION]
_________________,
2005
The
Boards of Directors
Summit
Financial Corporation, Inc.
Summit
National Bank
______________________
Greenville,
SC 2______
RE: Merger of
Summit Financial Corporation, Inc. and Summit National Bank
with
First Citizens Bancorporation, Inc. and First Citizens Bank and Trust Company,
Inc.
Our File
____________
Gentlemen:
We have
acted as South Carolina counsel to First Citizens Bank and Trust Company, Inc.
(“FCB”). a South Carolina-chartered bank, and its parent company, First Citizens
Bancorporation, Inc. (“Bancorp”), a South Carolina corporation, in connection
with the transactions described in that certain
Agreement and Plan of
Reorganization and Merger dated as of _________ 2005 (the “Agreement,” including
the Plan of Merger referenced therein), by and among Summit Financial
Corporation, Inc. (“Summit”), Summit National Bank (“SNB”), and FCB, and joined
in by Bancorp. Pursuant to and in accordance with the terms and conditions of
the Agreement, SFC and SNB are proposed to be merged into and with FCB (the
“Merger”) and each of the outstanding shares of SFC’s common stock will be
converted into the right to receive cash in the amount of $22.00. This letter is
delivered in connection with the consummation and closing of the Merger and
other transactions described in the Agreement (the “Closing”). Capitalized terms
appearing herein and not otherwise defined are used as defined in the
Agreement.
As
counsel to FCB and Bancorp, we have examined originals or copies of (i) FCB’s and
Bancorp’s Articles of Incorporation and Bylaws, (ii) the
Agreement, (iii)
certified copies of resolutions adopted, and records of other actions taken, by
FCB’s and Bancorp’s Boards of Directors, and by Bancorp’s Board of Directors as
FCB’s sole shareholder, pertaining to the Agreement and the Merger, (iv) Certificates
of _____________ issued by the South Carolina Secretary of State dated
___________, 2005, as to FCB and Bancorp (collectively, the “Certificates of
Existence”), (v) certificates
and written statements of officers of FCB and Bancorp, and (vi) such
other documents and records of FCB and Bancorp as we have deemed necessary for
the purpose of giving the opinions hereinafter expressed.
D-1
Based
upon and subject to the foregoing and the qualifications set forth below, it is
our opinion that:
1. Each of
FCB and Bancorp (i) is duly
organized and incorporated and validly existing as a business corporation and a
state-chartered bank, respectively, under the laws of South Carolina,
(ii) has all
requisite corporate power and authority to own its properties and conduct its
businesses as now are being conducted, (iii) is duly
qualified to do business and is in good standing in each other jurisdiction in
which the character of the properties owned or leased by it therein and of which
we have Actual Knowledge, or in which the transaction of its businesses of which
we have Actual Knowledge, makes such qualification necessary, except where
failure so to qualify would not have an FCB Material Adverse Effect, and,
(iv) to our
Actual Knowledge, is not transacting business, or operating any properties owned
or leased by it, in violation of any provision of federal or state law or any
rule or regulation promulgated thereunder, which violation would have a FCB
Material Adverse Effect.
2. FCB and
Bancorp each has the corporate power and authority to execute and deliver the
Agreement and to perform its obligations and agreements and carry out the
transactions described therein, all corporate proceedings required to be taken
to authorize each of them to enter into the Agreement and to perform its
obligations and agreements and carry out the transactions described therein
(including all required approvals of its Board of Directors and shareholders)
have been duly and properly taken, and the Agreement constitutes the valid and
binding agreement of FCB and Bancorp, enforceable against each of them in
accordance with its terms [subject to customary exceptions].
3. Except
where the same would not have a FCB Material Adverse Effect, neither the
execution and delivery of the Agreement, nor the consummation of the
transactions described therein, nor compliance by FCB or Bancorp with any of its
obligations or agreements contained therein, will: (i) conflict
with or result in a breach of the terms and conditions of, or constitute a
default or violation under any provision of, FCB’s or Bancorp’s Articles of
Incorporation or Bylaws, or, to our Actual Knowledge, any contract, agreement,
lease, mortgage, note, bond, indenture, license, or obligation or understanding
(oral or written) to which FCB or Bancorp is bound or by which their business,
capital stock or any of their properties or assets may be affected; (ii) to our
Actual Knowledge, result in the creation or imposition of any lien, claim,
interest, charge, restriction or encumbrance upon any of FCB’s or Bancorp’s
properties or assets; (iii) to our
Actual Knowledge, violate any applicable federal or state statute, law, rule or
regulation, or any judgment, order, writ, injunction or decree of any court,
administrative or regulatory agency or governmental body; or (iv) to our
Actual Knowledge, result in the acceleration of any obligation or indebtedness
of FCB or Bancorp.
4. To our
Actual Knowledge, no consents, approvals or waivers are required to be obtained
by FCB or Bancorp from any person or entity in connection with their execution
and delivery of the Agreement, or the performance of their respective
obligations or agreements or the consummation of the transactions described
therein, except for required approvals of FCB’s or Bancorp’s respective Boards
of Directors and FCB’s sole shareholder and required approvals of Regulatory
Authorities.
5. All
approvals of Regulatory Authorities required to be obtained by FCB or Bancorp
for the consummation of the transactions contemplated by the Agreement have been
obtained, all conditions imposed on FCB or Bancorp in connection therewith that
are required to be satisfied prior to consummation of such transactions have
been satisfied or waived, and, to our Actual Knowledge, all such regulatory
approvals are in full force and effect.
6. To our
Actual Knowledge, (i) neither
FCB nor Bancorp is subject to any supervisory agreement, enforcement order,
writ, injunction, capital directive, supervisory directive, memorandum of
understanding or other similar agreement, order, directive, memorandum or
consent of, with or issued by any regulatory or other governmental authority
(including without limitation the Federal Reserve Board, the Federal Deposit
Insurance Corporation, or the South Carolina Board of Financial Institutions),
and there are no judgments, orders, stipulations, injunctions, decrees or awards
against FCB or Bancorp, any of which in any manner limit, restrict, enjoin or
prohibit FCB’s consummation of the Merger; and, (ii) neither
FCB nor Bancorp has been advised, and neither of them has any reason to believe,
that any regulatory or other governmental authority or any court is
contemplating, threatening, or requesting the issuance of any such agreement,
order, injunction, directive, memorandum, judgment, stipulation, decree, or
award.
7. Subject
to acceptance of such filings, the Merger will become effective at the time
specified in Articles of Merger which have been executed by FCB and filed with
the South Carolina Secretary of State in accordance with applicable
law.
[QUALIFICATIONS
AND ASSUMPTIONS]
D-2
