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EXHIBIT 2
MERGER AGREEMENT
AMONG
FIRST BANCORP,
FIRST BANK,
FIRST SAVINGS BANCORP, INC., AND
FIRST SAVINGS BANK OF XXXXX COUNTY, INC., SSB
Dated as of December 15, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINED TERMS
1.1 Definitions..............................................................................................1
ARTICLE II
THE HOLDING COMPANY MERGER;
CONVERSION AND EXCHANGE OF COMPANY SHARES
2.1 The Holding Company Merger...............................................................................8
2.2 Company Shares...........................................................................................9
2.3 Merger Consideration.....................................................................................9
2.4 Closing Payment.........................................................................................10
2.5 Exchange Procedures.....................................................................................10
2.6 Conversion of Stock Options and Warrants................................................................11
ARTICLE III
THE BANK MERGER;
CONVERSION AND EXCHANGE OF COMPANY BANK SHARES
3.1 The Bank Merger.........................................................................................12
3.2 Company Bank Shares.....................................................................................12
ARTICLE IV
THE CLOSING
4.1 Closing.................................................................................................13
4.2 Deliveries by the Company Parties.......................................................................13
4.3 Deliveries by the Buyer.................................................................................13
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Organization, Standing and Power........................................................................14
5.2 Authority; No Conflicts.................................................................................14
5.3 Capital Stock; Subsidiaries.............................................................................15
5.4 SEC Filings; Company Financial Statements...............................................................15
5.5 Absence of Undisclosed Liabilities......................................................................16
5.6 Absence of Certain Changes or Events....................................................................16
5.7 Tax Matters.............................................................................................16
5.8 Assets..................................................................................................17
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5.9 Securities Portfolio and Investments....................................................................17
5.10 Environmental Matters...................................................................................18
5.11 Compliance with Laws....................................................................................18
5.12 Labor Relations.........................................................................................19
5.13 Employee Benefit Plans..................................................................................19
5.14 Material Contracts......................................................................................20
5.15 Legal Proceedings.......................................................................................21
5.16 Reports.................................................................................................21
5.17 Registration Statement; Joint Proxy Statement/Prospectus................................................21
5.18 Accounting, Tax, and Regulatory Matters.................................................................22
5.19 State Takeover Laws.....................................................................................22
5.20 Charter Provisions......................................................................................22
5.21 Records.................................................................................................22
5.22 Derivatives.............................................................................................22
5.23 Year 2000...............................................................................................22
5.24 Certain Regulated Businesses............................................................................22
5.25 Commissions.............................................................................................22
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE BUYER BANK
6.1 Organization............................................................................................23
6.2 Authority; No Conflicts.................................................................................23
6.3 Buyer's Stock; Subsidiaries.............................................................................24
6.4 SEC Filings; Buyer Financial Statements.................................................................24
6.5 Absence of Undisclosed Liabilities......................................................................25
6.6 Absence of Certain Changes or Events....................................................................25
6.7 Tax Matters.............................................................................................25
6.8 Assets..................................................................................................26
6.9 Securities Portfolio and Investments....................................................................26
6.10 Environmental Matters...................................................................................27
6.11 Compliance with Laws....................................................................................27
6.12 Labor Relations.........................................................................................28
6.13 Employee Benefit Plans..................................................................................28
6.14 Material Contracts......................................................................................30
6.15 Legal Proceedings.......................................................................................30
6.16 Reports.................................................................................................30
6.17 Registration Statement; Joint Proxy Statement/Prospectus................................................30
6.18 Accounting, Tax, and Regulatory Matters.................................................................31
6.19 Derivatives.............................................................................................31
6.20 Year 2000...............................................................................................31
6.21 Certain Regulated Businesses............................................................................31
6.22 Commissions.............................................................................................31
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ARTICLE VII
COVENANTS
7.1 Covenants of the Company Parties........................................................................32
7.2 Covenants of the Buyer..................................................................................35
7.3 Covenants of All Parties to the Agreement...............................................................38
ARTICLE VIII
DISCLOSURE OF ADDITIONAL INFORMATION
8.1 Access to Information...................................................................................40
8.2 Access to Premises......................................................................................40
8.3 Environmental Survey....................................................................................40
8.4 Confidentiality.........................................................................................40
8.5 Publicity...............................................................................................40
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Mutual Conditions.......................................................................................40
9.2 Conditions to the Obligations of the Company Parties....................................................42
9.3 Conditions to the Obligations of the Buyer..............................................................43
ARTICLE X
TERMINATION
10.1 Termination.............................................................................................44
10.2 Procedure and Effect of Termination.....................................................................45
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Expenses................................................................................................46
11.2 Survival of Representations.............................................................................46
11.3 Amendment and Modification..............................................................................46
11.4 Waiver of Compliance; Consents..........................................................................46
11.5 Notices.................................................................................................46
11.6 Assignment; Third Party Beneficiaries...................................................................47
11.7 Separable Provisions....................................................................................47
11.8 Governing Law...........................................................................................48
11.9 Counterparts............................................................................................48
11.10 Interpretation..........................................................................................48
11.11 Entire Agreement........................................................................................48
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EXHIBITS
Exhibit A Form of Plan of Merger in respect of the Holding Company Merger
Exhibit B Form of Plan of Merger in respect of the Bank Merger
Exhibit C Form of Employment Agreement for Xxxx X. Xxxxx
Exhibit D Form of Employment Agreement for Xxxxxxx X. Xxxxxx
Exhibit E Form of Employment Agreement for Xxxxxxx X. Xxxxxxx, Xx.
Exhibit F Form of Affiliate Pooling Letter
Exhibit G Form of Company Option Agreement
Exhibit H Form of Buyer Option Agreement
COMPANY'S DISCLOSURE SCHEDULE
Section 5.2 Authority; No Conflicts
Section 5.3 Subsidiaries
Section 5.4 SEC Filings; Company Financial Statements
Section 5.5 Absence of Undisclosed Liabilities
Section 5.6 Absence of Certain Changes or Events
Section 5.7 Tax Matters
Section 5.9 Securities Portfolio and Investments
Section 5.11 Compliance with Laws
Section 5.13 Employee Benefit Plans
Section 5.14 Material Contracts
Section 5.18 Accounting, Tax and Regulatory Matters
Section 5.19 State Takeover Laws
Section 5.25 Commissions
Section 7.1(a) Ordinary Conduct of Business
Section 7.1(d) Affiliates
Section 7.2(f)(i) Employment and Change-of-Control Agreements
BUYER'S DISCLOSURE SCHEDULE
Section 6.3 Capital Stock Subsidiaries
Section 6.5 Absence of Undisclosed Liabilities
Section 6.8 Assets
Section 6.9 Securities Portfolio and Investments
Section 6.13 Employee Benefit Plans
Section 6.14 Material Contracts
Section 6.22 Commissions
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MERGER AGREEMENT
THIS MERGER AGREEMENT (this "AGREEMENT"), dated as of the 15th day of
December, 1999, is by and among:
FIRST BANCORP, a North Carolina corporation and a holding company
registered with the Board of Governors of the Federal Reserve System under the
Bank Holding Company Act of 1956, as amended, and a North Carolina bank holding
company (the "BUYER");
FIRST BANK, a North Carolina bank and a wholly owned subsidiary of the
Buyer (the "BUYER BANK");
FIRST SAVINGS BANCORP, INC., a North Carolina corporation and a holding
company registered with the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act of 1956, as amended, and a North Carolina
savings bank holding company (the "COMPANY"); and
FIRST SAVINGS BANK OF XXXXX COUNTY, INC., SSB, a North Carolina stock
savings bank (the "COMPANY BANK").
BACKGROUND STATEMENT
The Buyer and the Company desire to effect a merger pursuant to which
the Company will merge into the Buyer, with the Buyer being the surviving
corporation (the "HOLDING COMPANY MERGER"); and the Buyer Bank and the Company
Bank desire to effect a merger pursuant to which the Company Bank will merge and
combine into the Buyer Bank, with the Buyer Bank being the surviving corporation
(the "BANK MERGER," and together with the Holding Company Merger, the
"MERGERS"). In consideration of the Mergers, the shareholders of the Company
will receive shares of common stock of the Buyer. It is intended that the
Mergers qualify as tax-free reorganizations under Section 368 of the Internal
Revenue Code and qualify for "pooling-of-interests" treatment under Generally
Accepted Accounting Principles.
STATEMENT OF AGREEMENT
In consideration of the premises and the mutual representations,
warranties, covenants, agreements and conditions contained herein, the parties
hereto agree as follows:
ARTICLE I
DEFINED TERMS
1.1 DEFINITIONS. As used in this Agreement, the following terms have
the following meanings:
"AFFILIATE" means, with respect to any Person, each of the Persons that
directly or indirectly, through one or more intermediaries, owns or controls, or
is controlled by or under common control with, such Person. For the purpose of
this Agreement, "CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise. Without
limiting the foregoing, as used with respect to the Company, the term
"AFFILIATES" includes its subsidiaries.
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"AGREEMENT" means this Merger Agreement.
"ASSETS" means all of the assets, properties, businesses and rights of
a Person of every kind, nature, character and description, whether real,
personal or mixed, tangible or intangible, accrued or contingent, whether or not
carried on any books and records of such Person, whether or not owned in such
Person's name and wherever located.
"AVERAGE CLOSING PRICE" has the meaning given to it in SECTION 10.1(F).
"BANK MERGER" has the meaning given to it in the Background Statement
hereof.
"BENEFIT PLANS" means all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stockownership, severance pay, vacation,
bonus, or other incentive plan, all other written employee programs or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including without limitation "employee benefit plans" as that term is defined in
Section 3(3) of ERISA maintained by, sponsored in whole or in part by, or
contributed to by, a Person or any of its subsidiaries for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
that shall be a legal holiday in the State of North Carolina.
"BUYER" has the meaning given to it in the introductory paragraph
hereof.
"BUYER BANK" has the meaning given to it in the introductory paragraph
hereof.
"BUYER CONTRACTS" has the meaning given to it in SECTION 6.14.
"BUYER ERISA AFFILIATE" has the meaning given to it in SECTION 6.13.
"BUYER FINANCIAL STATEMENTS" means, with respect to the Buyer and its
subsidiaries, the consolidated audited statements of income and stockholder's
equity and cash flows for the years ended December 31, 1998, 1997 and 1996 and
consolidated audited balance sheets as of December 31, 1998, 1997 and 1996, as
well as the interim unaudited consolidated statements of income and
stockholders' equity and cash flows for each of the completed fiscal quarters
since December 31, 1998 and the consolidated interim balance sheet as of each
such quarter.
"BUYER SEC REPORTS" has the meaning given to it in SECTION 6.4.
"BUYER'S STOCK" means the common stock of First Bancorp, no par value
per share, as traded on the Nasdaq National Market System.
"BUYER'S STOCK PERCENTAGE CHANGE" has the meaning given to it in
SECTION 10.1(F).
"CAUSE" has the meaning given to it in SECTION 7.2(F).
"CLOSING" means the closing of the Mergers, as identified more
specifically in ARTICLE IV.
"CLOSING DATE" has the meaning given to it in SECTION 4.1.
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"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed also to refer to any successor sections.
"COMPANY" has the meaning given to it in the introductory paragraph
hereof.
"COMPANY BANK" has the meaning given to it in the introductory
paragraph hereof.
"COMPANY BANK SHARES" has the meaning given to it in SECTION 3.2(A).
"COMPANY CONTRACTS" has the meaning given to it in SECTION 5.14.
"COMPANY FINANCIAL STATEMENTS" means, with respect to the Company and
its subsidiaries, the consolidated audited statements of income and
stockholder's equity and cash flows for the years ended June 30, 1999, 1998 and
1997 and consolidated audited balance sheets as of June 30, 1999, 1998 and 1997,
as well as the interim unaudited consolidated statements of income and
stockholders' equity and cash flows for each of the completed fiscal quarters
since June 30, 1999 and the consolidated interim balance sheet as of each such
quarter.
"COMPANY OPTIONS" has the meaning given to it in SECTION 2.6.
"COMPANY PARTIES" means the Company and the Company Bank.
"COMPANY SEC REPORTS" has the meaning given to it in SECTION 5.4.
"COMPANY SHARES" has the meaning given to it in SECTION 2.2(A).
"CONFIDENTIALITY AGREEMENTS" has the meaning given to it in SECTION
8.4.
"CONSENT" means any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person given or granted with
respect to any Contract, Law, Order, or Permit.
"CONTRACT" means any agreement, warranty, indenture, mortgage,
guaranty, lease, license or other contract, agreement, arrangement, commitment
or understanding, written or oral, to which a Person is a party.
"DEFAULT" means (i) any breach or violation of or default under any
Contract, Order or Permit (including any noncompliance with restrictions on
assignment, where assignment is defined to include a change of control of any of
the parties to this agreement or any of their subsidiaries or the merger or
consolidation of any of them with another Person), (ii) any occurrence of any
event that with the passage of time or the giving of notice or both would
constitute such a breach or violation of or default under any Contract, Order or
Permit, or (iii) any occurrence of any event that with or without the passage of
time or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order or Permit.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed also to refer to any successor sections.
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"ERISA PLAN" means any Benefit Plan that is an "employee welfare
benefit plan," as that term is defined in Section 3(l) of ERISA, or an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA.
"EFFECTIVE TIME" has the meaning given to it in SECTION 2.1(E) or
SECTION 3.1(E), as appropriate.
"EMPLOYMENT AGREEMENTS" means the Employment Agreement to be entered
into at or prior to Closing between the Company and each of Xxxx X. Xxxxx,
Xxxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxx, Xx., substantially in the forms
attached hereto as EXHIBITS C, D and E, respectively.
"ENVIRONMENTAL ASSESSMENT" means any and all soil and groundwater
tests, surveys, environmental assessments and other inspections, tests and
inquiries conducted by the Buyer or any agent of the Buyer and related to the
Real Property of the Company or its subsidiaries.
"ENVIRONMENTAL LAWS" means any federal, state or local law, statute,
ordinance, rule, regulation, permit, directive, license, approval, guidance,
interpretation, order or other legal requirement relating to the protection of
human health or the environment, including but not limited to any requirement
pertaining to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, handling, reporting, licensing, permitting,
investigation or remediation of materials that are or may constitute a threat to
human health or the environment. Without limiting the foregoing, each of the
following is an Environmental Law: the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.) ("RCRA"), the Federal
Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42
U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et seq.), the Safe Drinking Water Act (42 U.S.C. ss. 300 et seq.) and the
Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.) ("OSHA"), as such
laws and regulations have been or are in the future amended or supplemented, and
each similar federal, state or local statute, and each rule and regulation
promulgated under such federal, state and local laws.
"ENVIRONMENTAL SURVEY" has the meaning given to it in SECTION 8.3.
"EXCHANGE AGENT" has the meaning given to it in SECTION 2.5.
"EXCHANGE RATIO" has the meaning given to it in SECTION 2.3(A).
"FDIC" means the Federal Deposit Insurance Corporation.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means generally
accepted accounting principles as recognized by the American Institute of
Certified Public Accountants, as in effect from time to time, consistently
applied and maintained on a consistent basis for a Person throughout the period
indicated and consistent with such Person's prior financial practice.
"GOVERNMENTAL AUTHORITY" means any nation, province or state, or any
political subdivision thereof, and any agency, department, natural person or
other entity exercising executive, legislative, regulatory or administrative
functions of or pertaining to government, including Regulatory Authorities.
"HAZARDOUS MATERIAL" means any substance or material that either is or
contains a substance designated as a hazardous waste, hazardous substance,
hazardous material, pollutant, contaminant or toxic substance under any
Environmental Law or is otherwise regulated under any Environmental Law, or the
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presence of which in some quantity requires investigation, notification or
remediation under any Environmental Law.
"HOLDING COMPANY MERGER" has the meaning given to it in the Background
Statement hereof.
"INTELLECTUAL PROPERTY" means (a) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all copyrights and all
applications, registrations and renewals in connection therewith, (d) all
know-how, trade secrets, whether patentable or unpatentable and whether or not
reduced to practice (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production process and techniques,
technical data, designs, drawings, specifications, pricing and cost information
and business and marketing plans and proposals), (e) all computer software
(including data and related documentation) and (f) all other proprietary rights.
"JOINT PROXY STATEMENT/PROSPECTUS" has the meaning given to it in
SECTION 5.17.
"KNOWLEDGE OF THE BUYER PARTIES" means the actual personal knowledge of
any of the directors and officers of the Buyer and the Buyer Bank.
"KNOWLEDGE OF THE COMPANY PARTIES" means the actual personal knowledge
of any of the directors and officers of the Company and the Company Bank and any
of their subsidiaries.
"LAW" means any code, law, ordinance, rule, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities, business or operations promulgated, interpreted or enforced by any
Governmental Authority.
"LIABILITY" means any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured or otherwise.
"LIEN" means, whether contractual or statutory, any conditional sale
agreement, participation or repurchase agreement, assignment, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge or claim
of any nature whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due and
payable, (ii) easements, restrictions of record and title exceptions that could
not reasonably be expected to have any Material Adverse Effect, and (iii)
pledges to secure deposits and other Liens incurred in the ordinary course of
the banking business.
"LITIGATION" means any action, arbitration, cause of action, complaint,
criminal prosecution, governmental investigation, hearing, or administrative or
other proceeding, but shall not include regular, periodic examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"LOAN COLLATERAL" means all of the assets, properties, businesses and
rights of every kind, nature, character and description, whether real, personal,
or mixed, tangible or intangible, accrued or contingent,
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owned by whomever and wherever located, in which the Company or any of its
subsidiaries has taken a security interest with respect to, on which the Company
or any of it subsidiaries has placed a Lien with respect to, or which is
otherwise used to secure, any loan made by the Company or any of its
subsidiaries or any note, account, or other receivable payable to the Company or
any of its subsidiaries.
"MARKET VALUE" of the Buyer's Stock on any date shall be the closing
price of such stock on the Nasdaq National Market System (as reported by The
Wall Street Journal or, if not reported thereby, any other authoritative
source), or if such date is not a trading day, on the last trading day preceding
that date.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality in
that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change, or
occurrence that, individually or together with any other event, change, or
occurrence, has a Material adverse impact on (i) the financial condition,
results of operations, or business of such Party and its subsidiaries, taken as
a whole, or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Mergers or the other transactions contemplated by
this Agreement, provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in market interest rates, real estate markets or other market
conditions applicable to banks or thrift institutions generally, (c) changes in
GAAP or regulatory accounting principles generally applicable to banks and their
holding companies, (d) actions and omissions of a Party (or any of its
subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, (e) the Mergers (and the
reasonable expenses incurred in connection therewith) and compliance with the
provisions of this Agreement on the operating performance of the Parties, and
(f) any divestiture of assets or deposits in the aggregate of $100 million or
less of the Buyer and the Company and their subsidiaries taken as a whole as
required by any Regulatory Authority or pursuant to applicable law.
"MEASUREMENT PERIOD" has the meaning given to it in SECTION 10.1(F).
"MERGER CONSIDERATION" has the meaning given to it in SECTION 2.3(A).
"MERGERS" has the meaning given to it in the Background Statement
hereof.
"NORTH CAROLINA ADMINISTRATOR" means the North Carolina Administrator,
Savings Institutions Division, North Carolina Department of Commerce.
"OPTION AGREEMENTS" means the Option Agreements dated as of the date
hereof between the Buyer and the Company substantially in the form of EXHIBITS G
and H.
"ORDER" means any administrative decision or award, decree, injunction,
judgment, order, quasi-judicial decision or award, ruling, or writ of any
federal, state, local, foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Governmental Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its subsidiaries participates in the management
(including but not limited to participating in a fiduciary capacity) and, where
required by the context, said term means the owner or operator of such facility
or property, but only with respect to such facility or property.
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"PENSION PLAN" means any ERISA Plan that also is a "defined benefit
plan" (as defined in Section 414(j) of the Internal Revenue Code or Section
3(35) of ERISA).
"PERMIT" means any approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right given by a Governmental
Authority to which any Person is a party or that is or may be binding upon or
inure to the benefit of any Person or its securities, Assets or business.
"PERSON" means a corporation, a company, an association, a joint
venture, a partnership, an organization, a business, an individual, a trust, a
Governmental Authority or any other legal entity.
"REAL PROPERTY" means all of the land, buildings, premises, or other
real property in which a Person has ownership or possessory rights, whether by
title, lease or otherwise (including banking facilities and any foreclosed
properties). Notwithstanding the foregoing, "Real Property", as used with
respect to any of the Company and its subsidiaries, does not include any Loan
Collateral not yet foreclosed and conveyed to the Company or one of its
subsidiaries as of the date with respect to which the term "Real Property" is
being used.
"REGISTRATION STATEMENT" has the meaning given to it in SECTION 5.17.
"REGULATORY AUTHORITIES" means, collectively, the Federal Trade
Commission, the United States Department of Justice, the Federal Reserve Board,
the North Carolina Administrator, the North Carolina Commissioner of Banks, the
FDIC, the National Association of Securities Dealers and the SEC, and all other
regulatory agencies having jurisdiction over the Parties and their respective
subsidiaries.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
"SEC" means the Securities and Exchange Commission.
"SNL INDEX" has the meaning given to it in SECTION 10.1(F).
"SECURITIES DOCUMENTS" means all forms, proxy statements, registration
statements, reports, schedules and other documents filed or required to be filed
by a Party or any of its subsidiaries with any Regulatory Authority pursuant to
the Securities Laws.
"SECURITIES LAWS" means the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisors Act of 1940, the Trust Indenture Act of 1939, each as amended, and the
rules and regulations of any Governmental Authority promulgated under each.
"SHAREHOLDER MEETINGS" has the meaning given to it in SECTION 5.17.
"STOCK ADJUSTMENT" has the meaning given to it in SECTION 2.3(C).
"SURVIVING BANK" has the meaning given to it in SECTION 3.1(A).
"SURVIVING HOLDING COMPANY" has the meaning given to it in SECTION
2.1(A).
"TAX" or "TAXES" means any and all taxes, charges, fees, levies or
other assessments (whether federal, state, local or foreign), including without
limitation income, gross receipts, excise, property,
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estate, sales, use, value added, transfer, license, payroll, franchise, ad
valorem, withholding, Social Security and unemployment taxes, as well as any
interest, penalties and other additions to such taxes, charges, fees, levies or
other assessments.
"TAXABLE PERIOD" shall mean any period prescribed by any Governmental
Authority, including the United States or any state, local, or foreign
government or subdivision or agency thereof for which a Tax Return is required
to be filed or Tax is required to be paid.
"TAX RETURN" means any report, return or other information required to
be supplied to a taxing authority in connection with Taxes.
ARTICLE II
THE HOLDING COMPANY MERGER;
CONVERSION AND EXCHANGE OF COMPANY SHARES
2.1 THE HOLDING COMPANY MERGER.
(a) The Merger. On the terms and subject to the conditions of this
Agreement, the Plan of Merger in respect of the Holding Company Merger, which
shall be substantially in the form attached hereto as EXHIBIT A, and North
Carolina Law, the Company shall merge into the Buyer, the separate existence of
the Company shall cease, and the Buyer shall be the surviving corporation (the
"SURVIVING HOLDING COMPANY").
(b) Governing Documents. The articles of incorporation of the Buyer in
effect at the Effective Time (as defined below) of the Holding Company Merger
shall be the articles of incorporation of the Surviving Holding Company until
further amended in accordance with applicable law. The bylaws of the Buyer in
effect at such Effective Time shall be the bylaws of the Surviving Holding
Company until further amended in accordance with applicable law.
(c) Directors and Officers. Subject to SECTION 7.2(D) and SECTION
7.2(E), from and after the Effective Time of the Holding Company Merger, until
successors or additional directors are duly elected or appointed in accordance
with applicable law, (i) the directors of the Buyer at such Effective Time shall
be the directors of the Surviving Holding Company, and (ii) the officers of the
Buyer at such Effective Time shall be the officers of the Surviving Holding
Company.
(d) Approval. The parties hereto shall take and cause to be taken all
action necessary to approve and authorize (i) this Agreement and the other
documents contemplated hereby (including without limitation the above-described
Plan of Merger) and (ii) the Holding Company Merger and the other transactions
contemplated hereby.
(e) Effective Time. The Holding Company Merger shall become effective
on the date and at the time of filing of the related Articles of Merger, in the
form required by and executed in accordance with the laws of North Carolina, or
at such other time specified therein. The date and time when the Holding Company
Merger shall become effective is herein referred to as the "EFFECTIVE TIME" of
the Holding Company Merger.
(f) Filing of Articles of Merger. At the Closing, the Buyer and the
Company shall cause the Articles of Merger (containing the above-referenced Plan
of Merger) in respect of the Holding Company Merger to be executed and filed
with the Secretary of State of North Carolina, to the extent required by
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the laws of North Carolina, and shall take any and all other actions and do any
and all other things to cause the Holding Company Merger to become effective as
contemplated hereby.
2.2 COMPANY SHARES.
(a) Each share of the Company's capital stock (the "COMPANY SHARES"),
no par value per share, issued and outstanding to Persons, except for Company
Shares held by the Buyer and its Affiliates immediately prior to the Effective
Time of the Holding Company Merger (other than shares held in a fiduciary
capacity or as a result of debts previously contracted), shall, by virtue of the
Holding Company Merger and without any action on the part of the holders
thereof, be canceled and converted at such Effective Time into the right to
receive the Merger Consideration (as defined below) in accordance with this
ARTICLE II.
(b) Each Company Share, by virtue of the Holding Company Merger and
without any action on the part of the holder thereof, shall at the Effective
Time of the Holding Company Merger no longer be outstanding, shall be canceled
and retired and shall cease to exist, and each holder of certificates
representing any such Company Shares shall thereafter cease to have any rights
with respect to such shares, except for the right to receive the Merger
Consideration.
(c) Notwithstanding anything contained in this SECTION 2.2 to the
contrary, any Company Shares held in the treasury of the Company immediately
prior to the Effective Time of the Holding Company Merger shall be canceled
without any conversion thereof, and no payment shall be made with respect
thereto.
(d) From and after the Effective Time of the Holding Company Merger,
there shall be no transfers on the stock transfer books of the Surviving Holding
Company of the Company Shares that were outstanding immediately prior to the
Effective Time of the Holding Company Merger. If, after such Effective Time,
certificates representing Company Shares are presented to the Surviving Holding
Company, they shall be canceled, and exchanged and converted into the Merger
Consideration as provided for herein.
2.3 MERGER CONSIDERATION.
(a) Subject to SECTIONS 2.4 and 2.5, at the Effective Time of the
Holding Company Merger, the holders of Company Shares outstanding at such
Effective Time, other than the Buyer and its Affiliates, shall be entitled to
receive, and the Buyer shall pay or issue and deliver, a number of shares of the
Buyer's Stock (the "MERGER CONSIDERATION") representing 1.2468 shares of the
Buyer's Stock for each such Company Share, subject to adjustment in accordance
with SECTION 2.3(C) and SECTION 10.1(F) (the "EXCHANGE RATIO").
(b) No fractional shares of the Buyer's Stock shall be issued or
delivered in connection with the Holding Company Merger. In lieu of any such
fractional share, subject to SECTION 2.4, each holder of Company Shares who
would otherwise have been entitled to a fraction of a share of the Buyer's Stock
shall be entitled to receive cash (without interest) in an amount equal to such
fraction multiplied by the Market Value of one share of the Buyer's stock on the
trading day immediately prior to the Effective Time.
(c) In the event the Buyer changes the number of shares of the Buyer's
Stock issued and outstanding prior to the Effective Time of the Holding Company
Merger as a result of a stock split, stock dividend or similar recapitalization
with respect to such stock (each a "STOCK ADJUSTMENT") and the record date
therefor (in the case of a stock dividend) or the effective date thereof (in the
case of a stock
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split or similar recapitalization for which a record date is not established)
shall be prior to such Effective Time, the Exchange Ratio shall be equitably
adjusted to reflect such change.
2.4 CLOSING PAYMENT. At the Effective Time of the Holding Company
Merger or as soon thereafter as is reasonably practicable, the holders of the
Company Shares shall surrender the certificates representing such shares to the
Buyer and in exchange therefor, the Buyer shall issue and deliver to each such
holder certificates representing the number of shares of the Buyer's Stock to
which it is entitled hereunder and cash payments to which such holder is
entitled hereunder in respect of any fractional shares thereof. The Buyer shall
not be obligated to deliver any of such shares of the Buyer's Stock or cash
payments until such holder surrenders the certificates representing such
holder's Company Shares.
2.5 EXCHANGE PROCEDURES.
(a) Promptly after the Effective Time of the Holding Company Merger,
the Buyer shall cause the exchange agent selected by the Buyer (the "EXCHANGE
AGENT"), subject to the reasonable satisfaction of the Company, which may be an
Affiliate of the Buyer, to mail to the shareholders of the Company appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates representing shares of the Company
prior to such Effective Time shall pass, only upon proper delivery of such
certificates to the Exchange Agent). After such Effective Time, each holder of
Company Shares issued and outstanding at such Effective Time (other than any of
such shares held by the Buyer or any Affiliate thereof or canceled pursuant to
SECTION 2.2(C)) shall surrender the certificate or certificates representing
such shares to the Exchange Agent and shall promptly upon surrender thereof
receive in exchange therefor the number of shares of the Buyer's Stock to which
such holder is entitled hereunder, plus any cash payments to which such holder
is entitled hereunder in respect of rights to receive fractional shares. The
Buyer shall not be obligated to deliver any of such payments in cash or stock
until such holder surrenders the certificate(s) representing such holder's
Company Shares. The certificate(s) so surrendered shall be duly endorsed as the
Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither the Buyer nor the Exchange Agent shall be liable to any
holder of Company Shares for any amounts paid or properly delivered in good
faith to a public official pursuant to any applicable abandoned property Law.
(b) To the extent permitted by applicable Law, former shareholders of
record of the Company shall be entitled to vote after the Effective Time of the
Holding Company Merger at any meeting of the Buyer's shareholders the number of
whole shares of the Buyer's Stock into which their respective Company Shares are
converted pursuant to the Holding Company Merger, regardless of whether such
holders have exchanged their certificates representing such Company Shares for
certificates representing the Buyer's Stock in accordance with the provisions of
this Agreement. Whenever a dividend or other distribution is declared by the
Buyer on the Buyer's Stock, the record date for which is at or after the
Effective Time of the Holding Company Merger, the declaration shall include
dividends or other distributions on all shares of the Buyer's Stock issuable
pursuant to this Agreement, but beginning at such Effective Time no dividend or
other distribution payable to the holders of record of the Buyer's Stock as of
any time subsequent to such Effective Time of the Holding Company Merger shall
be delivered to the holder of any certificate representing any of the Company
Shares issued and outstanding at such Effective Time until such holder
surrenders such certificate for exchange as provided in this SECTION 2.5.
However, upon surrender of such certificate(s), both the certificate(s)
representing the shares of the Buyer's Stock to which such holder is entitled
and any such undelivered dividends and other distributions (without any
interest) shall be delivered and paid with respect to each share represented by
such certificates.
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2.6 CONVERSION OF STOCK OPTIONS AND WARRANTS.
(a) At the Effective Time of the Holding Company Merger, each option or
other right to purchase Company Shares pursuant to stock options or warrants
("COMPANY OPTIONS") granted by the Company under its Benefit Plans that are
outstanding at the Effective Time of the Holding Company Merger shall be
converted into and become rights with respect to the Buyer's Stock, and the
Buyer shall assume each Company Option, in accordance with the terms of the
applicable Benefit Plan of the Company and the stock option or warrant agreement
by which such Company Option is evidenced, except that from and after such
Effective Time: (i) the Buyer and its compensation committee shall be
substituted for the Company and the compensation committee of its board of
directors (including if applicable, the entire Board of Directors of the
Company) administering such Benefit Plan or Plans of the Company; (ii) the
Company Options assumed by the Buyer may be exercised solely for shares of the
Buyer's Stock; (iii) the number of shares of the Buyer's Stock subject to such
converted Company Options shall be equal to the number of Company Shares subject
to such Company Options immediately prior to the Closing Date multiplied by the
Exchange Ratio, rounded to the next highest share; and (iv) the per-share
exercise price under each such converted Company Option shall be adjusted by
dividing the exercise price of the Company Option immediately prior to the
Closing Date by the Exchange Ratio, rounded down to the nearest cent.
(b) In addition, notwithstanding clauses (ii), (iii) and (iv) of
SECTION 2.6(A), each assumed Company Option that is an "incentive stock option"
shall be adjusted as required by Section 424 of the Internal Revenue Code, and
the regulations promulgated thereunder, so as not to constitute a modification,
extension or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code.
(c) As soon as practicable after the Effective Time of the Holding
Company Merger, the Buyer shall deliver to the participants in each Benefit Plan
of the Company who remain employed by the Buyer an appropriate notice setting
forth such participant's rights pursuant thereto, and the grants pursuant to
such Benefit Plan shall continue in effect on substantially the same terms and
conditions (subject to the adjustments required by the above subsection (a)
after giving effect to the Holding Company Merger), and the Buyer shall comply
with the terms of each Benefit Plan of the Company to ensure, to the extent
required by, and subject to the provisions of, such Benefit Plan, that the
Company Options that qualified as incentive stock options prior to the Effective
Time of the Holding Company Merger continue to qualify as incentive stock
options after such Effective Time. At or prior to the Effective Time of the
Holding Company Merger, and at all times thereafter, the Buyer shall have
reserved a sufficient number of shares of the Buyer's Stock for issuance upon
exercise of the Company Options assumed by it in accordance with this SECTION
2.6. The Buyer agrees to file as promptly as practicable, and in no event later
than 60 days, after the Effective Time, a registration statement on Form S-8
covering the shares of the Buyer's Stock issuable pursuant to such options.
(d) Following the Effective Time of the Holding Company Merger, in the
event of any Stock Adjustment by the Buyer, or any consolidation or merger of
the Buyer with or into any other entity, or the sale or transfer or all or
substantially all of the Buyer's assets, the rights of the holders of
outstanding Company Options shall be appropriately adjusted so that such holders
will be in the same position as if their options had been exercised immediately
before such corporate action or transaction.
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ARTICLE III
THE BANK MERGER;
CONVERSION AND EXCHANGE OF COMPANY BANK SHARES
3.1 THE BANK MERGER.
(a) The Merger. Immediately after the consummation of the Holding
Company Merger, on the terms and subject to the conditions of this Agreement,
the Plan of Merger in respect of the Bank Merger, which shall be substantially
in the form of EXHIBIT B, attached hereto, and applicable North Carolina Law,
the Company Bank shall merge and combine into the Buyer Bank, the separate
existence of the Company Bank shall cease, and the Buyer Bank shall be the
surviving corporation (the "SURVIVING BANK").
(b) Governing Documents. The articles of incorporation of the Buyer
Bank in effect at the Effective Time (as defined below) of the Bank Merger shall
be the articles of incorporation of the Surviving Bank until further amended in
accordance with applicable law. The bylaws of the Buyer Bank in effect at such
Effective Time shall be the bylaws of the Surviving Bank until further amended
in accordance with applicable law.
(c) Directors and Officers. Subject to SECTION 7.2(D) and SECTION
7.2(E), from and after the Effective Time of the Bank Merger, until successors
are duly elected or appointed in accordance with applicable law, (i) the
directors of the Buyer Bank at such Effective Time shall be the directors of the
Surviving Bank, and (ii) the officers of the Buyer Bank at such Effective Time
shall be the officers of the Surviving Bank.
(d) Approval. The parties hereto shall take and cause to be taken all
action necessary to approve and authorize (i) this Agreement and other documents
contemplated hereby (including without limitation the above-described Plan of
Merger) and (ii) the Bank Merger and other transactions contemplated hereby.
(e) Effective Time. The Bank Merger shall become effective on the date
and at the time of filing of the related Articles of Merger in the form required
by and executed in accordance with the laws of North Carolina, or at such other
time specified therein (which in any event shall be later than the Effective
Time of the Holding Company Merger). The date and time when the Bank Merger
shall become effective is herein referred to as the "EFFECTIVE TIME" of the Bank
Merger.
(f) Filing of Articles of Merger. At the Closing but after the filing
of the Articles of Merger in respect of the Holding Company Merger, the Buyer
Bank and the Company Bank shall cause the Articles of Merger (which shall
contain the above-referenced Plan of Merger) in respect of the Bank Merger to be
executed and filed with the North Carolina Administrator and the Secretary of
State of North Carolina, to the extent required by applicable North Carolina
Law, and shall take any and all other actions and do any and all other things to
cause the Bank Merger to become effective as contemplated hereby.
3.2 COMPANY BANK SHARES.
(a) Each share of the Company Bank's capital stock (the "COMPANY BANK
SHARES"), no par value per share, issued and outstanding to Persons immediately
prior to the Effective Time of the Bank Merger shall, by virtue of the Bank
Merger and without any action on the part of the holder thereof, be
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canceled and retired and shall cease to exist, and each holder of certificates
representing any such shares shall thereafter cease to have any rights with
respect to such shares.
(b) From and after the Effective Time of the Bank Merger, there shall
be no transfers on the stock transfer books of the Surviving Bank of the Company
Bank Shares that were outstanding immediately prior to the Effective Time of the
Bank Merger. If, after the Effective Time of the Bank Merger, certificates
representing the Company Bank Shares are presented to the Surviving Bank, they
shall be canceled.
ARTICLE IV
THE CLOSING
4.1 CLOSING. The Closing of the Mergers shall take place at the offices
of Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A. in Charlotte, North Carolina as soon as
reasonably practical after all conditions to Closing have been met, or on such
other date or at such other location as the Buyer and the Company may mutually
agree (such date, the "CLOSING DATE"). At the Closing, the parties will execute,
deliver and file all documents necessary to effect the transactions contemplated
herein, including the Articles of Merger in respect of both Mergers.
4.2 DELIVERIES BY THE COMPANY PARTIES. At or by the Closing, the
Company shall have caused the following documents to be executed and delivered:
(a) the agreements, opinions, certificates, instruments and other
documents contemplated in SECTION 9.3;
(b) the Employment Agreements; and
(c) all other documents, certificates and instruments required
hereunder to be delivered to the Buyer, or as may reasonably be requested by the
Buyer at or prior to the Closing.
4.3 DELIVERIES BY THE BUYER. At or by the Closing, the Buyer shall have
caused the following documents to be executed and delivered:
(a) the agreements, opinions, certificates, instruments and other
documents contemplated in SECTION 9.2;
(b) the Employment Agreements; and
(c) all other documents, certificates and instruments required
hereunder to be delivered to the Company, or as may reasonably be requested by
the Company at or prior to the Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Company's Disclosure Schedule, each of the
Company Parties jointly and severally represents and warrants to the Buyer that
the statements contained in this ARTICLE V are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date.
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5.1 ORGANIZATION, STANDING AND POWER.
(a) The Company is a bank holding company registered with the Board of
Governors of the Federal Reserve System under the Bank Holding Company Act of
1956, as amended, and the Company Bank is a stock savings bank under North
Carolina Law. The Company Bank is an "insured institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and subject
to dollar limits under such Act, all deposits in the Company Bank are fully
insured by the FDIC.
(b) Each of the Company and its subsidiaries is either a bank or a
corporation, duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation or organization. Each of the
Company and its subsidiaries has the corporate or other applicable power and
authority to carry on, in all Material respects, its business as now conducted
and to own, lease and operate its Assets. Each of the Company and its
subsidiaries is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed could not
reasonably be expected to have a Material Adverse Effect on the Company.
5.2 AUTHORITY; NO CONFLICTS.
(a) Subject to required regulatory and shareholder approvals, each of
the Company Parties has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
each of the Company Parties' obligations under this Agreement and the
consummation of the transactions contemplated hereby, including the Mergers,
have been duly and validly authorized by all necessary corporate action (and by
Closing, all such shareholder action) in respect thereof on the part of each of
the Company Parties. This Agreement represents a legal, valid and binding
obligation of each of the Company Parties, enforceable against each of the
Company Parties in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of specific
performance, injunctive relief and other equitable remedies is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by the Company
Parties, nor the consummation by the Company Parties of the transactions
contemplated hereby, nor compliance by the Company Parties with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of the Company Parties' articles of incorporation, charter, bylaws or any other
similar governing document, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of the Company or any of its subsidiaries under, any Contract or Permit of
the Company or any of its subsidiaries, except as could not reasonably be
expected to have a Material Adverse Effect on the Company, or (iii) subject to
obtaining the requisite Consents referred to in SECTION 9.1(B) of this
Agreement, violate any Law or Order applicable to the Company or any of its
subsidiaries or any of their Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws and banking Regulatory Authorities, no notice to, filing with,
or Consent of, any Governmental Authority is necessary for the consummation by
the Company and the Company Bank of the Mergers and the other transactions
contemplated in this Agreement.
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5.3 CAPITAL STOCK; SUBSIDIARIES.
(a) The authorized capital stock of the Company consists of (a)
20,000,000 shares of common stock, no par value per share, of which 3,446,680
shares are issued and outstanding as of the date of this Agreement, and (b)
5,000,000 shares of Preferred Stock, no par value per share, none of which is
issued and outstanding, and except for such 3,446,680 shares of common stock,
there are no shares of capital stock or other equity securities of the Company
outstanding. The authorized capital stock of the Company Bank consists of (i)
20,000,000 shares of common stock, no par value per share, of which 3,744,000
shares are issued and outstanding as of the date of this Agreement and are owned
and held by the Company, and (ii) 5,000,000 shares of preferred stock, no par
value per share, of which no shares are issued and outstanding as of the date of
this Agreement, and except for such 3,744,000 shares of common stock, there are
no shares of capital stock or other equity securities of the Company Bank
outstanding. SECTION 5.3 of the Company's Disclosure Schedule lists all of the
Company's direct and indirect subsidiaries other than the Company Bank as of the
date of this Agreement. The Company or one of its subsidiaries owns all of the
issued and outstanding shares of capital stock of each such subsidiary.
(b) All of the issued and outstanding shares of capital stock of the
Company and its subsidiaries are duly and validly issued and outstanding and are
fully paid and nonassessable. None of the outstanding shares of capital stock of
the Company or any of its subsidiaries has been issued in violation of any
preemptive rights of the current or past shareholders of such Persons. Except as
set forth on SECTION 5.3 of the Company's Disclosure Schedule, no equity
securities of any subsidiary of the Company are or may become required to be
issued (other than to the Company or any of its subsidiaries) by reason of any
Rights, and there are no Contracts by which any subsidiary of the Company is
bound to issue (other than the Company or subsidiary of the Company) additional
shares of its capital stock or Rights or by which the Company or any of its
subsidiaries is or may be bound to transfer any shares of the capital stock of
any subsidiary of the Company (other than to the Company or any of its
subsidiaries). There are no equity securities reserved for any of the foregoing
purposes, and there are no Contracts relating to the rights of the Company or
any of its subsidiaries to vote or to dispose of any shares of the capital stock
of any subsidiary of the Company.
5.4 SEC FILINGS; COMPANY FINANCIAL STATEMENTS.
(a) The Company has filed and made available to the Buyer all forms,
reports, and documents required to be filed by the Company with the SEC since
December 31, 1995 (collectively, the "COMPANY SEC REPORTS"). The Company SEC
Reports (i) at the time filed, complied in all Material respects with the
applicable requirements of the Securities Laws, as the case may be, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a Material fact or omit to state a Material fact required to
be stated in such Company SEC Reports or necessary in order to make the
statements in such Company SEC Reports, in light of the circumstances under
which they were made, not misleading. None of the Company's subsidiaries is
required to file any forms, reports, or other documents with the SEC.
(b) Each of the Company Financial Statements (including, in each case,
any related notes) contained in the Company SEC Reports, including any Company
SEC Reports filed after the date of this Agreement until the Effective Time,
complied or will comply as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared or
will be prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements, or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC), and fairly presented or will fairly present the
consolidated financial position of the Company and its subsidiaries as at the
respective dates and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements
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were or are subject to normal and recurring year-end adjustments that were not
or are not expected to be Material in amount or effect (except as may be
indicated in such financial statements or notes thereto).
5.5 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company nor any of
its subsidiaries has any Liabilities that could reasonably be expected to have a
Material Adverse Effect on the Company, except Liabilities that are accrued or
reserved against in the consolidated balance sheets of the Company as of June
30, 1999, included in the Company Financial Statements or reflected in the notes
thereto and except for Liabilities incurred in the ordinary course of business
subsequent to June 30, 1999. Neither the Company nor any of its subsidiaries has
incurred or paid any Liability since June 30, 1999, except for (i) Liabilities
incurred or paid in the ordinary course of business consistent with past
business practice and (ii) Liabilities that could not reasonably be expected to
have a Material Adverse Effect on the Company. No facts or circumstances exist
that could reasonably be expected to serve as the basis for any other
Liabilities of the Company or any of its subsidiaries, except as could not
reasonably be expected to have a Material Adverse Effect on the Company.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1999, (i)
there have been no events, changes, or occurrences that have had, or could
reasonably be expected to have, a Material Adverse Effect on the Company, and
(ii) each of the Company and its subsidiaries has conducted in all Material
respects its respective businesses in the ordinary and usual course (excluding
the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby).
5.7 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any of
Company and its subsidiaries have been timely filed, or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before June 30, 1999, and, to the Knowledge of the Company Parties, all Tax
Returns filed are complete and accurate in all Material respects. All Tax
Returns for periods ending on or before the date of the most recent fiscal year
end immediately preceding the Effective Time will be timely filed or requests
for extensions will be timely filed. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that could reasonably be expected to have a Material
Adverse Effect on the Company, except to the extent reserved against in the
Company Financial Statements dated prior to the date of this Agreement. All
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) None of the Company or its subsidiaries has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) Adequate provision for any Material Taxes due or to become due for
any of the Company or its subsidiaries for the period or periods through and
including the date of the respective Company Financial Statements has been made
and is reflected on such Company Financial Statements.
(d) Each of the Company and its subsidiaries is in compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for any such
instances of noncompliance and omissions as could not reasonably be expected to
have a Material Adverse Effect on the Company.
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(e) None of the Company and its subsidiaries has made any payments, is
obligated to make any payments, or is a party to any contract, agreement, or
other arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(f) There are no Material Liens with respect to Taxes upon any of the
Assets of the Company and its subsidiaries.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Company and its subsidiaries that occurred
during or after any Taxable Period in which any of the Company and its
subsidiaries has incurred a net operating loss that carries over to any Taxable
Period ending after June 30, 1999.
(h) Neither the Company nor any of its subsidiaries has filed any
consent under Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(i) After the date of this Agreement, no Material election with respect
to Taxes will be made without the prior consent of the Buyer, which consent will
not be unreasonably withheld.
(j) Neither the Company nor any of its subsidiaries has or has had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
5.8 ASSETS. Each of the Company and its subsidiaries have good and
marketable title, free and clear of all Liens, to all of their respective
Assets, except for Liens to secure public deposits in the ordinary course of
business consistent with past practice. Except as could not reasonably be
expected to have a Material Adverse Effect on the Company, all tangible
properties used in the businesses of the Company and its subsidiaries are in
good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with each of their past practices. Except
as could not reasonably be expected to have a Material Adverse Effect on the
Company, all Material Assets held under leases or subleases by any of the
Company and its subsidiaries are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of specific performance, injunctive relief and other equitable
remedies is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. Each of the
Company and its subsidiaries currently maintain insurance in amounts, scope, and
coverage reasonably necessary for their operations. None of the Company or its
subsidiaries has received notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be increased in any Material respect. The Assets of the Company and its
subsidiaries include all Assets required to operate in all Material respects
their businesses taken as a whole as presently conducted.
5.9 SECURITIES PORTFOLIO AND INVESTMENTS. All securities owned by the
Company or any of its subsidiaries (whether owned of record or beneficially) are
held free and clear of all Liens that would impair the ability of the owner
thereof to dispose freely of any such security and/or otherwise to realize the
benefits of ownership thereof at any time, except for Liens to secure public
deposits in the ordinary course of business consistent with past practice and
those Liens that could not reasonably be expected to have a Material Adverse
Effect on the Company. There are no voting trusts or other agreements or
undertakings to which the Company or any of its subsidiaries is a party with
respect to the voting of any such securities. Except for fluctuations in the
market values of United States Treasury and agency or
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municipal securities, since June 30, 1999, there has been no significant
deterioration or Material adverse change in the quality, or any Material
decrease in the value, of the securities portfolio of the Company and its
subsidiaries, taken as a whole.
5.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of the Company Parties, each of the Company and
its subsidiaries, its Participation Facilities, and its Loan Collateral are, and
have been, in compliance with all Environmental Laws, except those violations
that could not reasonably be expected to have a Material Adverse Effect on the
Company.
(b) To the Knowledge of the Company Parties, there is no Litigation
pending or threatened before any court, governmental agency, or authority, or
other forum in which any of the Company and its subsidiaries or any of its
Participation Facilities has been or, with respect to threatened Litigation, may
reasonably be expected to be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving a site owned, leased, or operated by the
Company or any of its subsidiaries or any of its Participation Facilities,
except for such Litigation pending or threatened that could not reasonably be
expected to have a Material Adverse Effect on the Company.
(c) To the Knowledge of the Company Parties, there is no Litigation
pending, or threatened before any court, governmental agency or authority, or
other forum in which any of its Loan Collateral (or the Company or any of its
subsidiaries in respect of such Loan Collateral) has been or, with respect to
threatened Litigation, may reasonably be expected to be named as a defendant or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on, under,
or involving Loan Collateral, except for such Litigation pending or threatened
that is could not reasonably be expected to have a Material Adverse Effect on
the Company.
(d) To the Knowledge of the Company Parties, there is no reasonable
basis for any Litigation of a type described in subsections (b) or (c), except
such as could not reasonably be expected to have a Material Adverse Effect on
the Company.
(e) To the Knowledge of the Company Parties, during and prior to the
period of (i) any of the Company's or its subsidiaries' ownership or operation
of any of their respective current properties, (ii) any of the Company's or its
subsidiaries' participation in the management of any Participation Facility, or
(iii) any of the Company's or subsidiaries' holding of a security interest in
Loan Collateral, there have been no releases of Hazardous Material in, on,
under, or affecting (or potentially affecting) such properties, except such as
could not reasonably be expected to have a Material Adverse Effect on the
Company.
5.11 COMPLIANCE WITH LAWS. Each of the Company and its subsidiaries has
in effect all Permits necessary for it to own, lease, or operate its Material
Assets and to carry on, in all Material respects, its business as now conducted,
except for those Permits the absence of which could not reasonably be expected
to have a Material Adverse Effect on the Company, and there has occurred no
Default under any such Permit, other than Defaults that could not reasonably be
expected to have a Material Adverse Effect on the Company. None of the Company
or its subsidiaries: (a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for
violations that could not reasonably be expected to have a Material Adverse
Effect on the Company; and (b) has received any notification or communication
from any agency or department of federal, state, or
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local government or any Regulatory Authority or the staff thereof (i) asserting
that any of the Company and its subsidiaries is not in compliance with any of
the Laws or Orders that such governmental authority or Regulatory Authority
enforces, except where such noncompliance could not reasonably be expected to
have a Material Adverse Effect on the Company, (ii) threatening to revoke any
Permits, except where the revocation of which could not reasonably be expected
to have a Material Adverse Effect on the Company, or (iii) requiring the Company
or any of its subsidiaries (x) to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment, or memorandum
of understanding, or (y) to adopt any board or directors resolution or similar
undertaking that restricts Materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
5.12 LABOR RELATIONS. Neither the Company nor any of its subsidiaries
is the subject of any Litigation asserting that it has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel it to bargain with any labor organization as to
wages or conditions of employment, nor is any of them a party to or bound by any
collective bargaining agreement, Contract, or other agreement or understanding
with a labor union or labor organization, nor is there any strike or other labor
dispute involving any of them, pending or threatened, or to the Knowledge of the
Company Parties, is there any activity involving any of the Company's or its
subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
5.13 EMPLOYEE BENEFIT PLANS.
(a) The Company has made available to the Buyer prior to the execution
of this Agreement correct and complete copies in each case of all Material
Company Benefits Plans.
(b) All Company Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws, except
as could not reasonably be expected to have a Material Adverse Effect on the
Company.
(c) Neither the Company nor any of its subsidiaries has an "obligation
to contribute" (as defined in ERISA Section 4212) to a "multiemployer plan" (as
defined in ERISA Sections 4001(a)(3)and 3(37)(A)). Each "employee pension
benefit plan," as defined in Section 3(2) of ERISA, ever maintained by the
Company or its subsidiaries that was intended to qualify under Section 401(a) of
the Internal Revenue Code and with respect to which the Company or any of its
subsidiaries has any Liability, is disclosed as such in SECTION 5.13 of the
Company's Disclosure Schedule.
(d) The Company has made available to the Buyer prior to the execution
of this Agreement correct and complete copies of the following documents: (i)
all trust agreements or other funding arrangements for such Company Benefit
Plans (including insurance contracts), and all amendments thereto, (ii) with
respect to any such Company Benefit Plans or amendments, all determination
letters, Material rulings, Material opinion letters, Material information
letters, or Material advisory opinions issued by the Internal Revenue Service,
the United States Department of Labor, or the Pension Benefit Guaranty
Corporation after December 31, 1994, (iii) annual reports or returns, audited or
unaudited financial statements, actuarial valuations and reports, and summary
annual reports prepared for any Company Benefit Plan with respect to the most
recent plan year, and (iv) the most recent summary plan descriptions and any
Material modifications thereto.
(e) Each Company ERISA Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and, to the Knowledge of
the Company Parties, there is no circumstance that will or could reasonably be
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expected to result in revocation of any such favorable determination letter.
Each trust created under any Company ERISA Plan has been determined to be exempt
from Tax under Section 501(a) of the Internal Revenue Code and the Company is
not aware of any circumstance that will or could reasonably be expected to
result in revocation of such exemption. With respect to each such Company
Benefit Plan, to the Knowledge of the Company Parties, no event has occurred
that will or could reasonably be expected to give rise to a loss of any intended
Tax consequences under the Internal Revenue Code or to any Tax under Section 511
of the Internal Revenue Code that could reasonably be expected to have a
Material Adverse Effect on the Company. There is no Material Litigation pending
or, to the Knowledge of the Company Parties, threatened relating to any Company
ERISA Plan.
(f) Neither the Company nor any of its subsidiaries has engaged in a
transaction with respect to any Company Benefit Plan that, assuming the Taxable
Period of such transaction expired as of the date of this Agreement, would
subject the Company or any of its subsidiaries to a Material tax or penalty
imposed by either Section 4975 of the Internal Revenue Code or Section 502(i) of
ERISA in amounts that could reasonably be expected to have a Material Adverse
Effect on the Company. Neither the Company or any of its subsidiaries nor any
administrator or fiduciary of any Company Benefit Plan (or any agent of any of
the foregoing) has engaged in any transaction, or acted or failed to act in any
manner, that could subject the Company or any of its subsidiaries to any direct
or indirect Liability (by indemnity or otherwise) for breach of any fiduciary,
co-fiduciary, or other duty under ERISA, where such Liability that could
reasonably be expected to have a Material Adverse Effect on the Company. No oral
or written representation or communication with respect to any aspect of the
Company Benefit Plans has been made to employees of the Company or any of its
subsidiaries that is not in accordance with the written or otherwise preexisting
terms and provisions of such plans, except where any Liability with respect to
such representation or disclosure could not reasonably be expected to have a
Material Adverse Effect on the Company.
(g) Neither the Company nor any of its subsidiaries maintains or has
ever maintained a Company Pension Plan.
(h) Neither the Company nor any of its subsidiaries has any Material
obligation for retiree health and retiree life benefits under any of the Company
Benefit Plans other than with respect to benefit coverage mandated by applicable
Law.
(i) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will, by themselves, (i)
result in any Material payment (including without limitation severance,
unemployment compensation, golden parachute, or otherwise) becoming due to any
director or any employee of the Company or it subsidiaries from the Company or
any of its subsidiaries under any Company Benefit Plan or otherwise, (ii)
Materially increase any benefit otherwise payable under any Company Benefit
Plan, or (iii) result in any acceleration of the time of any Material payment or
vesting of any Material benefit.
5.14 MATERIAL CONTRACTS. None of the Company or its subsidiaries, nor
any of their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract, (ii) any Contract relating to
the borrowing of money by the Company or its subsidiaries or the guarantee by
the Company or its subsidiaries of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Reserve or Federal Home Loan Bank advances of
depository institution subsidiaries, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), and (iii) any
other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-K filed by the Company with the SEC as of the date of this
Agreement that has not been filed as an exhibit to the Company's Form 10-K filed
for the
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fiscal year ended June 30, 1999, or in another SEC Document and identified to
the Buyer (together with all Contracts referred to in SECTIONS 5.8 and 5.13(A)
of this Agreement, the "COMPANY CONTRACTS"). With respect to each Company
Contract: (i) the Contract is in full force and effect; (ii) none of the Company
or its subsidiaries is in Default hereunder, other than Defaults that could not
reasonably be expected to have a Material Adverse Effect on the Company; (iii)
neither the Company nor any of its subsidiaries has repudiated or waived any
Material provision of any such Contract; and (iv) no other party to any such
Contract is, to the Knowledge of the Company Parties, in Default in any respect,
other than Defaults that could not reasonably be expected to have a Material
Adverse Effect on the Company, or has repudiated or waived any Material
provision thereunder. Except for Federal Reserve and Federal Home Loan Bank
advances, all of the indebtedness of the Company and its subsidiaries for money
borrowed (not including deposit Liabilities) is prepayable at any time without
penalty or premium.
5.15 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
or, to the Knowledge of the Company Parties, threatened against the Company or
any of its subsidiaries, or against any Asset, employee benefit plan, interest,
or right of any of them, except as could not reasonably be expected to have a
Material Adverse Effect on the Company, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any the Company or its subsidiaries, except as could not
reasonably be expected to have a Material Adverse Effect on the Company. There
is no Litigation to which the Company or any of its subsidiaries is a party that
names the Company or any of its subsidiaries as a defendant or cross-defendant
and where the maximum exposure is estimated to be $25,000 or more.
5.16 REPORTS. Since December 31, 1995, or the date of organization if
later, each of the Company and its subsidiaries has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Regulatory Authorities, except
failures to file that could not reasonably be expected to have a Material
Adverse Effect on the Company. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all Material respects with all applicable Laws,
except noncompliance that could not reasonably be expected to have a Material
Adverse Effect on the Company.
5.17 REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS. Subject
to the accuracy of the representations contained in SECTION 6.17, the
information supplied by the Company and its subsidiaries for inclusion in the
registration statement (the "REGISTRATION STATEMENT") covering the shares of the
Buyer's Stock to be issued pursuant to this Agreement shall not, at the time the
Registration Statement (including any amendments or supplements thereto) is
declared effective by the SEC, contain any untrue statement of a Material fact
or omit to state any Material fact required to be stated therein or necessary to
make the statements therein not misleading. The information supplied by the
Company and its subsidiaries for inclusion in the joint proxy
statement/prospectus to be sent to the shareholders of the Buyer and the Company
to consider the Holding Company Merger and the issuance of shares of the Buyer's
Stock in connection with the Holding Company Merger (the "SHAREHOLDER MEETINGS")
(such proxy statement/prospectus as amended or supplemented is referred to
herein as the "JOINT PROXY STATEMENT/PROSPECTUS") will not, on the date the
Joint Proxy Statement/Prospectus is first mailed to shareholders, at the time of
the Shareholder Meetings and at the Effective Time, contain any untrue statement
of a Material fact or omit to state any Material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If at any time prior to the Effective Time any event relating to
the Company or its subsidiaries or any of their affiliates, officers or
directors should be discovered by the Company and its subsidiaries that should
be set forth in an amendment to the Registration Statement or a supplement to
the Joint Proxy Statement/Prospectus, the Company will promptly inform the
Buyer. Notwithstanding the foregoing, neither the Company nor any of its
subsidiaries makes any representation or warranty with respect to any
information supplied by the
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Buyer and its subsidiaries that is contained or incorporated by reference in, or
furnished in connection with the preparation of, the Joint Proxy
Statement/Prospectus.
5.18 ACCOUNTING, TAX, AND REGULATORY MATTERS. To the Knowledge of the
Company Parties, none of the Company or its subsidiaries or any Affiliate
thereof has taken or agreed to take any action, that could reasonably be
expected to (i) prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) Materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in SECTION 9.1(B) of this Agreement.
5.19 STATE TAKEOVER LAWS. Each of the Company and its subsidiaries has
taken all necessary action to exempt the transactions contemplated by this
Agreement from any applicable "moratorium," "control share," "fair price,"
"business combination," or other anti-takeover laws and regulations of the State
of North Carolina.
5.20 CHARTER PROVISIONS. Each of the Company and its subsidiaries has
taken all action so that the entering into of this Agreement and the
consummation of the Mergers and the other transactions contemplated by this
Agreement do not and will not result in the grant of any rights to any Person
under the Articles of Incorporation, Bylaws, or other governing instruments of
any of them or restrict or impair the ability of the Buyer or any of its
subsidiaries to vote, or otherwise to exercise the rights of a shareholder with
respect to, the capital stock of the Company or any of its subsidiaries that may
be directly or indirectly acquired or controlled by it.
5.21 RECORDS. Complete and accurate copies of the articles of
incorporation or charter and bylaws of each of the Company and its subsidiaries
have been made available to the Buyer. The stock book of each such Person
contains in all Material respects complete and accurate records of the record
share ownership of the issued and outstanding shares of stock thereof.
5.22 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for the account of the Company or it
subsidiaries or their customers were entered into (i) in accordance with prudent
business practices and all applicable Laws, and (ii) with counterparties
believed to be financially responsible.
5.23 YEAR 2000. The Company Parties have disclosed to the Buyer a
complete and accurate copy of their plan and previous actions taken, including
an estimate of the anticipated remaining associated costs, for implementing
modifications to the Company's and its subsidiaries' hardware, software, and
computer systems, chips, and microprocessors, to ensure proper execution and
accurate processing of all date-related data, whether from years in the same
century or in different centuries. Between the date of this Agreement and the
Effective Time, the Company Parties shall endeavor to continue its efforts to
implement such plan.
5.24 CERTAIN REGULATED BUSINESSES. Neither the Company nor any of its
subsidiaries is an "investment company" as defined in the Investment Company Act
of 1940, as amended, nor is it a "public utility holding company" as defined in
the Public Utility Holding Company Act of 1935, as amended.
5.25 COMMISSIONS. No broker, finder or other Person is entitled to any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated hereby by reason of any action taken by the Company, any of its
subsidiaries or any of the Company's shareholders.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE BUYER BANK
Except as set forth on the Buyer's Disclosure Schedule, each of the
Buyer and the Buyer Bank represents and warrants to the Company that the
statements contained in this ARTICLE VI are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date.
6.1 ORGANIZATION.
(a) The Buyer is a bank holding company registered with the Board of
Governors of the Federal Reserve System under the Bank Holding Company Act of
1956, as amended, and the Buyer Bank is a bank under North Carolina Law. The
Buyer Bank is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and subject to dollar
limits under such Act, all deposits in the Buyer Bank are fully insured by the
FDIC.
(b) Each of the Buyer and the Buyer Bank is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
North Carolina, and has the corporate power and authority to carry on, in all
Material respects, its businesses as now conducted and to own, lease and operate
its Assets. Each of the Buyer and the Buyer Bank is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so qualified or
licensed.
6.2 AUTHORITY; NO CONFLICTS.
(a) Subject to required regulatory and shareholder approvals, each of
the Buyer and the Buyer Bank has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
and performance of its obligations under this Agreement and the other documents
contemplated hereby, and the consummation of the transactions contemplated
herein, including the Mergers, have been duly and validly authorized by all
necessary corporate action (and by Closing, all such shareholder action) in
respect thereof on the part of each of the Buyer and the Buyer Bank. This
Agreement represents a legal, valid, and binding obligation of each of the Buyer
and the Buyer Bank, enforceable against it in accordance with its terms (except
in all cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting the enforcement
of creditors' rights generally and except that the availability of specific
performance, injunctive relief and other equitable remedies is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by the Buyer
or the Buyer Bank, nor the consummation by the Buyer and the Buyer Bank of the
transactions contemplated hereby, nor compliance by the Buyer or the Buyer Bank
with any of the provisions hereof will (i) conflict with or result in a breach
of any provision of the Buyer's or the Buyer Bank's articles of incorporation or
bylaws, or (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of the Buyer or
any of its subsidiaries under, any Contract or Permit of the Buyer or any of its
subsidiaries, except as could not reasonably be expected to have a Material
Adverse Effect on the Buyer, or (iii) subject to obtaining the requisite
Consents referred to in SECTION 9.1(B) of this Agreement, violate any Law or
Order applicable to the Buyer or the Buyer Bank or any of their respective
Assets.
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(c) Other than in connection or compliance with the provisions of the
Securities Laws and banking Regulatory Authorities, no notice to, filing with,
or Consent of, any Governmental Authority is necessary for the consummation by
the Buyer and the Buyer Bank of the Mergers and the other transactions
contemplated in this Agreement.
6.3 BUYER'S STOCK; SUBSIDIARIES.
(a) The authorized capital stock of the Buyer consists of 12,500,000
shares of common stock, no par value per share, of which 4,537,266 shares are
issued and outstanding as of the date of this Agreement, and except for such
shares, there are no shares of capital stock of the Buyer outstanding. The
authorized capital stock of the Buyer Bank consists of 2,500,000 shares of
common stock, $5.00 par value per share, of which 1,134,042 shares are issued
and outstanding as of the date of this Agreement, and except for such shares,
there are no shares of capital stock of the Buyer Bank outstanding. The Buyer
owns all of the issued and outstanding shares of capital stock of the Buyer
Bank, and no shares of capital stock of the Buyer Bank are owned by any other
Person. SECTION 6.3 of the Buyer's Disclosure Schedule lists all of the Buyer's
direct and indirect subsidiaries other than the Buyer Bank as of the date of
this Agreement. The Buyer or one of its subsidiaries owns all of the issued and
outstanding shares of capital stock of each such subsidiary.
(b) All of the issued and outstanding shares of capital stock of the
Buyer and its subsidiaries are duly and validly issued and outstanding and are
fully paid and nonassessable. Shares of the Buyer's Stock to be issued hereunder
are duly authorized and, upon issuance, will be validly issued and outstanding
and fully paid and nonassessable, free and clear of any Liens, pledges or
encumbrances. None of the outstanding shares of capital stock of the Buyer or
any of its subsidiaries has been issued in violation of any preemptive rights of
the current or past shareholders of such Persons, and none of the shares of the
Buyer's Stock to be issued pursuant to this Agreement will be issued in
violation of any preemptive rights of the current or past shareholders of the
Buyer.
6.4 SEC FILINGS; BUYER FINANCIAL STATEMENTS.
(a) The Buyer has filed and made available to the Buyer all forms,
reports, and documents required to be filed by the Buyer with the SEC since
December 31, 1995 (collectively, the "BUYER SEC REPORTS"). The Buyer SEC Reports
(i) at the time filed, complied in all Material respects with the applicable
requirements of the Securities Laws, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a Material fact or omit to state a Material fact required to be stated in
such Buyer SEC Reports or necessary in order to make the statements in such
Buyer SEC Reports, in light of the circumstances under which they were made, not
misleading. None of the Buyer's subsidiaries is required to file any forms,
reports, or other documents with the SEC.
(b) Each of the Buyer Financial Statements (including, in each case,
any related notes) contained in the Buyer SEC Reports, including any Buyer SEC
Reports filed after the date of this Agreement until the Effective Time,
complied or will comply as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared or
will be prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements, or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC), and fairly presented or will fairly present the
consolidated financial position of the Buyer and its subsidiaries as at the
respective dates and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments that
were not or are not expected to be Material in amount or effect (except as may
be indicated in such financial statements or notes thereto).
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6.5 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Buyer nor any of
its subsidiaries has any Liabilities that could reasonably be expected to have a
Material Adverse Effect on the Buyer, except Liabilities that are accrued or
reserved against in the consolidated balance sheets of the Buyer as of December
31, 1998, included in the Buyer Financial Statements or reflected in the notes
thereto and except for Liabilities incurred in the ordinary course of business
subsequent to December 31, 1998. Neither the Buyer nor any of its subsidiaries
has incurred or paid any Liability since December 31, 1998, except for (i)
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and (ii) Liabilities that could not reasonably be
expected to have a Material Adverse Effect on the Buyer. No facts or
circumstances exist that could reasonably be expected to serve as the basis for
any other Liabilities of the Buyer or any of its subsidiaries, except as could
not reasonably be expected to have a Material Adverse Effect on the Buyer.
6.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1998, (i)
there have been no events, changes, or occurrences that have had, or could
reasonably be expected to have, a Material Adverse Effect on the Buyer, and (ii)
each of the Buyer and its subsidiaries has conducted in all Material respects
its respective businesses in the ordinary and usual course (excluding the
incurrence of expenses in connection with this Agreement and the transactions
contemplated hereby).
6.7 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any of the
Buyer and its subsidiaries have been timely filed, or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1998, and, to the Knowledge of the Buyer Parties, all Tax
Returns filed are complete and accurate in all Material respects. All Tax
Returns for periods ending on or before the date of the most recent fiscal year
end immediately preceding the Effective Time will be timely filed or requests
for extensions will be timely filed. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that could reasonably be expected to have a Material
Adverse Effect on the Buyer, except to the extent reserved against in the Buyer
Financial Statements dated prior to the date of this Agreement. All Taxes and
other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid.
(b) None of the Buyer or its subsidiaries has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Material Taxes due or to become due for
any of the Buyer or its subsidiaries for the period or periods through and
including the date of the respective Buyer Financial Statements has been made
and is reflected on such Buyer Financial Statements.
(d) Each of the Buyer and its subsidiaries is in compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for any such
instances of noncompliance and omissions as could not reasonably be expected to
have a Material Adverse Effect on the Buyer.
(e) None of the Buyer and its subsidiaries has made any payments, is
obligated to make any payments, or is a party to any contract, agreement, or
other arrangement that could obligate it to make any
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payments that would be disallowed as a deduction under Section 280G or 162(m)
of the Internal Revenue Code.
(f) There are no Material Liens with respect to Taxes upon any of the
Assets of the Company and its subsidiaries.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Buyer and its subsidiaries that occurred
during or after any Taxable Period in which any of the Buyer and its
subsidiaries has incurred a net operating loss that carries over to any Taxable
Period ending after December 31, 1998.
(h) Neither the Buyer nor any of its subsidiaries has filed any consent
under Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(i) After the date of this Agreement, no Material election with respect
to Taxes will be made without the prior consent of the Company, which consent
will not be unreasonably withheld.
(j) Neither the Buyer nor any of its subsidiaries has or has had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
6.8 ASSETS. Each of the Buyer and its subsidiaries have good and
marketable title, free and clear of all Liens, to all of their respective
Assets. Except as could not reasonably be expected to have a Material Adverse
Effect on the Buyer, all tangible properties used in the businesses of the Buyer
and its subsidiaries are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with each of their
past practices. Except as could not reasonably be expected to have a Material
Adverse Effect on the Buyer, all Material Assets held under leases or subleases
by any of the Buyer and its subsidiaries are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other Laws affecting the enforcement of creditors' rights generally and
except that the availability of specific performance, injunctive relief and
other equitable remedies is subject to the discretion of the court before which
any proceedings may be brought), and each such Contract is in full force and
effect. Each of the Buyer and its subsidiaries currently maintain insurance in
amounts, scope, and coverage reasonably necessary for their operations. None of
the Buyer or its subsidiaries has received notice from any insurance carrier
that (i) such insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be increased in any Material respect. The Assets of the Buyer and
its subsidiaries include all Assets required to operate in all Material respects
their businesses taken as a whole as presently conducted.
6.9 SECURITIES PORTFOLIO AND INVESTMENTS. All securities owned by the
Buyer or any of its subsidiaries (whether owned of record or beneficially) are
held free and clear of all Liens that would impair the ability of the owner
thereof to dispose freely of any such security and/or otherwise to realize the
benefits of ownership thereof at any time, except for Liens to secure public
deposits in the ordinary course of business consistent with past practice and
those Liens that could not reasonably be expected to have a Material Adverse
Effect on the Buyer. There are no voting trusts or other agreements or
undertakings to which the Buyer or any of its subsidiaries is a party with
respect to the voting of any such securities. Except for fluctuations in the
market values of United States Treasury and agency or municipal securities,
since December 31, 1998, there has been no significant deterioration or Material
adverse change in the quality, or any Material decrease in the value, of the
securities portfolio of the Buyer and its subsidiaries, taken as a whole.
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6.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of the Buyer Parties, each of the Buyer and its
subsidiaries, its Participation Facilities, and its Loan Collateral are, and
have been, in compliance with all Environmental Laws, except those violations
that could not reasonably be expected to have a Material Adverse Effect on the
Buyer.
(b) To the Knowledge of the Buyer Parties, there is no Litigation
pending or threatened before any court, governmental agency, or authority, or
other forum in which any of the Buyer and its subsidiaries or any of its
Participation Facilities has been or, with respect to threatened Litigation, may
reasonably be expected to be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving a site owned, leased, or operated by the
Buyer or any of its subsidiaries or any of its Participation Facilities, except
for such Litigation pending or threatened that could not reasonably be expected
to have a Material Adverse Effect on the Buyer.
(c) To the Knowledge of the Buyer Parties, there is no Litigation
pending or threatened before any court, governmental agency or authority, or
other forum in which any of its Loan Collateral (or the Buyer or any of its
subsidiaries in respect of such Loan Collateral) has been or, with respect to
threatened Litigation, may reasonably be expected to be named as a defendant or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on, under,
or involving Loan Collateral, except for such Litigation pending or threatened
that could not reasonably be expected to have a Material Adverse Effect on the
Buyer.
(d) To the Knowledge of the Buyer Parties, there is no reasonable basis
for any Litigation of a type described in subsections (b) or (c), except such
could not reasonably be expected to have a Material Adverse Effect on the Buyer.
(e) To the Knowledge of the Buyer Parties, during and prior to the
period of (i) any of the Buyer's or its subsidiaries' ownership or operation of
any of their respective current properties, (ii) any of the Buyer's or its
subsidiaries' participation in the management of any Participation Facility, or
(iii) any of the Buyer's or subsidiaries' holding of a security interest in Loan
Collateral, there have been no releases of Hazardous Material in, on, under, or
affecting (or potentially affecting) such properties, except such as could not
reasonably be expected to have a Material Adverse Effect on the Buyer.
6.11 COMPLIANCE WITH LAWS. Each of the Buyer and its subsidiaries has
in effect all Permits necessary for it to own, lease, or operate its Material
Assets and to carry on, in all Material respects, its business as now conducted,
except for those Permits the absence of which could not reasonably be expected
to have a Material Adverse Effect on the Buyer, and there has occurred no
Default under any such Permit, other than Defaults that could not reasonably be
expected to have a Material Adverse Effect on the Buyer. None of the Buyer or
its subsidiaries: (a) is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for violations that
could not reasonably be expected to have a Material Adverse Effect on the Buyer;
and (b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that any of the Buyer and its subsidiaries is
not in compliance with any of the Laws or Orders that such governmental
authority or Regulatory Authority enforces, except where such noncompliance
could not reasonably be expected to have a Material Adverse Effect on the Buyer,
(ii) threatening to revoke any Permits, except where the revocation of which
could not reasonably be expected to have a Material Adverse Effect on the Buyer,
or (iii) requiring the Buyer or
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any of its subsidiaries (x) to enter into or consent to the issuance of a cease
and desist order, formal agreement, directive, commitment, or memorandum of
understanding, or (y) to adopt any board or directors resolution or similar
undertaking that restricts Materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
6.12 LABOR RELATIONS. Neither the Buyer nor any of its subsidiaries is
the subject of any Litigation asserting that it has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel it to bargain with any labor organization as to
wages or conditions of employment, nor is any of them a party to or bound by any
collective bargaining agreement, Contract, or other agreement or understanding
with a labor union or labor organization, nor is there any strike or other labor
dispute involving any of them, pending or threatened, or to the Knowledge of the
Buyer Parties, is there any activity involving any of the Buyer's or its
subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
6.13 EMPLOYEE BENEFIT PLANS.
(a) The Buyer has made available to the Company prior to the execution
of this Agreement correct and complete copies in each case of all Material Buyer
Benefits Plans.
(b) All Buyer Benefit Plans are in compliance with the applicable terms
of ERISA, the Internal Revenue Code, and any other applicable Laws, except as
could not reasonably be expected to have a Material Adverse Effect on the Buyer.
(c) Neither the Buyer nor any of its subsidiaries has an "obligation to
contribute" (as defined in ERISA Section 4212) to a "multiemployer plan" (as
defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(d) Each "employee pension benefit plan," as defined in Section 3(2) of
ERISA, ever maintained by the Buyer or its subsidiaries that was intended to
qualify under Section 401(a) of the Internal Revenue Code and with respect to
which the Buyer or any of its subsidiaries has any Liability, is disclosed as
such in SECTION 6.13 of the Buyer's Disclosure Schedule.
(e) The Buyer has made available to the Company prior to the execution
of this Agreement correct and complete copies of the following documents: (i)
all trust agreements or other funding arrangements for such Buyer Benefit Plans
(including insurance contracts), and all amendments thereto, (ii) with respect
to any such Buyer Benefit Plans or amendments, all determination letters,
Material rulings, Material opinion letters, Material information letters, or
Material advisory opinions issued by the Internal Revenue Service, the United
States Department of Labor, or the Pension Benefit Guaranty Corporation after
December 31, 1994, (iii) annual reports or returns, audited or unaudited
financial statements, actuarial valuations and reports, and summary annual
reports prepared for any Buyer Benefit Plan with respect to the most recent plan
year, and (iv) the most recent summary plan descriptions and any Material
modifications thereto.
(f) Each Buyer ERISA Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and, to the Knowledge of
the Buyer Parties, there is no circumstance that will or could reasonably be
expected to result in revocation of any such favorable determination letter.
Each trust created under any Buyer ERISA Plan has been determined to be exempt
from Tax under Section 501(a) of the Internal Revenue Code and to the Knowledge
of the Buyer, there is no circumstance that will or could reasonably
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be expected to result in revocation of such exemption. With respect to each
such Buyer Benefit Plan, to the Knowledge of the Buyer Parties, no event has
occurred that will or could reasonably be expected to give rise to a loss of any
intended Tax consequences under the Internal Revenue Code or to any Tax under
Section 511 of the Internal Revenue Code that could reasonably be expected to
have a Material Adverse Effect on the Buyer. There is no Material Litigation
pending or, to the Knowledge of the Buyer Parties, threatened relating to any
Buyer ERISA Plan.
(g) Neither the Buyer nor any of its subsidiaries has engaged in a
transaction with respect to any Buyer Benefit Plan that, assuming the Taxable
Period of such transaction expired as of the date of this Agreement, would
subject the Buyer or any of its subsidiaries to a Material tax or penalty
imposed by either Section 4975 of the Internal Revenue Code or Section 502(i) of
ERISA in amounts that could reasonably be expected to have a Material Adverse
Effect on the Buyer. Neither the Buyer or any of its subsidiaries nor any
administrator or fiduciary of any Buyer Benefit Plan (or any agent of any of the
foregoing) has engaged in any transaction, or acted or failed to act in any
manner, that could subject the Buyer or any of its subsidiaries to any direct or
indirect Liability (by indemnity or otherwise) for breach of any fiduciary,
co-fiduciary, or other duty under ERISA, where such Liability that could
reasonably be expected to have a Material Adverse Effect on the Buyer. No oral
or written representation or communication with respect to any aspect of the
Buyer Benefit Plans has been made to employees of the Buyer or any of its
subsidiaries that is not in accordance with the written or otherwise preexisting
terms and provisions of such plans, except where any Liability with respect to
such representation or disclosure could not reasonably be expected to have a
Material Adverse Effect on the Buyer.
(h) Since the date of the most recent actuarial valuation, there has
been (i) no Material change in the financial position or funded status of any
Buyer Pension Plan, (ii) no Material change in the actuarial assumptions with
respect to any Buyer Pension Plan, and (iii) no Material increase in benefits
under any Buyer Pension Plan as a result of plan amendments or changes in
applicable Law, except as could not reasonably be expected to have a Material
Adverse Effect on the Buyer. Neither any Buyer Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by the Buyer or its subsidiaries, or the
single-employer plan of any entity that is considered one employer with the
Buyer under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (a "BUYER ERISA AFFILIATE") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA. All contributions with respect to
a Buyer Pension Plan or any single-employer plan of a Buyer ERISA Affiliate have
or will be timely made and there is no Lien or expected to be a Lien under
Internal Revenue Code Section 412(n) or ERISA Section 302(f) or Tax under
Internal Revenue Code Section 4971. Neither the Buyer nor any of its
subsidiaries has provided, or is required to provide, security to a Buyer
Pension Plan or to any single-employer plan of a Buyer ERISA Affiliate pursuant
to Section 401(a)(29) of the Internal Revenue Code. All premiums required to be
paid under ERISA Section 4006 have been timely paid by the Buyer, except to the
extent any failure that could not reasonably be expected to have a Material
Adverse Effect on the Buyer.
(i) No Liability under Title IV of ERISA has been or is expected to be
incurred by the Buyer or it subsidiaries with respect to any defined benefit
plan currently or formerly maintained by any of them or by any Company ERISA
Affiliate that has not been satisfied in full (other than Liability for Pension
Benefit Guaranty Corporation premiums which have been paid when due), except to
the extent any failure could not reasonably be expected to have a Material
Adverse Effect on the Buyer.
(j) Neither the Buyer nor any of its subsidiaries has any Material
obligation for retiree health and retiree life benefits under any of the Buyer
Benefit Plans other than with respect to benefit coverage mandated by applicable
Law.
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(k) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will, by themselves, (i)
result in any Material payment (including without limitation severance,
unemployment compensation, golden parachute, or otherwise) becoming due to any
director or any employee of the Buyer or it subsidiaries from the Buyer or any
of its subsidiaries under any Buyer Benefit Plan or otherwise, (ii) Materially
increase any benefit otherwise payable under any Buyer Benefit Plan, or (iii)
result in any acceleration of the time of any Material payment or vesting of any
Material benefit.
6.14 MATERIAL CONTRACTS. None of the Buyer or its subsidiaries, nor any
of their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract, (ii) any Contract relating to
the borrowing of money by the Buyer or its subsidiaries or the guarantee by the
Buyer or its subsidiaries of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Reserve or Federal Home Loan Bank advances of
depository institution subsidiaries, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), and (iii) any
other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-K filed by the Buyer with the SEC as of the date of this
Agreement that has not been filed as an exhibit to the Buyer's Form 10-K filed
for the fiscal year ended December 31, 1998, or in another SEC Document and
identified to the Company (together with all Contracts referred to in SECTIONS
6.8 and 6.13 of this Agreement, the "BUYER CONTRACTS"). With respect to each
Buyer Contract: (i) the Contract is in full force and effect; (ii) none of the
Buyer or its subsidiaries is in Default hereunder, other than Defaults that
could not reasonably be expected to have a Material Adverse Effect on the Buyer;
(iii) neither the Buyer nor any of its subsidiaries has repudiated or waived any
Material provision of any such Contract; and (iv) no other party to any such
Contract is, to the Knowledge of the Buyer Parties, in Default in any respect,
other than Defaults that could not reasonably be expected to have a Material
Adverse Effect on the Buyer, or has repudiated or waived any Material provision
thereunder. Except for Federal Reserve or Federal Home Loan Bank advances, all
of the indebtedness of the Buyer and its subsidiaries for money borrowed (not
including deposit Liabilities) is prepayable at any time without penalty or
premium.
6.15 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
or, to the Knowledge of the Buyer Parties, threatened against the Buyer or any
of its subsidiaries, or against any Asset, employee benefit plan, interest, or
right of any of them, except as could not reasonably be expected to have a
Material Adverse Effect on the Buyer, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any the Buyer or its subsidiaries, except as could not reasonably be expected to
have a Material Adverse Effect on the Buyer. There is no Litigation as of the
date of this Agreement to which the Buyer or any of its subsidiaries is a party
and that names the Buyer or any of its subsidiaries as a defendant or
cross-defendant and where the maximum exposure is estimated to be $25,000 or
more.
6.16 REPORTS. Since December 31, 1995, or the date of organization if
later, each of the Buyer and its subsidiaries has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Regulatory Authorities, except
failures to file that could not reasonably be expected to have a Material
Adverse Effect on the Buyer. As of their respective dates, each of such reports
and documents, including the financial statements, exhibits, and schedules
thereto, complied in all Material respects with all applicable Laws, except
noncompliance that could not reasonably be expected to have a Material Adverse
Effect on the Buyer.
6.17 REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS. Subject
to the accuracy of the representations contained in SECTION 5.17, the
information supplied by the Buyer and its subsidiaries for inclusion in the
Registration Statement shall not, at the time the Registration Statement
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(including any amendments or supplements thereto) is declared effective by the
SEC, contain any untrue statement of a Material fact or omit to state any
Material fact required to be stated therein or necessary to make the statements
therein not misleading. The information supplied by the Buyer and its
subsidiaries for inclusion in the Joint Proxy Statement/Prospectus will not, on
the date the Joint Proxy Statement/Prospectus is first mailed to shareholders,
at the time of the Shareholder Meetings and at the Effective Time, contain any
untrue statement of a Material fact or omit to state any Material fact necessary
to make the statements therein, in light of circumstances under which they were
made, not misleading. If at any time prior to the Effective Time any event
relating to the Buyer or the Buyer Bank or any of their affiliates, officers or
directors should be discovered by the Buyer or the Buyer Bank that should be set
forth in an amendment to the Registration Statement or a supplement to the Joint
Proxy Statement/Prospectus, the Buyer or the Buyer Bank will promptly inform the
Company. Notwithstanding the foregoing, neither the Buyer nor the Buyer Bank
makes any representation or warranty with respect to any information supplied by
the Company and its subsidiaries that is contained or incorporated by reference
in, or furnished in connection with the preparation of, the Joint Proxy
Statement/Prospectus.
6.18 ACCOUNTING, TAX, AND REGULATORY MATTERS. To the Knowledge of the
Buyer Parties, none of the Buyer or its subsidiaries or any Affiliate thereof
has taken or agreed to take any action, that could reasonably be expected to (i)
prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
Materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in SECTION 9.1(B) of this Agreement.
6.19 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for the account of the Buyer or it
subsidiaries or their customers were entered into (i) in accordance with prudent
business practices and all applicable Laws, and (ii) with counterparties
believed to be financially responsible.
6.20 YEAR 2000. The Buyer and the Buyer Bank have disclosed to the
Company a complete and accurate copy of their plan and previous actions taken,
including an estimate of the anticipated remaining associated costs, for
implementing modifications to the Buyer's and its subsidiaries' hardware,
software, and computer systems, chips, and microprocessors, to ensure proper
execution and accurate processing of all date-related data, whether from years
in the same century or in different centuries. Between the date of this
Agreement and the Effective Time, the Buyer and the Buyer Bank shall endeavor to
continue its efforts to implement such plan.
6.21 CERTAIN REGULATED BUSINESSES. Neither the Buyer nor any of its
subsidiaries is an "investment company" as defined in the Investment Company Act
of 1940, as amended, nor is it a "public utility holding company" as defined in
the Public Utility Holding Company Act of 1935, as amended.
6.22 COMMISSIONS. No broker, finder or other Person is entitled to any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated hereby by reason of any action taken by the Buyer, any of its
subsidiaries or any of the Buyer's shareholders.
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ARTICLE VII
COVENANTS
7.1 COVENANTS OF THE COMPANY PARTIES.
(a) Ordinary Conduct of Business. Except as otherwise expressly
permitted by this Agreement, the Company and the Company Bank will, and each
will cause their subsidiaries to, from the date of this Agreement to the
Closing, conduct its business in the ordinary course in substantially the same
manner as presently conducted and make reasonable commercial efforts consistent
with past practices to preserve its relationships with other Persons.
Additionally, except as otherwise contemplated by this Agreement or as set forth
on SECTION 7.1(A) of the Company's Disclosure Schedule, neither the Company nor
the Company Bank will, nor will either permit any of their other subsidiaries
to, do any of the following without the prior written consent of the Buyer:
(i) amend its governing documents;
(ii) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver any stock or stock options or other
equity equivalents of any class or any other of its securities (other
than the issuance of any Company Shares pursuant to the exercise of
options set forth on SECTION 5.3 of the Company's Disclosure Schedule),
or amend any of the terms of any securities outstanding as of the date
hereof;
(iii) (A) split, combine or reclassify any shares of its
capital stock, (B) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock (except for regular quarterly
cash dividends paid in accordance with past practice at the rate of
$1.04 per share per annum, including the payment of any quarterly
portion thereof as is necessary to prevent the Company's shareholders
from failing to receive a quarterly dividend from either the Company or
the Buyer during any particular calendar quarter; provided, however,
that no such dividend shall be paid to the extent that it would or
could reasonably be expected to prevent "pooling of interests"
accounting treatment for the Mergers), or (C) redeem or otherwise
acquire any of its securities (other than the acceptance of any Company
Shares as payment of the exercise price in connection with the exercise
of options set forth on SECTION 5.3 of the Company's Disclosure
Schedule);
(iv) (A) incur or assume any long-term debt or issue any debt
securities other than in the ordinary course of business consistent
with past practice or, except under existing lines of credit and in
amounts not Material to it, incur or assume any short-term debt other
than in the ordinary course of business, (B) other than in the ordinary
course of business consistent with past practice, assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person, (C)
make any loans, advances or capital contributions to, or investments
in, any other Person, other than in the ordinary course and consistent
with past practice up to an amount per loan of $500,000, pledge or
otherwise encumber shares of its capital stock, or (E) mortgage or
pledge any of its assets, tangible or intangible, or create or suffer
to exist any Lien thereupon, other than Liens permitted by the proviso
clause in the definition of Liens and Liens created or existing in the
ordinary course of business consistent with past practice;
(v) except as required by Law or as contemplated herein, adopt
or amend any Benefit Plan; provided, however, that prior to the Closing
Date, the Company Parties shall be entitled to pay to or for the
benefit of its employees the amounts accrued in accordance with past
practice
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pursuant to the First Savings Bank of Xxxxx County, Inc., SSB Employees
Retirement Plan and its existing incentive bonus plan or arrangement;
(vi) grant to any director or executive officer or employee
any stock options or increase in his or her compensation (except in the
ordinary course of business consistent with past practice) or pay or
agree to pay to any such person other than in the ordinary course of
business any bonus, severance or termination payment, specifically
including any such payment that becomes payable upon the termination of
such person by it after the Closing; provided; however, that the
Company and the Company Bank shall be permitted to: (A) allow the term
of the existing employment Contract with Xxxx X. Xxxxx to be extended
for an additional year in accordance with the terms of such Contract,
(B) increase the annual salary of Xxxx X. Xxxxx pursuant to such
Contract to an amount up to $140,000, and (C) pay additional
compensation of an aggregate amount up to $100,000 between the date
hereof and the Effective Time for the purpose of retaining key
employees;
(vii) enter into or amend any employment Contract;
(viii) acquire, sell, lease or dispose of any assets outside
the ordinary course of business, or any other assets that in the
aggregate are Material to it, or acquire any Person (or division
thereof), any equity interest therein or the assets thereof outside the
ordinary course of business consistent with past practice;
(ix) change or modify any of the accounting principles or
practices used by it or revalue in any Material respect any of its
assets, including without limitation writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business or as required by GAAP or any Regulatory
Authority;
(x) (A) enter into, cancel or modify any Contract (other than
loans, advances, capital contributions or investments permitted by
subclause (iv)(C) of this SECTION 7.1) other than in the ordinary
course of business consistent with past practices, but not in any event
involving an amount in excess of $25,000; (B) authorize or make any
capital expenditure or expenditures that, individually or in the
aggregate, are in excess of $25,000; or (C) enter into or amend any
Contract with respect to any of the foregoing;
(xi) pay, discharge or satisfy, cancel, waive or modify any
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business of liabilities
reflected or reserved against in or contemplated by the Company
Financial Statements, or incurred in the ordinary course of business
consistent with past practices;
(xii) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated hereby;
(xiii) take, or agree in writing or otherwise to take, any
action that would make any of the representations or warranties of the
Company Parties contained in this Agreement untrue or incorrect or
result in any of the conditions set forth in this Agreement not being
satisfied; or
(xiv) agree, whether in writing or otherwise, to do any of the
foregoing.
(b) Consents. The Company Parties will exercise their reasonable best
efforts to obtain such Consents as may be necessary or desirable for the
consummation of the transactions contemplated hereby
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from the appropriate parties to any Contracts listed on the Company's Disclosure
Schedule such that such Contracts shall survive the Mergers and not be breached
thereby.
(c) Acquisition Proposals. Any offer or proposal by any Person or group
concerning any tender or exchange offer, proposal for a merger, share exchange,
recapitalization, consolidation or other business combination involving the
Company or any of its subsidiaries or divisions of any of the foregoing, or any
proposal or offer to acquire in any manner, directly or indirectly, a
significant equity interest in, or a substantial portion of the assets of, the
Company or any of its subsidiaries, other than pursuant to the transactions
contemplated by this Agreement, is hereby defined as an "ACQUISITION PROPOSAL".
Neither the Company nor the Company Bank shall, nor shall it permit any of its
officers, directors, affiliates, representatives or agents to, directly or
indirectly, (a) take any action to solicit, initiate or encourage any
Acquisition Proposal, or (b) participate in any discussions or negotiations with
or encourage any effort or attempt by any other Person or take any other action
to facilitate an Acquisition Proposal. From and after the date hereof, the
Company and its subsidiaries and all officers, directors, employees of, and all
investment bankers, attorneys and other advisors and representatives of, the
Company and its subsidiaries shall cease doing any of the foregoing.
Notwithstanding the foregoing, the Company or any such Persons may, directly or
indirectly, subject to a confidentiality agreement containing customary terms,
furnish to any party information and access in response to a request for
information or access made incident to an Acquisition Proposal made after the
date hereof and may participate in discussions and negotiate with such party
concerning any written Acquisition Proposal made after the date hereof, not
recommend shareholder approval of the Merger and terminate this Agreement
(provided that neither the Company nor any such Person, after the date hereof,
solicited, initiated or encouraged such Acquisition Proposal), if the board of
directors of the Company or any such Person shall have determined based upon the
written advice of outside counsel reasonably acceptable to the Buyer (which
shall in any event include Xxxxxx Xxxxxx XxXxxxxx Xxxxxxxx & Xxxxxxx, L.L.P.)
that failing to take such action would violate the directors' fiduciary duties
under applicable law. Unless this Agreement has been terminated, the board of
directors of the Company shall notify the Buyer immediately if any Acquisition
Proposal is made and shall in such notice indicate in reasonable detail the
identity of the offeror and the terms and conditions of such Acquisition
Proposal and shall keep the Buyer promptly advised of all Material developments
that could culminate in the board of directors withdrawing, modifying or
amending its recommendation of the Merger and the other transactions
contemplated by this Agreement. Unless this Agreement has been terminated,
neither the Company nor any of its subsidiaries shall waive or modify any
provisions contained in any confidentiality agreement entered into relating to a
possible acquisition (whether by merger, stock purchase, asset purchase or
otherwise) or recapitalization of the Company or any of its subsidiaries.
(d) Agreement of Affiliates. The Company Parties have disclosed in
SECTION 7.1(D) of the Company's Disclosure Schedule each Person who they
reasonably believe would be considered an "affiliate" of the Company or the
Company Bank for purposes of Rule 145 under the Securities Act of 1933, as
amended. The Company Parties shall use their respective reasonable best efforts
to cause each such Person to deliver to the Buyer not later than 30 days prior
to the Closing Date, a written agreement, substantially in the form of EXHIBIT
F, providing that such Person will not sell, pledge, transfer or otherwise
dispose of the Company Shares held by such Person except as contemplated by such
agreement or this Agreement and will not sell, pledge, transfer or otherwise
dispose of the shares of the Buyer's Stock to be received by such Person upon
consummation of the Mergers except in compliance with applicable provisions of
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, and until such time as financial results covering at
least 30 days of combined operations of the Buyer and the Company, and the Buyer
Bank and the Company Bank, have been published within the meaning of Section
201.01 of the SEC's Codification of Financial Reporting Policies. Irrespective
of whether each such affiliate has provided the written agreement referred to
above, no share of the Buyer' Stock received in connection with the Mergers will
be transferable by each such
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affiliate until such time as financial results covering at least 30 days of
combined operations of the Buyer and the Company, and the Buyer Bank and the
Company Bank, have been published within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies. In order to ensure
compliance with the provisions of this SECTION 7.1(E), the Buyer will place
customary restrictive legends upon certificates of the Buyer's Stock to be
issued to each such affiliate.
(e) Shareholder Approval. Subject to SECTION 7.1(C), the Company will,
at the earliest practicable date, hold a meeting of its shareholders for the
purpose of approving the Mergers. In connection with such shareholder meeting,
subject to SECTION 7.1(C), the Company's board of directors will recommend to
the Company's shareholders such approvals.
7.2 COVENANTS OF THE BUYER.
(a) Reservation of Shares of the Buyer's Stock. The Buyer shall reserve
for issuance a sufficient number of shares of the Buyer's Stock to cover the
issuances of such stock required hereby, including shares necessary to satisfy
Company Options set forth on SECTION 5.3 of the Company's Disclosure Schedule.
(b) Listing of Additional Shares. The Buyer will provide notice to the
Nasdaq Stock Market, as required by its rules (which in any event shall be at
least 15 days prior to Closing), of the issuance of the shares of the Buyer's
Stock pursuant to this Agreement and will pay any fees required in connection
with such notice, and will cause such shares to be eligible for quotation on the
Nasdaq National Market System.
(c) Shareholder Approval. The Buyer will, at the earliest practicable
date, hold a meeting of its shareholders for the purpose of (i) approving the
Mergers and the issuance of shares of the Buyer's Stock as the Merger
Consideration (in accordance with applicable corporate Law and Rule 4460 of the
Marketplace Rules of the Nasdaq Stock Market) and (ii) increasing the number of
directors of the Buyer by seven, from 11 to 18. In connection with the
shareholder meeting, the Buyer's board of directors will recommend to the
Buyer's shareholders such approvals (subject to any fiduciary or similar duties
of the members of the Buyer's board of directors).
(d) Directors. Immediately after the Effective Time of the Holding
Company Merger, the Buyer shall cause the seven members of the Company's
existing board of directors who currently are under the age of 75 to be elected
or appointed as members of the board of directors of the Buyer and the Buyer
Bank to serve as such until the next annual meeting of the shareholders of such
companies after such Effective Time, but conditional upon obtaining any
necessary regulatory approvals and upon the Buyer's shareholders approving the
increase in the size of the Buyer's board of directors pursuant to the
Prospectus/Joint Proxy Statement. Notwithstanding the foregoing, the Buyer shall
cause Xxxxxxx X. Xxxxxxx, Xx. and Xxxxxx X. Xxxxx to be exempted from any
mandatory retirement from serving on such boards until they become 75 years of
age, provided, however, that upon becoming 75 years of age, such directors will
be permitted to complete any remaining portion of their current terms as
directors. Additionally, as payment for serving on a local advisory board of the
Buyer (which the Buyer agrees to maintain during the time that such individuals
are entitled under this Section to receive payments for so serving), the Buyer
shall pay to each of the three directors of the Company that do not become
directors of the Buyer and the Buyer Bank the board fees now payable to such
directors for so long as each such individual serves on such local advisory
board, but in any event not past the scheduled end of their respective terms as
a director of the Company.
(e) Officers. Subject to SECTION 7.2(F), each of the individuals
serving as a Senior Vice President of the Company or the Company Bank
immediately prior to the Closing shall be employed by
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the Buyer or the Buyer Bank as a Senior Vice President after the Closing. As it
relates to the existing employment agreements of Xxxxxxx X. Xxxxxxx, Xx. and
Xxxx X. Xxxxx, Buyer acknowledges that the Closing will result in a "Termination
Event" as such term is defined in the existing employment agreements, and thus
the Buyer or one of its subsidiaries shall pay to each such individual upon
Closing the amounts described in Paragraphs 10(c) and 10(g) of such agreements.
(f) Employees.
(i) Except as covered by the Employment Agreements, any and
all of the Company Parties' employees will be employed on an "at-will"
basis, and nothing in this Agreement shall be deemed to constitute an
employment agreement with any such person to obligate the Buyer or any
Affiliate thereof to employ any such person for any specific period of
time or in any specific position or to restrict the Buyer's or any of
its Affiliates' right to terminate the employment of any such person at
any time and for any reason satisfactory to it (subject to the payment
of severance as described below); provided, however, that, any employee
of the Company Parties who is party or subject to or covered by an
employment contract (including the existing employment agreements of
Xxxxxxx X. Xxxxxxx, Xx. and Xxxx X. Xxxxx with the Company or one of
its subsidiaries) or change-of-control severance agreement or plan with
the any of the Company Parties (as set forth on SECTION 7.2(F)(I) of
the Company's Disclosure Schedule) or the Buyer or any of its
Affiliates shall not receive the severance provided for below, but
shall instead receive the payment contemplated under such employee's
employment contract or change-of-control severance agreement with
respect to termination of employment. For purposes of these contracts
and agreements, the Buyer acknowledges that the transactions
contemplated herein constitute a "change-of-control."
(ii) Any of the Company Parties' employees (other than those
described in paragraph (i) above) terminated without Cause within one
year following the Closing Date shall be paid a lump sum of cash equal
to the greater of (A) two week's salary for each year of credited
service (including prior years of service to the Company or any of its
subsidiaries), and (B) his or her salary for four months. Such payment
shall be in lieu of any payment or other benefits provided by any
severance plan of the Company or any of its subsidiaries in effect
prior to the Closing Date. For purposes of this paragraph, "CAUSE" with
respect to any employee covered by this paragraph shall exist when the
Company finds that such employee shall have (A) demonstrated gross
negligence or willful misconduct in the execution of such employee's
duties, (B) committed an act of dishonesty or moral turpitude, or (C)
been convicted of a felony or other serious crime.
(iii) Such Company employees who continue employment with the
Buyer or any of its subsidiaries will be eligible for benefits
consistent with those of existing employees of the Buyer or such
subsidiary, with credit for past service with the Company for purposes
of participation, eligibility and vesting (including with respect to
any amounts to be contributed by the Buyer or one of its subsidiaries
or amounts that will vest under any Buyer Benefit Plan, but not
including the calculation of any other benefit accrual); provided,
however, that any such continuing employee will not be subject to any
exclusion or penalty for pre-existing conditions that were covered
under the Company's or any of its subsidiaries' medical plans as of the
Closing Date or any waiting period relating to coverage under the
Buyer's or any of its subsidiaries' medical plans.
(iv) The Buyer or one of its subsidiaries shall honor any and
all vacation accrued by the employees of the Company and any sick leave
up to 90 days, and any such employee who is not retained for employment
by the Buyer shall be paid for all accrued but unused vacation as of
the date of termination of employment.
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(v) Notwithstanding the foregoing, the Buyer intends to enter
into the Employment Agreements at the Closing.
(vi) The Buyer or one of its subsidiaries shall make a
one-time increase to the salary compensation of each employee of the
Company or one of its subsidiaries that becomes an employee of the
Buyer or one of its subsidiaries after the Closing in order to
compensate each such individual for the higher cost of insurance
available from the Buyer and its subsidiaries immediately after the
Closing as compared to the cost of insurance available from the Company
and its subsidiaries immediately prior to the Closing.
(g) Directors and Officers Insurance and Indemnification.
(i) The Buyer shall maintain, or shall cause the Buyer Bank to
maintain, in effect for six years from the Closing Date, the current
directors' and officers' liability insurance policies maintained by the
Company; provided, however, that Buyer may substitute therefor policies
of at least the same coverage containing terms and conditions that are
not taken as a whole Materially less favorable to the insured with
respect to matters occurring prior to the Effective Time of the Holding
Company Merger.
(ii) From and after the Effective Time, the Buyer shall, or
shall cause the Buyer Bank to, indemnify, defend and hold harmless each
person who is now, or who has been at any time before the date hereof
or who becomes before the Effective Time, an officer or director of the
Company or Company Bank (the "INDEMNIFIED PARTIES") against all losses,
claims, damages, costs, expenses (including reasonable attorneys'
fees), liabilities or judgments or amounts that are paid in settlement
(which settlement shall require the prior written consent of Buyer,
which consent shall not be unreasonably withheld) of or in connection
with any claim, action, suit, proceeding or investigation, whether
civil, criminal, or administrative (each a "CLAIM"), in which an
Indemnified Party is, or is threatened to be made, a party or witness
in whole or in part on or arising in whole or in part out of the fact
that such person is or was a director or officer of the Company Bank or
any of its subsidiaries (including service as a trustee, director or
officer of an employee benefit plan or trust or other entity at the
request of or in connection with such Person's position with the
Company or any of its subsidiaries) if such Claim pertains to any
matter or fact arising, existing or occurring before the Effective Time
(including without limitation the Mergers and the other transactions
contemplated hereby), regardless of whether such Claim is asserted or
claimed before, at or after the Effective Time (the "INDEMNIFIED
LIABILITIES"), to the fullest extent permitted by applicable Law in
effect as of the date hereof or as amended applicable to a time before
the Effective Time. Any Indemnified Party wishing to claim
indemnification under this SECTION 7.2(G)(II), upon learning of any
Claim, shall notify the Buyer (but the failure so to so notify shall
not relieve the Buyer or the Buyer Bank from any liability that it may
have under this SECTION 7.2(G)(II), except to the extent such failure
Materially prejudices the Buyer or its Affiliates). In the event of any
such Claim, whether arising before, on or after the Effective Time, (1)
the Buyer shall have the right to assume the defense thereof (in which
event the Indemnified Parties will cooperate in the defense of any such
matter) and upon such assumption, the Buyer shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection
with the defense therefor, except that if the Buyer elects not to
assume such defense, or counsel for the Indemnified Parties reasonably
advises the Indemnified Parties that there are or may be (whether or
not any have yet actually arisen) issues that raise conflicts of
interest between the Buyer and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them, and the
Buyer shall pay the reasonable fees and expenses of such counsel for
the Indemnified Parties, (2) the Buyer shall be obligated pursuant to
this paragraph to pay for only
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one firm of counsel for all Indemnified Parties whose reasonable fees
and expenses shall be paid promptly as statements are received, (3) the
Buyer shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld), and
(4) the Buyer shall have no obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable Law (it being
acknowledged by the parties hereto that in the event of any good faith
dispute about the lawfulness of such indemnification, the Buyer or the
Buyer Bank may place the amounts at issue in escrow pending the final
and nonapplicable determination of such dispute). The obligations of
the Buyer and the Buyer Bank pursuant to this SECTION 7.2(G) are
intended to be enforceable against the Buyer and the Buyer Bank
directly by the Indemnified Parties. The indemnification provided
herein shall be in addition to any indemnification rights that any
Indemnified Parties may have by Law, pursuant to the Articles of
Incorporation or Bylaws of the Company or any of its subsidiaries or
pursuant to the terms of any employee benefit plan or trust for which
any Indemnified Party serves as a fiduciary.
(h) Future Dividends. Subject to applicable corporate approval
(including without limitation the approval of the Buyer's board of directors),
after the Effective Time, the Buyer shall increase its annual dividend to $0.76
per share, payable quarterly in accordance with the Buyer's customary dividend
payment practices.
7.3 COVENANTS OF ALL PARTIES TO THE AGREEMENT.
(a) Reorganization for Tax Purposes. Each of the parties hereto
undertakes and agrees to use its reasonable efforts to cause the Mergers to
qualify as "reorganizations" within the meaning of Section 368(a) of the Code
and that it will not intentionally take any action that would cause the Mergers
to fail to so qualify.
(b) Accounting Treatment. Each of the parties hereto undertakes and
agrees to use its reasonable efforts to cause the Mergers to qualify to be
treated as a "pooling-of-interests" under Generally Accepted Accounting
Principles and that it will not intentionally take any action that would cause
the Mergers to fail to so qualify.
(c) Notification. Each of the parties hereto agrees to notify promptly
the other parties hereto of any event, fact, or other circumstance arising after
the date hereof that would have caused any representation or warranty herein,
including, in the case of the Company Parties, any information on any schedule
hereto, to be untrue or misleading had such event, fact, or circumstance arisen
prior to the execution of this Agreement. The parties hereto will exercise their
reasonable best efforts to ensure that no such events, facts, or other
circumstances occur, come to pass, or become true.
(d) Consummation of Agreement. Subject to SECTION 7.1(C), the parties
hereto each agree to use their reasonable efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by them under this
Agreement so that the transactions contemplated hereby shall be consummated.
Except for events that are the subject of specific provisions of this Agreement,
if any event should occur, either within or outside the control of the Company
Parties, or the Buyer or the Buyer Bank, that would Materially delay or prevent
fulfillment of the conditions upon the obligations of any party hereto to
consummate the transactions contemplated by this Agreement, each party will
notify the others of any such event and, subject to SECTION 7.1(C), the parties
will use their reasonable, diligent and good faith efforts to cure or minimize
the same as expeditiously as possible. Subject to SECTION 7.1(C), each party
hereto shall use its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement and to assist in the procuring or providing of all
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documents that must be procured or provided pursuant to the provisions hereof.
Notwithstanding anything to the contrary contained in this Agreement, but
subject to SECTION 7.1(C), none of the parties hereto will take any action that
would (i) Materially affect or delay receipt of the approvals contemplated in
SECTION 9.1(B) from the Regulatory Authorities, or (ii) Materially adversely
affect or delay its ability to perform its covenants and agreements made
pursuant to this Agreement.
(e) Corporate Action. Subject to the terms and conditions hereof
(including SECTION 7.1(C)), each of the parties hereto shall, and each of them
shall cause their subsidiaries to, take all corporate action (including the
recommendation of the Mergers by their respective boards of directors to their
respective shareholders), and use each of their reasonable best efforts to cause
all shareholder action to be taken, necessary to consummate and give effect to
the respective Mergers.
(f) Maintenance of Corporate Existence. Each of the parties hereto
shall, and each of them shall cause their Affiliates to, maintain in full force
and effect each their respective corporate or legal existences.
(g) Applications and Reports. The Buyer shall prepare and file as soon
as reasonably practical after the date of this Agreement, and the Company
Parties shall cooperate in the preparation and, where appropriate, filing of,
all applications, reports and statements with all Regulatory Authorities having
jurisdiction over the transactions contemplated by this Agreement seeking the
requisite Consents necessary to consummate the transactions contemplated by this
Agreement.
(h) Registration Statement and Joint Proxy Statement/Prospectus. As
soon as reasonably practicable after the execution of the Agreement and after
the furnishing by the Company and the Company Bank of all information required
to be contained therein, the Buyer shall file with the SEC the Registration
Statement on Form S-4 (or on such other form as shall be appropriate), which
shall contain the Joint Proxy Statement/Prospectus. The Buyer and the Company
shall each use their reasonable best efforts to cause the Joint Proxy
Statement/Prospectus to comply in all Material respects with the requirements of
the Securities Laws and the rules and regulations thereunder. The Buyer and the
Company shall each use all reasonable efforts to cause the Registration
Statement to become effective as soon thereafter as practicable. Subject to
SECTION 7.1(C), the Joint Proxy Statement/Prospectus shall include the
recommendation of the Boards of Directors of the Buyer and the Company in favor
of the Holding Company Merger.
(i) Option Agreement. Concurrently with or immediately after the
execution of this Agreement by the parties, the parties shall execute and
deliver the Option Agreements.
(j) Closing. Subject to the terms and conditions hereof (including
SECTION 7.1(C)), the parties hereto shall use their reasonable best efforts to
consummate the Closing within 30 days after all conditions to the Closing have
been satisfied.
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ARTICLE VIII
DISCLOSURE OF ADDITIONAL INFORMATION
8.1 ACCESS TO INFORMATION. Prior to the Closing Date, the parties hereto
shall, and shall cause each of their subsidiaries to:
(a) give the other and its authorized representatives reasonable access,
during normal business hours and upon reasonable notice, to its books, records,
offices and other facilities and properties; and
(b) furnish the other with such financial and operating data and other
information with respect to its business, condition (financial or otherwise)
and properties, as it may reasonably request.
8.2 ACCESS TO PREMISES. Prior to Closing, the Company shall, and shall
cause its subsidiaries to, give the Buyer and its authorized representatives
reasonable access to all of the Company's and its subsidiaries' Real Property
for the purpose of inspecting such property.
8.3 ENVIRONMENTAL SURVEY. At its option, the Buyer may cause to be
conducted Phase I environmental assessments of the Real Property of the Company
and its subsidiaries, whether owned or leased, or any portion thereof, together
with such other studies, testing and intrusive sampling and analyses as the
Company shall deem necessary or desirable (collectively, the "ENVIRONMENTAL
SURVEY"). The Company shall complete all such Phase I environmental assessments
within 60 days following the date of this Agreement and thereafter conduct and
complete any such additional studies, testing, sampling and analyses within 60
days following completion of all Phase I environmental assessments. Subject to
the breach of any representation or warranty contained herein, the costs of the
Environmental Survey shall be paid by the Buyer.
8.4 CONFIDENTIALITY. The parties acknowledge that each of the Buyer and
the Company have previously executed two separate agreements (the
"CONFIDENTIALITY AGREEMENTS") dated September 21, 1999 and December 8, 1999 in
contemplation of negotiations about the Mergers and agree that such agreements
shall continue in full force and effect in accordance with its terms.
8.5 PUBLICITY. Without the prior consent of the other parties, no party
hereto shall issue any news release or other public announcement or disclosure,
or any general public announcement to its employees, suppliers or customers,
regarding this Agreement or the transactions contemplated hereby, except as may
be required by Law, but in which case the disclosing party shall provide the
other parties hereto with reasonable advance notice of the timing and substance
of any such disclosure.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 MUTUAL CONDITIONS. The respective obligations of each party hereto
to perform this Agreement and consummate the Mergers and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by all parties hereto pursuant to SECTION 11.4 of
this Agreement:
(a) Adverse Proceedings. Neither the Company, the Company Bank, the
Buyer, the Buyer Bank, nor any shareholder of any of the foregoing shall be
subject to any order, decree or injunction of a
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court of competent jurisdiction that enjoins or prohibits the consummation of
this Agreement or the Mergers, and no Governmental Authority shall have
instituted a suit or proceeding that is then pending and seeks to enjoin or
prohibit the transactions contemplated hereby. Any party who is subject to any
such order, decree or injunction or the subject of any such suit or proceeding
shall take any reasonable steps within that party's control to cause any such
order, decree or injunction to be modified so as to permit the Closing and to
cause any such suit or proceeding to be dismissed.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Mergers shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No such Consent obtained from any Regulatory Authority shall be
conditioned or restricted in a manner (including requirements relating to the
raising of additional capital or the disposition of Assets) not reasonably
anticipated as of the date of this Agreement that in the reasonable judgment of
the Board of Directors of the Buyer, the Buyer Bank, the Company or the Company
Bank hereto would so Materially adversely impact the economic or business
assumptions of the transactions contemplated by this Agreement that had such
condition or requirement been known, such party would not, in its reasonable
judgment, have entered into this Agreement. The parties agree that any
divestiture of assets or deposits in the aggregate of $100 million or less of
the Buyer and the Company and their subsidiaries taken as a whole required as a
condition of any such approval shall not enable any other party to terminate
this Agreement because a condition described in the paragraph shall not have
been satisfied.
(c) Consents and Approvals. Each Party hereto shall have obtained any
and all Consents required for consummation of the Mergers or for the preventing
of any Default under any Contract or Permit of such Party, including any
Consents listed on the Company's Disclosure Schedule, except to the extent that
the failure to obtain such any such Consents would not, individually or in the
aggregate, result in a Material Adverse Effect on such Party.
(d) Effectiveness of Registration Statement. The Registration Statement
filed with the SEC covering the shares of the Buyer's Stock to be issued
pursuant hereto shall have been declared effective by the SEC, and no stop
order suspending such effectiveness shall have been initiated or, to the
Knowledge of the Buyer Parties, threatened by the SEC.
(e) Approval. The Buyer's shareholders shall have approved this
Agreement and the Mergers in accordance with applicable corporate law and the
rules of the Nasdaq Stock Market or other applicable Law. The Company's and the
Company Bank's shareholders shall have approved this Agreement and the
respective Mergers in accordance with applicable corporate law.
(f) Tax Opinion. On the basis of facts, representations and assumptions
that shall be consistent with the state of facts existing at the Closing Date,
the Buyer and the Company shall have received an opinion of an acceptable tax
advisor reasonably acceptable in form and substance to each of them dated as of
the Closing Date, substantially to the effect that, for federal income tax
purposes: (i) the Mergers, when consummated in accordance with the terms
hereof, will each constitute a reorganization within the meaning of Section
368(a) of the Code, (ii) no gain or loss will be recognized by the Buyer, the
Buyer Bank, the Company or the Company Bank by reason of the Mergers, (iii) the
exchange or cancellation of Company Shares or Company Bank Shares in the
Mergers will not give rise to recognition of gain or loss for federal income
tax purposes to the shareholders of the Company and the Company Bank, (iv) the
basis of the Buyer's Stock to be received by a shareholder of the Company will
be the same as the basis of the stock of the Company surrendered in connection
with the Mergers, and (v) the holding period of the shares of the Buyer's Stock
to be received by a shareholder of the Company will include the period during
which the shareholder held the Company Shares surrendered in connection with
the Mergers, provided that the Company Shares surrendered in connection with
the Mergers are held as a
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capital asset at the Effective Time of such Mergers. Each of the Buyer and the
Company shall provide a letter to the tax advisor setting forth the facts,
assumptions and representations on which such tax advisor may rely in rendering
its opinion.
(g) Accounting Assurances. The Buyer shall have received assurances from
KPMG LLP, in form and substance satisfactory to it, that the Mergers will
qualify to be treated as "pooling-of-interests" for accounting purposes. The
Buyer also shall have received a letter from Xxxxx Xxxx PLLC, in form and
substance satisfactory to it to the effect that such accountants are not aware
of any fact or circumstance related to the Company or any of its subsidiaries
that might cause the Mergers not to qualify for such treatment. Nothing shall
have come to the attention of the Buyer or the Company that any event has
occurred or that any condition or circumstance exists that makes it likely that
the Mergers may not so qualify.
(h) Blue Sky Approvals. The Buyer shall have received all state
securities or "Blue Sky" Permits or other authorizations or confirmations as to
the availability of exemptions from "Blue Sky" registration requirements as may
be necessary, and no stop orders or proceedings shall be pending, or the
Knowledge of the Buyer Parties or the Company Parties, threatened by a state
"Blue Sky" administrator to suspend the effectiveness of any registration
statement filed therewith with respect to the issuance of the Buyer's Stock in
the Holding Company Merger.
(i) Nasdaq Listing. As of the Effective Time, the Buyer shall have
satisfied all requirements in order for the shares of the Buyer's Stock to be
issued to shareholders of the Company in connection with the Holding Company
Merger and holders of stock options issued pursuant to the Company Benefit
Plans (when issued) to be listed on the Nasdaq National Market System as of the
Effective Time.
9.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY PARTIES. The obligation
of the Company Parties to effect the transactions contemplated hereby shall be
further subject to the fulfillment of the following conditions, unless waived
by such parties pursuant to SECTION 11.4 of this Agreement:
(a) All representations and warranties of the Buyer and the Buyer Bank
contained in this Agreement shall be true and correct in all Material respects
as of the Closing Date as though made as of such date (except for
representations and warranties that are made as of a specific date). The Buyer
and the Buyer Bank shall have performed and complied in all Material respects
with all covenants and agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing.
(b) All documents required to have been executed and delivered by the
Buyer or the Buyer Bank, on behalf of itself or the Buyer Bank, to the Company
Parties at or prior to the Closing shall have been so executed and delivered,
whether or not such documents have been or will be executed and delivered by
the other parties contemplated thereby.
(c) The Company shall have received from Xxxxxxxx & Company a letter,
dated not more than five Business Days prior to the Joint Proxy
Statement/Prospectus, that the Merger Consideration is fair, from a financial
point of view, to the holders of the Company's Shares.
(d) The Company Parties shall have received an opinion of Xxxxxxxx,
Xxxxxxxx & Xxxxxx, P.A., counsel to the Buyer, dated as of the Closing Date, in
form and substance reasonably acceptable to the Company Parties.
(e) As of the Closing Date, the Company Parties shall have received the
following documents with respect to the Buyer and the Buyer Bank:
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(i) a true and complete copy of its articles of incorporation and
all amendments thereto, certified by the jurisdiction of its
incorporation as of a recent date;
(ii) a true and complete copy of its bylaws, certified by its
Secretary or an Assistant Secretary;
(iii) a certificate from its Secretary or an Assistant Secretary
certifying that its articles of incorporation have not been amended since
the date of the certificate described in subsection (i) above and that
nothing has occurred since such date that would adversely affect its
existence;
(iv) a true and complete copy of the resolutions of its board of
directors and shareholders authorizing the execution, delivery and
performance of this Agreement, and all instruments and documents to be
delivered in connection herewith, and the transactions contemplated
hereby, certified by its Secretary or an Assistant Secretary; and
(v) a certificate from its Secretary or an Assistant Secretary
certifying the incumbency and signatures of its officers who will execute
documents at the Closing or who have executed this Agreement.
(f) The Exchange Agent shall have delivered to the Company a
certificate, dated as of the Closing Date, to the effect that the Exchange
Agent has received from the Buyer appropriate instructions and authorization
for the Exchange Agent to issue a sufficient number of shares of Buyer Stock in
exchange for all of the Company Shares and the Company Bank Shares.
9.3 CONDITIONS TO THE OBLIGATIONS OF THE BUYER. The obligations of the
Buyer to effect the transactions contemplated hereby shall be further subject
to the fulfillment of the following conditions, unless waived by the Buyer
pursuant to SECTION 11.4 of this Agreement:
(a) All representations and warranties of the Company Parties contained
in this Agreement shall be true and correct in all Material respects as of the
Closing Date as though made as of such date (except for representations and
warranties that are made as of a specific date). The Company Parties shall have
performed and complied in all Material respects with all covenants and
agreements contained in this Agreement required to be performed and complied
with by them at or prior to the Closing.
(b) The Buyer shall have received from Stern, Agee & Xxxxx a letter,
dated not more than five Business Days prior to the Joint Proxy
Statement/Prospectus, that the Merger Consideration is fair, from a financial
point of view, to the holders of the Buyer's Stock.
(c) All documents required to have been executed and delivered by the
Company, the Company Bank or any third party to the Buyer or the Buyer Bank at
or prior to the Closing shall have been so executed and delivered, whether or
not such documents have been or will be executed and delivered by the other
parties contemplated thereby.
(d) The Buyer shall have received a legal opinion from Brooks, Pierce,
XxXxxxxx, Xxxxxxxx & Xxxxxxx, L.L.P., counsel to the Company Parties, dated as
of the Closing Date, in form and substance reasonably satisfactory to the
Buyer.
(e) As of the Closing Date, the Buyer shall have received the following
documents with respect to each of the Company and its subsidiaries:
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(i) a certificate of its corporate existence issued by the
jurisdiction of its incorporation as of a recent date and a certificate
of existence or authority as a foreign corporation issued as of a recent
date by each of the jurisdictions in which it is qualified to do business
as a foreign corporation;
(ii) a true and complete copy of its articles of incorporation or
charter and all amendments thereto, certified by the jurisdiction of its
incorporation as of a recent date;
(iii) a true and complete copy of its bylaws, certified by its
Secretary or an Assistant Secretary;
(iv) a certificate from its Secretary or an Assistant Secretary
certifying that its articles of incorporation or charter have not been
amended since the date of the certificate described in subsection (ii)
above, and that nothing has occurred since the date of issuance of the
certificate of existence specified in subsection (i) above that would
adversely affect its existence;
(v) with respect to the Company only, a true and complete copy of
the resolutions of its Board of Directors and shareholders authorizing
the execution, delivery and performance of this Agreement, and all
instruments and documents to be delivered in connection herewith, and the
transactions contemplated hereby, certified by its Secretary or an
Assistant Secretary; and
(vi) with respect to the Company only, a certificate from its
Secretary or an Assistant Secretary certifying the incumbency and
signatures of its officers who will execute documents at the Closing or
who have executed this Agreement.
ARTICLE X
TERMINATION
10.1 TERMINATION. The obligations of the parties hereunder may be
terminated and the transactions contemplated hereby abandoned at any time prior
to the Closing Date:
(a) By mutual written consent of the Company and the Buyer;
(b) By either the Buyer or the Company, if there shall be any law or
regulation that makes consummation of this Agreement illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining the
Company or its shareholders, the Company Bank, the Buyer or its shareholders,
or the Buyer Bank from consummating this Agreement is entered and such
judgment, injunction, order or decree shall become final and non-appealable;
(c) By either the Buyer or the Company, if the conditions to the
obligation to effect the transactions contemplated hereby of the party seeking
termination shall not have been fulfilled or waived by June 30, 2000, and if
the party seeking termination is in Material compliance with all of its
obligations under this Agreement;
(d) By either the Buyer or the Company, if a condition to the obligation
to effect the transactions contemplated hereby of the party seeking termination
shall have become incapable of fulfillment (notwithstanding the efforts of the
party seeking to terminate as set forth in SECTION 7.3(D)), and has not been
waived;
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(e) At any time on or prior to the Closing Date, by the Buyer in
writing, if the Company or the Company Bank has, or by the Company, if the
Buyer or the Buyer Bank has, in any Material respect, breached (i) any covenant
or agreement contained herein or (ii) any representation or warranty contained
herein, and in either case if such breach has not been cured by the earlier of
30 days after the date on which written notice of such breach is given to the
party committing such breach or the Closing Date.
(f) By the Company, if its board of directors determines to terminate
this Agreement (and the Mergers) and (i) the Average Closing Price of the
Buyer's Stock is less than $16 for the 20-trading day period (the "MEASUREMENT
PERIOD") ending three Business Days prior to the latest date to occur of (A)
the date on which the last approval from a Regulatory Authority in respect of
the Mergers is obtained or (B) the date on which the appropriate approvals in
respect of the Mergers of the shareholders of the Buyer or the Company are
obtained, and (ii) the percentage (the "BUYER'S STOCK PERCENTAGE CHANGE") by
which the Average Closing Price of the Buyer's Stock during the Measurement
Period is lower than $18 exceeds by more than 11 percentage points the
percentage (the "INDEX PERCENTAGE CHANGE") by which the Average Closing Price
of the SNL Index during the Measurement Period is lower than the Average
Closing Price of the SNL Index on December 14, 1999. (Examples: If the Average
Closing Price of the SNL Index has declined by 5%, the Average Closing Price of
the Buyer's Stock during the Measurement Period must be more than 16% lower
than $18; if the Average Closing Price of the SNL Index has declined by 10%,
the Average Closing Price of the Buyer's Stock during the Measurement Period
must be more than 21% lower than $18); provided, however, that in such case the
Buyer shall have the right to adjust the Exchange Ratio so that the product of
the number of shares of the Buyer's Stock issued for each Company Share
multiplied by the Average Closing Price of the Buyer's Stock for the
Measurement Period will equal the lesser of (x) $19.9488 (i.e. $16 x 1.2468)
and (y) an amount equal to the product of $22.4424 (i.e. $18 x 1.2468),
multiplied by the sum of (A) 100 percent, minus (B) the Index Percentage
Change, minus (C) 11 percent, in which case the Company shall not have the
right to terminate this Agreement and the Merger; provided, further, however,
that in the case that the Average Closing Price of the Buyer's Stock during the
Measurement Period is below $14.69 per share, but there is no termination right
by the Company under the above provisions because the difference between the
Buyer's Stock Percentage Change and the Index Percentage Change is 11
percentage points or less, then the Company shall have the right to terminate
this Agreement unless the Buyer elects to adjust the Exchange Ratio so that the
product of the number of shares of the Buyer's Stock issued for each such
Company Share multiplied by the Average Closing Price of the Buyer's Stock
during the Measurement Period will equal $18.31549 (i.e. $14.69 x 1.2468).
For purposes of this subclause (f): "AVERAGE CLOSING PRICE" means with
respect to the Buyer's Stock, the average of the daily closing sales price
thereof on the Nasdaq National Market System during a specified period and,
with respect to the SNL Index for a specified day or during a specified period,
the average of the daily closing prices of the stocks contained in such SNL
Index on the primary exchange or in the primary market on which each such stock
trades, all as reported by The Wall Street Journal; and "SNL INDEX" means the
SNL Nationwide Bank Index ($500 million to $1 billion).
10.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of a termination
contemplated hereby by any party pursuant to SECTION 10.1, the party seeking to
terminate this Agreement shall give prompt written notice thereof to the other
party, and the transactions contemplated hereby shall be abandoned, without
further action by any party hereto. In such event:
(a) The parties hereto shall continue to be bound by (i) their
obligations of confidentiality set forth in the Confidentiality Agreements, and
all copies of the information provided by the Company hereunder will be
returned to the Company or destroyed immediately upon its request therefor,
(ii) the provisions set forth in SECTION 8.4 relating to publicity and (iii)
the provisions set forth in SECTION 11.1 relating to expenses.
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(b) All filings, applications and other submissions relating to the
transactions contemplated hereby shall, to the extent practicable, be withdrawn
from the Person to which made.
(c) The terminating party shall be entitled to seek any remedy to which
such party may be entitled at law or in equity for the violation or breach of
any agreement, covenant, representation or warranty contained in this
Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, (i) the Buyer shall pay all costs and expenses incurred by it and
the Buyer Bank in connection with this Agreement and the Mergers and (ii) the
Company Bank shall pay all costs and expenses incurred by it and the Company in
connection with this Agreement and the Mergers.
11.2 SURVIVAL OF REPRESENTATIONS. The representations and warranties made
by the parties hereto will not survive the Closing, and no party shall make or
be entitled to make any claim based upon such representations and warranties
after the Closing Date. No warranty or representation shall be deemed to be
waived or otherwise diminished as a result of any due diligence investigation
by the party to whom the warranty or representation was made or as a result of
any actual or constructive knowledge by such party with respect to any facts,
circumstances or claims or by the actual or constructive knowledge of such
person that any warranty or representation is false at the time of signing or
Closing.
11.3 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified
or supplemented only by written agreement of all parties hereto.
11.4 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided in this
Agreement, any failure of the Buyer, on one hand, and the Company Parties, on
the other, to comply with any obligation, representation, warranty, covenant,
agreement or condition herein may be waived by the other party or parties only
by a written instrument signed by the party or parties granting such waiver,
but such waiver or failure to insist upon strict compliance with such
obligation, representation, warranty, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in
this SECTION 11.4.
11.5 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered by hand or by facsimile
transmission, one Business Day after sending by a reputable national over-night
courier service or three Business Days after mailing when mailed by registered
or certified mail (return receipt requested), postage prepaid, to the parties
in the manner provided below:
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(a) Any notice to the Company Parties shall be delivered to the
following addresses:
First Savings Bancorp, Inc.
205 S.E. Broad Street, X.X. Xxx 0000
Xxxxxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Brooks, Pierce, XxXxxxxx, Xxxxxxxx & Xxxxxxx, L.L.P.
0000 Xxxxxxxxxxx Xxxxx
000 Xxxxx Xxx Xxxxxx
P.O. Box 26000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx III
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) Any notice to the Buyer or the Buyer Bank shall be delivered to the
following addresses:
First Bancorp
000 Xxxxx Xxxx Xxxxxx
P. O. Xxx 000
Xxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change the address to which notice is to be given by notice given
in the manner set forth above.
11.6 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other parties.
11.7 SEPARABLE PROVISIONS. If any provision of this Agreement shall be
held invalid or unenforceable, the remainder nevertheless shall remain in full
force and effect.
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11.8 GOVERNING LAW. The execution, interpretation and performance of this
Agreement shall be governed by the internal laws and judicial decisions of the
State of North Carolina.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10 INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
11.11 ENTIRE AGREEMENT. This Agreement, including the agreements and
documents that are Schedules and Exhibits hereto, embodies the entire agreement
and understanding of the parties with respect of the subject matter of this
Agreement. This Agreement supersedes all prior agreements and understandings
between the parties with respect to the transactions contemplated hereby and
subject matter hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
FIRST SAVINGS BANCORP, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------------------
Name: Xxxx X. Xxxxx
Title: President
COMPANY BANK:
FIRST SAVINGS BANK OF XXXXX COUNTY, INC., SSB
By: /s/ Xxxx X. Xxxxx
-----------------------------------------------
Name: Xxxx X. Xxxxx
Title: President
BUYER:
FIRST BANCORP
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and CEO
BUYER BANK:
FIRST BANK
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and CEO
