EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
By And Between
SCBT FINANCIAL CORPORATION
(Buyer)
AND
NEW COMMERCE BANCORP
(Seller)
Dated as of
DECEMBER 16, 2004
TABLE OF CONTENTS
Page
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ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER...................................1
1.1 MERGER...........................................................1
1.2 TIME AND PLACE OF CLOSING........................................1
1.3 EFFECTIVE TIME...................................................1
1.4 RESTRUCTURE OF TRANSACTION.......................................2
ARTICLE 2 TERMS OF MERGER....................................................2
2.1 CHARTER..........................................................2
2.2 BYLAWS...........................................................2
2.3 DIRECTORS AND OFFICERS...........................................2
ARTICLE 3 MANNER OF CONVERTING SHARES........................................2
3.1 EFFECT ON SELLER COMMON STOCK....................................2
3.2 BUYER COMMON STOCK...............................................3
3.3 SELLER OPTIONS...................................................3
3.4 SELLER WARRANTS..................................................3
3.5 DISSENTING SHAREHOLDERS..........................................4
ARTICLE 4 PAYMENT OF SHARES..................................................4
4.1 PAYMENT PROCEDURES...............................................4
4.2 RIGHTS OF FORMER SELLER SHAREHOLDERS.............................5
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER AND BANK..................5
5.1 ORGANIZATION, STANDING, AND POWER................................5
5.2 AUTHORITY OF SELLER; NO BREACH BY AGREEMENT......................6
5.3 CAPITAL STOCK....................................................6
5.4 SELLER SUBSIDIARIES..............................................7
5.5 EXCHANGE ACT FILINGS; FINANCIAL STATEMENTS.......................7
5.6 ABSENCE OF UNDISCLOSED LIABILITIES...............................8
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.............................9
5.8 TAX MATTERS......................................................9
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES; LOAN AND INVESTMENT
PORTFOLIO, ETC.................................................11
5.10 ASSETS..........................................................12
5.11 INTELLECTUAL PROPERTY...........................................12
5.12 ENVIRONMENTAL MATTERS...........................................13
5.13 COMPLIANCE WITH LAWS............................................13
5.14 LABOR RELATIONS.................................................14
5.15 EMPLOYEE BENEFIT PLANS..........................................15
5.16 MATERIAL CONTRACTS..............................................17
5.17 PRIVACY OF CUSTOMER INFORMATION.................................18
5.18 LEGAL PROCEEDINGS...............................................18
5.19 REPORTS.........................................................18
5.20 BOOKS AND RECORDS...............................................19
5.21 LOANS TO EXECUTIVE OFFICERS AND DIRECTORS.......................19
5.22 REGULATORY MATTERS..............................................19
5.23 STATE TAKEOVER LAWS.............................................19
5.24 SHAREHOLDERS' VOTING AGREEMENTS.................................19
5.25 BROKERS AND FINDERS; OPINION OF FINANCIAL ADVISOR...............19
5.26 BOARD RECOMMENDATION............................................20
5.27 STATEMENTS TRUE AND CORRECT.....................................20
5.28 DELIVERY OF SELLER DISCLOSURE MEMORANDUM........................20
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ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER...........................20
6.1 ORGANIZATION, STANDING, AND POWER...............................20
6.2 AUTHORITY; NO BREACH BY AGREEMENT...............................21
6.3 EXCHANGE ACT FILINGS; FINANCIAL STATEMENTS......................21
6.4 REPORTS.........................................................22
6.5 BROKERS AND FINDERS.............................................22
6.6 CERTAIN ACTIONS.................................................22
6.7 AVAILABLE FUNDS.................................................22
6.8 STATEMENTS TRUE AND CORRECT.....................................22
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION..........................23
7.1 AFFIRMATIVE COVENANTS OF SELLER.................................23
7.2 NEGATIVE COVENANTS OF SELLER....................................24
7.3 ADVERSE CHANGES IN CONDITION....................................25
7.4 REPORTS.........................................................25
ARTICLE 8 ADDITIONAL AGREEMENTS.............................................26
8.1 PROXY STATEMENT; SHAREHOLDER APPROVAL...........................26
8.2 OTHER OFFERS, ETC...............................................27
8.3 [RESERVED]......................................................28
8.4 CONSENTS OF REGULATORY AUTHORITIES..............................28
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE...........................28
8.6 INVESTIGATION AND CONFIDENTIALITY...............................29
8.7 PRESS RELEASES..................................................29
8.8 CHARTER PROVISIONS..............................................29
8.9 EMPLOYEE BENEFITS AND CONTRACTS.................................30
8.10 INDEMNIFICATION.................................................30
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE.................32
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY.........................32
9.2 CONDITIONS TO OBLIGATIONS OF BUYER..............................32
9.3 CONDITIONS TO OBLIGATIONS OF SELLER.............................33
ARTICLE 10 TERMINATION.......................................................34
10.1 TERMINATION.....................................................34
10.2 EFFECT OF TERMINATION...........................................35
10.3 TERMINATION FEE.................................................35
10.4 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS...................36
ARTICLE 11 MISCELLANEOUS.....................................................36
11.1 DEFINITIONS.....................................................36
11.2 EXPENSES........................................................44
11.3 BROKERS AND FINDERS.............................................44
11.4 ENTIRE AGREEMENT................................................44
11.5 AMENDMENTS......................................................45
11.6 WAIVERS.........................................................45
11.7 ASSIGNMENT......................................................45
11.8 NOTICES.........................................................45
11.9 GOVERNING LAW...................................................46
11.10 COUNTERPARTS....................................................46
11.11 CAPTIONS; ARTICLES AND SECTIONS.................................46
11.12 INTERPRETATIONS.................................................46
11.13 ENFORCEMENT OF AGREEMENT........................................47
11.14 SEVERABILITY....................................................47
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LIST OF EXHIBITS
----------------
Exhibit Description
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A Form of Support Agreement
B Form of Employment Agreement
C Form of Consulting Agreement
D Form of Director's Agreement
E Form of Claims Letter
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of December
16, 2004 is by and between SCBT Financial Corporation, a South Carolina
corporation ("Buyer") and New Commerce BanCorp, a South Carolina corporation
("Seller").
Preamble
--------
The respective Boards of Directors of Buyer and Seller have determined that
the transactions described herein are in the best interests of the Parties to
this Agreement and their respective shareholders. This Agreement provides for
the acquisition of Seller by Buyer pursuant to the merger of Seller with and
into Buyer, subject to Section 1.4 below. The transactions described in this
Agreement are subject to the approvals of the shareholders of Seller, the Board
of Governors of the Federal Reserve System or its delegee ("Federal Reserve"),
the South Carolina Board of Financial Institutions (the "South Carolina Board"),
and the Office of the Comptroller of the Currency ("OCC") as well as the
satisfaction of certain other conditions described in this Agreement.
Concurrently with the execution and delivery of this Agreement, as a
condition and inducement to Buyer's willingness to enter into this Agreement,
certain of the holders of the outstanding shares of Seller's Common Stock have
executed and delivered to Buyer an agreement in substantially the form of
Exhibit A (the "Support Agreements" ) pursuant to which they have agreed, among
other things, subject to the terms of the Support Agreement, to vote the shares
of Seller Common Stock held of record by such Persons to approve and adopt this
Agreement.
Certain capitalized terms used in this Agreement are defined in Section
11.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, and other good and
valuable consideration and the receipt and sufficiency of which are
acknowledged, the Parties, intending to be legally bound, agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger.
Subject to the terms and conditions of this Agreement, at the Effective
Time, Seller shall be merged with and into Buyer pursuant to and with the effect
provided in Section 3-11-106 of the SCBCA (the "Merger"), and Buyer shall be the
Surviving Corporation resulting from the Merger and shall continue to be
governed by the Laws of the State of South Carolina and New Commerce Bank, N.A.
(the "Bank") shall become a wholly-owned subsidiary of Buyer. The Merger shall
be consummated pursuant to the terms of this Agreement, which has been approved
and adopted by the respective Boards of Directors of Seller and Buyer.
1.2 Time and Place of Closing.
The closing of the transactions contemplated hereby (the "Closing") will
take place at 9:00 A.M. Eastern Time on the date that the Effective Time occurs
(or the immediately preceding day if the Effective Time is earlier than 9:00
A.M. Eastern Time), or at such other time as the Parties, acting through their
authorized officers, may mutually agree. The Closing shall be held at such
location as may be mutually agreed upon by the Parties.
1.3 Effective Time.
The Merger and other transactions contemplated by this Agreement shall
become effective on the date and time the Articles of Merger (the "Articles of
Merger") reflecting the Merger shall be filed and become effective with the
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South Carolina Secretary of State (the "Effective Time"). Subject to the terms
and conditions hereof, unless otherwise mutually agreed upon in writing by the
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur within five business days of the
last of the following dates to occur: (i) the effective date (including
expiration of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the
Merger, and (ii) the date on which the shareholders of Seller approve this
Agreement to the extent such approval is required by applicable Law or such
later date within 30 days thereof as may be specified by Buyer.
1.4 Restructure of Transaction
Buyer shall have the right to revise the structure of the Merger
contemplated by this Agreement by merging Seller with and into a wholly-owned
subsidiary of Buyer, provided, that no such revision to the structure of the
Merger shall result in (i) any changes in the amount or type of the
consideration which the holders of shares of Seller Common Stock or Seller
Rights are entitled to receive under this Agreement, or (ii) would unreasonably
impede or delay consummation of the Merger. Buyer may exercise this right of
revision by giving written notice to Seller in the manner provided in Section
11.8, which notice shall be in the form of an amendment to this Agreement or in
the form of an Amended and Restated Agreement and Plan of Merger, and the
addition of such other exhibits hereto as are reasonably necessary or
appropriate to effect such change.
ARTICLE 2
TERMS OF MERGER
2.1 Charter.
The Articles of Incorporation of Buyer in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until otherwise duly amended or repealed.
2.2 Bylaws.
The Bylaws of Buyer in effect immediately prior to the Effective Time shall
be the Bylaws of the Surviving Corporation until otherwise duly amended or
repealed.
2.3 Directors and Officers.
The directors of Buyer in office immediately prior to the Effective Time,
together with such additional persons as may thereafter be elected, shall serve
as the directors of the Surviving Corporation from and after the Effective Time
in accordance with the Surviving Corporation's Bylaws, until the earlier of
their resignation or removal or otherwise ceasing to be a director. The officers
of Buyer in office immediately prior to the Effective Time, together with such
additional persons as may thereafter be elected, shall serve as the officers of
the Surviving Corporation from and after the Effective Time in accordance with
the Surviving Corporation's Bylaws, until the earlier of their resignation or
removal or otherwise ceasing to be an officer.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Effect on Seller Common Stock.
(a) At the Effective Time, in each case subject to Section 3.1(d), by
virtue of the Merger and without any action on the part of the Parties or the
holder thereof, each share of Seller Common Stock that is issued and outstanding
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immediately prior to the Effective Time (other than shares of Seller Common
Stock held by either Party or any Subsidiary of a Party (in each case other than
shares of Seller Common Stock held on behalf of third parties or held by any
Buyer Entity or Seller Entity, as a result of debts previously contracted) or
shares of the Common Stock that are owned by shareholders properly exercising
their dissenters' rights pursuant to Sections ▇▇-▇▇-▇▇▇ through ▇▇-▇▇-▇▇▇ of the
SCBCA) (the "Dissenter Shares") shall be converted into the right to receive
$18.00 (the "Per Share Purchase Price") in cash, less any applicable withholding
Taxes. The aggregate Merger Consideration, including payments for the Seller
Options and Seller Warrants, shall not exceed $20,183,000 (the "Merger
Consideration").
(b) At the Effective Time, all shares of Seller Common Stock shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist as of the Effective Time, and each certificate previously
representing any such shares of Seller Common Stock (the "Certificates") shall
thereafter represent only the right to receive the Merger Consideration and any
Dissenting Shares shall thereafter represent only the right to receive
applicable payments as set forth in Section 3.5.
(c) If, prior to the Effective Time, the outstanding shares of Seller
Common Stock shall have been increased, decreased, changed into or exchanged for
a different number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other similar change in capitalization, then an
appropriate and proportionate adjustment shall be made to the Per Share Purchase
Price.
(d) Each share of Seller Common Stock issued and outstanding immediately
prior to the Effective Time and owned by any of the Parties or their respective
Subsidiaries (in each case other than shares of Seller Common Stock held on
behalf of third parties or as a result of debts previously contracted) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
cease to be outstanding, shall be cancelled and retired without payment of any
consideration therefore and shall cease to exist (the "Excluded Shares").
3.2 Buyer Common Stock.
At and after the Effective Time, each share of Buyer Common Stock issued
and outstanding immediately prior to the Effective Time shall remain an issued
and outstanding share of Buyer Common Stock and shall not be affected by the
Merger.
3.3 Seller Options.
(a) At the Effective Time, each outstanding option (each, a "Seller
Option") to acquire a share of Seller Common Stock granted pursuant to Seller's
1999 Stock Incentive Plan then outstanding shall be cancelled and shall entitle
the holder of each Seller Option to receive from Buyer, an amount of cash
(without interest) equal to the excess, if any, of the amount of the Per Share
Purchase Price over the exercise price per share of Seller Common Stock under
such Seller Option (with the aggregate amount of such payment rounded down to
the nearest cent) less applicable Taxes, if any, required to be withheld with
respect to such payment. No consideration shall be paid with respect to any
Seller Option, the exercise price of which exceeds the Per Share Purchase Price.
(b) The Seller's Board of Directors or its Compensation Committee shall
make such adjustments and amendments to or make such determinations with respect
to the Seller Options to effect the foregoing provisions of this Section 3.3.
3.4 Seller Warrants.
Buyer shall pay each holder (each a "Warrantholder") of an outstanding
warrant to purchase shares of Seller Common Stock (each, a "Seller Warrant" and
collectively with the Seller Options, the "Seller Rights" ) upon surrender of
each Warrant, an amount in cash (without interest) equal to the product obtained
by multiplying (x) the total number of shares of Seller Common Stock issuable
upon the exercise in full of each Seller Warrant held by such Warrantholder by
(y) the excess, if any, of the amount of the Per Share Purchase Price over the
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exercise price per share of Seller Common Stock under such Seller Warrant (with
the aggregate amount of such payment rounded down to the nearest cent) less
applicable Taxes, if any, required to be withheld with respect to such payment.
No consideration shall be paid for any Seller Warrant the exercise price per
share of Seller Common Stock under which exceeds the Per Share Purchase Price,
and each such Seller Warrant shall be cancelled as of the Effective Time.
3.5 Dissenting Shareholders.
Any holder of shares of Seller Common Stock who perfects such holder's
dissenters' rights in accordance with and as contemplated by Sections ▇▇-▇▇-▇▇▇
through ▇▇-▇▇-▇▇▇ of the SCBCA shall be entitled to receive from the Surviving
Corporation, in lieu of the Per Share Purchase Price, the value of such shares
as to which dissenters rights have been perfected in cash as determined pursuant
to such provision of Law; provided, that no such payment shall be made to any
dissenting shareholder unless and until such dissenting shareholder has complied
with all applicable provisions of such Law, and surrendered to Seller the
certificate or certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting shareholder of
Seller fails to perfect, or effectively withdraws or loses, such holder's right
to appraisal of and payment for such holder's Dissenting Shares, Buyer or the
Surviving Corporation shall issue and deliver the consideration to which such
holder of shares of Seller Common Stock is entitled under this Article 3
(without interest) upon surrender by such holder of the certificate or
certificates representing such shares of Seller Common Stock held by such
holder.
ARTICLE 4
PAYMENT OF SHARES
4.1 Payment Procedures.
(a) Promptly after the Effective Time, Buyer shall cause the exchange agent
selected by Buyer (the "Exchange Agent") to mail to the former shareholders of
Seller and former holders of Seller Rights appropriate transmittal materials
(which shall specify that delivery shall be effected, and risk of loss and title
to the certificates or other instruments theretofore representing shares of
Seller Common Stock and Seller Rights shall pass, only upon proper delivery of
such certificates or other instruments to the Exchange Agent). The certificate
or certificates of Seller Common Stock and instruments representing Seller
Rights so surrendered shall be duly endorsed as the Exchange Agent may
reasonably require. In the event of a transfer of ownership of shares of Seller
Common Stock represented by certificates that is not registered in the transfer
records of Seller, the Merger Consideration payable for such shares as provided
in Section 3.1 may be issued to a transferee if the certificates representing
such shares are delivered to the Exchange Agent, accompanied by all documents
required to evidence such transfer and by evidence reasonably satisfactory to
the Exchange Agent that such transfer is proper and that any applicable stock
transfer taxes have been paid. In the event any certificate representing Seller
Common Stock certificate or Seller Right shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed and the posting by such person
of a bond in such amount as Buyer may reasonably direct as indemnity against any
claim that may be made against it with respect to such certificate, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed certificate the
Merger Consideration as provided for in Section 3.1. The Exchange Agent may
establish such other reasonable and customary rules and procedures in connection
with its duties as it may deem appropriate. Buyer shall pay all charges and
expenses, including those of the Exchange Agent in connection with the
distribution of the Merger Consideration as provided in Section 3.1.
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(b) After the Effective Time, each holder of shares of Seller Common Stock
(other than Excluded Shares) issued and outstanding at the Effective Time shall
surrender the Certificate or Certificates representing such shares to the
Exchange Agent and shall promptly upon surrender thereof receive in exchange
therefor the consideration provided in Section 3.1, without interest, pursuant
to this Section 4.1. Buyer shall not be obligated to deliver the consideration
to which any former holder of Seller Common Stock is entitled as a result of the
Merger until such holder surrenders such holder's Certificate or Certificates
for exchange as provided in this Section 4.1. Any other provision of this
Agreement notwithstanding, neither any Buyer Entity, nor any Seller Entity, nor
the Exchange Agent shall be liable to any holder of Seller Common Stock or to
any holder of Seller Rights for any amounts paid or properly delivered in good
faith to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
(c) Each of Buyer and the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Seller Common Stock and Seller Rights such amounts, if
any, as it is required to deduct and withhold with respect to the making of such
payment under the Code or any provision of state, local or foreign Tax Law or by
any Taxing Authority or Governmental Authority. To the extent that any amounts
are so withheld by Buyer, the Surviving Corporation or the Exchange Agent, as
the case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Seller Common Stock
or Seller Rights, as applicable in respect of which such deduction and
withholding was made by Buyer, the Surviving Corporation or the Exchange Agent,
as the case may be.
(d) Adoption of this Agreement by the shareholders of Seller shall
constitute ratification of the appointment of the Exchange Agent.
4.2 Rights of Former Seller Shareholders.
At the Effective Time, the stock transfer books of Seller shall be closed
as to holders of Seller Common Stock and no transfer of Seller Common Stock by
any holder of such shares shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1, each
Certificate theretofore representing shares of Seller Common Stock (other than
certificates representing Excluded Shares and Dissenting Shares), shall from and
after the Effective Time represent for all purposes only the right to receive
the Merger Consideration, without interest, as provided in Article 3.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER AND BANK
Seller represents and warrants to Buyer, except as set forth on the Seller
Disclosure Memorandum with respect to each such Section below, as follows:
5.1 Organization, Standing, and Power.
Seller is a corporation duly organized, validly existing, and in good
standing under the Laws of the State of South Carolina and is a bank holding
company within the meaning of the Bank Holding Company Act of 1956, as amended
(the "BHCA" ). The Bank is a national banking association, duly organized,
validly existing and in good standing under the laws of the United States of
America. Each of Seller and the Bank has the corporate power and authority to
carry on its business as now conducted and to own, lease and operate its Assets.
Each of the Seller and the Bank is duly qualified or licensed to transact
business as a foreign corporation in good standing in the states of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions where the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Seller Material
Adverse Effect. The minute book and other organizational documents for each of
Seller and the Bank have been made available to Buyer for its review and, except
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as disclosed in Section 5.1 of the Seller Disclosure Memorandum, are true and
complete in all material respects as in effect as of the date of this Agreement
and accurately reflect in all material respects all amendments thereto and all
proceedings of the respective Board of Directors (including any committees of
the Board of Directors) and shareholders thereof. The Bank is an "insured
institution" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder, and the deposits held by Bank are insured by the FDIC's
Bank Insurance Fund.
5.2 Authority of Seller; No Breach By Agreement.
(a) Seller has the corporate power and authority necessary to execute,
deliver, and, other than with respect to the Merger, perform this Agreement, and
with respect to the Merger, upon the approval of the Merger by Seller's
shareholders in accordance with this Agreement and the SCBCA, to perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of each of Seller, subject to the approval of this Agreement
by the holders of two-thirds of the outstanding shares of Seller Common Stock,
which is the only shareholder vote required for approval of this Agreement and
consummation of the Merger. Subject to such requisite shareholder approval, this
Agreement represents a legal, valid, and binding obligation of each of Seller
and the Bank, enforceable against each of Seller and the Bank in accordance with
its terms.
(b) Neither the execution and delivery of this Agreement by Seller, nor the
consummation by Seller and the Bank of the transactions contemplated hereby, nor
compliance by Seller and the Bank with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of Seller's Articles of
Incorporation or Bylaws or the certificate or articles of incorporation or
association or bylaws of any Seller Subsidiary or any resolution adopted by the
board of directors or the shareholders of any Seller Entity, or (ii) except as
disclosed in Section 5.2 of the Seller Disclosure Memorandum, 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 any Seller Entity under, any Contract or
Permit of any Seller Entity or, (iii) subject to receipt of the requisite
Consents referred to in Section 9.1(c), constitute or result in a Default under,
or require any Consent pursuant to, any Law or Order applicable to any Seller
Entity or any of their respective material Assets (including any Buyer Entity or
any Seller Entity becoming subject to or liable for the payment of any Tax or
any of the Assets owned by any Buyer Entity or any Seller Entity being
reassessed or revalued by any Regulatory Authority).
(c) Other than in connection or compliance with the provisions of the
Securities Laws and applicable state corporate and securities Laws, and other
than Consents required from Regulatory Authorities, and other than notices to or
filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, no notice to, filing
with, or Consent of, any Governmental Authority is necessary for the
consummation by Seller of the Merger and the other transactions contemplated in
this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of Seller consists only of 10,000,000
shares of Seller Common Stock, of which 1,000,000 shares are issued and
outstanding as of the date of this Agreement, 10,000,000 shares of preferred
stock, none of which are issued and outstanding as of the date of this
Agreement, and, assuming that all of the issued and outstanding Seller Options
or Seller Warrants are exercised, not more than 1,244,500 shares will be issued
and outstanding at the Effective Time. All of the issued and outstanding shares
of capital stock of Seller are duly and validly issued and outstanding and are
fully paid and nonassessable. None of the outstanding shares of capital stock of
Seller has been issued in violation of any preemptive rights of the current or
past shareholders of Seller.
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(b) Except for the 154,500 shares of Seller Common Stock reserved for
issuance pursuant to outstanding Seller Options and 90,000 shares of Seller
Common Stock reserved for issuance pursuant to outstanding Seller Warrants, each
as disclosed in Section 5.3(b) of the Seller Disclosure Memorandum, there are no
shares of capital stock or other equity securities of Seller reserved for
issuance and no outstanding Rights relating to the capital stock of Seller.
(c) Except as specifically set forth in this Section 5.3, there are no
shares of Seller capital stock or other equity securities of Seller outstanding
and there are no outstanding Rights with respect to any Seller securities or any
right or privilege (whether pre-emptive or contractual) capable of becoming a
Contract or Right for the purchase, subscription, exchange or issuance of any
securities of Seller.
5.4 Seller Subsidiaries.
Seller has disclosed in Section 5.4 of the Seller Disclosure Memorandum
each of the Seller Subsidiaries that is a corporation (identifying its
jurisdiction of incorporation, each jurisdiction in which it is qualified and/or
licensed to transact business, and the number of shares owned and percentage
ownership interest represented by such share ownership) and each of the Seller
Subsidiaries that is a general or limited partnership, limited liability
company, or other non-corporate entity (identifying the form of organization and
the Law under which such entity is organized, each jurisdiction in which it is
qualified and/or licensed to transact business, and the amount and nature of the
ownership interest therein). Except as disclosed in Section 5.4 of the Seller
Disclosure Memorandum, Seller owns, directly or indirectly all of the issued and
outstanding shares of capital stock (or other equity interests) of each Seller
Subsidiary. No capital stock (or other equity interest) of any Seller Subsidiary
is or may become required to be issued (other than to another Seller Entity) by
reason of any Rights, and there are no Contracts by which any Seller Subsidiary
is bound to issue (other than to another Seller Entity) additional shares of its
capital stock (or other equity interests) or Rights or by which any Seller
Entity is or may be bound to transfer any shares of the capital stock (or other
equity interests) of any Seller Subsidiary (other than to another Seller
Entity). There are no Contracts relating to the rights of any Seller Entity to
vote or to dispose of any shares of the capital stock (or other equity
interests) of any Seller Subsidiary. All of the shares of capital stock (or
other equity interests) of each Seller Subsidiary are fully paid and
nonassessable (except as provided in 12 U.S.C. 55 with respect to the Bank) and
are owned directly or indirectly by Seller free and clear of any Lien. Except as
disclosed in Section 5.4 of the Seller Disclosure Memorandum, each Seller
Subsidiary is a national banking association, corporation, limited liability
company, limited partnership or limited liability partnership, and each such
Subsidiary is duly organized, validly existing, and in good standing under the
Laws of the jurisdiction in which it is incorporated or organized, and has the
corporate or entity power and authority necessary for it to own, lease, and
operate its Assets and to carry on its business as now conducted. Each Seller
Subsidiary is duly qualified or licensed to transact business as a foreign
entity in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Seller Material
Adverse Effect. The minute book and other organizational documents for each
Seller Subsidiary have been made available to Buyer for its review, and, except
as disclosed in Section 5.4 of the Seller Disclosure Memorandum, are true and
complete in all material respects as in effect as of the date of this Agreement
and accurately reflect in all material respects all amendments thereto and all
proceedings of the Board of Directors and shareholders thereof.
5.5 Exchange Act Filings; Financial Statements.
(a) Seller has timely filed and made available to Buyer all Exchange Act
Documents required to be filed by Seller since December 31, 1999 (the "Seller
Exchange Act Reports") as listed in Section 5.5 of the Seller Disclosure Memo.
The Seller Exchange Act Reports (i) at the time filed, complied in all material
7
respects with the applicable requirements of the Securities Laws and other
applicable Laws 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 or, in the case of registration statements, at the effective date
thereof) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Seller Exchange Act Reports or
necessary in order to make the statements in such Seller Exchange Act Reports
not misleading. Seller has delivered to Buyer all comment letters received by
Seller from the staffs of the SEC and the OCC and all responses to such comment
letters by or on behalf of Seller with respect to all filings under the
Securities Laws. Seller's principal executive officer and principal financial
officer (and Seller's former principal executive officers and principal
financial officers, as applicable) have made the certifications required by
Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations of
the Exchange Act thereunder with respect to Seller's Exchange Act Documents. For
purposes of the preceding sentence, "principal executive officer" and "principal
financial officer" shall have the meanings given to such terms in the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. Such certifications contain no qualifications or exceptions
to the matters certified therein and have not been modified or withdrawn; and
neither Seller nor any of its officers has received notice from any Regulatory
Authority questioning or challenging the accuracy, completeness, content, form
or manner of filing or submission of such certifications. No Seller Subsidiary
is required to file any Exchange Act Documents.
(b) Each of the Seller Financial Statements (including, in each case, any
related notes) contained in the Seller Exchange Act Reports, including any
Seller Exchange Act Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the Exchange
Act, was 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 interim statements, as
permitted by Form 10-QSB of the Exchange Act), and fairly presented the
financial position of Seller and its Subsidiaries as at the respective dates and
the results of operations and cash flows for the periods indicated, including
the fair values of the assets and liabilities shown therein except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount or effect and were certified to the extent required by the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(c) Seller's independent public accountants, which have expressed their
opinion with respect to the Financial Statements of Seller and its Subsidiaries
included in Seller's Exchange Act Reports (including the related notes), are and
have been throughout the periods covered by such Financial Statements (x) a
registered public accounting firm (as defined in Section 2(a)(12) of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act) (to the extent applicable during such period), (y)
"independent" with respect to Seller within the meaning of Regulation S-X and
(z) with respect to Seller, in compliance with subsections (g) through (l) of
Section 10A of the Exchange Act and related Securities Laws. Section 5.5(c) of
the Seller Disclosure Memorandum lists all non-audit services preformed by
Seller's independent public accountants for Seller and its Subsidiaries.
(d) Seller maintains disclosure controls and procedures required by Rule
13a-15 or 15d-15 under the Exchange Act; such controls and procedures are
effective to ensure that all material information concerning Seller and its
Subsidiaries is made known on a timely basis to the individuals responsible for
the preparation of Seller's Exchange Act Documents. Seller and its directors and
executive officers have complied at all times with Section 16(a) of the Exchange
Act, including the filing requirements thereunder.
5.6 Absence of Undisclosed Liabilities.
No Seller Entity has any Liabilities required under GAAP to be set forth on
a consolidated balance sheet or in the notes thereto that are reasonably likely
to have, individually or in the aggregate, a Seller Material Adverse Effect,
except Liabilities which are (i) accrued or reserved against in the consolidated
balance sheet of Seller as of September 30, 2004, included in the Seller
Financial Statements delivered prior to the date of this Agreement or reflected
in the notes thereto, (ii) incurred in the ordinary course of business
8
consistent with past practices, or (iii) incurred in connection with the
transactions contemplated by this Agreement. Section 5.6 of the Seller
Disclosure Memorandum lists, and Seller has attached and delivered to Buyer
copies of the documentation creating or governing, all securitization
transactions and "off-balance sheet arrangements" (as defined in Item
303(a)(4)(ii) of Regulation S-K of the Exchange Act) effected by Seller or its
Subsidiaries other than letters of credit and unfunded loan commitments or
credit lines. Except as disclosed in Section 5.6 of the Seller Disclosure
Memorandum, no Seller Entity is directly or indirectly liable, by guarantee,
indemnity, or otherwise, upon or with respect to, or obligated, by discount or
repurchase agreement or in any other way, to provide funds in respect to, or
obligated to guarantee or assume any Liability of any Person for any amount in
excess of $50,000. Except (x) as reflected in Seller's balance sheet at
September 30, 2004 or liabilities described in any notes thereto (or liabilities
for which neither accrual nor footnote disclosure is required pursuant to GAAP
or any applicable Regulatory Authority) or (y) for liabilities incurred in the
ordinary course of business since September 30, 2004 consistent with past
practice or in connection with this Agreement or the transactions contemplated
hereby, neither Seller nor any of its Subsidiaries has any Material Liabilities
or obligations of any nature.
5.7 Absence of Certain Changes or Events.
Except as disclosed in the Seller Financial Statements delivered prior to
the date of this Agreement or as disclosed in Section 5.7 of the Seller
Disclosure Memorandum, (i) there have been no events, changes, or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Seller Material Adverse Effect, (ii) none of the Seller Entities
has taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of Seller provided in Article 7, and (iii) since
December 31, 2003 the Seller Entities have conducted their respective businesses
in the ordinary course of business consistent with past practice.
5.8 Tax Matters.
(a) All Seller Entities have timely filed with the appropriate Taxing
Authorities, all Tax Returns in all jurisdictions in which Tax Returns are
required to be filed, and such Tax Returns are correct and complete in all
respects. None of the Seller Entities is the beneficiary of any extension of
time within which to file any Tax Return. All Taxes of the Seller Entities
(whether or not shown on any Tax Return) have been fully and timely paid. There
are no Liens for any Taxes (other than a Lien for current real property or ad
valorem Taxes not yet due and payable) on any of the Assets of any of the Seller
Entities. No claim has ever been made by an authority in a jurisdiction where
any Seller Entity does not file a Tax Return that such Seller Entity may be
subject to Taxes by that jurisdiction.
(b) None of the Seller Entities has received any notice of assessment or
proposed assessment in connection with any Taxes, and there are no threatened or
pending disputes, claims, audits or examinations regarding any Taxes of any
Seller Entity or the assets of any Seller Entity. No officer or employee
responsible for Tax matters of any Seller Entity expects any Taxing Authority to
assess any additional Taxes for any period for which Tax Returns have been
filed. No issue has been raised by a Taxing Authority in any prior examination
of the company which, by application of the same or similar principles, could be
expected to result in a proposed deficiency for any subsequent taxable period.
None of the Seller Entities has waived any statute of limitations in respect of
any Taxes or agreed to a Tax assessment or deficiency.
(c) Each Seller Entity has complied with all applicable Laws relating to
the withholding of Taxes and the payment thereof to appropriate authorities,
including Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee or independent contractor, and Taxes
required to be withheld and paid pursuant to Sections 1441 and 1442 of the Code
or similar provisions under foreign Law.
9
(d) The unpaid Taxes of each Seller Entity (i) did not, as of the most
recent fiscal month end, exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the most recent balance sheet
(rather than in any notes thereto) for such Seller Entity and (ii) do not exceed
that reserve as adjusted for the passage of time through the Closing Date in
accordance with past custom and practice of the Seller Entities in filing their
Tax Returns.
(e) Except as described in Section 5.8(e) of the Seller Disclosure
Memorandum, none of the Seller Entities is a party to any Tax allocation or
sharing agreement and none of the Seller Entities has been a member of an
affiliated group filing a consolidated federal income Tax Return or has any Tax
Liability of any Person under Treasury Regulation Section 1.1502-6 or any
similar provision of state, local or foreign Law, or as a transferee or
successor, by contract or otherwise.
(f) During the five-year period ending on the date hereof, none of the
Seller Entities was a "distributing corporation" or a "controlled corporation"
as defined in, and in a transaction intended to be governed by Section 355 of
the Code.
(g) Except as disclosed in Section 5.8(g) of the Seller Disclosure
Memorandum, none of the Seller Entities has made any payments, is obligated to
make any payments, or is a party to any contract that could obligate it to make
any payments that could be disallowed as a deduction under Section 280G or
162(m) of the Code, or which would be subject to withholding under Section 4999
of the Code. Seller is not, and has not been, a United States real property
holding corporation within the meaning of Code Section 897(c)(1)(A)(ii). None of
the Seller Entities has been or will be required to include any adjustment in
taxable income for any Tax period (or portion thereof) pursuant to Section 481
of the Code or any comparable provision under state or foreign Tax Laws as a
result of transactions or events occurring prior to the Closing. There is no
taxable income of Seller that will be required under applicable tax law to be
reported by Buyer, including the Company, for a taxable period beginning after
the Closing Date which taxable income was realized prior to the Closing Date.
The net operating losses of the Seller Entities disclosed in Section 5.8(g) of
the Seller Disclosure Memorandum are not subject to any limitation on their use
under the provisions of Sections 382 or 269 of the Code or any other provisions
of the Code or the Treasury Regulations dealing with the utilization of net
operating losses other than any such limitations as may arise as a result of the
consummation of the transactions contemplated by this Agreement.
(h) Each of the Seller Entities 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 Code.
(i) No Seller Entity is subject to any private letter ruling of the IRS or
comparable rulings of any Taxing Authority.
(j) No property owned by any Seller Entity is (i) property required to be
treated as being owned by another Person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986, (ii)
"tax-exempt use property" within the meaning of Section 168(h)(1) of the Code or
(iii) "tax-exempt bond financed property" within the meaning of Section 168(g)
of the Code, (iv) "limited use property" within the meaning of Rev. Proc. 76-30,
(v) subject to Section 168(g)(1)(A) of the Code or (vi) subject to any provision
of state, local or foreign Law comparable to any of the provisions listed above.
(k) No Seller Entity has any "corporate acquisition indebtedness" within
the meaning of Section 279 of the Code.
10
(l) Seller has disclosed on its federal income Tax Returns all positions
taken therein that are reasonably believed to give rise to substantial
understatement of federal income tax within the meaning of Section 6662 of the
Code.
(m) No Seller Entity has participated in any reportable transaction, as
defined in Treasury Regulation Section 1.6011-4(b)(1), or a transaction
substantially similar to a reportable transaction.
(n) Seller has provided Buyer with complete copies of (i) all federal,
state, local and foreign income or franchise Tax Returns of the Seller Entities
relating to the taxable periods since 2000 and (ii) any audit report issued
within the last four (4) years relating to any Taxes due from or with respect to
the Seller Entities.
(o) No Seller Entity nor any other Person on its behalf has (i) filed a
consent pursuant to Section 341(f) of the Code (as in effect prior to the repeal
under the Jobs and Growth Tax Reconciliation Act of 2003) or agreed to have
Section 341(f)(2) of the Code (as in effect prior to the repeal under the Jobs
and Growth Tax Reconciliation Act of 2003) apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by any Seller Entities, (ii) executed or entered into a closing agreement
pursuant to Section 7121 of the Code or any similar provision of Law with
respect to the Seller Entities, or (iii) granted to any Person any power of
attorney that is currently in force with respect to any Tax matter.
(p) No Seller Entity has, or ever had, a permanent establishment in any
country other than the United States, or has engaged in a trade or business in
any country other than the United States that subjected it to tax in such
country.
For purposes of this Section 5.8, any reference to the Seller or any Seller
Entity shall be deemed to include any Person which merged with or was liquidated
into or otherwise combined with the Seller or a Seller Entity.
5.9 Allowance for Possible Loan Losses; Loan and Investment Portfolio, etc.
(a) The Seller's allowance for possible loan, lease, securities or credit
losses (the "Allowance") shown on the balance sheets of Seller included in the
most recent Seller Financial Statements dated prior to the date of this
Agreement was, and the Allowance shown on the balance sheets of Seller included
in the Seller Financial Statements as of dates subsequent to the execution of
this Agreement will be, as of the dates thereof, adequate (within the meaning of
GAAP and applicable regulatory requirements or guidelines) to provide for all
known or reasonably anticipated losses relating to or inherent in the loan,
lease and securities portfolios (including accrued interest receivables, letters
of credit and commitments to make loans or extend credit), by the Seller
Entities as of the dates thereof. The Seller Financial Statements fairly present
the fair market values of all loans, leases, securities, tangible and intangible
assets and liabilities, and any impairments thereof.
(b) As of the date hereof, all loans, discounts and leases (in which any
Seller Entity is lessor) reflected on Seller's Financial Statements were, and
with respect to the consolidated balance sheets delivered as of the dates
subsequent to the execution of this Agreement will be as of the dates thereof,
(a) at the time and under the circumstances in which made, made for good,
valuable and adequate consideration in the ordinary course of business and are
the legal and binding obligations of the obligors thereof, (b) evidenced by
genuine notes, agreements or other evidences of indebtedness and (c) to the
extent secured, have been secured, to the Knowledge of Seller, by valid liens
and security interests which have been perfected. Accurate lists of all loans,
discounts and financing leases as of November 30, 2004 and on a monthly basis
thereafter, and of the investment portfolios of each Seller Entity as of such
date, have been and will be delivered to Buyer concurrently with the Seller
Disclosure Memorandum. Except as specifically set forth in Section 5.9(b) of the
Seller Disclosure Memorandum, neither Seller nor the Bank is a party to any
written or oral loan agreement, note or borrowing arrangement, including any
11
loan guaranty, that was, as of the most recent month-end (i) delinquent by more
than 30 days in the payment of principal or interest, (ii) to Seller's
Knowledge, otherwise in material default for more than 30 days, (iii) classified
as "substandard," "doubtful," "loss," "other assets especially mentioned" or any
comparable classification by Seller or by any applicable Regulatory Authority or
Reserve, (iv) an obligation of any director, executive officer or 10%
shareholder of any Seller Entity who is subject to Regulation O of the Federal
Reserve Board (12 C.F.R. Part 215), or any person, corporation or enterprise
controlling, controlled by or under common control with any of the foregoing, or
(v) in violation of any Law.
5.10 Assets.
(a) Except as disclosed in Section 5.10 of the Seller Disclosure Memorandum
or as disclosed or reserved against in the Seller Financial Statements delivered
prior to the date of this Agreement, the Seller Entities have good and
marketable title, free and clear of all Liens, to all of their respective
Assets. All tangible properties used in the businesses of the Seller Entities
are in good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with Seller's past practices.
(b) All Assets which are material to Seller's business, held under leases
or subleases by any of the Seller Entities, are held under valid Contracts
enforceable in accordance with their respective terms, and each such Contract is
in full force and effect.
(c) The Seller Entities currently maintain insurance, including bankers'
blanket bonds, with insurers of recognized financial responsibility, similar in
amounts, scope, and coverage to that maintained by other peer organizations.
None of the Seller Entities has received notice from any insurance carrier that
(i) any policy of 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 substantially increased, or (iii) that similar coverage will
be denied or limited or not extended or renewed with respect to any Seller
Entity, any act or occurrence, or that any Asset, officer, director, employee or
agent of any Seller Entity will not be covered by such insurance or bond. There
are presently no claims for amounts exceeding $25,000 individually or in the
aggregate pending under such policies of insurance or bonds, and no notices of
claims in excess of such amounts have been given by any Seller Entity under such
policies. Seller has made no claims, and no claims are contemplated to be made,
under its directors' and officers' errors and omissions or other insurance or
bankers' blanket bond.
(d) The Assets of the Seller Entities include all Assets required to
operate the business of the Seller Entities as presently conducted.
5.11 Intellectual Property.
Each Seller Entity owns or has a license to use all of the Intellectual
Property used by such Seller Entity in the course of its business, including
sufficient rights in each copy possessed by each Seller Entity. Each Seller
Entity is the owner of or has a license, with the right to sublicense, to any
Intellectual Property sold or licensed to a third party by such Seller Entity in
connection with such Seller Entity's business operations, and such Seller Entity
has the right to convey by sale or license any Intellectual Property so
conveyed. No Seller Entity is in Default under any of its Intellectual Property
licenses. No proceedings have been instituted, or are pending or to the
Knowledge of Seller threatened, which challenge the rights of any Seller Entity
with respect to Intellectual Property used, sold or licensed by such Seller
Entity in the course of its business, nor has any person claimed or alleged any
rights to such Intellectual Property. The conduct of the business of the Seller
Entities does not infringe any Intellectual Property of any other person. Except
as disclosed in Section 5.11 of the Seller Disclosure Memorandum, no Seller
Entity is obligated to pay any recurring royalties to any Person with respect to
any such Intellectual Property. Except as disclosed in Section 5.11 of the
Seller Disclosure Memorandum, Seller has Contracts with each of its directors,
officers, or employees which require such officer, director or employee to
assign any interest in any Intellectual Property to a Seller Entity and to keep
confidential any trade secrets, proprietary data, customer information, or other
12
business information of a Seller Entity, and to Seller's Knowledge, no such
officer, director or employee is party to any Contract with any Person other
than a Seller Entity which requires such officer, director or employee to assign
any interest in any Intellectual Property to any Person other than a Seller
Entity or to keep confidential any trade secrets, proprietary data, customer
information, or other business information of any Person other than a Seller
Entity. To Seller's Knowledge, no officer, director or employee of any Seller
Entity is party to any confidentiality, nonsolicitation, noncompetition or other
Contract which restricts or prohibits such officer, director or employee from
engaging in activities competitive with any Person, including any Seller Entity.
5.12 Environmental Matters.
(a) Seller has delivered, or caused to be delivered to Buyer, or provided
Buyer access to, true and complete copies of, all environmental site
assessments, test results, analytical data, boring logs, and other environmental
reports and studies held by any Seller Entity relating to its Participating
Facilities and Operating Facilities. To Seller's Knowledge, there are no
material violations of Environmental Laws or properties that secure loans made
by Seller or Bank.
(b) To Seller's Knowledge, each Seller Entity, its Participation
Facilities, and its Operating Properties are, and have been, in compliance with
all Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Seller Material Adverse Effect.
(c) There is no Litigation pending or to Seller's Knowledge, threatened
before any Governmental Authority or other forum in which any Seller Entity or
any of its Operating Properties or Participation Facilities (or Seller in
respect of such Operating Property or Participation Facility) has been or, with
respect to threatened Litigation, may be named as a defendant (i) for alleged
noncompliance (including by any predecessor) with or Liability under any
Environmental Law or (ii) relating to the release, discharge, spillage, or
disposal into the environment of any Hazardous Material, whether or not
occurring at, on, under, adjacent to, or affecting (or potentially affecting) a
site currently or formerly owned, leased, or operated by any Seller Entity or
any of its Operating Properties or Participation Facilities.
(d) During the period of (i) any Seller Entity's ownership or operation of
any of their respective current properties, (ii) any Seller Entity's
participation in the management of any Participation Facility, or (iii) any
Seller Entity's holding of a security interest in any Operating Property, there
have been no releases, discharges, spillages, or disposals of Hazardous Material
in, on, under, adjacent to, or affecting (or potentially affecting) such
properties. Prior to the period of (i) any Seller Entity's ownership or
operation of any of their respective current properties, (ii) any Seller
Entity's participation in the management of any Participation Facility, or (iii)
any Seller Entity's holding of a security interest in any Operating Property, to
Seller's Knowledge, there were no releases, discharges, spillages, or disposals
of Hazardous Material in, on, under, or affecting any such property,
Participation Facility or Operating Property,
5.13 Compliance with Laws.
(a) Seller is a bank holding company duly registered and in good standing
as such with the Federal Reserve and the Commissioner. Seller Bank is a member
in good standing of the Federal Reserve System and the FDIC.
(b) Compliance with Permits, Laws and Orders.
(i) Each of the Seller Entities has in effect all Permits and has made
all filings, applications, and registrations with Governmental Authorities that
are material and required for it to own, lease, or operate its material assets
and to carry on its business as now conducted, and there has occurred no Default
under any such Permit applicable to their respective businesses or employees
conducting their respective businesses.
13
(ii) None of the Seller Entities is in Default under any Laws or Orders
applicable to its business or employees conducting its business.
(iii) None of the Seller Entities has received any notification or
communication from any Governmental Authority, (A) asserting that Seller or any
of its Subsidiaries is in Default under any of the Permits, Laws or Orders which
such Governmental Authority enforces, (B) threatening to revoke any Permits, or
(C) requiring Seller 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 resolution of
its Board of Directors or similar undertaking, which restricts materially the
conduct of its business, or in any material manner relates to its management.
(iv) There (A) is no unresolved violation, criticism, or exception by
any Governmental Authority with respect to any report or statement relating to
any examinations or inspections of Seller or any of its Subsidiaries, (B) and no
notices or correspondence received by Seller with respect to formal or informal
inquiries by, or disagreements or disputes with, any Governmental Authority with
respect to Seller's or any of Seller's Subsidiaries' business, operations,
policies or procedures since January 1, 2001, and (C) is not any pending or, to
its Knowledge, threatened, nor has any Governmental Authority indicated an
intention to conduct any, investigation or review of it or any of its
Subsidiaries.
(v) None of the Seller Entities nor any of its directors, officers,
employees or Representatives acting on its behalf has offered, paid, or agreed
to pay any Person, including any Government Authority, directly or indirectly,
any thing of value for the purpose of, or with the intent of obtaining or
retaining any business in violation of applicable Laws, including (1) using any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity, (2) making any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds, (3) violating any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (4) making any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(vi) Each Seller Entity has complied with all requirements of Law under
the Bank Secrecy Act and the USA Patriot Act, and each Seller Entity has timely
filed all reports of suspicious activity, including those required under 12
C.F.R. ss. 21.11.
5.14 Labor Relations.
(a) No Seller Entity is the subject of any Litigation asserting that it or
any other Seller Entity has committed an unfair labor practice (within the
meaning of the National Labor Relations Act or comparable state Law) or other
violation of state or federal labor Law or seeking to compel it or any other
Seller Entity to bargain with any labor organization or other employee
representative as to wages or conditions of employment, nor is any Seller Entity
party to any collective bargaining agreement or subject to any bargaining order,
injunction or other Order relating to Seller's relationship or dealings with its
employees, any labor organization or any other employee representative. There is
no strike, slowdown, lockout or other job action or labor dispute involving any
Seller Entity pending or threatened and there has been no such actions or
disputes in the past five years. To Seller's Knowledge, there has not been any
attempt by any Seller Entity employees or any labor organization or other
employee representative to organize or certify a collective bargaining unit or
to engage in any other union organization activity with respect to the workforce
of any Seller Entity. Except as disclosed in Section 5.14 of the Seller
Disclosure Memorandum, employment of each employee and the engagement of each
independent contractor of each Seller Entity is terminable at will by the
relevant Seller Entity without (i) any penalty, liability or severance
obligation incurred by any Seller Entity, (ii) and in all cases without prior
consent by any Governmental Authority. No Seller Entity will owe any amounts to
any of its employees or independent contractors as of the Closing Date,
including any amounts incurred for any wages, bonuses, vacation pay, sick leave,
contract notice periods, change of control payments or severance obligations
except as disclosed in Section 5.14 of the Seller Disclosure Memorandum.
14
(b) All of the employees employed in the United States are either United
States citizens or are legally entitled to work in the United States under the
Immigration Reform and Control Act of 1986, as amended, other United States
immigration Laws and the Laws related to the employment of non-United States
citizens applicable in the state in which the employees are employed.
(c) No Seller Entity has effectuated (i) a "plant closing" (as defined in
the Worker Adjustment and Retraining Notification Act (the "WARN Act"))
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of any Seller Entity; or (ii) a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or
facility of any Seller Entity; and no Seller Entity has been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local Law. None of any
Seller Entity's employees has suffered an "employment loss" (as defined in the
WARN Act) since six months prior to the Closing Date.
(d) Section 5.14 of the Seller Disclosure Memorandum contains a list of all
independent contractors of each Seller Entity (separately listed by Seller
Entity) and each such Person meets the standard for an independent contractor
under all Laws (including Treasury Regulations under the Code and federal and
state labor and employment Laws) and no such Person is an employee of any Seller
Entity under any applicable Law.
5.15 Employee Benefit Plans
(a) Seller has disclosed in Section 5.15 of the Seller Disclosure
Memorandum, and has delivered to Buyer prior to the execution of this Agreement,
(i) copies of each Employee Benefit Plan currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any Seller Entity or
ERISA Affiliate thereof for the benefit of employees, former employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries or under which employees, retirees, former employees, dependents,
spouses, directors, independent contractors, or other beneficiaries are eligible
to participate (collectively, the "Seller Benefit Plans" ) and (ii) a list of
each Employee Benefit Plan that is not identified in (i) above (e.g., former
Employee Benefit Plans) but for which any Seller Entity or ERISA Affiliate has
or reasonably could have any obligation or Liability. Any of the Seller Benefit
Plans which is an "employee pension benefit plan," as that term is defined in
ERISA Section 3(2), is referred to herein as a "Seller ERISA Plan." Each Seller
ERISA Plan which is also a "defined benefit plan" (as defined in Code Section
414(j)) is referred to herein as a "Seller Pension Plan," and is identified as
such in Section 5.15 of the Seller Disclosure Memorandum.
(b) Seller has delivered to Buyer prior to the execution of this Agreement
(i) all trust agreements or other funding arrangements for all Employee Benefit
Plans, (ii) all determination letters, rulings, opinion letters, information
letters or advisory opinions issued by the United States Internal Revenue
Service ("IRS" ), the United States Department of Labor ("DOL") or the Pension
Benefit Guaranty Corporation during this calendar year or any of the preceding
three calendar years, (iii) any filing or documentation (whether or not filed
with the IRS) where corrective action was taken in connection with the IRS EPCRS
program set forth in Revenue Procedure 2001-17 (or its predecessor or successor
rulings), (iv) annual reports or returns, audited or unaudited financial
statements, actuarial reports and valuations prepared for any Employee Benefit
Plan for the current plan year and the three preceding plan years, and (v) the
most recent summary plan descriptions and any material modifications thereto.
(c) Each Seller Benefit Plan is in compliance with the terms of such Seller
Benefit Plan, in compliance with the applicable requirements of the Code, in
material compliance with the applicable requirements of ERISA, and in compliance
with any other applicable Laws. Each Seller ERISA Plan which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS that is still in effect and applies to the
Seller ERISA Plan as amended and as administered or, within the time permitted
under Code Section 401(b), has timely applied for a favorable determination
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letter which when issued will apply retroactively to the Seller ERISA Plan as
amended and as administered. Seller is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. Seller has not
received any communication (written or unwritten) from any government agency
questioning or challenging the compliance of any Seller Benefit Plan with
applicable Laws. No Seller Benefit Plan is currently being audited by any
Governmental agency for compliance with applicable Laws or has been audited with
a determination by Authorities among Governmental Authority that the Employee
Benefit Plan failed to comply with applicable Laws.
(d) There has been no oral or written representation or communication with
respect to any aspect of the Employee Benefit Plans made to employees of the
Seller which is not in accordance with the written or otherwise preexisting
terms and provisions of such plans. Neither Seller nor any administrator or
fiduciary of any Seller Benefit Plan (or any agent of any of the foregoing) has
engaged in any transaction, or acted or failed to act in any manner, which could
subject Seller or Buyer to any direct or indirect Liability (by indemnity or
otherwise) for breach of any fiduciary, co-fiduciary or other duty under ERISA.
There are no unresolved claims or disputes under the terms of, or in connection
with, the Seller Benefit Plans other than claims for benefits which are payable
in the ordinary course of business and no action, proceeding, prosecution,
inquiry, hearing or investigation has been commenced with respect to any Seller
Benefit Plan.
(e) All Seller Benefit Plan documents and annual reports or returns,
audited or unaudited financial statements, actuarial valuations, summary annual
reports, and summary plan descriptions issued with respect to the Seller Benefit
Plans are correct and complete in all material respects, have been timely filed
with the IRS or the DOL, and distributed to participants of the Seller Benefit
Plans (as required by Law), and there have been no changes in the information
set forth therein.
(f) To the Seller's Knowledge, no "party in interest" (as defined in ERISA
Section 3(14)) or "disqualified person" (as defined in Code Section 4975(e)(2))
of any Seller Benefit Plan has engaged in any nonexempt "prohibited transaction"
(described in Code Section 4975(c) or ERISA Section 406).
(g) Seller does not have, and never has had, a Seller Pension Plan. All
contributions with respect to an Employee Benefit Plan of Seller, or any of its
ERISA Affiliates that is subject to Code Section 412 or ERISA Section 302 have
or will be timely made and, with respect to any such Employee Benefit Plan,
there is no Lien nor is there expected to be a Lien under Code Section 412(n) or
ERISA Section 302(f) or Tax under Code Section 4971. Neither Seller nor any of
its ERISA Affiliates is subject to or can reasonably be expected to become
subject to a Lien under Code Section 401(a)(29). All premiums required to be
paid under ERISA Section 4006 have been timely paid by Seller and by its ERISA
Affiliates.
(h) No Liability under Title IV of ERISA has been or is expected to be
incurred by Seller or its ERISA Affiliates and no event has occurred that could
reasonably result in Liability under Title IV of ERISA being incurred by Seller
or its ERISA Affiliates with respect to any ongoing, frozen, or terminated
single-employer plan of Seller or the single-employer plan of any ERISA
Affiliate. There has been no "reportable event," within the meaning of ERISA
Section 4043 for which the 30-day reporting requirement has not been waived by
any ongoing, frozen, or terminated single employer plan of Seller or of an ERISA
Affiliate.
(i) Except as disclosed in Section 5.15 of the Seller Disclosure
Memorandum, no Seller Entity has any Liability for retiree health and life
benefits under any of the Seller Benefit Plans and there are no restrictions on
the rights of such Seller Entity to amend or terminate any such retiree health
or benefit Plan without incurring any Liability thereunder except to the extent
required under Part 6 of Title I of ERISA or Code Section 4980B. No Tax under
Code Sections 4980B or 5000 has been incurred with respect to any Seller Benefit
Plan and no circumstance exists which could give rise to such Taxes.
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(j) Except as disclosed in Section 5.15 of the Seller Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Seller Entity
from any Seller Entity under any Seller Benefit Plan or otherwise, (ii) increase
any benefits otherwise payable under any Seller Benefit Plan, or (iii) result in
any acceleration of the time of payment or vesting of any such benefit, or any
benefit under any life insurance owned by any Seller Entity or the rights of any
Seller Entity in, to or under any insurance on the life of any current or former
officer, director or employee of any Seller Entity, or change any rights or
obligations of any Seller Entity with respect to such insurance.
(k) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any Seller Entity and their respective beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of Code Section 412 or ERISA Section 302, have been fully reflected
on the Seller Financial Statements to the extent required by and in accordance
with GAAP.
(l) All individuals who render services to any Seller Entity and who are
authorized to participate in a Seller Benefit Plan pursuant to the terms of such
Seller Benefit Plan are in fact eligible to and authorized to participate in
such Seller Benefit Plan. All individuals participating in (or eligible to
participate in) any Seller Benefit Plan are common-law employees of a Seller
Entity.
(m) On or after September 26, 1980, neither the Seller nor any of its ERISA
Affiliates has had 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)).
(n) There are no payments or changes in terms due to any insured person as
a result of this Agreement, the Merger or the transactions contemplated herein,
under any bank-owned, corporate-owned split dollar life insurance, other life
insurance, or similar arrangement or Contract, and the Successor Corporation
shall, upon and after the Effective Time, succeed to and have all the rights in,
to and under such life insurance Contracts as Seller presently holds. Each
Seller Entity will, upon the execution and delivery of this Agreement, and will
continue to have, notwithstanding this Agreement or the consummation of the
transaction contemplated hereby, all ownership rights and interest in all
corporate or bank-owned life insurance.
5.16 Material Contracts.
(a) Except as disclosed in Section 5.16 of the Seller Disclosure Memorandum
or otherwise reflected in the Seller Financial Statements, none of the Seller
Entities, 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 providing
for aggregate payments to any Person in any calendar year in excess of $25,000,
(ii) any Contract relating to the borrowing of money by any Seller Entity or the
guarantee by any Seller Entity of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds repurchase
agreements, fully-secured by the United States government and government agency
securities, and Federal Home Loan Bank advances of depository institution
Subsidiaries incurred in the ordinary course of Seller's business, trade
payables and Contracts relating to borrowings or guarantees made in the ordinary
course of Seller's business), (iii) any Contract which prohibits or restricts
any Seller Entity or any personnel of a Seller Entity from engaging in any
business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract involving Intellectual
Property (other than Contracts entered into in the ordinary course with
customers and "shrink-wrap" software licenses), (v) any Contract relating to the
provision of data processing, network communication, or other technical services
to or by any Seller Entity, (vi) any Contract relating to the purchase or sale
of any goods or services (other than Contracts entered into in the ordinary
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course of business and involving payments under any individual Contract or
series of contracts not in excess of $25,000), (vii) any exchange-traded or
over-the-counter swap, forward, future, option, cap, floor, or collar financial
Contract, or any other interest rate or foreign currency protection Contract or
any Contract that is a combination thereof not included on its balance sheet,
and (viii) any other Contract that would be required to be filed as an exhibit
to a Form 10-KSB filed by Seller as of the date of this Agreement pursuant to
the reporting requirements of the Exchange Act (together with all Contracts
referred to in Sections 5.11 and 5.15(a), the "Seller Contracts" ).
(b) With respect to each Seller Contract and except as disclosed in Section
5.16(b) of the Seller Disclosure Memorandum: (i) the Contract is in full force
and effect; (ii) no Seller Entity is in Default thereunder; (iii) no Seller
Entity has repudiated or waived any material provision of any such Contract;
(iv) no other party to any such Contract is, to Seller's Knowledge, in Default
in any respect or has repudiated or waived each material provision thereunder;
and (v) no consent is required by a Contract for the execution, delivery, or
performance of this Agreement, the consummation of the Merger or the other
transactions contemplated hereby. All of the indebtedness of any Seller Entity
for money borrowed is prepayable at any time by such Seller Entity without
penalty, premium or charge, except as specified in Section 5.16(b) of the Seller
Disclosure Memorandum
5.17 Privacy of Customer Information.
(a) Each Seller Entity is the sole owner of all individually identifiable
personal information relating to identifiable or identified natural person
("IIPI") relating to customers, former customers and prospective customers that
will be transferred to Buyer and the Buyer Entities pursuant to this Agreement.
(b) Each Seller Entity's collection and use of such IIPI the transfer of
such IIPI to the Buyer and the Buyer Entities, and the use of such IIPI by the
Buyer Entities as contemplated by this Agreement complies with Seller's privacy
policy, the Fair Credit Reporting Act, the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and all other
applicable privacy Laws, and any Contract and industry standard relating to
privacy.
5.18 Legal Proceedings.
There is no Litigation instituted or pending, or, to the Knowledge of
Seller, threatened (or unasserted but considered probable of assertion and which
if asserted would have at least a reasonable possibility of an unfavorable
outcome) against any Seller Entity, or against any director, officer, employee
or agent of any Seller Entity in their capacities as such or with respect to any
service to or on behalf of any Employee Benefit Plan or any other Person at the
request of the Seller Entity or Employee Benefit Plan of any Seller Entity, or
against any Asset, interest, or right of any of them, that is reasonably likely
to have, individually or in the aggregate, a Seller Material Adverse Effect, nor
are there any Orders outstanding against any Seller Entity. Section 5.18(a) of
the Seller Disclosure Memorandum contains a summary of all Litigation as of the
date of this Agreement (a) to which any Seller Entity is a party and which names
a Seller Entity as a defendant or cross-defendant or for which any Seller Entity
has any potential Liability or (b) against any director or officer of Seller
pursuant to Section 8A or 20(b) of the Securities Act of Section 21(d) or 21C of
the Exchange Act. Section 5.18(b) of the Seller Disclosure Memorandum contains a
summary of all Orders to which any Seller Entity is subject. No claim for
indemnity has been made or, to Seller's Knowledge, threatened by any director,
officer, employee, independent contractor or agent to any Seller Entity and to
Seller's knowledge, no basis for any such claim exists.
5.19 Reports.
Since January 1, 1999, each Seller Entity 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 Governmental Authorities. 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. As of their respective dates, such reports and
documents did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
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5.20 Books and Records.
Seller and each Seller Entity maintains accurate books and records
reflecting its Assets and Liabilities and maintains proper and adequate internal
accounting controls which provide assurance that (a) transactions are executed
with management's authorization; (b) transactions are recorded as necessary to
permit preparation of the consolidated financial statements of Seller and to
maintain accountability for Seller's consolidated Assets; (c) access to Seller's
Assets is permitted only in accordance with management's authorization; (d) the
reporting of Seller's Assets is compared with existing Assets at regular
intervals; and (e) accounts, notes and other receivables and inventory are
recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.
5.21 Loans to Executive Officers and Directors.
Seller has not, since July 30, 2002, extended or maintained credit,
arranged for the extension of credit, or renewed an extension of credit, in the
form of a personal loan to or for any director or executive officer (or
equivalent thereof) of Seller, except as permitted by Section 13(k) of the
Exchange Act and Federal Reserve Regulation O. Section 5.21 of the Seller
Disclosure Memorandum identifies any loan or extension of credit maintained by
Seller to which the second sentence of Section 13(k)(1) of the Exchange Act
applies.
5.22 Regulatory Matters.
No Seller Entity or, to Seller's Knowledge, any Affiliate thereof has taken
or agreed to take any action or has any Knowledge of any fact or circumstance
that is reasonably likely to materially impede or delay receipt of any required
Consents or result in the imposition of a condition or restriction of the type
referred to in the last sentence of Section 9.1(b).
5.23 State Takeover Laws.
Each Seller Entity has taken all necessary action to exempt the
transactions contemplated by this Agreement from, or if necessary to challenge
the validity or applicability of, any applicable "moratorium," "fair price,"
"business combination," "control share," or other anti-takeover Laws,
(collectively, "Takeover Laws").
5.24 Shareholders' Voting Agreements.
Each of the directors of Seller and each of the Beneficial Owners of 5% or
more of the outstanding shares of Seller Common Stock has executed and delivered
to Buyer the Support Agreements in the form of Exhibit A hereto.
5.25 Brokers and Finders; Opinion of Financial Advisor.
Except for Seller Financial Advisor, neither Seller nor its Subsidiaries,
or any of their respective officers, directors, employees or Representatives,
has employed any broker, finder or investment banker or incurred any Liability
for any financial advisory fees, investment bankers fees, brokerage fees,
commissions, or finder's or other fees in connection with this Agreement or the
transactions contemplated hereby. Seller has received the written opinion of the
Seller Financial Advisor, dated the date of this Agreement, to the effect that
the consideration to be received in the Merger by the holders of Seller Common
Stock is fair, from a financial point of view, to such holders, a signed copy of
which has been or will be delivered to Buyer.
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5.26 Board Recommendation.
The Board of Directors of Seller, at a meeting duly called and held, has by
unanimous vote of the directors present (i) determined that this Agreement and
the transactions contemplated hereby, including the Merger, the Support
Agreements and the transactions contemplated hereby and thereby, taken together,
are fair to and in the best interests of the Seller's shareholders and (ii)
resolved, subject to the terms of this Agreement, to recommend that the holders
of the shares of Seller Common Stock approve this Agreement, the Merger and the
related transactions and to call and hold a special meeting of Seller's
shareholders to consider this Agreement, the Merger and the related
transactions.
5.27 Statements True and Correct.
(a) No statement, certificate, instrument, or other writing furnished or to
be furnished by any Seller Entity or any Affiliate thereof to Buyer pursuant to
this Agreement or any other document, agreement, or instrument referred to
herein contains or will contain any untrue statement of material fact or will
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(b) None of the information supplied or to be supplied by any Seller Entity
or any Affiliate thereof for inclusion in the Proxy Statement to be mailed to
Seller's shareholders in connection with the Seller's Shareholders' Meeting, and
any other documents to be filed by a Seller Entity or any Affiliate thereof
under the Securities Act or the Exchange Act or with any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the Seller's shareholders, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of Seller's
Shareholders' Meeting be false or misleading with respect to any material fact,
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the
Seller's Shareholders' Meeting.
(c) All documents that any Seller Entity or any Affiliate thereof is
responsible for filing with any Governmental Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
5.28 Delivery of Seller Disclosure Memorandum.
Seller has delivered to Buyer a complete Seller Disclosure Memorandum.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
6.1 Organization, Standing, and Power.
Buyer is a corporation duly organized, validly existing, and in good
standing under the Laws of the State of South Carolina, and has the corporate
power and authority to carry on its business as now conducted and to own, lease
and operate its Assets. Buyer is duly qualified or licensed to transact business
as a foreign corporation in good standing in the states of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect.
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6.2 Authority; No Breach By Agreement.
(a) Buyer has the corporate power and authority necessary to execute,
deliver and perform this Agreement, to perform its obligations under this
Agreement, and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Buyer. This Agreement represents a legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by Buyer, nor the
consummation by Buyer of the transactions contemplated hereby, nor compliance by
Buyer with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of Buyer's Articles of Incorporation or Bylaws, or (ii)
except as disclosed in Section 6.2 of the Buyer Disclosure Memorandum,
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 any Buyer Entity under, any
Contract or Permit of any Buyer Entity, or, (iii) subject to receipt of the
requisite Consents referred to in Section 9.1(b), constitute or result in a
Default under, or require any Consent pursuant to, any Law or Order applicable
to any Buyer Entity or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws and other than
Consents required from Regulatory Authorities, and other than notices to or
filings with the IRS or the Pension Benefit Guaranty Corporation with respect to
any employee benefit plans, and other than Consents, filings, or notifications
which, if not obtained or made, are not reasonably likely to have, individually
or in the aggregate, a Buyer Material Adverse Effect, no notice to, filing with,
or Consent of, any Governmental Authority is necessary for the consummation by
Buyer of the Merger and the other transactions contemplated in this Agreement.
6.3 Exchange Act Filings; Financial Statements.
(a) Buyer has timely filed and made available to Seller all Exchange Act
Documents required to be filed by Buyer since December 31, 1999 (together with
all such Exchange Act Documents filed, whether or not required to be filed, the
"Buyer Exchange Act Reports"). The Buyer Exchange Act Reports (i) at the time
filed, complied in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws 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 amended or subsequent filing or, in the case
of registration statements, at the effective date thereof) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Buyer Exchange Act Reports or necessary in order to make the
statements in such Buyer Exchange Act Reports, in light of the circumstances
under which they were made, not misleading. Except for Buyer Subsidiaries that
are registered as a securities broker or dealer or investment advisor, no Buyer
Subsidiary is required to file any Exchange Act Documents.
(b) Each of the Buyer Financial Statements (including, in each case, any
related notes) contained in the Buyer Exchange Act Reports, including any Buyer
Exchange Act 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 Exchange Act with respect
thereto, was 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 interim statements, as
permitted by Form 10-Q of the Exchange Act), and fairly presented in all
material respects the consolidated financial position of Buyer and its
Subsidiaries as at the respective dates and the consolidated results of
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 which were not or are not expected to be material in amount
or effect. The Buyer Financial Statements are certified to the extent required
by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
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(c) Buyer's independent public accountants, which have expressed their
opinion with respect to the Financial Statements of Buyer included in Buyer's
Exchange Act Reports (including the related notes), are and have been throughout
the periods covered by such Financial Statements (x) a registered public
accounting firm (as defined in Section 2(a)(12) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act) (to
the extent applicable during such period), (y) "independent" with respect to
Seller within the meaning of Regulation S-X and, (z) with respect to Buyer, in
compliance with subsections (g) through (l) of Section 10A of the Exchange Act
and related Securities Laws.
(d) Buyer maintains disclosure controls and procedures required by Rule
13a-15 or 15d-15 under the Exchange Act; such controls and procedures are
effective to ensure that all material information concerning Buyer is made known
on a timely basis to the individuals responsible for the preparation of Buyer's
Exchange Act Documents.
6.4 Reports.
Since January 1, 2002, each Buyer Entity has filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with Governmental Authorities. 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. As of their respective date, each such report,
statement and document did not, in all material respects, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
6.5 Brokers and Finders.
Except for Sandler ▇'▇▇▇▇▇ & Partners, L.P., neither Buyer nor any of their
respective officers, directors, employees or Representatives, has employed any
broker or finder or insured any Liability for any financial advisory fees,
investment bankers fees, brokerage fees, commissions, or finder's fees in
connection with this Agreement or the transactions contemplated hereby.
6.6 Certain Actions.
No Buyer Entity or any Affiliate thereof has taken or agreed to take any
action or has any Knowledge of any fact or circumstance that is reasonably
likely to materially impede or delay receipt of any required Consents or result
in the imposition of a condition or restriction of the type referred to in the
last sentence of Section 9.1(b).
6.7 Available Funds.
Buyer has available to it, or as of the Effective Time will have available
to it, all funds necessary for the payment of the Merger Consideration and has
funds available to it to satisfy its payment obligations under this Agreement.
6.8 Statements True and Correct.
(a) No statement, certificate, instrument or other writing furnished or to
be furnished by any Buyer Entity or any Affiliate thereof to Seller pursuant to
this Agreement or any other document, agreement or instrument referred to herein
contains or will contain any untrue statement of material fact or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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(b) None of the information supplied or to be supplied by any Buyer Entity
or any Affiliate thereof for inclusion in the Proxy Statement to be mailed to
Seller's shareholders in connection with Seller's Shareholders' Meetings, or any
other documents, to be filed by any Buyer Entity or any Affiliate thereof under
the Securities Act or the Exchange Act or with any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to Seller's shareholders, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of Seller's Shareholders' Meeting, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of any proxy for the Seller's Shareholders'
Meetings.
(c) All documents that any Buyer Entity or any Affiliate thereof is
responsible for filing with any Governmental Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Seller.
(a) From the date of this Agreement until the earlier of the Effective Time
or the termination of this Agreement, unless the prior written consent of Buyer
shall have been obtained, and except as otherwise expressly contemplated herein,
Seller shall, and shall cause each of its Subsidiaries to, (i) operate its
business only in the usual, regular and ordinary course, (ii) use commercially
reasonable efforts to preserve intact its business organization and Assets and
maintain its rights and franchises, and (iii) take no action which would (A)
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of Sections 9.1(b) or
9.1(c), or (B) materially adversely affect the ability of any Party to perform
its covenants and agreements under this Agreement.
(b) From the date of this Agreement until the earlier of the Effective Time
or the termination of this Agreement, unless the prior written consent of Seller
shall have been obtained, and except as otherwise expressly contemplated herein,
Buyer shall, and shall cause each of its Subsidiaries to, take no action which
would (A) adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentences of
Sections 9.1(b) or 9.1(c), or (B) materially adversely affect the ability of any
Party to perform its covenants and agreements under this Agreement.
(c) Seller shall, and shall cause each of its Subsidiaries to cooperate
with Buyer and to provide all necessary corporate approvals, and to cooperate in
seeking all approvals of any business combinations of such Seller and its
Subsidiaries requested by Buyer, provided, the effective time of such business
combinations is on or after the Effective Time of the Merger. Seller will use
its reasonable efforts to obtain an executed Support Agreement from each
non-Director Beneficial Owner of greater than 5% of Seller Common Stock,
following the execution of this Agreement.
(d) Seller shall, and shall cause, each of its Subsidiaries to make such
additions to the Allowance as are reasonable pursuant to the terms of this
Agreement and consistent with GAAP and the requirements or guidelines of
applicable Regulatory Authorities, taking into account Buyers' diligence review
of Seller's loan portfolio.
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7.2 Negative Covenants of Seller.
From the date of this Agreement until the earlier of the Effective Time or
the termination of this Agreement, unless the prior written consent of Buyer
shall have been obtained, and except as otherwise expressly contemplated herein,
Seller covenants and agrees that it will not do or agree or commit to do, or
permit any of its Subsidiaries to do or agree or commit to do, any of the
following:
(a) amend the Articles of Incorporation, Articles of Association, Bylaws or
other governing instruments of any Seller Entity;
(b) incur any additional debt obligation or other obligation for borrowed
money in excess of an aggregate of $50,000 except in the ordinary course of the
business of any Seller Entity consistent with past practices and that are
prepayable without penalty, charge or other payment (which shall include, for
Seller Entities that are depository institutions, creation of deposit
liabilities, purchases of federal funds, advances from the Federal Reserve Bank
or Federal Home Loan Bank, and entry into repurchase agreements fully secured by
U.S. government securities or U.S. government agency securities), or impose, or
suffer the imposition, on any Asset of any Seller Entity of any Lien or permit
any such Lien to exist (other than in connection with public deposits,
repurchase agreements, bankers' acceptances, "treasury tax and loan" accounts
established in the ordinary course of business of Subsidiaries that are
depository institutions, the satisfaction of legal requirements in the exercise
of trust powers, and Liens in effect as of the date hereof that are disclosed in
the Seller Disclosure Memorandum);
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any Seller Entity, or declare or pay any dividend or make any
other distribution in respect of Seller's capital stock;
(d) except for this Agreement, or pursuant to the exercise of Seller
Options or Seller Warrants outstanding as of the date hereof and pursuant to the
terms thereof in existence on the date hereof issue, sell, pledge, encumber,
authorize the issuance of, enter into any Contract to issue, sell, pledge,
encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of Seller Common Stock, any other capital
stock of any Seller Entity, or any Right;
(e) adjust, split, combine or reclassify any capital stock of any Seller
Entity or issue or authorize the issuance of any other securities in respect of
or in substitution for shares of Seller Common Stock, or sell, lease, mortgage
or otherwise dispose of or otherwise (i) any shares of capital stock of any
Seller Subsidiary or (ii) any Asset other than in the ordinary course of
business for reasonable and adequate consideration;
(f) except for purchases of U.S. Government securities or U.S. Government
agency securities, which in either case have maturities of one year or less,
purchase any securities or make any material investment except in the ordinary
course of business consistent with past practice, either by purchase of stock or
securities, contributions to capital, Asset transfers, or purchase of any
Assets, in any Person other than a wholly owned Seller Subsidiary, or otherwise
acquire direct or indirect control over any Person, other than in connection
with foreclosures of loans in the ordinary course of business;
(g) except as set forth on Section 7.2(g) of the Seller Disclosure
Memorandum, (i) grant any bonus or increase in compensation or benefits to the
employees, officers or directors of any Seller Entity,; (ii) pay or commit or
agree to pay any severance or termination pay, or any stay or other bonus to any
Seller director, officer or employee; (iii) enter into or amend any severance
agreements with officers, employees, directors, independent contractors or
agents of any Seller Entity; (iv) change any fees or other compensation or other
benefits to directors of any Seller Entity; or (v) waive any stock repurchase
rights, accelerate, amend or change the period of exercisability of any Rights
or restricted stock, or reprice Rights granted under the Seller Stock Plans or
authorize cash payments in exchange for any Rights; or accelerate or vest or
commit or agree to accelerate or vest any amounts, benefits or rights payable by
any Seller Entity;
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(h) enter into or amend any employment Contract between any Seller Entity
and any Person (unless such amendment is required by Law) that the Seller Entity
does not have the unconditional right to terminate without Liability (other than
Liability for services already rendered), at any time on or after the Effective
Time;
(i) adopt any new employee benefit plan of any Seller Entity or terminate
or withdraw from, or make any material change in or to, any existing employee
benefit plans, welfare plans, insurance, stock or other plans of any Seller
Entity other than any such change that is required by Law or that, in the
written opinion of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan, or make any distributions from such employee
benefit or welfare plans, except as required by Law, the terms of such plans or
consistent with past practice;
(j) make any change in any Tax or accounting methods or systems of internal
accounting controls, except as may be appropriate and necessary to conform to
changes in Tax Laws, regulatory accounting requirements or GAAP;
(k) commence any Litigation other than in accordance with past practice,
settle any Litigation involving any Liability of any Seller Entity for material
money damages or restrictions upon the operations of any Seller Entity; or
(l) enter into, modify, amend or terminate any material Contract (including
any loan Contract with respect to any extension of credit with an unpaid balance
exceeding $250,000) or waive, release, compromise or assign any material rights
or claims. Seller shall not make or suffer any material adverse changes in the
mix, rates, terms or maturities of the Seller's deposits and other Liabilities;
(m) take any action to or fail to take any action that will cause Closing
Shareholders' Equity to be less than $7,900,000; or
(n) take any action or fail to take any action that at the time of such
action or inaction is reasonably likely to prevent, or would be reasonably
likely to materially interfere with, the consummation of this Merger.
7.3 Adverse Changes in Condition.
Each Party agrees to give written notice promptly to the other Party upon
becoming aware of the occurrence or impending occurrence of any event or
circumstance relating to it or any of its Subsidiaries which (i) has had or is
reasonably likely to have, individually or in the aggregate, a Seller Material
Adverse Effect or a Buyer Material Adverse Effect, as applicable, or (ii) would
cause or constitute a material breach of any of its representations, warranties,
or covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
7.4 Reports.
Each Party and its Subsidiaries shall file all reports required to be filed
by it with Regulatory Authorities between the date of this Agreement and the
Effective Time and shall deliver to the other Party copies of all such reports
promptly after the same are filed. If financial statements are contained in any
such reports filed under the Exchange Act or with any other Regulatory
Authority, such financial statements will fairly present the consolidated
financial position of the entity filing such statements as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows for the periods then ended in accordance with GAAP
25
(subject in the case of interim financial statements to normal recurring
year-end adjustments that are not material). As of their respective dates, such
reports filed under the Exchange Act or with any other Regulatory Authority will
comply in all material respects with the Securities Laws and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with the Laws applicable to
such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Proxy Statement; Shareholder Approval.
(a) As promptly as reasonably practicable after execution of this
Agreement, (i) in connection with the Seller's Shareholders' Meeting, Seller
shall prepare and file with the Commission, a Proxy Statement and subject to the
requirements of the applicable Regulatory Authorities, mail such Proxy Statement
to Seller's shareholders, and (ii) the Parties shall furnish to each other all
information concerning them that they may reasonably request in connection with
such Proxy Statement. Buyer and Seller shall timely and properly make all
necessary filings with respect to the Merger under the Securities Laws. Seller
will advise Buyer, when the definitive Proxy Statement or any supplement or
amendment has been filed, or of any request by the Commission for the amendment
or supplement of the Proxy Statement, or for additional information. Buyer and
Seller shall provide each other promptly with copies of all filings and letters
to and from the Commission and other Regulatory Authorities. Buyer shall be
entitled to review and comment on this Proxy Statement prior to it being filed
with the Commission.
(b) Seller shall duly call, give notice of, convene and hold a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
definitive Proxy Statement is filed with the Commission and not later than 35
days thereafter on a date reasonably acceptable to Buyer, for the purpose of
voting upon approval and adoption of this Agreement, the Merger, and the related
transactions ("Seller Shareholder Approval") and such other related matters as
it deems appropriate and shall, subject to the provisions of Section 8.1(c),
through its Board of Directors, recommend to its shareholders the approval and
adoption of this Agreement and use its reasonable efforts to obtain the Seller
Shareholder Approval.
(c) Neither the Board of Directors of Seller nor any committee thereof
shall (i) except as expressly permitted by this Section 8.1(c), withdraw,
qualify or modify, or propose publicly to withdraw, qualify or modify, in a
manner adverse to Buyer, the approval or recommendation of such Board of
Directors or such committee of the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
Proposal, or (iii) cause Seller to enter into any letter of intent, agreement in
principle, acquisition agreement or other document, instrument or agreement
(each, an "Acquisition Agreement") related to any Acquisition Proposal.
Notwithstanding the foregoing, in the event that, prior to the adoption of this
Agreement by the holders of Seller Common Stock, the Board of Directors of
Seller determines in good faith that it has received a Superior Proposal and,
after receipt of advice from outside counsel, that the failure to accept the
Superior Proposal would result in the Board of Directors of Seller breaching its
fiduciary duties to Seller shareholders under applicable Law, the Board of
Directors of Seller may (subject to this and the following sentences) inform
Seller shareholders that it no longer believes that the Merger is advisable and
no longer recommends approval and may (subject to this Section 8.1(c)) approve
or recommend a Superior Proposal (and in connection therewith withdraw or modify
its approval or recommendation of this Agreement and the Merger (a "Subsequent
Determination"), but only at a time that is after the fifth business day
following Buyer's receipt of written notice advising Buyer that the Board of
Directors of Seller has received a Superior Proposal specifying the material
terms and conditions of such Superior Proposal (and including a copy thereof
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with all accompanying documentation, if in writing), identifying the person
making such Superior Proposal and stating that it intends to make a Subsequent
Determination. After providing such notice, Seller shall provide Buyer
reasonable opportunity during this five business day period to make such
adjustments in the terms and conditions of this Agreement as would enable Seller
to proceed with its recommendation to its shareholders without a Subsequent
Determination; provided, however, that any such adjustment shall be at the
discretion of the Parties at the time. Notwithstanding any other provision of
this Agreement, except to the extent prohibited by the SCBCA determined by
Seller after consultation with Seller's counsel, Seller shall submit this
Agreement to its shareholders at its Shareholders' Meeting even if the Board of
Directors of Seller determines at any time after the date hereof that it is no
longer advisable or recommends that Seller shareholders reject it, in which case
the Board of Directors of Seller may communicate the basis for its lack of
recommendation to the shareholders in the Proxy Statement or any appropriate
amendment or supplement thereto.
(d) Seller agrees, as to itself and its Subsidiaries, that (i) the Proxy
Statement and any amendment or supplement thereto will comply in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations thereunder, along with the SCBCA, and (ii) none of the information
supplied by Seller or any of its Subsidiaries for inclusion or incorporation by
reference in the Proxy Statement will at the date of the mailing to its
shareholders or at the time of the meeting of its shareholders held for the
purpose of obtaining the Seller shareholder approval, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances in which they are made, not misleading.
8.2 Other Offers, Etc.
(a) No Seller Entity shall, nor shall it authorize or permit any of its
Affiliates or Representatives to, directly or indirectly (i) solicit, initiate,
encourage or induce the making, submission or announcement of any Acquisition
Proposal, (ii) participate in any discussions or negotiations regarding, or
furnish to any Person or "Group" (as such term is defined in Section 13(d) under
the Exchange Act) any nonpublic information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Acquisition Proposal,
(iii) subject to Section 8.2(c), approve, endorse or recommend any Acquisition
Proposal, or (iv) enter into any Acquisition Agreement contemplating or
otherwise relating to any Acquisition Transaction; provided, however, that this
Section 8.2(a) shall not prohibit a Seller Entity from furnishing nonpublic
information regarding any Seller Entity to, or entering into a confidentiality
agreement or discussions or negotiations with, any Person or Group in response
to a bona fide unsolicited written Acquisition Proposal submitted by such Person
or Group (and not withdrawn) if (A) no Seller Entity or Representative or
Affiliate thereof shall have violated any of the restrictions set forth in this
Section 8.2, (B) the Board of Directors of Seller determines in its good faith
judgment (based on, among other things, the advice of the Seller Financial
Advisor that such Acquisition Proposal constitutes a Superior Proposal, (C) the
Board of Directors of Seller concludes in good faith, after consultation with
its outside legal counsel, that the failure to take such action would be
inconsistent with its fiduciary duties, as such duties would exist in the
absence of this Section 8.2, to the shareholders of Seller under applicable Law,
(D) (1) at least five business days prior to furnishing any such nonpublic
information to, or entering into discussions or negotiations with, such Person
or Group, Seller gives Buyer written notice of the identity of such Person or
Group and of Seller's intention to furnish nonpublic information to, or enter
into discussions or negotiations with, such Person or Group, and (2) Seller
receives from such Person or Group an executed confidentiality agreement
containing terms no less favorable to the disclosing Party than the terms of the
Confidentiality Agreement, and (E) contemporaneously with furnishing any such
nonpublic information to such Person or Group, Seller furnishes such nonpublic
information to Buyer (to the extent such nonpublic information has not been
previously furnished by Seller to Buyer). In addition to the foregoing, Seller
shall provide Buyer with at least five business days' prior written notice of a
meeting of the Board of Directors of Seller at which meeting the Board of
Directors of Seller is reasonably expected to resolve to recommend a Superior
Proposal to its shareholders and together with such notice a copy of the most
recently proposed documentation relating to such Superior Proposal; provided,
further, that Seller hereby agrees promptly to provide to Buyer any revised
documentation and any Acquisition Agreement.
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(b) In addition to the obligations of Seller set forth in Section 8.2(a),
as promptly as practicable, after any of the executive officers of Seller become
aware thereof, Seller shall advise Buyer of any request received by Seller for
nonpublic information which Seller reasonably believes could lead to an
Acquisition Proposal or of any Acquisition Proposal, the material terms and
conditions of such request or Acquisition Proposal, and the identity of the
Person or Group making any such request or Acquisition Proposal. Seller shall
keep Buyer informed promptly of material amendments or modifications to any such
request or Acquisition Proposal.
(c) Seller shall, and shall cause its Subsidiaries directors, officers,
employees and Representatives to immediately cease any and all existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any Acquisition Proposal and will use and cause to be used all
commercially reasonable best efforts to enforce any confidentiality or similar
or related agreement relating to any Acquisition Proposal.
(d) Nothing contained in this Agreement shall prevent a Party or its board
of directors from complying with Rule 14d-9 and Rule 14e-2 under the Exchange
Act with respect to an Acquisition Proposal, provided, that such Rules will in
no way eliminate or modify the effect that any action pursuant to such Rules
would otherwise have under this Agreement.
8.3 [Reserved].
8.4 Consents of Regulatory Authorities.
The Parties hereto shall cooperate with each other and use their reasonable
efforts to promptly prepare and file all necessary documentation and
applications, to effect all applications, notices, petitions and filings and to
obtain as promptly as practicable all Consents of all Regulatory Authorities and
other Persons which are necessary or advisable to consummate the transactions
contemplated by this Agreement (including the Merger). The Parties agree that
they will consult with each other with respect to the obtaining of all Consents
of all Regulatory Authorities and other Persons necessary or advisable to
consummate the transactions contemplated by this Agreement and each Party will
keep the other apprised of the status of matters relating to contemplation of
the transactions contemplated herein. Each Party also shall promptly advise the
other upon receiving any communication from any Regulatory Authority or other
Person whose Consent is required for consummation of the transactions
contemplated by this Agreement which causes such Party to believe that there is
a reasonable likelihood that any requisite Consent will not be obtained or that
the receipt of any such Consent will be materially delayed.
8.5 Agreement as to Efforts to Consummate.
Subject to the terms and conditions of this Agreement, each Party agrees to
use, and to cause its Subsidiaries to use, its reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper, or advisable under applicable Laws to consummate and make
effective, as soon as reasonably practicable after the date of this Agreement,
the transactions contemplated by this Agreement, including using its reasonable
efforts to lift or rescind any Order adversely affecting its ability to
consummate the transactions contemplated herein and to cause to be satisfied the
conditions referred to in Article 9; provided, that nothing herein shall
preclude either Party from exercising its rights under this Agreement.
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8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of its business and properties (including that of its
Subsidiaries) and of their respective financial and legal conditions as the
other Party reasonably requests, provided, that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations. No investigation by a Party
shall affect the ability of such Party to rely on the representations and
warranties of the other Party. Between the date hereof and the Effective Time,
Seller shall permit Buyer's senior officers and independent auditors to meet
with the senior officers of Seller, including officers responsible for the
Seller Financial Statements, the internal controls of Seller and the disclosure
controls and procedures of Seller and Seller's independent public accountants,
to discuss such matters as Buyer may deem reasonably necessary or appropriate
for Buyer to satisfy its obligations under Sections 302, 404 and 906 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreement and the Buyer Confidentiality Agreement, which are
hereby reaffirmed, and incorporated by reference herein, each Party shall, and
shall cause its advisors and agents to, maintain the confidentiality of all
confidential information furnished to it by the other Party concerning its and
its Subsidiaries' businesses, operations, and financial positions and shall not
use such information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Seller shall use its reasonable efforts to exercise, and shall not
waive any of, its rights under confidentiality agreements entered into with
Persons which were considering an Acquisition Proposal with respect to Seller to
preserve the confidentiality of the information relating to the Seller Entities
provided to such Persons and their Affiliates and Representatives.
(d) Each Party agrees to give the other Party notice as soon as practicable
after any determination by it of any fact or occurrence relating to the other
Party which it has discovered through the course of its investigation and which
represents, or is reasonably likely to represent, either a material breach of
any representation, warranty, covenant or agreement of the other Party or which
has had or is reasonably likely to have a Seller Material Adverse Effect or a
Buyer Material Adverse Effect, as applicable.
8.7 Press Releases.
Prior to the Effective Time, Seller and Buyer shall consult with each other
as to the form and substance of any press release, communication with Seller
Shareholders, or other public disclosure materially related to this Agreement or
any other transaction contemplated hereby; provided, that nothing in this
Section 8.7 shall be deemed to prohibit any Party from making any disclosure
which its counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.8 Charter Provisions.
Each Seller Entity shall take all necessary action to ensure that the
entering into of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby do not and will not result in the grant of any
rights to any Person under the Articles of Incorporation, Articles of
Association, Bylaws or other governing instruments of any Seller Entity or
restrict or impair the ability of Buyer or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of any
Seller Entity that may be directly or indirectly acquired or controlled by them.
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8.9 Employee Benefits and Contracts.
(a) Following the Effective Time, Buyer shall provide generally to officers
and employees of the Seller Entities employee benefits under employee benefit
and welfare plans (other than stock option or other plans involving the
potential issuance of Buyer Common Stock), including Buyer's severance plan, on
terms and conditions which when taken as a whole are substantially similar to
those currently provided by the Buyer Entities to their similarly situated
officers and employees; provided however that with respect to severance only,
for the first six months following the Effective Time, Buyer will honor Seller's
severance policy for Seller employees as set forth in Section 8.9(a) of the
Seller Disclosure Memorandum; provided further that after such six month period,
Seller employees will receive severance benefits under Buyer's severance plan.
In no event will Buyer pay severance benefits to Seller employees under both
Seller's severance policy and Buyer's severance plan. For purposes of
participation, vesting and benefit accrual under Buyer's employee benefit plans,
the service of the employees of the Seller Entities prior to the Effective Time
shall be treated as service with a Buyer Entity participating in such employee
benefit plans; provided that employees of Seller Entity are not eligible to
participate in Buyer retirement plans that are defined benefit plans for a one
year period following the Effective Time and such employees will not receive any
credit for prior service in connection with such defined benefit plans. Seller
shall terminate its Employee Benefit Plans effective immediately prior to the
Effective Time.
(b) Simultaneously herewith, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have entered into an
Employment Agreement with the Buyer ("Employment Agreement") in the form of
Exhibit B, which shall become effective at the Effective Time. Simultaneously
herewith, ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have entered into a consulting agreement (the
"Consulting Agreement") with the Buyer in the form of Exhibit C, which shall
become effective at the Effective Time. At the Effective Time, the existing
written employment agreements as of the date hereof, set forth in Section 8.9(b)
of the Seller Disclosure Memorandum, between any of such Persons and the Seller
or Bank shall terminate and have no further force or effect; provided, however,
that any cash payments required to be made to the employees as a result of this
Agreement or the Merger shall be paid as provided under such existing written
agreements, the letter agreement between Seller and Messr. ▇▇▇▇▇▇▇, the
Employment Agreement and the Consulting Agreement each as provided to Buyer
prior to the execution of this Agreement.
(c) Upon the execution of this Agreement, each of Seller's directors shall
execute and deliver restrictive covenant agreements with Seller or Buyer or any
Buyer Entity that restrict certain activities within Greenville or Spartanburg
Counties, South Carolina, upon terms and conditions in the form and substance
set forth in Exhibit D (the "Director's Agreements" ).
8.10 Indemnification.
(a) For a period of six years after the Effective Time, Buyer shall, and
shall cause the Surviving Corporation to, indemnify, defend and hold harmless
the present and former directors, officers, employees and agents of the Seller
Entities (each, an "Indemnified Party") against all Liabilities arising out of
actions or omissions arising out of the Indemnified Party's service or services
as directors, officers, employees or agents of Seller or, at Seller's request,
of another corporation, partnership, joint venture, trust or other enterprise
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement) to the fullest extent permitted under the SCBCA,
Section 402 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, the Securities Laws and FDIC Regulations.
Part 359 and by Seller's Articles of Incorporation and Bylaws as in effect on
the date hereof, including provisions relating to advances of expenses incurred
in the defense of any Litigation and whether or not any Buyer Entity is insured
against any such matter. Without limiting the foregoing, in any case in which
approval by the Surviving Corporation is required to effectuate any
indemnification, the Surviving Corporation shall direct, at the election of the
Indemnified Party, that the determination of any such approval shall be made by
independent counsel mutually agreed upon between Buyer and the Indemnified
Party.
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(b) Buyer shall, or shall cause the Surviving Corporation to, use its
reasonable efforts (and Seller shall cooperate prior to the Effective Time in
these efforts) to maintain in effect for a period of up to six years after the
Effective ▇▇▇▇ ▇▇▇▇▇▇'▇ existing directors' and officers' liability insurance
policy (provided that Buyer or the Surviving Corporation may substitute therefor
(i) policies of substantially the same coverage and amounts containing terms and
conditions which are substantially no less advantageous or (ii) with the consent
of Seller given prior to the Effective Time, any other policy) with respect to
claims arising from facts or events which occurred prior to the Effective Time
and covering persons who are currently covered by such insurance; provided, that
none of Seller, Buyer nor the Surviving Corporation shall be obligated to make
aggregate premium payments longer than six years in respect of such policy (or
coverage replacing such policy) and which exceed, for the portion related to
Seller's directors and officers, $40,000 on Seller's current policy in effect as
of the date of this Agreement (the "Maximum Amount" ). If the amount of the
premiums necessary to maintain or procure such insurance coverage exceeds the
Maximum Amount, Buyer or the Surviving Corporation shall use its reasonable
efforts to maintain the most advantageous policies of directors' and officers'
liability insurance obtainable for a premium equal to the Maximum Amount, but
shall not be obligated to maintain any insurance coverage to the extent the cost
of such coverage exceeds the Maximum Amount.
(c) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 8.10, upon learning of any such Liability or Litigation,
shall promptly notify Buyer and the Surviving Corporation thereof. In the event
of any such Litigation (whether arising before or after the Effective Time), (i)
Buyer or the Surviving Corporation shall have the right to assume the defense
thereof and neither Buyer nor the Surviving Corporation shall be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Buyer or the Surviving Corporation elects
not to assume such defense or counsel for the Indemnified Parties advises that
there are substantive issues which raise conflicts of interest between Buyer or
the Surviving Corporation and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and Buyer or the Surviving Corporation
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; provided, that Buyer and
the Surviving Corporation shall be obligated pursuant to this paragraph (c) to
pay for only one firm of counsel for all Indemnified Parties in any
jurisdiction; (ii) the Indemnified Parties will cooperate in good faith in the
defense of any such Litigation; and (iii) neither Buyer nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent and which does not provide for a complete and irrevocable
release of all Buyer's Entities and their respective directors, officers and
controlling persons, employees, agents and Representatives; and provided,
further, that neither Buyer nor the Surviving Corporation shall have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have become final,
that the indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law.
(d) If Buyer or the Surviving Corporation or any successors or assigns
shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall transfer
all or substantially all of its assets to any Person, then and in each case,
proper provision shall be made so that the successors and assigns of Buyer or
the Surviving Corporation shall assume the obligations set forth in this Section
8.10.
(e) The provisions of this Section 8.10 are intended to be for the benefit
of and shall be enforceable by, each Indemnified Party and their respective
heirs and legal and personal representatives.
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ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party.
The respective obligations of each Party to perform this Agreement and
consummate the Merger and the other transactions contemplated hereby are subject
to the satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 11.6:
(a) Shareholder Approval. The shareholders of Seller shall have approved
this Agreement, and the consummation of the transactions contemplated hereby,
including the Merger, as and to the extent required by Law and by the provisions
of Seller's Articles of Association and Bylaws.
(b) Regulatory Approvals. All Consents of, filings and registrations with,
and notifications to, all Regulatory Authorities required for consummation of
the Merger shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired. No Consent
obtained from any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
(including requirements relating to the raising of additional capital or the
disposition of Assets) which in the reasonable judgment of the Board of
Directors of Buyer would so materially adversely affect the economic or business
benefits of the transactions contemplated by this Agreement that, had such
condition or requirement been known, the Buyer would not, in its reasonable
judgment, have entered into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained any and all
Consents required for consummation of the Merger (other than those referred to
in Section 9.1(b)) or for the preventing of any Default under any Contract or
Permit of such Party which, if not obtained or made, is reasonably likely to
have, individually or in the aggregate, a Seller Material Adverse Effect or a
Buyer Material Adverse Effect, as applicable. Seller shall have obtained the
Consents listed in Section 9.1(c) of the Seller Disclosure Memorandum, including
Consents from the lessors of each office leased by Seller, if any. No Consent so
obtained which is necessary to consummate the transactions contemplated hereby
shall be conditioned or restricted in a manner which in the reasonable judgment
of the Board of Directors of Buyer would so materially adversely affect the
economic or business benefits of the transactions contemplated by this Agreement
that, had such condition or requirement been known, Buyer would not, in its
reasonable judgment, have entered into this Agreement.
(d) Legal Proceedings. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law or Order
(whether temporary, preliminary or permanent) or taken any other action which
prohibits, restricts or makes illegal consummation of the transactions
contemplated by this Agreement.
9.2 Conditions to Obligations of Buyer.
The obligations of Buyer to perform this Agreement and consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Buyer pursuant to
Section 11.6(a):
(a) Representations and Warranties. For purposes of this Section 9.2(a),
the accuracy of the representations and warranties of Seller set forth in this
Agreement shall be assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided, that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties set forth in
Section 5.3 shall be true and correct (except for inaccuracies which are de
minimis in amount). There shall not exist inaccuracies in the representations
and warranties of Seller set forth in this Agreement (including the
representations and warranties set forth in Section 5.3) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a Seller
Material Adverse Effect; provided, that for purposes of this sentence only,
those representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or to the "Knowledge" of any Person
shall be deemed not to include such qualifications.
32
(b) Performance of Agreements and Covenants. Each and all of the agreements
and covenants of Seller to be performed and complied with pursuant to this
Agreement and the other agreements contemplated hereby prior to the Effective
Time shall have been duly performed and complied with in all material respects.
(c) Certificates. Seller shall have delivered to Buyer (i) a certificate,
dated as of the Effective Time and signed on its behalf by its chief executive
officer and its chief financial officer, to the effect that the conditions set
forth in Section 9.1 as it relates to Seller and in Sections 9.2(a), 9.2(b),
9.2(g) and 9.2(h) have been satisfied, and (ii) certified copies of resolutions
duly adopted by Seller's Board of Directors and shareholders evidencing the
taking of all corporate action necessary to authorize the execution, delivery
and performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Buyer and its counsel
shall request.
(d) Legal Opinions. Buyer shall have received legal opinions from Seller's
counsel in form and substance reasonably satisfactory to Buyer and its counsel.
(e) Claims Letters and Director's Agreements. Each of the directors and
officers of Seller shall have executed and delivered to Buyer Claims Letters in
the form of Exhibit E hereto; each director of Seller shall have executed and
delivered to Buyer the Director's Agreement. The Support Agreements, Employment
Agreement and Consulting Agreement shall have been executed and delivered.
(f) Notices of Dissent. Shareholders holding greater than 10.0% of the
outstanding Seller Common Stock shall not have given notice of their intent to
exercise their statutory right to dissent with respect to the Merger.
(g) Closing Shareholders' Equity; Allowance. At the Effective Time, Closing
Shareholders' Equity shall not be less than $7,900,000. As of the Effective
Time, the Allowance shall not be less than the amount required by Sections 5.9
and 7.1(d) herein.
(h) No Material Adverse Effect. As of the Effective Time, there shall not
have occurred any Seller Material Adverse Effect since the September 30, 2004
balance sheets with respect to Seller or the Bank.
9.3 Conditions to Obligations of Seller.
The obligations of Seller to perform this Agreement and consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Seller pursuant to
Section 11.6(b):
(a) Representations and Warranties. For purposes of this Section 9.3(a),
the accuracy of the representations and warranties of Buyer set forth in this
Agreement shall be assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). There shall not exist inaccuracies in the
representations and warranties of Buyer set forth in this Agreement such that
the aggregate effect of such inaccuracies has, or is reasonably likely to have,
a Buyer Material Adverse Effect; provided that, for purposes of this sentence
only, those representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or to the "Knowledge" of any Person
shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the agreements
and covenants of Buyer to be performed and complied with pursuant to this
Agreement and the other agreements contemplated hereby prior to the Effective
Time shall have been duly performed and complied with in all material respects.
33
(c) Certificates. Buyer shall have delivered to the Seller (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 9.1 as it relates to Buyer and in Sections
9.3(a) and 9.3(b) have been satisfied, and (ii) certified copies of resolutions
duly adopted by Buyer's Board of Directors evidencing the taking of all
corporate action necessary to authorize the execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as Seller and its counsel shall request.
(d) Payment Merger Consideration. Buyer shall pay the Merger Consideration
as provided by this Agreement.
ARTICLE 10
TERMINATION
10.1 Termination.
Notwithstanding any other provision of this Agreement, and notwithstanding
the approval of this Agreement by the shareholders of Seller, this Agreement may
be terminated and the Merger abandoned at any time prior to the Effective Time:
(a) By mutual written agreement of Buyer and Seller; or
(b) By either Party (provided, that the terminating Party is not then in
material breach of any representation, warranty, covenant, or other agreement
contained in this Agreement) in the event of a breach by the other Party of any
representation or warranty contained in this Agreement which cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching Party of such breach and which breach is reasonably likely, in the
opinion of the non-breaching Party, to permit such Party to refuse to consummate
the transactions contemplated by this Agreement pursuant to the standard set
forth in Section 9.2 or 9.3 as applicable; or
(c) By either Party in the event (i) any Consent of any Regulatory
Authority required for consummation of the Merger and the other transactions
contemplated hereby shall have been denied by final nonappealable action of such
authority or if any action taken by such authority is not appealed within the
time limit for appeal, (ii) any Law or Order permanently restraining, enjoining
or otherwise prohibiting the consummation of the Merger shall have become final
and nonappealable, or (iii) the shareholders of Seller fail to vote their
approval of the matters relating to this Agreement and the transactions
contemplated hereby at Seller's Shareholders' Meeting where such matters were
presented to such shareholders for approval and voted upon; or
(d) By either Party in the event that the Merger shall not have been
consummated by June 30, 2005, if the failure to consummate the transactions
contemplated hereby on or before such date is not caused by any breach of this
Agreement by the Party electing to terminate pursuant to this Section 10.1(d);
or
(e) By Buyer in the event that (i) the Board of Directors of Seller, shall
have failed to reaffirm its approval upon Buyer's request for such reaffirmation
of the Merger and the transactions contemplated by this Agreement (to the
exclusion of any other Acquisition Proposal), or shall have resolved not to
reaffirm the Merger, or (ii) the Board of Directors of Seller shall have failed
to include in the Proxy Statement its recommendation, without modification or
qualification, that Seller shareholders give the Seller Shareholder Approval or
shall have withdrawn, qualified or modified, or proposed publicly to withdraw,
qualify or modify, in a manner adverse to Buyer, the recommendation of such
Board of Directors to Seller shareholders that they give the Seller Shareholder
Approval, or (iii) the Board of Directors of Seller shall have affirmed,
recommended or authorized entering into any Acquisition Transaction other than
34
the Merger or, within 10 business days after commencement of any tender or
exchange offer for any shares of Seller Common Stock, the Board of Directors of
Seller shall have failed to recommend against acceptance of such tender or
exchange offer by its shareholders or shall have taken no position with respect
to the acceptance of such tender or exchange offer by its shareholders, or (iv)
the Board of Directors of Seller negotiates or authorizes the conduct of
negotiations, which shall not include the delivery of notice under Section
8.1(c) hereof, (and five business days have elapsed without such negotiations
being discontinued) with a third party (it being understood and agreed that
"negotiate" shall not be deemed to include the provision of information to, or
the request and receipt of information from, any Person that submits an
Acquisition Proposal or discussions regarding such information for the sole
purpose of ascertaining the terms of such Acquisition Proposal and determining
whether the board of directors will in fact engage in, or authorize,
negotiations) regarding an Acquisition Proposal other than the Merger; or
(f) By Seller, (provided, that Seller is not then in material breach of any
representation, warranty, covenant, or other agreement contained in this
Agreement), if prior to the adoption of this Agreement by the affirmative vote
of the holders of the requisite number of the outstanding shares of Seller
Common Stock entitled to vote thereon at the Seller Shareholders' Meeting, the
Board of Directors of Seller has (x) withdrawn or modified or changed its
recommendation or approval of this Agreement in a manner adverse to Buyer in
order to approve and permit Seller to accept a Superior Proposal and (y)
determined, after consultation with, and the receipt of advice from outside
legal counsel to Seller, that the failure to take such action as set forth in
the preceding clause (x) would be likely to result in a breach of the Board of
Directors' fiduciary duties under applicable Law, provided, however, that at
least 2 business days prior to any such termination, Seller shall, and shall
cause its advisors to, negotiate with Buyer, if Buyer elects to do so, to make
such adjustments in the terms and conditions of this Agreement as would enable
Seller to proceed with the transactions contemplated herein on such adjusted
terms.
10.2 Effect of Termination.
In the event of the termination and abandonment of this Agreement pursuant
to Section 10.1, this Agreement shall become void and have no effect, except
that (i) the provisions of Sections 8.6, 10.2, 10.3, 11.2 and 11.3 shall survive
any such termination and abandonment, and (ii) no such termination shall relieve
the breaching Party from Liability resulting from any breach by that Party of
this Agreement.
10.3 Termination Fee.
(a) If under either of the following circumstances:
(i) Seller terminates this Agreement pursuant to Section 0 of this
Agreement and within 12 months of such termination (A) an Acquisition Proposal
or Acquisition Transaction has been announced by Seller, or in cooperation with
Seller, with respect to any Seller Entity or (B) an Acquisition Agreement with
respect to an Acquisition Transaction has been entered into with respect to
Seller or any Seller Entity; or
(ii) Buyer shall terminate this Agreement pursuant to 10.1(e)(i)-(v);
then Seller shall promptly pay to Buyer an amount equal to $1,000,000 (the
"Termination Fee") upon the earlier of such announcement or the entry into such
Acquisition Agreement or the date of any announcement or statement with respect
to any Acquisition Proposal by Seller or its Board of Directors, other than a
recommendation for approval of the Merger; provided, however, that in connection
with a termination pursuant to Section 10.1(e)(i) only, the Termination Fee
shall be paid when the Acquisition Transaction is consummated, as opposed for
the others to be paid at the time of termination. Seller hereby waives any right
to set-off or counterclaim against such amount. If the Termination Fee shall be
payable pursuant to subsection (a)(i) of this Section 10.3, the Termination Fee
shall be paid in same-day funds at or prior to the earliest of the date of
consummation of such Acquisition Transaction, or the date of execution of an
Acquisition Agreement with respect to such Acquisition Transaction or the date
35
of any announcement or statement with respect to any Acquisition Proposal by
Seller or its Board of Directors, other than a recommendation for approval of
the Merger. If the Termination Fee shall be payable pursuant to subsection
(a)(ii) of this Section 10.3, the Termination Fee shall be paid in same-day
funds upon the earlier of (i) the execution of an Acquisition Agreement with
respect to such Acquisition Transaction or the date of any announcement or
statement with respect to any Acquisition Proposal by Seller or its Board of
Directors, other than a recommendation for approval of the Merger or (ii) two
business days from the date of termination of this Agreement.
(b) The Parties acknowledge that the agreements contained in Section
10.3(a) are an integral part of the transactions contemplated by this Agreement,
and that without these agreements, they would not enter into this Agreement.
Accordingly, if Seller fails to pay promptly any fee payable by it pursuant to
this Section 10.3, then Seller shall pay to Buyer, its reasonable costs and
expenses (including reasonable attorneys' fees and charges) in connection with
collecting such Termination Fee, together with interest on the amount of the fee
at the prime annual rate of interest (as published in The Wall Street Journal)
plus 2% as the same is in effect from time to time from the date such payment
was due under this Agreement until the date of payment.
(c) Notwithstanding anything herein to the contrary, in no event shall the
aggregate amount that Seller must pay to Buyer pursuant to Section 10.3(a) above
exceed $1,000,000.
10.4 Non-Survival of Representations and Covenants.
Except for Article 3 and Article 4, Sections 8.9 and 8.10, and this Article
10, the respective representations, warranties, obligations, covenants, and
agreements of the Parties shall not survive the Effective Time.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
"Acquisition Proposal" means any proposal (whether communicated to Seller
or publicly announced to Seller's shareholders) by any Person (other than Buyer
or any of its Affiliates) for an Acquisition Transaction involving Seller or any
of its present or future consolidated Subsidiaries, or any combination of such
Subsidiaries, the assets of which constitute 10% or more of the consolidated
assets of Seller as reflected on Seller's consolidated statement of condition
prepared in accordance with GAAP.
"Acquisition Transaction" means any transaction or series of related
transactions (other than the transactions contemplated by this Agreement)
involving: (i) any acquisition or purchase from Seller by any Person or Group
(other than Buyer or any of its Affiliates) of 25% or more in interest of the
total outstanding voting securities of Seller or any of its Subsidiaries, or any
tender offer or exchange offer that if consummated would result in any Person or
Group (other than Buyer or any of its Affiliates) beneficially owning 25% or
more in interest of the total outstanding voting securities of Seller or any of
its Subsidiaries, or any merger, consolidation, business combination or similar
transaction involving Seller pursuant to which the shareholders of Seller
immediately preceding such transaction hold less than 90% of the equity
interests in the surviving or resulting entity (which includes the parent
corporation of any constituent corporation to any such transaction) of such
transaction; (ii) any sale or lease (other than in the ordinary course of
business), or exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of 5% or more of the assets of Seller; or
(iii) any liquidation or dissolution of Seller.
36
"Affiliate" of a Person means: (i) any other Person directly, or indirectly
through one or more intermediaries, controlling, controlled by or under common
control with such Person; (ii) any officer, director, partner, employer, or
direct or indirect beneficial owner of any 10% or greater equity or voting
interest of such Person; or (iii) any other Person for which a Person described
in clause (ii) acts in any such capacity.
"Assets" of a Person means all of the assets, properties, businesses and
rights of such Person of every kind, nature, character and description, whether
real, personal or mixed, tangible or intangible, accrued or contingent, or
otherwise relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books and records
of such Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"Bank" means New Commerce Bank, N.A., a national banking association and a
wholly owned Subsidiary of Seller.
"BHC Act" means the federal Bank Holding Company Act of 1956, as amended.
"Buyer Confidentiality Agreement" means the Confidentiality Agreement
between Seller and Buyer, dated December 14, 2004.
"Buyer Disclosure Memorandum" means the written information entitled "SCBT
Financial Corporation Disclosure Memorandum" delivered prior to the date of this
Agreement to Seller describing in reasonable detail the matters contained
therein and, with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such disclosure is being
made. Information disclosed with respect to one Section shall not be deemed to
be disclosed for purposes of any other Section not specifically referenced with
respect thereto.
"Buyer Entities" means, collectively, Buyer and all Buyer Subsidiaries.
"Buyer Financial Statements" means (i) the consolidated balance sheets of
Buyer as of September 30, 2004, and as of December 31, 2003, and the related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for the periods ended September 30, 2004,
and for each of the three fiscal years ended December 31, 2003, as filed in
amended form by Buyer in Exchange Act Documents, and (ii) the consolidated
balance sheets of Buyer (including related notes and schedules, if any) and
related statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in Exchange Act
Documents, as amended, filed with respect to periods ended subsequent to
September 30, 2004.
"Buyer Material Adverse Effect" means an event, change or occurrence which,
individually or together with any other event, change or occurrence, has a
material adverse effect on (i) the financial position, property, business,
assets or results of operations of Buyer and its Subsidiaries, taken as a whole,
or (ii) the ability of Buyer to perform its obligations under this Agreement or
to consummate the Merger or the other transactions contemplated by this
Agreement, provided, that "Buyer Material Adverse Effect" shall not be deemed to
include the effects of (A) changes in banking and other Laws of general
applicability or interpretations thereof by Governmental Authorities, (B)
changes in GAAP or regulatory accounting principles generally applicable to
banks and their holding companies, (C) actions and omissions of Buyer (or any of
its Subsidiaries) taken with the prior written Consent of Seller in
contemplation of the transactions contemplated hereby, or (D) the direct effects
of compliance with this Agreement on the operating performance of Buyer.
37
"Buyer Subsidiaries" means the Subsidiaries of Buyer, which shall include
any corporation, bank, savings association, limited liability company, limited
partnership, limited liability partnership or other organization acquired as a
Subsidiary of Buyer in the future and held as a Subsidiary by Buyer at the
Effective Time.
"Closing Date" means the date on which the Closing occurs.
"Closing Shareholders' Equity" means Seller's shareholders' equity as of
the Effective Time, with the following adjustments taken into account: including
(i) net income or losses since September 30, 2004, and (ii) provisions for loan
and credit losses necessary or appropriate under GAAP and the standards of
applicable Regulatory Authorities; but excluding (i) unrealized gains and losses
on securities since September 30, 2004, (ii) the reasonable fees and expenses
incurred by Seller to pay Seller's Financial Advisor's fees disclosed in the
Seller Disclosure Memorandum, (iii) the reasonable fees and expenses of Seller's
counsel in connection with the Merger, (iv) the printing, mailing and proxy
solicitation materials incurred in connection with the Shareholders' Meeting,
(v) the cash payments to Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ described in Section 8.9(b)
hereof, and (vi) such other reasonable expenses incurred directly as a result of
compliance with the terms and conditions of this Agreement and the Merger, as
Buyer and Seller may mutually agree upon in writing.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Commission" or "SEC" means the United States Securities and Exchange
Commission.
"Commissioner" means the South Carolina Commissioner of Banking.
"Confidentiality Agreement" means the Confidentiality Agreement, dated
October 28, 2004, between Seller and Buyer. "Consent" means any consent,
approval, authorization, clearance, exemption, waiver, or similar affirmation by
any Person pursuant to any Contract, Law, Order, or Permit.
"Contract" means any written or oral agreement, arrangement, authorization,
commitment, contract, indenture, instrument, lease, license, obligation, plan,
practice, restriction, understanding, or undertaking of any kind or character,
or other document to which any Person is a party or that is binding on any
Person or its capital stock, Assets or business.
"Default" means (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, (ii)
any occurrence of any event that with the passage of time or the giving of
notice or both would constitute a breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, 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 of any Person to exercise any
remedy or obtain any relief under, terminate or revoke, suspend, cancel, or
modify or change the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit.
"Employee Benefit Plan" means each pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership, share purchase,
severance pay, vacation, bonus, retention, change in control or other incentive
plan, medical, vision, dental or other health plan, any life insurance plan,
flexible spending account, cafeteria plan, vacation, holiday, disability or any
other employee benefit plan or fringe benefit plan, including any "employee
benefit plan," as that term is defined in Section 3(3) of ERISA and any other
plan, fund, policy, program, practice, custom understanding or arrangement
providing compensation or other benefits, whether or not such Employee Benefit
Plan is or is intended to be (i) covered or qualified under the Code, ERISA or
any other applicable Law, (ii) written or oral, (iii) funded or unfunded, (iv)
actual or contingent or (v) arrived at through collective bargaining or
otherwise.
38
"Environmental Laws" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata) and which are
administered, interpreted or enforced by the United States Environmental
Protection Agency and state and local Governmental Authorities with jurisdiction
over, and including common law in respect of, pollution or protection of the
environment, including: (i) the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA");
(ii) the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"); (iii) the Emergency
Planning and Community Right to Know Act (42 U.S.C. 11001 et seq.); (iv) the
Clean Air Act (42 U.S.C. 7401 et seq.); (v) the Clean Water Act (33 U.S.C.
ss.ss.1251 et seq.); (vi) the Toxic Substances Control Act (15 U.S.C. ss.ss.2601
et seq.); (v) any state, county, municipal or local statues, laws or ordinances
similar or analogous to the federal statutes listed in parts (i) - (iv) of this
subparagraph; (vii) any amendments to the statues, laws or ordinances listed in
parts (i) - (vi) of this subparagraph, regardless of whether in existence on the
date hereof, (viii) any rules, regulations, guidelines, directives, orders or
the like adopted pursuant to or implementing the statutes, laws, ordinances and
amendments listed in parts (i) - (vii) of this subparagraph; and (ix) any other
law, statute, ordinance, amendment, rule, regulation, guideline, directive,
order or the like in effect now or in the future relating to environmental,
health or safety matters. and other Laws relating to emissions, discharges,
releases, or threatened releases of any Hazardous Material, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of any Hazardous Material.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any trade or business, whether or not incorporated,
which together with a Seller Entity would be treated as a single employer under
Code Section 414 or would be deemed a single employer within the meaning of
Sections.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Exchange Act Documents" means all forms, proxy statements, registration
statements, reports, schedules, and other documents, including all
certifications and statements required by the Exchange Act or Section 906 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act with respect to any report that is an Exchange Act Document,
filed, or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"Exhibits" means the Exhibits so marked, copies of which are attached to
this Agreement. Such Exhibits are hereby incorporated by reference herein and
made a part hereof, and may be referred to in this Agreement and any other
related instrument or document without being attached hereto or thereto
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve" shall mean the Board of Governors of the Federal Reserve
System and the Federal Reserve Bank of Atlanta.
"GAAP" shall mean generally accepted accounting principles in the United
States, consistently applied during the periods involved.
"Governmental Authority" shall mean any federal, state, local, foreign, or
other court, board, body, commission, agency, authority or instrumentality,
arbitral authority, self-regulatory authority, mediator, tribunal, including
Regulatory Authorities and Taxing Authorities.
"Group" shall mean two or more Persons acting in concert for the purpose of
acquiring, holding or disposing of securities of an issuer.
39
"Hazardous Material" shall mean any chemical, substance, waste, material,
pollutant, or contaminant defined as or deemed hazardous or toxic or otherwise
regulated under any Environmental Law, including RCRA hazardous wastes, CERCLA
hazardous substances, and HSRA regulated substances, pesticides and other
agricultural chemicals, oil and petroleum products or byproducts and any
constituents thereof, urea formaldehyde insulation, lead in paint or drinking
water, mold, asbestos, and polychlorinated biphenyls (PCBs): (i) any hazardous
substance, hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental Laws) and
(ii) any chemicals, pollutants, contaminants, petroleum, petroleum products, or
oil (and specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of Environmental Law), provided,
notwithstanding the foregoing or any other provision in this Agreement to the
contrary, the words "Hazardous Material" shall not mean or include any such
Hazardous Material used, generated, manufactured, stored, disposed of or
otherwise handled in normal quantities in the ordinary course of business in
compliance with all applicable Environmental Laws, or such that may be naturally
occurring in any ambient air, surface water, ground water, land surface or
subsurface strata.
"Intellectual Property" means copyrights, patents, trademarks, service
marks, service names, trade names, domain names, together with all goodwill
associated therewith, registrations and applications therefor, technology rights
and licenses, computer software (including any source or object codes therefor
or documentation relating thereto), trade secrets, franchises, know-how,
inventions, and other intellectual property rights.
"Knowledge" as used with respect to a Person (including references to such
Person being aware of a particular matter) means those facts that are known or
should reasonably have been known after due inquiry by the chairman, president,
or chief financial officer, or any senior or executive vice president of such
Person and the knowledge of any such Persons obtained or which would have been
obtained from a reasonable investigation.
"Law" means any code, law (including common law), ordinance, regulation,
reporting or licensing requirement, rule, statute, regulation or order
applicable to a Person or its Assets, Liabilities or business, including those
promulgated, interpreted or enforced by any Regulatory 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 any conditional sale agreement, default of title, easement,
encroachment, encumbrance, hypothecation, infringement, lien, mortgage, pledge,
reservation, restriction, security interest, title retention or other security
arrangement, or any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or any property interest,
other than (i) Liens for current property Taxes not yet due and payable, and
(ii) for any depository institution, pledges to secure public deposits and other
Liens incurred in the ordinary course of the banking business.
"Litigation" means any action, arbitration, cause of action, lawsuit,
claim, complaint, criminal prosecution, governmental or other examination or
investigation, audit (other than regular audits of financial statements by
outside auditors), compliance review, inspection, hearing, administrative or
other proceeding relating to or affecting a Party, its business, its Assets or
Liabilities (including Contracts related to Assets or Liabilities), or the
transactions contemplated by this Agreement, but shall not include regular,
periodic examinations of depository institutions and their Affiliates by
Regulatory Authorities.
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"Losses" means any and all demands, claims, actions or causes of action,
assessments, losses, diminution in value, damages (including special and
consequential damages), liabilities, costs, and expenses, including interest,
penalties, cost of investigation and defense, and reasonable attorneys' and
other professional fees and expenses.
"Material" or "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.
"OCC" means the federal Office of the Comptroller of the Currency.
"Operating Property" means any property owned, leased, or operated by the
Party in question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest or other interest (including an interest in
a fiduciary capacity), and, where required by the context, includes the owner or
operator of such property, but only with respect to such property.
"Order" means any administrative decision or award, decree, injunction,
judgment, order, quasi-judicial decision or award, directive, ruling, or writ of
any Governmental Authority.
"Participation Facility" means any facility or property in which the Party
in question or any of its Subsidiaries participates in the management and, where
required by the context, means the owner or operator of such facility or
property, but only with respect to such facility or property.
"Party" means Seller, Buyer or Bank and "Parties" means two or more of such
Persons.
"Permit" means any federal, state, local, and foreign Governmental
Authority approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its securities,
Assets, or business.
"Person" means a natural person or any legal, commercial or Governmental
Authority, such as, but not limited to, a corporation, general partnership,
joint venture, limited partnership, limited liability company, limited liability
partnership, trust, business association, group acting in concert, or any person
acting in a representative capacity.
"Proxy Statement" means the proxy statement used by Seller to solicit the
approval of its shareholders of the transactions contemplated by this Agreement.
"Regulatory Authorities" means, collectively, the Commission, the Nasdaq
National Market, the NASD, the OCC, the FDIC, the Department of Justice, and the
Federal Reserve and all other federal, state, county, local or other
Governmental Authorities having jurisdiction over a Party or its Subsidiaries.
"Representative" means any investment banker, financial advisor, attorney,
accountant, consultant, or other representative or agent of a Person.
"Rights" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, warrants, or other binding obligations
of any character whatsoever by which a Person is or may be bound to issue
additional shares of its capital stock or other securities, securities or rights
convertible into or exchangeable for, shares of the capital stock or other
securities of a Person or by which a Person is or may be bound to issue
additional shares of its capital stock or other Rights.
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act" means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended, and
the rules and regulations promulgated thereunder.
"SCBCA" means the South Carolina Business Corporation Act of 1988, as
mended.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
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"Securities Laws" means the Securities Act, the Exchange Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, the Investment Company Act of 1940, as amended, the
Investment Advisors Act of 1940, as amended, the Trust Indenture Act of 1939, as
amended, and the rules and regulations of any Regulatory Authority promulgated
thereunder.
"Seller Common Stock" means the $0.01 par value common stock of Seller.
"Seller Disclosure Memorandum" means the written information entitled "New
Commerce Bancorp Disclosure Memorandum" delivered prior to the date of this
Agreement to Buyer describing in reasonable detail the matters contained therein
and, with respect to each disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be disclosed for
purposes of any other Section not specifically referenced with respect thereto.
"Seller Entities" means, collectively, Seller and all Seller Subsidiaries.
"Seller Financial Advisor" means Triangle Capital Partners, LLC.
"Seller Financial Statements" means (i) the balance sheets (including
related notes and schedules, if any) of Seller as of September 30, 2004, and as
of December 31, 2003, and the related statements of operations, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) for the three and nine months ended September 30, 2004, and for each of the
three fiscal years ended December 31, 2003, as filed by Seller in its Exchange
Act Documents, and (ii) the balance sheets of Seller (including related notes
and schedules, if any) and related statements of operations, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) included in Exchange Act Documents filed with respect to periods ended
subsequent to September 30, 2004.
"Seller Material Adverse Effect" means an event, change or occurrence
which, individually or together with any other event, change or occurrence, has
a material adverse effect on (i) the management team, financial position,
property, business, assets or results of operations of Seller and its
Subsidiaries, taken as a whole, or (ii) the ability of Seller to perform its
obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement, provided, that "Seller Material
Adverse Effect" shall not be deemed to include the effects of (A) changes in
banking and other Laws of general applicability or interpretations thereof by
Governmental Authorities, (B) changes in GAAP or regulatory accounting
principles generally applicable to banks and their holding companies, or (C)
actions and omissions of Seller (or any of its Subsidiaries) taken with the
prior written Consent of Buyer in contemplation of the transactions contemplated
hereby, or (D) the direct effects on the operating performance of Seller of the
merger-related expenses excluded in the calculation of Closing Shareholders'
Equity or compliance with Section 7.1(d).
"Seller Subsidiaries" means the Subsidiaries, if any, of Seller, as of the
date of this Agreement, Seller has only one Subsidiary, New Commerce Bank, N.A.
"Seller Warrants" means the Warrants issued by Seller prior to the date of
this Agreement entitling the holders to purchase up to 90,000 shares of Seller
Common Stock at a weighted averaged exercise price of $10.00.
"Shareholders' Meeting" means the meeting of Seller's shareholders of to be
held pursuant to Section 8.1, including any adjournment or adjournments thereof.
"South Carolina Board" means the South Carolina State Board of Financial
Institutions.
"Subsidiaries" means all those corporations, banks associations, or other
entities of which the entity in question either (i) owns or controls 50% or more
of the outstanding equity securities either directly or through an unbroken
chain of entities as to each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent (provided, there shall
not be included any such entity the equity securities of which are owned or
controlled in a fiduciary capacity), (ii) in the case of partnerships, serves as
a general partner, (iii) in the case of a limited liability company, serves as a
managing member, or (iv) otherwise has the ability to elect a majority of the
directors, trustees or managing members thereof.
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"Superior Proposal" means any Acquisition Proposal (on its most recently
amended or modified terms, if amended or modified) (i) involving the acquisition
of at least a majority of the outstanding equity interest in, or all or
substantially all of the assets and liabilities of, the Seller Entities and (ii)
with respect to which the Board of Directors of Seller (A) determines in good
faith that such Acquisition Proposal, if accepted, is reasonably likely to be
consummated on a timely basis, taking into account all legal, financial,
regulatory and other aspects of the Acquisition Proposal and the Person or Group
making the Acquisition Proposal, and (B) determines in its good faith judgment
(based on, among other things, the advice of its financial advisor) to be more
favorable to Seller's shareholders than the Merger taking into account all
relevant factors (including whether, in the good faith judgment of the Board of
Directors of Seller, after obtaining the advice of Seller's Financial Advisor,
the Person or Group making such Acquisition Proposal is reasonably able to
finance the transaction and close it timely, and any proposed changes to this
Agreement that may be proposed by Buyer in response to such Acquisition
Proposal).
"Surviving Corporation" means Buyer as the surviving corporation resulting
from the Merger.
"Tax" or "Taxes" means all taxes, charges, fees, levies, imposts, duties,
or assessments, including income, gross receipts, excise, employment, sales,
use, transfer, recording license, payroll, franchise, severance, documentary,
stamp, occupation, windfall profits, environmental, federal highway use,
commercial rent, customs duties, capital stock, paid-up capital, profits,
withholding, Social Security, single business and unemployment, disability, real
property, personal property, registration, ad valorem, value added, alternative
or add-on minimum, estimated, or other taxes, fees, assessments or charges of
any kind whatsoever, imposed or required to be withheld by any Governmental
Authority (domestic or foreign), including any interest, penalties, and
additions imposed thereon or with respect thereto.
"Tax Return" means any report, return, information return, or other
information required to be supplied to a Governmental Authority in connection
with Taxes, including any return of an affiliated or combined or unitary group
that includes a Party or its Subsidiaries.
"Taxing Authority" means the Internal Revenue Service and any other
Governmental Authority responsible for the administration of any Tax.
(b) The terms set forth below shall have the meanings ascribed thereto in the
referenced sections:
Term Page Term Page
Acquisition Agreement................26 Certificates.........................3
Agreement.............................1 Closing..............................1
Allowance............................11 Consulting Agreement................30
Articles of Merger....................1 Derivative Contract.................18
BHCA..................................5 Director's Agreements...............30
Buyer.................................1 DOL.................................15
Buyer Exchange Act Reports...........21 Effective Time.......................2
CERCLA..................Section 11.1(a) Exchange Agent.......................4
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Excluded Shares.......................3 Seller ERISA Plan...................15
Federal Reserve.......................1 Seller Exchange Act Reports..........7
Indemnified Party....................30 Seller Pension Plan.................15
Individually Identifiable Personal Seller Shareholder Approval.........26
Information.........................18 Seller Warrant.......................3
IRS..................................15 South Carolina Board.................1
Maximum Amount.......................31 Subsequent Determination............27
Merger................................1 Support Agreements...................1
OCC...................................1 Takeover Laws.......................19
RCRA....................Section 11.1(a) Termination Fee....Section 10.3(a)(ii)
Seller................................1 WARN Act...............Section 5.13(c)
Seller Benefit Plans.................15 Warrantholder........................3
Seller Contracts.....................18
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation", and such terms shall not be limited
by enumeration or example.
11.2 Expenses.
Each of the Parties shall bear and pay all direct costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration and application fees, printing fees,
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, and which in the case of Seller, shall be
paid at Closing and prior to the Effective Time.
11.3 Brokers and Finders.
Except for Triangle Capital Partners, LLC as to Seller and except for
Sandler ▇'▇▇▇▇▇ & Partners, L.P. as to Buyer, each of the Parties represents and
warrants that neither it nor any of its officers, directors, employees, or
Affiliates has employed any broker or finder or incurred any Liability for any
financial advisory fees, investment bankers' fees, brokerage fees, commissions,
or finders' fees in connection with this Agreement or the transactions
contemplated hereby. In the event of a claim by any broker or finder based upon
such broker's representing or being retained by or allegedly representing or
being retained by Seller or by Buyer, each of Seller and Buyer, as the case may
be, agrees to indemnify and hold the other Party harmless from any Liability in
respect of any such claim. Seller has provided a copy of the Triangle Capital
Partners, LLC engagement letter and expected fee for its services as Section
11.3 of the Seller Disclosure Memorandum and shall pay all amounts due
thereunder at Closing and prior to the Effective Time.
11.4 Entire Agreement.
Except as otherwise expressly provided herein, this Agreement (including
the documents and instruments referred to herein) constitutes the entire
agreement between the Parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
thereto, written or oral (except, as to Section 8.6(b), for the Confidentiality
Agreement). Nothing in this Agreement expressed or implied, is intended to
confer upon any Person, other than the Parties or their respective successors,
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, other than as provided in Sections 8.9 and 8.10.
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11.5 Amendments.
To the extent permitted by Law, and subject to Section 1.4, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of each of the Parties, whether before or after shareholder approval of
this Agreement has been obtained; provided, that after any such approval by the
holders of Seller Common Stock, there shall be made no amendment that reduces or
modifies in any material respect the consideration to be received by holders of
Seller Common Stock.
11.6 Waivers.
(a) Prior to or at the Effective Time, Buyer, acting through its Board of
Directors, chief executive officer or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
Seller, to waive or extend the time for the compliance or fulfillment by Seller
of any and all of its obligations under this Agreement, and to waive any or all
of the conditions precedent to the obligations of Buyer under this Agreement,
except any condition which, if not satisfied, would result in the violation of
any Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Buyer.
(b) Prior to or at the Effective Time, Seller, acting through its Board of
Directors, chief executive officer or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
Buyer, to waive or extend the time for the compliance or fulfillment by Buyer of
any and all of its obligations under this Agreement, and to waive any or all of
the conditions precedent to the obligations of Seller under this Agreement,
except any condition which, if not satisfied, would result in the violation of
any Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Seller.
(c) The failure of any Party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such Party at a
later time to enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained in this Agreement
in one or more instances shall be deemed to be or construed as a further or
continuing waiver of such condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
11.7 Assignment.
Except as expressly contemplated hereby, neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any Party
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other Party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and assigns.
11.8 Notices.
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so delivered:
Buyer: SCBT Financial Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
45
Copy to Counsel: ▇▇▇▇▇▇ & Bird LLP
One Atlantic Center
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
Seller: New Commerce BanCorp
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Copy to Counsel: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
11.9 Governing Law.
Regardless of any conflict of law or choice of law principles that might
otherwise apply, the Parties agree that this Agreement shall be governed by and
construed in all respects in accordance with the laws of the State of South
Carolina. The Parties all expressly agree and acknowledge that the State of
South Carolina has a reasonable relationship to the Parties and/or this
Agreement. Each Party hereto hereby irrevocably waives, to the fullest extent
permitted by Law, (a) any objection that it may now or hereafter have to laying
venue of any suit, action or proceeding brought in such court, (b) any claim
that any suit, action or proceeding brought in such court has been brought in an
inconvenient forum, and (c) any defense that it may now or hereafter have based
on lack of personal jurisdiction in such forum.
11.10 Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.
11.11 Captions; Articles and Sections.
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement. Unless otherwise indicated, all references
to particular Articles or Sections shall mean and refer to the referenced
Articles and Sections of this Agreement.
11.12 Interpretations.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against any Party, whether under any rule of construction
or otherwise. No Party to this Agreement shall be considered the draftsman. The
Parties acknowledge and agree that this Agreement has been reviewed, negotiated,
and accepted by all Parties and their attorneys and shall be construed and
interpreted according to the ordinary meaning of the words used so as fairly to
accomplish the purposes and intentions of all Parties hereto.
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11.13 Enforcement of Agreement.
The Parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement was not performed in accordance
with its specific terms or was otherwise breached. It is accordingly agreed that
the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
11.14 Severability.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
[Signatures on Next Page]
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
SCBT FINANCIAL CORPORATION
(BUYER)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
President and Chief Executive Officer
NEW COMMERCE BANCORP
(Seller)
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
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