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EXHIBIT 99.2
Execution Copy
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MERGER AGREEMENT
AMONG
FIRST BANCORP
AND
CENTURY BANCORP, INC.
Dated as of October 19, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINED TERMS
1.1 Definitions...........................................................1
ARTICLE II
THE HOLDING COMPANY MERGER;
CONVERSION AND EXCHANGE OF COMPANY SHARES
2.1 The Holding Company Merger............................................9
2.2 Company Shares.......................................................10
2.3 Merger Consideration.................................................11
2.4 Election and Allocation Procedures...................................12
2.5 Closing Payment......................................................14
2.6 Exchange Procedures..................................................14
2.7 Dissenting Shares....................................................15
2.8 Company Stock Options................................................16
ARTICLE III
THE BANK MERGER;
CONVERSION AND EXCHANGE OF COMPANY BANK SHARES
3.1 The Bank Merger......................................................17
3.2 Company Bank Shares..................................................17
ARTICLE IV
THE CLOSING
4.1 Closing..............................................................17
4.2 Deliveries by the Company............................................18
4.3 Deliveries by the Buyer..............................................18
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Organization, Standing and Power.....................................18
5.2 Authority; No Conflicts..............................................19
5.3 Capital Stock; Subsidiaries..........................................19
5.4 SEC Filings; Company Financial Statements............................20
5.5 Absence of Undisclosed Liabilities...................................21
5.6 Absence of Certain Changes or Events.................................21
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5.7 Tax Matters..........................................................21
5.8 Assets...............................................................22
5.9 Securities Portfolio and Investments.................................23
5.10 Environmental Matters................................................23
5.11 Compliance with Laws.................................................24
5.12 Labor Relations......................................................24
5.13 Employee Benefit Plans...............................................25
5.14 Material Contracts...................................................26
5.15 Legal Proceedings....................................................27
5.16 Reports..............................................................27
5.17 Registration Statement; Proxy Statement..............................27
5.18 Accounting, Tax, and Regulatory Matters..............................28
5.19 State Takeover Laws..................................................28
5.20 Charter Provisions...................................................28
5.21 Records..............................................................28
5.22 Derivatives..........................................................28
5.23 Certain Regulated Businesses.........................................28
5.24 Commissions..........................................................28
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
6.1 Organization.........................................................29
6.2 Authority; No Conflicts..............................................29
6.3 Buyer's Stock; Subsidiaries..........................................30
6.4 SEC Filings; Buyer Financial Statements..............................30
6.5 Absence of Undisclosed Liabilities...................................31
6.6 Absence of Certain Changes or Events.................................31
6.7 Tax Matters..........................................................31
6.8 Assets...............................................................32
6.9 Securities Portfolio and Investments.................................33
6.10 Environmental Matters................................................33
6.11 Compliance with Laws.................................................34
6.12 Labor Relations......................................................34
6.13 Employee Benefit Plans...............................................35
6.14 Material Contracts...................................................37
6.15 Legal Proceedings....................................................37
6.16 Reports..............................................................37
6.17 Registration Statement; Proxy Statement..............................38
6.18 Accounting, Tax, and Regulatory Matters..............................38
6.19 Derivatives..........................................................38
6.20 Certain Regulated Businesses.........................................38
6.21 Commissions..........................................................38
ARTICLE VII
COVENANTS
7.1 Covenants of the Company.............................................39
7.2 Covenants of the Buyer...............................................42
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7.3 Covenants of All Parties to the Agreement............................45
ARTICLE VIII
DISCLOSURE OF ADDITIONAL INFORMATION
8.1 Access to Information................................................47
8.2 Access to Premises...................................................47
8.3 Environmental Survey.................................................47
8.4 Confidentiality......................................................47
8.5 Publicity............................................................48
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Mutual Conditions....................................................48
9.2 Conditions to the Obligations of the Company.........................50
9.3 Conditions to the Obligations of the Buyer...........................51
ARTICLE X
TERMINATION
10.1 Termination..........................................................52
10.2 Procedure and Effect of Termination..................................53
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Expenses.............................................................54
11.2 Survival of Representations..........................................54
11.3 Amendment and Modification...........................................54
11.4 Waiver of Compliance; Consents.......................................54
11.5 Notices..............................................................54
11.6 Assignment...........................................................55
11.7 Separable Provisions.................................................55
11.8 Governing Law........................................................55
11.9 Counterparts.........................................................56
11.10 Interpretation.......................................................56
11.11 Entire Agreement.....................................................56
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EXHIBITS
Exhibit A Form of Plan of Merger in respect of the Holding Company Merger
Exhibit B Form of Employment Agreement of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Exhibit C Form of Company Option Agreement
COMPANY'S DISCLOSURE SCHEDULE
Section 5.2 Authority; No Conflicts
Section 5.3 Subsidiaries
Section 5.5 Absence of Undisclosed Liabilities
Section 5.6 Absence of Certain Changes or Events
Section 5.7 Tax Matters
Section 5.9 Securities Portfolio and Investments
Section 5.11 Compliance with Laws
Section 5.13 Employee Benefit Plans
Section 5.14 Material Contracts
Section 5.19 State Takeover Laws
Section 5.24 Commissions
BUYER'S DISCLOSURE SCHEDULE
Section 6.3 Subsidiaries
Section 6.5 Absence of Undisclosed Liabilities
Section 6.6 Absence of Certain Changes or Events
Section 6.7 Tax Matters
Section 6.8 Assets
Section 6.9 Securities Portfolio and Investments
Section 6.13 Employee Benefit Plans
Section 6.14 Material Contracts
Section 6.22 Commissions
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MERGER AGREEMENT
THIS MERGER AGREEMENT (this "AGREEMENT"), dated as of the 19th day of
October, 2000, is by and among:
FIRST BANCORP, a North Carolina corporation and a holding company
registered with the Board of Governors of the Federal Reserve System under the
Bank Holding Company Act of 1956, as amended, and a North Carolina bank holding
company (the "BUYER"); and
CENTURY BANCORP, INC., a North Carolina corporation and a holding
company registered with the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act of 1956, as amended, and a North Carolina
bank holding company (the "COMPANY").
BACKGROUND STATEMENT
The Buyer and the Company desire to effect a merger pursuant to which
the Company will merge into the Buyer, with the Buyer being the surviving
corporation (the "HOLDING COMPANY MERGER"); and subsequent to the Holding
Company Merger, it is expected that the Buyer Bank and the Company Bank will
effect a merger pursuant to which the Company Bank will merge and combine into
the Buyer Bank, with the Buyer Bank being the surviving corporation (the "BANK
MERGER," and together with the Holding Company Merger, the "MERGERS"). In
consideration of the Holding Company Merger, the shareholders of the Company
will receive shares of common stock of the Buyer and/or cash. It is intended
that the Mergers qualify as tax-free reorganizations under Section 368 of the
Internal Revenue Code. The Mergers are expected to be accounted for under the
purchase method.
STATEMENT OF AGREEMENT
In consideration of the premises and the mutual representations,
warranties, covenants, agreements and conditions contained herein, the parties
hereto agree as follows:
ARTICLE I
DEFINED TERMS
1.1 DEFINITIONS. As used in this Agreement, the following terms have
the following meanings:
"AFFILIATE" means, with respect to any Person, each of the Persons that
directly or indirectly, through one or more intermediaries, owns or controls, or
is controlled by or under common control with, such Person. For the purpose of
this Agreement, "CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise. Without
limiting the foregoing, as used with respect to the Company, the term
"AFFILIATES" includes its subsidiaries.
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"AGREEMENT" means this Merger Agreement.
"ASSETS" means all of the assets, properties, businesses and rights of
a Person of every kind, nature, character and description, whether real,
personal or mixed, tangible or intangible, accrued or contingent, whether or not
carried on any books and records of such Person, whether or not owned in such
Person's name and wherever located.
"AVERAGE CLOSING PRICE" has the meaning given to it in SECTION 10.1(F).
"BANK MERGER" has the meaning given to it in the Background Statement
hereof.
"BENEFIT PLANS" means all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, restricted stock,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs or agreements, all medical, vision, dental, or other health
plans, all life insurance plans, and all other employee benefit plans or fringe
benefit plans, including without limitation "employee benefit plans" as that
term is defined in Section 3(3) of ERISA maintained by, sponsored in whole or in
part by, or contributed to by, a Person or any of its subsidiaries for the
benefit of employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
are eligible to participate.
"BUSINESS DAY" means any day excluding (a) Saturday, (b) Sunday and (c)
any day that shall be a legal holiday in the State of North Carolina.
"BUYER" has the meaning given to it in the introductory paragraph
hereof.
"BUYER BANK" means First Bank, a North Carolina bank and a wholly owned
subsidiary of the Buyer.
"BUYER CONTRACTS" has the meaning given to it in SECTION 6.14.
"BUYER ERISA AFFILIATE" has the meaning given to it in SECTION 6.13.
"BUYER FINANCIAL STATEMENTS" means, with respect to the Buyer and its
subsidiaries, the consolidated audited statements of income and stockholder's
equity and cash flows for the years ended December 31, 1999, 1998 and 1997 and
consolidated audited balance sheets as of December 31, 1999, 1998 and 1997, as
well as the interim unaudited consolidated statements of income and
stockholders' equity and cash flows for each of the completed fiscal quarters
since December 31, 1999 and the consolidated interim balance sheet as of each
such quarter.
"BUYER SEC REPORTS" has the meaning given to it in SECTION 6.4.
"BUYER'S STOCK" means the common stock of First Bancorp, no par value,
as traded on the Nasdaq National Market System.
"BUYER'S STOCK PERCENTAGE CHANGE" has the meaning given to it in
SECTION 10.1(F).
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"CASH DESIGNEE SHARES" has the meaning given to it in SECTION 2.4.
"CASH ELECTION AMOUNT" has the meaning given to it in SECTION 2.4.
"CASH ELECTION SHARES" has the meaning given to it in SECTION 2.4.
"CLOSING" means the closing of the Mergers, as identified more
specifically in ARTICLE IV.
"CLOSING DATE" has the meaning given to it in SECTION 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed also to refer to any successor sections.
"COMPANY" has the meaning given to it in the introductory paragraph
hereof.
"COMPANY BANK" means Home Savings, Inc., SSB, a North Carolina stock
savings bank.
"COMPANY BANK SHARES" has the meaning given to it in SECTION 3.2(A).
"COMPANY CONTRACTS" has the meaning given to it in SECTION 5.14.
"COMPANY FINANCIAL STATEMENTS" means, with respect to the Company and
its subsidiaries, the consolidated audited statements of income and
stockholder's equity and cash flows for the years ended June 30, 2000, 1999 and
1998 and consolidated audited balance sheets as of June 30, 2000, 1999 and 1998,
as well as the interim unaudited consolidated statements of income and
stockholders' equity and cash flows for each of the completed fiscal quarters
since June 30, 2000 and the consolidated interim balance sheet as of each such
quarter.
"COMPANY OPTION AGREEMENT" means the Option Agreement dated as of the
date hereof between the Buyer and the Company substantially in the form of
EXHIBIT C.
"COMPANY OPTIONS" has the meaning given to it in SECTION 2.8.
"COMPANY PARTIES" means the Company and the Company Bank.
"COMPANY SEC REPORTS" has the meaning given to it in SECTION 5.4.
"COMPANY SHARES" has the meaning given to it in SECTION 2.2(A).
"CONFIDENTIALITY AGREEMENTS" has the meaning given to it in SECTION
8.4.
"CONSENT" means any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person given or granted with
respect to any Contract, Law, Order, or Permit.
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"CONTRACT" means any agreement, warranty, indenture, mortgage,
guaranty, lease, license or other contract, agreement, arrangement, commitment
or understanding, written or oral, to which a Person is a party.
"DEFAULT" means (i) any breach or violation of or default under any
Contract, Order or Permit (including any noncompliance with restrictions on
assignment, where assignment is defined to include a change of control of the
parties to this agreement or any of their subsidiaries or the merger or
consolidation of any of them with another Person), (ii) any occurrence of any
event that with the passage of time or the giving of notice or both would
constitute such a breach or violation of or default under any Contract, Order or
Permit, or (iii) any occurrence of any event that with or without the passage of
time or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order or Permit.
"DISSENTING SHARES" has the meaning given to it in SECTION 2.7.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed also to refer to any successor sections.
"EFFECTIVE TIME" has the meaning given to it in SECTION 2.1(E) or
SECTION 3.1, as appropriate.
"ELECTION DEADLINE" has the meaning given to it in SECTION 2.4.
"ELECTION FORM" has the meaning given to it in SECTION 2.4.
"ENVIRONMENTAL ASSESSMENT" means any and all soil and groundwater
tests, surveys, environmental assessments and other inspections, tests and
inquiries conducted by the Buyer or any agent of the Buyer and related to the
Real Property of the Company and its subsidiaries.
"ENVIRONMENTAL LAWS" means any federal, state or local law, statute,
ordinance, rule, regulation, permit, directive, license, approval, guidance,
interpretation, order or other legal requirement relating to the protection of
human health or the environment, including but not limited to any requirement
pertaining to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, handling, reporting, licensing, permitting,
investigation or remediation of materials that are or may constitute a threat to
human health or the environment. Without limiting the foregoing, each of the
following is an Environmental Law: the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.) ("RCRA"), the Federal
Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42
U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et seq.), the Safe Drinking Water Act (42 U.S.C. ss. 300 et seq.) and the
Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.) ("OSHA"), as such
laws and regulations have been or are in the future amended or supplemented, and
each similar federal, state or local statute, and each rule and regulation
promulgated under such federal, state and local laws.
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"ENVIRONMENTAL SURVEY" has the meaning given to it in SECTION 8.3.
"ERISA PLAN" means any Benefit Plan that is an "employee welfare
benefit plan," as that term is defined in Section 3(l) of ERISA, or an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA.
"EXCHANGE AGENT" has the meaning given to it in SECTION 2.6.
"EXCHANGE RATIO" means 1.3333 (i.e., $20.00 divided by $15) shares of
the Buyer's Stock for each Company Share, subject to adjustment pursuant to
SECTION 10.1(F).
"FDIC" means the Federal Deposit Insurance Corporation.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means generally
accepted accounting principles as recognized by the American Institute of
Certified Public Accountants, as in effect from time to time, consistently
applied and maintained on a consistent basis for a Person throughout the period
indicated and consistent with such Person's prior financial practice.
"GOVERNMENTAL AUTHORITY" means any nation, province or state, or any
political subdivision thereof, and any agency, department, natural person or
other entity exercising executive, legislative, regulatory or administrative
functions of or pertaining to government, including Regulatory Authorities.
"HAZARDOUS MATERIAL" means any substance or material that either is or
contains a substance designated as a hazardous waste, hazardous substance,
hazardous material, pollutant, contaminant or toxic substance under any
Environmental Law or is otherwise regulated under any Environmental Law, or the
presence of which in some quantity requires investigation, notification or
remediation under any Environmental Law.
"HOLDING COMPANY MERGER" has the meaning given to it in the Background
Statement hereof.
"▇▇▇▇▇▇ EMPLOYMENT AGREEMENT" means the Employment Agreement to be
entered into at or prior to Closing between the Buyer and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
substantially in the form attached hereto as EXHIBIT B.
"INDEX PERCENTAGE CHANGE" has the meaning given to it in SECTION
10.1(F).
"INTELLECTUAL PROPERTY" means (a) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all copyrights and all
applications, registrations and renewals in connection therewith, (d) all
know-how, trade secrets, whether patentable or unpatentable and whether or not
reduced to practice (including ideas, research and development, know-how,
formulas, compositions, manufacturing
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and production process and techniques, technical data, designs, drawings,
specifications, pricing and cost information and business and marketing plans
and proposals), (e) all computer software (including data and related
documentation) and (f) all other proprietary rights.
"KNOWLEDGE OF THE BUYER PARTIES" means the actual personal knowledge of
any of the directors and officers of the Buyer and the Buyer Bank and any of
their subsidiaries.
"KNOWLEDGE OF THE COMPANY PARTIES" means the actual personal knowledge
of any of the directors and officers of the Company and the Company Bank and any
of their subsidiaries.
"LAW" means any code, law, ordinance, rule, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities, business or operations promulgated, interpreted or enforced by any
Governmental Authority.
"LIABILITY" means any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured or otherwise.
"LIEN" means, whether contractual or statutory, any conditional sale
agreement, participation or repurchase agreement, assignment, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge or claim
of any nature whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due and
payable, (ii) easements, restrictions of record and title exceptions that could
not reasonably be expected to have a Material Adverse Effect, and (iii) pledges
to secure deposits, Liens to secure advances from the Federal Home Loan Bank of
Atlanta and other Liens incurred in the ordinary course of the banking business.
"LITIGATION" means any action, arbitration, cause of action, complaint,
criminal prosecution, governmental investigation, hearing, or administrative or
other proceeding, but shall not include regular, periodic examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"LOAN COLLATERAL" means all of the assets, properties, businesses and
rights of every kind, nature, character and description, whether real, personal,
or mixed, tangible or intangible, accrued or contingent, owned by whomever and
wherever located, in which the Company or any of its subsidiaries has taken a
security interest with respect to, on which the Company or any of it
subsidiaries has placed a Lien with respect to, or which is otherwise used to
secure, any loan made by the Company or any of its subsidiaries or any note,
account, or other receivable payable to the Company or any of its subsidiaries.
"MAILING DATE" has the meaning given to in SECTION 2.4.
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"MARKET VALUE" of the Buyer's Stock on any date shall be the closing
price of such stock on the Nasdaq National Market System (as reported by The
Wall Street Journal or, if not reported thereby, any other authoritative
source), or if such date is not a trading day, on the last trading day preceding
that date.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality in
that instance.
"MATERIAL ADVERSE EFFECT" on a Person shall mean an event, change, or
occurrence that, individually or together with any other event, change, or
occurrence, has a Material adverse impact on (i) the financial condition,
results of operations, or business of such Person and its subsidiaries, taken as
a whole, or (ii) the ability of such Person to perform its obligations under
this Agreement or to consummate the Mergers or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect" shall
not be deemed to include the impact of (a) changes in banking and similar Laws
of general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in market interest rates, real estate markets or other
market conditions applicable to banks or thrift institutions generally, (c)
changes in GAAP or regulatory accounting principles generally applicable to
banks and their holding companies, (d) actions and omissions of a Person (or any
of its subsidiaries) taken with the prior informed consent of the other Person
in contemplation of the transactions contemplated hereby, and (e) the Mergers
(and the reasonable expenses incurred in connection therewith) and compliance
with the provisions of this Agreement on the operating performance of the
Persons.
"MEASUREMENT PERIOD" has the meaning given to it in SECTION 10.1(F).
"MERGER CONSIDERATION" has the meaning given to it in SECTION 2.3(A).
"MERGERS" has the meaning given to it in the Background Statement
hereof.
"NO ELECTION SHARE" has the meaning given to it in SECTION 2.4.
"NORTH CAROLINA ADMINISTRATOR" means the North Carolina Administrator,
Savings Institutions Division, North Carolina Department of Commerce.
"ORDER" means any administrative decision or award, decree, injunction,
judgment, order, quasi-judicial decision or award, ruling, or writ of any
federal, state, local, foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Governmental Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Person in question or any of its subsidiaries participates in the management
(including but not limited to participating in a fiduciary capacity) and, where
required by the context, said term means the owner or operator of such facility
or property, but only with respect to such facility or property.
"PENSION PLAN" means any ERISA Plan that also is a "defined benefit
plan" (as defined in Section 414(j) of the Internal Revenue Code or Section
3(35) of ERISA).
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"PERMIT" means any approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right given by a Governmental
Authority to which any Person is a party or that is or may be binding upon or
inure to the benefit of any Person or its securities, Assets or business.
"PERSON" means a corporation, a company, an association, a joint
venture, a partnership, an organization, a business, an individual, a trust, a
Governmental Authority or any other legal entity.
"PER SHARE CASH CONSIDERATION" has the meaning given to it in SECTION
2.3.
"PER SHARE STOCK CONSIDERATION" has the meaning given to in SECTION
2.3.
"PROXY STATEMENT" has the meaning given to it in SECTION 5.17.
"REAL PROPERTY" means all of the land, buildings, premises, or other
real property in which a Person has ownership or possessory rights, whether by
title, lease or otherwise (including banking facilities and any foreclosed
properties). Notwithstanding the foregoing, "Real Property", as used with
respect to any of the Company and its subsidiaries, does not include any Loan
Collateral not yet foreclosed and conveyed to the Company or one of its
subsidiaries as of the date with respect to which the term "Real Property" is
being used.
"REGISTRATION STATEMENT" has the meaning given to it in SECTION 5.17.
"REGULATORY AUTHORITIES" means, collectively, the Federal Trade
Commission, the United States Department of Justice, the Federal Reserve Board,
the North Carolina Administrator, the North Carolina Commissioner of Banks, the
FDIC, the National Association of Securities Dealers and the SEC, and all other
regulatory agencies having jurisdiction over the Parties and their respective
subsidiaries.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
"SEC" means the Securities and Exchange Commission.
"SNL INDEX" has the meaning given to it in SECTION 10.1(F).
"SECURITIES DOCUMENTS" means all forms, proxy statements, registration
statements, reports, schedules and other documents filed or required to be filed
by a Person or any of its subsidiaries with any Regulatory Authority pursuant to
the Securities Laws.
"SECURITIES LAWS" means the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisors Act of 1940, the Trust Indenture Act of 1939, each as amended, and the
rules and regulations of any Governmental Authority promulgated under each.
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"SHAREHOLDER MEETING" has the meaning given to it in SECTION 5.17.
"STOCK ADJUSTMENT" has the meaning given to it in SECTION 2.3(D).
"STOCK DESIGNEE SHARES" has the meaning given to it in SECTION 2.4.
"STOCK ELECTION SHARES" has the meaning given to it in SECTION 2.4.
"SURVIVING BANK" has the meaning given to it in SECTION 3.1.
"SURVIVING HOLDING COMPANY" has the meaning given to it in SECTION
2.1(A).
"TAX" or "TAXES" means any and all taxes, charges, fees, levies or
other assessments (whether federal, state, local or foreign), including without
limitation income, gross receipts, excise, property, estate, sales, use, value
added, transfer, license, payroll, franchise, ad valorem, withholding, Social
Security and unemployment taxes, as well as any interest, penalties and other
additions to such taxes, charges, fees, levies or other assessments.
"TAX RETURN" means any report, return or other information required to
be supplied to a taxing authority in connection with Taxes.
"TAXABLE PERIOD" shall mean any period prescribed by any Governmental
Authority, including the United States or any state, local, or foreign
government or subdivision or agency thereof for which a Tax Return is required
to be filed or Tax is required to be paid.
"TOTAL CASH MERGER CONSIDERATION" has the meaning given to it in
SECTION 2.3.
"TOTAL STOCK MERGER CONSIDERATION" has the meaning given to it in
SECTION 2.3.
ARTICLE II
THE HOLDING COMPANY MERGER;
CONVERSION AND EXCHANGE OF COMPANY SHARES
2.1 THE HOLDING COMPANY MERGER.
(a) The Merger. On the terms and subject to the conditions of this
Agreement, the Plan of Merger in respect of the Holding Company Merger, which
shall be substantially in the form attached hereto as EXHIBIT A, and North
Carolina Law, the Company shall merge into the Buyer, the separate existence of
the Company shall cease, and the Buyer shall be the surviving corporation (the
"SURVIVING HOLDING COMPANY").
(b) Governing Documents. The articles of incorporation of the Buyer in
effect at the Effective Time (as defined below) of the Holding Company Merger
shall be the articles of incorporation of the Surviving Holding Company until
further amended in accordance with applicable law. The bylaws of the Buyer in
effect at such Effective Time shall be the bylaws of the Surviving Holding
Company until further amended in accordance with applicable law.
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(c) Directors and Officers. Subject to SECTION 7.2(B) and the ▇▇▇▇▇▇
Employment Agreement, from and after the Effective Time of the Holding Company
Merger, until successors or additional directors are duly elected or appointed
in accordance with applicable law, (i) the directors of the Buyer at such
Effective Time shall be the directors of the Surviving Holding Company, and (ii)
the officers of the Buyer at such Effective Time shall be the officers of the
Surviving Holding Company. (d) Approval. The parties hereto shall take and cause
to be taken all action necessary to approve and authorize (i) this Agreement and
the other documents contemplated hereby (including without limitation the
above-described Plan of Merger) and (ii) the Holding Company Merger and the
other transactions contemplated hereby.
(e) Effective Time. The Holding Company Merger shall become effective
on the date and at the time of filing of the related Articles of Merger, in the
form required by and executed in accordance with the laws of North Carolina, or
at such other time specified therein. The date and time when the Holding Company
Merger shall become effective is herein referred to as the "EFFECTIVE TIME" of
the Holding Company Merger.
(f) Filing of Articles of Merger. At the Closing, the Buyer and the
Company shall cause the Articles of Merger (containing the above-referenced Plan
of Merger) in respect of the Holding Company Merger to be executed and filed
with the Secretary of State of North Carolina, as required by the laws of North
Carolina, and shall take any and all other actions and do any and all other
things to cause the Holding Company Merger to become effective as contemplated
hereby.
2.2 COMPANY SHARES.
(a) Each share of the Company's capital stock (the "COMPANY SHARES"),
no par value per share, issued and outstanding to Persons, except for Company
Shares held by the Buyer and its Affiliates immediately prior to the Effective
Time of the Holding Company Merger (other than shares held in a fiduciary
capacity or as a result of debts previously contracted), shall, by virtue of the
Holding Company Merger and without any action on the part of the holders
thereof, be canceled and converted at such Effective Time into the right to
receive the Merger Consideration (as defined below) in accordance with this
ARTICLE II.
(b) Each Company Share, by virtue of the Holding Company Merger and
without any action on the part of the holder thereof, shall at the Effective
Time of the Holding Company Merger no longer be outstanding, shall be canceled
and retired and shall cease to exist, and each holder of certificates
representing any such Company Shares shall thereafter cease to have any rights
with respect to such shares, except for the right to receive the Merger
Consideration.
(c) Trustees of the Home Savings, Inc. SSB Employee Stock Ownership
Plan will elect to receive Per Share Cash Consideration for the number of
unallocated Company Shares held by such plan necessary to produce an amount of
cash sufficient to repay the Company's loan to such Plan. Remaining unallocated
Company Shares held by such plan will be allocated to participants on a pro rata
basis in accordance with their respective account balances. The
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Company Shares held by such plan will be distributed to participants upon a
termination of such plan following the Effective Time in accordance with the
terms of the plan.
(d) Each Company Share in The Home Savings, Inc. SSB Management
Recognition Plan and Trust at the Effective Time that has not been granted to a
participant in such plan shall be canceled without any conversion thereof, and
no payment shall be made with respect thereto.
(e) Notwithstanding anything contained in this SECTION 2.2 to the
contrary, any Company Shares held in the treasury of the Company immediately
prior to the Effective Time of the Holding Company Merger shall be canceled
without any conversion thereof, and no payment shall be made with respect
thereto.
(f) From and after the Effective Time of the Holding Company Merger,
there shall be no transfers on the stock transfer books of the Surviving Holding
Company of the Company Shares that were outstanding immediately prior to the
Effective Time of the Holding Company Merger. If, after such Effective Time,
certificates representing Company Shares are presented to the Surviving Holding
Company, they shall be canceled, and exchanged and converted into the Merger
Consideration as provided for herein.
2.3 MERGER CONSIDERATION.
(a) Subject to SECTIONS 2.2, 2.4, 2.5 and 2.6, at the Effective Time of
the Holding Company Merger, the holders of Company Shares outstanding at such
Effective Time, other than the Buyer and its Affiliates, shall be entitled to
receive, and the Buyer shall pay or issue and deliver, in the aggregate, (i) a
number of shares of the Buyer's Stock for each Company Share based on the
Exchange Ratio (the "PER SHARE STOCK CONSIDERATION"), or (ii) an amount equal to
$20.00 in cash for each such Company Share (the "PER SHARE CASH CONSIDERATION").
The foregoing consideration, collectively and in the aggregate, shall be
referred to herein as the "MERGER CONSIDERATION."
(b) Subject to the allocation provisions of SECTION 2.4, each holder of
a Company Share may elect to receive the Per Share Stock Consideration or the
Per Share Cash Consideration for each such Company Share; provided, however,
that the aggregate number of Company Shares with respect to which the Per Share
Stock Consideration shall be paid as the Merger Consideration shall be 439,819
shares (subject to equitable adjustment for any stock dividend, stock split or
other stock payment by the Company after the date hereof but prior to the
Effective Time), subject to adjustment so that the amount of the Merger
Consideration paid in shares of the Buyer's Stock shall not be less than the
amount (currently 40%) necessary to qualify the Holding Company Merger as a
reorganization under Section 368 of the Code, as determined by the Company at or
immediately after the Effective Time upon consultation with its independent
accountants and counsel. Such amount of the Buyer's Stock paid as Merger
Consideration shall be referred to in this Agreement as the "TOTAL STOCK MERGER
CONSIDERATION," and such amount of cash paid as Merger Consideration shall be
referred to as the "TOTAL CASH MERGER CONSIDERATION."
(c) No fractional shares of the Buyer's Stock shall be issued or
delivered in connection with the Holding Company Merger. In lieu of any such
fractional share, subject to
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SECTION 2.5, each holder of Company Shares who would otherwise have been
entitled to a fraction of a share of the Buyer's Stock shall be entitled to
receive cash (without interest) in an amount equal to such fraction multiplied
by the Market Value of one share of the Buyer's stock on the trading day
immediately prior to the Effective Time.
(d) In the event the Buyer changes the number of shares of the Buyer's
Stock issued and outstanding prior to the Effective Time of the Holding Company
Merger as a result of a stock split, stock dividend or similar recapitalization
with respect to such stock (each a "STOCK ADJUSTMENT") and the record date
therefor (in the case of a stock dividend) or the effective date thereof (in the
case of a stock split or similar recapitalization for which a record date is not
established) shall be prior to such Effective Time, the Exchange Ratio shall be
equitably adjusted to reflect such change.
2.4 ELECTION AND ALLOCATION PROCEDURES.
(a) Election.
(i) An election form ("ELECTION FORM"), together with the
other transmittal materials described in SECTION 2.6, shall be mailed
as soon as reasonably practicable after the Effective Time to each
holder of Company Shares of record at the Effective Time. Such date of
mailing shall be referred to hereinafter as the "MAILING DATE." Each
Election Form shall permit a holder (or the beneficial owner through
appropriate and customary documentation and instruction) of Company
Shares to elect to receive the Per Share Cash Consideration with
respect to all or any of such holder's Company Shares (shares as to
which the election is made, "CASH ELECTION SHARES"). In addition, all
Dissenting Shares shall be deemed Cash Election Shares. The "CASH
ELECTION AMOUNT" shall be equal to the Per Share Cash Consideration
multiplied by the total number of Cash Election Shares. All Company
Shares other than the Cash Election Shares and the No Election Shares
(as defined below) shall be referred to herein as the "STOCK ELECTION
SHARES"
(ii) Any Company Share with respect to which the holder (or
the beneficial owner, as the case may be) shall not have submitted to
the Exchange Agent an effective, properly completed Election Form on or
before a date after the Effective Date to be agreed upon by the parties
hereto (which date will be set forth on the Election Form), but in any
event not earlier than the 20th Business Day after the Mailing Date
(such deadline, the "ELECTION DEADLINE"), shall be converted either
into the Per Share Stock Consideration or the Per Share Cash
Consideration as set forth in SECTION 2.4(B) (such shares, the "NO
ELECTION SHARES"), with the exception that No Election Shares held by a
holder of less than 100 Company Shares shall be deemed to be Cash
Election Shares.
(iii) The Buyer shall make available one or more Election
Forms as may be reasonably requested by all persons who become holders
(or beneficial owners) of Company Shares between the Mailing Date and
the close of business on the business day prior to the Election
Deadline, and the Buyer shall provide to the Exchange Agent all
information reasonably necessary for it to perform as specified herein.
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(iv) Any such election shall have been properly made only if
the Exchange Agent shall have actually received a properly completed
Election Form by the Election Deadline. An Election Form shall be
deemed properly completed only if accompanied by one or more
certificates (or customary affidavits and indemnification regarding the
loss or destruction of such certificates or the guaranteed delivery of
such certificates) representing all Company Shares covered by such
Election Form, together with duly executed transmittal materials
included with the Election Form. Any Election Form may be revoked or
changed by the person submitting such Election Form (or the beneficial
owner of the shares covered by such Election Form through appropriate
and customary documentation and instruction) at or prior to the
Election Deadline. In the event an Election Form is revoked prior to
the Election Deadline and no other valid election is made, the Company
Shares represented by such Election Form shall be No Election Shares.
Subject to the terms of this Agreement and of the Election Form, the
Exchange Agent shall have reasonable discretion to determine whether
any election, revocation or change has been properly or timely made and
to disregard immaterial defects in the Election Forms, and any good
faith decisions of the Exchange Agent regarding such matters shall be
binding and conclusive. Neither the Buyer nor the Exchange Agent shall
be under any obligation to notify any person of any defect in an
Election Form.
(b) Allocation. As soon as reasonably practicable after the Effective
Time, the Buyer shall cause the Exchange Agent to allocate the Total Cash Merger
Consideration and Total Stock Merger Consideration among the holders of Company
Shares, which shall be effected by the Exchange Agent as follows:
(i) If the Total Cash Merger Consideration is greater than the
Cash Election Amount, then:
(A) each Cash Election Share shall be converted into
the right to receive an amount of cash equal to the Per Share
Cash Consideration;
(B) the Exchange Agent will select, on a pro rata
basis, first from among the holders of No Election Shares and
then, if necessary, from among the holders of Stock Election
Shares, a sufficient number of such shares ("CASH DESIGNEE
SHARES") such that the sum of Cash Designee Shares and Cash
Election Shares multiplied by the Per Share Cash Consideration
equals as closely as practicable the Total Cash Merger
Consideration. Each Cash Designee Share shall be converted
into the right to receive the Per Share Cash Consideration;
and
(C) each remaining unconverted Company Share (after
application of subsections (A) and (B) above) shall be
converted into the right to receive the Per Share Stock
Consideration.
(ii) If the Total Cash Merger Consideration is less than the
Cash Election Amount then:
(A) each Stock Election Share and each No Election
Share (other than any No Election Shares held by holders of
less than 100 Company Shares, which
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shares are automatically deemed Cash Election Shares) shall be
converted into the right to receive the Per Share Stock
Consideration;
(B) the Exchange Agent will select, on a pro rata
basis from among the holders of Cash Election Shares (other
than holders of No Election Shares holding less than 100
Company Shares), a sufficient number of such shares ("STOCK
DESIGNEE SHARES") such that the number of such Stock Designee
Shares multiplied by the Per Share Cash Consideration equals
as closely as practicable the difference between the Cash
Election Amount and the Total Cash Merger Consideration. The
Stock Designee Shares shall be converted into the right to
receive the Per Share Stock Consideration; and
(C) each remaining unconverted Company Share (after
application of subsections (A) and (B) above) shall be
converted into the right to receive an amount of cash equal to
the Per Share Cash Consideration.
(iii) In the event that the Exchange Agent is required
pursuant to this SECTION 2.4 to designate from among all Stock Election
Shares the Cash Designee Shares to receive the Per Share Cash
Consideration, each holder of Stock Election Shares shall be allocated
a pro rata portion of the total Cash Designee Shares. Such pro ration
shall reflect the proportion that the number of Stock Election Shares
of each holder of Stock Election Shares bears to the total number of
Stock Election Shares.
(iv) In the event the Exchange Agent is required pursuant to
this SECTION 2.4 to designate from among all holders of Cash Election
Shares the Stock Designee Shares to receive the Per Share Stock
Consideration, each holder of Cash Election Shares (other than holders
of No Election Shares holding less than 100 Company Shares) shall be
allocated a pro rata portion of the total Stock Designee Shares. Such
pro ration shall reflect the proportion that the number of Cash
Election Shares of each holder of Cash Election Shares bears to the
total number of Cash Election Shares.
2.5 CLOSING PAYMENT. At the Effective Time of the Holding Company
Merger or as soon thereafter as is reasonably practicable, the holders of the
Company Shares shall surrender the certificates representing such shares to the
Buyer and in exchange therefor, the Buyer shall issue and deliver to each such
holder certificates representing the number of shares of the Buyer's Stock to
which it is entitled hereunder and cash payments to which such holder is
entitled hereunder (including, with respect to any fractional shares thereof).
The Buyer shall not be obligated to deliver any of such shares of the Buyer's
Stock or cash payments until such holder surrenders the certificates
representing such holder's Company Shares.
2.6 EXCHANGE PROCEDURES.
(a) After the Effective Time of the Holding Company Merger, the Buyer
shall cause the exchange agent selected by the Buyer (the "EXCHANGE AGENT"),
subject to the reasonable satisfaction of the Company and which may be an
Affiliate of the Buyer, to mail to the shareholders of the Company of record at
the Effective Time the Election Form, as required under SECTION 2.4, and other
appropriate transmittal materials (which shall specify that delivery
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shall be effected, and risk of loss and title to the certificates representing
shares of the Company prior to such Effective Time shall pass, only upon proper
delivery of such certificates to the Exchange Agent). After such Effective Time,
each holder of Company Shares issued and outstanding at such Effective Time
(other than any of such shares held by the Buyer or any Affiliate thereof or
canceled pursuant to SECTION 2.2(E)) shall surrender the certificate or
certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the number of shares of the
Buyer's Stock and the cash to which such holder is entitled hereunder (including
any cash payments to which such holder is entitled hereunder in respect of
rights to receive fractional shares). The Buyer shall not be obligated to
deliver any of such payments in cash or stock until such holder surrenders the
certificate(s) representing such holder's Company Shares. The certificate(s) so
surrendered shall be duly endorsed as the Exchange Agent may require. Any other
provision of this Agreement notwithstanding, neither the Buyer nor the Exchange
Agent shall be liable to any holder of Company Shares for any amounts paid or
properly delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
(b) To the extent permitted by applicable Law, former shareholders of
record of the Company shall be entitled to vote after the Total Stock Merger
Consideration has been allocated pursuant to the provisions of this Article at
any meeting of the Buyer's shareholders the number of whole shares of the
Buyer's Stock into which their respective Company Shares are converted pursuant
to the Holding Company Merger, regardless of whether such holders have exchanged
their certificates representing such Company Shares for certificates
representing the Buyer's Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by the Buyer on
the Buyer's Stock, the record date for which is at or after the Effective Time
of the Holding Company Merger, the declaration shall include dividends or other
distributions on all shares of the Buyer's Stock issuable pursuant to this
Agreement, but beginning at such Effective Time no dividend or other
distribution payable to the holders of record of the Buyer's Stock as of any
time subsequent to such Effective Time of the Holding Company Merger shall be
delivered to the holder of any certificate representing any of the Company
Shares issued and outstanding at such Effective Time until such holder
surrenders such certificate for exchange as provided in this SECTION 2.6.
However, upon surrender of such certificate(s), both the certificate(s)
representing the shares of the Buyer's Stock to which such holder is entitled
and any such undelivered dividends (without any interest) shall be delivered and
paid with respect to each share represented by such certificates.
2.7 DISSENTING SHARES. Notwithstanding any other provision of this
Agreement to the contrary, Company Shares that are outstanding immediately prior
to the Effective Time and that are held by stockholders who shall have not voted
in favor of the Merger or consented thereto in writing and who properly shall
have demanded appraisal for such shares in accordance with North Carolina Law
(collectively, the "DISSENTING SHARES") shall not be converted into or represent
the right to receive the Merger Consideration. Such stockholders instead shall
be entitled to receive payment of the appraised value of such shares held by
them in accordance with the provisions of North Carolina Law, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or otherwise lost their rights to appraisal of
such shares under North Carolina Law shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective Time, for
the right to receive, without any interest thereon, the Merger Consideration
upon
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surrender in the manner provided in SECTION 2.6 of the certificate or
certificates that, immediately prior to the Effective Time, evidenced such
shares. The Company shall give the Buyer (i) prompt notice of any written
demands for appraisal of any shares of Company Shares, attempted withdrawals of
such demands for appraisal or any other instruments served pursuant to North
Carolina Law and received by the Company relating to shareholders' rights of
appraisal, and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demands under North Carolina Law consistent with the
obligations of the Company thereunder. The Company shall not, except with the
prior written consent of the Buyer, (x) make any payment with respect to such
demand, (y) offer to settle or settle any demand for appraisal or (z) waive any
failure to timely deliver a written demand for appraisal or timely take any
other action to perfect appraisal rights in accordance with North Carolina Law.
2.8 COMPANY STOCK OPTIONS.
(a) At the Effective Time of the Holding Company Merger, each option or
other right to purchase Company Shares pursuant to stock options or warrants
("COMPANY OPTIONS") granted by the Company under its Benefit Plans that are
outstanding at the Effective Time of the Holding Company Merger shall be
converted into and become rights with respect to the Buyer's Stock, and the
Buyer shall assume each Company Option, in accordance with the terms of the
applicable Benefit Plan of the Company and the stock option or warrant agreement
by which such Company Option is evidenced, except that from and after such
Effective Time: (i) the Buyer and its compensation committee shall be
substituted for the Company and the compensation committee of its board of
directors (including if applicable, the entire Board of Directors of the
Company) administering such Benefit Plan or Plans of the Company; (ii) the
Company Options assumed by the Buyer may be exercised solely for shares of the
Buyer's Stock; (iii) the number of shares of the Buyer's Stock subject to such
converted Company Options shall be equal to the number of Company Shares subject
to such Company Options immediately prior to the Effective Time multiplied by
the Exchange Ratio, rounded to the next highest share; and (iv) the per-share
exercise price under each such converted Company Option shall be adjusted by
dividing the exercise price of the Company Option immediately prior to the
Effective Time by the Exchange Ratio, rounded down to the nearest cent.
(b) In addition, notwithstanding clauses (ii), (iii) and (iv) of
SECTION 2.8(A), each assumed Company Option that is an "incentive stock option"
shall be adjusted as required by Section 424 of the Internal Revenue Code, and
the regulations promulgated thereunder, so as not to constitute a modification,
extension or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code.
(c) As soon as practicable after the Effective Time of the Holding
Company Merger, the Buyer shall deliver to the participants in each Benefit Plan
of the Company who remain employed by the Buyer an appropriate notice setting
forth such participant's rights pursuant thereto, and the grants pursuant to
such Benefit Plan shall continue in effect on substantially the same terms and
conditions (subject to the adjustments required by the above subsection (a)
after giving effect to the Holding Company Merger), and the Buyer shall comply
with the terms of each Benefit Plan of the Company to ensure, to the extent
required by, and subject to the provisions of, such Benefit Plan, that the
Company Options that qualified as incentive stock options prior to the Effective
Time of the Holding Company Merger continue to qualify as
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incentive stock options after such Effective Time. At or prior to the Effective
Time of the Holding Company Merger, and at all times thereafter, the Buyer shall
have reserved a sufficient number of shares of the Buyer's Stock for issuance
upon exercise of the Company Options assumed by it in accordance with this
SECTION 2.8. The Buyer agrees to file as promptly as practicable, and in no
event later than 60 days, after the Effective Time, a registration statement on
Form S-8 covering the shares of the Buyer's Stock issuable pursuant to such
options.
(d) Following the Effective Time of the Holding Company Merger, in the
event of any Stock Adjustment by the Buyer, or any consolidation or merger of
the Buyer with or into any other entity, or the sale or transfer or all or
substantially all of the Buyer's assets, the rights of the holders of
outstanding Company Options shall be appropriately adjusted so that such holders
will be in the same position as if their options had been exercised immediately
before such corporate action or transaction.
ARTICLE III
THE BANK MERGER;
CONVERSION AND EXCHANGE OF COMPANY BANK SHARES
3.1 THE BANK MERGER. After the consummation of the Holding Company
Merger, it expected that the Company Bank shall merge and combine into the Buyer
Bank, the separate existence of the Company Bank shall cease, and the Buyer Bank
shall be the surviving corporation (the "SURVIVING BANK"). The date and time
when the Bank Merger shall become effective is herein referred to as the
"EFFECTIVE TIME" of the Bank Merger.
3.2 COMPANY BANK SHARES.
(a) Each share of the Company Bank's capital stock (the "COMPANY BANK
SHARES"), no par value, issued and outstanding to Persons immediately prior to
the Effective Time of the Bank Merger shall, by virtue of the Bank Merger and
without any action on the part of the holder thereof, be canceled and retired
and shall cease to exist, and each holder of certificates representing any such
shares shall thereafter cease to have any rights with respect to such shares.
(b) From and after the Effective Time of the Bank Merger, there shall
be no transfers on the stock transfer books of the Surviving Bank of the Company
Bank Shares that were outstanding immediately prior to the Effective Time of the
Bank Merger. If, after the Effective Time of the Bank Merger, certificates
representing the Company Bank Shares are presented to the Surviving Bank, they
shall be canceled.
ARTICLE IV
THE CLOSING
4.1 CLOSING. The Closing of the Holding Company Merger shall take place
at the offices of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A. in Charlotte, North Carolina
as soon as reasonably practical after all conditions to Closing have been met,
or on such other date or at such other location as the Buyer and the Company may
mutually agree (such date, the "CLOSING DATE"). At the Closing, the parties will
execute, deliver and file all documents necessary to
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effect the transactions contemplated herein, including the Articles of Merger in
respect of both Mergers.
4.2 DELIVERIES BY THE COMPANY. At or by the Closing, the Company shall
have caused the following documents to be executed and delivered:
(a) the agreements, opinions, certificates, instruments and other
documents contemplated in SECTION 9.3;
(b) the ▇▇▇▇▇▇ Employment Agreement; and
(c) all other documents, certificates and instruments required
hereunder to be delivered to the Buyer, or as may reasonably be requested by the
Buyer at or prior to the Closing.
4.3 DELIVERIES BY THE BUYER. At or by the Closing, the Buyer shall have
caused the following documents to be executed and delivered:
(a) the agreements, opinions, certificates, instruments and other
documents contemplated in SECTION 9.2;
(b) the ▇▇▇▇▇▇ Employment Agreement; and
(c) all other documents, certificates and instruments required
hereunder to be delivered to the Company, or as may reasonably be requested by
the Company at or prior to the Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Company's Disclosure Schedule, the Company
represents and warrants to the Buyer that the statements contained in this
ARTICLE V are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date.
5.1 ORGANIZATION, STANDING AND POWER.
(a) The Company is a bank holding company registered with the Board of
Governors of the Federal Reserve System under the Bank Holding Company Act of
1956, as amended, and the Company Bank is a stock savings bank under North
Carolina Law. The Company Bank is an "insured institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and subject
to dollar limits under such Act, all deposits in the Company Bank are fully
insured by the FDIC to the extent permitted by Law.
(b) Each of the Company and its subsidiaries is either a bank or a
corporation, duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation or organization. Each of the
Company and its subsidiaries has the corporate or other applicable power and
authority to carry on, in all Material respects, its businesses as now conducted
and to own, lease and operate its Assets. Each of the Company and its
subsidiaries is
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duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed could not reasonably be expected to have a
Material Adverse Effect on the Company.
5.2 AUTHORITY; NO CONFLICTS.
(a) Subject to required regulatory and shareholder approvals, the
Company has the corporate power and authority necessary to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of the Company's
obligations under this Agreement and the consummation of the transactions
contemplated hereby, including the Mergers, have been duly and validly
authorized by all necessary corporate action (and by Closing, all such
shareholder action) in respect thereof on the part of the Company. This
Agreement represents a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting the enforcement
of creditors' rights generally and except that the availability of specific
performance, injunctive relief and other equitable remedies is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by the
Company, nor the consummation by the Company Parties of the transactions
contemplated hereby, nor compliance by the Company Parties with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of the Company Parties' articles of incorporation, charter, bylaws or any other
similar governing document, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of the Company or any of its subsidiaries under, any Contract or Permit of
the Company or any of its subsidiaries, except as could not reasonably be
expected to have a Material Adverse Effect on the Company, or (iii) subject to
obtaining the requisite Consents referred to in SECTION 9.1(B) of this
Agreement, violate any Law or Order applicable to the Company or any of its
subsidiaries or any of their Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws and banking Regulatory Authorities, no notice to, filing with,
or Consent of, any Governmental Authority is necessary for the consummation by
the Company and the Company Bank of the Mergers and the other transactions
contemplated in this Agreement.
5.3 CAPITAL STOCK; SUBSIDIARIES.
(a) The authorized capital stock of the Company consists of (a)
20,000,000 shares of common stock, no par value per share, of which 1,105,019
shares are issued and outstanding as of the date of this Agreement, and (b)
5,000,000 shares of Preferred Stock, no par value per share, none of which is
issued and outstanding, and except for such 1,105,019 shares of common stock,
there are no shares of capital stock or other equity securities of the Company
outstanding. The authorized capital stock of the Company Bank consists of
100,000 shares of common stock,
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no par value per share, of which 1,000 shares are issued and outstanding as of
the date of this Agreement and are owned and held by the Company, and except for
such 1,000 shares of common stock, there are no shares of capital stock or other
equity securities of the Company Bank outstanding. SECTION 5.3 of the Company's
Disclosure Schedule lists all of the Company's direct and indirect subsidiaries
other than the Company Bank as of the date of this Agreement. The Company or one
of its subsidiaries owns all of the issued and outstanding shares of capital
stock of each such subsidiary.
(b) All of the issued and outstanding shares of capital stock of the
Company and its subsidiaries are duly and validly issued and outstanding and are
fully paid and nonassessable. None of the outstanding shares of capital stock of
the Company or any of its subsidiaries has been issued in violation of any
preemptive rights of the current or past shareholders of such Persons. Except as
set forth on SECTION 5.3 of the Company's Disclosure Schedule, no equity
securities of any subsidiary of the Company are or may become required to be
issued (other than to the Company or any of its subsidiaries) by reason of any
Rights, and there are no Contracts by which any subsidiary of the Company is
bound to issue (other than to the Company or subsidiary of the Company)
additional shares of its capital stock or Rights or by which the Company or any
of its subsidiaries is or may be bound to transfer any shares of the capital
stock of any subsidiary of the Company (other than to the Company or any of its
subsidiaries). There are no equity securities reserved for any of the foregoing
purposes, and there are no Contracts relating to the rights of the Company or
any of its subsidiaries to vote or to dispose of any shares of the capital stock
of any subsidiary of the Company.
5.4 SEC FILINGS; COMPANY FINANCIAL STATEMENTS.
(a) The Company has filed and made available to the Buyer all forms,
reports, and documents required to be filed by the Company with the SEC since
December 31, 1996 (collectively, the "COMPANY SEC REPORTS"). The Company SEC
Reports (i) at the time filed, complied in all Material respects with the
applicable requirements of the Securities Laws, as the case may be, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a Material fact or omit to state a Material fact required to
be stated in such Company SEC Reports or necessary in order to make the
statements in such Company SEC Reports, in light of the circumstances under
which they were made, not misleading. None of the Company's subsidiaries is
required to file any forms, reports, or other documents with the SEC.
(b) Each of the Company Financial Statements (including, in each case,
any related notes) contained in the Company SEC Reports, including any Company
SEC Reports filed after the date of this Agreement until the Effective Time,
complied or will comply as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared or
will be prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements, or, in the case of unaudited statements, as permitted by
Form 10-QSB of the SEC), and fairly presented or will fairly present the
consolidated financial position of the Company and its subsidiaries as at the
respective dates and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments that
were not or are not expected to be
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Material in amount or effect (except as may be indicated in such financial
statements or notes thereto).
5.5 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company nor any of
its subsidiaries has any Liabilities that could reasonably be expected to have a
Material Adverse Effect on the Company, except Liabilities that are accrued or
reserved against in the consolidated balance sheets of the Company as of June
30, 2000, included in the Company Financial Statements or reflected in the notes
thereto and except for Liabilities incurred in the ordinary course of business
subsequent to June 30, 2000. Neither the Company nor any of its subsidiaries has
incurred or paid any Liability since June 30, 2000, except for (a) such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and (b) Liabilities that could not reasonably be expected
to have a Material Adverse Effect on the Company. No facts or circumstances
exist that could reasonably be expected to serve as the basis for any other
Liabilities of the Company or any of its subsidiaries, except as could not
reasonably be expected to have a Material Adverse Effect on the Company.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 2000, (i)
there have been no events, changes, or occurrences that have had, or could
reasonably be expected to have, a Material Adverse Effect on the Company, and
(ii) each of the Company and its subsidiaries has conducted in all Material
respects its respective businesses in the ordinary and usual course (excluding
the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby).
5.7 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any of
Company and its subsidiaries have been timely filed, or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before June 30, 2000, and, to the Knowledge of the Company Parties, all Tax
Returns filed are complete and accurate in all Material respects. All Tax
Returns for periods ending on or before the date of the most recent fiscal year
end immediately preceding the Effective Time will be timely filed or requests
for extensions will be timely filed. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that could reasonably be expected to have a Material
Adverse Effect on the Company, except to the extent reserved against in the
Company Financial Statements dated prior to the date of this Agreement. All
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) None of the Company or its subsidiaries has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) Adequate provision for any Material Taxes due or to become due for
any of the Company or its subsidiaries for the period or periods through and
including the date of the respective Company Financial Statements has been made
and is reflected on such Company Financial Statements.
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(d) Each of the Company and its subsidiaries is in compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for any such
instances of noncompliance and such omissions as could not reasonably be
expected to have a Material Adverse Effect on the Company.
(e) None of the Company and its subsidiaries has made any payments, is
obligated to make any payments, or is a party to any contract, agreement, or
other arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(f) There are no Material Liens with respect to Taxes upon any of the
Assets of the Company and its subsidiaries.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Company and its subsidiaries that occurred
during any Taxable Period in which any of the Company and its subsidiaries has
incurred a net operating loss that carries over to another Taxable Period.
(h) Neither the Company nor any of its subsidiaries has filed any
consent under Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(i) After the date of this Agreement, no Material election with respect
to Taxes will be made without the prior consent of the Buyer, which consent will
not be unreasonably withheld.
(j) Neither the Company nor any of its subsidiaries has or has had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
5.8 ASSETS. Each of the Company and its subsidiaries have good and
marketable title, free and clear of all Liens, to all of their respective
Assets, except for Liens to secure public deposits in the ordinary course of
business consistent with past practice. Except as could not reasonably be
expected to have a Material Adverse Effect on the Company, all tangible
properties used in the businesses of the Company and its subsidiaries are in
good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with each of their past practices. Except
as could not reasonably be expected to have a Material Adverse Effect on the
Company, all Material Assets held under leases or subleases by any of the
Company and its subsidiaries are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of specific performance, injunctive relief and other equitable
remedies is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. Each of the
Company and its subsidiaries currently maintain insurance in amounts, scope, and
coverage reasonably necessary
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for their operations. None of the Company or its subsidiaries has received
notice from any insurance carrier that (i) such insurance will be canceled or
that coverage thereunder will be reduced or eliminated, or (ii) premium costs
with respect to such policies of insurance will be increased in any Material
respect. The Assets of the Company and its subsidiaries include all Assets
required to operate in all Material respects their businesses taken as a whole
as presently conducted.
5.9 SECURITIES PORTFOLIO AND INVESTMENTS. All securities owned by the
Company or any of its subsidiaries (whether owned of record or beneficially) are
held free and clear of all Liens that would impair the ability of the owner
thereof to dispose freely of any such security and/or otherwise to realize the
benefits of ownership thereof at any time, except for those Liens to secure
public deposits in the ordinary course of business consistent with past practice
and Liens that could not reasonably be expected to have a Material Adverse
Effect on the Company. There are no voting trusts or other agreements or
undertakings to which the Company or any of its subsidiaries is a party with
respect to the voting of any such securities. Except for fluctuations in the
market values of United States Treasury and agency or municipal securities,
since June 30, 2000, there has been no significant deterioration or Material
adverse change in the quality, or any Material decrease in the value, of the
securities portfolio of the Company and its subsidiaries, taken as a whole.
5.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of the Company Parties, each of the Company and
its subsidiaries, its Participation Facilities, and its Loan Collateral are, and
have been, in compliance with all Environmental Laws, except those violations
that could not reasonably be expected to have a Material Adverse Effect on the
Company.
(b) To the Knowledge of the Company Parties, there is no Litigation
pending or threatened before any court, governmental agency, or authority, or
other forum in which any of the Company and its subsidiaries or any of its
Participation Facilities has been or, with respect to threatened Litigation, may
reasonably be expected to be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving a site owned, leased, or operated by the
Company or any of its subsidiaries or any of its Participation Facilities,
except for such Litigation pending or threatened that could not reasonably be
expected to have a Material Adverse Effect on the Company.
(c) To the Knowledge of the Company Parties, there is no Litigation
pending or threatened before any court, governmental agency or authority or
other forum in which any of its Loan Collateral (or the Company or any of its
subsidiaries in respect of such Loan Collateral) has been or, with respect to
threatened Litigation, may reasonably be expected to be named as a defendant or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on, under,
or involving Loan Collateral, except for such Litigation pending or threatened
that is could not reasonably be expected to have a Material Adverse Effect on
the Company.
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(d) To the Knowledge of the Company Parties, no facts exist that
provide a reasonable basis for any Litigation of a type described in subsections
(b) or (c), except such as could not reasonably be expected to have a Material
Adverse Effect on the Company.
(e) To the Knowledge of the Company Parties, during and prior to the
period of (i) any of the Company's or its subsidiaries' ownership or operation
of any of their respective current properties, (ii) any of the Company's or its
subsidiaries' participation in the management of any Participation Facility, or
(iii) any of the Company's or subsidiaries' holding of a security interest in
Loan Collateral, there have been no releases of Hazardous Material in, on,
under, or affecting (or potentially affecting) such properties, except such as
could not reasonably be expected to have a Material Adverse Effect on the
Company.
5.11 COMPLIANCE WITH LAWS. Each of the Company and its subsidiaries has
in effect all Permits necessary for it to own, lease, or operate its Material
Assets and to carry on, in all Material respects, its business as now conducted,
except for those Permits the absence of which could not reasonably be expected
to have a Material Adverse Effect on the Company, and there has occurred no
Default under any such Permit, other than Defaults that could not reasonably be
expected to have a Material Adverse Effect on the Company. None of the Company
or its subsidiaries: (a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for
violations that could not reasonably be expected to have a Material Adverse
Effect on the Company (provided that this clause (a) shall not apply to
Environmental Laws, which are covered in SECTION 5.10 above); and (b) has
received any notification or communication from any agency or department of
federal, state, or local government or any Regulatory Authority or the staff
thereof (i) asserting that any of the Company and its subsidiaries is not in
compliance with any of the Laws or Orders that such governmental authority or
Regulatory Authority enforces, except where such noncompliance could not
reasonably be expected to have a Material Adverse Effect on the Company, (ii)
threatening to revoke any Permits, except where the revocation of which could
not reasonably be expected to have a Material Adverse Effect on the Company, or
(iii) requiring the Company or any of its subsidiaries (x) to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or (y) to adopt any board
or directors resolution or similar undertaking that restricts Materially the
conduct of its business, or in any manner relates to its capital adequacy, its
credit or reserve policies, its management, or the payment of dividends.
5.12 LABOR RELATIONS. Neither the Company nor any of its subsidiaries
is the subject of any Litigation asserting that it has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel it to bargain with any labor organization as to
wages or conditions of employment, nor is any of them a party to or bound by any
collective bargaining agreement, Contract, or other agreement or understanding
with a labor union or labor organization, nor is there any strike or other labor
dispute involving any of them, pending or threatened, or to the Knowledge of the
Company Parties, is there any activity involving any of the Company's or its
subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
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5.13 EMPLOYEE BENEFIT PLANS.
(a) The Company has made available to the Buyer prior to the execution
of this Agreement correct and complete copies in each case of all Material
Company Benefits Plans.
(b) All Company Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws, except
as could not reasonably be expected to have a Material Adverse Effect on the
Company.
(c) Neither the Company nor any of its subsidiaries has an "obligation
to contribute" (as defined in ERISA Section 4212) to a "multiemployer plan" (as
defined in ERISA Sections 4001(a)(3)and 3(37)(A)). Each "employee pension
benefit plan," as defined in Section 3(2) of ERISA, ever maintained by the
Company or its subsidiaries that was intended to qualify under Section 401(a) of
the Internal Revenue Code and with respect to which the Company or any of its
subsidiaries has any Liability, is disclosed as such in SECTION 5.13 of the
Company's Disclosure Schedule.
(d) The Company has made available to the Buyer prior to the execution
of this Agreement correct and complete copies of the following documents: (i)
all trust agreements or other funding arrangements for such Company Benefit
Plans (including insurance contracts), and all amendments thereto, (ii) with
respect to any such Company Benefit Plans or amendments, all determination
letters, Material rulings, Material opinion letters, Material information
letters, or Material advisory opinions issued by the Internal Revenue Service,
the United States Department of Labor, or the Pension Benefit Guaranty
Corporation after December 31, 1994, (iii) annual reports or returns, audited or
unaudited financial statements, actuarial valuations and reports, and summary
annual reports prepared for any Company Benefit Plan with respect to the most
recent plan year, and (iv) the most recent summary plan descriptions and any
Material modifications thereto.
(e) Each Company ERISA Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and, to the Knowledge of
the Company Parties, there is no circumstance that will or could reasonably be
expected to result in revocation of any such favorable determination letter.
Each trust created under any Company ERISA Plan has been determined to be exempt
from Tax under Section 501(a) of the Internal Revenue Code and the Company is
not aware of any circumstance that will or could reasonably be expected to
result in revocation of such exemption. With respect to each such Company
Benefit Plan, to the Knowledge of the Company Parties, no event has occurred
that will or could reasonably be expected to give rise to a loss of any intended
Tax consequences under the Internal Revenue Code or to any Tax under Section 511
of the Internal Revenue Code that could reasonably be expected to have a
Material Adverse Effect on the Company. There is no Material Litigation pending
or, to the Knowledge of the Company Parties, threatened relating to any Company
ERISA Plan.
(f) Neither the Company nor any of its subsidiaries has engaged in a
transaction with respect to any Company Benefit Plan that, assuming the Taxable
Period of such transaction expired as of the date of this Agreement, would
subject the Company or any of its subsidiaries to a Material tax or penalty
imposed by either Section 4975 of the Internal Revenue Code or
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Section 502(i) of ERISA in amounts that could reasonably be expected to have a
Material Adverse Effect on the Company. Neither the Company or any of its
subsidiaries nor any administrator or fiduciary of any Company Benefit Plan (or
any agent of any of the foregoing) has engaged in any transaction, or acted or
failed to act in any manner, that could subject the Company or any of its
subsidiaries to any direct or indirect Liability (by indemnity or otherwise) for
breach of any fiduciary, co-fiduciary, or other duty under ERISA, where such
Liability could reasonably be expected to have a Material Adverse Effect on the
Company. No oral or written representation or communication with respect to any
aspect of the Company Benefit Plans has been made to employees of the Company or
any of its subsidiaries that is not in accordance with the written or otherwise
preexisting terms and provisions of such plans, except where any Liability with
respect to such representation or disclosure could not reasonably be expected to
have a Material Adverse Effect on the Company.
(g) Neither the Company nor any of its subsidiaries maintains or has
ever maintained a Company Pension Plan.
(h) Neither the Company nor any of its subsidiaries has any Material
obligation for retiree health and retiree life benefits under any of the Company
Benefit Plans other than with respect to benefit coverage mandated by applicable
Law.
(i) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will, by themselves, (i)
result in any Material payment (including without limitation severance,
unemployment compensation, golden parachute, or otherwise) becoming due to any
director or any employee of the Company or it subsidiaries from the Company or
any of its subsidiaries under any Company Benefit Plan or otherwise, (ii)
Materially increase any benefit otherwise payable under any Company Benefit
Plan, or (iii) result in any acceleration of the time of any Material payment or
vesting of any Material benefit.
5.14 MATERIAL CONTRACTS. None of the Company or its subsidiaries, nor
any of their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract, (ii) any Contract relating to
the borrowing of money by the Company or its subsidiaries or the guarantee by
the Company or its subsidiaries of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Reserve or Federal Home Loan Bank advances of
depository institution subsidiaries, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), and (iii) any
other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-KSB filed by the Company with the SEC as of the date of
this Agreement that has not been filed as an exhibit to the Company's Form
10-KSB filed for the fiscal year ended June 30, 2000, or in another SEC Document
and identified to the Buyer (together with all Contracts referred to in SECTIONS
5.8 and 5.13(A) of this Agreement, the "COMPANY CONTRACTS"). With respect to
each Company Contract: (i) the Contract is in full force and effect; (ii) none
of the Company or its subsidiaries is in Default hereunder, other than Defaults
that could not reasonably be expected to have a Material Adverse Effect on the
Company; (iii) neither the Company nor any of its subsidiaries has repudiated or
waived any Material provision of any such Contract; and (iv) no other party to
any such Contract is, to the Knowledge of the Company Parties, in Default in any
respect, other than Defaults that could not
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reasonably be expected to have a Material Adverse Effect on the Company, or has
repudiated or waived any Material provision thereunder. Except for Federal
Reserve and Federal Home Loan Bank advances, all of the indebtedness of the
Company and its subsidiaries for money borrowed (not including deposit
Liabilities) is prepayable at any time without penalty or premium.
5.15 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
or, to the Knowledge of the Company Parties, threatened against the Company or
any of its subsidiaries, or against any Asset, employee benefit plan, interest,
or right of any of them, except as could not reasonably be expected to have a
Material Adverse Effect on the Company, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any the Company or its subsidiaries, except as could not
reasonably be expected to have a Material Adverse Effect on the Company. There
is no Litigation to which the Company or any of its subsidiaries is a party that
names the Company or any of its subsidiaries as a defendant or cross-defendant
and where the maximum exposure is estimated to be $25,000 or more.
5.16 REPORTS. Since December 31, 1996, or the date of organization if
later, each of the Company and its subsidiaries has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Regulatory Authorities, except
failures to file that could not reasonably be expected to have a Material
Adverse Effect on the Company. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied with all applicable Laws, except noncompliance that
could not reasonably be expected to have a Material Adverse Effect on the
Company.
5.17 REGISTRATION STATEMENT; PROXY STATEMENT. Subject to the accuracy
of the representations contained in SECTION 6.17, the information supplied by
the Company or its subsidiaries for inclusion in the registration statement (the
"REGISTRATION STATEMENT") covering the shares of the Buyer's Stock to be issued
pursuant to this Agreement shall not, at the time the Registration Statement
(including any amendments or supplements thereto) is declared effective by the
SEC, contain any untrue statement of a Material fact or omit to state any
Material fact required to be stated therein or necessary to make the statements
therein not misleading. The information supplied by or on behalf of the Company
and its subsidiaries for inclusion in the proxy statement/prospectus to be sent
to the shareholders of the Company to consider, at a special meeting (the
"SHAREHOLDER MEETING"), the Holding Company Merger (such proxy
statement/prospectus as amended or supplemented is referred to herein as the
"PROXY STATEMENT") will not, on the date the Proxy Statement is first mailed to
shareholders, at the time of the Shareholder Meeting and at the Effective Time,
contain any untrue statement of a Material fact or omit to state any Material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. If at any time prior to the
Effective Time any event relating to the Company or its subsidiaries or any of
their affiliates, officers or directors should be discovered by the Company or
its subsidiaries that should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, the Company will promptly
inform the Buyer. The Proxy Statement shall comply in all Material respects with
the requirements of the Securities Laws and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by the Buyer and its
subsidiaries that is contained or incorporated by
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reference in, or furnished in connection with the preparation of, the
Registration Statement or the Proxy Statement.
5.18 ACCOUNTING, TAX, AND REGULATORY MATTERS. To the Knowledge of the
Company Parties none of the Company or its subsidiaries or any Affiliate thereof
has taken or agreed to take any action, that could not reasonably be expected to
(i) prevent the transactions contemplated hereby, including the Mergers, from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) Materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in SECTION 9.1(B) of this
Agreement.
5.19 STATE TAKEOVER LAWS. Each of the Company and its subsidiaries has
taken all necessary action to exempt the transactions contemplated by this
Agreement from any applicable "moratorium," "control share," "fair price,"
"business combination," or other anti-takeover laws and regulations of the State
of North Carolina.
5.20 CHARTER PROVISIONS. Each of the Company and its subsidiaries has
taken all action so that the entering into of this Agreement and the
consummation of the Mergers and the other transactions contemplated by this
Agreement do not and will not result in the grant of any rights to any Person
under the Articles of Incorporation, Bylaws, or other governing instruments of
any of them or restrict or impair the ability of the Buyer or any of its
subsidiaries to vote, or otherwise to exercise the rights of a shareholder with
respect to, the capital stock of the Company or any of its subsidiaries that may
be directly or indirectly acquired or controlled by it.
5.21 RECORDS. Complete and accurate copies of the articles of
incorporation or charter and bylaws of each of the Company and its subsidiaries
have been made available to the Buyer. The stock book of each such Person
contains, in all Material respects, complete and accurate records of the record
share ownership of the issued and outstanding shares of stock thereof.
5.22 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for the account of the Company or it
subsidiaries or their customers were entered into (i) in accordance with prudent
business practices and all applicable Laws, and (ii) with counterparties
believed to be financially responsible.
5.23 CERTAIN REGULATED BUSINESSES. Neither the Company nor any of its
subsidiaries is an "investment company" as defined in the Investment Company Act
of 1940, as amended, nor is it a "public utility holding company" as defined in
the Public Utility Holding Company Act of 1935, as amended.
5.24 COMMISSIONS. No broker, finder or other Person is entitled to any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated hereby by reason of any action taken by the Company, any of its
subsidiaries or any of the Company's shareholders.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Except as set forth on the Buyer's Disclosure Schedule, the Buyer
represents and warrants to the Company that the statements contained in this
ARTICLE VI are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date.
6.1 ORGANIZATION.
(a) The Buyer is a bank holding company registered with the Board of
Governors of the Federal Reserve System under the Bank Holding Company Act of
1956, as amended, and the Buyer Bank is a bank under North Carolina Law. The
Buyer Bank is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and subject to dollar
limits under such Act, all deposits in the Buyer Bank are fully insured by the
FDIC to the extent permitted by Law.
(b) Each of the Buyer and the Buyer Bank is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
North Carolina, and has the corporate power and authority to carry on, in all
Material respects, its businesses as now conducted and to own, lease and operate
its Assets. Each of the Buyer and the Buyer Bank is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so qualified or
licensed.
6.2 AUTHORITY; NO CONFLICTS.
(a) Subject to required regulatory and shareholder approvals, the Buyer
has the corporate power and authority necessary to execute, deliver and perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of and performance of its
obligations under this Agreement and the other documents contemplated hereby,
and the consummation of the transactions contemplated herein, including the
Mergers, have been duly and validly authorized by all necessary corporate action
(and by Closing, all such shareholder action) in respect thereof on the part of
the Buyer. This Agreement represents a legal, valid, and binding obligation of
the Buyer, enforceable against it in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting the enforcement
of creditors' rights generally and except that the availability of specific
performance, injunctive relief and other equitable remedies is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by the Buyer,
nor the consummation by the Buyer Parties of the transactions contemplated
hereby, nor compliance by the Buyer Parties with any of the provisions hereof
will (i) conflict with or result in a breach of any provision of the Buyer
Parties' articles of incorporation or bylaws, or (ii) constitute or result in a
Default under, or require any Consent pursuant to, or result in the creation of
any Lien on any Asset of the Buyer or any of its subsidiaries under, any
Contract or Permit of the Buyer or
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any of its subsidiaries, except as could not reasonably be expected to have a
Material Adverse Effect on the Buyer, or (iii) subject to obtaining the
requisite Consents referred to in SECTION 9.1(B) of this Agreement, violate any
Law or Order applicable to the Buyer Parties or any of their respective Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws and banking Regulatory Authorities, no notice to, filing with,
or Consent of, any Governmental Authority is necessary for the consummation by
the Buyer and the Buyer Bank of the Mergers and the other transactions
contemplated in this Agreement.
6.3 BUYER'S STOCK; SUBSIDIARIES.
(a) The authorized capital stock of the Buyer consists of 12,500,000
shares of common stock, no par value per share, of which 8,930,779 shares are
issued and outstanding as of the date of this Agreement, and except for such
shares, there are no shares of capital stock of the Buyer outstanding. The
authorized capital stock of the Buyer Bank consists of 2,500,000 shares of
common stock, $5.00 par value per share, of which 1,134,042 shares are issued
and outstanding as of the date of this Agreement, and except for such shares,
there are no shares of capital stock of the Buyer Bank outstanding. The Buyer
owns all of the issued and outstanding shares of capital stock of the Buyer
Bank, and no shares of capital stock of the Buyer Bank are owned by any other
Person. SECTION 6.3 of the Buyer's Disclosure Schedule lists all of the Buyer's
direct and indirect subsidiaries other than the Buyer Bank as of the date of
this Agreement. The Buyer or one of its subsidiaries owns all of the issued and
outstanding shares of capital stock of each such subsidiary.
(b) All of the issued and outstanding shares of capital stock of the
Buyer and its subsidiaries are duly and validly issued and outstanding and are
fully paid and nonassessable. Shares of the Buyer's Stock to be issued hereunder
are duly authorized and, upon issuance, will be validly issued and outstanding
and fully paid and nonassessable, free and clear of any Liens, pledges or
encumbrances. None of the outstanding shares of capital stock of the Buyer or
any of its subsidiaries has been issued in violation of any preemptive rights of
the current or past shareholders of such Persons, and none of the shares of the
Buyer's Stock to be issued pursuant to this Agreement will be issued in
violation of any preemptive rights of the current or past shareholders of the
Buyer.
6.4 SEC FILINGS; BUYER FINANCIAL STATEMENTS.
(a) The Buyer has filed and made available to the Buyer all forms,
reports, and documents required to be filed by the Buyer with the SEC since
December 31, 1996 (collectively, the "BUYER SEC REPORTS"). The Buyer SEC Reports
(i) at the time filed, complied in all Material respects with the applicable
requirements of the Securities Laws, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a Material fact or omit to state a Material fact required to be stated in
such Buyer SEC Reports or necessary in order to make the statements in such
Buyer SEC Reports, in light of the circumstances under which they were made, not
misleading. None of the Buyer's subsidiaries is required to file any forms,
reports, or other documents with the SEC.
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(b) Each of the Buyer Financial Statements (including, in each case,
any related notes) contained in the Buyer SEC Reports, including any Buyer SEC
Reports filed after the date of this Agreement until the Effective Time,
complied or will comply as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared or
will be prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements, or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC), and fairly presented or will fairly present the
consolidated financial position of the Buyer and its subsidiaries as at the
respective dates and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments that
were not or are not expected to be Material in amount or effect (except as may
be indicated in such financial statements or notes thereto).
6.5 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Buyer nor any of
its subsidiaries has any Liabilities that could reasonably be expected to have a
Material Adverse Effect on the Buyer, except Liabilities that are accrued or
reserved against in the consolidated balance sheets of the Buyer as of December
31, 1999, included in the Buyer Financial Statements or reflected in the notes
thereto and except for Liabilities incurred in the ordinary course of business
subsequent to December 31, 1999. Neither the Buyer nor any of its subsidiaries
has incurred or paid any Liability since December 31, 1999, except for (a) such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and (b) Liabilities that could not reasonably be expected
to have a Material Adverse Effect on the Buyer. No facts or circumstances exist
that could reasonably be expected to serve as the basis for any other
Liabilities of the Buyer or any of its subsidiaries, except as could not
reasonably be expected to have a Material Adverse Effect on the Buyer.
6.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999, (i)
there have been no events, changes, or occurrences that have had, or could
reasonably be expected to have, a Material Adverse Effect on the Buyer, and (ii)
each of the Buyer and its subsidiaries has conducted, in all Material Respects,
its respective businesses in the ordinary and usual course (excluding the
incurrence of expenses in connection with this Agreement and the transactions
contemplated hereby).
6.7 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any of the
Buyer and its subsidiaries have been timely filed, or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1999, and, to the Knowledge of the Buyer Parties, all Tax
Returns filed are complete and accurate in all Material respects. All Tax
Returns for periods ending on or before the date of the most recent fiscal year
end immediately preceding the Effective Time will be timely filed or requests
for extensions will be timely filed. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that could reasonably be expected to have a Material
Adverse Effect on the Buyer, except to the extent reserved against in the Buyer
Financial Statements dated prior to the date of this Agreement. All Taxes and
other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid.
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(b) None of the Buyer or its subsidiaries has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Material Taxes due or to become due for
any of the Buyer or its subsidiaries for the period or periods through and
including the date of the respective Buyer Financial Statements has been made
and is reflected on such Buyer Financial Statements.
(d) Each of the Buyer and its subsidiaries is in compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for any such
instances of noncompliance and such omissions as could not reasonably be
expected to have a Material Adverse Effect on the Buyer.
(e) None of the Buyer and its subsidiaries has made any payments, is
obligated to make any payments, or is a party to any contract, agreement, or
other arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(f) There are no Material Liens with respect to Taxes upon any of the
Assets of the Buyer and its subsidiaries.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Buyer and its subsidiaries that occurred
during any Taxable Period in which any of the Buyer and its subsidiaries has
incurred a net operating loss that carries over to another Taxable Period ending
after December 31, 1999.
(h) Neither the Buyer nor any of its subsidiaries has filed any consent
under Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(i) After the date of this Agreement, no Material election with respect
to Taxes will be made without the prior consent of the Company, which consent
will not be unreasonably withheld.
(j) Neither the Buyer nor any of its subsidiaries has or has had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
6.8 ASSETS. Each of the Buyer and its subsidiaries have good and
marketable title, free and clear of all Liens, to all of their respective
Assets. Except as could not reasonably be expected to have a Material Adverse
Effect on the Buyer, all tangible properties used in the businesses of the Buyer
and its subsidiaries are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with each of their
past practices. Except as could not reasonably be expected to have a Material
Adverse Effect on the Buyer, all Material Assets held under leases or subleases
by any of the Buyer and its subsidiaries
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are held under valid Contracts enforceable in accordance with their respective
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws affecting the enforcement
of creditors' rights generally and except that the availability of the specific
performance, injunctive relief or other equitable remedies is subject to the
discretion of the court before which any proceedings may be brought), and each
such Contract is in full force and effect. Each of the Buyer and its
subsidiaries currently maintain insurance in amounts, scope, and coverage
reasonably necessary for their operations. None of the Buyer or its subsidiaries
has received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be increased in
any Material respect. The Assets of the Buyer and its subsidiaries include all
Assets required to operate in all Material respects their businesses taken as a
whole as presently conducted.
6.9 SECURITIES PORTFOLIO AND INVESTMENTS. All securities owned by the
Buyer or any of its subsidiaries (whether owned of record or beneficially) are
held free and clear of all Liens that would impair the ability of the owner
thereof to dispose freely of any such security and/or otherwise to realize the
benefits of ownership thereof at any time, except for those Liens to secure
public deposits in the ordinary course of business consistent with past practice
and those Liens that could not reasonably be expected to have a Material Adverse
Effect on the Buyer. There are no voting trusts or other agreements or
undertakings to which the Buyer or any of its subsidiaries is a party with
respect to the voting of any such securities. Except for fluctuations in the
market values of United States Treasury and agency or municipal securities,
since December 31, 1999, there has been no significant deterioration or Material
adverse change in the quality, or any Material decrease in the value, of the
securities portfolio of the Buyer and its subsidiaries, taken as a whole.
6.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of the Buyer Parties, each of the Buyer and its
subsidiaries, its Participation Facilities, and its Loan Collateral are, and
have been, in compliance with all Environmental Laws, except those violations
that could not reasonably be expected to have a Material Adverse Effect on the
Buyer.
(b) To the Knowledge of the Buyer Parties, there is no Litigation
pending or threatened before any court, governmental agency, or authority, or
other forum in which any of the Buyer and its subsidiaries or any of its
Participation Facilities has been or, with respect to threatened Litigation, may
reasonably be expected to be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving a site owned, leased, or operated by the
Buyer or any of its subsidiaries or any of its Participation Facilities, except
for such Litigation pending or threatened that could not reasonably be expected
to have a Material Adverse Effect on the Buyer.
(c) To the Knowledge of the Buyer Parties, there is no Litigation
pending or threatened before any court, governmental agency, or authority, or
other forum in which any of its Loan Collateral (or the Buyer or any of its
subsidiaries in respect of such Loan Collateral) has been or, with respect to
threatened Litigation, may reasonably be expected to be named as a
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defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving Loan Collateral, except for such
Litigation pending or threatened that could not reasonably be expected to have a
Material Adverse Effect on the Buyer.
(d) To the Knowledge of the Buyer Parties, no facts exist that provide
a reasonable basis for any Litigation of a type described in subsections (b) or
(c), except such could not reasonably be expected to have a Material Adverse
Effect on the Buyer.
(e) To the Knowledge of the Buyer Parties, during and prior to the
period of (i) any of the Buyer's or its subsidiaries' ownership or operation of
any of their respective current properties, (ii) any of the Buyer's or its
subsidiaries' participation in the management of any Participation Facility, or
(iii) any of the Buyer's or subsidiaries' holding of a security interest in Loan
Collateral, there have been no releases of Hazardous Material in, on, under, or
affecting (or potentially affecting) such properties, except such as could not
reasonably be expected to have a Material Adverse Effect on the Buyer.
6.11 COMPLIANCE WITH LAWS. Each of the Buyer and its subsidiaries has
in effect all Permits necessary for it to own, lease, or operate its Material
Assets and to carry on, in all Material respects, its business as now conducted,
except for those Permits the absence of which could not reasonably be expected
to have a Material Adverse Effect on the Buyer, and there has occurred no
Default under any such Permit, other than Defaults that could not reasonably be
expected to have a Material Adverse Effect on the Buyer. None of the Buyer or
its subsidiaries: (a) is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for violations that
could not reasonably be expected to have a Material Adverse Effect on the Buyer;
and (b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that any of the Buyer and its subsidiaries is
not in compliance with any of the Laws or Orders that such governmental
authority or Regulatory Authority enforces, except where such noncompliance
could not reasonably be expected to have a Material Adverse Effect on the Buyer,
(ii) threatening to revoke any Permits, except where the revocation of which
could not reasonably be expected to have a Material Adverse Effect on the Buyer,
or (iii) requiring the Buyer or any of its subsidiaries (x) to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or (y) to adopt any board
or directors resolution or similar undertaking that restricts Materially the
conduct of its business, or in any manner relates to its capital adequacy, its
credit or reserve policies, its management, or the payment of dividends.
6.12 LABOR RELATIONS. Neither the Buyer nor any of its subsidiaries is
the subject of any Litigation asserting that it has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel it to bargain with any labor organization as to
wages or conditions of employment, nor is any of them a party to or bound by any
collective bargaining agreement, Contract, or other agreement or understanding
with a labor union or labor organization, nor is there any strike or other labor
dispute involving any of them, pending or threatened, or to the Knowledge of the
Buyer Parties, is there any
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activity involving any of the Buyer's or its subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in any other organization
activity.
6.13 EMPLOYEE BENEFIT PLANS.
(a) The Buyer has made available to the Company prior to the execution
of this Agreement correct and complete copies in each case of all Material Buyer
Benefits Plans.
(b) All Buyer Benefit Plans are in compliance with the applicable terms
of ERISA, the Internal Revenue Code, and any other applicable Laws, except as
could not reasonably be expected to have a Material Adverse Effect on the Buyer.
(c) Neither the Buyer nor any of its subsidiaries has an "obligation to
contribute" (as defined in ERISA Section 4212) to a "multiemployer plan" (as
defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(d) Each "employee pension benefit plan," as defined in Section 3(2) of
ERISA, ever maintained by the Buyer or its subsidiaries that was intended to
qualify under Section 401(a) of the Internal Revenue Code and with respect to
which the Buyer or any of its subsidiaries has any Liability, is disclosed as
such in SECTION 6.13 of the Buyer's Disclosure Schedule.
(e) The Buyer has made available to the Company prior to the execution
of this Agreement correct and complete copies of the following documents: (i)
all trust agreements or other funding arrangements for such Buyer Benefit Plans
(including insurance contracts), and all amendments thereto, (ii) with respect
to any such Buyer Benefit Plans or amendments, all determination letters,
Material rulings, Material opinion letters, Material information letters, or
Material advisory opinions issued by the Internal Revenue Service, the United
States Department of Labor, or the Pension Benefit Guaranty Corporation after
December 31, 1994, (iii) annual reports or returns, audited or unaudited
financial statements, actuarial valuations and reports, and summary annual
reports prepared for any Buyer Benefit Plan with respect to the most recent plan
year, and (iv) the most recent summary plan descriptions and any Material
modifications thereto.
(f) Each Buyer ERISA Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and, to the Knowledge of
the Buyer Parties, there is no circumstance that will or could reasonably be
expected to result in revocation of any such favorable determination letter.
Each trust created under any Buyer ERISA Plan has been determined to be exempt
from Tax under Section 501(a) of the Internal Revenue Code and to the Knowledge
of the Buyer, there is no circumstance that will or could reasonably be expected
to result in revocation of such exemption. With respect to each such Buyer
Benefit Plan, to the Knowledge of the Buyer Parties, no event has occurred that
will or could reasonably be expected to give rise to a loss of any intended Tax
consequences under the Internal Revenue Code or to any Tax under Section 511 of
the Internal Revenue Code that could reasonably be expected to have a Material
Adverse Effect on the Buyer. There is no Material Litigation pending or, to the
Knowledge of the Buyer Parties, threatened relating to any Buyer ERISA Plan.
(g) Neither the Buyer nor any of its subsidiaries has engaged in a
transaction with respect to any Buyer Benefit Plan that, assuming the Taxable
Period of such transaction expired
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as of the date of this Agreement, would subject the Buyer or any of its
subsidiaries to a Material tax or penalty imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA in amounts that could
reasonably be expected to have a Material Adverse Effect on the Buyer. Neither
the Buyer or any of its subsidiaries nor any administrator or fiduciary of any
Buyer Benefit Plan (or any agent of any of the foregoing) has engaged in any
transaction, or acted or failed to act in any manner, that could subject the
Buyer or any of its subsidiaries to any direct or indirect Liability (by
indemnity or otherwise) for breach of any fiduciary, co-fiduciary, or other duty
under ERISA, where such Liability could reasonably be expected to have a
Material Adverse Effect on the Buyer. No oral or written representation or
communication with respect to any aspect of the Buyer Benefit Plans has been
made to employees of the Buyer or any of its subsidiaries that is not in
accordance with the written or otherwise preexisting terms and provisions of
such plans, except where any Liability with respect to such representation or
disclosure could not reasonably be expected to have a Material Adverse Effect on
the Buyer.
(h) Since the date of the most recent actuarial valuation, there has
been (i) no Material change in the financial position or funded status of any
Buyer Pension Plan, (ii) no Material change in the actuarial assumptions with
respect to any Buyer Pension Plan, and (iii) no Material increase in benefits
under any Buyer Pension Plan as a result of plan amendments or changes in
applicable Law, except as could not reasonably be expected to have a Material
Adverse Effect on the Buyer. Neither any Buyer Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by the Buyer or its subsidiaries, or the
single-employer plan of any entity that is considered one employer with the
Buyer under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (a "BUYER ERISA AFFILIATE") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA. All contributions with respect to
a Buyer Pension Plan or any single-employer plan of a Buyer ERISA Affiliate have
or will be timely made and there is no Lien or expected to be a Lien under
Internal Revenue Code Section 412(n) or ERISA Section 302(f) or Tax under
Internal Revenue Code Section 4971. Neither the Buyer nor any of its
subsidiaries has provided, or is required to provide, security to a Buyer
Pension Plan or to any single-employer plan of a Buyer ERISA Affiliate pursuant
to Section 401(a)(29) of the Internal Revenue Code. All premiums required to be
paid under ERISA Section 4006 have been timely paid by the Buyer, except to the
extent any failure that could not reasonably be expected to have a Material
Adverse Effect on the Buyer.
(i) No Liability under Title IV of ERISA has been or is expected to be
incurred by the Buyer or it subsidiaries with respect to any defined benefit
plan currently or formerly maintained by any of them or by any Buyer ERISA
Affiliate that has not been satisfied in full (other than Liability for Pension
Benefit Guaranty Corporation premiums which have been paid when due), except to
the extent any failure could not reasonably be expected to have a Material
Adverse Effect on the Buyer.
(j) Neither the Buyer nor any of its subsidiaries has any Material
obligation for retiree health and retiree life benefits under any of the Buyer
Benefit Plans other than with respect to benefit coverage mandated by applicable
Law.
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Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will, by themselves, (i) result in any Material
payment (including without limitation severance, unemployment compensation,
golden parachute, or otherwise) becoming due to any director or any employee of
the Buyer or it subsidiaries from the Buyer or any of its subsidiaries under any
Buyer Benefit Plan or otherwise, (ii) Materially increase any benefit otherwise
payable under any Buyer Benefit Plan, or (iii) result in any acceleration of the
time of any Material payment or vesting of any Material benefit.
6.14 MATERIAL CONTRACTS. None of the Buyer or its subsidiaries, nor any
of their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract, (ii) any Contract relating to
the borrowing of money by the Buyer or its subsidiaries or the guarantee by the
Buyer or its subsidiaries of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Reserve or Federal Home Loan Bank advances of
depository institution subsidiaries, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), and (iii) any
other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-K filed by the Buyer with the SEC as of the date of this
Agreement that has not been filed as an exhibit to the Buyer's Form 10-K filed
for the fiscal year ended December 31, 1999, or in another SEC Document and
identified to the Company (together with all Contracts referred to in SECTIONS
6.8 and 6.13 of this Agreement, the "BUYER CONTRACTS"). With respect to each
Buyer Contract: (i) the Contract is in full force and effect; (ii) none of the
Buyer or its subsidiaries is in Default hereunder, other than Defaults that
could not reasonably be expected to have a Material Adverse Effect on the Buyer;
(iii) neither the Buyer nor any of its subsidiaries has repudiated or waived any
Material provision of any such Contract; and (iv) no other party to any such
Contract is, to the Knowledge of the Buyer Parties, in Default in any respect,
other than Defaults that could not reasonably be expected to have a Material
Adverse Effect on the Buyer, or has repudiated or waived any Material provision
thereunder. Except for Federal Reserve or Federal Home Loan Bank advances, all
of the indebtedness of the Buyer and its subsidiaries for money borrowed (not
including deposit Liabilities) is prepayable at any time without penalty or
premium.
6.15 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
or, to the Knowledge of the Buyer Parties, threatened against the Buyer or any
of its subsidiaries, or against any Asset, employee benefit plan, interest, or
right of any of them, except as could not reasonably be expected to have a
Material Adverse Effect on the Buyer, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any the Buyer or its subsidiaries, except as could not reasonably be expected to
have a Material Adverse Effect on the Buyer. There is no Litigation as of the
date of this Agreement to which the Buyer or any of its subsidiaries is a party
and that names the Buyer or any of its subsidiaries as a defendant or
cross-defendant and where the maximum exposure is estimated to be $25,000 or
more.
6.16 REPORTS. Since December 31, 1996, or the date of organization if
later, each of the Buyer and its subsidiaries has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Regulatory Authorities, except
failures to file that could not reasonably be expected to have a
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Material Adverse Effect on the Buyer. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied with all applicable Laws, except noncompliance that
could not reasonably be expected to have a Material Adverse Effect on the Buyer
6.17 REGISTRATION STATEMENT; PROXY STATEMENT. Subject to the accuracy
of the representations contained in SECTION 5.17, the information supplied by
the Buyer and its subsidiaries for inclusion in the Registration Statement shall
not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a Material fact or omit to state any Material fact required to be
stated therein or necessary to make the statements therein not misleading. The
information supplied by the Buyer and its subsidiaries for inclusion in the
Proxy Statement will not, on the date the Proxy Statement/Prospectus is first
mailed to shareholders, at the time of the Shareholder Meeting and at the
Effective Time, contain any untrue statement of a Material fact or omit to state
any Material fact necessary to make the statements therein, in light of
circumstances under which they were made, not misleading. If at any time prior
to the Effective Time any event relating to the Buyer or the Buyer Bank or any
of their affiliates, officers or directors should be discovered by the Buyer or
the Buyer Bank that should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, the Buyer or the Buyer Bank
will promptly inform the Company. The Proxy Statement shall comply in all
Material respects with the requirements of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Notwithstanding the foregoing, the
Buyer makes no representation or warranty with respect to any information
supplied by the Company and its subsidiaries that is contained or incorporated
by reference in, or furnished in connection with the preparation of, the
Registration Statement or the Proxy Statement.
6.18 ACCOUNTING, TAX, AND REGULATORY MATTERS. To the Knowledge of the
Buyer Parties, none of the Buyer or it subsidiaries or any Affiliate thereof has
taken or agreed to take any action, that could reasonably be expected to (i)
prevent the transactions contemplated hereby, including the Mergers, from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) Materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in SECTION 9.1(B) of this
Agreement.
6.19 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for the account of the Buyer or it
subsidiaries or their customers were entered into (i) in accordance with prudent
business practices and all applicable Laws, and (ii) with counterparties
believed to be financially responsible.
6.20 CERTAIN REGULATED BUSINESSES. Neither the Buyer nor any of its
subsidiaries is an "investment company" as defined in the Investment Company Act
of 1940, as amended, nor is it a "public utility holding company" as defined in
the Public Utility Holding Company Act of 1935, as amended.
6.21 COMMISSIONS. No broker, finder or other Person is entitled to any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated hereby by reason of any action taken by the Buyer, any of its
subsidiaries or any of the Buyer's shareholders.
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ARTICLE VII
COVENANTS
7.1 COVENANTS OF THE COMPANY.
(a) Ordinary Conduct of Business. Except as otherwise expressly
permitted by this Agreement, the Company will, and each will cause its
subsidiaries (including the Company Bank) to, from the date of this Agreement to
the Closing, conduct its business in the ordinary course in substantially the
same manner as presently conducted and make reasonable commercial efforts
consistent with past practices to preserve its relationships with other Persons.
Additionally, except as otherwise contemplated by this Agreement or as set forth
on SECTION 7.1(A) of the Company's Disclosure Schedule, the Company will not,
and it will not permit its subsidiaries (including the Company Bank) to, do any
of the following without the prior written consent of the Buyer:
(i) amend its governing documents;
(ii) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver any stock or stock options or other
equity equivalents of any class or any other of its securities (other
than the issuance of any Company Shares pursuant to the exercise of
options set forth on SECTION 5.3 of the Company's Disclosure Schedule),
or amend any of the terms of any securities outstanding as of the date
hereof;
(iii) (A) split, combine or reclassify any shares of its
capital stock, (B) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock (except for regular quarterly
cash dividends paid in accordance with past practice at the rate of
$0.68 per share per annum, including the payment of any quarterly
portion thereof as is necessary to prevent the Company's shareholders
from failing to receive a quarterly dividend from either the Company or
the Buyer during any particular calendar quarter, or (C) redeem or
otherwise acquire any of its securities (other than the acceptance of
any Company Shares as payment of the exercise price in connection with
the exercise of options set forth on SECTION 5.3 of the Company's
Disclosure Schedule);
(iv) (A) incur or assume any long-term debt or issue any debt
securities other than in the ordinary course of business consistent
with past practice or, except under existing lines of credit and in
amounts not Material to it, incur or assume any short-term debt other
than in the ordinary course of business, (B) other than in the ordinary
course of business consistent with past practice assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person, (C)
make any loans, advances or capital contributions to, or investments
in, any other Person, other than in the ordinary course and consistent
with past practice up to an amount per loan of $400,000, pledge or
otherwise encumber shares of its capital stock, or (E) mortgage or
pledge any of its assets, tangible or intangible, or create or suffer
to exist any Lien thereupon, other than Liens permitted by the proviso
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clause in the definition of Liens and Liens created or existing in the
ordinary course of business consistent with past practice;
(v) except as required by Law or as contemplated herein, adopt
or amend any Benefit Plan;
(vi) grant to any director or executive officer or employee
any stock options or increase in his or her compensation (except in the
ordinary course of business consistent with past practice) or pay or
agree to pay to any such person other than in the ordinary course of
business any bonus, severance or termination payment, specifically
including any such payment that becomes payable upon the termination of
such person by it after the Closing;
(vii) enter into or amend any employment Contract (including
any termination agreement), except that any automatic renewals
contained in currently existing contracts and agreements shall be
allowed and compensation payable under employment Contracts may be
increased in the ordinary course of business consistent with past
practice;
(viii) acquire, sell, lease or dispose of any assets outside
the ordinary course of business, or any other assets that in the
aggregate are Material to it, or acquire any Person (or division
thereof), any equity interest therein or the assets thereof outside the
ordinary course of business consistent with past practice;
(ix) change or modify any of the accounting principles or
practices used by it or revalue in any Material respect any of its
assets, including without limitation writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business or as required by GAAP or any Regulatory
Authority;
(x) (A) enter into, cancel or modify any Contract (other than
loans, advances, capital contributions or investments permitted by
subclause (iv)(C) of this SECTION 7.1) other than in the ordinary
course of business consistent with past practices, but not in any event
involving an amount in excess of $10,000; (B) authorize or make any
capital expenditure or expenditures that, individually or in the
aggregate, are in excess of $10,000; or (C) enter into or amend any
Contract with respect to any of the foregoing;
(xi) pay, discharge or satisfy, cancel, waive or modify any
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business of liabilities
reflected or reserved against in or contemplated by the Company
Financial Statements, or incurred in the ordinary course of business
consistent with past practices;
(xii) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated hereby;
(xiii) take, or agree in writing or otherwise to take, any
action that would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect or result in
any of the conditions set forth in this Agreement not being satisfied;
or
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(xiv) agree, whether in writing or otherwise, to do any of the
foregoing.
(b) Consents. The Company will exercise its best efforts to obtain such
Consents as may be necessary or desirable for the consummation of the
transactions contemplated hereby from the appropriate parties to those Contracts
listed on SECTION 5.2 of the Company's Disclosure Schedule such that such
Contracts shall survive the Mergers and not be breached thereby.
(c) Acquisition Proposals. Any offer or proposal by any Person or group
concerning any tender or exchange offer, proposal for a merger, share exchange,
recapitalization, consolidation or other business combination involving the
Company or any of its subsidiaries or divisions of any of the foregoing, or any
proposal or offer to acquire in any manner, directly or indirectly, a
significant equity interest in, or a substantial portion of the assets of, the
Company or any of its subsidiaries, other than pursuant to the transactions
contemplated by this Agreement, is hereby defined as an "ACQUISITION PROPOSAL".
The Company shall not, and shall not permit any of its subsidiaries' to, permit
any of their respective officers, directors, affiliates, representatives or
agents to, directly or indirectly, (a) take any action to solicit, initiate or
encourage any Acquisition Proposal, or (b) participate in any discussions or
negotiations with or encourage any effort or attempt by any other Person or take
any other action to facilitate an Acquisition Proposal. From and after the date
hereof, the Company and its subsidiaries and all officers, directors, employees
of, and all investment bankers, attorneys and other advisors and representatives
of, the Company and its subsidiaries shall cease doing any of the foregoing.
Notwithstanding the foregoing, the Company or any such Persons may, directly or
indirectly, subject to a confidentiality agreement containing customary terms,
furnish to any party information and access in response to a request for
information or access made incident to an Acquisition Proposal made after the
date hereof and may participate in discussions and negotiate with such party
concerning any written Acquisition Proposal made after the date hereof, not
recommend shareholder approval of the Holding Company Merger and terminate this
Agreement (provided that neither the Company nor any such Person, after the date
hereof, solicited, initiated or encouraged such Acquisition Proposal), if the
board of directors of the Company or any such Person shall have determined based
upon the written advice of outside counsel reasonably acceptable to the Buyer
(which shall in any event include ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
L.L.P.) that failing to take such action would violate the directors' fiduciary
duties under applicable law. Unless this Agreement has been terminated, the
board of directors of the Company shall notify the Buyer immediately if any
Acquisition Proposal is made and shall in such notice indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
Acquisition Proposal and shall keep the Buyer promptly advised of all Material
developments that could culminate in the board of directors withdrawing,
modifying or amending its recommendation of the Merger and the other
transactions contemplated by this Agreement. Unless this Agreement has been
terminated, neither the Company nor any of its subsidiaries shall waive or
modify any provisions contained in any confidentiality agreement entered into
relating to a possible acquisition (whether by merger, stock purchase, asset
purchase or otherwise) or recapitalization of the Company or any of its
subsidiaries.
(d) Shareholder Approval. Subject to SECTION 7.1(C), the Company will,
at the earliest practicable date, hold a meeting of its shareholders for the
purpose of approving the
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Mergers. In connection with such shareholder meeting, subject to SECTION 7.1(C),
the Company's board of directors will recommend to the Company's shareholders
such approvals.
7.2 COVENANTS OF THE BUYER.
(a) Reservation of Shares of the Buyer's Stock. The Buyer shall reserve
for issuance a sufficient number of shares of the Buyer's Stock to cover the
issuances of such stock required hereby.
(b) Directors.
(i) As soon as reasonably practicable after the Effective Time
of the Holding Company Merger, the Buyer shall use its reasonable best
efforts to cause ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. to be elected or appointed as a
member of the board of directors of the Buyer and the Buyer Bank, but
conditional upon obtaining any necessary regulatory approvals and, with
respect to the Buyer's board of directors, upon the Buyer's
shareholders approving an increase in the size of the Buyer's board of
directors by one or a vacancy on such board becoming available. To the
extent that a vacancy on the Buyer's board of directors does not become
available prior to the Buyer's next scheduled annual meeting of
shareholders, the Buyer shall include in its proxy statement relating
to such meeting a proposal to increase the size of its board of
directors by one. The Buyer shall include such designated individual as
a candidate for election as a director and recommend and solicit
proxies for his election at such next annual meeting. After such
meeting, such designated person shall be subject to same nomination and
election procedures as the other directors on the boards of the Buyer
and the Buyer Bank.
(ii) Additionally, for a period of three years after the
Effective Time, each of the Company's board members at the Effective
Time who does not join the Buyer's board of directors shall be paid
$900 per month for their good faith service in promoting the Buyer and
the Buyer Bank as a member of local advisory board of the Buyer (which
advisory board the Buyer agrees to maintain for at least three years).
(c) Employees.
(i) Except as covered by the ▇▇▇▇▇▇ Employment Agreement, any
and all of the Company Parties' employees will be employed on an
"at-will" basis, and nothing in this Agreement shall be deemed to
constitute an employment agreement with any such person to obligate the
Buyer or any Affiliate thereof to employ any such person for any
specific period of time or in any specific position or to restrict the
Buyer's or any of its Affiliates' right to terminate the employment of
any such person at any time and for any reason satisfactory to it
(subject to the Company's Special Termination Agreements with ▇▇▇▇ ▇.
▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the Company Bank's Severance Plan for its
employees).
(ii) Such Company Parties' employees who continue employment
with the Buyer or any of its subsidiaries will be eligible for benefits
consistent with those of existing employees of the Buyer or such
subsidiary, with credit for past service with the Company or the
Company Bank for purposes of participation, eligibility and vesting
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(including with respect to any amounts to be contributed by the Buyer
or one of its subsidiaries or amounts that will vest under any Buyer
Benefit Plan, but not including the calculation of any other benefit
accrual); provided, however, that any such continuing employee will not
be subject to any exclusion or penalty for pre-existing conditions that
were covered under the Company's or any of its subsidiaries' medical
plans as of the Closing Date or any waiting period relating to coverage
under the Buyer's or any of its subsidiaries' medical plans. There
shall be no waiting periods applicable to any such Company employees to
participate in such benefits (including applicable insurance benefits).
(iii) The Buyer or one of its subsidiaries shall honor any and
all vacation accrued by the employees of the Company and the Company
Bank and any sick leave up to 90 days, and any such employee who is not
retained for employment by the Buyer shall be paid for all accrued but
unused vacation as of the date of termination of employment. The
employees of the Company and the Company Bank who qualify for the
Company Bank's extended sick leave (of between 10 and 60 days) shall be
deemed to have a number of days of accrued, unused sick leave equal to
the number of extended sick leave days for which they qualify in
addition to any normal accrued sick leave of up to 10 days held by
them.
(iv) For each employee of the Company or the Company Bank who
at the Effective Time does not own any options (whether or not vested)
to purchase Company Shares and who becomes an employee of the Buyer or
any of it subsidiaries immediately after the Effective Time, the Buyer
shall make or shall cause to be made a one-time increase to the salary
compensation of each such employee in order to compensate him or her
for the higher cost of insurance available from the Buyer and its
subsidiaries immediately after the Effective Time, as compared to the
cost of insurance available from the Company and its subsidiaries
immediately prior to the Effective Time.
(v) Company Bank Severance Plan. At the Effective Time, the
Buyer shall assume the obligations under the Company Bank's Severance
Plan.
(vi) Special Termination Agreements. At the Effective Time,
the Buyer shall assume the obligations of the Special Termination
Agreements with ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(vii) Special Payment to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. At or prior to
the Effective Time, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. has agreed to terminate his
current employment agreement with the Company Bank and enter into an
new employment agreement with the Buyer substantially in the form of
EXHIBIT B, and in the event that such existing agreement is terminated
and such new agreement is entered into by ▇▇. ▇▇▇▇▇▇, the Buyer shall
make a lump sum payment to ▇▇. ▇▇▇▇▇▇ equal to the following amount:
(x) ▇▇. ▇▇▇▇▇▇'▇ annual salary at the Effective Time, plus (y) 1.06
times ▇▇. ▇▇▇▇▇▇'▇ salary at the Effective Time, plus (z) 1.06 times
the amount determined in clause (y) above. The Buyer will enter in to
the ▇▇▇▇▇▇ Employment Agreement at the Effective Time.
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(viii) Payment to ▇▇▇▇ ▇. ▇▇▇▇. At the Effective Time, the
Buyer shall give to ▇▇▇▇ ▇. ▇▇▇▇ the Company car that he currently
drives.
(ix) Employee Life Insurance. The Buyer shall provide to each
previous Company or Company Bank employee that becomes an employee of
the Buyer or the Buyer Bank while an employee of the Buyer or the Buyer
Bank either term life insurance coverage in an amount equal to five
times such employee's then current annual salary or an adjustment for
such employee's annual salary deemed sufficient by the Buyer for such
employee to purchase such amounts of life insurance, which choice shall
be made by the Buyer in its sole discretion.
(x) Employee Stock Ownership Plan. The Home Savings, Inc. SSB
Employee Stock Ownership Plan shall be terminated as soon as
practicable after the Effective Time.
(xi) Management Recognition Plan. The Home Savings, Inc. SSB
Management Recognition Plan and Trust will be terminated as soon as
practicable after the Effective Time and Company Shares held by such
trust on the Effective Time that have not been granted at the Effective
Time will be cancelled and retired as of the Effective Time.
(d) Directors and Officers Insurance and Indemnification.
(i) The Buyer shall maintain, or shall cause the Buyer Bank to
maintain, in effect for six years from the Closing Date, if available,
the current directors' and officers' liability insurance policies
maintained by the Company; provided, however, that Buyer may substitute
therefor policies of at least the same coverage containing terms and
conditions that are not taken as a whole Materially less favorable to
the insured with respect to matters occurring prior to the Effective
Time of the Holding Company Merger.
(ii) From and after the Effective Time, the Buyer shall, or
shall cause the Buyer Bank to, indemnify, defend and hold harmless each
person who is now, or who has been at any time before the date hereof
or who becomes before the Effective Time, an officer or director of the
Company or Company Bank (the "INDEMNIFIED PARTIES") against all losses,
claims, damages, costs, expenses (including reasonable attorneys'
fees), liabilities or judgments or amounts that are paid in settlement
(which settlement shall require the prior written consent of Buyer,
which consent shall not be unreasonably withheld) of or in connection
with any claim, action, suit, proceeding or investigation, whether
civil, criminal, or administrative (each a "CLAIM"), in which an
Indemnified Person is, or is threatened to be made, a party or witness
arising in whole or in part out of the fact that such person is or was
a director, officer or employee of the Company Bank or any of its
subsidiaries if such Claim pertains to any matter or fact arising,
existing or occurring before the Effective Time (including without
limitation the Mergers and the other transactions contemplated hereby),
regardless of whether such Claim is asserted or claimed before, at or
after the Effective Time (the "INDEMNIFIED LIABILITIES"), to the
fullest extent permitted by applicable Law in effect as of the date
hereof or as amended applicable to a time before the Effective Time.
Any Indemnified Person wishing to claim
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indemnification under this SECTION 7.2(G)(II), upon learning of any
Claim, shall notify the Buyer (but the failure so to so notify shall
not relieve the Buyer or the Buyer Bank from any liability that it may
have under this SECTION 7.2(G)(II), except to the extent such failure
Materially prejudices the Buyer or its Affiliates). In the event of any
such Claim, whether arising before, on or after the Effective Time, (1)
the Buyer shall have the right to assume the defense thereof (in which
event the Indemnified Parties will cooperate in the defense of any such
matter) and upon such assumption, the Buyer shall not be liable to any
Indemnified Person for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Person in connection
with the defense therefor, except that if the Buyer elects not to
assume such defense, or counsel for the Indemnified Parties reasonably
advises the Indemnified Parties that there are or may be (whether or
not any have yet actually arisen) issues that raise conflicts of
interest between the Buyer and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them, and the
Buyer shall pay the reasonable fees and expenses of such counsel for
the Indemnified Parties, (2) the Buyer shall be obligated pursuant to
this paragraph to pay for only one firm of counsel for all Indemnified
Parties (unless counsel for one or more Indemnified Parties advises his
or her client that a conflict exists between his or her client and one
or more other Indemnified Parties, in which event the fees and expenses
of such counsel shall also be paid by the Buyer) whose reasonable fees
and expenses shall be paid promptly as statements are received, (3) the
Buyer shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld), and
(4) the Buyer shall have no obligation hereunder to any Indemnified
Person when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Person in the
manner contemplated hereby is prohibited by applicable Law (it being
acknowledged by the parties hereto that in the event of any good faith
dispute about the lawfulness of such indemnification, the Buyer or the
Buyer Bank may place the amounts at issue in escrow pending the final
and nonappealable determination of such dispute). The obligations of
the Buyer and the Buyer Bank pursuant to this SECTION 7.2(G) are
intended to be enforceable against the Buyer and the Buyer Bank
directly by the Indemnified Parties. The indemnification provided
herein shall be in addition to any indemnification rights that any
Indemnified Parties may have by Law, pursuant to the Articles of
Incorporation or Bylaws of the Company or any of its subsidiaries or
pursuant to the terms of any employee benefit plan or trust for which
any Indemnified Party serves as a fiduciary.
7.3 COVENANTS OF ALL PARTIES TO THE AGREEMENT.
(a) Reorganization for Tax Purposes. Each of the parties hereto
undertakes and agrees to use its reasonable efforts to cause the Mergers to
qualify as "reorganizations" within the meaning of Section 368(a) of the Code
and that it will not intentionally take any action that would cause the Mergers
to fail to so qualify.
(b) Notification. Each of the parties hereto agrees to notify promptly
the other parties hereto of any event, fact, or other circumstance arising after
the date hereof that would have caused any representation or warranty herein,
including, in the case of the Company, any information on any schedule hereto,
to be untrue or misleading had such event, fact, or
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circumstance arisen prior to the execution of this Agreement. The parties hereto
will exercise their reasonable best efforts to ensure that no such events,
facts, or other circumstances occur, come to pass, or become true.
(c) Consummation of Agreement. Subject to SECTION 7.1(C), the parties
hereto each agree to use their reasonable efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by them under this
Agreement so that the transactions contemplated hereby shall be consummated.
Except for events that are the subject of specific provisions of this Agreement,
if any event should occur, either within or outside the control of the Company
Parties, or the Buyer Parties, that would Materially delay or prevent
fulfillment of the conditions upon the obligations of any party hereto to
consummate the transactions contemplated by this Agreement, each party will
notify the others of any such event and, subject to SECTION 7.1(C), the parties
will use their reasonable, diligent and good faith efforts to cure or minimize
the same as expeditiously as possible. Subject to SECTION 7.1(C), each party
hereto shall use its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement and to assist in the procuring or providing of all documents that must
be procured or provided pursuant to the provisions hereof. Notwithstanding
anything to the contrary contained in this Agreement, but subject to SECTION
7.1(C), none of the parties hereto will take any action that would (i)
Materially affect or delay receipt of the approvals contemplated in SECTION
9.1(B) from the Regulatory Authorities, or (ii) Materially adversely affect or
delay its ability to perform its covenants and agreements made pursuant to this
Agreement.
(d) Corporate Action. Subject to the terms and conditions hereof
(including SECTION 7.1(C)), each of the parties hereto shall, and each of them
shall cause their subsidiaries to, take all corporate action, including the
recommendation of the Mergers by their respective boards of directors to their
respective shareholders, and use each of their best efforts to cause all
shareholder action to be taken, necessary to consummate and give effect to the
respective Mergers.
(e) Maintenance of Corporate Existence. Each of the parties hereto
shall, and each of them shall cause their Affiliates to, maintain in full force
and effect each their respective corporate or legal existences.
(f) Applications and Reports. The Buyer shall prepare and file as soon
as reasonably practical after the date of this Agreement, and the Company shall
cooperate in the preparation and, where appropriate, filing of, all
applications, reports and statements with all Regulatory Authorities having
jurisdiction over the transactions contemplated by this Agreement seeking the
requisite Consents necessary to consummate the transactions contemplated by this
Agreement.
(g) Registration Statement and Proxy Statement. As soon as reasonably
practicable after the execution of the Agreement and after the furnishing by the
Company and the Company Bank of all information required to be contained
therein, the Buyer shall file with the SEC the Registration Statement on Form
S-4 (or on such other form as shall be appropriate), which shall contain the
Proxy Statement. The Buyer and the Company shall each use their reasonable best
efforts to cause the Proxy Statement to comply in all Material respects with the
requirements of the Securities Laws and the rules and regulations thereunder.
The Buyer and the Company shall
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each use all reasonable efforts to cause the Registration Statement to become
effective as soon thereafter as practicable. Subject to SECTION 7.1(C), the
Proxy Statement shall include the recommendation of the Boards of Directors of
the Company in favor of the Holding Company Merger.
(h) Option Agreement. Concurrently with or immediately after the
execution of this Agreement by the Company, the Company shall execute and
deliver the Company Option Agreement.
(i) Closing. Subject to the terms and conditions hereof (including
SECTION 7.1(C)), the parties hereto shall use their reasonable best efforts to
consummate the Closing within 30 days after all conditions to the Closing have
been satisfied.
ARTICLE VIII
DISCLOSURE OF ADDITIONAL INFORMATION
8.1 ACCESS TO INFORMATION. Prior to the Closing Date, the parties
hereto shall, and shall cause each of their subsidiaries to:
(a) give the other and its authorized representatives reasonable
access, during normal business hours and upon reasonable notice, to its books,
records, offices and other facilities and properties; and
(b) furnish the other with such financial and operating data and other
information with respect to its business, condition (financial or otherwise) and
properties, as it may reasonably request.
8.2 ACCESS TO PREMISES. Prior to Closing, the Company shall, and shall
cause its subsidiaries to, give the Buyer and its authorized representatives
reasonable access to all of the Company's and its subsidiaries' Real Property
for the purpose of inspecting such property.
8.3 ENVIRONMENTAL SURVEY. At its option, the Buyer may cause to be
conducted Phase I environmental assessments of the Real Property of the Company
and its subsidiaries, whether owned or leased, or any portion thereof, together
with such other studies, testing and intrusive sampling and analyses as the
Company shall deem necessary or desirable (collectively, the "ENVIRONMENTAL
SURVEY"). The Company shall complete all such Phase I environmental assessments
within 60 days following the date of this Agreement and thereafter conduct and
complete any such additional studies, testing, sampling and analyses within 60
days following completion of all Phase I environmental assessments. Subject to
the breach of any representation or warranty contained herein, the costs of the
Environmental Survey shall be paid by the Buyer.
8.4 CONFIDENTIALITY. Prior to Closing, except as otherwise provided in
SECTION 8.5, each of parties hereto shall not, and shall not permit its
subsidiaries to, and each shall use its best efforts to cause its and its
subsidiaries' respective employees, lenders, accountants, representatives,
agents, consultants and advisors not to, discuss or disclose, or use for any
purpose other than the transactions contemplated hereby, the subject matter or
transactions contemplated by this Agreement or information pertaining to the
Company or any of its
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Subsidiaries, with any other Person without the prior consent of the other
parties hereto, unless (a) such information is public other than as a result of
a violation of this Agreement, or (b) the use of such information is necessary
or appropriate in making any filing or obtaining any Consent necessary or
desirable for the consummation of the transactions contemplated hereby.
8.5 PUBLICITY. Without the prior consent of the other parties, no party
hereto shall issue any news release or other public announcement or disclosure,
or any general public announcement to its employees, suppliers or customers,
regarding this Agreement or the transactions contemplated hereby, except as may
be required by Law, but in which case the disclosing party shall provide the
other parties hereto with reasonable advance notice of the timing and substance
of any such disclosure.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 MUTUAL CONDITIONS. The respective obligations of each party hereto
to perform this Agreement and consummate the Mergers and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by all parties hereto pursuant to SECTION 11.4 of this Agreement:
(a) Adverse Proceedings. Neither the Company, the Company Bank, the
Buyer, the Buyer Bank, nor any shareholder of any of the foregoing shall be
subject to any order, decree or injunction of a court of competent jurisdiction
that enjoins or prohibits the consummation of this Agreement or the Mergers, and
no Governmental Authority shall have instituted a suit or proceeding that is
then pending and seeks to enjoin or prohibit the transactions contemplated
hereby. Any party who is subject to any such order, decree or injunction or the
subject of any such suit or proceeding shall take any reasonable steps within
that party's control to cause any such order, decree or injunction to be
modified so as to permit the Closing and to cause any such suit or proceeding to
be dismissed.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for consummation
of the Mergers shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired. No such
Consent obtained from any Regulatory Authority shall be conditioned or
restricted in a manner (including requirements relating to the raising of
additional capital or the disposition of Assets) not reasonably anticipated as
of the date of this Agreement that in the reasonable judgment of the Board of
Directors of the Buyer, the Buyer Bank, the Company or the Company Bank hereto
would so Materially adversely impact the economic or business assumptions of the
transactions contemplated by this Agreement that had such condition or
requirement been known, such party would not, in its reasonable judgment, have
entered into this Agreement.
(c) Consents and Approvals. Each party hereto shall have obtained any
and all Consents required for consummation of the Mergers or for the preventing
of any Default under any Contract or Permit of such Person, including those
Consents listed on SECTION 5.2 of the Company's Disclosure Schedule, except to
the extent that the failure to obtain such any such
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Consents would not, individually or in the aggregate result in a Material
Adverse Effect on such Person.
(d) Effectiveness of Registration Statement. The Registration Statement
filed with the SEC covering the shares of the Buyer's Stock to be issued
pursuant hereto shall have been declared effective by the SEC, and no stop order
suspending such effectiveness shall have been initiated or, to the Knowledge of
the Buyer Parties, threatened by the SEC.
(e) Approval. The Company's shareholders shall have approved this
Agreement and the Holding Company Merger in accordance with applicable corporate
law.
(f) Tax Opinion. On the basis of facts, representations and assumptions
that shall be consistent with the state of facts existing at the Closing Date,
the Buyer and the Company shall have received an opinion of KPMG LLP or another
tax advisor reasonably acceptable in form and substance to each of them dated as
of the Closing Date, substantially to the effect that, for federal income tax
purposes: (i) the Mergers, when consummated in accordance with the terms hereof,
will each constitute a reorganization within the meaning of Section 368(a) of
the Code, (ii) no gain or loss will be recognized by the Buyer, the Buyer Bank,
the Company or the Company Bank by reason of the Mergers, (iii) the exchange or
cancellation of Company Shares or Company Bank Shares in the Mergers will not
give rise to recognition of gain or loss for federal income tax purposes to the
shareholders of the Company and the Company Bank to the extent such shareholders
receive Buyer's Stock in exchange for their Company Shares, (iv) the basis of
the Buyer's Stock to be received by a shareholder of the Company will be the
same as the basis of the stock of the Company surrendered in connection with the
Mergers, and (v) the holding period of the shares of the Buyer's Stock to be
received by a shareholder of the Company will include the period during which
the shareholder held the Company Bank Shares surrendered in connection with the
Mergers, provided that the Company Shares surrendered in connection with the
Mergers are held as a capital asset at the Effective Time of such Mergers. Each
of the Buyer and the Company shall provide a letter to the tax advisor setting
forth the facts, assumptions and representations on which such tax advisor may
rely in rendering its opinion.
(g) Blue Sky Approvals. The Buyer shall have received all state
securities or "Blue Sky" Permits or other authorizations or confirmations as to
the availability of exemptions from "Blue Sky" registration requirements as may
be necessary, and no stop orders or proceedings shall be pending, or to the
Knowledge of the Buyer Parties or the Company Parties, threatened by a state
"Blue Sky" administrator to suspend the effectiveness of any registration
statement filed therewith with respect to the issuance of the Buyer's Stock in
the Holding Company Merger.
(h) Nasdaq Listing. As of the Effective Time, the Buyer shall have
satisfied all requirements in order for the shares of the Buyer's Stock to be
issued to shareholders of the Company in connection with the Holding Company
Merger to be listed on the Nasdaq National Market System as of the Effective
Time.
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9.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation of the
Company to effect the transactions contemplated hereby shall be further subject
to the fulfillment of the following conditions, unless waived by such parties
pursuant to SECTION 11.4 of this Agreement:
(a) All representations and warranties of the Buyer contained in this
Agreement shall be true and correct in all Material respects as of the Closing
Date as though made as of such date (except for representations and warranties
that are made as of a specific date). The Buyer shall have performed and
complied in all Material respects with all covenants and agreements contained in
this Agreement required to be performed and complied with by it at or prior to
the Closing.
(b) All documents required to have been executed and delivered by the
Buyer to the Company at or prior to the Closing shall have been so executed and
delivered, whether or not such documents have been or will be executed and
delivered by the other parties contemplated thereby.
(c) The Company shall have received from Trident Securities, a division
of McDonald Investments Inc., a letter, dated not more than five Business Days
prior to the Proxy Statement, that the Merger Consideration is fair, from a
financial point of view, to the holders of the Company's Shares.
(d) The Company shall have received an opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, P.A., counsel to the Buyer, dated as of the Closing Date, in form and
substance reasonably acceptable to the Company.
(e) As of the Closing Date, the Company shall have received the
following documents with respect to the Buyer:
(i) a true and complete copy of its articles of incorporation
and all amendments thereto, certified by the jurisdiction of its
incorporation as of a recent date;
(ii) a true and complete copy of its bylaws, certified by its
Secretary or an Assistant Secretary;
(iii) a certificate from its Secretary or an Assistant
Secretary certifying that its articles of incorporation have not been
amended since the date of the certificate described in subsection (i)
above and that nothing has occurred since such date that would
adversely affect its existence;
(iv) a true and complete copy of the resolutions of its board
of directors and shareholders authorizing the execution, delivery and
performance of this Agreement, and all instruments and documents to be
delivered in connection herewith, and the transactions contemplated
hereby, certified by its Secretary or an Assistant Secretary; and
(v) a certificate from its Secretary or an Assistant Secretary
certifying the incumbency and signatures of its officers who will
execute documents at the Closing or who have executed this Agreement.
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(f) The Exchange Agent shall have delivered to the Company a
certificate, dated as of the Closing Date, to the effect that the Exchange Agent
has received from the Buyer appropriate instructions and authorization for the
Exchange Agent to issue a sufficient number of shares of Buyer Stock in exchange
for all of the Company Shares and the Company Bank Shares and to the effect that
the Exchange Agent has received the Total Cash Merger Consideration from the
Buyer and appropriate instructions and authorization to deliver the Total Cash
Merger Consideration as required by this Agreement.
9.3 CONDITIONS TO THE OBLIGATIONS OF THE BUYER. The obligations of the
Buyer to effect the transactions contemplated hereby shall be further subject to
the fulfillment of the following conditions, unless waived by the Buyer pursuant
to SECTION 11.4 of this Agreement:
(a) All representations and warranties of the Company contained in this
Agreement shall be true and correct in all Material respects as of the Closing
Date as though made as of such date (except for representations and warranties
that are made as of a specific date). The Company shall have performed and
complied in all Material respects with all covenants and agreements contained in
this Agreement required to be performed and complied with by them at or prior to
the Closing.
(b) Holders of Company Shares representing no more than ten percent
(10%) of the issued and outstanding Company Shares immediately prior to the
Effective Time shall have exercised dissenters' or similar rights with respect
to the Holding Company Merger.
(c) All documents required to have been executed and delivered by the
Company or any third party to the Buyer at or prior to the Closing shall have
been so executed and delivered, whether or not such documents have been or will
be executed and delivered by the other parties contemplated thereby.
(d) The Buyer shall have received a legal opinion from counsel to the
Company, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Buyer.
(e) As of the Closing Date, the Buyer shall have received the following
documents with respect to each of the Company and its subsidiaries (including
the Company Bank):
(i) a certificate of its corporate existence issued by the
jurisdiction of its incorporation as of a recent date and a certificate
of existence or authority as a foreign corporation issued as of a
recent date by each of the jurisdictions in which it is qualified to do
business as a foreign corporation;
(ii) a true and complete copy of its articles of incorporation
or charter and all amendments thereto, certified by the jurisdiction of
its incorporation as of a recent date;
(iii) a true and complete copy of its bylaws, certified by its
Secretary or an Assistant Secretary;
(iv) a certificate from its Secretary or an Assistant
Secretary certifying that its articles of incorporation or charter have
not been amended since the date of the certificate described in
subsection (ii) above, and that nothing has occurred since the date of
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issuance of the certificate of existence specified in subsection (i)
above that would adversely affect its existence;
(v) with respect to the Company only, a true and complete copy
of the resolutions of its Board of Directors and shareholders
authorizing the execution, delivery and performance of this Agreement,
and all instruments and documents to be delivered in connection
herewith, and the transactions contemplated hereby, certified by its
Secretary or an Assistant Secretary; and
(vi) with respect to the Company only, a certificate from its
Secretary or an Assistant Secretary certifying the incumbency and
signatures of its officers who will execute documents at the Closing or
who have executed this Agreement.
(f) Each of the Company Options (whether or not vested) held by the
Company's officers and directors shall have been cancelled, effective
immediately prior to the Effective Time, without the issuance of any Company
Shares or any payment being made in respect thereof, pursuant to written
documentation satisfactory to the Buyer.
ARTICLE X
TERMINATION
10.1 TERMINATION. The obligations of the parties hereunder may be
terminated and the transactions contemplated hereby abandoned at any time prior
to the Closing Date:
(a) By mutual written consent of the Company and the Buyer;
(b) By either the Buyer or the Company, if there shall be any law or
regulation that makes consummation of this Agreement illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining the Company
or its shareholders, the Company Bank, the Buyer or its shareholders, or the
Buyer Bank from consummating this Agreement is entered and such judgment,
injunction, order or decree shall become final and nonappealable;
(c) By either the Buyer or the Company, if the conditions to the
obligation to effect the transactions contemplated hereby of the party seeking
termination shall not have been fulfilled or waived by June 30, 2001, and if the
party seeking termination is in Material compliance with all of its obligations
under this Agreement;
(d) By either the Buyer or the Company, if a condition to the
obligation to effect the transactions contemplated hereby of the party seeking
termination shall have become incapable of fulfillment (notwithstanding the
efforts of the party seeking to terminate as set forth in SECTION 7.3(D)), and
has not been waived;
(e) At any time on or prior to the Closing Date, by the Buyer in
writing, if the Company or the Company Bank has, or by the Company, if the Buyer
has, in any Material respect, breached (i) any covenant or agreement contained
herein or (ii) any representation or warranty contained herein, and in either
case if such breach has not been cured by the earlier of
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30 days after the date on which written notice of such breach is given to the
party committing such breach or the Closing Date; and
(f) By the Company, if its board of directors determines to terminate
this Agreement (and the Holding Company Merger) and (i) the Average Closing
Price of the Buyer's Stock is less than $11.50 for the 20-trading day period
(the "MEASUREMENT PERIOD") ending three Business Days prior to the date of the
Shareholder Meeting, and (ii) the percentage (the "BUYER'S STOCK PERCENTAGE
CHANGE") by which the Average Closing Price of the Buyer's Stock during the
Measurement Period is lower than $15.00 exceeds by more than 15 percentage
points the percentage (the "INDEX PERCENTAGE CHANGE") by which the Average
Closing Price of the SNL Index during the Measurement Period is lower than the
Average Closing Price of the SNL Index on October 19, 2000 (Examples: If the
Average Closing Price of the SNL Index has declined by 10%, the Average Closing
Price of the Buyer's Stock during the Measurement Period must be more than 25%
lower than $15.00; if the Average Closing Price of the SNL Index has declined by
15%, the Average Closing Price of the Buyer's Stock during the Measurement
Period must be more than 30% lower than $15.00); provided, however, that in such
case the Buyer shall have the right to pay to the holder of each Company Share
$20.00 in cash, in which case the Company shall not have the right to terminate
this Agreement and the Merger.
For purposes of this subclause (f): "AVERAGE CLOSING PRICE" means, with
respect to the Buyer's Stock, the average of the daily closing sales price
thereof on the Nasdaq National Market System during a specified period as
reported in The Wall Street Journal and, with respect to the SNL Index , the
average of the daily closing prices of such SNL Index as reported by SNL
Securities; and "SNL INDEX" means the SNL Nationwide Bank Index ($500 million to
$1 billion).
10.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of a termination
contemplated hereby by any party pursuant to SECTION 10.1, the party seeking to
terminate this Agreement shall give prompt written notice thereof to the other
party, and the transactions contemplated hereby shall be abandoned, without
further action by any party hereto. In such event:
(a) The parties hereto shall continue to be bound by (i) their
obligations of confidentiality set forth in the Confidentiality Agreements, and
all copies of the information provided by the Company hereunder will be returned
to the Company or destroyed immediately upon its request therefor, (ii) the
provisions set forth in SECTION 8.4 relating to publicity and (iii) the
provisions set forth in SECTION 11.1 relating to expenses.
(b) All filings, applications and other submissions relating to the
transactions contemplated hereby shall, to the extent practicable, be withdrawn
from the Person to which made.
(c) The terminating party shall be entitled to seek any remedy to which
such party may be entitled at law or in equity for the violation or breach of
any agreement, covenant, representation or warranty contained in this Agreement.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, (i) the Buyer shall pay all costs and expenses incurred by it and
the Buyer Bank in connection with this Agreement and the Mergers and (ii) the
Company Bank shall pay all costs and expenses incurred by it and the Company in
connection with this Agreement and the Mergers.
11.2 SURVIVAL OF REPRESENTATIONS. The representations and warranties
made by the parties hereto will not survive the Closing, and no party shall make
or be entitled to make any claim based upon such representations and warranties
after the Closing Date. No warranty or representation shall be deemed to be
waived or otherwise diminished as a result of any due diligence investigation by
the party to whom the warranty or representation was made or as a result of any
actual or constructive knowledge by such party with respect to any facts,
circumstances or claims or by the actual or constructive knowledge of such
person that any warranty or representation is false at the time of signing or
Closing.
11.3 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement of all parties hereto.
11.4 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided in
this Agreement, any failure of the Buyer, on one hand, and the Company, on the
other, to comply with any obligation, representation, warranty, covenant,
agreement or condition herein may be waived by the other party or parties only
by a written instrument signed by the party or parties granting such waiver, but
such waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any party
hereto, such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this SECTION 11.4.
11.5 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered by hand or by facsimile
transmission, one Business Day after sending by a reputable national over-night
courier service or three Business Days after mailing when mailed by registered
or certified mail (return receipt requested), postage prepaid, to the parties in
the manner provided below:
(a) Any notice to any of the Company shall be delivered to the
following addresses:
Century Bancorp, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Brooks, Pierce, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Any notice to the Buyer shall be delivered to the following
addresses:
First Bancorp
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ( ▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change the address to which notice is to be given by notice given
in the manner set forth above.
11.6 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto without the prior written consent of the
other parties.
11.7 SEPARABLE PROVISIONS. If any provision of this Agreement shall be
held invalid or unenforceable, the remainder nevertheless shall remain in full
force and effect.
11.8 GOVERNING LAW. The execution, interpretation and performance of
this Agreement shall be governed by the internal laws and judicial decisions of
the State of North Carolina.
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11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10 INTERPRETATION. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
11.11 ENTIRE AGREEMENT. This Agreement, including the agreements and
documents that are Schedules and Exhibits hereto, embodies the entire agreement
and understanding of the parties with respect of the subject matter of this
Agreement. This Agreement supersedes all prior agreements and understandings
between the parties with respect to the transactions contemplated hereby and
subject matter hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
CENTURY BANCORP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
BUYER:
FIRST BANCORP
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title: Chief Executive Officer
-------------------------------------