AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
SOUTHERN SECURITY FINANCIAL CORPORATION,
AND
SOUTHERN SECURITY BANK CORPORATION
DATED AS OF , 1997
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of this the
day of 1997, by and between SOUTHERN SECURITY BANK CORPORATION
("Acquired Corporation"), a Florida corporation, and SOUTHERN SECURITY FINANCIAL
CORPORATION ("SSFC"), a Delaware corporation.
WITNESSETH:
WHEREAS, Acquired Corporation operates as a bank holding company for its
subsidiary, Southern Security Bank of Hollywood (the "Bank"), with its principal
office in Hollywood, Florida; and
WHEREAS, SSFC is desirous of becoming a bank holding company; and
WHEREAS, Acquired Corporation wishes to merge into SSFC and SSFC wishes
Acquired Corporation to merge into SSFC;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Parties hereto agree as follows:
ARTICLE 1
MERGER - TERMS AND CONDITIONS
1.1 Applicable Law.
On the Effective Date, Acquired Corporation shall be merged with and into
SSFC which shall be the surviving corporation in the merger (the "Merger") and
shall continue its corporate existence under the laws of the State of Delaware.
The Merger shall be undertaken pursuant to the provisions of and with the effect
provided in the Delaware General Corporation Law ("DGCL") and, to the extent
applicable, the Florida Business Corporation Act ("FBCA"). The offices and
facilities of Acquired Corporation shall become the offices and facilities of
SSFC.
1.2 Corporate Existence; Name of Surviving Corporation.
On the Effective Date, the corporate existence of Acquired Corporation
shall be merged into and continued in SSFC. All rights, franchises and interests
of Acquired Corporation and SSFC, respectively, in and to every type of property
(real, personal and mixed) and choses in action shall be transferred to and
vested in SSFC by virtue of the Merger without any deed or other transfer. SSFC
on the Effective Date, and without any order or other action on the part of any
court or otherwise, shall hold and enjoy all rights of property, franchises and
interests, including appointments, designations and nominations and all other
rights and interests as trustee, executor, administrator, transfer agent and
registrar of stocks and bonds, guardian of estates, assignee, and receiver and
in every other fiduciary capacity and in every agency, and capacity, in the same
manner and to the same extent as such rights, franchises and interests were held
or enjoyed by Acquired Corporation on the Effective Date. Simultaneously with
the effective time and date of the merger, or as soon thereafter as is
reasonably practicable, the name of SSFC shall be changed to Southern Security
Bank Corporation.
1.3 Articles of Incorporation and Bylaws.
On the Effective Date, the certificate of incorporation and bylaws of SSFC
shall be the restated certificate of incorporation and bylaws of SSFC as they
exist immediately before the Effective Date.
1.4 SSFC's Officers and Board.
The members of the Board of Directors and the officers of the Surviving
Corporation immediately at the effective time and date of the Merger shall be
those persons who were members of the Board of Directors and the officers of the
Acquired Corporation at the Effective Date of the Merger. SSFC's stockholders
and Board of Directors shall take all actions necessary to accomplish the
foregoing.
1.5 Stockholder Approval.
This Agreement shall be submitted to the shareholders of Acquired
Corporation at a stockholders meeting ("Stockholder Meeting") to be held as
promptly as practicable consistent with the satisfaction of the conditions set
forth in this Agreement. Upon approval by the requisite vote of the shareholders
of Acquired Corporation as required by applicable Law, the Merger shall become
effective as soon as practicable thereafter in the manner provided in section
1.7 hereof.
1.6 Further Acts.
If, at any time after the Effective Date, SSFC shall consider or be advised
that any further assignments or assurances in law or any other acts are
necessary or desirable (i) to vest, perfect, confirm or record, in SSFC, title
to and possession of any property or right of Acquired Corporation, acquired as
a result of the Merger, or (ii) otherwise to carry out the purposes of this
Agreement, Acquired Corporation's officers and directors shall execute and
deliver all such proper deeds, assignments and assurances in law and do all acts
necessary or proper to vest, perfect or confirm title to, and possession of,
such property or rights in SSFC and otherwise to carry out the purposes of this
Agreement; and the proper officers and directors of SSFC are fully authorized in
the name of Acquired Corporation to take any and all such action.
1.7 Effective Date.
Subject to the terms of all requirements of Law and the conditions
specified in this Agreement, the Merger shall become effective on the date
specified in the Certificate of Merger to be issued by the Secretary of State of
the State of Delaware (such time being herein called the "Effective Date"). On
the Effective Date or as soon as practicable thereafter, SSFC shall cause itself
to be qualified to conduct business as a foreign corporation in the State of
Florida.
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ARTICLE 2
CONVERSION OF ACQUIRED CORPORATION STOCK
2.1 Conversion of Acquired Corporation Stock.
(a) On the Effective Date, each share of Class A common stock of Acquired
Corporation outstanding and held by Acquired Corporation's
shareholders shall be converted by operation of law and without any
action by any holder thereof into one-third the number of shares of
SSFC Class A Common Stock.
(b) On the Effective Date, each share of Series A convertible preferred
stock of Acquired Corporation outstanding and held by Acquired
Corporation's shareholders shall be converted by operation of law and
without any action by the holder thereof into one-third the number of
SSFC Series A Convertible Preferred Stock.
(c)
(i) On the Effective Date, SSFC shall assume all Acquired Corporation
Options outstanding, and each such option shall cease to
represent a right to acquire Acquired Corporation common stock
and shall, instead, represent the right to acquire SSFC Common
Stock on substantially the same terms applicable to the Acquired
Corporation Options except that the number of shares of SSFC
Common Stock to be issued pursuant to such options shall equal
one-third the number of shares of Acquired Corporation's Class A
common stock subject to such Acquired Corporation Options.
(ii) Subsequent to becoming a reporting company under the rules of the
Securities Exchange Act of 1934, SSFC shall file at its expense a
registration statement in an appropriate form with respect to the
shares of the SSFC's Common Stock to be issued pursuant to such
options and shall use its reasonable best efforts to secure and
maintain the effectiveness of such registration statement for so
long as such options remain outstanding. Such shares shall also
be registered or qualified for sale under the securities laws of
any state in which registration or qualification is necessary.
2.2 Surrender of Acquired Corporation Stock.
After the Effective Date, each holder of an outstanding certificate or
certificates which prior thereto represented shares of Acquired Corporation
Stock who is entitled to receive SSFC Common or Preferred Stock shall be
entitled, upon surrender to SSFC of his certificate or certificates representing
shares of Acquired Corporation Stock (or an affidavit or affirmation by such
holder of the loss, theft, or destruction of such certificate or certificates in
such form as SSFC may reasonably require and, if SSFC reasonably requires, a
bond of indemnity in form and amount, and issued by such sureties, as SSFC may
reasonably require), to receive in exchange therefor a certificate or
certificates representing the number of whole shares of SSFC Common or
Preferrred Stock into and for which the shares of Acquired Corporation Stock so
surrendered shall have been converted, such certificates to be of such
denominations and registered in such names as such holder may reasonably
request. Until so surrendered and exchanged, each such outstanding certificate
which, prior to the Effective Date, represented shares of Acquired Corporation
Stock and which is to be converted into SSFC Common or Preferred Stock shall for
all purposes evidence ownership of SSFC Common or Preferred Stock into and for
which such shares shall have been so converted, except that no dividends or
other distributions with respect to such SSFC Common or Preferred Stock shall be
made until the certificates previously representing shares of Acquired
Corporation Stock shall have been properly tendered.
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2.3 Fractional Shares.
No fractional shares of SSFC Common or Preferred Stock shall be issued, and
each holder of shares of Acquired Corporation Stock having a fractional interest
arising upon the conversion of such shares into SSFC Common or Preferred Stock
shall, at the time of surrender of the certificates previously representing
Acquired Corporation Stock, be paid by SSFC an amount in cash equal to the book
value of such fractional share on the financial statements of SSFC as of the
Effective Date.
2.4 Adjustments.
In the event that prior to the Effective Date SSFC Common Stock shall be
changed into a different number of shares or a different class of shares by
reason of any recapitalization or reclassification, stock dividend, combination,
stock split, or reverse stock split of the SSFC Common Stock, an appropriate and
proportionate adjustment shall be made in the number of shares of SSFC Common
Stock into which the Acquired Corporation Stock shall be converted.
2.5 SSFC Stock.
The shares of Common Stock of SSFC issued and outstanding immediately
before the Effective Date shall continue to be issued and outstanding shares of
SSFC, subject to Section 3.2 below. No shares of Preferred Stock of SSFC shall
be issued and outstanding immediately before the Effective Date.
2.6 Dissenting Rights.
Any shareholder of Acquired Corporation who shall not have voted in favor
of this Agreement and who has complied with the applicable procedures set forth
in the FBCA relating to rights of dissenting shareholders, shall be entitled to
receive payment for the fair value of his/her/its Acquired Corporation stock.
If, after the Effective Date, a dissenting shareholder of Acquired Corporation
fails to perfect, or effectively withdraws or loses, his/her/its right to
appraisal and payment for his shares of Acquired Corporation Stock, SSFC shall
issue and deliver the consideration to which such holder of shares of Acquired
Corporation Stock is entitled under Section 2.1 (without interest) upon
surrender of such holder of the certificate or certificates representing shares
of Acquired Corporation Stock held by him/her/it.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SSFC
SSFC represents, warrants and covenants to and with Acquired Corporation as
follows:
3.1 Organization.
SSFC is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. SSFC has the necessary corporate powers
to carry on its business as presently conducted and is qualified to do business
in every jurisdiction in which the character and location of the assets owned by
it or the nature of the business transacted by it requires qualification or in
which the failure to qualify could, individually or in the aggregate, have a
material adverse effect.
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3.2 Capital Stock.
The authorized capital stock of SSFC consists of (a) 30,000,000 shares of
Class A Common Stock, $0.01 par value per share, of which, 602,500 shares are
validly issued and outstanding, fully paid and nonassessable and are not subject
to preemptive rights, (b) 5,000,000 shares of Class B Common Stock, $0.01 par
value, none of which are issued and outstanding, and (c) 5,000,000 shares of
Preferred Stock, $0.01 par value per share, none of which are issued and
outstanding. Prior to the Effective Date SSFC shall effectuate a 2.352707 to 1
reverse split of its outstanding and issued Class A Common Stock. The shares of
SSFC Common Stock to be issued in the Merger are or will be upon the stockholder
approval referenced in the following sentence duly authorized and, when so
issued, will be validly issued and outstanding, fully paid and nonassessable.
3.3 Financial Statements; Taxes.
(a) SSFC has delivered to Acquired Corporation copies of the audited
financial statements dated as of June 30, 1997.
All such financial statements are in all material respects in
accordance with the books and records of SSFC and have been prepared
in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated, all as more
particularly set forth in the notes to such statements.
(b) All tax returns required to be filed by or on behalf of SSFC have been
timely filed (or requests for extensions therefor have been timely
filed and granted and have not expired), and all returns filed are
complete and accurate in all material respects. All taxes shown on
these returns to be due and all additional assessments received have
been paid.
3.4 No Conflict with Other Instruments.
The consummation of the transactions contemplated by this Agreement will
not result in a breach of or constitute a default (without regard to the giving
of notice or the passage of time) under any material contract, indenture,
mortgage, deed of trust or other material agreement or instrument to which SSFC
is a party or by which its assets may be bound; will not conflict with any
provision of the amended certificate of incorporation or bylaws of SSFC; and
will not violate any provision of any Law, regulation, judgment or decree
binding on it or any of its assets.
3.5 Absence of Material Adverse Change.
Since the date of the most recent balance sheet provided under section
3.3(a) above, there have been no events, changes or occurrences which have had
or are reasonably likely to have, individually or in the aggregate, a material
adverse effect on SSFC.
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3.6 Approval of Agreements.
The Board of Directors of SSFC and the stockholders of SSFC have approved
this Agreement and the transactions contemplated by it and has authorized the
execution and delivery by SSFC of this Agreement. This Agreement constitutes the
legal, valid and binding obligation of SSFC, enforceable against it in
accordance with its terms. Subject to the matters referred to in section 7.2
hereof, SSFC has full power, authority and legal right to enter into this
Agreement and to consummate the transactions contemplated by this Agreement.
SSFC has no knowledge of any fact or circumstance under which the appropriate
regulatory approvals required by section 7.2 will not be granted without the
imposition of material conditions or material delays.
3.7 Tax Treatment.
SSFC has no present plan to sell or otherwise dispose of any of the assets
of Acquired Corporation, subsequent to the Merger, and SSFC intends to continue
the historic business of Acquired Corporation.
3.8 Title and Related Matters.
SSFC has good and marketable title to all the properties, interests in
properties and assets, real and personal, reflected in the most recent balance
sheet referred to in section 3.3(a), or acquired after the date of such balance
sheet (except properties, interests and assets sold or otherwise disposed of
since such date, in the ordinary course of business), free and clear of all
mortgages, liens, pledges, charges or encumbrances except (i) mortgages and
other encumbrances referred to in the notes of such balance sheet, (ii) liens
for current taxes not yet due and payable and (iii) such imperfections of title
and easements as do not materially detract from or interfere with the present
use of the properties subject thereto or affected thereby, or otherwise
materially impair present business operations at such properties. To the
knowledge of SSFC, the material structures and equipment of SSFC comply in all
material respects with the requirements of all applicable laws.
3.9 Contracts.
SSFC is not in default in any material respect under the terms of any
material contract, agreement, lease or other commitment which is or may be
material to the business, operations, properties or assets, or the condition,
financial or otherwise, of such company and, to the knowledge of SSFC, there is
no event which, with notice or lapse of time, or both, may be or become an event
of default under any such material contract, agreement, lease or other
commitment in respect of which adequate steps have not been taken to prevent
such a default from occurring.
3.10 Litigation.
There is no litigation before or by any court or agency, domestic or
foreign, now pending, nor, to the knowledge of SSFC, threatened against or
affecting SSFC (nor is SSFC aware of any facts which could give rise to any such
litigation).
3.11 Compliance.
SSFC to the knowledge of SSFC, is in material compliance with all material
federal, state or local laws applicable to their or the conduct of its business.
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3.12 Registration Statement.
SSFC has filed a registration statement on Form 10SB which, when it becomes
effective, will comply in all material respects with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations thereunder, will
not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3.13 Brokers.
All negotiations relative to this Agreement and the transactions
contemplated by this Agreement have been carried on by SSFC directly with
Acquired Corporation and without the intervention of any other person, either as
a result of any act of SSFC or otherwise in such manner as to give rights to any
valid claim against SSFC for finders fees, brokerage commissions or other like
payments.
3.14 Disclosure.
No representation or warranty, or any statement or certificate furnished or
to be furnished to Acquired Corporation by SSFC, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact necessary to make the statements contained in this Agreement or in any such
statement or certificate not misleading.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF ACQUIRED CORPORATION
Acquired Corporation represents, warrants and covenants to and with SSFC,
as follows:
4.1 Organization.
Acquired Corporation is a Florida corporation, and the Bank is a Florida
state bank. The Acquired Corporation and the Bank are duly organized, validly
existing and in good standing under the respective Laws of their jurisdictions
of incorporation and each has all requisite power and authority to carry on its
business as it is now being conducted and is qualified to do business in every
jurisdiction in which the character and location of the assets owned by it or
the nature of the business transacted by it requires qualification or in which
the failure to qualify could, individually, or in the aggregate, have a material
adverse effect.
4.2 Capital Stock.
The authorized capital stock of Acquired Corporation consists of 20,000,000
shares of Class A common stock, $0.01 par value per share, of which 14,910,613
shares are issued and outstanding; 5,000,000 shares of Class B common stock,
$0.01 par value, none of which are issued and outstanding; 1,200,000 shares of
Series A preferred convertible shares, $0.01 par value, of which no shares are
issued and outstanding. In addition, the Acquired Corporation has authorized and
issued to its Officers and directors options that expire over ten year terms, at
option exercise prices when granted equating to 110% of the then net book value
per share for common stock, 2,311,080 of which options have been granted as of
September 30, 1997.
Except for the foregoing, Acquired Corporation does not have any other
arrangements or commitments obligating it to issue shares of its capital stock
or any securities convertible into or having the right to purchase shares of its
capital stock, other than the stock option plans incorporated in the employment
contracts entered into with ▇▇▇▇▇▇ ▇. Modder and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
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4.3 Subsidiaries.
Acquired Corporation has no direct Subsidiaries other than the Bank, and
there are no Subsidiaries of the Bank. Acquired Corporation owns 96.6% of the
issued and outstanding capital stock of the Bank free and clear of any liens,
claims or encumbrances of any kind. All of the issued and outstanding shares of
capital stock of the Subsidiaries have been validly issued and are fully paid
and nonassessable. The Bank has no arrangements or commitments obligating it to
issue shares of its capital stock or any securities convertible into or having
the right to purchase shares of its capital stock, other than its stock option
plan for its officers and directors.
4.4 Financial Statements; Taxes.
(a) Acquired Corporation has delivered to SSFC copies of its audited
financial statements dated December 31, 1996.
All of the foregoing financial statements are in all material respects
in accordance with the books and records of Acquired Corporation and
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
indicated, except for changes required by GAAP, all as more
particularly set forth in the notes to such statements.
Each of such balance sheets presents fairly as of its date the
financial condition of Acquired Corporation. Except as and to the
extent reflected or reserved against in such balance sheets (including
the notes thereto), Acquired Corporation did not have, as of the date
of such balance sheets, any material Liabilities or obligations
(absolute or contingent) of a nature customarily reflected in a
balance sheet or the notes thereto. The statements of income,
stockholders' equity and cash flows present fairly the results of
operation, changes in shareholders equity and cash flows of Acquired
Corporation for the periods indicated.
(b) All tax returns required to be filed by or on behalf of Acquired
Corporation have been timely filed (or requests for extensions
therefor have been timely filed and granted and have not expired), and
all returns filed are complete and accurate in all material respects.
All Taxes shown on these returns to be due and all additional
assessments received have been paid. The amounts recorded for Taxes on
the balance sheets provided under section 4.4(a) are, to the knowledge
of Acquired Corporation, sufficient in all material respects for the
payment of all unpaid federal, state, county, local, foreign and other
Taxes (including any interest or penalties) of Acquired Corporation
accrued for or applicable to the period ended on the dates thereof,
and all years and periods prior thereto and for which Acquired
Corporation may at such dates have been liable in its own right or as
a transferee of the assets of, or as successor to, any other
corporation or other party. No audit, examination or investigation is
presently being conducted or, to the knowledge of Acquired
Corporation, threatened by any taxing authority which is likely to
result in a material tax liability, no material unpaid tax
deficiencies or additional liability of any sort have been proposed by
any governmental representative and no agreements for extension of
time for the assessment of any material amount of Tax have been
entered into by or on behalf of Acquired Corporation. Acquired
Corporation has not executed an extension or waiver of any statute of
limitations on the assessment or collection of any tax due that is
currently in effect.
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(c) Acquired Corporation and the Bank have withheld from their employees
(and timely paid to the appropriate governmental entity) proper and
accurate amounts for all periods in material compliance with all Tax
withholding provisions of applicable federal, state, foreign and local
Laws (including without limitation, income, social security and
employment tax withholding for all types of compensation).
4.5 Absence of Certain Changes or Events.
Since the date of the most recent balance sheet provided under section
4.4(a) above, neither Acquired Corporation nor the Bank have
(a) issued, delivered or agreed to issue or deliver any stock, bonds or
other corporate securities (whether authorized and unissued or held in
the treasury) except shares of common stock issued upon the exercise
of Acquired Corporation Options and shares issued as director's
qualifying shares;
(b) borrowed or agreed to borrow any funds or incurred, or become subject
to, any liability (absolute or contingent) except borrowings,
obligations (including purchase of federal funds) and Liabilities
incurred in the ordinary course of business and consistent with past
practice;
(c) paid any material obligation or Liability (absolute or contingent)
other than current liabilities reflected in or shown on the most
recent balance sheet referred to in section 4.4(a) and current
liabilities incurred since that date in the ordinary course of
business and consistent with past practice;
(d) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to
shareholders, or purchased or redeemed, or agreed to purchase or
redeem, directly or indirectly, or otherwise acquire, any of its
outstanding securities;
(e) except in the ordinary course of business, sold or transferred, or
agreed to sell or transfer, any of its assets, or canceled, or agreed
to cancel, any debts or claims;
(f) except in the ordinary course of business, entered or agreed to enter
into any agreement or arrangement granting any preferential rights to
purchase any of its assets, or requiring the consent of any party to
the transfer and assignment of any of its assets;
(g) suffered any Losses or waived any rights of value which in either
event in the aggregate are material considering its business as a
whole;
(h) except in the ordinary course of business, made or permitted any
amendment or termination of any contract, agreement or license to
which it is a party if such amendment or termination is material
considering its business as a whole;
(i) except in accordance with normal and usual practice, made any accrual
or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former
officer or employee;
(j) except in accordance with normal and usual practice, increased the
rate of compensation payable to or to become payable to any of its
officers or employees or made any material increase in any profit
sharing, bonus, deferred compensation, savings, insurance, pension,
retirement or other employee benefit plan, payment or arrangement made
to, for or with any of its officers or employees;
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(k) received notice or had knowledge or reason to believe that any of its
substantial customers has terminated or intends to terminate its
relationship, which termination would have a material adverse effect
on its financial condition, results of operations, business, assets or
properties;
(l) failed to operate its business in the ordinary course so as to
preserve its business intact and to preserve the goodwill of its
customers and others with whom it has business relations;
(m) entered into any other material transaction other than in the ordinary
course of business; or
(n) agreed in writing, or otherwise, to take any action described in
clauses (a) through (m) above.
Between the date hereof and the Effective Date, neither Acquired
Corporation nor the Bank, without the express written approval of SSFC, will do
any of the things listed in clauses (a) through (n) of this section 4.5 except
as permitted therein or as contemplated in this Agreement, and no Acquired
Corporation Company will enter into or amend any material Contract, other than
Loans or renewals thereof entered into in the ordinary course of business,
without the express written consent of SSFC.
4.6 Title.
Acquired Corporation has good and marketable title to all the properties,
interest in properties and assets, real and personal, reflected in the most
recent balance sheet referred to in section 4.4(a) hereof, or acquired after the
date of such balance sheet (except properties, interests and assets sold or
otherwise disposed of since such date, in the ordinary course of business), free
and clear of all mortgages, liens, pledges, charges or encumbrances except (i)
mortgages and other encumbrances referred to in the notes to such balance sheet,
(ii) liens for current taxes not yet due and payable and (iii) such
imperfections of title and easements as do not materially detract from or
interfere with the present use of the properties subject thereto or affected
thereby, or otherwise materially impair present business operations at such
properties. To the knowledge of Acquired Corporation, the material structures
and equipment of the Bank comply in all material respects with the requirements
of all applicable Laws.
4.7 Commitments.
Neither Acquired Corporation and the Bank are a party to any undisclosed
oral or written (i) Contracts for the employment of any officer or employee
which is not terminable on 30 days' (or less) notice, other than the employment
contracts recited in section 9.7 hereof, (ii) profit sharing, bonus, deferred
compensation, savings, stock option, severance pay, pension or retirement plan,
agreement or arrangement, (iii) loan agreement, indenture or similar agreement
relating to the borrowing of money by such party, (iv) guaranty of any
obligation for the borrowing of money or otherwise, excluding endorsements made
for collection, and guaranties made in the ordinary course of business, (v)
consulting or other similar material Contracts, (vi) collective bargaining
agreement, (vii) agreement with any present or former officer, director or
shareholder of such party, or (viii) other contract, agreement or other
commitment which is material to the business, operations, property, prospects or
assets or to the condition, financial or otherwise, of the Bank. Complete and
accurate copies of all contracts, plans and other items so listed have been made
or will be made available to SSFC for inspection.
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4.8 Charter and Bylaws.
The articles of incorporation and bylaws of Acquired Corporation and the
Bank, including all amendments thereto, previously provided to SSFC , are
currently in effect. There will be no changes in such articles of incorporation
or bylaws prior to the Effective Date, without the prior written consent of
SSFC.
4.9 Litigation.
There is no Litigation (whether or not purportedly on behalf of Acquired
Corporation) pending or, to the knowledge of Acquired Corporation, threatened
against or affecting Acquired Corporation and the Bank (nor is Acquired
Corporation aware of any facts which are likely to give rise to any such
Litigation) at law or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind, which involves the possibility of any
judgment or Liability not fully covered by insurance in excess of a reasonable
deductible amount or which may have a material adverse effect on Acquired
Corporation, and neither Acquired Corporation nor the Bank is in default with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental department, commission,
board, bureau, agency or instrumentality, which default would have a material
adverse effect on Acquired Corporation. To the knowledge of Acquired
Corporation, each Acquired Corporation Company has complied in all material
respects with all material applicable laws and regulations including those
imposing Taxes, of any applicable jurisdiction and of all states,
municipalities, other political subdivisions and agencies, in respect of the
ownership of its properties and the conduct of its business, which, if not
complied with, would have a material adverse effect on Acquired Corporation.
4.10 Material Contract Defaults.
Neither Acquired Corporation nor the Bank is in default in any material
respect under the terms of any material contract, agreement, lease or other
commitment which is or may be material to the business, operations, properties
or assets, or the condition, financial or otherwise, of such company and, to the
knowledge of Acquired Corporation, there is no event which, with notice or lapse
of time, or both, may be or become an event of default under any such material
contract, agreement, lease or other commitment in respect of which adequate
steps have not been taken to prevent such a default from occurring.
4.11 No Conflict with Other Instrument.
The consummation of the transactions contemplated by this Agreement will
not result in the breach of any term or provision of or constitute a default
under any material contract, indenture, mortgage, deed of trust or other
material agreement or instrument to which either Acquired Corporation or the
Bank is a party and will not conflict with any provision of the charter or
bylaws of Acquired Corporation or the Bank.
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4.12 Governmental Authorization.
Acquired Corporation and the Bank have all permits that, to the knowledge
of Acquired Corporation, are or will be legally required to enable Acquired
Corporation and the Bank to conduct their business in all material respects as
now conducted by Acquired Corporation and the Bank.
4.13 Absence of Regulatory Communications.
Neither Acquired Corporation nor the Bank is subject to, nor has Acquired
Corporation or the Bank received during the past three years, any written
communication directed specifically to it from any agency to which it is subject
or pursuant to which such agency has imposed or has indicated it may impose any
material restrictions on the operations of it or the business conducted by it or
in which such Agency has raised any material question concerning the condition,
financial or otherwise, of such company.
4.14 Absence of Material Adverse Change.
To the knowledge of Acquired Corporation, since the date of the most recent
balance sheet provided under section 4.4(a) hereof, there have been no events,
changes or occurrences which have had, or are reasonably likely to have,
individually or in the aggregate, a material adverse effect on Acquired
Corporation or the Bank.
4.15 Insurance.
Acquired Corporation and the Bank have in effect insurance coverage and
bonds with reputable insurers which, in respect to amounts, types and risks
insured, management of Acquired Corporation reasonably believes to be adequate
for the type of business conducted by Acquired Corporation and the Bank. Neither
Acquired nor the Bank is liable for any material retroactive premium adjustment.
All insurance policies and bonds are valid, enforceable and in full force and
effect, and neither Acquired Corporation nor the Bank has received any notice of
any material premium increase or cancellation with respect to any of its
insurance policies or bonds. Within the last three years, neither Acquired
Corporation nor the Bank has been refused any insurance coverage which it has
sought or applied for, and it has no reason to believe that existing insurance
coverage cannot be renewed as and when the same shall expire, upon terms and
conditions as favorable as those presently in effect, other than possible
increases in premiums that do not result from any extraordinary loss experience.
All policies of insurance presently held or policies containing substantially
equivalent coverage will be outstanding and in full force with respect to
Acquired Corporation and the Bank at all times from the date hereof to the
Effective Date.
4.16 Pension and Employee Benefit Plans.
(a) To the knowledge of Acquired Corporation, all employee benefit plans
of Acquired Corporation and the Bank have been established in
compliance with, and such plans have been operated in material
compliance with, all applicable Laws.
Except as may have been previously disclosed to SSFC, neither Acquired
Corporation nor the Bank sponsors or otherwise maintains a "pension
plan" within the meaning of section 3(2) of ERISA or any other
retirement plan other than the defined benefit plan of
12
Acquired Corporation that is intended to qualify under section 401 of
the Code, nor do any unfunded Liabilities exist with respect to any
employee benefit plan, past or present. To the knowledge of Acquired
Corporation, no employee benefit plan, any trust created thereunder or
any trustee or administrator thereof has engaged in a "prohibited
transaction," as defined in section 4975 of the Code, which may have a
material adverse effect on the condition, financial or otherwise, of
any Acquired Corporation Company.
(b) To the knowledge of Acquired Corporation, no amounts payable to any
employee of Acquired Corporation or the Bank will fail to be
deductible for federal income tax purposes by virtue of Section 280G
of the Code and regulations thereunder.
4.17 Buy-Sell Agreement.
To the knowledge of Acquired Corporation, there are no agreements among any
of its shareholders granting to any person or persons a right of first refusal
in respect of the sale, transfer, or other disposition of shares of outstanding
securities by any shareholder of Acquired Corporation, any similar agreement or
any voting agreement or voting trust in respect of any such shares.
4.18 Brokers.
All negotiations relative to this Agreement and the transactions
contemplated by this Agreement have been carried on by Acquired Corporation
directly with SSFC and without the intervention of any other person, either as a
result of any act of Acquired Corporation, or otherwise, in such manner as to
give rise to any valid claim against Acquired Corporation for a finder's fee,
brokerage commission or other like payment.
4.19 Approval of Agreement.
The Board of Directors of Acquired Corporation has approved this Agreement
and the transactions contemplated by this Agreement and has authorized the
execution and delivery by Acquired Corporation of this Agreement.
Subject to the matters referred to in section 7.2, Acquired Corporation has
full power, authority and legal right to enter into this Agreement, and, upon
appropriate vote of the shareholders of Acquired Corporation in accordance with
this Agreement, Acquired Corporation shall have full power, authority and legal
right to consummate the transactions contemplated by this Agreement.
4.20 Disclosure.
No representation or warranty, nor any statement or certificate furnished
or to be furnished to SSFC by Acquired Corporation, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact necessary to make the statements contained in this Agreement or in any such
statement or certificate not misleading.
4.21 Registration Statement.
At the time the registration statement on Form 10SB becomes effective and
at the time of the stockholders meeting, the Registration Statement will not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
13
4.22 Loans; Adequacy of Allowance for Loan Losses.
All reserves for loan losses shown on the most recent financial statements
furnished by Acquired Corporation have been calculated in accordance with
prudent and customary banking practices and are adequate in all material
respects to reflect the risk inherent in the loans of Acquired Corporation.
Acquired Corporation has no knowledge of any fact which is likely to require a
future material increase in the provision for loan losses or a material decrease
in the loan loss reserve reflected in such financial statements. Each loan
reflected as an asset on the financial statements of Acquired Corporation is the
legal, valid and binding obligation of the obligor of each loan, enforceable in
accordance with its terms subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to creditors' rights
generally and to general equitable principles. Acquired Corporation does not
have in its portfolio any loan exceeding its legal lending limit, and, Acquired
Corporation has no known significant delinquent, substandard, doubtful, loss,
non performing or problem loans which have not been disclosed to SSFC.
4.23 Environmental Matters.
To the knowledge of Acquired Corporation, Acquired Corporation and the Bank
each is in material compliance with all Laws and other governmental requirements
relating to the generation, management, handling, transportation, treatment,
disposal, storage, delivery, discharge, release or emission of any waste,
pollution, or toxic, hazardous or other substance (the "Environmental Laws" ),
and Acquired Corporation has no knowledge that Acquired Corporation or the Bank
have not complied with all regulations and requirements promulgated by the
Occupational Safety and Health Administration that are applicable to any
Acquired Corporation Company. To the knowledge of Acquired Corporation, there is
no Litigation pending or threatened with respect to any violation or alleged
violation of the Environmental Laws. To the knowledge of Acquired Corporation,
with respect to assets of or owned by Acquired Corporation or the Bank,
including any Loan Property, (i) there has been no spillage, leakage,
contamination or release of any substances for which the appropriate remedial
action has not been completed; (ii) no owned or leased property is contaminated
with or contains any hazardous substance or waste; and (iii) there are no
underground storage tanks on any premises owned or leased by Acquired
Corporation or the Bank. Acquired Corporation has no knowledge of any facts
which might suggest that either Acquired Corporation or the Bank has engaged in
any management practice with respect to any of its past or existing borrowers
which could reasonably be expected to subject Acquired Corporation or the Bank
to any liability.
4.24 Transfer of Shares.
Acquired Corporation has no knowledge of any plan or intention on the part
of Acquired Corporation's shareholders to sell or otherwise dispose of any of
the SSFC Common Stock to be received by them in the Merger that would reduce
such shareholders' ownership to a number of shares having, in the aggregate, a
fair market value of less than fifty (50%) percent of the total fair market
value of Acquired Corporation common stock outstanding immediately before the
Merger.
4.25 Collective Bargaining.
There are no labor contracts, collective bargaining agreements, letters
of undertakings or other arrangements, formal or informal, between Acquired
Corporation and the Bank and any union or labor organization covering any
employees of Acquired Corporation or the Bank and none of said employees are
represented by any union or labor organization.
14
4.26 Labor Disputes.
To the knowledge of Acquired Corporation, Acquired Corporation and the Bank
are in material compliance with all federal and state laws respecting employment
and employment practices, terms and conditions of employment, wages and hours.
Neither Acquired Corporation nor the Bank is or has been engaged in any unfair
labor practice, and, to the knowledge of Acquired Corporation, no unfair labor
practice complaint against Acquired Corporation or the Bank is pending before
the National Labor Relations Board. Relations between management of Acquired
Corporation and the Bank and their employees are amicable and there have not
been, nor to the knowledge of Acquired Corporation, are there presently, any
attempts to organize employees, nor to the knowledge of Acquired Corporation,
are there plans for any such attempts.
ARTICLE 5
ADDITIONAL COVENANTS
5.1 Additional Covenants of SSFC.
SSFC covenants to and with Acquired Corporation as follows:
(a) Registration Statement and Other Filings. SSFC has prepared and filed
with the SEC the Registration Statement and all amendments and
supplements thereto, in form reasonably satisfactory to Acquired
Corporation and its counsel, with respect to the Common Stock to be
issued pursuant to this Agreement. SSFC shall use reasonable good
faith efforts to prepare all necessary filings with any Agencies which
may be necessary for approval to consummate the transactions
contemplated by this Agreement. SSFC shall provide to counsel for
Acquired Corporation for review and comment (i) copies of drafts of
all filings made pursuant to this section 5.1(a) in advance of filing,
(ii) copies of documents as filed, and (iii) copies of any
correspondence between SSFC and any Agencies, including the SEC,
respecting the filings made pursuant to this section 5.1(a).
(b) Financial Statements. With reasonable promptness, SSFC shall furnish
Acquired Corporation with such additional financial data as Acquired
Corporation may reasonably request.
(c) No Control of Acquired Corporation by SSFC. Notwithstanding any other
provision hereof, until the Effective Date, the authority to establish
and implement the business policies of Acquired Corporation shall
continue to reside solely in Acquired Corporation's officers and Board
of Directors.
(d) Employee Benefit Matters. On the Effective Date, all employees of
Acquired Corporation shall either become employees of SSFC or be
entitled to severance benefits in accordance with the severance policy
of Acquired Corporation as of the date of this Agreement.
(e) Indemnification.
(i) Subject to the conditions set forth in the succeeding paragraph,
for a period of six years after the Effective Date SSFC shall
indemnify, defend and hold harmless each person entitled to
indemnification from the Acquired Corporation (each being an
"Indemnified Party") against all liabilities arising out of
actions or omissions occurring upon or prior to the Effective
Date (including without limitation the transactions contemplated
by this Agreement) to the extent authorized under the articles of
incorporation and bylaws of Acquired Corporation and Florida law.
15
(ii) Any Indemnified Party wishing to claim indemnification under this
subsection (g), upon learning of any such liability or
Litigation, shall promptly notify SSFC thereof. In the event of
any such Litigation (whether arising before or after the
Effective Date) (i) SSFC shall have the right to assume the
defense thereof with counsel reasonably acceptable to such
Indemnified Party and, upon assumption of such defense, SSFC
shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently
incurred by such Indemnified Parties in connection with the
defense thereof, except thatif SSFC elects not to assume such
defense or counsel for the Indemnified Parties advises that there
are substantive issues which raise conflicts of interest between
SSFC and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and SSFC shall pay all
reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; provided,
that SSFC shall be obligated pursuant to this subsection to pay
for only one firm of counsel for all Indemnified Parties in any
jurisdiction, (ii) the Indemnified Parties will cooperate in the
defense of any such litigation; and (iii) SSFC shall not be
liable for any settlement effected without its prior consent; and
provided further provided that SSFC shall not have any obligation
hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall determine, and such determination
shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited
by applicable Law.
(iii)In consideration of and as a condition precedent to the
effectiveness of the indemnification obligations provided by SSFC
in this section to a director or officer of the Acquired
Corporation, such director or officer of the Acquired Corporation
shall have delivered to SSFC on or prior to the Effective Date a
letter in form reasonably satisfactory to SSFC concerning claims
such directors or officers may have against Acquired Corporation.
In the letter, the directors or officers shall: (i) acknowledge
the assumption by SSFC as of the Effective Date of all Liability
(to the extent Acquired Corporation is so liable) for claims for
indemnification arising under section 5.1(e) hereof; (ii) affirm
that they do not have nor are they aware of any claims they might
have (other than those referred to in the following clause (iii))
against Acquired Corporation; (iv) identify any claims or any
facts or circumstances of which they are aware that could give
rise to a claim for indemnification under section 5.1(e) hereof;
and (iv) release as of the Effective Date any and all claims that
they may have against Acquired Corporation or the Bank other than
(A) those referred to in the foregoing clause (iii) and disclosed
in the letter of the director or officer, (B) claims by third
parties which have not yet been asserted against such director or
officer (other than claims arising from facts and circumstances
of which such director or officer is aware but which are not
disclosed in such director or executive officer's letter), (C)
claims by third parties arising from any transaction contemplated
by this Agreement and (D) claims by third parties arising in the
ordinary course of business of Acquired Corporation after the
date of the letter.
16
(iv) Acquired Corporation hereby represents and warrants to SSFC that
it has no knowledge of any claim, pending or threatened, or of
any facts or circumstances that could give rise to any obligation
by SSFC to provide the indemnification required by this section
5.1(e) other than as disclosed in the letters of the directors
and executive officers referred to in section5.1(e)(iii) hereof
and claims arising from any transaction contemplated by this
Agreement.
5.2 Additional Covenants of Acquired Corporation.
Acquired Corporation covenants to and with SSFC as follows:
(a) Operations. Acquired Corporation will conduct its business and the
business of the Bank in a proper and prudent manner and will use its
best efforts to maintain its relationships with its depositors,
customers and employees. Neither Acquired Corporation nor the Bank
will engage in any material transaction outside the ordinary course of
business or make any material change in its accounting policies or
methods of operation, nor will Acquired Corporation permit the
occurrence of any change or event which would render any of the
representations and warranties in Article 4 hereof untrue in any
material respect at and as of the Effective Date with the same effect
as though such representations and warranties had been made at and as
of such Effective Date.
(b) Stockholders Meeting; Best Efforts. Acquired Corporation will
cooperate with SSFC in the preparation of the Registration Statement
and any regulatory filings and will cause the stockholders meeting to
be held for the purpose of approving the Merger as soon as practicable
after the effective date of the Registration Statement, and will use
its best efforts to bring about the transactions contemplated by this
Agreement, including stockholder approval of this Agreement, as soon
as practicable unless this Agreement is terminated as provided herein.
(c) Director Recommendation. The members of the Board of Directors of
Acquired Corporation agree to support publicly the Merger.
(d) Financial Statements. Acquired Corporation shall furnish to SSFC with
reasonable promptness, such additional financial data as SSFC may
reasonably request; and
(e) Fiduciary Duties. Prior to the Effective Date, (i) no director or
officer (each an "Executive") of Acquired Corporation shall, directly
or indirectly, own, manage, operate, join, control, be employed by or
participate in the ownership, proposed ownership, management,
operation or control of or be connected in any manner with, any
business, corporation or partnership which is competitive to the
business of Acquired Corporation, except that a director or officer
may own stock in a publicly traded competitive business, (ii) all
Executives, at all times, shall satisfy their fiduciary duties to
Acquired Corporation and the Bank, and (iii) such Executives shall not
(except as required in the course of his or her employment with
Acquired Corporation or the Bank) communicate or divulge to, or use
for the benefit of himself or herself or any other person, firm,
association or corporation, without the express written consent of
Acquired Corporation, any confidential information which is possessed,
owned or used by or licensed by or to Acquired Corporation or the Bank
or confidential information belonging to third parties which Acquired
Corporation or the Bank shall be under obligation to keep secret or
which may be communicated to, acquired by or learned of by the
Executive in the course of or as a result of his or her employment
with Acquired Corporation or the Bank.
17
ARTICLE 6
MUTUAL COVENANTS AND AGREEMENTS
6.1 Best Efforts; Cooperation.
Subject to the terms and conditions herein provided, SSFC and Acquired
Corporation each agrees to use its best efforts promptly to take, or cause to be
taken, all actions and do, or cause to be done, all things necessary, proper or
advisable under applicable Laws or otherwise, including, without limitation,
promptly making required deliveries of stockholder lists and stock transfer
reports and attempting to obtain all necessary Consents and waivers and
regulatory approvals, including the holding of any regular or special board
meetings, to consummate and make effective, as soon as practicable, the
transactions contemplated by this Agreement. The officers of each Party to this
Agreement shall fully cooperate with officers and employees, accountants,
counsel and other representatives of the other Parties not only in fulfilling
the duties hereunder of the Party of which they are officers but also in
assisting, directly or through direction of employees and other persons under
their supervision or control, such as stock transfer agents for the Party, the
other Parties requiring information which is reasonably available from such
Party.
6.2 Press Release.
Each Party hereto agrees that, unless approved by the other Parties in
advance, such Party will not make any public announcement, issue any press
release or other publicity or confirm any statements by any person not a party
to this Agreement concerning the transactions contemplated hereby.
Notwithstanding the foregoing, each Party hereto reserves the right to make any
disclosure if such Party, in its reasonable discretion, deems such disclosure
required by Law. In that event, such Party shall provide to the other Party the
text of such disclosure sufficiently in advance to enable the other Party to
have a reasonable opportunity to comment thereon.
6.3 Access to Properties and Records.
Each Party hereto shall afford the officers and authorized representatives
of the other Party full access to the assets, books and records of such Party in
order that such other Parties may have full opportunity to make such
investigation as they shall desire of the affairs of such Party and shall
furnish to such Parties such additional financial and operating data and other
information as to its businesses and assets as shall be from time to time
reasonably requested. All such information that may be obtained by any such
Party will be held in confidence by such party, will not be disclosed by such
Party or any of its representatives except in accordance with this Agreement,
and will not be used by such Party for any purpose other than the accomplishment
of the Merger as provided herein.
6.4 Notice of Adverse Changes.
Each Party agrees to give written notice promptly to the other Party upon
becoming aware of the occurrence or impending occurrence of any event or
circumstance relating to it or any of its Subsidiaries which (i) is reasonably
likely to have, individually or in the aggregate, a material adverse effect on
it or (ii) would cause or constitute a material breach of any of its
representations, warranties, or covenants contained herein, and to use its
reasonable efforts to prevent or promptly to remedy the same.
18
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF ALL PARTIES
The obligations of SSFC and Acquired Corporation to cause the transactions
contemplated by this Agreement to be consummated shall be subject to the
satisfaction, in the sole discretion of the Party relying upon such conditions,
on or before the Effective Date of all the following conditions, except as such
Parties may waive such conditions in writing:
7.1 Approval by Shareholders.
At the Stockholders Meeting, this Agreement and the matters contemplated by
this Agreement shall have been duly approved by the vote of the holders of not
less than the requisite number of the issued and outstanding voting securities
of Acquired Corporation as is required by applicable Law and Acquired
Corporation's articles of incorporation and bylaws.
7.2 Regulatory Authority Approval.
Orders, consents and approvals, in form and substance reasonably
satisfactory to SSFC and Acquired Corporation, shall have been entered by the
Board of Governors of the Federal Reserve System and other appropriate bank
regulatory Agencies (i) granting the authority necessary for the consummation of
the transactions contemplated by this Agreement hereof and (ii) satisfying all
other requirements prescribed by Law. No order, consent or approval so obtained
which is necessary to consummate the transactions as contemplated hereby shall
be conditioned or restricted in a manner which in the reasonable good faith
judgment of the Board of Directors of SSFC or Acquired Corporation would so
materially adversely impact the economic benefits of the transaction as
contemplated by this Agreement so as to render inadvisable the consummation of
the Merger.
7.3 Litigation.
There shall be no pending or threatened litigation in any court or any
pending or threatened proceeding by any governmental commission, board or
agency, with a view to seeking or in which it is sought to restrain or prohibit
consummation of the transactions contemplated by this Agreement or in which it
is sought to obtain divestiture, rescission or damages in connection with the
transactions contemplated by this Agreement and no investigation by any Agency
shall be pending or threatened which might result in any such suit, action or
other proceeding.
7.4 Registration Statement.
The registration statement on Form 10SB filed pursuant to the Securities
Exchange Act of 1934 shall have become effective and no stop order suspending
the effectiveness of the Registration Statement shall be in effect; no
proceedings for such purpose, or under the proxy rules of the SEC or any bank
regulatory authority with respect to the transactions contemplated hereby, shall
be pending before or threatened by the SEC or any bank regulatory authority; and
all approvals or authorizations for the offer of SSFC Common Stock shall have
been received or obtained pursuant to any applicable state securities Laws, and
no stop order or proceeding with respect to the transactions contemplated hereby
shall be pending or threatened under any such state Law.
19
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
The obligations of Acquired Corporation to cause the transactions
contemplated by this Agreement to be consummated shall be subject to the
satisfaction on or before the Effective Date of all the following conditions
except as Acquired Corporation may waive such conditions in writing:
8.1 Representations, Warranties and Covenants.
Notwithstanding any investigation made by or on behalf of Acquired
Corporation, all representations and warranties of SSFC contained in this
Agreement shall be true in all material respects on and as of the Effective Date
as if such representations and warranties were made on and as of such Effective
Date, and SSFC shall have performed in all material respects all agreements and
covenants required by this Agreement to be performed by it on or prior to the
Effective Date.
8.2 Adverse Changes.
There shall have been no changes after the date of the most recent balance
sheet provided under section 4.4(a) hereof in the results of operations (as
compared with the corresponding period of the prior fiscal year), assets,
liabilities, financial condition or affairs of SSFC which in their total effect
constitute a material adverse effect, nor shall there have been any material
changes in the Laws governing the business of SSFC or which would impair the
rights of Acquired Corporation or its shareholders pursuant to this Agreement.
8.3 Certificate.
In addition to any other deliveries required to be delivered hereunder,
Acquired Corporation shall have received a certificate from the President or a
Vice President and from the Secretary or Assistant Secretary of SSFC certifying
that:
(a) the Board of Directors of SSFC has duly adopted resolutions approving
the substantive terms of this Agreement and authorizing the
consummation of the transactions contemplated by this Agreement and
such resolutions have not been amended or modified and remain in full
force and effect;
(b) each person executing this Agreement on behalf of SSFC is an officer
of SSFC holding the office or offices specified therein and the
signature of each person set forth on such certificate is his or her
genuine signature;
(c) the certificate of incorporation and bylaws of Acquired Corporation
and the Bank referenced in section 4.8 hereof remain in full force and
effect;
(d) such persons have no knowledge of a basis for any material claims in
any court or before any Agency or arbitration or otherwise against, by
or affecting SSFC or the business, prospects, condition (financial or
otherwise), or assets of SSFC or which would prevent the performance
of this Agreement or the transactions contemplated by this Agreement
or declare the same unlawful or cause the rescission thereof;
20
(e) to such persons' knowledge, the Proxy Statement delivered to Acquired
Corporation's shareholders, or any amendments or revisions thereto so
delivered, as of the date thereof, did not contain or incorporate by
reference 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 in light of the circumstances under
which they were made (it being understood that such persons need not
express a statement as to information concerning or provided by
Acquired Corporation for inclusion in such Proxy Statement); and
(f) the conditions set forth in this Article 8 insofar as they relate to
SSFC have been satisfied.
8.4 Other Matters.
There shall have been furnished to such counsel for Acquired Corporation
certified copies of such corporate records of SSFC and copies of such other
documents as such counsel may reasonably have requested for such purpose.
8.5 Material Events.
There shall have been no determination by the Board of Directors of
Acquired Corporation that the transactions contemplated by this Agreement have
become impractical because of any state of war, declaration of a banking
moratorium in the United States or a general suspension of trading on the
exchange on which SSFC Common Stock may be traded.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF SSFC
The obligations of SSFC to cause the transactions contemplated by this
Agreement to be consummated shall be subject to the satisfaction on or before
the Effective Date of all of the following conditions except as SSFC may waive
such conditions in writing:
9.1 Representations, Warranties and Covenants.
Notwithstanding any investigation made by or on behalf of SSFC, all
representations and warranties of Acquired Corporation contained in this
Agreement shall be true in all material respects on and as of the Effective Date
as if such representations and warranties were made on and as of the Effective
Date, and Acquired Corporation shall have performed in all material respects all
agreements and covenants required by this Agreement to be performed by it on or
prior to the Effective Date.
9.2 Adverse Changes.
There shall have been no changes after the date of the most recent balance
sheet provided under section 4.4(a) hereof in the results of operations (as
compared with the corresponding period of the prior fiscal year), assets,
liabilities, financial condition, or affairs of Acquired Corporation which
constitute a material adverse effect, nor shall there have been any material
changes in the Laws governing the business of Acquired Corporation which would
impair SSFC's rights pursuant to this Agreement.
21
9.3 Certificate.
In addition to any other deliveries required to be delivered hereunder,
SSFC shall have received a certificate from Acquired Corporation executed by the
President or Vice President and from the Secretary or Assistant Secretary of
Acquired Corporation certifying that:
(a) the Board of Directors of Acquired Corporation has duly adopted
resolutions approving the substantive terms of this Agreement and
authorizing the consummation of the transactions contemplated by this
Agreement and such resolutions have not been amended or modified and
remain in full force and effect;
(b) the shareholders of Acquired Corporation have duly adopted resolutions
approving the substantive terms of the Merger and the transactions
contemplated thereby and such resolutions have not been amended or
modified and remain in full force and effect;
(c) each person executing this Agreement on behalf of Acquired Corporation
is an officer of Acquired Corporation holding the office or offices
specified therein and the signature of each person set forth on such
certificate is his or her genuine signature;
(d) the articles of incorporation and bylaws of Acquired Corporation and
the Bank referenced in section 4.8 hereof remain in full force and
effect and have not been amended or modified since the date hereof;
(e) to such persons' knowledge, the Proxy Statement delivered to Acquired
Corporation's shareholders, or any amendments or revisions thereto so
delivered, as of the date thereof, did not contain or incorporate by
reference 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 in light of the circumstances under
which they were made (it being understood that such persons need only
express a statement as to information concerning or provided by
Acquired Corporation for inclusion in such Proxy Statement); and
(f) the conditions set forth in this Article 9 insofar as they related to
Acquired Corporation have been satisfied.
9.4 Other Matters.
There shall have been furnished to counsel for SSFC certified copies of
such corporate records of Acquired Corporation and copies of such other
documents as such counsel may reasonably have requested.
9.5 Dissenters.
The number of shares as to which shareholders of Acquired Corporation have
exercised dissenters rights of appraisal under section 2.6 does not exceed 10%
of the outstanding shares of common stock of Acquired Corporation.
9.6 Material Events.
There shall have been no determination by the Board of Directors of SSFC
that the transactions contemplated by this Agreement have become impractical
because of any state of war, declaration of a banking moratorium in the United
States or general suspension of trading on the NYSE or on any market on which
SSFC Common Stock may be traded.
9.7 Employment Agreements.
The President and Chairman of the Board of the Acquired Corporation,
respectively ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. Modder, are employed by the Acquired
Corporation under long-term employment agreements. At the consummation and
Effective Date and time of the Merger contemplated hereunder, the employment
agreements shall immediately become the liability of SSFC. Any contractual
obligations and liabilities of the Acquired Corporation shall immediately become
the contractual obligations and liabilities of SSFC upon the consummation and
Effective Date and time of the Merger contemplated hereunder.
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ARTICLE 10
TERMINATION OF REPRESENTATIONS AND WARRANTIES
All representations and warranties provided in Articles 3 and 4 of this
Agreement or in any certificate pursuant to Articles 8 and 9 shall terminate and
be extinguished at and shall not survive the Effective Date. All covenants,
agreements and undertakings required by this Agreement to be performed by any
Party hereto following the Effective Date shall survive such Effective Date and
be binding upon such Party. If the Merger is not consummated, all
representations, warranties, obligations, covenants, or agreements hereunder or
in any certificate delivered hereunder relating to the transaction which is not
consummated shall be deemed to be terminated or extinguished, except that
Sections 6.2, 6.4, 12.3 and 13.4, and Article 10 shall survive. Items
disclosed in the Exhibits and Schedules attached hereto are incorporated into
this Agreement and form a part of the representations, warranties, covenants or
agreements to which they relate. Information provided in such Exhibits and
Schedules is provided only in response to the specific section of this Agreement
which calls for such information.
ARTICLE 11
NOTICES
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given at the
time given or mailed, first class postage prepaid:
(a) If to Acquired Corporation, to:
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a courtesy copy to:
▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Goodyear, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
or as may otherwise be specified by or as Acquired Corporation in writing
to SSFC.
b) If to SSFC, to:
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
with a courtesy copy to:
▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or as may otherwise be specified in writing by SSFC to Acquired
Corporation.
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ARTICLE 12
AMENDMENT OR TERMINATION
12.1 Amendment.
This Agreement may be amended by the mutual consent of SSFC and Acquired
Corporation before or after approval of the transactions contemplated herein by
the shareholders of Acquired Corporation.
12.2 Termination.
This Agreement may be terminated at any time prior to or on the Effective
Date whether before or after action thereon by the shareholders of Acquired
Corporation, as follows:
(a) by the mutual consent of the respective boards of directors of
Acquired Corporation and SSFC;
(b) by the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any
representation, warranty, covenant, or other agreement contained in
this Agreement) in the event of a material breach by the other Party
of any representation or warranty contained in this Agreement which
cannot be or has not been cured within thirty (30) days after the
giving of written notice to the breaching Party of such breach and
which breach would provide the non-breaching Party the ability to
refuse to consummate the Merger under the standard set forth in
section 9.1 of this Agreement in the case of SSFC and section 8.1 of
this Agreement in the case of Acquired Corporation;
(c) by the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any
representation, warranty, covenant, or other agreement contained in
this Agreement) in the event of a material breach by the other Party
of any covenant or agreement contained in this Agreement which cannot
be or has not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such breach, or if any of the
conditions to the obligations of such Party contained in this
Agreement in Article 8 as to Acquired Corporation or Article 9 as to
SSFC shall not have been satisfied in full; or
(d) by the Board of Directors of either SSFC or Acquired Corporation if
all transactions contemplated by this Agreement shall not have been
consummated on or prior to October 31, 1997, if the failure to
consummate the transactions provided for in this Agreement on or
before such date is not caused by any breach of this Agreement by the
Party electing to terminate pursuant to this section 12.2(d).
12.3 Damages.
In the event of termination pursuant to section 12.2, Acquired
Corporation and SSFC shall not be liable for damages for any breach of a
covenant, warranty or representation contained in this Agreement made in good
faith, and, in that case, the expenses incurred shall be borne as set forth in
section 13.1 hereof.
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ARTICLE 13
MISCELLANEOUS
13.1 Expenses.
Each Party hereto shall bear its own legal, auditing, trustee, investment
banking, regulatory and other expenses in connection with this Agreement and the
transactions contemplated hereby.
13.2 Benefit.
This Agreement shall inure to the benefit of and be binding upon Acquired
Corporation and SSFC, and their respective successors. This Agreement shall not
be assignable by any Party without the prior written consent of the other Party.
13.3 Federal Tax Attributes.
This Merger for tax and other purposes shall be construed as a form of
reorganization, and therefor the tax attributes of the Acquired Corporation and
the Bank shall carry over to and consolidate with SSFC, from that of the
Acquired Corporation and the Bank which file consolidated Federal Income Tax
returns. It is anticipated that SSFC will file consolidated Federal Income Tax
returns involving those entities contemplated by this Merger Agreement, thereby
preserving the tax attributes in Acquired Corporation and the Bank.
13.4 Governing Law.
Except to the extent that the laws of the State of Florida apply to the
Merger, this Agreement shall be governed by, and construed in accordance with
the Laws of the State of Delaware without regard to any conflicts of law.
13.5 Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed to constitute an original. Each such counterpart shall become effective
when one counterpart has been signed by each Party thereto.
13.6 Headings.
The headings of the various articles and sections of this Agreement are for
convenience of reference only and shall not be deemed a part of this Agreement
or considered in construing the provisions thereof.
13.7 Severability.
Any term or provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining terms
and provisions thereof or affecting the validity or enforceability of such
provision in any other jurisdiction, and if any term or provision of this
Agreement is held by any court of competent jurisdiction to be void, voidable,
invalid or unenforceable in any given circumstance or situation, then all other
terms and provisions, being severable, shall remain in full force and effect in
such circumstance or situation and the term or provision shall remain valid and
in effect in any other circumstances or situation.
13.8 Construction.
Use of the masculine pronoun herein shall be deemed to refer to the
feminine and neuter genders and the use of singular references shall be deemed
to include the plural and vice versa, as appropriate. No inference in favor of
or against any Party shall be drawn from the fact that such Party or such
Party's counsel has drafted any portion of this Agreement.
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13.9 Return of Information.
In the event of termination of this Agreement prior to the Effective Date,
each Party shall return to the other, without retaining copies thereof, all
confidential or nonpublic documents, work papers and other materials obtained
from the other Party in connection with the transactions contemplated in this
Agreement and shall keep such information confidential, not disclose such
information to any other person or entity, and not use such information in
connection with its business.
13.10 Equitable Remedies.
The Parties agree that, in the event of a breach of this Agreement by
either Party, the other Party may be without an adequate remedy at law owing to
the unique nature of the contemplated transactions. In recognition thereof, in
addition to (and not in lieu of) any remedies at law that may be available to
the non-breaching Party, the non-breaching Party shall be entitled to obtain
equitable relief, including the remedies of specific performance and injunction,
in the event of breach of this Agreement by the other Party, and no attempt on
the part of the non-breaching Party to obtain such equitable relief shall be
deemed to constitute an election of remedies by the non-breaching Party that
would preclude the non-breaching Party from obtaining any remedies at law to
which it would otherwise be entitled.
13.11 Attorneys' Fees.
If any Party hereto shall bring an action at law or in equity to enforce
its rights under this Agreement (including an action based upon a
misrepresentation or the breach of any warranty, covenant, agreement or
obligation contained herein), the prevailing Party in such action shall be
entitled to recover from the other Party its costs and expenses incurred in
connection with such action (including fees, disbursements and expenses of
attorneys and costs of investigation).
13.12 No Waiver.
No failure, delay or omission of or by any Party in exercising any right,
power or remedy upon any breach or default of any other Party shall impair any
such rights, powers or remedies of the Party not in breach or default, nor shall
it be construed to be a wavier of any such right, power or remedy, or an
acquiescence in any similar breach or default; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Party of any provisions of this
Agreement must be in writing and be executed by the Parties to this Agreement
and shall be effective only to the extent specifically set forth in such
writing.
13.13 Remedies Cumulative.
All remedies provided in this Agreement, by law or otherwise, shall be
cumulative and not alternative.
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13.14 Entire Contract.
This Agreement and the documents and instruments referred to herein
constitute the entire contract between the parties to this Agreement and
supersede all other understandings with respect to the subject matter of this
Agreement.
IN WITNESS WHEREOF, Acquired Corporation and SSFC have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
SOUTHERN SECURITY FINANCIAL CORPORATION
By:
Its:
SOUTHERN SECURITY BANK CORPORATION
By:
Its:
27